CONTENTS
PERFORMANCE A-2 How the fund has done over
time.
FUND TALK A-5 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGE A-8 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS A-9 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS A-14 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES A-18 Notes to the financial
statements.
REPORT OF INDEPENDENT A-21 The auditors' opinion.
ACCOUNTANTS
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,
THE 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 FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $100,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past five years and the past
10 years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
Fidelity Inst Sht-Int Govt 2.37% 37.62% 89.45%
LB 1-5 Year US Government Bond 2.40% 38.98% 95.42%
Short-Intermediate US 1.26% 34.53% 88.55%
Government Funds Average
CUMULATIVE TOTAL RETURNS show the fund'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 the fund's returns to the performance of the
Lehman Brothers 1-5 Year U.S. Government Bond Index - a market
value-weighted index of government fixed-rate debt issues with
maturities between one and five years. To measure how the fund's
performance stacked up against its peers, you can compare it to the
short-intermediate U.S. government funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past one year average represents a peer group of 92 mutual
funds. These benchmarks reflect reinvestment of dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
Fidelity Inst Sht-Int Govt 2.37% 6.59% 6.60%
LB 1-5 Year US Government Bond 2.40% 6.80% 6.93%
Short-Intermediate US 1.26% 6.10% 6.54%
Government Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$100,000 OVER 10 YEARS
Inst Sht-Int Govt LB 1-5 Year U.S. Govt
00662 LB069
1989/11/30 100000.00 100000.00
1989/12/31 100445.80 100357.10
1990/01/31 100360.49 100177.21
1990/02/28 100849.78 100636.34
1990/03/31 101294.80 100845.77
1990/04/30 101422.20 100875.31
1990/05/31 102953.77 102676.94
1990/06/30 103997.41 103882.50
1990/07/31 105177.43 105278.70
1990/08/31 105584.74 105391.47
1990/09/30 106298.57 106288.26
1990/10/31 107358.73 107603.91
1990/11/30 108539.27 108852.43
1990/12/31 109764.41 110245.95
1991/01/31 110764.01 111322.63
1991/02/28 111598.62 112018.04
1991/03/31 112293.61 112713.46
1991/04/30 113417.51 113859.95
1991/05/31 114252.97 114536.57
1991/06/30 114495.94 114813.12
1991/07/31 115584.95 115954.25
1991/08/31 117406.40 117857.91
1991/09/30 118391.97 119450.11
1991/10/31 119663.85 120838.26
1991/11/30 120817.87 122202.23
1991/12/31 123751.19 124516.70
1992/01/31 122572.65 123909.89
1992/02/29 123126.61 124234.78
1992/03/31 123075.53 123952.85
1992/04/30 123991.30 125158.41
1992/05/31 125572.57 126694.23
1992/06/30 127063.99 128324.03
1992/07/31 128403.26 130297.50
1992/08/31 129785.58 131588.98
1992/09/30 131374.76 133151.65
1992/10/31 129881.93 131860.17
1992/11/30 130144.63 131422.51
1992/12/31 131590.36 132875.09
1993/01/31 133156.43 134950.60
1993/02/28 134382.41 136529.37
1993/03/31 135010.66 137004.62
1993/04/30 135516.10 138032.97
1993/05/31 135806.00 137589.95
1993/06/30 136885.69 139050.59
1993/07/31 137295.18 139302.97
1993/08/31 138152.13 140951.56
1993/09/30 138482.63 141410.70
1993/10/31 138702.49 141754.38
1993/11/30 138644.42 141453.66
1993/12/31 139309.92 142014.82
1994/01/31 140583.47 143180.11
1994/02/28 139375.72 141754.38
1994/03/31 137039.77 140368.92
1994/04/30 136334.95 139558.05
1994/05/31 136474.55 139705.72
1994/06/30 136636.18 139917.84
1994/07/31 138147.05 141453.66
1994/08/31 138526.45 141894.00
1994/09/30 137903.85 141136.83
1994/10/31 138162.88 141314.04
1994/11/30 137666.24 140607.88
1994/12/31 138115.43 140916.66
1995/01/31 140074.44 143056.60
1995/02/28 142417.12 145478.47
1995/03/31 143134.22 146286.65
1995/04/30 144728.89 147790.25
