(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND - CLASS A AND CLASS T
SEMIANNUAL REPORT
MAY 31, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 11 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 14 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 15 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 26 Notes to the financial statements.
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:
Through the first five months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
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 SHORT-INTERMEDIATE MUNICIPAL INCOME 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 prior to September 3, 1996 are those of Class T, the original
class of the fund, and reflect Class T's 0.15% 12b-1 fee. 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>
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor Short-Intermediate Municipal Income 1.32% 4.67% 15.61%
Fund - Class A
Advisor Short-Intermediate Municipal Income Fund - -0.20% 3.10% 13.88%
Class A (incl. max. 1.50% sales charge)
Lehman Brothers 1-5 Year Municipal Bond Index 1.67% 5.42% n/a
Short-Intermediate Municipal Debt Funds Average 1.32% 4.79% n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, six months, one year, and since the fund
started on March 16, 1994. 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 the performance of
the Lehman Brothers 1-5 Year Municipal Bond Index - a total return
benchmark for investment-grade municipal bonds with maturities between one
and five years. To measure how Class A's performance stacked up against its
peers, you can compare it to the short-intermediate municipal debt funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 32 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor Short-Intermediate Municipal Income Fund - 4.67% 4.62%
Class A
Advisor Short-Intermediate Municipal Income Fund - 3.10% 4.13%
Class A (incl. max. 1.50% sales charge)
Lehman Brothers 1-5 Year Municipal Bond Index 5.42% n/a
Short-Intermediate Municipal Debt Funds Average 4.79% n/a
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 LIFE OF FUND
1994/03/31 9850.00 10000.00
1994/04/30 9873.66 10084.80
1994/05/31 9890.94 10172.24
1994/06/30 9911.64 10110.08
1994/07/31 9992.26 10295.40
1994/08/31 10024.82 10331.02
1994/09/30 9997.13 10179.36
1994/10/31 9962.73 9998.58
1994/11/30 9898.29 9817.80
1994/12/31 9995.49 10033.89
1995/01/31 10133.68 10320.66
1995/02/28 10239.13 10620.79
1995/03/31 10309.05 10742.82
1995/04/30 10326.92 10755.50
1995/05/31 10469.99 11098.70
1995/06/30 10466.31 11002.15
1995/07/31 10556.16 11106.45
1995/08/31 10656.08 11247.28
1995/09/30 10692.36 11318.47
1995/10/31 10759.99 11483.04
1995/11/30 10826.60 11673.55
1995/12/31 10863.04 11785.73
1996/01/31 10942.04 11874.71
1996/02/29 10944.42 11794.56
1996/03/31 10894.93 11643.82
1996/04/30 10897.90 11610.87
1996/05/31 10902.74 11606.22
1996/06/30 10960.22 11732.62
1996/07/31 11018.60 11839.38
1996/08/31 11033.85 11836.54
1996/09/30 11088.39 12002.25
1996/10/31 11160.71 12138.00
1996/11/30 11263.96 12360.12
1996/12/31 11246.18 12308.21
1997/01/31 11284.22 12331.47
1997/02/28 11352.45 12444.68
1997/03/31 11279.81 12278.79
1997/04/30 11328.05 12381.56
1997/05/30 11434.87 12567.78
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Short-Intermediate Municipal Income Fund -
Class A on March 31, 1994, shortly after the fund started, and the current
maximum 1.50% sales charge was paid. As the chart shows, by May 31, 1997,
the value of the investment would have grown to $11,412 - a 14.12% increase
on the initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index - a total return performance benchmark for
investment-grade municipal bonds with maturities of at least one year - did
over the same period. With dividends reinvested, the same $10,000
investment would have grown to $12,568 - a 25.68% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MARCH 16, 1994
(COMMENCEMENT
OF OPERATIONS) TO
NOVEMBER 30,
1994
SIX MONTHS YEARS ENDED NOVEMBER
ENDED 30,
MAY 31,
1997 1996 1995
</TABLE>
Dividend return 2.01% 4.04% 4.57% 2.57%
Capital appreciation return -0.69% 0.00% 4.81% -2.30%
Total return 1.32% 4.04% 9.38% 0.27%
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 6 LIFE OF
MONTH MONTHS CLASS
Dividends per share 3.50(cents) 20.24(cents) 30.22(cents)
Annualized dividend rate 4.08% 4.01% 4.03%
30-day annualized yield 3.65% - -
30-day annualized tax-equivalent yield 5.70% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $10.09
over the past one month, $10.12 over the past six months and $10.13 over
the life of the class, 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. The offering share price used in the
calculation of the yield includes the effect of Class A's maximum 1.50%
sales charge. The tax-equivalent yield shows what you would have to earn on
a taxable investment to equal the class' tax-free yield, if you're in the
36% federal tax bracket, but does not reflect payment of the federal
alternative minimum tax, if applicable. If Fidelity had not reimbursed
certain class expenses, the yield would have been -14.60%.
ADVISOR SHORT-INTERMEDIATE MUNICIPAL INCOME 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. 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>
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor Short-Intermediate Municipal Income 1.31% 4.68% 15.62%
Fund - Class T
Advisor Short-Intermediate Municipal Income Fund - -0.21% 3.11% 13.89%
Class T (incl. max. 1.50% sales charge)
Lehman Brothers 1-5 Year Municipal Bond Index 1.67% 5.42% n/a
Short-Intermediate Municipal Debt Funds Average 1.32% 4.79% n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, six months, one year, and since the fund
started on March 16, 1994. 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 the performance of
the Lehman Brothers 1-5 Year Municipal Bond Index - a total return
benchmark for investment-grade municipal bonds with maturities between one
and five years. To measure how Class T's performance stacked up against its
peers, you can compare it to the short-intermediate municipal debt funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 32 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor Short-Intermediate Municipal Income Fund - 4.68% 4.62%
Class T
Advisor Short-Intermediate Municipal Income Fund - 3.11% 4.13%
Class T (incl. max. 1.50% sales charge)
Lehman Brothers 1-5 Year Municipal Bond Index 5.42% n/a
Short-Intermediate Municipal Debt Funds Average 4.79% n/a
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 LIFE OF FUND
1994/03/31 9850.00 10000.00
1994/04/30 9873.66 10084.80
1994/05/31 9890.94 10172.24
1994/06/30 9911.64 10110.08
1994/07/31 9992.26 10295.40
1994/08/31 10024.82 10331.02
1994/09/30 9997.13 10179.36
1994/10/31 9962.73 9998.58
1994/11/30 9898.29 9817.80
1994/12/31 9995.49 10033.89
1995/01/31 10133.68 10320.66
1995/02/28 10239.13 10620.79
1995/03/31 10309.05 10742.82
1995/04/30 10326.92 10755.50
1995/05/31 10469.99 11098.70
1995/06/30 10466.31 11002.15
1995/07/31 10556.16 11106.45
1995/08/31 10656.08 11247.28
1995/09/30 10692.36 11318.47
1995/10/31 10759.99 11483.04
1995/11/30 10826.60 11673.55
1995/12/31 10863.04 11785.73
1996/01/31 10942.04 11874.71
1996/02/29 10944.42 11794.56
1996/03/31 10894.93 11643.82
1996/04/30 10897.90 11610.87
1996/05/31 10902.74 11606.22
1996/06/30 10960.22 11732.62
1996/07/31 11018.60 11839.38
1996/08/31 11033.85 11836.54
1996/09/30 11092.44 12002.25
1996/10/31 11163.59 12138.00
1996/11/30 11265.80 12360.12
1996/12/31 11258.70 12308.21
1997/01/31 11296.61 12331.47
1997/02/28 11353.66 12444.68
1997/03/31 11292.15 12278.79
1997/04/30 11340.50 12381.56
1997/05/30 11413.53 12567.78
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Short-Intermediate Municipal Income Fund -
Class T on March 31, 1994, shortly after the fund started, and the current
maximum 1.50% sales charge was paid. As the chart shows, by May 31, 1997,
the value of the investment would have grown to $11,414 - a 14.14% increase
on the initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index - a total return performance benchmark for
investment-grade municipal bonds with maturities of at least one year - did
over the same period. With dividends reinvested, the same $10,000
investment would have grown to $12,568 - a 25.68% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MARCH 16, 1994
(COMMENCEMENT
OF OPERATIONS) TO
NOVEMBER 30,
1994
SIX MONTHS YEARS ENDED NOVEMBER
ENDED 30,
MAY 31,
1997 1996 1995
</TABLE>
Dividend return 2.00% 4.06% 4.57% 2.57%
Capital appreciation return -0.69% 0.00% 4.81% -2.30%
Total return 1.31% 4.06% 9.38% 0.27%
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.49(cents) 20.19(cents) 40.43(cents)
Annualized dividend rate 4.07% 4.00% 4.00%
30-day annualized yield 3.76% - -
30-day annualized tax-equivalent yield 5.88% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $10.09
over the past one month, $10.12 over the past six months and $10.12 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. The offering share price used in the
calculation of the yield includes the effect of Class T's maximum 1.50%
sales charge. The tax-equivalent yield shows what you would have to earn on
a taxable investment to equal the class' tax-free yield, if you're in the
36% federal tax bracket, but does not reflect payment of the federal
alternative minimum tax, if applicable. If Fidelity had not reimbursed
certain class expenses, the yield and tax-equivalent yield would have been
3.60% and 5.63%, respectively.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Norm Lind, Portfolio Manager of Fidelity Advisor
Short-Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the six months that ended May 31, 1997, the fund's Class A and Class
T shares had total returns of 1.32% and 1.31%, respectively. For the same
six-month period, the short-intermediate municipal debt funds average
returned 1.32%, according to Lipper Analytical Services, and the Lehman
Brothers 1-5 Year Municipal Bond Index returned 1.67%. For the 12-month
period that ended May 31, 1997, the fund's Class A and Class T shares had
total returns of 4.67% and 4.68%, respectively. For the same 12-month
period, the short-intermediate municipal debt funds average returned 4.79%,
again according to Lipper Analytical Services, and the Lehman Brothers 1-5
Year Municipal Bond Index returned 5.42%.
Q. THE PAST SIX MONTHS WERE A DIFFICULT PERIOD FOR FIXED-INCOME INVESTMENTS
. . .
A. That's true, although municipals actually performed better than
Treasuries during the period. Generally speaking, the bond market prefers a
steady, slow-growing economy with low inflation. But there were signs that
economic growth was more vigorous than investors had originally expected
and that set off a bout of inflationary fears. Bond holders, of course,
dislike inflation because it eats away at their fixed-income payments.
While the anticipated uptick in inflation never did materialize during the
period, investors were worried enough about the future to send bond yields
higher and bond prices lower. Municipals, however, suffered less during
this troubled period, buoyed mainly by a classic case of rising demand
butting up against a limited supply. We saw a lot of demand from
corporations for short-maturity municipals of between one and four years in
January and February, as they bought in anticipation of changes to
corporate tax laws that essentially would limit their ability to own munis.
Q. CAN YOU POINT TO SPECIFIC BONDS THAT HELPED THE FUND'S PERFORMANCE OVER
THE PAST SIX MONTHS?
A. Sure. As I mentioned, the demand for munis with maturities in the one-
to four-year maturity range was strong, which helped them to perform well
relative to other municipals. I later sold a significant number of holdings
with maturities of between one and four years because I felt that they had
reached full value. As a result of those sales, the fund had a relatively
heavy weighting in securities with maturities of less than one year, and in
bonds with maturities of 5-7 years.
Q. HOW DID THAT STRUCTURE WORK OUT?
A. Fairly well. In March and April, the yield curve - which is a graphical
representation of the yields paid by bonds with various maturities -
flattened. By that I mean that yields on shorter-term securities rose
relative to longer-maturity bonds. In this environment, the fund's longer
positions generated solid performance. Later, as the shorter-maturity
portion of the municipal yield curve flattened further, I added more
short-term securities at attractive prices.
Q. HOW DID SHIFTING AMONG VARIOUS MATURITIES AFFECT THE FUND'S DURATION -
ITS SENSITIVITY TO CHANGES IN INTEREST RATES?
A. I manage the fund's duration to be similar to that of the fund's
benchmark index. In my experience, it's impossible to predict the direction
of interest rates with any great consistency over a long period of time. So
typically when I buy shorter-term securities, I'll offset it with a
purchase of an appropriate amount of longer-term bonds, and vice versa. As
a result, the fund's duration was in line with the benchmark throughout the
period.
Q. THE FUND'S STAKE IN BONDS RATED BAA BY MOODY'S INVESTORS SERVICES -
WHICH ARE THE LOWEST OF THE INVESTMENT-GRADE BONDS AVAILABLE - ROSE DURING
THE PERIOD. WHY WAS THAT?
A. For securities in the shorter-maturity end of the municipal market,
income generally accounts for a large portion of their total return. So I
looked for relatively high-yielding, Baa-bonds that I thought offered
enough yield to adequately compensate for their increased credit risk.
During the past six months, I added Baa-rated New York City bonds, which
were some of the municipal market's best performers. Their performance was
triggered, in part, by the strength of Wall Street and its contributions -
by way of corporate and personal income taxes - to New York City's rising
revenues. On the opposite end of the credit quality spectrum, I sold some
Aaa-rated student loan bonds at what I viewed to be attractive prices.
Q. WHAT OTHER FACTORS INFLUENCED YOUR CHOICES?
A. Two of my primary considerations are a bond's coupon and call feature.
As far as coupons go, I tended to favor premium-coupon bonds, which pay
higher annual income than newly issued bonds. These bonds offer downside
protection should the market fall and are protected from unfavorable tax
treatment that can occur during some market environments. As far as call
features are concerned, I generally prefer non-callable bonds, which can't
be redeemed by their issuers before maturity. If interest rates fall, the
fund can continue to hold the high-yielding, premium-coupon, non-callable
bonds without fear of them being redeemed by issuers looking to refinance
their debt at lower rates.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET?
A. As always, the municipal bond market's performance largely will be
dictated by the direction of interest rates, and it's anyone's guess what
will happen from here. But from a supply and demand standpoint, municipals
in general appear to be in pretty good shape, barring any unforeseen
legislation the could negatively affect them. I don't expect to see a
tremendous amount of additional supply entering the market.
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.
FUND FACTS
GOAL: to seek high current
income exempt from federal
income taxes consistent with
preservation of capital, by
investing in
investment-grade municipal
securities under normal
conditions
START DATE: March 16, 1994
SIZE: as of May 31, 1997,
more than $24 million
MANAGER: Norm Lind, since
1995; manager, Fidelity
Advisor New York Municipal
Income, since 1995; joined
Fidelity in 1986
(checkmark)
NORM LIND ON INSURED AND
GENERAL OBLIGATION BONDS:
INSURED BONDS: "Roughly
half of all new municipal
bonds issued today are
insured, compared to
one-third at the beginning of
the decade. One implication
of this development has been
that it's increasingly difficult
for the fund to find bonds with
additional yield. Bonds that
might naturally carry an
A-rating, an Aa-rating or a
Baa-rating are being insured
and offering lower yields
because of the insurance.
Even though this situation has
posed a significant challenge,
I look for higher-yielding,
uninsured bonds where I think
the yield adequately
compensates an investor for
the additional risk the bonds
carry."
GENERAL OBLIGATIONS BONDS:
"General obligation bonds
(GOs) make up the largest
sector concentration of the
fund, as well as the municipal
bond market as a whole. GOs
are municipal bonds backed by
the full faith and credit -
which includes the taxing
power - of a city, county or
state and are repaid by general
revenues, such as taxes. That
is in contrast to revenue
bonds, which are repaid by
the revenue generated from a
specific facility, such as a
tunnel or sewer system.
Generally speaking, GOs tend
to do well when the economy is
strong because tax receipts
rise as a function of increased
personal income, corporate
profits and other sources. In
times of economic weakness,
tax receipts may drop and I
would likely favor revenue
bonds because the demand
for essential services - such
as the use of toll roads -
would likely stay constant."
INVESTMENT CHANGES
TOP FIVE STATES AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
Texas 20.5 20.6
New York 15.4 10.3
California 7.8 6.3
Georgia 5.3 3.4
South Carolina 5.3 9.3
TOP FIVE MARKET SECTORS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligation 34.0 28.0
Education 16.1 17.3
Electric Revenue 14.7 14.3
Escrowed/Pre-Refunded 11.1 17.7
Transportation 4.5 2.4
AVERAGE YEARS TO MATURITY AS OF MAY 31, 1997
6 MONTHS AGO
Years 3.2 3.4
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 MAY 31, 1997
6 MONTHS AGO
Years 2.8 3.0
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.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF MAY 31, 1997 AS OF NOVEMBER 30, 1996
Aaa 53.6%
Aa, A 26.3%
Baa 14.3%
Short-term
investments 5.8%
Aaa 54.6%
Aa, A 28.3%
Baa 12.4%
Short-term
investments 4.7%
Row: 1, Col: 1, Value: 53.6
Row: 1, Col: 2, Value: 26.3
Row: 1, Col: 3, Value: 14.3
Row: 1, Col: 4, Value: 5.8
Row: 1, Col: 1, Value: 54.6
Row: 1, Col: 2, Value: 28.3
Row: 1, Col: 3, Value: 12.4
Row: 1, Col: 4, Value: 4.7
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS MAY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 94.2%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ALABAMA - 0.7%
Mobile Board of Wtr. & Swr. Commissioners Wtr. Svc. Rev.
9.875% 1/1/98 (Escrowed to Maturity) (b) $ 175,000 $ 180,897
CALIFORNIA - 7.8%
California Rural Home Mtg. Fin. Auth. Lease Rev. Series A,
4.45% 8/1/01 (MBIA Insured) 1,000,000 992,500
Central Valley Fing. Auth. Cogeneration Rev. Ltd. Tax
(Carson Ice-Generation Proj.) 5% 7/1/98 1,000,000 1,004,940
1,997,440
COLORADO - 2.0%
Denver City & County Arpt. Rev. Series A:
6.60% 11/15/97 (a) 250,000 252,683
6.90% 11/15/98 (a) 250,000 258,750
511,433
FLORIDA - 0.4%
St. Petersburg Excise Tax Rev. Rfdg.
3.80% 10/1/98 (FGIC Insured) 100,000 99,750
GEORGIA - 5.3%
Georgia Gen. Oblig.:
6.25% 4/1/03 750,000 810,000
6.80% 8/1/01 500,000 542,500
1,352,500
INDIANA - 2.1%
Indianapolis Resource Recovery Rev. Rfdg. (Ogden Martin
Sys. Inc. Proj.) 6.50% 12/1/01 (AMBAC Insured) 500,000 537,500
LOUISIANA - 4.9%
Louisiana Pub. Facs. Auth. Rev. Rfdg. Student Loan Sr.
Series A-1, 6.20% 3/1/01 1,200,000 1,248,000
MAINE - 4.0%
Maine Edl. Loan Marketing Corp Student Loan Rev.
Series A-4, 5.45% 11/1/99 (a) 1,000,000 1,021,250
MICHIGAN - 1.3%
Michigan Hosp. Fin. Auth. Rev. Rfdg. (Mercy Health Services)
Series S, 5.75% 8/15/05 200,000 207,500
Utica Community School Bldg. & Site Rfdg.
4.10% 5/1/98 (FGIC Insured) 125,000 125,205
332,705
MINNESOTA - 0.6%
Minneapolis (Cap. Appreciation) Series B,
0%, 12/1/02 200,000 155,250
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MONTANA - 5.1%
Montana Higher Ed. Student Asst. Corp. Rev. Student Loan
Series B, 6.60% 12/1/99 (a) $ 1,250,000 $ 1,306,250
NEVADA - 2.3%
Clark County School Dist. Ltd. Tax Series A,
9.75% 6/1/01 (MBIA Insured) 500,000 592,500
NEW JERSEY - 0.4%
New Jersey Trans. Corp. Series A,
5.40% 9/1/02 (FSA Insured) 100,000 102,625
NEW MEXICO - 1.0%
Albuquerque New Mexico Arpt. Rev. Rfdg.
6.25% 7/1/00 (AMBAC Insured) 250,000 261,250
NEW YORK - 15.4%
New York City Muni. Assistance Corp. Rfdg.
