(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
SHORT-INTERMEDIATE TAX-EXEMPT
FUND
REPORT TO SHAREHOLDERS
NOVEMBER 30, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 5 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 8 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 9 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 13 Statements of assets and
liabilities, operations, and changes
in net assets, as well as financial
highlights.
NOTES 17 Notes to the financial statements.
REPORT OF INDEPENDENT 20 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
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The unsettling period that began for bond investors when the Federal
Reserve Board raised short-term interest rates in February has continued in
the fourth quarter of 1994. The Board raised the federal funds rate - the
rate banks charge each other for overnight loans - five times from February
through August, taking it from 3.00% to 4.75%. A sixth increase in November
lifted the rate to 5.50%. The Fed rate hikes were intended to forestall
inflation that could result from an improving U.S. economy, and they led to
negative returns for many bond investments and below-average returns for
many stocks.
The volatility we have witnessed this year follows a period in which there
was a nearly perfect investing environment. Although there was a
late-summer rally in stocks and, to a lesser extent in bond markets, it is
impossible to predict where interest rates might go or what might happen in
the markets in the months ahead. That's why it probably is a good time to
again review your investment portfolio and how well it matches your goals.
Keeping in mind that the negative effects of rising rates on your bond
investments will only be "paper" losses unless you sell your shares,
staying in your bond fund may be appropriate. The longer your investing
time frame, the more likely it is that you will retain your principal
investment through both up and down markets. For example, a 10-year time
frame, such as saving for a college education, enables you to weather these
ups and downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and 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, which seeks income
and a stable share price by investing in high-quality, short-term
investments. As with any mutual fund, of course, there is no assurance that
a money market fund will achieve its goal, and money market funds are not
insured by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically, as we have discussed here. A periodic investment
plan will not, of course, assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
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 $10,000 investment. A fund's total
return includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value). You can also look at the fund's
income to measure performance. If Fidelity had not reimbursed certain fund
expenses during the period shown, the total returns and yields dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED LIFE OF
NOVEMBER 30, 1994 FUND
Advisor Short-Intermediate
Tax-Exempt 0.27%
Advisor Short-Intermediate Tax-Exempt
(incl. 1.5% sales charge) (1.23)%
Consumer Price Index 1.83%
CUMULATIVE TOTAL RETURNS reflect the fund's actual performance in
percentage terms over a set period - in this case, since the fund began on
March 16, 1994. For example, if you invested $1,000 in a fund that had a 5%
return over the past year, you would end up with $1,050. Comparing the
fund's performance to the consumer price index (CPI) helps show how your
investment did compared to inflation. (The CPI returns begin on the month
end closest to the fund's start date.)
AVERAGE ANNUAL RETURNS and the growth of a hypothetical $10,000
INVESTMENT in the fund will appear once the fund is a year old.
DIVIDENDS
PERIOD ENDED LIFE OF
NOVEMBER 30, 1994 FUND
Dividends per share 25.86(cents)
Annualized dividend rate 3.65%
Dividends per share show the actual income paid by the fund for a set
period. You can annualize this number, based on an average share price of
$9.94 since the fund started.
YIELD
PERIOD ENDED PAST 30
NOVEMBER 30, 1994 DAYS
30-day annualized yield 4.83%
Tax-equivalent annualized yield 7.0%
The 30-day annualized yield is a standard formula for all funds based on
the yield of the bonds in the fund, averaged over the past 30 days. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 31% federal
tax bracket. If the adviser had not reimbursed certain portfolio expenses
during the period shown, the yield and tax-equivalent yield would have been
4.04% and 5.86%, respectively.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, 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)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Sharply rising interest rates and
ongoing inflation worries caused
a severe downturn in U.S. bond
markets in 1994. Yields rose
sharply - and prices fell - on
taxable and tax-free bonds alike.
For the 12 months ended
November 30, 1994, the Lehman
Brothers Municipal Bond Index -
a broad measure of the tax-free
market - had a total return of
- -5.25%. By comparison, the
Lehman Brothers Aggregate
Bond Index - a proxy of
investment-grade taxable bonds
- - returned -3.06%. After interest
rates remained low and relatively
steady in December 1993 and
January 1994, the rate
environment changed
dramatically. The Federal
Reserve Board raised the federal
funds rate - the rate banks
charge each other for overnight
loans - from 3.00% to 5.50%
from February through
November. The Fed was hoping
to head off future inflation that
might be triggered
by an improving U.S. economy.