1995/05/31 147687.63 151173.34
1995/06/30 148627.07 152054.02
1995/07/31 148982.75 152405.76
1995/08/31 150153.47 153458.28
1995/09/30 150993.99 154317.47
1995/10/31 152534.41 155796.91
1995/11/30 153898.77 157413.27
1995/12/31 155300.29 158758.46
1996/01/31 156720.09 160181.51
1996/02/29 155644.22 159099.45
1996/03/31 155265.36 158621.52
1996/04/30 154992.87 158492.64
1996/05/31 155051.68 158600.04
1996/06/30 156561.83 159972.08
1996/07/31 157102.45 160546.67
1996/08/31 157452.02 160952.10
1996/09/30 159143.49 162700.03
1996/10/31 161376.79 164931.26
1996/11/30 162919.56 166469.77
1996/12/31 162612.55 166061.65
1997/01/31 163168.26 166813.45
1997/02/28 163646.49 167130.28
1997/03/31 163011.56 166628.18
1997/04/30 164653.56 168231.12
1997/05/31 165786.45 169444.74
1997/06/30 167064.89 170752.34
1997/07/31 169239.98 173209.11
1997/08/31 169247.11 173010.42
1997/09/30 170680.55 174583.83
1997/10/31 172151.36 176216.30
1997/11/30 172682.62 176562.67
1997/12/31 173803.35 177875.63
1998/01/31 175648.05 179916.23
1998/02/28 175752.34 179884.01
1998/03/31 176324.78 180498.87
1998/04/30 177055.58 181366.13
1998/05/31 178189.22 182450.86
1998/06/30 178926.22 183487.27
1998/07/31 179852.03 184276.66
1998/08/31 181936.72 187103.96
1998/09/30 184977.55 190505.85
1998/10/31 185332.04 191257.65
1998/11/30 185072.87 190830.74
1998/12/31 185814.80 191485.88
1999/01/31 186763.50 192310.17
1999/02/28 185467.36 190685.75
1999/03/31 186453.02 192018.97
1999/04/30 186993.41 192565.82
1999/05/31 186560.76 191987.97
1999/06/30 186903.44 192472.51
1999/07/31 186849.42 192788.10
1999/08/31 187183.24 193260.56
1999/09/30 188943.32 194719.91
1999/10/31 189316.62 195162.52
1999/11/30 189453.98 195415.80
IMATRL PRASUN SHR__CHT 19991130 19991214 102415 R00000000000123
$100,000 OVER 10 YEARS: Let's say hypothetically that $100,000 was
invested in Fidelity Institutional Short-Intermediate Government Fund
on November 30, 1989. As the chart shows, by November 30, 1999, the
value of the investment would have grown to $189,454 - an 89.45%
increase on the initial investment. For comparison, look at how the
Lehman Brothers 1-5 Year U.S. Government Bond Index did over the same
period. With dividends and capital gains, if any, reinvested, the same
$100,000 would have grown to $195,416 - a 95.42% 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.
TOTAL RETURN COMPONENTS
YEARS ENDED NOVEMBER 30,
1999 1998 1997 1996 1995
Dividend returns 6.27% 6.54% 6.83% 6.90% 7.56%
Capital returns -3.90% 0.64% -0.84% -1.04% 4.23%
Total returns 2.37% 7.18% 5.99% 5.86% 11.79%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.66(cents) 28.14(cents) 58.72(cents)
Annualized dividend rate 6.20% 6.12% 6.33%
30-day annualized yield 6.22% - -
DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of $9.14
over the past one month, $9.17 over the past six months and $9.27 over
the past one year, you can compare the fund's income over these three
periods. The 30-day annualized YIELD is a standard formula for all
bond 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
Fueled by robust economic growth
and a tighter monetary policy,
interest rates moved sharply higher,
leaving most bonds gasping for air
during the 12-month period that
ended November 30, 1999. The
Lehman Brothers Aggregate Bond
Index, a popular measure of
taxable-bond performance, closed
out the period down 0.04%. Treasury
prices had the roughest time of it,
wilting in response to three
quarter-point interest-rate hikes
levied by the Federal Reserve Board,
which effectively erased all of late
1998's rate cuts. The Lehman
Brothers Treasury Index gave back
1.71% during this time frame. The
struggle wasn't as pronounced
elsewhere in the bond market, as
spread sectors - namely,
mortgage securities and
government agency securities -
maintained their edge over
comparable duration Treasuries.
