FIDELITY REAL ESTATE HIGH INCOME FUND
SEMIANNUAL REPORT
MAY 31, 1995
INVESTMENTS MAY 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMERCIAL MORTGAGE SECURITIES - 95.8%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
ACP Mortgage LP
commercial floater Class D,
8 5/8%, 2/25/28 (b)(c) BBB $ 2,000,000 $ 1,868,750
American Southwest Financial
Securities commercial Series
1994-C2 Class B2,
14.2179%,12/25/01 (b) - 3,000,000 3,012,188
CBA Mortgage Corp.
commercial Series 1993-C1
Class E, 7.1545%,
12/25/03 (b) Ba2 3,000,000 2,534,531
CS First Boston Mortgage
Securities Corp. commercial
Series (b):
1994-M1 Class E,
12.60%, 2/15/02 - 1,000,000 1,002,500
1994-CFB1 Class E,
7.7893%, 1/25/28 Ba2 2,309,946 1,842,182
Lennar Central Partners LP
commercial Series 1995-1
Class F, 11.70%,
5/15/05 (b) - 2,500,000 2,501,563
Merrill Lynch Mortgage
Investments, Inc. commercial
Series 8.1397%,
6/25/22 (b) Ba2 2,000,000 1,757,320
Meritor Mortgage Security Corp.
commercial Series 1987-1
Class B, 9.40%, 2/1/00 (b) - 12,919,000 2,603,088
New England Mutual Life
Insurance Co. commercial
Series 1993-1 Class D,
8%,12/15/23 (b) Ba2 5,001,934 4,126,595
Phoenix Real Estate Securities, Inc.
commercial Series 1993,
Class D-1, 8 1/4%,
11/25/23 (b) Ba2 3,500,000 2,896,250
Resolution Trust Corp.:
commercial Series:
1992-C8 Class E,
8.835%, 12/25/23 Ba3 1,441,591 1,297,432
1994-C2 Class E,
8%, 4/25/25 BB+ 1,966,720 1,797,092
1994-C2 Class F,
8%, 4/25/25 BB 1,942,949 1,687,633
1994-C2 Class G,
8%, 4/25/25 B 4,836,335 3,949,047
1994-C1 Class E,
8%, 6/25/26 BB 3,868,542 3,206,053
sequential pay Series 1994-C1
Class F, 8%, 6/25/26 B 4,728,870 3,783,095
SKW Real Estate commercial
Series Class F, 12.80%,
4/15/05 (b) - 2,310,750 2,330,969
SML, Inc. commercial Series
1994-C1, Class B
10.30% 9/20/99 - 3,000,000 2,894,064
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
Structured Asset Securities
Corp. commercial Series:
1992-M1 Class C,
7.05% 11/25/02 B2 $ 3,200,000 $ 2,494,500
1995-C1 Class E,
7 3/8%, 9/25/24 (b) BB 3,500,000 2,560,469
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $47,526,143) 50,145,321
COMPLEX MORTGAGE SECURITIES - 2.1%
INTEREST ONLY STRIPS - 2.1%
Mortgage Capital Funding, Inc.
commercial Series (d):
1993-C1 Class 2,
3.6298%, 5/25/15 Aa2 42,582,853 1,024,635
1993-C1 Class 2,
1.4611%, 5/25/15 Aa2 8,791,177 83,104
TOTAL COMPLEX MORTGAGE SECURITIES
(Cost $1,118,128) 1,107,739
CONVERTIBLE PREFERRED STOCKS - 1.6%
SHARES
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.6%
Catellus Development Corp., exchangeable,
Series B, $3.625 (b) (Cost $700,000) 20,000 830,000
REPURCHASE AGREEMENTS - 0.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6.13% dated
5/31/95 due 6/1/95 $ 275,047 275,000
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $49,619,271) $ 52,358,060
LEGEND
1. Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
2. 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 $29,866,405 or 56.6% of net
assets.
3. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
4. Security represents right to receive monthly interest payments on an
underlying pool of mortgages. Principal shown is the par amount of the
mortgage pool.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 2.1% AAA, AA, A 0.0%
Baa 0.0% BBB 3.6%
Ba 27.6% BB 25.0%
B 4.8% B 14.8%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 27.4%. FMR
has determined that unrated debt securities that are lower quality account
for 27.4% of the total value of investment in securities.
