(2_FIDELITY_LOGOS)(REGISTERED TRADEMARK)
FIDELITY ADVISOR
INTERMEDIATE MUNICIPAL INCOME FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
ANNUAL REPORT
OCTOBER 31, 1998
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 19 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 22 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST FIVE MONTHS.
INVESTMENTS 23 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 32 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 41 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 51 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 52
PROXY VOTING RESULTS 54
NOTE TO SHAREHOLDERS: The fiscal year end for Fidelity Advisor
Intermediate Municipal Income Fund recently changed from November 30
to October 31. This change was made in order to align the fund's
fiscal year end more closely with other similar Fidelity Advisor
FundsSM.
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:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY 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 shares and reflect Class T
shares' 0.25% 12b-1 fee. Returns prior to September 10, 1992 are those
of Institutional Class, the original class of the fund, which does not
bear a 12b-1 fee. Had Class A shares' 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 OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - CL A 6.46% 27.64% 87.30%
FIDELITY ADV INT MUNICIPAL INCOME - CL A 2.47% 22.85% 80.27%
(INCL. 3.75% SALES CHARGE)
LB 1-17 YEAR MUNICIPAL BOND 7.46% 34.05% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 29.68% 94.19%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class A's returns to those of the Lehman
Brothers 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 one year average represents a peer group of 146 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 OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - CL A 6.46% 5.00% 6.48%
FIDELITY ADV INT MUNICIPAL INCOME - CL A 2.47% 4.20% 6.07%
(INCL. 3.75% SALES CHARGE)
LB 1-17 YEAR MUNICIPAL BOND 7.46% 6.04% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 5.33% 6.85%
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
FA Int Muni Inc -CL A LB Municipal Bond
00262 LB015
1988/10/31 9625.00 10000.00
1988/11/30 9593.69 9908.40
1988/12/31 9654.22 10009.76
1989/01/31 9751.93 10216.76
1989/02/28 9693.69 10100.19
1989/03/31 9662.94 10076.05
1989/04/30 9799.52 10315.26
1989/05/31 9945.86 10529.51
1989/06/30 10055.02 10672.50
1989/07/31 10155.36 10817.75
1989/08/31 10122.46 10711.84
1989/09/30 10120.45 10679.92
1989/10/31 10201.62 10810.54
1989/11/30 10313.24 10999.72
1989/12/31 10406.20 11089.70
1990/01/31 10372.26 11037.25
1990/02/28 10464.36 11135.48
1990/03/31 10482.19 11138.82
1990/04/30 10374.40 11058.17
1990/05/31 10563.54 11299.57
1990/06/30 10651.00 11398.90
1990/07/31 10779.54 11566.46
1990/08/31 10716.86 11398.51
1990/09/30 10745.57 11405.01
1990/10/31 10865.74 11611.90
1990/11/30 11039.10 11845.41
1990/12/31 11068.89 11896.94
1991/01/31 11192.49 12056.60
1991/02/28 11294.39 12161.49
1991/03/31 11301.98 12165.87
1991/04/30 11404.43 12327.67
1991/05/31 11495.79 12437.27
1991/06/30 11502.78 12424.95
1991/07/31 11617.99 12576.29
1991/08/31 11710.83 12741.92
1991/09/30 11782.60 12907.82
1991/10/31 11909.13 13023.99
1991/11/30 11939.15 13060.33
1991/12/31 12136.44 13340.60
1992/01/31 12221.22 13371.02
1992/02/29 12235.24 13375.30
1992/03/31 12188.45 13380.25
1992/04/30 12273.70 13499.33
1992/05/31 12408.33 13658.22
1992/06/30 12571.17 13887.40
1992/07/31 12841.91 14303.75
1992/08/31 12746.96 14164.29
1992/09/30 12867.46 14256.92
1992/10/31 12775.91 14116.77
1992/11/30 13009.35 14369.61
1992/12/31 13025.06 14516.32
1993/01/31 13173.17 14685.14
1993/02/28 13538.91 15216.31
1993/03/31 13404.61 15055.47
1993/04/30 13498.89 15207.38
1993/05/31 13555.71 15292.84
1993/06/30 13698.58 15548.08
1993/07/31 13714.14 15568.45
1993/08/31 13966.47 15892.59
1993/09/30 14110.95 16073.60
1993/10/31 14124.20 16104.62
1993/11/30 14014.10 15962.74
1993/12/31 14253.55 16299.72
1994/01/31 14385.79 16485.86
1994/02/28 14026.59 16058.87
1994/03/31 13478.56 15404.96
1994/04/30 13597.86 15535.59
1994/05/31 13719.57 15670.28
1994/06/30 13620.97 15574.54
1994/07/31 13810.75 15860.02
1994/08/31 13862.97 15914.90
1994/09/30 13707.71 15681.27
1994/10/31 13499.27 15402.77
1994/11/30 13204.29 15124.28
1994/12/31 13443.31 15457.17
1995/01/31 13781.61 15898.94
1995/02/28 14131.31 16361.28
1995/03/31 14285.89 16549.27
1995/04/30 14281.79 16568.80
1995/05/31 14607.98 17097.51
1995/06/30 14529.50 16948.76
1995/07/31 14624.07 17109.43
1995/08/31 14821.74 17326.38
1995/09/30 14916.43 17436.06
1995/10/31 15075.53 17689.58
1995/11/30 15249.25 17983.05
1995/12/31 15351.73 18155.86
1996/01/31 15454.16 18292.94
1996/02/29 15403.67 18169.46
1996/03/31 15252.08 17937.26
1996/04/30 15203.38 17886.49
1996/05/31 15201.74 17879.34
1996/06/30 15319.07 18074.05
1996/07/31 15438.60 18238.52
1996/08/31 15437.50 18234.14
1996/09/30 15573.08 18489.42
1996/10/31 15725.44 18698.54
1996/11/30 15998.17 19040.72
1996/12/31 15937.81 18960.75
1997/01/31 15983.80 18996.58
1997/02/28 16117.21 19170.97
1997/03/31 15928.06 18915.42
1997/04/30 16049.13 19073.75
1997/05/31 16219.61 19360.61
1997/06/30 16389.12 19566.81
1997/07/31 16797.38 20108.81
1997/08/31 16652.75 19920.39
1997/09/30 16839.73 20156.84
1997/10/31 16933.93 20286.45
1997/11/30 17025.10 20405.73
1997/12/31 17215.87 20703.45
1998/01/31 17358.32 20917.11
1998/02/28 17349.15 20923.39
1998/03/31 17362.23 20941.80
1998/04/30 17293.08 20847.35
1998/05/31 17519.79 21177.37
1998/06/30 17580.61 21260.81
1998/07/31 17595.01 21314.17
1998/08/31 17839.46 21643.47
1998/09/30 18032.86 21913.15
1998/10/30 18027.48 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981123 145752 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Class A on October 31, 1988, and the current 3.75% sales charge was
paid. As the chart shows, by October 31, 1998, the value of the
investment would have grown to $18,027 - an 80.27% 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 and capital gains, if any, reinvested, the same $10,000
investment would have grown to $21,913 - a 119.13% increase.
UNDERSTANDING
PERFORMANCE
HOW A FUND DID YESTERDAY IS
NO GUARANTEE OF HOW IT WILL
DO TOMORROW. BOND PRICES, FOR
EXAMPLE, GENERALLY MOVE IN THE
OPPOSITE DIRECTION OF INTEREST
RATES. IN TURN, THE SHARE PRICE,
RETURN AND YIELD OF A FUND THAT
INVESTS IN BONDS WILL VARY. THAT
MEANS IF YOU SELL YOUR SHARES
DURING A MARKET DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN
RIDE OUT THE MARKET'S UPS AND
DOWNS, YOU MAY HAVE A GAIN.
(CHECKMARK)
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31, SEPTEMBER 3, 1996
(COMMENCEMENT
OF SALE OF
CLASS A SHARES) TO
OCTOBER 31,
1998 1997 1996
DIVIDEND RETURNS 4.37% 4.65% 0.75%
CAPITAL RETURNS 2.09% 3.03% 1.08%
TOTAL RETURNS 6.46% 7.68% 1.83%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital 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, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 3.68(CENTS) 22.47(CENTS) 44.84(CENTS)
ANNUALIZED DIVIDEND RATE 4.01% 4.17% 4.21%
30-DAY ANNUALIZED YIELD 3.26% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 5.09% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $10.81 over the past one month, $10.69 over the past six months and
$10.66 over the past one year, you can compare the class' income over
these three periods. The 30-day annualized YIELD is a standard formula
for all funds based on the yields of the bonds in the fund, averaged
over the past 30 days. This figure shows you the yield characteristics
of the fund's investments at the end of the period.
It also helps you compare funds from different companies on an equal
basis. The offering share price used in the calculation of the yield
includes the effect of Class A's current 3.75% 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.
FIDELITY 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, which does not bear a 12b-1 fee. Had Class T
shares' 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 OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - CL T 6.50% 27.42% 86.98%
FIDELITY ADV INT MUNICIPAL INCOME - CL T 3.57% 23.91% 81.83%
(INCL. 2.75% SALES CHARGE)
LB 1-17 YEAR MUNICIPAL BOND 7.46% 34.05% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 29.68% 94.19%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class T's returns to those of the Lehman
Brothers 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 one year average
represents a peer group of 146 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 OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - CL T 6.50% 4.96% 6.46%
FIDELITY ADV INT MUNICIPAL INCOME - CL T 3.57% 4.38% 6.16%
(INCL. 2.75% SALES CHARGE)
LB 1-17 YEAR MUNICIPAL BOND 7.46% 6.04% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 5.33% 6.85%
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
FA Int Muni Inc -CL T LB Municipal Bond
00289 LB015
1988/10/31 9725.00 10000.00
1988/11/30 9693.36 9908.40
1988/12/31 9754.53 10009.76
1989/01/31 9853.25 10216.76
1989/02/28 9794.40 10100.19
1989/03/31 9763.34 10076.05
1989/04/30 9901.33 10315.26
1989/05/31 10049.19 10529.51
1989/06/30 10159.48 10672.50
1989/07/31 10260.87 10817.75
1989/08/31 10227.63 10711.84
1989/09/30 10225.60 10679.92
1989/10/31 10307.61 10810.54
1989/11/30 10420.39 10999.72
1989/12/31 10514.32 11089.70
1990/01/31 10480.02 11037.25
1990/02/28 10573.08 11135.48
1990/03/31 10591.09 11138.82
1990/04/30 10482.18 11058.17
1990/05/31 10673.29 11299.57
1990/06/30 10761.66 11398.90
1990/07/31 10891.53 11566.46
1990/08/31 10828.21 11398.51
1990/09/30 10857.21 11405.01
1990/10/31 10978.63 11611.90
1990/11/30 11153.79 11845.41
1990/12/31 11183.89 11896.94
1991/01/31 11308.77 12056.60
1991/02/28 11411.73 12161.49
1991/03/31 11419.40 12165.87
1991/04/30 11522.92 12327.67
1991/05/31 11615.23 12437.27
1991/06/30 11622.29 12424.95
1991/07/31 11738.70 12576.29
1991/08/31 11832.50 12741.92
1991/09/30 11905.02 12907.82
1991/10/31 12032.87 13023.99
1991/11/30 12063.19 13060.33
1991/12/31 12262.53 13340.60
1992/01/31 12348.19 13371.02
1992/02/29 12362.35 13375.30
1992/03/31 12315.09 13380.25
1992/04/30 12401.22 13499.33
1992/05/31 12537.24 13658.22
1992/06/30 12701.78 13887.40
1992/07/31 12975.33 14303.75
1992/08/31 12879.40 14164.29
1992/09/30 13001.15 14256.92
1992/10/31 12908.64 14116.77
1992/11/30 13144.51 14369.61
1992/12/31 13160.39 14516.32
1993/01/31 13310.03 14685.14
1993/02/28 13679.58 15216.31
1993/03/31 13543.88 15055.47
1993/04/30 13639.14 15207.38
1993/05/31 13696.54 15292.84
1993/06/30 13840.90 15548.08
1993/07/31 13856.63 15568.45
1993/08/31 14111.57 15892.59
1993/09/30 14257.56 16073.60
1993/10/31 14270.94 16104.62
1993/11/30 14159.70 15962.74
1993/12/31 14401.64 16299.72
1994/01/31 14535.25 16485.86
1994/02/28 14172.32 16058.87
1994/03/31 13618.60 15404.96
1994/04/30 13739.14 15535.59
1994/05/31 13862.11 15670.28
1994/06/30 13762.48 15574.54
1994/07/31 13954.24 15860.02
1994/08/31 14007.00 15914.90
1994/09/30 13850.13 15681.27
1994/10/31 13639.52 15402.77
1994/11/30 13341.48 15124.28
1994/12/31 13582.98 15457.17
1995/01/31 13924.79 15898.94
1995/02/28 14278.13 16361.28
1995/03/31 14434.31 16549.27
1995/04/30 14430.18 16568.80
1995/05/31 14759.75 17097.51
1995/06/30 14680.45 16948.76
1995/07/31 14776.01 17109.43
1995/08/31 14975.74 17326.38
1995/09/30 15071.41 17436.06
1995/10/31 15232.16 17689.58
1995/11/30 15407.68 17983.05
1995/12/31 15511.22 18155.86
1996/01/31 15614.72 18292.94
1996/02/29 15563.71 18169.46
1996/03/31 15410.54 17937.26
1996/04/30 15361.33 17886.49
1996/05/31 15359.68 17879.34
1996/06/30 15478.23 18074.05
1996/07/31 15599.00 18238.52
1996/08/31 15597.89 18234.14
1996/09/30 15733.75 18489.42
1996/10/31 15901.76 18698.54
1996/11/30 16160.48 19040.72
1996/12/31 16114.36 18960.75
1997/01/31 16143.81 18996.58
1997/02/28 16276.23 19170.97
1997/03/31 16083.72 18915.42
1997/04/30 16204.65 19073.75
1997/05/31 16391.22 19360.61
1997/06/30 16545.09 19566.81
1997/07/31 16955.78 20108.81
1997/08/31 16808.28 19920.39
1997/09/30 16995.67 20156.84
1997/10/31 17073.17 20286.45
1997/11/30 17163.87 20405.73
1997/12/31 17371.22 20703.45
1998/01/31 17513.47 20917.11
1998/02/28 17502.96 20923.39
1998/03/31 17514.79 20941.80
1998/04/30 17460.19 20847.35
1998/05/31 17671.10 21177.37
1998/06/30 17732.43 21260.81
1998/07/31 17763.62 21314.17
1998/08/31 17993.61 21643.47
1998/09/30 18188.72 21913.15
1998/10/30 18183.36 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981123 151623 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Class T on October 31, 1988, and the current 2.75% sales charge was
paid. As the chart shows, by October 31, 1998, the value of the
investment would have grown to $18,183 - an 81.83% 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 and capital gains, if any, reinvested, the same $10,000
investment would have grown to $21,913 - a 119.13% increase.
UNDERSTANDING
PERFORMANCE
HOW A FUND DID YESTERDAY IS
NO GUARANTEE OF HOW IT WILL
DO TOMORROW. BOND PRICES, FOR
EXAMPLE, GENERALLY MOVE IN THE
OPPOSITE DIRECTION OF INTEREST
RATES. IN TURN, THE SHARE PRICE,
RETURN AND YIELD OF A FUND THAT
INVESTS IN BONDS WILL VARY. THAT
MEANS IF YOU SELL YOUR SHARES
DURING A MARKET DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN
RIDE OUT THE MARKET'S UPS AND
DOWNS, YOU MAY HAVE A GAIN.