The Lehman Brothers
Mortgage-Backed Securities Index
and the Lehman Brothers U.S.
Agency Index posted returns of
2.54% and -0.02%, respectively. A
favorable technical backdrop
painted by declining interest-rate
volatility, as well as a falloff in
new-issue supply, supported the
rise in mortgages during the
period. Discount mortgage
securities reaped the rewards of a
strong economy, benefiting from
faster prepayment activity induced
by housing turnover. Premium
coupon issues received their lift from
slowing prepayments, a by-product
of higher rates. Agency securities
turned in positive relative
performance, riding investors'
enthusiasm for the additional
liquidity provided by issuing
larger-denominated securities in
response to waning Treasury
issuance.
(photograph of Andrew Dudley)
An interview with Andrew Dudley, Portfolio Manager of Fidelity
Institutional Short-Intermediate Government Fund
Q. HOW DID THE FUND PERFORM, ANDREW?
A. For the 12-month period that ended November 30, 1999, the fund
posted a total return of 2.37%. By comparison, the short-intermediate
U.S. government funds average tracked by Lipper Inc. returned 1.26%,
and the Lehman Brothers 1-5 Year U.S. Government Bond Index returned
2.40%.
Q. WHAT DROVE FUND RETURNS DURING THE PERIOD?
A. Having an average duration - a measure of how sensitive the fund's
share price is to changing interest rates - generally shorter than its
peers during a rising interest-rate environment bolstered fund
performance. Additionally, sector allocation was a key ingredient in
the fund's success relative to its peers over the past 12 months. The
fund's heavy exposure to federal agencies helped, as this asset class
outperformed comparable duration Treasuries during this time frame.
The fund garnered additional returns through its significant stake in
mortgage securities - a segment of the bond market not included in the
fund's benchmark index. Declining interest-rate volatility toward the
latter stages of the period boosted mortgage security valuations,
leading to tighter spread levels relative to Treasuries. Specifically,
the fund's heavy weighting in discount mortgages - those issues priced
below face value, or par - ensured that the fund benefited from this
spread tightening.
Q. WHAT WERE SOME OF YOUR STRATEGIES DURING THE PERIOD?
A. In a move reflective of the fundamental shift in the agency market,
I began to rotate more of the fund's holdings out of the less liquid,
smaller issues to some of the larger, more liquid deals from top-tier
agency issuers such as Fannie Mae and Federal Home Loan Bank. The
benefits gained from added liquidity should more than make up for the
slightly lower yield that the more liquid issues offer. The mortgage
market itself experienced a transformation during the period, as
discount-coupon issues took claim to a larger piece of the mortgage
universe. Something similar evolved with respect to the fund's
mortgage position. As the period progressed, some of the less-liquid
premium bonds paid down, and I purchased more of the generic,
current-coupon issues in their place. I also took on some additional
exposure to the structured side of the mortgage market in
collateralized mortgage obligations, or CMOs. Our internally developed
modeling can help us identify the risk/reward tradeoff inherent in
these securities.
Q. SPECIFICALLY, HOW DID THE FUND'S POSITIONING IN PREMIUM MORTGAGE
SECURITIES AFFECT PERFORMANCE?
A. Seasoned, premium-coupon mortgage securities - issues priced above
par that have been known for their resilience to prepayments - made up
slightly more than one-half of the mortgage component of the fund. At
the beginning of the period, we were caught in the peak of the strong
refinancing wave brought on by lower interest rates. We were caught
off guard here, similar to many of our competitors, as prepayments in
these securities were much higher than the market anticipated, which,
in turn, dampened fund performance. Prepayment activity quickly
changed course though, slowing considerably on the back of sharply
rising interest rates. In this environment, which dominated much of
the period, the fund benefited from yield spreads tightening relative
to Treasuries. Moreover, by replacing our premium-mortgage position -
as it paid down - with more current-coupon mortgage exposure along the
way, the fund was able to benefit from further spread tightening later
in the period.