However, investors heavily sold
bonds at the very threat of
inflation because inflation
diminishes the value of their
fixed-rate income payments. Two
other influences affected the
performance of tax-free bonds,
specifically. First, investor
demand fell due to inflation
worries, which dampened prices.
Second, although it didn't
outweigh the negative effects of
lower demand, the supply of
tax-free bonds fell as well. The
ability of states, cities and public
agencies to refinance
outstanding debt at lower, more
attractive rates was limited amid
a rising rate environment.
An interview with David Murphy, Portfolio Manager of Fidelity Advisor
Short-Intermediate Tax-Exempt Fund
Q. DAVID, HOW HAS THE FUND PERFORMED?
A. The fund only began operating on March 16, 1994, so 12-month results are
not available. However, from the date of its inception through November 30,
1994, the fund's total return was 0.27%. To get a sense of how the fund did
compared to the average short municipal bond fund, we have to look at the
six-month period from May 31, 1994, to November 30, 1994. For that period,
the fund returned 0.07%, compared to the average short municipal bond
fund's return of 0.00%, according to Lipper Analytical Services.
Q. WHAT FACTORS CONTRIBUTED TO THE DECLINE IN BOND PRICES?
A. There's definitely a lot to the story. Until February 1994, short-term
interest rates had remained low for several years. That enticed many
investors to use leverage, or borrowed money, to make what essentially
amounted to a bet that short-term interest rates would continue to stay low
and long-term interest rates would fall. However, when the Federal Reserve
Board started raising short-term interest rates in February, those
investors found themselves on the wrong side of the bet and were forced to
liquidate their bond holdings to pay back borrowed money. The selling, or
unwinding, of those positions put additional downward pressure on bond
prices. Other factors - like the dollar's weakness - also contributed to
the market's decline.
Q. WHAT ACCOUNTS FOR THE FUND'S
PERFORMANCE?
A. The fund began after the Fed made its first interest rate hike. It
seemed fairly likely that the Fed would continue to raise interest rates
further. So I positioned the fund defensively by keeping duration short
from March through October, helping its performance. Duration is a measure
of the fund's sensitivity to changes in interest rates, the shorter the
fund's duration, the less sensitive its share price is when interest rates
rise or fall. In November, I began to lengthen duration. That's because I
believed that the economy's growth was slowing and that the Fed might be
close to the end of its campaign to raise interest rates in an effort to
stave off inflation. Unfortunately, the market continued to decline, as
investors sold bonds for tax purposes. That is, they locked in losses from
bonds to balance gains they may have realized in other investments. As a
result, the fund gave back some its earlier gains.
Q. HAVE YOU CHANGED YOUR STRATEGY OVER THE PAST SIX MONTHS?
A. Yes, I've made adjustments among different types of bonds as market
conditions warranted. In the spring, I invested a sizable amount of the
fund in pre-refunded bonds. When a bond is pre-refunded, the issuer sells a
new bond, and then invests the proceeds in short-term Treasury securities,
which pays off the old bond at the earliest opportunity. Until it is
called, or redeemed, by its issuer the old bond stays outstanding and is
said to be pre-refunded. When interest rates first started rising, these
bonds were among the first to be sold by many investors, thereby depressing
their prices. So I bought them at a time when their prices were attractive.
Throughout the summer, these bonds became relatively expensive, so I sold
some and moved into more attractively priced insured bonds. Pre-refunded
bonds became cheap again in the fall, so I once again increased the fund's
stake in them.
Q. WHICH OTHER SECTORS DID YOU FAVOR?
A. Education and student loan bonds made up the fund's largest sector
concentration at 22.2% at the end of the period. These are attractive
because of their relatively high yields. They're high-yielding because they
carry the risk that they will be repaid early. However, our research
department does careful analysis to assess the prepayment risk of these
bonds, ensuring that the bonds' yields compensate for the added risk.
Another high-yielding area that I've found attractive is Baa-rated bonds,
which made up about 6.1% of investments at the end of the period. One
example is an industrial development bond issued by Marathon Oil to fund
pollution control projects. The bond was attractive from a credit
perspective. I believe that oil prices will rise over the next few years.
Further, Marathon Oil is a subsidiary of USX, which also produces steel and
is benefiting from the improving economy. Those factors could help both the
credit quality and the price of the bond. As I find more of these
attractive situations, I'll probably continue to add to the fund's stake in
Baa-rated bonds.
