(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(REGISTERED TRADEMARK)
INTERMEDIATE BOND
FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
ANNUAL REPORT
NOVEMBER 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 21 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 24 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 25 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 33 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 42 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 50 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 51
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:
Although financial turmoil in Pacific Basin countries was a catalyst
for significant volatility in U.S. markets in late October and into
November, the Standard & Poor's 500 Index has risen more than 31%
year-to-date, almost three times its historical annual average.
Meanwhile, bond markets - primarily influenced by a relatively steady
flow of positive news on the inflation front - continued to post solid
returns through the first 11 months of 1997.
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.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek 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 INTERMEDIATE BOND 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). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class A shares
took place on September 3, 1996. Class A shares bear a 0.15% 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 0.25%
12b-1 fee. Returns prior to September 10, 1992 are those of the
Institutional Class, the original class of the fund which does not
bear a 12b-1 fee. Had Class A's 12b-1 fee been reflected, returns
prior to September 10, 1992 would have been lower. Effective August 1,
1997, the maximum 3.25% sales charge on Class A shares was increased
to 3.75%. If Fidelity had not reimbursed certain class expenses, the
total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND - CLASS A 5.81% 35.77% 117.76%
ADVISOR INTERMEDIATE BOND - CLASS A 1.84% 30.67% 109.60%
(INCL. MAX. 3.75% SALES CHARGE)
LEHMAN BROTHERS INTERMEDIATE 6.33% 38.84% 123.31%
GOVERNMENT/CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT FUNDS AVERAGE 6.57% 39.47% 124.91%
SHORT-INTERMEDIATE INVESTMENT GRADE 5.51% 30.68% 97.81%
DEBT FUNDS AVERAGE
</TABLE>
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, 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 those of the Lehman
Brothers Intermediate Government/Corporate Bond Index - a market value
weighted performance benchmark for government and corporate fixed-rate
debt issues with maturities between one and 10 years. You can also
compare the fund's performance to averages calculated by Lipper
Analytical Services, Inc. The fund formerly was included in Lipper's
intermediate investment grade debt funds category (which included 195
funds for the past one year), but will be included in the
short-intermediate investment grade debt funds category (107 funds) in
the future. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND - CLASS A 5.81% 6.31% 8.09%
ADVISOR INTERMEDIATE BOND - CLASS A 1.84% 5.50% 7.68%
(INCL. MAX. 3.75% SALES CHARGE)
LEHMAN BROTHERS INTERMEDIATE 6.33% 6.78% 8.37%
GOVERNMENT/CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT FUNDS AVERAGE 6.57% 6.86% 8.42%
SHORT-INTERMEDIATE INVESTMENT GRADE 5.51% 5.49% 7.04%
DEBT FUNDS AVERAGE
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
IMAHDR PRASUN SHR__CHT 19971130 19971211 155754 S00000000000001
FA Intermed Bond -CL A LB Intermediate Govt/Corp
00261 LB007
1987/11/30 9625.00 10000.00
1987/12/31 9720.78 10105.06
1988/01/31 10015.93 10363.63
1988/02/29 10165.88 10478.96
1988/03/31 10087.00 10438.68
1988/04/30 10065.68 10421.30
1988/05/31 10006.66 10375.22
1988/06/30 10191.83 10540.58
1988/07/31 10181.17 10518.19
1988/08/31 10209.99 10533.99
1988/09/30 10398.55 10716.73
1988/10/31 10537.91 10862.34
1988/11/30 10472.84 10769.66
1988/12/31 10482.47 10779.14
1989/01/31 10596.52 10892.36
1989/02/28 10571.43 10847.33
1989/03/31 10613.20 10894.20
1989/04/30 10791.73 11111.96
1989/05/31 10994.69 11332.61
1989/06/30 11262.57 11618.31
1989/07/31 11500.84 11856.86
1989/08/31 11345.51 11703.62
1989/09/30 11399.07 11758.91
1989/10/31 11636.92 12007.48
1989/11/30 11732.63 12122.28
1989/12/31 11751.98 12155.46
1990/01/31 11635.09 12077.52
1990/02/28 11673.36 12121.49
1990/03/31 11657.03 12137.29
1990/04/30 11581.67 12095.16
1990/05/31 11856.75 11939.81
1990/06/30 12015.28 12526.46
1990/07/31 12175.69 12700.25
1990/08/31 12074.05 12648.11
1990/09/30 12163.30 12745.80
1990/10/31 12277.93 12893.78
1990/11/30 12490.46 12636.79
1990/12/31 12681.84 13268.47
1991/01/31 12776.12 13403.02
1991/02/28 12878.58 13510.19
1991/03/31 12960.17 13602.09
1991/04/30 13104.73 13750.33
1991/05/31 13174.63 13834.85
1991/06/30 13178.60 13844.59
1991/07/31 13326.81 13998.89
1991/08/31 13606.60 14266.15
1991/09/30 13859.32 14511.56
1991/10/31 14023.32 14677.18
1991/11/30 14157.49 14845.70
1991/12/31 14604.11 15208.28
1992/01/31 14417.24 15070.57
1992/02/29 14454.63 15130.08
1992/03/31 14402.61 15070.57
1992/04/30 14483.54 15203.01
1992/05/31 14748.23 15438.68
1992/06/30 14956.20 15667.23
1992/07/31 15308.21 15978.72
1992/08/31 15449.75 16138.55
1992/09/30 15629.48 16357.63
1992/10/31 15398.81 16145.40
1992/11/30 15438.12 16084.05
1992/12/31 15644.98 16299.44
1993/01/31 15956.81 16616.46
1993/02/28 16275.19 16878.46
1993/03/31 16382.09 16945.60
1993/04/30 16482.68 17081.99
1993/05/31 16494.26 17044.08
1993/06/30 16821.27 17311.60
1993/07/31 16951.56 17353.99
1993/08/31 17324.45 17629.15
1993/09/30 17374.07 17702.35
1993/10/31 17467.62 17749.75
1993/11/30 17367.60 17650.75
1993/12/31 17443.10 17731.58
1994/01/31 17627.31 17928.54
1994/02/28 17286.62 17663.38
1994/03/31 16951.77 17371.90
1994/04/30 16884.37 17253.67
1994/05/31 16826.11 17265.26
1994/06/30 16821.44 17267.63
1994/07/31 16981.07 17516.19
1994/08/31 16979.06 17570.96
1994/09/30 16894.78 17409.29
1994/10/31 16895.81 17406.92
1994/11/30 16944.25 17327.93
1994/12/31 17012.86 17389.28
1995/01/31 17197.79 17682.34
1995/02/28 17410.41 18049.13
1995/03/31 17499.38 18152.35
1995/04/30 17671.90 18376.43
1995/05/31 18103.58 18932.01
1995/06/30 18210.69 19058.93
1995/07/31 18200.95 19061.56
1995/08/31 18347.03 19235.08
1995/09/30 18476.21 19374.37
1995/10/31 18661.66 19590.29
1995/11/30 18880.46 19847.81
1995/12/31 19087.36 20055.82
1996/01/31 19245.12 20228.82
1996/02/29 19007.36 19991.31
1996/03/31 18933.74 19888.36
1996/04/30 18838.06 19818.05
1996/05/31 18815.06 19803.04
1996/06/30 18987.35 20013.43
1996/07/31 19037.11 20072.94
1996/08/31 19069.02 20088.74
1996/09/30 19277.78 20368.63
1996/10/31 19582.77 20728.58
1996/11/30 19808.67 21001.90
1996/12/31 19701.01 20867.34
1997/01/31 19784.34 20948.44
1997/02/28 19803.00 20988.47
1997/03/31 19679.75 20843.65
1997/04/30 19896.89 21088.52
1997/05/31 20021.56 21263.63
1997/06/30 20219.79 21457.69
1997/07/31 20590.56 21894.25
1997/08/31 20512.06 21784.19
1997/09/30 20724.00 22037.50
1997/10/31 20920.84 22281.58
1997/11/28 20959.68 22330.82
IMATRL PRASUN SHR__CHT 19971130 19971211 155758 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Bond Fund - Class A on
November 30, 1987, and the current maximum 3.75% sales charge was
paid. As the chart shows, by November 30, 1997, the value of the
investment would have grown to $20,960 - a 109.60% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Intermediate Government/Corporate Bond Index did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $22,331 - a 123.31% 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
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
DIVIDEND RETURN 6.09% 6.44% 6.56% 5.46% 7.80%
CAPITAL APPRECIATION RETURN -0.28% -1.58% 4.87% -7.90% 4.70%
TOTAL RETURN 5.81% 4.86% 11.43% -2.44% 12.50%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. A dividend return reflects the actual dividends
paid by the class. A capital appreciation return reflects both the
amount paid by the class to shareholders as capital gain distributions
and changes in the class' share price. Both returns assume the
dividends or capital gains paid by the class are reinvested, if any,
and exclude the effect of sales charges.
DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.97(CENTS) 30.17(CENTS) 62.22(CENTS)
ANNUALIZED DIVIDEND RATE 5.72% 5.73% 5.95%
30-DAY ANNUALIZED YIELD 5.19% - -
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average net asset value of $10.57 over the past
one month, $10.51 over the past six months and $10.46 over the past
one year, you can compare the class' income over these three periods.
The 30-day annualized YIELD is a standard formula for all funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you to compare
funds from different companies on an equal basis. The offering share
price used in the calculation of the yield includes the effect of
Class A's maximum 3.75% sales charge. If Fidelity had not reimbursed
certain class expenses, the yield would have been 3.67%.
ADVISOR INTERMEDIATE BOND 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). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class T shares
took place on September 10, 1992. Class T shares bear a 0.25% 12b-1
fee 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 which does not bear a 12b-1 fee. 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 year and past 10 year total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND - CLASS T 5.56% 35.68% 117.63%
ADVISOR INTERMEDIATE BOND - CLASS T 2.65% 31.95% 111.65%
(INCL. MAX. 2.75% SALES CHARGE)
LEHMAN BROTHERS INTERMEDIATE 6.33% 38.84% 123.31%
GOVERNMENT/CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT 6.57% 39.47% 124.91%
FUNDS AVERAGE
SHORT-INTERMEDIATE INVESTMENT GRADE 5.51% 30.68% 97.81%
DEBT FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, 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 T's returns to those of the Lehman
Brothers Intermediate Government/Corporate Bond Index - a market value
weighted performance benchmark for government and corporate fixed-rate
debt issues with maturities between one and 10 years. You can also
compare the fund's performance to averages calculated by Lipper
Analytical Services, Inc. The fund formerly was included in Lipper's
intermediate investment grade debt funds category (which included 195
funds for the past one year), but will be included in the
short-intermediate investment grade debt funds category (107 funds) in
the future. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND - CLASS T 5.56% 6.29% 8.09%
ADVISOR INTERMEDIATE BOND - CLASS T 2.65% 5.70% 7.79%
(INCL. MAX. 2.75% SALES CHARGE)
LEHMAN BROTHERS INTERMEDIATE 6.33% 6.78% 8.37%
GOVERNMENT/CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT 6.57% 6.86% 8.42%
FUNDS AVERAGE
SHORT-INTERMEDIATE INVESTMENT GRADE 5.51% 5.49% 7.04%
DEBT FUNDS AVERAGE
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
IMAHDR PRASUN SHR__CHT 19971130 19971211 164810 S00000000000001
FA Intermed Bond -CL T LB Intermediate Govt/Corp
00287 LB007
1987/11/30 9725.00 10000.00
1987/12/31 9821.78 10105.06
1988/01/31 10119.99 10363.63
1988/02/29 10271.50 10478.96
1988/03/31 10191.80 10438.68
1988/04/30 10170.26 10421.30
1988/05/31 10110.63 10375.22
1988/06/30 10297.72 10540.58
1988/07/31 10286.95 10518.19
1988/08/31 10316.06 10533.99
1988/09/30 10506.59 10716.73
1988/10/31 10647.39 10862.34
1988/11/30 10581.65 10769.66
1988/12/31 10591.38 10779.14
1989/01/31 10706.62 10892.36
1989/02/28 10681.26 10847.33
1989/03/31 10723.47 10894.20
1989/04/30 10903.85 11111.96
1989/05/31 11108.92 11332.61
1989/06/30 11379.58 11618.31
1989/07/31 11620.33 11856.86
1989/08/31 11463.39 11703.62
1989/09/30 11517.51 11758.91
1989/10/31 11757.82 12007.48
1989/11/30 11854.53 12122.28
1989/12/31 11874.07 12155.46
1990/01/31 11755.97 12077.52
1990/02/28 11794.64 12121.49
1990/03/31 11778.15 12137.29
1990/04/30 11702.00 12095.16
1990/05/31 11979.94 11939.81
1990/06/30 12140.11 12526.46
1990/07/31 12302.19 12700.25
1990/08/31 12199.49 12648.11
1990/09/30 12289.67 12745.80
1990/10/31 12405.49 12893.78
1990/11/30 12620.23 12636.79
1990/12/31 12813.60 13268.47
1991/01/31 12908.86 13403.02
1991/02/28 13012.39 13510.19
1991/03/31 13094.83 13602.09
1991/04/30 13240.88 13750.33
1991/05/31 13311.51 13834.85
1991/06/30 13315.52 13844.59
1991/07/31 13465.27 13998.89
1991/08/31 13747.96 14266.15
1991/09/30 14003.31 14511.56
1991/10/31 14169.01 14677.18
1991/11/30 14304.58 14845.70
1991/12/31 14755.84 15208.28
1992/01/31 14567.02 15070.57
1992/02/29 14604.81 15130.08
1992/03/31 14552.24 15070.57
1992/04/30 14634.02 15203.01
1992/05/31 14901.46 15438.68
1992/06/30 15111.58 15667.23
1992/07/31 15467.26 15978.72
1992/08/31 15610.27 16138.55
1992/09/30 15791.86 16357.63
1992/10/31 15558.80 16145.40
1992/11/30 15598.51 16084.05
1992/12/31 15807.52 16299.44
1993/01/31 16122.59 16616.46
1993/02/28 16444.28 16878.46
1993/03/31 16552.29 16945.60
1993/04/30 16653.93 17081.99
1993/05/31 16665.63 17044.08
1993/06/30 16996.04 17311.60
1993/07/31 17127.68 17353.99
1993/08/31 17504.45 17629.15
1993/09/30 17554.58 17702.35
1993/10/31 17649.10 17749.75
1993/11/30 17548.04 17650.75
1993/12/31 17624.32 17731.58
1994/01/31 17810.45 17928.54
1994/02/28 17466.22 17663.38
1994/03/31 17127.89 17371.90
1994/04/30 17059.79 17253.67
1994/05/31 17000.92 17265.26
1994/06/30 16996.21 17267.63
1994/07/31 17157.50 17516.19
1994/08/31 17155.46 17570.96
1994/09/30 17070.31 17409.29
1994/10/31 17071.35 17406.92
1994/11/30 17120.29 17327.93
1994/12/31 17189.62 17389.28
1995/01/31 17376.46 17682.34
1995/02/28 17591.30 18049.13
1995/03/31 17681.19 18152.35
1995/04/30 17855.50 18376.43
1995/05/31 18291.66 18932.01
1995/06/30 18399.89 19058.93
1995/07/31 18390.05 19061.56
1995/08/31 18537.65 19235.08
1995/09/30 18668.17 19374.37
1995/10/31 18855.55 19590.29
1995/11/30 19076.62 19847.81
1995/12/31 19285.68 20055.82
1996/01/31 19445.07 20228.82
1996/02/29 19204.84 19991.31
1996/03/31 19130.46 19888.36
1996/04/30 19033.78 19818.05
1996/05/31 19010.54 19803.04
1996/06/30 19184.63 20013.43
1996/07/31 19234.90 20072.94
1996/08/31 19267.14 20088.74
1996/09/30 19497.03 20368.63
1996/10/31 19804.08 20728.58
1996/11/30 20050.27 21001.90
1996/12/31 19943.11 20867.34
1997/01/31 20007.26 20948.44
1997/02/28 20024.15 20988.47
1997/03/31 19899.32 20843.65
1997/04/30 20117.59 21088.52
1997/05/31 20242.77 21263.63
1997/06/30 20422.17 21457.69
1997/07/31 20815.77 21894.25
1997/08/31 20716.06 21784.19
1997/09/30 20948.64 22037.50
1997/10/31 21146.20 22281.58
1997/11/28 21164.62 22330.82
IMATRL PRASUN SHR__CHT 19971130 19971211 164814 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Bond Fund - Class T on
November 30, 1987, and the current maximum 2.75% sales charge was
paid. As the chart shows, by November 30, 1997, the value of the
investment would have grown to $21,165 - a 111.65% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Intermediate Government/Corporate Bond Index did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $22,331 - a 123.31% 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
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
DIVIDEND RETURN 6.03% 6.49% 6.56% 5.46% 7.80%
CAPITAL APPRECIATION RETURN -0.47% -1.39% 4.87% -7.90% 4.70%
TOTAL RETURN 5.56% 5.10% 11.43% -2.44% 12.50%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. A dividend return reflects the actual dividends
paid by the class. A capital appreciation return reflects both the
amount paid by the class to shareholders as capital gain distributions
and changes in the class' share price. Both returns assume the
dividends or capital gains paid by the class are reinvested, if any,
and exclude the effect of sales charges.
DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.92(CENTS) 29.88(CENTS) 61.74(CENTS)
ANNUALIZED DIVIDEND RATE 5.66% 5.67% 5.90%
30-DAY ANNUALIZED YIELD 5.20% - -
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average net asset value of $10.57 over the past
one month, $10.52 over the past six months and $10.47 over the past
one year, you can compare the class' income over these three periods.
The 30-day annualized YIELD is a standard formula for all funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you to compare
funds from different companies on an equal basis. The offering share
price used in the calculation of the yield includes the effect of
Class T's maximum 2.75% sales charge.
ADVISOR INTERMEDIATE BOND 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). You can also look at the class' income, as reflected in its
yield, to measure performance.
The initial offering of Class B shares took place on June 30, 1994.
Class B shares bear a 0.90% 12b-1/shareholder service fee (1.00% prior
to January 1, 1996) 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
0.25% 12b-1 fee. Returns prior to September 10, 1992 are those of the
Institutional Class, the original class of the fund which does not
bear a 12b-1 fee. Had Class B's 12b-1 fee been reflected, returns
prior to June 30, 1994 would have been lower. Class B's contingent
deferred sales charge included in the past one year, past five years
and past 10 years total return figures are 3%, 0% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND - CLASS B 4.83% 32.13% 111.93%
ADVISOR INTERMEDIATE BOND - CLASS B 1.85% 32.13% 111.93%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/ 6.33% 38.84% 123.31%
CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT 6.57% 39.47% 124.91%
FUNDS AVERAGE
SHORT-INTERMEDIATE INVESTMENT GRADE 5.51% 30.68% 97.81%
DEBT FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, 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 those of the Lehman
Brothers Intermediate Government/Corporate Bond Index - a market value
weighted performance benchmark for government and corporate fixed-rate
debt issues with maturities between one and 10 years. You can also
compare the fund's performance to averages calculated by Lipper
Analytical Services, Inc. The fund formerly was included in Lipper's
intermediate investment grade debt funds category (which included 195
funds for the past one year), but will be included in the
short-intermediate investment grade debt funds category (107 funds) in
the future. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND - CLASS B 4.83% 5.73% 7.80%
ADVISOR INTERMEDIATE BOND - CLASS B 1.85% 5.73% 7.80%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/ 6.33% 6.78% 8.37%
CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT 6.57% 6.86% 8.42%
FUNDS AVERAGE
SHORT-INTERMEDIATE INVESTMENT GRADE 5.51% 5.49% 7.04%
DEBT FUNDS AVERAGE
AVERAGE ANNUAL TOTAL RETURNS take Class B's cumulative return and show
you what would have happened if Class B had performed at a constant
rate each year.
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19971130 19971211 155825 S00000000000001
FA Intermed Bond -CL B LB Intermediate Govt/Corp
00687 LB007
1987/11/30 10000.00 10000.00
1987/12/31 10099.51 10105.06
1988/01/31 10406.16 10363.63
1988/02/29 10561.96 10478.96
1988/03/31 10480.00 10438.68
1988/04/30 10457.85 10421.30
1988/05/31 10396.53 10375.22
1988/06/30 10588.92 10540.58
1988/07/31 10577.84 10518.19
1988/08/31 10607.78 10533.99
1988/09/30 10803.69 10716.73
1988/10/31 10948.48 10862.34
1988/11/30 10880.87 10769.66
1988/12/31 10890.88 10779.14
1989/01/31 11009.38 10892.36
1989/02/28 10983.30 10847.33
1989/03/31 11026.71 10894.20
1989/04/30 11212.19 11111.96
1989/05/31 11423.05 11332.61
1989/06/30 11701.37 11618.31
1989/07/31 11948.92 11856.86
1989/08/31 11787.55 11703.62
1989/09/30 11843.19 11758.91
1989/10/31 12090.30 12007.48
1989/11/30 12189.75 12122.28
1989/12/31 12209.84 12155.46
1990/01/31 12088.41 12077.52
1990/02/28 12128.17 12121.49
1990/03/31 12111.21 12137.29
1990/04/30 12032.91 12095.16
1990/05/31 12318.70 11939.81
1990/06/30 12483.40 12526.46
1990/07/31 12650.07 12700.25
1990/08/31 12544.47 12648.11
1990/09/30 12637.20 12745.80
1990/10/31 12756.29 12893.78
1990/11/30 12977.10 12636.79
1990/12/31 13175.94 13268.47
1991/01/31 13273.89 13403.02
1991/02/28 13380.35 13510.19
1991/03/31 13465.12 13602.09
1991/04/30 13615.30 13750.33
1991/05/31 13687.93 13834.85
1991/06/30 13692.05 13844.59
1991/07/31 13846.04 13998.89
1991/08/31 14136.72 14266.15
1991/09/30 14399.30 14511.56
1991/10/31 14569.68 14677.18
1991/11/30 14709.08 14845.70
1991/12/31 15173.10 15208.28
1992/01/31 14978.95 15070.57
1992/02/29 15017.80 15130.08
1992/03/31 14963.75 15070.57
1992/04/30 15047.83 15203.01
1992/05/31 15322.84 15438.68
1992/06/30 15538.90 15667.23
1992/07/31 15904.64 15978.72
1992/08/31 16051.69 16138.55
1992/09/30 16238.42 16357.63
1992/10/31 15998.76 16145.40
1992/11/30 16039.60 16084.05
1992/12/31 16254.52 16299.44
1993/01/31 16578.50 16616.46
1993/02/28 16909.29 16878.46
1993/03/31 17020.35 16945.60
1993/04/30 17124.86 17081.99
1993/05/31 17136.89 17044.08
1993/06/30 17476.65 17311.60
1993/07/31 17612.01 17353.99
1993/08/31 17999.43 17629.15
1993/09/30 18050.99 17702.35
1993/10/31 18148.17 17749.75
1993/11/30 18044.26 17650.75
1993/12/31 18122.70 17731.58
1994/01/31 18314.09 17928.54
1994/02/28 17960.12 17663.38
1994/03/31 17612.23 17371.90
1994/04/30 17542.20 17253.67
1994/05/31 17481.67 17265.26
1994/06/30 17476.82 17267.63
1994/07/31 17623.68 17516.19
1994/08/31 17608.67 17570.96
1994/09/30 17509.24 17409.29
1994/10/31 17480.77 17406.92
1994/11/30 17519.35 17327.93
1994/12/31 17560.59 17389.28
1995/01/31 17740.01 17682.34
1995/02/28 17949.48 18049.13
1995/03/31 18046.63 18152.35
1995/04/30 18195.93 18376.43
1995/05/31 18646.85 18932.01
1995/06/30 18763.00 19058.93
1995/07/31 18724.47 19061.56
1995/08/31 18864.49 19235.08
1995/09/30 18987.28 19374.37
1995/10/31 19167.41 19590.29
1995/11/30 19379.92 19847.81
1995/12/31 19581.95 20055.82
1996/01/31 19716.12 20228.82
1996/02/29 19481.01 19991.31
1996/03/31 19376.09 19888.36
1996/04/30 19285.07 19818.05
1996/05/31 19230.91 19803.04
1996/06/30 19415.51 20013.43
1996/07/31 19435.99 20072.94
1996/08/31 19456.90 20088.74
1996/09/30 19678.94 20368.63
1996/10/31 19997.61 20728.58
1996/11/30 20216.41 21001.90
1996/12/31 20096.57 20867.34
1997/01/31 20169.83 20948.44
1997/02/28 20175.64 20988.47
1997/03/31 20036.10 20843.65
1997/04/30 20225.06 21088.52
1997/05/31 20358.51 21263.63
1997/06/30 20527.70 21457.69
1997/07/31 20891.30 21894.25
1997/08/31 20798.47 21784.19
1997/09/30 21000.78 22037.50
1997/10/31 21187.11 22281.58
1997/11/28 21193.48 22330.82
IMATRL PRASUN SHR__CHT 19971130 19971211 155827 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Bond Fund - Class B on
November 30, 1987. As the chart shows, by November 30, 1997 the value
of the investment would have been $21,193 - a 111.93% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Intermediate Government/Corporate Bond Index did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $22,331 - a 123.31% 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
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
DIVIDEND RETURN 5.30% 5.81% 5.74% 5.08% 7.80%
CAPITAL APPRECIATION RETURN -0.47% -1.49% 4.88% -7.99 4.70%
%
TOTAL RETURN 4.83% 4.32% 10.62% -2.91 12.50%
%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. A dividend return reflects the actual dividends
paid by the class. A capital appreciation return reflects both the
amount paid by the class to shareholders as capital gain distributions
and changes in the class' share price. Both returns assume the
dividends or capital gains paid by the class are reinvested, if any,
and exclude the effect of sales charges.
DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.32(CENTS) 26.24(CENTS) 54.43(CENTS)
ANNUALIZED DIVIDEND RATE 4.98% 4.98% 5.20%
30-DAY ANNUALIZED YIELD 4.65% - -
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average net asset value of $10.55 over the past
one month, $10.50 over the past six months and $10.46 over the past
one year you can compare the class' income over these three periods.
The 30-day annualized YIELD is a standard formula for all funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The offering share price
used in the calculation of the yield excludes the effect of Class B's
contingent deferred sales charge. If Fidelity had not reimbursed
certain class expenses, the yield would have been 4.56%.
ADVISOR INTERMEDIATE BOND FUND - CLASS C
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). You can also look at the class' income, as reflected in its
yield, to measure performance.
The initial offering of Class C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1/shareholder service fee that is
reflected in returns after November 3, 1997. Returns between June 30,
1994 and November 3, 1997 are those of Class B and reflect Class B's
0.90% 12b-1 fee/shareholder service fee (1.00% prior to January 1,
1996). Returns between September 10, 1992 (the date Class T shares
were first offered) and June 30, 1994 are those of Class T shares and
reflect Class T shares' 0.25% 12b-1 fee. Returns prior to September
10, 1992 are those of the Institutional Class, the original class of
the fund which does not bear a 12b-1 fee. Had Class C shares' 12b-1
fee been reflected, returns prior to November 3, 1997 would have been
lower. Class C's contingent deferred sales charge included in the past
one year is 1%. If Fidelity had not reimbursed certain class expenses,
the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND - CLASS C 4.82% 32.19% 112.02%
ADVISOR INTERMEDIATE BOND - CLASS C 3.82% 32.19% 112.02%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/ 6.33% 38.84% 123.31%
CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT 6.57% 39.47% 124.91%
FUNDS AVERAGE
SHORT-INTERMEDIATE INVESTMENT GRADE 5.51% 30.68% 97.81%
DEBT FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, 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 C's returns to those of the Lehman
Brothers Intermediate Government/Corporate Bond Index - a market value
weighted performance benchmark for government and corporate fixed-rate
debt issues with maturities between one and 10 years. You can also
compare the fund's performance to averages calculated by Lipper
Analytical Services, Inc. The fund formerly was included in Lipper's
intermediate investment grade debt funds category (which included 195
funds for the past one year), but will be included in the
short-intermediate investment grade debt funds category (107 funds) in
the future. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND - CLASS C 4.82% 5.74% 7.80%
ADVISOR INTERMEDIATE BOND - CLASS C 3.82% 5.74% 7.80%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/ 6.33% 6.78% 8.37%
CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT 6.57% 6.86% 8.42%
FUNDS AVERAGE
SHORT-INTERMEDIATE INVESTMENT GRADE 5.51% 5.49% 7.04%
DEBT FUNDS AVERAGE
AVERAGE ANNUAL TOTAL RETURNS take Class C's cumulative return and show
you what would have happened if Class C had performed at a constant
rate each year.