Q. WHAT'S YOUR OUTLOOK?
A. Over the past year, we witnessed higher levels of interest-rate and
spread volatility than we have in recent memory. My feeling is that it
would be difficult for this higher volatility to persist going
forward, particularly as we get beyond the uncertainty surrounding the
Year 2000 changeover. I expect the "new" agency and mortgage markets
to continue to evolve over the next 12 months. As they do, I will keep
a watchful eye on them, and remain poised to pursue the best
opportunities available to us.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
ANDREW DUDLEY ON THE
FUND'S INVESTMENT IN CALLABLE
AGENCIES:
"As part of the new agency issuance
program, one development that we
feel creates a new set of
opportunities for us is callable
agencies. These are securities that can
be called back, or retired, by the
issuing agency prior to maturity,
should rates fall. In return, we, as
investors, receive a higher
beginning yield to compensate for this
embedded option. These
higher-yielding securities are now
trading in very large-sized, liquid
deals and are comparable to certain
parts of the mortgage market with
respect to their risk profiles - or
durations.
"As a result, we have a good set of
conditions for opportunistic trading
between the agency and mortgage
sectors. By trading one part of the
market for another, we can take
advantage of changing market
conditions and supply/demand
imbalances that may develop within
each market. While different sectors
of the bond market are interrelated,
they are not intimately connected.
By drilling down into the market's
disjoints, I feel we can add further
value to the fund."
FUND FACTS
GOAL: seeks a high level of
current income in a manner
consistent with preservation
of capital
START DATE: November 10,
1986
SIZE: as of November 30,
1999, more than $415 million
MANAGER: Andrew Dudley,
since 1998; manager,
various Fidelity bond funds;
joined Fidelity in 1996
(checkmark)
INVESTMENT CHANGES
COUPON DISTRIBUTION AS OF
NOVEMBER 30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6
MONTHS AGO
Zero coupon bonds 1.8 1.7
5 - 5.99% 30.7 26.7
6 - 6.99% 25.8 26.7
7 - 7.99% 8.3 8.3
8 - 8.99% 9.3 9.9
9 - 9.99% 7.2 9.5
10 - 10.99% 3.7 8.8
11 - 11.99% 6.1 2.4
12% and over 2.7 2.0
COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE
FUND'S INVESTMENTS, EXCLUDING SHORT-TERM INVESTMENTS.
AVERAGE YEARS TO MATURITY AS
OF NOVEMBER 30, 1999
6 MONTHS AGO
Years 3.8 3.5
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30,
1999
6 MONTHS AGO
Years 2.5 2.3
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF NOVEMBER 30, 1999 AS OF MAY 31, 1999
Mortgage Securities 19.5% Mortgage Securities 18.0%
CMOs and Other Mortgage CMOs and Other Mortgage
Related Securities 3.1% Related Securities 1.8%
U.S. Treasury Obligations U.S. Treasury Obligations
18.7% 21.6%
U.S. Government Agency U.S. Government Agency
Obligations 55.9% Obligations 53.5%
Short-Term Investments and Short-Term Investments and
Net Other Assets 2.8% Net Other Assets 5.1%
</TABLE>
Row: 1, Col: 1, Value: 19.5
Row: 1, Col: 2, Value: 3.1
Row: 1, Col: 3, Value: 18.7
Row: 1, Col: 4, Value: 55.9
Row: 1, Col: 5, Value: 2.8
Row: 1, Col: 1, Value: 18.0
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 21.6
