(2_FIDELITY_LOGOS)FIDELITY
REAL ESTATE HIGH INCOME
FUND
ANNUAL REPORT
AUGUST 31, 1993
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PERFORMANCE 3 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 5 THE MANAGER'S REVIEW OF FUND PERFORMANCE,
STRATEGY AND OUTLOOK.
INVESTMENTS 6 A COMPLETE LIST OF THE FUND'S INVESTMENTS WITH
THEIR MARKET VALUES.
FINANCIAL STATEMENTS 8 STATEMENTS OF ASSETS AND LIABILITIES, OPERATIONS,
AND CHANGES IN NET ASSETS, AS WELL AS FINANCIAL
HIGHLIGHTS.
NOTES 10 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT ACCOUNTANTS 12 THE AUDITORS' OPINION.
DISTRIBUTIONS 13
</TABLE>
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 THE POSSIBLE LOSS
OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON THE FUND, INCLUDING CHARGES AND EXPENSES, CALL JEFF
GANDEL AT 617-563-6414 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
REAL ESTATE HIGH INCOME
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $100,000 investment. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
NOVEMBER 30, 1995 FUND
Real Estate High Income 20.33%
Merrill Lynch High Yield Master Index 17.79%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on January 5,
1995. 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 the fund's return to the performance of the Merrill Lynch High
Yield Master Index - a broad measure of the high yield bond market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year. In the fund's next report we'll report these
numbers for the fund and the benchmark.
$100,000 OVER LIFE OF FUND
Real Estate HighHigh Yield Maste
01/05/95 100000.00 100000.00
01/31/95 100918.56 101216.68
02/28/95 104093.12 104374.76
03/31/95 105430.21 105827.31
04/30/95 107058.44 108305.10
05/31/95 111364.63 111688.80
06/30/95 112854.47 112541.88
07/31/95 113387.98 113828.48
08/31/95 115807.97 114519.33
09/30/95 117769.89 115829.55
10/31/95 118684.60 116650.61
11/30/95 120329.56 117789.28
Let's say you invested $100,000 in Fidelity Real Estate High Income Fund on
January 5, 1995, when the fund started. By November 30, 1995, the value of
your investment would have grown to $120,330 - a 20.33% increase on your
initial investment. That compares to $100,000 invested in the Merrill Lynch
High Yield Master Index, which would have grown to $117,789 over the same
period - a 17.79% increase.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. Bond prices, for
example, generally move in the opposite
direction of interest rates. In turn, the share
price, return, and yield of a fund that invests in
bonds 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)
TOTAL RETURN COMPONENTS
JANUARY 5, 1995
(COMMENCEMENT
OF
OPERATIONS) TO
NOVEMBER 30,
1995
Dividend return 9.93%
Capital appreciation return 10.40%
Total return 20.33%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested.
DIVIDENDS
PERIODS ENDED NOVEMBER 30, 1995 PAST PAST 6 LIFE OF
MONTH MONTHS FUND
Dividends per share 7.19(cents) 59.54(cents) 92.71(cents)
Annualized dividend rate 7.95% 10.90% 8.71%
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $11.00 over
the past month, $10.89 over the past six months and $10.64 over the life of
fund, you can compare the fund's income over these three periods.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
Mark Snyderman, Portfolio Manager of Fidelity Real
Estate High Income Fund
Q. HOW DID THE FUND PERFORM, MARK?
A. Very well. The fund commenced operations on January 5, 1995. Fidelity
generally looks at performance for six- and 12-month periods. For this
report, we will look at performance since the fund's commencement of
operations. For the period ended November 30, 1995 the fund returned
20.33%, while its benchmark index, the Merrill Lynch High Yield Master
Index, returned 17.79%.
Q. WHY DID THE FUND DO WELL?
A. I think there were two major factors. First, the credit spreads on many
of the securities owned by the fund narrowed, thus resulting in price
appreciation for the fund. The credit spread is the difference in yield
between a given bond and that of a U.S. Treasury bond of comparable
maturity. Second, the fund benefited from this year's bond market rally.
Q. WERE PREPAYMENTS A BIG CONCERN?
A. The commercial mortgage bonds I bought were often at a 10% to 20%
discount from par, so prepayments were generally good. In other words,
because the bonds would be paid off at par, the investor would receive the
difference between the bonds' discount price and their par value. However,
the creditworthiness of the collateral is more important. If the
creditworthiness of the collateral securing the bonds the fund owns
improves, their bond prices should go up and vice versa.