Series E, 5.50% 7/1/00 1,000,000 1,027,500
New York City Gen. Oblig. Rfdg.:
Series H, 7.875% 8/1/00 1,000,000 1,083,750
Series F, 8.10% 11/15/99 240,000 258,900
New York State Local Gov't Assistance Corp. Series A,
7% 4/1/16 (Pre-Refunded to 4/1/01 @ 102) (b) 1,000,000 1,105,000
New York State Thruway Auth. Svc. Contract Rev.
Local Hwy. & Bridge:
5.40% 4/1/03 250,000 252,188
6% 4/1/03 200,000 208,250
3,935,588
NORTH CAROLINA - 3.0%
North Carolina Muni. Pwr. Agcy. Rev. Rfdg.
(Proj. #1 Catawba Elec.) 5.75% 1/1/02 750,000 772,500
OHIO - 1.2%
Columbus Wtrwks. & Swr. Impt. Unltd. Tax (Variable Purp.)
12% 5/15/98 270,000 289,734
PENNSYLVANIA - 3.9%
Pennsylvania Convention Ctr. Auth. Rev. Rfdg. Series A,
5.75% 9/1/99 315,000 320,906
Pennsylvania Higher Edl. Facs. Health Svc. Rev. Rfdg.
Series A, (Univ. of Pennsylvania)
(Presbyterian Med. Ctr. Proj.) 5.125% 1/1/01 650,000 659,750
980,656
SOUTH CAROLINA - 5.3%
South Carolina Gen. Oblig. State Hwy. Ltd. Tax 5.40% 8/1/03 1,300,000
1,348,750
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
TENNESSEE - 1.1%
Memphis-Shelby County Arpt. Auth. Arpt. Rev. Rfdg.
Series A, 5.25% 2/15/01, (MBIA Insured) (a)(c) $ 275,000 $ 278,438
TEXAS - 20.5%
Austin Pub. Impt. Ltd. Tax 7% 9/1/01 1,000,000 1,090,000
Austin Independent School Dist. School Bldg.
8.125% 8/1/01 (PSF Guaranteed)
(Escrowed to Maturity) (b) 500,000 568,125
Brazos Higher Ed. Auth. Student Loan Rev. Rfdg.
Series A-1, 6.05% 12/1/01 (a) 500,000 521,250
Deer Park Independent School Dist. Rfdg.
0% 2/15/03 (PSF Guaranteed) 200,000 151,500
Northside Independent School Dist. School Bldg. Ltd. Tax
8.375% 2/1/00 (PSF Guaranteed) 500,000 547,500
Plano Independent School Dist. Series B, 8.625% 2/15/03
(FGIC Insured) (Pre-Refunded to
2/15/01 @ 100) (b) 400,000 455,000
Round Rock Gen. Oblig. Rfdg. 6.40% 8/1/98
(FGIC Insured) 770,000 773,280
San Antonio Rfdg. Ltd. Tax (Gen. Impt.)
5.50% 8/1/02 (c) 125,000 126,250
San Antonio Elec. & Gas Rev. Rfdg.
6.40% 2/1/98 1,000,000 1,006,460
5,239,365
UTAH - 1.7%
Intermountain Pwr. Agcy. Pwr. Supply Rev. Rfdg.
(Cap. Appreciation) Series B, 0% 7/1/00 (MBIA Insured) 500,000 433,750
VIRGINIA - 2.1%
Virginia Pub. School Auth. School Fing. Series A,
6.20% 1/1/00 (Pre-Refunded to 1/1/00 @ 102) (b) 500,000 530,625
WASHINGTON - 2.1%
Washington Pub. Pwr. Supply Sys. Rev. Rfdg. (Nuclear Proj. #1)
Series A, 7.25% 7/1/99 500,000 525,000
TOTAL MUNICIPAL BONDS
(Cost $23,834,955) 24,033,756
CASH EQUIVALENTS - 5.8%
SHARES VALUE (NOTE 1)
Municipal Central Cash Fund (d)(e)
(Cost $1,487,641) 1,487,641 $ 1,487,641
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $25,322,596) $ 25,521,397
LEGEND
1. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
2. Security collateralized by an amount sufficient to pay interest and
principal.
3. Security purchased on a delayed delivery or when-issued basis (see Note
5 of Notes to Financial Statements).
4. Information in this report regarding holdings by state and security
types do not reflect the holdings of the Municipal Central Cash Fund. A
listing of the Municipal Central Cash Fund's holdings as of its most recent
fiscal period end is available upon request.
5. At the period end, the seven-day yield of the Municipal Central Cash
Fund was 3.90% The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 80.0% AAA, AA, A 63.8%
Baa 10.3% BBB 14.3%
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%
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 34.0%
Education 16.1
Electric Revenue 14.7
Escrowed/Pre-Refunded 11.1
Others (individually less than 5%) 24.1
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1997, the aggregate cost of investment securities for income tax
purposes was $25,322,596. Net unrealized appreciation aggregated $198,801,
of which $231,551 related to appreciated investment securities and $32,750
related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $25,322,596) - $ 25,521,397
See accompanying schedule
Interest receivable 437,798
Other receivables 911
Prepaid expenses 5,031
TOTAL ASSETS 25,965,137
LIABILITIES
Payable for investments purchased $ 544,380
Regular delivery
Delayed delivery 404,192
Payable for fund shares redeemed 34,054
Distributions payable 14,540
Accrued management fee 689
Distribution fees payable 3,002
Other payables and accrued expenses 20,913
TOTAL LIABILITIES 1,021,770
NET ASSETS $ 24,943,367
Net Assets consist of:
Paid in capital $ 24,731,577
Accumulated undistributed net realized gain (loss) 12,989
on investments
Net unrealized appreciation (depreciation) on 198,801
investments
NET ASSETS $ 24,943,367
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
MAY 31, 1997 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $10.11
CLASS A:
NET ASSET VALUE and redemption price per share
($159,338 (divided by) 15,754 shares)
Maximum offering price per share (100/98.50 of $10.11) $10.26
CLASS T: $10.11
NET ASSET VALUE and redemption price per share
($24,327,169 (divided by) 2,406,530 shares)
Maximum offering price per share (100/98.50 of $10.11) $10.26
INSTITUTIONAL CLASS: $10.11
NET ASSET VALUE, offering price and redemption price
per share ($456,860 (divided by) 45,168 shares)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
INTEREST INCOME $ 659,253
EXPENSES
Management fee $ 52,804
Transfer agent fees 27,265
Distribution fees 19,853
Accounting fees and expenses 34,475
Non-interested trustees' compensation 125
Custodian fees and expenses 2,820
Registration fees 36,451
Audit 19,735
Legal 152
Miscellaneous 314
Total expenses before reductions 193,994
Expense reductions (73,414) 120,580
NET INVESTMENT INCOME 538,673
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 31,301
Futures contracts 2,032 33,333
Change in net unrealized appreciation (depreciation) on (233,912)
investment securities
NET GAIN (LOSS) (200,579)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 338,094
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 538,673 $ 1,180,079
Net investment income
Net realized gain (loss) 33,333 130,000
Change in net unrealized appreciation (depreciation) (233,912) (87,628)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 338,094 1,222,451
FROM OPERATIONS
Distributions to shareholders (538,673) (1,180,079)
From net interest income
From net realized gain (86,476) (83,995)
TOTAL DISTRIBUTIONS (625,149) (1,264,074)
Share transactions - net increase (decrease) (5,330,543) 1,194,041
TOTAL INCREASE (DECREASE) IN NET ASSETS (5,617,598) 1,152,418
NET ASSETS
Beginning of period 30,560,965 29,408,547
End of period $ 24,943,367 $ 30,560,965
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1997
(UNAUDITED) 1996 D
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.210 $ 10.100
Income from Investment Operations
Net interest income .202 .100
Net realized and unrealized gain (loss) (.070) .110
Total from investment operations .132 .210
Less Distributions
From net interest income (.202) (.100)
From net realized gain (.030) -
Total distributions (.232) (.100)
Net asset value, end of period $ 10.110 $ 10.210
TOTAL RETURN B, C 1.32% 2.09%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 159 $ 186
Ratio of expenses to average net assets .90% A, E .90% A,
E
Ratio of net interest income to average net assets 4.02% A 4.06% A
Portfolio turnover rate 35% A 62%
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 FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO NOVEMBER 30, 1996.
E 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 T
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997
(UNAUDITED) 1996 1995 1994 D
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.210 $ 10.240 $ 9.770 $ 10.000
Income from Investment Operations
Net interest income .202 .404 .430 .259
Net realized and unrealized gain (loss) (.070) - .470 (.230)
Total from investment operations .132 .404 .900 .029
Less Distributions
From net interest income (.202) (.404) (.430) (.259)
From net realized gain (.030) (.030) - -
Total distributions (.232) (.434) (.430) (.259)
Net asset value, end of period $ 10.110 $ 10.210 $ 10.240 $ 9.770
TOTAL RETURN B, C 1.31% 4.06% 9.38% .27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 24,327 $ 29,887 $ 29,274 $ 16,563
Ratio of expenses to average net assets .90% A, .90% .82% .75% A,
E E E E
Ratio of expenses to average net assets .90% A .89% .82% .75% A
after expense reductions F
Ratio of net interest income to average 4.01% A 3.97% 4.25% 3.74% A
net assets
Portfolio turnover rate 35% A 62% 80% 111% A
</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 ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD MARCH 16, 1994 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO
NOVEMBER 30, 1994.
E 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).
F 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 - INSTITUTIONAL CLASS
SIX MONTHS YEARS ENDED NOVEMBER
ENDED MAY 31, 30,
1997
(UNAUDITED) 1996 1995 D
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.210 $ 10.230 $ 10.070
Income from Investment Operations
Net interest income .209 .407 .178
Net realized and unrealized gain (loss) (.070) .010 .160
Total from investment operations .139 .417 .338
Less Distributions
From net interest income (.209) (.407) (.178)
From net realized gain (.030) (.030) -
Total distributions (.239) (.437) (.178)
Net asset value, end of period $ 10.110 $ 10.210 $ 10.230
TOTAL RETURN B, C 1.38% 4.19% 3.37%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 457 $ 487 $ 134
Ratio of expenses to average net assets .75% A, E .75% E .75% A,
E
Ratio of expenses to average net assets after .75% A .74% F .75% A
expense reductions
Ratio of net interest income to average net assets 4.15% A 4.03% 4.18% A
Portfolio turnover rate 35% A 62% 80%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED .
C 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).
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO NOVEMBER 30, 1995.
E 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).
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Short-Intermediate Municipal Income 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 fund offers Class A, Class T, 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. Interest
income, realized and unrealized capital gains and losses, the common
expenses of the fund, and certain fund-level expense reductions 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 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.
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."
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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest 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 market
discount and losses deferred due to futures and options. The fund also
utilized earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net interest income and realized
and unrealized gain (loss). 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.
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.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund may invest in the Municipal
Central Cash Fund (the Cash Fund) managed by FMR Texas, an affiliate of
FMR. The Cash Fund is an open-end money market fund available only to
investment companies and other accounts managed by FMR and its affiliates.
The Cash Fund seeks preservation of capital, liquidity, and current income
by investing in high-quality, short-term municipal securities of various
states and municipalities. Income distributions from the Cash Fund are
declared daily and paid monthly from net interest income. Income
distributions received by the fund are recorded as interest income in the
accompanying financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. The fund may
receive compensation for interest forgone in the purchase of a when-issued
security. With respect to purchase commitments, the fund identifies
securities as segregated in its custodial records with a value at least
equal to the amount of the commitment.
2. OPERATING POLICIES - CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
The payables and receivables associated with the purchases and sales of
when-issued securities having the same settlement date and broker are
offset. When-issued securities that have been purchased from and sold to
different brokers are reflected as both payables and receivables in the
statement of assets and liabilities under the caption "Delayed delivery."
Losses may arise due to changes in the market value of the underlying
securities, if the counterparty does not perform under the contract, or if
the issuer does not issue the securities due to political, economic, or
other factors.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Losses may arise
from changes in the value of the underlying instruments, if there is an
illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms. Futures contracts are valued at the
settlement price established each day by the board of trade or exchange on
which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $4,592,547 and $10,589,486, respectively.
The market value of futures contracts opened and closed during the period
amounted to $1,261,796 and $1,263,828, 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 .25%. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
For the period, the management fee was equivalent to an annualized rate of
.39% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 .15%
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 $ 112 $ 112
CLASS T 19,741 19,741
$ 19,853 $ 19,853
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 received a front-end sales charge of up to 1.50% for
selling Class A and Class T shares of the fund.
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 $ 585 $ 502
CLASS T 34,049 13,585
$ 34,634 $ 14,087
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class T, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC an affiliate of FMR, receives account fees and asset-based fees that
vary according to the account size and type of account of the shareholders
of the respective
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
classes of the fund. All fees are paid to FIIOC by UMB, which is reimbursed
by each class for such payments. FIIOC pays for typesetting, printing and
mailing of all shareholder reports. For the period, each class paid the
following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 466 .63%*
CLASS T UMB 26,160 .20%*
INSTITUTIONAL CLASS UMB 639 .26%*
$ 27,265
* ANNUALIZED
UMB also has a sub-contract with Fidelity Service Company, Inc. (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.
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 class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 16,346
CLASS T .90% 45,750
INSTITUTIONAL CLASS .75% 11,318
$ 73,414
6. BENEFICIAL INTEREST.
At the end of the period, one shareholder was record owner of approximately
17% of the total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1996 A
1997
CLASS A
From net investment income $ 2,990 $ 1,658
From net realized gain 543 -
Total $ 3,533 $ 1,658
CLASS T
From net investment income $ 525,640 $ 1,165,115
From net realized gain 84,495 83,601
Total $ 610,135 $ 1,248,716
INSTITUTIONAL CLASS
From net investment income $ 10,043 $ 13,306
From net realized gain 1,438 394
Total $ 11,481 $ 13,700
$ 625,149 $ 1,264,074
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30, ENDED MAY 31, NOVEMBER 30,
1997 1996 A 1997 1996 A
CLASS A 5,094 18,079 $ 51,372 $ 182,623
Shares sold
Reinvestment of distributions 343 164 3,466 1,669
Shares redeemed (7,926) - (80,066) -
Net increase (decrease) (2,489) 18,243 $ (25,228) $ 184,292
CLASS T 956,971 1,927,010 $ 9,680,268 $ 19,536,753
Shares sold
Reinvestment of distributions 49,037 103,571 496,355 1,051,496
Shares redeemed (1,527,497) (1,962,525) (15,456,060) (19,930,259)
Net increase (decrease) (521,489) 68,056 $ (5,279,437) $ 657,990
INSTITUTIONAL CLASS 23,310 36,423 $ 236,356 $ 370,359
Shares sold
Reinvestment of distributions 513 713 5,190 7,234
Shares redeemed (26,377) (2,548) (267,424) (25,834)
Net increase (decrease) (2,554) 34,588 $ (25,878) $ 351,759
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 16,235
CLASS T 9,788
INSTITUTIONAL CLASS 10,428
$ 36,451
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Norman U. Lind, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
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 *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
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 TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Overseas Fund
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 High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
MAY 31, 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 15 Statements of assets and
liabilities, operations, and changes
in net assets, as well as financial
highlights.
NOTES 22 Notes to the financial statements.
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:
Through the first five months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
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 SHORT-INTERMEDIATE MUNICIPAL INCOME 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. The initial
offering of Institutional Class shares took place on July 3, 1995.
Institutional Class shares are sold to eligible investors without a sales
load or 12b-1 fee. Returns prior to July 3, 1995 are those of Class T, the
original class of the fund, and reflect Class T's 0.15% 12b-1 fee. If
Fidelity had not reimbursed certain class expenses, the total returns and
dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor Short-Intermediate Municipal Income - 1.38% 4.72% 15.80%
Institutional Class
Lehman Brothers 1-5 Year Municipal Bond Index 1.67% 5.42% n/a
Short-Intermediate Municipal Debt Funds Average 1.32% 4.79% n/a
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, six months, one year,
and since the fund started on March 16, 1994. 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 Institutional
Class' returns to the performance of the Lehman Brothers 1-5 Year Municipal
Bond Index - a total return benchmark for investment-grade municipal bonds
with maturities between one and five years. To measure how Institutional
Class' performance stacked up against its peers, you can compare it to the
short-intermediate municipal debt funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 32 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor Short-Intermediate Municipal Income - 4.72% 4.67%
Institutional Class
Lehman Brothers 1-5 Year Municipal Bond Index 5.42% n/a
Short-Intermediate Municipal Debt Funds Average 4.79% n/a
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 LIFE OF FUND
1994/03/31 10000.00 10000.00
1994/04/30 10024.02 10084.80
1994/05/31 10041.56 10172.24
1994/06/30 10062.58 10110.08
1994/07/31 10144.43 10295.40
1994/08/31 10177.48 10331.02
1994/09/30 10149.37 10179.36
1994/10/31 10114.45 9998.58
1994/11/30 10049.02 9817.80
1994/12/31 10147.71 10033.89
1995/01/31 10288.00 10320.66
1995/02/28 10395.05 10620.79
1995/03/31 10466.04 10742.82
1995/04/30 10484.19 10755.50
1995/05/31 10629.43 11098.70
1995/06/30 10625.69 11002.15
1995/07/31 10716.95 11106.45
1995/08/31 10819.79 11247.28
1995/09/30 10857.92 11318.47
1995/10/31 10928.33 11483.04
1995/11/30 10986.80 11673.55
1995/12/31 11035.61 11785.73
1996/01/31 11117.00 11874.71
1996/02/29 11120.38 11794.56
1996/03/31 11058.92 11643.82
1996/04/30 11058.47 11610.87
1996/05/31 11081.79 11606.22
1996/06/30 11140.49 11732.62
1996/07/31 11201.04 11839.38
1996/08/31 11206.87 11836.54
1996/09/30 11267.75 12002.25
1996/10/31 11341.46 12138.00
1996/11/30 11446.75 12360.12
1996/12/31 11440.81 12308.21
1997/01/31 11480.79 12331.47
1997/02/28 11539.97 12444.68
1997/03/31 11478.96 12278.79
1997/04/30 11529.52 12381.56
1997/05/30 11605.24 12567.78
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Short-Intermediate Municipal Income Fund -
Institutional Class on March 31, 1994, shortly after the fund started. As
the chart shows, by May 31, 1997, the value of the investment would have
grown to $11,605 - a 16.05% increase on the initial investment. For
comparison, look at how the Lehman Brothers Municipal Bond Index - a total
return performance benchmark for investment-grade municipal bonds with
maturities of at least one year - did over the same period. With dividends
reinvested, the same $10,000 investment would have grown to $12,568 - a
25.68% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED MARCH 16, 1994
ENDED NOVEMBER 30, (COMMENCEMENT
MAY 31, OF OPERATIONS) TO
NOVEMBER 30,
1997 1996 1995 1994
</TABLE>
Dividend return 2.07% 4.09% 4.63% 2.57%
Capital appreciation return -0.69% 0.10% 4.71% -2.30%
Total return 1.38% 4.19% 9.34% 0.27%
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.62(cents) 20.91(cents) 41.81(cents)
Annualized dividend rate 4.22% 4.14% 4.13%
30-day annualized yield 3.98% - -
30-day annualized tax-equivalent yield 6.22% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $10.10
over the past one month, $10.12 over the past six months and $10.12 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. The tax-equivalent yield shows what
you would have to earn on a taxable investment to equal the class' tax-free
yield, if you're in the 36% federal tax bracket - but does not reflect
payment of the federal alternative minimum tax, if applicable. If Fidelity
had not reimbursed certain class expenses, the yield and tax-equivalent
yield would have been 3.73% and 5.83%, respectively.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Norm Lind, Portfolio Manager of Fidelity Advisor
Short-Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the six months that ended May 31, 1997, the fund's Institutional
Class shares had a total return of 1.38%. For the same six-month period,
the short-intermediate municipal debt funds average returned 1.32%,
according to Lipper Analytical Services, and the Lehman Brothers 1-5 Year
Municipal Bond Index returned 1.67%. For the 12-month period that ended May
31, 1997, the Institutional Class shares had a total return of 4.72%, the
short-intermediate municipal debt funds average returned 4.79%, again
according to Lipper Analytical Services, and the Lehman Brothers 1-5 Year
Municipal Bond Index returned 5.42%.
Q. THE PAST SIX MONTHS WERE A DIFFICULT PERIOD FOR FIXED-INCOME INVESTMENTS
. . .
