FIDELITY ADVISOR SERIES III, 485APOS, 1994-04-14

FIDELITY ADVISOR SERIES III
485APOS, 1994-04-14

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-77571) UNDER THE
SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 31 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. _____ [ ]
Fidelity Advisor Series III
(Exact Name of Registrant as Specified in Declaration of Trust)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Office)
Registrant's Telephone Number: (617) 570-7000
Arthur S. Loring, Esq.
82 Devonshire Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b) of Rule 485
( ) On January 29, 1994 pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
(x) On June 30, 1994 pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and filed the notice on January 29, 1994.

lg940460035

FIDELITY ADVISOR FUNDS - CLASS A
CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
<S> <C>
Form N-1A Item Number

Part A Prospectus Caption

1 Cover Page

2 Financial History

3 a,b Financial Highlights

c Performance

4 a(i) The Trusts and the Fidelity Organization

a(ii),b,c Investment Objectives; Investment Policies and Risks; Investment
Limitations; Appendix

5 a The Trusts and the Fidelity Organization

b,c,d,e The Trusts and the Fidelity Organization; Fees

f Portfolio Transactions

5A *

6 a The Trusts and the Fidelity Organization; How to Buy Shares;
How to Exchange; How to Sell Shares; Shareholder Services

b *

c Investment Policies and Risks; The Trusts and the Fidelity
Organization

d Cover Page; Financial History; The Trusts and the Fidelity
Organization

e Investor Services; Shareholder Communications; How to Buy
Shares; How to Exchange; How to Sell Shares

f,g Distribution Options; Distributions and Taxes

7 a Fees

b Valuation; How to Buy Shares

c Investor Services

d How to Buy Shares

e,f Fees

8 How to Sell Shares

9 *

</TABLE>

- --------------------------------------
* Not Applicable

FIDELITY ADVISOR FUNDS - CLASS B
CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
<S> <C>
Form N-1A Item Number

Part A Prospectus Caption

1 Cover Page

2 Financial History

3 a,b Financial Highlights

c Performance

4 a(i) The Trusts and the Fidelity Organization

a(ii),b,c Investment Objectives; Investment Policies and Risks; Investment
Limitations; Appendix

5 a The Trusts and the Fidelity Organization

b,c,d,e The Trusts and the Fidelity Organization; Fees

f Portfolio Transactions

5A *

6 a The Trusts and the Fidelity Organization; How to Buy Shares;
How to Exchange; How to Sell Shares; Shareholder Services

b *

c Investment Policies and Risks; The Trusts and the Fidelity
Organization

d Cover Page; Financial History; The Trusts and the Fidelity
Organization

e Investor Services; Shareholder Communications; How to Buy
Shares; How to Exchange; How to Sell Shares

f,g Distribution Options; Distributions and Taxes

7 a Fees

b Valuation; How to Buy Shares

c Investor Services

d How to Buy Shares

e,f Fees

8 How to Sell Shares

9 *

</TABLE>

- --------------------------------------
* Not Applicable

FIDELITY ADVISOR INSTITUTIONAL FUNDS
CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
<S> <C>
Form N-1A Item Number

Part A Prospectus Caption

1 Cover Page

2 Financial History

3 a,b Financial Highlights

c Fund Performance

4 a(i) The Trust and the Fidelity Organization

a(ii),b,c Investment Objectives, Policies and Risks; Investment

Limitations; Appendix

5 a The Trusts and the Fidelity Organization

b,c,d,e The Trusts and the Fidelity Organization; Fees and Expenses

f Portfolio Transactions

5A *

6 a The Trusts and the Fidelity Organization; Purchasing Shares of
the Funds; Exchange Privileges; Redeeming Shares of the Funds;
Shareholder Services

b *

c Investment Objectives, Policies and Risks; The Trusts and the
Fidelity Organization

d The Trusts and the Fidelity Organization

e Purchasing Shares of the Funds; Redeeming Shares of the
Funds; Shareholder Services; Exchange Privileges

f,g Distribution Options; Tax Information

7 a Fees and Expenses

b Fund Shares Valuation; Purchasing Shares of the Funds;

c Shareholder Services

d Purchasing Shares of the Funds

e,f Fees and Expenses

8 Redeeming Shares of the Funds

9 *

</TABLE>

- --------------------------------------
* Not Applicable

FIDELITY ADVISOR SERIES III
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME
CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
<S> <C>
Form N-1A Item Number

Part B Statement of Additional Information

10 Cover Page

11 Table of Contents

12 FMR; Description of the Trust

13 a,b,c Investment Policies and Limitations

d Portfolio Transactions

14 a,b Trustees and Officers

c *

15 a *

b Description of the Trust

c *

16 a(i, ii) FMR, Management and Other Services; Trustees and Officers;
Distribution and Service Plans

a(iii),b,c,d Management and Other Services;

e Portfolio Transactions

f Distribution and Service Plan

g *

h Description of the Trust

i Management and Other Services;

17 a,b,c,d Portfolio Transactions

e *

18 a Description of the Trust

b *

19 a Additional Purchase, Exchange and Redemption Information

b Valuation of Portfolio Securities

20 Distributions and Taxes

21 Distribution and Service Plans

22 a *

b Performance

23 *

</TABLE>

- --------------------------------------
* Not Applicable

FIDELITY ADVISOR FUNDS - CLASS A
PROSPECTUS
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109
JUNE 30 , 1994
The Fidelity Advisor Funds (Funds) offer investors a broad selection of
diversified portfolios.
EQUITY FUNDS:
FIDELITY ADVISOR OVERSEAS FUND - CLASS A
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH - CLASS A
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND - CLASS A
FIDELITY ADVISOR GLOBAL RESOURCES FUND - CLASS A
(formerly Fidelity Advisor Global Natural Resources Portfolio)
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND - CLASS A
(formerly Fidelity Special Situations Fund: Advisor Class)
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME - CLASS A
FIDELITY ADVISOR INCOME & GROWTH FUND - CLASS A
FIXED-INCOME FUNDS:
FIDELITY ADVISOR EMERGING MARKETS INCOME FUND - CLASS A
FIDELITY ADVISOR HIGH YIELD FUND - CLASS A
FIDELITY ADVISOR LIMITED TERM BOND FUND - CLASS A
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND - CLASS A
FIDELITY ADVISOR SHORT FIXED-INCOME FUND - CLASS A

MUNICIPAL/TAX-EXEMPT FUNDS:
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND - CLASS A
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND - CLASS A
FIDELITY ADVISOR SHORT-INTERMEDIATE TAX-EXEMPT
FUND - CLASS A
Fidelity Advisor Equity Portfolio Growth is a portfolio of Fidelity Advisor
Series I. Fidelity Advisor Growth Opportunities Fund, Fidelity Advisor
Income & Growth Fund, Fidelity Advisor High Yield Fund, Fidelity
Advisor Government Investment Fund and Fidelity Advisor Short Fixed-Income
Fund are portfolios of Fidelity Advisor Series II. Fidelity Advisor Equity
Portfolio Income is a portfolio of Fidelity Advisor Series III. Fidelity
Advisor Limited Term Bond Fund is a portfolio of Fidelity Advisor Series
IV. Fidelity Advisor Global Resources Fund and Fidelity Advisor High Income
Municipal Fund are portfolios of Fidelity Advisor Series V. Fidelity
Advisor Limited Term Tax-Exempt Fund and Fidelity Advisor
Short-Intermediate Tax-Exempt Fund are portfolio s of Fidelity
Advisor Series VI. Fidelity Advisor Overseas Fund is a portfolio of
Fidelity Advisor Series VII. Fidelity Advisor Strategic Opportunities Fund
and Fidelity Advisor Emerging Markets Income Fund are
portfolio s of Fidelity Advisor Series VIII. Certain funds sell two
classes of shares to retail investors : Class A sh a res and
Class B sh a res. Class A shares are offered through this prospectus.
Class B shares are offered through a separate prospectus.
FIDELITY ADVISOR HIGH YIELD FUND INVESTS IN LOWER-RATED DEBT SECURITIES,
WHICH PRESENT HIGHER RISKS OF UNTIMELY INTEREST AND PRINCIPAL PAYMENTS,
DEFAULT, AND PRICE VOLATILITY THAN HIGHER-RATED SECURITIES, AND MAY PRESENT
PROBLEMS OF LIQUIDITY AND VALUATION.
Please read this Prospectus before investing. It is designed to provide you
with information and help you decide if a Fund's goals match your own.
RETAIN THIS DOCUMENT FOR FUTURE REFERENCE.
A Statement of Additional Information (SAI) dated June 30 , 1994 for
each Fund has been filed with the Securities and Exchange Commission (SEC)
and each is incorporated herein by reference. SAIs and each Fund's Annual
Report are available free upon request from Fidelity Distributors
Corporation (Distributors), 82 Devonshire Street, Boston, MA 02109, or from
your investment professional.
MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR ENDORSED OR GUARANTEED
BY ANY BANK, SAVINGS ASSOCIATION, INSURED DEPOSITORY INSTITUTION OR
GOVERNMENT AGENCY, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE
PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. INVESTMENT IN THE FUNDS INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE VALUE OF THE
INVESTMENT AND ITS RETURN WILL FLUCTUATE AND ARE NOT GUARANTEED. WHEN SOLD,
THE VALUE OF SHARES OF THE INVESTMENT MAY BE HIGHER OR LOWER THAN THE
AMOUNT ORIGINALLY INVESTED.

LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
(Registered trademark)

TABLE OF CONTENTS Page
FINANCIAL HISTORY
Shareholder Transaction Expenses
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVES
INVESTMENT POLICIES AND RISKS 13
INVESTMENT LIMITATIONS
HOW TO BUY SHARES
Sales Charges and Investment Professional Concessions
Minimum Account Balance
Sales Charge Waivers
INVESTOR SERVICES
Quantity Discounts
Combined Purchases
Rights of Accumulation
Letter of Intent
Fidelity Advisor Systematic Investment Program
SHAREHOLDER COMMUNICATIONS
HOW TO EXCHANGE
Fidelity Advisor Systematic Exchange Program
HOW TO SELL SHARES
Redemption Requests by Telephone
Redemption Requests in Writing
Reinstatement Privilege
Fidelity Advisor Systematic Withdrawal Program
Checkwriting Service
DISTRIBUTION OPTIONS
DISTRIBUTIONS AND TAXES
Distributions
Capital Gains
"Buying a Dividend"
Federal Taxes
State and Local Taxes
Other Tax Information
FEES
Management and Other Services
Distribution and Service Plans
VALUATION
PERFORMANCE
PORTFOLIO TRANSACTIONS
THE TRUSTS AND THE FIDELITY ORGANIZATION
APPENDIX
FINANCIAL HISTORY - CLASS A
The purpose of the table below is to assist you in understanding the
various costs and expenses that an investor in Class A would bear
directly or indirectly. This standard format was developed for use by all
mutual funds to help investors make their investment decisions. This
expense information should be considered along with other important
information such as each Fund's investment objective and past performance.
For information regarding expenses of Class B shares, see "The Trusts and
the Fidelity Organization."
1.SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge (as a percentage of the offering price)
- -Short Intermediate Tax-Exempt Fund 1.50%
- -Short Fixed-Income Fund 1.50%
- -Other Fidelity Advisor Funds 4.75%
Sales Charge on Reinvested Dividends None
Deferred Sales Charge on Redemptions None
Redemption Fees None
Exchange Fees None
SHAREHOLDER TRANSACTION EXPENSES represent charges paid when you purchase,
sell or exchange Class A shares of a Fund. If you exchange Class
A shares or direct dividends of Short Fixed-Income Fund or
Short-Intermediate Tax-Exempt into Class A shares of other
Fidelity Advisor Funds, a differential sales charge may apply. Lower sales
charges may be available with purchases of $50,000 or more or in
conjunction with various programs. See "How to Buy Shares," page 21.
ANNUAL OPERATING EXPENSES are based on historical expenses for the most
recent fiscal year ended. Management fees are paid by each Fund to Fidelity
Management & Research Company (FMR) for managing its investments and
business affairs. Management fees for Overseas, Growth Opportunities and
Strategic Opportunities will vary based on performance. 12b-1 fees are paid
by Class A shares of the Funds to Distributors for services and
expenses in connection with the distribution of Class A shares.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the National Association of
Securities Dealers (NASD) due to 12b-1 fees . The Funds incur other
expenses for maintaining shareholder records, furnishing shareholder
statements and reports, and for other services. A portion of the brokerage
commissions that Equity Portfolio Growth, Growth Opportunities, Global
Resources and Income & Growth paid were used t o reduce Fund
expenses. Without this reduction, the total operating expenses
for their Class A shares would have been 1.85%, 1.65%, 2.63% and 1.52%,
respectively. FMR has voluntarily agreed to reimburse Emerging Markets
Income, Government Investment, Limited Term Tax-Exempt, and
Short-Intermediate Tax-Exempt, to the extent that total operating
expenses for Class A shares (exclusive of taxes, interest, brokerage
commissions, and extraordinary expenses) are in excess of an annual rate
of 1.50%, 0.60% , 0.90% and .75% , respectively, of
average net assets. If reimbursements were not in effect, the management
fees, other expenses (including 12b-1 fees) and total fund operating
expenses for Class A shares would have been: .46%, .86%, and 1.32%,
(Government Investment); and .42%, .94%, and 1.36%, (Limited Term
Tax-Exempt). Please refer to the section "Fees," page 26.
The HYPOTHETICAL EXAMPLE illustrates the expenses, including the maximum
sales charge, associated with a $1,000 investment in Class A shares of
each Fund over periods of one, three, five and ten years, based on the
expenses (after reimbursements, if any) in the table and an assumed annual
return of 5%. THE RETURN OF 5% AND EXPENSES SHOULD NOT BE CONSIDERED
INDICATIONS OF ACTUAL OR EXPECTED CLASS A PERFORMANCE OR EXPENSES,
BOTH OF WHICH MAY VARY.

2.ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

EXPENSE TABLE EXAMPLE:
You would pay the following expenses, including the
maximum sales charge, on a $1,000 investment in Class
A
Shares of a Fund assuming (1) a 5% annual return
and (2) full redemption at the end of each time period:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS: MANAGEME 12B-1 OTHER TOTAL
NT FEE EXPENSES OPERATING 1 YEAR 3 YEARS 5 YEARS 10 YEARS
FEE EXPENSES

Overseas - Class A .77% .65% .96% 2.38% $ 70 $ 118 $ 169 $ 306

Equity Portfolio Growth
- Class A .66% .65% .53%* 1.84% 65 103 142 265

Growth Opportunities
- - Class A .68% .65% .31%* 1.64% 63 97 132 233

Global Resources
- Class A .77% .65% 1.20%* 2.62% 73 125 180 329

Strategic Opportunities
- Class A .54% .65% .38% 1.57% 63 95 129 225

Equity Portfolio Income
- Class A .50% .65% .62% 1.77% 65 101 139 246

Income & Growth
- Class A .53% .65% .33%* 1.51% 62 93 126 219

FIXED-INCOME FUNDS:

Emerging Markets Income
- - Class A1 .42% .25% .83% 1.50% 62 93 -- --

High Yield - Class A .51% .25% .35% 1.11% 58 81 106 176

Limited Term Bond
- Class A .42% .25% .56% 1.23% 59 85 112 189

Government Investment
- Class A .00% .25% .35%* .60% 53 66 79 119
*

Short Fixed-Income
- Class A .47% .15% .33% .95% 25 45 67 130

MUNICIPAL/TAX-EXEMPT FUNDS:

High Income Municipal
- - Class A .42% .25% .25% .92% 56 75 96 155

Limited Term Tax-Exempt
- Class A .12% .25% .53%* .90% 56 75 95 153
*

Short-Intermediate Tax-Exempt .09% .15% .51% .75% 26 48 -- --
- - Class A1

</TABLE>

* AFTER EXPENSE REDUCTIONS
1 PROJECTIONS ARE BASED ON ESTIMATED EXPENSES.
FINANCIAL HIGHLIGHTS
The following tables give information about each Fund's financial history
and use its fiscal year. They have been audited by each Fund's independent
accountant whose unqualified report is included in each Fund's Annual
Report. The Annual Report for each Fund is incorporated by reference into
its SAI. On or about May 2, 1994, Strategic Opportunities, Equity
Portfolio Income, Emerging Markets Income, High Yield, Limited Term Bond,
Government Investment, High Income Municipal, and Limited Term Tax-Exempt,
each is expected to offer Class B shares to retail investors. The
information in each Fund's respective table (and Annual Report) does not
reflect payment of 12b-1 fees or shareholder service fees, and may not be
representative of the expected operational results of Class B shares.
FIDELITY ADVISOR OVERSEAS FUND - CLASS A
April 23, 1990
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 October 31, 1990

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 9.07 $ 9.78 $ 9.55 $ 10.00

Income from Investment Operations

Net investment income .03 .05 .14 .05

Net realized and unrealized gain (loss) on investments 3.93 (.62) .17 (.50)

Total from investment operations 3.96 (.57) .31 (.45)

Less Distributions

From net investment income (.07) (.14) (.07) -

From net realized gain on investments (.03)(S DIAMOND) - (.01)(S DIAMOND)-

Total distributions (.10) (.14) (.08) -

Net asset value, end of period $ 12.93 $ 9.07 $ 9.78 $ 9.55

TOTAL RETURN (dagger)(double dagger) 44.13% (5.88)% 3.25% (4.50)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 221,370 $ 18,652 $ 19,091 $ 18,161

Ratio of expenses to average net assets 2.38% 2.64% 2.85% 3.07%*+

Ratio of net investment income to average net assets (.18)% .48% 1.48% 1.45%*

Portfolio turnover rate 42% 168% 226% 137%*

</TABLE>

FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH - CLASS A
Equity Portfolio Growth Institutional Equity Portfolio Growth
Year Period
Ended Ended
Nov. 30, Nov. 30 Years Ended November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987 1986
1985 1984
Net asset value, beginning of period $ 26.33 $ 23.78 $ 26.37 $ 24.28 $
15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18 $ 11.09 $ 8.03 $ 10.05
Income from Investment Operations
Net investment income (.07)(dagger)(dagger) .01(dagger)(dagger)
.19(dagger)(dagger) .17(dagger)(dagger) .04 .01 .06 .28#
.00(dagger)(dagger) .03 .01 .02
Net realized and unrealized gain
(loss) on investments 3.82 2.54 3.78 4.55 8.69 .34 5.50 2.59
(2.03) 2.41 3.05 (2.04)
Total from investment operations 3.75 2.55 3.97 4.72 8.73 .35
5.56 2.87 (2.03) 2.44 3.06 (2.02)
Less Distributions
From net investment income (.08) - (.10) (.03) - (.08) (.26)
(.01) (.01) (.02) - -
From net realized gain on investments (.50) - (.50) (2.60) -
(2.04) - (.76) (1.22) (.33) - -
Total distributions (.58) - (.60) (2.63) - (2.12) (.26) (.77)
(1.23) (.35) - -
Net asset value, end of period $ 29.50 $ 26.33 $ 29.74 $ 26.37 $ 24.28 $
15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18 $ 11.09 $ 8.03
TOTAL RETURN (dagger)(double dagger) 14.52% 10.72% 15.36% 21.14%
56.14% 2.75% 47.18% 29.77% (17.12)% 22.55% 38.11% (20.10)%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 377,984 $ 22,655 $ 296,466 $
179,325 $ 68,766 $ 27,473 $ 24,523 $ 20,182 $ 43,537 $ 63,607 $ 23,447 $
4,117
Ratio of expenses to average net assets 1.84%## 1.47%* .94%## .98%
1.13% 1.74% 1.60% 1.47% 1.11% 1.07% 1.50%+ 1.50%+
Ratio of expenses to average net assets
before expense reductions 1.85%## 1.47%* .95% ## .98% 1.13% 1.74%
1.60% 1.47% 1.11% 1.07% 1.50%+ 1.50%+
Ratio of net investment income to
average net assets (.24)% .25%* .66% .73% .25% .07% .38% 1.20%
.00% .29% .43% .33%
Portfolio turnover rate 160% 240% 160% 240% 254% 262% 269% 331%
226% 115% 108% 453%
* ANNUALIZED.
** INITIAL OFFERING OF CLASS A SHARES, SEPTEMBER 10, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
+ EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION.
(S DIAMOND) INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
# DURING THE PERIOD A SHAREHOLDER REDEEMED A SIGNIFICANT PORTION OF THE
ASSETS OF THE FUND. DUE TO THE TIMING OF THIS TRANSACTION, THE FUND
EXPERIENCED AN UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME PER SHARE.
## FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION
OF THE FUND'S EXPENSES.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND - CLASS A
November 18, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 October 31, 1988

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27 $ 10.00

Income from Investment Operations

Net investment income .08 .14 .06 .18# .02 .05

Net realized and unrealized gain (loss)
on investments 5.56 2.04 7.70 (2.50) 3.03 4.22

Total from investment operations 5.64 2.18 7.76 (2.32) 3.05 4.27

Less Distributions

From net investment income (.13) (.09) (.17) (.05) (.03) -

From net realized gain on investments (1.26) (1.53) - (1.17) (.76) -

Total distributions (1.39) (1.62) (.17) (1.22) (.79) -

Net asset value, end of period $ 25.39 $ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27

TOTAL RETURN (dagger) (double dagger) 28.11% 12.09% 60.25% (15.05)% 22.69% 42.70%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 2,054,988 $ 580,595 $ 213,095 $ 51,122 $ 34,351 $ 8,097

Ratio of expenses to average net assets 1.64%* 1.60% 1.73% 2.00% 2.45% 2.52%*(dagger)
* (dagger)

Ratio of expenses to average net assets
before expense reductions 1.65%* 1.60% 1.73% 2.00% 2.45% 2.52%*
*

Ratio of net investment income to average net
assets .43% .80% .47% 1.49% .31% .82%*

Portfolio turnover rate 69% 94% 142% 136% 163% 143%*

</TABLE>

FIDELITY ADVISOR GLOBAL RESOURCES FUND - CLASS A
December 29, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 October 31, 1988

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period
$ 13.88 $ 14.11 $ 12.30 $ 12.60 $ 11.47 $ 10.00

Income from Investment Operations

Net investment income
.22 (.10) (.15) (.10) .10(S DIAMOND) (.05)

Net realized and unrealized gain (loss) on investments
4.91 .79 2.45 .93 1.96 1.52

Total from investment operations
5.13 .69 2.30 .83 2.06 1.47

Less Distributions

From net investment income
- - - (.08) - -

From net realized gain on investments
(1.42) (.92) (.49) (1.05) (.93) -

Total distributions
(1.42) (.92) (.49) (1.13) (.93) -

Net asset value, end of period
$ 17.59 $ 13.88 $ 14.11 $ 12.30 $ 12.60 $ 11.47

TOTAL RETURN (dagger)(double dagger)
41.05% 5.97% 19.50% 6.37% 19.63% 14.70%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted)
$ 40,309 $ 7,087 $ 5,940 $ 4,615 $ 2,049 $ 916

Ratio of expenses to average net assets
2.62%** 3.27%(dagger)(dagger) 3.35%(dagger)(dagger) 3.34%(dagger)(dagger) 3.23%(dagger)(dagger) 2.85%*(dagger)
(dagger)

Ratio of expenses to average net assets before expense
2.63% 3.94% 3.35% 3.34% 3.23% 2.85%*
reductions

Ratio of net investment income to average net assets
(1.18)% (1.22)% (1.28)% (1.13)% .83% (.64)%*

Portfolio turnover rate
208% 248% 256% 229% 249% 220%*

* ANNUALIZED.
** FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN ACCORDANCE WITH A STATE EXPENSE LIMITATION
REGULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REIMBURSED CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
# NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.09 PER SHARE.
(S DIAMOND) NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.17 PER SHARE.

</TABLE>

FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND - CLASS A
August 20,1986
(Commencement
of Operations) to
Years Ended September 30, September 30,
1993 1992(dagger)(dagger) 1991 1990 1989 1988 1987 1986
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.53 $ 21.38 $ 17.21 $ 19.55 $
15.53 $ 19.06 $ 16.71 $ 17.81
Income from Investment Operations
Net investment income .33 .61 .66 .70 .50 .42 .46 .08(S
DIAMOND)
Net realized and unrealized gain (loss) on investments 4.44 .58 4.26
(2.49) 4.08 (1.80) 2.95 (1.18)
Total from investment operations 4.77 1.19 4.92 (1.79) 4.58 (1.38)
3.41 (1.10)
Less Distributions
From net investment income (.57) (.62) (.75) (.55) (.56) (.24)
(.09) --
From net realized gain on investments (1.21) (2.42) - -- --
(1.91) (.97) --
Total distributions (1.78) (3.04) (.75) (.55) (.56) (2.15) (1.06)
- -
Net asset value, end of period $ 22.52 $ 19.53 $ 21.38 $ 17.21 $ 19.55
$ 15.53 $ 19.06 $ 16.71
TOTAL RETURN (dagger)(double dagger) 26.33% 7.26% 29.51% (9.49)%
30.45% (4.98)% 21.28% (6.23)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 269,833 $ 194,694 $ 199,604 $
172,083 $ 198,198 $ 191,454 $ 283,117 $ 22,141
Ratio of expenses to average net assets 1.57%++ 1.46% 1.56% 1.59%
1.51% 1.71% 1.67%+ 1.50%*+
Ratio of net investment income to average net assets 2.06% 3.22% 3.61%
3.70% 3.23% 3.10% 2.36% 2.77%*
Portfolio turnover rate 183% 211% 223% 114% 89% 160% 225% --
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME - CLASS A
Equity Portfolio Income Institutional Equity Portfolio Income

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07 $ 9.44 $ 10.00

Income from Investment Operations

Net investment income .48 .50 .51 .56 1.01# .62 .27

Net realized and unrealized gain (loss) on 2.18 .85 3.74 (1.34) 1.27 1.56 (.63)
investments

Total from investment operations 2.66 1.35 4.25 (.78) 2.28 2.18 (.36)

Less Distributions

From net investment income (.56) (.46) (.53) (1.06) (.58) (.55) (.20)

From net realized gain on investments (.60) (.61) - (.52) - - -

Total distributions (1.16) (1.07) (.53) (1.58) (.58) (.55) (.20)

Net asset value, end of period $ 15.91 $ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07 $ 9.44

TOTAL RETURN (dagger)(double dagger) 19.66% 10.27% 41.73% (7.15)% 21.15% 23.66% (3.90)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 1,654,124 $ 397,672 $ 135,533 $ 60,934 $ 46,139 $ 36,224 $ 34,376

Ratio of expenses to average net assets 1.51%** 1.60% 1.71% 1.85% 1.91% 2.06% 2.06%*

Ratio of expenses to average net assets before 1.52%** 1.60% 1.71% 1.85% 1.91% 2.06% 2.06%*
expense reductions

Ratio of net investment income to average net 3.24% 3.97% 4.19% 5.29% 8.80% 5.83% 3.95%*
assets

Portfolio turnover rate 200% 389% 220% 297% 151% 204% 206%*

</TABLE>

FIDELITY ADVISOR HIGH YIELD FUND - CLASS A
January 5, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period
$ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090 $ 10.000

Income from Investment Operations

Net investment income
.980 1.146 1.115 1.144 1.237 1.165 .878

Net realized and unrealized gain (loss) on
1.153 .975 1.948 (.820) (.890) .770 (.910)
investments

Total from investment operations
2.133 2.121 3.063 .324 .347 1.935 (.032)

Less Distributions

From net investment income
(.963) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)

From net realized gain on investments
(.230) - - - - - -

Total distributions
(1.193) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)

Net asset value, end of period
$ 12.010 $ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090

TOTAL RETURN (dagger)(double dagger)
20.47% 21.96% 39.67% 3.58% 3.34% 22.14% (.81)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted)
$ 485,559 $ 136,316 $ 38,681 $ 15,134 $ 13,315 $ 11,900 $ 9,077

Ratio of expenses to average net assets
1.11% 1.10% 1.10% 1.10% 1.10% 1.10% 1.24%*

Ratio of expenses to average net assets before
1.11% 1.16% 1.76% 2.04% 2.17% 2.22% 2.25%*
voluntary
(H DIAMOND)
expense limitation

Ratio of net investment income to average net
8.09% 9.95% 12.20% 12.72% 12.98% 11.86% 10.74%*
assets

Portfolio turnover rate
79% 100% 103% 90% 131% 135% 166%*

* ANNUALIZED.
** FMR HAS DIRECTED CERTAIN TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
# NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.26 PER SHARE.
(H DIAMOND) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.

</TABLE>

FIDELITY ADVISOR LIMITED TERM BOND FUND - CLASS A
Limited Term
Bond Fund Institutional Limited Term Bond Fund

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200 $ 10.000

Income from Investment Operations

Net investment income .567 .666 .700 .735 .773 .769 .614

Net realized and unrealized gain (loss) on .601 .125 .419 (.160) .050 .060 (.800)
investments

Total from investment operations 1.168 .791 1.119 .575 .823 .829 (.186)

Less Distributions

From net investment income (.558) (.651) (.679) (.735) (.773) (.769) (.614)

From net realized gain on investments (.200) - - - - - -

Total distributions (.758) (.651) (.679) (.735) (.773) (.769) (.614)

Net asset value, end of period $ 10.140 $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200

TOTAL RETURN (dagger)(double dagger) 12.53% 8.49% 12.65% 6.48% 9.37% 9.34% (1.84)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 69,876 $ 23,281 $ 13,058 $ 9,822 $ 8,203 $ 6,590 $ 4,584

Ratio of expenses to average net assets .68% 1.10% 1.10% 1.10% 1.10% 1.10% 1.29%*

Ratio of expenses to average net assets before 1.32% 1.79% 2.46% 2.74% 2.75% 2.25% 2.36%*
voluntary
expense limitation

Ratio of net investment income to average net 6.11% 6.98% 7.47% 8.04% 8.45% 8.30% 8.12%*
assets

Portfolio turnover rate 333% 315% 54% 31% 42% 44% 32%*

</TABLE>

* ANNUALIZED.
** INITIAL OFFERING OF CLASS A SHARES SEPTEMBER 10, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
(dagger)(dagger)(dagger) IN JULY 1985, THE SEC ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
# THE AMOUNT SHOWN IN THIS CAPTION, WHILE DETERMINABLE BY THE SUMMATION OF
AMOUNTS COMPUTED DAILY AS SHARES WERE SOLD OR REPURCHASED, IS ALSO THE
BALANCING FIGURE DERIVED FROM THE OTHER FIGURES IN THE STATEMENT AND HAS
BEEN SO COMPUTED. THE AMOUNT SHOWN FROM THE PERIOD ENDED NOVEMBER 30, 1992
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD DOES NOT ACCORD WITH THE NET
REALIZED AND UNREALIZED GAIN ON INVESTMENTS FOR THE PERIOD BECAUSE OF THE
TIMING OF SALES AND REPURCHASES OF THE LIMITED TERM BOND FUND SHARES IN
RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
FIDELITY ADVISOR SHORT FIXED-INCOME FUND - CLASS A
September 16, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 9.950 $ 9.870 $ 9.620 $ 9.950 $ 9.940 $ 10.060 $ 10.000

Income from Investment Operations

Net investment income .732 .830 .848 .868 .832 .852 .101

Net realized and unrealized gain (loss) on .146 .071 .270 (.330) .010 (.120) .060
investments

Total from investment operations .878 .901 1.118 .538 .842 .732 .161

Less Distributions

From net investment income (.738) (.821) (.868) (.868) (.832) (.852) (.101)

Net asset value, end of period $ 10.090 $ 9.950 $ 9.870 $ 9.620 $ 9.950 $ 9.940 $ 10.060

TOTAL RETURN (dagger)(double dagger) 9.13% 9.44% 12.19% 5.59% 8.89% 7.56% 1.61%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 654,202 $ 170,558 $ 25,244 $ 13,062 $ 12,394 $ 13,433 $ 3,252

Ratio of expenses to average net assets .95% .90% .90% .90% .90% .90% .90%*

Ratio of expenses to average net assets before .95% 1.03% 1.74% 1.90% 2.22% 1.84% 2.15%*
voluntary (H DIAMOND)

expense limitation

Ratio of net investment income to average net 6.77% 7.59% 8.50% 8.86% 8.45% 8.39% 7.65%*
assets

Portfolio turnover rate 58% 57% 127% 144% 157% 178% 119%*

</TABLE>

FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND - CLASS A
September 16, 1987
(Commencement of
Years Ended October 31, Operations) to
SELECTED PER-SHARE DATA 1993 1992 1991 1990 1989 1988 October
31, 1987

Net asset value, beginning of period $ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850 $ 10.000

Income from Investment Operations

Net interest income .710 .774 .803 .811 .800 .750 .092

Net realized and unrealized gain (loss) on 1.100 .250 .660 .150 .410 .610 (.150)

investments

Total from investment operations 1.810 1.024 1.463 .961 1.210 1.360 (.058)

Less Distributions

From net interest income (.710) (.774) (.803) (.811) (.800) (.750) (.092)

From net realized gain on investments (.030) (.010) (.120) (.100) (.050) - -

Total distributions (.740) (.784) (.923) (.911) (.850) (.750) (.092)

Net asset value, end of period $ 12.720 $ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850

TOTAL RETURN (dagger)(double dagger) 15.95% 9.21% 14.02% 9.28% 12.05% 14.22% (.58)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 497,575 $ 156,659 $ 67,135 $ 22,702 $ 6,669 $ 3,290 $ 1,275

Ratio of expenses to average net assets .92% .90% .90% .90% .90% .89% .80%*

Ratio of expenses to average net assets before .92% .96% 1.24% 2.09% 2.75% 2.25% 2.25%*

voluntary (H DIAMOND) (H DIAMOND) (H
DIAMOND)
expense limitation

Ratio of net interest income to average net assets 5.59% 6.59% 7.08% 7.37% 7.60% 7.33% 7.24%*

Portfolio turnover rate 27% 13% 10% 11% 27% 19% -%

</TABLE>

* ANNUALIZED.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(H DIAMOND) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND - CLASS A
Limited Term
Tax-Exempt Fund Institutional Limited Term Tax-Exempt Fund
September 19, 1985
Year Period (Commencement
Ended Ended of Operations) to
Nov. 30 Nov. 30 Years Ended November 30, November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987
1986 1985
Net asset value, beginning of period $ 11.080 $ 11.010 $ 11.080 $ 10.800 $
10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280 $ 10.000
Income from Investment Operations
Net interest income .508 .131 .536 .666 .682 .689 .674 .650 .641
.671 .130
Net realized and unrealized gain (loss) on investments .260 .070 .260
.280 .160 .030 .090 .140 (.540) .760 .280
Total from investment operations .768 .201 .796 .946 .842 .719
.764 .790 .101 1.431 .410
Less Distributions
From net interest income (.508) (.131) (.536) (.666) (.682) (.689)
(.674) (.650) (.641) (.671) (.130)
From net realized gain on investments (.880) -- (.880) -- -- --
- -- -- (.070) (.050) --
Total distributions (1.388) (.131) (1.416) (.666) (.682) (.689)
(.674) (.650) (.711) (.721) (.130)
Net asset value, end of period $ 10.460 $ 11.080 $ 10.460 $ 11.080 $
10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280
TOTAL RETURN (dagger)(double dagger) 7.72% 1.37% 8.01% 9.01% 8.15%
7.04% 7.50% 7.77% .97% 14.39% 4.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 39,800 $ 1,752 $ 15,076 $ 28,428
$ 100,294 $ 111,506 $ 121,418 $ 132,443 $ 162,857 $ 161,045 $ 94,391
Ratio of expenses to average net assets .90% 1.04%* .65% .66% .61%
.62% .65% .63% .59% .58% .69%*
Ratio of expenses to average net assets before voluntary
expense limitation 1.36% 1.06%* .83% .67% .61% .62% .65% .63%
.59% .58% .69%*
Ratio of net investment income to average net assets 4.76% 5.65%* 5.01%
6.05% 6.40% 6.53% 6.45% 6.20% 6.01% 6.29% 6.33%*
Portfolio turnover rate 46% 36% 46% 36% 20% 32% 31% 24% 43% 34%
103%*

* ANNUALIZED.
** INITIAL OFFERING OF CLASS A SHARES, SEPTEMBER 13, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.

As of December 31, 1993, ( fiscal y e ar end ) Fidelity
Advisor Emerging Markets Income Fund , the Fund had not
commen c ed oper a tions.

As of November 30, 1993, ( fiscal year end ) Fidelity Advisor
Short-Intermediate Tax-Exempt F und , the Fund had not
commenced oper a tions.