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19971130 19980120 080306 S00000000000001
FA Intermed Bond -CL C LB Intermediate Govt/Corp
00524 LB007
1987/11/30 10000.00 10000.00
1987/12/31 10099.50 10105.06
1988/01/31 10406.16 10363.63
1988/02/29 10561.95 10478.96
1988/03/31 10479.99 10438.68
1988/04/30 10457.84 10421.30
1988/05/31 10396.52 10375.22
1988/06/30 10588.90 10540.58
1988/07/31 10577.84 10518.19
1988/08/31 10607.77 10533.99
1988/09/30 10803.68 10716.73
1988/10/31 10948.46 10862.34
1988/11/30 10880.87 10769.66
1988/12/31 10890.88 10779.14
1989/01/31 11009.37 10892.36
1989/02/28 10983.30 10847.33
1989/03/31 11026.70 10894.20
1989/04/30 11212.18 11111.96
1989/05/31 11423.03 11332.61
1989/06/30 11701.36 11618.31
1989/07/31 11948.91 11856.86
1989/08/31 11787.54 11703.62
1989/09/30 11843.18 11758.91
1989/10/31 12090.29 12007.48
1989/11/30 12189.74 12122.28
1989/12/31 12209.85 12155.46
1990/01/31 12088.39 12077.52
1990/02/28 12128.15 12121.49
1990/03/31 12111.20 12137.29
1990/04/30 12032.91 12095.16
1990/05/31 12318.69 11939.81
1990/06/30 12483.39 12526.46
1990/07/31 12650.06 12700.25
1990/08/31 12544.45 12648.11
1990/09/30 12637.20 12745.80
1990/10/31 12756.29 12893.78
1990/11/30 12977.09 12636.79
1990/12/31 13175.94 13268.47
1991/01/31 13273.88 13403.02
1991/02/28 13380.33 13510.19
1991/03/31 13465.11 13602.09
1991/04/30 13615.29 13750.33
1991/05/31 13687.92 13834.85
1991/06/30 13692.05 13844.59
1991/07/31 13846.04 13998.89
1991/08/31 14136.70 14266.15
1991/09/30 14399.28 14511.56
1991/10/31 14569.68 14677.18
1991/11/30 14709.06 14845.70
1991/12/31 15173.09 15208.28
1992/01/31 14978.22 15070.57
1992/02/29 15017.72 15130.08
1992/03/31 14963.47 15070.57
1992/04/30 15048.89 15203.01
1992/05/31 15324.73 15438.68
1992/06/30 15542.05 15667.23
1992/07/31 15908.96 15978.72
1992/08/31 16055.26 16138.55
1992/09/30 16238.80 16357.63
1992/10/31 15998.50 16145.40
1992/11/30 16039.49 16084.05
1992/12/31 16254.93 16299.44
1993/01/31 16580.13 16616.46
1993/02/28 16912.06 16878.46
1993/03/31 17023.25 16945.60
1993/04/30 17127.78 17081.99
1993/05/31 17139.72 17044.08
1993/06/30 17480.50 17311.60
1993/07/31 17616.30 17353.99
1993/08/31 18004.93 17629.15
1993/09/30 18056.25 17702.35
1993/10/31 18153.38 17749.75
1993/11/30 18049.39 17650.75
1993/12/31 18127.91 17731.58
1994/01/31 18319.85 17928.54
1994/02/28 17965.13 17663.38
1994/03/31 17616.44 17371.90
1994/04/30 17546.43 17253.67
1994/05/31 17485.86 17265.26
1994/06/30 17480.76 17267.63
1994/07/31 17627.96 17516.19
1994/08/31 17613.10 17570.96
1994/09/30 17513.53 17409.29
1994/10/31 17485.00 17406.92
1994/11/30 17523.80 17327.93
1994/12/31 17565.03 17389.28
1995/01/31 17744.97 17682.34
1995/02/28 17954.95 18049.13
1995/03/31 18052.31 18152.35
1995/04/30 18201.80 18376.43
1995/05/31 18653.68 18932.01
1995/06/30 18769.89 19058.93
1995/07/31 18731.13 19061.56
1995/08/31 18871.86 19235.08
1995/09/30 18994.89 19374.37
1995/10/31 19175.41 19590.29
1995/11/30 19388.53 19847.81
1995/12/31 19591.22 20055.82
1996/01/31 19725.94 20228.82
1996/02/29 19489.89 19991.31
1996/03/31 19384.81 19888.36
1996/04/30 19293.64 19818.05
1996/05/31 19239.24 19803.04
1996/06/30 19424.68 20013.43
1996/07/31 19445.61 20072.94
1996/08/31 19465.84 20088.74
1996/09/30 19688.50 20368.63
1996/10/31 20008.04 20728.58
1996/11/30 20227.40 21001.90
1996/12/31 20107.29 20867.34
1997/01/31 20181.08 20948.44
1997/02/28 20186.54 20988.47
1997/03/31 20046.52 20843.65
1997/04/30 20236.27 21088.52
1997/05/31 20370.13 21263.63
1997/06/30 20539.56 21457.69
1997/07/31 20904.04 21894.25
1997/08/31 20811.24 21784.19
1997/09/30 21014.01 22037.50
1997/10/31 21200.88 22281.58
1997/11/28 21201.86 22330.82
IMATRL PRASUN SHR__CHT 19971130 19980120 080309 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Bond Fund - Class C on
November 30, 1987. As the chart shows, by November 30, 1997 the value
of the investment would have been $21,202 - a 112.02% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Intermediate Government/Corporate Bond Index did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $22,331 - a 123.31% 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
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
DIVIDEND RETURN 5.28% 5.81% 5.74% 5.08% 7.80%
CAPITAL APPRECIATION -0.46% -1.49% 4.88% -7.99 4.70%
RETURN %
TOTAL RETURN 4.82% 4.32% 10.62% -2.91 12.50%
%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. A dividend return reflects the actual dividends
paid by the class. A capital appreciation return reflects both the
amount paid by the class to shareholders as capital gain distributions
and changes in the class' share price. Both returns assume the
dividends or capital gains paid by the class are reinvested, if any,
and exclude the effect of sales charges.
DIVIDENDS AND YIELD
PERIOD ENDED NOVEMBER 30, 1997 LIFE OF
CLASS
DIVIDENDS PER SHARE 3.62(CENTS)
ANNUALIZED DIVIDEND RATE 4.63%
30-DAY ANNUALIZED YIELD -
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. The annual dividend rate
is based on an average net asset value of $10.57 over the life of the
class. The 30-day annualized YIELD is a standard formula for all funds
based on the yields of the bonds in the fund, averaged over the past
30 days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. Yield information will be
reported once Class C has a longer more stable operating history.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
A lack of inflationary pressure
resulted in a generally favorable
investing climate for bonds during
the 12 months that ended
November 30, 1997. The Lehman
Brothers Aggregate Bond Index -
a broad measure of the U.S.
taxable bond market - returned
7.55% during this time. Through
the first half of the period, bonds
suffered from the perception of an
accelerating economy and, in turn,
that inflation would make an
appearance. In a move largely
expected by investors, the Federal
Reserve Board raised a key
short-term interest rate by 0.25% in
March to try to curb an inflation
uptick. Spurred on by encouraging
economic data, as well as the Fed's
reluctance to raise rates further,
bond markets rallied from April
through July. While some of the
market's gains evaporated in
August, a strong September and
October helped ease the pain.
When financial trouble erupted in
Asia in late October, the bond
market attracted wary stock
investors in search of investments
that offered less volatility. Treasury
bonds also fared especially well in
this `flight to quality,' as interest
rates on the 30-year bond hovered
around - and in some instances
below - the 6% mark toward the
end of the period. Sustained
economic growth and demand for
higher yields aided corporate
bonds. The Lehman Brothers
Corporate Bond Index returned
7.57% during the period.
Mortgage-backed securities -
despite increased prepayment
activity in November due to falling
rates - also performed relatively
well. The Salomon Brothers
Mortgage Index returned 7.80%
during the 12-month period.
An interview with Kevin Grant, Portfolio Manager of Advisor
Intermediate Bond Fund
Q. HOW DID THE FUND PERFORM, KEVIN?
A. For the 12 months that ended November 30, 1997, the fund's Class A,
Class T, Class B and Class C shares had total returns of 5.81%, 5.56%,
4.83% and 4.82%, respectively. This compares with the 6.33% return of
the Lehman Brothers Intermediate Government/Corporate Bond Index over
the same period.
Q. HOW DID PERFORMANCE STACK UP AGAINST THE FUND'S PEERS?
A. The fund's Class A and Class T shares outperformed the Lipper peer
group - Lipper's short-intermediate investment grade debt funds
average - which recorded a return of 5.51% for the 12-month period.
Lipper historically placed the fund in its intermediate investment
grade debt funds average, so this peer group is a new one for the
fund. The short-intermediate category turns out to be a better fit
because Lipper's definition of "intermediate" differs from the fund's.
The funds in Lipper's intermediate category tend to have longer
maturities, and more
interest-rate sensitivity, than the fund and the Lehman Brothers
index.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The fund was overweighted in corporate bonds, relative to the
index, which helped performance during the period. As of November 30,
the fund was about 42% invested in corporate bonds, of which about 14%
was invested in asset-backed securities, while the index was only
about 24% weighted in corporate bonds. As a result, about 42% of the
fund's investments provided better yields than government securities.
Also, because most of the fund's holdings in corporate bonds,
including asset-backed securities, have short maturities, they had
minimal price risk relative to Treasuries. So the fund reaped the
rewards of the yield advantage, while only taking on a small amount of
increased risk.
Q. WHAT TYPES OF SECURITIES WERE PARTICULARLY STRONG PERFORMERS?
A. Bank bonds performed quite well during the period, as this sector
of the corporate market reaped the benefits of improving credit
quality through consolidation in the industry. Many A-rated banks were
being acquired by Aa-rated banks, so by owning bonds issued by the
A-rated banks, the fund benefited from the credit upgrades of these
securities. The fund was about 8% invested in banks, while the index
was only about 3% weighted in this sector - a position that helped the
fund. Putable corporate bonds - issues that give investors the option
to redeem the securities at some point prior to their actual
maturities - also were attractive during the period. Put bonds are
structured so that they perform well as long as interest rates move -
either up or down. The fund owned putable bonds in Motorola, Sears
Roebuck, Phillip Morris, Wachovia, US Bancorp and Freddie Mac during
the period, all of which performed well because interest rates moved -
even though the movements were only within an average range of
volatility.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. During the period, the fund held a small position in South Korean
yankee bonds - dollar-denominated bonds issued in the U.S. by foreign
governments or corporations - which slightly hurt returns. As
financial problems in Southeast Asia rolled over into Korea, these
securities suffered. However, the fund sold that position by the end
of the period, minimizing the negative effect during the period.
Q. WERE THERE ANY OTHER CHANGES TO THE FUND?
A. Yes. The fund's board of trustees authorized a change to the
debt-quality policy of the fund, effective February 28, 1998, to allow
it to invest without limitation in the lowest tier of investment-grade
securities - which are Baa-quality, according to Moody's - and to
reserve the right to invest up to 5% in below Baa-quality securities.
However, the fund does not intend to invest in securities that are
rated below Baa-quality under normal conditions. By modifying the
debt-quality policy, Fidelity anticipates more opportunities to add
value through its credit analysis, without significantly increasing
the risk of the fund.
Q. WHAT'S YOUR OUTLOOK FOR THE BOND MARKET?
A. I think we're entering an environment that likely will be tougher
for financial assets in general. The events in Southeast Asia are
significant and I think the ramifications have yet to be felt around
the world. At the same time, the U.S. economy is strong. So, at the
end of the period, we watched as two counteracting factors created
some degree of balance. Going forward, I don't know which side of the
equation will tip the scales. Either way, I think we're going into a
period of higher volatility. Even though the investing environment
will get a bit tougher, more buying opportunities should arise.
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.
KEVIN GRANT ON INVESTING IN
ASSET-BACKED SECURITIES:
"A typical asset-backed security is
a pool of credit cards. Credit card
companies generally charge
customers a high rate of interest
so that they can cover defaults
and delinquencies. If a credit card
company charges customers an
average of 16% interest, and it is
paying investors about 7% interest
on its credit card bond, the company
can use 9% of its portfolio each year
to cover defaults and delinquencies
and still make its interest payments
to bond investors. On top of that,
these securities have triggers,
meaning that even if delinquencies
and defaults get to a high enough
level, the bond will be paid off
automatically. Asset-backed
securities usually carry a Triple-A
rating because of this structure.
Of course, the market knows this,
so there aren't any real bargains
out there. However, I believe
asset-backed securities are a
safe alternative to other types
of corporate bonds."