(CHECKMARK)
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 1994
DIVIDEND RETURNS 4.32% 4.54% 4.59% 4.94% 4.20%
CAPITAL RETURNS 2.18% 2.83% -0.19% 6.74% -8.62%
TOTAL RETURNS 6.50% 7.37% 4.40% 11.68% -4.42%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital 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, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 3.68(CENTS) 22.40(CENTS) 44.29(CENTS)
ANNUALIZED DIVIDEND RATE 4.01% 4.16% 4.15%
30-DAY ANNUALIZED YIELD 3.30% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 5.16% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $10.81 over the past one month, $10.69 over the past six months and
$10.66 over the past one year, you can compare the class' income over
these three periods. The 30-day annualized YIELD is a standard formula
for all funds based on the yields of the bonds in the fund, averaged
over the past 30 days. This figure shows you the yield characteristics
of the fund's investments at the end of the period.
It also helps you compare funds from different companies on an equal
basis. The offering share price used in the calculation of the yield
includes the effect of Class T's current 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 3.25% and 5.08%, respectively.
FIDELITY 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 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 shares and reflect Class T shares'
0.25% 12b-1 fee. Returns prior to September 10, 1992 are those of
Institutional Class, the original class of the fund, which does not
bear a 12b-1 fee. Had Class B shares' 12b-1 fee been reflected,
returns prior to June 30, 1994 would have been lower. Class B shares'
contingent deferred sales charges included in the past one year, past
five years and past 10 years total return figures are 3%, 0% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - CL B 5.77% 23.55% 81.30%
FIDELITY ADV INT MUNICIPAL INCOME - CL B 2.77% 23.55% 81.30%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB 1-17 YEAR MUNICIPAL BOND 7.46% 34.05% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 29.68% 94.19%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, past 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 one year average represents a peer group of 146 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 OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - CL B 5.77% 4.32% 6.13%
FIDELITY ADV INT MUNICIPAL INCOME - CL B 2.77% 4.32% 6.13%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB 1-17 YEAR MUNICIPAL BOND 7.46% 6.04% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 5.33% 6.85%
AVERAGE ANNUAL TOTAL RETURNS take Class B's cumulative return and show
you what would have happened if Class B had performed at a constant
rate each year.
$10,000 OVER 10 YEARS
FA Int Muni Inc -CL B LB Municipal Bond
00689 LB015
1988/10/31 10000.00 10000.00
1988/11/30 9967.47 9908.40
1988/12/31 10030.36 10009.76
1989/01/31 10131.87 10216.76
1989/02/28 10071.36 10100.19
1989/03/31 10039.42 10076.05
1989/04/30 10181.32 10315.26
1989/05/31 10333.36 10529.51
1989/06/30 10446.77 10672.50
1989/07/31 10551.02 10817.75
1989/08/31 10516.84 10711.84
1989/09/30 10514.76 10679.92
1989/10/31 10599.09 10810.54
1989/11/30 10715.05 10999.72
1989/12/31 10811.64 11089.70
1990/01/31 10776.37 11037.25
1990/02/28 10872.06 11135.48
1990/03/31 10890.58 11138.82
1990/04/30 10778.59 11058.17
1990/05/31 10975.11 11299.57
1990/06/30 11065.98 11398.90
1990/07/31 11199.52 11566.46
1990/08/31 11134.40 11398.51
1990/09/30 11164.22 11405.01
1990/10/31 11289.08 11611.90
1990/11/30 11469.19 11845.41
1990/12/31 11500.15 11896.94
1991/01/31 11628.56 12056.60
1991/02/28 11734.43 12161.49
1991/03/31 11742.31 12165.87
1991/04/30 11848.76 12327.67
1991/05/31 11943.68 12437.27
1991/06/30 11950.94 12424.95
1991/07/31 12070.64 12576.29
1991/08/31 12167.09 12741.92
1991/09/30 12241.67 12907.82
1991/10/31 12373.13 13023.99
1991/11/30 12404.31 13060.33
1991/12/31 12609.28 13340.60
1992/01/31 12697.37 13371.02
1992/02/29 12711.93 13375.30
1992/03/31 12663.33 13380.25
1992/04/30 12751.90 13499.33
1992/05/31 12891.77 13658.22
1992/06/30 13060.96 13887.40
1992/07/31 13342.24 14303.75
1992/08/31 13243.60 14164.29
1992/09/30 13368.79 14256.92
1992/10/31 13273.67 14116.77
1992/11/30 13516.21 14369.61
1992/12/31 13532.53 14516.32
1993/01/31 13686.41 14685.14
1993/02/28 14066.40 15216.31
1993/03/31 13926.87 15055.47
1993/04/30 14024.82 15207.38
1993/05/31 14083.85 15292.84
1993/06/30 14232.29 15548.08
1993/07/31 14248.46 15568.45
1993/08/31 14510.62 15892.59
1993/09/30 14660.73 16073.60
1993/10/31 14674.49 16104.62
1993/11/30 14560.10 15962.74
1993/12/31 14808.88 16299.72
1994/01/31 14946.27 16485.86
1994/02/28 14573.08 16058.87
1994/03/31 14003.70 15404.96
1994/04/30 14127.65 15535.59
1994/05/31 14254.09 15670.28
1994/06/30 14151.65 15574.54
1994/07/31 14334.71 15860.02
1994/08/31 14376.27 15914.90
1994/09/30 14190.92 15681.27
1994/10/31 13979.95 15402.77
1994/11/30 13664.93 15124.28
1994/12/31 13903.30 15457.17
1995/01/31 14242.67 15898.94
1995/02/28 14595.45 16361.28
1995/03/31 14745.62 16549.27
1995/04/30 14731.89 16568.80
1995/05/31 15058.55 17097.51
1995/06/30 14968.03 16948.76
1995/07/31 15070.47 17109.43
1995/08/31 15249.57 17326.38
1995/09/30 15338.01 17436.06
1995/10/31 15491.87 17689.58
1995/11/30 15659.93 17983.05
1995/12/31 15740.76 18155.86
1996/01/31 15853.13 18292.94
1996/02/29 15792.93 18169.46
1996/03/31 15613.90 17937.26
1996/04/30 15571.26 17886.49
1996/05/31 15545.81 17879.34
1996/06/30 15672.99 18074.05
1996/07/31 15786.42 18238.52
1996/08/31 15776.20 18234.14
1996/09/30 15905.18 18489.42
1996/10/31 16050.69 18698.54
1996/11/30 16319.11 19040.72
1996/12/31 16248.64 18960.75
1997/01/31 16285.97 18996.58
1997/02/28 16411.52 19170.97
1997/03/31 16208.46 18915.42
1997/04/30 16321.69 19073.75
1997/05/31 16484.64 19360.61
1997/06/30 16646.63 19566.81
1997/07/31 17034.51 20108.81
1997/08/31 16892.99 19920.39
1997/09/30 17072.29 20156.84
1997/10/31 17140.71 20286.45
1997/11/30 17222.59 20405.73
1997/12/31 17421.41 20703.45
1998/01/31 17554.87 20917.11
1998/02/28 17534.83 20923.39
1998/03/31 17537.04 20941.80
1998/04/30 17456.54 20847.35
1998/05/31 17674.36 21177.37
1998/06/30 17724.81 21260.81
1998/07/31 17728.05 21314.17
1998/08/31 17963.19 21643.47
1998/09/30 18146.93 21913.15
1998/10/30 18130.07 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981123 151152 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Class B on October 31, 1988. As the chart shows, by October 31, 1998,
the value of the investment would have been $18,130 - an 81.30%
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 and capital gains, if any, reinvested, the same
$10,000 would have grown to $21,913 - a 119.13% increase.
UNDERSTANDING
PERFORMANCE
HOW A FUND DID YESTERDAY IS
NO GUARANTEE OF HOW IT WILL
DO TOMORROW. BOND PRICES, FOR
EXAMPLE, GENERALLY MOVE IN
THE OPPOSITE DIRECTION OF
INTEREST RATES. IN TURN, THE SHARE
PRICE, RETURN AND YIELD OF A
FUND THAT INVESTS IN BONDS WILL
VARY. THAT MEANS IF YOU SELL
YOUR SHARES DURING A MARKET
DOWNTURN, YOU MIGHT LOSE
MONEY. BUT IF YOU CAN RIDE OUT
THE MARKET'S UPS AND DOWNS,
YOU MAY HAVE A GAIN.
(CHECKMARK)
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31, JUNE 30, 1994
(COMMENCEMENT
OF SALE OF
CLASS B SHARES) TO
OCTOBER 31,
1998 1997 1996 1995 1994
DIVIDEND RETURNS 3.59% 3.86% 3.90% 4.07% 1.22%
CAPITAL RETURNS 2.18% 2.93% -0.29% 6.74% -2.43%
TOTAL RETURNS 5.77% 6.79% 3.61% 10.81% -1.21%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital 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, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 3.00(CENTS) 18.46(CENTS) 36.91(CENTS)
ANNUALIZED DIVIDEND RATE 3.27% 3.43% 3.46%
30-DAY ANNUALIZED YIELD 2.63% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 4.11% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $10.81 over the past one month, $10.68 over the past six months and
$10.66 over the past one year, you can compare the class' income over
these three periods. The 30-day annualized YIELD is a standard formula
for all funds based on the yields of the bonds in the fund, averaged
over the past 30 days. This figure shows you the yield characteristics
of the fund's investments at the end of the period.
It also helps you compare funds from different companies on an equal
basis. The offering share price used in the calculation of the yield
excludes the effect of Class B's contingent deferred sales charge. 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.
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - CLASS C
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change, or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance.
The initial offering of Class C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1 fee that is reflected in returns
after November 3, 1997. Returns between June 30, 1994 (the date Class
B shares were first offered) and November 3, 1997 are those of Class B
shares and reflect Class B shares' 0.90% 12b-1 fee (1.00% prior to
January 1, 1996). Returns between September 10, 1992 (the date Class T
shares were first offered) and June 30, 1994 are those of Class T
shares and reflect Class T shares' 0.25% 12b-1 fee. Returns prior to
September 10, 1992 are those of the Institutional Class, the original
class of the fund, which does not bear a 12b-1 fee. Had Class C
shares' 12b-1 fee been reflected, returns between November 3, 1997 and
January 1, 1996 and prior to June 30, 1994 would have been lower.
Class C shares' contingent deferred sales charge included in the past
one year, past five years and past 10 years total return figures are
1%, 0% and 0%, respectively. If Fidelity had not reimbursed certain
class expenses, the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - CL C 5.65% 23.41% 81.10%
FIDELITY ADV INT MUNICIPAL INCOME - CL C 4.65% 23.41% 81.10%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB 1-17 YEAR MUNICIPAL BOND 7.46% 34.05% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 29.68% 94.19%
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, past one year, five years or
10 years. For example, if you had invested $1,000 in a fund that had a
5% return over the past year, the value of your investment would be
$1,050. You can compare Class C's returns to those of the Lehman
Brothers 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 C'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 one year average
represents a peer group of 146 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 OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - CL C 5.65% 4.30% 6.12%
FIDELITY ADV INT MUNICIPAL INCOME - CL C 4.65% 4.30% 6.12%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB 1-17 YEAR MUNICIPAL BOND 7.46% 6.04% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 5.33% 6.85%
AVERAGE ANNUAL TOTAL RETURNS take Class C's cumulative return and show
you what would have happened if Class C had performed at a constant
rate each year.
$10,000 OVER 10 YEARS
FA Int Muni Inc -CL C LB Municipal Bond
00525 LB015
1988/10/31 10000.00 10000.00
1988/11/30 9967.47 9908.40
1988/12/31 10030.36 10009.76
1989/01/31 10131.87 10216.76
1989/02/28 10071.36 10100.19
1989/03/31 10039.42 10076.05
1989/04/30 10181.32 10315.26
1989/05/31 10333.36 10529.51
1989/06/30 10446.77 10672.50
1989/07/31 10551.02 10817.75
1989/08/31 10516.84 10711.84
1989/09/30 10514.76 10679.92
1989/10/31 10599.09 10810.54
1989/11/30 10715.05 10999.72
1989/12/31 10811.64 11089.70
1990/01/31 10776.37 11037.25
1990/02/28 10872.06 11135.48
1990/03/31 10890.58 11138.82
1990/04/30 10778.59 11058.17
1990/05/31 10975.11 11299.57
1990/06/30 11065.98 11398.90
1990/07/31 11199.52 11566.46
1990/08/31 11134.40 11398.51
1990/09/30 11164.22 11405.01
1990/10/31 11289.08 11611.90
1990/11/30 11469.19 11845.41
1990/12/31 11500.15 11896.94
1991/01/31 11628.56 12056.60
1991/02/28 11734.43 12161.49
1991/03/31 11742.31 12165.87
1991/04/30 11848.76 12327.67
1991/05/31 11943.68 12437.27
1991/06/30 11950.94 12424.95
1991/07/31 12070.64 12576.29
1991/08/31 12167.09 12741.92
1991/09/30 12241.67 12907.82
1991/10/31 12373.13 13023.99
1991/11/30 12404.31 13060.33
1991/12/31 12609.28 13340.60
1992/01/31 12697.37 13371.02
1992/02/29 12711.93 13375.30
1992/03/31 12663.33 13380.25
1992/04/30 12751.90 13499.33
1992/05/31 12891.77 13658.22
1992/06/30 13060.96 13887.40
1992/07/31 13342.24 14303.75
1992/08/31 13243.60 14164.29
1992/09/30 13368.79 14256.92
1992/10/31 13273.67 14116.77
1992/11/30 13516.21 14369.61
1992/12/31 13532.53 14516.32
1993/01/31 13686.41 14685.14
1993/02/28 14066.40 15216.31
1993/03/31 13926.87 15055.47
1993/04/30 14024.82 15207.38
1993/05/31 14083.85 15292.84
1993/06/30 14232.29 15548.08
1993/07/31 14248.46 15568.45
1993/08/31 14510.62 15892.59
1993/09/30 14660.73 16073.60
1993/10/31 14674.49 16104.62
1993/11/30 14560.10 15962.74
1993/12/31 14808.88 16299.72
1994/01/31 14946.27 16485.86
1994/02/28 14573.08 16058.87
1994/03/31 14003.70 15404.96
1994/04/30 14127.65 15535.59
1994/05/31 14254.09 15670.28
1994/06/30 14151.65 15574.54
1994/07/31 14334.71 15860.02
1994/08/31 14376.27 15914.90
1994/09/30 14190.92 15681.27
1994/10/31 13979.95 15402.77
1994/11/30 13664.93 15124.28
1994/12/31 13903.30 15457.17
1995/01/31 14242.67 15898.94
1995/02/28 14595.45 16361.28
1995/03/31 14745.62 16549.27
1995/04/30 14731.89 16568.80
1995/05/31 15058.55 17097.51
1995/06/30 14968.03 16948.76
1995/07/31 15070.47 17109.43
1995/08/31 15249.57 17326.38
1995/09/30 15338.01 17436.06
1995/10/31 15491.87 17689.58
1995/11/30 15659.93 17983.05
1995/12/31 15740.76 18155.86
1996/01/31 15853.13 18292.94
1996/02/29 15792.93 18169.46
1996/03/31 15613.90 17937.26
1996/04/30 15571.26 17886.49
1996/05/31 15545.81 17879.34
1996/06/30 15672.99 18074.05
1996/07/31 15786.42 18238.52
1996/08/31 15776.20 18234.14
1996/09/30 15905.18 18489.42
1996/10/31 16050.69 18698.54
1996/11/30 16319.11 19040.72
1996/12/31 16248.64 18960.75
1997/01/31 16285.97 18996.58
1997/02/28 16411.52 19170.97
1997/03/31 16208.46 18915.42
1997/04/30 16321.69 19073.75
1997/05/31 16484.64 19360.61
1997/06/30 16646.63 19566.81
1997/07/31 17034.51 20108.81
1997/08/31 16892.99 19920.39
1997/09/30 17072.29 20156.84
1997/10/31 17140.71 20286.45
1997/11/30 17221.37 20405.73
1997/12/31 17419.01 20703.45
1998/01/31 17550.36 20917.11
1998/02/28 17529.44 20923.39
1998/03/31 17545.31 20941.80
1998/04/30 17463.29 20847.35
1998/05/31 17679.32 21177.37
1998/06/30 17710.90 21260.81
1998/07/31 17729.43 21314.17
1998/08/31 17946.11 21643.47
1998/09/30 18128.28 21913.15
1998/10/30 18109.83 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981123 151444 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Class C on October 31, 1988. As the chart shows, by October 31, 1998,
the value of the investment would have been $18,110 - an 81.10%
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 and capital gains, if any, reinvested, the same
$10,000 would have grown to $21,913 - a 119.13% 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
NOVEMBER 3, 1997
(COMMENCEMENT
OF SALE OF
CLASS C SHARES) TO
OCTOBER 31,
1998
DIVIDEND RETURNS 3.44%
CAPITAL RETURNS 2.38%
TOTAL RETURNS 5.82%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital 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, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 6 LIFE OF
MONTH MONTHS CLASS
DIVIDENDS PER SHARE 2.90(CENTS) 17.86(CENTS) 35.42(CENTS)
ANNUALIZED DIVIDEND RATE 3.16% 3.31% 3.35%
30-DAY ANNUALIZED YIELD N/A - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD N/A - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set
period. The annualized dividend rate is based on an average share
price of $10.81 over the past one month, $10.69 over the past six
months and $10.66 over the life of the class. The 30-day annualized
YIELD is a standard formula for all funds based on the yields of the
bonds in the fund, averaged over the past 30 days. This figure shows
you the yield characteristics of the fund's investments at the end of
the period. It also helps you compare funds from different companies
on an equal basis. 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. Yield information
will be reported once Class C has a longer, more stable, operating
history.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite heavy new supply and
slack demand for municipal bonds,
and an extreme flight to Treasuries
by investors, the municipal bond
market turned in a solid
performance for the 12 months
ended October 31, 1998. While
the glut of new issues hurt the price
of munis, their yields - which
move in the opposite direction of
prices - became attractive relative
to taxable bonds. Two interest-rate
cuts by the Federal Reserve Board
and low inflation provided
additional support. During this
period, the Lehman Brothers
Municipal Bond Index - a popular
measure of the municipal bond
market - returned 8.02%. By
comparison, the Lehman Brothers
Aggregate Bond Index - a widely
followed measure of taxable bond
performance - returned 9.34%
during the period. Throughout most
of the period, low interest rates and
a stable economy resulted in a
flood of municipalities rushing to
sell bonds this year. In fact, 1998 is
on track to top the record $293
billion muni-bond issuance during
1993. While waves of new issues
kept total return in check, volatility
in the equity markets, concerns
about the impact of overseas
markets on the U.S. economy and
the attractive level of muni-bond
yields provided support through
the end of September. Late in the
period, however, as equity markets
rallied, demand for the safety of
municipal bonds weakened,
putting further pressure on prices.
