(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
EQUITY INCOME
FUND - CLASS A, CLASS T AND CLASS B
SEMIANNUAL REPORT
MAY 31, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 10 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 13 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 14 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 26 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 34 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Through the first five months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories as bonds. If you have a short investment time
horizon, you might want to consider moving some of your investment into a
money market fund, which seeks income and a stable share price by investing
in high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR EQUITY INCOME FUND - CLASS A
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can look at
the total percentage change in value, the average annual percentage change
or the growth of a hypothetical $10,000 investment. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value).
The initial offering of Class A shares took place on September 3, 1996.
Class A shares bear a 0.25% 12b-1 fee that is reflected in returns after
September 3, 1996. Returns between September 10, 1992 (the date Class T
shares were first offered) and September 3, 1996 are those of Class T and
reflect Class T's 0.50% 12b-1 fee (0.65% prior to January 1, 1996). Returns
prior to September 10, 1992 are those of the Institutional Class, the
original class of the fund. Had Class A's 12b-1 fee been reflected, returns
prior to September 10, 1992 would have been lower. If Fidelity had not
reimbursed certain class expenses, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Advisor Equity Income Fund - Class A 9.02% 19.51% 125.20% 238.28%
Advisor Equity Income Fund - Class A 3.30% 13.24% 113.37% 220.52%
(incl. max. 5.25% sales charge)
S&P 500(registered trademark) 13.15% 29.42% 132.50% 294.84%
Equity Income Funds Average 10.11% 22.43% 102.02% 209.24%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, six months, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return, over the past year, the value of your investment would be $1,050.
You can compare Class A's returns to the performance of the Standard &
Poor's 500 Index - a widely recognized, unmanaged index of common stocks.
To measure how Class A's performance stacked up against its peers, you can
compare it to the equity income funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 185 mutual funds. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Equity Income Fund - Class A 19.51% 17.63% 12.96%
Advisor Equity Income Fund - Class A 13.24% 16.37% 12.35%
(incl. max. 5.25% sales charge)
S&P 500 29.42% 18.38% 14.70%
Equity Income Funds Average 22.43% 14.98% 11.69%
AVERAGE ANNUAL TOTAL RETURNS take Class A's cumulative return and show you
what would have happened if Class A had performed at a constant rate each
year.
$10,000 OVER 10 YEARS
1987/05/31 9475.00 10000.00
1987/06/30 9748.93 10505.00
1987/07/31 10031.30 11037.60
1987/08/31 10307.78 11449.31
1987/09/30 10065.75 11198.57
1987/10/31 8241.46 8786.40
1987/11/30 7889.39 8062.40
1987/12/31 8189.23 8675.94
1988/01/31 8749.32 9041.20
1988/02/29 9176.12 9462.52
1988/03/31 9056.06 9170.13
1988/04/30 9185.43 9271.92
1988/05/31 9298.19 9352.58
1988/06/30 9830.26 9781.87
1988/07/31 9812.71 9744.70
1988/08/31 9618.57 9413.38
1988/09/30 9902.77 9814.39
1988/10/31 10081.36 10087.23
1988/11/30 10018.58 9942.98
1988/12/31 10091.28 10116.98
1989/01/31 10737.92 10857.54
1989/02/28 10646.38 10587.19
1989/03/31 10858.02 10833.87
1989/04/30 11255.71 11396.15
1989/05/31 11525.03 11857.70
1989/06/30 11571.65 11790.11
1989/07/31 12302.50 12854.75
1989/08/31 12462.51 13106.71
1989/09/30 12301.77 13052.97
1989/10/31 11627.31 12750.14
1989/11/30 11780.05 13010.24
1989/12/31 11951.58 13322.49
1990/01/31 11195.84 12428.55
1990/02/28 11215.83 12588.88
1990/03/31 11215.83 12922.48
1990/04/30 10781.73 12599.42
1990/05/31 11491.72 13827.86
1990/06/30 11440.78 13733.84
1990/07/31 11256.42 13689.89
1990/08/31 10401.63 12452.32
1990/09/30 9615.04 11845.89
1990/10/31 9396.52 11794.96
1990/11/30 10024.35 12556.91
1990/12/31 10245.04 12907.25
1991/01/31 10766.33 13470.00
1991/02/28 11536.12 14433.11
1991/03/31 11720.23 14782.39
1991/04/30 11719.95 14817.87
1991/05/31 12361.79 15458.00
1991/06/30 11794.41 14750.02
1991/07/31 12439.88 15437.37
1991/08/31 12703.35 15803.24
1991/09/30 12637.53 15539.33
1991/10/31 12848.09 15747.55
1991/11/30 12327.08 15112.93
1991/12/31 13299.06 16841.85
1992/01/31 13432.94 16528.59
1992/02/29 13847.97 16743.46
1992/03/31 13622.98 16416.96
1992/04/30 14108.52 16899.62
1992/05/31 14233.07 16982.43
1992/06/30 14074.60 16729.39
1992/07/31 14440.17 17413.62
1992/08/31 14097.35 17056.64
1992/09/30 14189.48 17257.91
1992/10/31 14373.83 17318.31
1992/11/30 14881.23 17908.87
1992/12/31 15251.82 18129.15
1993/01/31 15727.47 18281.43
1993/02/28 16134.68 18530.06
1993/03/31 16658.70 18921.04
1993/04/30 16577.04 18463.15
1993/05/31 16834.47 18957.97
1993/06/30 16998.99 19012.95
1993/07/31 17234.37 18936.89
1993/08/31 17835.82 19654.60
1993/09/30 17717.62 19503.26
1993/10/31 17930.37 19906.98
1993/11/30 17563.96 19717.86
1993/12/31 18001.29 19956.45
1994/01/31 18828.66 20634.97
1994/02/28 18332.24 20075.76
1994/03/31 17547.23 19200.46
1994/04/30 18153.12 19446.22
1994/05/31 18271.93 19765.14
1994/06/30 18151.46 19280.90
1994/07/31 18772.03 19913.31
1994/08/31 19738.67 20729.75
1994/09/30 19403.56 20221.88
1994/10/31 19786.84 20676.87
1994/11/30 19116.10 19923.82
1994/12/31 19164.01 20219.29
1995/01/31 19457.90 20743.57
1995/02/28 20143.64 21551.95
1995/03/31 20794.19 22187.95
1995/04/30 21348.54 22841.38
1995/05/31 21939.84 23754.35
1995/06/30 22248.39 24306.17
1995/07/31 23052.25 25112.16
1995/08/31 23324.33 25175.19
1995/09/30 24041.32 26237.58
1995/10/31 23768.40 26143.91
1995/11/30 24748.41 27291.63
1995/12/31 25401.35 27817.27
1996/01/31 26154.31 28764.17
1996/02/29 26243.62 29030.81
1996/03/31 26435.49 29310.38
1996/04/30 26614.80 29742.41
1996/05/31 26819.73 30509.47
1996/06/30 26666.25 30625.71
1996/07/31 25664.34 29272.67
1996/08/31 26152.45 29890.03
1996/09/30 27077.60 31572.24
1996/10/31 27619.67 32443.00
1996/11/30 29400.75 34895.37
1996/12/31 29076.03 34204.09
1997/01/31 30048.34 36341.16
1997/02/28 30288.08 36626.08
1997/03/31 29083.93 35121.11
1997/04/30 30314.14 37217.84
1997/05/30 32052.49 39483.67
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Advisor Equity Income Fund - Class A on May 31, 1987, and the
current maximum 5.25% sales charge was paid. As the chart shows, by May 31,
1997, the value of the investment would have grown to $32,052 - a 220.52%
increase on the initial investment. For comparison, look at how the S&P 500
did over the same period. With dividends reinvested, the same $10,000
investment would have grown to $39,484 - a 294.84% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn,
the share price and return of
a fund that invests in stocks
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
ADVISOR EQUITY INCOME FUND - CLASS T
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can look at
the total percentage change in value, the average annual percentage change
or the growth of a hypothetical $10,000 investment. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value).
The initial offering of Class T shares took place on September 10, 1992.
Class T shares bear a 0.50% 12b-1 fee (0.65% prior to January 1, 1996) that
is reflected in returns after September 10, 1992. Returns prior to that
date are those of the Institutional Class, the original class of the fund.
Had Class T's 12b-1 fee been reflected, returns prior to September 10, 1992
would have been lower. If Fidelity had not reimbursed certain class
expenses, the past five and past 10 year total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Advisor Equity Income Fund - Class T 9.11% 19.70% 125.56% 238.83%
Advisor Equity Income Fund - Class T 5.29% 15.51% 117.67% 226.97%
(incl. max. 3.50% sales charge)
S&P 500(registered trademark) 13.15% 29.42% 132.50% 294.84%
Equity Income Funds Average 10.11% 22.43% 102.02% 209.24%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, six months, one year, five years or 10
years. For example, if you invested $1,000 in a fund that had a 5% return,
over the past year, the value of your investment would be $1,050. You can
compare Class T's returns to the performance of the Standard & Poor's 500
Index - a widely recognized, unmanaged index of common stocks. To measure
how Class T's performance stacked up against its peers, you can compare it
to the equity income funds average, which reflects the performance of
mutual funds with similar objectives tracked by Lipper Analytical Services,
Inc. The past six months average represents a peer group of 185 mutual
funds. These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Equity Income Fund - Class T 19.70% 17.67% 12.98%
Advisor Equity Income Fund - Class T 15.51% 16.83% 12.58%
(incl. max. 3.50% sales charge)
S&P 500 29.42% 18.38% 14.70%
Equity Income Funds Average 22.43% 14.98% 11.69%
AVERAGE ANNUAL TOTAL RETURNS take Class T's cumulative return and show you
what would have happened if Class T had performed at a constant rate each
year.
$10,000 OVER 10 YEARS
1987/05/31 9650.00 10000.00
1987/06/30 9928.98 10505.00
1987/07/31 10216.57 11037.60
1987/08/31 10498.16 11449.31
1987/09/30 10251.66 11198.57
1987/10/31 8393.68 8786.40
1987/11/30 8035.10 8062.40
1987/12/31 8340.48 8675.94
1988/01/31 8910.92 9041.20
1988/02/29 9345.60 9462.52
1988/03/31 9223.32 9170.13
1988/04/30 9355.08 9271.92
1988/05/31 9469.92 9352.58
1988/06/30 10011.82 9781.87
1988/07/31 9993.94 9744.70
1988/08/31 9796.22 9413.38
1988/09/30 10085.68 9814.39
1988/10/31 10267.56 10087.23
1988/11/30 10203.62 9942.98
1988/12/31 10277.66 10116.98
1989/01/31 10936.25 10857.54
1989/02/28 10843.01 10587.19
1989/03/31 11058.56 10833.87
1989/04/30 11463.60 11396.15
1989/05/31 11737.90 11857.70
1989/06/30 11785.38 11790.11
1989/07/31 12529.72 12854.75
1989/08/31 12692.69 13106.71
1989/09/30 12528.98 13052.97
1989/10/31 11842.06 12750.14
1989/11/30 11997.62 13010.24
1989/12/31 12172.32 13322.49
1990/01/31 11402.62 12428.55
1990/02/28 11422.98 12588.88
1990/03/31 11422.98 12922.48
1990/04/30 10980.87 12599.42
1990/05/31 11703.97 13827.86
1990/06/30 11652.09 13733.84
1990/07/31 11464.32 13689.89
1990/08/31 10593.75 12452.32
1990/09/30 9792.63 11845.89
1990/10/31 9570.07 11794.96
1990/11/30 10209.49 12556.91
1990/12/31 10434.26 12907.25
1991/01/31 10965.18 13470.00
1991/02/28 11749.19 14433.11
1991/03/31 11936.70 14782.39
1991/04/30 11936.41 14817.87
1991/05/31 12590.11 15458.00
1991/06/30 12012.25 14750.02
1991/07/31 12669.64 15437.37
1991/08/31 12937.98 15803.24
1991/09/30 12870.94 15539.33
1991/10/31 13085.39 15747.55
1991/11/30 12554.75 15112.93
1991/12/31 13544.69 16841.85
1992/01/31 13681.05 16528.59
1992/02/29 14103.73 16743.46
1992/03/31 13874.59 16416.96
1992/04/30 14369.10 16899.62
1992/05/31 14495.95 16982.43
1992/06/30 14334.55 16729.39
1992/07/31 14706.88 17413.62
1992/08/31 14357.72 17056.64
1992/09/30 14451.56 17257.91
1992/10/31 14639.31 17318.31
1992/11/30 15156.08 17908.87
1992/12/31 15533.51 18129.15
1993/01/31 16017.95 18281.43
1993/02/28 16432.68 18530.06
1993/03/31 16966.38 18921.04
1993/04/30 16883.22 18463.15
1993/05/31 17145.40 18957.97
1993/06/30 17312.96 19012.95
1993/07/31 17552.68 18936.89
1993/08/31 18165.24 19654.60
1993/09/30 18044.86 19503.26
1993/10/31 18261.54 19906.98
1993/11/30 17888.36 19717.86
1993/12/31 18333.77 19956.45
1994/01/31 19176.42 20634.97
1994/02/28 18670.83 20075.76
1994/03/31 17871.32 19200.46
1994/04/30 18488.41 19446.22
1994/05/31 18609.40 19765.14
1994/06/30 18486.71 19280.90
1994/07/31 19118.74 19913.31
1994/08/31 20103.24 20729.75
1994/09/30 19761.94 20221.88
1994/10/31 20152.30 20676.87
1994/11/30 19469.17 19923.82
1994/12/31 19517.97 20219.29
1995/01/31 19817.28 20743.57
1995/02/28 20515.69 21551.95
1995/03/31 21178.25 22187.95
1995/04/30 21742.84 22841.38
1995/05/31 22345.06 23754.35
1995/06/30 22659.31 24306.17
1995/07/31 23478.02 25112.16
1995/08/31 23755.12 25175.19
1995/09/30 24485.35 26237.58
1995/10/31 24207.39 26143.91
1995/11/30 25205.51 27291.63
1995/12/31 25870.50 27817.27
1996/01/31 26637.37 28764.17
1996/02/29 26728.33 29030.81
1996/03/31 26923.74 29310.38
1996/04/30 27106.37 29742.41
1996/05/31 27315.08 30509.47
1996/06/30 27158.77 30625.71
1996/07/31 26138.35 29272.67
1996/08/31 26635.48 29890.03
1996/09/30 27590.70 31572.24
1996/10/31 28155.12 32443.00
1996/11/30 29966.50 34895.37
1996/12/31 29649.47 34204.09
1997/01/31 30636.89 36341.16
1997/02/28 30880.36 36626.08
1997/03/31 29645.82 35121.11
1997/04/30 30907.06 37217.84
1997/05/30 32697.20 39483.67
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Advisor Equity Income Fund - Class T on May 31, 1987, and the
current maximum 3.50% sales charge was paid. As the chart shows, by May 31,
1997, the value of the investment would have grown to $32,697 - a 226.97%
increase on the initial investment. For comparison, look at how the S&P 500
did over the same period. With dividends reinvested, the same $10,000
investment would have grown to $39,484 - a 294.84% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn,
the share price and return of
a fund that invests in stocks
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
ADVISOR EQUITY INCOME FUND - CLASS B
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can look at
the total percentage change in value, the average annual percentage change,
or the growth of a hypothetical $10,000 investment. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value).