A. That's true, although municipals actually performed better than
Treasuries during the period. Generally speaking, the bond market prefers a
steady, slow-growing economy with low inflation. But there were signs that
economic growth was more vigorous than investors had originally expected
and that set off a bout of inflationary fears. Bond holders, of course,
dislike inflation because it eats away at their fixed-income payments.
While the anticipated uptick in inflation never did materialize during the
period, investors were worried enough about the future to send bond yields
higher and bond prices lower. Municipals, however, suffered less during
this troubled period, buoyed mainly by a classic case of rising demand
butting up against a limited supply. We saw a lot of demand from
corporations for short-maturity municipals of between one and four years in
January and February, as they bought in anticipation of changes to
corporate tax laws that essentially would limit their ability to own munis.
Q. CAN YOU POINT TO SPECIFIC BONDS THAT HELPED THE FUND'S PERFORMANCE OVER
THE PAST SIX MONTHS?
A. Sure. As I mentioned, the demand for munis with maturities in the one-
to four-year maturity range was strong, which helped them to perform well
relative to other municipals. I later sold a significant number of holdings
with maturities of between one and four years because I felt that they had
reached full value. As a result of those sales, the fund had a relatively
heavy weighting in securities with maturities of less than one year, and in
bonds with maturities of 5-7 years.
Q. HOW DID THAT STRUCTURE WORK OUT?
A. Fairly well. In March and April, the yield curve - which is a graphical
representation of the yields paid by bonds with various maturities -
flattened. By that I mean that yields on shorter-term securities rose
relative to longer-maturity bonds. In this environment, the fund's longer
positions generated solid performance. Later, as the shorter-maturity
portion of the municipal yield curve flattened further, I added more
short-term securities at attractive prices.
Q. HOW DID SHIFTING AMONG VARIOUS MATURITIES AFFECT THE FUND'S DURATION -
ITS SENSITIVITY TO CHANGES IN INTEREST RATES?
A. I manage the fund's duration to be similar to that of the fund's
benchmark index. In my experience, it's impossible to predict the direction
of interest rates with any great consistency over a long period of time. So
typically when I buy shorter-term securities, I'll offset it with a
purchase of an appropriate amount of longer-term bonds, and vice versa. As
a result, the fund's duration was in line with the benchmark throughout the
period.
Q. THE FUND'S STAKE IN BONDS RATED BAA BY MOODY'S INVESTORS SERVICES -
WHICH ARE THE LOWEST OF THE INVESTMENT-GRADE BONDS AVAILABLE - ROSE DURING
THE PERIOD. WHY WAS THAT?
A. For securities in the shorter-maturity end of the municipal market,
income generally accounts for a large portion of their total return. So I
looked for relatively high-yielding, Baa-bonds that I thought offered
enough yield to adequately compensate for their increased credit risk.
During the past six months, I added Baa-rated New York City bonds, which
were some of the municipal market's best performers. Their performance was
triggered, in part, by the strength of Wall Street and its contributions -
by way of corporate and personal income taxes - to New York City's rising
revenues. On the opposite end of the credit quality spectrum, I sold some
Aaa-rated student loan bonds at what I viewed to be attractive prices.
Q. WHAT OTHER FACTORS INFLUENCED YOUR CHOICES?
A. Two of my primary considerations are a bond's coupon and call feature.
As far as coupons go, I tended to favor premium-coupon bonds, which pay
higher annual income than newly issued bonds. These bonds offer downside
protection should the market fall and are protected from unfavorable tax
treatment that can occur during some market environments. As far as call
features are concerned, I generally prefer non-callable bonds, which can't
be redeemed by their issuers before maturity. If interest rates fall, the
fund can continue to hold the high-yielding, premium-coupon, non-callable
bonds without fear of them being redeemed by issuers looking to refinance
their debt at lower rates.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET?
A. As always, the municipal bond market's performance largely will be
dictated by the direction of interest rates, and it's anyone's guess what
will happen from here. But from a supply and demand standpoint, municipals
in general appear to be in pretty good shape, barring any unforeseen
legislation the could negatively affect them. I don't expect to see a
tremendous amount of additional supply entering the market.
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.
FUND FACTS
GOAL: to seek high current
income exempt from federal
income taxes consistent with
preservation of capital, by
investing in
investment-grade municipal
securities under normal
conditions
START DATE: March 16, 1994
SIZE: as of May 31, 1997,
more than $24 million
MANAGER: Norm Lind, since
1995; manager, Fidelity
Advisor New York Municipal
Income, since 1995; joined
Fidelity in 1986
(checkmark)
NORM LIND ON INSURED AND
GENERAL OBLIGATION BONDS:
INSURED BONDS: "Roughly
half of all new municipal
bonds issued today are
insured, compared to
one-third at the beginning of
the decade. One implication
of this development has been
that it's increasingly difficult
for the fund to find bonds with
additional yield. Bonds that
might naturally carry an
A-rating, an Aa-rating or a
Baa-rating are being insured
and offering lower yields
because of the insurance.
Even though this situation has
posed a significant challenge,
I look for higher-yielding,
uninsured bonds where I think
the yield adequately
compensates an investor for
the additional risk the bonds
carry."
GENERAL OBLIGATIONS BONDS:
"General obligation bonds
(GOs) make up the largest
sector concentration of the
fund, as well as the municipal
bond market as a whole. GOs
are municipal bonds backed by
the full faith and credit -
which includes the taxing
power - of a city, county or
state and are repaid by general
revenues, such as taxes. That
is in contrast to revenue
bonds, which are repaid by
the revenue generated from a
specific facility, such as a
tunnel or sewer system.
Generally speaking, GOs tend
to do well when the economy is
strong because tax receipts
rise as a function of increased
personal income, corporate
profits and other sources. In
times of economic weakness,
tax receipts may drop and I
would likely favor revenue
bonds because the demand
for essential services - such
as the use of toll roads -
would likely stay constant."
INVESTMENT CHANGES
TOP FIVE STATES AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
Texas 20.5 20.6
New York 15.4 10.3
California 7.8 6.3
Georgia 5.3 3.4
South Carolina 5.3 9.3
TOP FIVE MARKET SECTORS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligation 34.0 28.0
Education 16.1 17.3
Electric Revenue 14.7 14.3
Escrowed/Pre-Refunded 11.1 17.7
Transportation 4.5 2.4
AVERAGE YEARS TO MATURITY AS OF MAY 31, 1997
6 MONTHS AGO
Years 3.2 3.4
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 MAY 31, 1997
6 MONTHS AGO
Years 2.8 3.0
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.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF MAY 31, 1997 AS OF NOVEMBER 30, 1996
Aaa 53.6%
Aa, A 26.3%
Baa 14.3%
Short-term
investments 5.8%
Aaa 54.6%
Aa, A 28.3%
Baa 12.4%
Short-term
investments 4.7%
Row: 1, Col: 1, Value: 53.6
Row: 1, Col: 2, Value: 26.3
Row: 1, Col: 3, Value: 14.3
Row: 1, Col: 4, Value: 5.8
Row: 1, Col: 1, Value: 54.6
Row: 1, Col: 2, Value: 28.3
Row: 1, Col: 3, Value: 12.4
Row: 1, Col: 4, Value: 4.7
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS MAY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 94.2%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ALABAMA - 0.7%
Mobile Board of Wtr. & Swr. Commissioners Wtr. Svc. Rev.
9.875% 1/1/98 (Escrowed to Maturity) (b) $ 175,000 $ 180,897
CALIFORNIA - 7.8%
California Rural Home Mtg. Fin. Auth. Lease Rev. Series A,
4.45% 8/1/01 (MBIA Insured) 1,000,000 992,500
Central Valley Fing. Auth. Cogeneration Rev. Ltd. Tax
(Carson Ice-Generation Proj.) 5% 7/1/98 1,000,000 1,004,940
1,997,440
COLORADO - 2.0%
Denver City & County Arpt. Rev. Series A:
6.60% 11/15/97 (a) 250,000 252,683
6.90% 11/15/98 (a) 250,000 258,750
511,433
FLORIDA - 0.4%
St. Petersburg Excise Tax Rev. Rfdg.
3.80% 10/1/98 (FGIC Insured) 100,000 99,750
GEORGIA - 5.3%
Georgia Gen. Oblig.:
6.25% 4/1/03 750,000 810,000
6.80% 8/1/01 500,000 542,500
1,352,500
INDIANA - 2.1%
Indianapolis Resource Recovery Rev. Rfdg. (Ogden Martin
Sys. Inc. Proj.) 6.50% 12/1/01 (AMBAC Insured) 500,000 537,500
LOUISIANA - 4.9%
Louisiana Pub. Facs. Auth. Rev. Rfdg. Student Loan Sr.
Series A-1, 6.20% 3/1/01 1,200,000 1,248,000
MAINE - 4.0%
Maine Edl. Loan Marketing Corp Student Loan Rev.
Series A-4, 5.45% 11/1/99 (a) 1,000,000 1,021,250
MICHIGAN - 1.3%
Michigan Hosp. Fin. Auth. Rev. Rfdg. (Mercy Health Services)
Series S, 5.75% 8/15/05 200,000 207,500
Utica Community School Bldg. & Site Rfdg.
4.10% 5/1/98 (FGIC Insured) 125,000 125,205
332,705
MINNESOTA - 0.6%
Minneapolis (Cap. Appreciation) Series B,
0%, 12/1/02 200,000 155,250
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MONTANA - 5.1%
Montana Higher Ed. Student Asst. Corp. Rev. Student Loan
Series B, 6.60% 12/1/99 (a) $ 1,250,000 $ 1,306,250
NEVADA - 2.3%
Clark County School Dist. Ltd. Tax Series A,
9.75% 6/1/01 (MBIA Insured) 500,000 592,500
NEW JERSEY - 0.4%
New Jersey Trans. Corp. Series A,
5.40% 9/1/02 (FSA Insured) 100,000 102,625
NEW MEXICO - 1.0%
Albuquerque New Mexico Arpt. Rev. Rfdg.
6.25% 7/1/00 (AMBAC Insured) 250,000 261,250
NEW YORK - 15.4%
New York City Muni. Assistance Corp. Rfdg.
Series E, 5.50% 7/1/00 1,000,000 1,027,500
New York City Gen. Oblig. Rfdg.:
Series H, 7.875% 8/1/00 1,000,000 1,083,750
Series F, 8.10% 11/15/99 240,000 258,900
New York State Local Gov't Assistance Corp. Series A,
7% 4/1/16 (Pre-Refunded to 4/1/01 @ 102) (b) 1,000,000 1,105,000
New York State Thruway Auth. Svc. Contract Rev.
Local Hwy. & Bridge:
5.40% 4/1/03 250,000 252,188
6% 4/1/03 200,000 208,250
3,935,588
NORTH CAROLINA - 3.0%
North Carolina Muni. Pwr. Agcy. Rev. Rfdg.
(Proj. #1 Catawba Elec.) 5.75% 1/1/02 750,000 772,500
OHIO - 1.2%
Columbus Wtrwks. & Swr. Impt. Unltd. Tax (Variable Purp.)
12% 5/15/98 270,000 289,734
PENNSYLVANIA - 3.9%
Pennsylvania Convention Ctr. Auth. Rev. Rfdg. Series A,
5.75% 9/1/99 315,000 320,906
Pennsylvania Higher Edl. Facs. Health Svc. Rev. Rfdg.
Series A, (Univ. of Pennsylvania)
(Presbyterian Med. Ctr. Proj.) 5.125% 1/1/01 650,000 659,750
980,656
SOUTH CAROLINA - 5.3%
South Carolina Gen. Oblig. State Hwy. Ltd. Tax 5.40% 8/1/03 1,300,000
1,348,750
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
TENNESSEE - 1.1%
Memphis-Shelby County Arpt. Auth. Arpt. Rev. Rfdg.
Series A, 5.25% 2/15/01, (MBIA Insured) (a)(c) $ 275,000 $ 278,438
TEXAS - 20.5%
Austin Pub. Impt. Ltd. Tax 7% 9/1/01 1,000,000 1,090,000
Austin Independent School Dist. School Bldg.
8.125% 8/1/01 (PSF Guaranteed)
(Escrowed to Maturity) (b) 500,000 568,125
Brazos Higher Ed. Auth. Student Loan Rev. Rfdg.
Series A-1, 6.05% 12/1/01 (a) 500,000 521,250
Deer Park Independent School Dist. Rfdg.
0% 2/15/03 (PSF Guaranteed) 200,000 151,500
Northside Independent School Dist. School Bldg. Ltd. Tax
8.375% 2/1/00 (PSF Guaranteed) 500,000 547,500
Plano Independent School Dist. Series B, 8.625% 2/15/03
(FGIC Insured) (Pre-Refunded to
2/15/01 @ 100) (b) 400,000 455,000
Round Rock Gen. Oblig. Rfdg. 6.40% 8/1/98
(FGIC Insured) 770,000 773,280
San Antonio Rfdg. Ltd. Tax (Gen. Impt.)
5.50% 8/1/02 (c) 125,000 126,250
San Antonio Elec. & Gas Rev. Rfdg.
6.40% 2/1/98 1,000,000 1,006,460
5,239,365
UTAH - 1.7%
Intermountain Pwr. Agcy. Pwr. Supply Rev. Rfdg.
(Cap. Appreciation) Series B, 0% 7/1/00 (MBIA Insured) 500,000 433,750
VIRGINIA - 2.1%
Virginia Pub. School Auth. School Fing. Series A,
6.20% 1/1/00 (Pre-Refunded to 1/1/00 @ 102) (b) 500,000 530,625
WASHINGTON - 2.1%
Washington Pub. Pwr. Supply Sys. Rev. Rfdg. (Nuclear Proj. #1)
Series A, 7.25% 7/1/99 500,000 525,000
TOTAL MUNICIPAL BONDS
(Cost $23,834,955) 24,033,756
CASH EQUIVALENTS - 5.8%
SHARES VALUE (NOTE 1)
Municipal Central Cash Fund (d)(e)
(Cost $1,487,641) 1,487,641 $ 1,487,641
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $25,322,596) $ 25,521,397
LEGEND
1. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
2. Security collateralized by an amount sufficient to pay interest and
principal.
3. Security purchased on a delayed delivery or when-issued basis (see Note
5 of Notes to Financial Statements).
4. Information in this report regarding holdings by state and security
types do not reflect the holdings of the Municipal Central Cash Fund. A
listing of the Municipal Central Cash Fund's holdings as of its most recent
fiscal period end is available upon request.
5. At the period end, the seven-day yield of the Municipal Central Cash
Fund was 3.90% The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 80.0% AAA, AA, A 63.8%
Baa 10.3% BBB 14.3%
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%
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 34.0%
Education 16.1
Electric Revenue 14.7
Escrowed/Pre-Refunded 11.1
Others (individually less than 5%) 24.1
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1997, the aggregate cost of investment securities for income tax
purposes was $25,322,596. Net unrealized appreciation aggregated $198,801,
of which $231,551 related to appreciated investment securities and $32,750
related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $25,322,596) - $ 25,521,397
See accompanying schedule
Interest receivable 437,798
Other receivables 911
Prepaid expenses 5,031
TOTAL ASSETS 25,965,137
LIABILITIES
Payable for investments purchased $ 544,380
Regular delivery
Delayed delivery 404,192
Payable for fund shares redeemed 34,054
Distributions payable 14,540
Accrued management fee 689
Distribution fees payable 3,002
Other payables and accrued expenses 20,913
TOTAL LIABILITIES 1,021,770
NET ASSETS $ 24,943,367
Net Assets consist of:
Paid in capital $ 24,731,577
Accumulated undistributed net realized gain (loss) 12,989
on investments
Net unrealized appreciation (depreciation) on 198,801
investments
NET ASSETS $ 24,943,367
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
MAY 31, 1997 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $10.11
CLASS A:
NET ASSET VALUE and redemption price per share
($159,338 (divided by) 15,754 shares)
Maximum offering price per share (100/98.50 of $10.11) $10.26
CLASS T: $10.11
NET ASSET VALUE and redemption price per share
($24,327,169 (divided by) 2,406,530 shares)
Maximum offering price per share (100/98.50 of $10.11) $10.26
INSTITUTIONAL CLASS: $10.11
NET ASSET VALUE, offering price and redemption price
per share ($456,860 (divided by) 45,168 shares)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
INTEREST INCOME $ 659,253
EXPENSES
Management fee $ 52,804
Transfer agent fees 27,265
Distribution fees 19,853
Accounting fees and expenses 34,475
Non-interested trustees' compensation 125
Custodian fees and expenses 2,820
Registration fees 36,451
Audit 19,735
Legal 152
Miscellaneous 314
Total expenses before reductions 193,994
Expense reductions (73,414) 120,580
NET INVESTMENT INCOME 538,673
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 31,301
Futures contracts 2,032 33,333
Change in net unrealized appreciation (depreciation) on (233,912)
investment securities
NET GAIN (LOSS) (200,579)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 338,094
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 538,673 $ 1,180,079
Net investment income
Net realized gain (loss) 33,333 130,000
Change in net unrealized appreciation (depreciation) (233,912) (87,628)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 338,094 1,222,451
FROM OPERATIONS
Distributions to shareholders (538,673) (1,180,079)
From net interest income
From net realized gain (86,476) (83,995)
TOTAL DISTRIBUTIONS (625,149) (1,264,074)
Share transactions - net increase (decrease) (5,330,543) 1,194,041
TOTAL INCREASE (DECREASE) IN NET ASSETS (5,617,598) 1,152,418
NET ASSETS
Beginning of period 30,560,965 29,408,547
End of period $ 24,943,367 $ 30,560,965
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1997
(UNAUDITED) 1996 D
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.210 $ 10.100
Income from Investment Operations
Net interest income .202 .100
Net realized and unrealized gain (loss) (.070) .110
Total from investment operations .132 .210
Less Distributions
From net interest income (.202) (.100)
From net realized gain (.030) -
Total distributions (.232) (.100)
Net asset value, end of period $ 10.110 $ 10.210
TOTAL RETURN B, C 1.32% 2.09%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 159 $ 186
Ratio of expenses to average net assets .90% A, E .90% A,
E
Ratio of net interest income to average net assets 4.02% A 4.06% A
Portfolio turnover rate 35% A 62%
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 FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO NOVEMBER 30, 1996.
E 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 T
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997
(UNAUDITED) 1996 1995 1994 D
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.210 $ 10.240 $ 9.770 $ 10.000
Income from Investment Operations
Net interest income .202 .404 .430 .259
Net realized and unrealized gain (loss) (.070) - .470 (.230)
Total from investment operations .132 .404 .900 .029
Less Distributions
From net interest income (.202) (.404) (.430) (.259)
From net realized gain (.030) (.030) - -
Total distributions (.232) (.434) (.430) (.259)
Net asset value, end of period $ 10.110 $ 10.210 $ 10.240 $ 9.770
TOTAL RETURN B, C 1.31% 4.06% 9.38% .27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 24,327 $ 29,887 $ 29,274 $ 16,563
Ratio of expenses to average net assets .90% A, .90% .82% .75% A,
E E E E
Ratio of expenses to average net assets .90% A .89% .82% .75% A
after expense reductions F
Ratio of net interest income to average 4.01% A 3.97% 4.25% 3.74% A
net assets
Portfolio turnover rate 35% A 62% 80% 111% A
</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 ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD MARCH 16, 1994 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO
NOVEMBER 30, 1994.
E 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).
F 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 - INSTITUTIONAL CLASS
SIX MONTHS YEARS ENDED NOVEMBER
ENDED MAY 31, 30,
1997
(UNAUDITED) 1996 1995 D
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.210 $ 10.230 $ 10.070
Income from Investment Operations
Net interest income .209 .407 .178
Net realized and unrealized gain (loss) (.070) .010 .160
Total from investment operations .139 .417 .338
Less Distributions
From net interest income (.209) (.407) (.178)
From net realized gain (.030) (.030) -
Total distributions (.239) (.437) (.178)
Net asset value, end of period $ 10.110 $ 10.210 $ 10.230
TOTAL RETURN B, C 1.38% 4.19% 3.37%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 457 $ 487 $ 134
Ratio of expenses to average net assets .75% A, E .75% E .75% A,
E
Ratio of expenses to average net assets after .75% A .74% F .75% A
expense reductions
Ratio of net interest income to average net assets 4.15% A 4.03% 4.18% A
Portfolio turnover rate 35% A 62% 80%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED .
C 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).
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO NOVEMBER 30, 1995.
E 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).
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Short-Intermediate Municipal Income 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 fund offers Class A, Class T, 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. Interest
income, realized and unrealized capital gains and losses, the common
expenses of the fund, and certain fund-level expense reductions 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 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.
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."
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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest 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 market
discount and losses deferred due to futures and options. The fund also
utilized earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net interest income and realized
and unrealized gain (loss). 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.
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.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund may invest in the Municipal
Central Cash Fund (the Cash Fund) managed by FMR Texas, an affiliate of
FMR. The Cash Fund is an open-end money market fund available only to
investment companies and other accounts managed by FMR and its affiliates.
The Cash Fund seeks preservation of capital, liquidity, and current income
by investing in high-quality, short-term municipal securities of various
states and municipalities. Income distributions from the Cash Fund are
declared daily and paid monthly from net interest income. Income
distributions received by the fund are recorded as interest income in the
accompanying financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. The fund may
receive compensation for interest forgone in the purchase of a when-issued
security. With respect to purchase commitments, the fund identifies
securities as segregated in its custodial records with a value at least
equal to the amount of the commitment.
2. OPERATING POLICIES - CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
The payables and receivables associated with the purchases and sales of
when-issued securities having the same settlement date and broker are
offset. When-issued securities that have been purchased from and sold to
different brokers are reflected as both payables and receivables in the
statement of assets and liabilities under the caption "Delayed delivery."
Losses may arise due to changes in the market value of the underlying
securities, if the counterparty does not perform under the contract, or if
the issuer does not issue the securities due to political, economic, or
other factors.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Losses may arise
from changes in the value of the underlying instruments, if there is an
illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms. Futures contracts are valued at the
settlement price established each day by the board of trade or exchange on
which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $4,592,547 and $10,589,486, respectively.
The market value of futures contracts opened and closed during the period
amounted to $1,261,796 and $1,263,828, 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 .25%. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
For the period, the management fee was equivalent to an annualized rate of
.39% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 .15%
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 $ 112 $ 112
CLASS T 19,741 19,741
$ 19,853 $ 19,853
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 received a front-end sales charge of up to 1.50% for
selling Class A and Class T shares of the fund.
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 $ 585 $ 502
CLASS T 34,049 13,585
$ 34,634 $ 14,087
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class T, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC an affiliate of FMR, receives account fees and asset-based fees that
vary according to the account size and type of account of the shareholders
of the respective
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
classes of the fund. All fees are paid to FIIOC by UMB, which is reimbursed
by each class for such payments. FIIOC pays for typesetting, printing and
mailing of all shareholder reports. For the period, each class paid the
following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 466 .63%*
CLASS T UMB 26,160 .20%*
INSTITUTIONAL CLASS UMB 639 .26%*
$ 27,265
* ANNUALIZED
UMB also has a sub-contract with Fidelity Service Company, Inc. (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.
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 class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 16,346
CLASS T .90% 45,750
INSTITUTIONAL CLASS .75% 11,318
$ 73,414
6. BENEFICIAL INTEREST.
At the end of the period, one shareholder was record owner of approximately
17% of the total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1996 A
1997
CLASS A
From net investment income $ 2,990 $ 1,658
From net realized gain 543 -
Total $ 3,533 $ 1,658
CLASS T
From net investment income $ 525,640 $ 1,165,115
From net realized gain 84,495 83,601
Total $ 610,135 $ 1,248,716
INSTITUTIONAL CLASS
From net investment income $ 10,043 $ 13,306
From net realized gain 1,438 394
Total $ 11,481 $ 13,700
$ 625,149 $ 1,264,074
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30, ENDED MAY 31, NOVEMBER 30,
1997 1996 A 1997 1996 A
CLASS A 5,094 18,079 $ 51,372 $ 182,623
Shares sold
Reinvestment of distributions 343 164 3,466 1,669
Shares redeemed (7,926) - (80,066) -
Net increase (decrease) (2,489) 18,243 $ (25,228) $ 184,292
CLASS T 956,971 1,927,010 $ 9,680,268 $ 19,536,753
Shares sold
Reinvestment of distributions 49,037 103,571 496,355 1,051,496
Shares redeemed (1,527,497) (1,962,525) (15,456,060) (19,930,259)
Net increase (decrease) (521,489) 68,056 $ (5,279,437) $ 657,990
INSTITUTIONAL CLASS 23,310 36,423 $ 236,356 $ 370,359
Shares sold
Reinvestment of distributions 513 713 5,190 7,234
Shares redeemed (26,377) (2,548) (267,424) (25,834)
Net increase (decrease) (2,554) 34,588 $ (25,878) $ 351,759
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 16,235
CLASS T 9,788
INSTITUTIONAL CLASS 10,428
$ 36,451
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Norman U. Lind, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
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 *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
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 TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Overseas Fund
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 High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
INTERMEDIATE MUNICIPAL INCOME FUND - CLASS A, CLASS T AND CLASS B
SEMIANNUAL REPORT
MAY 31, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 15 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 18 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 19 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 25 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 33 Notes to the financial statements.
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:
Through the first five months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
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 MUNICIPAL INCOME 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. Had Class A'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 total
returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Advisor Intermediate Municipal Income - 1.38% 6.66% 30.65% 87.99%
Class A
Advisor Intermediate Municipal Income - -1.91% 3.19% 26.40% 81.88%
Class A (incl. max. 3.25% sales
charge)
Lehman Brothers 1-17 Year Municipal 1.69% 7.38% n/a n/a
Bond Index
Intermediate Municipal Debt Funds 1.28% 6.23% 33.93% 96.62%
Average
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, six months, 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 1-17 Year
Municipal Bond Index - a total return performance benchmark for
investment-grade municipal bonds with maturities between one and 17 years.
To measure how Class A's performance stacked up against its peers, you can
compare it to the intermediate municipal debt funds average, which reflects
the performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 138 mutual funds. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Intermediate Municipal Income - 6.66% 5.49% 6.52%
Class A
Advisor Intermediate Municipal Income - 3.19% 4.80% 6.16%
Class A (incl. max. 3.25% sales charge)
Lehman Brothers 1-17 Year Municipal 7.38% n/a n/a
Bond Index
Intermediate Municipal Debt Funds Average 6.23% 6.01% 6.98%
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
1987/05/31 9675.00 10000.00
1987/06/30 9855.67 10293.60
1987/07/31 9971.27 10398.59
1987/08/31 9992.71 10421.99
1987/09/30 9673.85 10037.73
1987/10/31 9763.64 10073.27
1987/11/30 9987.33 10336.28
1987/12/31 10087.05 10486.26
1988/01/31 10448.78 10859.78
1988/02/29 10491.40 10974.57
1988/03/31 10338.01 10847.26
1988/04/30 10389.98 10929.70
1988/05/31 10422.85 10898.11
1988/06/30 10496.12 11057.55
1988/07/31 10550.73 11129.65
1988/08/31 10555.78 11139.44
1988/09/30 10671.61 11341.07
1988/10/31 10798.56 11540.67
1988/11/30 10763.43 11434.96
1988/12/31 10831.35 11551.94
1989/01/31 10940.96 11790.83
1989/02/28 10875.62 11656.30
1989/03/31 10841.13 11628.44
1989/04/30 10994.36 11904.50
1989/05/31 11158.54 12151.75
1989/06/30 11281.01 12316.78
1989/07/31 11393.58 12484.41
1989/08/31 11356.67 12362.18
1989/09/30 11354.42 12325.35
1989/10/31 11445.48 12476.08
1989/11/30 11570.71 12694.42
1989/12/31 11675.01 12798.26
1990/01/31 11636.93 12737.72
1990/02/28 11740.26 12851.09
1990/03/31 11760.26 12854.94
1990/04/30 11639.33 12761.87
1990/05/31 11851.54 13040.46
1990/06/30 11949.66 13155.09
1990/07/31 12093.87 13348.47
1990/08/31 12023.55 13154.65
1990/09/30 12055.75 13162.15
1990/10/31 12190.58 13400.91
1990/11/30 12385.08 13670.40
1990/12/31 12418.50 13729.87
1991/01/31 12557.17 13914.12
1991/02/28 12671.49 14035.17
1991/03/31 12680.01 14040.23
1991/04/30 12794.95 14226.96
1991/05/31 12897.46 14353.44
1991/06/30 12905.29 14339.23
1991/07/31 13034.56 14513.88
1991/08/31 13138.71 14705.03
1991/09/30 13219.24 14896.49
1991/10/31 13361.19 15030.56
1991/11/30 13394.87 15072.49
1991/12/31 13616.21 15395.95
1992/01/31 13711.33 15431.05
1992/02/29 13727.06 15435.99
1992/03/31 13674.57 15441.70
1992/04/30 13770.22 15579.13
1992/05/31 13921.25 15762.50
1992/06/30 14103.95 16026.99
1992/07/31 14407.70 16507.48
1992/08/31 14301.18 16346.53
1992/09/30 14434.10 16453.44
1992/10/31 14331.40 16291.70
1992/11/30 14593.27 16583.49
1992/12/31 14610.89 16752.80
1993/01/31 14777.03 16947.64
1993/02/28 15187.30 17560.64
1993/03/31 15036.65 17375.02
1993/04/30 15142.41 17550.33
1993/05/31 15206.14 17648.97
1993/06/30 15366.41 17943.53
1993/07/31 15383.87 17967.03
1993/08/31 15666.91 18341.11
1993/09/30 15828.99 18550.01
1993/10/31 15843.85 18585.81
1993/11/30 15720.34 18422.07
1993/12/31 15988.95 18810.96
1994/01/31 16137.29 19025.78
1994/02/28 15734.35 18533.02
1994/03/31 15119.60 17778.35
1994/04/30 15253.43 17929.11
1994/05/31 15389.95 18084.56
1994/06/30 15279.35 17974.06
1994/07/31 15492.24 18303.53
1994/08/31 15550.81 18366.86
1994/09/30 15376.65 18097.23
1994/10/31 15142.84 17775.82
1994/11/30 14811.94 17454.44
1994/12/31 15080.06 17838.61
1995/01/31 15459.54 18348.44
1995/02/28 15851.83 18882.01
1995/03/31 16025.23 19098.96
1995/04/30 16020.63 19121.50
1995/05/31 16386.53 19731.67
1995/06/30 16298.49 19560.00
1995/07/31 16404.59 19745.43
1995/08/31 16626.32 19995.80
1995/09/30 16732.54 20122.38
1995/10/31 16911.01 20414.96
1995/11/30 17105.87 20753.64
1995/12/31 17220.83 20953.08
1996/01/31 17335.73 21111.28
1996/02/29 17279.10 20968.78
1996/03/31 17109.05 20700.80
1996/04/30 17054.42 20642.21
1996/05/31 17052.58 20633.96
1996/06/30 17184.20 20858.66
1996/07/31 17318.28 21048.47
1996/08/31 17317.05 21043.42
1996/09/30 17462.66 21338.03
1996/10/31 17633.51 21579.36
1996/11/30 17939.33 21974.27
1996/12/31 17871.64 21881.97
1997/01/31 17923.22 21923.33
1997/02/28 18072.82 22124.59
1997/03/31 17860.71 21829.67
1997/04/30 17996.47 22012.38
1997/05/30 18170.08 22343.45
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Advisor Intermediate Municipal Income Fund - Class A on May 31,
1987, and the current maximum 3.25% sales charge was paid. As the chart
shows, by May 31, 1997, the value of the investment would have grown to
$18,188 - an 81.88% increase on the initial investment. For comparison,
look at how the Lehman Brothers Municipal Bond Index, which reflects the
performance of the investment-grade municipal bond market, did over the
same period. With dividends reinvested, the same $10,000 investment would
have grown to $22,343 - a 123.43% 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
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31,
1997 1996 1995 1994 1993 1992
Dividend return 2.24% 4.58% 5.06% 4.18% 5.13% 6.37%
Capital appreciation -0.86% 0.29% 10.43% -9.96% 2.59% 2.59%
return
Total return 1.38% 4.87% 15.49% -5.78% 7.72% 8.96%
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 MAY 31, 1997 PAST 1 PAST 6 LIFE OF
MONTH MONTHS CLASS
Dividends per share 3.89(cents) 23.04(cents) 34.39(cents)
Annualized dividend rate 4.46% 4.49% 4.52%
30-day annualized yield 4.12% - -
30-day annualized tax-equivalent 6.44% - -
yield
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $10.28
over the past one month, $10.30 over the past six months and $10.28 over
the life of the class, 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 3.25% sales charge. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the class' tax-free yield, if you're in the 36% federal
tax bracket but does not reflect payment of the federal alternative minimum
tax, if applicable. If Fidelity had not reimbursed certain class expenses,
the yield would have been -1.54%.
ADVISOR INTERMEDIATE MUNICIPAL INCOME 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 Institutional Class, the
original class of the fund. 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 total returns and dividends would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Advisor Intermediate Municipal Income - 1.43% 6.72% 30.72% 88.09%
Class T
Advisor Intermediate Municipal Income - -1.36% 3.78% 27.12% 82.92%
Class T (incl. max. 2.75% sales
charge)
Lehman Brothers 1-17 Year Municipal 1.69% 7.38% n/a n/a
Bond Index
Intermediate Municipal Debt Funds 1.28% 6.23% 33.93% 96.62%
Average
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, six months, 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 1-17 Year
Municipal Bond Index - a total return performance benchmark for
investment-grade municipal bonds with maturities between one and 17 years.
To measure how Class T's performance stacked up against its peers, you can
compare it to the intermediate municipal debt funds average, which reflects
the performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 138 mutual funds. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Intermediate Municipal Income - 6.72% 5.50% 6.52%
Class T
Advisor Intermediate Municipal Income - 3.78% 4.92% 6.22%
Class T (incl. max. 2.75% sales charge)
Lehman Brothers 1-17 Year Municipal 7.38% n/a n/a
Bond Index
Intermediate Municipal Debt Funds Average 6.23% 6.01% 6.98%
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
1987/05/31 9725.00 10000.00
1987/06/30 9906.60 10293.60
1987/07/31 10022.80 10398.59
1987/08/31 10044.36 10421.99
1987/09/30 9723.85 10037.73
1987/10/31 9814.10 10073.27
1987/11/30 10038.95 10336.28
1987/12/31 10139.18 10486.26
1988/01/31 10502.77 10859.78
1988/02/29 10545.62 10974.57
1988/03/31 10391.43 10847.26
1988/04/30 10443.67 10929.70
1988/05/31 10476.72 10898.11
1988/06/30 10550.36 11057.55
1988/07/31 10605.25 11129.65
1988/08/31 10610.33 11139.44
1988/09/30 10726.76 11341.07
1988/10/31 10854.37 11540.67
1988/11/30 10819.05 11434.96
1988/12/31 10887.32 11551.94
1989/01/31 10997.51 11790.83
1989/02/28 10931.83 11656.30
1989/03/31 10897.16 11628.44
1989/04/30 11051.18 11904.50
1989/05/31 11216.20 12151.75
1989/06/30 11339.30 12316.78
1989/07/31 11452.46 12484.41
1989/08/31 11415.37 12362.18
1989/09/30 11413.10 12325.35
1989/10/31 11504.63 12476.08
1989/11/30 11630.51 12694.42
1989/12/31 11735.34 12798.26
1990/01/31 11697.07 12737.72
1990/02/28 11800.94 12851.09
1990/03/31 11821.04 12854.94
1990/04/30 11699.48 12761.87
1990/05/31 11912.79 13040.46
1990/06/30 12011.42 13155.09
1990/07/31 12156.37 13348.47
1990/08/31 12085.69 13154.65
1990/09/30 12118.06 13162.15
1990/10/31 12253.58 13400.91
1990/11/30 12449.08 13670.40
1990/12/31 12482.68 13729.87
1991/01/31 12622.06 13914.12
1991/02/28 12736.98 14035.17
1991/03/31 12745.54 14040.23
1991/04/30 12861.08 14226.96
1991/05/31 12964.11 14353.44
1991/06/30 12971.99 14339.23
1991/07/31 13101.92 14513.88
1991/08/31 13206.61 14705.03
1991/09/30 13287.55 14896.49
1991/10/31 13430.24 15030.56
1991/11/30 13464.09 15072.49
1991/12/31 13686.58 15395.95
1992/01/31 13782.19 15431.05
1992/02/29 13798.00 15435.99
1992/03/31 13745.24 15441.70
1992/04/30 13841.38 15579.13
1992/05/31 13993.19 15762.50
1992/06/30 14176.84 16026.99
1992/07/31 14482.16 16507.48
1992/08/31 14375.08 16346.53
1992/09/30 14508.69 16453.44
1992/10/31 14405.46 16291.70
1992/11/30 14668.68 16583.49
1992/12/31 14686.40 16752.80
1993/01/31 14853.40 16947.64
1993/02/28 15265.79 17560.64
1993/03/31 15114.36 17375.02
1993/04/30 15220.67 17550.33
1993/05/31 15284.73 17648.97
1993/06/30 15445.82 17943.53
1993/07/31 15463.37 17967.03
1993/08/31 15747.88 18341.11
1993/09/30 15910.80 18550.01
1993/10/31 15925.73 18585.81
1993/11/30 15801.58 18422.07
1993/12/31 16071.58 18810.96
1994/01/31 16220.69 19025.78
1994/02/28 15815.67 18533.02
1994/03/31 15197.74 17778.35
1994/04/30 15332.26 17929.11
1994/05/31 15469.49 18084.56
1994/06/30 15358.31 17974.06
1994/07/31 15572.30 18303.53
1994/08/31 15631.18 18366.86
1994/09/30 15456.12 18097.23
1994/10/31 15221.09 17775.82
1994/11/30 14888.49 17454.44
1994/12/31 15157.99 17838.61
1995/01/31 15539.44 18348.44
1995/02/28 15933.75 18882.01
1995/03/31 16108.04 19098.96
1995/04/30 16103.43 19121.50
1995/05/31 16471.21 19731.67
1995/06/30 16382.72 19560.00
1995/07/31 16489.36 19745.43
1995/08/31 16712.25 19995.80
1995/09/30 16819.01 20122.38
1995/10/31 16998.40 20414.96
1995/11/30 17194.28 20753.64
1995/12/31 17309.83 20953.08
1996/01/31 17425.32 21111.28
1996/02/29 17368.40 20968.78
1996/03/31 17197.47 20700.80
1996/04/30 17142.56 20642.21
1996/05/31 17140.71 20633.96
1996/06/30 17273.01 20858.66
1996/07/31 17407.78 21048.47
1996/08/31 17406.54 21043.42
1996/09/30 17558.15 21338.03
1996/10/31 17745.65 21579.36
1996/11/30 18034.36 21974.27
1996/12/31 17982.90 21881.97
1997/01/31 18015.76 21923.33
1997/02/28 18163.54 22124.59
1997/03/31 17948.71 21829.67
1997/04/30 18083.66 22012.38
1997/05/30 18291.86 22343.45
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Advisor Intermediate Municipal Income Fund - Class T on May 31,
1987, and the current maximum 2.75% sales charge was paid. As the chart
shows, by May 31, 1997, the value of the investment would have grown to
$18,292 - an 82.92% increase on the initial investment. For comparison,
look at how the Lehman Brothers Municipal Bond Index, which reflects the
performance of the investment-grade municipal bond market, did over the
same period. With dividends reinvested, the same $10,000 investment would
have grown to $22,343 - a 123.43% 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
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31,
1997 1996 1995 1994 1993 1992
Dividend return 2.19% 4.60% 5.06% 4.18% 5.13% 6.37%
Capital appreciation -0.76% 0.29% 10.43% -9.96% 2.59% 2.59%
return
Total return 1.43% 4.89% 15.49% -5.78% 7.72% 8.96%
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 MAY 31, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.80(cents) 22.50(cents) 45.64(cents)
Annualized dividend rate 4.35% 4.38% 4.45%
30-day annualized yield 4.04% - -
30-day annualized tax-equivalent 6.31% - -
yield
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $10.29
over the past one month, $10.30 over the past six months and $10.25 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. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the class' tax-free yield, if you're in the 36% federal
tax bracket but does not reflect payment of the federal alternative minimum
tax, if applicable. If Fidelity had not reimbursed certain class expenses,
the yield and tax-equivalent yield would have been 4.00% and 6.25%,
respectively.