An interview with Norm Lind, Portfolio Manager of Fidelity Advisor
Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the 12-month period ended October 31, 1998, the fund's Class A,
Class T, Class B and Class C shares had total returns of 6.46%, 6.50%,
5.77% and 5.65%, respectively. To get a sense of how the fund did
relative to its competitors, the intermediate municipal debt funds
average returned 6.53% for the same 12-month period, according to
Lipper Analytical Services. Additionally, the Lehman Brothers 1-17
Year Municipal Bond Index - which tracks the types of securities in
which the fund invests - returned 7.46% for the same 12-month period.
Q. WHICH TYPES OF MUNICIPAL BONDS PERFORMED WELL OVER THE PAST YEAR?
A. Bonds rated Baa - which made up roughly 12% of the fund's
investments at the end of the period - were among the fund's best
performers during that time frame. Bond yields drifted lower
throughout most of the year, forcing investors to seek out
lower-quality, investment-grade bonds because of their yield advantage
over higher-rated bonds. That growing demand for Baa-rated bonds,
coupled with what proved to be a limited supply of them, boosted their
prices.
Q. IN LIGHT OF THAT STRONG PERFORMANCE, WHY DID YOU KEEP THE MAJORITY
OF THE FUND'S HOLDINGS IN HIGHER-RATED SECURITIES?
A. When Baa-bond prices rose, their yields - which move in the
opposite direction of their prices - fell and their yield advantage
over the top-rated Aaa bonds became quite small. In other words, the
slight amount of additional yield they offered over Aaa-rated bonds
generally wasn't enough to cover the extra risk they carried. Given
that the yield spread - the difference in yield between Aaa-rated and
Baa-rated bonds - was very small from a historical perspective, I
didn't think it had much room to tighten further, so the potential
upside for Baa-rated bonds was limited. I also became concerned that
if the spread were to increase, or widen, again in response to an
economic downturn, Baa-rated bonds would suffer price losses that
would more than overwhelm their small income advantage. To replace
some Baa-rated bonds that I sold - such as some of the fund's holdings
in bonds issued by New York state - I bought higher-rated bonds.
Q. WHICH TYPES OF BONDS WERE LAGGARDS DURING THE PERIOD?
A. Bonds sensitive to being prepaid before maturity lagged the overall
municipal market. For example, housing bonds - which are pools of home
mortgages - experienced increased prepayment activity when interest
rates fell and mortgage borrowers refinanced their debt. While
prepayment is good for the borrower because it lowers their interest
costs, it can be bad for housing bond holders because it potentially
forces them to reinvest at lower prevailing interest rates.
Q. DID YOU SHIFT THE FUND'S INVESTMENTS AMONG VARIOUS SECTORS OF THE
MUNICIPAL MARKET?
A. Yes, I did. Economic turmoil in Asia, Russia and Latin America
increased the possibility that the U.S. economy would slow in
response. With that in mind, I felt that the risk that economically
sensitive municipal bonds would be hurt in the event of an economic
slowdown outweighed the potential for them to appreciate much more,
given that I believe we may be in the late stages of a protracted
economic upswing. So I sold some more-economically sensitive bonds,
replacing them with bonds that historically have proven more resilient
during periods of economic weakness. For example, I reduced the fund's
stake in industrial revenue bonds, which are bonds issued by a
municipality on behalf of a corporate entity. As such, the performance
of an industrial revenue bond is sensitive to the fortunes of the
corporation on whose behalf it's issued. I also sold some general
obligation bonds, which are repaid by the general revenues of an
issuer, including property, sales and income taxes. At the same time I
added more bonds issued by water, sewer and electric utilities. That's
because utilities generally are less sensitive to the economy's ups
and downs because of their essential nature.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET?
A. At the end of the period, municipal bonds were priced quite
attractively relative to their U.S. Treasury counterparts when viewed
from a historical basis. One measure of how inexpensive they were was
that their yields were roughly 95% of Treasury yields, as opposed to
their more historical yield of between 65% and 80% of Treasuries. If
the demand for municipals rises, municipal bond yields - which move in
the opposite direction of their prices - would likely move back to
their historical relationship with Treasuries and perform relatively
well as a result. Of course, the main factor that will determine
municipal bond performance is the direction of interest rates, which
could move any direction from here.
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.
NORM LIND ON THE ROLE OF
MUNICIPAL BOND INSURANCE:
"THE ROLE OF MUNICIPAL BOND
INSURANCE HAS GROWN DRAMATICALLY
DURING THE PAST DECADE AS THE
NUMBER OF MUNICIPAL BONDS WITH
INSURANCE HAS MUSHROOMED.
MUNICIPAL BOND INSURANCE,
UNDERWRITTEN BY PRIVATE INSURERS,
GUARANTEES THE TIMELY PAYMENT OF
PRINCIPAL AND INTEREST SHOULD THE
ISSUER DEFAULT ON THE UNDERLYING
DEBT. INSURANCE CAN BE PURCHASED
EITHER BY THE ISSUER OR AN INVESTOR.
BECAUSE THEY GENERALLY ENJOY THE
HIGHEST CREDIT RATING (AAA, AAA OR
OTHER, DEPENDING ON THE INSURER),
INSURED BONDS TEND TO BE MORE
POPULAR THAN UNINSURED BONDS AMONG
MANY TYPES OF INVESTORS.
"INSURED BONDS HAVE A COUPLE OF
CHARACTERISTICS THAT INVESTORS
SHOULD UNDERSTAND. THEY TEND TO
OFFER LOWER YIELDS THAN SIMILARLY
RATED UNINSURED BONDS BECAUSE THE
COST OF INSURANCE IS PASSED ON TO
THE INVESTOR. SECOND, INSURANCE
DOESN'T PROTECT A BOND FROM
SUFFERING PRICE LOSSES. LIKE ALL
BONDS, INSURED BOND PRICES FLUCTUATE
IN RESPONSE TO SUPPLY, DEMAND,
INTEREST-RATE MOVEMENTS AND OTHER
FACTORS."
FUND FACTS
GOAL: TO PROVIDE HIGH CURRENT
INCOME EXEMPT FROM FEDERAL
INCOME TAX BY INVESTING
NORMALLY IN INVESTMENT-GRADE
MUNICIPAL SECURITIES
START DATE: SEPTEMBER 19, 1985
SIZE: AS OF OCTOBER 31, 1998,
MORE THAN $79 MILLION
MANAGER: NORM LIND, SINCE
1998; JOINED FIDELITY IN 1986
(CHECKMARK)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE HOLDINGS
5 MONTHS AGO
CALIFORNIA 13.1 16.7
NEW YORK 8.3 8.9
MASSACHUSETTS 6.6 6.6
WASHINGTON 5.5 4.0
TEXAS 5.2 7.6
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THE THESE SECTORS
5 MONTHS AGO
EDUCATION 21.6 21.7
GENERAL OBLIGATIONS 20.9 22.8
ELECTRIC UTILITIES 16.2 16.2
HEALTH CARE 14.6 9.3
HOUSING 5.2 5.3
</TABLE>
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1998
5 MONTHS AGO
YEARS 7.3 6.6
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 OCTOBER 31, 1998
5 MONTHS AGO
YEARS 5.2 5.3
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF OCTOBER 31, 1998 AS OF MAY 31, 1998
AAA 46.1%
AA, A 34.5%
BAA 12.0%
SHORT-TERM
INVESTMENTS 7.4%
AAA 47.2%
AA, A 35.0%
BAA 11.4%
SHORT-TERM
INVESTMENTS 6.4%
ROW: 1, COL: 1, VALUE: 46.1
ROW: 1, COL: 2, VALUE: 34.5
ROW: 1, COL: 3, VALUE: 12.0
ROW: 1, COL: 4, VALUE: 7.4
ROW: 1, COL: 1, VALUE: 47.2
ROW: 1, COL: 2, VALUE: 35.0
ROW: 1, COL: 3, VALUE: 11.4
ROW: 1, COL: 4, VALUE: 6.4
ROW: 1, COL: 5, VALUE: NIL
ROW: 1, COL: 6, VALUE: NIL
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 OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 92.6%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
ALASKA - 3.6%
Alaska Student Ln. Corp. Student Ln. Rev. Aaa $ 300,000 $ 309,411
Series A, 5% 7/1/03 (AMBAC Insured) (d)
North Slope Borough (Cap. Appreciation) Aaa 3,000,000 2,550,056
Series B, 0% 1/1/03 (MBIA Insured)
2,859,467
ARIZONA - 1.4%
Maricopa County Cmnty. College Dist. Aa1 1,000,000 1,066,770
Series B, 5.25% 7/1/10
ARKANSAS - 1.1%
Arkansas Gen. Oblig. (Cap. Appreciation) Aa3 1,000,000 875,010
Series A, 0% 6/1/02
CALIFORNIA - 13.1%
California Ed. Facilities Auth. Rev. Rfdg. AAA 225,000 234,815
(Chapman Univ.) 5.375% 10/1/16
(Connie Lee Insured),
California Health Facilities Fin. Auth. Rev. (Casa A+ 2,275,000 2,446,194
de Las Campanas) Series A, 5.375% 8/1/09
(California Health Prc. Cns. Ln. Prg. Insured)
California Hsg. Fin. Agcy. Rev. (Home Mtg.) Aaa 1,000,000 1,043,580
Series R, 5.35% 8/1/07 (MBIA Insured) (d)
California Poll. Cont. Fing. Auth. Resource Baa3 500,000 537,790
Recovery Rev. (Waste Mgmt., Inc.) Series A,
7.15% 2/1/11 (d)
California Rural Home Mtg. Fin. Auth. Lease Rev. Aaa 2,000,000 2,028,760
(Rural Lease Purp.) Series A, 4.45% 8/1/01
(MBIA Insured)
Los Angeles County Ctfs. of Prtn. (Disney Parking Baa1 970,000 755,446
Proj.) 0% 9/1/04
Los Angeles Unified School Dist. Series A, 6% Aaa 250,000 290,295
7/1/11 (FGIC Insured)
Sacramento Muni. Util. Dist. Elec. Rev. 5.45% Aaa 1,000,000 1,078,220
11/15/08 (FGIC Insured)
Sacramento Pwr. Auth. Cogeneration Proj. Rev.:
6% 7/1/02 BBB- 1,000,000 1,071,950
6.5% 7/1/08 BBB- 300,000 342,375
San Bernardino County Rfdg. Ctfs. of Prtn. (Med. A3 500,000 525,100
Ctr. Fing. Proj.) 5.25% 8/1/04
10,354,525
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
COLORADO - 1.7%
Arapaho County Cap. Impt. Trust Fund Hwy. Rev. Aaa $ 3,620,000 $ 572,503
(Cap. Appreciation) Series C, 0% 8/31/26
(Pre-Refunded to 8/31/05 @ 20.862) (e)
Colorado Health Facilities Auth. Rev. Rfdg. Baa2 500,000 528,155
(Rocky Mountain Adventist) 6.25% 2/1/04
Denver City & County Arpt. Rev. Series A, 6.9% Baa1 250,000 250,235
11/15/98 (d)
1,350,893
DISTRICT OF COLUMBIA - 2.0%
District of Columbia Gen. Oblig. Rfdg. Series B Aaa 1,000,000 1,070,530
1, 5.4% 6/1/06 (AMBAC Insured)
District of Columbia Redev. Land Agcy. Baa 500,000 511,350
Washington D.C. Sports Arena Spl. Tax Rev.