Initial offering of Class B shares took place on June 30, 1994. Class B
shares bear a 1.00% 12b-1/shareholder service fee that is reflected in
returns after June 30, 1994. Returns between September 10, 1992 (the date
Class T shares were first offered) and June 30, 1994 are those of Class T,
and reflect Class T's prior 0.65% 12b-1 fee. Returns prior to September 10,
1992 are those of the Institutional Class, the original class of the fund.
Had Class B's 12b-1 fee been reflected, returns prior to June 30, 1994
would have been lower. Effective January 2, 1997, Class B's contingent
deferred sales charge is based on a declining scale that ranges from 5% to
1% on Class B shares redeemed within six years of purchase. This scale is
revised from the previous scale of 4% to 1% on shares redeemed within five
years of purchase. Class B's contingent deferred sales charge included in
the past six months, past one year, past five years, and past 10 years
total return figures are 5%, 5%, 2% and 0%, respectively. If Fidelity had
not reimbursed certain class expenses, the past five and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Advisor Equity Income Fund - Class B 8.91% 19.13% 122.82% 234.71%
Advisor Equity Income Fund - Class B 3.91% 14.13% 120.82% 234.71%
(incl. contingent deferred sales
charge)
S&P 500(registered trademark) 13.15% 29.42% 132.50% 294.84%
Equity Income Funds Average 10.11% 22.43% 102.02% 209.24%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case six months, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return, over the past year, the value of your investment would be $1,050.
You can compare Class B's returns to the performance of the Standard &
Poor's 500 Index - a widely recognized, unmanaged index of common stocks.
To measure how Class B's performance stacked up against its peers, you can
compare it to the equity income funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 185 mutual funds. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Equity Income Fund - Class B 19.13% 17.38% 12.84%
Advisor Equity Income Fund - Class B 14.13% 17.17% 12.84%
(incl. contingent deferred sales charge)
S&P 500 29.42% 18.38% 14.70%
Equity Income Funds Average 22.43% 14.98% 11.69%
AVERAGE ANNUAL TOTAL RETURNS take Class B's cumulative return and shows you
what would have happened if Class B had performed at a constant rate each
year.
$10,000 OVER 10 YEARS
1987/05/31 10000.00 10000.00
1987/06/30 10289.10 10505.00
1987/07/31 10587.12 11037.60
1987/08/31 10878.92 11449.31
1987/09/30 10623.48 11198.57
1987/10/31 8698.11 8786.40
1987/11/30 8326.53 8062.40
1987/12/31 8642.99 8675.94
1988/01/31 9234.11 9041.20
1988/02/29 9684.56 9462.52
1988/03/31 9557.84 9170.13
1988/04/30 9694.38 9271.92
1988/05/31 9813.39 9352.58
1988/06/30 10374.94 9781.87
1988/07/31 10356.42 9744.70
1988/08/31 10151.52 9413.38
1988/09/30 10451.48 9814.39
1988/10/31 10639.96 10087.23
1988/11/30 10573.70 9942.98
1988/12/31 10650.42 10116.98
1989/01/31 11332.90 10857.54
1989/02/28 11236.28 10587.19
1989/03/31 11459.65 10833.87
1989/04/30 11879.38 11396.15
1989/05/31 12163.62 11857.70
1989/06/30 12212.83 11790.11
1989/07/31 12984.16 12854.75
1989/08/31 13153.05 13106.71
1989/09/30 12983.40 13052.97
1989/10/31 12271.56 12750.14
1989/11/30 12432.77 13010.24
1989/12/31 12613.81 13322.49
1990/01/31 11816.18 12428.55
1990/02/28 11837.29 12588.88
1990/03/31 11837.29 12922.48
1990/04/30 11379.14 12599.42
1990/05/31 12128.47 13827.86
1990/06/30 12074.71 13733.84
1990/07/31 11880.13 13689.89
1990/08/31 10977.98 12452.32
1990/09/30 10147.80 11845.89
1990/10/31 9917.17 11794.96
1990/11/30 10579.79 12556.91
1990/12/31 10812.71 12907.25
1991/01/31 11362.88 13470.00
1991/02/28 12175.33 14433.11
1991/03/31 12369.63 14782.39
1991/04/30 12369.34 14817.87
1991/05/31 13046.75 15458.00
1991/06/30 12447.93 14750.02
1991/07/31 13129.16 15437.37
1991/08/31 13407.23 15803.24
1991/09/30 13337.76 15539.33
1991/10/31 13559.99 15747.55
1991/11/30 13010.11 15112.93
1991/12/31 14035.95 16841.85
1992/01/31 14177.25 16528.59
1992/02/29 14615.27 16743.46
1992/03/31 14377.81 16416.96
1992/04/30 14890.26 16899.62
1992/05/31 15021.71 16982.43
1992/06/30 14854.46 16729.39
1992/07/31 15240.29 17413.62
1992/08/31 14878.47 17056.64
1992/09/30 14975.71 17257.91
1992/10/31 15170.27 17318.31
1992/11/30 15705.78 17908.87
1992/12/31 16096.90 18129.15
1993/01/31 16598.91 18281.43
1993/02/28 17028.68 18530.06
1993/03/31 17581.75 18921.04
1993/04/30 17495.56 18463.15
1993/05/31 17767.25 18957.97
1993/06/30 17940.89 19012.95
1993/07/31 18189.30 18936.89
1993/08/31 18824.08 19654.60
1993/09/30 18699.33 19503.26
1993/10/31 18923.88 19906.98
1993/11/30 18537.17 19717.86
1993/12/31 18998.72 19956.45
1994/01/31 19871.94 20634.97
1994/02/28 19348.01 20075.76
1994/03/31 18519.50 19200.46
1994/04/30 19158.97 19446.22
1994/05/31 19284.36 19765.14
1994/06/30 19157.22 19280.90
1994/07/31 19812.17 19913.31
1994/08/31 20844.97 20729.75
1994/09/30 20491.17 20221.88
1994/10/31 20870.64 20676.87
1994/11/30 20162.30 19923.82
1994/12/31 20213.17 20219.29
1995/01/31 20497.50 20743.57
1995/02/28 21208.32 21551.95
1995/03/31 21907.76 22187.95
1995/04/30 22479.49 22841.38
1995/05/31 23090.21 23754.35
1995/06/30 23402.54 24306.17
1995/07/31 24249.99 25112.16
1995/08/31 24523.78 25175.19
1995/09/30 25266.71 26237.58
1995/10/31 24966.22 26143.91
1995/11/30 25998.32 27291.63
1995/12/31 26672.57 27817.27
1996/01/31 27437.97 28764.17
1996/02/29 27531.93 29030.81
1996/03/31 27720.22 29310.38
1996/04/30 27895.23 29742.41
1996/05/31 28097.18 30509.47
1996/06/30 27922.29 30625.71
1996/07/31 26856.66 29272.67
1996/08/31 27369.24 29890.03
1996/09/30 28327.12 31572.24
1996/10/31 28895.02 32443.00
1996/11/30 30733.91 34895.37
1996/12/31 30407.43 34204.09
1997/01/31 31409.41 36341.16
1997/02/28 31632.07 36626.08
1997/03/31 30363.79 35121.11
1997/04/30 31631.85 37217.84
1997/05/30 33471.24 39483.67
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Advisor Equity Income Fund - Class B on May 31, 1987. As the
chart shows, by May 31, 1997, the value of the investment, would have been
$33,471 - a 234.71% increase on the initial investment. For comparison,
look at how the S&P 500 did over the same period. With dividends
reinvested, the same $10,000 investment would have grown to $39,484 - a
294.84% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn,
the share price and return of
a fund that invests in stocks
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Robert Chow, Portfolio Manager of Fidelity Advisor Equity
Income Fund
Q. BOB, HOW DID THE FUND PERFORM?
A. For the six months ending May 31, 1997, the fund's Class A, Class T and
Class B shares returned 9.02%, 9.11% and 8.91%, respectively. For the past
year, the Class A, Class T and Class B shares returned 19.51%, 19.70% and
19.13%, respectively. The fund trailed the equity income funds average for
the same time periods, as tracked by Lipper Analytical Services, which was
up 10.11% for six months and 22.43% for the year. Additionally, the
Standard & Poor's 500 Index was up 13.15% for six months and 29.42% for the
year.
Q. WHY DID THE FUND UNDERPERFORM THE INDEX?
A. Over the period, the fund's cash position was fairly high - between 8%
and 10% of assets - which hurt returns since the fund wasn't fully invested
in a rising market. The large cash position was mostly the result of
dramatic inflows of capital into the fund, especially this past January.
Following that inflow, I made the decision to invest a portion of the
proceeds in S&P 500 futures. I saw these low-risk futures not as a market
bet, but as a place to get some market exposure on a temporary basis. My
goal going forward is to eliminate this position entirely. I should point
out that I am a value investor, and I look hard at whether a stock is
attractive on a valuation basis; that is, whether it's cheap or expensive
relative to its own history, similar companies or its underlying assets. I
also invest for the long term. As a result, I tend to be cautious when the
fund has large inflows of cash. I'm not just going to throw this capital
into equities; instead I'll wait to find value stocks with the potential
for long-term success.
Q. WERE THERE ANY OTHER REASONS BEHIND THE FUND'S UNDERPERFORMANCE COMPARED
TO THE INDEX OVER THE PAST SIX MONTHS?
A. Yes. The fund underperformed the index because the index held more
large-capitalization companies, which the market favored over the period,
than the fund held. I found value mostly in mid-cap stocks, although I did
hold a number of large-cap stocks in my top 10 positions. In addition, the
fund was hurt by holding fewer bank stocks than the average equity-income
fund. Banks did very well over the period, especially in January of 1997.
The fund's fairly large sector weighting in finance at the end of the
period - 18% - mostly represented its investments in non-banks, such as
insurance companies.
Q. WHAT WERE SOME INVESTMENT DECISIONS THAT PAID OFF FOR THE FUND OVER THE
PERIOD?
A. Probably the fund's best-performing holdings were Wal-Mart and IBM,
which both turned in strong results over the period. Wal-Mart, one of the
fund's top holdings during the period, was perhaps my favorite. About three
or four years ago, it embarked on a strategy of converting its existing
stores into superstores, which have just about everything a consumer would
want to buy, including groceries. This strategy set Wal-Mart up for future
profits, but was very expensive in the short run since it costs a
tremendous amount to convert stores. I invested in Wal-Mart early on in
this strategy, and this year that investment started paying off as these
superstores continued to mature.