INCOME TAX INFORMATION
At May 31, 1995, the aggregate cost of investment securities for income tax
purposes was $49,619,271. Net unrealized appreciation (depreciation)
aggregated $2,738,789, of which $2,788,419 related to appreciated
investment securities and $49,630 related to depreciated investment
securities.
REAL ESTATE HIGH INCOME
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $275,000) (cost $49,619,271) - See $ 52,358,060
accompanying schedule
Cash 775,645
Interest receivable 511,312
TOTAL ASSETS 53,645,017
LIABILITIES
Payable for investments purchased $ 804,503
Accrued management fee 32,313
Other payables and accrued expenses 36,898
TOTAL LIABILITIES 873,714
NET ASSETS $ 52,771,303
Net Assets consist of:
Paid in capital $ 49,933,069
Distributions in excess of net investment income (13,867
)
Accumulated undistributed net realized gain (loss) on investments 113,312
Net unrealized appreciation (depreciation) on investments 2,738,789
NET ASSETS, for 4,890,934 shares outstanding $ 52,771,303
NET ASSET VALUE, offering price $10.79
and redemption price per share ($52,771,303 (divided by) 4,890,934 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 5, 1995
(COMMENCEMENT OF OPERATIONS)
TO MAY 31, 1995 (UNAUDITED)
INVESTMENT INCOME $ 18,125
Dividends
Interest 1,360,774
TOTAL INCOME 1,378,899
EXPENSES
Management fee $ 107,955
Transfer agent fees 23,798
Accounting fees and expenses 18,197
Non-interested trustees' compensation 20
Custodian fees and expenses 420
Audit 9,300
Legal 6
TOTAL EXPENSES 159,696
NET INVESTMENT INCOME 1,219,203
REALIZED AND UNREALIZED GAIN (LOSS) 113,312
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 2,738,789
NET GAIN (LOSS) 2,852,101
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,071,304
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS JANUARY 5, 1995
(COMMENCEMENT
OF
OPERATIONS) TO
MAY 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Operations $ 1,219,203
Net investment income
Net realized gain (loss) 113,312
Change in net unrealized appreciation (depreciation) 2,738,789
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,071,304
Distributions to shareholders from net investment income (1,233,070)
Share transactions 50,199,999
Net proceeds from sales of shares
Reinvestment of distributions 1,233,070
Cost of shares redeemed (1,500,000)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 49,933,069
TOTAL INCREASE (DECREASE) IN NET ASSETS 52,771,303
NET ASSETS
Beginning of period -
End of period (including distributions in excess of net investment income of $(13,867)) $ 52,771,303
OTHER INFORMATION
Shares
Sold 4,917,536
Issued in reinvestment of distributions 117,214
Redeemed (143,816)
Net increase (decrease) 4,890,934
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
JANUARY 5, 1995
(COMMENCEMENT
OF
OPERATIONS) TO
MAY 31, 1995
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations .329
Net investment income
Net realized and unrealized gain (loss) .793
Total from investment operations 1.122
Less Distributions (.332)
From net investment income
Net asset value, end of period $ 10.790
TOTAL RETURN B 11.36%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 52,771
Ratio of expenses to average net assets 1.12% A
Ratio of net investment income to average net assets 8.55% A
Portfolio turnover rate 42% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1995 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Real Estate High Income Fund (the fund) is a fund of Fidelity
Advisor Series IV (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 following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities (including restricted securities) for
which market quotations are not readily available are valued at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees.
INCOME TAXES. The fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. By so qualifying, the fund
will not be 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. Interest income, which includes accretion of original
issue discount, is accrued as earned and dividend income is recorded on the
ex-dividend date.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences may result in distribution reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain loss. Undistributed net investment income (loss) and
accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences which will reverse in a
subsequent period. Accumulated net realized gain (loss) on investments may
include temporary book and tax basis differences that 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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. FMR, the fund's
investment adviser, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $53,481,077 and $4,250,118, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of the fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from .1200% to
.3700% for the period. The annual individual fund fee rate is .60%. For the
period, the management fee was equivalent to an annualized rate of .75% of
average net assets.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, is the fund's transfer, dividend disbursing
and shareholder servicing agent. Effective January 1, 1995, the Board of
Trustees approved a revised transfer agent contract pursuant to which FIIOC
receives account fees and asset-based fees that vary according to account
size and type of account. FIIOC pays for typesetting, printing and mailing
of all shareholder reports, except proxy statements.
ACCOUNTING FEES. Fidelity Service Co., 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.