ADVISOR INTERMEDIATE MUNICIPAL INCOME 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 Institutional Class, the
original class of the fund. 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 charges included in the past six months, past one year, past five
years and past 10 years total return figures are 3%, 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Advisor Intermediate Municipal Income - 1.01% 6.04% 27.85% 83.97%
Class B
Advisor Intermediate Municipal Income - -1.96 3.04% 27.85% 83.97%
Class B (incl. contingent deferred sales %
charge)
Lehman Brothers 1-17 Year Municipal 1.69% 7.38% n/a n/a
Bond Index
Intermediate Municipal Debt Funds Average 1.28% 6.23% 33.93% 96.62%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case, six months, 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 1-17 Year
Municipal Bond Index - a total return performance benchmark for
investment-grade municipal bonds with maturities between one and 17 years.
To measure how Class B's performance stacked up against its peers, you can
compare it to the intermediate municipal debt funds average, which reflects
the performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 138 mutual funds. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Intermediate Municipal Income - 6.04% 5.04% 6.29%
Class B
Advisor Intermediate Municipal Income - 3.04% 5.04% 6.29%
Class B (incl. contingent deferred sales charge)
Lehman Brothers 1-17 Year Municipal 7.38% n/a n/a
Bond Index
Intermediate Municipal Debt Funds Average 6.23% 6.01% 6.98%
AVERAGE ANNUAL TOTAL RETURNS take Class Bs' 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
1987/05/31 10000.00 10000.00
1987/06/30 10186.74 10293.60
1987/07/31 10306.22 10398.59
1987/08/31 10328.39 10421.99
1987/09/30 9998.81 10037.73
1987/10/31 10091.62 10073.27
1987/11/30 10322.82 10336.28
1987/12/31 10425.89 10486.26
1988/01/31 10799.77 10859.78
1988/02/29 10843.82 10974.57
1988/03/31 10685.28 10847.26
1988/04/30 10739.00 10929.70
1988/05/31 10772.98 10898.11
1988/06/30 10848.70 11057.55
1988/07/31 10905.15 11129.65
1988/08/31 10910.37 11139.44
1988/09/30 11030.09 11341.07
1988/10/31 11161.30 11540.67
1988/11/30 11124.99 11434.96
1988/12/31 11195.19 11551.94
1989/01/31 11308.49 11790.83
1989/02/28 11240.95 11656.30
1989/03/31 11205.30 11628.44
1989/04/30 11363.68 11904.50
1989/05/31 11533.37 12151.75
1989/06/30 11659.95 12316.78
1989/07/31 11776.31 12484.41
1989/08/31 11738.17 12362.18
1989/09/30 11735.84 12325.35
1989/10/31 11829.96 12476.08
1989/11/30 11959.39 12694.42
1989/12/31 12067.19 12798.26
1990/01/31 12027.83 12737.72
1990/02/28 12134.64 12851.09
1990/03/31 12155.31 12854.94
1990/04/30 12030.31 12761.87
1990/05/31 12249.65 13040.46
1990/06/30 12351.07 13155.09
1990/07/31 12500.12 13348.47
1990/08/31 12427.44 13154.65
1990/09/30 12460.73 13162.15
1990/10/31 12600.08 13400.91
1990/11/30 12801.11 13670.40
1990/12/31 12835.66 13729.87
1991/01/31 12978.98 13914.12
1991/02/28 13097.15 14035.17
1991/03/31 13105.95 14040.23
1991/04/30 13224.76 14226.96
1991/05/31 13330.70 14353.44
1991/06/30 13338.80 14339.23
1991/07/31 13472.41 14513.88
1991/08/31 13580.06 14705.03
1991/09/30 13663.29 14896.49
1991/10/31 13810.02 15030.56
1991/11/30 13844.82 15072.49
1991/12/31 14073.60 15395.95
1992/01/31 14171.92 15431.05
1992/02/29 14188.17 15435.99
1992/03/31 14133.92 15441.70
1992/04/30 14232.78 15579.13
1992/05/31 14388.89 15762.50
1992/06/30 14577.73 16026.99
1992/07/31 14891.68 16507.48
1992/08/31 14781.58 16346.53
1992/09/30 14921.31 16453.44
1992/10/31 14815.14 16291.70
1992/11/30 15085.85 16583.49
1992/12/31 15104.07 16752.80
1993/01/31 15275.81 16947.64
1993/02/28 15699.93 17560.64
1993/03/31 15544.20 17375.02
1993/04/30 15653.53 17550.33
1993/05/31 15719.41 17648.97
1993/06/30 15885.09 17943.53
1993/07/31 15903.14 17967.03
1993/08/31 16195.74 18341.11
1993/09/30 16363.28 18550.01
1993/10/31 16378.64 18585.81
1993/11/30 16250.97 18422.07
1993/12/31 16528.64 18810.96
1994/01/31 16681.99 19025.78
1994/02/28 16265.45 18533.02
1994/03/31 15629.95 17778.35
1994/04/30 15768.29 17929.11
1994/05/31 15909.42 18084.56
1994/06/30 15793.05 17974.06
1994/07/31 15997.34 18303.53
1994/08/31 16043.72 18366.86
1994/09/30 15836.87 18097.23
1994/10/31 15601.43 17775.82
1994/11/30 15249.88 17454.44
1994/12/31 15515.88 17838.61
1995/01/31 15894.63 18348.44
1995/02/28 16288.31 18882.01
1995/03/31 16455.90 19098.96
1995/04/30 16440.58 19121.50
1995/05/31 16805.13 19731.67
1995/06/30 16704.11 19560.00
1995/07/31 16818.43 19745.43
1995/08/31 17018.31 19995.80
1995/09/30 17117.00 20122.38
1995/10/31 17288.71 20414.96
1995/11/30 17476.27 20753.64
1995/12/31 17566.46 20953.08
1996/01/31 17691.87 21111.28
1996/02/29 17624.69 20968.78
1996/03/31 17424.89 20700.80
1996/04/30 17377.31 20642.21
1996/05/31 17348.91 20633.96
1996/06/30 17490.84 20858.66
1996/07/31 17617.43 21048.47
1996/08/31 17606.02 21043.42
1996/09/30 17749.95 21338.03
1996/10/31 17912.34 21579.36
1996/11/30 18211.90 21974.27
1996/12/31 18133.25 21881.97
1997/01/31 18174.91 21923.33
1997/02/28 18315.03 22124.59
1997/03/31 18088.42 21829.67
1997/04/30 18214.78 22012.38
1997/05/30 18396.62 22343.45
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Advisor Intermediate Municipal Income Fund - Class B on May 31,
1987. As the chart shows, by May 31, 1997, the value of the investment
would have been $18,397 - an 83.97% increase on the initial investment. For
comparison, look at how the Lehman Brothers Municipal Bond Index, which
reflects the performance of the investment-grade municipal bond market, did
over the same period. With dividends reinvested, the same $10,000 would
have grown to $22,343 - a 123.43% 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
SIX YEARS ENDED NOVEMBER 30,
MONTHS
ENDED
MAY 31,
1997 1996 1995 1994 1993 1992
Dividend return 1.86% 3.92% 4.17% 3.81% 5.13% 6.37%
Capital appreciation -0.85% 0.29% 10.43% -9.96% 2.59% 2.59%
return
Total return 1.01% 4.21% 14.60% -6.15% 7.72% 8.96%
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.23(cents) 19.26(cents) 39.05(cents)
Annualized dividend rate 3.70% 3.75% 3.81%
30-day annualized yield 3.51% - -
30-day annualized tax-equivalent yield 5.48% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $10.28
over the past one month, $10.30 over the past six months, and $10.25 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 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. The offering share price used in the
calculation of the yield excludes the effect of Class B's contingent
deferred sales charge. The tax-equivalent yield shows what you would have
to earn on a taxable investment to equal the class' tax-free yield, if
you're in the 36% federal tax bracket but does not reflect payment of the
federal alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW
An Interview with David Murphy, Portfolio Manager of Fidelity Advisor
Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, DAVE?
A. For the six months that ended May 31, 1997, the fund's Class A, T and B
shares had total returns of 1.38%, 1.43% and 1.01%, respectively. For the
past year, their returns were 6.66%, 6.72% and 6.04%, respectively. The
intermediate municipal debt funds average, as tracked by Lipper Analytical
Services, was up 1.28% for the past six months and 6.23% for the year.
Also, for comparative purposes, the Lehman Brothers 1-17 Year Municipal
Bond Index returned 1.69% over the past six months and 7.38% over the past
year.
Q. THE BOND MARKET WAS SOMEWHAT SKITTISH OVER THE PAST SIX MONTHS, YET
MUNICIPALS WERE ONE OF THE BETTER-
PERFORMING FIXED-INCOME INVESTMENTS. WHAT ACCOUNTS FOR THEIR RELATIVE
STRENGTH?
A. Rising interest rates caused all bonds to come under pressure, but
municipals were somewhat immunized by favorable supply and demand factors.
A lot of the outperformance of munis versus Treasuries occurred toward the
end of the period when the available supply of tax-free bonds was limited.
On the demand side of the equation, it seemed as though some investors
began to question the high levels of the stock market and re-directed some
of their investment dollars into municipals. We saw additional purchases
triggered by upcoming municipal calls. By this I mean that June and July
are expected to see a record amount of municipal issuers calling, or
redeeming, a lot of their outstanding debt before maturity. In anticipation
of their muni holdings being called, investors bought new municipal bonds
in their place.
Q. WHICH OF THE FUND'S HOLDINGS WERE THE BEST PERFORMERS DURING THE PERIOD?
WHICH WERE DISAPPOINTING?
A. Bonds issued by New York City were among the municipal bond market's -
and the fund's - best performers during the past six months. The main
reason for their success was that the city's economy continued to expand
and tax revenues increased. The strength of the stock market had something
to do with rising tax revenues, because Wall Street handed out handsome
bonuses, which translated into higher personal income tax collections for
the city. What's more, capital gains and corporate tax receipts also rose
as the economy improved. I like the fact that the city has been reasonably
conservative in its budgeting, not relying on a continuation of the
dramatic boost from Wall Street next year. In addition, bonds appropriated
by the state of New York also performed well, buoyed by many of the same
positives that helped New York City. As far as disappointments go, I can't
really single out any one issuer that detracted from performance. But
generally speaking, bonds with shorter maturities were hurt more than those
with longer-maturities because short-term interest rates rose more than
longer-term interest rates during the past six months.
Q. HOW DID YOU STRUCTURE THE FUND
DURING THE PERIOD?
A. In terms of the maturity ranges targeted, I have been adding more bonds
with maturities of between five and 10 years because I felt that bonds in
this maturity range offered an appropriate amount of potential return given
their maturity. I also sold some bonds with maturities longer than 10
years. Here's why: The yield curve, which is a graphical representation of
the yield of bonds by ascending maturity dates, flattened. By that I mean
that up to about a 10-year maturity, an investor would be paid an
appropriate amount of additional income for each additional year of
maturity. It is this additional income that compensates the investor for
the additional risk taken on by investing in the longer maturity. After 10
years, however, the extra income for each successive year of maturity was
not, in my opinion, attractive enough for the level of risk inherent in
these bonds.
Q. ANOTHER CHOICE YOU FACED WAS WHICH COUPON RANGES TO TARGET. WHAT WAS
YOUR STRATEGY THERE?
A. I continued to use a barbelled coupon structure. If you picture a
barbell, the middle is light and the ends are heavy. That's exactly how the
fund looks in terms of the coupons in which it invested. On one end of the
barbell are premium coupon bonds, which pay higher annual income than newly
issued bonds. On the other end are discount-coupon bonds, with annual
income below newly issued bonds. In the middle - the lightest part of the
barbell - are par bonds, which trade at face value. The premium coupons
offer downside protection should the market fall, while the discount
coupons offer price appreciation potential should the market rally.
Q. DID YOU FOCUS ON PARTICULAR STATES?
A. I increased the fund's holdings in New York, for reasons I already
mentioned and based on my evaluation that there were going to be fewer
bonds issued in the state in the second quarter of 1997 than in most other
quarters. Since that scarcity materialized and New York bonds performed
well relative to other munis, I began to sell some, anticipating more
normalized supply levels. I continued to keep a heavier weighting than the
fund's benchmark in bonds from California, a state that also enjoyed
relatively strong performance. The state is enjoying a fairly substantial
budget surplus for fiscal year 1997, a lot of which will flow back to the
counties to help with school funding. With the strong economy and higher
tax revenues, the state won't have to scramble to balance its budget. Also,
I sold some bonds from Texas in order to lock in the gains they made during
the period.
Q. WHAT'S YOUR OUTLOOK FOR MUNICIPALS?
A. During the last several years, the amount of municipal bonds outstanding
in the market has shrunk considerably and, more recently, has helped the
municipal market outperform the taxable bond market. I think that the total
supply available will increase slightly by the end of this year. The
question is, will there be enough demand to digest that supply? In my view,
that will depend on how investors perceive the attractiveness of municipals
relative to other fixed-income and equity choices.
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.
FUND FACTS
GOAL: seeks the highest
level of income exempt from
federal income taxes that
can be obtained consistent
with the preservation of
capital
START DATE: September 19,
1985
SIZE: as of May 31, 1997,
more than $65 million
MANAGER: David Murphy,
since 1995; joined Fidelity in
1989
(checkmark)
DAVID MURPHY ON
OPPORTUNITIES IN ELECTRIC
UTILITY MUNICIPALS:
"The electric utility industry is
in the early stages of a
transformation from one
where electric providers enjoy
monopolistic strongholds on a
given service area to one
where competition probably
will reign. Given the changing
environment, I have been
focusing on electric utilities
that are either well-prepared
to deal with increased
competition or those that I
believe can meet competitive
challenges down the road, but
have been too severely
penalized by the market
today. Even though it seems
inevitable that competition will
increase, I believe there will
be opportunities to invest
profitably in this sector."
INVESTMENT CHANGES
TOP FIVE STATES AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
California 18.5 17.7
New York 12.4 9.8
Massachusetts 7.3 7.3
Texas 6.1 11.3
New Mexico 5.5 6.0
TOP FIVE MARKET SECTORS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligation 29.8 26.8
Education 19.9 21.9
Electric Revenue 13.7 13.1
Health Care 7.8 6.7
Housing 5.5 5.0
AVERAGE YEARS TO MATURITY AS OF MAY 31, 1997
6 MONTHS AGO
Years 7.8 8.6
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 MAY 31, 1997
6 MONTHS AGO
Years 5.7 5.9
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.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF MAY 31, 1997 AS OF NOVEMBER 30, 1996
Aaa 38.8%
Aa, A 39.1%
Baa 17.2%
Short-term
investments 4.9%
Aaa 42.7%
Aa, A 39.2%
Baa 15.4%
Non-rated 0.7%
Short-term
investments 2.0%
Row: 1, Col: 1, Value: 38.8
Row: 1, Col: 2, Value: 39.1
Row: 1, Col: 3, Value: 17.2
Row: 1, Col: 4, Value: 4.9
Row: 1, Col: 1, Value: 42.7
Row: 1, Col: 2, Value: 37.2
Row: 1, Col: 3, Value: 15.4
Row: 1, Col: 4, Value: 1.7
Row: 1, Col: 5, Value: 3.0
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS MAY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 95.1%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
ALASKA - 3.5%
North Slope Borough (Cap. Appreciation)
Series B, 0% 1/1/03 (MBIA Insured) $ 3,000,000 $ 2,261,250
ARIZONA - 0.3%
Maricopa County Ind. Dev. Auth. Hosp. Facs. Rev. Rfdg.
(Sun Health Corp.) 5.75% 4/1/07 200,000 201,000
ARKANSAS - 1.2%
Arkansas Gen. Oblig. 0% 6/1/02 1,000,000 783,750
CALIFORNIA - 18.5%
California Edl. Facs. Auth. Rev. Rfdg. (Chapman Univ.)
5.37% 10/1/16 225,000 216,563
California Gen. Oblig. 6.25% 10/1/19 400,000 428,500
California Hsg. Fin. Agcy. Rev. (Home Mortgage) Series R,
5.35% 8/1/07 (MBIA Insured) (b) 1,000,000 1,002,500
California Poll. Cont. Fing. Auth. Resource Recovery Rev.
(Waste Management Inc.) Series A, 7.15% 2/1/11 (b) 1,000,000 1,080,000
California Pub. Wks. Board Lease Rev.:
(Dept. Correction State Prisons, Madera) Series E,
6% 6/1/07 1,000,000 1,057,500
Rfdg.:
(Various California Univ. Proj.) Series A,
5.50% 6/1/10 1,000,000 1,018,750
(Dept. Corrections State Prisons, Monterey)
Series D, 5.37% 11/1/14 500,000 484,375
California Rural Home Mtg. Fin. Auth. Lease Rev.
Series A, 4.45% 8/1/01 (MBIA Insured) 1,000,000 992,500
Los Angeles County Ctfs. of Prtn. (Disney Parking Project)
(Cap. Appreciation) 0% 9/1/04 970,000 648,688
Rosemead Redev. Agcy. Sub. Lien Tax Allocation Proj.
(Area 1) 0% 10/1/02 (Escrowed to Maturity) (c) 1,450,000 1,123,750
Sacramento Muni. Util. Dist. Elec. Rev. 1.76% 11/15/08
(FGIC Insured) (e) 1,000,000 963,750
Sacramento Pwr. Auth. Cogeneration Proj. Rev.:
6% 7/1/02 1,000,000 1,037,500
6.50% 7/1/08 300,000 317,250
San Bernadino County Ctfs. of Prtn. Rfdg. (Med. Ctr.
Fing. Proj.) 5.25% 8/1/04 500,000 500,625
West Covina Ctfs. of Prtn. (Queen of the Valley Hospital)
6.50% 8/15/09 1,000,000 1,062,500
11,934,751
COLORADO - 0.8%
Colorado Health Facs. Auth. Rev. Rfdg. (Rocky Mountain
Adventist) 6.25% 2/1/04 500,000 518,750
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
DISTRICT OF COLUMBIA - 2.3%
District of Columbia Gen. Oblig. Rfdg. Series B-1,
5.40% 6/1/06 (AMBAC Insured) $ 1,000,000 $ 1,011,250
District of Columbia Redev. Land Agcy. Spl. Tax Rev.
(Washington D.C. Sports Arena) 5.40% 11/1/00 500,000 500,625
1,511,875
FLORIDA - 2.5%
Broward County Resources Recovery Rev. (SES Broward Co.
LP South Proj.) 7.95% 12/1/08 500,000 544,375
Dade County Wtr. & Swr. Sys. Rev. 6.25% 10/1/10
(FGIC Insured) 500,000 551,875
Jacksonville Port Auth. Rev. Rfdg. 5.75% 11/1/09
(MBIA Insured) (b) 500,000 520,625
1,616,875
GEORGIA - 2.6%
Georgia State Rfdg. Series A, 6.25% 3/1/06 1,000,000 1,098,750
Monroe County Dev. Auth. Poll. Cont. Rev. Rfdg.
(Oglethorpe Pwr. Corp.) Series A,
6.60% 1/1/07 500,000 551,250
1,650,000
ILLINOIS - 3.9%
Chicago Midway Arpt. Rev. Series B, 6% 1/1/09
(MBIA Insured) (b) 300,000 313,875
Illinois Health Facs. Auth. Rev. Rfdg. (Felician Health Care, Inc.)
Series A, 6.85% 1/1/00 (AMBAC Insured) 1,000,000 1,056,250
Metropolitan Pier & Exposition Auth. Dedicated Tax Rev.
(McCormick Place Expansion Proj.):
0% 6/15/00, (AMBAC Insured) 1,000,000 870,000
(Cap Appreciation) Series A, 0% 6/15/09 (FGIC Insured) 500,000 259,375
2,499,500
INDIANA - 0.8%
Indianapolis Resource Rec. Rev. Rfdg. (Ogden Martin Sys.,
Inc. Proj.) 6.50% 12/1/03 (AMBAC Insured) 500,000 546,875
IOWA - 1.6%
Iowa Student Loan Liquidity Corp. Student Loan Rev.
Series A, 6.35% 3/1/01 1,000,000 1,045,000
LOUISIANA - 1.6%
Louisiana Pub. Facs. Auth. Rev. Rfdg. Student Loan Sr.