Q. WHAT ABOUT IBM?
A. Top 10 stock IBM was another solid holding. New management has come in
and helped generate tremendous cash flow, which has been used in part to
repurchase one in every seven shares outstanding. I got into IBM very early
in this process when its stock was inexpensive and my research showed that
there was a favorable risk/reward ratio. This meant that the potential
downside of the stock was much lower than the potential upside.
Q. YOU NOTED EARLIER THAT YOU ARE A VALUE INVESTOR. WERE THERE SOME STOCKS
THAT YOU CONSIDERED REAL VALUE STOCKS OVER THE PERIOD?
A. Yes. Clearly, I thought Wal-Mart and IBM were value stocks. Another good
example was top 10 holding Philip Morris. Philip Morris did very well and
had steady earnings and cash flow over the period. The problem is that it's
a tobacco company facing litigation. This kept its valuation low. When you
buy a well-established Fortune 500 stock at this value price, you know
there's some risk involved. However, my research showed me that the stock's
potential reward was higher than its potential risk, so the risk/reward
ratio was still good. Another value company was Masco, which makes faucets
and kitchen cabinets. It has been undervalued due to some past strategy
errors, but its core business has been profitable throughout recent
history. In addition, the chairman, who is paid a cash salary of only $1 a
year but has a stock option for a million shares if he reaches the
company's goals, has a strong incentive to profitably grow the company.
Q. DID YOU HAVE ANY REGRETS OVER THE PERIOD?
A. Sure. As I mentioned earlier, I wish I had invested less of the fund in
cash over the period. I am actively working to minimize or reduce this
position.
Q. BOB, HOW DOES THE FUND LOOK GOING FORWARD?
A. I am positioning the fund to provide reasonable returns with low
volatility and risk. Going forward, I have some concerns because valuation
levels look quite high, so I expect that there will be fewer positive
risk/reward opportunities available. However, if the economy continues on
its steady path of slow, moderate growth, I think the overall market
outlook is pretty bright.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: seeks to maintain a
yield that exceeds the
composite dividend of the
S&P 500, while considering
the potential for achieving
capital appreciation
START DATE: April 25, 1983
SIZE: as of May 31, 1997,
more than $2.9 billion
MANAGER: Robert Chow,
since 1996; joined Fidelity in
1989
(checkmark)
BOB CHOW ON THE GOALS OF THE
FUND:
"The goal of the fund is
long-term capital
appreciation achieved in a
context of low risk. This
entails several things, such as
low volatility and low fund
turnover. The fund's average
holding time is three years,
which is very consistent with
my long-term investment
approach.
"Part of the way I work toward
the fund's goals is to strongly
consider the risk/ reward
ratio, which I've discussed in
this report. In fact, the first
question I ask when I'm
considering a stock is `What's
the downside?' After I've
determined the downside, I
need to make sure the reward
is higher.
"This fund is not trying to
catch a fast bang from the
market, but is positioned for
the long-term."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
British Petroleum PLC ADR 3.5 2.6
Wal-Mart Stores, Inc. 3.2 2.4
American Express Co. 2.6 2.3
Philip Morris Companies, Inc. 2.2 2.2
International Business Machines Corp. 2.2 2.5
Masco Corp. 1.6 1.0
NationsBank Corp. 1.6 0.3
Allstate Corp. 1.5 1.0
Lockheed Martin Corp. 1.4 0.6
General Re Corp. 1.4 1.9
TOP FIVE MARKET SECTORS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Finance 18.0 18.5
Energy 8.0 7.9
Basic Industries 6.9 6.7
Retail & Wholesale 6.8 5.6
Nondurables 6.7 6.0
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF MAY 31, 1997 * AS OF NOVEMBER 30, 1996 **
Row: 1, Col: 1, Value: 5.9
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 91.3
Stocks and
equity futures 86.5%
Bonds 2.0%
Convertible
securities 2.1%
Short-term
investments 9.4%
FOREIGN
INVESTMENTS 3.6%
Stocks and
equity futures 91.5%
Bonds 1.7%
Convertible
securities 0.9%
Short-term
investments 5.9%
FOREIGN
INVESTMENTS 5.4%
Row: 1, Col: 1, Value: 9.4
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 86.5
*
**
INVESTMENTS MAY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.6%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 4.4%
AEROSPACE & DEFENSE - 3.4%
AlliedSignal, Inc. 140,000 $ 10,745
Boeing Co. 100,000 10,525
Lockheed Martin Corp. 450,000 42,131
McDonnell Douglas Corp. 180,000 11,588
Rockwell International Corp. 150,000 9,675
United Technologies Corp. 200,000 16,075
100,739
DEFENSE ELECTRONICS - 0.6%
Litton Industries, Inc. (a) 180,000 8,145
Raytheon Co. 190,000 9,073
17,218
SHIP BUILDING & REPAIR - 0.4%
General Dynamics Corp. 140,000 10,483
Newport News Shipbuilding, Inc. 150,000 2,493
12,976
TOTAL AEROSPACE & DEFENSE 130,933
BASIC INDUSTRIES - 6.9%
CHEMICALS & PLASTICS - 2.2%
Dow Chemical Co. 50,000 4,168
du Pont (E.I.) de Nemours & Co. 260,000 28,308
Monsanto Co. 200,000 8,800
Union Carbide Corp. 230,000 10,752
Valspar Corp. 300,000 8,400
Witco Corp. 150,000 5,550
65,978
IRON & STEEL - 0.4%
Nucor Corp. 200,000 11,800
METALS & MINING - 0.5%
Aluminum Co. of America 220,000 16,198
PAPER & FOREST PRODUCTS - 3.8%
Champion International Corp. 350,000 17,281
Chesapeake Corp. 390,000 13,065
Fort Howard Corp. (a) 220,000 10,106
James River Corp. of Virginia 150,000 5,269
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Kimberly-Clark Corp. 160,000 $ 8,020
MacMillan Bloedel Ltd. 337,600 4,899
Mead Corp. 100,000 6,375
Pentair, Inc. 570,000 18,739
Union Camp Corp. 120,000 6,300
Unisource Worldwide, Inc. 281,100 4,884
Weyerhaeuser Co. 264,000 13,167
Willamette Industries, Inc. 60,000 4,470
112,575
TOTAL BASIC INDUSTRIES 206,551
CONSTRUCTION & REAL ESTATE - 4.3%
BUILDING MATERIALS - 2.9%
CalMat Co. 440,000 8,745
Masco Corp. 1,220,000 47,428
RPM, Inc. 700,000 13,300
Sherwin-Williams Co. 530,000 15,900
85,373
CONSTRUCTION - 0.4%
Centex Corp. 110,000 4,386
Lennar Corp. 350,000 9,188
13,574
ENGINEERING - 0.3%
Fluor Corp. 170,000 8,989
REAL ESTATE INVESTMENT TRUSTS - 0.7%
Duke Realty Investors, Inc. 111,836 4,262
Felcor Suite Hotels, Inc. 100,000 3,725
Public Storage, Inc. 240,000 6,390
RFS Hotel Investors, Inc. 350,000 6,519
20,896
TOTAL CONSTRUCTION & REAL ESTATE 128,832
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 6.1%
AUTOS, TIRES, & ACCESSORIES - 3.7%
Chrysler Corp. 1,100,000 $ 34,925
Cummins Engine Co., Inc. 160,000 10,200
Eaton Corp. 140,000 11,165
General Motors Corp. 570,000 32,632
Modine Manufacturing Co. 310,000 9,068
PACCAR, Inc. 100,000 4,525
Snap-on Tools Corp. 220,000 8,773
111,288
CONSUMER DURABLES - 0.7%
Minnesota Mining & Manufacturing Co. 230,000 21,103
CONSUMER ELECTRONICS - 0.8%
Black & Decker Corp. 70,000 2,433
Maytag Co. 740,000 19,795
22,228
HOME FURNISHINGS - 0.7%
Heilig-Meyers Co. 200,000 3,300
Leggett & Platt, Inc. 420,000 15,855
19,155
TEXTILES & APPAREL - 0.2%
Russell Corp. 220,000 6,736
TOTAL DURABLES 180,510
ENERGY - 8.0%
ENERGY SERVICES - 1.4%
Baker Hughes, Inc. 240,000 9,000
Schlumberger Ltd. 130,000 15,486
Western Atlas, Inc. (a) 270,000 18,293
42,779
OIL & GAS - 6.6%
Amerada Hess Corp. 320,000 17,120
Atlantic Richfield Co. 30,000 4,364
British Petroleum PLC ADR 720,000 104,310
Burlington Resources, Inc. 300,000 13,950
Occidental Petroleum Corp. 500,000 11,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Royal Dutch Petroleum Co. ADR 100,000 $ 19,525
Texaco, Inc. 180,000 19,643
Total SA sponsored ADR 120,000 5,475
196,012
TOTAL ENERGY 238,791
FINANCE - 17.2%
BANKS - 4.0%
Bank of New York Co., Inc. 620,000 26,428
BankAmerica Corp. 30,000 3,506
Citicorp 230,000 26,306
NationsBank Corp. 800,000 47,100
Norwest Corp. 270,000 14,445
117,785
CREDIT & OTHER FINANCE - 4.0%
American Express Co. 1,100,000 76,450
Associates First Capital Corp. 140,000 6,615
Fleet Financial Group, Inc. 400,000 24,450
Household International, Inc. 110,000 10,808
118,323
FEDERAL SPONSORED CREDIT - 2.5%
Federal Home Loan Mortgage Corporation 900,000 29,700
Federal National Mortgage Association 780,000 34,028
Student Loan Marketing Association 90,000 10,946
74,674
INSURANCE - 6.3%
Allstate Corp. 600,000 44,173
Berkley (W.R.) Corp. 160,000 8,300
CIGNA Corp. 115,900 20,138
General Re Corp. 230,000 40,308
Hartford Financial Services Group, Inc. 300,000 23,400
Loews Corp. 170,000 16,533
PXRE Corp. 663,600 17,917
Provident Companies, Inc. 310,000 16,663
187,432
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - 0.4%
Lehman Brothers Holdings, Inc. 360,000 $ 14,535
TOTAL FINANCE 512,749
HEALTH - 4.0%
DRUGS & PHARMACEUTICALS - 2.4%
American Home Products Corp. 130,000 9,912
Bristol-Myers Squibb Co. 400,000 29,350
Merck & Co., Inc. 80,000 7,190
Pharmacia & Upjohn, Inc. 140,000 4,848
Schering-Plough Corp. 230,000 20,873
72,173
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
Allegiance Corp. 190,000 5,153
Bergen Brunswig Corp. Class A 130,000 4,940
Johnson & Johnson 100,000 5,988
16,081
MEDICAL FACILITIES MANAGEMENT - 1.1%
Columbia/HCA Healthcare Corp. 330,000 12,086
Tenet Healthcare Corp. (a) 720,000 19,800
31,886
TOTAL HEALTH 120,140
HOLDING COMPANIES - 0.5%
PartnerRe Ltd. 500,000 15,688
INDUSTRIAL MACHINERY & EQUIPMENT - 4.7%
ELECTRICAL EQUIPMENT - 1.4%
Emerson Electric Co. 230,000 12,420
General Electric Co. 380,000 22,942
Scientific-Atlanta, Inc. 300,000 5,438
40,800
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 2.0%
Caterpillar, Inc. 180,000 $ 17,572
Deere & Co. 220,000 11,248
Ingersoll-Rand Co. 220,000 11,990
Tyco International Ltd. 310,000 19,685
60,495
POLLUTION CONTROL - 1.3%
Browning-Ferris Industries, Inc. 530,000 17,358
Waste Management, Inc. 720,000 22,860
40,218
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 141,513
MEDIA & LEISURE - 1.9%
ENTERTAINMENT - 0.1%
MGM Grand, Inc. (a) 110,000 4,166
LODGING & GAMING - 0.5%
Circus Circus Enterprises, Inc. (a) 90,000 2,340
ITT Corp. (a) 200,000 11,925
14,265
PUBLISHING - 1.3%
ACNielsen Corp. (a) 1,000,000 16,875
Gannett Co., Inc. 60,000 5,550
Knight-Ridder, Inc. 120,000 5,175
Times Mirror Co. Class A 170,000 9,541
37,141
RESTAURANTS - 0.0%
Uno Restaurant Corp. (a) 200,000 1,176
TOTAL MEDIA & LEISURE 56,748
NONDURABLES - 6.7%
BEVERAGES - 0.6%
Anheuser-Busch Companies, Inc. 160,000 6,860
Coors (Adolph) Co. Class B 85,500 2,084
PepsiCo, Inc. 200,000 7,350
16,294
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
FOODS - 0.8%
Campbell Soup Co. 200,000 $ 9,200
Hershey Foods Corp. 150,000 8,419
Quaker Oats Co. 140,000 5,775
Sara Lee Corp. 30,000 1,226
24,620
HOUSEHOLD PRODUCTS - 2.3%
Church & Dwight Co., Inc. 332,100 8,801
Clorox Co. 130,000 16,412
First Brands Corp. 120,000 3,150
Gillette Co. 150,000 13,331
Procter & Gamble Co. 120,000 16,545
Rubbermaid, Inc. 16,800 468
Unilever NV ADR 50,000 9,688
68,395
TOBACCO - 3.0%
Philip Morris Companies, Inc. 1,520,000 66,880
RJR Nabisco Holdings Corp. 520,000 16,835
Schweitzer-Mauduit International, Inc. 170,000 5,844
89,559
TOTAL NONDURABLES 198,868
PRECIOUS METALS - 0.4%
Newmont Mining Corp. 320,000 12,520
RETAIL & WHOLESALE - 6.8%
APPAREL STORES - 0.2%
TJX Companies, Inc. 100,000 4,800
DRUG STORES - 0.2%
CVS Corp. 114,946 5,503
GENERAL MERCHANDISE STORES - 4.6%
Dillards, Inc. Class A 260,000 8,775
May Department Stores Co. (The) 200,000 9,425
Neiman-Marcus Group, Inc. (a) 130,000 3,445
Nordstrom, Inc. 180,000 8,640
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Sears, Roebuck & Co. 200,000 $ 9,825
Wal-Mart Stores, Inc. 3,250,000 96,688
136,798
GROCERY STORES - 0.4%
Albertson's, Inc. 140,000 4,690
Safeway, Inc. (a) 160,000 7,200
11,890
RETAIL & WHOLESALE, MISCELLANEOUS - 1.4%
Fabri-Centers of America, Inc. Class B (non-vtg.) (a) 330,100 7,055
Home Depot, Inc. (The) 250,000 15,750
Officemax, Inc. (a) 800,000 11,100
Toys "R" Us, Inc. (a) 300,000 9,338
43,243
TOTAL RETAIL & WHOLESALE 202,234
SERVICES - 1.8%
PRINTING - 0.3%
Donnelley (R.R.) & Sons Co. 220,000 8,167
SERVICES - 1.5%
Block (H&R), Inc. 670,000 22,110
Dun & Bradstreet Corp. 520,000 13,585
Olsten Corp. 140,000 2,748
Pittston Co. 260,000 6,695
45,138
TOTAL SERVICES 53,305
TECHNOLOGY - 6.6%
COMPUTER SERVICES & SOFTWARE - 0.3%
Electronic Data Systems Corp. 210,000 7,848
COMPUTERS & OFFICE EQUIPMENT - 3.4%
International Business Machines Corp. 760,000 65,740
Pitney Bowes, Inc. 490,000 34,423
100,163
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - 0.4%
Applied Materials, Inc. (a) 100,000 $ 6,525
KLA Instruments Corp. (a) 100,000 4,756
11,281
ELECTRONICS - 2.1%
AMP, Inc. 670,000 27,554
Cypress Semiconductor Corp. (a) 120,000 1,710
Thomas & Betts Corp. 670,000 34,086
63,350
PHOTOGRAPHIC EQUIPMENT - 0.4%
Eastman Kodak Co. 100,000 8,288
Imation Corp. (a) 230,000 5,520
13,808
TOTAL TECHNOLOGY 196,450
TRANSPORTATION - 3.3%
AIR TRANSPORTATION - 0.6%
AMR Corp. (a) 90,000 8,943
Delta Air Lines, Inc. 90,000 8,438
17,381
RAILROADS - 0.8%
Burlington Northern Santa Fe Corp. 160,000 13,280
CSX Corp. 220,000 11,660
24,940
TRUCKING & FREIGHT - 1.9%
Arnold Industries, Inc. 900,000 15,074
CNF Transportation, Inc. 480,000 15,480
Consolidated Freightways Corp. 700,000 8,663
Hunt (J.B.) Transport Services, Inc. 170,000 2,593
USFreightways Corp. 320,000 7,760
Werner Enterprises, Inc. 330,000 6,435
56,005
TOTAL TRANSPORTATION 98,326