Q. DOES 1995 LOOK MORE POSITIVE FOR MUNICIPAL BOND INVESTORS?
A. I think the Fed probably will hike interest rates one or two more times,
which will have more of an impact on the prices of short-term bonds than
long-term bonds. However, it appears that the bond markets are starting to
anticipate that we're nearing the end of the Fed's actions to raise
interest rates. What's more, fixed-income investments are starting to look
fairly attractive compared to other investments. Real taxable yields on
long-term taxable securities, determined by subtracting inflation from the
issue's stated yield, were about 5% at the end of the period. That is
fairly high on a historical basis. I believe that these yields could help
attract investors, which ultimately might help the municipal market.
FUND FACTS
GOAL: to provide a high level
of current income exempt
from federal income taxes
START DATE: March 16, 1994
SIZE: as of November 30,
1994, more than $16 million
MANAGER: David Murphy,
since March 1994; joined
Fidelity in 1989
(checkmark)
DAVID MURPHY'S STRATEGY:
"In my opinion, the Federal
Reserve Board will raise
interest rates one or two more
times. If that is the case,
short-term bonds may
continue to fall in price as their
yields rise. On the other hand,
there is evidence that the
economy is slowing down. In
my view, that means yields on
longer-term bonds could fall
and prices could rise. As a
result, I've started to invest
more of the fund in
longer-term bonds by using a
strategy known as a maturity
barbell. If you picture a
barbell, the ends are heavy
and the middle is light. In this
fund, the barbell is heavily
weighted on one end in
longer-term bonds, which
could appreciate. On the
other end are very short-term
bonds, which most likely will
have limited downside. At the
end of November I had about
a third of the fund in bonds
with longer-term maturities of
between five and 10 years,
and about 11% in
shorter-term maturities of
under one year."
(solid bullet) As of November 30, 1994,
the fund held one bond issued
by Orange County, which
recently declared bankruptcy
because of losses from its
investments. However, the
bond is pre-refunded and its
principal and interest
payments are backed by U.S.
Treasuries.
INVESTMENT CHANGES
TOP FIVE STATES AS OF NOVEMBER 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
Texas 15.0 1.7
Pennsylvania 11.5 -
California 10.9 6.6
Louisiana 8.6 2.8
Minnesota 6.4 -
TOP FIVE SECTORS AS OF NOVEMBER 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Education 22.2 2.1
General Obligation 19.6 8.9
Escrowed/Pre-Refunded 16.4 41.1
Electric Revenue 10.3 0.9
Industrial Development 9.2 5.1
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1994
6 MONTHS AGO
Years 3.7 2.5
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, 1994
6 MONTHS AGO
Years 3.1 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.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF NOVEMBER 30, 1994 AS OF MAY 31, 1994
Row: 1, Col: 1, Value: 6.8
Row: 1, Col: 2, Value: 3.2
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 6.1
Row: 1, Col: 5, Value: 51.1
Row: 1, Col: 6, Value: 29.8
Aaa 29.8%
Aa, A 51.1%
Baa 6.1%
Ba 3.0%
Nonrated 3.2%
Short-term investments 6.8%
Aaa 40.4%
Aa, A 31.0%
Baa -%
Ba -%
Nonrated 2.3%
Short-term investments 26.3%
Row: 1, Col: 1, Value: 26.3
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 31.0
Row: 1, Col: 4, Value: 40.4
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS NOVEMBER 30, 1994
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 93.2%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ALABAMA - 1.2%
Mobile Board of Wtr. & Swr. Commisioners Wtr. Svc. Rev.
9.875% 1/1/98, (Escrowed to Maturity) (b) $ 175,000 $ 196,438
ALASKA - 0.6%
Matanuska-Susitna Borough School Unltd. Tax Rfdg.
6.50% 2/1/95, (MBIA Insured) 100,000 100,250
CALIFORNIA - 10.9%
Los Angeles County Trans. Commission Sales Tax Rev. Series A,
6.90% 7/1/21, (Pre-Refunded to 7/1/01 @ 102) (b) 500,000 533,750
Orange County Commty. Facs. Dist. #88-1 Spl. Tax
(Aliso Viejo) Series A, 7.35% 8/15/18,
(Pre-refunded to 8/15/02 @102) (b) 550,000 598,813
West Covina Ctfs. of Prtn. (Queen of the Valley Hosp.)