INVESTMENT OBJECTIVES
EQUITY FUNDS:
FIDELITY ADVISOR OVERSEAS FUND seeks growth of capital primarily through
investments in foreign securities.
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH seeks to achieve capital
appreciation by investing primarily in the common and preferred stock and
securities convertible into the common stock, of companies with above
average growth characteristics.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND seeks to provide capital growth
by investing primarily in common stocks and securities convertible into
common stocks.
FIDELITY ADVISOR GLOBAL RESOURCES FUND seeks long-term growth of capital
and protection of the purchasing power of shareholders' capital by
investing primarily in securities of foreign and domestic companies that
own or develop natural resources, or that supply goods and services to such
companies, or in physical commodities.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by
investing primarily in securities of companies believed by FMR to involve a
"special situation."
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME seeks a yield from dividend and
interest income which exceeds the composite dividend yield on securities
comprising the Standard & Poor's 500 Composite Stock Price Index
(S&P 500).
FIDELITY ADVISOR INCOME & GROWTH FUND seeks both income and growth of
capital by investing in a diversified portfolio of equity and fixed-income
securities with income, growth of income and capital appreciation
potential.
FIXED-INCOME FUNDS:
FIDELITY ADVISOR EMERGING MARKETS INCOME FUND seeks a high level of
current income by investing primarily in debt securities and other
instruments of issuers in emerging markets. As a secondary objective, the
Fund seeks capital appreciation.
FIDELITY ADVISOR HIGH YIELD FUND seeks a combination of a high level of
income and the potential for capital gains by investing in a diversified
portfolio consisting primarily of high-yielding, fixed-income and zero
coupon securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
FIDELITY ADVISOR LIMITED TERM BOND FUND seeks to provide a high rate of
income through investment in high and upper-medium grade fixed-income
obligations. The Fund normally maintains a dollar-weighted average
maturity of ten years or less.
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND seeks a high level of current
income by investing primarily in obligations issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities. The Fund
normally maintains a dollar-weighted average maturity of ten years or
less.
FIDELITY ADVISOR SHORT FIXED-INCOME FUND seeks to obtain a high level of
current income, consistent with preservation of capital, by investing
primarily in a broad range of investment grade fixed-income securities.
The Fund normally maintains a dollar-weighted average maturity of three
years or less.
MUNICIPAL/TAX-EXEMPT FUNDS:
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND seeks to provide a high current
yield by investing in a diversified portfolio of municipal obligations
whose interest is not included in gross income for purposes of calculating
federal income tax. The Fund reserves the right to invest up to 100% of its
assets in municipal obligations subject to the federal alternative minimum
tax.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND seeks the highest level of
income exempt from federal income taxes that can be obtained consistent
with the preservation of capital, from a diversified portfolio of high
quality or upper-medium quality municipal obligations. The Fund
normally maintains a dollar-weighted average maturity of ten years or
less.
FIDELITY ADVISOR SHORT-INTERMEDIATE TAX-EXEMPT FUND seeks as high a
level of current income, exempt from federal income tax, as is consistent
with preservation of capital by focusing on investment-grade municipal
securities. The Fund normally maintains a dollar-weighted average maturity
of between two and four years.
The investment objective of each Fund is fundamental and can only be
changed by vote of a majority of the outstanding shares of the Fund. Except
as otherwise noted, the investment limitations and policies of Equity
Portfolio Growth, Strategic Opportunities, Income & Growth, Emerging
Markets Income, Limited Term Bond, Government Investment, High Income
Municipal, Limited Term Tax-Exemp t and Short-Intermediate Tax-Exempt
are fundamental and may not be changed without shareholder approval. Except
for the investment limitations and policies identified as fundamental, the
limitations and policies of Overseas, Growth Opportunities, Global
Resources, Equity Portfolio Income, High Yield, and Short Fixed-Income are
not fundamental. Non-fundamental investment limitations and policies may be
changed without shareholder approval.
The yield, return and potential price changes of each Fund depend on the
quality and maturity of the obligations in its portfolio, as well as on
market conditions. Risks vary based on the type of fund in which you are
investing. As is the case with any investment in securities, investment in
the Funds involve certain risks and therefore a Fund may not always achieve
its investment objective.
INVESTMENT POLICIES AND RISKS
Further information relating to the types of securities in which each Fund
may invest and the investment policies of each Fund in general are set
forth in the Appendix to this Prospectus and in each Fund's SAI.
EQUITY FUNDS. Equity Funds invest mainly in common stock and other equity
securities in search of growth or a combination of growth and income. Their
performance depends heavily on stock market conditions in the U.S. and
abroad, and can also be affected by changes in interest rates or other
economic conditions. Investments in Equity Funds are more suitable for
investors who take a long-term approach to investing.
FIDELITY ADVISOR OVERSEAS FUND defines foreign securities as securities of
issuers whose principal activities are outside of the United States.
Normally, at least 65% of the Fund's total assets will be invested in
securities of issuers from at least three different countries outside of
North America (the U.S., Canada, Mexico, and Central America). The Fund
expects to invest most of its assets in securities of issuers located in
developed countries in these general geographic areas: The Americas (other
than the U.S.), the Far East and the Pacific Basin, and Western Europe. In
determining whether a company's or organization's principal activities are
in a particular region, FMR will look at such factors as the location of
assets, personnel, sales, and earnings.
FMR expects that opportunities for capital growth will come most often from
common stock and other equity securities, and therefore, expects that
equity securities will account for the majority of the Fund's investments.
However, the Fund also may find opportunities for capital growth from debt
securities of any quality or maturity by reason of anticipated changes in
such factors as interest rates, currency relationships, or the credit
standing of individual issuers. The Fund will not consider dividend income
as a primary factor in choosing securities, unless FMR believes the income
will contribute to the securities' growth potential.
When allocating the investments of the Fund among geographic regions and
individual countries, and among assets denominated in U.S. and foreign
currencies, FMR considers various factors, such as prospects for relative
economic growth among countries, regions or geographic areas; expected
levels of inflation; government policies influencing business conditions;
and the outlook for currency relationships. Although the Fund has the
ability under normal conditions to invest up to 35% of its total assets in
the U.S., FMR currently intends to manage the Fund to be as fully invested
outside the U.S. as is practicable in light of the Fund's cash flow and
cash needs.
The equity securities in which the Fund may invest include common stocks of
companies or closed-end investment companies, securities such as warrants
or rights that are convertible into common stock, preferred stocks, and
depositary receipts for those securities.
The Fund may invest in debt securities of any type of issuer, including
governments and governmental entities (including supranational
organizations such as the World Bank) as well as corporations and other
business organizations. The Fund has no limitation on the quality of debt
securities in which it may invest. The Fund may invest in lower-quality,
high-yielding debt securities (commonly referred to as "junk bonds"),
although it intends to limit its investments in these securities to
3 5% of its assets. FMR may invest a portion of the Fund's assets in
high-quality, short-term debt securities, bank deposits and money market
instruments (including repurchase agreements) denominated in U.S. dollars
or foreign currencies. When market conditions warrant, FMR can make
substantial temporary defensive investments in U.S. government securities
or investment-grade obligations of companies incorporated in, and having
principal business activities in, the U.S.
The Fund may also purchase or engage in indexed securities, illiquid
investments, loans and other direct debt instruments, options and futures
contracts, repurchase agreements and securities loans, restricted
securities, and swap agreements.
CONSIDERATIONS IN INVESTING IN SHARES OF OVERSEAS FUND:
Investing outside the U.S. involves different opportunities and different
risks from U.S. investments. FMR believes that it may be possible to obtain
significant returns from a portfolio of foreign investments, or a
combination of foreign investments and U.S. investments, and to achieve
increased diversification in comparison to a portfolio invested solely in
U.S. securities. By including international investments in your investment
portfolio, you may gain increased diversification by combining securities
from various countries and geographic areas that offer different investment
opportunities and are affected by different economic trends. At the same
time, these opportunities and trends involve risks that may not be
encountered with U.S. investments.
International investing in general may involve greater risks than U.S.
investments. There is generally less publicly available information about
foreign issuers, and there may be less government regulation and
supervision of foreign stock exchanges, brokers, and listed companies.
There may be difficulty in enforcing legal rights outside the U.S. Foreign
companies generally are not subject to uniform accounting, auditing, and
financial reporting standards, practices, and requirements comparable to
those that apply to U.S. companies. Security trading practices abroad may
offer less protection to investors such as the Fund. Settlement of
transactions in some foreign markets may be delayed or may be less frequent
than in the U.S., which could affect the liquidity of the Fund.
Additionally, in some foreign countries, there is the possibility of
expropriation or confiscatory taxation; limitations on the removal of
securities, property, or other assets of the Fund; political or social
instability; or diplomatic developments which could affect U.S. investments
in foreign countries. FMR will take these factors into consideration in
managing the Fund's investments.
The Fund may invest a portion of its assets in developing countries, or in
countries with a new or developing capital market. The considerations noted
above are generally intensified for these investments. These countries may
have relatively unstable governments, economies based on only a few
industries, and securities markets that trade a small number of securities.
Securities of issuers located in these countries tend to have volatile
prices and may offer significant potential for loss as well as gain.
FOREIGN CURRENCIES. The value of the Fund's investments, and the value of
dividends and interest earned by the Fund, may be significantly affected by
changes in currency exchange rates. Some foreign currency values may be
volatile, and there is the possibility of government controls on
currency exchange or government intervention in currency markets,
which could adversely affect the Fund. Although FMR may attempt to manage
currency exchange rate risks, there is no assurance that FMR will do so at
an appropriate time or that FMR will be able to predict exchange rates
accurately. For example, if FMR increases the Fund's exposure to a foreign
currency, and that currency's value subsequently falls, FMR's currency
management may result in increased losses to the Fund. Similarly, if FMR
hedges the Fund's exposure to a foreign currency, and that currency's value
rises, the Fund will lose the opportunity to participate in the currency's
appreciation.
CURRENCY MANAGEMENT. The relative performance of foreign currencies is an
important factor in the Fund's performance. FMR may manage the Fund's
exposure to various currencies to take advantage of different yield, risk,
and return characteristics that different currencies can provide for U.S.
investors.
To manage exposure to currency fluctuations, the Fund may enter into
currency exchange contracts (agreements to exchange one currency for
another at a future date) or currency swap agreements, buy and sell options
and futures contracts relating to foreign currencies, and purchase
securities indexed to foreign currencies. The Fund will use currency
exchange contracts in the normal course of business to lock in an exchange
rate in connection with purchases and sales of securities denominated in
foreign currencies. Other currency management strategies allow FMR to hedge
portfolio securities, to shift investment exposure from one currency to
another, or to attempt to profit from anticipated declines in the value of
a foreign currency relative to the U.S. dollar. There is no limitation on
the amount of the Fund's assets that may be committed to currency
management strategies.
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH as a general rule, will invest
in the securities of companies whose growth in the areas of earnings or
gross sales measured either in dollars or in unit volume (either on an
absolute or percentage basis) may exceed that of the average of the
companies whose securities are included in the S&P 500. These
securities generally command high multiples (price/earnings ratios) in the
stock markets over time. Above average growth characteristics are most
often associated with companies in new and emerging areas of the economy
but occasionally can be found in the stronger companies of more mature and
even declining industries. The Fund will, therefore, be invested in the
securities of smaller, less well-known companies except when FMR believes
that opportunities for above-average growth are presented by larger, more
mature companies which have undergone reformation and revitalization or
possess a strong position in relation to the market as a whole.
The market price of securities with above average growth characteristics
often can experience a more sudden and more dramatic downward reaction to
negative news than is the case with securities carrying a lower market
multiple. This can be particularly true for companies with a narrow product
line or whose securities are relatively thinly-traded, characteristics
which are common to smaller, less well-known companies.
As a non-fundamental policy, at least 65% of the total assets of the Fund
normally will be invested in common and preferred stock. As a
non-fundamental policy, the Fund may invest up to 35% of its total assets
in debt obligations of all types and quality, a high percentage of which
are expected to be convertible into common stocks. The Fund may invest in
lower-quality, high yielding debt securities (commonly referred to as "junk
bonds" ) although as a non-fundamental policy it intends to limit its
investments in these securities to 35% of its assets . The Fund also
may purchase or engage in foreign investments, indexed securities, illiquid
investments, loans and other direct debt instruments, options and futures
contracts, repurchase agreements and securities loans , restricted
securities, swap agreements, and warrants.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND . Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
securities of companies that FMR believes have long-term growth potential.
Growth can be considered either appreciation of the security itself or
growth of the company's earnings or gross sales. Accordingly, these
securities will often pay little, if any, income, which will be entirely
incidental to the objective of capital growth.
The Fund also has the ability to purchase other securities, such as
preferred stock and bonds that may produce capital growth. Securities may
be of all types or quality. The Fund may invest in lower-quality,
high-yielding debt securities (commonly referred to as "junk bonds"),
although the Fund currently intends to limit its investments in these
securities to 35 % of its assets.
The Fund may purchase foreign investments of all types without limitation
and may enter into foreign forward currency exchange contracts for the
purpose of managing exchange rate risks. The Fund may purchase or engage in
indexed securities, illiquid investments, loans and other direct debt
instruments, options and futures contracts, repurchase agreements and
securities loans, restricted securities, reverse repurchase agreements,
swap agreements, and warrants.
The Fund may make substantial temporary investments in high-quality debt
securities and money market instruments, including commercial paper,
obligations of banks or the U.S. government and repurchase agreements for
defensive purposes when, in FMR's judgment, economic or market conditions
warrant.
FIDELITY ADVISOR GLOBAL RESOURCES FUND . Under normal
circumstances, the Fund will invest at least 65% of its total assets in
securities of foreign and domestic companies that own or develop natural
resources, or supply goods and services to such companies, or in physical
commodities. The remainder of the Fund may be invested in other investments
including debt securities of any kind including asset-backed securities,
obligations of foreign governments or their political subdivisions, foreign
companies and supranational organizations, and common and preferred stocks
of corporations not necessarily engaged in natural resources. FMR will seek
securities that are priced relative to the intrinsic value of the relevant
natural resource or that are issued by companies which are positioned to
benefit during particular portions of the economic cycle. Accordingly, the
Fund may shift its emphasis from one natural resource industry to another
depending upon prevailing trends or developments. For example, when FMR
anticipates significant economic, political or financial pressures or major
dislocations in the foreign currency exchange markets, the Fund may, in
seeking to protect the purchasing power of shareholders' capital, invest a
substantial portion of its assets in companies that explore for, extract,
process, or deal in precious metals, and/or invest in precious metals
themselves. The Fund expects to invest a majority of its assets to be
invested in securities of companies that have their principal business
activities in at least three different countries (including the U.S.).
A company will be deemed to have substantial ownership of, or activities
in, natural resources if, at the time of the Fund's acquisition of its
securities, at least 50% of the company's assets are involved in, either
directly or through subsidiaries, exploring, mining, refining, processing,
transporting, fabricating, dealing in, or owning natural resources. Natural
resources include precious metals (such as gold, palladium, platinum and
silver), ferrous and nonferrous metals (such as iron, aluminum and copper),
strategic metals (such as uranium and titanium), hydrocarbons (such as
coal, oil and natural gases), chemicals, forest products, real estate, food
products and other basic commodities which, historically, have been
produced and marketed profitably during periods of rising inflation.
The Fund may purchase foreign securities of all types without limitation
and may enter into forward foreign currency exchange contracts for the
purpose of managing exchange rate risks. The Fund may invest in
lower-quality, high-yielding debt securities (commonly referred to as "junk
bonds''), rated as low as CCC by Standard & Poor's Corporation
(S&P) or Caa by Moody's Investors Service, Inc. (Moody's). The Fund
does not currently intend to invest more than 3 5% of its net assets
in debt securities rated below BBB or Baa . Debt securities
ordinarily will make up a relatively small portion of the Fund's assets.
The Fund may purchase ADRs and EDRs. The Fund may purchase indexed
securities, illiquid investments, loans and other direct debt instruments,
options and futures contracts, repurchase agreements and securities
loans, restricted securities, and warrants. The Fund may also purchase
securities on a delayed-delivery basis.
As a fundamental policy, the Fund is authorized to invest up to 50% of its
assets in physical commodities. In order to permit the sale of the Fund's
shares in certain states, the Fund has adopted a non-fundamental policy of
limiting investments in physical commodities to precious metals (i.e.,
gold, palladium, platinum and silver) to 25% of the Fund's
total assets. Investments in other types of physical commodities could
present concerns, including practical problems of delivery, storage and
maintenance, possible illiquidity, the unavailability of accurate market
valuations and increased expenses. When a precious metal is purchased, FMR
currently intends that it will be only in a form that is readily marketable
and that it will be delivered to and stored with a qualified U.S. bank.
Investments in bullion earn no investment income and may involve higher
custody and transaction costs than investments in securities. The Fund may
receive no more than 10% of its yearly income from gains resulting from
selling metals or any other physical commodity. The Fund may be required,
therefore, either to hold its metals or sell them at a loss, or to sell its
portfolio securities at a gain, when it would not otherwise do so for
investment reasons. Precious metals, at times, have been subject to
substantial price fluctuations over short periods of time and may be
affected by unpredictable international monetary and political policies
such as currency devaluations or revaluations, economic and social
conditions within a country, trade imbalances, or trade or currency
restrictions between countries.
Since the Fund may invest in physical commodities and utilize investment
techniques which are subject to market fluctuations and/or foreign market
risk, an investment in the Fund may be considered more speculative than an
investment in other funds that seek capital growth. The value of equity
securities of natural resource companies will fluctuate pursuant to market
conditions generally, as well as the market for the particular natural
resource in which the issuer is involved. In addition, the values of
natural resources are subject to numerous factors, including nature and
international politics.
During periods when, in FMR's opinion, a temporary defensive posture in the
market is appropriate, the Fund may invest without limitation in cash or
high-quality money market instruments including, but not limited to,
certificates of deposit, commercial paper and obligations issued by the
U.S. government or any of its agencies or instrumentalities.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by
investing primarily in securities of companies believed by FMR to involve a
"special situation." The term "special situation" refers to FMR's
identification of an unusual, and possibly non-repetitive, development
taking place in a company or a group of companies in an industry.
As a non-fundamental policy, the Fund normally will invest at least 65% of
its assets in companies involving a special situation. A special situation
may involve one or more of the following characteristics:
(bullet) A technological advance or discovery, the offering of a new or
unique product or service, or changes in consumer demand or consumption
forecasts.
(bullet) Changes in the competitive outlook or growth potential of an
industry or a company within an industry, including changes in the scope or
nature of foreign competition or the development of an emerging industry.
(bullet) New or changed management, or material changes in management
policies or corporate structure.
(bullet) Significant economic or political occurrences abroad, including
changes in foreign or domestic import and tax laws or other regulations.
(bullet) Other events, including natural disasters, favorable litigation
settlements, or a major change in demographic patterns.
In seeking capital appreciation, the Fund also may invest in securities of
companies not involving a special situation, but which are companies with
valuable fixed assets and whose securities are believed by FMR to be
undervalued in relation to the companies' assets, earnings, or growth
potential.
FMR intends to invest primarily in common stocks and securities that are
convertible into common stocks; however, it also may invest in debt
securities of all types and quality if FMR believes that investing in these
securities will result in capital appreciation. As a non-fundamental
investment policy, the Fund may invest in lower-quality, high-yielding debt
securities (commonly referred to as "junk bonds"). The Fund currently
intends to limit its investments in these securities to 35% of its assets.
The Fund also may invest in unrated securities. The Fund may invest up to
30% of its assets in foreign investments of all types and may enter into
forward foreign currency exchange contracts for the purpose of managing
exchange rate risks. The Fund may purchase or engage in indexed securities,
illiquid instruments, loans and other direct debt instruments, options and
futures contracts, repurchase agreements and securities loans, restricted
securities, swap agreements, warrants, and zero coupon bonds.
The Fund expects to be fully invested under most market conditions. The
Fund may make substantial temporary investments in high-quality debt
securities for defensive purposes when, in FMR's judgment, a more
conservative approach to investment is desirable.
An investment in the Fund may be considered more speculative than an
investment in other funds that seek capital appreciation. There are greater
risks involved in investing in securities of smaller companies rather than
companies operating according to established patterns and having longer
operating histories. The Fund may invest in securities in which other
investors have not shown significant interest or confidence, and which are
subject to stock market fluctuations. Larger well-established companies
experiencing a special situation may involve, to a certain extent, breaks
with past experience, which may pose greater risks. There are also greater
risks involved in investing in securities of companies that are not
currently favored by the public but show potential for capital
appreciation.
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME seeks to obtain reasonable income
from a portfolio consisting primarily of income-producing equity
securities. In addition, consistent with the primary objective of obtaining
reasonable income, in managing its portfolio, the Fund will consider the
potential for achieving capital appreciation.
It is the policy of the Fund that at least 65% of its total assets normally
will be invested in income-producing equity securities. For purposes of
this policy, equity securities are defined as common stocks and preferred
stocks.
The balance of the Fund will tend to be invested in debt obligations, a
high percentage of which are expected to be convertible into common stocks.
As a non-fundamental policy, the Fund may invest in lower-quality
high-yielding debt securities (commonly referred to as "junk bonds"),
although it currently intends to limit its investments in these securities
to 35% of its assets. Additionally, the Fund may purchase or engage in
foreign investments, indexed securities, illiquid investments, loans and
other direct debt instruments, futures and options, repurchase
agreements and securities loans, restricted securities, short sales, swap
agreements, and warrants.
Because of the income considerations, investors should not expect capital
appreciation comparable to the appreciation which could be achieved by
funds whose primary objective is capital appreciation. While the investment
portfolio will not mirror the stocks in the S&P 500 ( unlike an
index fund), the yield on the overall investment portfolio generally will
increase or decrease from year to year in accordance with market conditions
and in relation to the changes in yields of the stocks included in the
S&P 500.
The Fund may make temporary investments in securities such as
investment-grade bonds or short-term notes for defensive purposes.
FIDELITY ADVISOR INCOME & GROWTH FUND will invest in equity
securities, convertible securities, preferred and common stocks paying any
combination of dividends and capital gains and in fixed-income securities.
The Fund also may buy securities that are not providing dividends but offer
prospects for growth of capital or future income. The proportion of the
Fund's assets invested in each type of security will vary from time to time
in accordance with FMR's assessment of economic conditions.
In selecting securities for the Fund, FMR will consider such factors as the
company's financial strength, its outlook for increased dividend or
interest payments (defined herein as "growth of income") and capital gains.
In addition, industry factors and overall economic conditions may be
considered. The Fund may invest in equity securities of some smaller, more
rapidly growing companies. Investing in smaller, less well-known companies,
especially those that have a narrow product line or are thinly traded,
often involves greater risk than investing in established companies with
proven track records. In selecting fixed-income securities for the Fund
(such as bonds, notes, mortgage securities, convertible securities, and
short-term obligations such as bankers' acceptances, certificates of
deposit, and commercial paper), FMR will consider several factors,
including maturity, quality and expected yield.
The Fund may invest in lower-quality high-yielding debt securities
(commonly referred to as "junk bonds"). The Fund currently intends to limit
its investments in these securities to 35% of its assets. The Fund also may
invest in or engage in foreign investments, currency exchange
contracts, indexed securities, illiquid instruments, loans and other direct
debt instruments, options and futures contracts, repurchase agreements and
securities loans, restricted securities, swap agreements, warrants, and
zero coupon bonds. The Fund may, for temporary defensive purposes, invest
without limit in short-term securities.
FIXED-INCOME FUNDS. Fixed-Income Funds invest primarily in debt securities
(e.g., bonds, debentures, notes and similar obligations). The share value
of fixed-income funds tends to move inversely with changes in prevailing
interest rates. Shorter-term bonds are less sensitive to interest rate
changes, but longer-term bonds generally offer higher yields. It also is
important to note that high-yielding, lower-quality bonds involve greater
risks, because there is a greater possibility of a financial reversal
affecting the issuer's ability to pay interest and principal on time. Share
value and yield are not guaranteed and will fluctuate based on credit
quality and changes in interest rates.
FMR will use its extensive research facilities in addition to
considering the ratings of Nationally Recognized Statistical Rating
Organizations (NRSROs) in selecting investments for the Funds. Unrated
securities are not necessarily of lower quality than rated securities, but
they may not be attractive to as many buyers. This credit analysis includes
consideration of the economic feasibility, the financial condition of the
issuer with respect to liquidity, cash flow and political developments that
may affect credit quality. Since the risk of default is higher for
lower-quality obligations, FMR's research and analysis are an integral part
of choosing a Fund's securities. Through portfolio diversification and
careful credit analysis, FMR can reduce risk, although there can be no
assurance that losses will not occur. FMR also considers trends in the
economy, in geographic areas, in various industries, and in the financial
markets.
Under normal conditions, the Fund will invest at least 65% of its total
assets in debt securities and other instruments of issuers in emerging
markets. For this purpose, "emerging markets" will include any countries
(i) having an "emerging stock market" as defined by the International
Finance Corporation; (ii) with low- to middle-income economies according to
the International Bank for Reconstruction and Development (the World Bank);
or (iii) listed in World Bank publications as "developing." Currently, the
countries NOT included in these categories are Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, the United
Kingdom, and the U.S. For purposes of this 65% policy, issuers whose
principal activities are in countries with emerging markets include
issuers: (1) organized under the laws of, (2) whose securities have their
primary trading market in, (3) deriving at least 50% of their revenues or
profits from goods sold, investments made, or services performed in, or (4)
having at least 50% of their assets located in a country with an emerging
market.
Under current market conditions, FMR expects that emerging market
opportunities will be found mainly within Latin America, and to a lesser
extent in Africa, Asia and emerging European nations. FMR will actively
manage the allocation of the Fund's investments among countries, geographic
regions, and currency denominations in an attempt to achieve current income
and capital appreciation. In doing so, FMR will also consider such factors
as prospects for relative economic growth among countries, regions, or
geographic areas, expected levels of inflation, government policies
influencing business conditions, current and anticipated interest rates,
and the outlook for currency relationships. Although the Fund will normally
invest in at least three different countries, it is not limited to any
particular country or currency, and may invest substantially all of its
assets in any one country.
The Fund may invest in all types of fixed-income instruments, including
corporate debt securities, sovereign debt instruments issued by governments
or governmental entities, and all types of domestic and foreign money
market instruments. The Fund may invest in lower-rated, high-yielding debt
securities (commonly referred to as "junk bonds". Many emerging market
securities are of below-investment-grade quality, and at any one time
substantially all of the Fund's assets may be invested in securities that
are of poor quality or are in default.
Other investments the Fund may make or engage in include options and
futures contracts, swap agreements, indexed securities, loans and other
direct debt instruments, repurchase agreements and securities loans,
foreign repurchase agreements, illiquid investments, restricted securities,
mortgage-backed securities, asset-backed securities, delayed-delivery
transactions, and interfund borrowing. The Fund may also invest a portion
of its assets in common and preferred stocks of emerging market issuers,
debt securities of non-emerging market foreign issuers, and lower-quality
debt securities of U.S. issuers. Although the Fund may invest up to 35% of
its total assets in these securities, FMR does not currently anticipate
that these investments will exceed approximately 20% of the Fund's total
assets. Though these types of investments present the possibility for
significant capital appreciation over the long-term, they may fluctuate
dramatically in the short term and entail a high degree of risk.
For cash management purposes, the Fund will ordinarily invest a portion
of its assets in high-quality, short-term debt securities and money market
instruments, including repurchase agreements and bank deposits denominated
in U.S. or foreign currencies. When, in FMR's judgment, market conditions
warrant, the Fund can make substantial temporary defensive investments in
money market instruments, U.S. government securities, or investment-grade
obligations of U.S. companies.
CONSIDERATIONS IN INVESTING IN THE SHARES OF EMERGING MARKETS INCOME
FUND:
International investing in general may involve greater risks than U.S.
investments. There is generally less publicly available information about
foreign issuers, and there may be less government regulation and
supervision of foreign stock exchanges, brokers, and listed companies.
There may be difficulty in enforcing legal rights outside the U.S. Foreign
companies generally are not subject to uniform accounting, auditing, and
financial reporting standards, practices, and requirements comparable to
those that apply to U.S. companies. Security trading practices abroad may
offer less protection to investors such as the Fund. Settlement of
transactions in some foreign markets may be delayed or may be less frequent
than in the U.S., which could affect the liquidity of the Fund.
Additionally, in some foreign countries, there is the possibility of
expropriation or confiscatory taxation; limitations on the removal of
securities, property, or other assets of the Fund; political or social
instability; or diplomatic developments which could affect U.S. investments
in foreign countries. FMR will take these factors into consideration in
managing the Fund's investments.
These risks may be intensified in the case of investments in emerging
markets or countries with limited or developing capital markets. Security
prices in emerging markets can be significantly more volatile than in more
developed nations, reflecting the greater uncertainties of investing in
less established markets and economies. In particular, countries with
emerging markets may have relatively unstable governments; present the risk
of nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets; and may have less protection of
property rights than more developed countries. The economies of countries
with emerging markets may be predominantly based on only a few industries,
may be highly vulnerable to changes in local or global trade conditions,
and may suffer from extreme and volatile debt burdens or inflation rates.
Local securities markets may trade a small number of securities and may be
unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of substantial holdings difficult or impossible
at times. Securities of issuers located in countries with emerging markets
may have limited marketability and may be subject to more abrupt or erratic
price movements.
By itself, the Fund does not constitute a balanced investment plan. The
Fund is designed for aggressive investors interested in the investment
opportunities and income potential offered by securities issued in emerging
markets. The value of the Fund's investments and the income they generate
will vary from day to day, generally reflecting changes in interest rates,
market conditions, and other political and economic news. The Fund's
performance will also depend on currency values, foreign economies, and
other factors relating to foreign investments. Because the Fund focuses on
emerging markets, it involves higher risks than U.S. bond investments.
Investors should be willing to assume a greater degree of investment risk
and should expect a higher level of volatility than is generally associated
with investing in more established markets. The Fund's yield and share
price will change based on changes in foreign interest rates, the value of
foreign currencies, and issuers' creditworthiness. In general, bond prices
rise when interest rates fall, and vice versa. The Fund's share price,
yield, and total return fluctuate, and your investment may be worth more or
less than your original cost when you redeem your shares.
FIDELITY ADVISOR HIGH YIELD FUND :
As a non-fundamental policy, the Fund normally will invest at least 65% of
its assets in high-yielding, income producing debt securities and preferred
stocks, including convertible and zero coupon securities. The Fund may
invest all or a substantial portion of its assets in lower-quality debt
securities (commonly referred to as "junk bonds"). Please refer to
"Risks of Lower-Quality Debt Securities". In addition, the Fund also
may invest in government securities, securities of any state or any of
its subdivisions, agencies or instrumentalities, and securities of
foreign issuers, including securities of foreign governments. The Fund may
invest up to 35% of its assets in equity securities, including common
stocks, warrants and rights.
Debt instruments include securities such as bonds, notes, convertible
bonds, and mortgage-backed or asset-backed securities; commercial paper and
other money market instruments, including repurchase agreements; and loans,
trade claims, and similar instruments representing direct
indebtedness of a corporate borrower. These instruments may provide for
interest payments in cash or in kind, may pay no interest, or may be in
default, and may have warrants attached or otherwise include rights to
purchase common stocks. The Fund may purchase debt instruments in public
offerings or through private placements. The Fund has no specific
limitations on the maturity or credit ratings of the debt instruments in
which it invests.
The Fund may enter into currency contracts and may purchase or
engage in foreign investments, indexed securities, illiquid investments,
loans and other direct debt instruments, options and futures contracts,
repurchase agreements and securities loans, restricted securities, reverse
repurchase agreements, and swap agreements.
RISKS OF LOWER-QUALITY DEBT SECURITIES
Lower-quality debt securities usually are defined as securities rated Ba or
lower by Moody's or BB or lower by S&P. Lower-rated debt securities are
considered speculative and involve greater risk of loss than higher-rated
debt securities, and are more sensitive to changes in the issuer's capacity
to pay. This is an aggressive approach to income investing.
The 1980s saw a dramatic increase in the use of lower-rated debt securities
to finance highly leveraged corporate acquisitions and restructurings. Past
experience may not provide an accurate indication of the future performance
of lower-rated debt securities, especially during periods of economic
recession. In fact, from 1989 to 1991, the percentage of lower-rated debt
securities that defaulted rose significantly above prior levels, although
the default rate decreased in 1992.
Lower-rated debt securities may be thinly traded, which can adversely
affect the prices at which these securities can be sold and can result in
high transaction costs. If market quotations are not available, lower-rated
debt securities will be valued in accordance with standards set by the
Board s of Trustees, including the use of outside pricing services.
Judgment plays a greater role in valuing lower-rated debt securities than
securities for which more extensive quotations and last sale information
are available. Adverse publicity and changing investor perceptions may
affect the ability of outside pricing services to value lower-rated debt
securities, and the Fund's ability to dispose of these securities.
The market prices of lower-rated debt securities may decline significantly
in periods of general economic difficulty, which may follow periods of
rising interest rates. During an economic downturn or a prolonged period of
rising interest rates, the ability of issuers of lower-rated debt to
service their payment obligations, meet projected goals, or obtain
additional financing may be impaired.
The Fund may choose, at its own expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the interest of Fund shareholders.
The considerations discussed above for lower-rated debt securities also
apply to lower-quality, unrated debt instruments of all types, including
loans and other direct indebtedness of businesses with poor credit
standing. Unrated debt instruments are not necessarily of lower-quality
than rated securities, but they may not be attractive to as many buyers.
The Fund relies more on FMR's credit analysis when investing in debt
instruments that are unrated. Please refer to pages 31 and 32 for a
discussion of Moody's and S&P ratings.
FIDELITY ADVISOR LIMITED TERM BOND FUND seeks to provide a high rate of
income through investment in high- and upper-medium grade fixed-income
obligations, as follows:
(I) Corporate obligations which are rated AAA, AA, or A by S&P, or Aaa,
Aa, or A by Moody's;
(II) Obligations issued or guaranteed as to interest and principal by the
government of the U.S., or any agency or instrumentality thereof;
(III) Obligations (including certificates of deposit and bankers'
acceptances) of U.S. banks which at the date of investment have capital
gains, surplus, and undivided profits (as of the date of their most
recently published annual financial statements) in excess of $100,000,000;
(IV) Commercial paper which at the date of investment is rated A-1 or A-2
by S&P or Prime-1 or Prime-2 by Moody's or, if not rated, is issued by
companies which at the date of investment have an outstanding debt issue
rated AAA, AA, or A by S&P or Aaa, Aa, or A by Moody's; and
(V) Such other fixed-income instruments as the Board of Trustees, in its
judgment, deems to be of comparable quality to those enumerated above.
Instruments in which the Fund may invest include asset-backed securities,
collateralized mortgage obligations, convertible securities, loans and
other direct debt instruments, mortgage-backed securities, and zero coupon
bonds .
FMR's standards for determining high- and upper-medium grades are
essentially the same as those described by S&P and Moody's as
characteristic of their ratings of A and above. Such instruments have
strong protection of principal and interest payments. In addition to
reliance on S&P's or Moody's ratings, FMR also performs its own credit
analysis. The Fund also may invest in unrated instruments, and may at times
purchase instruments rated below A if FMR judges them to be of comparable
quality to those rated A or better. Currently, the Fund does not intend to
invest in debt obligations rated below Baa/ BBB. Investment-grade
bonds are generally of medium to high quality. Those rated in the lower end
of the category (Baa/BBB), however, may possess speculative characteristics
and may be more sensitive to economic changes and changes in the financial
condition of issues.
In addition, the Fund may seek capital appreciation when consistent with
its primary objective. In seeking capital appreciation, FMR will select
securities for the Fund based on its judgment as to economic and market
conditions and the prospects for interest rate changes.
The Fund may purchase or engage in foreign investments, indexed securities,
illiquid investments, loans and other direct debt instruments, options and
futures contracts, repurchase agreements and securities loans, restricted
securities, and swap agreements. The Fund also may engage in reverse
repurchase agreements for temporary or emergency purposes and not for
investment purposes.
The Fund will maintain a dollar-weighted average maturity of 10 years or
less. As of November 30, 1993, its average maturity was 8.12 years. Based
on FMR's assessment of interest rate trends, generally, the average
maturity will be shortened when interest rates are expected to rise and
lengthened up to 10 years when interest rates are expected to decline.
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND Under normal circumstances, as
a non-fundamental policy at least 65% of the Fund's assets will be invested
in government securities.
The Fund invests primarily in obligations issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities (U.S. government
securities), including U.S. Treasury bonds, notes and bills, Government
National Mortgage Association mortgage-backed pass-through certificates
(Ginnie Maes) and mortgage-backed securities issued by the Federal National
Mortgage Association (Fannie Maes) or the Federal Home Loan Mortgage
Corporation (Freddie Macs). The U.S. government securities the Fund invests
in may or may not be fully backed by the U.S. government. The Fund may
enter into repurchase agreements involving any securities in which it may
invest and also may enter into reverse repurchase agreements. The Fund
considers "government securities" to include U.S. government securities
subject to repurchase agreements. The Fund is not restricted as to the
percentage of its assets that may be invested in any one type of U.S.
government security. The Fund may for temporary defensive purposes invest
without limit in U.S. government securities having a maturity of 365 days
or less. The Fund may invest in delayed-delivery transactions, options and
futures contracts, indexed securities, swap agreements and zero coupon
bonds. In seeking current income, the Fund also may consider the potential
for capital gain.
FIDELITY ADVISOR SHORT FIXED-INCOME FUND . Under normal conditions,
at least 65% of the Fund's total assets will be invested in fixed-income
securities. Where consistent with its investment objective, the Fund will
take advantage of opportunities to realize capital appreciation.
The Fund normally will invest primarily in investment-grade fixed-income
securities of all types. Investment-grade fixed-income securities are
considered to be securities rated Baa or higher by Moody's or BBB or higher
by S&P, and unrated securities that are of equivalent quality in FMR's
opinion. The Fund may invest in lower-quality, high-yielding securities
(commonly referred to as "junk bonds"), as long as they are consistent with
the Fund's objective of obtaining a high level of current income consistent
with the preservation of capital. The Fund currently intends to limit its
investments in these securities to 35% of its assets. As a non-fundamental
policy, the Fund does not currently expect to invest in securities rated
lower than B by S&P or Moody's.
Fixed-income securities may include, in any proportion, bonds, notes, U.S.
government and government agency obligations, mortgage-related and
asset-backed securities, zero coupon securities, foreign securities,
indexed securities and convertible securities, and short-term obligations
such as certificates of deposit, repurchase agreements, bankers'
acceptances and commercial paper. The Fund also may purchase or engage in
illiquid investments, loans and other direct debt instruments, options and
futures contracts, restricted securities, and swap agreements.
In making investment decisions for the Fund, FMR will consider many factors
other than current yield, including the preservation of capital, the
potential for realizing capital appreciation, maturity and yield to
maturity. FMR will adjust the Fund's investments in particular securities
or in types of debt securities in response to its appraisal of changing
economic conditions and trends. FMR may sell securities in anticipation of
a market decline or purchase securities in anticipation of a market rise.
In addition, FMR may sell one security and purchase another security of
comparable quality and maturity to take advantage of what FMR believes to
be short-term differentials in market values or yield disparities. The Fund
may invest a portion of its assets in securities issued by foreign
companies and foreign governments, which may be less liquid or more
volatile than domestic investments. The Fund's investments, other than
those backed by the U.S. government, are subject to the ability of the
issuer to make payment at maturity.
The Fund will maintain a dollar-weighted maturity of three years or less.
The Fund may hold individual securities with remaining maturities of more
than three years, as long as the Fund's average maturity is three years or
less.
MUNICIPAL/TAX-EXEMPT FUNDS. Tax-exempt funds invest primarily in municipal
securities which are issued by state and local governments and their
agencies to raise money for various public purposes, including general
purpose financing for state and local governments as well as financing for
specific projects or public facilities. Municipal securities may be backed
by the full taxing power of a municipality or by the revenues from a
specific project or the credit of a private organization. Some municipal
securities are insured by private insurance companies, while others may be
supported by letters of credit furnished by domestic or foreign banks. FMR
monitors the financial condition of parties (including insurance companies,
banks, and corporations) whose creditworthiness is relied upon in
determining the credit quality of securities the Funds may purchase.
Yields on municipal bonds, and therefore the yield of High Income Municipal
and Limited Term Tax-Exempt, depend on factors such as general market
conditions, interest rates, the size of a particular offering, the
maturities of the obligations and the quality of the issues. The ability of
the Funds to achieve their investment objectives is also dependent on the
continuing ability of the issuers of the municipal obligations in which the
Funds invest to meet their obligations for the payment of interest and
principal when due.
Bonds generally are considered to be interest rate sensitive, which means
that their values move inversely to interest rates. Long-term municipa l
bonds generally are more exposed to market fluctuations resulting from
changes in interest rates than are short-term municipal bonds.
While the market for municipals is considered to be substantial, adverse
publicity and changing investor perceptions may affect the ability of
outside pricing services used by a Fund to value its portfolio securities
and the Fund's ability to dispose of lower-rated bonds. The outside pricing
services are consistently monitored to assure that securities are valued by
a method that the Boards believe accurately reflects fair value. The
impact of changing investor perceptions may be especially pronounced in
markets where municipal securities are thinly traded.
The Funds' investments in municipal securities may include fixed, variable,
or floating rate general obligation and revenue bonds (including municipal
lease obligations and resource recovery bonds); zero coupon and
asset-backed securities; inverse floaters; tax, revenue, or bond
anticipation notes; and tax-exempt commercial paper. The Funds may buy or
sell securities on a when-issued or delayed-delivery basis (including
refunding contracts), and may purchase restricted securities. The Funds may
also buy and sell options and futures contracts.
Municipal obligations, including industrial development revenue bonds, are
issued by or on behalf of states, territories, and possessions of the U.S.
and the District of Columbia and their political subdivisions, agencies,
and instrumentalities.
Each Fund may from time to time invest more than 25% of its total assets in
securities whose revenue sources are from similar types of projects (e.g.,
education, electric utilities, health care, housing, transportation, or
water, sewer and gas utilities) or whose issuers share the same geographic
location. As a result, a Fund may be more susceptible to a single economic,
political or regulatory development than would a portfolio of bonds with a
greater variety of issuers. These developments include proposed legislation
or pending court decisions affecting the financing of such projects and
market factors affecting the demand for their services or products.
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND Interest from all or a portion
of the Fund's municipal bonds may be a "tax preference" item for some
shareholders in determining their federal alternative minimum tax.
Stability and growth of principal also will be considered when choosing
securities.
Interest on some "private activity" municipal obligations is subject to the
federal alternative minimum tax AMT bonds. AMT bonds are municipal
obligations that benefit a private or industrial user or finance a private
facility. The Fund reserves the right to invest up to 100% of its assets in
AMT bonds.
The Fund may invest in municipal obligations which are rated in the medium
and lower rating categories of NRSROs (such as obligations rated Caa by
Moody's or CCC by S&P) or which are unrated, but judged by FMR,
pursuant to procedures established by the Board of Trustees, to meet the
quality standards of the Fund. Municipal obligations which are in the
medium and lower rating categories or which are unrated generally offer a
higher current yield than those offered by municipal obligations which are
in the higher rating categories. Since available yields and the yield
differential between higher and lower-rated obligations vary over time, no
specific level of income or yield differential can be assured. Lower-rated
bonds (those rated Ba/BB or lower) involve greater risk, including risk of
default.
The Fund also may purchase tax-exempt instruments that become available in
the future as long as FMR believes that their quality is equivalent to
those rated Caa or CCC or better by Moody's or S&P, respectively.
The Fund's yield depends in part on the quality of its investments.
Obligations rated investment grade or better (Baa/BBB or higher) generally
are of medium to high quality. These securities typically have moderate to
poor protection of principal and interest payments and have speculative
characteristics.
Unrated obligations may be either investment grade or lower quality, but
usually are not attractive to as many buyers. The Fund relies heavily on
FMR's credit analysis when purchasing unrated or lower-rated bonds.
While lower-rated bonds traditionally have been less sensitive to interest
rate changes than higher-rated investments, as with all bonds, the prices
of lower-rated bonds will be affected by interest rate changes. Economic
changes may affect lower-rated securities differently than other
securities. Lower-rated municipal bonds may be more sensitive to adverse
economic changes (including recession) in specific regions or localities or
among specific types of issuers. During an economic downturn or a prolonged
period of rising interest rates, issuers of lower-rated debt may have
problems servicing their debt, meeting projected revenue goals, or
obtaining additional financing. Periods of economic uncertainty and
interest rate changes may cause market price volatility for lower-rated
bonds and corresponding volatility in the Fund's share price.
During periods when, in FMR's opinion, a temporary defensive posture in the
market is appropriate, the Fund may invest without limitation in cash or in
obligations whose interest payments may be federally taxable. Taxable
obligations include, but are not limited to, certificates of deposit,
commercial paper, obligations issued by the U.S. government or any of its
agencies or instrumentalities, and repurchase agreements.
The Fund may purchase long-term municipals with maturities of 20 years or
more, which generally produce higher yields than short-term municipals. The
Fund also may purchase short-term municipal obligations in order to provide
for short-term capital needs. The average maturity of the Fund is currently
expected to be greater than 20 years. Since the Fund's objective is to
provide a high current yield, the Fund will purchase municipals with an
emphasis on income. FMR may vary the Fund's average maturity depending on
anticipated market conditions. Generally, the average maturity will be
shortened when interest rates are expected to rise and lengthened when
rates are expected to decline.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND Under normal conditions, at
least 80% of the Fund's annual income will be exempt from federal income
taxes and at least 80% of the Fund's net assets will be invested in
obligations having remaining maturities of 15 years or less. The Fund will
maintain a dollar-weighted average maturity of 10 years or less.
The Fund will invest in municipal obligations which, in the judgment of
FMR, are high quality or at least upper-medium quality. The Fund's
standards for high quality and upper-medium quality obligations are
essentially the same as those described by Moody's in rating municipal
obligations within its three highest ratings of Aaa, Aa, and A and as those
described by S&P in rating such obligations within its three highest
ratings of AAA, AA and A. As a non-fundamental policy, the Fund will not
purchase a security rated by Moody's or S&P unless it has received at
least an A rating from either rating service.
The Fund may invest up to 20% of its total assets in municipal obligations
which are unrated by Moody's or S&P if, in the judgment of FMR, such
municipal obligations meet the standards of quality as set forth above.
Unrated bonds are not necessarily of lower quality and may have higher
yields than rated bonds, but the market for rated bonds is usually broader.
The Fund may engage in delayed delivery transactions and may purchase
restricted securities. The Fund also may purchase and sell futures
contracts and may purchase and write put and call options.
The Fund may invest up to 25% of its total assets in a single issuer's
securities. The Fund may invest any portion of its assets in industrial
revenue bonds (IRBs) backed by private issuers, and may invest up to 25% of
its total assets in IRBs related to a single industry.
The Fund currently does not intend to invest in taxable obligations;
however, consistent with that portion of its investment objective concerned
with the preservation of capital, from time to time the Fund may invest a
portion (normally not to exceed 20%) of its net assets on a temporary basis
in fixed-income obligations whose interest is subject to federal income
tax. These taxable obligations may include repurchase agreements. The Fund
does not currently intend to invest in AMT bonds.
FIDELITY ADVISOR SHORT INTERMEDIATE TAX-EXEMPT will maintain a
dollar-weighted average portfolio maturity of between two and four years
under normal conditions. Although the Fund is permitted to hold securities
with maturities of more than four years, its dollar-weighted average
maturity is limited to a maximum of four years.
The Fund normally invests at least 60% of its net assets in securities
that FMR judges to be of equivalent quality to those rated A or better by
Moody's or the S&P. The Fund may not invest more than 5% of its net
assets in securities rated below Baa by Moody's or BBB by S&P, or in
unrated securities of equivalent quality, and does not currently intend to
purchase securities rated lower than Ba or BB.
The Fund may invest up to 25% of its total assets in a single issuer's
securities. The Fund may invest any portion of its assets in industrial
revenue bonds (IRBs) backed by private issuers, and may invest up to 25% of
its total assets in IRBs related to a single industry. The Fund may also
invest 25% or more of its total assets in municipal securities whose
revenue sources are from similar types of projects, e.g., education,
electric utilities, healthcare, housing, transportation, or water, sewer,
and gas utilities.
The Fund's investments in municipal securities may include fixed,
variable, or floating rate general obligations and revenue bonds (including
municipal lease obligations and resource recovery bonds); zero coupon and
asset-backed securities; inverse floaters; tax, revenue, or bond
anticipation notes; and tax-exempt commercial paper. The Fund may buy or
sell securities on a when-issued or delayed-delivery basis (including
refunding contracts), and may purchase restricted and illiquid securities.
The Fund may also buy and sell options and futures contracts. See the
Appendix for further discussion of the Fund's investments.
The Fund may temporarily change its investment focus for defensive
purposes. During periods when, in FMR's opinion, a temporary defensive
posture in the market is appropriate, the Fund may hold cash that is not
earning interest or invest without limitation in short-term municipal
obligations and money market instruments, including obligations whose
interest may be federally taxable. Under such circumstances, the Fund may
temporarily invest so that less than 80% of its net assets will be invested
in securities whose interest is exempt from federal income tax. Federally
taxable obligations include, but are not limited to, obligations issued by
the U.S. government or any of its agencies or instrumentalities,
high-quality commercial paper, certificates of deposit, and repurchase
agreements. The Fund does not intend to invest in federally taxable
obligations under normal conditions.
INVESTMENT LIMITATIONS
Each Fund has adopted the following investment limitations designed to
reduce investment risk. The policies and limitations discussed below, and
in the Appendix beginning on page , are considered at the time of purchase.
With the exception of each Fund's borrowing policy, the sale of portfolio
securities is not required in the event of a subsequent change in
circumstances.
DIVERSIFICATION: These limitations do not apply to U.S. government
securities and are fundamental unless otherwise noted.
(bullet) Equity Portfolio Growth and Strategic Opportunities each may not
purchase a security if, as a result, more than 5% of its total assets would
be invested in the securities of any issuer;
(bullet) With respect to 75% of its total assets, each other Fund may not
purchase a security if, as a result, more than 5% of its total assets would
be invested in the securities of any issuer.
(bullet) Each Fund may not purchase a security if, as a result, it would
hold more than 10% of the outstanding voting securities of any issuer
(except that Overseas, Growth Opportunities, Equity Portfolio Income,
Income & Growth, High Yield, Government Investment, and Short
Fixed-Income each may invest up to 25% of its total assets without regard
to this limitation).
(bullet) Limited Term Tax-Exempt may not purchase the securities of any
issuer if, as a result, more than 25% of its total assets would be invested
in industrial development bonds whose issuers are in any one industry.
(bullet) Emerging Markets Income and Short Intermediate Tax-Exempt are
considered non-diversified. To meet quarterly federal tax requirements for
qualification as a "regulated investment company," Fund limits its
investments so that (a) no more than 25% of its total assets are invested
in the securities of a single issuer, and (b) with respect to at least 50%
of its total assets, no more than 5% of total assets are invested in the
securities of a single issuer. These limitations do not apply to U.S.
government securities. Short-Intermediate Tax-Exempt may invest more than
25% of its total assets in tax-free securities that finance similar types
of projects.
(bullet) Each other Fund may not purchase the securities of any issuer if,
as a result, more than 25% of the Fund's total assets would be invested in
the securities of issuers having their principal business activities in the
same industry. Limited Term bond may, however, invest more than 25% of
its total assets in obligations of banks.
BORROWING: The following limitations are fundamental.
(bullet) Each fund may borrow money for temporary or emergency purposes,
in an amount not exceeding 33 1/3% of the value of its total assets;
(bullet) Strategic Opportunities, Limited Term Bond, and Limited
Term Tax-Exempt may not purchase any security while borrowings representing
more than 5% of its total assets are outstanding.
(bullet) Growth Opportunities, Income & Growth, Government Investment
Short Fixed Income and High Income Municipal may not purchase any security
while borrowings representing more than 5% of its net assets are
outstanding.
The following limitations are non-fundamental.
(bullet) Growth Opportunities may not purchase any security while
borrowings representing more than 5% of its net assets are outstanding.
(bullet) Each other fund may not purchase any security while borrowings
representing more than 5% of its total assets are outstanding.
(bullet) Each Fund may borrow money from banks or from other funds advised
by FMR, or by engaging in reverse repurchase agreements.
LENDING: Percentage limitations are fundamental.
(bullet) High Income Municipal Limited Term Tax-Exempt and
Short-Intermediate Tax-Exempt do not currently intend to engage in
repurchase agreements or make loans (but this limitation does not apply to
purchases of debt securities).
(bullet) Each fund (a) may lend securities to a broker-dealer or
institution when the loan is fully collateralized; and (b) may lend money
to a mutual fund advised by FMR or an affiliate. Each Fund will limit loans
in the aggregate to 33 1/3% of its total assets.
Each Fund has received permission from the SEC to lend money to and borrow
money from other funds advised by FMR or its affiliates, High Income
Municipal , Limited Term Tax-Exempt and Short-Intermediate
Tax-Exempt will participate only as borrowers. If a Fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. To this extent, purchasing securities when borrowings are
outstanding may involve an element of leverage.
As a non-fundamental policy, each Fund may not purchase a security, if as a
result, more than 15% (Overseas, Emerging Markets Income and High
Yield) or 10% (all others) of its assets would be invested in illiquid
investments.
HOW TO BUY SHARES
Class A s hares of each Fund are offered continuously to investors
who engage an investment professional for investment advice and may be
purchased at the public offering price (the offering price) next determined
after the transfer agent receives your order to purchase. State Street Bank
and Trust Company (the Transfer Agent), P.O. Box 8302, Boston,
Massachusetts 02266-8302, provides transfer and dividend paying services
for Class A shares of each Fund.
2.SALES CHARGES AND INVESTMENT PROFESSIONAL CONCESSIONS - CLASS A
SALES CHARGES AS % OF INVESTMENT PROFESSIONAL
AMOUNT OF PURCHASE OFFERING NET AMOUNT CONCESSION AS %
IN SINGLE TRANSACTIONS PRICE INVESTED OF OFFERING PRICE
FIDELITY ADVISOR FUNDS - CLASS A:
Less than $50,000 4.75% 4.99% 4.00%
$50,000 to less than $100,000 4.50% 4.71% 4.00%
$100,000 to less than $250,000 3.50% 3.63% 3.00%
$250,000 to less than $500,000 2.50% 2.56% 2.00%
$500,000 to less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None See Below*
SHORT FIXED-INCOME FUND AND
SHORT-INTERMEDIATE TAX-EXEMPT FUND::
Less than $1,000,000 1.50% 1.52% 1.20%
$1,000,000 or more None None See Below*
* INVESTMENT PROFESSIONALS WILL BE COMPENSATED WITH A FEE OF .25% FOR
PURCHASES OF $1 MILLION OR MORE, IF THE ASSETS ON WHICH THE .25% IS PAID
REMAIN WITHIN THE FIDELITY ADVISOR FUNDS FOR ONE YEAR, EXCEPT FOR PURCHASES
THROUGH A BANK OR BANK-AFFILIATED BROKER-DEALER THAT QUALIFY FOR A SALES
CHARGE WAIVER DESCRIBED BELOW. ALL ASSETS ON WHICH THE .25% FEE IS PAID
MUST REMAIN IN CLASS A SHARES OF THE FIDELITY ADVISOR FUNDS, OF DAILY MONEY
FUND, OR OF SHARES OF DAILY TAX-EXEMPT MONEY FUND FOR A PERIOD OF ONE
UNINTERRUPTED YEAR OR THE INVESTMENT PROFESSIONAL WILL BE REQUIRED TO
REFUND THIS FEE TO DISTRIBUTORS.
The offering price is equal to the net asset value per share (NAV) plus a
sales charge, which is a variable percentage of the offering price
depending upon the amount of the purchase. The table above shows
total sales charges and concessions to securities dealers and banks
(investment professionals) having Agreements with Distributors.
You can open an account with a minimum initial investment of $2,500 in
Class A shares or more in Class A shares by completing and
returning an account application. You can make additional investments in
Class A shares of $250 or more. For tax-deferred retirement plans,
including IRA accounts, there is a $500 minimum initial investment and a
$100 subsequent investment minimum. For accounts established under the
Fidelity Advisor Systematic Investment Program or the Fidelity Advisor
Systematic Exchange Program, there is a $1,000 initial and $100 monthly
subsequent investment minimum requirement. FOR FURTHER INFORMATION ON
OPENING AN ACCOUNT, PLEASE CONSULT YOUR INVESTMENT PROFESSIONAL OR REFER TO
THE ACCOUNT APPLICATION.
It is the responsibility of your investment professional to transmit your
order to purchase Class A shares to the Transfer Agent before 4:00
p.m. Eastern time in order for you to receive that day's Class A
share price. The Transfer Agent must receive payment within five business
days after an order is placed, otherwise, the purchase order may be
canceled and you could be held liable for resulting fees and/or losses.
All of your purchases must be made in U.S. dollars and checks must be drawn
on U.S. banks. Each Fund reserves the right to limit the number of your
checks processed at one time. If your check does not clear, the Fund may
cancel your purchase and you could be held liable for any fees and/or
losses incurred. When you purchase directly by check, the Fund can hold the
proceeds of redemptions until the Transfer Agent is reasonably satisfied
that the purchase payment has been collected (which can take up to seven
calendar days). You may avoid a delay in receiving redemption proceeds by
purchasing Class A shares with a certified check. Shares of the
fixed-income funds purchased through investment professionals utilizing an
automated order placement and settlement system that guarantees payment for
orders on a specified date, begin to earn income dividends on that date.
Direct purchases and all other orders begin to earn dividends on the
business day after the Fund receives payment.
Each Fund and Distributors reserve the right to suspend the offering of
Class A shares for a period of time and to reject any order for the
purchase of Class A shares, including certain purchases by exchange
(see "How to Exchange,'' page ).
3.MINIMUM ACCOUNT BALANCE. You must maintain an account balance of
$1,000 in Class A shares . If your account falls below $1,000 due to
redemption of Class A shares , the Transfer Agent may close it at
the NAV next determined on the day your account is closed and mail you the
proceeds at the address shown on the Transfer Agent's records. The Transfer
Agent will give you 30 days' notice that your account will be closed unless
you make an investment to increase your account balance to the $1,000
minimum. The minimum account balance does not apply to IRA accounts.
4.SALES CHARGE WAIVERS. Sales charges do not apply to Class A shares
of a Fund purchased:
(1) by registered representatives, bank trust officers and other employees
(and their immediate families) of investment professionals having
Agreements with Distributors;
(2) by a current or former Trustee or officer of a Fidelity fund or a
current or retired officer, director or regular employee of FMR
Corp. or its direct or indirect subsidiaries (a "Fidelity Trustee or
employee"), the spouse of a Fidelity Trustee or employee, a Fidelity
Trustee or employee acting as custodian for a minor child, or a person
acting as trustee of a trust for the sole benefit of the minor child of a
Fidelity Trustee or employee;
(3) by a charitable organization (as defined in Section 501(c)(3) of the
Internal Revenue Code) investing $100,000 or more;
(4 ) by a charitable remainder trust or life income pool established
for the benefit of a charitable organization (as defined in Section
501(c)(3) of the Internal Revenue Code);
(5) by trust institutions (including bank trust departments) investing on
their own behalf or on behalf of their clients;
(6) in accounts as to which a bank or broker-dealer charges an account
management fee, provided the bank or broker-dealer has an Agreement with
Distributors;
(7) as part of an employee benefit plan having more than 200 eligible
employees or a minimum of $1,000,000 invested in Fidelity Advisor Funds;
(8) in a Fidelity or Fidelity Advisor IRA account purchased with the
proceeds of a distribution from (i) an employee benefit plan having more
than 200 eligible employees or a minimum of $3,000,000 in plan assets
invested in Fidelity mutual funds or $1,000,000 invested in Fidelity
Advisor mutual funds, or (ii) an insurance company separate account
qualifying under (9) below, or funding annuity contracts purchased by
employee benefit plans which in the aggregate have at least $3,000,000 in
plan assets invested in Fidelity mutual funds;
(9) by an insurance company separate account used to fund annuity contracts
purchased by employee benefit plans which in the aggregate have more than
200 eligible employees or $1,000,000 invested in Fidelity Advisor mutual
funds;
(10) by any state, county, city, or any governmental instrumentality,
department, authority or agency; or
(11) with redemption proceeds from other mutual fund complexes on which the
investor has paid a front-end sales charge only. (A Sales Charge Waiver
Form must accompany these transactions.)
Qualification for s ales charge waivers must be cleared
through Distributors in advance, and employee benefit plan investors must
meet additional requirements specified in the SAIs. Your investment
professional should call Fidelity for more information.
INVESTOR SERVICES
You may initiate many transactions by telephone. Note that the Transfer
Agent will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the
identity of the caller. The Transfer Agent will request personalized
security codes or other information, and may also record calls. You should
verify the accuracy of your confirmation statements immediately after you
receive them. If you do not want the ability to redeem and exchange by
telephone, call the Transfer Agent for instructions.
5.QUANTITY DISCOUNTS. Reduced sales charges are applicable to purchases
of Class A shares of a Fund in amounts of $50,000 or more
($1,000,000 or more for Short Fixed-Income or Short-Intermediate
Tax-Exempt ) alone or in combination with purchases of Class A or
Class B shares of other Fidelity Advisor Funds ,
Initial shares or Class B shares of Daily Money Fund and shares
of Daily Tax-Exempt Money Fund acquired by exchange from other Fidelity
Advisor Funds. To obtain the reduction of the sales charge, you or your
investment professional must notify the Transfer Agent at the time of
purchase whenever a quantity discount is applicable to your purchase. Upon
such notification, you will receive the lowest applicable sales charge.
For purposes of qualifying for a reduction in sales charges under the
Combined Purchase, Rights of Accumulation or Letter of Intent
programs , the following may qualify as an individual, or a "company" as
defined in Section 2(a)(8) of the Investment Company Act of 1940 (1940
Act): an individual, spouse, and their children under age 21 purchasing for
his, her, or their own account; a trustee, administrator or other fiduciary
purchasing for a single trust estate or single fiduciary account or for a
single or a parent-subsidiary group of "employee benefit plans" (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974);
and tax-exempt organizations as defined under Section 501(c)(3) of the
Internal Revenue Code.
6.COMBINED PURCHASES. When you invest in Class A shares of a Fund
for several accounts at the same time, you may combine these investments
into a single transaction to qualify for the quantity discount if purchased
through one investment professional, and if the total is at least $50,000
(at least $1,000,000 for Short Fixed-Income or Short-Intermediate
Tax-Exempt ).
7.RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on any future purchases of Class A shares after you
have reached a new breakpoint in a Fund's sales charge schedule. You
may add the value of currently held Fidelity Advisor Fund
Class A and Class B shares , and Initial shares or Class B shares
of Daily Money Fund and shares of Daily Tax-Exempt Money Fund
ACQUIRED BY EXCHANGE FROM ANY FIDELITY ADVISOR FUND, determined at the
current day's NAV at the close of business, to the amount of your new
purchase valued at the current offering price to determine your reduced
sales charge.
8.LETTER OF INTENT. If you anticipate purchasing $50,000 or more
($1,000,000 for Short Fixed-Income or Short-Intermediate Tax-Exempt )
of a Fund's Class A shares alone or in combination with Class A
or Class B shares of other Fidelity Advisor Funds within a 13-month
period, you may obtain Class A shares at the same reduced sales
charge as though the total quantity were invested in one lump sum, by
filing a non-binding Letter of Intent (the Letter) within 90 days of the
start of the purchases. Each Class A investment you make after
signing the Letter will be entitled to the sales charge applicable to the
total investment indicated in the Letter. For example, a $2,500 purchase
of Class A shares toward a $50,000 Letter would receive the same
reduced sales charge as if the $50,000 ($1,000,000 for Short
Fixed-Income or Short-Intermediate Tax-Exempt ) had been invested at
one time. To ensure that the reduced price will be received on future
purchases, you or your investment professional must inform the Transfer
Agent that the Letter is in effect each time Class A shares are
purchased. Neither income dividends nor capital gain distributions taken in
additional Class A or Class B shares will apply toward the
completion of the Letter.
Your initial investment must be at least 5% of the total amount you plan to
invest. Out of the initial purchase, 5% of the dollar amount specified in
the Letter will be registered in your name and held in escrow. The Class
A shares held in escrow cannot be redeemed or exchanged until the
Letter is satisfied or the additional sales charges have been paid. You
will earn income dividends and capital gain distributions on escrowed
Class A shares. The escrow will be released when your purchase of the
total amount has been completed. You are not obligated to complete the
Letter.
If you purchase more than the amount specified in the Letter and qualify
for a further front-end sales charge reduction, the front-end
sales charge will be adjusted to reflect your total purchase at the end of
13 months. Surplus funds will be applied to the purchase of additional
Class A shares at the then current offering price applicable to the
total purchase.
If you do not complete your purchase under the Letter within the 13-month
period, 30 days' written notice will be provided for you to pay the
increased front-end sales charges due. Otherwise, sufficient
escrowed Class A shares will be redeemed to pay such charges.
9.FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM. You can make regular
investments in Class A shares of a Fidelity Advisor Fund with the
Systematic Investment Program by completing the appropriate section of the
account application and attaching a voided personal check. Investments may
be made monthly by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time. There is a $1,000 minimum initial investment requirement for the
Systematic Investment Program. Class A s hares will be purchased at
the offering price next determined following receipt of the investment by
the Transfer Agent. You may cancel the Systematic Investment Program at any
time without payment of a cancellation fee. You will receive a confirmation
from the Transfer Agent for every transaction, and a debit entry will
appear on your bank statement.
SHAREHOLDER COMMUNICATIONS
The Transfer Agent will send you a confirmation after every transaction
that affects your Class A share balance or account registration. In
addition, a consolidated statement will be provided at least
quarterly. At least twice a year each shareholder will receive the Fund's
financial statements, with a summary of its portfolio composition and
performance. To reduce expenses, only one copy of most shareholder reports
(such as a Fund's Annual Report) will be mailed to each shareholder
address. Please write to the Transfer Agent or contact your investment
professional if you need to have additional reports sent each time.
A Fund pays for these shareholder communications, but not for special
services that are required by a few shareholders, such as a request for a
historical transcript of an account. You may be required to pay a fee for
such special services. If you are purchasing Class A shares of a
Fund through a program of administrative services offered by an investment
professional, you should read the additional materials pertaining to that
program in conjunction with this p rospectus. Certain features of a
Fund, such as the minimum initial or subsequent investment, may be modified
in these programs, and administrative charges may be imposed for the
services rendered.
HOW TO EXCHANGE
An exchange is the redemption of Class A shares of one Fund
and the purchase of Class A shares of another Fund, each at the next
determined NAV. The exchange privilege is a convenient way to buy
and sell Class A shares of the Fidelity Advisor
Funds , Initial shares of Daily Money Fund, and shares of Daily
Tax-Exempt Money Fund provided such funds are registered in your state.
To protect the performance of each Fund's Class A shares and
shareholders, FMR discourages frequent trading in response to short-term
market fluctuations. The Funds reserve the right to refuse Class A
exchange purchases by any person or group if, in FMR's opinion, a Fund
would be unable to invest effectively in accordance with its investment
objective and policies, or would otherwise be affected adversely. Your
exchanges may be restricted or refused if a Fund receives or anticipates
simultaneous orders affecting significant portions of a Fund's assets. In
particular, a pattern of exchanges that coincides with a "market timing"
strategy may be disruptive to a Fund. Exchange restrictions may be imposed
at any time. The Funds may modify or terminate the exchange privilege. The
exchange limit may be modified for certain institutional retirement plans.
Exchange instructions may be given by you in writing or by telephone
directly to the Transfer Agent or through your investment professional. FOR
MORE INFORMATION ON ENTERING AN EXCHANGE TRANSACTION, PLEASE CONSULT YOUR
INVESTMENT PROFESSIONAL.
Before you make an exchange:
1. Read the prospectus of the Fund into which you want to exchange.
2. Class A s hares of a Fund may be exchanged for Class A
shares of another Fidelity Advisor Fund seven calendar days after
purchase at NAV. If you have held Class A shares of Short
Fixed-Income Fund or Short-Intermediate Tax-Exempt for less than six
months, you will pay a sales charge equal to the difference between the
front-end sales charge on the Class A shares of the Fund you are
exchanging into and the front-end sales charge applicable to
Class A shares of Short Fixed-Income or Short-Intermediate
Tax-Exempt being exchanged. For example, if you paid the full 1.5%
front-end sales charge when you purchased your Short Fixed-Income or
Short-Intermediate Tax-Exempt Class A shares, you will have to pay a
sales charge of up to 3.25% when you exchange these shares into Class A
shares of another Fidelity Advisor Fund with a maximum
front-end sales charge of 4.75%. After six months, shares may be
exchanged at NAV. Exchanges into Class A shares of a Fidelity
Advisor Fund from the Initial shares of Daily Money Fund or shares of
Daily Tax-Exempt Money Fund will be processed at the next determined
offering price (unless the shares were acquired by exchange from another
Fidelity Advisor Fund).
3. You may only exchange between accounts that are registered in the same
name, address, and taxpayer identification number.
4. You may make four exchanges out of a Fund per calendar year. If you
exceed this limit, your future purchases of (including exchanges into)
Fidelity Advisor Funds may be permanently refused. For purposes of the four
exchange limit, accounts under common ownership or control, including
accounts having the same taxpayer identification number, will be
aggregated. Systematic exchanges are not subject to this four exchange
limit (see following section).
5. TAXES: The exchange of Class A shares represent s a sale
and is taxable. The Transfer Agent will send you a confirmation of
each exchange transaction.
10.FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM. You can exchange a
specific dollar amount of Class A shares from a Fund into Class A
shares of another Fidelity Advisor Fund on a monthly, quarterly or
semiannual basis under the following conditions:
1. The account from which the exchanges are to be processed must have a
minimum balance of $10,000.
2. The account into which the exchanges are to be processed must be an
existing account with a minimum balance of $1,000.
3. Both accounts must have identical registrations and taxpayer
identification numbers. The minimum amount that can be exchanged
systematically into a Fund is $100.
4. Systematic Exchanges will be processed at the NAV determined on the
transaction date, except that Systematic Exchanges into Class A shares
of a Fidelity Advisor Fund from Initial shares of Daily Money Fund
or shares of Daily Tax-Exempt Money Fund, will be processed at the
offering price next determined on the transaction date (unless the shares
were acquired by exchange from another Fidelity Advisor Fund).
HOW TO SELL SHARES
You may sell (redeem) all or a portion of your Class A shares on any
day the New York Stock Exchange (NYSE) is open, at the NAV next determined
after the Transfer Agent receives your request to sell. Orders to sell may
be placed by you in writing or by telephone or through your investment
professional. Orders to sell received by the Transfer Agent before 4:00
p.m. Eastern time will receive that day's share price. For orders to sell
placed through your investment professional, it is the investment
professional's responsibility to transmit such orders to the Transfer Agent
by 4:00 p.m. Eastern time for you to receive that day's share price.
Once your Class A shares are redeemed, a Fund normally will send the
proceeds on the next business day to the address of record. If making
immediate payment could adversely affect the Fund, the Fund may take up to
seven days to pay you. A Fund may withhold redemption proceeds until it is
reasonably satisfied that it has collected investments that were made by
check (which can take up to seven calendar days).
When the NYSE is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any
emergency circumstances as determined by the SEC to merit such action, a
Fund may suspend redemption or postpone payment dates for more than seven
days. The Transfer Agent requires additional documentation to redeem
Class A shares registered in the name of a corporation, agent or
fiduciary or a surviving joint owner. Call 1-800-221-5207 for specific
requirements.
11.REDEMPTION REQUESTS BY TELEPHONE:
TO RECEIVE A CHECK. You may sell Class A shares of a Fund having a
value of $100,000 or less from your account by calling the Transfer Agent.
Redemption proceeds must be sent to the address of record listed on the
account, and a change of address must not have occurred within the
preceding 60 days.
TO RECEIVE A WIRE. You may sell Class A shares of a Fund and have
the proceeds wired to a pre-designated bank account. Wires will generally
be sent the next business day following the redemption of Class A
shares from your account.
Telephone redemptions cannot be processed for Fidelity Advisor Fund
prototype retirement accounts where State Street Bank and Trust Company is
the custodian.
12.REDEMPTION REQUESTS IN WRITING. For your protection, if you sell
Class A shares of a Fund having a value of more than $100,000, or if
you are sending the proceeds of a redemption of any amount to an address
other than the address of record listed on the account, or if you have
requested a change of address within the preceding 60 days, or if you wish
to have the proceeds wired to a non predesignated bank account, you must
send a letter of instruction signed by all registered owners with
signature(s) guaranteed to the Transfer Agent. A signature guarantee is a
widely recognized way to protect you by guaranteeing the signature on your
request; it may not be provided by a notary public. Signature guarantee(s)
will be accepted from banks, brokers, dealers, municipal securities
dealers, municipal securities brokers, government securities dealers,
government securities brokers, credit unions (if authorized under state
law), national securities exchanges, registered securities associations,
clearing agencies and savings associations.
13.REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class A
shares of a Fund you may reinvest an amount equal to all or a portion
of the redemption proceeds in Class A shares of the Fund, or in
Class A shares of any of the other Fidelity Advisor Funds, at the NAV
next determined after receipt of your investment order, provided that such
reinvestment is made within 30 days of redemption. You must reinstate
your Class A shares into an account with the same registration. This
privilege may be exercised only once by a shareholder with respect to a
Fund and certain restrictions may apply.
14.FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM. If you own Class
A shares of a Fund worth $10,000 or more, you may periodically have
proceeds sent automatically from your account to you, to a person named by
you, or to your bank checking account. Your Systematic Withdrawal Program
payments are drawn from Class A share redemptions. If Systematic
Withdrawal Program redemptions exceed distributions earned on your Class
A shares, your account eventually may be exhausted. Since a sales
charge is applied on new Class A shares you buy, it is to your
disadvantage to buy Class A shares while also making systematic
redemptions. You may obtain information about the Systematic Withdrawal
Program by contacting your investment professional.
15.CHECKWRITING SERVICE. Short Fixed-Income Fund and Short-Intermediate
Tax-Exempt Fund each offer a check-writing service ($500 minimum) to
allow the redemption of shares from your account. Refer to the account
application or each SAI and complete the attached signature card.
Upon receipt of the properly completed account application and signature
card, the Fund will provide checks. If you redeem by check from the Fund
and the amount of the check is greater than the value of your account, your
check will be returned to you and you may be subject to additional charges.
DISTRIBUTION OPTIONS
When you fill out your account application, you can choose from four
Distribution Options:
1. REINVESTMENT OPTION. Dividends and capital gain distributions will be
automatically reinvested in additional Class A shares of a Fund. If
you do not indicate a choice on your account application, you will be
assigned this option.
2. INCOME-EARNED OPTION. Capital gain distributions will be automatically
reinvested, but a check will be sent for each dividend distribution.
3. CASH OPTION. A check will be sent for each dividend and capital gain
distribution.
4. DIRECTED DIVIDENDS PROGRAM. Dividends and capital gain distributions
will be automatically invested in Class A of another identically
registered Fidelity Advisor Fund.
You may change your Distribution Option at any time by notifying the
Transfer Agent in writing. Distribution checks for fixed-income funds will
be mailed no later than seven days after the last day of the month. On the
day a Fund goes ex-dividend, the amount of the distribution is deducted
from its share price. Reinvestment of distributions will be made at that
day's NAV. If you select option 2 or 3 and the U.S. Postal Service cannot
deliver your checks, or if your checks remain uncashed for six months,
distribution checks will be reinvested in your account at the current NAV
and your election may be converted to the Reinvestment Option.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. The Funds distribute substantially all of their net
investment income and capital gains, if any, to shareholders each year
pursuant to the following schedule. Each Fund may pay capital gains in
December. In addition, Equity Portfolio Growth, Equity Portfolio Income,
Limited Term Bond and Limited Term Tax-Exempt may pay capital gains in
January as well. Emerging Markets Income may also pay capital gains in
February.
Equity Portfolio Growth pays net investment income , if any, in
January and December; Overseas, Growth Opportunities, Global Resources, and
Strategic Opportunities pay in December; High Yield, Limited Term Bond,
Government Investment, Short Fixed-Income, Emerging Markets Income,
High Income Municipal , Limited Term Tax-Exempt and
Short-Intermediate Tax-Exempt declare dividends daily and pay monthly;
and Equity Portfolio Income and Income & Growth declare dividends in
March, June, September, and December and pay the following month.
16.CAPITAL GAINS. You may realize a gain or loss when you sell (redeem) or
exchange shares. For most types of accounts, a Fund will report the
proceeds of your redemptions to you and the IRS annually. However, because
the tax treatment also depends on your purchase price and your personal tax
position, YOU SHOULD KEEP YOUR REGULAR ACCOUNT STATEMENTS to use in
determining your tax.
17."BUYING A DIVIDEND." On the record date for a distribution from a Fund,
the Fund's share price is reduced by the amount of the distribution. If you
buy shares just before the record date (buying a dividend), you will pay
the full offering price for the shares, and then receive a portion of the
price back as a taxable distribution.
18.FEDERAL TAXES. Distributions from each Fund's income and short-term
capital gains are taxed as dividends, and long-term capital gain
distributions are taxed as long-term capital gains. Gains on the sale of
tax-free bonds results in a taxable distribution. Short-term capital gains
and a portion of the gain on bonds purchased at a discount after April
30, 1993 are taxed as dividends. Distributions are taxable when they
are paid, whether you take them in cash or reinvest them in additional
shares, except that distributions declared in December and paid in January
are taxable as if paid on December 31. Each Fund will send you a tax
statement by January 31 showing the tax status of the distributions you
received in the past year. A copy will be filed with the Internal Revenue
Service (IRS).
To the extent that a Fund invest in municipal obligations
whose interest is subject to the federal alternative minimum tax for
individuals (AMT bonds). I ndividuals who are subject to the AMT will be
required to report a portion of the Fund's dividends as a "tax-preference
item" in determining their federal tax. Federally tax-free interest earned
by the Funds is federally tax-free when distributed as income dividends.
During the most recent fiscal year ended, 100% of the income dividends for
High Income Municipal and Limited Term Tax-Exempt were free from federal
tax. If the Funds earn taxable income from any of their investments, it
will be distributed as a taxable dividend. Some of the Funds may be
eligible for the dividends-received deduction for corporations.
If a Fund has paid withholding or other taxes to foreign governments during
the year, the taxes will reduce the Fund's dividends but will be included
in the taxable income reported on your tax statement. You may be able to
claim an offsetting tax credit or itemized deduction for foreign taxes paid
by a Fund. Your tax statement will show the amount of foreign tax for which
a credit or deduction may be available.
STATE AND LOCAL TAXES. Mutual fund dividends from most U.S. government
securities generally are free from state and local income taxes. However,
certain types of securities, such as repurchase agreements and certain
agency backed securities, may not qualify for the government interest
exemption on a state-by-state basis. GNMA and other mortgage backed
securities are other notable exceptions in many states. Some states may
impose intangible property taxes. You should consult your own tax advisor
for details and up-to-date information on the tax laws in your state.
19.OTHER TAX INFORMATION. In addition to federal taxes, you may be subject
to state or local taxes on your investment, depending on the laws in your
area. Because some states exempt their own municipal obligations from tax,
you will receive tax information each year showing how High Income
Municipal Limited Term Tax-Exempt and Short-Intermediate
Tax-Exempt allocated their investments by state.
When you sign your account application, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a Fund to
withhold 31% of your taxable distributions and redemptions.
FEES
20.MANAGEMENT AND OTHER SERVICES. For managing its investments and business
affairs, each Fund pays a monthly fee to FMR.
Each Fund (with the exception of Equity Portfolio Income, see below) pays a
monthly fee to FMR based on a basic fee rate, which is the sum of two
components:
1. A group fee rate based on the monthly average net assets of all of the
mutual funds advised by FMR. This rate for Equity Funds cannot rise above
.52% and it drops (to as low as a marginal rate of .31%*) as total assets
in all of these funds rise. The effective Equity Fund group fee rate for
September 1993, October 1993 and November 1993 was .3262%, .3254% and
.3250%, respectively. The group fee rate for Fixed-Income Funds cannot rise
above .37% and it drops (to as low as a marginal rate of .15%*) as total
assets in all of these funds rise. The effective Fixed-Income group fee
rate for October 1993 and November 1993 was .1631% and .1627%,
respectively.
2. An individual fund fee rate, which varies for each Fund.
* FMR VOLUNTARILY AGREED TO ADOPT REVISED GROUP FEE RATE SCHEDULES WHICH
PROVIDE FOR A MARGINAL RATE AS LOW AS .285% (EQUITY FUNDS) AND .1325%
(FIXED-INCOME FUNDS) WHEN AVERAGE GROUP NET ASSETS EXCEED $336 BILLION. A
NEW MANAGEMENT CONTRACT WITH A REVISED GROUP FEE RATE SCHEDULE WILL BE
PRESENTED FOR APPROVAL AT EACH FUND'S NEXT SHAREHOLDER MEETING.
One-twelfth of the annual management fee rate is applied to each Fund's net
assets averaged over the most recent month, giving a dollar amount which is
the management fee for that month.
Equity Portfolio Income pays FMR a monthly management fee at an annual rate
of .50% of its average net assets.
The following are the individual fund fee rates and total management fees
for each Fund's most recent fiscal year end.
TOTAL
MANAGEMENT FEE
INDIVIDUAL (AS A PERCENT OF AVERAGE
FUND FEE RATE NET ASSETS)
(AS A PERCENTAGE OF BEFORE REIMBURSEMENTS,
AVERAGE NET ASSETS) IF ANY
EQUITY FUNDS:
Overseas 0.45% 0.77%(dagger)
Equity Portfolio Growth 0.33% 0.66%
Growth Opportunities 0.30% 0.68%
Global Resources 0.45% 0.77%(dagger)
Strategic Opportunities 0.30% 0.54%
Equity Portfolio Income .NA 0.50%
Income & Growth 0.20% 0.53%
FIXED-INCOME FUNDS:
Emerging Markets Income* 0.55% 0.71%
High Yield 0.45% 0.51%
Limited Term Bond 0.25% 0.42%
Government Investment 0.30% 0.46%
Short Fixed-Income 0.30% 0.47%