Row: 1, Col: 4, Value: 53.5
Row: 1, Col: 5, Value: 5.1
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS NOVEMBER 30, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 74.6%
PRINCIPAL AMOUNT VALUE (NOTE 1)
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 55.9%
Fannie Mae:
5.75% 6/15/05 $ 5,900,000 $ 5,662,171
6.5% 4/29/09 6,300,000 5,978,133
Federal Agricultural Mortgage
Corp.:
6.92% 8/10/00 1,040,000 1,045,366
7.61% 10/16/00 3,000,000 3,037,020
Federal Farm Credit Bank 5.7% 1,540,000 1,464,186
1/18/05
Federal Home Loan Bank:
5.375% 3/2/01 15,000,000 14,852,400
5.595% 3/27/01 3,900,000 3,864,666
5.875% 8/15/01 5,000,000 4,968,750
5.875% 9/17/01 15,000,000 14,896,800
6% 8/15/02 17,000,000 16,827,280
6.045% 7/9/01 9,000,000 8,962,020
Financing Corp. - coupon 2,500,000 2,297,775
STRIPS 0% 4/6/01
Freddie Mac 5.75% 6/15/01 14,000,000 13,896,260
Government Loan Trusts 2,489,039 2,610,753
(assets of Trust guaranteed
by U.S. Government through
Agency for International
Development) 8.5% 4/1/06
Government Trust Certificates
(assets of Trust guaranteed
by U.S. Government through
Defense Security Assistance
Agency):
Class 1-C, 9.25% 11/15/01 17,720,909 18,279,295
Class 2-E, 9.4% 5/15/02 1,821,984 1,876,772
Class T-3, 9.625% 5/15/02 3,427,389 3,539,568
Guaranteed Export Trust
Certificates (assets of
Trust guaranteed by U.S.
Government through Export-
Import Bank):
Series 1993-C, 5.2% 10/15/04 456,000 439,783
Series 1993-D, 5.23% 5/15/05 407,234 390,322
Series 1994-A, 7.12% 4/15/06 1,610,199 1,612,132
Series 1994-F, 8.187% 12/15/04 20,370,138 20,916,262
Series 1995-A, 6.28% 6/15/04 3,523,529 3,488,562
Guaranteed Trade Trust
Certificates (assets of
Trust guaranteed by U.S.
Government through Export-
Import Bank):
Series 1992-A, 7.02% 9/1/04 5,216,249 5,246,843
Series 1997-A, 6.104% 7/15/03 4,866,666 4,802,427
Israel Export Trust 7,778,646 7,815,362
Certificates (assets of
Trust guaranteed by U.S.
Government through
Export-Import Bank) Series
1994-1, 6.88% 1/26/03
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
U.S. GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
Overseas Private Investment $ 2,543,287 $ 2,527,697
Corp. U.S. Government
guaranteed participation
certificate Series 1994-195,
6.08% 8/15/04 (callable)
Private Export Funding Corp.
secured:
5.65% 3/15/03 565,499 557,736
5.8% 2/1/04 5,409,000 5,337,060
5.82% 6/15/03 (a) 11,500,000 11,119,120
6.86% 4/30/04 1,755,225 1,757,793
7.9% 3/31/00 1,000,000 1,005,000
State of Israel (guaranteed
by U.S. Government through
Agency for International
Development):
5.25% 9/15/00 17,250,000 17,107,515
5.625% 9/15/03 10,271,000 9,899,190
6.625% 8/15/03 2,500,000 2,491,925
Tennessee Valley Authority 6% 11,649,000 11,632,575
11/1/00
232,206,519
U.S. TREASURY OBLIGATIONS -
18.7%
U.S. Treasury Bonds:
10.75% 8/15/05 9,300,000 11,235,516
11.75% 2/15/10 (callable) 14,098,000 17,353,792
12% 8/15/13 6,400,000 8,694,976
U.S. Treasury Notes:
5.5% 5/31/03 22,500,000 22,067,548
6.5% 8/31/01 9,089,000 9,162,803
7.875% 8/15/01 4,000,000 4,118,120
U.S. Treasury Notes - coupon
STRIPS:
0% 3/31/00 1,034,000 1,016,215
0% 9/30/00 734,000 700,750
0% 11/30/00 107,000 101,065
0% 3/31/01 1,034,000 957,267
0% 9/30/01 399,000 358,075
0% 10/31/01 142,000 126,731