Series A-1, 6.20% 3/1/01 1,000,000 1,040,000
MASSACHUSETTS - 7.3%
Boston Rev. (Boston City Hosp.) Series A, 7.625% 2/15/21
(FHA Guaranteed) (FSA Insured) (Pre-Refunded to
8/15/00 @102) (c) 250,000 277,813
Massachusetts State Gen. Oblig. Rfdg.
Series A, 5.50% 2/1/11 250,000 252,500
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Rev. (Massachusetts Biomedical
Research) (Cap. Appreciation) Series A-1:
0% 8/1/00 $ 1,100,000 $ 943,250
0% 8/1/02 1,600,000 1,232,000
New England Ed. Loan Marketing Corp. Rev. Rfdg.
(Massachusetts Student Loan) Series B,
5.40% 6/1/00 1,950,000 1,981,688
4,687,251
MINNESOTA - 2.0%
Minnesota State Gen. Oblig. 6% 5/1/06 1,000,000 1,081,250
Minnesota Higher Ed. Facs. (Macalester College)
5.50% 3/1/12 200,000 201,750
1,283,000
NEW JERSEY - 2.2%
New Jersey Economic Dev. Auth. Market Transition Fac.
Rev. (Sr. Lien) Series A, 7% 7/1/04 (MBIA Insured) 1,000,000 1,123,750
New Jersey Trans. Corp. Capital Grant Anticipation Notes
Series A, 5.40% 9/1/02 (FSA Insured) 300,000 307,875
1,431,625
NEW MEXICO - 5.5%
Albuquerque Arpt. Rev. Rfdg. 6.75% 7/1/09
(AMBAC Insured) (b) 450,000 502,875
New Mexico Edl. Assistance Foundation Student Loan Rev.
Sr. Series IV-A2, 6.65% 3/1/07 2,300,000 2,432,250
Rio Rancho Wtr. & Wastewtr. Sys. Rev. Series A,
8% 5/15/04 (FSA Insured) 500,000 590,625
3,525,750
NEW YORK - 12.4%
Metropolitan Trans. Auth. Svc. Contract Rfdg.
(Transit Facs.) Series 5, 6.90% 7/1/05 1,000,000 1,073,750
New York City Muni. Assistance Corp.
Series E, 6% 7/1/04 500,000 530,625
New York Gen. Oblig.:
Series B, 8.25% 6/1/07 1,000,000 1,208,750
Series G, 5.40% 2/1/01 2,000,000 2,020,000
New York State Dorm. Auth. Rev.:
(City Univ. Sys. Consolidated) Series A, 5.70% 7/1/05 500,000 514,375
(City Univ. Sys. Consolidated) Series A, 5.75% 7/1/13 500,000 505,625
(City Univ. Sys.) Series C, 7.50% 7/1/10 500,000 587,500
Rfdg. (State Univ. Edl. Facs.) Series A, 6.50% 5/15/04 500,000 539,375
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
NEW YORK - CONTINUED
New York State Local Govt. Assistance Corp.
(Cap. Appreciation) Series A, 0% 4/1/08 $ 1,000,000 $ 558,750
New York State Thruway Auth. Hwy. & Bridge Trust Fund
Series A, 5.80% 4/1/09 500,000 514,375
8,053,125
NORTH CAROLINA - 1.5%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev.:
Series A, 5.625% 1/1/03 500,000 505,625
Rfdg.:
Series B, 6% 1/1/06 250,000 257,813
Series C, 5.50% 1/1/07 200,000 198,000
961,438
OHIO - 1.2%
Ohio State Bldg. Auth. (Adult Correctional Facs.) Series A,
5.95% 10/1/14 (MBIA Insured) 500,000 515,000
Ohio Tpk. Commission Tpk. Rev. Series A,
5.60% 2/15/12 (MBIA Insured) 250,000 253,438
768,438
PENNSYLVANIA - 3.8%
Pennsylvania Higher Edl. Facs. Auth. College & Univ. Rev.
Rfdg. (RIDC Reg. Growth - Carnegie-Mellon Univ. Proj.)
6% 11/1/04 1,270,000 1,366,838
Pennsylvania Hsg. Fin. Agcy. Rfdg. (Residential Dev. Section 8)
Series A, 7% 7/1/01 1,000,000 1,066,250
2,433,088
RHODE ISLAND - 1.6%
Rhode Island Student Loan Auth. Student Loan Rev. Rfdg.
Series A, 6.55% 12/1/00 1,000,000 1,061,250
SOUTH CAROLINA - 3.7%
South Carolina Edl. Assistance Auth. Rev. Rfdg. (Guaranteed
Student Loan):
(Sr. Lien) A-2, 5.40% 9/1/02 1,350,000 1,387,125
(Sub. Lien) Series B, 5.70% 9/1/05 (b) 1,000,000 1,021,250
2,408,375
TENNESSEE - 0.4%
Memphis-Shelby Cnty. Arpt. Auth. Rev. Rfdg. Series A,
6% 2/15/07 (MBIA Insured) (b)(f) 265,000 280,565
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
TEXAS - 6.1%
Hurst Euless Bedford Independent School Dist. Rfdg.
(Cap. Appreciation) Unltd. Tax 0% 8/15/11
(PSF Guaranteed) $ 1,000,000 $ 460,000
North East Independent School Dist. Rfdg.
(Cap. Appreciation) Unltd. Tax Series D, 0% 2/1/00 2,065,000 1,830,106
Port Arthur Hsg. Fin. Corp. Single Family Mtg. Rev. Rfdg.
8.70% 3/1/12 490,000 526,750
Texas Pub. Fin. Auth. Bldg. Rev. Rfdg. (Texas Technical College)
6.25% 8/1/09 (MBIA Insured) 1,000,000 1,096,250
3,913,106
UTAH - 3.2%
Intermountain Pwr. Agcy. Pwr. Supply Rev. Series A:
0% 7/1/06 (MBIA Insured) 2,860,000 1,787,500
6.50% 7/1/08 (AMBAC Insured) 250,000 279,688
2,067,188
WASHINGTON - 4.6%
Washington Pub. Pwr. Supply Sys. Nuclear Proj. #2 Rev.:
5.40% 7/1/12 (d) 2,000,000 1,897,500
Rfdg. Series C, 7.50% 7/1/03 525,000 576,844
Washington Pub. Pwr. Supply Sys. Nuclear Proj. #3
Rev. Rfdg. Series C, 5.10% 7/1/07 500,000 489,375
2,963,719
TOTAL MUNICIPAL BONDS
(Cost $60,351,188) 61,447,544
CASH EQUIVALENTS - 4.9%
SHARES
Municipal Central Cash Fund (a)
(Cost $3,177,340) 3,177,340 3,177,340
TOTAL INVESTMENTS - 100%
(Cost $63,528,528) $ 64,624,884
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
U.S. Treasury Bond Contracts Sept. 1997 $ 1,096,250 $ 10,222
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.7%
LEGEND
1. At the period end, the seven-day yield of the Municipal Central Cash
Fund was 3.90%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
2. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3. Security collateralized by an amount sufficient to pay interest and
principal.
4. A portion of the security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $47,438.
5. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
6. Security purchased on a delayed delivery or when-issued basis (see Note
2 of Notes to Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 69.9% AAA, AA, A 68.9%
Baa 15.1% BBB 15.7%
Ba 0.0% BB 0.0%
B 0.0% B 0.8%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 29.8%
Education 19.9
Electric Revenue 13.7
Health Care 7.8
Housing 5.5
Transportation 5.1
Others (individually less than 5%) 18.2
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1997, the aggregate cost of investment securities for income tax
purposes was $63,528,528. Net unrealized appreciation aggregated
$1,096,356, of which $1,359,309 related to appreciated investment
securities and $262,953 related to depreciated investment securities.
At November 30, 1996, the fund had a capital loss carryforward of
approximately $426,000 which will expire on November 30, 2003.
At November 30, 1996, the fund was required to defer approximately $386,000
of losses on futures contracts.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $63,528,528) - $ 64,624,884
See accompanying schedule
Interest receivable 920,289
Receivable for daily variation on futures contracts 6,875
Prepaid expenses 5,031
TOTAL ASSETS 65,557,079
LIABILITIES
Payable for investments purchased $ 275,444
Delayed delivery
Payable for fund shares redeemed 124,233
Distributions payable 81,983
Accrued management fee 13,435
Distribution fees payable 15,867
Other payables and accrued expenses 32,708
TOTAL LIABILITIES 543,670
NET ASSETS $ 65,013,409
Net Assets consist of:
Paid in capital $ 64,293,016
Accumulated undistributed net realized gain (loss) (386,185)
on investments
Net unrealized appreciation (depreciation) on 1,106,578
investments
NET ASSETS $ 65,013,409
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
MAY 31, 1997 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $10.32
CLASS A:
NET ASSET VALUE and redemption price per share
($344,092 (divided by) 33,330 shares)
Maximum offering price per share (100/96.75 of $10.32) $10.67
CLASS T: $10.33
NET ASSET VALUE and redemption price per share
($49,851,869 (divided by) 4,827,509 shares)
Maximum offering price per share (100/97.25 of $10.33) $10.62
CLASS B: $10.32
NET ASSET VALUE and offering price per share
($7,349,499 (divided by) 711,925 shares) A
INSTITUTIONAL CLASS: $10.33
NET ASSET VALUE, offering price and redemption price
per share ($7,467,949 (divided by) 723,167 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>
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
INTEREST INCOME $ 1,799,532
EXPENSES
Management fee $ 131,240
Transfer agent fees 64,472
Distribution fees 98,710
Accounting fees and expenses 30,072
Non-interested trustees' compensation 43
Custodian fees and expenses 3,293
Registration fees 43,361
Audit 19,801
Legal 369
Miscellaneous 1,052
Total expenses before reductions 392,413
Expense reductions (43,440) 348,973
NET INTEREST INCOME 1,450,559
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 468,530
Futures contracts (36,454) 432,076
Change in net unrealized appreciation (depreciation) on:
Investment securities (1,017,252)
Futures contracts 10,222 (1,007,030)
NET GAIN (LOSS) (574,954)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 875,605
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED MAY NOVEMBER 30,
31,1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 1,450,559 $ 3,449,493
Net interest income
Net realized gain (loss) 432,076 684,780
Change in net unrealized appreciation (depreciation) (1,007,030) (712,133)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 875,605 3,422,140
FROM OPERATIONS
Distributions to shareholders (1,450,559) (3,449,493)
From net interest income
From net realized gain (6,721) -
TOTAL DISTRIBUTIONS (1,457,280) (3,449,493)
Share transactions - net increase (decrease) (5,138,044) (9,402,984)
TOTAL INCREASE (DECREASE) IN NET ASSETS (5,719,719) (9,430,337)
NET ASSETS
Beginning of period 70,733,128 80,163,465
End of period $ 65,013,409 $ 70,733,128
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1997 1996 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.410 $ 10.160
Income from Investment Operations
Net interest income .230 .113
Net realized and unrealized gain (loss) (.089) .250 D
Total from investment operations .141 .363
Less Distributions
From net interest income (.230) (.113)
From net realized gain (.001) -
Total Distributions (.231) (.113)
Net asset value, end of period $ 10.320 $ 10.410
TOTAL RETURN B, C 1.38% 3.59%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 344 $ 103
Ratio of expenses to average net assets .90% A, F .90% A,
F
Ratio of net interest income to average net assets 4.47% A 4.60% A
Portfolio turnover rate 21% A 35%
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 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.
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).
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997
(UNAUDITED) 1996 1995 1994 F 1993 1992 E
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080 $ 11.010
beginning of period
Income from
Investment
Operations
Net interest .225 .461 .451 .455 .508 .131
income
Net realized (.079) .030 D .980 (1.040) .260 .070
and unrealized
gain (loss)
Total from .146 .491 1.431 (.585) .768 .201
investment
operations
Less Distributions
From net (.225) (.461) (.451) (.455) (.508) (.131)
interest income
From net (.001) - - - (.880) -
realized gain
In excess of net - - - (.020) - -
realized gain
Total distributions (.226) (.461) (.451) (.475) (1.388) (.131)
Net asset value, $ 10.330 $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080
end of period
TOTAL RETURN B, C 1.43% 4.89% 15.49% (5.78)% 7.72% 1.37%
RATIOS AND SUPPLEMENTAL DATA
Net assets, $ 49,852 $ 56,729 $ 62,852 $ 57,382 $ 39,800 $ 1,752
end of period
(000 omitted)
Ratio of expenses to 1.00% A, 1.00% .94% .90% .90% 1.04% A,
average net assets G G G G G G
Ratio of net interest 4.38% A 4.42% 4.56% 4.49% 4.76% 5.65% A
income to average
net assets
Portfolio turnover 21% A 35% 53% 53% 46% 36%
rate
</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 ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D 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.
E FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO NOVEMBER 30, 1992.
F EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
G 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 B
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997
(UNAUDITED) 1996 1995 1994 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.410 $ 10.380 $ 9.400 $ 9.890
Income from Investment Operations
Net interest income .193 .394 .373 .155
Net realized and unrealized gain (loss) (.089) .030 D .980 (.490)
Total from investment operations .104 .424 1.353 (.335)
Less Distributions
From net interest income (.193) (.394) (.373) (.155)
From net realized gain (.001) - - -
Total Distributions (.194) (.394) (.373) (.155)
Net asset value, end of period $ 10.320 $ 10.410 $ 10.380 $ 9.400
TOTAL RETURN B, C 1.01% 4.21% 14.60% (3.44)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 7,349 $ 7,445 $ 6,226 $ 1,682
Ratio of expenses to average net assets 1.65% A, 1.66% 1.68% 1.65% A,
F F F F
Ratio of net interest income to average 3.75% A 3.76% 3.71% 3.74% A
net assets
Portfolio turnover rate 21% A 35% 53% 53%
</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 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.
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 - INSTITUTIONAL CLASS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997
(UNAUDITED) 1996 1995 1994 E 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080 $ 10.800
beginning of period
Income from
Investment
Operations
Net interest .238 .487 .477 .481 .536 .666
income
Net realized (.079) .050 D .950 (1.030) .260 .280
and unrealized
gain (loss)
Total from .159 .537 1.427 (.549) .796 .946
investment
operations
Less Distributions (.238) (.487) (.477) (.481) (.536) (.666)
From net interest
income
From net (.001) - - - (.880) -
realized gain
In excess of net - - - (.020) - -
realized gain
Total distributions (.239) (.487) (.477) (.501) (1.416) (.666)
Net asset value, $ 10.330 $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080
end of period
TOTAL RETURN B, C 1.56% 5.36% 15.44% (5.43)% 8.01% 9.01%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 7,468 $ 6,455 $ 11,085 $ 11,702 $ 15,076 $ 28,428
period (000
omitted)
Ratio of expenses to .75% A, .75% .70% .65% .65% .66% F
average net assets F F F F F
Ratio of expenses to .75% A .74% .70% .65% .65% .66%
average net assets G
after expense
reductions
Ratio of net interest 4.64% A 4.68% 4.96% 4.75% 5.01% 6.05%
income to average
net assets
Portfolio turnover 21% A 35% 53% 53% 46% 36%
rate
</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 FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D 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. E EFFECTIVE DECEMBER 1, 1993, THE
FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND
FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INTEREST
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES. 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.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Intermediate Municipal Income 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 fund offers Class A, Class T, Class B, 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.
Interest income, realized and unrealized capital gains and losses, the
common expenses of the fund, and certain fund-level expense reductions 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 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.
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."
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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest 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 futures
and options transactions, market discount, capital loss carryforwards and
losses deferred due to futures and options. The fund also utilized earnings
and profits distributed to shareholders on redemption of shares as a part
of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net interest income and realized
and unrealized gain (loss). Accumulated undistributed net realized gain
(loss) on investments may include temporary book and tax basis differences
that will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by FMR Texas, an
affiliate of FMR. The Cash Fund is an open-end money market fund available
only to investment companies and other accounts managed by FMR and its
affiliates. The Cash Fund seeks preservation of capital, liquidity, and
current income by investing in high-quality, short-term municipal
securities of various states and municipalities. Income distributions from
the Cash Fund are declared daily and paid monthly from net interest income.
Income distributions received by the fund are recorded as interest income
in the accompanying financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. With respect to
purchase commitments, the fund identifies securities as segregated in its
custodial records with a value at least equal to the amount of the
commitment. The
2. OPERATING POLICIES - CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
payables and receivables associated with the purchases and sales of
when-issued securities having the same settlement date and broker are
offset. When-issued securities that have been purchased from and sold to
different brokers are reflected as both payables and receivables in the
statement of assets and liabilities under the caption "Delayed delivery."
Losses may arise due to changes in the market value of the underlying
securities, if the counterparty does not perform under the contract, or if
the issuer does not issue the securities due to political, economic, or
other factors.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period end
is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $6,775,277 and $15,350,063, respectively.
The market value of futures contracts opened and closed during the period
amounted to $5,998,208 and $4,875,726, 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 .25%. In the event that these rates were lower than the
contractual rates in
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
effect during 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 annualized rate of .39% 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% *
* .65% 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 $ 214 $ 214
CLASS T 65,441 65,441
CLASS B 33,055 9,182
$ 98,710 $ 74,837
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 3.25% and 2.75%
for selling Class A and Class T shares of the fund, respectively, and the
proceeds of a contingent deferred sales charge levied on Class B share
redemptions occurring within three years of purchase. The Class B charge is
based on declining rates which range from 3% to 1% 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 $ 3,529 $ 3,019
CLASS T 14,361 11,941
CLASS B 10,786 0 *
$ 28,676 $ 14,960
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM ITS OWN
RESOURCES TO DEALERS THROUGH WHICH
THE SALES ARE MADE.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class T, Class B, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC, an affiliate of FMR, receives 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. All fees are paid to FIIOC by UMB,
which is reimbursed by each class for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports. For the
period, each class paid the following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 531 .37 *
CLASS T UMB 50,790 .19 *
CLASS B UMB 6,834 .19 *
INSTITUTIONAL CLASS UMB 6,317 .18 *
$ 64,472
* ANNUALIZED
UMB also has a sub-contract with Fidelity Service Company, Inc. (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.
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 class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 16,409
CLASS T 1.00% 8,014
CLASS B 1.65% 9,537
INSTITUTIONAL CLASS .75% 9,480
$ 43,440
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1996 A
1997
CLASS A
From net investment income $ 6,490 $ 1,046
From net realized gain 24 -
Total $ 6,514 $ 1,046
CLASS T
From net investment income $ 1,144,408 $ 2,699,983
From net realized gain 5,310 -
Total $ 1,149,718 $ 2,699,983
CLASS B
From net investment income $ 137,162 $ 269,283
From net realized gain 767 -
Total $ 137,929 $ 269,283
INSTITUTIONAL CLASS
From net investment income $ 162,499 $ 479,181
From net realized gain 620 -
$ 163,119 $ 479,181
TOTAL $ 1,457,280 $ 3,449,493
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30, ENDED MAY 31, NOVEMBER 30,
1997 1996 B 1997 1996 B
CLASS A 23,247 9,815 $ 240,020 $ 99,788
Shares sold
Reinvestment of distributions 619 108 6,376 1,046
Shares redeemed (459) - (4,702) -
Net increase (decrease) 23,407 9,923 $ 241,694 $ 100,834
CLASS T 641,831 2,035,422 $ 6,610,747 $ 20,912,410
Shares sold
Reinvestment of distributions 79,784 189,811 822,082 1,947,724
Shares redeemed (1,343,223) (2,833,821) (13,840,061) (28,990,305)
Net increase (decrease) (621,608) (608,588) $ (6,407,232) $ (6,130,171)
CLASS B 84,643 326,024 $ 870,619 $ 3,345,475
Shares sold
Reinvestment of distributions 9,032 17,066 93,052 175,043
Shares redeemed (97,052) (227,839) (1,000,327) (2,324,198)
Net increase (decrease) (3,377) 115,251 $ (36,656) $ 1,196,320
INSTITUTIONAL CLASS 191,067 476,090 $ 1,973,855 $ 4,887,410
Shares sold
Reinvestment of distributions 3,207 6,443 33,026 66,083
Shares redeemed (91,267) (932,023) (942,731) (9,523,460)
Net increase (decrease) 103,007 (449,490) $ 1,064,150 $ (4,569,967)
</TABLE>
B SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30,1996.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 16,142
CLASS T 7,463
CLASS B 9,889
INSTITUTIONAL CLASS 9,867
$ 43,361
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
David L. Murphy, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
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 *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
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 TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Overseas Fund
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 High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
INTERMEDIATE MUNICIPAL INCOME FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
MAY 31, 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 17 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 25 Notes to the financial statements.