MUNICIPAL/TAX-EXEMPT FUNDS:
High Income Municipal Fund 0.25% 0.42%
Limited Term Tax-Exempt Fund 0.25% 0.42%
Short-Intermediate Tax-Free* 0.25% 0.41%
(dagger) TOTAL MANAGEMENT FEES ARE HIGHER THAN THOSE CHARGED BY MOST MUTUAL
FUNDS, BUT NOT NECESSARILY HIGHER THAN THOSE OF A TYPICAL INTERNATIONAL
FUND, DUE TO THE GREATER COMPLEXITY, EXPENSE AND COMMITMENT OF RESOURCES
INVOLVED IN INTERNATIONAL INVESTING.
* PROJECTIONS FOR FIRST YEAR OF OPERATIONS.
In addition to the basic fee, the management fees for Overseas, Growth
Opportunities, and Strategic Opportunities vary based on performance. The
performance adjustment is added to or subtracted from the basic fee and is
calculated monthly. It is based on a comparison of each Fund's performance
to that of an index, over the most recent 36-month period. The difference
is converted into a dollar amount that is added to or subtracted from the
basic fee. This adjustment rewards FMR when the Fund outperforms the index
and reduces FMR's fee when the Fund underperforms the index. The maximum
annualized performance index adjustment rate for each Fund is +/- .20%.
Overseas compares itself to the Morgan Stanley Capital International
Europe, Australia, Far East Index. (Prior to December 1, 1992, Overseas
Fund's performance adjustment was based on a comparison with the Morgan
Stanley Capital International Europe Index.) Growth Opportunities and
Strategic Opportunities compare themselves to the S&P 500 . See "The
Trusts and the Fidelity Organization" for information regarding performance
calculations for Strategic Opportunities.
FMR may, from time to time, agree to reimburse a Fund for expenses
(excluding interest, taxes, brokerage commissions, and extraordinary
expenses) above a specified percentage of average net assets. FMR retains
the ability to be repaid by a Fund for these expense reimbursements in the
amount that expenses fall below the limit prior to the end of the fiscal
year. Fee reimbursements by FMR will increase a Fund's yield and total
return, and repayment by a Fund will lower its yield and total return. FMR
has voluntarily agreed to reimburse expenses of the Class A shares
of Emerging Markets Income, Government Investment and Limited
Term Tax-Exempt to the extent that total expenses exceed , 1.50%,
0.0%, and 0.90%, respectively, of average net assets of Class A
shares .
FMR has entered into sub-advisory agreements on behalf of certain Funds.
Sub-advisors provide research and investment advice and research services
with respect to companies based outside the U nited States and FMR
may grant sub-advisers investment management authority as well as the
authority to buy and sell securities if FMR believes it would be beneficial
to a Fund.
Overseas, Equity Portfolio Growth, Strategic Opportunities, Equity
Portfolio Income, Emerging Markets Income, High Yield and Limited
Term Bond each have entered into sub-advisory agreements with Fidelity
Management & Research (U.K.) Inc. (FMR U.K.) and Fidelity Management
& Research (Far East) Inc. (FMR Far East). FMR U.K. focuses primarily
on companies based in Europe, and FMR Far East focuses primarily on
companies based in Asia and the Pacific Basin. Under the sub-advisory
agreements, FMR, and not the Fund, may pay FMR U.K. and FMR Far East fees
equal to 110% and 105%, respectively, of each sub-advisor's costs incurred
in connection with its sub-advisory agreement.
In addition, Overseas and Emerging Markets Income each have
entered into a sub-advisory agreement with Fidelity International
Investment Advisors (FIIA). FIIA, in turn, has entered into a sub-advisory
agreement with its wholly owned subsidiary Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.). Currently, FIIAL U.K.
focuses on companies other than the U.S., including countries in Europe,
Asia, and the Pacific Basin. Under the sub-advisory agreement, FMR pays
FIIA 30% of its monthly management fee with respect to the average market
value of investments held by the Fund for which FIIA has provided FMR with
investment advice. FIIA, in turn, pays FIIAL U.K. a fee equal to 110% of
FIIAL U.K.'s costs incurred in connection with providing investment advice
and research services.
The Transfer Agent has delegated certain transfer, dividend paying and
shareholder services to Fidelity Investments Institutional Operations
Company (FIIOC), 82 Devonshire Street, Boston, Massachusetts 02109, an
affiliate of FMR. The Transfer Agent reallows to FIIOC a portion of its fee
for accounts for which FIIOC provides limited services, or its full fee for
accounts that FIIOC maintains on its behalf.
The Funds pay transfer agent fees based on the type, size and number of
accounts in a Fund and the number of monetary transactions made by
shareholders.
The fees for pricing and bookkeeping services are based on a Fund's average
net assets, but must fall within a range of $45,000 to $750,000 per year.
Fidelity Service Co. (Service), 82 Devonshire Street, Boston, Massachusetts
02109, an affiliate of FMR, calculates each Fund's daily share price, and
maintains its general accounting records (with the exception of High Income
Municipal and Limited Term Tax-Exempt, see below). For those Funds which
can engage in securities lending, Service also administers its securities
lending program. For the most recent fiscal year ended, each Fund's fees
for pricing and bookkeeping services (including related out-of-pocket
expenses) amounted to: $57,711 (Overseas); $234,813 (Equity Portfolio
Growth); $513,950 (Growth Opportunities); $45,425 (Global Resources);
$145,494 (Strategic Opportunities); $113,026 (Equity Portfolio Income);
$410,561 (Income & Growth); $121,204 (High Yield); $81,106 (Limited
Term Bond); $46,457 (Government Investment); and $143,813 (Short
Fixed-Income).
For High Income Municipal , L imited Term Tax-Exempt and
Short-Intermediate Tax-Exempt , United Missouri Bank, N.A. (United
Missouri), 1010 Grand Avenue, Kansas City, Missouri 64106, acts as the
custodian, transfer agent and pricing and bookkeeping agent. United
Missouri has a sub-arrangement with the Transfer Agent for transfer agent
services and a sub-arrangement with Service for pricing and bookkeeping
services. For the most recent fiscal year ended, fees paid to Service
(including related out-of-pocket expenses) amounted to $157,559 (High
Income Municipal) and $45,724 (Limited Term Tax-Exempt). All of the fees
are paid to the Transfer Agent and Service by United Missouri, which is
reimbursed by the Funds for such payments.
The Funds' operating expenses include custodial, legal and accounting fees,
charges to register a Trust or Fund with federal and state regulatory
authorities and other miscellaneous expenses. Each Fund's total operating
expenses for Class A shares after reimbursement, if any, as a
percent of average net assets, including the 12b-1 fee (see below), for the
most recent fiscal year ended were as follows: 2.38% (Overseas); 1.84%
(Equity Portfolio Growth); 1.64% (Growth Opportunities); 2.62% (Global
Resources); 1.57% (Strategic Opportunities); 1.77% (Equity Portfolio
Income); 1.51% (Income & Growth); 1.11% (High Yield); 1.23% (Limited
Term Bond); .68% (Government Investment); .95% (Short Fixed-Income); .92%
(High Income Municipal); .90% (Limited Term Tax-Exempt). If FMR had not
reimbursed certain Funds, total operating expenses for Class A
shares for the most recent fiscal year ended would have been as
follows: 1.32% (Government Investment) and 1.36% (Limited Term Tax-Exempt).
21.DISTRIBUTION AND SERVICE PLANS. The Board of Trustees of each Trust has
adopted a Distribution and Service Plan (the Plans) on behalf of Class A
shares, pursuant to Rule 12b-1 under the 1940 Act (the Rule). The Rule
provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is intended primarily to result
in the sale of shares of a f und except pursuant to a plan
adopted by the f und under the Rule. The Boards of Trustees have
adopted the Plans to allow Class A shares and FMR to incur certain
expenses that might be considered to constitute direct or indirect payment
by a Fund of distribution expenses.
Under each Plan, Class A shares are authorized to pay Distributors a
monthly distribution fee as compensation for its services and expenses in
connection with the distribution of Class A shares of the Fund.
Each Fund pay Distributors a distribution fee at an annual rate of
average net assets of Class A shares of the Fund determined as of
the close of business on each day throughout the month. The Board of
Trustees for certain Funds has approved a distribution fee that is
less than the maximum allowed. The distribution fee may be increased
only when, in the opinion of the Trustees, it is in the best interests of
the Class A shareholders to do so. This distribution fee is paid
by the Class A shares of each Fund, not by individual accounts.
The Class A shares of Overseas, Growth Opportunities, Global Resources,
Strategic Opportunities, and Income & Growth each pay .65%. The
Class A shares of Equity Portfolio Growth and Equity Portfolio Income
each pay .65% (the Board can approve a maximum rate of .75%). The Class
A shares of Emerging Markets Income, High Yield, Limited Term
Bond, Government Investment, High Income Municipal and Limited Term
Tax-Exempt each pay .25% (the Board can approve a maximum rate of .40%).
The Class A shares of Short Fixed-Income and Short-Intermediate
Tax-Exempt pay .15%.
All or a portion of the distribution fee may be paid by Distributors to
investment professionals as compensation for selling Class A shares
of the Funds . The distribution fee is a Class expense. Such
expenses will reduce the net investment income and total return of Class
A shares .
The Plan also provides that, through Distributors, FMR may make payments
from its management fee or other resources to investment professionals in
connection with the distribution of Class A shares. Investment
professionals will be compensated with a fee of .25% if the assets on which
the .25% is paid remain in Class A shares of the Fidelity Advisor
Funds for one uninterrupted year or the investment professional will be
required to refund this fee to Distributors. The fee will not be paid on
purchases through a bank or bank-affiliated broker-dealers that qualify for
a Sales Charge Waiver described on page 12. FMR may terminate the program
at any time.
Fees paid pursuant to each Fund's Class A Distribution and Service
Plan will be limited by the restrictions imposed by the NASD rule which
subjects asset based sales charges to a maximum.
Distributors may pay all or a portion of the applicable sales charge and
distribution fee to investment professionals who sell Class A shares
of the Funds. Investment professionals who provide enhanced inquiry, order
entry and sales facilities in connection with transactions in Class
A shares by their clients may receive an administrative fee up to the
maximum applicable sales charge described in "Sales Charges and Investment
Professional Concessions," on page . In addition, Distributors will, at its
expense, provide promotional incentives such as sales contests and trips to
investment professionals who support the sale of Class A shares of
the Funds. In some instances, these incentives will be offered only to
certain types of investment professionals, such as bank-affiliated or
non-bank affiliated broker-dealers, or to investment professionals whose
representatives provide services in connection with the sale or expected
sale of significant amounts of Class A shares.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been fully defined, in Distributors' opinion it
should not prohibit banks from being paid for shareholder servicing and
recordkeeping. If, because of changes in law or regulation, or because of
new interpretations of existing law, a bank or a Fund were prevented from
continuing these arrangements, it is expected that the Board would make
other arrangements for these services and that shareholders would not
suffer adverse financial consequences. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
VALUATION
A Fund's Class A shares are valued at NAV. NAV is determined for
Class A shares of each Fund by adding the value of all security
holdings and other assets of the Fund, deducting liabilities allocated to
C lass A (when appropriate), and then dividing the result by
the proportional number of Class A shares of the Fund outstanding.
NAV normally is calculated as of the close of business of the NYSE
(normally 4:00 p.m. Eastern time). The Funds are open for business and NAV
is calculated each day the NYSE is open for trading. Fund securities and
other assets are valued primarily on the basis of market quotations
furnished by pricing services, or if quotations are not available, by a
method that the Board of Trustees believes accurately reflects fair value.
Foreign securities are valued based on quotations from the primary market
in which they are traded and are converted from the local currency into
U.S. dollars using current exchange rates.
PERFORMANCE
Class A's performance may be quoted in advertising in terms of total
return. All performance information is historical and is not intended to
indicate future performance. Share price and total return fluctuate in
response to market conditions and other factors, and the value of a Fund's
shares when sold may be worth more or less than their original cost.
Excluding a sales charge from a performance calculation produces a higher
total return figure. TOTAL RETURN is the change in value of an investment
in a Fund over a given period, assuming reinvestment of any dividends and
capital gains. A CUMULATIVE TOTAL RETURN reflects actual performance over a
stated period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical
rate of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the entire
period. Average annual total returns smooth out variations in performance;
they are not the same as actual year-by-year results. When an average
annual return covers a period of less than one year, the calculation
assumes that performance will remain constant for the rest of the year.
Since this may or may not occur, the average annual returns should be
viewed as a hypothetical rather than actual performance figure. Average
annual and cumulative total returns usually will include the effect of
paying a Fund's maximum sales charge.
The Funds also may quote performance in terms of yield. YIELD refers to the
income generated by an investment in a Fund over a given period of time,
expressed as an annual percentage rate. Yields are calculated according to
a standard that is required for all stock and bond funds. High Income
Municipal Limited Term Tax-Exempt and Short-Intermediate
Tax-Exempt may quote a TAX-EQUIVALENT YIELD, which shows the taxable
yield an investor would have to earn after taxes to equal the Fund's
tax-free yield. A tax-equivalent yield is calculated by dividing a Fund's
yield by the result of one minus a stated federal or state tax rate.
Because yield calculations differ from other accounting methods, the quoted
yield may not equal the income actually paid to shareholders. This
difference may be significant for funds whose investments are denominated
in foreign currencies. In calculating yield, the Funds may from time to
time use a security's coupon rate instead of its yield to maturity in order
to reflect the risk premium on that security. This practice will have the
effect of reducing a Fund's yield.
For additional performance information, please contact your investment
professional or Distributors for a free Annual Report and SAI.
PORTFOLIO TRANSACTIONS
FMR uses various brokerage firms to carry out each Fund's equity security
transactions Fixed-income securities are generally traded in the
over-the-counter market through broker-dealers. A broker-dealer is a
securities firm or bank which makes a market for securities by offering to
buy at one price and sell at a slightly higher price. The difference is
known as a spread. Foreign securities are normally traded in foreign
countries since the best available market for foreign securities is often
on foreign markets. In transactions on foreign stock exchanges, brokers'
commissions are generally fixed and are often higher than in the U.S.,
where commissions are negotiated. Since FMR, directly or through affiliated
sub-advisers, places a large number of transactions, including those of
Fidelity's other funds, the Funds pay lower commissions than those paid by
individual investors, and broker-dealers are willing to work with the Funds
on a more favorable spread.
The Funds have authorized FMR to allocate transactions to some
broker-dealers who help distribute the Fund's shares or the shares of
Fidelity's other funds to the extent permitted by law, and on an agency
basis to Fidelity Brokerage Services, Inc. (FBSI) and Fidelity Brokerage
Services Ltd. (FBSL), affiliates of FMR. FMR will make such allocations if
commissions are comparable to those charged by non-affiliated qualified
broker-dealers for similar services.
FMR may also allocate brokerage transactions to a Fund's custodian, acting
as a broker-dealer, or other broker-dealers, so long as transaction quality
and commission rates are comparable to those of other
broker-dealers, where the broker-dealer will allocate a portion of the
commissions paid toward payment of a Fund's expenses. These expenses
currently include transfer agent fees and custodian fees.
Higher commissions may be paid to those firms that provide research,
valuation and other services to the extent permitted by law. FMR also is
authorized to allocate brokerage transactions to FBSI in order to secure
from FBSI research services produced by third party, independent entities.
FMR may use this research information in managing each Fund's assets, as
well as assets of other clients.
When consistent with its investment objective, each Fixed-Income fund may
engage in short-term trading. Also, a security may be sold and another of
comparable quality simultaneously purchased to take advantage of what FMR
believes to be a temporary disparity in the normal yield relationship of
the two securities.
The frequency of portfolio transactions - the turnover rate - will vary
from year to year depending on market conditions. Each Fund's turnover rate
for the most recent fiscal year ended was: 42% (Overseas); 160% (Equity
Portfolio Growth); 69% (Growth Opportunities); 208% (Global Resources);
183% (Strategic Opportunities); 120% (Equity Portfolio Income); 200%
(Income & Growth); 79% (High Yield); 59% (Limited Term Bond); 333%
(Government Investment); 58% (Short Fixed Income); 27% (High Income
Municipal); and 46% (Limited Term Tax-Exempt) . Because a high
turnover rate increases transaction costs and may increase taxable capital
gains, FMR carefully weighs the anticipated benefits of short-term
investing against these consequences.
THE TRUSTS AND THE FIDELITY ORGANIZATION
Each Trust is an open-end diversified management investment company. Each
Trust was established by a separate Declaration of Trust as a Massachusetts
business trust on each date as follows: June 24, 1983, Fidelity Advisor
Series I; April 24, 1986, Fidelity Advisor Series II; May 17, 1982,
Fidelity Advisor Series III; May 6, 1983, Fidelity Advisor Series IV; April
24, 1986, Fidelity Advisor Series V; June 1, 1983, Fidelity Advisor Series
VI; March 21, 1980, Fidelity Advisor Series VII; and September 23, 1983,
Fidelity Advisor Series VIII. Each Trust has its own Board of Trustees that
supervises Fund activities and reviews the Fund's contractual arrangements
with companies that provide the Funds with services. As Massachusetts
business trusts, the Trusts are not required to hold annual
shareholder meetings, although special meetings may be called for a class
of shares, a Fund or the Trust as a whole for purposes such as
electing or removing Trustees, changing fundamental investment policies or
limitations or approving a management contract or plan of distribution. As
a shareholder, you receive one vote for each share and fractional votes for
fractional shares of the Fund you own. For shareholders of Equity Portfolio
Income the number of votes to which you are entitled is based on the
dollar value of your investment. Separate votes are taken by each class of
shares, or each Fund if a matter affects just that class of shares or Fund,
respectively. There is a remote possibility that one Fund might become
liable for any misstatement in the Prospectus about another Fund. Each
class of shares is offered through a separate prospectus.
INSTITUTIONAL SHARES CLASS. Fidelity Advisor Equity Portfolio Growth,
Fidelity Advisor Equity Portfolio Income, Fidelity Advisor Limited Term
Bond Fund and Fidelity Advisor Limited Term Tax-Exempt Fund each offer its
shares to two groups of investors: institutional investors and retail
investors. Shares offered to institutional investors (Institutional Shares)
are offered continuously at NAV to (i) banks and trust institutions
investing for their own accounts or for accounts of their trust customers,
(ii) plan sponsors meeting the ERISA definition of fiduciary, (iii)
government entities or authorities and (iv) corporations with at least $100
million in annual revenues. The initial and subsequent investment minimums
for Institutional Shares are $100,000 and $2,500, respectively. The minimum
account balance is $40,000. Institutional Shares may be exchanged for
Institutional shares of other Fidelity Advisor Funds. Transfer agent and
shareholder services are performed by FIIOC. For the fiscal year ended
November 30, 1993, total operating expenses as a percent of average net
assets were: .94% for Fidelity Advisor Institutional Equity Portfolio
Growth, .79% for Fidelity Advisor Institutional Equity Portfolio Income,
.64% for Fidelity Advisor Limited Term Bond and .65% for Fidelity Advisor
Institutional Limited Term Tax-Exempt. Because the Institutional Shares
have lower total expenses, they will generally have a higher yield and
total return than the shares sold to retail investors. The Institutional
shares have a Distribution and Service Plan that does not provide for
payment of a separate distribution fee; rather the Plan recognizes that FMR
may use its management fee and other resources to pay expenses for
distribution-related activities and may make payments to investment
professionals that provide shareholder support services or sell shares.
Investment professionals currently do not receive compensation in
connection with distribution and/or shareholder servicing of Institutional
Shares.
CLASS B. Fidelity Advisor High Income Municipal Fund, Fidelity Advisor
High Yield Fund, Fidelity Advisor Government Investment Fund, Fidelity
Advisor Emerging Markets Income Fund, Fidelity Advisor Equity Portfolio
Income, Fidelity Advisor Limited Term Bond Fund, and Fidelity Advisor
Limited Term Tax-Exempt Fund each offer a class of shares to retail
investors who engage an investment professional for investment advice with
a contingent deferred sales charge ("Class B" shares). Class B shares are
subject to a .75% annual distribution fee, a 25% annual service fee and a
contingent deferred sales charge upon redemption within five years of
purchase, which decreases from a maximum of 4% to 0%. At the end of a six
year period, Class B shares automatically convert to Class A shares. The
initial and subsequent investment minimums for Class B are identical to
those for Class A. Class B shares of a Fidelity Advisor Fund may be
exchanged only for Class B shares of other Fidelity Advisor Funds, as well
as for Class B shares of Daily Money Fund: U.S. Treasury Portfolio.
Transfer agent and shareholder services for Class B shares of Fidelity
Advisor Equity Portfolio Income Fund, Fidelity Advisor Emerging markets
income Fund, Fidelity Advisor High Yield Fund, Fidelity Advisor Limited
Term Bond Fund and Fidelity Advisor Government Investment Fund are
performed by FIIOC and through a sub-contract arrangement with United
Missouri for Class B shares of Fidelity Advisor High Income Municipal Fund
and Fidelity Advisor Limited Term Tax-Exempt Fund. For the current fiscal
year, total operating expenses for Class B shares are estimated to be as
follows: 1.67% for Fidelity Advisor High Income Municipal Fund; 1.86% for
Fidelity Advisor High Yield Fund; 1.70% for Fidelity Advisor Government
Investment Fund; 2.25% for Fidelity Advisor Emerging Markets Income Fund;
2.12% for Fidelity Advisor Equity Portfolio Income; 1.92% for Fidelity
Advisor Strategic Opportunities Fund; 1.98% for Fidelity Advisor Limited
Term Bond Fund; and 1.65% for Fidelity Advisor Limited Term Tax-Exempt
Fund. Class B shares of a Fund will generally have a lower yield and total
return than Class A shares of the same Fund, due to higher expenses in
general. Investment professionals may receive different levels of
compensation with respect to one particular class of shares over another
class of shares in the Funds.
Strategic Opportunities is comprised of two groups of shares, Fidelity
Strategic Opportunities Fund ("Initial Shares") and Fidelity Advisor
Strategic Opportunities Fund ("Advisor Shares") (formerly Special
Situations: Initial Class and Advisor Class). Investment performance will
be measured separately for Initial Shares and Advisor Shares, and the
lesser of the two results obtained will be used in calculating the
performance adjustment to the management fee paid by Strategic
Opportunities. Advisor Shares are comprised of two classes: Class A shares
and Class B shares. Class A shares are offered through this prospectus.
Class B shares are described above and offered through a separate
prospectus.
Fidelity Investments is one of the largest investment management
organizations in the U.S. and has its principal business address at 82
Devonshire Street, Boston, MA 02109. It includes a number of different
companies that provide a variety of financial services and products. The
Trusts employ various Fidelity companies to perform certain activities
required to operate the Funds.
Fidelity Management & Research Company is the original Fidelity company
founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. It maintains a
large staff of experienced investment personnel and a full complement of
related support facilities. As of December 31, 1993, FMR advised funds
having approximately 15 million shareholder accounts with a total value of
more than $225 billion. Fidelity Distributors Corp. distributes shares for
the Fidelity funds.
FMR Corp. is the parent company for the Fidelity companies. Through
ownership of voting common stock, Edward C. Johnson 3d (President and a
Trustee of the Trust), Johnson family members, and various trusts for the
benefit of Johnson family members form a controlling group with respect to
FMR Corp.
Peter J. Allegrini is manager of Advisor High Income Municipal, which he
has managed since February 1992. Mr. Allegrini also manages Spartan
Connecticut Municipal High Yield, Michigan Tax-Free High Yield and Ohio
Tax-Free High Yield. Mr. Allegrini joined Fidelity in 1982.
Robert K. Citrone is manager of Advisor Emerging Market Income. He also
manages Fidelity New Markets Income Fund, which he has managed since May
1993 and serves as strategist for Fidelity's emerging market fixed-income
investments. Mr. Citrone joined Fidelity in 1990.
Bettina E. Doulton has been manager of Advisor Equity Portfolio Income
since August 1993, and VIP Equity-Income since July 1993. Previously, she
managed Select Automotive Portfolio and assisted on Equity-Income Portfolio
and Magellan(Registered trademark). Ms. Doulton also served as an analyst
following the domestic and European automotive and tire manufacturing
industry as well as the gaming and lodging industry. She joined Fidelity in
1985.
Margaret L. Eagle is vice president and manager of Advisor High Yield,
which she has managed since it began in January 1987. Ms. Eagle also
manages several pension fund accounts. Previously, she managed Spartan High
Income, and High Income (now Capital & Income). She also managed the
bond portion of Puritan(Registered trademark). Ms. Eagle joined Fidelity in
1980.
Daniel R. Frank is vice president and manager of Advisor Strategic
Opportunities which he has managed since December 1983. Previously, he was
an assistant to Peter Lynch on Magellan. Mr. Frank joined Fidelity in 1979.
Michael S. Gray is vice president and manager of Advisor Limited Term Bond
which he has managed since August 1987. Mr. Gray also manages Investment
Grade Bond, Spartan Investment Grade Bond, and Intermediate Bond. Mr. Gray
joined Fidelity in 1982.
Robert E. Haber is vice president and manager of Advisor Income &
Growth, which he has managed since January 1987. Mr. Haber also manages
Balanced and co-manages Global Balanced. Previously, he managed Convertible
Securities. Mr. Haber joined Fidelity in 1985.
John (Jack) F. Haley Jr. is vice president and manager of Advisor Limited
Term Tax-Exempt, which he has managed since 1985. Mr. Haley also manages
California Tax-Free Insured, California Tax-Free High Yield, and Spartan
California Municipal High Yield. Mr. Haley joined Fidelity in 1981.
John R. Hickling is manager of Advisor Overseas, which he has managed since
February 1993. Mr. Hickling also manages Japan, Overseas, VIP: Overseas and
International Growth & Income. Previously he managed Emerging Markets,
Europe and Pacific Basin. Mr. Hickling joined Fidelity in 1982.
Curtis Hollingsworth is vice president and manager of Advisor Government
Investment, which he has managed since January 1992. Mr. Hollingsworth also
manages Short-Intermediate Government, Government Securities, Institutional
Short-Intermediate Government, Spartan Limited Maturity Government Bond,
Spartan Long-Term Government Bond and Spartan Short-Intermediate
Government. He joined Fidelity in 1983.
Malcolm W. MacNaught is vice president and manager of Advisor Global
Resources, which he has managed since November 1988. Mr. MacNaught also
manages Select Precious Metals and Minerals and Select American Gold. Mr.
MacNaught joined Fidelity in 1968.
David Murphy is manager of Advisor Short-Intermediate Tax-Exempt Fund.
He also manages Limited Term Municipals, New York Tax-Free Insured, Spartan
Intermediate Municipal and Spartan New Jersey Municipal High Yield. Before
joining Fidelity in 1989, he managed municipal bond funds at Scudder,
Stevens & Clark.
Robert E. Stansky is vice president and manager of Advisor Equity Portfolio
Growth, which he has managed since April 1987. Mr. Stansky also manages
Growth Company. Previously, he managed Emerging Growth and Select Defense
and Aerospace. Mr. Stansky joined Fidelity in 1983.
Donald G. Taylor is vice president and manager of Advisor Short
Fixed-Income, which he has managed since September 1989. Mr. Taylor also
manages Short-Term Bond, Spartan Short-Term Bond, and VIP II: Investment
Grade Bond. In addition, he manages Income Plus for Fidelity International
and serves as an assistant on Asset Manager: Income. Previously, he managed
Corporate Trust, Qualified Dividend, VIP: Zero Coupon Bond and Utilities
Income. Mr. Taylor joined Fidelity in 1986.
George A. Vanderheiden is vice president and manager of Advisor Growth
Opportunities, which he has managed since November 1987. Mr. Vanderheiden
also manages Destiny I and Destiny II. He is a managing director of FMR
Corp., Leader of the Growth Group, and joined Fidelity in 1971.
APPENDIX
The following paragraphs provide a brief description of securities in which
the Funds may invest and transactions they may make. Consistent with its
investment objective and policies, each Fund may invest in or engage in one
or more of the following securities transactions. However, the Funds are
not limited by this discussion and may purchase or engage in one or more of
the following securities or transactions.
DELAYED-DELIVERY TRANSACTIONS. Securities may be bought and sold on a
when-issued or delayed-delivery basis, with payment and delivery taking
place at a future date. The market value of securities purchased in this
way may change before the delivery date which could increase fluctuations
in a Fund's yield. Ordinarily, a Fund will not earn interest on securities
purchased until they are delivered.
FOREIGN INVESTMENTS involve additional risks. Foreign securities and
securities denominated in or indexed to foreign currencies may be affected
by the strength of foreign currencies relative to the U.S. dollar, or by
political or economic developments in foreign countries. Foreign companies
may not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public information
about their operations. In addition, foreign markets may be less liquid or
more volatile than U.S. markets, and may offer less protection to investors
such as a Fund. These risks are typically greater for investments in less
developed countries whose governments and financial markets may be more
susceptible to adverse political and economic developments. FMR considers
these factors in making investments for the Funds.
A Fund may enter into currency exchange contracts (agreements to exchange
one currency for another at a future date) to manage currency risks and to
facilitate transactions in foreign securities. Although currency forward
contracts can be used to protect the Fund from adverse exchange rate
changes, they involve a risk of loss if FMR fails to predict foreign
currency values correctly.
ILLIQUID INVESTMENTS. Under the supervision of the Board of Trustees, FMR
determines the liquidity of each Fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for a Fund to sell them promptly at an acceptable price.
INDEXED SECURITIES. Indexed securities values are linked to currencies,
interest rates, commodities, indices, or other financial indicators. Most
indexed securities are short to intermediate term fixed-income securities
whose values at maturity or interest rates rise or fall according to the
change in one or more specified underlying instruments. Indexed securities
may be positively or negatively indexed (i.e., their value may increase or
decrease if the underlying instrument appreciates), and may have return
characteristics similar to direct investments in the underlying instrument
or to one or more options on the underlying instrument. Indexed securities
may be more volatile than the underlying instrument itself.
INTERFUND BORROWING PROGRAM. Interfund loans and borrowings normally will
extend overnight, but can have a maximum duration of seven days. A Fund
will lend through the program only when the returns are higher than those
available at the same time from other short-term instruments (such as
repurchase agreements), and will borrow through the program only when the
costs are equal to or lower than the cost of bank loans. Each Fund will not
lend more than 5% (Equity Funds) or 7.5% (Fixed-Income Funds) of its assets
to other funds, and will not borrow through the program if, after doing so,
total outstanding borrowings would exceed 15% of total assets. Loans may be
called on one day's notice, and a Fund may have to borrow from a bank at a
higher interest rate if an interfund loan is called or not renewed. Any
delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the risk
of loss in case of default or insolvency of the borrower and may offer less
legal protection to a Fund in the event of fraud or misrepresentation. In
addition, loan participations involve a risk of insolvency of the lending
bank or other financial intermediary. Direct debt instruments may also
include standby financing commitments that obligate a Fund to supply
additional cash to the borrower on demand.
LOWER-QUALITY DEBT SECURITIES are those rated Ba or lower by Moody's or BB
or lower by S&P that have poor protection against default in the
payment of principal and interest or may be in default. These securities
are often considered to be speculative and involve greater risk of loss or
price changes due to changes in the issuer's capacity to pay. The market
prices of lower-rated debt securities may fluctuate more than those of
higher-rated debt securities, and may decline significantly in periods of
general economic difficulty, which may follow periods of rising interest
rates. See "Debt Obligations" on page .
SOVEREIGN DEBT OBLIGATIONS debt instruments issued or guaranteed by foreign
governments or their agencies, including debt of Latin American nations or
other developing countries. Sovereign debt may be in the form of
conventional securities or other types of debt instruments such as loans or
loan participations. Sovereign debt of developing countries may involve a
high degree of risk, and may be in default or present the risk of default.
Governmental entities responsible for repayment of the debt may be unable
or unwilling to repay principal and interest when due, and may require
renegotiation or rescheduling of debt payments. In addition, prospects for
repayment of principal and interest may depend on political as well as
economic factors.
MORTGAGE-BACKED SECURITIES are issued by government entities and
non-government entities such as banks, mortgage lenders, or other financial
institutions.
A mortgage-backed security may be an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized mortgage
obligations (CMOs), make payments of both principal and interest at a
variety of intervals; others make semiannual interest payments at a
predetermined rate and repay principal at maturity (like a typical bond).
Mortgage-backed securities are based on different types of mortgages
including those on commercial real estate or residential properties. Other
types of mortgage-backed securities will likely be developed in the future,
and a Fund may invest in them if FMR determines they are consistent with a
Fund's investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security. The prices of stripped mortgage-backed
securities may be particularly affected by changes in interest rates. As
interest rates fall, prepayment rates tend to increase, which tends to
reduce prices of IOs and increase prices of POs. Rising interest rates can
have the opposite effect.
ASSET-BACKED SECURITIES represent interests in pools of consumer loans
(generally unrelated to mortgage loans) and most often are structured as
pass-through securities. Interest and principal payments ultimately depend
on payment of the underlying loans by individuals, although the securities
may be supported by letters of credit or other credit enhancements. The
value of asset-backed securities may also depend on the creditworthiness of
the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing the credit enhancement.
A Fund may purchase units of beneficial interest in pools of purchase
contracts, financing leases, and sales agreements entered into by
municipalities. These municipal obligations may be created when a
municipality enters into an installment purchase contract or lease with a
vendor and may be secured by the assets purchased or leased by the
municipality. However, except in very limited circumstances, there will be
no recourse against the vendor if the municipality stops making payments.
The market for tax-exempt asset-backed securities is still relatively new.
These obligations are likely to involve unscheduled prepayments of
principal.
OPTIONS AND FUTURES CONTRACTS are bought and sold to manage a Fund's
exposure to changing interest rates, security prices, and currency exchange
rates. Some options and futures strategies, including selling futures,
buying puts, and writing calls, tend to hedge a Fund's investment against
price fluctuations. Other strategies, including buying futures, writing
puts, and buying calls, tend to increase market exposure. Options and
futures may be combined with each other or with forward contracts in order
to adjust the risk and return characteristics of the overall strategy. A
Fund may invest in options and futures based on any type of security,
index, or currency, including options and futures traded on foreign
exchanges and options not traded on exchanges.
Options and futures can be volatile investments and involve certain risks.
If FMR applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower a Fund's return. A
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could
not close out its positions because of an illiquid secondary market.
Options and futures do not pay interest, but may produce taxable capital
gains.
Each Fund will not hedge more than 25% of its total assets by selling
futures, buying puts, and writing calls under normal conditions. In
addition each Fund will not buy futures or write puts whose underlying
value exceeds 25% of its total assets, and will not buy calls with a value
exceeding 5% of its total assets.
REAL ESTATE BACKED SECURITIES. Real estate industry companies may include
among others: real estate investment trusts; brokers or real estate
developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. Companies
engaged in the real estate industry may be subject to certain risks
including: declines in the value of real estate, risks related to general
and local conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, and variations in rental income.
REPURCHASE AGREEMENTS AND SECURITIES LOANS. In a repurchase agreement, a
Fund buys a security at one price and simultaneously agrees to sell it back
at a higher price. A Fund may also make securities loans to broker-dealers
and institutional investors, including FBSI. In the event of the bankruptcy
of the other party to either a repurchase agreement or a securities loan, a
Fund could experience delays in recovering its cash or the securities it
lent. To the extent that, in the meantime, the value of the securities
purchased had decreased or the value of the securities lent had increased,
a Fund could experience a loss. In all cases, FMR must find the
creditworthiness of the other party to the transaction satisfactory.
RESTRICTED SECURITIES are securities which cannot be sold to the public
without registration under the Securities Act of 1933. Unless registered
for sale, these securities can only be sold in privately negotiated
transactions or pursuant to an exemption from registration.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a Fund
temporarily transfers possession of a portfolio instrument to another
party, such as a bank or broker-dealer, in return for cash. At the same
time, the Fund agrees to repurchase the instrument at an agreed-upon price
and time. A Fund expects that it will engage in reverse repurchase
agreements for temporary purposes such as to fund redemptions. Reverse
repurchase agreements may increase the risk of fluctuation in the market
value of a Fund's assets or in its yield.
SHORT SALES. If a Fund enters into short sales with respect to stocks
underlying its convertible security holdings, the transaction may help to
hedge against the effect of stock price declines, but may result in losses
if a convertible security's price does not track the price of its
underlying equity. Under normal conditions convertible securities hedged
with short sales are not currently expected to exceed 15% of a Fund's total
assets.
SWAP AGREEMENTS. As one way of managing its exposure to different types of
investments, a Fund may enter into interest rate swaps, currency swaps, and
other types of swap agreements such as caps, collars, and floors. In a
typical interest rate swap, one party agrees to make regular payments equal
to a floating interest rate times a "notional principal amount," in return
for payments equal to a fixed rate times the same amount, for a specified
period of time. If a swap agreement provides for payments in different
currencies, the parties might agree to exchange the notional principal
amount as well. Swaps may also depend on other prices or rates, such as the
value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a Fund's investments and its share price and yield.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on a Fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A Fund may also
suffer losses if it is unable to terminate outstanding swap agreements or
reduce its exposure through offsetting transactions.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal obligations, have interest rate adjustment formulas
that help to stabilize their market values. Many variable and floating rate
instruments also carry demand features that permit the fund to sell them at
par value plus accrued interest on short notice.
WARRANTS entitle the holder to buy equity securities at a specific price
for a specific period of time. Warrants tend to be more volatile than their
underlying securities. Also, the value of the warrant does not necessarily
change with the value of the underlying securities and a warrant ceases to
have value if it is not exercised prior to the expiration date.
ZERO COUPON BONDS do not make interest payments; instead, they are sold at
a deep discount from their face value and are redeemed at face value when
they mature. Because zero coupon bonds do not pay current income, their
prices can be very volatile when interest rates change. In calculating its
daily dividend, a Fund takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.
A broker-dealer creates a DERIVATIVE ZERO by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros. Government Investment Fund has
been advised that the staff of the Division of Investment Management of the
SEC does not consider these instruments U.S. government securities as
defined by the 1940 Act. Therefore, Government Investment Fund will not
treat these obligations as U.S. government securities for purposes of the
65% portfolio composition test mentioned on page 21.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation (REFCORP) and the Financing Corporation (FICO) can also be
separated in this fashion. ORIGINAL ISSUE ZEROS are zero coupon securities
originally issued by the U.S. government or a government agency.
DEBT OBLIGATIONS. The table below provides a summary of ratings assigned to
debt holdings (not including money market instruments) in Funds which have
the ability to invest over 5% in lower-rated debt securities. These figures
are dollar-weighted averages of month-end portfolio holdings during the
thirteen months ended September 30, 1993 (Strategic Opportunities), October
31, 1993 (Income & Growth, High Yield, Short Fixed-Income, and High
Income Municipal,) and November 30, 1993 (and Equity Portfolio Income),
presented as a percentage of total investments. These percentages are
historical and are not necessarily indicative of the quality of current or
future portfolio holdings, which may vary.
The dollar-weighted average of debt securities not rated by either Moody's
or S&P amounted to 0% (Equity Portfolio Growth), .89% (Strategic
Opportunities), .57% (Equity Portfolio Income), 6.72% (Income &
Growth), 18.74% (High Yield), 5.85% (Short Fixed-Income), and 25.23% (High
Income Municipal) of total investments. This may include securities rated
by other nationally recognized rating organizations, as well as unrated
securities. Unrated securities are not necessarily lower-quality
securities.
As of October 31, 1993, Global Resources had no investments below Baa/BBB.
MOODY'S RATING & PERCENTAGE OF INVESTMENTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MOOD EQUITY STRATE EQUITY INCOME EMERGING HIGH SHORT HIGH
Y'S PORTFOLI GIC PORTFOLIO & MARKETS YIELD FIXED- INCOME
RATIN O OPPORT INCOME GROWTH INCOME INCOME MUNICI
G GROWTH UNITIES PAL

Aaa/A -- 15.99 1.02% 22.75% -- .02% 25.81% 27.39%
a/A %

Baa -- -- .77% .86% -- -- 34.74% 20.40%

Ba -- .18% 1.25% 6.09% -- 6.60% 12.76% 8.10%

B .07% .22% 1.27% 3.89% -- 34.26% 1.08% .63%

Caa -- 1.63 .06% .66% -- 9.09% -- --
%

Ca/C -- -- -- -- -- 4.50% -- --

</TABLE>

S&P RATING & PERCENTAGE OF INVESTMENTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S&AM EQUITY STRATE EQUITY INCOM EMERGI HIGH SHORT HIGH
P;P PORTFO GIC PORTFO E NG YIELD FIXED INCOM
RATIN LIO OPPORT LIO & MARKET - E
G GROWT UNITIES INCOM GROWT S INCO MUNICI
H E H INCOME ME PAL

AAA/A -- 15.99 1.03 21.9 -- .97% 27.08 29.05
A/A % % 8% % %

BBB -- -- .84% 2.03 -- 1.09% 33.92 18.73
% % %

BB -- -- .98% 2.22 -- 6.94% 7.55 4.37
% % %

B .07% .80% 1.35 2.51 -- 33.28 1.13 1.75
% % % % %

CCC -- -- .15% .69% -- 7.62% .04%

CC/C -- -- -- --% -- 1.55%

D -- .89% .03% 5.58%

</TABLE>

THE FOLLOWING DESCRIBES MUNICIPAL INSTRUMENTS:
MUNICIPAL SECURITIES include GENERAL OBLIGATION SECURITIES, which are
backed by the full taxing power of a municipality, and REVENUE SECURITIES,
which are backed by the revenues of a specific tax, project, or facility.
INDUSTRIAL REVENUE BONDS are a type of revenue bond backed by the credit
and security of a private issuer and may involve greater risk. PRIVATE
ACTIVITY MUNICIPAL SECURITIES, which may be subject to the federal
alternative minimum tax, include securities issued to finance housing
projects, student loans, and privately-owned solid waste disposal and water
and sewage treatment facilities.
TAX AND REVENUE ANTICIPATION NOTES are issued by municipalities in
expectation of future tax or other revenues, and are payable from those
specific taxes or revenues. BOND ANTICIPATION NOTES normally provide
interim financing in advance of an issue of bonds or notes, the proceeds of
which are used to repay the anticipation notes. TAX-EXEMPT COMMERCIAL PAPER
is issued by municipalities to help finance short-term capital or operating
needs.
MUNICIPAL LEASE OBLIGATIONS are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities.
These obligations typically are not fully backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If
funds are not appropriated for the following year's lease payments, the
lease may terminate, with the possibility of significant loss to a Fund.
CERTIFICATES OF PARTICIPATION in municipal lease obligations or installment
sales contracts entitle the holder to a proportionate interest in the
lease-purchase payments made.
RESOURCE RECOVERY BONDS are a type of revenue bond issued to build
facilities such as solid waste incinerators or waste-to-energy plants.
Typically, a private corporation will be involved, at least during the
construction phase, and the revenue stream will be secured by fees or rents
paid by municipalities for use of the facilities. The viability of a
resource recovery project, environmental protection regulations, and
project operator tax incentives may affect the value and credit quality of
resource recovery bonds.
A DEMAND FEATURE is a put that entitles the security holder to repayment of
the principal amount of the underlying security, upon notice at any time or
at specified intervals. A STANDBY COMMITMENT is a put that entitles the
security holder to same-day settlement at amortized cost plus accrued
interest.
Issuers or financial intermediaries who provide demand features or standby
commitments often support their ability to buy securities on demand by
obtaining LETTERS OF CREDIT (LOCS) or other guarantees from domestic or
foreign banks. LOCs also may be used as credit supports for other types of
municipal instruments. FMR may rely upon its evaluation of a bank's credit
in determining whether to purchase an instrument supported by an LOC. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank may be
subject to unfavorable political or economic developments, currency
controls, or other governmental restrictions that might affect the bank's
ability to honor its credit commitment.
INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
REFUNDING CONTRACTS. A Fund may purchase securities on a when-issued basis
in connection with the refinancing of an issuer's outstanding indebtedness.
Refunding contracts require the issuer to sell and the Fund to buy refunded
municipal obligations at a stated price and yield on a settlement date that
may be several months or several years in the future.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through C in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating will
also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to D may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.

No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAIs, in connection with
the offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the Fund or Distributors. This Prospectus and the related
SAIs do not constitute an offer by a Fund or by Distributors to sell or to
buy shares of a Fund to any person to whom it is unlawful to make such
offer.