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 5.0%
ELECTRIC UTILITY - 0.3%
American Electric Power Co., Inc. 220,000 $ 8,965
TELEPHONE SERVICES - 4.7%
AT&T Corp. 200,000 7,375
Ameritech Corp. 120,000 7,860
Bell Atlantic Corp. 40,000 2,800
MCI Communications Corp. 450,000 17,269
NYNEX Corp. 620,000 33,325
SBC Communications, Inc. 650,000 38,025
Sprint Corp. 240,000 11,730
U.S. WEST Communications Group 550,000 20,142
138,526
TOTAL UTILITIES 147,491
TOTAL COMMON STOCKS
(Cost $2,031,556) 2,641,649
CONVERTIBLE PREFERRED STOCKS - 0.8%
FINANCE - 0.8%
INSURANCE - 0.8%
Allstate Corp. $2.30 500,000 23,313
MEDIA & LEISURE - 0.0%
PUBLISHING - 0.0%
Taylor, J.N. Holdings Ltd. 9 1/2% (a) 50,000 -
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $19,485) 23,313
CORPORATE BONDS - 0.3%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (000S) (000S)
CONVERTIBLE BONDS - 0.1%
TECHNOLOGY - 0.1%
ELECTRONICS - 0.1%
National Semiconductor Corp. 6 1/2%,
10/1/02 (c) Ba2 $ 1,800 $ 1,845
NONCONVERTIBLE BONDS - 0.2%
DURABLES - 0.2%
TEXTILES & APPAREL - 0.2%
Westpoint Stevens, Inc. 8 3/4%, 12/15/01 Ba3 5,200 5,356
TOTAL CORPORATE BONDS
(Cost $6,783) 7,201
U.S. TREASURY OBLIGATIONS - 1.7%
U.S. Treasury Bills, yield at date of purchase
5.16% to 5.21%, 6/26/97 (d) 7,250 7,230
U.S. Treasury Bonds
7 1/4%, 2/15/23 Aaa 5,020 5,091
6 1/4%, 8/15/23 Aaa 2,610 2,377
7 1/2%, 11/15/24 Aaa 13,590 14,437
7 5/8%, 2/15/25 Aaa 8,830 9,518
U.S. Treasury Note 7 7/8%, 11/15/04 Aaa 12,300 13,190
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $54,007) 51,843
CASH EQUIVALENTS - 8.6%
SHARES
Taxable Central Cash Fund (b)
(Cost $256,497) 256,497,000 256,497
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,368,328) $ 2,980,503
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
(000S) (000S)
200 S&P 500 Stock Index Contracts Jun 97 $ 85,060 $ 6,607
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.9%.
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.54%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,845,000 or 0.1% of net
assets.
4. A portion of the security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $3,737,000.
INCOME TAX INFORMATION
At May 31, 1997, the aggregate cost of investment securities for income tax
purposes was $2,370,512,000. Net unrealized appreciation aggregated
$609,991,000, of which $629,885,000 related to appreciated investment
securities and $19,894,000 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending November 30,
1997 approximately $6,650,000 of losses recognized during the period
November 1, 1996 to November 30, 1996.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) MAY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $2,368,328) - $ 2,980,503
See accompanying schedule
Receivable for investments sold 12,917
Receivable for fund shares sold 5,000
Dividends receivable 5,079
Interest receivable 2,260
Receivable for daily variation on futures contracts 494
Other receivables 173
Prepaid expenses 5
TOTAL ASSETS 3,006,431
LIABILITIES
Payable for investments purchased $ 48,274
Payable for fund shares redeemed 5,632
Accrued management fee 1,200
Distribution fees payable 1,241
Other payables and accrued expenses 625
TOTAL LIABILITIES 56,972
NET ASSETS $ 2,949,459
Net Assets consist of:
Paid in capital $ 2,286,634
Undistributed net investment income 6,083
Accumulated undistributed net realized gain (loss) on 37,961
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 618,781
investments and assets and liabilities in foreign
currencies
NET ASSETS $ 2,949,459
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) MAY 31, 1997 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $23.97
CLASS A:
NET ASSET VALUE and redemption price per share
($11,312 (divided by) 472 shares)
Maximum offering price per share (100/94.75 of $23.97) $25.30
CLASS T: $24.11
NET ASSET VALUE and redemption price per share
($1,899,588 (divided by) 78,773 shares)
Maximum offering price per share (100/96.50 of $24.11) $24.98
CLASS B: $24.02
NET ASSET VALUE and offering price per share
($573,916 (divided by) 23,897 shares) A
INSTITUTIONAL CLASS: $24.30
NET ASSET VALUE, offering price and redemption price
per share ($464,643 (divided by) 19,117.3 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 23,703
Dividends
Interest 10,505
TOTAL INCOME 34,208
EXPENSES
Management fee $ 6,770
Transfer agent fees 2,538
Distribution fees 6,981
Accounting fees and expenses 403
Non-interested trustees' compensation 10
Custodian fees and expenses 26
Registration fees 183
Audit 41
Legal 9
Miscellaneous 53
Total expenses before reductions 17,014
Expense reductions (216) 16,798
NET INVESTMENT INCOME 17,410
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 36,706
Foreign currency transactions (3)
Futures contracts 10,381 47,084
Change in net unrealized appreciation (depreciation) on:
Investment securities 178,053
Assets and liabilities in foreign currencies 1
Futures contracts 6,607 184,661
NET GAIN (LOSS) 231,745
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 249,155
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 17,410 $ 29,299
Net investment income
Net realized gain (loss) 47,084 69,742
Change in net unrealized appreciation (depreciation) 184,661 261,601
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 249,155 360,642
FROM OPERATIONS
Distributions to shareholders (15,967) (28,968)
From net investment income
From net realized gain (64,868) (35,076)
TOTAL DISTRIBUTIONS (80,835) (64,044)
Share transactions - net increase (decrease) 260,525 776,408
TOTAL INCREASE (DECREASE) IN NET ASSETS 428,845 1,073,006
NET ASSETS
Beginning of period 2,520,614 1,447,608
End of period (including undistributed net investment $ 2,949,459 $ 2,520,614
income of $6,083 and $4,640, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1997
(UNAUDITED) 1996 F
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA E
Net asset value, beginning of period $ 22.78 $ 20.38
Income from Investment Operations
Net investment income .13 .06
Net realized and unrealized gain (loss) 1.85 2.44
Total from investment operations 1.98 2.50
Less Distributions
From net investment income (.20) (.10)
From net realized gain (.59) -
Total distributions (.79) (.10)
Net asset value, end of period $ 23.97 $ 22.78
TOTAL RETURN B, C 9.02% 12.31%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 11,312 $ 3,306
Ratio of expenses to average net assets 1.44% A, G 1.46% A,
D, G
Ratio of expenses to average net assets after expense 1.43% A, H 1.44% A,
reductions H
Ratio of net investment income to average net assets 1.17% A 1.27% A
Portfolio turnover 50% A 78%
Average commission rate I $ .0423 $ .0424
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO NOVEMBER 30, 1996.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
I FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1997
(UNAUDITED) 1996 1995 1994 F 1993 1992 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 22.83 $ 19.95 $ 15.96 $ 14.86 $ 12.86 $ 12.37
beginning of period
Income from
Investment
Operations
Net investment .15 D .30 D .31 .28 D .33 .13
income
Net realized and 1.86 3.35 4.26 1.03 1.97 .47
unrealized
gain (loss)
Total from 2.01 3.65 4.57 1.31 2.30 .60
investment
operations
Less Distributions
From net (.14) (.31) (.30) (.21) (.30) (.11)
investment
income
From net (.59) (.46) (.28) - - -
realized gain
Total distributions (.73) (.77) (.58) (.21) (.30) (.11)
Net asset value, $ 24.11 $ 22.83 $ 19.95 $ 15.96 $ 14.86 $ 12.86
end of period
TOTAL RETURN B, C 9.11% 18.89% 29.46% 8.84% 18.03% 4.88%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 1,899,588 $ 1,672,994 $ 880,054 $ 179,501 $ 42,326 $ 1,462
period (000 omitted)
Ratio of expenses to 1.25% A 1.27% 1.48% 1.67% 1.77% 1.55%
average net assets A
Ratio of expenses to 1.24% A, 1.26% 1.47% 1.64% 1.77% 1.55%
average net assets G G G G A
after expense
reductions
Ratio of net 1.31% A 1.45% 1.78% 1.69% 2.02% 3.39%
investment income A
to average net
assets
Portfolio turnover 50% A 78% 80% 140% 120% 51%
Average commission $ .0423 $ .0424
rate H
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF
SALE OF CLASS T SHARES) TO NOVEMBER 30, 1992. F EFFECTIVE DECEMBER 1, 1993,
THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE,
AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES. G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). H FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1997
(UNAUDITED) 1996 1995 1994 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 22.73 $ 19.90 $ 15.94 $ 15.21
Income from Investment Operations
Net investment income .09 D .19 D .26 .08 D
Net realized and unrealized gain (loss) 1.87 3.33 4.23 .72
Total from investment operations 1.96 3.52 4.49 .80
Less Distributions
From net investment income (.08) (.23) (.25) (.07)
From net realized gain (.59) (.46) (.28) -
Total distributions (.67) (.69) (.53) (.07)
Net asset value, end of period $ 24.02 $ 22.73 $ 19.90 $ 15.94
TOTAL RETURN B, C 8.91% 18.22% 28.95% 5.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 573,916 $ 500,447 $ 270,101 $ 35,373
Ratio of expenses to average net assets 1.78% A 1.81% 1.85% 2.24% A
Ratio of expenses to average net assets 1.77% A, 1.79% 1.84% 2.18% A
after expense reductions F F F , F
Ratio of net investment income to .79% A .92% 1.41% 1.15% A
average net assets
Portfolio turnover 50% A 78% 80% 140%
Average commission rate G $ .0423 $ .0424
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1994.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1997
(UNAUDITED) 1996 1995 1994 D 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 23.00 $ 20.09 $ 16.07 $ 14.93 $ 12.88 $ 11.08
beginning of period
Income from
Investment
Operations
Net investment .21 C .42 C .45 .41 C .39 .49
income
Net realized and 1.89 3.37 4.28 1.05 2.02 1.79
unrealized
gain (loss)
Total from 2.10 3.79 4.73 1.46 2.41 2.28
investment
operations
Less Distributions
From net (.21) (.42) (.43) (.32) (.36) (.48)
investment
income
From net (.59) (.46) (.28) - - -
realized gain
Total distributions (.80) (.88) (.71) (.32) (.36) (.48)
Net asset value, $ 24.30 $ 23.00 $ 20.09 $ 16.07 $ 14.93 $ 12.88
end of period
TOTAL RETURN B 9.47% 19.54% 30.43% 9.82% 18.90% 20.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 464,643 $ 343,867 $ 297,453 $ 197,533 $ 191,138 $ 139,391
period (000 omitted)
Ratio of expenses to .71% A .71% .74% .73% .80% .71%
average net assets F
Ratio of expenses to .68% A .70% .73% .71% .79% .71%
average net assets , E E E E E
after expense
reductions
Ratio of net 1.85% A 2.02% 2.52% 2.62% 3.00% 3.77%
investment income
to average net
assets
Portfolio turnover 50% A 78% 80% 140% 120% 51%
Average commission $ .0423 $ .0424
rate G
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D EFFECTIVE DECEMBER 1, 1993,
THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE,
AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER. G FOR
FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Equity Income Fund(the fund) is a fund of Fidelity Advisor
Series III (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of 1940,
as amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Investment income, realized and unrealized capital gains and losses, the
common expenses of the fund, and certain fund-level expense reductions are
allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the fund. Each class of
shares differs in its respective distribution, transfer agent,
registration, and certain other class-specific fees, expenses, and expense
reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities with remaining maturities
of sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both of
which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange
rates on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income, which includes accretion of original issue discount, is accrued as
earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for litigation
proceeds, market discount, non-taxable dividends and losses deferred due to
wash sales and excise tax regulations. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part of
the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
Losses may arise from changes in the value of the foreign currency or if
the counterparties do not perform under the
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
contracts' terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at the
time of each trade. The cost of the foreign currency contracts is included
in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission(the SEC), the fund, along with other
affiliated entities of FMR, may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities. Income
distributions from the Cash Fund are declared daily and paid monthly from
net interest income. Income distributions received by the fund are recorded
as interest income in the accompanying financial statements.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock market and to fluctuations in currency values. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period end
is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
2. OPERATING POLICIES - CONTINUED
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, the
fund had no investments in restricted securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $809,091,000 and $595,045,000, respectively, of which U.S.