0% 3/31/02 1,034,000 899,994
0% 9/30/02 834,000 704,913
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
U.S. TREASURY OBLIGATIONS -
CONTINUED
U.S. Treasury Notes - coupon
STRIPS: - continued
0% 10/31/02 $ 142,000 $ 119,422
0% 11/30/02 207,000 173,035
77,790,222
TOTAL U.S. GOVERNMENT AND 309,996,741
GOVERNMENT AGENCY OBLIGATIONS
(Cost $315,743,231)
U.S. GOVERNMENT AGENCY -
MORTGAGE SECURITIES - 19.5%
FANNIE MAE - 11.6%
5.5% 1/1/09 1,382,310 1,319,609
6% 9/1/08 to 11/1/13 13,144,091 12,734,225
6.5% 7/1/00 to 6/1/29 9,974,042 9,545,487
7% 6/1/00 to 9/1/29 17,232,979 16,855,755
8% 6/1/02 to 8/1/09 323,299 328,614
8.25% 12/1/01 1,807,560 1,855,584
9% 2/1/13 to 8/1/21 1,956,973 2,043,160
9.5% 5/1/09 to 11/1/21 195,310 205,418
10% 1/1/17 to 1/1/20 374,569 399,732
10.5% 5/1/10 to 8/1/20 266,615 289,847
11% 11/1/10 to 9/1/14 1,198,515 1,300,784
11.5% 11/1/15 to 7/15/19 1,106,103 1,199,540
12% 4/1/15 121,701 132,768
12.5% 3/1/16 90,945 101,834
12.75% 10/1/13 27,498 31,069
48,343,426
FREDDIE MAC - 3.1%
6.25% 1/1/03 520,753 512,771
6.5% 7/1/03 to 5/1/08 630,299 622,065
7.5% 11/1/12 1,353,010 1,357,394
8% 9/1/07 to 12/1/09 1,587,460 1,605,241
8.5% 5/1/06 to 6/1/14 1,419,562 1,458,824
9% 12/1/07 to 3/1/22 831,600 865,477
9.5% 1/1/17 to 12/1/22 2,097,475 2,219,937
10% 1/1/09 to 6/1/20 639,848 681,017
10.25% 12/1/09 26,836 28,235
10.5% 1/1/16 to 5/1/21 1,539,900 1,650,494
U.S. GOVERNMENT AGENCY -
MORTGAGE SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
FREDDIE MAC - CONTINUED
11% 12/1/11 to 1/1/19 $ 39,269 $ 42,210
11.5% 10/1/15 43,836 47,436
12% 9/1/11 to 11/1/19 92,076 101,090
12.25% 11/1/14 33,589 37,338
12.5% 8/1/10 to 6/1/19 1,481,483 1,648,047
12,877,576
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 4.8%
8% 11/15/09 to 12/15/23 10,000,881 10,202,719
8.5% 5/15/16 to 4/15/17 224,890 233,840
9.5% 11/15/09 to 11/15/20 1,405,039 1,494,251
10% 11/15/09 to 9/15/19 333,065 358,221
10.5% 1/15/16 to 1/15/18 872,057 951,037
11% 12/15/09 to 8/15/19 2,751,860 3,018,160
11.5% 4/15/10 to 5/15/19 2,606,696 2,895,562
12% 3/20/14 to 2/15/16 473,995 531,712
12.5% 11/15/14 113,834 129,490
13% 8/15/14 to 11/15/14 58,839 66,855
13.5% 7/15/11 40,632 46,526
19,928,373
TOTAL U.S. GOVERNMENT AGENCY 81,149,375
- - MORTGAGE SECURITIES
(Cost $81,409,569)
COLLATERALIZED MORTGAGE
OBLIGATIONS - 3.1%
U.S. GOVERNMENT AGENCY - 3.1%
Fannie Mae REMIC planned
amortization class:
Series 1993-191 Class PE, 807,721 803,935
5.8% 9/25/06
Series 1993-224 Class G, 6.5% 4,000,000 3,981,240
9/25/21
Series 1993-229 Class PD, 1,271,165 1,262,426
5.6% 7/25/06
Fanniemae Whole Loan 6% 3,200,000 3,133,625
2/25/20
Freddie Mac:
6% 12/15/08 2,117,935 2,086,167
7.5% 1/15/03 1,806,489 1,822,296
TOTAL COLLATERALIZED MORTGAGE 13,089,689
OBLIGATIONS
(Cost $13,237,008)
</TABLE>
CASH EQUIVALENTS - 4.7%
MATURITY AMOUNT VALUE (NOTE 1)
Investments in repurchase $ 19,339,076 $ 19,336,000
agreements (U.S. Government
obligations), in a joint
trading account at 5.73%,
dated 11/30/99 due 12/1/99
(Cost $19,336,000)
TOTAL INVESTMENT PORTFOLIO - 423,571,805
101.9%
(Cost $429,725,808)
NET OTHER ASSETS - (1.9)% (7,849,829)
NET ASSETS - 100% $ 415,721,976
LEGEND
(a) 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 $11,119,120 or 2.7% of net assets.