5.4% 11/1/00
1,581,880
FLORIDA - 2.0%
Broward County Resource Recovery Rev. (SES A3 480,000 511,680
Broward Co. LP South Proj.) 7.95% 12/1/08
Dade County Aviation Rev. Rfdg. Aaa 500,000 521,585
(Miami Int'l. Arpt.) Series A, 5.25% 10/1/01
(FSA Insured) (d)
Jacksonville Port Auth. Rev. Rfdg. 5.75% Aaa 500,000 555,445
11/1/09 (MBIA Insured) (d)
1,588,710
ILLINOIS - 2.0%
Chicago Midway Arpt. Rev. Series B, 6% Aaa 300,000 330,837
1/1/09 (MBIA Insured) (d)
Metropolitan Pier & Exposition Auth. Dedicated
Tax Rev. (Cap. Appreciation):
Series A:
0% 6/15/09 Aaa 435,000 270,701
0% 6/15/09 (FGIC Insured) Aaa 65,000 41,167
(Escrowed to Maturity) (e)
0% 6/15/00 (AMBAC Insured) Aaa 1,000,000 947,640
1,590,345
IOWA - 1.3%
Iowa Student Ln. Liquidity Corp. Student Ln. Rev. Aa1 1,000,000 1,047,760
Series A, 6.35% 3/1/01
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
KANSAS - 4.2%
Kansas Dev. Fin. Auth. Rev. (Sisters of Charity -
Leavenworth Health Svc. Co.):
5.25% 12/1/09 (MBIA Insured) Aaa $ 1,385,000 $ 1,480,704
5.25% 12/1/11 (MBIA Insured) Aaa 1,750,000 1,848,175
3,328,879
LOUISIANA - 2.4%
Louisiana Pub. Facilities Auth. Rev. Rfdg. Aaa 1,825,000 1,902,033
(Student Ln.) Series A 1, 6.2% 3/1/01
MAINE - 1.3%
Maine Edl. Ln. Marketing Corp. Ln. Rev. Series A Aaa 1,000,000 1,014,930
4, 5.45% 11/1/99 (d)
MASSACHUSETTS - 6.6%
Boston Rev. (Boston City Hosp.) Series A, 7.625% Aaa 250,000 272,560
2/15/21 (Pre-Refunded to 8/15/00
@101.666) (e)
Massachusetts Gen. Oblig. Rfdg. Series A, 5.5% Aa3 250,000 265,463
2/1/11
Massachusetts Health & Edl. Facilities Auth. Rev. Aaa 700,000 705,642
Rfdg. (Fairview Extended Care) Series B,
4.55% 1/1/21 (MBIA Insured)
LOC BankBoston NA
Massachusetts Ind. Fin. Agcy. Rev. A1 1,600,000 1,376,096
(Massachusetts Biomedical) Series A 1, 0%
8/1/02
Massachusetts Tpk. Auth. Western Tpk. Rev. Aaa 600,000 606,450
Series A, 5.55% 1/1/17 (MBIA Insured)
New England Ed. Ln. Marketing Corp. A3 1,950,000 1,990,599
Massachusetts Student Ln. Rev. Rfdg. Series B,
5.4% 6/1/00
5,216,810
MICHIGAN - 2.8%
Michigan Hosp. Fin. Auth. Rev. Rfdg.:
(McLaren Health Care Corp.) Series A, A1 2,000,000 1,949,720
5% 6/1/19
(Mercy Health Svcs.) Series S, 5.75% 8/15/05 Aa3 200,000 218,232
2,167,952
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
MINNESOTA - 0.5%
Minneapolis Convention Ctr. (Cap. Appreciation) Aaa $ 200,000 $ 172,064
Series B, 0% 12/1/02
Minnesota Higher Ed. Facilities Auth. Rev. Aa3 200,000 209,518
(Macalester College) Series 4 C, 5.5% 3/1/12
381,582
MONTANA - 1.6%
Montana Higher Ed. Student Assistance Corp. A 1,225,000 1,257,095
Student Ln. Rev. Series B, 6.6% 12/1/99 (d)
NEVADA - 0.7%
Clark County School Dist. Series A, 9.75% Aaa 500,000 573,890
6/1/01 (MBIA Insured)
NEW MEXICO - 4.8%
Albuquerque Arpt. Rev. Rfdg.:
6.25% 7/1/00 (AMBAC Insured) (d) Aaa 250,000 260,393
6.75% 7/1/09 (AMBAC Insured) (d) Aaa 450,000 534,380
New Mexico Edl. Assistance Foundation Student Aaa 2,200,000 2,355,760
Ln. Rev. Series IV A2, 6.65% 3/1/07
Rio Rancho Wtr. & Wastewtr. Sys. Rev. Series A, Aaa 500,000 601,570
8% 5/15/04 (FSA Insured)
3,752,103
NEW YORK - 8.3%
Buffalo Gen. Oblig. Rfdg. Series C, 5.25% Aaa 1,025,000 1,082,933
12/1/13 (FGIC Insured)
New York City Gen. Oblig. Series H, 5.5% A3 1,000,000 1,061,340
8/1/12
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.) Series A, A3 500,000 560,310
6.5% 5/15/04
(City Univ. Sys. Consolidated) Series A, Baa1 500,000 556,760
5.75% 7/1/13
(City Univ. Sys.) Series C, 7.5% 7/1/10 Baa1 500,000 616,770
New York State Local Gov't. Assistance Corp.:
Rfdg. Series A, 5.5% 4/1/04 Aaa 100,000 107,757
(AMBAC Insured)
(Cap. Appreciation) Series A, 0% 4/1/08 A3 1,000,000 673,220
New York State Thruway Auth. Hwy. & Bridge A3 500,000 535,360
Trust Fund Series A, 5.8% 4/1/09
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
NEW YORK - CONTINUED
New York State Thruway Auth. Svc. Contract Rev.
(Local Hwy. & Bridge):
5.4% 4/1/03 Baa1 $ 250,000 $ 262,870
6% 4/1/03 Baa1 200,000 215,342
New York State Urban Dev. Corp. Rev.:
Rfdg. (Correctional Facilities) 5.625% 1/1/07 Aaa 300,000 323,322
(AMBAC Insured)
Series A, 5.5% 4/1/10 (MBIA Insured) Aaa 500,000 541,380
6,537,364
NORTH CAROLINA - 4.8%
North Carolina Eastern Muni. Pwr. Agcy. Pwr.
Sys. Rev.:
Rfdg.:
Series B, 6% 1/1/06 Baa1 1,315,000 1,438,728
Series C, 5.5% 1/1/07 Baa1 700,000 749,896
Series A, 5.625% 1/1/03 Baa1 500,000 527,640
North Carolina Muni. Pwr. Agcy. #1 Catawba
Elec. Rev. Rfdg.:
5.75% 1/1/02 A3 750,000 787,628
5.9% 1/1/03 A3 250,000 266,815
3,770,707
OHIO - 1.0%
Ohio Bldg. Auth. Facilities (Adult Correctional) Aaa 500,000 542,885
Series A, 5.95% 10/1/14 (MBIA Insured)
Ohio Tpk. Commission Tpk. Rev. Series A, 5.6% Aaa 250,000 270,035
2/15/12 (MBIA Insured)
812,920
PENNSYLVANIA - 4.6%
Pennsylvania Convention Ctr. Auth. Rev. Rfdg. Baa 110,000 111,406
Series A, 5.75% 9/1/99
Pennsylvania Higher Edl. Facilities Auth. College AA- 1,270,000 1,397,572
& Univ. Rev. Rfdg. (RIDC Reg'l. Growth -
Carnegie Mellon Univ. Proj.) 6% 11/1/04
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
PENNSYLVANIA - CONTINUED
Pennsylvania Hsg. Fin. Agcy. Rev. Rfdg. Aa3 $ 1,000,000 $ 1,064,480
(Residential Dev. Section 8)
Series A, 7% 7/1/01
Philadelphia Gas Works Rev. Series A, 5.25% Aaa 1,000,000 1,069,920
7/1/05 (FSA Insured)
3,643,378
RHODE ISLAND - 1.3%
Rhode Island Student Ln. Auth. Student Ln. Rev. A 1,000,000 1,042,750
Rfdg. Series A, 6.55% 12/1/00
SOUTH CAROLINA - 3.0%
South Carolina Ed. Assistance Auth. Rev. Rfdg.:
(Guaranteed Student Ln.) A 1,000,000 1,064,290
Series B, 5.7% 9/1/05 (d)
Series A 2, 5.4% 9/1/02 AAA 1,250,000 1,300,175
2,364,465
TENNESSEE - 1.6%
Memphis-Shelby County Arpt. Auth. Arpt. Rev. Aaa 275,000 284,529
Rfdg. Series A, 5.25% 2/15/01 (MBIA
Insured) (d)
Montgomery County Health Edl.& Hsg. Facilities Baa2 1,000,000 989,220
Board Hosp. Rev. Rfdg. & Impt. (Clarksville
Reg'l. Health Sys.) 5.375% 1/1/28
1,273,749
TEXAS - 5.2%
Austin Independent School Dist. School Bldg. Aaa 500,000 558,520
8.125% 8/1/01 (Escrowed to Maturity) (e)
Brazos Higher Ed. Auth., Inc. Student Ln. Rev. Aaa 435,000 457,076
Rfdg. Series A 1, 6.05% 12/1/01 (d)
Deer Park Independent School Dist. Rfdg. 0% Aaa 200,000 169,272
2/15/03
Hurst Euless Bedford Independent School Dist. Aaa 1,000,000 557,950
Rfdg. (Cap. Appreciation) 0% 8/15/11
Irving Independent School Dist. (Cap. Aaa 250,000 238,985
Appreciation) 0% 2/15/00
Northside Independent School Dist. (School Aaa 500,000 528,945
Bldg.) 8.375% 2/1/00
San Antonio Gen. Oblig. Rfdg. 5.5% 8/1/02 Aa2 125,000 133,193
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
TEXAS - CONTINUED
Texas Pub. Fin. Auth. Bldg. Rev. Rfdg. Aaa $ 1,000,000 $ 1,154,750
(Texas Technical College) 6.25% 8/1/09
(MBIA Insured)
Univ. of Texas Permanent Univ. Fund 5% 7/1/10 Aaa 250,000 262,780
4,061,471
UTAH - 3.5%
Intermountain Pwr. Agcy. Pwr.:
(Cap. Appreciation) Series A, 0% 7/1/06 Aaa 2,860,000 2,076,703
(MBIA Insured)
Rfdg.:
Series B, 0% 7/1/00 (MBIA Insured) Aaa 500,000 472,040
Series D, 5% 7/1/21 (MBIA Insured) Aaa 200,000 196,804
2,745,547
VIRGINIA - 0.7%
Virginia Pub. Bldg. Auth. Pub. Facilities Rev. Aa2 475,000 502,203
Rfdg. Series A, 5% 8/1/05
WASHINGTON - 5.5%
King County Ltd. Tax Gen. Oblig. 5.9% 12/1/14 Aa1 1,000,000 1,114,640
Washington Pub. Pwr. Supply Sys. Nuclear Proj.
#2 Rev.:
Rfdg. Series C, 7.5% 7/1/03 Aa1 525,000 576,261
(Pre-Refunded to 1/1/01 @102) (e)
5.4% 7/1/12 (a) Aa1 2,000,000 2,112,000
Washington Pub. Pwr. Supply Sys. Nuclear Proj. Aa1 500,000 528,750
#3 Rev. Rfdg. Series C, 5.1% 7/1/07
4,331,651
TOTAL MUNICIPAL BONDS 72,996,839
(Cost $69,856,860)
</TABLE>
CASH EQUIVALENTS - 7.4%
SHARES
Municipal Central Cash Fund (b)(c) 5,845,648 5,845,648
(Cost $5,845,648)
TOTAL INVESTMENT IN SECURITIES - 100% $ 78,842,487
(Cost $75,702,508)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION UNDERLYING UNREALIZED
DATE FACE AMOUNT GAIN/LOSS
PURCHASED
20 Bond Buyer Municipal Bond Index Dec. 1998 $ 2,509,375 $ (38,839)
Contracts
</TABLE>
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENTS IN SECURITIES - 3.1%.
LEGEND
(a) 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 $95,040.
(b) Information in this report regarding holdings by state and
security types does 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.
(c) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 3.35%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) Security collateralized by an amount sufficient to pay interest
and principal.
(f) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 72.4% AAA, AA, A 64.5%
Baa 10.2% BBB 12.0%
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 investments in securities, is as follows:
Education 21.6%
General Obligations 20.9
Electric Utilities 16.2
Health Care 14.6
Housing 5.2
Others (individually less than 5%) 21.5
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $75,702,508. Net unrealized appreciation
aggregated $3,139,979, all of which related to appreciated investment
securities.
The fund hereby designates approximately $224,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $75,702,508) - $ 78,842,487
SEE ACCOMPANYING SCHEDULE
CASH 47,119
INTEREST RECEIVABLE 1,100,168
OTHER RECEIVABLES 911
TOTAL ASSETS 79,990,685
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED $ 27,413
DISTRIBUTIONS PAYABLE 82,600
ACCRUED MANAGEMENT FEE 25,803
DISTRIBUTION FEES PAYABLE 21,390
PAYABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 15,000
OTHER PAYABLES AND ACCRUED EXPENSES 67,695
TOTAL LIABILITIES 239,901
NET ASSETS $ 79,750,784
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 75,994,747
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) 654,897
ON INVESTMENTS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 3,101,140
NET ASSETS $ 79,750,784
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE $10.77
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,081,939 (DIVIDED BY) 100,473 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.25 OF $10.77) $11.19
CLASS T: $10.77
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($60,070,263 (DIVIDED BY) 5,577,719 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/97.25 OF $10.77) $11.07
CLASS B: $10.76
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($11,133,867 (DIVIDED BY) 1,034,393 SHARES) A
CLASS C: $10.77
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($1,137,075 (DIVIDED BY) 105,579 SHARES) A
INSTITUTIONAL CLASS: $10.77
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($6,327,640 (DIVIDED BY) 587,618 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
ELEVEN MONTHS YEAR ENDED
ENDED NOVEMBER 30,
OCTOBER 31, 1998 1997
INTEREST INCOME $ 3,222,527 $ 3,478,411
EXPENSES
MANAGEMENT FEE 242,984 255,140
TRANSFER AGENT FEES 114,374 127,011
DISTRIBUTION FEES 196,910 194,896
ACCOUNTING FEES AND EXPENSES 57,149 61,883
NON-INTERESTED TRUSTEES' COMPENSATION 122 180
CUSTODIAN FEES AND EXPENSES 7,777 6,548
REGISTRATION FEES 70,508 74,299
AUDIT 33,204 43,635
LEGAL 11,795 886
MISCELLANEOUS 14,452 1,700
TOTAL EXPENSES BEFORE REDUCTIONS 749,275 766,178
EXPENSE REDUCTIONS (103,292) (82,120)
TOTAL EXPENSES AFTER REDUCTIONS 645,983 684,058
NET INTEREST INCOME 2,576,544 2,794,353
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 843,060 858,153
FUTURES CONTRACTS (11,061) 16,876
TOTAL NET REALIZED GAIN (LOSS) 831,999 875,029
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 850,690 175,681
FUTURES CONTRACTS (55,341) 16,502
TOTAL CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 795,349 192,183
NET GAIN (LOSS) 1,627,348 1,067,212
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 4,203,892 $ 3,861,565
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
ELEVEN MONTHS YEAR ENDED YEAR ENDED
ENDED NOVEMBER 30, NOVEMBER 30,
OCTOBER 31, 1998 1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 2,576,544 $ 2,794,353 $ 3,449,493
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 831,999 875,029 684,780
CHANGE IN NET UNREALIZED 795,349 192,183 (712,133)
APPRECIATION (DEPRECIATION)
NET INCREASE (DECREASE) IN NET ASSETS 4,203,892 3,861,565 3,422,140
RESULTING FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (2,576,544) (2,794,353) (3,449,493)
FROM NET INTEREST INCOME
FROM NET REALIZED GAIN (172,795) (6,721) -
TOTAL DISTRIBUTIONS (2,749,339) (2,801,074) (3,449,493)
SHARE TRANSACTIONS - 14,997,838 (8,495,226) (9,402,984)
NET INCREASE (DECREASE)
TOTAL INCREASE (DECREASE) 16,452,391 (7,434,735) (9,430,337)
IN NET ASSETS
NET ASSETS
BEGINNING OF PERIOD 63,298,393 70,733,128 80,163,465
END OF PERIOD $ 79,750,784 $ 63,298,393 $ 70,733,128
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
ELEVEN MONTHS ENDED YEARS ENDED
OCTOBER 31, NOVEMBER 30,
1998 1997 1996 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.600 $ 10.410 $ 10.160
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .411 .459 .113
NET REALIZED AND UNREALIZED GAIN (LOSS) .200 .191 .250
TOTAL FROM INVESTMENT OPERATIONS .611 .650 .363
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.411) (.459) (.113)
FROM NET REALIZED GAIN (.030) (.001) -
TOTAL DISTRIBUTIONS (.441) (.460) (.113)
NET ASSET VALUE, END OF PERIOD $ 10.770 $ 10.600 $ 10.410
TOTAL RETURN B, C 5.89% 6.42% 3.59%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,082 $ 442 $ 103
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A, E .90% E .90% A, E
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.19% A 4.37% 4.60% A
PORTFOLIO TURNOVER RATE 26% A, F 18% 35%
</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 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).