FIDELITY ADVISOR FUNDS CLASS B
PROSPECTUS
FIDELITY ADVISOR HIGH INCOME
82 Devonshire Street
Boston, Massachusetts 02109
June 30, 1994
The Fidelity Advisor Funds (the Funds) offer investors a broad selection of
diversified portfolios.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND - CLASS B
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME FUND - CLASS B
FIDELITY ADVISOR EMERGING MARKETS INCOME - CLASS B
FIDELITY ADVISOR HIGH YIELD FUND - CLASS B
FIDELITY ADVISOR LIMITED TERM BOND FUND - CLASS B
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND - CLASS B
FIDELITY INVESTMENT HIGH INCOME MUNICIPAL FUND - CLASS B
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND - CLASS B
Fidelity Advisor High Yield Fund and Fidelity Advisor Government Investment
Fund are portfolios of Fidelity Advisor Series II. Fidelity Advisor Equity
Portfolio Income is a portfolio of Fidelity Advisor Series III. Fidelity
Advisor Limited Term Bond Fund is a portfolio of Fidelity Advisor Series
IV. Fidelity Advisor High Income Municipal Fund is a portfolio of Fidelity
Advisor Series V. Fidelity Advisor Limited Term Tax-Exempt Fund is a
portfolio of Fidelity Advisor Series VI. Fidelity Advisor Strategic
Opportunities Fund and Fidelity Advisor Emerging Markets Income Fund are
portfolios of Fidelity Advisor Series VIII. Each Fund sells two classes of
shares to retail investors: Class A shares and Class B shares. Class B
shares are offered through this prospectus. Class A shares are offered
through a separate prospectus.
FIDELITY ADVISOR HIGH YIELD FUND INVEST IN LOWER-RATED DEBT SECURITIES,
WHICH PRESENT HIGHER RISKS OF UNTIMELY INTEREST AND PRINCIPAL PAYMENTS,
DEFAULT, AND PRICE VOLATILITY THAN HIGHER-RATED SECURITIES, AND MAY PRESENT
PROBLEMS OF LIQUIDITY AND VALUATION.
Please read this Prospectus before investing. It is designed to provide
you with information and help you decide if a Fund's goals match your own.
RETAIN THIS DOCUMENT FOR FUTURE REFERENCE.
A Statement of Additional Information (SAI) dated June 30, 1994 has been
filed with the Securities and Exchange Commission (SEC) for each Fund and
each is incorporated herein by reference. SAIs and each Fund's Annual
Report are available free upon request from Fidelity Distributors
Corporation (Distributors), 82 Devonshire Street, Boston, MA 02109, or from
your investment professional.
MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY, ANY BANK, OR SAVINGS ASSOCIATION, INSURED DEPOSITORY INSTITUTION OR
GOVERNMENT AGENCY, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY
THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. INVESTMENTS IN
THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THE VALUE OF THE INVESTMENT AND ITS RETURN WILL FLUCTUATE AND ARE NOT
GUARANTEED. WHEN SOLD, THE VALUE OF THE INVESTMENT MAY BE HIGHER OR LOWER
THAN THE AMOUNT ORIGINALLY INVESTED.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Fidelity Investments logo
TABLE OF CONTENTS PAGE
FINANCIAL HISTORY 3
Shareholder Transaction Expenses 3
FINANCIAL HIGHLIGHTS 4
INVESTMENT OBJECTIVES 5
INVESTMENT POLICIES AND RISKS 6
INVESTMENT LIMITATIONS 13
HOW TO BUY SHARES 14
Minimum Account Balance 16
INVESTOR SERVICES 16
Combined Purchases 16
Rights of Accumulation 16
Letter of Intent 16
Fidelity Advisor Systematic Investment Program 17
SHAREHOLDER COMMUNICATIONS 17
HOW TO EXCHANGE 17
Fidelity Advisor Systematic Exchange Program 18
HOW TO SELL SHARES 18
Redemption Requests by Telephone 18
Redemption Requests in Writing 19
Reinstatement Privilege 19
DISTRIBUTION OPTIONS 20
DISTRIBUTIONS AND TAXES 20
Distributions 20
Capital Gains 20
"Buying a Dividend" 20
Federal Taxes 20
State and Local Taxes 21
Other Tax Information 21
FEES 21
Management and Other Services 21
Distribution and Service Plans 20
VALUATION 24
PERFORMANCE 24
PORTFOLIO TRANSACTIONS 25
THE TRUSTS AND THE FIDELITY ORGANIZATION 26
APPENDIX 28

FINANCIAL HISTORY
The purpose of the table below is to assist you in understanding the
various costs and expenses that an investor in Class B shares of each Fund
would bear directly or indirectly. The standard format was developed for
use by all mutual funds to help investors make their investment decisions.
The expense information should be considered along with other important
information such as each Fund's investment objective and past performance.
For information regarding expenses of Class A shares, see "The Trusts and
the Fidelity Organization" page __.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Charge
(as a percentage of redemption proceeds) 4.00%*
Sales Charge on Reinvested Dividends None
Exchange Fees
*DECLINES FROM 4.00% TO 0.00% FOR CLASS B SHARES HELD UP TO A MAXIMUM OF 5
YEARS.
SHAREHOLDER TRANSACTION EXPENSES represent charges paid when you purchase,
sell or exchange Class B shares of a Fund. See "How to Buy Shares" and
"How to Sell Shares" on pages __ and __, respectively.
ANNUAL OPERATING EXPENSES are based on historical expenses for the most
recent fiscal year ended. Management fees are paid by each Fund to
Fidelity Management & Research Company (FMR) for managing its
investments and business affairs. Management fees for Strategic
Opportunities will vary based on performance. Distribution Fees are paid
by Class B shares of the Funds to Distributors for services and expenses in
connection with the distribution of Class B shares. Long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers, Inc.
(NASD). Shareholder Service Fees are paid to investment professionals for
services and expenses incurred in connection with providing individual
assistance to Class B shareholders. The Funds incur other expenses for
maintaining shareholder records, furnishing shareholder statements and
reports, and for other services. FMR has voluntarily agreed to reimburse
Emerging Markets Income, Government Investment and Limited Term Tax-Exempt
to the extent that total operating expenses for Class B shares (exclusive
of taxes, interest, brokerage commissions, and extraordinary expenses) are
in excess of an annual rate of 2.25%, 1.70%, and 1.65%, respectively, of
average net assets. If reimbursements were not in effect, the management
fees, other expenses (including Distribution Fee and Shareholder Service
Fee) and total operating expenses for Class B shares would be .71%, 1.83%,
and 2.54% (Emerging Markets Income); .46%, 1.61%, and 2.07%, (Government
Investment); and .42%, 1.69%, and 2.11% (Limited Term Tax-Exempt). Please
refer to the section "Fees," page __.
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MANAGEMENT DISTRIBUTION SHAREHOLDER OTHER TOTAL
FEE FEE SERVICE FEE EXPENSES1 OPERATING
EXPENSES

EQUITY FUNDS:

Strategic Opportunities .54% .75% .25% .38% 1.92%

Equity Portfolio Income .50% .75% .25% .62% 2.12%

FIXED-INCOME FUNDS:

Emerging Markets Income .42%* .75% .25% .83% 2.25%

High Yield .51% .75% .25% .35% 1.86%

Limited Term Bond .42% .75% .25% .56% 1.98%

Government Investment .09%* .75% .25% .61% 1.70%

MUNICIPAL/TAX-EXEMPT FUNDS:

High Income Municipal .42% .75% .25% .25% 1.67%

Limited Term Tax-Exempt .03%* .75% .25% .62% 1.65%

</TABLE>

* AFTER EXPENSE REDUCTIONS
1PROJECTIONS ARE BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
The HYPOTHETICAL EXAMPLE illustrates the estimated expenses associated with
a $1,000 investment in Class B shares of each Fund over periods of one,
three, five and ten years, based on the estimated expenses (after
reimbursements, if any) in the table, an assumed annual return of 5% and
deduction of applicable contingent deferred sales charge (CDSC) in years 1,
3 and 5. A CDSC IS IMPOSED ONLY IF YOU REDEEM CLASS B SHARES WITHIN 5
YEARS. SEE "HOW TO SELL SHARES," PAGE __, FOR INFORMATION ABOUT THE CDSC.
THE RETURN OF 5% AND ESTIMATED EXPENSES SHOULD NOT BE CONSIDERED
INDICATIONS OF ACTUAL OR EXPECTED FUND PERFORMANCE OR EXPENSES, BOTH OF
WHICH MAY VARY.
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Class B shares of a Fund assuming a 5% annual return and
either (1) redemption or (2) no redemption at the end of each time period.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS

(1)* (2) (1)* (2) (1)* (2) (1)(SEE NOTE) (2)(SEE NOTE)

EQUITY FUNDS:

Strategic Opportunities $59 $19 $90 $60_ $114 $104 $211 $211

Equity Portfolio Income $62 $22 $96 $66 $124 $114 $232 $232

FIXED-INCOME FUNDS:

Emerging Markets Income $63 $23 $100 $70 $130 $120 $231 $231

Limited Term Bond $60 $20 $92 $62 $117 $107 $203 $203

High Yield $59 $19 $88 $58 $111 $101 $190 $190

Government Investment $57 $17 $84 $54 $102 $92 $172 $172

MUNICIPAL/TAX-EXEMPT

FUNDS:

High Income Municipal $57 $17 $83 $53 $101 $91 $169 $169

Limited Term Tax-Exempt $57 $17 $82 $52 $100 $90 $166 $166

</TABLE>

* REFLECTS DEDUCTION OF APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
(SEE NOTE) REFLECTS CONVERSION TO CLASS A AFTER SIX YEARS.
FINANCIAL HIGHLIGHTS
The following tables give information about each Fund's financial history
and use its fiscal year. They have been audited by each Fund's independent
accountant whose unqualified report is included in each Fund's Annual
Report. The Annual Report for each Fund is incorporated by reference into
its SAI On or about June 30, 1994, Class B shares of the Funds will be
offered to retail investors. the inforamtion in the tables (and the Annual
Reports) regarding Class A shares and, where appropriate, shares offered to
institutional investors, does not reflect payment of 12b-1 fees borne by
Class B shareholders, and may not be representative of the actual
operational results of Class B shares.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND - CLASS A
August 20,1986
(Commencement
of Operations) to
Years Ended September 30, September 30,
1993 1992(dagger)(dagger) 1991 1990 1989 1988 1987 1986
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.53 $ 21.38 $ 17.21 $ 19.55 $
15.53 $ 19.06 $ 16.71 $ 17.81
Income from Investment Operations
Net investment income .33 .61 .66 .70 .50 .42 .46 .08(S
DIAMOND)
Net realized and unrealized gain (loss) on investments 4.44 .58 4.26
(2.49) 4.08 (1.80) 2.95 (1.18)
Total from investment operations 4.77 1.19 4.92 (1.79) 4.58 (1.38)
3.41 (1.10)
Less Distributions
From net investment income (.57) (.62) (.75) (.55) (.56) (.24)
(.09) --
From net realized gain on investments (1.21) (2.42) - -- --
(1.91) (.97) --
Total distributions (1.78) (3.04) (.75) (.55) (.56) (2.15) (1.06)
- -
Net asset value, end of period $ 22.52 $ 19.53 $ 21.38 $ 17.21 $ 19.55
$ 15.53 $ 19.06 $ 16.71
TOTAL RETURN (dagger)(double dagger) 26.33% 7.26% 29.51% (9.49)%
30.45% (4.98)% 21.28% (6.23)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 269,833 $ 194,694 $ 199,604 $
172,083 $ 198,198 $ 191,454 $ 283,117 $ 22,141
Ratio of expenses to average net assets 1.57%++ 1.46% 1.56% 1.59%
1.51% 1.71% 1.67%+ 1.50%*+
Ratio of net investment income to average net assets 2.06% 3.22% 3.61%
3.70% 3.23% 3.10% 2.36% 2.77%*
Portfolio turnover rate 183% 211% 223% 114% 89% 160% 225% --
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME
Equity Portfolio Income - Class A Institutional Equity Portfolio Income
Year Period
Ended Ended
Nov. 30 Nov. 30 Years Ended November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987 1986
1985 1984
Net asset value, beginning of period $ 12.86 $ 12.37 $ 12.88 $ 11.08 $
9.52 $ 12.27 $ 11.10 $ 10.93 $ 13.54 $ 11.95 $ 10.24 $ 10.49
Income from Investment Operations
Net investment income .33 .13 .39 .49 .63 # .69 .75 .75 .76
.78 .79 .72
Net realized and unrealized gain
(loss) on investments 1.97 .47 2.02 1.79 1.52 (2.42) 1.17
1.81 (1.53) 1.92 1.69 (.14)
Total from investment operations 2.30 .60 2.41 2.28 2.15 (1.73)
1.92 2.56 (.77) 2.70 2.48 .58
Less Distributions
From net investment income (.30) (.11) (.36) (.48) (.59) (.72)
(.75) (.74) (.70) (.77) (.77) (.74)
From net realized gain on investments - - - - - (.30) -
(1.65) (1.14) (.34) - (.09)
Total distributions (.30) (.11) (.36) (.48) (.59) (1.02) (.75)
(2.39) (1.84) (1.11) (.77) (.83)
Net asset value, end of period $ 14.86 $ 12.86 $ 14.93 $ 12.88 $ 11.08 $
9.52 $ 12.27 $ 11.10 $ 10.93 $ 13.54 $ 11.95 $ 10.24
TOTAL RETURN (dagger)(double dagger) 18.03% 4.88% 18.90% 20.91%
22.97% (14.90)% 17.58% 26.99% (7.28)% 23.48% 24.86% 6.20%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 42,326 $ 1,462 $ 191,138 $
139,391 $ 168,590 $ 253,049 $ 463,696 $ 436,753 $ 443,603 $ 544,269 $
349,262 $ 89,364
Ratio of expenses to average net assets 1.77% 1.55%* .79%## .71%(H
DIAMOND) .67%(H DIAMOND) .61%(H DIAMOND) .55%(H DIAMOND) .55%(H DIAMOND)
.54%(H DIAMOND) .61% .63% .77%
Ratio of expenses to average net assets
before expense reductions 1.77% 1.55%* .80%## .79%(H DIAMOND) .77%(H
DIAMOND) .71%(H DIAMOND) .65%(H DIAMOND) .65%(H DIAMOND) .61%(H DIAMOND)
.61% .63% .77%
Ratio of net investment income
to average net assets 2.02% 3.39%* 3.00% 3.77% 5.66% 6.11% 6.09%
6.86% 5.58% 6.06% 7.36% 7.86%
Portfolio turnover rate 120% 51% 120% 51% 91% 103% 93% 78% 137%
107% 110%(dagger)(dagger)(dagger) 121%
* ANNUALIZED.
** INITIAL OFFERING OF CLASS A SHARES, SEPTEMBER 10, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(dagger)(dagger) AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
(dagger)(dagger)(dagger) IN JULY 1985, THE SEC ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
+ EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION. IN ADDITION, DURING THE PERIOD JULY 1,
1986 THROUGH OCTOBER 31, 1987 THE INVESTMENT ADVISER WAIVED .05% OF THE
ANNUAL INDIVIDUAL FUND FEE OF .35%.
++ INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FIDELITY MANAGEMENT &
RESEARCH COMPANY FOR ADJUSTMENTS TO PRIOR PERIODS' FEES. IF THIS
REIMBURSEMENT HAD NOT EXISTED THE RATIO OF EXPENSES TO AVERAGE NET ASSETS
WOULD HAVE BEEN 1.73%.
(H DIAMOND) EFFECTIVE APRIL 1, 1987 TO SEPTEMBER 10, 1992 THE ADVISER
REDUCED .10% OF THE ANNUAL MANAGEMENT FEE OF .50%.
(S DIAMOND) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE AT THE END OF THE PERIOD LESS
THE AMOUNT OF UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE OF THE FUND AT
AUGUST 20, 1986.
# INCLUDES $.04 PER-SHARE FROM FOREIGN TAXES RECOVERED.
## FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION
OF THE FUND'S EXPENSES.
FIDELITY ADVISOR HIGH YIELD FUND
January 5, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period
$ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090 $ 10.000

Income from Investment Operations

Net investment income
.980 1.146 1.115 1.144 1.237 1.165 .878

Net realized and unrealized gain (loss) on
1.153 .975 1.948 (.820) (.890) .770 (.910)
investments

Total from investment operations
2.133 2.121 3.063 .324 .347 1.935 (.032)

Less Distributions

From net investment income
(.963) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)

From net realized gain on investments
(.230) - - - - - -

Total distributions
(1.193) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)

Net asset value, end of period
$ 12.010 $ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090

TOTAL RETURN (dagger)(double dagger)
20.47% 21.96% 39.67% 3.58% 3.34% 22.14% (.81)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted)
$ 485,559 $ 136,316 $ 38,681 $ 15,134 $ 13,315 $ 11,900 $ 9,077

Ratio of expenses to average net assets
1.11% 1.10% 1.10% 1.10% 1.10% 1.10% 1.24%*

Ratio of expenses to average net assets
1.11% 1.16% 1.76% 2.04% 2.17% 2.22% 2.25%*
before voluntary
(H DIAMOND)
expense limitation

Ratio of net investment income to average
8.09% 9.95% 12.20% 12.72% 12.98% 11.86% 10.74%*
net assets

Portfolio turnover rate
79% 100% 103% 90% 131% 135% 166%*

* ANNUALIZED.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(H DIAMOND) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.

</TABLE>

FIDELITY ADVISOR LIMITED TERM BOND FUND
Limited Term
Bond Fund - Class A Institutional Limited Term Bond Fund

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, beginning of period $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200 $ 10.000

Income from Investment Operations

Net investment income .567 .666 .700 .735 .773 .769 .614

Net realized and unrealized gain (loss) .601 .125 .419 (.160) .050 .060 (.800)
on investments

Total from investment operations 1.168 .791 1.119 .575 .823 .829 (.186)

Less Distributions

From net investment income (.558) (.651) (.679) (.735) (.773) (.769) (.614)

From net realized gain on investments (.200) - - - - - -

Total distributions (.758) (.651) (.679) (.735) (.773) (.769) (.614)

Net asset value, end of period $ 10.140 $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200

TOTAL RETURN (dagger)(double dagger) 12.53% 8.49% 12.65% 6.48% 9.37% 9.34% (1.84)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 69,876 $ 23,281 $ 13,058 $ 9,822 $ 8,203 $ 6,590 $ 4,584

Ratio of expenses to average net assets .68% 1.10% 1.10% 1.10% 1.10% 1.10% 1.29%*

Ratio of expenses to average net assets 1.32% 1.79% 2.46% 2.74% 2.75% 2.25% 2.36%*
before voluntary
expense limitation

Ratio of net investment income to average 6.11% 6.98% 7.47% 8.04% 8.45% 8.30% 8.12%*
net assets

Portfolio turnover rate 333% 315% 54% 31% 42% 44% 32%*

</TABLE>

* ANNUALIZED.
** INITIAL OFFERING OF CLASS A SHARES, SEPTEMBER 10, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
(dagger)(dagger)(dagger) IN JULY 1985, THE SEC ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
# THE AMOUNT SHOWN IN THIS CAPTION, WHILE DETERMINABLE BY THE SUMMATION OF
AMOUNTS COMPUTED DAILY AS SHARES WERE SOLD OR REPURCHASED, IS ALSO THE
BALANCING FIGURE DERIVED FROM THE OTHER FIGURES IN THE STATEMENT AND HAS
BEEN SO COMPUTED. THE AMOUNT SHOWN FROM THE PERIOD ENDED NOVEMBER 30, 1992
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD DOES NOT ACCORD WITH THE NET
REALIZED AND UNREALIZED GAIN ON INVESTMENTS FOR THE PERIOD BECAUSE OF THE
TIMING OF SALES AND REPURCHASES OF THE LIMITED TERM BOND FUND SHARES IN
RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND
September 16, 1987
(Commencement of
Years Ended October 31, Operations) to
SELECTED PER-SHARE DATA 1993 1992 1991 1990 1989 1988 October
31, 1987

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850 $ 10.000

Income from Investment Operations

Net interest income .710 .774 .803 .811 .800 .750 .092

Net realized and unrealized gain (loss) 1.100 .250 .660 .150 .410 .610 (.150)
on investments

Total from investment operations 1.810 1.024 1.463 .961 1.210 1.360 (.058)

Less Distributions

From net interest income (.710) (.774) (.803) (.811) (.800) (.750) (.092)

From net realized gain on investments (.030) (.010) (.120) (.100) (.050) - -

Total distributions (.740) (.784) (.923) (.911) (.850) (.750) (.092)

Net asset value, end of period $ 12.720 $ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850

TOTAL RETURN (dagger)(double dagger) 15.95% 9.21% 14.02% 9.28% 12.05% 14.22% (.58)%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period (000 omitted) $ 497,575 $ 156,659 $ 67,135 $ 22,702 $ 6,669 $ 3,290 $ 1,275

Ratio of expenses to average net assets .92% .90% .90% .90% .90% .89% .80%*

Ratio of expenses to average net assets .92% .96% 1.24% 2.09% 2.75% 2.25% 2.25%*
before voluntary (H DIAMOND) (H DIAMOND) (H DIAMOND)
expense limitation

Ratio of net interest income to average net 5.59% 6.59% 7.08% 7.37% 7.60% 7.33% 7.24%*
assets

Portfolio turnover rate 27% 13% 10% 11% 27% 19% -%

</TABLE>

* ANNUALIZED.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(H DIAMOND) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND
Limited Term
Tax-Exempt Fund - Class A Institutional Limited Term Tax-Exempt Fund
September 19, 1985
Year Period (Commencement
Ended Ended of Operations) to
Nov. 30 Nov. 30 Years Ended November 30, November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987
1986 1985
Net asset value, beginning of period $ 11.080 $ 11.010 $ 11.080 $ 10.800 $
10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280 $ 10.000
Income from Investment Operations
Net interest income .508 .131 .536 .666 .682 .689 .674 .650 .641
.671 .130
Net realized and unrealized gain (loss) on investments .260 .070 .260
.280 .160 .030 .090 .140 (.540) .760 .280
Total from investment operations .768 .201 .796 .946 .842 .719
.764 .790 .101 1.431 .410
Less Distributions
From net interest income (.508) (.131) (.536) (.666) (.682) (.689)
(.674) (.650) (.641) (.671) (.130)
From net realized gain on investments (.880) -- (.880) -- -- --
- -- -- (.070) (.050) --
Total distributions (1.388) (.131) (1.416) (.666) (.682) (.689)
(.674) (.650) (.711) (.721) (.130)
Net asset value, end of period $ 10.460 $ 11.080 $ 10.460 $ 11.080 $
10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280
TOTAL RETURN (dagger)(double dagger) 7.72% 1.37% 8.01% 9.01% 8.15%
7.04% 7.50% 7.77% .97% 14.39% 4.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 39,800 $ 1,752 $ 15,076 $ 28,428
$ 100,294 $ 111,506 $ 121,418 $ 132,443 $ 162,857 $ 161,045 $ 94,391
Ratio of expenses to average net assets .90% 1.04%* .65% .66% .61%
.62% .65% .63% .59% .58% .69%*
Ratio of expenses to average net assets before voluntary
expense limitation 1.36% 1.06%* .83% .67% .61% .62% .65% .63%
.59% .58% .69%*
Ratio of net investment income to average net assets 4.76% 5.65%* 5.01%
6.05% 6.40% 6.53% 6.45% 6.20% 6.01% 6.29% 6.33%*
Portfolio turnover rate 46% 36% 46% 36% 20% 32% 31% 24% 43% 34%
103%*