Q. WHAT WERE SOME SECURITIES THAT PERFORMED WELL?
A. The fund owned bonds secured by a group of mortgages originated by an
insurance company called The New England. The creditworthiness of these
bonds improved during the period and the fund enjoyed a substantial capital
gain. Additionally, some bonds issued by the former Resolution Trust Corp.
(RTC) - the U.S. government agency created to merge or close insolvent
savings and loan institutions - did well during the period.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. The fund's positions in liquidating trust bonds - pooled nonperforming
loans - underperformed when compared to other commercial mortgage
securities because they tend not to appreciate in bond market rallies like
we had in 1995. These bonds are issued close to par and are therefore
considered "defensive." I've used these bonds to keep down the fund's
duration - or the fund's price sensitivity to interest rates.
Q. ARE THERE ANY OTHER WAYS YOU MANAGED THE FUND'S INTEREST-RATE
SENSITIVITY?
A. Yes. I emphasize bonds with shorter maturities relative to the overall
market. In other words, if you compared my portfolio to a "market basket"
of high yield commercial mortgage-backed bonds, my duration was shorter
than that of the market.
Q. WHAT'S YOUR OUTLOOK?
A. I don't think fixed-income investors can expect the same amount of price
appreciation in 1996 as they enjoyed in 1995. For commercial mortgage
securities in particular, investors should keep in mind that this is an
immature market and that periods of volatility can occur at any time. That
said, however, I believe the high yield commercial mortgage-backed
securities market offers the potential to provide better returns than other
high yield debt markets in the coming year.
FUND FACTS
GOAL: to provide high current income by
investing primarily in commercial
mortgage-backed securities, with an emphasis
on lower-quality securities
START DATE: January 5, 1995
SIZE: as of November 30, 1995, more than
$72 million
MANAGER: Mark Snyderman, since
January 1995; joined Fidelity in May 1994
(checkmark)
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.
INVESTMENTS NOVEMBER 30, 1995
Showing Percentage of Total Value of Investment in Securities
CORPORATE BONDS - 2.6%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
CONVERTIBLE BONDS - 1.2%
CONSTRUCTION & REAL ESTATE - 1.2%
REAL ESTATE INVESTMENT TRUSTS - 1.2%
Haagen Alexander Properties, Inc.,
Series A, 0%, 1/1/03 - $ 1,000,000 $ 820,000
NONCONVERTIBLE BONDS - 1.4%
CONSTRUCTION & REAL ESTATE - 1.4%
CONSTRUCTION - 1.4%
WCI Communities LP 17%,
7/24/98 (e) - 1,000,000 1,000,000
TOTAL CORPORATE BONDS
(Cost $1,827,446) 1,820,000
COMMERCIAL MORTGAGE SECURITIES - 93.7%
ACP Mortgage LP commercial
floater Series E 7.6448%,
2/28/28 (b)(c) BB 2,806,912 2,173,602
American Southwest Financial
Securities commercial Series
1994-C2 Class B2, 14.1884%,
12/25/01 (b)(c) - 3,000,000 2,970,000
CBA Mortgage Corp. commercial
Series 1993-C1 Class E,
7.154%, 12/25/03 (b)(c) Ba2 3,000,000 2,626,875
CS First Boston Mortgage Securities
Corp. commercial Series:
1994-M1 Class E, 12.60%,
2/15/02 (b) - 1,000,000 998,750
1995-AEWI Class E,
9.187%, 11/25/97 (b)(c) - 2,500,000 2,207,813
1994-CFB1 Class E,
8.0145%, 1/25/28 (b)(c) Ba2 3,187,016 2,603,891
Kearny Street Mortgage
commercial floater Series 1995-1
Class F, 7.7899%,
2/20/30 (b)(c) B 2,080,000 1,492,401
Lennar U.S. Partners LP
commercial Series 1995-1
Class F, 11.70%, 5/15/05 (b) - 2,500,000 2,515,625
Meritor Mortgage Security Corp.
commercial Series 1987-1
Class B, 9.40%, 2/1/00 (b)(g) - 12,919,000 2,325,420
Merrill Lynch Mortgage
Investments, Inc. commercial Series:
1994-M1 Class E, 8.1706%,
6/25/22 (b)(c) Ba2 3,000,000 2,626,406
1995-C2 Class E, 8.15%,
6/15/21 (b) Ba3 3,492,295 3,173,623
Morgan Stanley Capital
commercial Series 1995-TNE
Class D2, 8.24%,
12/15/23 (b) Ba3 2,000,084 1,745,073
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
Nomura Asset Securities Corp.