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
ELEVEN MONTHS ENDED YEARS ENDED NOVEMBER 30,
OCTOBER 31,
1998 1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST .407 .449 .461 .451 .455 .508
INCOME
NET REALIZED AND .210 .181 .030 .980 (1.040) .260
UNREALIZED
GAIN (LOSS)
TOTAL FROM .617 .630 .491 1.431 (.585) .768
INVESTMENT
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST (.407) (.449) (.461) (.451) (.455) (.508)
INCOME
FROM NET REALIZED (.030) (.001) - - - (.880)
GAIN
IN EXCESS OF NET - - - - (.020) -
REALIZED GAIN
TOTAL DISTRIBUTIONS (.437) (.450) (.461) (.451) (.475) (1.388)
NET ASSET VALUE, END $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460
OF PERIOD
TOTAL RETURN B, C 5.94% 6.21% 4.89% 15.49% (5.78)% 7.72%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, $ 60,070 $ 48,830 $ 56,729 $ 62,852 $ 57,382 $ 39,800
END OF PERIOD
(000 OMITTED)
RATIO OF EXPENSES .95% A, D 1.00% D 1.00% D .94% D .90% D .90% D
TO AVERAGE
NET ASSETS
RATIO OF NET INTEREST 4.15% A 4.32% 4.42% 4.56% 4.49% 4.76%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 26% A, E 18% 35% 53% 53% 46%
</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 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).
E THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
ELEVEN MONTHS ENDED YEARS ENDED NOVEMBER 30,
OCTOBER 31,
1998 1997 1996 1995 1994 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 9.890
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .339 .382 .394 .373 .155
NET REALIZED AND UNREALIZED .200 .181 .030 .980 (.490)
GAIN (LOSS)
TOTAL FROM INVESTMENT .539 .563 .424 1.353 (.335)
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.339) (.382) (.394) (.373) (.155)
FROM NET REALIZED GAIN (.030) (.001) - - -
TOTAL DISTRIBUTIONS (.369) (.383) (.394) (.373) (.155)
NET ASSET VALUE, END OF PERIOD $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400
TOTAL RETURN B, C 5.27% 5.54% 4.21% 14.60% (3.44)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 11,134 $ 7,917 $ 7,445 $ 6,226 $ 1,682
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 1.65% A, E 1.65% E 1.66% E 1.68% E 1.65% A, E
NET ASSETS
RATIO OF NET INTEREST INCOME TO 3.45% A 3.67% 3.76% 3.71% 3.74% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 26% A, F 18% 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 FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
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 THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
ELEVEN MONTHS ENDED YEAR ENDED
OCTOBER 31, NOVEMBER 30,
1998 1997 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.590 $ 10.550
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .328 .027
NET REALIZED AND UNREALIZED GAIN (LOSS) .210 .040
TOTAL FROM INVESTMENT OPERATIONS .538 .067
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.328) (.027)
FROM NET REALIZED GAIN (.030) -
TOTAL DISTRIBUTIONS (.358) (.027)
NET ASSET VALUE, END OF PERIOD $ 10.770 $ 10.590
TOTAL RETURN B, C 5.16% 0.63%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,137 $ 13
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, E 1.75% A, E
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.29% A 3.33% A
PORTFOLIO TURNOVER RATE 26% A, F 18%
</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 FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO NOVEMBER 30, 1997.
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 THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
ELEVEN MONTHS ENDED YEARS ENDED NOVEMBER 30,
OCTOBER 31,
1998 1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .427 .475 .487 .477 .481 .536
NET REALIZED AND .210 .181 .050 .950 (1.030) .260
UNREALIZED
GAIN (LOSS)
TOTAL FROM .637 .656 .537 1.427 (.549) .796
INVESTMENT
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST (.427) (.475) (.487) (.477) (.481) (.536)
INCOME
FROM NET REALIZED (.030) (.001) - - - (.880)
GAIN
IN EXCESS OF NET - - - - (.020) -
REALIZED GAIN
TOTAL DISTRIBUTIONS (.457) (.476) (.487) (.477) (.501) (1.416)
NET ASSET VALUE, END $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460
OF PERIOD
TOTAL RETURN B, C 6.04% 6.48% 5.36% 15.44% (5.43)% 8.01%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, $ 6,328 $ 6,098 $ 6,455 $ 11,085 $ 11,702 $ 15,076
END OF PERIOD
(000 OMITTED)
RATIO OF EXPENSES .75% A, D .75% D .75% D .70% D .65% D .65% D
TO AVERAGE
NET ASSETS
RATIO OF EXPENSES TO .75% A .75% .74% E .70% .65% .65%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INTEREST 4.36% A 4.57% 4.68% 4.96% 4.75% 5.01%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 26% A, F 18% 35% 53% 53% 46%
</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 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).
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Interest income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class of shares
differs in its respective distribution, transfer agent, and certain
other class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. On October 16, 1997, the Board of Trustees approved a
change in the fiscal year-end of the fund from November 30 to October
31. Accordingly, the financial statements of the fund are presented
for the eleven month period ended October 31, 1998. 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
among the funds in the trust.
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 transactions and losses deferred due to
futures. 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 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 Fidelity
Investments Money Management, Inc., an affiliate of Fidelity
Management & Research Company (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
earned 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. 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. 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.
2. OPERATING POLICIES - CONTINUED
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 or if the counterparties do not perform under
the contracts' terms. Gains (losses) are realized upon the expiration
or closing of the futures contracts. 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 $15,869,034 and $20,934,072, respectively.
The market value of futures contracts opened and closed during the
period amounted to $15,909,407 and $14,563,151, 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 periods ended October
31, 1998 and November 30, 1997, the management fee was equivalent to
an annualized rate of .38% and an annual rate of .39%, respectively,
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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
periods, this fee was based on the following annual rates of the
average net assets of each applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the periods, each class paid FDC the following amounts, a portion
of which was retained by FDC:
ELEVEN MONTHS ENDED
OCTOBER 31, 1998
PAID TO RETAINED
FDC BY FDC
CLASS A $ 1,130 $ 214
CLASS T 121,547 1,926
CLASS B 69,603 50,270
CLASS C 4,630 4,611
$ 196,910 $ 57,021
YEAR ENDED
NOVEMBER 30, 1997
PAID TO RETAINED
FDC BY FDC
CLASS A $ 521 $ -
CLASS T 127,082 -
CLASS B 67,287 48,596
CLASS C 6 6
$ 194,896 $ 48,602
Under the Plans, FMR 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. For the
period ended October 31, 1998, the following amounts were paid to
third parties under the Plans:
CLASS A $ 182
CLASS T 6,183
CLASS B 1,941
CLASS C 611
INSTITUTIONAL CLASS 674
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD. FDC receives a front-end sales charge of up to 3.75% for
selling Class A shares, and 2.75% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within three years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 3% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% 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. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
For the period ended October 31, 1998, sales charge amounts paid to
and retained by FDC were as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 11,024 $ 4,498
CLASS T 15,232 4,671
CLASS B 8,419 8,419 *
CLASS C 534 534*
$ 35,209 $ 18,122
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS 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, Class C, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
such payments. FIIOC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. For the periods, each
class paid the following transfer agent fees:
ELEVEN MONTHS ENDED
OCTOBER 31, 1998
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 2,121 .28*
CLASS T 88,831 .18*
CLASS B 12,448 .16*
CLASS C 1,263 .27*
INSTITUTIONAL CLASS 9,711 .17*
$ 114,374
YEAR ENDED
NOVEMBER 30, 1997
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 1,254 .36
CLASS T 99,245 .20
CLASS B 14,216 .19
CLASS C 5 .64*
INSTITUTIONAL CLASS 12,291 .18
$ 127,011
* 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 of the following classes:
FMR ELEVEN MONTHS ENDED YEAR ENDED
EXPENSE OCTOBER 31, NOVEMBER 30,
LIMITATIONS 1998 1997
CLASS A .90% $ 7,051 $ 29,398
CLASS T .90% 51,409 19,986
CLASS B 1.65% 9,298 15,147
CLASS C 1.75% 24,925 1,250
INSTITUTIONAL CLASS .75% 10,609 14,954
$ 103,292 $ 80,735
5. EXPENSE REDUCTIONS - CONTINUED
Effective May 29, 1998, Class T's expense limitation was changed from
1.00% to .90% of Class T's average net assets.
Effective December 1, 1998, Class A's, Class B's, Class C's and
Institutional Class' expense limitations were changed to .85%, 1.60%,
1.70% and .70% of each class' average net assets, respectively.
In addition, the fund has entered into an arrangement with each class'
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the year
ended November 30, 1997, Class T's expenses were reduced by $1,385
under the transfer agent arrangement:
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
ELEVEN MONTHS ENDED YEARS ENDED
OCTOBER 31, NOVEMBER 30,
1998 1997 B 1996 A
FROM NET INTEREST INCOME
CLASS A $ 31,705 $ 15,189 $ 1,046
CLASS T 2,019,325 2,195,690 2,699,983
CLASS B 267,333 274,703 269,283
CLASS C 15,339 26 -
INSTITUTIONAL CLASS 242,842 308,745 479,181
TOTAL $ 2,576,544 $ 2,794,353 $ 3,449,493
FROM NET REALIZED GAIN
CLASS A $ 1,246 $ 24 $ -
CLASS T 136,882 5,310 -
CLASS B 22,913 767 -
CLASS C 35 - -
INSTITUTIONAL CLASS 11,719 620 -
TOTAL $ 172,795 $ 6,721 $ -
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
B DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SHARES DOLLARS
ELEVEN MONTHS YEAR ENDED YEAR ENDED ELEVEN MONTHS YEAR ENDED YEAR ENDED
ENDED NOVEMBER 30, NOVEMBER 30, ENDED NOVEMBER 30, NOVEMBER 30,
OCTOBER 31, 1997 B 1996 A OCTOBER 31, 1997 B 1996 A
1998 1998
CLASS A 72,895 37,401 9,815 $ 774,852 $ 388,486 $ 99,788
SHARES SOLD
ISSUE IN EXCHANGE 52,153 - - 554,907 - -
FOR THE SHARES OF
FIDELITY ADVISOR
SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND CLASS A
REINVESTMENT OF 2,327 1,437 108 24,853 14,999 1,046
DISTRIBUTIONS
SHARES REDEEMED (68,581) (7,082) - (732,634) (74,532) -
NET INCREASE 58,794 31,756 9,923 $ 621,978 $ 328,953 $ 100,834
(DECREASE)
CLASS T 833,212 1,237,934 2,035,422 $ 8,684,653 $ 12,868,543 $ 20,912,410
SHARES SOLD
ISSUE IN EXCHANGE 1,639,675 - - 17,446,147 - -
FOR THE SHARES OF
FIDELITY ADVISOR
SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND CLASS T
REINVESTMENT OF 146,958 150,942 189,811 1,569,314 1,571,556 1,947,724
DISTRIBUTIONS
SHARES REDEEMED (1,651,570) (2,228,549) (2,833,821) (17,602,042) (23,132,793) (28,990,305)
NET INCREASE 968,275 (839,673) (608,588) $ 10,098,072 $ (8,692,694) $ (6,130,171)
(DECREASE)
CLASS B 412,030 162,293 326,024 $ 4,400,752 $ 1,686,065 $ 3,345,475
SHARES SOLD
REINVESTMENT OF 17,176 17,600 17,066 183,295 183,295 175,043
DISTRIBUTIONS
SHARES REDEEMED (142,402) (147,606) (227,839) (1,517,988) (1,530,078) (2,324,198)
NET INCREASE 286,804 32,287 115,251 $ 3,066,059 $ 339,282 $ 1,196,320
(DECREASE)
CLASS C 123,360 1,185 - $ 1,314,301 $ 12,505 $ -
SHARES SOLD
REINVESTMENT OF 1,212 2 - 12,987 25 -
DISTRIBUTIONS
SHARES REDEEMED (20,180) - - (217,401) - -
NET INCREASE 104,392 1,187 - $ 1,109,887 $ 12,530 $ -
(DECREASE)
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
B SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
7. SHARE TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SHARES DOLLARS
ELEVEN MONTHS YEAR ENDED YEAR ENDED ELEVEN MONTHS YEAR ENDED YEAR ENDED
ENDED NOVEMBER 30, NOVEMBER 30, ENDED NOVEMBER 30, NOVEMBER 30,
OCTOBER 31, 1997 1996 OCTOBER 31, 1997 1996
1998 1998
INSTITUTIONAL 344,786 221,521 476,090 $ 3,651,862 $ 2,293,637 $ 4,887,410
CLASS
SHARES SOLD
ISSUE IN EXCHANGE 41,426 - - 440,774 - -
FOR THE SHARES OF
FIDELITY ADVISOR
SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND INSTITUTIONAL
CLASS
REINVESTMENT OF 3,754 5,385 6,443 40,053 55,968 66,083
DISTRIBUTIONS
SHARES REDEEMED (378,091) (271,323) (932,023) (4,030,847) (2,832,902) (9,523,460)
NET INCREASE 11,875 (44,417) (449,490) $ 101,842 $ (483,297) $ (4,569,967)
(DECREASE)
</TABLE>
8. REGISTRATION FEES.
For the periods, each class paid the following amounts to register its
shares for sale:
ELEVEN MONTHS YEAR ENDED
OCTOBER 31, NOVEMBER 30,
1998 1997
CLASS A $ 6,152 $ 28,753
CLASS T 19,311 14,768
CLASS B 10,543 14,527
CLASS C 24,408 1,253
INSTITUTIONAL CLASS 10,094 14,998
$ 70,508 $ 74,299
9. MERGER INFORMATION.
On May 28, 1998, Class A, Class T, and Institutional Class of the fund
acquired all of the assets and assumed all of the liabilities of
Fidelity Advisor Short-Intermediate Municipal Income Fund Class A,
Class T, and Institutional Class, respectively. Each acquisition was
approved by the shareholders of each class of Fidelity Advisor
Short-Intermediate Municipal Income Fund on May 4, 1998. Based on the
opinion of fund counsel, the reorganization qualified as a tax-free
reorganization for federal income tax purposes with no gain or loss
recognized to the funds or their shareholders.
9. MERGER INFORMATION - CONTINUED
Class A's acquisition of Fidelity Advisor Short-Intermediate Class A
was accomplished by an exchange of 52,123 shares of Class A for the
54,832 shares then outstanding of Fidelity Advisor Short-Intermediate
Class A (each valued at $10.12). Class T's acquisition of Fidelity
Advisor Short-Intermediate Class T was accomplished by an exchange of
1,639,675 shares of Class T for the 1,722,226 shares then outstanding
of Fidelity Advisor Short-Intermediate Class T (each valued at
$10.13). Institutional Class' acquisition of Fidelity Advisor
Short-Intermediate Institutional Class was accomplished by an exchange
of 41,426 shares of Institutional Class for the 43,512 shares then
outstanding of Fidelity Advisor Short-Intermediate Institutional Class
(each valued at $10.13).