FUND FACTS
GOAL: seeks to provide a high
current income by investing in
investment grade debt securities
START DATE: February 2, 1984
SIZE: as of November 30,
1997, more than $482 million
MANAGER: Kevin Grant, since
1995; joined Fidelity in 1993
(checkmark)
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1997
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO
AAA 59.1 63.0
AA 10.0 8.3
A 22.3 21.5
BAA 5.9 4.7
TABLE EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1997
6 MONTHS AGO
YEARS 5.9 5.6
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30, 1997
6 MONTHS AGO
YEARS 3.3 3.2
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1997* AS OF MAY 31, 1997 **
CORPORATE BONDS 42.7%
U.S. GOVERNMENT
AND AGENCY
OBLIGATIONS 29.7%
MORTGAGE-BACKED
SECURITIES 16.4%
FOREIGN GOVERNMENT
OBLIGATIONS 4.8%
OTHER 3.7%
SHORT-TERM
INVESTMENTS 2.7%
CORPORATE BONDS 33.9%
U.S. GOVERNMENT
AND AGENCY
OBLIGATIONS 38.8%
MORTGAGE-BACKED
SECURITIES 20.2%
FOREIGN GOVERNMENT
OBLIGATIONS 3.6%
OTHER 1.0%
SHORT-TERM
INVESTMENTS 2.5%
ROW: 1, COL: 1, VALUE: 2.7
ROW: 1, COL: 2, VALUE: 3.7
ROW: 1, COL: 3, VALUE: 4.8
ROW: 1, COL: 4, VALUE: 16.4
ROW: 1, COL: 5, VALUE: 29.7
ROW: 1, COL: 6, VALUE: 42.7
ROW: 1, COL: 1, VALUE: 3.0
ROW: 1, COL: 2, VALUE: 2.0
ROW: 1, COL: 3, VALUE: 3.6
ROW: 1, COL: 4, VALUE: 20.2
ROW: 1, COL: 5, VALUE: 37.8
ROW: 1, COL: 6, VALUE: 33.4
* FOREIGN
INVESTMENTS 12.0%
** FOREIGN
INVESTMENTS 9.9%
INVESTMENTS NOVEMBER 30, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
NONCONVERTIBLE BONDS - 42.7%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
BASIC INDUSTRIES - 0.6%
CHEMICALS & PLASTICS - 0.6%
Methanex Corp. yankee 8 7/8%, 11/15/01 $ 2,790,000 $ 2,940,325
ENERGY - 1.6%
OIL & GAS - 1.6%
Apache Corp. 9 1/4%, 6/1/02 7,075,000 7,823,960
FINANCE - 33.0%
ASSET-BACKED SECURITIES - 13.8%
Aesop Funding II LLC 6.22%, 10/20/01 (b) 8,000,000 7,999,687
Arcadia Automobile Receivables Trust
6 1/2%, 6/17/02 5,000,000 5,012,500
Capital Equipment Receivables Trust 6.11%, 7/15/99 7,670,000
7,686,567
Chase Manhattan Grantor Trust:
6.61%, 9/15/02 2,494,859 2,507,918
6.76%, 9/15/02 935,572 940,031
Chevy Chase Auto Receivables Trust:
6.60%, 12/15/02 861,778 865,811
5.90%, 7/15/03 2,429,376 2,421,025
Citibank Credit Card Master Trust I 6.46%, 8/15/02 10,000,000
10,056,250
Contimortgage Home Equity Loan Trust
6.26%, 7/15/12 5,000,000 4,994,532
Ford Credit Auto Owner Trust 6.40%, 5/15/02 1,460,000 1,458,175
Ford Credit Grantor Trust 5.90%, 10/15/00 1,845,734 1,844,293
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 78,920 78,707
MBNA Master Credit Card Trust II 6.56%, 1/15/07 10,000,000
10,117,200
PNC Student Loan Trust I 6.314%, 1/25/01 5,000,000 5,006,250
SCFC Recreational Vehicle Loan Trust
7 1/4%, 9/15/06 315,398 314,903
Sears Credit Account Master Trust II
6 1/2%, 10/15/03 3,400,000 3,419,108
Standard Credit Card Master Trust I
7.65%, 2/15/00 1,200,000 1,203,375
65,926,332
BANKS - 8.4%
ABN Amro Bank NV 6 5/8%, 10/31/01 2,750,000 2,789,435
Banc One Corp. 6.70%, 3/24/00 1,900,000 1,916,625
Bank of Boston 6 3/8%, 8/11/00 2,620,000 2,628,279
Banponce Financial Corp.:
6.69%, 9/21/00 2,250,000 2,263,140
6 3/4%, 8/9/01 3,850,000 3,872,831
Citicorp. 7.20%, 6/15/07 1,580,000 1,644,085
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
Kansallis-Osake-Pankki 10%, 5/1/02 $ 650,000 $ 736,710
Nationsbank Corp. 8 1/8%, 6/15/02 3,000,000 3,198,060
Provident Bank 6 1/8%, 12/15/00 5,000,000 4,958,150
Skandinaviska Enskilda Banken yankee
8.45%, 5/15/02 4,600,000 4,937,502
Star Banc Corp. 6.80%, 5/1/99 2,400,000 2,423,520
US Bancorp 7 1/2%, 6/1/26 2,000,000 2,148,000
Union Planters National Bank 6.81%, 8/20/01 1,500,000 1,520,625
Wachovia Corp. 6.605%, 10/1/25 5,000,000 5,075,000
40,111,962
CREDIT & OTHER FINANCE - 8.6%
Associates Corp. of North America
6 1/2%, 9/9/98 5,000,000 5,019,450
Chrysler Financial Corp.:
6.16%, 7/28/99 5,000,000 5,003,850
6 3/8%, 1/28/00 2,580,000 2,584,386
CIT Group Holdings, Inc. 6 1/4%, 9/30/99 4,560,000 4,561,961
Deere (John) Capital Corp. 9 5/8%, 11/1/98 2,500,000 2,574,425
Ford Motor Credit Co. 7 3/4%, 11/15/02 100,000 105,464
General Electric Capital Corp. 6.83%,
4/13/09 (a) 2,530,000 2,553,478
General Motors Acceptance Corp. 6.65%, 5/24/00 2,000,000 2,015,980
Morgan Guaranty Trust Co. 5 3/4%, 10/8/99 10,000,000 9,913,800
RBSG Capital Corp. 10 1/8%, 3/1/04 1,500,000 1,770,375
Sears Roebuck Acceptance Corp. 6.15%, 11/15/05 5,000,000 4,935,350
41,038,519
INSURANCE - 2.2%
Protective Life Corp. 7.95%, 7/1/04 1,000,000 1,065,840
SunAmerica, Inc. 6.20%, 10/31/99 9,300,000 9,282,051
10,347,891
TOTAL FINANCE 157,424,704
INDUSTRIAL MACHINERY & EQUIPMENT - 1.3%
POLLUTION CONTROL - 1.3%
WMX Technologies, Inc. 7.10%, 8/1/26 6,000,000 6,080,160
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
NONDURABLES - 1.3%
TOBACCO - 1.3%
Philip Morris Companies, Inc.:
6 3/8%, 1/15/98 $ 250,000 $ 250,025
6.95%, 6/1/06 6,000,000 6,132,960
6,382,985
RETAIL & WHOLESALE - 0.4%
GENERAL MERCHANDISE STORES - 0.4%
Penney (J.C.) Co., Inc. 6.95%, 4/1/00 1,800,000 1,825,488
TECHNOLOGY - 3.2%
COMPUTER SERVICES & SOFTWARE - 1.1%
First Data Corp. 6 5/8%, 4/1/03 5,000,000 5,045,000
ELECTRONICS - 2.1%
Motorola, Inc. 6 1/2%, 9/1/25 5,000,000 5,116,200
Texas Instruments, Inc. 6 7/8%, 7/15/00 5,000,000 5,064,250
10,180,450
TOTAL TECHNOLOGY 15,225,450
UTILITIES - 1.3%
ELECTRIC UTILITY - 1.3%
British Columbia Hydro & Power Authority
yankee 12 1/2%, 1/15/14 940,000 1,040,185
DR Investment UK yankee 7.10%, 5/15/02 (b) 5,000,000 5,140,750
Virginia Electric & Power Co. 1st & Ref. Mtg.,
7 3/8%, 7/1/02 150,000 156,206
TOTAL UTILITIES 6,337,141
TOTAL NONCONVERTIBLE BONDS
(Cost $203,073,686) 204,040,213
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 29.7%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 19.1%
6 7/8%, 3/31/00 $ 21,500,000 $ 21,990,415
6 3/8%, 3/31/01 40,400,000 41,037,512
7 7/8%, 8/15/01 395,000 421,046
7%, 7/15/06 11,200,000 12,012,000
12 3/4%, 11/15/10 (callable) 10,998,000 15,639,486
91,100,459
U.S. GOVERNMENT AGENCY OBLIGATIONS - 10.6%
Federal Farm Credit Bank Consolidated Systemwide
6.55%, 2/7/04 740,000 759,307
Federal Home Loan Bank:
7.31%, 6/16/04 3,830,000 4,074,775
7.38%, 8/5/04 1,930,000 2,064,791
7.70%, 9/20/04 1,250,000 1,355,463
Federal Home Loan Mortgage Corp.:
7.59%, 2/14/00 2,500,000 2,584,375
5.035%, 4/28/03 15,000,000 14,883,150
8.115%, 1/31/05 5,460,000 6,066,551
Federal National Mortgage Association
6.72%, 8/1/05 2,230,000 2,298,283
Financing Corp. stripped principal:
0%, 5/30/00 1,000,000 864,390
0%, 6/6/02 2,800,000 2,139,508
Government Trust Certificates (assets of Trust guaranteed
by U.S. Government through Defense Security
Assistance Agency) Class 2-E, 9.40%, 5/15/02 904,378 961,553
Guaranteed Export Trust Certificates (assets of Trust
guaranteed by U.S. Government through
Export-Import Bank):
Series 1994-A, 7.12%, 4/15/06 315,882 327,308
Series 1994-C, 6.61%, 9/15/99 57,709 58,016
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
8%, 11/15/01 1,740,000 1,858,111
6 1/8%, 3/15/03 680,000 679,769
6 5/8%, 2/15/04 140,000 144,271
7 5/8%, 8/15/04 840,000 910,477
5.89%, 8/15/05 2,070,000 2,042,036
U.S. Department of Housing and Urban Development
Government guaranteed participation certificates:
Series 1995-A, 8.24%, 8/1/04 1,030,000 1,143,094
Series 1996-A, 6.92%, 8/1/04 5,360,000 5,582,118
50,797,346
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $140,902,292) 141,897,805
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 9.1%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.4%
5 1/2%, 12/1/02 to 6/1/03 $ 2,194,650 $ 2,126,006
7%, 11/1/00 to 6/1/01 2,724,469 2,756,168
9 1/2%, 1/1/17 53,015 57,007
10%, 4/1/05 to 10/1/10 388,126 417,249
10 1/4%, 12/1/09 37,802 40,881
10 1/2%, 5/1/21 740,401 816,736
11%, 12/1/11 43,834 48,590
11 1/2%, 10/1/15 122,373 137,385
11 3/4%, 10/1/10 90,551 102,379
6,502,401
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 2.6%
5 1/2%, 5/1/03 to 3/1/11 3,889,444 3,767,687
6%, 5/1/01 to 3/1/11 1,884,502 1,864,289
9 1/2%, 2/1/25 3,371,668 3,641,368
10%, 1/1/20 103,935 113,971
10 1/2%, 7/1/11 to 8/1/20 519,540 579,972
11%, 8/1/15 2,242,592 2,501,791
12 1/2%, 2/1/11 to 2/1/15 109,489 129,429
12,598,507
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 5.1%
7%, 11/1/22 to 11/1/27 5,084,410 5,115,719
8%, 2/1/02 to 6/1/25 4,234,387 4,364,553
8 1/2%, 4/1/17 to 12/1/21 747,214 789,909
9%, 5/1/16 to 10/1/18 3,434,713 3,720,266
10%, 8/1/18 to 1/1/26 4,133,293 4,610,681
11%, 12/1/09 to 10/1/20 1,155,117 1,315,808
11 1/2%, 3/1/10 to 2/1/19 3,673,337 4,230,092
24,147,028
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $42,425,722) 43,247,936
U.S. GOVERNMENT AGENCY - COLLATERALIZED MORTGAGE OBLIGATIONS - 3.1%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
Federal Home Loan Mortgage Corporation:
planned amortization class Series 1645 Class ZA,
5 1/2%, 4/15/05 $ 11,143,122 $ 10,960,297
sequential pay Series 1838 Class A,
6 1/2%, 12/15/02 4,019,227 4,020,477
TOTAL U.S. GOVERNMENT AGENCY-
COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $14,833,172) 14,980,774
COMMERCIAL MORTGAGE SECURITIES - 4.2%
BKB Commercial Mortgage Trust Series 1997-C1 (b):
Class A-1, 6 7/8%, 2/25/43 1,972,998 1,969,299
Class B, 7.21%, 2/25/43 (c) 4,000,000 4,006,718
CBM Funding Corp. sequential pay Series 1996-1
Class A-1, 7.55%, 7/1/99 127,148 128,682
CS First Boston Mortgage Securities Corp.
Series 1995-WF1 Class A-2, 6.648%, 12/21/27 5,000,000 5,000,000
Equitable Life Assurance Society of the United States
(The) Series 1996-1 Class C1,
7.52%, 5/15/06 (b) 1,000,000 1,060,300
First Union - Lehman Brothers Commercial Mortgage
Trust sequential pay Series 1997-C2 Class A3,
6.65%, 12/18/07 4,000,000 4,006,250
Structured Asset Securities Corp. sequential pay
Series 1995-C4 Class A-1A, 6.90%, 6/25/26 177,582 177,582
Thirteen Affiliates of General Growth Properties, Inc.
sequential pay Series A-2, 6.602%, 11/15/07 (b) 2,500,000
2,491,797
Wells Fargo Capital Markets Apartment Financing
Trust 6.56%, 12/29/05 (b) 935,450 942,091
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $19,703,683) 19,782,719
FOREIGN GOVERNMENT OBLIGATIONS - 4.8%
Alberta Province yankee 9 1/4%, 4/1/00 2,200,000 2,342,450
Canadian Government yankee 6 1/8%, 7/15/02 5,000,000 5,012,500
Export Development Corp. yankee
8 1/8%, 8/10/99 740,000 762,992
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
Manitoba Province yankee:
6 3/8%, 10/15/99 $ 2,590,000 $ 2,598,728
6 7/8%, 9/15/02 5,000,000 5,118,950
Quebec Province yankee 6.86%, 4/15/26 (a) 5,000,000 5,125,550
Slovenian Republic euro 7%, 8/6/01 2,080,000 2,083,120
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $22,690,392) 23,044,290
SUPRANATIONAL OBLIGATIONS - 3.2%
African Development Bank 8.70%, 5/1/01 4,500,000 4,848,300
Inter-American Development Bank yankee
6.29%, 7/16/27 10,000,000 10,268,200
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $14,313,980) 15,116,500
CERTIFICATES OF DEPOSIT - 0.5%
Canadian Imperial Bank of Commerce (NY Branch)
yankee 6.20%, 8/1/00 (Cost $2,503,750) 2,500,000 2,497,500
CASH EQUIVALENTS - 2.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.70%, dated
11/28/97 due 12/1/97 $ 12,989,167 12,983,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $473,429,677) $ 477,590,737
LEGEND
1. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.
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 $23,610,642 or
4.9% of net assets.
3. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
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 89.0% AAA, AA, A 86.2%
Baa 5.9% BBB 6.1%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
of the sovereign credit of the issuing government. The percentage not
rated by Moody's or S&P amounted to 0.0%.
INCOME TAX INFORMATION
At November 30, 1997, the aggregate cost of investment securities for
income tax purposes was $473,515,361. Net unrealized appreciation
aggregated $4,075,376, of which $5,651,688 related to appreciated
investment securities and $1,576,312 related to depreciated investment
securities.