5.10% 8/15/96 630,000 621,338
1,753,901
COLORADO - 3.1%
Aurora Ctf. of Prtn. Rfdg. 4.75% 12/1/96 500,000 492,500
CONNECTICUT - 2.9%
Connecticut Resources Recovery Auth. Rev. (Bridgeport Resco
Co. LP Proj.) Series B, 8% 1/1/95 470,000 470,588
KENTUCKY - 5.0%
Kentucky Tpk. Auth. Toll Road Rev. Rfdg. Series A,
13.375% 7/1/10, (Pre-Refunded to 8/15/95 @ 101) (b) 755,000 805,019
LOUISIANA - 8.6%
Louisiana Pub. Facs. Auth. Rev. Student Loan Sr. Series A-1,
6.20% 3/1/01 1,400,000 1,391,250
MASSACHUSETTS - 4.7%
Massachusetts Health & Edl. Facs. Auth. Rev.
(Salem Hosp.) Series A, 6.75% 7/1/00, (Pre-Refunded
to 7/1/97 @ 100) (b) 500,000 516,875
New England Ed. Loan Marketing Corp. Rev. Rfdg.
(Massachusetts Student Loan) Series B, 5.40% 6/1/00 250,000 237,810
754,685
MINNESOTA - 6.4%
Western Minnesota Muni. Pwr. Agcy. Pwr. Supply Sys. Rev.
Series A, 8.45% 1/1/96 1,000,000 1,037,500
NEVADA - 5.0%
Clark County School Dist. Series A, 9.75% 6/1/01,
(MBIA Insured) 500,000 596,875
Washoe County Reno Sparks Convention (Bowling Fac.)
Series A, 8.50% 7/1/97, (FGIC Insured) 200,000 215,000
811,875
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
NEW JERSEY - 4.5%
New Jersey Healthcare Facs. Fing. Auth. Rev. Rfdg.
(Atlantic City Med. Ctr.) Seires C, 6.45% 7/1/02 $ 500,000 $ 491,250
Somerset County Unltd. Tax Series B, 6.50% 11/1/97 230,000 239,200
730,450
OHIO - 3.3%
Columbus Variable Purp. Wtrwks. & Swr. Impt. Unltd. Tax
12% 5/15/98 270,000 324,675
Ohio Pub. Facs. Commission Higher Ed. Cap. Facs.
Series II-A, 5.30% 12/1/95 200,000 201,250
525,925
PENNSYLVANIA - 9.0%
Allegheny County Ind. Dev. Agcy. Rev. Rfdg. (Environmental
Impt. USX Marathon Group) Series B, 5.30% 12/1/96 1,000,000 980,000
Pennsylvania Convention Ctr. Auth. Rev. Rfdg. Series A,
5.75% 9/1/99 500,000 480,000
1,460,000
SOUTH CAROLINA - 3.1%
South Carolina Ed. Assistance Auth. Rev. Rfdg. (Guaranteed
Student Loan Sr. Lien) Series A2, 4.75% 9/1/96 500,000 495,000
SOUTH DAKOTA - 6.0%
South Dakota Student Loan Fin. Corp. Student Loan Rev.
Series A:
5.70% 8/1/99 (c) 500,000 488,125
5.95% 8/1/01 500,000 485,625
973,750
TEXAS - 15.0%
Brazos Higher Ed. Auth. Student Loan Rev. Rfdg.
Series A-1, 6.05% 12/1/01 (c) 500,000 490,000
Northside Independent School Dist. School Bldg.
8.375% 2/1/00, (PSF Guaranteed) 500,000 556,875
Texas Gen. Oblig. Rfdg. (Superconducting) Series C,
0% 4/1/02, (FGIC Insured) 750,000 476,250
Texas National Research Lab. Commission Fing. Corp. Lease
Rev. (Superconducting Supercollider) 5.70% 12/1/96 500,000 501,875
Texas Veterans Hsg. Assistance Series B-4, 5% 12/1/97 (c) 400,000 395,000
2,420,000
UTAH - 0.6%
Intermountain Pwr. Agcy. Unltd. Tax Pwr. Supply Rev. Rfdg.
Series J, 7.90% 7/1/95 100,000 101,750
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
WASHINGTON - 3.3%
Washington Pub. Pwr. Supply Sys. Nuclear Proj. #1 Rev.