Fidelity Advisor Short-Intermediate Municipal Income Fund's net
assets, including $276,190 of unrealized appreciation, were combined
with the fund for total net assets after the acquisition of
$77,174,506.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VI and the Shareholders of
Fidelity Advisor Intermediate Municipal Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Intermediate Municipal Income Fund (a fund of
Fidelity Advisor Series VI) at October 31, 1998, and the results of
its operations for the eleven month period then ended and the year
ended November 30, 1997, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fidelity Advisor
Intermediate Municipal Income Fund's management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at October 31, 1998 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 8, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Intermediate Municipal
Income Fund voted to pay to shareholders of record at the opening of
business on record date, the following distributions derived from
capital gains realized from sales of portfolio securities, and
dividends derived from net investment income:
CLASS A
PAY DATE 12/29/97 12/7/98
RECORD DATE 12/26/97 12/4/98
DIVIDENDS $- $-
SHORT-TERM
CAPITAL GAINS $- $-
LONG-TERM
CAPITAL GAINS $.03 $.08
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate - -
20% rate 100% 100%
CLASS T
PAY DATE 12/29/97 12/7/98
RECORD DATE 12/26/97 12/4/98
DIVIDENDS $- $-
SHORT-TERM
CAPITAL GAINS $- $-
LONG-TERM
CAPITAL GAINS $.03 $.08
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate - -
20% rate 100% 100%
CLASS B
PAY DATE 12/29/97 12/7/98
RECORD DATE 12/26/97 12/4/98
DIVIDENDS $- $-
SHORT-TERM
CAPITAL GAINS $- $-
LONG-TERM
CAPITAL GAINS $.03 $.08
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate - -
20% rate 100% 100%
CLASS C
PAY DATE 12/29/97 12/7/98
RECORD DATE 12/26/97 12/4/98
DIVIDENDS $- $-
SHORT-TERM
CAPITAL GAINS $- $-
LONG-TERM
CAPITAL GAINS $.03 $.08
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate - -
20% rate 100% 100%
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
During fiscal year ended 1998, 100% of the fund's income dividends was
free from federal income tax, and 12.78% of the fund's income
dividends was subject to the federal alternative minimum tax.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on October 7,
1998. The results of votes taken among shareholders on proposals
before them are reported below. Each vote reported represents one
dollar of net asset value held on the record date for the meeting.
PROPOSAL 1
To approve an amended management contract for the fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 34,867,170.38 87.284
AGAINST 2,146,147.59 5.373
ABSTAIN 2,933,345.14 7.343
TOTAL 39,946,663.11 100.000
PROPOSAL 2
To amend the fund's fundamental investment limitation concerning
diversification.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 36,036,081.55 90.210
AGAINST 812,448.21 2.034
ABSTAIN 3,098,133.35 7.756
TOTAL 39,946,663.11 100.000
PROPOSAL 3
To approve an agreement and plan providing for the reorganization of
the fund from a separate series of one Massachusetts business trust to
another.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 35,992,091.07 90.616
AGAINST 760,732.69 1.916
ABSTAIN 2,966,334.87 7.468
TOTAL 39,719,158.63 100.000
BROKER 227,504.48
NON-VOTES
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Stanley N. Griffith, Assistant Vice President
Norman U. Lind, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
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 International Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuantSM
Growth Fund
Fidelity Advisor Small Cap 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
LTTE-ANN-1298 67027
1.539401.101
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)(registered trademark)
FIDELITY ADVISOR
INTERMEDIATE MUNICIPAL INCOME FUND - INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 1998
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 FIVE MONTHS.
INVESTMENTS 11 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 20 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 29 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 39 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 40
PROXY VOTING RESULTS 41
NOTE TO SHAREHOLDERS: The fiscal year end for Fidelity Advisor
Intermediate Municipal Income Fund recently changed from November 30
to October 31. This change was made in order to align the fund's
fiscal year end more closely with other similar Fidelity Advisor
FundsSM.
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:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY 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
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - INST CL 6.63% 28.88% 89.66%
LB 1-17 YEAR MUNICIPAL BOND 7.46% 34.05% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 29.68% 94.19%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Institutional Class' returns to those
of the Lehman Brothers 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 one
year average represents a peer group of 146 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 OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV INT MUNICIPAL INCOME - INST CL 6.63% 5.21% 6.61%
LB 1-17 YEAR MUNICIPAL BOND 7.46% 6.04% N/A
INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE 6.53% 5.33% 6.85%
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
FA Int Muni Inc -CL I LB Municipal Bond
00089 LB015
1988/10/31 10000.00 10000.00
1988/11/30 9967.47 9908.40
1988/12/31 10030.36 10009.76
1989/01/31 10131.87 10216.76
1989/02/28 10071.36 10100.19
1989/03/31 10039.42 10076.05
1989/04/30 10181.32 10315.26
1989/05/31 10333.36 10529.51
1989/06/30 10446.77 10672.50
1989/07/31 10551.02 10817.75
1989/08/31 10516.84 10711.84
1989/09/30 10514.76 10679.92
1989/10/31 10599.09 10810.54
1989/11/30 10715.05 10999.72
1989/12/31 10811.64 11089.70
1990/01/31 10776.37 11037.25
1990/02/28 10872.06 11135.48
1990/03/31 10890.58 11138.82
1990/04/30 10778.59 11058.17
1990/05/31 10975.11 11299.57
1990/06/30 11065.98 11398.90
1990/07/31 11199.52 11566.46
1990/08/31 11134.40 11398.51
1990/09/30 11164.22 11405.01
1990/10/31 11289.08 11611.90
1990/11/30 11469.19 11845.41
1990/12/31 11500.15 11896.94
1991/01/31 11628.56 12056.60
1991/02/28 11734.43 12161.49
1991/03/31 11742.31 12165.87
1991/04/30 11848.76 12327.67
1991/05/31 11943.68 12437.27
1991/06/30 11950.94 12424.95
1991/07/31 12070.64 12576.29
1991/08/31 12167.09 12741.92
1991/09/30 12241.67 12907.82
1991/10/31 12373.13 13023.99
1991/11/30 12404.31 13060.33
1991/12/31 12609.28 13340.60
1992/01/31 12697.37 13371.02
1992/02/29 12711.93 13375.30
1992/03/31 12663.33 13380.25
1992/04/30 12751.90 13499.33
1992/05/31 12891.77 13658.22
1992/06/30 13060.96 13887.40
1992/07/31 13342.24 14303.75
1992/08/31 13243.60 14164.29
1992/09/30 13367.29 14256.92
1992/10/31 13276.00 14116.77
1992/11/30 13521.36 14369.61
1992/12/31 13527.51 14516.32
1993/01/31 13697.84 14685.14
1993/02/28 14067.39 15216.31
1993/03/31 13930.87 15055.47
1993/04/30 14031.48 15207.38
1993/05/31 14093.30 15292.84
1993/06/30 14245.24 15548.08
1993/07/31 14278.39 15568.45
1993/08/31 14531.16 15892.59
1993/09/30 14685.06 16073.60
1993/10/31 14716.12 16104.62
1993/11/30 14604.85 15962.74
1993/12/31 14871.72 16299.72
1994/01/31 15013.02 16485.86
1994/02/28 14627.54 16058.87
1994/03/31 14059.45 15404.96
1994/04/30 14186.83 15535.59
1994/05/31 14316.82 15670.28
1994/06/30 14216.98 15574.54
1994/07/31 14418.16 15860.02
1994/08/31 14475.68 15914.90
1994/09/30 14302.13 15681.27
1994/10/31 14101.98 15402.77
1994/11/30 13811.30 15124.28
1994/12/31 14064.05 15457.17
1995/01/31 14405.82 15898.94
1995/02/28 14774.16 16361.28
1995/03/31 14939.02 16549.27
1995/04/30 14937.98 16568.80
1995/05/31 15282.46 17097.51
1995/06/30 15203.50 16948.76
1995/07/31 15320.77 17109.43
1995/08/31 15515.96 17326.38
1995/09/30 15618.70 17436.06
1995/10/31 15788.70 17689.58
1995/11/30 15943.44 17983.05
1995/12/31 16085.27 18155.86
1996/01/31 16196.41 18292.94
1996/02/29 16147.19 18169.46
1996/03/31 15991.70 17937.26
1996/04/30 15944.30 17886.49
1996/05/31 15930.14 17879.34
1996/06/30 16072.20 18074.05
1996/07/31 16200.83 18238.52
1996/08/31 16202.82 18234.14
1996/09/30 16363.12 18489.42
1996/10/31 16525.13 18698.54
1996/11/30 16797.38 19040.72
1996/12/31 16752.94 18960.75
1997/01/31 16787.16 18996.58
1997/02/28 16929.06 19170.97
1997/03/31 16732.52 18915.42
1997/04/30 16861.76 19073.75
1997/05/31 17059.47 19360.61
1997/06/30 17223.13 19566.81
1997/07/31 17654.31 20108.81
1997/08/31 17504.42 19920.39
1997/09/30 17703.16 20156.84
1997/10/31 17787.63 20286.45
1997/11/30 17885.75 20405.73
1997/12/31 18105.53 20703.45
1998/01/31 18257.76 20917.11
1998/02/28 18250.34 20923.39
1998/03/31 18266.62 20941.80
1998/04/30 18196.28 20847.35
1998/05/31 18437.33 21177.37
1998/06/30 18503.78 21260.81
1998/07/31 18521.31 21314.17
1998/08/31 18781.14 21643.47
1998/09/30 18987.10 21913.15
1998/10/30 18966.34 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981123 151853 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Institutional Class on October 31, 1988. As the chart shows, by
October 31, 1998, the value of the investment would have grown to
$18,966 - an 89.66% 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 and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $21,913 -
a 119.13% increase.
UNDERSTANDING
PERFORMANCE
HOW A FUND DID YESTERDAY IS
NO GUARANTEE OF HOW IT WILL
DO TOMORROW. BOND PRICES, FOR
EXAMPLE, GENERALLY MOVE IN THE
OPPOSITE DIRECTION OF INTEREST
RATES. IN TURN, THE SHARE PRICE,
RETURN AND YIELD OF A FUND THAT
INVESTS IN BONDS WILL VARY. THAT
MEANS IF YOU SELL YOUR SHARES
DURING A MARKET DOWNTURN, YOU
MIGHT LOSE MONEY. BUT IF YOU CAN
RIDE OUT THE MARKET'S UPS AND
DOWNS, YOU MAY HAVE A GAIN.
(CHECKMARK)
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 1994
DIVIDEND RETURNS 4.54% 4.81% 4.85% 5.22% 4.45%
CAPITAL RETURNS 2.09% 2.83% -0.19% 6.74% -8.62%
TOTAL RETURNS 6.63% 7.64% 4.66% 11.96% -4.17%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital 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, if
any, paid by the class are reinvested.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 3.82(CENTS) 23.31(CENTS) 46.52(CENTS)
ANNUALIZED DIVIDEND RATE 4.16% 4.33% 4.36%
30-DAY ANNUALIZED YIELD 3.54% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 5.53% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $10.81 over the past one month, $10.69 over the past six months and
$10.66 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.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite heavy new supply and
slack demand for municipal bonds,
and an extreme flight to Treasuries
by investors, the municipal bond
market turned in a solid
performance for the 12 months
ended October 31, 1998. While
the glut of new issues hurt the price
of munis, their yields - which
move in the opposite direction of
prices - became attractive relative
to taxable bonds. Two interest-rate
cuts by the Federal Reserve Board
and low inflation provided
additional support. During this
period, the Lehman Brothers
Municipal Bond Index - a popular
measure of the municipal bond
market - returned 8.02%. By
comparison, the Lehman Brothers
Aggregate Bond Index - a widely
followed measure of taxable bond
performance - returned 9.34%
during the period. Throughout most
of the period, low interest rates and
a stable economy resulted in a
flood of municipalities rushing to
sell bonds this year. In fact, 1998 is
on track to top the record $293
billion muni-bond issuance during
1993. While waves of new issues
kept total return in check, volatility
in the equity markets, concerns
about the impact of overseas
markets on the U.S. economy and
the attractive level of muni-bond
yields provided support through
the end of September. Late in the
period, however, as equity markets
rallied, demand for the safety of
municipal bonds weakened,
putting further pressure on prices.
An interview with Norm Lind, Portfolio Manager of Fidelity Advisor
Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the 12-month period that ended October 31, 1998, the fund's
Institutional Class shares had a total return of 6.63%. To get a sense
of how the fund did relative to its competitors, the intermediate
municipal debt funds average returned 6.53% for the same 12-month
period, according to Lipper Analytical Services. Additionally, the
Lehman Brothers 1-17 Year Municipal Bond Index - which tracks the
types of securities in which the fund invests - returned 7.46% for the
same 12-month period.
Q. WHICH TYPES OF MUNICIPAL BONDS PERFORMED WELL OVER THE PAST YEAR?
A. Bonds rated Baa - which made up roughly 12% of the fund's
investments at the end of the period - were among the fund's best
performers during that time frame. Bond yields drifted lower
throughout most of the year, forcing investors to seek out
lower-quality, investment-grade bonds because of their yield advantage
over higher-rated bonds. That growing demand for Baa-rated bonds,
coupled with what proved to be a limited supply of them, boosted their
prices.
Q. IN LIGHT OF THAT STRONG PERFORMANCE, WHY DID YOU KEEP THE MAJORITY
OF THE FUND'S HOLDINGS IN HIGHER-RATED SECURITIES?
A. When Baa-bond prices rose, their yields - which move in the
opposite direction of their prices - fell and their yield advantage
over the top-rated Aaa bonds became quite small. In other words, the
slight amount of additional yield they offered over Aaa-rated bonds
generally wasn't enough to cover the extra risk they carried. Given
that the yield spread - the difference in yield between Aaa-rated and
Baa-rated bonds - was very small from a historical perspective, I
didn't think it had much room to tighten further, so the potential
upside for Baa-rated bonds was limited. I also became concerned that
if the spread were to increase, or widen, again in response to an
economic downturn, Baa-rated bonds would suffer price losses that
would more than overwhelm their small income advantage. To replace
some Baa-rated bonds that I sold - such as some of the fund's holdings
in bonds issued by New York state - I bought higher-rated bonds.
Q. WHICH TYPES OF BONDS WERE LAGGARDS DURING THE PERIOD?
A. Bonds sensitive to being prepaid before maturity lagged the overall
municipal market. For example, housing bonds - which are pools of home
mortgages - experienced increased prepayment activity when interest
rates fell and mortgage borrowers refinanced their debt. While
prepayment is good for the borrower because it lowers their interest
costs, it can be bad for housing bond holders because it potentially
forces them to reinvest at lower prevailing interest rates.
Q. DID YOU SHIFT THE FUND'S INVESTMENTS AMONG VARIOUS SECTORS OF THE
MUNICIPAL MARKET?