At November 30, 1997, the fund had a capital loss carryforward of
approximately $15,259,000 of which $2,841,000, $1,035,000, $134,000,
$9,840,000 and $1,409,000 will expire on November 30, 1998, 1999,
2002, 2004 and 2005 , respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 477,590,737
AGREEMENTS OF $12,983,000) (COST $473,429,677) -
SEE ACCOMPANYING SCHEDULE
CASH 68,580
RECEIVABLE FOR INVESTMENTS SOLD 25,147
INTEREST RECEIVABLE 5,767,428
PREPAID EXPENSES 13,782
TOTAL ASSETS 483,465,674
LIABILITIES
DISTRIBUTIONS PAYABLE $ 586,556
ACCRUED MANAGEMENT FEE 169,390
DISTRIBUTION FEES PAYABLE 75,123
OTHER PAYABLES AND ACCRUED EXPENSES 158,066
TOTAL LIABILITIES 989,135
NET ASSETS $ 482,476,539
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 495,658,912
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (1,999,021)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (15,344,412)
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 4,161,060
NET ASSETS $ 482,476,539
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
NOVEMBER 30, 1997
CALCULATION OF MAXIMUM OFFERING PRICE $10.56
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($3,818,829 (DIVIDED BY) 361,750 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.25 OF $10.56) $10.97
CLASS T: $10.56
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($278,869,303 (DIVIDED BY) 26,408,491 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/97.25 OF $10.56) $10.86
CLASS B: $10.54
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($22,200,906 (DIVIDED BY) 2,105,568 SHARES) A
CLASS C: $10.56
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($160,415 (DIVIDED BY) 15,191 SHARES) A
INSTITUTIONAL CLASS: $10.57
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE ($177,427,086 (DIVIDED BY) 16,790,852 SHARES)
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>
YEAR ENDED NOVEMBER 30, 1997
INVESTMENT INCOME $ 33,006,612
INTEREST
EXPENSES
MANAGEMENT FEE $ 2,095,786
TRANSFER AGENT FEES 876,536
DISTRIBUTION FEES 834,999
ACCOUNTING FEES AND EXPENSES 195,556
NON-INTERESTED TRUSTEES' COMPENSATION 7,862
CUSTODIAN FEES AND EXPENSES 29,201
REGISTRATION FEES 91,318
AUDIT 51,920
LEGAL 11,323
MISCELLANEOUS 7,221
TOTAL EXPENSES BEFORE REDUCTIONS 4,201,722
EXPENSE REDUCTIONS (63,858) 4,137,864
NET INVESTMENT INCOME 28,868,748
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (1,460,647)
FOREIGN CURRENCY TRANSACTIONS 747 (1,459,900)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (1,413,676)
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (747) (1,414,423)
NET GAIN (LOSS) (2,874,323)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 25,994,425
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 28,868,748 $ 31,675,872
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) (1,459,900) (9,733,480)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (1,414,423) 2,408,292
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 25,994,425 24,350,684
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (28,478,083) (31,669,310)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) (8,667,273) 47,816,674
TOTAL INCREASE (DECREASE) IN NET ASSETS (11,150,931) 40,498,048
NET ASSETS
BEGINNING OF PERIOD 493,627,470 453,129,422
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS $ 482,476,539 $ 493,627,470
OF NET INVESTMENT INCOME OF $1,999,021 AND
$2,016,748, RESPECTIVELY)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED NOVEMBER 30,
1997 1996 E
SELECTED PER-SHARE DATA D
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.590 $ 10.350
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .615 .159
NET REALIZED AND UNREALIZED GAIN (LOSS) (.023) .235 G
TOTAL FROM INVESTMENT OPERATIONS .592 .394
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.622) (.154)
NET ASSET VALUE, END OF PERIOD $ 10.560 $ 10.590
TOTAL RETURN B, C 5.81% 3.83%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,819 $ 687
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% F .90% A,
F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.93% 6.45% A
PORTFOLIO TURNOVER RATE 138% 200%
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 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.610 $ 10.760 $ 10.260 $ 11.140 $ 10.640
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .625 C .671 C .649 .609 .785
NET REALIZED AND UNREALIZED (.058) (.147) .491 (.876) .511
GAIN (LOSS)
TOTAL FROM INVESTMENT .567 .524 1.140 (.267) 1.296
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.617) (.674) (.640) (.555) (.796)
IN EXCESS OF NET - - - (.058) -
INVESTMENT INCOME
TOTAL DISTRIBUTIONS (.617) (.674) (.640) (.613) (.796)
NET ASSET VALUE, END OF PERIOD $ 10.560 $ 10.610 $ 10.760 $ 10.260 $ 11.140
TOTAL RETURN A, B 5.56% 5.10% 11.43% (2.44)% 12.50%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 278,869 $ 262,103 $ 228,439 $ 141,866 $ 59,184
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .96% .97% .94% D 1.02% D 1.23%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE .96% .96% E .94% 1.02% 1.23%
NET ASSETS AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT INCOME 5.97% 6.38% 6.20% 6.04% 6.81%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 138% 200% 189% 68% 59%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.590 $ 10.750 $ 10.250 $ 10.430
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .551 D .597 D .579 .204
NET REALIZED AND UNREALIZED GAIN (LOSS) (.057) (.153) .483 (.178)
TOTAL FROM INVESTMENT OPERATIONS .494 .444 1.062 .026
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.544) (.604) (.562) (.187)
IN EXCESS OF NET INVESTMENT INCOME - - - (.019)
TOTAL DISTRIBUTIONS (.544) (.604) (.562) (.206)
NET ASSET VALUE, END OF PERIOD $ 10.540 $ 10.590 $ 10.750 $ 10.250
TOTAL RETURN B, C 4.83% 4.32% 10.62% 0.24%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 22,201 $ 18,972 $ 15,830 $ 3,156
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65% F 1.66% F 1.70% F 1.65% A,
F
RATIO OF NET INVESTMENT INCOME TO AVERAGE 5.27% 5.69% 5.44% 5.42% A
NET ASSETS
PORTFOLIO TURNOVER RATE 138% 200% 189% 68%
</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 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).
FINANCIAL HIGHLIGHTS - CLASS C
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED
NOVEMBER 30,
1997 E
SELECTED PER-SHARE DATA D
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.570
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .031
NET REALIZED AND UNREALIZED GAIN (LOSS) (.005)
TOTAL FROM INVESTMENT OPERATIONS .026
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.036)
NET ASSET VALUE, END OF PERIOD $ 10.560
TOTAL RETURN B, C .25%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 160
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.73% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.42% A
PORTFOLIO TURNOVER RATE 138%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD 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 NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO NOVEMBER 30, 1997.
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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
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).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.620 $ 10.770 $ 10.270 $ 11.160 $ 10.640
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .658 B .705 B .671 .602 .832
NET REALIZED AND UNREALIZED (.060) (.151) .499 (.833) .531
GAIN (LOSS)
TOTAL FROM INVESTMENT .598 .554 1.170 (.231) 1.363
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.648) (.704) (.670) (.597) (.843)
IN EXCESS OF NET - - - (.062) -
INVESTMENT INCOME
TOTAL DISTRIBUTIONS (.648) (.704) (.670) (.659) (.843)
NET ASSET VALUE, END OF PERIOD $ 10.570 $ 10.620 $ 10.770 $ 10.270 $ 11.160
TOTAL RETURN A 5.86% 5.40% 11.73% (2.10)% 13.17%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 177,427 $ 211,866 $ 208,861 $ 172,122 $ 183,790
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .67% .66% .67% C .61% .64%
NET ASSETS
RATIO OF NET INVESTMENT INCOME 6.27% 6.69% 6.47% 6.45% 7.41%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 138% 200% 189% 68% 59%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Intermediate Bond 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 fund offers Class A, Class T, Class B, Class C 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, if any, 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 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.
Securities (including restricted securities) for which 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. 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 foreign
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. Interest income, which includes accretion of
original issue discount, is accrued as earned.
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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are borne by Class C and amortized over
one year.
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 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 paydown gains/losses on certain securities, futures and
options transactions, market discount, capital loss carryforwards and
losses deferred due to futures and options and wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Distributions in excess of net investment income and accumulated
undistributed net realized gain (loss) on investments and foreign
currency transactions 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.
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 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 funds, 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 funds, 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 funds' 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, 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 $626,102,979 and $633,343,025, respectively, of which U.S.
government and government agency obligations aggregated $456,099,378
and $567,464,076, 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 .1100% to .3700% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
the period, FMR voluntarily implemented the above rates, as they
resulted in the same or a lower management fee. For the period, the
management fee was equivalent to an annual rate of .44% of 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 .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .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 $ $
3,177 3,177
CLASS T
655,179 655,179
CLASS B
176,588 49,049
CLASS C
55 -
$ $
834,999 707,405
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 3.75% for
selling Class A shares (3.25% prior to August 1, 1997), and 2.75% for
selling Class T shares of the fund, respectively. FDC receives the
proceeds of contingent deferred sales charges levied on Class B share
redemptions occurring within three years of purchase and Class C share
redemptions occuring within one year of purchase. Contingent deferred
sales charges are based on declining rates ranging from 3% to 1% for
Class B and 1% for Class C, 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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 $ $
68,475 43,995
CLASS T
109,296 77,414
CLASS B
68,602 0*
CLASS C
- -*
$ $
246,373 121,409
* WHEN CLASS B AND CLASS C 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.
FIIOC pays for typesetting, printing and mailing of all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC* $ .34%
7,231
CLASS T** FIIOC* .20%
521,357
CLASS B FIIOC* .26%
50,467
CLASS C FIIOC* .35% ***
25
INSTITUTIONAL CLASS FIIOC* .15%
297,456
$
876,536
* 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
ACCOUNTING FEES. FSC 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. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A .90% $
32,105
CLASS T 1.00%
-
CLASS B 1.65%
16,908
CLASS C 1.75%
5,670
INSTITUTIONAL CLASS .75%
-
$
54,683
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $9,175 under this
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED NOVEMBER 30,
1997 B 1996 A
CLASS A
FROM NET INVESTMENT INCOME $ $
122,899 6,183
CLASS T
FROM NET INVESTMENT INCOME
15,434,281 16,284,509
CLASS B
FROM NET INVESTMENT INCOME
1,017,603 1,037,161
CLASS C
FROM NET INVESTMENT INCOME
312 -
INSTITUTIONAL CLASS
FROM NET INVESTMENT INCOME
11,902,988 14,341,457
TOTAL $ 28,478,083 $
31,669,310
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
B DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 B 1996 A 1997 B 1996 A
CLASS A $ $
SHARES SOLD 455,670 72,448 4,761,173 756,142
REINVESTMENT OF DISTRIBUTIONS
10,671 475 111,981 4,998
SHARES REDEEMED
(169,434) (8,080) (1,767,583) (84,516)
NET INCREASE (DECREASE) 296,907 64,843 $ $
3,105,571 676,624
CLASS T $ $
SHARES SOLD 13,128,368 14,999,140 137,559,201 158,724,547
REINVESTMENT OF DISTRIBUTIONS
1,340,839 1,411,416 14,043,998 14,860,075
SHARES REDEEMED
(12,764,354) (12,931,481) (133,637,535) (136,183,619)
NET INCREASE (DECREASE) 1,704,853 3,479,075 $ $
17,965,664 37,401,003
CLASS B $ $
SHARES SOLD 1,113,298 1,114,235 11,661,677 11,808,349
REINVESTMENT OF DISTRIBUTIONS
76,151 76,373 796,683 803,087
SHARES REDEEMED
(874,566) (872,302) (9,166,397) (9,227,658)
NET INCREASE (DECREASE) 314,883 318,306 $ $
3,291,963 3,383,778
CLASS C $ $
SHARES SOLD 15,175 - 160,441 -
REINVESTMENT OF DISTRIBUTIONS
16 - 167 -
NET INCREASE (DECREASE) 15,191 - $ $
160,608 -
INSTITUTIONAL CLASS $ $
SHARES SOLD 5,646,676 9,022,232 59,206,035 95,376,649
REINVESTMENT OF DISTRIBUTIONS
477,520 561,358 5,003,755 5,915,605
SHARES REDEEMED
(9,287,961) (9,022,616) (97,400,869) (94,936,985)
NET INCREASE (DECREASE) (3,163,765) 560,974 $ (33,191,079) $
6,355,269
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
B SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $
30,352
CLASS T
22,481
CLASS B
14,929
CLASS C
5,703
INSTITUTIONAL CLASS
17,853
$
91,318
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series IV and the Shareholders of
Fidelity Advisor Intermediate Bond Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Advisor Series IV: Fidelity Advisor Intermediate Bond
Fund, including the schedule of portfolio investments, as of November
30, 1997, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two
years in the period then ended and the financial highlights of Class
A, Class T, Class B, Class C and Institutional Class for each of the
periods indicated therein. 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 audits.
We conducted our audits 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, 1997 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 audits provide 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 Advisor
Intermediate Bond Fund as of November 30, 1997, the results of its
operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial
highlights of Class A, Class T, Class B, Class C and Institutional
Class for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 13, 1998
DISTRIBUTIONS
A total of 32.27% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
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
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Kevin E. Grant, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
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 *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
Bank of New York
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 International Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant
Growth Fund
SM
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 Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(REGISTERED TRADEMARK)
INTERMEDIATE BOND
FUND - INSTITUTIONAL CLASS
ANNUAL REPORT
NOVEMBER 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 7 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 10 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 19 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 28 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 36 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 37
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 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:
Although financial turmoil in Pacific Basin countries was a catalyst
for significant volatility in U.S. markets in late October and into
November, the Standard & Poor's 500 Index has risen more than 31%
year-to-date, almost three times its historical annual average.
Meanwhile, bond markets - primarily influenced by a relatively steady
flow of positive news on the inflation front - continued to post solid
returns through the first 11 months of 1997.