commercial Series 1993-1
Class B3, 6.68%,
12/15/03 (b) B $ 3,000,000 $ 2,349,375
Oregon pass thru certificates
commercial Series 1995
Class 1-E, 9.9621%,
6/25/26 (b)(c) BB 3,000,000 2,668,125
Phoenix Real Estate Securities, Inc.
commercial Series 1993
Class D-1, 8 1/4%,
11/25/23 (b) Ba2 3,500,000 3,049,375
Resolution Trust Corp.:
commercial Series:
1991-M2 Class A1,
7.5056%, 9/25/20(c) Ba3 4,306,320 3,186,676
1994-C1 Class E, 8%,
6/25/26 BB 4,696,913 4,124,477
1994-C2 Class F, 8%,
4/25/25 BB 1,832,811 1,632,633
1994-C2 Class G, 8%,
4/25/25 B 4,608,158 3,882,373
1995-C1 Class F, 6.90%,
2/25/27 B1 2,947,027 2,568,978
Series 1994-C1 Class F, 8%,
6/25/26 B 5,849,884 4,909,332
SKW Real Estate
commercial Series Class F,
12.80%, 4/15/05 (b) - 2,310,750 2,339,634
Structured Asset Securities Corp.
commercial Series:
1992-M1 Class C,
7.05%, 11/25/02 B2 3,200,000 2,611,000
1995-C1 Class E, 7 3/8%,
9/25/24 (b) BB 3,500,000 2,641,406
Whitehall Partners commercial
Series 1995-C1 Class E, 8.01%,
7/20/25 (b) - 2,500,000 2,346,875
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $62,523,236) 65,769,738
COMPLEX MORTGAGE SECURITIES - 0.5%
INTEREST ONLY STRIPS - 0.5%
Mortgage Capital Funding, Inc.
commercial Series (c)(d):
1993-C1 Class 2, 1.4606%,
5/25/15 Aa2 2,593,993 16,861
1993-C1 Class 2, 3.6502%,
5/25/15 Aa2 22,968,829 344,532
TOTAL COMPLEX MORTGAGE SECURITIES
(Cost $448,010) 361,393
COMMON STOCKS - 1.2%
SHARES VALUE
(NOTE 1)
CONSTRUCTION & REAL ESTATE - 1.2%
REAL ESTATE - 1.2%
Trizec Ltd. (f) (Cost $895,584) 120,000 $ 859,823
CONVERTIBLE PREFERRED STOCKS - 0.6%
CONSTRUCTION & REAL ESTATE - 0.6%
REAL ESTATE - 0.6%
Catellus Development Corp., exchangeable,
Series B, $3.625 (b) (Cost $350,000) 10,000 382,500
REPURCHASE AGREEMENTS - 1.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.90%, dated
11/30/95 due 12/1/95 $ 976,160 976,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $67,020,276) $ 70,169,454
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 $43,236,769 or 59.7% 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.
5. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
WCI Communities LP term
loan 17%, 7/24/98 7/24/95 $ 987,446
6. Non-income producing
7. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
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 0.5% AAA, AA, A 0.0%
Baa 0.0% BBB 0.0%
Ba 27.1% BB 27.2%
B 7.4% B 18.0%
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 25.0%. FMR
has determined that unrated debt securities that are lower quality account
for 25.0% of the total value of investment in securities.
INCOME TAX INFORMATION
At November 30, 1995, the aggregate cost of investment securities for
income tax purposes was $67,020,276. Net unrealized appreciation aggregated
$3,149,178, of which $3,814,221 related to appreciated investment
securities and $665,043 related to depreciated investment securities.