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:
Through the first five months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
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 MUNICIPAL INCOME 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 total returns and dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Advisor Intermediate Municipal Income - 1.56% 7.09% 32.33% 90.41%
Institutional Class
Lehman Brothers 1-17 Year Municipal 1.69% 7.38% n/a n/a
Bond Index
Intermediate Municipal Debt Funds Average 1.28% 6.23% 33.93% 96.62%
</TABLE>
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, six months, 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 1-17 Year Municipal Bond Index - a total return performance
benchmark for investment-grade municipal bonds with maturities between one
and 17 years. To measure how Institutional Class' performance stacked up
against its peers, you can compare it to the intermediate municipal debt
funds average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 138 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Intermediate Municipal Income - 7.09% 5.76% 6.65%
Institutional Class
Lehman Brothers 1-17 Year Municipal 7.38% n/a n/a
Bond Index
Intermediate Municipal Debt Funds Average 6.23% 6.01% 6.98%
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
1987/05/31 10000.00 10000.00
1987/06/30 10186.74 10293.60
1987/07/31 10306.22 10398.59
1987/08/31 10328.39 10421.99
1987/09/30 9998.81 10037.73
1987/10/31 10091.62 10073.27
1987/11/30 10322.82 10336.28
1987/12/31 10425.89 10486.26
1988/01/31 10799.77 10859.78
1988/02/29 10843.82 10974.57
1988/03/31 10685.28 10847.26
1988/04/30 10739.00 10929.70
1988/05/31 10772.98 10898.11
1988/06/30 10848.70 11057.55
1988/07/31 10905.15 11129.65
1988/08/31 10910.37 11139.44
1988/09/30 11030.09 11341.07
1988/10/31 11161.30 11540.67
1988/11/30 11124.99 11434.96
1988/12/31 11195.19 11551.94
1989/01/31 11308.49 11790.83
1989/02/28 11240.95 11656.30
1989/03/31 11205.30 11628.44
1989/04/30 11363.68 11904.50
1989/05/31 11533.37 12151.75
1989/06/30 11659.95 12316.78
1989/07/31 11776.31 12484.41
1989/08/31 11738.17 12362.18
1989/09/30 11735.84 12325.35
1989/10/31 11829.96 12476.08
1989/11/30 11959.39 12694.42
1989/12/31 12067.19 12798.26
1990/01/31 12027.83 12737.72
1990/02/28 12134.64 12851.09
1990/03/31 12155.31 12854.94
1990/04/30 12030.31 12761.87
1990/05/31 12249.65 13040.46
1990/06/30 12351.07 13155.09
1990/07/31 12500.12 13348.47
1990/08/31 12427.44 13154.65
1990/09/30 12460.73 13162.15
1990/10/31 12600.08 13400.91
1990/11/30 12801.11 13670.40
1990/12/31 12835.66 13729.87
1991/01/31 12978.98 13914.12
1991/02/28 13097.15 14035.17
1991/03/31 13105.95 14040.23
1991/04/30 13224.76 14226.96
1991/05/31 13330.70 14353.44
1991/06/30 13338.80 14339.23
1991/07/31 13472.41 14513.88
1991/08/31 13580.06 14705.03
1991/09/30 13663.29 14896.49
1991/10/31 13810.02 15030.56
1991/11/30 13844.82 15072.49
1991/12/31 14073.60 15395.95
1992/01/31 14171.92 15431.05
1992/02/29 14188.17 15435.99
1992/03/31 14133.92 15441.70
1992/04/30 14232.78 15579.13
1992/05/31 14388.89 15762.50
1992/06/30 14577.73 16026.99
1992/07/31 14891.68 16507.48
1992/08/31 14781.58 16346.53
1992/09/30 14919.64 16453.44
1992/10/31 14817.74 16291.70
1992/11/30 15091.60 16583.49
1992/12/31 15098.46 16752.80
1993/01/31 15288.57 16947.64
1993/02/28 15701.04 17560.64
1993/03/31 15548.67 17375.02
1993/04/30 15660.96 17550.33
1993/05/31 15729.96 17648.97
1993/06/30 15899.54 17943.53
1993/07/31 15936.54 17967.03
1993/08/31 16218.67 18341.11
1993/09/30 16390.44 18550.01
1993/10/31 16425.10 18585.81
1993/11/30 16300.91 18422.07
1993/12/31 16598.77 18810.96
1994/01/31 16756.48 19025.78
1994/02/28 16326.24 18533.02
1994/03/31 15692.18 17778.35
1994/04/30 15834.35 17929.11
1994/05/31 15979.44 18084.56
1994/06/30 15868.00 17974.06
1994/07/31 16092.54 18303.53
1994/08/31 16156.75 18366.86
1994/09/30 15963.04 18097.23
1994/10/31 15739.64 17775.82
1994/11/30 15415.21 17454.44
1994/12/31 15697.31 17838.61
1995/01/31 16078.77 18348.44
1995/02/28 16489.89 18882.01
1995/03/31 16673.89 19098.96
1995/04/30 16672.73 19121.50
1995/05/31 17057.21 19731.67
1995/06/30 16969.09 19560.00
1995/07/31 17099.98 19745.43
1995/08/31 17317.83 19995.80
1995/09/30 17432.50 20122.38
1995/10/31 17622.24 20414.96
1995/11/30 17794.96 20753.64
1995/12/31 17953.25 20953.08
1996/01/31 18077.30 21111.28
1996/02/29 18022.36 20968.78
1996/03/31 17848.82 20700.80
1996/04/30 17795.92 20642.21
1996/05/31 17780.11 20633.96
1996/06/30 17938.67 20858.66
1996/07/31 18082.23 21048.47
1996/08/31 18084.45 21043.42
1996/09/30 18263.37 21338.03
1996/10/31 18444.20 21579.36
1996/11/30 18748.06 21974.27
1996/12/31 18698.46 21881.97
1997/01/31 18736.65 21923.33
1997/02/28 18895.04 22124.59
1997/03/31 18675.67 21829.67
1997/04/30 18819.92 22012.38
1997/05/30 19040.59 22343.45
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Advisor Intermediate Municipal Income Fund - Institutional
Class on May 31, 1987. As the chart shows, by May 31, 1997, the value of
the investment would have grown to $19,041 - a 90.41% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index, which reflects the performance of the
investment-grade bond market, did over the same period. With dividends
reinvested, the same $10,000 investment would have grown to $22,343 - a
123.43% 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
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31,
1997 1996 1995 1994 1993 1992
Dividend return 2.32% 4.88% 5.34% 4.44% 5.41% 6.42%
Capital appreciation -0.76% 0.48% 10.10% -9.87% 2.60% 2.59%
return
Total return 1.56% 5.36% 15.44% -5.43% 8.01% 9.01%
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.02(cents) 23.84(cents) 48.23(cents)
Annualized dividend rate 4.60% 4.64% 4.71%
30-day annualized yield 4.40% - -
30-day annualized tax-equivalent yield 6.88% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $10.29
over the past one month, $10.30 over the past six months and $10.25 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 tax- equivalent yield shows what
you would have to earn on a taxable investment to equal the class' tax-free
yield, if you're in the 36% federal tax bracket but does not reflect
payment of the federal alternative minimum tax, if applicable. If Fidelity
had not reimbursed certain class expenses, the yield and tax-equivalent
yield would have been 4.35% and 6.80%, respectively.
FUND TALK: THE MANAGER'S OVERVIEW
An Interview with David Murphy, Portfolio Manager of Fidelity Advisor
Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, DAVE?
A. For the six- and 12-months periods that ended May 31, 1997, the fund's
Institutional Class shares had total returns of 1.56% and 7.09%,
respectively. For the same six- and 12-month periods, the Lehman Brothers
1-17 Year Municipal Bond Index returned 1.69% and 7.38%, respectively.
Additionally, the intermediate municipal debt funds average returned 1.28%
for the same six-month period and 6.23% for the same 12-month period,
according to Lipper Analytical Services.
Q. THE BOND MARKET WAS SOMEWHAT SKITTISH OVER THE PAST SIX MONTHS, YET
MUNICIPALS WERE ONE OF THE BETTER-
PERFORMING FIXED-INCOME INVESTMENTS. WHAT ACCOUNTS FOR THEIR RELATIVE
STRENGTH?
A. Rising interest rates caused all bonds to come under pressure, but
municipals were somewhat immunized by favorable supply and demand factors.
A lot of the outperformance of munis versus Treasuries occurred toward the
end of the period when the available supply of tax-free bonds was limited.
On the demand side of the equation, it seemed as though some investors
began to question the high levels of the stock market and re-directed some
of their investment dollars into municipals. We saw additional purchases
triggered by upcoming municipal calls. By this I mean that June and July
are expected to see a record amount of municipal issuers calling, or
redeeming, a lot of their outstanding debt before maturity. In anticipation
of their muni holdings being called, investors bought new municipal bonds
in their place.
Q. WHICH OF THE FUND'S HOLDINGS WERE THE BEST PERFORMERS DURING THE PERIOD?
WHICH WERE DISAPPOINTING?
A. Bonds issued by New York City were among the municipal bond market's -
and the fund's - best performers during the past six months. The main
reason for their success was that the city's economy continued to expand
and tax revenues increased. The strength of the stock market had something
to do with rising tax revenues, because Wall Street handed out handsome
bonuses, which translated into higher personal income tax collections for
the city. What's more, capital gains and corporate tax receipts also rose
as the economy improved. I like the fact that the city has been reasonably
conservative in its budgeting, not relying on a continuation of the
dramatic boost from Wall Street next year. In addition, bonds appropriated
by the state of New York also performed well, buoyed by many of the same
positives that helped New York City. As far as disappointments go, I can't
really single out any one issuer that detracted from performance. But
generally speaking, bonds with shorter maturities were hurt more than those
with longer-maturities because short-term interest rates rose more than
longer-term interest rates during the past six months.
Q. HOW DID YOU STRUCTURE THE FUND
DURING THE PERIOD?
A. In terms of the maturity ranges targeted, I have been adding more bonds
with maturities of between five and 10 years because I felt that bonds in
this maturity range offered an appropriate amount of potential return given
their maturity. I also sold some bonds with maturities longer than 10
years. Here's why: The yield curve, which is a graphical representation of
the yield of bonds by ascending maturity dates, flattened. By that I mean
that up to about a 10-year maturity, an investor would be paid an
appropriate amount of additional income for each additional year of
maturity. It is this additional income that compensates the investor for
the additional risk taken on by investing in the longer maturity. After 10
years, however, the extra income for each successive year of maturity was
not, in my opinion, attractive enough for the level of risk inherent in
these bonds.
Q. ANOTHER CHOICE YOU FACED WAS WHICH COUPON RANGES TO TARGET. WHAT WAS
YOUR STRATEGY THERE?
A. I continued to use a barbelled coupon structure. If you picture a
barbell, the middle is light and the ends are heavy. That's exactly how the
fund looks in terms of the coupons in which it invested. On one end of the
barbell are premium coupon bonds, which pay higher annual income than newly
issued bonds. On the other end are discount-coupon bonds, with annual
income below newly issued bonds. In the middle - the lightest part of the
barbell - are par bonds, which trade at face value. The premium coupons
offer downside protection should the market fall, while the discount
coupons offer price appreciation potential should the market rally.
Q. DID YOU FOCUS ON PARTICULAR STATES?
A. I increased the fund's holdings in New York, for reasons I already
mentioned and based on my evaluation that there were going to be fewer
bonds issued in the state in the second quarter of 1997 than in most other
quarters. Since that scarcity materialized and New York bonds performed
well relative to other munis, I began to sell some, anticipating more
normalized supply levels. I continued to keep a heavier weighting than the
fund's benchmark in bonds from California, a state that also enjoyed
relatively strong performance. The state is enjoying a fairly substantial
budget surplus for fiscal year 1997, a lot of which will flow back to the
counties to help with school funding. With the strong economy and higher
tax revenues, the state won't have to scramble to balance its budget. Also,
I sold some bonds from Texas in order to lock in the gains they made during
the period.
Q. WHAT'S YOUR OUTLOOK FOR MUNICIPALS?
A. During the last several years, the amount of municipal bonds outstanding
in the market has shrunk considerably and, more recently, has helped the
municipal market outperform the taxable bond market. I think that the total
supply available will increase slightly by the end of this year. The
question is, will there be enough demand to digest that supply? In my view,
that will depend on how investors perceive the attractiveness of municipals
relative to other fixed-income and equity choices.
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.
FUND FACTS
GOAL: seeks the highest
level of income exempt from
federal income taxes that
can be obtained consistent
with the preservation of
capital
START DATE: September 19,
1985
SIZE: as of May 31, 1997,
more than $65 million
MANAGER: David Murphy,
since 1995; joined Fidelity in
1989
(checkmark)
DAVID MURPHY ON
OPPORTUNITIES IN ELECTRIC
UTILITY MUNICIPALS:
"The electric utility industry is
in the early stages of a
transformation from one
where electric providers enjoy
monopolistic strongholds on a
given service area to one
where competition probably
will reign. Given the changing
environment, I have been
focusing on electric utilities
that are either well-prepared
to deal with increased
competition or those that I
believe can meet competitive
challenges down the road, but
have been too severely
penalized by the market
today. Even though it seems
inevitable that competition will
increase, I believe there will
be opportunities to invest
profitably in this sector."
INVESTMENT CHANGES
TOP FIVE STATES AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
California 18.5 17.7
New York 12.4 9.8
Massachusetts 7.3 7.3
Texas 6.1 11.3
New Mexico 5.5 6.0
TOP FIVE MARKET SECTORS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligation 29.8 26.8
Education 19.9 21.9
Electric Revenue 13.7 13.1
Health Care 7.8 6.7
Housing 5.5 5.0
AVERAGE YEARS TO MATURITY AS OF MAY 31, 1997
6 MONTHS AGO
Years 7.8 8.6
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 MAY 31, 1997
6 MONTHS AGO
Years 5.7 5.9
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.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF MAY 31, 1997 AS OF NOVEMBER 30, 1996
Aaa 38.8%
Aa, A 39.1%
Baa 17.2%
Short-term
investments 4.9%
Aaa 42.7%
Aa, A 39.2%
Baa 15.4%
Non-rated 0.7%
Short-term
investments 2.0%
Row: 1, Col: 1, Value: 38.8
Row: 1, Col: 2, Value: 39.1
Row: 1, Col: 3, Value: 17.2
Row: 1, Col: 4, Value: 4.9
Row: 1, Col: 1, Value: 42.7
Row: 1, Col: 2, Value: 37.2
Row: 1, Col: 3, Value: 15.4
Row: 1, Col: 4, Value: 1.7
Row: 1, Col: 5, Value: 3.0
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS MAY 31, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 95.1%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
ALASKA - 3.5%
North Slope Borough (Cap. Appreciation)
Series B, 0% 1/1/03 (MBIA Insured) $ 3,000,000 $ 2,261,250
ARIZONA - 0.3%
Maricopa County Ind. Dev. Auth. Hosp. Facs. Rev. Rfdg.
(Sun Health Corp.) 5.75% 4/1/07 200,000 201,000
ARKANSAS - 1.2%
Arkansas Gen. Oblig. 0% 6/1/02 1,000,000 783,750
CALIFORNIA - 18.5%
California Edl. Facs. Auth. Rev. Rfdg. (Chapman Univ.)
5.37% 10/1/16 225,000 216,563
California Gen. Oblig. 6.25% 10/1/19 400,000 428,500
California Hsg. Fin. Agcy. Rev. (Home Mortgage) Series R,
5.35% 8/1/07 (MBIA Insured) (b) 1,000,000 1,002,500
California Poll. Cont. Fing. Auth. Resource Recovery Rev.
(Waste Management Inc.) Series A, 7.15% 2/1/11 (b) 1,000,000 1,080,000
California Pub. Wks. Board Lease Rev.:
(Dept. Correction State Prisons, Madera) Series E,
6% 6/1/07 1,000,000 1,057,500
Rfdg.:
(Various California Univ. Proj.) Series A,
5.50% 6/1/10 1,000,000 1,018,750
(Dept. Corrections State Prisons, Monterey)
Series D, 5.37% 11/1/14 500,000 484,375
California Rural Home Mtg. Fin. Auth. Lease Rev.
Series A, 4.45% 8/1/01 (MBIA Insured) 1,000,000 992,500
Los Angeles County Ctfs. of Prtn. (Disney Parking Project)
(Cap. Appreciation) 0% 9/1/04 970,000 648,688
Rosemead Redev. Agcy. Sub. Lien Tax Allocation Proj.
(Area 1) 0% 10/1/02 (Escrowed to Maturity) (c) 1,450,000 1,123,750
Sacramento Muni. Util. Dist. Elec. Rev. 1.76% 11/15/08
(FGIC Insured) (e) 1,000,000 963,750
Sacramento Pwr. Auth. Cogeneration Proj. Rev.:
6% 7/1/02 1,000,000 1,037,500
6.50% 7/1/08 300,000 317,250
San Bernadino County Ctfs. of Prtn. Rfdg. (Med. Ctr.
Fing. Proj.) 5.25% 8/1/04 500,000 500,625
West Covina Ctfs. of Prtn. (Queen of the Valley Hospital)
6.50% 8/15/09 1,000,000 1,062,500
11,934,751
COLORADO - 0.8%
Colorado Health Facs. Auth. Rev. Rfdg. (Rocky Mountain
Adventist) 6.25% 2/1/04 500,000 518,750
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
DISTRICT OF COLUMBIA - 2.3%
District of Columbia Gen. Oblig. Rfdg. Series B-1,
5.40% 6/1/06 (AMBAC Insured) $ 1,000,000 $ 1,011,250
District of Columbia Redev. Land Agcy. Spl. Tax Rev.
(Washington D.C. Sports Arena) 5.40% 11/1/00 500,000 500,625
1,511,875
FLORIDA - 2.5%
Broward County Resources Recovery Rev. (SES Broward Co.
LP South Proj.) 7.95% 12/1/08 500,000 544,375
Dade County Wtr. & Swr. Sys. Rev. 6.25% 10/1/10
(FGIC Insured) 500,000 551,875
Jacksonville Port Auth. Rev. Rfdg. 5.75% 11/1/09
(MBIA Insured) (b) 500,000 520,625
1,616,875
GEORGIA - 2.6%
Georgia State Rfdg. Series A, 6.25% 3/1/06 1,000,000 1,098,750
Monroe County Dev. Auth. Poll. Cont. Rev. Rfdg.
(Oglethorpe Pwr. Corp.) Series A,
6.60% 1/1/07 500,000 551,250
1,650,000
ILLINOIS - 3.9%
Chicago Midway Arpt. Rev. Series B, 6% 1/1/09
(MBIA Insured) (b) 300,000 313,875
Illinois Health Facs. Auth. Rev. Rfdg. (Felician Health Care, Inc.)
Series A, 6.85% 1/1/00 (AMBAC Insured) 1,000,000 1,056,250
Metropolitan Pier & Exposition Auth. Dedicated Tax Rev.
(McCormick Place Expansion Proj.):
0% 6/15/00, (AMBAC Insured) 1,000,000 870,000
(Cap Appreciation) Series A, 0% 6/15/09 (FGIC Insured) 500,000 259,375
2,499,500
INDIANA - 0.8%
Indianapolis Resource Rec. Rev. Rfdg. (Ogden Martin Sys.,
Inc. Proj.) 6.50% 12/1/03 (AMBAC Insured) 500,000 546,875
IOWA - 1.6%
Iowa Student Loan Liquidity Corp. Student Loan Rev.
Series A, 6.35% 3/1/01 1,000,000 1,045,000
LOUISIANA - 1.6%
Louisiana Pub. Facs. Auth. Rev. Rfdg. Student Loan Sr.
Series A-1, 6.20% 3/1/01 1,000,000 1,040,000
MASSACHUSETTS - 7.3%
Boston Rev. (Boston City Hosp.) Series A, 7.625% 2/15/21
(FHA Guaranteed) (FSA Insured) (Pre-Refunded to
8/15/00 @102) (c) 250,000 277,813
Massachusetts State Gen. Oblig. Rfdg.