government and government agency obligations aggregated $3,171,000 and $0,
respectively.
The market value of futures contracts opened and closed during the period
amounted to $471,796,000 and $403,724,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee that
is computed daily at an annual rate of .50% of the fund's average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
each class of shares (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 8,000 $ 8,000
CLASS T 4,355,000 4,355,000
CLASS B 2,618,000 655,000
$ 6,981,000 $ 5,018,000
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the fund,
respectively, and the proceeds of a contingent deferred sales charge levied
on Class B share redemptions occurring within six years of purchase (five
years prior to January 2, 1997). The Class B charge is based on declining
rates which range from 5% to 1%(4% to 1% prior to January 2, 1997) of the
lesser of the cost of shares at the initial date of purchase or the net
asset value of the redeemed shares, excluding any reinvested dividends and
capital gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities, dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 157,000 $ 150,000
CLASS T 762,000 534,000
CLASS B 585,000 0*
$ 1,504,000 $ 684,000
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM ITS
OWN RESOURCES TO DEALERS THROUGH WHICH
THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a separate
transfer, dividend disbursing, and shareholder servicing agent
(collectively referred to as the Transfer Agents) contract with respect to
its shares. The Transfer Agents receive account fees and asset-based fees
that vary according to the account size and type of account of the
shareholders of the respective classes of the fund. For the period, the
following amounts were paid to each transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS ***
CLASS A FIIOC * $ 8,000 .26
CLASS T ** FIIOC * 1,661,000 .19
CLASS B FIIOC * 550,000 .21
INSTITUTIONAL CLASS FIIOC * 319,000 .15
$ 2,538,000
* FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC. (FIIOC) AN
AFFILIATE OF FMR.
** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS THE
TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET, HOWEVER, HAD
DELEGATED CERTAIN
TRANSFER, DIVIDEND DISBURSING, AND SHAREHOLDER SERVICES TO FIIOC FOR
WHICH FIIOC RECEIVED ITS ALLOCABLE SHARE OF ALL SUCH FEES.
*** ANNUALIZED
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level of
average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $274,000 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse certain transfer agent, registration
and other class specific expenses for Class A. For the period, the
reimbursement reduced these expenses by $8,000.
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses were
reduced by $163,000 under this arrangement.
In addition, the fund has entered into an arrangement with each class'
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period, each
applicable class' expenses were reduced as follows under the transfer agent
arrangements:
TRANSFER
AGENT
INTEREST
CREDITS
CLASS T $ 15,000
INSTITUTIONAL CLASS 30,000
$ 45,000
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1997 1996 A
CLASS A
From net investment income $ 45,000 $ 4,000
From net realized gain 99,000 -
Total $ 144,000 $ 4,000
CLASS T
From net investment income $ 10,484,000 $ 18,521,000
From net realized gain 43,070,000 21,465,000
Total $ 53,554,000 $ 39,986,000
CLASS B
From net investment income $ 1,806,000 $ 4,108,000
From net realized gain 13,038,000 6,588,000
Total $ 14,844,000 $ 10,696,000
INSTITUTIONAL CLASS
From net investment income $ 3,632,000 $ 6,335,000
From net realized gain 8,661,000 7,023,000
Total $ 12,293,000 $ 13,358,000
$ 80,835,000 $ 64,044,000
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30, ENDED MAY 31, NOVEMBER 30,
1997 1996 A 1997 1996 A
CLASS A 354 150 $ 8,002 $ 3,202
Shares sold
Reinvestment of distributions 6 - 130 3
Shares redeemed (33) (5) (753) (105)
Net increase (decrease) 327 145 $ 7,379 $ 3,100
CLASS T 16,249 44,565 $ 365,803 $ 918,821
Shares sold
Reinvestment of distributions 2,303 1,866 50,772 37,447
Shares redeemed (13,075) (17,253) (295,251) (358,513)
Net increase (decrease) 5,477 29,178 $ 121,324 $ 597,755
CLASS B 2,763 11,769 $ 62,340 $ 243,202
Shares sold
Reinvestment of distributions 643 478 14,094 9,527
Shares redeemed (1,525) (3,806) (34,419) (79,827)
Net increase (decrease) 1,881 8,441 $ 42,015 $ 172,902
INSTITUTIONAL CLASS 9,546 7,490 $ 211,663 $ 155,473
Shares sold
Reinvestment of distributions 418 432 9,304 8,672
Shares redeemed (5,798) (7,780) (131,160) (161,494)
Net increase (decrease) 4,166 142 $ 89,807 $ 2,651
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 21,000
CLASS T 96,000
CLASS B 37,000
INSTITUTIONAL CLASS 29,000
$ 183,000
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
EQUITY INCOME
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
MAY 31, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 22 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 30 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Through the first five months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories as bonds. If you have a short investment time
horizon, you might want to consider moving some of your investment into a
money market fund, which seeks income and a stable share price by investing
in high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR EQUITY INCOME FUND - INSTITUTIONAL CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can look at
the total percentage change in value, the average annual percentage change
or the growth of a hypothetical $10,000 investment. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). If Fidelity had not reimbursed
certain class expenses, the past five and 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTH YEAR YEARS YEARS
S
Advisor Equity Income Fund - Institutional 9.47% 20.41% 133.37% 250.57%
Class
S&P 500(registered trademark) 13.15% 29.42% 132.50% 294.84%
Equity Income Funds Average 10.11% 22.43% 102.02% 209.24%
</TABLE>
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, six months, one year,
five years, or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare the Institutional Class' returns to the
performance of the Standard & Poor's 500 Index - a widely recognized,
unmanaged index of common stocks. To measure how Institutional Class'
performance stacked up against its peers, you can compare it to the equity
income funds average, which reflects the performance of mutual funds with
similar objectives tracked by Lipper Analytical Services, Inc. The past six
months average represents a peer group of 185 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Equity Income Fund - Institutional Class 20.41% 18.47% 13.36%
S&P 500 29.42% 18.38% 14.70%
Equity Income Funds Average 22.43% 14.98% 11.69%
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' cumulative return
and show you what would have happened if Institutional Class had performed
at a constant rate each year.
$10,000 OVER 10 YEARS
1987/05/31 10000.00 10000.00
1987/06/30 10289.10 10505.00
1987/07/31 10587.12 11037.60
1987/08/31 10878.92 11449.31
1987/09/30 10623.48 11198.57
1987/10/31 8698.11 8786.40
1987/11/30 8326.53 8062.40
1987/12/31 8642.99 8675.94
1988/01/31 9234.11 9041.20
1988/02/29 9684.56 9462.52
1988/03/31 9557.84 9170.13
1988/04/30 9694.38 9271.92
1988/05/31 9813.39 9352.58
1988/06/30 10374.94 9781.87
1988/07/31 10356.42 9744.70
1988/08/31 10151.52 9413.38
1988/09/30 10451.48 9814.39
1988/10/31 10639.96 10087.23
1988/11/30 10573.70 9942.98
1988/12/31 10650.42 10116.98
1989/01/31 11332.90 10857.54
1989/02/28 11236.28 10587.19
1989/03/31 11459.65 10833.87
1989/04/30 11879.38 11396.15
1989/05/31 12163.62 11857.70
1989/06/30 12212.83 11790.11
1989/07/31 12984.16 12854.75
1989/08/31 13153.05 13106.71
1989/09/30 12983.40 13052.97
1989/10/31 12271.56 12750.14
1989/11/30 12432.77 13010.24
1989/12/31 12613.81 13322.49
1990/01/31 11816.18 12428.55
1990/02/28 11837.29 12588.88
1990/03/31 11837.29 12922.48
1990/04/30 11379.14 12599.42
1990/05/31 12128.47 13827.86
1990/06/30 12074.71 13733.84
1990/07/31 11880.13 13689.89
1990/08/31 10977.98 12452.32
1990/09/30 10147.80 11845.89
1990/10/31 9917.17 11794.96
1990/11/30 10579.79 12556.91
1990/12/31 10812.71 12907.25
1991/01/31 11362.88 13470.00
1991/02/28 12175.33 14433.11
1991/03/31 12369.63 14782.39
1991/04/30 12369.34 14817.87
1991/05/31 13046.75 15458.00
1991/06/30 12447.93 14750.02
1991/07/31 13129.16 15437.37
1991/08/31 13407.23 15803.24
1991/09/30 13337.76 15539.33
1991/10/31 13559.99 15747.55
1991/11/30 13010.11 15112.93
1991/12/31 14035.95 16841.85
1992/01/31 14177.25 16528.59
1992/02/29 14615.27 16743.46
1992/03/31 14377.81 16416.96
1992/04/30 14890.26 16899.62
1992/05/31 15021.71 16982.43
1992/06/30 14854.46 16729.39
1992/07/31 15240.29 17413.62
1992/08/31 14878.47 17056.64
1992/09/30 14999.95 17257.91
1992/10/31 15182.40 17318.31
1992/11/30 15730.13 17908.87
1992/12/31 16133.60 18129.15
1993/01/31 16623.74 18281.43
1993/02/28 17054.03 18530.06
1993/03/31 17620.20 18921.04
1993/04/30 17558.57 18463.15
1993/05/31 17843.40 18957.97
1993/06/30 18030.09 19012.95
1993/07/31 18279.39 18936.89
1993/08/31 18941.52 19654.60
1993/09/30 18828.78 19503.26
1993/10/31 19054.27 19906.98
1993/11/30 18703.50 19717.86
1993/12/31 19167.02 19956.45
1994/01/31 20068.99 20634.97
1994/02/28 19567.90 20075.76
1994/03/31 18733.96 19200.46
1994/04/30 19389.96 19446.22
1994/05/31 19541.35 19765.14
1994/06/30 19425.05 19280.90
1994/07/31 20098.38 19913.31
1994/08/31 21165.55 20729.75
1994/09/30 20820.92 20221.88
1994/10/31 21229.92 20676.87
1994/11/30 20539.73 19923.82
1994/12/31 20603.95 20219.29
1995/01/31 20931.41 20743.57
1995/02/28 21678.03 21551.95
1995/03/31 22400.68 22187.95
1995/04/30 23007.89 22841.38
1995/05/31 23667.90 23754.35
1995/06/30 23998.71 24306.17
1995/07/31 24888.04 25112.16
1995/08/31 25193.34 25175.19
1995/09/30 25989.33 26237.58
1995/10/31 25709.30 26143.91
1995/11/30 26789.41 27291.63
1995/12/31 27505.05 27817.27
1996/01/31 28329.18 28764.17
1996/02/29 28452.77 29030.81
1996/03/31 28673.14 29310.38
1996/04/30 28880.12 29742.41
1996/05/31 29114.69 30509.47
1996/06/30 28963.27 30625.71
1996/07/31 27882.34 29272.67
1996/08/31 28436.66 29890.03
1996/09/30 29462.49 31572.24
1996/10/31 30075.13 32443.00
1996/11/30 32024.44 34895.37
1996/12/31 31701.99 34204.09
1997/01/31 32793.68 36341.16
1997/02/28 33052.24 36626.08
1997/03/31 31767.46 35121.11
1997/04/30 33123.56 37217.84
1997/05/30 35056.73 39483.67
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Advisor Equity Income Fund - Institutional Class on May 31,
1987. As the chart shows, by May 31, 1997, the value of the investment
would have grown to $35,057 - a 250.57% increase on the initial investment.