Rfdg. Series A, 7.25% 7/1/99 $ 500,000 $ 523,750
TOTAL MUNICIPAL BONDS
(Cost $15,337,772) 15,044,631
MUNICIPAL NOTES (A) - 6.8%
ILLINOIS - 3.1%
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. (American
Airlines, Inc.) Series 1984 D, 3.80%, LOC Long-Term
Cr. Bank of Japan, VRDN 500,000 500,000
MARYLAND - 1.2%
Montgomery County Multi-Family Hsg. Rev. (Falkland Apts.)
Series 1985 B, 3.65%, Connecticut Gen. Life Insurance
Guaranteed, VRDN 200,000 200,000
PENNSYLVANIA - 2.5%
Schuylkill County Ind. Dev. Auth. Resources Recovery Rev.
(Westwood Energy Prop.) Series 1985, 3.55%, LOC
Fuji Bank, VRDN 400,000 400,000
TOTAL MUNICIPAL NOTES
(Cost $1,100,000) 1,100,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $16,437,772) $ 16,144,631
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Security collateralized by an amount sufficient to pay interest and
principal.
(c) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
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 74.9% AAA, AA, A 65.6%
Baa 6.1% BBB 0.0%
Ba 3.0% BB 9.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 3.2%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Education 22.2%
General Obligation 19.6
Escrowed/Pre-Prefunded 16.4
Electric Revenue 10.3
Others (individually less than 10%) 31.5
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1994, the aggregate cost of investment securities for
income tax purposes was $16,437,772. Net unrealized depreciation aggregated
$293,141, of which $3,206 related to appreciated investment securities and
$296,347 related to depreciated investment securities.
At November 30, 1994, the fund had a capital loss carryforward of
approximately $8,000 which will expire on November 30, 2002.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1994
ASSETS
Investment in securities, at value (cost $16,437,772) - $ 16,144,631
See accompanying schedule
Cash 99,991
Interest receivable 360,707
Receivable from investment adviser for expense 5,989
reductions
TOTAL ASSETS 16,611,318
LIABILITIES
Dividends payable $ 12,073
Accrued management fee 5,227
Other payables and accrued expenses 30,585
TOTAL LIABILITIES 47,885
NET ASSETS $ 16,563,433
Net Assets consist of:
Paid in capital $ 16,864,262
Accumulated undistributed net realized gain (loss) on (7,688)
investments
Net unrealized appreciation (depreciation) on (293,141)
investments
NET ASSETS, for 1,694,485 shares outstanding $ 16,563,433
NET ASSET VALUE and redemption price per share $9.77
($16,563,433 (divided by) 1,694,485 shares)
Maximum offering price per share (100/98.50 of $9.77) $9.92
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 16, 1994 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1994
INTEREST INCOME $ 343,724
EXPENSES
Management fee $ 31,109
Transfer agent, accounting and custodian fees and 41,142
expenses
Distribution fees 11,446
Non-interested trustees' compensation 32
Registration fees 13,257
Audit 20,000
Legal 184
Miscellaneous 350
Total expenses before reductions 117,520
Expense reductions (60,106) 57,414
NET INTEREST INCOME 286,310
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (10,322)
Futures contracts 2,634 (7,688)
Change in net unrealized appreciation (depreciation) (293,141)
on investment securities
NET GAIN (LOSS) (300,829)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (14,519)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
MARCH 16, 1994
(COMMENCEMENT
OF OPERATIONS) TO
NOVEMBER 30,
1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 286,310
Net interest income
Net realized gain (loss) (7,688)
Change in net unrealized appreciation (depreciation) (293,141)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (14,519)
Dividends to shareholders from net interest income (286,310)
Share transactions 23,575,248
Net proceeds from sales of shares
Reinvestment of distributions 218,561
Cost of shares redeemed (6,929,547)
Net increase (decrease) in net assets resulting from share transactions 16,864,262
TOTAL INCREASE (DECREASE) IN NET ASSETS 16,563,433
NET ASSETS
Beginning of period -
End of period $ 16,563,433
OTHER INFORMATION
Shares
Sold 2,370,102
Issued in reinvestment of distributions 22,041
Redeemed (697,658)
Net increase (decrease) 1,694,485
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C>
MARCH 16, 1994
(COMMENCEMEN
T OF OPERATIONS)
TO NOVEMBER
30,
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations .259
Net interest income
Net realized and unrealized gain (loss) (.230)
Total from investment operations .029
Less Distributions (.259)
From net interest income
Net asset value, end of period $ 9.770
TOTAL RETURN B, C .27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 16,563
Ratio of expenses to average net assets C .75% A
Ratio of expenses to average net assets before expense reductions C 1.54% A
Ratio of net interest income to average net assets 3.74% A
Portfolio turnover rate 111% A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN. SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Advisor Short-Intermediate Tax-Exempt Fund (the fund) is a fund of
Fidelity Advisor Series VI (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities for which quotations are not readily
available through the pricing service are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
INCOME TAXES. The fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. By so qualifying, the fund
will not be subject to income taxes to the extent that it distributes all
of its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption
"Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and 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.