Series A, 5.50% 2/1/11 250,000 252,500
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Rev. (Massachusetts Biomedical
Research) (Cap. Appreciation) Series A-1:
0% 8/1/00 $ 1,100,000 $ 943,250
0% 8/1/02 1,600,000 1,232,000
New England Ed. Loan Marketing Corp. Rev. Rfdg.
(Massachusetts Student Loan) Series B,
5.40% 6/1/00 1,950,000 1,981,688
4,687,251
MINNESOTA - 2.0%
Minnesota State Gen. Oblig. 6% 5/1/06 1,000,000 1,081,250
Minnesota Higher Ed. Facs. (Macalester College)
5.50% 3/1/12 200,000 201,750
1,283,000
NEW JERSEY - 2.2%
New Jersey Economic Dev. Auth. Market Transition Fac.
Rev. (Sr. Lien) Series A, 7% 7/1/04 (MBIA Insured) 1,000,000 1,123,750
New Jersey Trans. Corp. Capital Grant Anticipation Notes
Series A, 5.40% 9/1/02 (FSA Insured) 300,000 307,875
1,431,625
NEW MEXICO - 5.5%
Albuquerque Arpt. Rev. Rfdg. 6.75% 7/1/09
(AMBAC Insured) (b) 450,000 502,875
New Mexico Edl. Assistance Foundation Student Loan Rev.
Sr. Series IV-A2, 6.65% 3/1/07 2,300,000 2,432,250
Rio Rancho Wtr. & Wastewtr. Sys. Rev. Series A,
8% 5/15/04 (FSA Insured) 500,000 590,625
3,525,750
NEW YORK - 12.4%
Metropolitan Trans. Auth. Svc. Contract Rfdg.
(Transit Facs.) Series 5, 6.90% 7/1/05 1,000,000 1,073,750
New York City Muni. Assistance Corp.
Series E, 6% 7/1/04 500,000 530,625
New York Gen. Oblig.:
Series B, 8.25% 6/1/07 1,000,000 1,208,750
Series G, 5.40% 2/1/01 2,000,000 2,020,000
New York State Dorm. Auth. Rev.:
(City Univ. Sys. Consolidated) Series A, 5.70% 7/1/05 500,000 514,375
(City Univ. Sys. Consolidated) Series A, 5.75% 7/1/13 500,000 505,625
(City Univ. Sys.) Series C, 7.50% 7/1/10 500,000 587,500
Rfdg. (State Univ. Edl. Facs.) Series A, 6.50% 5/15/04 500,000 539,375
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
NEW YORK - CONTINUED
New York State Local Govt. Assistance Corp.
(Cap. Appreciation) Series A, 0% 4/1/08 $ 1,000,000 $ 558,750
New York State Thruway Auth. Hwy. & Bridge Trust Fund
Series A, 5.80% 4/1/09 500,000 514,375
8,053,125
NORTH CAROLINA - 1.5%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev.:
Series A, 5.625% 1/1/03 500,000 505,625
Rfdg.:
Series B, 6% 1/1/06 250,000 257,813
Series C, 5.50% 1/1/07 200,000 198,000
961,438
OHIO - 1.2%
Ohio State Bldg. Auth. (Adult Correctional Facs.) Series A,
5.95% 10/1/14 (MBIA Insured) 500,000 515,000
Ohio Tpk. Commission Tpk. Rev. Series A,
5.60% 2/15/12 (MBIA Insured) 250,000 253,438
768,438
PENNSYLVANIA - 3.8%
Pennsylvania Higher Edl. Facs. Auth. College & Univ. Rev.
Rfdg. (RIDC Reg. Growth - Carnegie-Mellon Univ. Proj.)
6% 11/1/04 1,270,000 1,366,838
Pennsylvania Hsg. Fin. Agcy. Rfdg. (Residential Dev. Section 8)
Series A, 7% 7/1/01 1,000,000 1,066,250
2,433,088
RHODE ISLAND - 1.6%
Rhode Island Student Loan Auth. Student Loan Rev. Rfdg.
Series A, 6.55% 12/1/00 1,000,000 1,061,250
SOUTH CAROLINA - 3.7%
South Carolina Edl. Assistance Auth. Rev. Rfdg. (Guaranteed
Student Loan):
(Sr. Lien) A-2, 5.40% 9/1/02 1,350,000 1,387,125
(Sub. Lien) Series B, 5.70% 9/1/05 (b) 1,000,000 1,021,250
2,408,375
TENNESSEE - 0.4%
Memphis-Shelby Cnty. Arpt. Auth. Rev. Rfdg. Series A,
6% 2/15/07 (MBIA Insured) (b)(f) 265,000 280,565
MUNICIPAL BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
TEXAS - 6.1%
Hurst Euless Bedford Independent School Dist. Rfdg.
(Cap. Appreciation) Unltd. Tax 0% 8/15/11
(PSF Guaranteed) $ 1,000,000 $ 460,000
North East Independent School Dist. Rfdg.
(Cap. Appreciation) Unltd. Tax Series D, 0% 2/1/00 2,065,000 1,830,106
Port Arthur Hsg. Fin. Corp. Single Family Mtg. Rev. Rfdg.
8.70% 3/1/12 490,000 526,750
Texas Pub. Fin. Auth. Bldg. Rev. Rfdg. (Texas Technical College)
6.25% 8/1/09 (MBIA Insured) 1,000,000 1,096,250
3,913,106
UTAH - 3.2%
Intermountain Pwr. Agcy. Pwr. Supply Rev. Series A:
0% 7/1/06 (MBIA Insured) 2,860,000 1,787,500
6.50% 7/1/08 (AMBAC Insured) 250,000 279,688
2,067,188
WASHINGTON - 4.6%
Washington Pub. Pwr. Supply Sys. Nuclear Proj. #2 Rev.:
5.40% 7/1/12 (d) 2,000,000 1,897,500
Rfdg. Series C, 7.50% 7/1/03 525,000 576,844
Washington Pub. Pwr. Supply Sys. Nuclear Proj. #3
Rev. Rfdg. Series C, 5.10% 7/1/07 500,000 489,375
2,963,719
TOTAL MUNICIPAL BONDS
(Cost $60,351,188) 61,447,544
CASH EQUIVALENTS - 4.9%
SHARES
Municipal Central Cash Fund (a)
(Cost $3,177,340) 3,177,340 3,177,340
TOTAL INVESTMENTS - 100%
(Cost $63,528,528) $ 64,624,884
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
U.S. Treasury Bond Contracts Sept. 1997 $ 1,096,250 $ 10,222
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.7%
LEGEND
7. At the period end, the seven-day yield of the Municipal Central Cash
Fund was 3.90%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
8. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
9. Security collateralized by an amount sufficient to pay interest and
principal.
10. A portion of the security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $47,438.
11. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
12. Security purchased on a delayed delivery or when-issued basis (see Note
2 of Notes to Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 69.9% AAA, AA, A 68.9%
Baa 15.1% BBB 15.7%
Ba 0.0% BB 0.0%
B 0.0% B 0.8%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 29.8%
Education 19.9
Electric Revenue 13.7
Health Care 7.8
Housing 5.5
Transportation 5.1
Others (individually less than 5%) 18.2
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1997, the aggregate cost of investment securities for income tax
purposes was $63,528,528. Net unrealized appreciation aggregated
$1,096,356, of which $1,359,309 related to appreciated investment
securities and $262,953 related to depreciated investment securities.
At November 30, 1996, the fund had a capital loss carryforward of
approximately $426,000 which will expire on November 30, 2003.
At November 30, 1996, the fund was required to defer approximately $386,000
of losses on futures contracts.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $63,528,528) - $ 64,624,884
See accompanying schedule
Interest receivable 920,289
Receivable for daily variation on futures contracts 6,875
Prepaid expenses 5,031
TOTAL ASSETS 65,557,079
LIABILITIES
Payable for investments purchased $ 275,444
Delayed delivery
Payable for fund shares redeemed 124,233
Distributions payable 81,983
Accrued management fee 13,435
Distribution fees payable 15,867
Other payables and accrued expenses 32,708
TOTAL LIABILITIES 543,670
NET ASSETS $ 65,013,409
Net Assets consist of:
Paid in capital $ 64,293,016
Accumulated undistributed net realized gain (loss) (386,185)
on investments
Net unrealized appreciation (depreciation) on 1,106,578
investments
NET ASSETS $ 65,013,409
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
MAY 31, 1997 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $10.32
CLASS A:
NET ASSET VALUE and redemption price per share
($344,092 (divided by) 33,330 shares)
Maximum offering price per share (100/96.75 of $10.32) $10.67
CLASS T: $10.33
NET ASSET VALUE and redemption price per share
($49,851,869 (divided by) 4,827,509 shares)
Maximum offering price per share (100/97.25 of $10.33) $10.62
CLASS B: $10.32
NET ASSET VALUE and offering price per share
($7,349,499 (divided by) 711,925 shares) A
INSTITUTIONAL CLASS: $10.33
NET ASSET VALUE, offering price and redemption price
per share ($7,467,949 (divided by) 723,167 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>
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
INTEREST INCOME $ 1,799,532
EXPENSES
Management fee $ 131,240
Transfer agent fees 64,472
Distribution fees 98,710
Accounting fees and expenses 30,072
Non-interested trustees' compensation 43
Custodian fees and expenses 3,293
Registration fees 43,361
Audit 19,801
Legal 369
Miscellaneous 1,052
Total expenses before reductions 392,413
Expense reductions (43,440) 348,973
NET INTEREST INCOME 1,450,559
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 468,530
Futures contracts (36,454) 432,076
Change in net unrealized appreciation (depreciation) on:
Investment securities (1,017,252)
Futures contracts 10,222 (1,007,030)
NET GAIN (LOSS) (574,954)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 875,605
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED MAY NOVEMBER 30,
31,1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 1,450,559 $ 3,449,493
Net interest income
Net realized gain (loss) 432,076 684,780
Change in net unrealized appreciation (depreciation) (1,007,030) (712,133)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 875,605 3,422,140
FROM OPERATIONS
Distributions to shareholders (1,450,559) (3,449,493)
From net interest income
From net realized gain (6,721) -
TOTAL DISTRIBUTIONS (1,457,280) (3,449,493)
Share transactions - net increase (decrease) (5,138,044) (9,402,984)
TOTAL INCREASE (DECREASE) IN NET ASSETS (5,719,719) (9,430,337)
NET ASSETS
Beginning of period 70,733,128 80,163,465
End of period $ 65,013,409 $ 70,733,128
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1997 1996 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.410 $ 10.160
Income from Investment Operations
Net interest income .230 .113
Net realized and unrealized gain (loss) (.089) .250 D
Total from investment operations .141 .363
Less Distributions
From net interest income (.230) (.113)
From net realized gain (.001) -
Total Distributions (.231) (.113)
Net asset value, end of period $ 10.320 $ 10.410
TOTAL RETURN B, C 1.38% 3.59%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 344 $ 103
Ratio of expenses to average net assets .90% A, F .90% A,
F
Ratio of net interest income to average net assets 4.47% A 4.60% A
Portfolio turnover rate 21% A 35%
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 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.
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).
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997
(UNAUDITED) 1996 1995 1994 F 1993 1992 E
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080 $ 11.010
beginning of period
Income from
Investment
Operations
Net interest .225 .461 .451 .455 .508 .131
income
Net realized (.079) .030 D .980 (1.040) .260 .070
and unrealized
gain (loss)
Total from .146 .491 1.431 (.585) .768 .201
investment
operations
Less Distributions
From net (.225) (.461) (.451) (.455) (.508) (.131)
interest income
From net (.001) - - - (.880) -
realized gain
In excess of net - - - (.020) - -
realized gain
Total distributions (.226) (.461) (.451) (.475) (1.388) (.131)
Net asset value, $ 10.330 $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080
end of period
TOTAL RETURN B, C 1.43% 4.89% 15.49% (5.78)% 7.72% 1.37%
RATIOS AND SUPPLEMENTAL DATA
Net assets, $ 49,852 $ 56,729 $ 62,852 $ 57,382 $ 39,800 $ 1,752
end of period
(000 omitted)
Ratio of expenses to 1.00% A, 1.00% .94% .90% .90% 1.04% A,
average net assets G G G G G G
Ratio of net interest 4.38% A 4.42% 4.56% 4.49% 4.76% 5.65% A
income to average
net assets
Portfolio turnover 21% A 35% 53% 53% 46% 36%
rate
</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 ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D 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.
E FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO NOVEMBER 30, 1992.
F EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
G 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 B
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997
(UNAUDITED) 1996 1995 1994 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.410 $ 10.380 $ 9.400 $ 9.890
Income from Investment Operations
Net interest income .193 .394 .373 .155
Net realized and unrealized gain (loss) (.089) .030 D .980 (.490)
Total from investment operations .104 .424 1.353 (.335)
Less Distributions
From net interest income (.193) (.394) (.373) (.155)
From net realized gain (.001) - - -
Total Distributions (.194) (.394) (.373) (.155)
Net asset value, end of period $ 10.320 $ 10.410 $ 10.380 $ 9.400
TOTAL RETURN B, C 1.01% 4.21% 14.60% (3.44)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 7,349 $ 7,445 $ 6,226 $ 1,682
Ratio of expenses to average net assets 1.65% A, 1.66% 1.68% 1.65% A,
F F F F
Ratio of net interest income to average 3.75% A 3.76% 3.71% 3.74% A
net assets
Portfolio turnover rate 21% A 35% 53% 53%
</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 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.
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 - INSTITUTIONAL CLASS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997
(UNAUDITED) 1996 1995 1994 E 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080 $ 10.800
beginning of period
Income from
Investment
Operations
Net interest .238 .487 .477 .481 .536 .666
income
Net realized (.079) .050 D .950 (1.030) .260 .280
and unrealized
gain (loss)
Total from .159 .537 1.427 (.549) .796 .946
investment
operations
Less Distributions (.238) (.487) (.477) (.481) (.536) (.666)
From net interest
income
From net (.001) - - - (.880) -
realized gain
In excess of net - - - (.020) - -
realized gain
Total distributions (.239) (.487) (.477) (.501) (1.416) (.666)
Net asset value, $ 10.330 $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080
end of period
TOTAL RETURN B, C 1.56% 5.36% 15.44% (5.43)% 8.01% 9.01%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 7,468 $ 6,455 $ 11,085 $ 11,702 $ 15,076 $ 28,428
period (000
omitted)
Ratio of expenses to .75% A, .75% .70% .65% .65% .66% F
average net assets F F F F F
Ratio of expenses to .75% A .74% .70% .65% .65% .66%
average net assets G
after expense
reductions
Ratio of net interest 4.64% A 4.68% 4.96% 4.75% 5.01% 6.05%
income to average
net assets
Portfolio turnover 21% A 35% 53% 53% 46% 36%
rate
</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 FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D 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. E EFFECTIVE DECEMBER 1, 1993, THE
FUND ADOPTED STATEMENT OF POSITION 93-2, "DETERMINATION, DISCLOSURE, AND
FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INTEREST
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES. 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.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1997 (Unaudited)
9. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Intermediate Municipal Income 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 fund offers Class A, Class T, Class B, 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.
Interest income, realized and unrealized capital gains and losses, the
common expenses of the fund, and certain fund-level expense reductions 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 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.
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."
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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest 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 futures
and options transactions, market discount, capital loss carryforwards and
losses deferred due to futures and options. The fund also utilized earnings
and profits distributed to shareholders on redemption of shares as a part
of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net interest income and realized
and unrealized gain (loss). Accumulated undistributed net realized gain
(loss) on investments may include temporary book and tax basis differences
that will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
10. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by FMR Texas, an
affiliate of FMR. The Cash Fund is an open-end money market fund available
only to investment companies and other accounts managed by FMR and its
affiliates. The Cash Fund seeks preservation of capital, liquidity, and
current income by investing in high-quality, short-term municipal
securities of various states and municipalities. Income distributions from
the Cash Fund are declared daily and paid monthly from net interest income.
Income distributions received by the fund are recorded as interest income
in the accompanying financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. With respect to
purchase commitments, the fund identifies securities as segregated in its
custodial records with a value at least equal to the amount of the
commitment. The
2. OPERATING POLICIES - CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
payables and receivables associated with the purchases and sales of
when-issued securities having the same settlement date and broker are
offset. When-issued securities that have been purchased from and sold to
different brokers are reflected as both payables and receivables in the
statement of assets and liabilities under the caption "Delayed delivery."
Losses may arise due to changes in the market value of the underlying
securities, if the counterparty does not perform under the contract, or if
the issuer does not issue the securities due to political, economic, or
other factors.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period end
is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
11. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $6,775,277 and $15,350,063, respectively.
The market value of futures contracts opened and closed during the period
amounted to $5,998,208 and $4,875,726, 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 .25%. In the event that these rates were lower than the
contractual rates in
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
effect during 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 annualized rate of .39% 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% *
* .65% 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 $ 214 $ 214
CLASS T 65,441 65,441
CLASS B 33,055 9,182
$ 98,710 $ 74,837
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 3.25% and 2.75%
for selling Class A and Class T shares of the fund, respectively, and the
proceeds of a contingent deferred sales charge levied on Class B share
redemptions occurring within three years of purchase. The Class B charge is
based on declining rates which range from 3% to 1% 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 $ 3,529 $ 3,019
CLASS T 14,361 11,941
CLASS B 10,786 0 *
$ 28,676 $ 14,960
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM ITS OWN
RESOURCES TO DEALERS THROUGH WHICH
THE SALES ARE MADE.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class T, Class B, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC, an affiliate of FMR, receives 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. All fees are paid to FIIOC by UMB,
which is reimbursed by each class for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports. For the
period, each class paid the following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 531 .37 *
CLASS T UMB 50,790 .19 *
CLASS B UMB 6,834 .19 *
INSTITUTIONAL CLASS UMB 6,317 .18 *
$ 64,472
* ANNUALIZED
UMB also has a sub-contract with Fidelity Service Company, Inc. (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.
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 class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 16,409
CLASS T 1.00% 8,014
CLASS B 1.65% 9,537
INSTITUTIONAL CLASS .75% 9,480
$ 43,440
14. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1996 A
1997
CLASS A
From net investment income $ 6,490 $ 1,046
From net realized gain 24 -
Total $ 6,514 $ 1,046
CLASS T
From net investment income $ 1,144,408 $ 2,699,983
From net realized gain 5,310 -
Total $ 1,149,718 $ 2,699,983
CLASS B
From net investment income $ 137,162 $ 269,283
From net realized gain 767 -
Total $ 137,929 $ 269,283
INSTITUTIONAL CLASS
From net investment income $ 162,499 $ 479,181
From net realized gain 620 -
$ 163,119 $ 479,181
TOTAL $ 1,457,280 $ 3,449,493
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
15. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30, ENDED MAY 31, NOVEMBER 30,
1997 1996 B 1997 1996 B
CLASS A 23,247 9,815 $ 240,020 $ 99,788
Shares sold
Reinvestment of distributions 619 108 6,376 1,046
Shares redeemed (459) - (4,702) -
Net increase (decrease) 23,407 9,923 $ 241,694 $ 100,834
CLASS T 641,831 2,035,422 $ 6,610,747 $ 20,912,410
Shares sold
Reinvestment of distributions 79,784 189,811 822,082 1,947,724
Shares redeemed (1,343,223) (2,833,821) (13,840,061) (28,990,305)
Net increase (decrease) (621,608) (608,588) $ (6,407,232) $ (6,130,171)
CLASS B 84,643 326,024 $ 870,619 $ 3,345,475
Shares sold
Reinvestment of distributions 9,032 17,066 93,052 175,043
Shares redeemed (97,052) (227,839) (1,000,327) (2,324,198)
Net increase (decrease) (3,377) 115,251 $ (36,656) $ 1,196,320
INSTITUTIONAL CLASS 191,067 476,090 $ 1,973,855 $ 4,887,410
Shares sold
Reinvestment of distributions 3,207 6,443 33,026 66,083
Shares redeemed (91,267) (932,023) (942,731) (9,523,460)
Net increase (decrease) 103,007 (449,490) $ 1,064,150 $ (4,569,967)
</TABLE>
B SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30,1996.
16. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 16,142
CLASS T 7,463
CLASS B 9,889
INSTITUTIONAL CLASS 9,867
$ 43,361
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
David L. Murphy, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
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 *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
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 TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Overseas Fund
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 High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
PrimeFund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