For comparison, look at how the S&P 500 did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$39,484 - a 294.84% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn,
the share price and return of
a fund that invests in stocks
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Robert Chow, Portfolio Manager of Fidelity Advisor Equity
Income Fund
Q. BOB, HOW DID THE FUND PERFORM?
A. For the six- month and one-year periods ending May 31, 1997, the fund's
Institutional Class shares returned 9.47% and 20.41%, respectively. For the
same time periods, the equity income funds average, as tracked by Lipper
Analytical Services, was 10.11% and 22.43%. Additionally, the Standard &
Poor's 500 Index was up 13.15% for six months and 29.42% for the year.
Q. WHY DID THE FUND UNDERPERFORM THE INDEX?
A. Over the period, the fund's cash position was fairly high - between 8%
and 10% of assets - which hurt returns since the fund wasn't fully invested
in a rising market. The large cash position was mostly the result of
dramatic inflows of capital into the fund, especially this past January.
Following that inflow, I made the decision to invest a portion of the
proceeds in S&P 500 futures. I saw these low-risk futures not as a market
bet, but as a place to get some market exposure on a temporary basis. My
goal going forward is to eliminate this position entirely. I should point
out that I am a value investor, and I look hard at whether a stock is
attractive on a valuation basis; that is, whether it's cheap or expensive
relative to its own history, similar companies or its underlying assets. I
also invest for the long term. As a result, I tend to be cautious when the
fund has large inflows of cash. I'm not just going to throw this capital
into equities; instead I'll wait to find value stocks with the potential
for long-term success.
Q. WERE THERE ANY OTHER REASONS BEHIND THE FUND'S UNDERPERFORMANCE COMPARED
TO THE INDEX OVER THE PAST SIX MONTHS?
A. Yes. The fund underperformed the index because the index held more
large-capitalization companies, which the market favored over the period,
than the fund held. I found value mostly in mid-cap stocks, although I did
hold a number of large-cap stocks in my top 10 positions. In addition, the
fund was hurt by holding fewer bank stocks than the average equity-income
fund. Banks did very well over the period, especially in January of 1997.
The fund's fairly large sector weighting in finance at the end of the
period - 18% - mostly represented its investments in non-banks, such as
insurance companies.
Q. WHAT WERE SOME INVESTMENT DECISIONS THAT PAID OFF FOR THE FUND OVER THE
PERIOD?
A. Probably the fund's best-performing holdings were Wal-Mart and IBM,
which both turned in strong results over the period. Wal-Mart, one of the
fund's top holdings during the period, was perhaps my favorite. About three
or four years ago, it embarked on a strategy of converting its existing
stores into superstores, which have just about everything a consumer would
want to buy, including groceries. This strategy set Wal-Mart up for future
profits, but was very expensive in the short run since it costs a
tremendous amount to convert stores. I invested in Wal-Mart early on in
this strategy, and this year that investment started paying off as these
superstores continued to mature.
Q. WHAT ABOUT IBM?
A. Top 10 stock IBM was another solid holding. New management has come in
and helped generate tremendous cash flow, which has been used in part to
repurchase one in every seven shares outstanding. I got into IBM very early
in this process when its stock was inexpensive and my research showed that
there was a favorable risk/reward ratio. This meant that the potential
downside of the stock was much lower than the potential upside.
Q. YOU NOTED EARLIER THAT YOU ARE A VALUE INVESTOR. WERE THERE SOME STOCKS
THAT YOU CONSIDERED REAL VALUE STOCKS OVER THE PERIOD?
A. Yes. Clearly, I thought Wal-Mart and IBM were value stocks. Another good
example was top 10 holding Philip Morris. Philip Morris did very well and
had steady earnings and cash flow over the period. The problem is that it's
a tobacco company facing litigation. This kept its valuation low. When you
buy a well-established Fortune 500 stock at this value price, you know
there's some risk involved. However, my research showed me that the stock's
potential reward was higher than its potential risk, so the risk/reward
ratio was still good. Another value company was Masco, which makes faucets
and kitchen cabinets. It has been undervalued due to some past strategy
errors, but its core business has been profitable throughout recent
history. In addition, the chairman, who is paid a cash salary of only $1 a
year but has a stock option for a million shares if he reaches the
company's goals, has a strong incentive to profitably grow the company.
Q. DID YOU HAVE ANY REGRETS OVER THE PERIOD?
A. Sure. As I mentioned earlier, I wish I had invested less of the fund in
cash over the period. I am actively working to minimize or reduce this
position.
Q. BOB, HOW DOES THE FUND LOOK GOING FORWARD?
A. I am positioning the fund to provide reasonable returns with low
volatility and risk. Going forward, I have some concerns because valuation
levels look quite high, so I expect that there will be fewer positive
risk/reward opportunities available. However, if the economy continues on
its steady path of slow, moderate growth, I think the overall market
outlook is pretty bright.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: seeks to maintain a
yield that exceeds the
composite dividend of the
S&P 500, while considering
the potential for achieving
capital appreciation
START DATE: April 25, 1983
SIZE: as of May 31, 1997,
more than $2.9 billion
MANAGER: Robert Chow,
since 1996; joined Fidelity in
1989
(checkmark)
BOB CHOW ON THE GOALS OF THE
FUND:
"The goal of the fund is
long-term capital
appreciation achieved in a
context of low risk. This
entails several things, such as
low volatility and low fund
turnover. The fund's average
holding time is three years,
which is very consistent with
my long-term investment
approach.
"Part of the way I work toward
the fund's goals is to strongly
consider the risk/ reward
ratio, which I've discussed in
this report. In fact, the first
question I ask when I'm
considering a stock is `What's
the downside?' After I've
determined the downside, I
need to make sure the reward
is higher.
"This fund is not trying to
catch a fast bang from the
market, but is positioned for
the long-term."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
British Petroleum PLC ADR 3.5 2.6
Wal-Mart Stores, Inc. 3.2 2.4
American Express Co. 2.6 2.3
Philip Morris Companies, Inc. 2.2 2.2
International Business Machines Corp. 2.2 2.5
Masco Corp. 1.6 1.0
NationsBank Corp. 1.6 0.3
Allstate Corp. 1.5 1.0
Lockheed Martin Corp. 1.4 0.6
General Re Corp. 1.4 1.9
TOP FIVE MARKET SECTORS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Finance 18.0 18.5
Energy 8.0 7.9
Basic Industries 6.9 6.7
Retail & Wholesale 6.8 5.6
Nondurables 6.7 6.0
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF MAY 31, 1997 * AS OF NOVEMBER 30, 1996 **
Row: 1, Col: 1, Value: 5.9
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 91.3
Stocks and
equity futures 86.5%
Bonds 2.0%
Convertible
securities 2.1%
Short-term
investments 9.4%
FOREIGN
INVESTMENTS 3.6%
Stocks and
equity futures 91.5%
Bonds 1.7%
Convertible
securities 0.9%
Short-term
investments 5.9%
FOREIGN
INVESTMENTS 5.4%
Row: 1, Col: 1, Value: 9.4
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 86.5
*
**
INVESTMENTS MAY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.6%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 4.4%
AEROSPACE & DEFENSE - 3.4%
AlliedSignal, Inc. 140,000 $ 10,745
Boeing Co. 100,000 10,525
Lockheed Martin Corp. 450,000 42,131
McDonnell Douglas Corp. 180,000 11,588
Rockwell International Corp. 150,000 9,675
United Technologies Corp. 200,000 16,075
100,739
DEFENSE ELECTRONICS - 0.6%
Litton Industries, Inc. (a) 180,000 8,145
Raytheon Co. 190,000 9,073
17,218
SHIP BUILDING & REPAIR - 0.4%
General Dynamics Corp. 140,000 10,483
Newport News Shipbuilding, Inc. 150,000 2,493
12,976
TOTAL AEROSPACE & DEFENSE 130,933
BASIC INDUSTRIES - 6.9%
CHEMICALS & PLASTICS - 2.2%
Dow Chemical Co. 50,000 4,168
du Pont (E.I.) de Nemours & Co. 260,000 28,308
Monsanto Co. 200,000 8,800
Union Carbide Corp. 230,000 10,752
Valspar Corp. 300,000 8,400
Witco Corp. 150,000 5,550
65,978
IRON & STEEL - 0.4%
Nucor Corp. 200,000 11,800
METALS & MINING - 0.5%
Aluminum Co. of America 220,000 16,198
PAPER & FOREST PRODUCTS - 3.8%
Champion International Corp. 350,000 17,281
Chesapeake Corp. 390,000 13,065
Fort Howard Corp. (a) 220,000 10,106
James River Corp. of Virginia 150,000 5,269
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Kimberly-Clark Corp. 160,000 $ 8,020
MacMillan Bloedel Ltd. 337,600 4,899
Mead Corp. 100,000 6,375
Pentair, Inc. 570,000 18,739
Union Camp Corp. 120,000 6,300
Unisource Worldwide, Inc. 281,100 4,884
Weyerhaeuser Co. 264,000 13,167
Willamette Industries, Inc. 60,000 4,470
112,575
TOTAL BASIC INDUSTRIES 206,551
CONSTRUCTION & REAL ESTATE - 4.3%
BUILDING MATERIALS - 2.9%
CalMat Co. 440,000 8,745
Masco Corp. 1,220,000 47,428
RPM, Inc. 700,000 13,300
Sherwin-Williams Co. 530,000 15,900
85,373
CONSTRUCTION - 0.4%