* ANNUALIZED.
** INITIAL OFFERING OF CLASS A SHARES, SEPTEMBER 15, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
As of December 31, 1993, (its fiscal year end, FIDELITY ADVISOR EMERGING
MARKETS INCOME FUND) the Fund had not commenced operations.
INVESTMENT OBJECTIVES
EQUITY FUNDS:
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by
investing primarily in securities of companies believed by FMR to involve a
"special situation."
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME seeks a yield from dividend and
interest income which exceeds the composite dividend yield on securities
comprising the Standard & Poor's 500 Composite Stock Price Index
(S&P 500).
FIXED-INCOME FUNDS:
FIDELITY ADVISOR EMERGING MARKETS INCOME FUND seeks a high level of current
income by investing primarily in debt securities and other instruments of
issuers in emerging markets. As a secondary objective, the Fund seeks
capital appreciation.
FIDELITY ADVISOR HIGH YIELD FUND seeks a combination of a high level of
income and the potential for capital gains by investing in a diversified
portfolio consisting primarily of high-yielding, fixed-income and zero
coupon securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
FIDELITY ADVISOR LIMITED TERM BOND FUND seeks to provide a high rate of
income through investment in high and upper-medium grade fixed-income
obligations. The Fund normally maintains a dollar-weighted maturity of ten
years or less.
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND seeks a high level of current
income by investing primarily in obligations issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities.
MUNICIPAL/TAX-EXEMPT FUNDS:
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND seeks to provide a high current
yield by investing in a diversified portfolio of municipal obligations
whose interest is not included in gross income for purposes of calculating
federal income tax. The Fund reserves the right to invest up to 100% of
its assets in municipal obligations subject to the federal alternative
minimum tax.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND seeks the highest level of
income exempt from federal income taxes that can be obtained consistent
with the preservation of capital, from a diversified portfolio of high
quality or upper-medium quality municipal obligations. The Fund normally
maintains a dollar-weighted maturity of ten years or less.
The investment objective of each Fund is fundamental and can only be
changed by vote of a majority of the outstanding shares of the Fund.
Except as otherwise noted, the investment limitations and policies of
Strategic Opportunities, Emerging Markets Income, Limited Term Bond,
Government Investment, High Income Municipal, and Limited Term Tax-Exempt
are fundamental and may not be changed without shareholder approval.
Except for the investment limitations and policies identified as
fundamental, the limitations and policies of Equity Portfolio Income and
High Yield, are not fundamental. Non-fundamental investment limitations
and policies may be changed without shareholder approval.
The yield, return and potential price changes of each Fund depend on the
quality and maturity of the obligations in its portfolio, as well as on
market conditions. Risks vary based on the type of fund in which you are
investing. As is the case with any investment in securities, investment in
the Funds involve certain risks and therefore a Fund may not always achieve
its investment objective. See "Investment Policies" beginning on page ___.
INVESTMENT POLICIES AND RISKS
Further information relating to the types of securities in which each Fund
may invest and the investment policies of each Fund in general are set
forth in the Appendix to this Prospectus and in each Fund's SAI.
EQUITY FUNDS. Equity Funds invest mainly in common stock and other equity
securities in search of growth or a combination of growth and income.
Their performance depends heavily on stock market conditions in the U.S.
and abroad, and can also be affected by changes in interest rates or other
economic conditions. Investments in Equity Funds are more suitable for
investors who take a long-term approach to investing.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by
investing primarily in securities of companies believed by FMR to involve a
"special situation." The term "special situation" refers to FMR's
identification of an unusual, and possibly non-repetitive, development
taking place in a company or a group of companies in an industry.
As a non-fundamental policy, the Fund normally will invest at least 65% of
its assets in companies involving a special situation. A special situation
may involve one or more of the following characteristics:
A technological advance or discovery, the offering of a new or unique
product or service, or changes in consumer demand or consumption forecasts.
Changes in the competitive outlook or growth potential of an industry or a
company within an industry, including changes in the scope or nature of
foreign competition or the development of an emerging industry.
New or changed management, or material changes in management policies or
corporate structure.
Significant economic or political occurrences abroad, including changes in
foreign or domestic import and tax laws or other regulations.
Other events, including natural disasters, favorable litigation
settlements, or a major change in demographic patterns.
In seeking capital appreciation, the Fund also may invest in securities of
companies not involving a special situation, but which are companies with
valuable fixed assets and whose securities are believed by FMR to be
undervalued in relation to the companies' assets, earnings, or growth
potential.
FMR intends to invest primarily in common stocks and securities that are
convertible into common stocks; however, it also may invest in debt
securities of all types and quality if FMR believes that investing in these
securities will result in capital appreciation. As a non-fundamental
investment policy, the Fund may invest in lower-quality, high-yielding debt
securities (commonly referred to as "junk bonds"). The Fund currently
intends to limit its investments in these securities to 35% of its assets.
The Fund also may invest in unrated securities. The Fund may invest up to
30% of its assets in foreign investments of all types and may enter into
forward foreign currency exchange contracts for the purpose of managing
exchange rate risks. The Fund may purchase or engage in indexed
securities, illiquid instruments, loans and other direct debt instruments,
options and futures contracts, repurchase agreements and securities loans,
restricted securities, swap agreements, warrants, and zero coupon bonds.
The Fund expects to be fully invested under most market conditions. The
Fund may make substantial temporary investments in high-quality debt
securities for defensive purposes when, in FMR's judgment, a more
conservative approach to investment is desirable.
An investment in the fund may be considered more speculative than an
investment in other funds that seek capital appreciation. There are
greater risks involved in investing in securities of smaller companies
rather than companies operating according to established patterns and
having longer operating histories. The Fund may invest in securities in
which other investors have not shown significant interest or confidence,
and which are subject to stock market fluctuations. Larger
well-established companies experiencing a special situation may involve, to
a certain extent, breaks with past experience, which may pose greater
risks. There are also greater risks involved in investing in securities of
companies that are not currently favored by the public but show potential
for capital appreciation.
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME seeks to obtain reasonable income
from a portfolio consisting primarily of income-producing equity
securities. The Fund seeks a yield from dividend and interest income which
exceeds the composite dividend yield on securities comprising the S&P
500. In addition, consistent with the primary objective of obtaining
reasonable income, in managing its portfolio, the Fund will consider the
potential for achieving capital appreciation.
It is the policy of the Fund that at least 65% of its total assets normally
will be invested in income-producing equity securities. For purposes of
this policy, equity securities are defined as common stocks and preferred
stocks.
The balance of the Fund will tend to be invested in debt obligations, a
high percentage of which are expected to be convertible into common stocks.
As a non-fundamental policy, the Fund may invest in lower-quality
high-yielding debt securities (commonly referred to as "junk bonds"),
although it currently intends to limit its investments in these securities
to 35% of its assets. Additionally, the Fund may purchase or engage in
foreign investments, indexed securities, illiquid investments, loans and
other direct debt instruments, futures and options, repurchase agreements
and securities loans, restricted securities, short sales, swap agreements,
and warrants.
Because of the income considerations, investors should not expect capital
appreciation comparable to the appreciation which could be achieved by
funds whose primary objective is capital appreciation. While the
investment portfolio will not mirror the stocks in the S&P 500, the
yield on the overall investment portfolio generally will increase or
decrease from year to year in accordance with market conditions and in
relation to the changes in yields of the stocks included in the S&P
500.
The Fund may make temporary investments in securities such as
investment-grade bonds or short-term notes for defensive purposes.
FIXED-INCOME FUNDS. Fixed-Income Funds invest primarily in debt securities
(e.g., bonds, debentures, notes and similar obligations). The share value
of fixed-income funds tends to move inversely with changes in prevailing
interest rates. Shorter-term bonds are less sensitive to interest rate
changes, but longer-term bonds generally offer higher yields. It also is
important to note that high-yielding, lower-quality bonds involve greater
risks, because there is a greater possibility of a financial reversal
affecting the issuer's ability to pay interest and principal on time.
Share value and yield are not guaranteed and will fluctuate based on credit
quality and changes in interest rates.
FMR will use its extensive research facilities in addition to considering
the ratings of Nationally Recognized Statistical Rating Organizations
(NRSROs) in selecting investments for the Funds. Unrated securities are
not necessarily of lower quality than rated securities, but they may not be
attractive to as many buyers. This credit analysis includes consideration
of the economic feasibility, the financial condition of the issuer with
respect to liquidity, cash flow and political developments that may affect
credit quality. Since the risk of default is higher for lower-quality
obligations, FMR's research and analysis are an integral part of choosing a
Fund's securities. Through portfolio diversification and careful credit
analysis, FMR can reduce risk, although there can be no assurance that
losses will not occur. FMR also considers trends in the economy, in
geographic areas, in various industries, and in the financial markets.
FIDELITY ADVISOR EMERGING MARKETS INCOME FUND will, under normal
conditions, invest at least 65% of its total assets in debt securities and
other instruments of issuers in emerging markets. For this purpose,
"emerging markets" will include any countries (I) having an "emerging stock
market" as defined by the International Finance Corporation; (II) with low-
to middle-income economies according to the International Bank for
Reconstruction and Development (the World Bank); or (III) listed in World
Bank publications as "developing." Currently, the countries not included in
these categories are Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand,
Norway, Spain, Sweden, Switzerland, the United Kingdom, and the U.S. For
purposes of this 65% policy, issuers whose principal activities are in
countries with emerging markets include issuers: (1) organized under the
laws of, (2) whose securities have their primary trading market in, (3)
deriving at least 50% of their revenues or profits from goods sold,
investments made, or services performed in, or (4) having at least 50% of
their assets located in a country with an emerging market.
The Fund emphasizes countries with relatively low gross national product
per capita compared to the world's major economies, and with the potential
for rapid economic growth. Many investments in emerging markets can be
considered speculative, and therefore may offer higher income potential
than the developed markets of the world.
Under current market conditions, FMR expects that emerging market
opportunities will be found mainly within Latin America, and to a lesser
extent in Africa, Asia and emerging European nations. FMR will actively
manage the allocation of the Fund's investments among countries, geographic
regions, and currency denominations in an attempt to achieve current income
and capital appreciation. In doing so, FMR will also consider such factors
as prospects for relative economic growth among countries, regions, or
geographic areas, expected levels of inflation, government policies
influencing business conditions, current and anticipated interest rates,
and the outlook for currency relationships. Although the Fund will
normally invest in at least three different countries, it is not limited to
any particular country or currency, and may invest substantially all of its
assets in any one country.
The Fund may invest in all types of fixed-income instruments, including
corporate debt securities, sovereign debt instruments issued by governments
or governmental entities, and all types of domestic and foreign money
market instruments. The Fund may invest in lower-rated, high yielding U.S.
Corporate debt securities (sometimes referred to as "junk bonds"). Many
emerging market securities are of below investment-grade quality, and at
any one time substantially all of the Fund's assets may be invested in
securities that are of poor quality or are in default.
Other investments the Fund may make or engage in include options and
futures contracts, swap agreements, indexed securities, loans and other
direct debt instruments, repurchase agreements and securities loans,
foreign repurchase agreements, illiquid investments, restricted securities,
mortgage-backed securities, asset-backed securities, delayed-delivery
transactions, and interfund borrowing. The Fund may also invest a portion
of its assets in common and preferred stocks of emerging markets issuers,
debt securities of non-emerging market foreign issuers and lower-quality
debt securities of U.S. issuers. Although the Fund may invest up to 35% of
its total assets in these securities, FMR does not currently anticipate
that these investments will exceed approximately 20% of the Fund's total
assets. Though common and preferred stocks and convertible securities
present the possibility for significant capital appreciation over the
long-term, they may fluctuate dramatically in the short-term and entail a
high degree of risk.
For cash management purposes, the Fund will ordinarily invest a portion of
its assets in high-quality, short-term debt securities and money market
instruments, including repurchase agreements and bank deposits denominated
in U.S. or foreign currencies. When, in FMR's judgment, market conditions
warrant, the Fund can make substantial temporary defensive investments in
money market instruments, U.S. government securities, or investment-grade
obligations of U.S. companies.
CONSIDERATIONS IN INVESTING IN THE SHARES OF EMERGING MARKETS INCOME FUND:
International investing in general may involve greater risks than U.S.
investments. There is generally less publicly available information about
foreign issuers, and there may be less government regulation and
supervision of foreign stock exchanges, brokers, and listed companies.
There may be difficulty in enforcing legal rights outside the U.S. Foreign
companies generally are not subject to uniform accounting, auditing, and
financial reporting standards, practices, and requirements comparable to
those that apply to U.S. companies. Security trading practices abroad may
offer less protection to investors such as the Fund. Settlement of
transactions in some foreign markets may be delayed or may be less frequent
than in the U.S., which could affect the liquidity of the Fund.
Additionally, in some foreign countries, there is the possibility of
expropriation or confiscatory taxation; limitations on the removal of
securities, property, or other assets of the Fund; political or social
instability; or diplomatic developments which could affect U.S. investments
in foreign countries. FMR will take these factors into consideration in
managing the Fund's investments.
These risks may be intensified in the case of investments in emerging
markets or countries with limited or developing capital markets. Security
prices in emerging markets can be significantly more volatile than in more
developed nations, reflecting the greater uncertainties of investing in
less established markets and economies. In particular, countries with
emerging markets may have relatively unstable governments; present the risk
of nationalization of businesses, restrictions on foreign ownership, or
prohibitions of repatriation of assets; and may have less protection of
property rights than more developed countries. The economies of countries
with emerging markets may be predominantly based on only a few industries,
may be highly vulnerable to changes in local or global trade conditions,
and may suffer from extreme and volatile debt burdens or inflation rates.
Local securities markets may trade a small number of securities and may be
unable to respond effectively to increases in trading volume, potentially
making prompt liquidation of substantial holdings difficult or impossible
at times. Securities of issuers located in countries with emerging markets
may have limited marketability and may be subject to more abrupt or erratic
price movements.
By itself, the Fund does not constitute a balanced investment plan. The
Fund is designed for aggressive investors interested in the investment
opportunities and income potential offered by securities issued in emerging
markets. The value of the Fund's investments and the income they generate
will vary from day to day, generally reflecting changes in interest rates,
market conditions, and other political and economic news. The Fund's
performance will also depend on currency values, foreign economies, and
other factors relating to foreign investments. Because the Fund focuses on
emerging markets, it involves higher risks than U.S. bond investments.
Investors should be willing to assume a greater degree of investment risk
and should expect a higher level of volatility than is generally associated
with investing in more established markets. The Fund's yield and share
price will change based on changes in domestic or foreign interest rates,
the value of foreign currencies, and issuers' creditworthiness. In
general, bond prices rise when interest rates fall, and vice versa.
The Fund is non-diversified, which means that it may invest a greater
portion of its assets in securities of a single issuer than would be the
case if it were diversified. As a result, changes in the financial
condition or market assessment of a single issuer could cause greater
fluctuation in the Fund's share value.
FIDELITY ADVISOR HIGH YIELD FUND seeks a combination of a high level of
income and the potential for capital gains by investing in a diversified
portfolio consisting primarily of high-yielding, fixed-income and zero
coupon securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
As a non-fundamental policy, the Fund normally will invest at least 65% of
its assets in high-yielding, income producing debt securities and preferred
stocks, including convertible and zero coupon securities. The Fund may
invest all or a substantial portion of its assets in lower-quality debt
securities (commonly referred to as "junk bonds"). Please refer to "Risks
of Lower-Quality Debt Securities." In addition, the Fund also may invest
in government securities, securities of any state or any of its
subdivisions, agencies or instrumentalities, and securities of foreign
issuers, including securities of foreign governments. The Fund may invest
up to 35% of its assets in equity securities, including common stocks,
warrants and rights.
Debt instruments include securities such as bonds, notes, convertible
bonds, and mortgage-backed or asset-backed securities; commercial paper and
other money market instruments, including repurchase agreements; and loans,
trade claims, and similar instruments representing indebtedness of a
corporate borrower. These instruments may provide for interest payments in
cash or in kind, may pay no interest, or may be in default, and may have
warrants attached or otherwise include rights to purchase common stocks.
The Fund may purchase debt instruments in public offerings or through
private placements. The Fund has no specific limitations on the maturity
or credit ratings of the debt instruments in which it invests.
The Fund may enter into forward contracts and may purchase or engage in
foreign investments, indexed securities, illiquid investments, loans and
other direct debt instruments, options and futures contracts, repurchase
agreements and securities loans, restricted securities, reverse repurchase
agreements, and swap agreements.
RISKS OF LOWER-QUALITY TAXABLE DEBT SECURITIES.
Lower-quality debt securities usually are defined as securities rated Ba or
lower by Moody's or BB or lower by S&P. Lower-rated debt securities
are considered speculative and involve greater risk of loss than
higher-rated debt securities, and are more sensitive to changes in the
issuer's capacity to pay. This is an aggressive approach to income
investing.
The 1980s saw a dramatic increase in the use of lower-rated debt securities
to finance highly leveraged corporate acquisitions and restructurings.
Past experience may not provide an accurate indication of the future
performance of lower-rated debt securities, especially during periods of
economic recession. In fact, from 1989 to 1991, the percentage of
lower-rated debt securities that defaulted rose significantly above prior
levels, although the default rate decreased in 1992.
Lower-rated debt securities may be thinly traded, which can adversely
affect the prices at which these securities can be sold and can result in
high transaction costs. If market quotations are not available,
lower-rated debt securities will be valued in accordance with standards set
by the Boards of Trustees, including the use of outside pricing services.
Judgment plays a greater role in valuing lower-rated debt securities than
securities for which more extensive quotations and last sale information
are available. Adverse publicity and changing investor perceptions may
affect the ability of outside pricing services to value lower-rated debt
securities, and the Fund's ability to dispose of these securities.
The market prices of lower-rated debt securities may decline significantly
in periods of general economic difficulty, which may follow periods of
rising interest rates. During an economic downturn or a prolonged period
of rising interest rates, the ability of issuers of lower-rated debt to
service their payment obligations, meet projected goals, or obtain
additional financing may be impaired.
The Fund may choose, at its own expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the interest of Fund shareholders.
The considerations discussed above for lower-rated debt securities also
apply to lower-quality, unrated debt instruments of all types, including
loans and other direct indebtedness of businesses with poor credit
standing. Unrated debt instruments are not necessarily of lower-quality
than rated securities, but they may not be attractive to as many buyers.
The Fund relies more on FMR's credit analysis when investing in debt
instruments that are unrated. Please refer to pages __ and __ for a
discussion of Moody's and S&P ratings.
FIDELITY ADVISOR LIMITED TERM BOND FUND seeks to provide a high rate of
income through investment in high- and upper-medium grade fixed-income
obligations, as follows:
(I) Corporate obligations which are rated AAA, AA, or A by S&P, or Aaa,
Aa, or A by Moody's;
(II) Obligations issued or guaranteed as to interest and principal by the
government of the U.S., or any agency or instrumentality thereof;
(III) Obligations (including certificates of deposit and bankers'
acceptances) of U.S. banks which at the date of investment have capital
gains, surplus, and undivided profits (as of the date of their most
recently published annual financial statements) in excess of $100,000,000;
(IV) Commercial paper which at the date of investment is rated A-1 or A-2
by S&P or Prime-1 or Prime-2 by Moody's or, if not rated, is issued by
companies which at the date of investment have an outstanding debt issue
rated AAA, AA, or A by S&P or Aaa, Aa, or A by Moody's; and
(V) Such other fixed-income instruments as the Board of Trustees, in its
judgment, deems to be of comparable quality to those enumerated above.
Instruments in which the Fund may invest include asset-backed securities,
collateralized mortgage obligations, convertible securities, loans and
other direct debt instruments, mortgage-backed securities, and zero coupon
bonds.
FMR's standards for determining high- and upper-medium grades are
essentially the same as those described by S&P and Moody's as
characteristic of their ratings of A and above. Such instruments have
strong protection of principal and interest payments. In addition to
reliance on S&P's or Moody's ratings, FMR also performs its own credit
analysis. The Fund also may invest in unrated instruments, and may at
times purchase instruments rated below A if FMR judges them to be of
comparable quality to those rated A or better. Currently, the Fund does
not intend to invest in debt obligations rated below BBB. Investment-grade
bonds are generally of medium to high quality. Those rated in the lower
end of the category (Baa/BBB), however, may possess speculative
characteristics and may be more sensitive to economic changes and changes
in the financial condition of issues.
In addition, the Fund may seek capital appreciation when consistent with
its primary objective. In seeking capital appreciation, FMR will select
securities for the Fund based on its judgment as to economic and market
conditions and the prospects for interest rate changes.
The Fund may purchase or engage in foreign investments, indexed securities,
illiquid investments, options and futures contracts, repurchase agreements
and securities loans, restricted securities, and swap agreements. The Fund
also may engage in reverse repurchase agreements for temporary or emergency
purposes and not for investment purposes.
The Fund will maintain a dollar-weighted average maturity of 10 years or
less. As of November 30, 1993, its average maturity was 8.12 years. Based
on FMR's assessment of interest rate trends, generally, the average
maturity will be shortened when interest rates are expected to rise and
lengthened up to 10 years when interest rates are expected to decline.
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND seeks a high level of current
income by investing primarily in obligations issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities. Under normal
circumstances, as a non-fundamental policy at least 65% of the Fund's
assets will be invested in government securities.
The Fund invests primarily in obligations issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities (U.S. government
securities), including U.S. Treasury bonds, notes and bills, Government
National Mortgage Association mortgage-backed pass-through certificates
(Ginnie Maes) and mortgage-backed securities issued by the Federal National
Mortgage Association (Fannie Maes) or the Federal Home Loan Mortgage
Corporation (Freddie Macs). The U.S. government securities the Fund
invests in may or may not be fully backed by the U.S. government. The Fund
may enter into repurchase agreements involving any securities in which it
may invest and also may enter into reverse repurchase agreements. The Fund
considers "government securities" to include U.S. government securities
subject to repurchase agreements. The Fund is not restricted as to the
percentage of its assets that may be invested in any one type of U.S.
government security. The Fund may for temporary defensive purposes invest
without limit in U.S. government securities having a maturity of 365 days
or less. The Fund may invest in delayed-delivery transactions, options and
futures contracts, indexed securities, swap agreements and zero coupon
bonds. In seeking current income, the Fund also may consider the potential
for capital gain.
MUNICIPAL/TAX-EXEMPT FUNDS. Tax-Exempt Funds invest primarily in municipal
securities which are issued by state and local governments and their
agencies to raise money for various public purposes, including general
purpose financing for state and local governments as well as financing for
specific projects or public facilities. Municipal securities may be backed
by the full taxing power of a municipality or by the revenues from a
specific project or the credit of a private organization. Some municipal
securities are insured by private insurance companies, while others may be
supported by letters of credit furnished by domestic or foreign banks. FMR
monitors the financial condition of parties (including insurance companies,
banks, and corporations) whose creditworthiness is relied upon in
determining the credit quality of securities the Funds may purchase.
Yields on municipal bonds, and therefore the yield of High Income Municipal
and Limited Term Tax-Exempt, depend on factors such as general market
conditions, interest rates, the size of a particular offering, the
maturities of the obligations and the quality of the issues. The ability
of the Funds to achieve their investment objectives is also dependent on
the continuing ability of the issuers of the municipal obligations in which
the Funds invest to meet their obligations for the payment of interest and
principal when due.
Bonds generally are considered to be interest rate sensitive, which means
that their values move inversely to interest rates. Long-term municipal
bonds generally are more exposed to market fluctuations resulting from
changes in interest rates than are short-term municipal bonds.
While the market for municipals is considered to be substantial, adverse
publicity and changing investor perceptions may affect the ability of
outside pricing services used by a Fund to value its portfolio securities
and the Fund's ability to dispose of lower-rated bonds. The outside
pricing services are consistently monitored to assure that securities are
valued by a method that the Board believes accurately reflects fair value.
The impact of changing investor perceptions may be especially pronounced in
markets where municipal securities are thinly traded.
The Funds' investments in municipal securities may include fixed, variable,
or floating rate general obligation and revenue bonds (including municipal
lease obligations and resource recovery bonds); zero coupon and
asset-backed securities; inverse floaters; tax, revenue, or bond
anticipation notes; and tax-exempt commercial paper. The Funds may buy or
sell securities on a when-issued or delayed-delivery basis (including
refunding contracts), and may purchase restricted securities. The Funds
may also buy and sell options and futures contracts.
Municipal obligations, including industrial development revenue bonds, are
issued by or on behalf of states, territories, and possessions of the U.S.
and the District of Columbia and their political subdivisions, agencies,
and instrumentalities.
Each Fund may from time to time invest more than 25% of its total assets in
securities whose revenue sources are from similar types of projects (e.g.,
education, electric utilities, health care, housing, transportation, or
water, sewer and gas utilities) or whose issuers share the same geographic
location. As a result, a Fund may be more susceptible to a single
economic, political or regulatory development than would a portfolio of
bonds with a greater variety of issuers. These developments include
proposed legislation or pending court decisions affecting the financing of
such projects and market factors affecting the demand for their services or
products.
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND seeks to provide a high current
yield by investing in a diversified portfolio of municipal obligations. It
is the policy of the Fund that under normal conditions at least 80% of its
net assets will be invested in municipal obligations whose interest is not
included in gross income for purposes of calculating federal income tax.
Interest from all or a portion of the Fund's municipal bonds may be a "tax
preference" item for some shareholders in determining their federal
alternative minimum tax. Stability and growth of principal also will be
considered when choosing securities.
Interest on some "private activity" municipal obligations is subject to the
federal alternative minimum tax AMT bonds. AMT bonds are municipal
obligations that benefit a private or industrial user or finance a private
facility. The Fund reserves the right to invest up to 100% of its assets
in AMT bonds.
The Fund may invest in municipal obligations which are rated in the medium
and lower rating categories of NRSROs (such as obligations rated Caa by
Moody's or CCC by S&P) or which are unrated, but judged by FMR,
pursuant to procedures established by the Board of Trustees, to meet the
quality standards of the Fund. Municipal obligations which are in the
medium and lower rating categories or which are unrated generally offer a
higher current yield than those offered by municipal obligations which are
in the higher rating categories. Since available yields and the yield
differential between higher and lower-rated obligations vary over time, no
specific level of income or yield differential can be assured. Lower-rated
bonds (those rated Ba/BB or lower) involve greater risk, including risk of
default.
The Fund also may purchase tax-exempt instruments that become available in
the future as long as FMR believes that their quality is equivalent to
those rated Caa or CCC or better by Moody's or S&P, respectively.
The Fund's yield depends in part on the quality of its investments.
Obligations rated investment grade or better (Baa/BBB or higher) generally
are of medium to high quality. These securities typically have moderate to
poor protection of principal and interest payments and have speculative
characteristics. Unrated obligations may be either investment grade or
lower quality, but usually are not attractive to as many buyers.
The Fund relies heavily on FMR's credit analysis when purchasing unrated or
lower-rated bonds. While lower-rated bonds traditionally have been less
sensitive to interest rate changes than higher-rated investments, as with
all bonds, the prices of lower-rated bonds will be affected by interest
rate changes. Economic changes may affect lower-rated securities
differently than other securities. Lower-rated municipal bonds may be more
sensitive to adverse economic changes (including recession) in specific
regions or localities or among specific types of issuers. During an
economic downturn or a prolonged period of rising interest rates, issuers
of lower-rated debt may have problems servicing their debt, meeting
projected revenue goals, or obtaining additional financing. Periods of
economic uncertainty and interest rate changes may cause market price
volatility for lower-rated bonds and corresponding volatility in the Fund's
share price.
During periods when, in FMR's opinion, a temporary defensive posture in the
market is appropriate, the Fund may invest without limitation in cash or in
obligations whose interest payments may be federally taxable. Taxable
obligations include, but are not limited to, certificates of deposit,
commercial paper, obligations issued by the U.S. government or any of its
agencies or instrumentalities, and repurchase agreements.
The Fund may purchase long-term municipals with maturities of 20 years or
more, which generally produce higher yields than short-term municipals.
The Fund also may purchase short-term municipal obligations in order to
provide for short-term capital needs. The average maturity of the Fund is
currently expected to be greater than 20 years. Since the Fund's objective
is to provide a high current yield, the Fund will purchase municipals with
an emphasis on income. FMR may vary the Fund's average maturity depending
on anticipated market conditions. Generally, the average maturity will be
shortened when interest rates are expected to rise and lengthened when
rates are expected to decline.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND seeks the highest level of
income exempt from federal income taxes that can be obtained consistent
with the preservation of capital, from a diversified portfolio of high
quality or upper-medium quality municipal obligations. Under normal
conditions, at least 80% of the Fund's annual income will be exempt from
federal income taxes and at least 80% of the Fund's net assets will be
invested in obligations having remaining maturities of 15 years or less.
The Fund will maintain a dollar-weighted average maturity of 10 years or
less.
The Fund will invest in municipal obligations which, in the judgment of
FMR, are high quality or at least upper-medium quality. The Fund's
standards for high quality and upper-medium quality obligations are
essentially the same as those described by Moody's in rating municipal
obligations within its three highest ratings of Aaa, Aa, and A and as those
described by S&P in rating such obligations within its three highest
ratings of AAA, AA and A. As a non-fundamental policy, the Fund will not
purchase a security rated by Moody's or S&P unless it has received at
least an A rating from either rating service.
The Fund may invest up to 20% of its total assets in municipal obligations
which are unrated by Moody's or S&P if, in the judgment of FMR, such
municipal obligations meet the standards of quality as set forth above.
Unrated bonds are not necessarily of lower quality and may have higher
yields than rated bonds, but the market for rated bonds is usually broader.
The Fund may engage in delayed delivery transactions and may purchase
restricted securities. The Fund also may purchase and sell futures
contracts and may purchase and write put and call options. The Fund may
invest up to 25% of its total assets in a single issuer's securities.
The Fund may invest any portion of its assets in industrial revenue bonds
(IRBs) backed by private issuers, and may invest up to 25% of its total
assets in IRBs related to a single industry.
The Fund currently does not intend to invest in taxable obligations;
however, consistent with that portion of its investment objective concerned
with the preservation of capital, from time to time the Fund may invest a
portion (normally not to exceed 20%) of its net assets on a temporary basis
in fixed-income obligations whose interest is subject to federal income
tax. These taxable obligations may include repurchase agreements. The
Fund does not currently intend to invest in AMT bonds.
INVESTMENT LIMITATIONS
Each Fund has adopted the following investment limitations designed to
reduce investment risk. The policies and limitations discussed below, and
in the Appendix beginning on page __, are considered at the time of
purchase. With the exception of each Fund's borrowing policy, the sale of
portfolio securities is not required in the event of a subsequent change in
circumstances.
DIVERSIFICATION: These limitations do not apply to U.S. government
securities and are fundamental.
Strategic Opportunities may not purchase a security if, as a result, more
than 5% of its total assets would be invested in the securities of any
issuer;
With respect to 75% of its total assets, each other Fund may not purchase
a security if, as a result, more than 5% of its total assets would be
invested in the securities of any issuer.
Each Fund may not purchase a security if, as a result, it would hold more
than 10% of the outstanding voting securities of any issuer (except that
Equity Portfolio Income, High Yield, and Government Investment, each may
invest up to 25% of its total assets without regard to this limitation).
Limited Term Tax-Exempt may not purchase the securities of any issuer if,
as a result, more than 25% of its total assets would be invested in
industrial development bonds whose issuers are in any one industry.
Emerging Markets is considered non-diversified. To meet quarterly federal
tax requirements for qualification as a "regulated investment company," the
Fund limits its investments so that: (A) no more than 25% of its total
assets are invested in the securities of a single issuer, and (B) with
respect to at least 50% of its total assets, no more than 5% of total
assets are invested in the securities of a single issuer. These
limitations do not apply to U.S. government securities.
Each other Fund may not purchase the securities of any issuer if, as a
result, more than 25% of the Fund's total assets would be invested in the
securities of issuers having their principal business activities in the
same industry.
BORROWING: The following limitations are fundamental.
Each fund may borrow money for temporary or emergency purposes, in an
amount not exceeding 33 1/3% of the value of its total assets;
STRATEGIC OPPORTUNITIES
Strategic Opportunities, Limited Term Bond, and Limited Term Tax-Exempt
may not purchase any security while borrowings representing more than 5% of
its total assets are outstanding.
Government Investment and High Income Municipal may not purchase any
security while borrowings representing more than 5% of its net assets are
outstanding.
The following limitations are non-fundamental.
Each other Fund may not purchase any security while borrowings
representing more than 5% of its total assets are outstanding.
Each Fund may borrow money from banks or from other funds advised by FMR,
or by engaging in reverse repurchase agreements.
LENDING: Percentage limitations are fundamental.
High Income Municipal and Limited Term Tax-Exempt do not currently intend
to engage in repurchase agreements or make loans (but this limitation does
not apply to purchases of debt securities).
Each fund (a) may lend securities to a broker-dealer or institution when
the loan is fully collateralized; and (b) may lend money to a mutual fund
advised by FMR or an affiliate. Each Fund will limit loans in the
aggregate to 33 1/3% of its total assets.
Each Fund has received permission from the SEC to lend money to and borrow
money from other funds advised by FMR or its affiliates, High Income
Municipal and Limited Term Tax-Exempt will participate only as borrowers.
If a Fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off. To this extent, purchasing
securities when borrowings are outstanding may involve an element of
leverage.
As a non-fundamental policy, each Fund may not purchase a security, if as a
result, more than 15% (High Yield) or 10% (all others) of its assets would
be invested in illiquid investments.
HOW TO BUY SHARES
Class B shares of each Fund are offered continuously to investors who
engage an investment professional for investment advice and may be
purchased at the net asset value per share (NAV) next determined after the
transfer agent receives your order to purchase. Securities dealers and
banks (investment professionals), with which Distributors has Agreements,
receive as compensation from Distributors a concession equal to 3% of your
purchase. Fidelity Investments Institutional Operations Company (FIIOC)
(the Transfer Agent), ZR5, P.O. Box 1182, Boston, MA 02103-1182, provides
transfer and dividend paying services for each Fund.
The Class B shares are offered at NAV without an initial a sales charge.
Class B shares may be subject to a CDSC upon redemption. For more
information on how the CDSC is calculated, see "How to Sell Shares," page
_____.
You can open an account with a minimum initial investment of $2,500 or more
by completing and returning an account application. You can make
additional investments of $250 or more. The maximum purchase amounts of
$250,000 or more will not be accepted for Class B shares of the Funds. For
tax-deferred retirement plans, including IRA accounts, there is a $500
minimum initial investment and a $100 subsequent investment minimum. For
accounts established under the Fidelity Advisor Systematic Investment
Program or the Fidelity Advisor Systematic Exchange Program, there is a
$1,000 initial and $100 monthly subsequent investment minimum requirement.
For further information on opening an account, please consult your
investment professional or refer to the account application.
It is the responsibility of your investment professional to transmit your
order to purchase Class B shares to the Transfer Agent before 4:00 p.m.
Eastern time in order for you to receive that day's share price. The
Transfer Agent must receive payment within five business days after an
order is placed; otherwise, the purchase order may be canceled and you
could be held liable for resulting fees and/or losses.
All of your purchases must be made in U.S. dollars and checks must be drawn
on U.S. banks. Each Fund reserves the right to limit the number of your
checks processed at one time. If your check does not clear, the Fund may
cancel your purchase and you could be held liable for any fees and/or
losses incurred. When you purchase directly by check, the Fund can hold
the proceeds of redemptions until the Transfer Agent is reasonably
satisfied that the purchase payment has been collected (which can take up
to seven calendar days). You may avoid a delay in receiving redemption
proceeds by purchasing shares with a certified check. Class B shares of
the fixed-income funds purchased through investment professionals utilizing
an automated order placement and settlement system that guarantees payment
for orders on a specified date, begin to earn income dividends on that
date. Direct purchases and all other orders begin to earn dividends on the
business day after the Fund receives payment.
Each Fund and Distributors reserve the right to suspend the offering of
Class B shares for a period of time and to reject any order for the
purchase of shares, including certain purchases by exchange (see "How to
Exchange,'' page ___).
MINIMUM ACCOUNT BALANCE. You must maintain an account balance of $1000.
If your account falls below $1000 due to redemption, the Transfer Agent may
close it at the NAV next determined on the day your account is closed and
mail you the proceeds at the address shown on the Transfer Agent's records.
The Transfer Agent will give you 30 days' notice that your account will be
closed unless you make an investment to increase your account balance to
the $1,000 minimum. The minimum account balance does not apply to IRA
accounts.
INVESTOR SERVICES
You may initiate many transactions by telephone. Note that the Transfer
Agent will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the
identity of the caller. The Transfer Agent will request personalized
security codes or other information, and may also record calls. You should
verify the accuracy of your confirmation statements immediately after you
receive them. If you do not want the ability to redeem and exchange by
telephone, call the Transfer Agent for instructions.
QUANTITY DISCOUNTS. For Class A shares, reduced front-end sales charges
are applicable to purchases of $50,000 or more ($1,000,000 or more for
Fidelity Advisor Short Fixed-Income Fund or Fidelity Advisor
Short-Intermediate Tax-Exempt Fund). Your purchases and/or existing
balances of Class B shares may be included for purposes of qualifying for a
Class A front-end sales charge reduction in the following programs.
COMBINED PURCHASES. When you invest in a Fund for a several accounts at
the same time, you may combine these investments into a single transaction
to qualify for a quantity discount, if purchased through one investment
professional and if the total is at least $50,000 ($1,000,000 for Fidelity
Advisor Short Fixed-Income Fund or Fidelity Advisor Short-Intermediate
Tax-Exempt Fund).
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
front-end sales charges on any future purchases of Class A shares. You can
add the value of currently held Class A and Class B shares of Fidelity
Advisor Funds, Initial shares and Class B shares of Daily Money Fund and
shares of Daily Tax-Exempt Money Fund ACQUIRED BY EXCHANGE FROM ANY
FIDELITY ADVISOR FUND, determined at the current day's NAV at the close of
business, to the amount of your new purchase valued at the current offering
price, to determine your reduced sales charge.
LETTER OF INTENT. You may qualify for reduced front-end sales charges on
purchases of Class A shares made within a 13-month period by filing a
non-binding Letter of Intent (the Letter) to purchase at least $50,000
($1,000,000 for Fidelity Advisor Short Fixed Income Fund and Fidelity
Advisor Short Intermediate Tax-Exempt Fund). You may include, as an
accumulation credit toward the completion of the Letter, the value of all
Class A and Class B shares held in Fidelity Advisor Funds, and the value of
Initial shares and Class B shares of Daily Money Fund and shares of Daily
Tax Exempt Money Fund ACQUIRED BY EXCHANGE FROM ANY FIDELITY ADVISOR FUND.
FOR MORE INFORMATION ON THE TERMS OF QUANTITY DISCOUNTS, PLEASE CONSULT
YOUR INVESTMENT PROFESSIONAL.
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM. You can make regular
investments in a Fidelity Advisor Fund with the Systematic Investment
Program by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly by
automatically deducting $100 or more from your bank checking account. You
may change the amount of your monthly purchase at any time. There is a
$1,000 minimum initial investment requirement for the Systematic Investment
Program. Class B shares will be purchased at the offering price next
determined following receipt of the investment by the Transfer Agent. You
may cancel the Systematic Investment Program at any time without payment of
a cancellation fee. You will receive a confirmation from the Transfer
Agent for every transaction, and a debit entry will appear on your bank
statement.
SHAREHOLDER COMMUNICATIONS
The Transfer Agent or your investment professional will send you a
confirmation after every transaction that affects your share balance or
account registration. In addition, a consolidated statement will be
provided at least quarterly. At least twice a year each shareholder will
receive the Fund's financial statements, with a summary of its portfolio
composition and performance. To reduce expenses, only one copy of most
shareholder reports (such as a Fund's Annual Report) will be mailed to each
shareholder address. Please write to the Transfer Agent or contact your
investment professional if you need to have additional reports sent each
time.
A Fund pays for these shareholder communications, but not for special
services that are required by a few shareholders, such as a request for a
historical transcript of an account. You may be required to pay a fee for
such special services. If you are purchasing Class B shares of a Fund
through a program of administrative services offered by an investment
professional, you should read the additional materials pertaining to that
program in conjunction with this prospectus. Certain features of a Fund,
such as the minimum initial or subsequent investment, may be modified in
these programs, and administrative charges may be imposed for the services
rendered.
HOW TO EXCHANGE
An exchange is the redemption of Class B shares of one Fund and the
purchase of Class B shares of another Fund, each at the next determined
NAV. A CDSC WILL NOT APPLY TO CLASS B SHARES REDEEMED BY EXCHANGE, AND THE
APPLICABLE CDSC FOR EXCHANGED CLASS B SHARES WILL BE BASED ON THE DATE OF
THE CLASS B SHARES INITIALLY PURCHASED. The exchange privilege is a
convenient way to sell and buy Class B shares of other Fidelity Advisor
Funds and of Daily Money Fund: U.S. Treasury Portfolio (DMF: Treasury)
registered in your state.
To protect each Fund's performance and shareholders, FMR discourages
frequent trading in response to short-term market fluctuations. The Funds
reserve the right to refuse exchange purchases by any person or group if,
in FMR's opinion, a Fund would be unable to invest effectively in
accordance with its investment objective and policies, or would otherwise
be affected adversely. Your exchanges may be restricted or refused if a
Fund receives or anticipates simultaneous orders affecting significant
portions of a Fund's assets. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to a Fund.
Exchange restrictions may be imposed at any time. The Funds may modify or
terminate the exchange privilege. The exchange limit may be modified for
certain institutional retirement plans.
Exchange instructions may be given by you in writing or by telephone
directly to the Transfer Agent or through your investment professional. FOR
MORE INFORMATION ON ENTERING AN EXCHANGE TRANSACTION, PLEASE CONSULT YOUR
INVESTMENT PROFESSIONAL.
Before you make an exchange:
1. Read the prospectus of the Fund into which you want to exchange.
2. Class B shares may be exchanged only into Class B shares of another
Fidelity Advisor Fund or DMF: Treasury, seven calendar days after purchase
at NAV.
3. You may exchange only between accounts that are registered in the same
name, address, and taxpayer identification number.
4. You may make four exchanges out of a Fund per calendar year. If you
exceed this limit, your future purchases of (including exchanges into)
Fidelity Advisor Funds may be permanently refused. For purposes of the
four exchange limit, accounts under common ownership or control, including
accounts having the same taxpayer identification number, will be
aggregated. Systematic exchanges are not subject to this four exchange
limit (see following section).
5. Taxes: The exchange of shares is considered a sale and may be taxable.
The Transfer Agent will send you or your investment professional a
confirmation of each exchange transaction.
FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM. You can exchange a specific
dollar amount of Class B shares from a Fund into Class B shares of another
Fidelity Advisor Fund or DMF: Treasury on a monthly, quarterly or
semiannual basis under the following conditions:
1. The account from which the exchanges are to be processed must have a
minimum balance of $10,000.
2. The account into which the exchanges are to be processed must be an
existing account with a minimum balance of $1,000.
3. Both accounts must have identical registrations and taxpayer
identification numbers. The minimum amount that can be exchanged
systematically into a Fund is $100.
4. Systematic Exchanges will be processed at the NAV determined on the
transaction date.
HOW TO SELL SHARES
You may sell (redeem) all or a portion of your Class B shares on any day
the New York Stock Exchange (NYSE) is open at the NAV next determined after
the Transfer Agent receives your request to sell, minus any applicable CDSC
(see below). Orders to sell may be placed by you in writing or by
telephone or through your investment professional. Orders to sell received
by the Transfer Agent before 4:00 p.m. Eastern time will be priced at that
day's share price. For orders to sell placed through your investment
professional, it is the investment professional's responsibility to
transmit such orders to the Transfer Agent by 4:00 p.m. Eastern time for
you to receive that day's share price.
Once your Class B shares are redeemed, a Fund normally will send the
proceeds on the next business day to the address of record. If making
immediate payment could adversely affect the Fund, the Fund may take up to
seven days to pay you. A Fund may withhold redemption proceeds until it is
reasonably satisfied that it has collected investments that were made by
check (which can take up to seven calendar days).
When the NYSE is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any
emergency circumstances as determined by the SEC to merit such action, a
Fund may suspend redemption or postpone payment dates for more than seven
days. The Transfer Agent requires additional documentation to sell Class B
shares registered in the name of a corporation, agent or fiduciary or a
surviving joint owner. Call 1-800-221-5207 for specific requirements.
REDEMPTION REQUESTS BY TELEPHONE:
TO RECEIVE A CHECK. You may sell Class B shares of a Fund having a value
of $100,000 or less from your account by calling the Transfer Agent.
Redemption proceeds must be sent to the address of record listed on the
account, and a change of address must not have occurred within the
preceding 60 days.
TO RECEIVE A WIRE. You may sell Class B shares of a Fund and have the
proceeds wired to a pre-designated bank account. Wires will generally be
sent the next business day following the redemption of Class B shares from
your account.
Telephone redemptions cannot be processed for Fidelity Advisor Fund
prototype retirement accounts where State Street Bank and Trust Company is
the custodian.
REDEMPTION REQUESTS IN WRITING. For your protection, if you sell Class B
shares of a Fund having a value of more than $100,000, or if you are
sending the proceeds of a redemption of any amount to an address other than
the address of record listed on the account, or if you have requested a
change of address within the preceding 60 days, or if you wish to have the
proceeds wired to a non-predesignated bank account, you must send a letter
of instruction signed by all registered owners with signature(s) guaranteed
to the Transfer Agent. A signature guarantee is a widely recognized way to
protect you by guaranteeing the signature on your request; it may not be
provided by a notary public. Signature guarantee(s) will be accepted from
banks, brokers, dealers, municipal securities dealers, municipal securities
brokers, government securities dealers, government securities brokers,
credit unions (if authorized under state law), national securities
exchanges, registered securities associations, clearing agencies and
savings associations.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your shares of a
Fund you may reinvest an amount equal to all or a portion of the redemption
proceeds in Class B shares of the Fund or Class B shares of any of the
other Fidelity Advisor Funds, at the NAV next determined after receipt of
your investment order, provided that such reinvestment is made within 30
days of redemption. Under these circumstances, the dollar amount of the
CDSC you paid will be reimbursed to you by reinvesting that amount in Class
B shares. You must reinstate your shares into an account with the same
registration. This privilege may be exercised only once by a shareholder
with respect to a Fund and certain restrictions may apply. For purposes of
the CDSC schedule, the holding period of the Class B shares will continue
as if the Class B shares had not been redeemed.
CONTINGENT DEFERRED SALES CHARGE. Class B shares may, upon redemption, be
assessed a CDSC based on the following schedule:
CONTINGENT DEFERRED
FROM DATE OF PURCHASE SALES CHARGE
Less than 1 year 4%
1 year to less than 3 years 3%
3 years to less than 4 years 2%
4 years to less than 5 years 1%
5 years to less than 6 years* 0%
*After a maximum holding period of 6 years, Class B shares will convert
automatically to Class A shares of the same Fidelity Advisor Fund. See
"Conversion Feature" below for more information.
The CDSC will be calculated based on the lesser of the value of Class B
shares at the initial date of purchase or on the value of Class B shares at
redemption, not including any reinvested dividends or capital gains. In
determining the applicability and rate of any CDSC at redemption, Class B
shares representing reinvested dividends and capital gains, if any, will be
redeemed first, followed by Class B shares that have been held for the
longest period of time.
CONVERSION FEATURE. After a maximum holding period of 6 years from the
initial date of purchase, Class B shares convert automatically to Class A
shares of the same Fidelity Advisor Fund. Conversion to Class A shares
will be made at NAV. At the time of conversion, a portion of the Class B
shares purchased through the reinvestment of dividends or capital gains
(Dividend Shares) will also convert to Class A shares. The portion of
Dividend Shares that will convert is determined by the ratio that your
Class B non-Dividend Shares converting bear to your total Class B
non-Dividend Shares. (A portion of Class B shares that had been acquired by
exchange also may convert, representing the appreciated value and/or
reinvested dividends or capital gains applicable to Class B shares prior to
their exchange into a Fund.)
CONTINGENT DEFERRED SALES CHARGE WAIVERS. The CDSC may be waived (I) in
cases of disability or death, provided that the redemption is made within
one year following the death or initial determination of disability, or
(II) in connection with a total or partial redemption made in connection
with certain distributions from retirement plans or accounts.
FOR MORE INFORMATION ABOUT THE CDSC, INCLUDING THE CONVERSION FEATURE AND
THE PERMITTED CIRCUMSTANCES FOR CDSC WAIVERS, CONTACT YOUR INVESTMENT
PROFESSIONAL.
DISTRIBUTION OPTIONS
When you fill out your account application, you can choose from four
Distribution Options:
1. Reinvestment Option. Dividends and capital gain distributions will be
automatically reinvested in additional Class B shares of a Fund. If you do
not indicate a choice on your account application, you will be assigned
this option.
2. Income-Earned Option. Capital gain distributions will be automatically
reinvested, but a check will be sent for each dividend distribution.
3. Cash Option. A check will be sent for each dividend and capital gain
distribution.
4. Directed Dividends Program. Dividends and capital gain distributions
will be automatically invested in Class b shares of another identically
registered Fidelity Advisor Fund.
You may change your Distribution Option at any time by notifying the
Transfer Agent in writing. Distribution checks for fixed-income funds will
be mailed no later than seven days after the last day of the month. On the
day a Fund goes ex-dividend, the amount of the distribution is deducted
from its share price. Reinvestment of distributions will be made at that
day's NAV. If you select option 2 or 3 and the U.S. Postal Service cannot
deliver your checks, or if your checks remain uncashed for six months,
distribution checks will be reinvested in your account at the current NAV
and your election may be converted to the Reinvestment Option. Class B
Shares acquired through distributions will not be subject to a CDSC.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. The Funds distribute substantially all of their net
investment income and capital gains, if any, to shareholders each year
pursuant to the following schedule. Each Fund may pay capital gains in
December. In addition, Equity Portfolio Income, Limited Term Bond and
Limited Term Tax-Exempt may pay capital gains in January as well. Emerging
Markets Income may pay in February.
Emerging Markets Income, High Yield, Limited Term Bond, Government
Investment, High Income Municipal, and Limited Term Tax-Exempt declare
dividends daily and pay monthly; and Equity Portfolio Income declare
dividends in March, June, September, and December and pay the following
month.
CAPITAL GAINS. You may realize a gain or loss when you sell (redeem) or
exchange shares. For most types of accounts, a Fund will report the
proceeds of your redemption's to you and the IRS annually. However,
because the tax treatment also depends on your purchase price and your
personal tax position, YOU SHOULD KEEP YOUR REGULAR ACCOUNT STATEMENTS TO
USE IN DETERMINING YOUR TAX.
"BUYING A DIVIDEND." On the record date for a distribution from a Fund, the
Fund's share price is reduced by the amount of the distribution. If you buy
shares just before the record date (buying a dividend), you will pay the
full price for the shares, and then receive a portion of the price back as
a taxable distribution.
FEDERAL TAXES. Distributions from each Fund's income and short-term
capital gains are taxed as dividends, and long-term capital gain
distributions are taxed as long-term capital gains. Gains on the sale of
tax-free bonds results in a taxable distribution. Short-term capital gains
and a portion of the gain on bonds purchased at a discount are taxed as
dividends. Distributions are taxable when they are paid, whether you take
them in cash or reinvest them in additional shares, except that
distributions declared in December and paid in January are taxable as if
paid on December 31. Each Fund will send you a tax statement by January
31 showing the tax status of the distributions you received in the past
year. A copy will be filed with the Internal Revenue Service (IRS).
High Income Municipal and Limited Term Tax-Exempt may each invest in
municipal obligations whose interest is subject to the federal alternative
minimum tax for individuals (AMT bonds) to the extent that the Fund's
invest in AMT bonds, individuals who are subject to the AMT will be
required to report a portion of the Fund's dividends as a "tax-preference
item" in determining their federal tax. Federally tax-free interest earned
by the Funds is federally tax-free when distributed as income dividends.
During the most recent fiscal year ended, 100% of the income dividends for
High Income Municipal and Limited Term Tax-Exempt were free from federal
tax. If the Funds earn taxable income from any of their investments, it
will be distributed as a taxable dividend. Some of the Funds may be
eligible for the dividends-received deduction for corporations.
If a Fund has paid withholding or other taxes to foreign governments during
the year, the taxes will reduce the Fund's dividends but will be included
in the taxable income reported on your tax statement. You may be able to
claim an offsetting tax credit or itemized deduction for foreign taxes paid
by a Fund. Your tax statement will show the amount of foreign tax for which
a credit or deduction may be available.
STATE AND LOCAL TAXES. Mutual fund dividends from most U.S. government
securities generally are free from state and local income taxes. However,
certain types of securities, such as repurchase agreements and certain
agency-backed securities, may not qualify for the government interest
exemption on a state-by-state basis. GNMA and other mortgage backed
securities are other notable exceptions in many states. Some states may
impose intangible property taxes. You should consult your own tax advisor
for details and up-to-date information on the tax laws in your state.
OTHER TAX INFORMATION. In addition to federal taxes, you may be subject to
state or local taxes on your investment, depending on the laws in your
area. Because some states exempt their own municipal obligations from tax,
you will receive tax information each year showing how High Income
Municipal and Limited Term Tax-Exempt allocated their investments by state.
When you sign your account application, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a Fund to
withhold 31% of your taxable distributions and redemptions.
FEES
MANAGEMENT AND OTHER SERVICES. For managing its investments and business
affairs, each Fund pays a monthly fee to FMR.
Each Fund (with the exception of Equity Portfolio Income, see below) pays a
monthly fee to FMR based on a basic fee rate, which is the sum of two
components:
1. A group fee rate based on the monthly average net assets of all of the
mutual funds advised by FMR. This rate for Equity Funds cannot rise above
.52% and it drops (to as low as a marginal rate of .31%*) as total assets
in all of these funds rise. The effective Equity Fund group fee rate for
September 1993, October 1993 and November 1993 was .3262%, .3254% and
.3250%, respectively. The group fee rate for Fixed-Income Funds cannot rise
above .37% and it drops (to as low as a marginal rate of .15%*) as total
assets in all of these funds rise. The effective Fixed-Income group fee
rate for October 1993 and November 1993 was .1631% and .1627%,
respectively.
2. An individual fund fee rate, which varies for each Fund.
* FMR VOLUNTARILY AGREED TO ADOPT REVISED GROUP FEE RATE SCHEDULES WHICH
PROVIDE FOR A MARGINAL RATE AS LOW AS
.285% (EQUITY FUNDS) AND .1325% (FIXED-INCOME FUNDS) WHEN AVERAGE GROUP NET
ASSETS EXCEED $336 BILLION. (THE MANAGEMENT CONTRACT FOR EMERGING MARKETS
INCOME CONTAINS THE REVISED GROUP FEE RATE SCHEDULE.) A NEW MANAGEMENT
CONTRACT WITH A REVISED GROUP FEE RATE SCHEDULE WILL BE PRESENTED FOR
APPROVAL AT EACH FUND'S NEXT SHAREHOLDER MEETING.
One-twelfth of the annual management fee rate is applied to each Fund's net
assets averaged over the most recent month, giving a dollar amount which is
the management fee for that month.
Equity Portfolio Income pays FMR a monthly management fee at an annual rate
of .50% of its average net assets.
The following are the individual fund fee rates and total management fees
for each Fund's most recent fiscal year end.
TOTAL
MANAGEMENT FEE
INDIVIDUAL (AS A PERCENT OF AVERAGE
FUND FEE RATE NET ASSETS)
(AS A PERCENTAGE OF BEFORE REIMBURSEMENTS,
AVERAGE NET ASSETS) IF ANY
EQUITY FUNDS:
STRATEGIC OPPORTUNITIES 0.30% 0.54%
EQUITY PORTFOLIO INCOME NA 0.50%
FIXED-INCOME FUNDS:
EMERGING MARKETS INCOME 0.55%* 0.71%*
HIGH YIELD 0.45% 0.51%
LIMITED TERM BOND 0.25% 0.42%
GOVERNMENT INVESTMENT 0.30% 0.46%
MUNICIPAL/TAX-EXEMPT FUNDS:
HIGH INCOME MUNICIPAL FUND 0.25% 0.42%
LIMITED TERM TAX-EXEMPT FUND 0.25% 0.42%
*Projection for first year of operations. Total management fees are higher
than those charged by most mutual funds, but not necessarily higher than
those of a typical international fund, due to the greater complexity,
expense and commitment of resources involved in international investing.
In addition to the basic fee, the management fee for Strategic
Opportunities varies based on performance. The performance adjustment is
added to or subtracted from the management fee and is calculated monthly.
It is based on a comparison of the Fund's performance to that of an index,
over the most recent 36-month period. The difference is converted into a
dollar amount that is added to or subtracted from the management fee. This
adjustment rewards FMR when the Fund outperforms the index and reduces
FMR's fee when the Fund underperforms the index. The maximum annualized
performance index adjustment rate for Strategic Opportunities is +/-.20%.
Strategic Opportunities compares itself to the S&P 500. See "The
Trusts and the Fidelity Organization" for information regarding performance
calculations for Strategic Opportunities.
FMR may, from time to time, agree to reimburse a Fund for expenses
(excluding interest, taxes, brokerage commissions, and extraordinary
expenses) above a specified percentage of average net assets. FMR retains
the ability to be repaid by a Fund for these expense reimbursements in the
amount that expenses fall below the limit prior to the end of the fiscal
year. Fee reimbursements by FMR will increase a Fund's yield and total
return, and repayment by a Fund will lower its yield and total return. FMR
has voluntarily agreed to reimburse expenses of Government Investment and
Limited Term Tax-Exempt to the extent that total expenses exceed 1.70%, and
1.65%, respectively, of the Fund's average net assets.
FMR has entered into sub-advisory agreements on behalf of certain Funds.
Sub-advisors provide research and investment advice and research services
with respect to companies based outside the U.S. and FMR may grant
sub-advisers investment management authority as well as the authority to
buy and sell securities if FMR believes it would be beneficial to a Fund.
Strategic Opportunities, Equity Portfolio Income, Emerging Markets Income
and High Yield each have entered into sub-advisory agreements with Fidelity
Management & Research (U.K.) Inc. (FMR U.K.) and Fidelity Management
& Research (Far East) Inc. (FMR Far East). FMR U.K. focuses primarily
on companies based in Europe, and FMR Far East focuses primarily on
companies based in Asia and the Pacific Basin. Under the sub-advisory
agreements, FMR, and not the Fund, may pay FMR U.K. and FMR Far East fees
equal to 110% and 105%, respectively, of each sub-advisor's costs incurred
in connection with its sub-advisory agreement.
In addition, Emerging Markets Income has entered into a sub-advisory
agreement with Fidelity International Investment Advisors (FIIA). FIIA, in
turn, has entered into a sub-advisory agreement with its wholly owned
subsidiary Fidelity International Investment Advisors (U.K.) Limited (FIIAL
U.K.). Currently, FIIAL U.K. focuses on companies other than the U.S.,
including countries in Europe, Asia, and the Pacific Basin. Under the
sub-advisory agreement, FMR pays FIIA 30% of its monthly management fee
with respect to the average market value of investments held by the Fund
for which FIIA has provided FMR with investment advice. FIIA, in turn,
pays FIIAL U.K. a fee equal to 110% of FIIAL U.K.'s costs incurred in
connection with providing investment advice and research services.
FIIOC, 82 Devonshire Street, Boston, MA and affiliate of FMR, acts as
transfer and dividend-paying agent and maintains shareholder records.
FIIOC is paid fees based on the typed, size and number of accounts in Class
B shares, and the number of transactions made by shareholders of Class B
shares.
The Funds pay transfer agent fees based on the type, size and number of
accounts in a Fund and the number of monetary transactions made by
shareholders.
The fees for pricing and bookkeeping services are based on a Fund's average
net assets, but must fall within a range of $45,000 to $750,000 per year.
Fidelity Service Co. (Service), 82 Devonshire Street, Boston, Massachusetts
02109, an affiliate of FMR, calculates each Fund's daily share price, and
maintains its general accounting records (with the exception of High Income
Municipal and Limited Term Tax-Exempt, see below). For those Funds which
can engage in securities lending, Service also administers its securities
lending program. For the most recent fiscal year ended, each Fund's fees
for pricing and bookkeeping services (including related out-of-pocket
expenses) amounted to: $145,494 (Strategic Opportunities); $113,026
(Equity Portfolio Income); $121,204 (High Yield); $81,106 (Limited Term
Bond); and $46,457 (Government Investment).
For High Income Municipal and Limited Term Tax-Exempt, United Missouri
Bank, N.A. (United Missouri), 1010 Grand Avenue, Kansas City, Missouri
64106, acts as the custodian, transfer agent and pricing and bookkeeping
agent. United Missouri has a sub-arrangement with the Transfer Agent for
transfer agent services and a sub-arrangement with Service for pricing and
bookkeeping services. For the most recent fiscal year ended, fees paid to
Service (including related out-of-pocket expenses) amounted to $157,559
(High Income Municipal) and $45,724 (Limited Term Tax-Exempt). All of the
fees are paid to the Transfer Agent and Service by United Missouri, which
is reimbursed by the Funds for such payments.
The Funds' operating expenses include custodial, legal and accounting fees,
charges to register a Trust or Fund with federal and state regulatory
authorities and other miscellaneous expenses. The total operating expenses
for Class A shares of each Fund after reimbursement, if any, as a percent
of average net assets, including the 12b-1 fee, for the most recent fiscal
year ended were as follows: 1.57% (Strategic Opportunities) 1.77% (Equity
Portfolio Income); 1.51% (Income & Growth); 1.11% (High Yield); 1.23%
(Limited Term Bond); .68% (Government Investment); 92% (High Income
Municipal); .90% (Limited Term Tax-Exempt). If FMR had not reimbursed
certain Funds, total operating expenses for the most recent fiscal year
ended would have been as follows: 1.32% (Government Investment) and 1.36%
(Limited Term Tax-Exempt). Total operating expenses for Class B shares
will be different due to different expenses than those for Class A shares.
DISTRIBUTION AND SERVICE AND SHAREHOLDER SERVICING PLANS. The Board of
Trustees of each Trust has adopted a Distribution and Service Plan (the
Plan) on behalf of each Fund's Class B shares pursuant to Rule 12b-1 under
the 1940 Act (the Rule). The Rule provides in substance that a mutual fund
may not engage directly or indirectly in financing any activity that is
intended primarily to result in the sale of shares of a fund except
pursuant to a plan adopted by the fund under the Rule. The Boards of
Trustees have adopted the Plans to allow Class B shares of each Fund and
FMR to incur certain expenses that might be considered to constitute direct
or indirect payment by Class B shares of a Fund of distribution expenses.
Under each Plan, Class B shares are authorized to pay Distributors a
monthly distribution fee as compensation for its services and expenses in
connection with the distribution of Class B shares. The Class B shares of
each Fund pay Distributors a distribution fee at an annual rate of .75%
based on the average net assets of that Fund's Class B shares determined as
of the close of business on each day throughout the month.
The distribution fee is a Class B expense in addition to the management fee
and the other Class B expenses. Such expenses will reduce the net
investment income and total return of a Fund's Class B shares.
The Plan also provides that, through Distributors, FMR may make payments
from its management fee or other resources to investment professionals in
connection with the distribution of Class B shares.
Class B of each Fund also has a Shareholder Servicing Plan adopted under
Rule 12b-1. Under Shareholder Servicing Plans in effect for the Class B
shares of each Fund, investment professionals are compensated at an annual
rate of .25% of average daily net assets of that Fund's Class B shares for
providing ongoing shareholder support services to investors in Class B
shares. The Shareholder Servicing Plans have been approved by each
Trust's Board of Trustees.
Class B shares of each Fund bear the fees paid pursuant to their
Distribution and Service Plan and Shareholder Servicing Plan. Such fees
are not borne by individual accounts, and will be limited by the
restrictions imposed by the NASD rule regarding asset based sales charges.
Distributors may at its expense, provide promotional incentives such as
sales contests and trips to investment professionals who support the sale
of Class B shares. In some instances, these incentives will be offered
only to certain types of investment professionals, such as bank-affiliated
or non-bank affiliated broker-dealers, or to investment professionals whose
representatives provide services in connection with the sale or expected
sale of significant amounts of Class B shares.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been fully defined, in Distributors' opinion it
should not prohibit banks from being paid for shareholder servicing and
recordkeeping. If, because of changes in law or regulation, or because of
new interpretations of existing law, a bank or a Fund were prevented from
continuing these arrangements, it is expected that the Board would make
other arrangements for these services and that shareholders would not
suffer adverse financial consequences. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
VALUATION
A Fund's Class B shares are valued at NAV. NAV is determined for Class B
shares of each Fund by adding the value of all security holdings and other
assets of the Fund, deducting liabilities allocated to Class B (when
appropriate), and then dividing the result by the proportional number of
Class B shares of the Fund outstanding.
NAV normally is calculated as of the close of business of the NYSE
(normally 4:00 p.m. Eastern time). The Funds are open for business and NAV
is calculated each day the NYSE is open for trading. Fund securities and
other assets are valued primarily on the basis of market quotations
furnished by pricing services, or if quotations are not available, by a
method that the Board of Trustees believes accurately reflects fair value.
Foreign securities are valued based on quotations from the primary market
in which they are traded and are converted from the local currency into
U.S. dollars using current exchange rates.
PERFORMANCE
Each Fund's performance may be quoted in advertising in terms of total
return. All performance information is historical and is not intended to
indicate future performance. Share price and total return fluctuate in
response to market conditions and other factors, and the value of a Fund's
shares when sold may be worth more or less than their original cost.
Excluding a sales charge from a performance calculation produces a higher
total return figure. TOTAL RETURN is the change in value of an investment
in a Fund over a given period, assuming reinvestment of any dividends and
capital gains. A CUMULATIVE TOTAL RETURN reflects actual performance over
a stated period of time. An AVERAGE ANNUAL TOTAL return is a hypothetical
rate of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the entire
period. Average annual total returns smooth out variations in performance;
they are not the same as actual year-by-year results. When an average
annual return covers a period of less than one year, the calculation
assumes that performance will remain constant for the rest of the year.
Since this may or may not occur, the average annual returns should be
viewed as a hypothetical rather than actual performance figure. Average
annual and cumulative total returns usually will include the effect of
paying the applicable sales charge.
The Funds also may quote performance in terms of yield. YIELD refers to
the income generated by an investment in a Fund over a given period of
time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond funds.
High Income Municipal Fund and Limited Term Tax-Exempt Fund may quote a
TAX-EQUIVALENT YIELD, which shows the taxable yield an investor would have
to earn after taxes to equal the Fund's tax-free yield. A tax-equivalent
yield is calculated by dividing a Fund's yield by the result of one minus a
stated federal or state tax rate. Because yield calculations differ from
other accounting methods, the quoted yield may not equal the income
actually paid to shareholders. This difference may be significant for funds
whose investments are denominated in foreign currencies. In calculating
yield, the Funds may from time to time use a security's coupon rate instead
of its yield to maturity in order to reflect the risk premium on that
security. This practice will have the effect of reducing a Fund's yield.
For additional performance information, please contact your investment
professional or Distributors for a free Annual Report and SAI.
PORTFOLIO TRANSACTIONS
FMR uses various brokerage firms to carry out each Fund's equity security
transactions Fixed-income securities are generally traded in the
over-the-counter market through broker-dealers. A broker-dealer is a
securities firm or bank which makes a market for securities by offering to
buy at one price and sell at a slightly higher price. The difference is
known as a spread. Foreign securities are normally traded in foreign
countries since the best available market for foreign securities is often
on foreign markets. In transactions on foreign stock exchanges, brokers'
commissions are generally fixed and are often higher than in the U.S.,
where commissions are negotiated. Since FMR, directly or through affiliated
sub-advisers, places a large number of transactions, including those of
Fidelity's other funds, the Funds pay lower commissions than those paid by
individual investors, and broker-dealers are willing to work with the Funds
on a more favorable spread.
The Funds have authorized FMR to allocate transactions to some
broker-dealers who help distribute the Fund's shares or the shares of
Fidelity's other funds to the extent permitted by law, and on an agency
basis to Fidelity Brokerage Services, Inc. (FBSI) and Fidelity Brokerage
Services Ltd. (FBSL), affiliates of FMR. FMR will make such allocations if
commissions are comparable to those charged by non-affiliated qualified
broker-dealers for similar services.
FMR may also allocate brokerage transactions to a Fund's custodian, acting
as a broker-dealer, or other broker-dealers, so long as transaction quality
and commission rates are comparable to those of other broker-dealers, where
the broker-dealer will allocate a portion of the commissions paid toward
payment of a Fund's expenses. These expenses currently include transfer
agent fees and custodian fees.
Higher commissions may be paid to those firms that provide research,
valuation and other services to the extent permitted by law. FMR also is
authorized to allocate brokerage transactions to FBSI in order to secure
from FBSI research services produced by third party, independent entities.
FMR may use this research information in managing each Fund's assets, as
well as assets of other clients.
When consistent with its investment objective, each fund may engage in
short-term trading. Also, a security may be sold and another of comparable
quality simultaneously purchased to take advantage of what FMR believes to
be a temporary disparity in the normal yield relationship of the two
securities.
The frequency of portfolio transactions - the turnover rate - will vary
from year to year depending on market conditions. Each Fund's turnover rate
for the most recent fiscal year ended was: 183% (Strategic Opportunities)
120% (Equity Portfolio Income); 79% (High Yield); 59% (Limited Term Bond);
333% (Government Investment); 27% (High Income Municipal); and 46% Limited
Term Tax-Exempt. Emerging Markets Income's annualized turnover rate is not
expected to exceed 200% for its first fiscal period ended December 31,
1994.
Because a high turnover rate increases transaction costs and may increase
taxable capital gains, FMR carefully weighs the anticipated benefits of
short-term investing against these consequences.
THE TRUSTS AND THE FIDELITY ORGANIZATION
Each Trust is an open-end diversified (except Emerging Markets Income which
is non-diversified) investment management company. Each Trust was
established by a separate Declaration of Trust as a Massachusetts business
trust on each date as follows: April 24, 1986, Fidelity Advisor Series II;
May 17, 1982, Fidelity Advisor Series III; May 6, 1983, Fidelity Advisor
Series IV; April 24, 1986, Fidelity Advisor Series V; June 1, 1983,
Fidelity Advisor Series VI; and September 23, 1983, Fidelity Advisor
Series VIII. Each Trust has its own Board of Trustees that supervises Fund
activities and reviews the Fund's contractual arrangements with companies
that provide the Funds with services. As Massachusetts business trusts,
the Funds are not required to hold annual shareholder meetings, although
special meetings may be called for a class of shares, a Fund, or a Trust as
a whole for purposes such as electing or removing Trustees, changing
fundamental investment policies or limitations, or approving a management
contract or plan of distribution. As a shareholder, you receive one vote
for each share and fractional votes for fractional shares of the Fund you
own. For shareholders of Equity Portfolio Income, the number of votes to
which you are entitled is based on the dollar value of your investment.
Separate votes are taken by each class of shares or each Fund if a matter
affects just that class of shares or Fund, respectively. There is a remote
possibility that one Fund might become liable for any misstatement in the
prospectus about another Fund. Each class of shares is offered through
separate prospectus.
INSTITUTIONAL SHARES. Fidelity Advisor Equity Portfolio Income, Fidelity
Advisor Limited Term Bond Fund and Fidelity Advisor Limited Term Tax-Exempt
Fund each offers of shares to institutional and retail investors. Shares
offered to institutional investors (Institutional Shares) are offered
continuously at NAV to (I) banks and trust institutions investing for their
own accounts or for accounts of their trust customers, (II) plan sponsors
meeting the ERISA definition of fiduciary, (III) government entities or
authorities and (IV) corporations with at least $100 million in annual
revenues. The initial and subsequent investment minimums for Institutional
Shares are $100,000 and $2,500, respectively. The minimum account balance
is $40,000. Institutional Shares may be exchanged for certain other
Fidelity funds including Institutional Shares of other Fidelity Advisor
Funds. Transfer agent and shareholder services for these shares are
performed by FIIOC. For the fiscal year ended November 30, 1993, total
operating expenses as a percent of average net assets were: .79% for
Fidelity Advisor Institutional Equity Portfolio Income, .64% for Fidelity
Advisor Institutional Limited Term Bond and .65% for Fidelity Advisor
Institutional Limited Term Tax-Exempt. Because the Institutional Shares
have lower total expenses, the Institutional Shares of a Fund will
generally have a higher yield and total return than the shares of the same
Fund offered to retail investors. The Institutional Shares have a
Distribution and Service Plan that does not provide for payment of a
separate distribution fee; rather the Plan recognizes that FMR may use its
management fee and other resources to pay expenses for distribution-related
activities and may make payments to investment professionals that provide
shareholder support services or sell shares. The Institutional Shares also
do not bear a shareholder servicing fee. Investment professionals
currently do not receive compensation in connection with distribution
and/or shareholder servicing of Institutional Shares.
CLASS A. Each Fund offers a class of shares to retail investors who
engage an investment professional for investment advice, with a maximum
initial 4.75% sales charge (Class A shares). The initial and subsequent
investment minimums for Class A shares are $2,500 and $250, respectively.
The minimum account balance for Class A investors is $1,000. Reduced sales
charges are applicable to purchases of $50,000 or more of Class A shares of
one Fund or in combination with purchases of shares of other Fidelity
Advisor Funds. Class A investors also may qualify for a reduction in sales
charge under the Rights of Accumulation or Letter of Intent programs. Sales
charges are waived for certain groups of investors. In addition, Class A
investors may participate in various investment programs. Class A shares of
each Fund may be exchanged for Class A shares of other Fidelity Advisor
Funds. Transfer agent and shareholder services for Class A shares of
Fidelity Advisor Strategic Opportunities, Fidelity Advisor Equity Portfolio
Income, Fidelity Advisor Emerging Markets Income, Fidelity Advisor High
Yield, Fidelity Advisor Limited Term Bond Fund Fidelity, Advisor Government
Investment are performed by State Street Bank and Trust Company; and for
Class A shares of Fidelity Advisor High Income Municipal and Fidelity
Limited Term Tax-Exempt through a sub-contractual arrangement with United
Missouri. For the fiscal year ended November 30, 1993, total operating
expenses of average net assets for the Class A shares were as follows:
1.57% for Fidelity Advisor Strategic Opportunities; 1.77% for Fidelity
Advisor Equity Portfolio Income; 1.11% for Fidelity Advisor High Yield;
1.23% for Fidelity Advisor Limited Term Bond; .60% for Fidelity Advisor
Government Investment; .92% for High Income Municipal; and .90% for
Fidelity Advisor Limited Term Tax- Exempt. Fidelity Advisor Emerging
Markets Income has an estimated total operating expense of 1.50% for the
first year. Because the Class A shares of a Fund have lower total expenses
than Class B shares of the same Fund, Class A shares will generally have
higher yields and total returns than Class B shares.
Under their Distribution and Service Plans, the Class A shares of Fidelity
Advisor Strategic Opportunities, Fidelity Advisor Equity Portfolio Income,
Fidelity Advisor Emerging Markets Income each pay a .65% annual
distribution fee (the Board can approve a maximum rate of .75%); Fidelity
Advisor High Yield, Fidelity Advisor Government Investment, Fidelity
Advisor High Income Municipal, Fidelity Advisor Limited Term Bond Fund and
Fidelity Advisor Limited Term Tax- Exempt Fund each pay a .25% annual
distribution fee (the Board can approve a maximum rate of .40%). All or a
portion of the distribution fee is paid to investment professionals that
provide shareholder support services or sell Class A shares. Class A shares
do not pay a shareholder servicing fee in addition to the distribution fee.
Investment professionals may receive different levels of compensation with
respect to one particular class of shares over another class of shares in
the Funds.
Fidelity Investments is one of the largest investment management
organizations in the U.S. and has its principal business address at 82
Devonshire Street, Boston, MA 02109. It includes a number of different
companies that provide a variety of financial services and products. The
Trusts employ various Fidelity companies to perform certain activities
required to operate the Funds.
Fidelity Management & Research Company is the original Fidelity company
founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. It maintains a
large staff of experienced investment personnel and a full complement of
related support facilities. As of December 31, 1994, FMR advised funds
having approximately 15 million shareholder accounts with a total value of
more than $225 billion. Fidelity Distributors Corp. distributes shares for
the Fidelity funds.
FMR Corp. is the parent company for the Fidelity companies. Through
ownership of voting common stock, Edward C. Johnson 3d (President and a
Trustee of the Trust), Johnson family members, and various trusts for the
benefit of Johnson family members form a controlling group with respect to
FMR Corp.
Peter J. Allegrini is manager of Advisor High Income Municipal, which he
has managed since February 1992. Mr. Allegrini also manages Spartan
Connecticut Municipal High Yield, Michigan Tax-Free High Yield and Ohio
Tax-Free High Yield. Mr. Allegrini joined Fidelity in 1982.
Robert K. Citrone is manager of Advisor Emerging Markets Income. He also
manages Fidelity New Markets Income fund, which he has managed since May
1993 and serves as strategist for Fidelity's emerging market fixed-income
investments. Mr. Citrone joined Fidelity in 1990.
Bettina E. Doulton has been manager of Advisor Equity Portfolio Income
since August 1993, and VIP Equity-Income since July 1993. Previously, she
managed Select Automotive Portfolio and assisted on Equity-Income Portfolio
and Magellan. Ms. Doulton also served as an analyst following the domestic
and European automotive and tire manufacturing industry as well as the
gaming and lodging industry. She joined Fidelity in 1985.
Margaret L. Eagle is vice president and manager of Advisor High Yield,
which she has managed since it began in January 1987. Ms. Eagle also
manages several pension fund accounts. Previously, she managed Spartan
High Income, and High Income (now Capital & Income). She also managed
the bond portion of Puritan. Ms. Eagle joined Fidelity in 1980.
Daniel R. Frank is vice president and manager of Advisor Strategic
Opportunities which he has managed since December 1983. Previously, he was
an assistant to Peter Lynch on Magellan. Mr. Frank joined Fidelity in
1979.
Michael S. Gray is vice president and manager of Advisor Limited Term
Bond, which he has managed since August 1987. Mr. Gray also manages
Investment Grade Bond, Spartan Investment Grade Bond, and Intermediate
Bond. Mr. Gray joined Fidelity in 1982.
John (Jack) F. Haley Jr. is vice president and manager of Advisor Limited
Term Tax-Exempt, which he has managed since 1985. Mr. Haley also manages
California Tax-Free Insured, California Tax-Free High Yield, and Spartan
California Municipal High Yield. Mr. Haley joined Fidelity in 1981.
Curtis Hollingsworth is vice president and manager of Advisor Government
Investment, which he has managed since January 1992. Mr. Hollingsworth
also manages Short-Intermediate Government, Government Securities,
Institutional Short-Intermediate Government, Spartan Limited Maturity
Government Bond, Spartan Long-Term Government Bond and Spartan
Short-Intermediate Government. He joined Fidelity in 1983.
APPENDIX
The following paragraphs provide a brief description of securities in which
the Funds may invest and transactions they may make. Consistent with its
investment objective and policies, each Fund may invest in or engage in one
or more of the following securities transactions. However, the Funds are
not limited by this discussion and may purchase or engage in other types of
securities and enter into other types of transactions if they are
consistent with a Fund's investment objective and policies.
DELAYED-DELIVERY TRANSACTIONS. Securities may be bought and sold on a
when-issued or delayed-delivery basis, with payment and delivery taking
place at a future date. The market value of securities purchased in this
way may change before the delivery date which could increase fluctuations
in a Fund's yield. Ordinarily, a Fund will not earn interest on securities
purchased until they are delivered.
FOREIGN INVESTMENTS involve additional risks. Foreign securities and
securities denominated in or indexed to foreign currencies may be affected
by the strength of foreign currencies relative to the U.S. dollar, or by
political or economic developments in foreign countries. Foreign companies
may not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public information
about their operations. In addition, foreign markets may be less liquid or
more volatile than U.S. markets, and may offer less protection to investors
such as a Fund. These risks are typically greater for investments in less
developed countries whose governments and financial markets may be more
susceptible to adverse political and economic developments. FMR considers
these factors in making investments for the Funds.
A Fund may enter into currency exchange contracts (agreements to exchange
one currency for another at a future date) to manage currency risks and to
facilitate transactions in foreign securities. Although currency forward
contracts can be used to protect the Fund from adverse exchange rate
changes, they involve a risk of loss if FMR fails to predict foreign
currency values correctly.
ILLIQUID INVESTMENTS. Under the supervision of the Board of Trustees, FMR
determines the liquidity of each Fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for a Fund to sell them promptly at an acceptable price.
INDEXED SECURITIES. Indexed securities values are linked to currencies,
interest rates, commodities, indices, or other financial indicators. Most
indexed securities are short to intermediate term fixed-income securities
whose values at maturity or interest rates rise or fall according to the
change in one or more specified underlying instruments. Indexed securities
may be positively or negatively indexed (i.e., their value may increase or
decrease if the underlying instrument appreciates), and may have return
characteristics similar to direct investments in the underlying instrument
or to one or more options on the underlying instrument. Indexed securities
may be more volatile than the underlying instrument itself.
INTERFUND BORROWING PROGRAM. Interfund loans and borrowings normally will
extend overnight, but can have a maximum duration of seven days. A Fund
will lend through the program only when the returns are higher than those
available at the same time from other short-term instruments (such as
repurchase agreements), and will borrow through the program only when the
costs are equal to or lower than the cost of bank loans. Each Fund will
not lend more than 5% (Equity Funds) or 7.5% (Fixed-Income Funds) of its
assets to other funds, and will not borrow through the program if, after
doing so, total outstanding borrowings would exceed 15% of total assets.
Loans may be called on one day's notice, and a Fund may have to borrow from
a bank at a higher interest rate if an interfund loan is called or not
renewed. Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the
risk of loss in case of default or insolvency of the borrower and may offer
less legal protection to a Fund in the event of fraud or misrepresentation.
In addition, loan participations involve a risk of insolvency of the
lending bank or other financial intermediary. Direct debt instruments may
also include standby financing commitments that obligate a Fund to supply
additional cash to the borrower on demand.
LOWER-QUALITY DEBT SECURITIES are those rated Ba or lower by Moody's or BB
or lower by S&P that have poor protection against default in the
payment of principal and interest or may be in default. These securities
are often considered to be speculative and involve greater risk of loss or
price changes due to changes in the issuer's capacity to pay. The market
prices of lower-rated debt securities may fluctuate more than those of
higher-rated debt securities, and may decline significantly in periods of
general economic difficulty, which may follow periods of rising interest
rates. See "Debt Obligations" on page ___.
SOVEREIGN DEBT OBLIGATIONS are debt instruments issued or guaranteed by
foreign governments or their agencies, including debt of Latin American
nations or other developing countries. Sovereign debt may be in the form
of conventional securities or other types of debt instruments such as loans
or loan participations. Sovereign debt of developing countries may involve
a high degree of risk, and may be in default or present the risk of
default. Governmental entities responsible for repayment of the debt may be
unable or unwilling to repay principal and interest when due, and may
require renegotiation or rescheduling of debt payments. In addition,
prospects for repayment of principal and interest may depend on political
as well as economic factors.
MORTGAGE-BACKED SECURITIES are issued by government entities and
non-government entities such as banks, mortgage lenders, or other financial
institutions.
A mortgage-backed security may be an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized
mortgage obligations (CMOs), make payments of both principal and interest
at a variety of intervals; others make semiannual interest payments at a
predetermined rate and repay principal at maturity (like a typical bond).
Mortgage-backed securities are based on different types of mortgages
including those on commercial real estate or residential properties. Other
types of mortgage-backed securities will likely be developed in the future,
and a Fund may invest in them if FMR determines they are consistent with a
Fund's investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security. The prices of stripped mortgage-backed
securities may be particularly affected by changes in interest rates. As
interest rates fall, prepayment rates tend to increase, which tends to
reduce prices of IOs and increase prices of POs. Rising interest rates can
have the opposite effect.
ASSET-BACKED SECURITIES represent interests in pools of consumer loans
(generally unrelated to mortgage loans) and most often are structured as
pass-through securities. Interest and principal payments ultimately depend
on payment of the underlying loans by individuals, although the securities
may be supported by letters of credit or other credit enhancements. The
value of asset-backed securities may also depend on the creditworthiness of
the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing the credit enhancement.
A Fund may purchase units of beneficial interest in pools of purchase
contracts, financing leases, and sales agreements entered into by
municipalities. These municipal obligations may be created when a
municipality enters into an installment purchase contract or lease with a
vendor and may be secured by the assets purchased or leased by the
municipality. However, except in very limited circumstances, there will be
no recourse against the vendor if the municipality stops making payments.
The market for tax-exempt asset-backed securities is still relatively new.
These obligations are likely to involve unscheduled prepayments of
principal.
OPTIONS AND FUTURES CONTRACTS are bought and sold to manage a Fund's
exposure to changing interest rates, security prices, and currency exchange
rates. Some options and futures strategies, including selling futures,
buying puts, and writing calls, tend to hedge a Fund's investment against
price fluctuations. Other strategies, including buying futures, writing
puts, and buying calls, tend to increase market exposure. Options and
futures may be combined with each other or with forward contracts in order
to adjust the risk and return characteristics of the overall strategy. A
Fund may invest in options and futures based on any type of security,
index, or currency, including options and futures traded on foreign
exchanges and options not traded on exchanges.
Options and futures can be volatile investments and involve certain risks.
If FMR applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower a Fund's return. A
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could
not close out its positions because of an illiquid secondary market.
Options and futures do not pay interest, but may produce taxable capital
gains.
Each Fund will not hedge more than 25% of its total assets by selling
futures, buying puts, and writing calls under normal conditions. In
addition each Fund will not buy futures or write puts whose underlying
value exceeds 25% of its total assets, and will not buy calls with a value
exceeding 5% of its total assets.
REAL ESTATE BACKED SECURITIES. Real estate industry companies may include
among others: real estate investment trusts; brokers or real estate
developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies.
Companies engaged in the real estate industry may be subject to certain
risks including: declines in the value of real estate, risks related to
general and local conditions, overbuilding and increased competition,
increases in property taxes and operating expenses, and variations in
rental income.
REPURCHASE AGREEMENTS AND SECURITIES LOANS. In a repurchase agreement, a
Fund buys a security at one price and simultaneously agrees to sell it back
at a higher price. A Fund may also make securities loans to broker-dealers
and institutional investors, including FBSI. In the event of the
bankruptcy of the other party to either a repurchase agreement or a
securities loan, a Fund could experience delays in recovering its cash or
the securities it lent. To the extent that, in the meantime, the value of
the securities purchased had decreased or the value of the securities lent
had increased, a Fund could experience a loss. In all cases, FMR must find
the creditworthiness of the other party to the transaction satisfactory.
RESTRICTED SECURITIES are securities which cannot be sold to the public
without registration under the Securities Act of 1933. Unless registered
for sale, these securities can only be sold in privately negotiated
transactions or pursuant to an exemption from registration.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a Fund
temporarily transfers possession of a portfolio instrument to another
party, such as a bank or broker-dealer, in return for cash. At the same
time, the Fund agrees to repurchase the instrument at an agreed-upon price
and time. A Fund expects that it will engage in reverse repurchase
agreements for temporary purposes such as to fund redemptions. Reverse
repurchase agreements may increase the risk of fluctuation in the market
value of a Fund's assets or in its yield.
SHORT SALES. If a Fund enters into short sales with respect to stocks
underlying its convertible security holdings, the transaction may help to
hedge against the effect of stock price declines, but may result in losses
if a convertible security's price does not track the price of its
underlying equity. Under normal conditions convertible securities hedged
with short sales are not currently expected to exceed 15% of a Fund's total
assets.
SWAP AGREEMENTS. As one way of managing its exposure to different types
of investments, a Fund may enter into interest rate swaps, currency swaps,
and other types of swap agreements such as caps, collars, and floors. In a
typical interest rate swap, one party agrees to make regular payments equal
to a floating interest rate times a "notional principal amount," in return
for payments equal to a fixed rate times the same amount, for a specified
period of time. If a swap agreement provides for payments in different
currencies, the parties might agree to exchange the notional principal
amount as well. Swaps may also depend on other prices or rates, such as
the value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a Fund's investments and its share price and yield.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on a Fund's performance. Swap agreements are subject
to risks related to the counterparty's ability to perform, and may decline
in value if the counterparty's creditworthiness deteriorates. A Fund may
also suffer losses if it is unable to terminate outstanding swap agreements
or reduce its exposure through offsetting transactions.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal obligations, have interest rate adjustment formulas
that help to stabilize their market values. Many variable and floating
rate instruments also carry demand features that permit the fund to sell
them at par value plus accrued interest on short notice.
WARRANTS entitle the holder to buy equity securities at a specific price
for a specific period of time. Warrants tend to be more volatile than
their underlying securities. Also, the value of the warrant does not
necessarily change with the value of the underlying securities and a
warrant ceases to have value if it is not exercised prior to the expiration
date.
ZERO COUPON BONDS do not make interest payments; instead, they are sold at
a deep discount from their face value and are redeemed at face value when
they mature. Because zero coupon bonds do not pay current income, their
prices can be very volatile when interest rates change. In calculating its
daily dividend, a Fund takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.
A broker-dealer creates a DERIVATIVE ZERO by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRS (Treasury Investment Growth Receipts), and TRS (Treasury
Receipts) are examples of derivative zeros. Government Investment Fund has
been advised that the staff of the Division of Investment Management of the
SEC does not consider these instruments U.S. government securities as
defined by the 1940 Act. Therefore, Government Investment Fund will not
treat these obligations as U.S. government securities for purposes of the
65% portfolio composition test mentioned on page __.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation (REFCORP) and the Financing Corporation (FICO) can also be
separated in this fashion. ORIGINAL ISSUE ZEROS are zero coupon securities
originally issued by the U.S. government or a government agency.
DEBT OBLIGATIONS. The table below provides a summary of ratings assigned
to debt holdings (not including money market instruments) in Funds which
have the ability to invest over 5% in lower-rated debt securities. These
figures are dollar-weighted averages of month-end portfolio holdings during
the thirteen months ended September 30, 1993 (Strategic Opportunities)
October 31, 1993 (High Yield and High Income Municipal,) and November 30,
1993 (Equity Portfolio Income), presented as a percentage of total
investments. These percentages are historical and are not necessarily
indicative of the quality of current or future portfolio holdings, which
may vary.
The dollar-weighted average of debt securities not rated by either Moody's
or S&P amounted to .89% (Strategic Opportunities) .57% (Equity
Portfolio Income), 18.74% (High Yield), and 25.23% (High Income Municipal)
of total investments. This may include securities rated by other
nationally recognized rating organizations, as well as unrated securities.
Unrated securities are not necessarily lower-quality securities.
MOODY'S RATING & PERCENTAGE OF INVESTMENTS
MOOD STRATE EQUITY EMERGIN HIGH HIGH
Y'S GIC PORTFOLIO G YIELD INCOME
RATIN OPPORT INCOME MARKETS MUNICI
G UNITIES INCOME PAL

Aaa/A 15.99 1.02% -- .02% 27.39%
a/A %

Baa -- .77% -- -- 20.40%

Ba .18% 1.25% -- 6.60% 8.10%

B .22% 1.27% -- 34.26% .63%

Caa 1.63 .06% -- 9.09% --
%

Ca/C -- -- -- 4.50% --

S&P RATING & PERCENTAGE OF INVESTMENTS
S&AM STRATE EQUITY EMERGI HIGH HIGH
P;P GIC PORTFO NG YIELD INCOM
RATIN OPPORT LIO MARKET E
G UNITIES INCOM S MUNICI
E INCOME PAL

AAA/A 15.99 1.03 -- .97% 29.05
A/A % % %

BBB -- .84% -- 1.09% 18.73
%

BB -- .98% -- 6.94% 4.37
%

B .80% 1.35 -- 33.28 1.75
% % %

CCC -- .15% -- 7.62% .04%

CC/C -- -- -- 1.55%

D .89% .03% 5.58%

THE FOLLOWING DESCRIBES MUNICIPAL INSTRUMENTS:
MUNICIPAL SECURITIES include GENERAL OBLIGATION SECURITIES, which are
backed by the full taxing power of a municipality, and REVENUE SECURITIES,
which are backed by the revenues of a specific tax, project, or facility.
INDUSTRIAL REVENUE BONDS are a type of revenue bond backed by the credit
and security of a private issuer and may involve greater risk. PRIVATE
ACTIVITY MUNICIPAL SECURITIES, which may be subject to the federal
alternative minimum tax, include securities issued to finance housing
projects, student loans, and privately-owned solid waste disposal and water
and sewage treatment facilities.
TAX AND REVENUE ANTICIPATION NOTES are issued by municipalities in
expectation of future tax or other revenues, and are payable from those
specific taxes or revenues. BOND ANTICIPATION NOTES normally provide
interim financing in advance of an issue of bonds or notes, the proceeds of
which are used to repay the anticipation notes. TAX-EXEMPT COMMERCIAL
PAPER is issued by municipalities to help finance short-term capital or
operating needs.
MUNICIPAL LEASE OBLIGATIONS are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities.
These obligations typically are not fully backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If
funds are not appropriated for the following year's lease payments, the
lease may terminate, with the possibility of significant loss to a Fund.
CERTIFICATES OF PARTICIPATION in municipal lease obligations or installment
sales contracts entitle the holder to a proportionate interest in the
lease-purchase payments made.
RESOURCE RECOVERY BONDS are a type of revenue bond issued to build
facilities such as solid waste incinerators or waste-to-energy plants.
Typically, a private corporation will be involved, at least during the
construction phase, and the revenue stream will be secured by fees or rents
paid by municipalities for use of the facilities. The viability of a
resource recovery project, environmental protection regulations, and
project operator tax incentives may affect the value and credit quality of
resource recovery bonds.
A DEMAND FEATURE is a put that entitles the security holder to repayment of
the principal amount of the underlying security, upon notice at any time or
at specified intervals. A STANDBY COMMITMENT is a put that entitles the
security holder to same-day settlement at amortized cost plus accrued
interest.
Issuers or financial intermediaries who provide demand features or standby
commitments often support their ability to buy securities on demand by
obtaining LETTERS OF CREDIT (LOCS) or other guarantees from domestic or
foreign banks. LOCs also may be used as credit supports for other types of
municipal instruments. FMR may rely upon its evaluation of a bank's credit
in determining whether to purchase an instrument supported by an LOC. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank may be
subject to unfavorable political or economic developments, currency
controls, or other governmental restrictions that might affect the bank's
ability to honor its credit commitment.
INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
REFUNDING CONTRACTS. A Fund may purchase securities on a when-issued basis
in connection with the refinancing of an issuer's outstanding indebtedness.
Refunding contracts require the issuer to sell and the Fund to buy refunded
municipal obligations at a stated price and yield on a settlement date that
may be several months or several years in the future.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through C in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating
will also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to D may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.