REAL ESTATE HIGH INCOME
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $976,000) (cost $67,020,276) - See $ 70,169,454
accompanying schedule
Receivable for investments sold 1,782,730
Interest receivable 582,560
TOTAL ASSETS 72,534,744
LIABILITIES
Payable to custodian bank $ 11,690
Accrued management fee 44,227
Other payables and accrued expenses 49,826
TOTAL LIABILITIES 105,743
NET ASSETS $ 72,429,001
Net Assets consist of:
Paid in capital $ 68,082,358
Distributions in excess of net investment income (31,563
)
Accumulated undistributed net realized gain (loss) on investments 1,229,028
Net unrealized appreciation (depreciation) on investments 3,149,178
NET ASSETS, for 6,559,746 shares outstanding $ 72,429,001
NET ASSET VALUE, offering price and redemption price per share ($72,429,001 (divided by) 6,559,746 shares) $11.04
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 5, 1995
(COMMENCEMENT OF OPERATIONS)
TO NOVEMBER 30, 1995
INVESTMENT INCOME $ 54,375
Dividends
Interest 4,673,366
TOTAL INCOME 4,727,741
EXPENSES
Management fee $ 347,146
Transfer agent fees 69,351
Accounting fees and expenses 40,672
Non-interested trustees' compensation 131
Custodian fees and expenses 3,899
Registration fees 23,476
Audit 17,377
Miscellaneous 274
TOTAL EXPENSES 502,326
NET INVESTMENT INCOME 4,225,415
REALIZED AND UNREALIZED GAIN (LOSS) 1,654,410
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 3,149,178
NET GAIN (LOSS) 4,803,588
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 9,029,003
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
JANUARY 5, 1995
(COMMENCEMENT
OF
OPERATIONS) TO
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 4,225,415
Net investment income
Net realized gain (loss) 1,654,410
Change in net unrealized appreciation (depreciation) 3,149,178
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 9,029,003
Distributions to shareholders (4,225,415)
From net investment income
In excess of net investment income (454,831)
TOTAL DISTRIBUTIONS (4,680,246)
Share transactions 64,899,998
Net proceeds from sales of shares
Reinvestment of distributions 4,680,246
Cost of shares redeemed (1,500,000)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 68,080,244
TOTAL INCREASE (DECREASE) IN NET ASSETS 72,429,001
NET ASSETS
Beginning of period -
End of period (including distributions in excess of net investment income of $31,563) $ 72,429,001
OTHER INFORMATION
Shares
Sold 6,269,408
Issued in reinvestment of distributions 434,154
Redeemed (143,816)
Net increase (decrease) 6,559,746
</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
NOVEMBER 30, 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations .922
Net investment income
Net realized and unrealized gain (loss) 1.045
Total from investment operations 1.967
Less Distributions (.837)
From net investment income
In excess of net investment income (.090)
TOTAL DISTRIBUTIONS (.927)
Net asset value, end of period $ 11.040
TOTAL RETURN B 20.33%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 72,429
Ratio of expenses to average net assets 1.09% A
Ratio of net investment income to average net assets 9.14% A
Portfolio turnover rate 49% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1995
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 quotations are not readily available through the pricing service 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. 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. 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, which may result in distribution
reclassifications, are primarily due to differing treatments for paydown
gains/losses on certain securities.
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). Distributions in excess of net investment
income and accumulated undistributed 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, 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 U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. 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.
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,
restricted securities (excluding 144A issues) amounted to $1,000,000 or
1.4% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $85,037,170 and $20,647,304, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, 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. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. 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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
The Board of Trustees has approved a new group fee rate schedule with rates
ranging from .1100% to .3700%. Effective January 1, 1996, FMR voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, is the fund's transfer, dividend disbursing
and shareholder servicing agent. 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. For the period, the transfer agent fees
were equivalent to an annualized rate of .15% of average net assets
ACCOUNTING FEES. Fidelity Service Co. (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.
5. BENEFICIAL INTEREST.
At the end of the period, one shareholder was record owner of the total
outstanding shares of the fund.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series IV and the Shareholder of
Fidelity Real Estate High Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series IV: Fidelity Real Estate High Income Fund,
including the schedule of portfolio investments, as of November 30, 1995,
and the related statement of operations, the statement of changes in net
assets and the financial highlights for the period January 5, 1995
(commencement of operations) to November 30, 1995. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1995 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series IV: Fidelity Real Estate High Income Fund as of
November 30, 1995, the results of its operations, the changes in its net
assets, and the financial highlights for the period January 5, 1995
(commencement of operations) to November 30, 1995, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 22, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Real Estate High Income Fund voted to pay
to shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales of
portfolio securities :
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS
12/26/95 12/22/95 - $.17
1/8/96 1/5/96 - $.01
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Robert A. Lawrence, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Kenneth A. Rathgeber, TREASURER
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER SERVICING AGENT
Fidelity Investments Institutional Operations Company
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
* INDEPENDENT TRUSTEES