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 are primarily due to differing treatments for
losses deferred due to futures and options.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect net interest income per share. 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.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures and options
contracts, and may also write options. Risks may be caused by an imperfect
correlation between movements in the price of the instruments and the price
of the underlying securities and interest rates. Risks also may arise if
there is an illiquid secondary market for the instruments, or due to the
inability of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $22,966,812 and $7,498,234, respectively.
The market value of futures contracts opened and closed during the period
amounted to $8,512,667 and $8,515,301, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of the fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from .1325% to
.3700% for the period March 16, 1994 to July 31, 1994 and .1200% to .3700%
for the period August 1, 1994 to November 30, 1994. In the event that these
rates were lower than the contractual rates in effect during those periods,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .25%. For
the period, the management fee was equivalent to an annualized rate of .41%
of average net assets.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, the
fund pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a
distribution and service fee that is based on an annual rate of .15% of its
average net assets. For the period, the fund paid FDC $11,446 all of which
was paid to securities dealers, banks and other financial institutions for
selling shares of the fund and providing shareholder support services.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES -
CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
In addition, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $33 for the
period.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR,
and the general distributor of the fund, received sales charges for selling
shares of the fund. The sales charge rates is 1.50% based on purchase
amounts of less than $1,000,000. Purchase amounts of more than $1,000,000
are not charged a sales load. For the period, FDC received $122,128 of
which $108,759 was paid to securities dealers, banks and other financial
institutions.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-contract with State Street Bank and Trust
Company (SSB) under which SSB performs the activities associated with the
fund's transfer and shareholder servicing agent functions. SSB has an
arrangement for certain transfer, dividend disbursing and shareholder
servicing to be performed by Fidelity Investments Institutional Operations
Company (FIIOC), an affiliate of FMR. The fund pays fees based on the type,
size, number of accounts and the number of transactions made by
shareholders.
The Bank also has a sub-contract with Fidelity Service Co. (FSC), an
affiliate of FMR, under which 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. For the period, FSC received accounting fees
amounting to $31,953.
5. EXPENSE REDUCTIONS.
For the period, FMR voluntarily agreed to reimburse the fund's operating
expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) above an annual rate of .75% of average net assets.
For the period, the reimbursement reduced the fund's expenses by $60,106 or
.79% of average net assets under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VI and the Shareholders of
Fidelity Advisor Short-Intermediate Tax-Exempt Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series VI: Fidelity Advisor Short-Intermediate Tax-Exempt
Fund, including the schedule of portfolio investments, as of November 30,
1994, and the related statement of operations, statement of changes in net
assets and the financial highlights for the the period March 16, 1994
(commencement of operations) to November 30, 1994. These financial
statements and financial highlights are the responsibility of the fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included
confirmation of securities owned as of November 30, 1994 by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series VI: Fidelity Advisor Short-Intermediate
Tax-Exempt Fund as of November 30, 1994, the results of its operations, the
changes in its net assets, and the financial highlights for the period
March 16, 1994 (commencement of operations) to November 30, 1994, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 5, 1995
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Thomas J. Steffanci, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
United Missouri Bank N.A.
Kansas City, MO
CUSTODIAN
United Missouri Bank N.A.
Kansas City, MO
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Global Resources Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Portfolio Income
Fidelity Advisor Income & Growth Fund
INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Limited Term
Bond Fund
Fidelity Advisor Short
Fixed-Income Fund
Fidelity Advisor Strategic Income Fund
TAX-EXEMPT FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Limited Term Tax-Exempt Fund
Fidelity Advisor Short-Intermediate Tax-Exempt Fund
MONEY MARKET FUNDS
Daily Money Fund:
Money Market Portfolio
Daily Money Fund:
U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