FIDELITY ADVISOR INSTITUTIONAL FUNDS
PROSPECTUS
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109
JUNE 30 , 1994
The Fidelity Advisor Institutional Funds offer investors a selection of
diversified portfolios.
EQUITY FUNDS:
FIDELITY ADVISOR INSTITUTIONAL EQUITY PORTFOLIO INCOME - seeks a yield from
dividend and interest income which exceeds the composite dividend yield on
securities com prising the Sta ndard & Poor's Index of 500
Composite Stocks (S&P 500).
FIDELITY ADVISOR INSTITUTIONAL EQUITY PORTFOLIO GROWTH - seeks to achieve
capital appreciation by investing primarily in common and preferred stock,
and securities convertible into common stock, of companies with above
average growth characteristics.
FIXED INCOME FUNDS:
FIDELITY ADVISOR INSTITUTIONAL LIMITED TERM BOND FUND - seeks to provide a
high rate of income through investment in high and upper-medium grade
fixed-income obligations.
FIDELITY ADVISOR INSTITUTIONAL LIMITED TERM TAX-EXEMPT FUND - seeks the
highest level of income exempt from federal income taxes that can be
obtained consistent with the preservation of capital, from a diversified
portfolio of high-quality or upper-medium quality municipal obligations.
Shares of these Funds are offered by this Prospectus to (i) banks and
trust institutions investing for their own accounts or for accounts of
their trust customers, (ii) plan sponsors meeting the ERISA definition of
fiduciary, (iii) government entities or authorities and (iv)
corporations with at least $100 million in annual revenues.
Fidelity Advisor Institutional Equity Portfolio Income is a portfolio of
Fidelity Advisor Series III. Fidelity Advisor Institutional Equity
Portfolio Growth is a portfolio of Fidelity Advisor Series I. Fidelity
Advisor Institutional Limited Term Bond Fund is a portfolio of Fidelity
Advisor Series IV. Fidelity Advisor Institutional Limited Term Tax-Exempt
Fund is a portfolio of Fidelity Advisor Series VI.
Please read this Prospectus before investing. It is designed to provide you
with information and help you decide if a Fund's goals match your own.
Retain this document for future reference.
A Statem ent of Additional Information (SAI) (dated June 30, 1994)
for each Fund has been filed with the Securities and Exchange Commission
(SEC) and each is incorporated herein by reference. Each Fund's SAI is
available free upon request from Fidelity Distributors Corporation
(Distributors), 82 Devonshire Street, Boston, MA 02109.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, SAVINGS ASSOCIATION, INSURED DEPOSITORY
INSTITUTION OR GOVERNMENTAL AGENCY, NOR ARE THEY FEDERALLY INSURED OR
OTHERWISE PROTECTED BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. INVESTMENTS IN THE FUND, INVOLVE INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL. THE VALUE OF THE INVESTMENT AND ITS RETURN WILL
FLUCTUATE AND ARE NOT GUARANTEED. WHEN SOLD, THE VALUE OF THE INVESTMENT
MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
(Registered trademark)

TABLE OF CONTENTS Page
Financial History 3
Financial Highlights
Investment Objectives, Policies and Risks 7
Investment Limitations 9
Purchasing Shares of the Funds
Distribution Options
Exchange Privileges
Redeeming Shares of the Funds
Shareholder Services
Tax Information
Fees and Expenses
Fund Shares Valuation
Fund Performance
Portfolio Transactions
The Trusts and the Fidelity Organization
Appendix
Financial State ments 19

FINANCIAL HISTORY
The purpose of the table below is to assist investors in understanding the
various costs and expenses that an investor in each Fund would bear
directly or indirectly. This standard format was developed for use by all
mutual funds to help an investor make investment decisions. This expense
information should be considered along with other important information
such as each Fund's investment objective and past performance. There are
no shareholder transaction expenses associated with purchases, exchanges or
redemptions.
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)

MANAGEME OTHER TOTAL
NT EXPENSES OPERATING
FEE EXPENSES

Institutional Equity .50% .29%* .79%
Portfolio Income

Institutional Equity .66% .28%* .94%
Portfolio Growth

Institutional Limited .42% .22% .64%
Term Bond

Institutional Limited .12% .53% .65%*
Term Tax-Exempt

* AFTER EXPENSE REDUCTIONS.
Annual operating expenses are based on historical expenses for the most
recent fiscal year end. Management fees are paid by each Fund to Fidelity
Management & Research Company (FMR) for managing its investments and
business affairs. The Funds incur other expenses for maintaining
shareholder records, furnishing shareholder statements and reports, and for
other services. A portion of the brokerage commissions that Equity
Portfolio Income and Equity Portfolio Growth paid were used to reduce Fund
expenses. Without this reduction total fund operating expenses would
have been .80% (Equity Portfolio Income) and .95% (Equity Portfolio
Growth), respectively. FMR has voluntarily agreed to reimburse Limited
Term Tax-Exempt to the extent that aggregate operating expenses

(exclusive of taxes, interest, brokerage commissions, and extraordinary
expenses) are in excess of an annual rate of 0.65% of average net assets.
If reimbursements were not in effect, the management fees, other expenses,
and total fund operating expenses would have been .42%, .41%, and .83%,
respectively. Please refer to the section "Fees and Expenses," page __.

EXAMPLE: YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT IN A
FUND ASSUMING (1) A 5% ANNUAL RETURN AND (2) FULL REDEMPTION AT THE END OF
EACH TIME PERIOD.

1 YEAR 3 YEARS 5 YEARS 10 YEARS

$ 8 $ 25 $ 44 $ 98

10 30 52 115

7 20 36 80

7 21 36 81

The hypothetical example illustrates the expenses associated with a $1,000
investment in each Fund over periods of one, three, five and ten years,
based on the expenses (after reimbursements, if any) in the table and an
assumed annual return of 5%. THE RETURN OF 5% AND EXPENSES SHOULD NOT BE
CONSIDERED INDICATIONS OF ACTUAL OR EXPECTED FUND PERFORMANCE OR EXPENSES,
BOTH OF WHICH MAY VARY.
FINANCIAL HIGHLIGHTS
The following tables give information about each Fund's financial history
and uses its fiscal year. They have been audited by Coopers & Lybrand,
independent accountants whose unqualified reports covering the
fisca l periods shown are included in each Fund's Annual Report. The
Annual Reports for each Fund is included herein, beginning on page 19.
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME
Effective September 10, 1992, the Fund commenced sale of two classes of
shares, entitled "Fidelity Advisor Institutional Equity Portfolio
In come" (repr esenting the Fund's original shares) and "Fidelity
Advisor Equity Portfolio Income - Class A" (representing the new shares).
With the exception of the Equity Portfolio Income columns, the information
below does not reflect Equity Portfolio Income's 12b-1 fee and revised
transfer agent fee arrangement.
Equity Portfolio I ncome - Class A Institutional Equity Portfolio
Income

Year Period
Ended Ended
Nov. 30 Nov. 30 Years Ended November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987 1986
1985 1984
Net asset value, beginning of period $ 12.86 $ 12.37 $ 12.88 $ 11.08 $
9.52 $ 12.27 $ 11.10 $ 10.93 $ 13.54 $ 11.95 $ 10.24 $ 10.49
Income from Investment Operations
Net investment income .33 .13 .39 .49 .63 # .69 .75 .75 .76
.78 .79 .72
Net realized and unrealized gain
(loss) on investments 1.97 .47 2.02 1.79 1.52 (2.42) 1.17
1.81 (1.53) 1.92 1.69 (.14)
Total from investment operations 2.30 .60 2.41 2.28 2.15 (1.73)
1.92 2.56 (.77) 2.70 2.48 .58
Less Distributions
From net investment income (.30) (.11) (.36) (.48) (.59) (.72)
(.75) (.74) (.70) (.77) (.77) (.74)
From net realized gain on investments - - - - - (.30) -
(1.65) (1.14) (.34) - (.09)
Total distributions (.30) (.11) (.36) (.48) (.59) (1.02) (.75)
(2.39) (1.84) (1.11) (.77) (.83)
Net asset value, end of period $ 14.86 $ 12.86 $ 14.93 $ 12.88 $ 11.08 $
9.52 $ 12.27 $ 11.10 $ 10.93 $ 13.54 $ 11.95 $ 10.24
TOTAL RETURN (dagger)(double dagger) 18.03% 4.88% 18.90% 20.91%
22.97% (14.90)% 17.58% 26.99% (7.28)% 23.48% 24.86% 6.20%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 42,326 $ 1,462 $ 191,138 $
139,391 $ 168,590 $ 253,049 $ 463,696 $ 436,753 $ 443,603 $ 544,269 $
349,262 $ 89,364
Ratio of expenses to average
net assets 1.77% 1.55%* .79%(double dagger)(double dagger) .71%(H
DIAMOND) .67%(H DIAMOND) .61%(H DIAMOND) .55%(H DIAMOND) .55%(H DIAMOND)
.54%(H DIAMOND) .61% .63% .77%
Ratio of expenses to average net assets
before expense reductions 1.77% 1.55%* .80%(double dagger)(double
dagger) .79%(H DIAMOND) .77%(H DIAMOND) .71%(H DIAMOND) .65%(H DIAMOND)
.65%(H DIAMOND) .61%(H DIAMOND) .61% .63% .77%
Ratio of net investment income
to average net assets 2.02% 3.39%* 3.00% 3.77% 5.66% 6.11% 6.09%
6.86% 5.58% 6.06% 7.36% 7.86%
Portfolio turnover rate 120% 51% 120% 51% 91% 103% 93% 78% 137%
107% 110%(dagger)(dagger)(dagger) 121%
* ANNUALIZED
** FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF EQUITY
PORTFOLIO INCOME - CLASS A) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
+ EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION. IN ADDITION, DURING THE PERIOD JULY 1,
1986 THROUGH OCTOBER 31, 1987 THE INVESTMENT ADVISER WAIVED .05% OF THE
ANNUAL INDIVIDUAL FUND FEE OF .35%.
++ Includes reimbursement of $.03 per share from Fidelity Management &
Research Company for adjustments to prior periods' fees. If this
reimbursement had not existed the ratio of expenses to average net assets
would have been 1.73%.
(S DIAMOND) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE AT THE END OF THE PERIOD LESS
THE AMOUNT OF UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE OF THE FUND AT
AUGUST 20, 1986.
(dagger)(dagger) AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
# INCLUDES $.04 PER-SHARE FROM FOREIGN TAXES RECOVERED.
(dagger)(dagger)(dagger) IN JULY 1985, THE SEC ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATION.
(double dagger)(double dagger) FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO
BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES.
(H DIAMOND) EFFECTIVE APRIL 1, 1987 TO SEPTEMBER 10, 1992, THE INVESTMENT
ADVISER REIMBURSED .10% OF THE ANNUAL MANAGEMENT FEE OF .50%.
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH
Effective September 10, 1992, the Fund commenced sale of two classes of
shares, entitled "Fidelity Advisor Institutional Equity Portfolio Growth"
(rep resenting t he Fund's original shares) and "Fidelity Advisor
Equity Portfolio Growth - Class A" (representing the new shares). With the
exception of the Equity Portfolio Growth columns, the information below
does not reflect Equity Portfolio Growth's 12b-1 fee and revised transfer
agent fee arrangement.
Equity Portfoli o Growth - Class A Institutional Equity Portfolio
Growth
Year Period
Ended Ended
Nov. 30, Nov. 30 Years Ended November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987 1986
1985 1984
Net asset value, beginning of period $ 26.33 $ 23.78 $ 26.37 $ 24.28 $
15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18 $ 11.09 $ 8.03 $ 10.05
Income from Investment Operations
Net investment income (.07)(dagger)(dagger) .01(dagger)(dagger)
.19(dagger)(dagger) .17(dagger)(dagger) .04 .01 .06 .28#
.00(dagger)(dagger) .03 .01 .02
Net realized and unrealized gain
(loss) on investments 3.82 2.54 3.78 4.55 8.69 .34 5.50 2.59
(2.03) 2.41 3.05 (2.04)
Total from investment operations 3.75 2.55 3.97 4.72 8.73 .35
5.56 2.87 (2.03) 2.44 3.06 (2.02)
Less Distributions
From net investment income (.08) - (.10) (.03) - (.08) (.26)
(.01) (.01) (.02) - -
From net realized gain on investments (.50) - (.50) (2.60) -
(2.04) - (.76) (1.22) (.33) - -
Total distributions (.58) - (.60) (2.63) - (2.12) (.26) (.77)
(1.23) (.35) - -
Net asset value, end of period $ 29.50 $ 26.33 $ 29.74 $ 26.37 $ 24.28 $
15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18 $ 11.09 $ 8.03
TOTAL RETURN (dagger)(double dagger) 14.52% 10.72% 15.36% 21.14%
56.14% 2.75% 47.18% 29.77% (17.12)% 22.55% 38.11% (20.10)%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 377,984 $ 22,655 $ 296,466 $
179,325 $ 68,766 $ 27,473 $ 24,523 $ 20,182 $ 43,537 $ 63,607 $ 23,447 $
4,117
Ratio of expenses to average net assets 1.84%## 1.47%* .94%## .98%
1.13% 1.74% 1.60% 1.47% 1.11% 1.07% 1.50%+ 1.50%+
Ratio of expenses to average net assets
before expense reductions 1.85%## 1.47%* .95%## .98% 1.13% 1.74%
1.60% 1.47% 1.11% 1.07% 1.50%+ 1.50%+
Ratio of net investment income to
average net assets (.24)% .25%* .66% .73% .25% .07% .38% 1.20%
.00% .29% .43% .33%
Portfolio turnover rate 160% 240% 160% 240% 254% 262% 269% 331%
226% 115% 108% 453%
* ANNUALIZED
** FOR THE PE RIOD SEPTEMBER 10, 19 92 (COMMENCEMENT OF SALE OF EQUITY
PORTFOLIO GROWTH - CLASS A) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(dagger)(dagger) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE ADVISER NOT
REIMBURSED CERTAIN EXPENSES DURING THE PERIODS SHOWN.
+ EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION.
# DURING THE PERIOD A SHAREHOLDER REDEEMED A SIGNIFICANT PORTION OF THE
ASSETS OF THE FUND. DUE TO THE TIMING OF THIS TRANSACTION, THE FUND
EXPERIENCED AN UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME PER SHARE.
## FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION
OF THE FUND'S EXPENSES.
FIDELITY ADVISOR LIMITED TERM BOND FUND
Effective September 10, 1992, the Fund commenced sale of two classes of
shares, entitled "Fidelity Advisor Institutional Limited Term Bond Fund"
(representing the Fund's original shares) and "Fidelity Advisor Limited
Term Bond Fund - Class A " (representing the new shares). With the
exception of the Limited Term Bond Fund columns, the information below does
not reflect Limited Term Bond Fund's 12b-1 fee and revised transfer agent
fee arrangement.
Limited Term
Bond Fun d - Class A Institutional Limited Term Bond Fund

Year Period February 2, 1984
Ended Ended (Commencement
Nov. 30, Nov. 30 Years Ended November 30, of Operations) to
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987 1986
1985 November 30, 1984
Net asset value, beginning
of period $ 10.640 $ 10.960 $ 10.640 $ 10.550 $ 10.140 $ 10.410 $ 10.180
$ 10.250 $ 11.240 $ 10.550 $ 9.960 $ 10.000
Income from Investment Operations
Net investment income .785 .170 .832 .840 .884 .901 .937 .944
.953 1.026 1.053 .897
Net realized and unrealized gain (loss)
on investments .511 (.320)# .531 .102 .411 (.270) .230 (.070)
(.770) .710 .590 (.040)
Total from investment operations 1.296 (.150) 1.363 .942 1.295 .631
1.167 .874 .183 1.736 1.643 .857
Less Distributions
From net investment income (.796) (.170) (.843) (.852) (.885)
(.901) (.937) (.944) (.953) (1.026) (1.053) (.897)
From net realized gain on investments - -- -- -- -- -- -- --
(.220) (.020) -- --
Total distributions (.796) (.170) (.843) (.852) (.885) (.901)
(.937) (.944) (1.173) (1.046) (1.053) (.897)
Net asset value, end of period $ 11.140 $ 10.640 $ 11.160 $ 10.640 $
10.550 $ 10.140 $ 10.410 $ 10.180 $ 10.250 $ 11.240 $ 10.550 $ 9.960
TOTAL RETURN (dagger)(double dagger) 12.50% (1.37)% 13.17% 9.21%
13.35% 6.46% 12.03% 8.81% 1.78% 17.04% 17.40% 9.33%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 59,184 $ 2,583 $ 183,790 $
160,156 $ 327,756 $ 356,564 $ 426,832 $ 418,929 $ 407,228 $ 418,632 $
253,913 $ 15,192
Ratio of expenses to average net assets 1.23% .82%* .64%* .57% .57%
.58% .54% .54% .53% .53% .65% 1.50%*(dagger)(dagger)
Ratio of net investment income to
average net assets 6.81% 7.67%* 7.41% 7.96% 8.59% 8.90% 9.16%
9.16% 9.03% 9.22% 10.29% 11.01%*
Portfolio turnover rate 59% 7% 59% 7% 60% 59% 87% 48% 92% 59%
88%(dagger)(dagger)(dagger) 12%*
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND
Effective September 10, 1992, the Fund commenced sale two classes of
shares, entitled "Fidelity Advisor Institutional Limited Term Tax-Exempt
Fund" (representing the Fund's original shares) and "Fidelity Advisor
Limited Term Tax-Exempt Fund" (representing the new shares). With the
exception of the Limited Term Tax-Exempt Fund columns, the information
below does not reflect Limited Term Tax-Exempt Fund's 12b-1 fee and revised
transfer agent fee arrangement.
Limited Term
Tax-Exempt F und - Class A Institutional Limited Term Tax-Exempt
Fund
September 19, 1985
Years Period (Commencement
Ended Ended of Operations) to
Nov. 30 Nov. 30 Years Ended November 30, November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987
1986 1985
Net asset value, beginning of period $ 11.080 $ 11.010 $ 11.080 $ 10.800 $
10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280 $ 10.000
Income from Investment Operations
Net interest income .508 .131 .536 .666 .682 .689 .674 .650 .641
.671 .130
Net realized and unrealized gain (loss) on investments .260 .070 .260
.280 .160 .030 .090 .140 (.540) .760 .280
Total from investment operations .768 .201 .796 .946 .842 .719
.764 .790 .101 1.431 .410
Less Distributions
From net interest income (.508) (.131) (.536) (.666) (.682) (.689)
(.674) (.650) (.641) (.671) (.130)
From net realized gain on investments (.880) -- (.880) -- -- --
- -- -- (.070) (.050) --
Total distributions (1.388) (.131) (1.416) (.666) (.682) (.689)
(.674) (.650) (.711) (.721) (.130)
Net asset value, end of period $ 10.460 $ 11.080 $ 10.460 $ 11.080 $
10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280
TOTAL RETURN (dagger)(double dagger) 7.72% 1.37% 8.01% 9.01% 8.15%
7.04% 7.50% 7.77% .97% 14.39% 4.12%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 39,800 $ 1,752 $ 15,076 $ 28,428
$ 100,294 $ 111,506 $ 121,418 $ 132,443 $ 162,857 $ 161,045 $ 94,391
Ratio of expenses to average net assets .90% 1.04%* .65% .66% .61%
.62% .65% .63% .59% .58% .69%*
Ratio of expenses to average net assets before
expense reductions(double dagger)(double dagger) 1.36% 1.06%* .83%
.67% .61% .62% .65% .63% .59% .58% .69%*
Ratio of net investment income to average net assets 4.76% 5.65%* 5.01%
6.05% 6.40% 6.53% 6.45% 6.20% 6.01% 6.29% 6.33%*
Portfolio turnover rate 46% 36% 46% 36% 20% 32% 31% 24% 43% 34%
103%*

* ANNUALIZED
** FOR THE PERIOD SEPTEMBER 15, 1992 (CO MMENCEME NT OF OPERATIONS OF
LIMITED TERM TAX-EXEMPT FUND - CLASS A) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(double dagger)(double dagger) EFFECTIVE OCTOBER 21 , 1992, FMR HAS
VOLUNTARILY AGREED TO REIMBURSE EXPENSES OF EACH CLASS TO THE EXTENT THAT
EXPENSES EXCEED .90% (LIMITED TERM TAX-EXEMPT FUND - CLASS A)AND .65%
(INSTITUTIONAL LIMITED TERM TAX-EXEMPT FUND) OF EACH CLASS' AVERAGE NET
ASSETS, RESPECTIVELY.
(dagger)(dagger) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
(dagger)(dagger)(dagger) IN JULY 1985, THE SEC ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATION.
# THE AMOUNT SHOWN IN THIS CAPTION, WHILE DETERMINABLE BY THE SUMMATION OF
AMOUNTS COMPUTED DAILY AS SHARES WERE SOLD OR REPURCHASED, IS ALSO THE
BALANCING FIGURE DERIVED FROM THE OTHER FIGURES IN THE STATEMENT AND HAS
BEEN SO COMPUTED. THE AMOUNT SHOWN FROM THE PERIOD ENDED NOVEMBER 30, 1992
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD DOES NOT ACCORD WITH THE NET
REALIZED AND UNREALIZED GAIN ON INVESTMENTS FOR THE PERIOD BECAUSE OF THE
TIMING OF SALES AND REPURCHASES OF THE LIMITED TERM BOND FUND SHARES IN
RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The investment objective of each Fund is fundamental and can only be
changed by vote of a majority of the outstanding shares of the Fund. Except
as otherwise noted, the investment limitations and policies of Equity
Portfolio Growth, Limited Term Bond, and Limited Term Tax-Exempt are
fundamental and may not be changed without shareholder approval. Except for
the investment limitations and policies identified as fundamental, the
limitations and policies of Equity Portfolio Income are not fundamental.
Non-fundamental investment limitations and policies may be changed without
shareholder approval.
The yield, return and potential price changes of each Fund depends on
the quality and maturity of the obligations in its portfolio, as well as on
market conditions. Risks vary based on the type of fund in which an
investor is invested. As is the case with any investment in securities,
investment in the Funds involves certain risks. A Fund may not always
achieve its investment objective, but it will follow investment policies
described in this section.
Further information relating to the types of securities in which each
Fund may invest and the investment policies of each Fund in general are set
forth in the Appendix to this Prospectus and in each Fund's SAI.
EQUITY FUNDS: Equity funds invest in common stocks and other
equity securities in search of growth or a combination of growth and
income. Their performance depends heavily on stock market conditions in the
U.S. and abroad, and can also be affected by changes in interest rates or
other economic conditions. Investments in equity funds are more suitable
for investors who take a long-term approach to investing.
It is also important to note that high-yielding,lower-quality bonds
involve greater risks, because there is a greater possibility of a
financial reversal affecting the issuer's ability to pay interest on
time.
FMR will use its extensive research facilities in addition to
considering the ratings of Nationally Recognized Statistical Rating
Organizations (NRSROs) in selecting investments for the Funds. Unrated
securities are not necessarily of lower quality than rated securities, but
they may not be attractive to as many buyers. This credit analysis includes
consideration of the economic feasibility of revenue bond project finances
and general purpose borrowings, the financial condition of the issuer with
respect to liquidity, cash flow and ability to meet anticipated debt
service requirements and political developments that may affect credit
quality. Since the risk of default is higher for lower-quality obligations,
FMR's research and analysis are an integral part of choosing the fund's
securities. Through portfolio diversification and careful credit analysis,
FMR can reduce risk, although there can be no assurance that losses will
not occur. FMR also considers trends in the economy, in geographic areas,
in various industries, and in the financial markets.
FIDELITY ADVISOR INSTITUTIONAL EQUITY PORTFOLIO INCOME seeks to
obtain reasonable income from a portfolio consisting primarily of
income-producing equity securities. The Fund seeks a yield from dividend
and interest income which exceeds the composite dividend yield on
securities comprising the S&P 500. In addition, consistent with the
primary objective of obtaining reasonable income, in managing its
portfolio, the Fund will consider the potential for achieving capital
appreciation.
It is the policy of the Fund that at least 65% of its total assets
normally will be invested in income-producing equity securities. For
purposes of this policy, equity securities are defined as common stocks and
preferred stocks.
The balance of the Fund will tend to be invested in debt obligations, a
high percentage of which are expected to be convertible into common stocks.
As a non-fundamental policy the Fund may invest in lower-quality,
high-yielding debt securities (commonly referred to as "junk bonds")
although it currently intends to limit its investments in these securities
to 35% of its assets. Additionally, the Fund may purchase or engage in
foreign investments, indexed securities, illiquid investments, loans and
other direct debt instruments, options and futures contracts, repurchase
agreements and securities loans, restricted securities, short sales, swap
agreements, and warrants.
Because of the income considerations, investors should not expect
capital appreciation comparable to the appreciation which could be achieved
by funds whose primary objective is capital appreciation. While the
investment portfolio will not mirror the stocks in the S&P 500 (unlike
an index fund), the yield on the overall investment portfolio generally
will increase or decrease from year to year in accordance with market
conditions and in relation to the changes in yields of the stocks included
in the S&P 500.
The Fund may make temporary investments in securities such as
investment-grade bonds or short-term notes for defensive purposes.
FIDELITY ADVISOR INSTITUTIONAL EQUITY PORTFOLIO GROWTH seeks to
achieve capital appreciation by investing primarily in the common and
preferred stock, and securities convertible into the common stock, or
companies with above average growth characteristics.
As a general rule, the Fund will invest in the securities of companies
whose growth in the areas of earnings or gross sales measured either in
dollars or in unit volume (either on an absolute or percentage basis) may
exceed that of the average of the companies whose securities are included
in the S&P 500. These securities generally command high multiples
(price/earnings ratios) in the stock markets over time. Above average
growth characteristics are most often associated with companies in new and
emerging areas of the economy but occasionally can be found in the stronger
companies of more mature and even declining industries. The Fund will,
therefore, be invested in the securities of smaller, less well-known
companies except when FMR believes that opportunities for above-average
growth are presented by larger, more mature companies which have undergone
reformation and revitalization or possess a strong position in relation to
the market as a whole.
The market price of securities with above average growth characteristics
often can experience a more sudden and more dramatic downward reaction to
negative news than is the case with securities carrying a lower market
multiple. This can be particularly true for companies with a narrow product
line or whose securities are relatively thinly-traded, characteristics
which are common to smaller, less well-known companies.
As a non-fundamental policy, at least 65% of the total assets of the
Fund normally will be invested in common and preferred stock. The balance
of the Fund will tend to be invested in debt obligations, a high percentage
of which are expected to be convertible into common stocks. As a
non-fundamental policy, the Fund may invest in lower-quality, high yielding
debt securities (commonly referred to as "junk bonds") although, it
currently intends to limit its investments in these securities to 35% of
i ts assets. The Fund also may purchase or engage in foreign
investments, indexed securities, illiquid investments, loans and other
direct debt instruments, options and futures contracts, repurchase
agreements and securities loans, restricted securities, swap agreements,
and warrants.
FIXED-INCOME FUNDS: Fixed income funds invest primarily in debt
securities (e.g., bonds, debentures, notes and similar obligations). The
share value of fixed-income funds tends to move inversely with changes in
prevailing interest rates. Shorter-term bonds are less sensitive to
interest rate changes, but longer-term bonds generally offer higher yields.
Share value and yield will fluctuate based on the credit quality and
changes in interest rates.
FIDELITY ADVISOR INSTITUTIONAL LIMITED TERM BOND FUND seeks to
provide a high rate of income through investment in high- and upper-medium
grade fixed-income obligations. The Fund will maintain a dollar-weighted
average maturity of 10 years or less, defined herein as "limited term." In
addition, the Fund may seek capital appreciation when consistent with its
primary objective.
The Fund seeks to provide a high rate of income through investments in
high- and upper-medium grade fixed-income obligations, as follows:
(I) Corporate obligations which are rated AAA, AA, or A by
S&P, or Aaa, Aa, or A by Moody's;
(II) Obligations issued or guaranteed as to interest and
principal by the government of the U.S., or any agency or instrumentality
thereof;
(III) Obligations (including certificates of deposit and bankers'
acceptances) of U.S. banks which at the date of investment have capital
gains, surplus, and undivided profits (as of the date of their most
recently published annual financial statements) in excess of
$100,000,000;
(IV) Commercial paper which at the date of investment is rated
A-1 or A-2 by S&P or Prime-1 or Prime-2 by Moody's or, if not rated, is
issued by companies which at the date of investment have an outstanding
debt issue rated AAA, AA, or A by S&P or Aaa, Aa, or A by Moody's;
and
(V) Such other fixed-income instruments as the Board of Trustees,
in its judgment, deems to be of comparable quality to those enumerated
above.
Instruments in which the Fund may invest include asset-backed
securities, collateralized mortgage obligations, convertible securities,
loans and other direct debt instruments, mortgage backed securities and
zero coupon securities.
FMR's standards for determining high- and upper-medium grades are
essentially the same as those described by S&P and Moody's as
characteristic of their ratings of A and above. Such instruments have
strong protection of principal and interest payments. In addition to
reliance on S&P's or Moody's ratings, FMR also performs its own credit
analysis. The Fund also may invest in unrated instruments, and may at times
purchase instruments rated below A if FMR judges them to be of comparable
quality to those rated A or better. Currently, the Fund does not intend to
invest in debt obligations rated below BBB. Investment-grade bonds are
generally of medium to high quality. Those rated in the lower end of the
category (Baa/BBB), however, may possess speculative characteristics and
may be more sensitive to economic changes and changes in the financial
condition of issuers.
In addition, the Fund may seek capital appreciation when consistent with
its primary objective. In seeking capital appreciation, FMR will select
securities for the Fund based on its judgment as to economic and market
conditions and the prospects for interest rate changes.
The Fund may purchase or engage in foreign investments, indexed
securities, illiquid investments, loans and other direct debt instruments,
options and futures contracts, repurchase agreements and securities loans,
restricted securities, and swap agreements. The Fund also may engage in
reverse repurchase agreements for temporary or emergency purposes and not
for investment purposes.
As of November 30, 1993 the average maturity was 8.12 years. Based on
FMR's assessment of interest rate trends, generally, the average maturity
will be shortened when interest rates are expected to rise and lengthened
up to 10 years when interest rates are expected to decline.
MUNICIPAL/TAX-EXEMPT FUNDS: Tax-exempt funds invest primarily in
municipal securities which are issued by state and local governments and
their agencies to raise money for various public purposes, including
general purpose financing for state and local governments as well as
financing for specific projects or public facilities. Municipal securities
may be backed by the full taxing power of a municipality or by the revenues
from a specific project or the credit of a private organization. Some
municipal securities are insured by private insurance companies, while
others may be supported by letters of credit furnished by domestic or
foreign banks. FMR monitors the financial condition of parties (including
insurance companies, banks, and corporations) whose creditworthiness is
relied upon in determining the credit quality of securities the Fund may
purchase.
Yields on municipal bonds, and therefore the yield of Limited Term
Tax-Exempt, depends on factors such as general market conditions, interest
rates, the size of a particular offering, the maturities of the obligations
and the quality of the issues. The ability of the Fund to achieve its
investment objective is also dependent on the continuing ability of the
issuers of the municipal obligations in which the Fund invests to meet its
obligations for the payment of interest and principal when due.
Bonds generally are considered to be interest rate sensitive, which
means that their values move inversely to interest rates. Long-term
municipals generally are more exposed to market fluctuations resulting from
changes in interest rates than are short-term municipals.
FIDELITY ADVISOR INSTITUTIONAL LIMITED TERM TAX-EXEMPT FUND seeks
the highest level of income exempt from federal income taxes that can be
obtained consistent with the preservation of capital, from a diversified
portfolio of high quality or upper-medium quality municipal obligations.
Under normal conditions, at least 80% of the Fund's annual income will be
exempt from federal income taxes and at least 80% of the Fund's net assets
will be invested in obligations having remaining maturities of 15 years or
less. The Fund will maintain a dollar-weighted average maturity of 10
years or less.
The Fund will seek to achieve its objective by investing in a
diversified portfolio of municipal obligations whose interest payments are
exempt from federal income tax. These obligations, including industrial
development revenue bonds, are issued by or on behalf of states,
territories, and possessions of the United States and the District of
Columbia and their political subdivisions, agencies, and instrumentalities.

The Fund will invest in municipal obligations which, in the judgment of
FMR, are "high quality" or at least "upper-medium quality." The Fund's
standards for "high quality" and "upper-medium q uality" obliga tions
are essentially the same as those described by Moody's in rating municipal
obligations within its three highest ratings of Aaa, Aa, and A and as those
described by S&P in rating such obligations within its three highest
ratings of AAA, AA and A. As a non-fundamental policy, the Fund will not
purchase a security rated by Moody's or S&P unless it has received at
least an A rating from either rating service.
The Fund may invest up to 20% of its total assets, in municipal
obligations which are unrated by Moody's or S&P if, in the judgment of
FMR, such municipal obligations meet the standards of quality as set forth
above. Unrated bonds are not necessarily of lower quality and may have
higher yields than rated bonds, but the market for rated bonds is usually
broader.
The Fund may engage in delayed delivery transactions and may purchase
restricted securities and engage in options and futures contracts.
The Fund's investments in municipal securities may include fixed,
variable, or floating rate general obligations and revenues bonds
(including municipal lease obligations and resource recovery bonds); zero
coupon and asset-backed securities; inverse floaters; tax, revenue, or bond
anticipation notes; and tax-exempt commercial paper.
The Fund may invest up to 25% of its total assets in a single issuer's
securities. The Fund may invest any portion of its assets in industrial
revenue bonds (IRBs) backed by private issuers, and may invest up to 25% of
its total assets in IRBs related to a single industry. The Fund may also
invest 25% or more of its total assets in securities whose revenue sources
are from similar types of projects ( e.g., education, electric utilities)
health care, housing, transportation, or water, sewer, and gas utilities or
whose issuers share the same geographic location. There may be economic,
business or political developments or changes that affect all securities of
a similar type. Therefore, developments affecting a single issuer or
industry, or securities financing similar types of projects, could have a
significant effect on the Fund's performance.
The Fund currently does not intend to invest in taxable obligations;
however, consistent with that portion of its investment objective concerned
with the preservation of capital, from time to time the Fund may invest a
portion (normally not to exceed 20%) of its net assets on a temporary basis
in fixed-income obligations whose interest is subject to federal income
tax. These taxable obligations may include repurchase agreements. The Fund
does not currently intend to invest in AMT bonds.
INVESTMENT LIMITATIONS
Each Fund has adopted the following investment limitations designed to
reduce investment risk. The policies and limitations discussed below, and
in the Appendix beginning on page __, are considered at the time of
purchase. With the exception of each Fund's borrowing policy, the sale of
portfolio securities is not required in the event of a subsequent change in
circumstances.
DIVERSIFICATION: These limitations do not apply to U.S.
government securities and are fundamental.
(bullet) Equity Portfolio Growth may not purchase a security if, as a
result, more than 5% of its total assets would be invested in the
securities of any issuer.
(bullet) With respect to 75% of its total assets, each other Fund may
not purchase a security if, as a result, more than 5% of its total assets
would be invested in the securities of any issuer.
(bullet) Limited Term Tax-Exempt may not purchase the securities of any
issuer if, as a result, more than 25% of its total assets would be in
industrial development bonds whose issuers are in any one industry.
(bullet) Each Fund may not purchase a security if, as a result, it
would hold more than 10% of the outstanding voting securities of any issuer
(except that Equity Portfolio Income may invest up to 25% of its total
assets without regard to this limitation).
(bullet) Each Fund may not purchase the securities of any issuer if, as
a result, more than 25% of the Fund's total assets would be invested in the
securities of issuers having their principal business activities in the
same industry. Limited Term Bond may, however, invest more than 25% of its
total assets in obligations of banks.
BORROWING: The following limitations are fundamental.
(bullet) Each Fund may borrow money for temporary or emergency purposes
in an amount not exceeding 33 1/3% of the value of its total assets.
(bullet) Limited Term Bond and Limited Term Tax-Exempt may not purchase
any security while borrowings representing 5% or more of its total assets
are outstanding.
The following limitations are non-fundamental.
(bullet) Equity Portfolio Income and Equity Portfolio Growth may not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding.
(bullet) Each Fund may borrow money from banks or from other funds
advised by FMR or by engaging in reverse repurchase agreements.
LENDING: Percentage limitations are fundamental.
(bullet) Limited Term Tax-Exempt does not currently intend to engage in
repurchase agreements or make loans (but this limitation does not apply to
purchases of debt securities).
(bullet) Each other Fund (a) may lend securities when the loan is fully
collateralized; and (b) may lend money to other funds advised by FMR or an
affiliate. Each Fund will limit loans in the aggregate to 33 1/3% of its
total assets.
Each Fund has received permission from the SEC to lend money to and
borrow money from other funds advised by FMR or its affiliates. Limited
Term Tax-Exempt will participate only as a borrower. If a Fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. To this extent, purchasing securities when
borrowings are outstanding may involve an element of leverage.
As a non-fundamental policy, each Fund may not purchase a security if as
a result, more than 10% of its assets would be invested in illiquid
investments.
PURCHASING SHARES OF THE FUNDS
Shares of each Fund are offered continuously to (i) banks and trust
institutions investing for their own accounts or for accounts of their
trust customers, (ii) plan sponsors meeting the ERISA definition of
fiduciary, (iii) government entities or authorities, and (iv) corporations
with at least $100 million in annual revenues. Shares may be
purch ased at the net asset value (NAV) next determined after the
transfer agent receives the order to purchase.
Orders for the purchase of shares must be transmitted to the transfer agent
before 4:00 p.m. Eastern time in order for the investor to receive that
day's share price. An investor can open an account for $100,000 or more by
completing and returning a signed account application. Orders will be
confirmed at the NAV next determined following receipt of the order by the
transfer agent. Additional investments of $2,500 or more may be made.
Minimum investments may differ for tax-deferred retirement plans. For
specific information on opening an account, please contact your
institutional sales representative.
Fund shares also are offered to any investor who purchased shares of the
Funds prior to September 10, 1992. Any such investor will be exempt from
the investment minimum and account balance requirements currently in effect
for shares. Further, this exemption is also available to any investor
having opened an account in the Funds prior to January 29, 1993 through a
registered investment adviser not registered as a broker-dealer that
charges an account management fee.
All purchases must be made in U.S. dollars and checks must be drawn on
U.S. banks. Each Fund reserves the right to limit the number of checks
processed at one time. If a check does not clear, the Fund may cancel the
purchase and the investor could be held liable for any fees and/or losses
incurred. When an investor purchases by check, the Fund can hold the
proceeds of redemptions until the transfer agent is reasonably satisfied
that the purchase payment has been collected (which can take up to seven
days). An investor may avoid a delay in receiving redemption proceeds by
purchasing shares with a certified check.
Financial institutions that meet Distributors' creditworthiness criteria
may enter confirmed purchase orders on behalf of customers by phone, with
payment to follow no later than the close of business on the next business
day. If payment is not received by the next business day, the order will be
canceled and the financial institution may be liable for any losses.
Investors in Limited Term Bond and Limited Term Tax-Exempt begin to earn
income dividends on a confirmed purchase on the day the Fund receives
payment. For all other purchase orders for these Funds, investors begin to
earn income dividends on the business day after receipt of payment.
Each Fund and Distributors reserves the right to suspend the offering of
shares for a period of time and to reject any order for the purchase of
shares, including certain purchases by exchange (see "Exchange
Privileges"). Purchase orders may be refused if, in FMR's opinion, they are
of a size that would disrupt the management of each Fund.
TO INVEST BY WIRE: It is recommended that investors wire funds early in the
day to ensure proper credit. For wire information and instructions, please
call the institution through which you trade or Fidelity Client
Se rvices at (800) 343-3001.
DISTRIBUTION OPTIONS
An investor may choose from three different Distribution Options:
A. The SHARE OPTION reinvests income dividends and capital gain
distributions.
B. The INCOME-EARNED OPTION pays income dividends by check
and reinvests capital gain distributions.
C. With the CASH OPTION the investor receives income dividends and
capital gain distributions by check.
The Distribution Option may be changed at any time by notifying the
transfer agent in writing. If no distribution option is selected when an
account is opened, the Share Option automatically will be assigned. On
the day a Fund goes ex-dividend, the amount of the distribution is deducted
from its share price. Reinvestment of distributions will be made at that
day's NAV. Cash distribution checks will be mailed within seven d ays.
EXCHANGE PRIVILEGES
An exchange is the redemption of shares of one fund at the next determined
NAV and the purchase of shares of another fund at the next determined NAV.
The exchange privilege is a convenient way to sell and b uy shares of
other Fidelity Advisor Institutional Funds and other Fidelity funds
registered in the investor's state. Sales charges for Fidelity funds, if
any, will apply unless the exchange is made pursuant to a load waiver
policy of the fund to be acquired. Please consult that fund's prospectus to
determine if any load waiver policies apply. FOR INSTRUCTIONS ON ENTERING
AN EXCHANGE TRANSACTION, PLEASE CONSULT THE PROGRAM MATERIALS.
To protect each Fund's performance and shareholders, FMR discourages
frequent trading in response to short-term market fluctuations. Each Fund
reserves the right to refuse exchange purchases by any person or group if,
in FMR's opinion, a Fund would be unable to invest effectively in
accordance with its investment objective and policies, or would otherwise
be affected adversely. Exchanges may be restricted or refused if the Fund
receives or anticipates simultaneous orders affecting significant portions
of the Fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to each Fund. Although
each Fund will attempt to give prior notice whenever it is reasonably able
to do so, it may impose these restrictions at any time. Each Fund may
modify or terminate the exchange privilege.
Before making an exchange, please note the following:
(bullet) Read the prospectus of the fund to be acquired by exchange.
(bullet) Investors may only exchange between accounts that are registered
in the same name, address, and taxpayer identification number. Exchanges
will not be permitted until a completed and signed application is on file.
(bullet) There is currently a limit of four exchanges out of each Fund per
calendar year. Each Fund reserves the right to temporarily or permanently
suspend the exchange privilege for any investor who exceeds this limit.
Other funds may have different exchange restrictions. Please check each
fund's prospectus for details. The exchange limit may be modified for
accounts in certain institutional retirement plans to conform to plan
exchange limits and Department of Labor Regulations. See plan materials for
further information.
TAXES. Each exchange actually represents the sale of shares from one fund
and the purchase of shares in another fund and, depending upon the tax
basis of the exchanged shares, may result in a loss or taxable gain.
REDEEMING SHARES OF THE FUNDS
Investors may redeem all or a portion of their shares on any day the New
York Stock Exchange (NYSE) is open, at the NAV next determined after the
transfer agent receives the redemption request. Any redemption orders
received by the transfer agent before 4:00 p.m. Eastern time on any
business day will receive that day's NAV.
Once an investor's shares are redeemed, each Fund normally will send the
proceeds on the next business day to the address of record on the account.
If making immediate payment could adversely affect the Fund, the Fund may
take up to seven days to pay redemption proceeds. Each Fund may withhold
redemption proceeds until it is reasonably satisfied that it has collected
investments that were made by check (which may take up to seven days). The
transfer agent requires additional documentation to redeem shares
registered in the name of a corporation, agent or fiduciary, or a surviving
joint owner.
When the NYSE is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any
emergency circumstances as determined by the SEC to merit such action, each
Fund may suspend redemption or postpone payment dates. FOR FURTHER
INFORMATION ON REDEEMING SHARES, PLEASE CONSULT THE PROGRAM MATERIALS.
TO REDEEM BY MAIL: An investor may redeem by submitting written
instructions with an authorized signature that is on file for that account.
Each Fund reserves the right to require that the signature be guaranteed by
a bank, broker, dealer, municipal securities dealer, municipal securities
broker, government securities dealer, government securities broker, credit
union (if authorized under state law), national securities exchange,
registered securities association, clearing agency or savings association.
Written requests for redemption should be mailed to:
Fund Name
FIIOC, ZR5
P.O. Box 1182
Boston, MA 02103-1182
An investor may redeem shares of each Fund having a NAV of $100,000 or less
by calling the transfer agent. Redemption proceeds must be sent to the
address of record listed on the account, and a change of address must not
have occurred within the preceding 60 days.
TO REDEEM BY TELEPHONE: An investor may redeem Fund shares and instruct the
transfer agent to have proceeds wired directly to a designated bank
account. In making redemption requests, the name(s) on the investor's
account registration and the account number must be supplied. To redeem by
telephone, call the transfer agent:
NATIONWIDE (TOLL FREE) (800) 343-3001
Y ou may initiate many transactions by telephone. Note that Fidelity
will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the
identity of the caller. Fidelity will request personalized security codes
or other information, and may also record calls. The investor should
verify the accuracy of the confirmation statements immediately after
receipt. If an investor does not want the ability to redeem and exchange
by telephone, call Fidelity for instructions. Additional documentation may
be required from corporations, associations and certain fiduciaries.
MINIMUM ACCOUNT BALANCE. Each Fund account must have a balance of $40,000
in it in order to remain open. If the account balance falls below $40,000
due to redemption, the transfer agent may close it and mail the proceeds to
the address shown on the transfer agent's records. The transfer agent will
give 30 days' notice that an investor's account will be closed unless an
investment is made to increase the account balance to the $40,000 minimum.
Please note that shares will be redeemed at the NAV on the day the account
is closed.
SHAREHOLDER SERVICES
The transfer agent will send a confirmation to the investor after every
transaction that affects the share balance or the account registration. At
least twice a year each investor will receive a financial statement, with a
summary of its portfolio composition and performance. To reduce expenses,
only one copy of most shareholder reports (such as a Fund's Annual Report)
may be mailed to each investor address. Please write to the transfer agent
to have additional reports sent each time.
Each Fund pays for these shareholder services, but not for special services
that are required by a few shareholders, such as a request for a historical
transcript of an account. An investor may be required to pay a fee for
these special services. If an investor is purchasing shares of each Fund
through a program of administrative services offered by an investment
professional, read materials pertaining to that program in conjunction with
this Prospectus. Certain features of each Fund, such as the minimum initial
or subsequent investment, may be modified in these programs, and
administrative charges may be imposed for the services rendered.
TAX INFORMATION
DISTRIBUTIONS. The Funds distribute substantially all of their net
investment income and capital gains each year pursuant to the following
schedule. Each Fund may pay capital gains in December. In addition, Equity
Portfolio Income, Equity Portfolio Growth, Limited Term Bond and Limited
Term Tax-Exempt may pay capital gains in January.
Equity Portfolio Growth pays net investment income in January and December;
Limited Term Bond and Limited Term Tax-Exempt declare dividends daily and
pay monthly; and Equity Portfolio Income declares dividends in March, June,
September, and December, and pay the following month.
CAPITAL GAINS. An investor may realize a gain or loss when shares are sold
(redeemed) or exchanged. For most types of accounts, a Fund will report the
proceeds of redemptions to the investor and the Inter nal Rev enue
Service (IRS) annually. However, because the tax treatment also depends on
an investor's purchase price and personal tax position, regular account
statements should be retained for tax purposes.
BUYING A DIVIDEND. On the record date for a distribution from a Fund, the
Fund's share price is reduced by the amount of the distribution. If shares
are bought just before the record date (buying a dividend), an investor
will pay the full offering price for the shares, and then receive a portion
of the price back as a taxable distribution.
FEDERAL TAXES. With the exception of Limited Term Tax-Exempt, distributions
from each Fund's income and short-term capital gains are taxed as
dividends, and long-term capital gain distributions are taxed as long-term
capital gains. Gains on the sale of tax-free bonds results in a taxable
distribution. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Distributions are taxable
when they are paid, whether taken in cash or reinvested in additional
shares, except that distributions declared in December and paid in January
are taxable as if paid on December 31. Each Fund will send a tax statement
by January 31 showing the tax status of the distributions received in the
past year. A copy will be filed with the IRS.
To the extent that a Fund invests in municipal obligations whose
interest is subject to the federal alternative minimum tax for individuals
(A MT bonds), individuals who are subject to the AMT will be required to
report a portion of the Fund's dividends as a "tax-preference item" in
determining their federal tax. Federally tax-free interest earned by the
Fund is federally tax-free when distributed as income dividends. During the
most recent fiscal year ended, 100% of the income dividends for Limited
Term Tax-Exempt were free from federal tax. If the Fund earned taxable
income from any of its investments, it will be distributed as a taxable
dividend.
Some of the Funds may be eligible for the dividends-received deduction for
corporations.
If a Fund has paid withholding or other taxes to foreign governments during
the year, the taxes will reduce the Fund's dividends but will be included
in the taxable income reported on your tax statement. An investor may be
able to claim an offsetting tax credit or itemized deduction for foreign
taxes paid by a Fund. A tax statement will show the amount of foreign tax
for which a credit or deduction may be available.
OTHER TAX INFORMATION. In addition to federal taxes, an investor may be
subject to state or local taxes on an investment, depending on the laws in
your area. Because some states exempt their own municipal obligations from
tax, an investor will receive tax information each year showing how Limited
Term Tax-Exempt allocated its investments by state.
When an account application is signed, an investor will be asked to certify
that the social security or taxpayer identification number is correct and
that the investor is not subject to 31% backup withholding for failing to
report income to the IRS. If an investor violates IRS regulations, the IRS
can require a Fund to withhold 31% of taxable distributions and
redemptions.
FEES AND EXPENSES
MANAGEMENT AND OTHER SERVICES. For managing its investments and business
affairs, each Fund pays a monthly fee to FMR.
Each Fund (with the exception of Equity Portfolio Income, see below)
pays a monthly f ee to FMR based on a management fee rate, which is
the sum of two components:
1. A group fee rate based on the monthly average net assets of all of the
mutual funds advised by FMR. This rate for equity funds cannot rise above
.52% and it drops (to as low as a marginal rate of .31%*) as total assets
in all of these funds rise. The effective equity fund group fee rate for
November 1993 was .3250%. The group fee rate for fixed-income funds cannot
rise above .37% and it drops (to as low as a marginal rate of .15%*) as
total assets in all of these funds rise. The effective fixed-income group
fee rate for November 1993 was .1627%.
2. An individual fund fee rate, which varies for each Fund.
* FMR VOLUNTARILY AGREED TO ADOPT REVISED GROUP FEE RATE SCHEDULES WHICH
PROVIDE FOR A MARGINAL RATE AS LOW AS .2850% (EQUITY FUNDS) AND .1325%
(FIXED-INCOME FUNDS) WHEN AVERAGE GROUP NET ASSETS EXCEED $336 BILLION. A
NEW MANAGEMENT CONTRACT WITH A REVISED GROUP FEE RATE SCHEDULE WILL BE
PRESENTED FOR APPROVAL AT EACH FUND'S NEXT SHAREHOLDER MEETING.
One-twelfth of the annual management fee rate is applied to each Fund's net
assets averaged over the most recent month, giving a dollar amount which is
the management fee for that month.
Equity Portfolio Income pays FMR a monthly management fee of an annual rate
of .50% of its average net assets.
The following are the individual fund fee rates and total management fees
for each Funds most recent fiscal year end.
INDIVIDUAL TOTAL
FUND FEE (AS MANAGEMENT FEE
A PERCENTAGE (AS A PERCENT OF
OF AVERAGE AVERAGE NET
NET ASSETS) ASSETS) BEFORE
REIMBURSEMENTS,
IF ANY

EQUITY FUNDS:

Equity Portfolio Income n/a .50%

Equity Portfolio Growth .33% .66%

FIXED INCOME FUNDS:

Limited Term Bond .25% .42%

Limited Term Tax-Exempt .25% .42%

FMR may, from time to time, agree to reimburse a Fund for expenses
(excluding interest, taxes, brokerage commissions, and extraordinary
expenses) above a specified percentage of average net assets. FMR retains
the ability to be repaid by a Fund for these expense reimbursements in the
amount that expenses fall below the limit prior to the end of the fiscal
year. Fee reimbursements by FMR will increase a Fund's yield and total
return, and repayment by a Fund will lower its yield and total return. FMR
voluntarily agreed to reimburse expenses of Limited Term Tax-Exempt to the
extent that expenses exceed .65% of its average net assets.
Equity Portfolio Income, Equity Portfolio Growth, and Limited Term
B ond have entered into sub-advisory agreements with Fidelity Management
& Research (U.K.) Inc. (FMR U.K.) and Fidelity Manage ment &
Research (Far East) Inc. (FMR Far East). Sub-advisors provide research and
investment advice and research services with respect to companies based
outside the United States and may grant sub-advisors investment management
authority as well as the authority to buy and sell securities if FMR
believes it would be beneficial to a Fund. FM R U.K. focuses primarily
on companies based in Europe, and FMR Far East focuses primarily on
companies based in Asia and the Pacific Basin. Under the sub-advisory
agreements, FMR, and not the Fund, pays FMR U.K. and FMR Far East fees
equal to 110% and 105%, respectively, of each sub-advisor's costs incurred
in connection with its sub-advisory agreement.
Fidelity Investments Institutional Operations Company (the "transfer
agent"), an affiliate of FMR, 82 Devonshire Street, Boston, Massachusetts
02109, is each Fund's transfer and dividend paying agent (with the
exception of Limited Term Tax-Exempt, see below). Each Fund pays the
transfer agent fees based on the type, size and number of accounts in a
Fund and the number of monetary transactions made by shareholders. For the
most recent fiscal year, the fee for transfer agency services amounted to
$239,364 (Equity Portfolio Income), $324,822 (Equity Portfolio Growth) and
$180,350 (Limited Term Bond).
Fidelity Service Co. (Service), 82 Devonshire Street, Boston, Massachusetts
02109, an affiliate of FMR, calculates each Fund's daily share price and
maintains its general accounting records (with the exception of Limited
Term Tax-Exempt, see below). For those Funds which can engage in securities
lending, Service also administers its securities lending program. The fees
for pricing and bookkeeping services are based on a Fund's average net
assets, but must fall within a range of $45,000 to $750,000 per year. For
the most recent fiscal year ended, each Fund's fees for pricing and
bookkeeping services (including re lated out-of-pocket expenses) amounted
to: $113,026 (Equity Portfolio Income); $234,813 (Equity Portfolio Growth)
and $81,106 (Limited Ter m Bond).
United Missouri Bank, N.A. (United Missouri), 1010 Grand Avenue, Kansas
City, Missouri 64106, acts as the custodian, transfer and pricing and
bookkeeping agent for Limited Term Tax-Exempt. United Missouri has a
sub-arrangement with the transfer agent for transfer agent services and a
sub-arrangement with Service for pricing and bookkeeping services. For the
most recent fiscal year ended, fees paid to the transfer agent and Service
(including related out-of-pocket expenses) amounted to $11,310 and
$45,724, respectively. All of the fees are paid to the transfer agent and
Service by United Missouri, which is reimbursed by the Fund for such
payments.
Each Fund's operating expenses include custodial, legal and accounting
fees, charges to register a Trust or Fund with federal and state regulatory
authorities, and other miscellaneous expenses. Each Fund's total operating
expenses after reimbursement, if any, as a percent of average net assets,
for the most recent fiscal year ended were as follows: .79% (Equity
Portfolio Income); .94% (Equity Portfolio Growth); .64% (Limited Term
Bond); .65% (Limited Term Tax-Exempt). If FMR had not reimbursed Limited
Term Tax-Exempt Fund, total operating expenses for the most recent fiscal
year ended would have been .83%.
DISTRIBUTION AND SERVICE PLAN. The Board of Trustees of each Fund have
adopted a Distribution and Service Plan (the Plan) on be half of the
Institutional class pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the Rule). The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
intended primarily to result in the sale of Institutional class shares
except pursuant to a plan adopted by the Fund under the Rule. The Board of
Trustees has adopted the Plan to allow each Institutional class and FMR to
incur certain expenses that might be considered to constitute direct or
indirect payment by each Institutional class of distribution expenses. No
separate payments by each Institutional class are authorized under the
Plan. Rather, the Plan recognizes that FMR may use its management fee and
other resources to pay expenses associated with activities primarily
intended to result in the sale of Institutional class shares. It also
provides that FMR may make payments from these sources to securities
dealers and banks having agreements with Distributors (investment
professionals) that provide shareholder support services or engage in the
sale of Institutional class shares . The Board of Trustees has not
authorized such payments.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been fully defined, in Distributors' opinion it
should not prohibit banks from being paid for shareholder servicing and
recordkeeping. If, because of changes in law or regulation, or because of
new interpretations of existing law, a bank or a Fund were prevented from
continuing these arrangements, it is expected that the Board would make
other arrangements for these services and that shareholders would not
suffer adverse financial consequences. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
FUND SHARES VALUATION
A Fund's shares are valued at net asset value (NAV). NAV is determined for
shares of each Fund by adding the value of all security holdings and other
assets of the Fund, deducting liabilities allocated to each class,
an d then dividing the result by the proportional number of shares of
the Fund outstanding in a class.
NAV normally is calculated as of the close of business of the NYSE
(normally 4:00 p.m. Eastern time). The Funds are open for business and NAV
is calculated each day the NYSE is open for trading. Portfolio securities
and other assets are valued primarily on the basis of market quotations
furnished by pricing services, or if quotations are not available, by a
method that the Board of Trustees believes accurately reflects fair value.
Foreign securities are valued based on quotations from the primary market
in which they are traded and are converted from the local currency into
U.S. dollars using current exchange rates.
FUND PERFORMANCE
Each Fund's performance may be quoted in advertising in terms of total
return. All performance information is historical and is not intended to
indicate future performance. Share price and total return fluctuate in
response to market conditions and other factors, and the value of a Fund's
shares when redeemed may be worth more or less than their original cost.
TOTAL RETURN is the change in value of an investment in a Fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
The Funds also may quote performance in terms of yield. YIELD refers to the
income generated by an investment in a Fund over a given period of time,
expressed as an annual percentage rate. Yields are calculated according to
a standard that is required for all stock and bond funds. Limited Term
Tax-Exempt may quote a TAX-EQUIVALENT YIELD, which shows the taxable yield
an investor would have to earn after taxes to equal the Fund's tax free
yield. A TAX-EQUIVALENT YIELD is calculated by dividing a Fund's yield by
the result of one minus a stated federal tax rate. Because yield
calculations differ from other accounting methods, the quoted yield may not
equal the income actually paid to shareholders. This difference may be
significant for funds whose investments are denominated in foreign
currencies. In calculating yield, the Funds may, from time to time, use a
security's coupon rate instead of its yield to maturity in order to reflect
the risk premium on that security. This practice will have the effect of
reducing a Fund's yield. Fixed Income Funds, including Tax-Exempt Funds,
may also quote distribution rate, which reflects the Fund's income
dividends to its shareholders, divided by the Fund's offering price for
each day in a given period.