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.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek 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 INTERMEDIATE BOND 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). You can also look at the class' income, as reflected in its
yield, to measure performance. If Fidelity had not reimbursed certain
class expenses, the past five year and past 10 year total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND FUND - INSTITUTIONAL CLASS 5.86% 38.13% 121.90%
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/ 6.33% 38.84% 123.31%
CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT FUNDS AVERAGE 6.57% 39.47% 124.91%
SHORT-INTERMEDIATE INVESTMENT GRADE DEBT 5.51% 30.68% 97.81%
FUNDS AVERAGE
</TABLE>
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, 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 Institutional Class' returns to
those of the Lehman Brothers Intermediate Government/Corporate Bond
Index - a market value weighted performance benchmark for government
and corporate fixed-rate debt issues with maturities between one and
10 years. You can also compare the fund's performance to averages
calculated by Lipper Analytical Services, Inc. The fund formerly was
included in Lipper's intermediate investment grade debt funds category
(which included 195 funds for the past one year), but will be included
in the short-intermediate investment grade debt funds category (107
funds) in the future. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR INTERMEDIATE BOND FUND - INSTITUTIONAL CLASS 5.86% 6.67% 8.30%
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/ 6.33% 6.78% 8.37%
CORPORATE BOND INDEX
INTERMEDIATE INVESTMENT GRADE DEBT FUNDS AVERAGE 6.57% 6.86% 8.42%
SHORT-INTERMEDIATE INVESTMENT GRADE DEBT 5.51% 5.49% 7.04%
FUNDS AVERAGE
</TABLE>
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
IMAHDR PRASUN SHR__CHT 19971130 19971211 164747 S00000000000001
FA Intermed Bond -CL I LB Intermediate Govt/Corp
00087 LB007
1987/11/30 10000.00 10000.00
1987/12/31 10099.51 10105.06
1988/01/31 10406.16 10363.63
1988/02/29 10561.96 10478.96
1988/03/31 10480.00 10438.68
1988/04/30 10457.85 10421.30
1988/05/31 10396.53 10375.22
1988/06/30 10588.92 10540.58
1988/07/31 10577.84 10518.19
1988/08/31 10607.78 10533.99
1988/09/30 10803.69 10716.73
1988/10/31 10948.48 10862.34
1988/11/30 10880.87 10769.66
1988/12/31 10890.88 10779.14
1989/01/31 11009.38 10892.36
1989/02/28 10983.30 10847.33
1989/03/31 11026.71 10894.20
1989/04/30 11212.19 11111.96
1989/05/31 11423.05 11332.61
1989/06/30 11701.37 11618.31
1989/07/31 11948.92 11856.86
1989/08/31 11787.55 11703.62
1989/09/30 11843.19 11758.91
1989/10/31 12090.30 12007.48
1989/11/30 12189.75 12122.28
1989/12/31 12209.84 12155.46
1990/01/31 12088.41 12077.52
1990/02/28 12128.17 12121.49
1990/03/31 12111.21 12137.29
1990/04/30 12032.91 12095.16
1990/05/31 12318.70 11939.81
1990/06/30 12483.40 12526.46
1990/07/31 12650.07 12700.25
1990/08/31 12544.47 12648.11
1990/09/30 12637.20 12745.80
1990/10/31 12756.29 12893.78
1990/11/30 12977.10 12636.79
1990/12/31 13175.94 13268.47
1991/01/31 13273.89 13403.02
1991/02/28 13380.35 13510.19
1991/03/31 13465.12 13602.09
1991/04/30 13615.30 13750.33
1991/05/31 13687.93 13834.85
1991/06/30 13692.05 13844.59
1991/07/31 13846.04 13998.89
1991/08/31 14136.72 14266.15
1991/09/30 14399.30 14511.56
1991/10/31 14569.68 14677.18
1991/11/30 14709.08 14845.70
1991/12/31 15173.10 15208.28
1992/01/31 14978.95 15070.57
1992/02/29 15017.80 15130.08
1992/03/31 14963.75 15070.57
1992/04/30 15047.83 15203.01
1992/05/31 15322.84 15438.68
1992/06/30 15538.90 15667.23
1992/07/31 15904.64 15978.72
1992/08/31 16051.69 16138.55
1992/09/30 16256.17 16357.63
1992/10/31 16020.06 16145.40
1992/11/30 16064.45 16084.05
1992/12/31 16283.11 16299.44
1993/01/31 16626.35 16616.46
1993/02/28 16946.09 16878.46
1993/03/31 17061.04 16945.60
1993/04/30 17171.51 17081.99
1993/05/31 17191.87 17044.08
1993/06/30 17539.00 17311.60
1993/07/31 17700.52 17353.99
1993/08/31 18098.88 17629.15
1993/09/30 18157.56 17702.35
1993/10/31 18261.62 17749.75
1993/11/30 18180.37 17650.75
1993/12/31 18250.53 17731.58
1994/01/31 18450.00 17928.54
1994/02/28 18081.39 17663.38
1994/03/31 17737.16 17371.90
1994/04/30 17693.19 17253.67
1994/05/31 17646.87 17265.26
1994/06/30 17649.04 17267.63
1994/07/31 17820.50 17516.19
1994/08/31 17822.54 17570.96
1994/09/30 17739.99 17409.29
1994/10/31 17743.89 17406.92
1994/11/30 17798.71 17327.93
1994/12/31 17874.89 17389.28
1995/01/31 18072.43 17682.34
1995/02/28 18281.72 18049.13
1995/03/31 18396.66 18152.35
1995/04/30 18564.12 18376.43
1995/05/31 19039.41 18932.01
1995/06/30 19155.97 19058.93
1995/07/31 19151.03 19061.56
1995/08/31 19310.04 19235.08
1995/09/30 19432.91 19374.37
1995/10/31 19651.58 19590.29
1995/11/30 19886.94 19847.81
1995/12/31 20110.06 20055.82
1996/01/31 20262.34 20228.82
1996/02/29 20035.99 19991.31
1996/03/31 19944.01 19888.36
1996/04/30 19866.41 19818.05
1996/05/31 19826.97 19803.04
1996/06/30 20032.01 20013.43
1996/07/31 20089.32 20072.94
1996/08/31 20108.75 20088.74
1996/09/30 20373.14 20368.63
1996/10/31 20698.81 20728.58
1996/11/30 20961.11 21001.90
1996/12/31 20854.56 20867.34
1997/01/31 20926.54 20948.44
1997/02/28 20949.15 20988.47
1997/03/31 20823.56 20843.65
1997/04/30 21056.56 21088.52
1997/05/31 21192.55 21263.63
1997/06/30 21385.31 21457.69
1997/07/31 21781.77 21894.25
1997/08/31 21703.41 21784.19
1997/09/30 21952.22 22037.50
1997/10/31 22143.97 22281.58
1997/11/28 22189.55 22330.82
IMATRL PRASUN SHR__CHT 19971130 19971211 164753 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Bond Fund - Institutional
Class on November 30, 1987. As the chart shows, by November 30, 1997,
the value of the investment would have grown to $22,190 - a 121.90%
increase on the initial investment. For comparison, look at how the
Lehman Brothers Intermediate Government/Corporate Bond Index did over
the same period. With dividends and capital gains, if any, reinvested,
the same $10,000 investment would have grown to $22,331 - a 123.31%
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
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
DIVIDEND RETURN 6.33% 6.79% 6.86% 5.87% 8.28%
CAPITAL APPRECIATION -0.47% -1.39% 4.87% -7.97 4.89%
RETURN %
TOTAL RETURN 5.86% 5.40% 11.73% -2.10 13.17%
%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. A dividend return reflects the actual dividends
paid by the class. A capital appreciation return reflects both the
amount paid by the class to shareholders as capital gain distributions
and changes in the class' share price. Both returns assume the
dividends or capital gains paid by the class are reinvested, if any.
DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 5.18(CENTS) 31.44(CENTS) 64.81(CENTS)
ANNUALIZED DIVIDEND RATE 5.96% 5.96% 6.18%
30-DAY ANNUALIZED YIELD 5.64% - -
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average net asset value of $10.58 over the past
one month, $10.52 over the past six months and $10.48 over the past
one year, you can compare the class' income over these three periods.
The 30-day annualized YIELD is a standard formula for all funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
A lack of inflationary pressure
resulted in a generally favorable
investing climate for bonds during
the 12 months that ended
November 30, 1997. The Lehman
Brothers Aggregate Bond Index
- - a broad measure of the U.S.
taxable bond market - returned
7.55% during this time. Through
the first half of the period, bonds
suffered from the perception of an
accelerating economy and, in
turn, that inflation would make an
appearance. In a move largely
expected by investors, the Federal
Reserve Board raised a key
short-term interest rate by 0.25%
in March to try to curb an inflation
uptick. Spurred on by encouraging
economic data, as well as the
Fed's reluctance to raise rates
further, bond markets rallied from
April through July. While some of
the market's gains evaporated in
August, a strong September and
October helped ease the pain.
When financial trouble erupted in
Asia in late October, the bond
market attracted wary stock
investors in search of investments
that offered less volatility. Treasury
bonds also fared especially well in
this `flight to quality,' as interest
rates on the 30-year bond hovered
around - and in some instances
below - the 6% mark toward the
end of the period. Sustained
economic growth and demand for
higher yields aided corporate
bonds. The Lehman Brothers
Corporate Bond Index returned
7.57% during the period.
Mortgage-backed securities -
despite increased prepayment
activity in November due to falling
rates - also performed relatively
well. The Salomon Brothers
Mortgage Index returned 7.80%
during the 12-month period.
An interview with Kevin Grant, Portfolio Manager of Advisor
Intermediate Bond Fund
Q. HOW DID THE FUND PERFORM, KEVIN?
A. For the 12 months that ended November 30, 1997, the fund's
Institutional Class shares had a total return of 5.86%. This compares
with the 6.33% return of the Lehman Brothers Intermediate
Government/Corporate Bond Index over the same period.
Q. HOW DID PERFORMANCE STACK UP AGAINST THE FUND'S PEERS?
A. The fund's Institutional Class shares outperformed the Lipper peer
group - Lipper's short-intermediate investment grade debt funds
average - which recorded a return of 5.51% for the 12-month period.
Lipper historically placed the fund in its intermediate investment
grade debt funds average, so this peer group is a new one for the
fund. The short-intermediate category turns out to be a better fit
because Lipper's definition of "intermediate" differs from the fund's.
The funds in Lipper's intermediate category tend to have longer
maturities, and more interest-rate sensitivity, than the fund and the
Lehman Brothers index.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The fund was overweighted in corporate bonds, relative to the
index, which helped performance during the period. As of November 30,
the fund was about 42% invested in corporate bonds, of which about 14%
was invested in asset-backed securities, while the index was only
about 24% weighted in corporate bonds. As a result, about 42% of the
fund's investments provided better yields than government securities.
Also, because most of the fund's holdings in corporate bonds,
including asset-backed securities, have short maturities, they had
minimal price risk relative to Treasuries. So the fund reaped the
rewards of the yield advantage, while only taking on a small amount of
increased risk.
Q. WHAT TYPES OF SECURITIES WERE PARTICULARLY STRONG PERFORMERS?
A. Bank bonds performed quite well during the period, as this sector
of the corporate market reaped the benefits of improving credit
quality through consolidation in the industry. Many A-rated banks were
being acquired by Aa-rated banks, so by owning bonds issued by the
A-rated banks, the fund benefited from the credit upgrades of these
securities. The fund was about 8% invested in banks, while the index
was only about 3% weighted in this sector - a position that helped the
fund. Putable corporate bonds - issues that give investors the option
to redeem the securities at some point prior to their actual
maturities - also were attractive during the period. Put bonds are
structured so that they perform well as long as interest rates move -
either up or down. The fund owned putable bonds in Motorola, Sears
Roebuck, Phillip Morris, Wachovia, US Bancorp and Freddie Mac during
the period, all of which performed well because interest rates moved -
even though the movements were only within an average range of
volatility.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. During the period, the fund held a small position in South Korean
yankee bonds - dollar-denominated bonds issued in the U.S. by foreign
governments or corporations - which slightly hurt returns. As
financial problems in Southeast Asia rolled over into Korea, these
securities suffered. However, the fund sold that position by the end
of the period, minimizing the negative effect during the period.
Q. WERE THERE ANY OTHER CHANGES TO THE FUND?
A. Yes. The fund's board of trustees authorized a change to the
debt-quality policy of the fund, effective February 28, 1998, to allow
it to invest without limitation in the lowest tier of investment-grade
securities - which are Baa-quality, according to Moody's - and to
reserve the right to invest up to 5% in below Baa-quality securities.
However, the fund does not intend to invest in securities that are
rated below Baa-quality under normal conditions. By modifying the
debt-quality policy, Fidelity anticipates more opportunities to add
value through its credit analysis, without significantly increasing
the risk of the fund.
Q. WHAT'S YOUR OUTLOOK FOR THE BOND MARKET?
A. I think we're entering an environment that likely will be tougher
for financial assets in general. The events in Southeast Asia are
significant and I think the ramifications have yet to be felt around
the world. At the same time, the U.S. economy is strong. So, at the
end of the period, we watched as two counteracting factors created
some degree of balance. Going forward, I don't know which side of the
equation will tip the scales. Either way, I think we're going into a
period of higher volatility. Even though the investing environment
will get a bit tougher, more buying opportunities should arise.
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.
KEVIN GRANT ON INVESTING IN
ASSET-BACKED SECURITIES:
"A typical asset-backed security is
a pool of credit cards. Credit card
companies generally charge
customers a high rate of interest
so that they can cover defaults
and delinquencies. If a credit card
company charges customers an
average of 16% interest, and it is
paying investors about 7% interest
on its credit card bond, the company
can use 9% of its portfolio each year
to cover defaults and delinquencies
and still make its interest payments
to bond investors. On top of that,
these securities have triggers,
meaning that even if delinquencies
and defaults get to a high enough
level, the bond will be paid off
automatically. Asset-backed
securities usually carry a Triple-A
rating because of this structure.
Of course, the market knows this,
so there aren't any real bargains
out there. However, I believe
asset-backed securities are a
safe alternative to other types
of corporate bonds."