INCOME TAX INFORMATION
At November 30, 1999, the aggregate cost of investment securities for
income tax purposes was $429,737,438. Net unrealized depreciation
aggregated $6,165,633, of which $932,644 related to appreciated
investment securities and $7,098,277 related to depreciated investment
securities.
At November 30, 1999, the fund had a capital loss carryforward of
approximately $27,477,000 of which $14,003,000, $3,288,000,
$4,169,000, $101,000 and $5,916,000 will expire on November 30, 2002,
2003, 2004, 2005 and 2007, respectively.
A total of 32.54% 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 2000 of the applicable
percentage for use in preparing 1999 income tax returns.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1999
ASSETS
Investment in securities, at $ 423,571,805
value (including repurchase
agreements of $19,336,000)
(cost $429,725,808) - See
accompanying schedule
Cash 619,445
Receivable for investments 146,911
sold
Receivable for fund shares 545,463
sold
Interest receivable 5,919,495
TOTAL ASSETS 430,803,119
LIABILITIES
Payable for investments $ 14,337,112
purchased
Payable for fund shares 471,863
redeemed
Distributions payable 113,738
Accrued management fee 155,775
Other payables and accrued 2,655
expenses
TOTAL LIABILITIES 15,081,143
NET ASSETS $ 415,721,976
Net Assets consist of:
Paid in capital $ 449,117,309
Undistributed net investment 247,359
income
Accumulated undistributed net (27,488,689)
realized gain (loss) on
investments
Net unrealized appreciation (6,154,003)
(depreciation) on investments
NET ASSETS $ 415,721,976
NET ASSET VALUE, offering $9.11
price and redemption price
per share ($415,721,976
(divided by) 45,615,235
shares)
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1999
INVESTMENT INCOME $ 27,299,190
Interest
EXPENSES
Management fee $ 1,833,261
Non-interested trustees' 1,273
compensation
Total expenses before 1,834,534
reductions
Expense reductions (40,412) 1,794,122
NET INVESTMENT INCOME 25,505,068
REALIZED AND UNREALIZED GAIN (6,331,174)
(LOSS)
Net realized gain (loss) on
investment securities
Change in net unrealized (9,569,757)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (15,900,931)
NET INCREASE (DECREASE) IN $ 9,604,137
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1999 YEAR ENDED NOVEMBER 30, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 25,505,068 $ 23,067,092
income
Net realized gain (loss) (6,331,174) 566,385
Change in net unrealized (9,569,757) 1,261,224
appreciation (depreciation)
NET INCREASE (DECREASE) IN 9,604,137 24,894,701
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (25,770,056) (22,513,973)
from net investment income
Share transactions
Net proceeds from sales of 204,472,069 175,113,300
shares
Reinvestment of distributions 23,438,270 20,197,390
Cost of shares redeemed (175,575,782) (175,282,427)
NET INCREASE (DECREASE) IN 52,334,557 20,028,263
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) 36,168,638 22,408,991
IN NET ASSETS
NET ASSETS
Beginning of period 379,553,338 357,144,347
End of period (including $ 415,721,976 $ 379,553,338
undistributed net investment
income of $247,359 and
$956,253, respectively)
OTHER INFORMATION
Shares Sold 21,982,347 18,516,963
Issued in reinvestment of 2,531,302 2,139,251
distributions
Redeemed (18,926,299) (18,559,541)
Net increase (decrease) 5,587,350 2,096,673
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 9.480 $ 9.420 $ 9.500 $ 9.600 $ 9.210
of period
Income from Investment
Operations
Net investment income .579 B .611 B .637 B .641 .669
Net realized and unrealized (.362) .045 (.090) (.102) .383
gain (loss)
Total from investment .217 .656 .547 .539 1.052
operations
Less Distributions
From net investment income (.587) (.596) (.627) (.639) (.662)
Net asset value, end of period $ 9.110 $ 9.480 $ 9.420 $ 9.500 $ 9.600
TOTAL RETURN A 2.37% 7.18% 5.99% 5.86% 11.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 415,722 $ 379,553 $ 357,144 $ 337,131 $ 348,570
(000 omitted)
Ratio of expenses to average .45% .45% .45% .42% C .45%
net assets
Ratio of expenses to average .44% D .44% D .44% D .41% D .45%
net assets after expense
reductions
Ratio of net investment 6.26% 6.47% 6.79% 6.95% 7.14%
income to average net assets
Portfolio turnover rate 85% 210% 147% 141% 214%
</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 FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Institutional Short-Intermediate Government 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, as an open-end