Other illustrations of performance may show moving averages over
specified periods. For additional performance information, see the
at tached annual reports.
PORTFOLIO TRANSACTIONS
FMR uses various brokerage firms to carry out each Fund's equity security
transactions. Fixed-income securities are generally traded in the
over-the-counter market through broker-dealers. A broker-dealer is a
securities firm or bank which makes a market for securities by offering to
buy at one price and sell at a slightly higher price. The difference is
known as a spread. Foreign securities are normally traded in foreign
countries since the best available market for foreign securities is often
on foreign markets. In transactions on foreign stock exchanges, except in
Canada, brokers' commissions are generally fixed and are often higher than
in the United States, where commissions are negotiated. Since FMR, directly
or through affiliated sub-advisors, places a large number of transactions,
including those of Fidelity's other funds, the Funds pay lower commissions
than those paid by individual investors, and broker-dealers are willing to
work with the Funds on a more favorable spread.
The Funds have authorized FMR to allocate transactions to some
broker-dealers who help distribute the Fund's shares or the shares of
Fidelity's other funds to the extent permitted by law, and on an agency
basis, to Fidelity Brokerage Services, Inc. (FBSI) and Fidelity Brokerage
Services Ltd. (FBSL), affiliates of FMR. FMR will make such allocations if
commissions are comparable to those charged by non-affiliated qualified
broker-dealers for similar services.
FMR may also allocate brokerage transactions to a Fund's custodian, acting
as a broker-dealer, or other broker-dealers, so long as transaction quality
and commission rates are comparable to those of other broker-dealers, where
the broker-dealers will allocate a portion of the commissions paid toward
payment of a Fund's expenses. These expenses currently include transfer
agent and custodian fees.
Higher commissions may be paid to those firms that provide research,
valuation and other services to the extent permitted by law. FMR also is
authorized to allocate brokerage transactions to FBSI in order to secure
from FBSI research services produced by third party, independent entities.
FMR may use this research information in managing each Fund's assets, as
well as assets of other clients.
When consistent with its investment objective, each fixed-income fund may
engage in short-term trading. Also, a security may be sold and another of
comparable quality simultaneously purchased to take advantage of what FMR
believes to be a temporary disparity in the normal yield relationship of
the two securities.
The frequency of portfolio transactions - the turnover rate - will vary
from year to year depending on market conditions. Each Fund's turnover rate
for the most recent fiscal year ended was: 120% ( Equity Portfolio Income);
160% (Equity Portfolio Growth); 59% (Limited Term Bond); and 46% (Limited
Term Tax-Exempt). Because a high turnover rate increases transaction costs
and may increase taxable capital gains, FMR carefully weighs the
anticipated benefits of short-term investing against these consequences.
THE TRUSTS AND THE FIDELITY ORGANIZATION
Each Trust is an open-end diversified management investment company.
Each Trust was established by a separate Declaration of Trust as
Massachusetts business trusts on each date as follows: June 24, 1983,
(Fidelity Advisor Series I); May 17, 1982,( Fidelity Advisor Series III);
May 6, 1983, (Fidelity Advisor Series IV); and June 1, 1983, Fidelity
Advisor Series VI. Each Trust has its own Board of Trustees that
supervises Fund activities and reviews the Fund's contractual arrangements
with companies that provide the Funds with services. As Massachusetts
business trusts, the Funds are not required to hold annual shareholder
meetings, although special meetings may be called for a class of shares, a
Fund or a Trust as a whole for purposes such as electing or removing
Trustees, changing fundamental investment policies or limitations, or
approving a management contract or plan of distribution. Shareholders
receive one vote for each share and fractional votes for fractional shares
of the Fund. For shareholders of Equity Portfolio Income, the number of
votes a shareholder is entitled to is based upon the dollar value of the
investment. Separate votes are taken by each class of shares, or each Fund
if a matter affects just that class of shares or Fund, respectively. There
is a remote possibility that one Fund might become liable for any
misstatement in the Prospectus about another Fund. Each class of shares is
offered by a separate prospectus.
Each Fund is sold to both institutional and retail investors. This
prospectus offers fund shares to institutional investors (Institutional
class shares). Investment professionals do not receive any compensation
for selling or providing shareholder support services to institutional
investors. There are two classes of shares offered to retail investors:
Class A shares and Class B shares. Each class of shares has its own
prospectus.
CLASS A. Equity Portfolio Income, Equity Portfolio Growth, Limited Term
Bond and Limited Term Tax-Exempt each offer a class of shares which carries
a maximum 4.75% sales charge and is sold to retail investors who engage an
investment professional for investment advice ("Class A" shares). The
initial and subsequent investment minimums for Class A shares are $2,500
and $250, respectively. The minimum account balance for Class A investors
is $1,000. Reduced sales charges are applicable to purchases of $50,000 or
more of Class A shares of one Fund or in combination with purchases of
shares of certain other Fidelity Advisor Funds. Class A investors also may
qualify fora reduction in sales charge under the Rights of Accumulation or
Letter of Intent programs. Sales charges are waived for certain groups of
investors. In addition, Class A investors may participate in various
investment programs.
Class A shares of each Fund may be exchanged for Class A shares of other
Fidelity Advisor Funds. Transfer agent and shareholder services for Class
A shares of Equity Portfolio Income, Equity Portfolio Growth, and Limited
Term Bond are performed by State Street Bank and Trust Company and through
a sub-contractual arrangement with United Missouri Bank for Class A shares
of Limited Term Tax-Exempt. For the fiscal year ended November 30, 1993,
total operating expenses for the Class A shares of Equity Portfolio Income,
Equity Portfolio Growth, Limited Term Bond, and Limited Term Tax-Exempt
were 1.77%, 1.84%, 1.23%, and .90%, respectively, of average net assets.
If FMR had not reimbursed Limited Term Tax-Exempt, total operating expenses
would have been 1.36%. A portion of the brokerage commissions that Equity
Portfolio Income and Equity Portfolio Growth paid was used to reduce each
Fund's expenses. Without this reduction, total Fund operating
expenses would have been .80% and .95% for Equity Portfolio Income and
Equity Portfolio Growth, respectively.
Under their Distribution and Service Plans, the Class A shares of Equity
Portfolio Income and Equity Portfolio Growth each pay .65% (the Board can
approve a maximum rate of .75%); Limited Term Bond and Limited Term
Tax-Exempt each pay .25% (the Board can approve a maximum rate of .40%).
All or a portion of the distribution fee is paid to investment
professionals that provide shareholder support services or sell retail
Class A shares.
CLASS B. Equity Portfolio Income, Limited Term Bond, and Limited Term
Tax-Exempt each offer a class of shares which has a contingent deferred
sales charge and is sold to retail investors who engage an investment
professional for investment advice ("Class B" shares). Class B shares are
subject to a .75% annual distribution fee, a .25% annual service fee and a
contingent deferred sales charge upon redemption within six years of
purchase, which decreases from a maximum of 4% to 0%. At the end of the
six year periods, Class B shares automatically convert to Class A shares.
The initial and subsequent investment minimums for Class B are identical to
those for Class A.
Class B shares may be exchanged only for Class B shares of certain other
Fidelity Advisor Funds, as well as for Class B shares of Daily Money Fund:
U.S. Treasury Portfolio. Transfer agent and shareholder services for Class
B shares of Equity Portfolio Income and Limited Term Bond are performed by
FIIOC and through a sub-contractual arrangement with United Missouri Bank
for Class B shares of Limited Term Tax-Exempt. For the current fiscal
year, total operating expenses, as a percentage of average net assets, for
Class B shares are estimated to be as follows: ___% for Equity Portfolio
Income; ___% for Limited Term Bond and ___% for Limited Term
Tax-Exempt.
Class B shares of a Fund will generally have a lower yield and total
return than Class A shares of the same Fund, due to higher expenses in
general. Investment professionals may receive different levels of
compensation with respect to one particular class of shares over another
class of shares in the Funds.
Fidelity Investments is one of the largest investment management
organizations in the U.S. and has its principal business address at 82
Devonshire Street, Boston, MA 02109. It includes a number of different
companies that provide a variety of financial services and products. The
Trusts employ various Fidelity companies to perform certain activities
required to operate the Funds.
Fidelity Management & Research Company is the original Fidelity company
founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. It maintains a
large staff of experienced investment personnel and a full complement of
related support facilities. As of December 31, 1993, FMR advised funds
having approximately 15 million shareholder a ccounts with a total value
of more than $225 billion. Fidelity Distributors Corp. distributes shares
for the Fidelity funds.
FMR Corp. is the parent company for the Fidelity companies. Through
ownership of voting common stock, Edward C. Johnson 3d (President and a
Trustee of each Trust), Johnson family members, and various trusts for the
benefit of Johnson family form a controlling group with respect to FMR
Corp.
Bettina E. Doulton has been manager of, Advisor Equity Portfolio Income
since August 1993, and VIP Equity-Income since July 1993. Previously, she
managed select Automotive Portfolio and assisted on Fidelity Equity-Income
Portfolio and on Magellan(Registered trademark). Ms. Doulton also served
as an analyst following the domestic and European automotive and tire
manufacturing industry as well as the gaming and lodging industry. Ms.
Doulton joined Fidelity in 1985.
Michael S. Gray is vice president and manager of Advisor Limited Term Bond,
which he has managed since August 1987. Mr. Gray also manages Fidelity
Investment Grade Bond, Spartan Investment Grade Bond, and Intermediate
Bond. Mr. Gray joined Fidelity in 1982.
John (Jack) F. Haley Jr. is vice president and manager of Advisor Limited
Term Tax-Exempt, which he has managed since 1985. Mr. Haley also manages
California Tax-Free Insured, California Tax-Free High Yield, and Spartan
California Municipal High Yield. Mr. Haley joined Fidelity in 1981.
Robert E. Stansky is vice president and manager of Advisor Equity Portfolio
Growth, which he has managed since April 1987. Mr. Stansky also manages
Growth Company. Previously, he managed Emerging Growth and Select Defense
and Aerospace. Mr. Stansky joined Fidelity in 1983.
APPENDIX
The following paragraphs provide a brief description of securities in
which the Funds may invest and transactions they may make. Consistent
with its investment objective and policies, each Fund may invest in or
engage in one or more of the following securities transactions. However,
the Funds are not limited by this discussion and may purchase or engage in
one or more of the following securities or transactions if they are
co nsistent with a Fund's investment objective and policies.
DELAYED-DELIVERY TRANSACTIONS. Securities may be bought and sold on a
when-issued or delayed-delivery basis, with payment and delivery taking
place at a future date. The market value of securities purchased in this
way may change before the delivery date which could increase fluctuations
in a Fund's share price and yield. Ordinarily, a Fund will not earn
interest on securities purchased until they are delivered.
FOREIGN INVESTMENTS involve additional risks. Foreign securities and
securities denominated in or indexed to foreign currencies may be affected
by the strength of foreign currencies relative to the U.S. dollar, or by
political or economic developments in foreign countries. Foreign companies
may not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public information
about their operations. In addition, foreign markets may be less liquid or
more volatile than U.S. markets, and may offer less protection to investors
such as a Fund. These risks are typically greater for investments in less
developed countries whose governments and financial markets may be more
susceptible to adverse political and economic developments. FMR considers
these factors in making investments for a Fund.
A Fund may enter into currency exchange contracts (agreements to exchange
one currency for another at a future date) to manage currency risks and to
facilitate transactions in foreign securities. Although currency forward
contracts can be used to protect the Fund from adverse exchange rate
changes, they involve a risk of loss if FMR fails to predict foreign
currency values correctly.
ILLIQUID INVESTMENTS. Under the supervision of the Board of Trustees, FMR
determines the liquidity of each Fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for a Fund to sell them promptly at an acceptable price.
INDEXED SECURITIES values are linked to currencies, interest rates,
commodities, indices, or other financial indicators. Most indexed
securities are short to intermediate term fixed-income securities whose
values at maturity or interest rates rise or fall according to the change
in one or more specified underlying instruments. Indexed securities may be
positively or negatively indexed (i.e., their value may increase or
decrease if the underlying instrument appreciates), and may have return
characteristics similar to direct investments in the underlying instrument
or to one or more options on the underlying instrument. Indexed securities
may be more volatile than the underlying instrument itself.
INTERFUND BORROWING PROGRAM. Interfund loans and borrowings normally will
extend overnight, but can have a maximum duration of seven days. A Fund
will lend through the program only when the returns are higher than those
available at the same time from other short-term instruments (such as
repurchase agreements), and will borrow through the program only when the
costs are equal to or lower than the cost of bank loans. Each Fund will not
lend more than 5% (Equity Funds) or 7.5% (Fixed-Income Funds) of its assets
to other funds, and will not borrow through the program if, after doing so,
total outstanding borrowings would exceed 15% of total assets. Loans may be
called on one day's notice, and a Fund may have to borrow from a bank at a
higher interest rate if an interfund loan is called or not renewed. Any
delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the risk
of loss in case of default or insolvency of the borrower and may offer less
legal protection to the Fund in the event of fraud or misrepresentation. In
addition, loan participations involve a risk of insolvency of the lending
bank or other financial intermediary. Direct debt instruments may also
include standby financing commitments that obligate the Fund to supply
additional cash to the borrower on demand.
LOWER-QUALITY DEBT SECURITIES (those rated Ba or lower by Moody's or BB or
lower by S&P) have poor protection against default in the payment of
principal and interest, or may be in default. These securities are often
considered to be speculative and involve greater risk of loss or price
changes due to changes in the issuer's capacity to pay. The market prices
of lower-rated debt securities may fluctuate more than those of
higher-rated debt securities, and may decline significantly in periods of
general economic difficulty, which may follow periods of rising interest
rates. See "Debt Obligations" on page .
MORTGAGE-BACKED SECURITIES are issued by government entities and
non-government entities such as banks, mortgage lenders, or other financial
institutions.
A mortgage-backed security may be an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized mortgage
obligations or CMOs, make payments of both principal and interest at a
variety of intervals; others make semiannual interest payments at a
predetermined rate and repay principal at maturity (like a typical bond).
Mortgage-backed securities are based on different types of mortgages
including those on commercial real estate or residential properties. Other
types of mortgage-backed securities will likely be developed in the future,
and each Fund may invest in them if FMR determines they are consistent with
a Fund's investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security. The prices of stripped mortgage-backed
securities may be particularly affected by changes in interest rates. As
interest rates fall, prepayment rates tend to increase, which tends to
reduce prices of IOs and increase prices of POs. Rising interest rates can
have the opposite effect.
ASSET-BACKED SECURITIES represent interests in pools of consumer loans
(generally unrelated to mortgage loans) and most often are structured as
pass-through securities. Interest and principal payments ultimately depend
on payment of the underlying loans by individuals, although the securities
may be supported by letters of credit or other credit enhancements. The
value of asset-backed securities may also depend on the creditworthiness of
the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing the credit enhancement.
A Fund may purchase units of beneficial interest in pools of purchase
contracts, financing leases, and sales agreements entered into by
municipalities. These municipal obligations may be created when a
municipality enters into an installment purchase contract or lease with a
vendor and may be secured by the assets purchased or leased by the
municipality. However, except in very limited circumstances, there will be
no recourse against the vendor if the municipality stops making payments.
The market for tax-exempt asset-backed securities is still relatively new.
These obligations are likely to involve unscheduled prepayments of
principal.
OPTIONS AND FUTURES CONTRACTS are bought and sold to manage a Fund's
exposure to changing interest rates, security prices, and currency exchange
rates. Some options and futures strategies, including selling futures,
buying puts, and writing calls, tend to hedge a Fund's investment against
price fluctuations. Other strategies, including buying futures, writing
puts, and buying calls, tend to increase market exposure. Options and
futures may be combined with each other or with forward contracts in order
to adjust the risk and return characteristics of the overall strategy. A
Fund may invest in options and futures based on any type of security,
index, or currency, including options and futures traded on foreign
exchanges and options not traded on exchanges.
Options and futures can be volatile investments, and involve certain risks.
If FMR applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower a Fund's return. A
Fund could also experience losses if the prices of its options and
futures positions were poorly correlated with its other investments, or if
it could not close out its positions because of an illi quid secondary
market.
Each Fund will not hedge more than 25% of its total assets by selling
futures, buying puts, and writing calls under normal conditions. In
addition each Fund will not buy futures or write puts whose underlying
val ue exceeds 25% of its total assets, and will not buy calls with a
value exceeding 5% of its total assets. Each Fund's policies regarding
futures contracts and options are non-fundamental and can be changed at any
ti me without shareholder approval.
REPURCHASE AGREEMENTS AND SECURITIES LOANS. In a repurchase agreement, a
Fund buys a security at one price and simultaneously agrees to sell it back
at a higher price. A Fund may also make securities loans to broker-dealers
and institutional investors, including FBSI. In the event of the bankruptcy
of the other party to either a repurchase agreement or a securities loan, a
Fund could experience delays in recovering its cash or the securities it
lent. To the extent that, in the meantime, the value of the securities
purchased had decreased or the value of the securities lent had increased,
a Fund could experience a loss. In all cases, FMR must find the
creditworthiness of the other party to the transaction satisfactory.
RESTRICTED SECURITIES are securities which cannot be sold to the public
without registration under the Securities Act of 1933. Unless registered
for sale, these securities can only be sold in privately negotiated
transactions or pursuant to an exemption from registration.
SHORT SALES. If a Fund enters into short sales with respect to stocks
underlying its convertible security holdings, these transactions may help
to hedge against the effect of stock price declines, but may result in
losses if a convertible security's price does not track the price of its
underlying equity. Under normal conditions, convertible securities hedged
with short sales are not currently expected to exceed 15% of a Fund's total
assets.
SOVEREIGN DEBT OBLIGATION are debt instruments issued or guaranteed by
foreign governments or their agencies, including debt of Latin American
nations or other developing countries. Sovereign debt may be in the form
of conventional securities or other types of debt instruments such as loans
or loan participations. Sovereign debt of developing countries may involve
a high degree of risk, and may be in default or present the risk of
default. Governmental entities responsible for repayment of the debt may
be unable or unwilling to repay principal and interest when due, and may
require renegotiation or rescheduling of debt payments. In addition,
prospects for repayment of principal and interest may depend on political
as well as economic factors.
SWAP AGREEMENTS. As one way of managing its exposure to different types of
investments, a Fund may enter into interest rate swaps, currency swaps, and
other types of swap agreements such as caps, collars, and floors. In a
typical interest rate swap, one party agrees to make regular payments equal
to a floating interest rate times a "notional principal amount," in return
for payments equal to a fixed rate times the same amount, for a specified
period of time. If a swap agreement provides for payments in different
currencies, the parties might agree to exchange the notional principal
amount as well. Swaps may also depend on other prices or rates, such as the
value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a Fund's investments and its share price and yield.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on a Fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A Fund may also
suffer losses if it is unable to terminate outstanding swap agreements or
reduce its exposure through offsetting transactions.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal obligations, have interest rate adjustment formulas
that help to stabilize their market values. Many variable and floating rate
instruments also carry demand features that permit the fund to sell them at
par value plus accrued interest on short notice.
ZERO COUPON BONDS do not make interest payments; instead, they are sold at
a deep discount from their face value and are redeemed at face value when
they mature. Because zero coupon bonds do not pay current income, their
prices can be very volatile when interest rates change. In calculating its
daily dividend, a Fund takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.
A broker-dealer creates a derivative zero by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation (REFCORP) and the Financing Corporation (FICO) can also be
separated in this fashion. Original issue zeros are zero coupon securities
originally issued by the U.S. government or a government agency.
DEBT OBLIGATIONS. The table below provides a summary of ratings assigned to
debt holdings (not including money market instruments) of Funds which have
the ability to invest over 5% in lower-rated debt securities. These figures
are dollar-weighted averages of month-end portfolio holdings during the
thirteen months ended November 30, 1993, presented as a percentage of
total investments. These percentages are historical and are not necessarily
indicative of the quality of current or future portfolio holdings, which
may vary.
MOODY'S RATING & PERCENTAGE OF INVESTMENT
MOODY'S EQUITY EQUITY DESCRIPTION
RATING PORTFOLIO PORTFOLIO INVESTMENT GRADE
INCOME GROWTH

Aaa/Aa/A 1.02% -- Highest quality/high quality/
upper medium grade

Baa 0.77% -- Medium grade

LOWER QUALITY

Ba 1.25% -- Moderately speculative

B 1.29% 0.07% Speculative

Caa 0.06% -- Highly speculative

Ca/C -- -- Poor quality/lowest quality,
no interest

S&P RATING & PERCENTAGE OF INVESTMENT
S&P EQUITY EQUITY DESCRIPTION
RATING PORTFOLIO PORTFOLIO INVESTMENT GRADE
INCOME GROWTH

AAA/AA/A 1.03% -- Highest quality/high quality/
upper medium grade

BBB 0.84% -- Medium grade

LOWER QUALITY

BB 0.98% -- Moderately speculative

B 1.35% 0.07% Speculative

CCC 0.15% -- Highly speculative

CC/C -- -- Poor quality/lowest quality,
no interest

D 0.03% -- In default, in arrears

The dollar-weighted average of debt securities not rated by either Moody's
or S&P amounted to .57% (Equity Portfolio Income) and 0% (Equity
Portfolio Growth) of total investments. This may include securities rated
by other nationally recognized rating organizations, as well as unrated
securities. Unrated securities are not necessarily lower-quality
securities. Please refer to the Statement of Additional information for a
more complete discussion of these ratings.
THE FOLLOWING DESCRIBES MUNICIPAL INSTRUMENTS:
MUNICIPAL SECURITIES include GENERAL OBLIGATION SECURITIES, which are
backed by the full taxing power of a municipality, and revenue securities,
which are backed by the revenues of a specific tax, project, or facility.
INDUSTRIAL REVENUE BONDS are a type of revenue bond backed by the credit
and security of a private issuer and may involve greater risk. PRIVATE
ACTIVITY MUNICIPAL SECURITIES, which may be subject to the federal
alternative minimum tax, include securities issued to finance housing
projects, student loans, and privately-owned solid waste disposal and water
and sewage treatment facilities.
TAX AND REVENUE ANTICIPATION NOTES are issued by municipalities in
expectation of future tax or other revenues, and are payable from those
specific taxes or revenues. BOND ANTICIPATION NOTES normally provide
interim financing in advance of an issue of bonds or notes, the proceeds of
which are used to repay the anticipation notes. TAX-EXEMPT COMMERCIAL PAPER
is issued by municipalities to help finance short-term capital or operating
needs.
MUNICIPAL LEASE OBLIGATIONS are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities.
These obligations typically are not fully backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If
funds are not appropriated for the following year's lease payments, the
lease may terminate, with the possibility of significant loss to the Fund.
CERTIFICATES OF PARTICIPATION in municipal lease obligations or installment
sales contracts entitle the holder to a proportionate interest in the
lease-purchase payments made.
RESOURCE RECOVERY BONDS are a type of revenue bond issued to build
facilities such as solid waste incinerators or waste-to-energy plants.
Typically, a private corporation will be involved, at least during the
construction phase, and the revenue stream will be secured by fees or rents
paid by municipalities for use of the facilities. The viability of a
resource recovery project, environmental protection regulations, and
project operator tax incentives may affect the value and credit quality of
resource recovery bonds.
A DEMAND FEATURE is a put that entitles the security holder to repayment of
the principal amount of the underlying security, upon notice, at any time
or at specified intervals. A standby commitment is a put that entitles the
security holder to same-day settlement at amortized cost plus accrued
interest.
Issuers or financial intermediaries who provide demand features or standby
commitments often support their ability to buy securities on demand by
obtaining letters of credit (LOCs) or other guarantees from domestic or
foreign banks. LOCs also may be used as credit supports for other types of
municipal instruments. FMR may rely upon its evaluation of a bank's credit
in determining whether to purchase an instrument supported by an LOC. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank may be
subject to unfavorable political or economic developments, currency
controls, or other governmental restrictions that might affect the bank's
ability to honor its credit commitment.
INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
REFUNDING CONTRACTS. A Fund may purchase securities on a when-issued basis
in connection with the refinancing of an issuer's outstanding indebtedness.
Refunding contracts require the issuer to sell and the Fund to buy refunded
municipal obligations at a stated price and yield on a settlement date that
may be several months or several years in the future.
FINANCIAL STATEMENTS
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME - CLASS A
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME - CLASS B
FIDELITY ADVISOR INSTITUTIONAL EQUITY PORTFOLIO INCOME
A FUND OF FIDELITY ADVISOR SERIES III
STATEMENT OF ADDITIONAL INFORMATION
JUNE 30 , 1994
This Statement is not a prospectus but should be read in conjunction with
the current Fidelity Advisor Equity Portfolio Income (the "Fund")
Prospectuses (dated June 30 , 1994) . The Fund offers its
shares to two groups of investors: Institutional investors and Retail
investors. Institutional investors are offered Institutional shares and
Retail investors are offered Class A and Class B shares. Please retain
this document for future reference. The Annual Report for Institutional
shares for the fiscal year ended November 30, 1993 is incorporated into
its Prospectus. The Annual Report for Class A shares for the
fi scal year ended November 30, 1993, a separate report supplied with
this Statement of Additional Information, is incorporated herein by
reference. Additional copies of either Prospectus, the Statement of
Additional Information, or the Annual Reports, are available without charge
upon request from Fidelity Distributors Corporation, 82 Devonshire Street,
Boston, Massachusetts 02109 or from your investment professional.
NATIONWIDE 800-522-7297
TABLE OF CONTENTS PAGE

Investment Policies and Limitations 2

Portfolio Transactions 10

Valuation of Portfolio Securities 11

Performance 12

Additional Purchase, Exchange and Redemption Information 15

Distributions and Taxes 18

FMR 19

Trustees and Officers 19

Management and Other Services 21

The Distributor 22

Distribution and Service Plan 22

Description of the Trust 23

Financial Statements 24

Appendix 24

INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (Distributors)
TRANSFER AGENT FOR FIDELITY ADVISOR EQUITY PORTFOLIO INCOME - CLASS A

State Street Bank and Trust Company (State Street)
TRANSFER AGENT FOR FIDELITY ADVISOR INSTITUTIONAL EQUITY PORTFOLIO
INCOME
AND CLASS B
Fidelity Investments Institutional Operations Company (FIIOC)
CUSTODIAN
The Chase Manhattan Bank, N.A. (Chase)
I.BD-EPISAI- 5 94
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the Fund's assets that may be
invested in any security or other assets or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the Fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets or other circumstances will not be considered when
determining whether the investment complies with the Fund's investment
policies and limitations.
The Fund's fundamental investment policies and limitations cannot be
changed without approval of a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (the 1940
Act)) of the Fund. The following are the Fund's fundamental investment
limitations set forth in their entirety. The Fund may not:
(1) 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;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the Fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(7) lend any security or make any other loan if, as a result, more than
33 1/3% of total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or to repurchase agreements;
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The Fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The Fund does not currently intend to purchase securities on margin,
except that the Fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The Fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser of (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation). The Fund will not purchase
any security while borrowings representing more than 5% of its total
assets are outstanding. The fund will not borrow from other funds advised
by FMR or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The Fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The Fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange (NYSE) or the American Stock Exchange (AMEX) or
traded on the NASDAQ National Market System.
(vi) The Fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 5% of the
Fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The Fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation or merger.
(viii) The Fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.
(ix) The Fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the Fund's net assets.
Included in that amount, but not to exceed 2% of the Fund's net assets, may
be warrants that are not listed on the NYSE or AMEX. Warrants acquired by
the Fund in units or attached to securities are not subject to these
restrictions.
(x) The Fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The Fund does not currently intend to invest in oil, gas or other
mineral exploration or development programs or leases.
For the Fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 7 .
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission, the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
FUND'S RIGHTS AS A SHAREHOLDER. The Fund does not intend to direct or
administer the day-to-day operations of any company. The Fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
other shareholders of a company when FMR determines that such matters could
have a significant effect on the value of the Fund's investment in the
company. The activities that the Fund may engage in, either individually
or in conjunction with others, may include, among others, supporting or
opposing proposed changes in a company's corporate structure or business
activities; seeking changes in a company's directors or management; seeking
changes in company's direction or policies; seeking the sale or
reorganization of the company or a portion of its assets; or supporting or
opposing third-party takeover efforts. This area of corporate activity is
increasingly prone to litigation and it is possible that the Fund could be
involved in lawsuits related to such activities. FMR will monitor such
activities with a view to mitigating, to the extent possible, the risk of
litigation against the Fund and the risk of actual liability if the Fund is
involved in litigation. No guarantee can be made, however, that litigation
against the Fund will not be undertaken or liabilities incurred.
ASSET-BACKED SECURITIES. Asset-backed securities represent interests in
pools of consumer loans (generally unrelated to mortgage loans) and most
often are structured as pass-through securities. Interest and principal
payments ultimately depend on payment of the underlying loans by
individuals, although the securities may be supported by letters of credit
or other credit enhancements. The value of asset-backed securities may
also depend on the creditworthiness of the servicing agent for the loan
pool, the originator of the loans, or the financial institution providing
the credit enhancement.
FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions and
custodial costs, are generally higher than for U.S. investments.

Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers and securities markets may be subject to less
government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be
difficult to enforce legal rights in foreign countries.

Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises. Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.

The considerations noted above generally are intensified for investments
in developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.

The Fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject
to transfer restrictions may be marketable abroad, they may be less liquid
than foreign securities of the same class that are not subject to such
restrictions.

American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs), are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.

FOREIGN CURRENCY TRANSACTIONS. The Fund may hold foreign currency
deposits from time to time, and may convert dollars and foreign currencies
in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering
into forward contracts to purchase or sell foreign currencies at a future
date and price. Forward contracts generally are traded in an interbank
market conducted directly between currency traders (usually large
commercial banks) and their customers. The parties to a forward contract
may agree to offset or terminate the contract before its maturity, or may
hold the contract to maturity and complete the contemplated currency
exchange.

The Fund may use currency forward contracts to manage currency risks and
to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the Fund.

In connection with purchases and sales of securities denominated in
foreign currencies, the Fund may enter into currency forward contracts to
fix a definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing the Fund's foreign investments. The Fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.

The Fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For
example, if the Fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such
a hedge, sometimes referred to as a "position hedge", would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. The Fund could also
hedge the position by selling another currency expected to perform
similarly to the pound sterling - for example, by entering into a forward
contract to sell Deutschemarks or European Currency Units in return for
U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge", could offer advantages in terms of cost, yield, or efficiency, but
generally would not hedge currency exposure as effectively as a simple
hedge into U.S. dollars. Proxy hedges could result in losses if the
currency used to hedge does not perform similarly to the currency in which
the hedged securities are denominated.

Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the Fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The Fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges and proxy hedges.

Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change the Fund's investment exposure to changes in currency
exchange rates, and could result in losses to the Fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the Fund by selling that currency in exchange for
dollars, the Fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
Fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly,
if FMR increases the Fund's exposure to a foreign currency, and that
currency's value declines, the Fund will realize a loss. There is no
assurance that FMR's use of forward currency contracts will be advantageous
to the Fund or that it will hedge at an appropriate time. The policies
described in this section are non-fundamental policies of the Fund.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the Fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the Fund's investments, FMR may consider various factors
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features) and (5) the nature of the marketplace for
trades (including the ability to assign or offset the Fund's rights and
obligations relating to the investment). Investments currently considered
by the Fund to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days,
over-the-counter options and non-government stripped fixed-rate
mortgage-backed securities. Also, FMR may determine some restricted
securities, government stripped fixed-rate mortgage-backed securities,
loans and other direct debt instruments and swap agreements to be illiquid.
However, with respect to over-the-counter options the Fund writes, all or a
portion of the value of the underlying instrument may be illiquid depending
on the assets held to cover the option and the nature and terms of any
agreement the Fund may have to close out the option before expiration. In
the absence of market quotations, illiquid investments are priced at fair
value as determined in good faith by a committee appointed by the Board of
Trustees. If through a change in values, net assets or other
circumstances, the Fund were in a position where more than 10% of its net
assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the Fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the Fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the
risk of loss in case of default or insolvency of the borrower. Direct debt
instruments may offer less legal protection to the Portfolio in the event
of fraud or misrepresentation. In addition, loan participations involve a
risk of insolvency of the lending bank or other financial intermediary.
Direct debt instruments also may include standby financing commitments that
obligate the Portfolio to supply additional cash to the borrower on demand.
LOWER-RATED DEBT SECURITIES. While the market for high-yield corporate
debt securities has been in existence for many years and has weathered
previous economic downturns, the 1980s brought a dramatic increase in the
use of such securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
the future performance of the high yield bond market, especially during
periods of economic recession. In fact, from 1989 to 1991, the percentage
of lower-rated debt securities that defaulted rose significantly above
prior levels, although the default rate decreased in 1992.

The market for lower-rated debt securities may be thinner and less active
than that for higher rated debt securities, which can adversely affect the
prices at which the former are sold. If market quotations are not
available, lower-rated debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-rated debt
securities and the Fund's ability to dispose of these securities.
Since the risk of default is higher for lower-rated debt securities, FMR's
research and credit analysis are an especially important part of managing
securities of this type held by the Fund. In considering investments for
the Fund, FMR will attempt to identify those issuers of high-yielding debt
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
The Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as a security holder to
seek to protect the interests of security holders if it determines this to
be in the best interest of the Fund's shareholders.
MORTGAGE-BACKED SECURITIES. The Portfolio may purchase mortgage-backed
securities issued by government and non-government entities such as banks,
mortgage lenders, or other financial institutions. A mortgage-backed
security may be an obligation of the issuer backed by a mortgage or pool of
mortgages or a direct interest in an underlying pool of mortgages. Some
mortgage-backed securities, such as collateralized mortgage obligations or
CMOs, make payments of both principal and interest at a variety of
intervals; others make semiannual interest payments at a predetermined rate
and repay principal at maturity (like a typical bond). Mortgage-backed
securities are based on different types of mortgages including those on
commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and the
Portfolio may invest in them if FMR determines they are consistent with the
Portfolio's investment objective and policies.

The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
REAL ESTATE-BACKED SECURITIES. The Portfolio may invest in the equity
securities of companies principally engaged in the real estate industry.
Real estate industry companies may include among others: real estate
investment trusts; brokers or real estate developers; and companies with
substantial real estate holdings, such as paper and lumber producers and
hotel and entertainment companies. Companies engaged in the real estate
industry may be subject to certain risks including: declines in the value
of real estate, risks related to general and local conditions, overbuilding
and increased competition, increases in property taxes and operating
expenses, and variations in rental income.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed-upon price, which obligation is
in effect secured by the value (at least equal to the amount of the
agreed-upon resale price and marked to market daily) of the underlying
security. The Fund may engage in repurchase agreements with respect to any
security in which it is authorized to invest. While it does not presently
appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the
underlying securities, as well as delay and costs to the Fund in connection
with bankruptcy proceedings), it is the policy of the Fund to limit
repurchase agreements to those member banks of the Federal Reserve System
and primary dealers in U.S. government securities whose creditworthiness
has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the
Fund sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the Fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The Fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the Fund's
assets and may be viewed as a form of leverage.
SECURITIES LENDING. The Fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the NYSE and a subsidiary of
FMR Corp.

Securities lending allows the Fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.

FMR understands that it is the current view of the SEC Staff that the Fund
may engage in loan transactions only under the following conditions: (1)
the Fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the Fund must be able to terminate
the loan at any time; (4) the Fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the Fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.

Cash received through loan transactions may be invested in any security in
which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease the Fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. The Fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the Fund's investment objective and policies.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the Fund. If a swap
agreement calls for payments by the Fund, the Fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. The Fund expects to be able to
reduce its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
The Fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the
Fund enters into a swap agreement on a net basis, it will segregate assets
with a daily value at least equal to the excess, if any, of the Fund's
accrued obligations under the swap agreement over the accrued amount the
Fund is entitled to receive under the agreement. If the Fund enters into a
swap agreement on other than a net basis, it will segregate assets with a
value equal to the full amount of the Fund's accrued obligations under the
agreement.
INDEXED SECURITIES. The Fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more volatile
than the underlying instruments.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Fund intends to file
a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets, before engaging in any purchases or sales of futures
contracts or options on futures contracts. The Fund intends to comply with
Section 4.5 of the regulations under the Commodity Exchange Act which
limits the extent to which the Fund can commit assets to initial margin
deposits and option premiums.

In addition, the Fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the Fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the Fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the Fund would
exceed 5% of the Fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the Fund's investments in futures contracts and
options, and the Fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When the Fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When the Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the Fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's 500 Composite Stock
Price Index (S&P 500). Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is available.

The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the Fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the Fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the Fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the Fund, the Fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the Fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the Fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the Fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The Fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the Fund will lose the entire premium it paid. If the Fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The Fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.

The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).

The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the Fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the Fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract, the Fund will be required to make margin payments to an FCM as
described above for futures contracts. The Fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the Fund has written, however, the
Fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.

If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.

Writing a call option obligates the Fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a
profitable strategy if prices remain the same or fall. Through receipt of
the option premium, a call writer mitigates the effects of a price decline.
At the same time, because a call writer must be prepared to deliver the
underlying instrument in return for the strike price, even if its current
value is greater, a call writer gives up some ability to participate in
security price increases.
COMBINED POSITIONS. The Fund may purchase and write options in
combination with futures or forward contracts, to adjust the risk and
return characteristics of its overall position. For example, the Fund may
purchase a put option and write a call option on the same underlying
instrument, in order to construct a combined position whose risk and return
characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one
strike price and buying a call option at a lower price, in order to reduce
the risk of the written call option in the event of a substantial price
increase. Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open and
close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the Fund's current or
anticipated investments exactly. The Fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of the Fund's other investments.

Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the Fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the Fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the Fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the Fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
Fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.

The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
Fund may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. The Fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the Fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
the Fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the Fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the Fund's investments exactly over
time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The Fund will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot
be sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the Fund's assets
could impede portfolio management or the Fund's ability to meet redemption
requests or other current obligations.

SHORT SALES. The Fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a convertible
security the Fund holds, it may sell the stock short. If the stock price
subsequently declines, the proceeds of the short sale could be expected to
offset all or a portion of the effect of the stock's decline on the value
of the convertible security. The Fund currently intends to hedge no more
than 15% of its total assets with short sales on equity securities
underlying its convertible security holdings under normal circumstances.
When the Fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to those sold short (or securities
convertible or exchangeable into such securities) and will be required to
hold them aside while the short sale is outstanding. The Fund will incur
transaction costs, including interest expense, in connection with opening,
maintaining, and closing short sales.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Fund by FMR pursuant to authority contained in its Management
Contract. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment adviser. In selecting broker-dealers subject to
applicable limitations of the federal securities laws, FMR will consider
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any spreads or commissions. FMR may also allocate
brokerage transactions to the fund's custodian, acting as a broker-dealer,
or to other broker-dealers, where the broker dealers will allocate a
portion of the commissions paid toward payment of the fund's expenses.
These expenses currently include transfer agent and custodian fees.
Commissions for foreign investments traded on foreign exchanges will
generally be higher than for U.S. investments and may not be subject to
negotiation.

The Fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the Fund or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). In selecting broker-dealers subject to
applicable limitations of the federal securities laws, FMR will consider
various relevant factors, including, but not limited to, the size and
type of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions; and arrangements for payment of fund
expenses.

The receipt of research from broker-dealers that execute transactions on
behalf of the Fund may be useful to FMR in rendering investment management
services to the Fund, its other clients, and conversely, such information
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the Fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses which might otherwise be incurred if it were to attempt
to develop comparable information through its own efforts.

Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the Fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers
viewed in terms of a particular transaction or FMR's overall
responsibilities to the Fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.

FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the Fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc.
(FBSI), and Fidelity Brokerage Services, Ltd. (FBSL), affiliates of FMR, if
the commissions are fair, reasonable and comparable to commissions charged
by non-affiliated, qualified brokerage firms for similar services. Prior
to September 4, 1992, FBSL operated under the name of Fidelity Portfolio
Services Ltd. (FPSL), as a wholly-owned subsidiary of Fidelity
International Limited (FIL). Edward C. Johnson 3d is Chairman of FIL. Mr.
Johnson 3d, Johnson family members, and various trusts for the benefit of
the Johnson family own, directly or indirectly, more than 25% of the voting
common stock of FIL.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulation of the SEC. Pursuant to such regulations, the Board of Trustees
has approved a written agreement which permits FBSI to effect portfolio
transactions on national securities exchanges and to retain compensation in
connection with such transactions.

The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Fund and review the commissions paid by the Fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the Fund.

For the fiscal years ended November 30, 1993 and 1992, the Fund's annual
portfolio turnover rate was 65% and 51%, respectively.

For the fiscal years ended November 30, 1993, 1992, and 1991, the Fund
paid brokerage commissions of $62,741, $342,397, and $530,887,
respectively. During fiscal 1993, approximately $386,057 or 68.6% of these
commissions were paid to brokerage firms which provided research services,
although the providing of such services was not necessarily a factor in the
placement of all of this business with such firms. The Fund pays both
commissions and spreads in connection with the placement of portfolio
transactions; FBSI is paid on a commission basis. During fiscal 1993, 1992
and 1991, the Fund paid brokerage commissions of $126,832, $107,503, and
$151,059, respectively, to FBSI. During fiscal 1993 this amounted to 22.5%
of the aggregate brokerage commissions paid by the Fund for transactions
involving 38.2% of the aggregate dollar amount of transactions in which the
Fund paid brokerage commissions. The difference in the percentage of the
brokerage commissions paid to, and the percentage of the dollar amount of
transactions effected through FBSI is a result of the low commission rates
charged by FBSI.
During the fiscal years ended November 30, 1993, 1992 and 1991, the Fund
paid $0, $441, and $6,072, respectively, in brokerage commissions to FPSL.
From time to time the Trustees will review whether the recapture for the
benefit of the Fund of some portion of the brokerage commissions or similar
fees paid by the Fund on portfolio transactions is legally permissible and
advisable. The Fund seeks to recapture soliciting dealer fees on the tender
of portfolio securities, but at present no other recapture arrangements are
in effect. The Trustees intend to continue to review whether recapture
opportunities are available and are legally permissible and, if so, to
determine, in the exercise of their business judgment, whether it would be
advisable for the Fund to seek such recapture.

Although the Trustees and officers of the Fund are substantially the same
as those of other funds managed by FMR, investment decisions for the Fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions and prices for the
Fund. It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to the Fund outweighs any disadvantages
that may be said to exist from exposure to simultaneous transactions.

VALUATION OF PORTFOLIO SECURITIES
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Equity securities for
which the primary market is the U.S. are valued at last sale price or, if
no sale has occurred, at the closing bid price. Equity securities for
which the primary market is outside the U.S. are valued using the official
closing price or the last sale price in the principal market where they are
traded. If the last sale price (on local exchange) is unavailable, the
last evaluated quote or last bid price is normally used. Short-term
securities are valued either at amortized cost or at original cost plus
accrued interest, both of which approximate current value. Fixed-income
securities are valued primarily by a pricing service that uses a vendor
security valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. This twofold
approach is believed to more accurately reflect fair value because it takes
into account appropriate factors such as institutional trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics, and other market data, without exclusive reliance
upon quoted, exchange, or over-the-counter prices. Use of pricing services
has been approved by the Board of Trustees.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by the Fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as
well as corporate bonds, U.S. government securities, money market
instruments, and repurchase agreements, is substantially completed each day
at the close of the NYSE. The values of any such securities held by the
Fund are determined as of such time for the purpose of computing the Fund's
net asset value. Foreign security prices are furnished by independent
brokers of quotation services which express the value of securities in
their local currency. Service gathers all exchange rates daily at the
close of the NYSE using the last quoted price on the local currency and
then translates the value of foreign securities from their local currency
into U. S. dollars. Any changes in the value of forward contracts due to
exchange rate fluctuations and days to maturity are included in the
calculation of net asset value. If an extraordinary event that is expected
to materially affect the value of a portfolio security occurs after the
close of an exchange on which that security is traded, then the security
will be valued as determined in good faith by a committee appointed by the
Board of Trustees.

PERFORMANCE
Institutional shares, Class A shares and Class B shares may quote
their respective performance in various ways. All performance
information supplied by each class in advertising is historical and is not
intended to indicate future returns. Share price and total return for each
class fluctuate in response to market conditions and other factors, and the
value of each class' shares when redeemed may be more or less than their
original cost.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of each class' of shares return, including the effect of
reinvesting dividends and capital gain distributions, and any change in the
N AV over the period. Average annual total returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in a class of shares over a stated period, and then calculating
the annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative return of 100% over ten years would
produce an average annual total return of 7.18%, which is the steady annual
return that would equal 100% growth on a compounded basis in ten years.
While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that a class of shares'
performance is not constant over time, but changes from year to year, and
that average annual returns represent averaged figures as opposed to actual
year-to-year performance of that class of shares.
In addition to average annual total returns, each class of shares may
quote unaveraged or cumulative total returns reflecting the simple change
in value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, and/or a series of redemptions, over any time period. Total
returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to illustrate
the relationship of these factors and their contributions to total return.
An example of this type of illustration is given on page 15 . For
Fidelity Advisor Equity Portfolio Income, total returns may be quoted with
or without taking the maximum 4.75% sales charge into account. The Fund
may quote its total returns on a before-tax or after-tax basis. Excluding
the sales charge from a total return calculation produces a higher total
return figure. Total returns and other performance information may be
quoted numerically or in a table, graph or similar illustration.
NET ASSET VALUE. Charts and graphs using the Fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the Fund
and reflects all elements of its return. Unless otherwise indicated, the
Fund's adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. The Fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving average
is the average of each day's adjusted closing NAV for a specified period.
Moving Average Activity Indicators combine adjusted closing NAVs from the
last business day of each week with moving averages for a specified period
to produce indicators showing when an NAV has crossed, stayed above, or
stayed below its moving average. On November 26, 1993 the 13-week and
39-week long-term moving averages were $15.06, and $14.52, respectively,
for Institutional Equity Portfolio Income, and $14.51 and $15.01,
respectively, for Equity Portfolio Income.
The following charts show total returns for the periods ended November 30,
1993.
INSTITUTIONAL EQUITY PORTFOLIO INCOME(DAGGER)
Average Annual Total Returns Cumulative Total Returns

One Year Five Year Ten Year One Year Five Year Ten Year

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
18. 90 % 12.0 8 % 13.0 5 % 18. 90 % 76. 89% 241.03%

</TABLE>

EQUITY PORTFOLIO INCOME - CLASS A (DAGGER)(DAGGER)
Average Annual Total Returns Cumulative Total Returns

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
One Year Five Year Ten Year One Year Five Year Ten Year

12.42% 10.80% 12.40% 18.03% 75.31% 237.99%

</TABLE>

EQUITY PORTFOLIO INCOME - CLASS B(DAGGER)(DAGGER)(DAGGER)

<TABLE>
<CAPTION>
<S> <C> <C>
Average Annual Total Returns Cumulative Total Returns

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
One Year Five Year Ten Year One Year Five Year Ten Year

14.90% 11.96% 12.40% 18.90% 76.89% 241.03%

</TABLE>

(dagger) If FMR had not reimbursed .10% of the management fee during these
periods, total returns would have been lower.
(dagger)(dagger) Average annual total returns include the effect of the
maximum 4.75% front end sales charge. Cumulative total returns do
not include the effect of this front end charge and would have been
lower if it had been taken into account. Neither total returns include
the effects of Class B shares distribution and service fees. These fees
will be charged once Class B shares commence operations. Effective
September 10, 1992, the Fund commenced sale of Class A shares. This
performance information reflects the Class A shares 12b-1 fee and
revised transfer agent fee arrangement for the period September 10, 1992
through November 30, 1993 and may not be representative of Class
A ' s performance.
(dagger)(dagger)(dagger) Average annual total returns include the effect
of the maximum contingent deferred sales charge applicable at the end of
the stated period - cumulative total returns do not include the effects of
the contingent deferred sales charge and would have been lower if it had
been taken into account. Class B shares are expected to be available on or
about May 2, 1994.
PERFORMANCE COMPARISONS. Ibbotson Associates of Chicago, Illinois
(Ibbotson) provides historical returns of the capital markets in the United
States, including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term government
bonds, Treasury bills, the U.S. rate of inflation (based on the Consumer
Price Index), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to
those of the Fund. Ibbotson calculates total returns in the same method as
the Fund. The Fund may also compare performance to that of other
compilations or indices that may be developed and made available in the
future.

P erformance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey which monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, each class of
shares' performance may be compared to mutual fund performance indices
prepared by Lipper.

Performance may be quoted in advertising and other types of
literature as compared to certificates of deposit (CDs), bank-issued money
market instruments and money market mutual funds. Unlike CDs and
bank-issued money market instruments, money market mutual funds and both
classes of shares are not insured by the FDIC.

P erformance may be quoted to that of the Standard and Poor's
Index of 500 Common Stocks (S&P 500) which is a registered trademark of
Standard & Poor's Corporation, the Dow Jones Industrial Average (the
Dow or DJIA) and the NASDAQ Composite Index (NASDAQ). The S&P 500 and
the Dow are widely recognized, unmanaged indices of common stock prices.
The performance of the S&P 500 and DJIA is based on changes in the
prices of stocks comprising the Indices and assumes the reinvestment of all
dividends paid on such stocks. Taxes, brokerage commissions and other fees
are disregarded in computing the level of the S&P 500, the DJIA and the
NASDAQ. Each class of shares' performance also may be compared to the
increase in the cost of living as measured by the CPI.
Institutional, Class A, and Class B shar es may compare its
performance or the performance of securities in which it may invest to
IBC/Donoghue's MONEY FUND AVERAGES/All-Taxable, which monitors the
performance of over 200 taxable money market funds. This index, which also
assumes reinvestment of distributions, is published by IBC/Donoghue's MONEY
FUND REPORT of Ashland, Massachusetts 01271. Investors should consider the
relevant differences in investment objectives and policies between the Fund
and such money market funds in evaluating such comparisons. Specifically,
money market funds invest in short-term, high-quality instruments and seek
to maintain a stable $1.00 share price, while the Fund invests in
longer-term instruments and the share prices of each class changes daily in
response to a variety of factors.
As of December 31, 1993 , FMR managed over $2 25 billion in
fund assets. This figure represents the largest amount of equity fund
assets under management by a mutual fund advisor in the United States,
making FMR America's leading equity (stock) fund manager. From time to
time, the Fund may use this information in advertising and sales
literature.
The Fund may reference and discuss its fund number, Quotron(TRADEMARK)
number, CUSIP number, and current portfolio manager in advertising.
From time to time, p erformance also may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, the Fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds
on the basis of risk-adjusted performance. In addition, the Fund may quote
financial or business publications and periodicals as they relate to fund
management, investment philosophy, and investment techniques. Rankings
that compare the performance of Fidelity funds to one another in
appropriate categories over specific periods of time may also be quoted in
advertising.
VOLATILITY. Institutional shares, Class A and Class B may quote
various measures of volatility and benchmark correlation in advertising.
In addition, those measures may be compared to those of other funds.
Measures of volatility seek to compare the Fund's historical share price
fluctuations or total returns to those of a benchmark. Measures of
benchmark correlation indicate how valid a comparative benchmark may be.
All measures of volatility and correlation are calculated using averages of
historical data.
MOVING AVERAGES. Performance may be illustrated using moving averages.
A long-term moving average is the average of each week's adjusted closing
NAV for a specified period. A short-term moving average is the average of
each day's adjusted closing NAV for a specified periods. Moving Average
Activity Indicators combine adjusted closing NAVs from the last business
day of each week with moving averages for a specified period to produce
indicators showing when an NAV has crossed, stayed above, or stayed below
its moving average. On _____________, the 13-week and 39-week long term
moving averages were $_____ and $_____, respectively.
MOMENTUM INDICATORS indicate Insti tutional shares, Class A and
Class B price movements over specific periods of time. Each point on the
momentum indicator represen ts percentage change in price movements
over that period.
Institutional shares, Class A and Class B may advertise to the extent
applicable, examples of the effects of periodic investment plans,
including the principle of dollar-cost averaging. In such a program, an
investor invests a fixed dollar amount in a portfolio at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares had been purchased
at the same intervals. In evaluating such a plan, investors should
consider their ability to continue purchasing shares through periods of low
price levels.