A. Yes, I did. Economic turmoil in Asia, Russia and Latin America
increased the possibility that the U.S. economy would slow in
response. With that in mind, I felt that the risk that economically
sensitive municipal bonds would be hurt in the event of an economic
slowdown outweighed the potential for them to appreciate much more,
given that I believe we may be in the late stages of a protracted
economic upswing. So I sold some more-economically sensitive bonds,
replacing them with bonds that historically have proven more resilient
during periods of economic weakness. For example, I reduced the fund's
stake in industrial revenue bonds, which are bonds issued by a
municipality on behalf of a corporate entity. As such, the performance
of an industrial revenue bond is sensitive to the fortunes of the
corporation on whose behalf it's issued. I also sold some general
obligation bonds, which are repaid by the general revenues of an
issuer, including property, sales and income taxes. At the same time I
added more bonds issued by water, sewer and electric utilities. That's
because utilities generally are less sensitive to the economy's ups
and downs because of their essential nature.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET?
A. At the end of the period, municipal bonds were priced quite
attractively relative to their U.S. Treasury counterparts when viewed
from a historical basis. One measure of how inexpensive they were was
that their yields were roughly 95% of Treasury yields, as opposed to
their more historical yield of between 65% and 80% of Treasuries. If
the demand for municipals rises, municipal bond yields - which move in
the opposite direction of their prices - would likely move back to
their historical relationship with Treasuries and perform relatively
well as a result. Of course, the main factor that will determine
municipal bond performance is the direction of interest rates, which
could move any direction from here.
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.
NORM LIND ON THE ROLE OF
MUNICIPAL BOND INSURANCE:
"THE ROLE OF MUNICIPAL BOND
INSURANCE HAS GROWN DRAMATICALLY
DURING THE PAST DECADE AS THE
NUMBER OF MUNICIPAL BONDS WITH
INSURANCE HAS MUSHROOMED.
MUNICIPAL BOND INSURANCE,
UNDERWRITTEN BY PRIVATE INSURERS,
GUARANTEES THE TIMELY PAYMENT OF
PRINCIPAL AND INTEREST SHOULD THE
ISSUER DEFAULT ON THE UNDERLYING
DEBT. INSURANCE CAN BE PURCHASED
EITHER BY THE ISSUER OR AN INVESTOR.
BECAUSE THEY GENERALLY ENJOY THE
HIGHEST CREDIT RATING (AAA, AAA OR
OTHER, DEPENDING ON THE INSURER),
INSURED BONDS TEND TO BE MORE
POPULAR THAN UNINSURED BONDS AMONG
MANY TYPES OF INVESTORS.
"INSURED BONDS HAVE A COUPLE OF
CHARACTERISTICS THAT INVESTORS
SHOULD UNDERSTAND. THEY TEND TO
OFFER LOWER YIELDS THAN SIMILARLY
RATED UNINSURED BONDS BECAUSE THE
COST OF INSURANCE IS PASSED ON TO
THE INVESTOR. SECOND, INSURANCE
DOESN'T PROTECT A BOND FROM
SUFFERING PRICE LOSSES. LIKE ALL
BONDS, INSURED BOND PRICES FLUCTUATE
IN RESPONSE TO SUPPLY, DEMAND,
INTEREST-RATE MOVEMENTS AND OTHER
FACTORS."
FUND FACTS
GOAL: TO PROVIDE HIGH CURRENT
INCOME EXEMPT FROM FEDERAL
INCOME TAX BY INVESTING
NORMALLY IN INVESTMENT-GRADE
MUNICIPAL SECURITIES
START DATE: SEPTEMBER 19, 1985
SIZE: AS OF OCTOBER 31, 1998,
MORE THAN $79 MILLION
MANAGER: NORM LIND, SINCE
1998; JOINED FIDELITY IN 1986
(CHECKMARK)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE HOLDINGS
5 MONTHS AGO
CALIFORNIA 13.1 16.7
NEW YORK 8.3 8.9
MASSACHUSETTS 6.6 6.6
WASHINGTON 5.5 4.0
TEXAS 5.2 7.6
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THE THESE SECTORS
5 MONTHS AGO
EDUCATION 21.6 21.7
GENERAL OBLIGATIONS 20.9 22.8
ELECTRIC UTILITIES 16.2 16.2
HEALTH CARE 14.6 9.3
HOUSING 5.2 5.3
</TABLE>
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1998
5 MONTHS AGO
YEARS 7.3 6.6
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 OCTOBER 31, 1998
5 MONTHS AGO
YEARS 5.2 5.3
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF OCTOBER 31, 1998 AS OF MAY 31, 1998
AAA 46.1%
AA, A 34.5%
BAA 12.0%
SHORT-TERM
INVESTMENTS 7.4%
AAA 47.2%
AA, A 35.0%
BAA 11.4%
SHORT-TERM
INVESTMENTS 6.4%
ROW: 1, COL: 1, VALUE: 46.1
ROW: 1, COL: 2, VALUE: 34.5
ROW: 1, COL: 3, VALUE: 12.0
ROW: 1, COL: 4, VALUE: 7.4
ROW: 1, COL: 1, VALUE: 47.2
ROW: 1, COL: 2, VALUE: 35.0
ROW: 1, COL: 3, VALUE: 11.4
ROW: 1, COL: 4, VALUE: 6.4
ROW: 1, COL: 5, VALUE: NIL
ROW: 1, COL: 6, VALUE: NIL
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 OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 92.6%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
ALASKA - 3.6%
Alaska Student Ln. Corp. Student Ln. Rev. Aaa $ 300,000 $ 309,411
Series A, 5% 7/1/03 (AMBAC Insured) (d)
North Slope Borough (Cap. Appreciation) Aaa 3,000,000 2,550,056
Series B, 0% 1/1/03 (MBIA Insured)
2,859,467
ARIZONA - 1.4%
Maricopa County Cmnty. College Dist. Aa1 1,000,000 1,066,770
Series B, 5.25% 7/1/10
ARKANSAS - 1.1%
Arkansas Gen. Oblig. (Cap. Appreciation) Aa3 1,000,000 875,010
Series A, 0% 6/1/02
CALIFORNIA - 13.1%
California Ed. Facilities Auth. Rev. Rfdg. AAA 225,000 234,815
(Chapman Univ.) 5.375% 10/1/16
(Connie Lee Insured),
California Health Facilities Fin. Auth. Rev. (Casa A+ 2,275,000 2,446,194
de Las Campanas) Series A, 5.375% 8/1/09
(California Health Prc. Cns. Ln. Prg. Insured)
California Hsg. Fin. Agcy. Rev. (Home Mtg.) Aaa 1,000,000 1,043,580
Series R, 5.35% 8/1/07 (MBIA Insured) (d)
California Poll. Cont. Fing. Auth. Resource Baa3 500,000 537,790
Recovery Rev. (Waste Mgmt., Inc.) Series A,
7.15% 2/1/11 (d)
California Rural Home Mtg. Fin. Auth. Lease Rev. Aaa 2,000,000 2,028,760
(Rural Lease Purp.) Series A, 4.45% 8/1/01
(MBIA Insured)
Los Angeles County Ctfs. of Prtn. (Disney Parking Baa1 970,000 755,446
Proj.) 0% 9/1/04
Los Angeles Unified School Dist. Series A, 6% Aaa 250,000 290,295
7/1/11 (FGIC Insured)
Sacramento Muni. Util. Dist. Elec. Rev. 5.45% Aaa 1,000,000 1,078,220
11/15/08 (FGIC Insured)
Sacramento Pwr. Auth. Cogeneration Proj. Rev.:
6% 7/1/02 BBB- 1,000,000 1,071,950
6.5% 7/1/08 BBB- 300,000 342,375
San Bernardino County Rfdg. Ctfs. of Prtn. (Med. A3 500,000 525,100
Ctr. Fing. Proj.) 5.25% 8/1/04
10,354,525
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
COLORADO - 1.7%
Arapaho County Cap. Impt. Trust Fund Hwy. Rev. Aaa $ 3,620,000 $ 572,503
(Cap. Appreciation) Series C, 0% 8/31/26
(Pre-Refunded to 8/31/05 @ 20.862) (e)
Colorado Health Facilities Auth. Rev. Rfdg. Baa2 500,000 528,155
(Rocky Mountain Adventist) 6.25% 2/1/04
Denver City & County Arpt. Rev. Series A, 6.9% Baa1 250,000 250,235
11/15/98 (d)
1,350,893
DISTRICT OF COLUMBIA - 2.0%
District of Columbia Gen. Oblig. Rfdg. Series B Aaa 1,000,000 1,070,530
1, 5.4% 6/1/06 (AMBAC Insured)
District of Columbia Redev. Land Agcy. Baa 500,000 511,350
Washington D.C. Sports Arena Spl. Tax Rev.
5.4% 11/1/00
1,581,880
FLORIDA - 2.0%
Broward County Resource Recovery Rev. (SES A3 480,000 511,680
Broward Co. LP South Proj.) 7.95% 12/1/08
Dade County Aviation Rev. Rfdg. Aaa 500,000 521,585
(Miami Int'l. Arpt.) Series A, 5.25% 10/1/01
(FSA Insured) (d)
Jacksonville Port Auth. Rev. Rfdg. 5.75% Aaa 500,000 555,445
11/1/09 (MBIA Insured) (d)
1,588,710
ILLINOIS - 2.0%
Chicago Midway Arpt. Rev. Series B, 6% Aaa 300,000 330,837
1/1/09 (MBIA Insured) (d)
Metropolitan Pier & Exposition Auth. Dedicated
Tax Rev. (Cap. Appreciation):
Series A:
0% 6/15/09 Aaa 435,000 270,701
0% 6/15/09 (FGIC Insured) Aaa 65,000 41,167
(Escrowed to Maturity) (e)
0% 6/15/00 (AMBAC Insured) Aaa 1,000,000 947,640
1,590,345
IOWA - 1.3%
Iowa Student Ln. Liquidity Corp. Student Ln. Rev. Aa1 1,000,000 1,047,760
Series A, 6.35% 3/1/01
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
KANSAS - 4.2%
Kansas Dev. Fin. Auth. Rev. (Sisters of Charity -
Leavenworth Health Svc. Co.):
5.25% 12/1/09 (MBIA Insured) Aaa $ 1,385,000 $ 1,480,704
5.25% 12/1/11 (MBIA Insured) Aaa 1,750,000 1,848,175
3,328,879
LOUISIANA - 2.4%
Louisiana Pub. Facilities Auth. Rev. Rfdg. Aaa 1,825,000 1,902,033
(Student Ln.) Series A 1, 6.2% 3/1/01
MAINE - 1.3%
Maine Edl. Ln. Marketing Corp. Ln. Rev. Series A Aaa 1,000,000 1,014,930
4, 5.45% 11/1/99 (d)
MASSACHUSETTS - 6.6%
Boston Rev. (Boston City Hosp.) Series A, 7.625% Aaa 250,000 272,560
2/15/21 (Pre-Refunded to 8/15/00
@101.666) (e)
Massachusetts Gen. Oblig. Rfdg. Series A, 5.5% Aa3 250,000 265,463
2/1/11
Massachusetts Health & Edl. Facilities Auth. Rev. Aaa 700,000 705,642
Rfdg. (Fairview Extended Care) Series B,
4.55% 1/1/21 (MBIA Insured)
LOC BankBoston NA
Massachusetts Ind. Fin. Agcy. Rev. A1 1,600,000 1,376,096
(Massachusetts Biomedical) Series A 1, 0%
8/1/02
Massachusetts Tpk. Auth. Western Tpk. Rev. Aaa 600,000 606,450
Series A, 5.55% 1/1/17 (MBIA Insured)
New England Ed. Ln. Marketing Corp. A3 1,950,000 1,990,599
Massachusetts Student Ln. Rev. Rfdg. Series B,
5.4% 6/1/00
5,216,810
MICHIGAN - 2.8%
Michigan Hosp. Fin. Auth. Rev. Rfdg.:
(McLaren Health Care Corp.) Series A, A1 2,000,000 1,949,720
5% 6/1/19
(Mercy Health Svcs.) Series S, 5.75% 8/15/05 Aa3 200,000 218,232
2,167,952
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
MINNESOTA - 0.5%
Minneapolis Convention Ctr. (Cap. Appreciation) Aaa $ 200,000 $ 172,064
Series B, 0% 12/1/02
Minnesota Higher Ed. Facilities Auth. Rev. Aa3 200,000 209,518
(Macalester College) Series 4 C, 5.5% 3/1/12
381,582
MONTANA - 1.6%
Montana Higher Ed. Student Assistance Corp. A 1,225,000 1,257,095
Student Ln. Rev. Series B, 6.6% 12/1/99 (d)
NEVADA - 0.7%
Clark County School Dist. Series A, 9.75% Aaa 500,000 573,890
6/1/01 (MBIA Insured)
NEW MEXICO - 4.8%
Albuquerque Arpt. Rev. Rfdg.:
6.25% 7/1/00 (AMBAC Insured) (d) Aaa 250,000 260,393
6.75% 7/1/09 (AMBAC Insured) (d) Aaa 450,000 534,380
New Mexico Edl. Assistance Foundation Student Aaa 2,200,000 2,355,760
Ln. Rev. Series IV A2, 6.65% 3/1/07
Rio Rancho Wtr. & Wastewtr. Sys. Rev. Series A, Aaa 500,000 601,570
8% 5/15/04 (FSA Insured)
3,752,103
NEW YORK - 8.3%
Buffalo Gen. Oblig. Rfdg. Series C, 5.25% Aaa 1,025,000 1,082,933
12/1/13 (FGIC Insured)
New York City Gen. Oblig. Series H, 5.5% A3 1,000,000 1,061,340
8/1/12
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.) Series A, A3 500,000 560,310
6.5% 5/15/04
(City Univ. Sys. Consolidated) Series A, Baa1 500,000 556,760
5.75% 7/1/13
(City Univ. Sys.) Series C, 7.5% 7/1/10 Baa1 500,000 616,770
New York State Local Gov't. Assistance Corp.:
Rfdg. Series A, 5.5% 4/1/04 Aaa 100,000 107,757
(AMBAC Insured)
(Cap. Appreciation) Series A, 0% 4/1/08 A3 1,000,000 673,220
New York State Thruway Auth. Hwy. & Bridge A3 500,000 535,360
Trust Fund Series A, 5.8% 4/1/09
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
NEW YORK - CONTINUED
New York State Thruway Auth. Svc. Contract Rev.
(Local Hwy. & Bridge):
5.4% 4/1/03 Baa1 $ 250,000 $ 262,870
6% 4/1/03 Baa1 200,000 215,342
New York State Urban Dev. Corp. Rev.:
Rfdg. (Correctional Facilities) 5.625% 1/1/07 Aaa 300,000 323,322
(AMBAC Insured)
Series A, 5.5% 4/1/10 (MBIA Insured) Aaa 500,000 541,380
6,537,364
NORTH CAROLINA - 4.8%
North Carolina Eastern Muni. Pwr. Agcy. Pwr.