Centex Corp. 110,000 4,386
Lennar Corp. 350,000 9,188
13,574
ENGINEERING - 0.3%
Fluor Corp. 170,000 8,989
REAL ESTATE INVESTMENT TRUSTS - 0.7%
Duke Realty Investors, Inc. 111,836 4,262
Felcor Suite Hotels, Inc. 100,000 3,725
Public Storage, Inc. 240,000 6,390
RFS Hotel Investors, Inc. 350,000 6,519
20,896
TOTAL CONSTRUCTION & REAL ESTATE 128,832
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 6.1%
AUTOS, TIRES, & ACCESSORIES - 3.7%
Chrysler Corp. 1,100,000 $ 34,925
Cummins Engine Co., Inc. 160,000 10,200
Eaton Corp. 140,000 11,165
General Motors Corp. 570,000 32,632
Modine Manufacturing Co. 310,000 9,068
PACCAR, Inc. 100,000 4,525
Snap-on Tools Corp. 220,000 8,773
111,288
CONSUMER DURABLES - 0.7%
Minnesota Mining & Manufacturing Co. 230,000 21,103
CONSUMER ELECTRONICS - 0.8%
Black & Decker Corp. 70,000 2,433
Maytag Co. 740,000 19,795
22,228
HOME FURNISHINGS - 0.7%
Heilig-Meyers Co. 200,000 3,300
Leggett & Platt, Inc. 420,000 15,855
19,155
TEXTILES & APPAREL - 0.2%
Russell Corp. 220,000 6,736
TOTAL DURABLES 180,510
ENERGY - 8.0%
ENERGY SERVICES - 1.4%
Baker Hughes, Inc. 240,000 9,000
Schlumberger Ltd. 130,000 15,486
Western Atlas, Inc. (a) 270,000 18,293
42,779
OIL & GAS - 6.6%
Amerada Hess Corp. 320,000 17,120
Atlantic Richfield Co. 30,000 4,364
British Petroleum PLC ADR 720,000 104,310
Burlington Resources, Inc. 300,000 13,950
Occidental Petroleum Corp. 500,000 11,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Royal Dutch Petroleum Co. ADR 100,000 $ 19,525
Texaco, Inc. 180,000 19,643
Total SA sponsored ADR 120,000 5,475
196,012
TOTAL ENERGY 238,791
FINANCE - 17.2%
BANKS - 4.0%
Bank of New York Co., Inc. 620,000 26,428
BankAmerica Corp. 30,000 3,506
Citicorp 230,000 26,306
NationsBank Corp. 800,000 47,100
Norwest Corp. 270,000 14,445
117,785
CREDIT & OTHER FINANCE - 4.0%
American Express Co. 1,100,000 76,450
Associates First Capital Corp. 140,000 6,615
Fleet Financial Group, Inc. 400,000 24,450
Household International, Inc. 110,000 10,808
118,323
FEDERAL SPONSORED CREDIT - 2.5%
Federal Home Loan Mortgage Corporation 900,000 29,700
Federal National Mortgage Association 780,000 34,028
Student Loan Marketing Association 90,000 10,946
74,674
INSURANCE - 6.3%
Allstate Corp. 600,000 44,173
Berkley (W.R.) Corp. 160,000 8,300
CIGNA Corp. 115,900 20,138
General Re Corp. 230,000 40,308
Hartford Financial Services Group, Inc. 300,000 23,400
Loews Corp. 170,000 16,533
PXRE Corp. 663,600 17,917
Provident Companies, Inc. 310,000 16,663
187,432
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SECURITIES INDUSTRY - 0.4%
Lehman Brothers Holdings, Inc. 360,000 $ 14,535
TOTAL FINANCE 512,749
HEALTH - 4.0%
DRUGS & PHARMACEUTICALS - 2.4%
American Home Products Corp. 130,000 9,912
Bristol-Myers Squibb Co. 400,000 29,350
Merck & Co., Inc. 80,000 7,190
Pharmacia & Upjohn, Inc. 140,000 4,848
Schering-Plough Corp. 230,000 20,873
72,173
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
Allegiance Corp. 190,000 5,153
Bergen Brunswig Corp. Class A 130,000 4,940
Johnson & Johnson 100,000 5,988
16,081
MEDICAL FACILITIES MANAGEMENT - 1.1%
Columbia/HCA Healthcare Corp. 330,000 12,086
Tenet Healthcare Corp. (a) 720,000 19,800
31,886
TOTAL HEALTH 120,140
HOLDING COMPANIES - 0.5%
PartnerRe Ltd. 500,000 15,688
INDUSTRIAL MACHINERY & EQUIPMENT - 4.7%
ELECTRICAL EQUIPMENT - 1.4%
Emerson Electric Co. 230,000 12,420
General Electric Co. 380,000 22,942
Scientific-Atlanta, Inc. 300,000 5,438
40,800
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 2.0%
Caterpillar, Inc. 180,000 $ 17,572
Deere & Co. 220,000 11,248
Ingersoll-Rand Co. 220,000 11,990
Tyco International Ltd. 310,000 19,685
60,495
POLLUTION CONTROL - 1.3%
Browning-Ferris Industries, Inc. 530,000 17,358
Waste Management, Inc. 720,000 22,860
40,218
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 141,513
MEDIA & LEISURE - 1.9%
ENTERTAINMENT - 0.1%
MGM Grand, Inc. (a) 110,000 4,166
LODGING & GAMING - 0.5%
Circus Circus Enterprises, Inc. (a) 90,000 2,340
ITT Corp. (a) 200,000 11,925
14,265
PUBLISHING - 1.3%
ACNielsen Corp. (a) 1,000,000 16,875
Gannett Co., Inc. 60,000 5,550
Knight-Ridder, Inc. 120,000 5,175
Times Mirror Co. Class A 170,000 9,541
37,141
RESTAURANTS - 0.0%
Uno Restaurant Corp. (a) 200,000 1,176
TOTAL MEDIA & LEISURE 56,748
NONDURABLES - 6.7%
BEVERAGES - 0.6%
Anheuser-Busch Companies, Inc. 160,000 6,860
Coors (Adolph) Co. Class B 85,500 2,084
PepsiCo, Inc. 200,000 7,350
16,294
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
FOODS - 0.8%
Campbell Soup Co. 200,000 $ 9,200
Hershey Foods Corp. 150,000 8,419
Quaker Oats Co. 140,000 5,775
Sara Lee Corp. 30,000 1,226
24,620
HOUSEHOLD PRODUCTS - 2.3%
Church & Dwight Co., Inc. 332,100 8,801
Clorox Co. 130,000 16,412
First Brands Corp. 120,000 3,150
Gillette Co. 150,000 13,331
Procter & Gamble Co. 120,000 16,545
Rubbermaid, Inc. 16,800 468
Unilever NV ADR 50,000 9,688
68,395
TOBACCO - 3.0%
Philip Morris Companies, Inc. 1,520,000 66,880
RJR Nabisco Holdings Corp. 520,000 16,835
Schweitzer-Mauduit International, Inc. 170,000 5,844
89,559
TOTAL NONDURABLES 198,868
PRECIOUS METALS - 0.4%
Newmont Mining Corp. 320,000 12,520
RETAIL & WHOLESALE - 6.8%
APPAREL STORES - 0.2%
TJX Companies, Inc. 100,000 4,800
DRUG STORES - 0.2%
CVS Corp. 114,946 5,503
GENERAL MERCHANDISE STORES - 4.6%
Dillards, Inc. Class A 260,000 8,775
May Department Stores Co. (The) 200,000 9,425
Neiman-Marcus Group, Inc. (a) 130,000 3,445
Nordstrom, Inc. 180,000 8,640
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Sears, Roebuck & Co. 200,000 $ 9,825
Wal-Mart Stores, Inc. 3,250,000 96,688
136,798
GROCERY STORES - 0.4%
Albertson's, Inc. 140,000 4,690
Safeway, Inc. (a) 160,000 7,200
11,890
RETAIL & WHOLESALE, MISCELLANEOUS - 1.4%
Fabri-Centers of America, Inc. Class B (non-vtg.) (a) 330,100 7,055
Home Depot, Inc. (The) 250,000 15,750
Officemax, Inc. (a) 800,000 11,100
Toys "R" Us, Inc. (a) 300,000 9,338
43,243
TOTAL RETAIL & WHOLESALE 202,234
SERVICES - 1.8%
PRINTING - 0.3%
Donnelley (R.R.) & Sons Co. 220,000 8,167
SERVICES - 1.5%
Block (H&R), Inc. 670,000 22,110
Dun & Bradstreet Corp. 520,000 13,585
Olsten Corp. 140,000 2,748
Pittston Co. 260,000 6,695
45,138
TOTAL SERVICES 53,305
TECHNOLOGY - 6.6%
COMPUTER SERVICES & SOFTWARE - 0.3%
Electronic Data Systems Corp. 210,000 7,848
COMPUTERS & OFFICE EQUIPMENT - 3.4%
International Business Machines Corp. 760,000 65,740
Pitney Bowes, Inc. 490,000 34,423
100,163
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - 0.4%
Applied Materials, Inc. (a) 100,000 $ 6,525
KLA Instruments Corp. (a) 100,000 4,756
11,281
ELECTRONICS - 2.1%
AMP, Inc. 670,000 27,554
Cypress Semiconductor Corp. (a) 120,000 1,710
Thomas & Betts Corp. 670,000 34,086
63,350
PHOTOGRAPHIC EQUIPMENT - 0.4%
Eastman Kodak Co. 100,000 8,288
Imation Corp. (a) 230,000 5,520
13,808
TOTAL TECHNOLOGY 196,450
TRANSPORTATION - 3.3%
AIR TRANSPORTATION - 0.6%
AMR Corp. (a) 90,000 8,943
Delta Air Lines, Inc. 90,000 8,438
17,381
RAILROADS - 0.8%
Burlington Northern Santa Fe Corp. 160,000 13,280
CSX Corp. 220,000 11,660
24,940
TRUCKING & FREIGHT - 1.9%
Arnold Industries, Inc. 900,000 15,074
CNF Transportation, Inc. 480,000 15,480
Consolidated Freightways Corp. 700,000 8,663
Hunt (J.B.) Transport Services, Inc. 170,000 2,593
USFreightways Corp. 320,000 7,760
Werner Enterprises, Inc. 330,000 6,435
56,005
TOTAL TRANSPORTATION 98,326
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 5.0%
ELECTRIC UTILITY - 0.3%
American Electric Power Co., Inc. 220,000 $ 8,965
TELEPHONE SERVICES - 4.7%
AT&T Corp. 200,000 7,375
Ameritech Corp. 120,000 7,860
Bell Atlantic Corp. 40,000 2,800
MCI Communications Corp. 450,000 17,269
NYNEX Corp. 620,000 33,325
SBC Communications, Inc. 650,000 38,025
Sprint Corp. 240,000 11,730
U.S. WEST Communications Group 550,000 20,142
138,526
TOTAL UTILITIES 147,491
TOTAL COMMON STOCKS
(Cost $2,031,556) 2,641,649
CONVERTIBLE PREFERRED STOCKS - 0.8%
FINANCE - 0.8%
INSURANCE - 0.8%
Allstate Corp. $2.30 500,000 23,313
MEDIA & LEISURE - 0.0%
PUBLISHING - 0.0%
Taylor, J.N. Holdings Ltd. 9 1/2% (a) 50,000 -
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $19,485) 23,313
CORPORATE BONDS - 0.3%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (000S) (000S)
CONVERTIBLE BONDS - 0.1%
TECHNOLOGY - 0.1%
ELECTRONICS - 0.1%
National Semiconductor Corp. 6 1/2%,
10/1/02 (c) Ba2 $ 1,800 $ 1,845
NONCONVERTIBLE BONDS - 0.2%
DURABLES - 0.2%
TEXTILES & APPAREL - 0.2%
Westpoint Stevens, Inc. 8 3/4%, 12/15/01 Ba3 5,200 5,356
TOTAL CORPORATE BONDS
(Cost $6,783) 7,201
U.S. TREASURY OBLIGATIONS - 1.7%
U.S. Treasury Bills, yield at date of purchase
5.16% to 5.21%, 6/26/97 (d) 7,250 7,230
U.S. Treasury Bonds
7 1/4%, 2/15/23 Aaa 5,020 5,091
6 1/4%, 8/15/23 Aaa 2,610 2,377
7 1/2%, 11/15/24 Aaa 13,590 14,437
7 5/8%, 2/15/25 Aaa 8,830 9,518
U.S. Treasury Note 7 7/8%, 11/15/04 Aaa 12,300 13,190
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $54,007) 51,843
CASH EQUIVALENTS - 8.6%
SHARES
Taxable Central Cash Fund (b)
(Cost $256,497) 256,497,000 256,497
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,368,328) $ 2,980,503
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
(000S) (000S)
200 S&P 500 Stock Index Contracts Jun 97 $ 85,060 $ 6,607
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.9%.
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.54%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,845,000 or 0.1% of net
assets.