Institutional shares, Class A and Class B may be available for
purchase through retirement plans or other programs offering deferral of or
exemption from income taxes, which may produce superior after-tax returns
over time. For example, an investment of $1,000 earning a taxable return
of 10% annually would have an after-tax value of $1,949 after ten years,
assuming tax was deducted from the return each year at a 31% rate. An
equivalent tax-deferred investment would have an after-tax value of $2,100
after ten years, assuming tax was deducted at a 31% rate from the deferred
earnings at the end of the ten year period.
TRADITION OF PERFORMANCE. Fidelity's tradition of performance is achieved
through:
(bullet) Money Management: a proud tradition of money management
motivated by the expectation of excellence backed by solid analysis and
worldwide resources. Fidelity employs a bottom-up approach to security
selection based upon in-depth analysis of the fundamentals of that
investment opportunity.
(bullet) Innovation: constant attention to the changing needs of today's
investors and vigilance to the opportunities that arise from changing
global markets. Research is central to Fidelity's investment
decision-making process. Fidelity's greatest resource--over 200 skilled
investment professionals--is supported with the most sophisticated
technology available.
Fidelity provides:
(bullet) Global research resources: an opportunity to diversify
portfolios and share in the growth of markets outside the United States.
(bullet) In-house, proprietary bond-rating system, constantly updated,
which provides extremely sensitive credit analysis.
(bullet) Comprehensive chart room with over 1500 exhibits to provide
sophisticated charting of worldwide economic, financial, and technical
indicators, as well as to provide tracking of over 800 individual stocks
for portfolio managers.
(bullet) State-of-the-art trading desk, with access to over 200 brokerage
houses, providing real-time information to achieve the best executions and
optimize the value of each transaction.
(bullet) Use of extensive on-line computer-based research services.
(bullet) Service: Timely, accurate and complete reporting. Prompt and
expert attention when an investor or an investment professional needs it.
HISTORICAL FUND RESULTS. The following chart shows the income and capital
elements of the Institutional shares' year-by-year total returns
from April 25, 1983 (commencement of operations) through November 30, 1993.
The chart compares the Institutional shares' return to the record of
the S&P 500, the DJIA and the cost of living measured by the CPI over
the same period. The comparisons to the S&P 500 and the DJIA show how
the Institutional shares' total return compared to the record of a
broad average of common stock prices, and a narrower set of stocks of major
industrial companies, respectively. The Fund has the ability to invest in
securities not included in either index, and its investment portfolio may
or may not be similar in composition to the indices. The S&P 500 and
DJIA are based on the prices of unmanaged groups of stocks and, unlike the
Fund's returns, their returns do not include the effect of paying brokerage
commissions and other costs of investing.
During the period from April 25, 1983 (commencement of operations) to
November 30, 1993, a hypothetical $10,000 investment in Institutional
shares would have grown to $37,148 assuming all distributions were
reinvested. This was a period of widely fluctuating stock prices, and the
chart should not necessarily be considered a representation of the income
or capital gain or loss that could be realized from an investment in
Institutional shares today.
FIDELITY ADVISOR INSTITUTIONAL EQUITY PORTFOLIO INCOME* INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of

Initial Reinvested Reinvested Cost

Year $10,000 Income Capital Gain Total of

Ended Investment Distributions Distributions Value S&P DJIA Living(dagger)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
11/30/83** $10,490 $ 410 $ 0 $10,900 $10,646 $10,955 $10,264

11/30/84 10,240 1,237 99 11,576 10,966 10,720 10,680

11/30/85 11,950 2,388 116 14,454 14,145 13,899 11,055

11/30/86 13,540 3,715 593 17,848 18,060 18,736 11,197

11/30/87 10,930 3,844 1,775 16,549 17,215 18,500 11,704

11/30/88 11,100 5,280 4,635 21,015 21,231 22,114 12,201

11/30/89 12,270 7,317 5,124 24,710 27,781 29,370 12,769

11/30/90 9,520 7,042 4,465 21,027 26,813 28,879 13,570

11/30/91 11,080 9,581 5,197 25,857 32,270 33,778 13,976

11/30/92 12,880 12,342 6,041 31,263 38,240 39,722 14,402

11/30/93 14,920 15,230 6,998 37,148 42,103 45,575 14,787

</TABLE>

* Fidelity Advisor Equity Portfolio Income Class A became
effective on September 10, 1992. The chart above is based on Fidelity
Advisor Institutional Equity Portfolio Income only. Had Class A shares
been offered during the period from April 25, 1983 through November 30,
1993, a hypothetical $10,000 investment in Class A would have grown
to $35,092, including the effect of the maximum 4.75% sales charge but
excluding the effects of the 0. 6 5% 12b-1 fee and other Class A
specific expenses prior to September 10, 1992, and assuming all
distributions were reinvested . Class B shares are expected to be
available on or about May 2, 1994.
** April 25, 1983 (commencement of operations) - November 30, 1983
(dagger) From month end closest to initial investment date.

EXPLANATORY NOTES: With an initial investment of $10,000 made on April
25, 1983, the net amount invested in Institutional sh ares was
$10,000. The cost of the initial investment ($10,000), together with the
aggregate cost of reinvested dividends and capital gain distributions for
the period covered (that is, their cash value at the time they were
reinvested), amounted to $26,938. If distributions had not been
reinvested, the amount of distributions earned from the Institutional
shares over time would have been smaller, and the cash payments for the
period would have come to $7,020 for income dividends and $3,520 for
capital gain distributions. Tax consequences of different investments have
not been factored into the figures.
ADDITIONAL PURCHASE, EXCHANGE, AND REDEMPTION INFORMATION
The Fund is open for business and the NAV of each class is calculated each
day the NYSE is open for trading. The NYSE has designated the following
holiday closings for 1994: Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time. On any day that the NYSE closes
early, or as permitted by the SEC, the right is reserved to advance the
time on that day by which purchase and redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days
the NYSE is closed, each class' NAV may be affected on days when investors
do not have access to the Fund to purchase or redeem shares. Certain
Fidelity funds may follow different holiday closing schedules.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the NAV of each class. Shareholders receiving any such
securities or other property on redemption may realize a gain or loss for
tax purposes, and will incur any costs of sale, as well as the associated
inconveniences.

Pursuant to Rule 11a-3 under the 1940 Act (the Rule), the Fund is required
to give shareholders at least 60 days' notice prior to terminating or
modifying its exchange privilege. Under the Rule, the 60 day notification
requirement may be waived if (i) the only effect of a modification would be
to reduce or eliminate an administrative fee, redemption fee or deferred
sales charge ordinarily payable at the time of exchange, or (ii) the Fund
suspends the redemption of shares to be exchanged as permitted under the
1940 Act or the rules and regulations thereunder, or the fund to be
acquired suspends the sale of its shares because it is unable to invest
amounts effectively in accordance with its investment objective and
policies.
In each prospectus, the Fund has notified shareholders that it reserves
the right at any time, without prior notice, to refuse exchange purchases
by any person or group if, in FMR's judgment, the Fund would be unable to
invest effectively in accordance with its investment objective and policies
or would otherwise potentially be adversely affected.
PURCHASE INFORMATION
As provided for in Rule 22d-1 under the 1940 Act, Distributors exercises
its right to waive Class A's maximum 4.75% sales charge in
connection with the Fund's merger with or acquisition of any investment
company or trust.
NET ASSET VALUE PURCHASES. Front-end sales charges do not apply to
Class A shares purchased: (1) by registered representatives, bank trust
officers and other employees (and their immediate families) of investment
professionals having agreements with Distributors; (2) by a current or
former Trustee or officer of a Fidelity fund or a current or retired
officer, director or regular employee of FMR Corp. or its direct or
indirect subsidiaries (a "Fidelity Trustee or employee"), the spouse of a
Fidelity Trustee or employee, a Fidelity Trustee or employee acting as
custodian for a minor child, or a person acting as trustee of a trust for
the sole benefit of the minor child of a Fidelity Trustee or employee; (3)
by a charitable organization (as defined in Section 501(c)(3) of the
Internal Revenue Code) investing $100,000 or more; (4) by a charitable
remainder trust or life income pool established for the benefit of a
charitable organization (as defined in Section 501(c)(3) of the Internal
Revenue Code); (5) by trust institutions (including bank trust departments)
investing on their own behalf or on behalf of their clients; (6) in
accounts as to which a bank or broker-dealer charges an investment
management fee, provided the bank or broker-dealer has an agreement with
Distributors; (7) as part of an employee benefit plan (including
Fidelity-Sponsored 403(b) and Corporate IRA programs, but otherwise as
defined in the Employee Retirement Income Security Act (ERISA)), maintained
by a U.S. Employer having more than 200 eligible employees, or a minimum of
$1,000,000 invested in Fidelity Advisor mutual funds and the assets of
which are held in a bona fide trust for the exclusive benefit of employees
participating therein; (8) in a Fidelity or Fidelity Advisor IRA account
purchase with the proceeds of a distribution from an employee benefit plan
that is part of (i) an employee benefit plan having more than 200 eligible
employees or a minimum of $3,000,000 in plan assets invested in Fidelity
mutual funds or $1,000,000 invested in Fidelity Advisor mutual funds or
(ii) an insurance company separate account qualifying under (9) below, or
funding annuity contracts purchased by employee benefit plans which in the
aggregate have at least $3,000,000 in plan assets invested in Fidelity
mutual funds; (9) by an insurance company separate account used to fund
annuity contracts purchased by employee benefit plans (including 403(b)
programs, but otherwise as defined in ERISA), which, in the aggregate, have
either more than 200 eligible employees or a minimum of $3,000,000 in
assets invested in Fidelity mutual funds or a minimum of $1,000,000
invested in Fidelity Advisor mutual funds; or (10) by any state, county, or
city, or any governmental instrumentality, department, authority or agency;
and (11) with redemption proceeds from other mutual fund complexes on which
the investor has paid a front-end sales charge only. A sales load waiver
form must accompany these transactions.
The contingent deferred sales charge ("CDSC") on Class B shares may be
waived in the case of disability or death, provided that the redemption is
made within one year following the death or initial determination of
disability, or in connection with a total or partial redemption made in
connection with certain distributions from retirement plan accounts.
Distributors, the Fund's distributor, is located at 82 Devonshire Street,
Boston, Massachusetts 02109. Distributors compensates securities dealers
and banks having agreements with Distributors (investment professionals),
who sell Class A and Class B shares according to the schedule in
each prospectus. Distributors may, at its expense, provide
promotional incentives to investment professionals who support the sale of
Institutional, Class A and Class B s hares without reimbursement from
the Fund. In some instances, these incentives may be offered only to
certain investment professionals whose representatives provide services in
connection with the sale or expected sale of significant amounts of shares.
FIIOC, an affiliate of FMR, is paid fees based on the type, size and number
of accounts and the number of their monetary transactions.
Distributors compensates investment professionals with a fee of .25% on
purchases of $1 million or more, except for purchases made through a bank
or bank-affiliated broker-dealer that qualify for a Class A Sales Charge
Waiver described in the Fund's prospectus. All assets on which the .25%
fee is paid must remain within the Fidelity Advisor Funds (including shares
exchanged into Daily Money Fund and Daily Tax-Exempt Money Fund) for a
period of one uninterrupted year or the investment professional will be
required to refund this fee to Distributors. Purchases by insurance
company separate accounts will qualify for the .25% fee only if an
insurance company's client relationship underlying the separate account
exceeds $1 million. It is the responsibility of the insurance company to
maintain records of purchases by any such client relationship.
Distributors may request records evidencing any fees payable through this
program.
QUANTITY DISCOUNTS. Reduced sales charges are applicable to purchases of
Class A shares of the Fund in amounts of $ 50,000 or more of the Fund
alone or in combination with purchases of Class A and Class B
shares of Fidelity Advisor Funds made at any one time ( and
Daily Money Fund and Daily Tax-Exempt Money Fund shares acquired by
exchange from any Fidelity Advisor Fund ). To obtain the reduction
of the front-end sales charge, you or your investment professional
must notify the transfer agent at the time of purchase whenever a quantity
discount is applicable to your purchase. Upon such notification, you will
receive the lowest applicable front-end sales charge.
In addition to investing at one time in any combination of portfolios
i n an amount entitling you to a reduced front-end sales charge,
you may qualify for a reduction in the front-end sales charge under
the following programs:
COMBINED PURCHASES. When you invest in Class A shares for several
accounts at the same time, you may combine these investments into a single
transaction if purchased through one investment professional, and if the
total is at least $50,000. The following may qualify for this privilege:
an individual, or "company" as defined in Section 2(a)(8) of the 1940 Act;
an individual, spouse, and their children under age 21 purchasing for his,
her, or their own account; a trustee, administrator or other fiduciary
purchasing for a single trust estate or single fiduciary account or for a
single or a parent-subsidiary group of "employee benefit plans" (as defined
in Section 3(3) of the ERISA); and tax-exempt organizations under Section
501(c)(3) of the Internal Revenue Code.
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
front-end sales charges on any future purchases after you have
reached a new breakpoint in Class A sales charge schedule (see the
Class A Prospectus for the front-end sales charge schedule).
You can add the value of existing Fidelity Advisor Fund Class A and
Class B shares , hel d by you, your spouse, and your children
under age 21 determined at the previous day's NAV at the close of business,
to the amount of your new purchase valued at the current offering price to
determine your reduced front-end sales charge. You can also add
shares of Daily Money Fund and shares of Daily Tax-Exempt Money Fund,
provided they were acquired for by exchange from any Fidelity Advisor Fund,
to the amount of your new purchase.
LETTER OF INTENT. If you anticipate purchasing $50,000 or more of
Class A shares of the Fund or in combination with Class A
and Class B shares of other Fidelity Advisor Funds within a
13-month period, you may obtain Class A shares at the same reduced
front-end sales charge as though the total quantity were invested in
one lump sum, by filing a nonbinding Letter of Intent (the Letter) within
90 days of the start of the purchases. Each investment you make after
signing the Letter will be entitled to the front-end sales charge
applicable to the total investment indicated in the Letter. For example, a
$2,500 purchase toward a $50,000 Letter would receive the same reduced
front-end sales charge as if the $50,000 had been invested at one
time. To ensure that the reduced front-end sales charge will be
received on future purchases, you or your investment professional must
inform the transfer agent that the Letter is in effect each time Class A
or Class B shares are purchased. Neither income dividends nor capital
gain distributions taken in additional shares will apply toward the
completion of the Letter.
Your initial investment must be at least 5% of the total amount you plan
to invest. Out of the initial purchase, 5% of the dollar amount specified
in the Letter will be registered in your name and held in escrow. The
Class A shares held in escrow cannot be redeemed or exchanged until
the Letter is satisfied or the additional front-end sales charges
have been paid. You will earn income dividends and capital gain
distributions on escrowed Class A shares. The escrow will be
released when your purchase of the total amount has been completed. You
are not obligated to complete the Letter.
If you purchase more than the amount specified in the Letter and qualify
for a further front-end sales charge reduction, the sales charge
will be adjusted to reflect your total purchase at the end of 13 months.
Surplus funds will be applied to the purchase of additional Class A
shares at the then current offering price applicable to the total
purchase.
If you do not complete your purchase under the Letter within the 13-month
period, your front-end sales charge will be adjusted upward,
corresponding to the amount actually purchased, and if after 30 days'
written notice, you do not pay the increased front-end sales charge,
sufficient escrowed Class A shares will be redeemed to pay such
charge.
SYSTEMATIC INVESTMENT PLAN. You can make regular investments in Class
A or Class B shares of the Fund or other Fidelity Advisor Funds with
the Systematic Investment Plan by completing the appropriate section of the
account application and attaching a voided personal check with your bank's
magnetic ink coding number across the front. If your bank account is
jointly owned, be sure that all owners sign. Investments may be made
monthly by automatically deducting $100 or more from your bank checking
account. You may change the amount of your monthly purchase at any time.
There is a $1,000 minimum initial investment requirement for systematic
investment plans.
Your account will be drafted on or about the first business day of every
month. Class A or Class B shares will be purchased at the offering
price next determined following receipt of the order by the Transfer Agent.
You may cancel your participation in the Systematic Investment
plan at any time without payment of a cancellation fee. You will
receive a confirmation from the Transfer Agent for every transaction, and a
debit entry will appear on your bank statement.
EXCHANGE INFORMATION
SYSTEMATIC EXCHANGE PLAN. With the Systematic Exchange Plan, you can
exchange a specific dollar amount of Class A or Class B shares into
the same class of other Fidelity Advisor Funds on a monthly,
quarterly or semiannual basis.
1. The account from which the exchanges are to be processed must have a
minimum value of $10,000 before you may elect to begin exchanging
systematically. The account into which the exchanges are to be processed
must be an existing account with a minimum balance of $1,000.
2. Both accounts must have identical registrations and taxpayer
identification numbers. The minimum amount to be exchanged systematically
is $100.
3. Systematic Exchanges will be processed at the NAV determined on the
transaction date, except that Systematic Exchanges into a Fidelity Advisor
Fund from Daily Money Fund or Daily Tax-Exempt Money Market Fund
will be processed at the offering price next determined on the transaction
date, unless the shares of Daily Money Fund or Daily Tax-Exempt Money
Market Fund were acquired by exchange from another Fidelity Advisor
Fund.
REDEMPTION INFORMATION
REINSTATEMENT PRIVILEGE. If you have redeemed all or part of your
Class A or Class B shares you may reinvest an amount equal to all or
a portion of the redemption proceeds in the same class of Fund or
any of the other Fidelity Advisor Funds, at the NAV next determined after
receipt of your investment order, provided that such reinvestment is made
within 30 days of redemption. No charge currently is made for reinvestment
in Class A or Class B shares of the Fund. You must reinstate your
shares into an account with the same registration. This privilege may be
exercised only once by a shareholder with respect to the Fund.

SYSTEMATIC WITHDRAWAL PLAN. If you own Class A s hares worth
$10,000 or more, you can have monthly, quarterly or semiannual checks sent
from your account to you, to a person named by you, or to your bank
checking account. You may obtain information about the Systematic
Withdrawal Plan by contacting your investment professional. Your
Systematic Withdrawal Plan payments are drawn from front-end share
redemptions. If Systematic Withdrawal Plan redemptions exceed income
dividends earned on your shares, your account eventually may be exhausted.
Since a front-end sales charge is applied on new shares you buy, it
is to your disadvantage to buy Class A shares while also making
systematic redemptions.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, the Transfer Agent may reinvest your distributions
at the then current NAV. All subsequent distributions will then be
reinvested until you provide the Transfer Agent with alternative
instructions.
DIVIDENDS. A portion of the Fund's income may qualify for the dividends
received deduction available to corporate shareholders to the extent that
the Fund's income is derived from qualifying dividends. Because the Fund
may also earn other types of income, such as interest, income from
securities loans, non-qualifying dividends and short-term capital gains,
the percentage of dividends that qualify for the deduction will generally
be less than 100%. The Fund will notify corporate shareholders annually of
the percentage of Fund dividends which qualify for the dividends received
deduction. A portion of the Fund's dividends derived from certain U.S.
government obligations may be exempt from state and local taxation. Gains
(losses) attributable to foreign currency fluctuations are generally
taxable as ordinary income and, therefore, will increase (decrease)
dividend distributions. The Fund will send each shareholder a notice in
January describing the tax status of dividends and capital gains
distributions for the prior year.

CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the Fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
the shareholders have held their shares. If a shareholder receives a
long-term capital gain distribution on shares of the Fund and such shares
are held for less than six months and are sold at a loss, the portion of
the loss equal to the amount of the long-term capital gain distribution
will be considered a long-term loss for tax purposes.
Short-term capital gains distributed by the Fund are taxable to
shareholders as dividends, not as capital gains. Distributions from the
short-term capital gains do not qualify for the dividends received
deduction.

FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the Fund does
not currently anticipate that securities of foreign issuers will constitute
more than 50% of its total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.

TAX STATUS OF THE FUND. The Fund has qualified and intends to continue to
qualify as a "regulated investment company" for tax purposes, so that it
will not be liable for federal tax on income and capital gains distributed
to shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes, the Fund intends to
distribute substantially all of its net investment income and realized
capital gains within each calendar year as well as on a fiscal year basis.
The Fund also intends to comply with other tax rules applicable to
regulated investment companies, including a requirement that capital gains
from the sale of securities held for less than three months must constitute
less than 30% of the Fund's gross income for each fiscal year. Gains from
some forward currency contracts, futures contracts and options are included
in this 30% calculation, which may limit the Fund's investments in such
instruments.
If the Fund purchases shares in certain foreign investment entities,
called passive foreign investment companies (PFICs), it may be subject to
U.S. federal income tax on a portion of any excess distribution or gain
from the disposition of such shares. Interest charges may also be imposed
on the Fund with respect to deferred taxes arising from such distributions
or gains.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the Fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders of the Fund may be subject
to state and local taxes on distributions received from the Fund.
Investors should consult their tax advisors to determine whether the Fund
is suitable to their particular tax situation. The Fund is treated as a
separate entity from the other portfolios of Fidelity Advisor Series III
for tax purposes.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions, as follows: Service, which is
the transfer and shareholder servicing agent for certain of the funds
advised by FMR; FIIOC, which performs shareholder servicing functions for
certain institutional customers; and Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within the
Fidelity organization.

Several affiliates of FMR also are engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K. and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas, Inc. (FMR Texas), a wholly owned subsidiary of FMR formed in
1989, supplies portfolio management and research services in connection
with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Board of Trustees and executive officers of the Fund are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. All persons named as
Trustees and officers also serve in similar capacities for other funds
advised by FMR. Unless otherwise noted, the business address of each
Trustee and officer is 82 Devonshire Street, Boston, MA 02109, which is
also the address of FMR. Those Trustees who are "interested persons" (as
defined in the 1940 Act) by virtue of their affiliation with either the
Fund or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments, Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior
to his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee.
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary (1991), is Vice President and General Counsel
of FMR, Vice President-Legal of FMR Corp., and Clerk of Distributors.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR.
BETH TERRANA, Vice President (1991), is an employee of FMR.
Under a retirement program which became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime based on their basic trustees fees and length of service.
Currently, Messrs. Robert L. Johnson, William R. Spaulding, Bertram H.
Witham and David L. Yunich participate in the program.
As of December 31, 1993, the Trustees and officers owned in the aggregate
less than 1% of the outstanding shares of the Fund.

MANAGEMENT AND OTHER SERVICES

The Fund employs FMR to furnish investment advisory and other services.
Under FMR's 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, and
compensates all officers of the Trust, all Trustees who are "interested
persons" of the Trust or FMR, and all personnel of the Trust 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 law, developing management and shareholder services
for the Fund and furnishing reports, evaluations and analyses on a variety
of subjects to the Trustees.

For these services the Fund pays FMR a monthly management fee at an annual
rate of .50% of the average net assets of the Fund determined at the close
of business on each day throughout the month. FMR may, from time to time,
agree to voluntarily reimburse the Fund for expenses above a specified
percentage of net assets of the Fund. 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. Reimbursement by FMR will
increase the Fund's total return. For the fiscal years ended November 30,
1993, 1992 and 1991, FMR received $933,830, $622,216, and $806,504,
respectively, after reimbursement. Effective April 1, 1987, FMR agreed to
voluntarily reimburse 10% of its annual management fee, reducing the fee to
.40%. As of September 10, 1992, this reimbursement was no longer in
effect.

In addition to the management fee payable to FMR and the fees payable to
FIIOC for Institutional shares and Class B shares , State Street
for Class A shares , and Service, the Fund pays all its expenses,
without limitation, that are not assumed by those parties. The Fund pays
for the typesetting, printing and mailing of proxy material to
shareholders, legal expenses, and the fees of the custodian, auditor and
non-interested Trustees. Although the Fund's current Management Contract
provides that the Fund will pay for the typesetting, printing and mailing
of Prospectuses, Statements of Additional Information and reports to
existing shareholders, the Fund entered into a revised transfer agent
agreement with FIIOC effective June 1, 1989, pursuant to which FIIOC will
bear the cost of providing these services to existing shareholders. Other
expenses paid by the Fund include interest, taxes, brokerage commissions,
the Fund's proportionate share of insurance premiums and Investment Company
Institute dues, and the costs of registering shares under federal and state
securities laws. The Fund is also liable for such nonrecurring expenses as
may arise, including costs of litigation to which the Fund is a party and
any obligation it may have to indemnify its officers and Trustees with
respect to such litigation.

To comply with the California Code of Regulations, FMR will reimburse the
Fund if and to the extent that the Fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the Fund expenses for purposes of this regulation, the
Fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.

SUB-ADVISERS. On December 1, 1990, FMR entered into sub-advisory
agreements with FMR U.K. and FMR Far East pursuant to which FMR U.K. and
FMR Far East supply FMR with investment research and recommendations
concerning foreign securities for the benefit of the Fund.
FMR U.K. and FMR Far East, both wholly-owned subsidiaries of FMR, were
formed in 1986 and registered under the Investment Advisers Act of 1940 on
May 11, 1987 to research and to make recommendations with respect to
companies located outside of North America.
The sub-advisory agreements provide that FMR, and not the Fund, pays fees
to FMR U.K. and FMR Far East equal to 110% and 105%, respectively, of FMR
U.K.'s and FMR Far East's costs incurred in connection with each agreement,
said costs to be determined in relation to the assets of the Fund that
benefit from the services of the sub-advisers.
TRANSFER AGENT. FIIOC is transfer and shareholder servicing agent for
Institutional shares and Class B shares . Under its contract with
the Fund, FIIOC pays out-of-pocket expenses associated with providing
transfer agency services, and FIIOC bears the expense of typesetting,
printing and mailing of Prospectuses, Statements of Additional Information,
reports, notices and statements to shareholders. Effective January 1,
1993, FIIOC is paid a per account fee of $95 and a monetary transaction fee
of $20 or $17.50 depending on the nature of the services provided. From
June 1, 1990 until December 31, 1992, FIIOC was paid a per account fee and
a monetary transaction fee of $65 and $14, or $60 and $12, respectively .
Fees for institutional retirement plan accounts, if any, are based on
the net asset value of all such accounts.
Transfer agent and out-of-pocket expenses for Institutional shares
for the fiscal years ended November 30, 1993, 1992 and 1991, amounted to
$239,364, $127,808, and $151,916, respectively.
State Street is transfer and shareholder servicing agent for Class A
shares . State Street has delegated certain transfer, dividend-paying
and shareholder services to FIIOC. Under a revised fee arrangement
effective January 1, 1993, the Fund pays a per account fee and a monetary
transaction fee of $30 and $6, respectively. For accounts that FIIOC
maintains on behalf of State Street, FIIOC receives all such fees. For
accounts as to which FIIOC provides limited services, FIIOC may receive a
portion (currently $20 and $6, respectively) of related per account fees
and monetary transaction fees, less applicable charges and expenses of
State Street for account maintenance and transactions.
The Fund has a contract with Service providing that Service will perform
the calculations necessary to determine NAV and dividends of
Institutional shares, Class A shares and Class B shares, and maintain
the Fund's accounting records. Prior to July 1, 1991, the annual fee for
these pricing and bookkeeping services was based on two schedules, one
pertaining to the Fund's average net assets, and one pertaining to the type
and number of transactions the Fund made. The fee rates in effect as of
July 1, 1991 are based on the Fund's average net assets, specifically, .06%
for the first $500 million of average net assets and .03% for average net
assets in excess of $500 million. The fee is limited to a minimum of
$45,000 and a maximum of $750,000 per year. For fiscal 1993, 1992, and
1991, the fees paid to Service for pricing and bookkeeping services
(including related out-of-pocket expenses) were $113,026, $91,899, and
$132,644, respectively.
THE DISTRIBUTOR
The Fund has a General Distribution Agreement with Distributors, a
Massachusetts corporation organized July 18, 1960. distributors, located at
82 Devonshire STreet, Boston, Massachusetts 02109, 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 General Distribution
Agreement calls for Distributors to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Fund, which
are offered continuously. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by Distributors.
Distributors also acts as general distributor for other publicly offered
Fidelity funds. The expenses of these operations are borne by FMR or
Distributors.
DISTRIBUTION AND SERVICE PLAN
The Trustees of the Trust on behalf of each of the Institutional
shares, Class A shares and Class B shares have adopted a Distribution
and Service Plan (each Plan) under Rule 12b-1of the 1940 Act (the Rule) .
The Rule provides in substance that a mutual fund may not engage directly
or indirectly in financing any activity that is primarily intended to
result in the sale of shares of the mutual fund except pursuant to a plan
adopted by the mutual fund under the Rule. The Trustees have adopted each
Plan to assure that each of the Institutional shares, Class A shares and
Class B shares and FMR may incur certain expenses that might be
considered to constitute indirect payment by the Fund of distribution
expenses. Under the Plan, if the payment by the class to FMR of management
fees should be deemed to be indirect financing by the Fund of the
distribution of its shares, such payment is authorized by the respective
Plan s .
Each Plan also specifically recognizes that FMR, either directly or through
Distributors, may use its management fee revenue, past profits or other
resources, without limitation, to pay promotional and administrative
expenses in connection with the offer and sale of shares of the Fund's
classes. In addition, each Plan provides that FMR may use its resources,
including its management fee revenues, to make payments to third parties
that provide assistance in selling shares of a class, or to third parties,
including banks, that render shareholder support services.
In addition, Class A pays D istributors a distribution fee at
an annual rate of up to .75% (currently at .65%) of its average net assets
determined as of the close of business on each day throughout the month,
but excluding assets attributable to shares purchased more than 144 months
prior to such day. This distribution fee is an expense of Class A ,
and is not charged directly to individual accounts.
Class B pays Distributors a distribution fee of .75% of its average
daily net assets determined as of the close of business on each day
throughout the month. Class B also pays investment professionals at an
annual rate of 0.25% for providing ongoing shareholder support
services.
Each Plan has been approved by the Trustees. As required by the Rule, the
Trustees carefully considered all pertinent factors relating to the
implementation of each Plan prior to its approval, and have determined that
there is a reasonable likelihood that the Plan will benefit
Institutional, Class A and Class B shares, a nd their
respective shareholders. To the extent that the Plan gives FMR and
Distributors greater flexibility in connection with the distribution of
shares of the Fund, additional sales of shares may result. Additionally,
certain shareholder support services may be provided more effectively under
the Plan by local entities with whom shareholders have other
relationships.

The Glass-Steagall Act generally prohibits federally and state chartered
or supervised banks from engaging in the business of underwriting, selling
or distributing securities. Although the scope of this prohibition under
the Glass-Steagall Act has not been clearly defined, in Distributors'
opinion it should not preclude a bank from performing shareholder servicing
and recordkeeping functions. Distributors intends to engage banks to
perform only such functions. However, changes in federal or state statutes
and regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the Fund
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The Fund may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the Plan s . No preference will be shown
in the selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Advisor Equity Portfolio Income Fund is a
series of Fidelity Ad visor III, an open-end investment company
organized as a Massachusetts business trust by Declaration of Trust dated
May 17, 1982. The F und currently offers Institutional shares and
Retail shares. Retail Shares are comprised of two classes: Class A and
Class B. On January 29, 1986, the name was changed from Equity
Portfolio: Income to Fidelity Franklin Street Trust. On April 15, 1993 the
Trust's name was again changed to Fidelity Advisor Series III. The
Trust's Declaration of Trust permits the Trustees to create additional
series . In the event that FMR ceases to be the investment adviser to
the Fund, the right of the Trust or Fund to use the identifying name
"Fidelity" may be withdrawn.
As of March 15, 1994, the following owned of record or beneficially
more than 5% of Institutional Class shares: First National Bank of Ohio,
Akron, OH, 24.15%; Financial Advisor Services, San Francisco, CA, 868%;
First National Bank; Gainesville, GA, 6.26%; Union Planters National Bank,
Memphis, TN, 5.5%.

As of March 15, 1994, the following owned of record or beneficially
more than 5% of Class A shares: First Trust Company, Denver, CO, 10.65%;
Capital Analysts, Inc., Radnor, PA, 7.96%, Smith Barney. Lehman, New York,
NY, 5.98%.
SHAREHOLDER AND TRUSTEE LIABILITY. The Fund is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the Fund shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or other instrument entered into or executed by
the Fund or the Trustees shall include a provision limiting the obligations
created thereby to the Fund and its assets. The Declaration of Trust
provides for indemnification out of the Fund's property of any shareholder
held personally liable for the obligations of the Fund. The Declaration of
Trust also provides that the Fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
Fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for neglect or wrongdoing,
but nothing in the Declaration of Trust protects a Trustee against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of their office. Claims asserted
against Institutional shares may subject holders to certain liabilities,
and claims asserted against Retail shares may subject holders of
Institutional shares to certain liabilities.
VOTING RIGHTS. As a shareholder, you receive one vote for each dollar of
net asset value per share you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of redemption,
and the privilege of exchange are described in each p rospectus.
Shares are fully paid and nonassessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of the Trust or of Institutional shares, Class
A shares or Class B shares of the Fund, as set forth in the
Declaration of Trust, may call meetings f or any purpose
related to the Trust , Fu nd, or Institutional shares, Class A
shares or Class B shares as applicable, inc luding, in the case of a
meeting of the entire Trust, the purpose of voting on removal of one or
more Trustees. The Trust or the Fund may be terminated upon the
sale of its assets to another open-end management investment company, or
upon liquidation and distribution of its assets, if approved by the vote of
the holders of a majority of the dollar value of outstanding shares of the
Trust or Fund. If not so terminated, the Trust or Fund will continue
indefinitely.
CUSTODIAN. The Chase Manhattan Bank, N.A., 1 Chase Manhattan Plaza, New
York, New York 10081, is custodian of the assets of the Fund. The
custodian is responsible for the safekeeping of the Fund's assets and the
appointment of subcustodian banks and clearing agencies. The custodian
takes no part in determining the investment policies of the Fund or in
deciding which securities are purchased or sold by the Fund. The Fund may,
however, invest in obligations of the custodian and may purchase securities
from or sell securities to the custodian.
FMR, its officers and directors, its affiliated companies and the Trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. Transactions that have occurred to date include 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.
AUDITOR. Coopers & Lybrand serves as the Trust's independent
accountant. The auditor examines financial statements for the Fund, and
provides other audit, tax, and related services.
FINANCIAL STATEMENTS
The Annual Report for Class A shares Annual Report for the fiscal
year ended November 30, 1993, a separate report supplied with this SAI
is incorporated herein by reference. The Annual Report for
Institutional shares is a separate report and is incorporated into the
Prospectus for Institutional shares.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
The 'C' rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating
will also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.

PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements for the fiscal year ended November 30, 1993 are
incorporeated herein by reference to Post-Effective Amendment No. 28.
(b) Exhibits:
(1) (a) Declaration of Trust dated May 17, 1982, as currently in effect,
is incorporated herein by reference to Exhibit 1 to the initial
Registration Statement No. 2-77571.
(b) Supplement to Declaration of Trust, dated August 26, 1982, is
incorporated herein by reference to Exhibit 1 to Form N1-Q for the calendar
quarter ended February 28, 1983.
(c) Supplement to Declaration of Trust, dated December 20, 1982, is
incorporated herein by reference to Exhibit 1 to Form N1-Q for the calendar
quarter ended February 28, 1983.
(d) Supplement to Declaration of Trust dated September 29, 1983, is
incorporated herein by reference to Exhibit 1(b)1(c) to Post-Effective
Amendment No. 2.
(e) Amendment to Declaration of Trust dated August 1, 1986, is incorporated
herein by reference to Exhibit 1(e) to Post-Effective Amendment No. 7.
(f) Supplement to Declaration of Trust dated November 30, 1990 is
incorporated herein by reference to Exhibit 1(f) to Post-Effective
Amendment No. 16.
(2) By-Laws of the Trust are incorporated herein by reference to Exhibit 2
to the initial Registration Statement.
(3) Not applicable.
(4) Not applicable.
(5) (a) Management Contract between the Registrant and Fidelity Management
& Research Company is incorporated herein by reference to Exhibit 5 to
Post-Effective Amendment No. 7.
(b) Sub-Advisory Agreement between Fidelity Management and Research (U.K.)
Inc. and Fidelity Management & Research Company dated December 1, 1990
is incorporated herein by reference to Exhibit 5(b) to Post-Effective
Amendment No. 16.
(c) Sub-Advisory Agreement between Fidelity Management and Research (Far
East) Inc. and Fidelity Management & Research Company dated December 1,
1990 is incorporated herein as Exhibit 5(c) to Post-Effective Amendment No.
16.
(6) General Distribution Agreement, dated April 1, 1987, between the
Registrant and Fidelity Distributors Corporation, is incorporated herein by
reference to Exhibit 7 to Post-Effective Amendment No. 8.
(7) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, effective November 1, 1989 is incorporated herein by
reference to Exhibit 7 to Post-Effective Amendment No. 19.
(8) (a) Custodian Contract, dated October 31, 1989, between Registrant and
Fidelity Management & Trust Company is incorporated herein by reference
to Exhibit 8(a) to Post-Effective Amendment No. 15.
(b) Subcustodian Agreement, dated October 31, 1989, between Fidelity
Management Trust Company and Morgan Stanley Trust Company is incorporated
herein by reference to Exhibit 8(b) to Post-Effective Amendment No. 15.
(9) (a) Amended Service Agreement, including Schedules B and C, between the
Registrant, FMR Corp. and Fidelity Service Co., dated June 1, 1989, is
incorporated herein by reference to Exhibit 9(c) to Post-Effective
Amendment No. 13.
(b) Amended Transfer Agency Agreement (including Schedule A) between the
Registrant, FMR Corp. and Fidelity Investments Institutional Operations
Company, dated June 1, 1989, is incorporated herein by reference to Exhibit
9(d) to Post-Effective Amendment No. 15.
(10) Not applicable.
(11) Consent of independent auditor is filed herein electronically as
Exhibit 11.
(12) Not applicable.
(13) Not applicable.
(14) (a) Form for Fidelity Advisor Funds Individual Retirement Account
Custodial Agreement Disclosure Statement in effect as of January 1, 1994 is
electronically filed herein as Exhibit 14(a).

(b) Form for Fidelity Institutional Individual Retirement Account
Custodial Agreement in effect as of January 1, 1994 is electronically filed
herein as Exhibit 14(b).
(15) (a) Distribution and Service Plan pursuant to Rule 12b-1 for Equity
Portfolio: Income is incorporated herein by reference to Exhibit 15 to
Post-Effective Amendment No. 6.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Equity Portfolio: Income: Class B is elecronically filed herein
as Exhibit 15(b).
(16) (a) Schedule for calculation of performance quotations was filed as
Exhibit 16 in Post-Effective No. 11.
(b) Schedule for computation of the moving average calculation is filed
herein electronically as Exhibit 16(b).
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is the same as the boards of other
funds advised by FMR, each of which has Fidelity Management & Research
Company as its investment adviser. In addition, the officers of these
funds are substantially identical. Nonetheless, Registrant takes the
position that it is not under common control with these other funds since
the power residing in the respective boards and officers arises as the
result of an official position with the respective funds.

Item 26. Number of Holders of Securities
February 28, 1994
Title of Class: Shares of Beneficial Interest Number of Recordholders
Insitutional Class 818
Class A 2,995
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee, or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President and
Chief Executive Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., FMR Texas Inc. (1989),
Fidelity Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; President and
Trustee of funds advised by FMR;

J. Gary Burkhead President of FMR; Managing Director of FMR Corp.; President
and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management &
Research (Far East) Inc.; Senior Vice President and Trustee of
funds advised by FMR.

Peter S. Lynch Vice Chairman of FMR (1992).

David Breazzano Vice President of FMR (1993) and of a fund advised by FMR.

Stephan Campbell Vice President of FMR (1993).

Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR; Corporate
Preferred Group Leader.

Will Danof Vice President of FMR (1993) and of a fund advised by FMR.

Scott DeSano Vice President of FMR (1993).

Penelope Dobkin Vice President of FMR (1990) and of a fund advised by FMR.

Larry Domash Vice President of FMR (1993).

George Domolky Vice President of FMR (1993) and of a fund advised by FMR.

Charles F. Dornbush Senior Vice President of FMR (1991); Chief Financial Officer of
the Fidelity funds; Treasurer of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.

Robert K. Duby Vice President of FMR.

Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.

Kathryn L. Eklund Vice President of FMR (1991).

Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised by
FMR.

Daniel R. Frank Vice President of FMR and of funds advised by FMR.

Gary L. French Vice President of FMR (1991) and Treasurer of the funds advised
by FMR (1991). Prior to assuming the position as Treasurer he
was Senior Vice President, Fund Accounting - Fidelity
Accounting & Custody Services Co. (1991) (Vice President,
1990-1991); and Senior Vice President, Chief Financial and
Operations Officer - Huntington Advisers, Inc. (1985-1990).

Michael S. Gray Vice President of FMR and of funds advised by FMR.

Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.

William J. Hayes Senior Vice President of FMR (1989); Income/Growth Group
Leader (1990) and International Group Leader (1990).

Robert Haber Vice President of FMR (1991) and of funds advised by FMR.

Daniel Harmetz Vice President of FMR (1991) and of a fund advised by FMR.

Ellen S. Heller Vice President of FMR (1991).

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
John Hickling Vice President of FMR (1993) and of funds advised by FMR.

</TABLE>

Robert F. Hill Vice President of FMR (1989); and Director of Technical
Research.

Stephan Jonas Vice President of FMR (1993).

David B. Jones Vice President of FMR (1993).

Steven Kaye Vice President of FMR (1993) and of a fund advised by FMR.

Frank Knox Vice President of FMR (1993).

Robert A. Lawrence Senior Vice President of FMR (1993); and High Income Group
Leader.

Alan Leifer Vice President of FMR and of a fund advised by FMR.

Harris Leviton Vice President of FMR (1993) and of a fund advised by FMR.

Bradford E. Lewis Vice President of FMR (1991) and of funds advised by FMR.

Robert H. Morrison Vice President of FMR and Director of Equity Trading.

David Murphy Vice President of FMR (1991) and of funds advised by FMR.

Jacques Perold Vice President of FMR (1991).

Brian Posner Vice President of FMR (1993) and of a fund advised by FMR.

Anne Punzak Vice President of FMR (1990) and of funds advised by FMR.

Richard A. Spillane Vice President of FMR (1990) and of funds advised by FMR; and
Director of Equity Research (1989).

Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised by
FMR.

Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income Division
Head.

Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.

Donald Taylor Vice President of FMR (1993) and of funds advised by FMR.

Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised by
FMR.

Joel Tillinghast Vice President of FMR (1993) and of a fund advised by FMR.

Robert Tucket Vice President of FMR (1993).

George A. Vanderheiden Senior Vice President of FMR; Vice President of funds advised by
FMR; and Growth Group Leader (1990).

Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised by
FMR.

Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.

Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of FMR;
Vice President, Legal of FMR Corp.; and Secretary of funds
advised by FMR.

</TABLE>

(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the Executive
Committee of FMR; Chief Executive Officer of FMR Corp.;
Chairman of the Board and a Director of FMR, FMR Corp., FMR
Texas Inc., and Fidelity Management & Research (Far East)
Inc.; President and Trustee of funds advised by FMR.

J. Gary Burkhead President and Director of FMR U.K.; President of FMR; Managing
Director of FMR Corp.; President and a Director of FMR Texas Inc.
and Fidelity Management & Research (Far East) Inc.; Senior
Vice President and Trustee of funds advised by FMR.

Richard C. Habermann Senior Vice President of FMR U.K. (1991); Senior Vice President of
Fidelity Management & Research (Far East) Inc. (1991);
Director of Worldwide Research of FMR.

Charles F. Dornbush Treasurer of FMR U.K.; Treasurer of Fidelity Management &
Research (Far East) Inc.; Treasurer of FMR Texas Inc., Senior Vice
President and Chief Financial Officer of the Fidelity funds.

David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management & Research
(Far East) Inc.; Secretary of FMR Texas Inc.

</TABLE>

(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of FMR,
FMR Corp., FMR Texas Inc. and Fidelity Management &
Research (U.K.) Inc.; President and Trustee of funds advised by
FMR.

J. Gary Burkhead President and Director of FMR Far East; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research
(U.K.) Inc.; Senior Vice President and Trustee of funds advised
by FMR.

Richard C. Habermann Senior Vice President of FMR Far East (1991); Senior Vice
President of Fidelity Management & Research (U.K.) Inc.
(1991); Director of Worldwide Research of FMR.

William R. Ebsworth Vice President of FMR Far East.

Bill Wilder Vice President of FMR Far East (1993).

Charles F. Dornbush Treasurer of FMR Far East; Treasurer of Fidelity Management
& Research (U.K.) Inc.; Treasurer of FMR Texas Inc.;
Senior Vice President and Chief Financial Officer of the
Fidelity funds.

David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management &
Research (U.K.) Inc.; Secretary of FMR Texas Inc. .

</TABLE>

Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
The Freedom Fund
ARK Funds
CrestFunds, Inc.
(b)

Name and Principal Positions and Offices Positions and Offices

Business Address* With Underwriter With Registrant

Edward C. Johnson 3d Director Trustee and President

Nita B. Kincaid Director None

W. Humphrey Bogart Director None

Kurt A. Lange President and Treasurer None

William L. Adair Senior Vice President None

Thomas W. Littauer Senior Vice President None

Arthur S. Loring Vice President and Clerk Secretary

* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the fund's
custodian The Chase Manhattan Bank, 1211 Avenue of the Americas, New York,
N.Y.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
The Registrant, on behalf of Fidelity Advisor Institutional Equity
Portfolio Income and Fidelity Advisor Equity Portfolio Income undertakes,
provided the information required by Item 5A is contained in the annual
report, to furnish each person to whom a prospectus has been delivered,
upon their request and without charge, a copy of the Registrant's latest
annual report to shareholders.

SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 31 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, and Commonwealth of Massachusetts, on the 13th day of April 1994.
FIDELITY ADVISOR SERIES III
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)

<TABLE>
<CAPTION>
<S> <C> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee April 13, 1994

Edward C. Johnson 3d (Principal Executive Officer)

</TABLE>

/s/Gary L. French Treasurer April 13, 1994

Gary L. French

/s/J. Gary Burkhead Trustee April 13, 1994

J. Gary Burkhead

/s/Ralph F. Cox* Trustee April 13, 1994

Ralph F. Cox

/s/Phyllis Burke Davis* Trustee April 13, 1994

Phyllis Burke Davis

/s/Richard J. Flynn* Trustee April 13, 1994

Richard J. Flynn

/s/E. Bradley Jones* Trustee April 13, 1994

E. Bradley Jones

/s/Donald J. Kirk* Trustee April 13, 1994

Donald J. Kirk

/s/Peter S. Lynch* Trustee April 13, 1994

Peter S. Lynch

/s/Edward H. Malone* Trustee April 13, 1994

Edward H. Malone

/s/Marvin L. Mann* Trustee April 13, 1994

Marvin L. Mann

/s/Gerald C. McDonough* Trustee April 13, 1994

Gerald C. McDonough

/s/Thomas R. Williams* Trustee April 13, 1994

Thomas R. Williams

(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signatures affixed by Stephanie A. Xupolos pursuant to a power of
attorney dated October 20, 1993 and filed herewith.

POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993

Edward C. Johnson 3d

POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.

/s/Edward C. Johnson 3d /s/Peter S. Lynch

Edward C. Johnson 3d Peter S. Lynch

/s/J. Gary Burkhead /s/Edward H. Malone

J. Gary Burkhead Edward H. Malone

/s/Richard J. Flynn /s/Gerald C. McDonough

Richard J. Flynn Gerald C. McDonough

/s/E. Bradley Jones /s/Thomas R. Williams

E. Bradley Jones Thomas R. Williams

/s/Donald J. Kirk

Donald J. Kirk

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993

Ralph F. Cox

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P.
Fidelity Beacon Street Trust Fidelity Trend Fund
Fidelity Capital Trust Fidelity Union Street Trust
Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Contrafund Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Institutional Trust

</TABLE>

Phyllis Burke Davis

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Special Situations Fund
Fidelity Advisor Series IV Fidelity Sterling Performance Portfolio, L.P.
Fidelity Advisor Series VI Fidelity Trend Fund
Fidelity Advisor Series VII Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Advisor Series VIII Fidelity U.S. Investments-Government Securities
Fidelity Contrafund Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Yen Performance Portfolio, L.P.
Portfolio, L.P. Spartan U.S. Treasury Money Market
Fidelity Fixed-Income Trust Fund
Fidelity Government Securities Fund Variable Insurance Products Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund II
Fidelity Institutional Trust

</TABLE>

Marvin L. Mann

Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Statement of
Additional Information in Post-Effective Amendment No. 31 to the
Registration Statement on Form N-1A (the "Registration Statement") of
Fidelity Advisor Series III (formerly Fidelity Franklin Street Trust):
Fidelity Advisor Equity Portfolio Income of our report dated January 7,
1994, relating to the financial statements and financial highlights which
is incorporated by reference in said Statement of Additional Information.
We further consent to the references to our Firm in the Prospectus and
Statement of Additional Information under the headings "Financial
Highlights" and "Auditor."
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Boston, Massachusetts
April 13, 1994

Exhibit 15

FORM OF
DISTRIBUTION AND SERVICE PLAN
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") for the Class B shares of Fidelity
Advisor Equtiy Portfolio: Income Fund ("Class B"), a class of shares of
Fidelity Advisor Equity Portfolio Income Fund (the "Fund"), a series of
Fidelity Advisor Series III (the "Trust").
2. The Trust has entered into a General Distribution Agreement on behalf
of the Fund with Fidelity Distributors Corporation (the "Distributor")
under which the Distributor uses all reasonable efforts, consistent with
its other business, to secure purchasers of the Fund's shares of beneficial
interest (the "shares"). Such efforts may include, but neither are
required to include nor are limited to, the following: (1) formulation and
implementation of marketing and promotional activities, such as mail
promotions and television, radio, newspaper, magazine and other mass media
advertising; (2) preparation, printing and distribution of sales
literature; (3) preparation, printing and distribution of prospectuses of
the Fund and reports to recipients other than existing shareholders of the
Fund; (4) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Distributor may, from time to
time, deem advisable; (5) making payments to securities dealers and others
engaged in the sale of shares or who engage in shareholder support services
("Investment Professionals"); and (6) providing training, marketing and
support to Investment Professionals with respect to the sale of shares.
3. In accordance with such terms as the Trustees may, from time to time
establish, and in conjunction with its services under the General
Distribution Agreement with respect to shares of Class B ("Class B
Shares"), the Distributor is hereby specifically authorized to make
payments to Investment Professionals in connection with the sale of the
Class B Shares. Such payments may be paid as a percentage of the dollar
amount of purchases of Class B Shares attributable to a particular
Investment Professional, or may take such other form as may be approved by
the Trustees.
4. In consideration for the services provided and the expenses incurred
by the Distributor pursuant to the General Distribution Agreement and
paragraphs 2 and 3 hereof, all with respect to the Class B Shares:
(a) Class B shall pay to the Distributor a monthly distribution fee at the
annual rate of 0.75% (or such lesser amount as the Trustees may, from time
to time, determine) of the average daily net assets of Class B throughout
the month. The determination of daily net assets shall be made at the
close of business each day throughout the month and computed in the manner
specified in the Fund's then current Prospectus for the determination of
the net asset value of Class B Shares, but shall exclude assets
attributable to (i) Class B Shares purchased more than 144 months prior to
such date or (ii) any other class of shares of the Fund. The Distributor
may, but shall not be required to, use all or any portion of the
distribution fee received pursuant to the Plan to compensate Investment
Professionals who have engaged in the sale of Class B Shares or in
shareholder support services pursuant to agreements with the Distributor,
or to pay any of the expenses associated with other activities authorized
under paragraphs 2 and 3 hereof; and
(b) In addition, the Plan recognizes that the Distributor may, in
accordance with such terms as the Trustees may from time to time establish,
receive all or a portion of any sales charges, including contingent
deferred sales charges, which may be imposed upon the sale or redemption of
Class B Shares.
5. Separate from any payments made as described in paragraph 4 hereof,
Class B shall also pay to the Distributor a service fee at the annual rate
of 0.25% (or such lesser amount as the Trustees may, from time to time,
determine) of the average daily net assets of Class B throughout the month.
The determination of daily net assets shall be made at the close of
business each day throughout the month and computed in the manner specified
in the Fund's then current Prospectus for the determination of the net
asset value of Class B shares, but shall exclude assets attributable to any
other class of shares of the Fund. The Distributor shall use all [or a
portion] of such service fees to compensate Investment Professionals for
personal service and/or the maintenance of shareholder accounts.
6. The Fund presently pays, and will continue to pay, a management fee to
Fidelity Management and Research Company (the "Adviser") pursuant to a
management agreement between the Fund and the Adviser (the "Management
Contract"). It is recognized that the Adviser may use its management fee
revenue, as well as its past profits or its resources from any other
source, to reimburse the Distributor for expenses incurred in connection
with the distribution of Class B Shares, including the activities referred
to in paragraphs 2 and 3 hereof. To the extent that the payment of
management fees by the Fund to the Adviser should be deemed to be indirect
financing of any activity primarily intended to result in the sale of Class
B Shares within the meaning of Rule 12b-1, then such payment shall be
deemed to be authorized by this Plan.
7. This Plan shall become effective upon the first business day of the
month following approval by "a vote of at least a majority of the
outstanding voting securities" (as defined in the Act) of Class B, this
Plan having been approved by a vote of a majority of the Trustees of the
Trust, including a majority of Trustees who are not "interested persons" of
the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related
to the Plan (the "Independent Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan.
8. This Plan shall, unless terminated as hereinafter provided, remain in
effect until [date], and from year to year thereafter; provided, however,
that such continuance is subject to approval annually by a vote of a
majority of the Trustees of the Trust, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on this Plan. This Plan may be amended at any time by the Board of
Trustees, provided that (a) any amendment to increase materially the fees
provided for in paragraphs 4 and 5 hereof or any amendment of the
Management Contract to increase the amount to be paid by the Fund
thereunder shall be effective only upon approval by a vote of a majority of
the outstanding voting securities of Class B in the case of this Plan, or
upon approval by a vote of the majority of the outstanding voting
securities of the Fund, in the case of the Management Contract, and (b) any
material amendment of this Plan shall be effective only upon approval in
the manner provided in the first sentence of paragraph 7.
9. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of
a majority of the outstanding voting securities of Class B.
10. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any activity
primarily intended to result in the sale of Class B Shares (making
estimates of such costs where necessary or desirable) and the purposes for
which such expenditures were made.
11. This Plan does not require the Adviser or Distributor to perform any
specific type or level of distribution activities or to incur any specific
level of expenses for activities primarily intended to result in the sale
of Class B Shares.
12. Consistent with the limitation of shareholder liability as set forth
in the Trust's Declaration of Trust, any obligation assumed by Class B
pursuant to this Plan and any agreement related to this Plan shall be
limited in all cases to Class B and its assets and shall not constitute an
obligation of any shareholder of the Trust or of any other class of the
Fund, series of the Trust or class of such series.
13. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall
not be affected thereby.