management investment company organized as a Massachusetts business
trust. The financial statements have been prepared in conformity with
generally accepted accounting principles which require 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 market
quotations are not readily available are valued at their fair value as
determined in good faith under consistently applied procedures under
the general supervision of the Board of Trustees. 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.
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
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net investment income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for paydown gains/losses on certain securities, market
discount, capital loss carryforwards, and losses deferred due to wash
sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences which will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in
the following year.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR),
may transfer uninvested cash balances into one or more joint trading
accounts. These balances are invested in one or more repurchase
agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a delayed delivery basis. Payment and
delivery may take place after the customary settlement period for that
security. The price of the underlying securities and the date when the
securities will be delivered and paid for are fixed at the time the
transaction is negotiated. The fund may receive compensation for
interest forgone in the purchase of a delayed delivery security. With
respect to purchase commitments, the fund identifies securities as
segregated in its records with a value at least equal to the amount of
the commitment. Losses may arise due to changes in the market value of
the underlying securities or if the counterparty does not perform
under the contract.
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 long-term U.S. government and government agency
obligations aggregated $380,760,810 and $333,522,863, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee
that is computed daily at an annual rate of .45% of the fund's average
net assets. FMR pays all other expenses, except the compensation of
the non-interested Trustees and certain exceptions such as interest,
taxes, brokerage commissions and extraordinary expenses. The
management fee paid to FMR by the fund is reduced by an amount equal
to the fees and expenses paid by the fund to the non-interested
Trustees.
SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement with Fidelity Investments Money Management,
Inc. (FIMM), a wholly owned subsidiary of FMR. For its services, FIMM
receives a fee from FMR of 50% of the management fee payable to FMR.
The fee is paid prior to any voluntary expense reimbursements which
may be in effect.
5. EXPENSE REDUCTIONS.
Through arrangements with the fund's custodian and transfer agent,
credits realized as a result of uninvested cash balances were used to
reduce a portion of the fund's expenses. During the period, the fund's
expenses were reduced by $40,412 under these arrangements.
6. BENEFICIAL INTEREST.
At the end of the period, two shareholders were each record owners of
more than 10% of the total outstanding shares of the fund, totaling
33%.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series IV and the Shareholders of
Fidelity Institutional Short-Intermediate Government Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Institutional Short-Intermediate Government Fund (a fund of
Fidelity Advisor Series IV) at November 30, 1999, and the results of
its operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements")
are the responsibility of the Fidelity Institutional
Short-Intermediate Government Fund's management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at November 30, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 11, 2000
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investment Money
Management, Inc. (FIMM),
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Andrew J. Dudley, Vice President
Stanley N. Griffith, Assistant Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
John H. Costello, Assistant Treasurer
Thomas J. Simpson, 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
Abigail P. Johnson
Ned C. Lautenbach
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