FUND FACTS
GOAL: seeks to provide a high
current income by investing in
investment grade debt securities
START DATE: February 2, 1984
SIZE: as of November 30,
1997, more than $482 million
MANAGER: Kevin Grant, since
1995; joined Fidelity in 1993
(checkmark)
INVESTMENT CHANGES
QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1997
(MOODY'S RATINGS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO
AAA 59.1 63.0
AA 10.0 8.3
A 22.3 21.5
BAA 5.9 4.7
TABLE EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1997
6 MONTHS AGO
YEARS 5.9 5.6
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30, 1997
6 MONTHS AGO
YEARS 3.3 3.2
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1997* AS OF MAY 31, 1997 **
CORPORATE BONDS 42.7%
U.S. GOVERNMENT
AND AGENCY
OBLIGATIONS 29.7%
MORTGAGE-BACKED
SECURITIES 16.4%
FOREIGN GOVERNMENT
OBLIGATIONS 4.8%
OTHER 3.7%
SHORT-TERM
INVESTMENTS 2.7%
CORPORATE BONDS 33.9%
U.S. GOVERNMENT
AND AGENCY
OBLIGATIONS 38.8%
MORTGAGE-BACKED
SECURITIES 20.2%
FOREIGN GOVERNMENT
OBLIGATIONS 3.6%
OTHER 1.0%
SHORT-TERM
INVESTMENTS 2.5%
ROW: 1, COL: 1, VALUE: 2.7
ROW: 1, COL: 2, VALUE: 3.7
ROW: 1, COL: 3, VALUE: 4.8
ROW: 1, COL: 4, VALUE: 16.4
ROW: 1, COL: 5, VALUE: 29.7
ROW: 1, COL: 6, VALUE: 42.7
ROW: 1, COL: 1, VALUE: 3.0
ROW: 1, COL: 2, VALUE: 2.0
ROW: 1, COL: 3, VALUE: 3.6
ROW: 1, COL: 4, VALUE: 20.2
ROW: 1, COL: 5, VALUE: 37.8
ROW: 1, COL: 6, VALUE: 33.4
* FOREIGN
INVESTMENTS 12.0%
** FOREIGN
INVESTMENTS 9.9%
INVESTMENTS NOVEMBER 30, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
NONCONVERTIBLE BONDS - 42.7%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
BASIC INDUSTRIES - 0.6%
CHEMICALS & PLASTICS - 0.6%
Methanex Corp. yankee 8 7/8%, 11/15/01 $ 2,790,000 $ 2,940,325
ENERGY - 1.6%
OIL & GAS - 1.6%
Apache Corp. 9 1/4%, 6/1/02 7,075,000 7,823,960
FINANCE - 33.0%
ASSET-BACKED SECURITIES - 13.8%
Aesop Funding II LLC 6.22%, 10/20/01 (b) 8,000,000 7,999,687
Arcadia Automobile Receivables Trust
6 1/2%, 6/17/02 5,000,000 5,012,500
Capital Equipment Receivables Trust 6.11%, 7/15/99 7,670,000
7,686,567
Chase Manhattan Grantor Trust:
6.61%, 9/15/02 2,494,859 2,507,918
6.76%, 9/15/02 935,572 940,031
Chevy Chase Auto Receivables Trust:
6.60%, 12/15/02 861,778 865,811
5.90%, 7/15/03 2,429,376 2,421,025
Citibank Credit Card Master Trust I 6.46%, 8/15/02 10,000,000
10,056,250
Contimortgage Home Equity Loan Trust
6.26%, 7/15/12 5,000,000 4,994,532
Ford Credit Auto Owner Trust 6.40%, 5/15/02 1,460,000 1,458,175
Ford Credit Grantor Trust 5.90%, 10/15/00 1,845,734 1,844,293
KeyCorp Auto Grantor Trust 5.80%, 7/15/00 78,920 78,707
MBNA Master Credit Card Trust II 6.56%, 1/15/07 10,000,000
10,117,200
PNC Student Loan Trust I 6.314%, 1/25/01 5,000,000 5,006,250
SCFC Recreational Vehicle Loan Trust
7 1/4%, 9/15/06 315,398 314,903
Sears Credit Account Master Trust II
6 1/2%, 10/15/03 3,400,000 3,419,108
Standard Credit Card Master Trust I
7.65%, 2/15/00 1,200,000 1,203,375
65,926,332
BANKS - 8.4%
ABN Amro Bank NV 6 5/8%, 10/31/01 2,750,000 2,789,435
Banc One Corp. 6.70%, 3/24/00 1,900,000 1,916,625
Bank of Boston 6 3/8%, 8/11/00 2,620,000 2,628,279
Banponce Financial Corp.:
6.69%, 9/21/00 2,250,000 2,263,140
6 3/4%, 8/9/01 3,850,000 3,872,831
Citicorp. 7.20%, 6/15/07 1,580,000 1,644,085
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FINANCE - CONTINUED
BANKS - CONTINUED
Kansallis-Osake-Pankki 10%, 5/1/02 $ 650,000 $ 736,710
Nationsbank Corp. 8 1/8%, 6/15/02 3,000,000 3,198,060
Provident Bank 6 1/8%, 12/15/00 5,000,000 4,958,150
Skandinaviska Enskilda Banken yankee
8.45%, 5/15/02 4,600,000 4,937,502
Star Banc Corp. 6.80%, 5/1/99 2,400,000 2,423,520
US Bancorp 7 1/2%, 6/1/26 2,000,000 2,148,000
Union Planters National Bank 6.81%, 8/20/01 1,500,000 1,520,625
Wachovia Corp. 6.605%, 10/1/25 5,000,000 5,075,000
40,111,962
CREDIT & OTHER FINANCE - 8.6%
Associates Corp. of North America
6 1/2%, 9/9/98 5,000,000 5,019,450
Chrysler Financial Corp.:
6.16%, 7/28/99 5,000,000 5,003,850
6 3/8%, 1/28/00 2,580,000 2,584,386
CIT Group Holdings, Inc. 6 1/4%, 9/30/99 4,560,000 4,561,961
Deere (John) Capital Corp. 9 5/8%, 11/1/98 2,500,000 2,574,425
Ford Motor Credit Co. 7 3/4%, 11/15/02 100,000 105,464
General Electric Capital Corp. 6.83%,
4/13/09 (a) 2,530,000 2,553,478
General Motors Acceptance Corp. 6.65%, 5/24/00 2,000,000 2,015,980
Morgan Guaranty Trust Co. 5 3/4%, 10/8/99 10,000,000 9,913,800
RBSG Capital Corp. 10 1/8%, 3/1/04 1,500,000 1,770,375
Sears Roebuck Acceptance Corp. 6.15%, 11/15/05 5,000,000 4,935,350
41,038,519
INSURANCE - 2.2%
Protective Life Corp. 7.95%, 7/1/04 1,000,000 1,065,840
SunAmerica, Inc. 6.20%, 10/31/99 9,300,000 9,282,051
10,347,891
TOTAL FINANCE 157,424,704
INDUSTRIAL MACHINERY & EQUIPMENT - 1.3%
POLLUTION CONTROL - 1.3%
WMX Technologies, Inc. 7.10%, 8/1/26 6,000,000 6,080,160
NONCONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
NONDURABLES - 1.3%
TOBACCO - 1.3%
Philip Morris Companies, Inc.:
6 3/8%, 1/15/98 $ 250,000 $ 250,025
6.95%, 6/1/06 6,000,000 6,132,960
6,382,985
RETAIL & WHOLESALE - 0.4%
GENERAL MERCHANDISE STORES - 0.4%
Penney (J.C.) Co., Inc. 6.95%, 4/1/00 1,800,000 1,825,488
TECHNOLOGY - 3.2%
COMPUTER SERVICES & SOFTWARE - 1.1%
First Data Corp. 6 5/8%, 4/1/03 5,000,000 5,045,000
ELECTRONICS - 2.1%
Motorola, Inc. 6 1/2%, 9/1/25 5,000,000 5,116,200
Texas Instruments, Inc. 6 7/8%, 7/15/00 5,000,000 5,064,250
10,180,450
TOTAL TECHNOLOGY 15,225,450
UTILITIES - 1.3%
ELECTRIC UTILITY - 1.3%
British Columbia Hydro & Power Authority
yankee 12 1/2%, 1/15/14 940,000 1,040,185
DR Investment UK yankee 7.10%, 5/15/02 (b) 5,000,000 5,140,750
Virginia Electric & Power Co. 1st & Ref. Mtg.,
7 3/8%, 7/1/02 150,000 156,206
TOTAL UTILITIES 6,337,141
TOTAL NONCONVERTIBLE BONDS
(Cost $203,073,686) 204,040,213
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 29.7%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 19.1%
6 7/8%, 3/31/00 $ 21,500,000 $ 21,990,415
6 3/8%, 3/31/01 40,400,000 41,037,512
7 7/8%, 8/15/01 395,000 421,046
7%, 7/15/06 11,200,000 12,012,000
12 3/4%, 11/15/10 (callable) 10,998,000 15,639,486
91,100,459
U.S. GOVERNMENT AGENCY OBLIGATIONS - 10.6%
Federal Farm Credit Bank Consolidated Systemwide
6.55%, 2/7/04 740,000 759,307
Federal Home Loan Bank:
7.31%, 6/16/04 3,830,000 4,074,775
7.38%, 8/5/04 1,930,000 2,064,791
7.70%, 9/20/04 1,250,000 1,355,463
Federal Home Loan Mortgage Corp.:
7.59%, 2/14/00 2,500,000 2,584,375
5.035%, 4/28/03 15,000,000 14,883,150
8.115%, 1/31/05 5,460,000 6,066,551
Federal National Mortgage Association
6.72%, 8/1/05 2,230,000 2,298,283
Financing Corp. stripped principal:
0%, 5/30/00 1,000,000 864,390
0%, 6/6/02 2,800,000 2,139,508
Government Trust Certificates (assets of Trust guaranteed
by U.S. Government through Defense Security
Assistance Agency) Class 2-E, 9.40%, 5/15/02 904,378 961,553
Guaranteed Export Trust Certificates (assets of Trust
guaranteed by U.S. Government through
Export-Import Bank):
Series 1994-A, 7.12%, 4/15/06 315,882 327,308
Series 1994-C, 6.61%, 9/15/99 57,709 58,016
State of Israel (guaranteed by U.S. Government
through Agency for International Development):
8%, 11/15/01 1,740,000 1,858,111
6 1/8%, 3/15/03 680,000 679,769
6 5/8%, 2/15/04 140,000 144,271
7 5/8%, 8/15/04 840,000 910,477
5.89%, 8/15/05 2,070,000 2,042,036
U.S. Department of Housing and Urban Development
Government guaranteed participation certificates:
Series 1995-A, 8.24%, 8/1/04 1,030,000 1,143,094
Series 1996-A, 6.92%, 8/1/04 5,360,000 5,582,118
50,797,346
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $140,902,292) 141,897,805
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 9.1%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.4%
5 1/2%, 12/1/02 to 6/1/03 $ 2,194,650 $ 2,126,006
7%, 11/1/00 to 6/1/01 2,724,469 2,756,168
9 1/2%, 1/1/17 53,015 57,007
10%, 4/1/05 to 10/1/10 388,126 417,249
10 1/4%, 12/1/09 37,802 40,881
10 1/2%, 5/1/21 740,401 816,736
11%, 12/1/11 43,834 48,590
11 1/2%, 10/1/15 122,373 137,385
11 3/4%, 10/1/10 90,551 102,379
6,502,401
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 2.6%
5 1/2%, 5/1/03 to 3/1/11 3,889,444 3,767,687
6%, 5/1/01 to 3/1/11 1,884,502 1,864,289
9 1/2%, 2/1/25 3,371,668 3,641,368
10%, 1/1/20 103,935 113,971
10 1/2%, 7/1/11 to 8/1/20 519,540 579,972
11%, 8/1/15 2,242,592 2,501,791
12 1/2%, 2/1/11 to 2/1/15 109,489 129,429
12,598,507
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 5.1%
7%, 11/1/22 to 11/1/27 5,084,410 5,115,719
8%, 2/1/02 to 6/1/25 4,234,387 4,364,553
8 1/2%, 4/1/17 to 12/1/21 747,214 789,909
9%, 5/1/16 to 10/1/18 3,434,713 3,720,266
10%, 8/1/18 to 1/1/26 4,133,293 4,610,681
11%, 12/1/09 to 10/1/20 1,155,117 1,315,808
11 1/2%, 3/1/10 to 2/1/19 3,673,337 4,230,092
24,147,028
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $42,425,722) 43,247,936
U.S. GOVERNMENT AGENCY - COLLATERALIZED MORTGAGE OBLIGATIONS - 3.1%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
Federal Home Loan Mortgage Corporation:
planned amortization class Series 1645 Class ZA,
5 1/2%, 4/15/05 $ 11,143,122 $ 10,960,297
sequential pay Series 1838 Class A,
6 1/2%, 12/15/02 4,019,227 4,020,477
TOTAL U.S. GOVERNMENT AGENCY-
COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $14,833,172) 14,980,774
COMMERCIAL MORTGAGE SECURITIES - 4.2%
BKB Commercial Mortgage Trust Series 1997-C1 (b):
Class A-1, 6 7/8%, 2/25/43 1,972,998 1,969,299
Class B, 7.21%, 2/25/43 (c) 4,000,000 4,006,718
CBM Funding Corp. sequential pay Series 1996-1
Class A-1, 7.55%, 7/1/99 127,148 128,682
CS First Boston Mortgage Securities Corp.
Series 1995-WF1 Class A-2, 6.648%, 12/21/27 5,000,000 5,000,000
Equitable Life Assurance Society of the United States
(The) Series 1996-1 Class C1,
7.52%, 5/15/06 (b) 1,000,000 1,060,300
First Union - Lehman Brothers Commercial Mortgage
Trust sequential pay Series 1997-C2 Class A3,
6.65%, 12/18/07 4,000,000 4,006,250
Structured Asset Securities Corp. sequential pay
Series 1995-C4 Class A-1A, 6.90%, 6/25/26 177,582 177,582
Thirteen Affiliates of General Growth Properties, Inc.
sequential pay Series A-2, 6.602%, 11/15/07 (b) 2,500,000
2,491,797
Wells Fargo Capital Markets Apartment Financing
Trust 6.56%, 12/29/05 (b) 935,450 942,091
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $19,703,683) 19,782,719
FOREIGN GOVERNMENT OBLIGATIONS - 4.8%
Alberta Province yankee 9 1/4%, 4/1/00 2,200,000 2,342,450
Canadian Government yankee 6 1/8%, 7/15/02 5,000,000 5,012,500
Export Development Corp. yankee
8 1/8%, 8/10/99 740,000 762,992
FOREIGN GOVERNMENT OBLIGATIONS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
Manitoba Province yankee:
6 3/8%, 10/15/99 $ 2,590,000 $ 2,598,728
6 7/8%, 9/15/02 5,000,000 5,118,950
Quebec Province yankee 6.86%, 4/15/26 (a) 5,000,000 5,125,550
Slovenian Republic euro 7%, 8/6/01 2,080,000 2,083,120
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $22,690,392) 23,044,290
SUPRANATIONAL OBLIGATIONS - 3.2%
African Development Bank 8.70%, 5/1/01 4,500,000 4,848,300
Inter-American Development Bank yankee
6.29%, 7/16/27 10,000,000 10,268,200
TOTAL SUPRANATIONAL OBLIGATIONS
(Cost $14,313,980) 15,116,500
CERTIFICATES OF DEPOSIT - 0.5%
Canadian Imperial Bank of Commerce (NY Branch)
yankee 6.20%, 8/1/00 (Cost $2,503,750) 2,500,000 2,497,500
CASH EQUIVALENTS - 2.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.70%, dated
11/28/97 due 12/1/97 $ 12,989,167 12,983,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $473,429,677) $ 477,590,737
LEGEND
1. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.