4. A portion of the security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $3,737,000.
INCOME TAX INFORMATION
At May 31, 1997, the aggregate cost of investment securities for income tax
purposes was $2,370,512,000. Net unrealized appreciation aggregated
$609,991,000, of which $629,885,000 related to appreciated investment
securities and $19,894,000 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending November 30,
1997 approximately $6,650,000 of losses recognized during the period
November 1, 1996 to November 30, 1996.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) MAY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $2,368,328) - $ 2,980,503
See accompanying schedule
Receivable for investments sold 12,917
Receivable for fund shares sold 5,000
Dividends receivable 5,079
Interest receivable 2,260
Receivable for daily variation on futures contracts 494
Other receivables 173
Prepaid expenses 5
TOTAL ASSETS 3,006,431
LIABILITIES
Payable for investments purchased $ 48,274
Payable for fund shares redeemed 5,632
Accrued management fee 1,200
Distribution fees payable 1,241
Other payables and accrued expenses 625
TOTAL LIABILITIES 56,972
NET ASSETS $ 2,949,459
Net Assets consist of:
Paid in capital $ 2,286,634
Undistributed net investment income 6,083
Accumulated undistributed net realized gain (loss) on 37,961
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 618,781
investments and assets and liabilities in foreign
currencies
NET ASSETS $ 2,949,459
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) MAY 31, 1997 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $23.97
CLASS A:
NET ASSET VALUE and redemption price per share
($11,312 (divided by) 472 shares)
Maximum offering price per share (100/94.75 of $23.97) $25.30
CLASS T: $24.11
NET ASSET VALUE and redemption price per share
($1,899,588 (divided by) 78,773 shares)
Maximum offering price per share (100/96.50 of $24.11) $24.98
CLASS B: $24.02
NET ASSET VALUE and offering price per share
($573,916 (divided by) 23,897 shares) A
INSTITUTIONAL CLASS: $24.30
NET ASSET VALUE, offering price and redemption price
per share ($464,643 (divided by) 19,117.3 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
INVESTMENT INCOME $ 23,703
Dividends
Interest 10,505
TOTAL INCOME 34,208
EXPENSES
Management fee $ 6,770
Transfer agent fees 2,538
Distribution fees 6,981
Accounting fees and expenses 403
Non-interested trustees' compensation 10
Custodian fees and expenses 26
Registration fees 183
Audit 41
Legal 9
Miscellaneous 53
Total expenses before reductions 17,014
Expense reductions (216) 16,798
NET INVESTMENT INCOME 17,410
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 36,706
Foreign currency transactions (3)
Futures contracts 10,381 47,084
Change in net unrealized appreciation (depreciation) on:
Investment securities 178,053
Assets and liabilities in foreign currencies 1
Futures contracts 6,607 184,661
NET GAIN (LOSS) 231,745
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 249,155
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 17,410 $ 29,299
Net investment income
Net realized gain (loss) 47,084 69,742
Change in net unrealized appreciation (depreciation) 184,661 261,601
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 249,155 360,642
FROM OPERATIONS
Distributions to shareholders (15,967) (28,968)
From net investment income
From net realized gain (64,868) (35,076)
TOTAL DISTRIBUTIONS (80,835) (64,044)
Share transactions - net increase (decrease) 260,525 776,408
TOTAL INCREASE (DECREASE) IN NET ASSETS 428,845 1,073,006
NET ASSETS
Beginning of period 2,520,614 1,447,608
End of period (including undistributed net investment $ 2,949,459 $ 2,520,614
income of $6,083 and $4,640, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1997
(UNAUDITED) 1996 F
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA E
Net asset value, beginning of period $ 22.78 $ 20.38
Income from Investment Operations
Net investment income .13 .06
Net realized and unrealized gain (loss) 1.85 2.44
Total from investment operations 1.98 2.50
Less Distributions
From net investment income (.20) (.10)
From net realized gain (.59) -
Total distributions (.79) (.10)
Net asset value, end of period $ 23.97 $ 22.78
TOTAL RETURN B, C 9.02% 12.31%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 11,312 $ 3,306
Ratio of expenses to average net assets 1.44% A, G 1.46% A,
D, G
Ratio of expenses to average net assets after expense 1.43% A, H 1.44% A,
reductions H
Ratio of net investment income to average net assets 1.17% A 1.27% A
Portfolio turnover 50% A 78%
Average commission rate I $ .0423 $ .0424
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO NOVEMBER 30, 1996.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
I FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1997
(UNAUDITED) 1996 1995 1994 F 1993 1992 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 22.83 $ 19.95 $ 15.96 $ 14.86 $ 12.86 $ 12.37
beginning of period
Income from
Investment
Operations
Net investment .15 D .30 D .31 .28 D .33 .13
income
Net realized and 1.86 3.35 4.26 1.03 1.97 .47
unrealized
gain (loss)
Total from 2.01 3.65 4.57 1.31 2.30 .60
investment
operations
Less Distributions
From net (.14) (.31) (.30) (.21) (.30) (.11)
investment
income
From net (.59) (.46) (.28) - - -
realized gain
Total distributions (.73) (.77) (.58) (.21) (.30) (.11)
Net asset value, $ 24.11 $ 22.83 $ 19.95 $ 15.96 $ 14.86 $ 12.86
end of period
TOTAL RETURN B, C 9.11% 18.89% 29.46% 8.84% 18.03% 4.88%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 1,899,588 $ 1,672,994 $ 880,054 $ 179,501 $ 42,326 $ 1,462
period (000 omitted)
Ratio of expenses to 1.25% A 1.27% 1.48% 1.67% 1.77% 1.55%
average net assets A
Ratio of expenses to 1.24% A, 1.26% 1.47% 1.64% 1.77% 1.55%
average net assets G G G G A
after expense
reductions
Ratio of net 1.31% A 1.45% 1.78% 1.69% 2.02% 3.39%
investment income A
to average net
assets
Portfolio turnover 50% A 78% 80% 140% 120% 51%
Average commission $ .0423 $ .0424
rate H
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF
SALE OF CLASS T SHARES) TO NOVEMBER 30, 1992. F EFFECTIVE DECEMBER 1, 1993,
THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE,
AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES. G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). H FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS
ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND
DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1997
(UNAUDITED) 1996 1995 1994 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 22.73 $ 19.90 $ 15.94 $ 15.21
Income from Investment Operations
Net investment income .09 D .19 D .26 .08 D
Net realized and unrealized gain (loss) 1.87 3.33 4.23 .72
Total from investment operations 1.96 3.52 4.49 .80
Less Distributions
From net investment income (.08) (.23) (.25) (.07)
From net realized gain (.59) (.46) (.28) -
Total distributions (.67) (.69) (.53) (.07)
Net asset value, end of period $ 24.02 $ 22.73 $ 19.90 $ 15.94
TOTAL RETURN B, C 8.91% 18.22% 28.95% 5.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 573,916 $ 500,447 $ 270,101 $ 35,373
Ratio of expenses to average net assets 1.78% A 1.81% 1.85% 2.24% A
Ratio of expenses to average net assets 1.77% A, 1.79% 1.84% 2.18% A
after expense reductions F F F , F
Ratio of net investment income to .79% A .92% 1.41% 1.15% A
average net assets
Portfolio turnover 50% A 78% 80% 140%
Average commission rate G $ .0423 $ .0424
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1994.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1997
(UNAUDITED) 1996 1995 1994 D 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 23.00 $ 20.09 $ 16.07 $ 14.93 $ 12.88 $ 11.08
beginning of period
Income from
Investment
Operations
Net investment .21 C .42 C .45 .41 C .39 .49
income
Net realized and 1.89 3.37 4.28 1.05 2.02 1.79
unrealized
gain (loss)
Total from 2.10 3.79 4.73 1.46 2.41 2.28
investment
operations
Less Distributions
From net (.21) (.42) (.43) (.32) (.36) (.48)
investment
income
From net (.59) (.46) (.28) - - -
realized gain
Total distributions (.80) (.88) (.71) (.32) (.36) (.48)
Net asset value, $ 24.30 $ 23.00 $ 20.09 $ 16.07 $ 14.93 $ 12.88
end of period
TOTAL RETURN B 9.47% 19.54% 30.43% 9.82% 18.90% 20.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 464,643 $ 343,867 $ 297,453 $ 197,533 $ 191,138 $ 139,391
period (000 omitted)
Ratio of expenses to .71% A .71% .74% .73% .80% .71%
average net assets F
Ratio of expenses to .68% A .70% .73% .71% .79% .71%
average net assets , E E E E E
after expense
reductions
Ratio of net 1.85% A 2.02% 2.52% 2.62% 3.00% 3.77%
investment income
to average net
assets
Portfolio turnover 50% A 78% 80% 140% 120% 51%
Average commission $ .0423 $ .0424
rate G
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS). C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD. D EFFECTIVE DECEMBER 1, 1993,
THE FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE,
AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS
WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). F FMR AGREED TO
REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER. G FOR
FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND
FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS
WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1997 (Unaudited)
9. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Equity Income Fund(the fund) is a fund of Fidelity Advisor
Series III (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of 1940,
as amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Investment income, realized and unrealized capital gains and losses, the
common expenses of the fund, and certain fund-level expense reductions are
allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the fund. Each class of
shares differs in its respective distribution, transfer agent,
registration, and certain other class-specific fees, expenses, and expense
reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities with remaining maturities
of sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both of
which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes in foreign currency exchange
rates on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income, which includes accretion of original issue discount, is accrued as
earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for litigation
proceeds, market discount, non-taxable dividends and losses deferred due to
wash sales and excise tax regulations. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part of
the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
10. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
Losses may arise from changes in the value of the foreign currency or if
the counterparties do not perform under the
2. OPERATING POLICIES - CONTINUED
FOREIGN CURRENCY CONTRACTS - CONTINUED
contracts' terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at the
time of each trade. The cost of the foreign currency contracts is included
in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission(the SEC), the fund, along with other
affiliated entities of FMR, may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities. Income
distributions from the Cash Fund are declared daily and paid monthly from
net interest income. Income distributions received by the fund are recorded
as interest income in the accompanying financial statements.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock market and to fluctuations in currency values. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period end
is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
2. OPERATING POLICIES - CONTINUED
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, the
fund had no investments in restricted securities (excluding 144A issues).
11. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $809,091,000 and $595,045,000, respectively, of which U.S.
government and government agency obligations aggregated $3,171,000 and $0,
respectively.
The market value of futures contracts opened and closed during the period
amounted to $471,796,000 and $403,724,000, respectively.
12. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee that
is computed daily at an annual rate of .50% of the fund's average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
each class of shares (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 8,000 $ 8,000
CLASS T 4,355,000 4,355,000
CLASS B 2,618,000 655,000
$ 6,981,000 $ 5,018,000
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the fund,
respectively, and the proceeds of a contingent deferred sales charge levied
on Class B share redemptions occurring within six years of purchase (five
years prior to January 2, 1997). The Class B charge is based on declining
rates which range from 5% to 1%(4% to 1% prior to January 2, 1997) of the
lesser of the cost of shares at the initial date of purchase or the net
asset value of the redeemed shares, excluding any reinvested dividends and
capital gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities, dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 157,000 $ 150,000
CLASS T 762,000 534,000
CLASS B 585,000 0*
$ 1,504,000 $ 684,000
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM ITS
OWN RESOURCES TO DEALERS THROUGH WHICH
THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a separate
transfer, dividend disbursing, and shareholder servicing agent
(collectively referred to as the Transfer Agents) contract with respect to
its shares. The Transfer Agents receive account fees and asset-based fees
that vary according to the account size and type of account of the
shareholders of the respective classes of the fund. For the period, the
following amounts were paid to each transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS ***
CLASS A FIIOC * $ 8,000 .26
CLASS T ** FIIOC * 1,661,000 .19
CLASS B FIIOC * 550,000 .21
INSTITUTIONAL CLASS FIIOC * 319,000 .15
$ 2,538,000
* FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC. (FIIOC) AN
AFFILIATE OF FMR.
** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS THE
TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET, HOWEVER, HAD
DELEGATED CERTAIN
TRANSFER, DIVIDEND DISBURSING, AND SHAREHOLDER SERVICES TO FIIOC FOR
WHICH FIIOC RECEIVED ITS ALLOCABLE SHARE OF ALL SUCH FEES.
*** ANNUALIZED
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level of
average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $274,000 for the period.
13. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse certain transfer agent, registration
and other class specific expenses for Class A. For the period, the
reimbursement reduced these expenses by $8,000.
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses were
reduced by $163,000 under this arrangement.
In addition, the fund has entered into an arrangement with each class'
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period, each
applicable class' expenses were reduced as follows under the transfer agent
arrangements:
TRANSFER
AGENT
INTEREST
CREDITS
CLASS T $ 15,000
INSTITUTIONAL CLASS 30,000
$ 45,000
14. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1997 1996 A
CLASS A
From net investment income $ 45,000 $ 4,000
From net realized gain 99,000 -
Total $ 144,000 $ 4,000
CLASS T
From net investment income $ 10,484,000 $ 18,521,000
From net realized gain 43,070,000 21,465,000
Total $ 53,554,000 $ 39,986,000
CLASS B
From net investment income $ 1,806,000 $ 4,108,000
From net realized gain 13,038,000 6,588,000
Total $ 14,844,000 $ 10,696,000
INSTITUTIONAL CLASS
From net investment income $ 3,632,000 $ 6,335,000
From net realized gain 8,661,000 7,023,000
Total $ 12,293,000 $ 13,358,000
$ 80,835,000 $ 64,044,000
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
15. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30, ENDED MAY 31, NOVEMBER 30,
1997 1996 A 1997 1996 A
CLASS A 354 150 $ 8,002 $ 3,202
Shares sold
Reinvestment of distributions 6 - 130 3
Shares redeemed (33) (5) (753) (105)
Net increase (decrease) 327 145 $ 7,379 $ 3,100
CLASS T 16,249 44,565 $ 365,803 $ 918,821
Shares sold
Reinvestment of distributions 2,303 1,866 50,772 37,447
Shares redeemed (13,075) (17,253) (295,251) (358,513)
Net increase (decrease) 5,477 29,178 $ 121,324 $ 597,755
CLASS B 2,763 11,769 $ 62,340 $ 243,202
Shares sold
Reinvestment of distributions 643 478 14,094 9,527
Shares redeemed (1,525) (3,806) (34,419) (79,827)
Net increase (decrease) 1,881 8,441 $ 42,015 $ 172,902
INSTITUTIONAL CLASS 9,546 7,490 $ 211,663 $ 155,473
Shares sold
Reinvestment of distributions 418 432 9,304 8,672
Shares redeemed (5,798) (7,780) (131,160) (161,494)
Net increase (decrease) 4,166 142 $ 89,807 $ 2,651
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
16. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 21,000
CLASS T 96,000
CLASS B 37,000
INSTITUTIONAL CLASS 29,000
$ 183,000
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