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 $23,610,642 or
4.9% of net assets.
3. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
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 89.0% AAA, AA, A 86.2%
Baa 5.9% BBB 6.1%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
of the sovereign credit of the issuing government. The percentage not
rated by Moody's or S&P amounted to 0.0%.
INCOME TAX INFORMATION
At November 30, 1997, the aggregate cost of investment securities for
income tax purposes was $473,515,361. Net unrealized appreciation
aggregated $4,075,376, of which $5,651,688 related to appreciated
investment securities and $1,576,312 related to depreciated investment
securities.
At November 30, 1997, the fund had a capital loss carryforward of
approximately $15,259,000 of which $2,841,000, $1,035,000, $134,000,
$9,840,000 and $1,409,000 will expire on November 30, 1998, 1999,
2002, 2004 and 2005 , respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 477,590,737
AGREEMENTS OF $12,983,000) (COST $473,429,677) -
SEE ACCOMPANYING SCHEDULE
CASH 68,580
RECEIVABLE FOR INVESTMENTS SOLD 25,147
INTEREST RECEIVABLE 5,767,428
PREPAID EXPENSES 13,782
TOTAL ASSETS 483,465,674
LIABILITIES
DISTRIBUTIONS PAYABLE $ 586,556
ACCRUED MANAGEMENT FEE 169,390
DISTRIBUTION FEES PAYABLE 75,123
OTHER PAYABLES AND ACCRUED EXPENSES 158,066
TOTAL LIABILITIES 989,135
NET ASSETS $ 482,476,539
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 495,658,912
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (1,999,021)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (15,344,412)
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 4,161,060
NET ASSETS $ 482,476,539
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
NOVEMBER 30, 1997
CALCULATION OF MAXIMUM OFFERING PRICE $10.56
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($3,818,829 (DIVIDED BY) 361,750 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.25 OF $10.56) $10.97
CLASS T: $10.56
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($278,869,303 (DIVIDED BY) 26,408,491 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/97.25 OF $10.56) $10.86
CLASS B: $10.54
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($22,200,906 (DIVIDED BY) 2,105,568 SHARES) A
CLASS C: $10.56
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($160,415 (DIVIDED BY) 15,191 SHARES) A
INSTITUTIONAL CLASS: $10.57
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE ($177,427,086 (DIVIDED BY) 16,790,852 SHARES)
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>
YEAR ENDED NOVEMBER 30, 1997
INVESTMENT INCOME $ 33,006,612
INTEREST
EXPENSES
MANAGEMENT FEE $ 2,095,786
TRANSFER AGENT FEES 876,536
DISTRIBUTION FEES 834,999
ACCOUNTING FEES AND EXPENSES 195,556
NON-INTERESTED TRUSTEES' COMPENSATION 7,862
CUSTODIAN FEES AND EXPENSES 29,201
REGISTRATION FEES 91,318
AUDIT 51,920
LEGAL 11,323
MISCELLANEOUS 7,221
TOTAL EXPENSES BEFORE REDUCTIONS 4,201,722
EXPENSE REDUCTIONS (63,858) 4,137,864
NET INVESTMENT INCOME 28,868,748
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (1,460,647)
FOREIGN CURRENCY TRANSACTIONS 747 (1,459,900)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (1,413,676)
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (747) (1,414,423)
NET GAIN (LOSS) (2,874,323)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 25,994,425
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 28,868,748 $ 31,675,872
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) (1,459,900) (9,733,480)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (1,414,423) 2,408,292
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 25,994,425 24,350,684
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (28,478,083) (31,669,310)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) (8,667,273) 47,816,674
TOTAL INCREASE (DECREASE) IN NET ASSETS (11,150,931) 40,498,048
NET ASSETS
BEGINNING OF PERIOD 493,627,470 453,129,422
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS $ 482,476,539 $ 493,627,470
OF NET INVESTMENT INCOME OF $1,999,021 AND
$2,016,748, RESPECTIVELY)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED NOVEMBER 30,
1997 1996 E
SELECTED PER-SHARE DATA D
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.590 $ 10.350
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .615 .159
NET REALIZED AND UNREALIZED GAIN (LOSS) (.023) .235 G
TOTAL FROM INVESTMENT OPERATIONS .592 .394
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.622) (.154)
NET ASSET VALUE, END OF PERIOD $ 10.560 $ 10.590
TOTAL RETURN B, C 5.81% 3.83%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,819 $ 687
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% F .90% A,
F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.93% 6.45% A
PORTFOLIO TURNOVER RATE 138% 200%
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 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.610 $ 10.760 $ 10.260 $ 11.140 $ 10.640
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .625 C .671 C .649 .609 .785
NET REALIZED AND UNREALIZED (.058) (.147) .491 (.876) .511
GAIN (LOSS)
TOTAL FROM INVESTMENT .567 .524 1.140 (.267) 1.296
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.617) (.674) (.640) (.555) (.796)
IN EXCESS OF NET - - - (.058) -
INVESTMENT INCOME
TOTAL DISTRIBUTIONS (.617) (.674) (.640) (.613) (.796)
NET ASSET VALUE, END OF PERIOD $ 10.560 $ 10.610 $ 10.760 $ 10.260 $ 11.140
TOTAL RETURN A, B 5.56% 5.10% 11.43% (2.44)% 12.50%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 278,869 $ 262,103 $ 228,439 $ 141,866 $ 59,184
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .96% .97% .94% D 1.02% D 1.23%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE .96% .96% E .94% 1.02% 1.23%
NET ASSETS AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT INCOME 5.97% 6.38% 6.20% 6.04% 6.81%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 138% 200% 189% 68% 59%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.590 $ 10.750 $ 10.250 $ 10.430
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .551 D .597 D .579 .204
NET REALIZED AND UNREALIZED GAIN (LOSS) (.057) (.153) .483 (.178)
TOTAL FROM INVESTMENT OPERATIONS .494 .444 1.062 .026
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.544) (.604) (.562) (.187)
IN EXCESS OF NET INVESTMENT INCOME - - - (.019)
TOTAL DISTRIBUTIONS (.544) (.604) (.562) (.206)
NET ASSET VALUE, END OF PERIOD $ 10.540 $ 10.590 $ 10.750 $ 10.250
TOTAL RETURN B, C 4.83% 4.32% 10.62% 0.24%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 22,201 $ 18,972 $ 15,830 $ 3,156
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65% F 1.66% F 1.70% F 1.65% A,
F
RATIO OF NET INVESTMENT INCOME TO AVERAGE 5.27% 5.69% 5.44% 5.42% A
NET ASSETS
PORTFOLIO TURNOVER RATE 138% 200% 189% 68%
</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 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).
FINANCIAL HIGHLIGHTS - CLASS C
<TABLE>
<CAPTION>
<S> <C>
YEAR ENDED
NOVEMBER 30,
1997 E
SELECTED PER-SHARE DATA D
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.570
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .031
NET REALIZED AND UNREALIZED GAIN (LOSS) (.005)
TOTAL FROM INVESTMENT OPERATIONS .026
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.036)
NET ASSET VALUE, END OF PERIOD $ 10.560
TOTAL RETURN B, C .25%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 160
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.73% A, G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.42% A
PORTFOLIO TURNOVER RATE 138%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD 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 NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO NOVEMBER 30, 1997.
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 (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
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).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED NOVEMBER 30,
1997 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.620 $ 10.770 $ 10.270 $ 11.160 $ 10.640
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .658 B .705 B .671 .602 .832
NET REALIZED AND UNREALIZED (.060) (.151) .499 (.833) .531
GAIN (LOSS)
TOTAL FROM INVESTMENT .598 .554 1.170 (.231) 1.363
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.648) (.704) (.670) (.597) (.843)
IN EXCESS OF NET - - - (.062) -
INVESTMENT INCOME
TOTAL DISTRIBUTIONS (.648) (.704) (.670) (.659) (.843)
NET ASSET VALUE, END OF PERIOD $ 10.570 $ 10.620 $ 10.770 $ 10.270 $ 11.160
TOTAL RETURN A 5.86% 5.40% 11.73% (2.10)% 13.17%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 177,427 $ 211,866 $ 208,861 $ 172,122 $ 183,790
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .67% .66% .67% C .61% .64%
NET ASSETS
RATIO OF NET INVESTMENT INCOME 6.27% 6.69% 6.47% 6.45% 7.41%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 138% 200% 189% 68% 59%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1997
9. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Intermediate Bond 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 fund offers Class A, Class T, Class B, Class C 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, if any, 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 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.
Securities (including restricted securities) for which 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. 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 foreign
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. Interest income, which includes accretion of
original issue discount, is accrued as earned.
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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are borne by Class C and amortized over
one year.
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 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 paydown gains/losses on certain securities, futures and
options transactions, market discount, capital loss carryforwards and
losses deferred due to futures and options and wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Distributions in excess of net investment income and accumulated
undistributed net realized gain (loss) on investments and foreign
currency transactions 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.
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 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 funds, 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 funds, 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 funds' 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, 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 $626,102,979 and $633,343,025, respectively, of which U.S.
government and government agency obligations aggregated $456,099,378
and $567,464,076, respectively.
12. 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 .1100% to .3700% for the
period. The annual individual fund fee rate is .30%. In the event that
these rates were lower than the contractual rates in effect during
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
the period, FMR voluntarily implemented the above rates, as they
resulted in the same or a lower management fee. For the period, the
management fee was equivalent to an annual rate of .44% of 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 .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .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 $ $
3,177 3,177
CLASS T
655,179 655,179
CLASS B
176,588 49,049
CLASS C
55 -
$ $
834,999 707,405
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 3.75% for
selling Class A shares (3.25% prior to August 1, 1997), and 2.75% for
selling Class T shares of the fund, respectively. FDC receives the
proceeds of contingent deferred sales charges levied on Class B share
redemptions occurring within three years of purchase and Class C share
redemptions occuring within one year of purchase. Contingent deferred
sales charges are based on declining rates ranging from 3% to 1% for
Class B and 1% for Class C, 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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
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 $ $
68,475 43,995
CLASS T
109,296 77,414
CLASS B
68,602 0*
CLASS C
- -*
$ $
246,373 121,409
* WHEN CLASS B AND CLASS C 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.
FIIOC pays for typesetting, printing and mailing of all shareholder
reports. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC* $ .34%
7,231
CLASS T** FIIOC* .20%
521,357
CLASS B FIIOC* .26%
50,467
CLASS C FIIOC* .35% ***
25
INSTITUTIONAL CLASS FIIOC* .15%
297,456
$
876,536
* 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
ACCOUNTING FEES. FSC 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.
13. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A .90% $
32,105
CLASS T 1.00%
-
CLASS B 1.65%
16,908
CLASS C 1.75%
5,670
INSTITUTIONAL CLASS .75%
-
$
54,683
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $9,175 under this
arrangement.
14. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEAR ENDED NOVEMBER 30,
1997 B 1996 A
CLASS A
FROM NET INVESTMENT INCOME $ $
122,899 6,183
CLASS T
FROM NET INVESTMENT INCOME
15,434,281 16,284,509
CLASS B
FROM NET INVESTMENT INCOME
1,017,603 1,037,161
CLASS C
FROM NET INVESTMENT INCOME
312 -
INSTITUTIONAL CLASS
FROM NET INVESTMENT INCOME
11,902,988 14,341,457
TOTAL $ 28,478,083 $
31,669,310
C DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
D DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
15. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 B 1996 A 1997 B 1996 A
CLASS A $ $
SHARES SOLD 455,670 72,448 4,761,173 756,142
REINVESTMENT OF DISTRIBUTIONS
10,671 475 111,981 4,998
SHARES REDEEMED
(169,434) (8,080) (1,767,583) (84,516)
NET INCREASE (DECREASE) 296,907 64,843 $ $
3,105,571 676,624
CLASS T $ $
SHARES SOLD 13,128,368 14,999,140 137,559,201 158,724,547
REINVESTMENT OF DISTRIBUTIONS
1,340,839 1,411,416 14,043,998 14,860,075
SHARES REDEEMED
(12,764,354) (12,931,481) (133,637,535) (136,183,619)
NET INCREASE (DECREASE) 1,704,853 3,479,075 $ $
17,965,664 37,401,003
CLASS B $ $
SHARES SOLD 1,113,298 1,114,235 11,661,677 11,808,349
REINVESTMENT OF DISTRIBUTIONS
76,151 76,373 796,683 803,087
SHARES REDEEMED
(874,566) (872,302) (9,166,397) (9,227,658)
NET INCREASE (DECREASE) 314,883 318,306 $ $
3,291,963 3,383,778
CLASS C $ $
SHARES SOLD 15,175 - 160,441 -
REINVESTMENT OF DISTRIBUTIONS
16 - 167 -
NET INCREASE (DECREASE) 15,191 - $ $
160,608 -
INSTITUTIONAL CLASS $ $
SHARES SOLD 5,646,676 9,022,232 59,206,035 95,376,649
REINVESTMENT OF DISTRIBUTIONS
477,520 561,358 5,003,755 5,915,605
SHARES REDEEMED
(9,287,961) (9,022,616) (97,400,869) (94,936,985)
NET INCREASE (DECREASE) (3,163,765) 560,974 $ (33,191,079) $
6,355,269
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
B SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
16. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $
30,352
CLASS T
22,481
CLASS B
14,929
CLASS C
5,703
INSTITUTIONAL CLASS
17,853
$
91,318
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series IV and the Shareholders of
Fidelity Advisor Intermediate Bond Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Advisor Series IV: Fidelity Advisor Intermediate Bond
Fund, including the schedule of portfolio investments, as of November
30, 1997, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two
years in the period then ended and the financial highlights of Class
A, Class T, Class B, Class C and Institutional Class for each of the
periods indicated therein. 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 audits.
We conducted our audits 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, 1997 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 audits provide 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 Advisor
Intermediate Bond Fund as of November 30, 1997, the results of its
operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial
highlights of Class A, Class T, Class B, Class C and Institutional
Class for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
/s/ COOPERS & LYBRAND, L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 13, 1998
DISTRIBUTIONS
A total of 32.27% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
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
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Eric D. Roiter, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
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 *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
Bank of New York
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 International Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant
Growth Fund
SM
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 Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