Sys. Rev.:
Rfdg.:
Series B, 6% 1/1/06 Baa1 1,315,000 1,438,728
Series C, 5.5% 1/1/07 Baa1 700,000 749,896
Series A, 5.625% 1/1/03 Baa1 500,000 527,640
North Carolina Muni. Pwr. Agcy. #1 Catawba
Elec. Rev. Rfdg.:
5.75% 1/1/02 A3 750,000 787,628
5.9% 1/1/03 A3 250,000 266,815
3,770,707
OHIO - 1.0%
Ohio Bldg. Auth. Facilities (Adult Correctional) Aaa 500,000 542,885
Series A, 5.95% 10/1/14 (MBIA Insured)
Ohio Tpk. Commission Tpk. Rev. Series A, 5.6% Aaa 250,000 270,035
2/15/12 (MBIA Insured)
812,920
PENNSYLVANIA - 4.6%
Pennsylvania Convention Ctr. Auth. Rev. Rfdg. Baa 110,000 111,406
Series A, 5.75% 9/1/99
Pennsylvania Higher Edl. Facilities Auth. College AA- 1,270,000 1,397,572
& Univ. Rev. Rfdg. (RIDC Reg'l. Growth -
Carnegie Mellon Univ. Proj.) 6% 11/1/04
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
PENNSYLVANIA - CONTINUED
Pennsylvania Hsg. Fin. Agcy. Rev. Rfdg. Aa3 $ 1,000,000 $ 1,064,480
(Residential Dev. Section 8)
Series A, 7% 7/1/01
Philadelphia Gas Works Rev. Series A, 5.25% Aaa 1,000,000 1,069,920
7/1/05 (FSA Insured)
3,643,378
RHODE ISLAND - 1.3%
Rhode Island Student Ln. Auth. Student Ln. Rev. A 1,000,000 1,042,750
Rfdg. Series A, 6.55% 12/1/00
SOUTH CAROLINA - 3.0%
South Carolina Ed. Assistance Auth. Rev. Rfdg.:
(Guaranteed Student Ln.) A 1,000,000 1,064,290
Series B, 5.7% 9/1/05 (d)
Series A 2, 5.4% 9/1/02 AAA 1,250,000 1,300,175
2,364,465
TENNESSEE - 1.6%
Memphis-Shelby County Arpt. Auth. Arpt. Rev. Aaa 275,000 284,529
Rfdg. Series A, 5.25% 2/15/01 (MBIA
Insured) (d)
Montgomery County Health Edl.& Hsg. Facilities Baa2 1,000,000 989,220
Board Hosp. Rev. Rfdg. & Impt. (Clarksville
Reg'l. Health Sys.) 5.375% 1/1/28
1,273,749
TEXAS - 5.2%
Austin Independent School Dist. School Bldg. Aaa 500,000 558,520
8.125% 8/1/01 (Escrowed to Maturity) (e)
Brazos Higher Ed. Auth., Inc. Student Ln. Rev. Aaa 435,000 457,076
Rfdg. Series A 1, 6.05% 12/1/01 (d)
Deer Park Independent School Dist. Rfdg. 0% Aaa 200,000 169,272
2/15/03
Hurst Euless Bedford Independent School Dist. Aaa 1,000,000 557,950
Rfdg. (Cap. Appreciation) 0% 8/15/11
Irving Independent School Dist. (Cap. Aaa 250,000 238,985
Appreciation) 0% 2/15/00
Northside Independent School Dist. (School Aaa 500,000 528,945
Bldg.) 8.375% 2/1/00
San Antonio Gen. Oblig. Rfdg. 5.5% 8/1/02 Aa2 125,000 133,193
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (F) AMOUNT
TEXAS - CONTINUED
Texas Pub. Fin. Auth. Bldg. Rev. Rfdg. Aaa $ 1,000,000 $ 1,154,750
(Texas Technical College) 6.25% 8/1/09
(MBIA Insured)
Univ. of Texas Permanent Univ. Fund 5% 7/1/10 Aaa 250,000 262,780
4,061,471
UTAH - 3.5%
Intermountain Pwr. Agcy. Pwr.:
(Cap. Appreciation) Series A, 0% 7/1/06 Aaa 2,860,000 2,076,703
(MBIA Insured)
Rfdg.:
Series B, 0% 7/1/00 (MBIA Insured) Aaa 500,000 472,040
Series D, 5% 7/1/21 (MBIA Insured) Aaa 200,000 196,804
2,745,547
VIRGINIA - 0.7%
Virginia Pub. Bldg. Auth. Pub. Facilities Rev. Aa2 475,000 502,203
Rfdg. Series A, 5% 8/1/05
WASHINGTON - 5.5%
King County Ltd. Tax Gen. Oblig. 5.9% 12/1/14 Aa1 1,000,000 1,114,640
Washington Pub. Pwr. Supply Sys. Nuclear Proj.
#2 Rev.:
Rfdg. Series C, 7.5% 7/1/03 Aa1 525,000 576,261
(Pre-Refunded to 1/1/01 @102) (e)
5.4% 7/1/12 (a) Aa1 2,000,000 2,112,000
Washington Pub. Pwr. Supply Sys. Nuclear Proj. Aa1 500,000 528,750
#3 Rev. Rfdg. Series C, 5.1% 7/1/07
4,331,651
TOTAL MUNICIPAL BONDS 72,996,839
(Cost $69,856,860)
</TABLE>
CASH EQUIVALENTS - 7.4%
SHARES
Municipal Central Cash Fund (b)(c) 5,845,648 5,845,648
(Cost $5,845,648)
TOTAL INVESTMENT IN SECURITIES - 100% $ 78,842,487
(Cost $75,702,508)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION UNDERLYING UNREALIZED
DATE FACE AMOUNT GAIN/LOSS
PURCHASED
20 Bond Buyer Municipal Bond Index Dec. 1998 $ 2,509,375 $ (38,839)
Contracts
</TABLE>
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENTS IN SECURITIES - 3.1%.
LEGEND
(a) 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 $95,040.
(b) Information in this report regarding holdings by state and
security types does 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.
(c) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 3.35%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) Security collateralized by an amount sufficient to pay interest
and principal.
(f) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 72.4% AAA, AA, A 64.5%
Baa 10.2% BBB 12.0%
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 investments in securities, is as follows:
Education 21.6%
General Obligations 20.9
Electric Utilities 16.2
Health Care 14.6
Housing 5.2
Others (individually less than 5%) 21.5
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $75,702,508. Net unrealized appreciation
aggregated $3,139,979, all of which related to appreciated investment
securities.
The fund hereby designates approximately $224,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $75,702,508) - $ 78,842,487
SEE ACCOMPANYING SCHEDULE
CASH 47,119
INTEREST RECEIVABLE 1,100,168
OTHER RECEIVABLES 911
TOTAL ASSETS 79,990,685
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED $ 27,413
DISTRIBUTIONS PAYABLE 82,600
ACCRUED MANAGEMENT FEE 25,803
DISTRIBUTION FEES PAYABLE 21,390
PAYABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 15,000
OTHER PAYABLES AND ACCRUED EXPENSES 67,695
TOTAL LIABILITIES 239,901
NET ASSETS $ 79,750,784
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 75,994,747
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) 654,897
ON INVESTMENTS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 3,101,140
NET ASSETS $ 79,750,784
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE $10.77
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,081,939 (DIVIDED BY) 100,473 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.25 OF $10.77) $11.19
CLASS T: $10.77
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($60,070,263 (DIVIDED BY) 5,577,719 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/97.25 OF $10.77) $11.07
CLASS B: $10.76
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($11,133,867 (DIVIDED BY) 1,034,393 SHARES) A
CLASS C: $10.77
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($1,137,075 (DIVIDED BY) 105,579 SHARES) A
INSTITUTIONAL CLASS: $10.77
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($6,327,640 (DIVIDED BY) 587,618 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
ELEVEN MONTHS YEAR ENDED
ENDED NOVEMBER 30,
OCTOBER 31, 1998 1997
INTEREST INCOME $ 3,222,527 $ 3,478,411
EXPENSES
MANAGEMENT FEE 242,984 255,140
TRANSFER AGENT FEES 114,374 127,011
DISTRIBUTION FEES 196,910 194,896
ACCOUNTING FEES AND EXPENSES 57,149 61,883
NON-INTERESTED TRUSTEES' COMPENSATION 122 180
CUSTODIAN FEES AND EXPENSES 7,777 6,548
REGISTRATION FEES 70,508 74,299
AUDIT 33,204 43,635
LEGAL 11,795 886
MISCELLANEOUS 14,452 1,700
TOTAL EXPENSES BEFORE REDUCTIONS 749,275 766,178
EXPENSE REDUCTIONS (103,292) (82,120)
TOTAL EXPENSES AFTER REDUCTIONS 645,983 684,058
NET INTEREST INCOME 2,576,544 2,794,353
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 843,060 858,153
FUTURES CONTRACTS (11,061) 16,876
TOTAL NET REALIZED GAIN (LOSS) 831,999 875,029
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 850,690 175,681
FUTURES CONTRACTS (55,341) 16,502
TOTAL CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 795,349 192,183
NET GAIN (LOSS) 1,627,348 1,067,212
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 4,203,892 $ 3,861,565
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
ELEVEN MONTHS YEAR ENDED YEAR ENDED
ENDED NOVEMBER 30, NOVEMBER 30,
OCTOBER 31, 1998 1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 2,576,544 $ 2,794,353 $ 3,449,493
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 831,999 875,029 684,780
CHANGE IN NET UNREALIZED 795,349 192,183 (712,133)
APPRECIATION (DEPRECIATION)
NET INCREASE (DECREASE) IN NET ASSETS 4,203,892 3,861,565 3,422,140
RESULTING FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (2,576,544) (2,794,353) (3,449,493)
FROM NET INTEREST INCOME
FROM NET REALIZED GAIN (172,795) (6,721) -
TOTAL DISTRIBUTIONS (2,749,339) (2,801,074) (3,449,493)
SHARE TRANSACTIONS - 14,997,838 (8,495,226) (9,402,984)
NET INCREASE (DECREASE)
TOTAL INCREASE (DECREASE) 16,452,391 (7,434,735) (9,430,337)
IN NET ASSETS
NET ASSETS
BEGINNING OF PERIOD 63,298,393 70,733,128 80,163,465
END OF PERIOD $ 79,750,784 $ 63,298,393 $ 70,733,128
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
ELEVEN MONTHS ENDED YEARS ENDED
OCTOBER 31, NOVEMBER 30,
1998 1997 1996 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.600 $ 10.410 $ 10.160
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .411 .459 .113
NET REALIZED AND UNREALIZED GAIN (LOSS) .200 .191 .250
TOTAL FROM INVESTMENT OPERATIONS .611 .650 .363
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.411) (.459) (.113)
FROM NET REALIZED GAIN (.030) (.001) -
TOTAL DISTRIBUTIONS (.441) (.460) (.113)
NET ASSET VALUE, END OF PERIOD $ 10.770 $ 10.600 $ 10.410
TOTAL RETURN B, C 5.89% 6.42% 3.59%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,082 $ 442 $ 103
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A, E .90% E .90% A, E
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.19% A 4.37% 4.60% A
PORTFOLIO TURNOVER RATE 26% A, F 18% 35%
</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 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).
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
ELEVEN MONTHS ENDED YEARS ENDED NOVEMBER 30,
OCTOBER 31,
1998 1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST .407 .449 .461 .451 .455 .508
INCOME
NET REALIZED AND .210 .181 .030 .980 (1.040) .260
UNREALIZED
GAIN (LOSS)
TOTAL FROM .617 .630 .491 1.431 (.585) .768
INVESTMENT
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST (.407) (.449) (.461) (.451) (.455) (.508)
INCOME
FROM NET REALIZED (.030) (.001) - - - (.880)
GAIN
IN EXCESS OF NET - - - - (.020) -
REALIZED GAIN
TOTAL DISTRIBUTIONS (.437) (.450) (.461) (.451) (.475) (1.388)
NET ASSET VALUE, END $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460
OF PERIOD
TOTAL RETURN B, C 5.94% 6.21% 4.89% 15.49% (5.78)% 7.72%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, $ 60,070 $ 48,830 $ 56,729 $ 62,852 $ 57,382 $ 39,800
END OF PERIOD
(000 OMITTED)
RATIO OF EXPENSES .95% A, D 1.00% D 1.00% D .94% D .90% D .90% D
TO AVERAGE
NET ASSETS
RATIO OF NET INTEREST 4.15% A 4.32% 4.42% 4.56% 4.49% 4.76%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 26% A, E 18% 35% 53% 53% 46%
</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 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).
E THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
ELEVEN MONTHS ENDED YEARS ENDED NOVEMBER 30,
OCTOBER 31,
1998 1997 1996 1995 1994 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 9.890
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .339 .382 .394 .373 .155
NET REALIZED AND UNREALIZED .200 .181 .030 .980 (.490)
GAIN (LOSS)
TOTAL FROM INVESTMENT .539 .563 .424 1.353 (.335)
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.339) (.382) (.394) (.373) (.155)
FROM NET REALIZED GAIN (.030) (.001) - - -
TOTAL DISTRIBUTIONS (.369) (.383) (.394) (.373) (.155)
NET ASSET VALUE, END OF PERIOD $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400
TOTAL RETURN B, C 5.27% 5.54% 4.21% 14.60% (3.44)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 11,134 $ 7,917 $ 7,445 $ 6,226 $ 1,682
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 1.65% A, E 1.65% E 1.66% E 1.68% E 1.65% A, E
NET ASSETS
RATIO OF NET INTEREST INCOME TO 3.45% A 3.67% 3.76% 3.71% 3.74% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 26% A, F 18% 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 FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
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 THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
ELEVEN MONTHS ENDED YEAR ENDED
OCTOBER 31, NOVEMBER 30,
1998 1997 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.590 $ 10.550
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .328 .027
NET REALIZED AND UNREALIZED GAIN (LOSS) .210 .040
TOTAL FROM INVESTMENT OPERATIONS .538 .067
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.328) (.027)
FROM NET REALIZED GAIN (.030) -
TOTAL DISTRIBUTIONS (.358) (.027)
NET ASSET VALUE, END OF PERIOD $ 10.770 $ 10.590
TOTAL RETURN B, C 5.16% 0.63%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,137 $ 13
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, E 1.75% A, E
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.29% A 3.33% A
PORTFOLIO TURNOVER RATE 26% A, F 18%
</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 FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO NOVEMBER 30, 1997.
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 THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
ELEVEN MONTHS ENDED YEARS ENDED NOVEMBER 30,
OCTOBER 31,
1998 1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .427 .475 .487 .477 .481 .536
NET REALIZED AND .210 .181 .050 .950 (1.030) .260
UNREALIZED
GAIN (LOSS)
TOTAL FROM .637 .656 .537 1.427 (.549) .796
INVESTMENT
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST (.427) (.475) (.487) (.477) (.481) (.536)
INCOME
FROM NET REALIZED (.030) (.001) - - - (.880)
GAIN
IN EXCESS OF NET - - - - (.020) -
REALIZED GAIN
TOTAL DISTRIBUTIONS (.457) (.476) (.487) (.477) (.501) (1.416)
NET ASSET VALUE, END $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460
OF PERIOD
TOTAL RETURN B, C 6.04% 6.48% 5.36% 15.44% (5.43)% 8.01%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, $ 6,328 $ 6,098 $ 6,455 $ 11,085 $ 11,702 $ 15,076
END OF PERIOD
(000 OMITTED)
RATIO OF EXPENSES .75% A, D .75% D .75% D .70% D .65% D .65% D
TO AVERAGE
NET ASSETS
RATIO OF EXPENSES TO .75% A .75% .74% E .70% .65% .65%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INTEREST 4.36% A 4.57% 4.68% 4.96% 4.75% 5.01%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 26% A, F 18% 35% 53% 53% 46%
</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 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).
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER (SEE NOTE 9 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998
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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Interest income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class of shares
differs in its respective distribution, transfer agent, and certain
other class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. On October 16, 1997, the Board of Trustees approved a
change in the fiscal year-end of the fund from November 30 to October
31. Accordingly, the financial statements of the fund are presented
for the eleven month period ended October 31, 1998. 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
among the funds in the trust.
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 transactions and losses deferred due to
futures. 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 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 Fidelity
Investments Money Management, Inc., an affiliate of Fidelity
Management & Research Company (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
earned 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. 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. 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.
2. OPERATING POLICIES - CONTINUED
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 or if the counterparties do not perform under
the contracts' terms. Gains (losses) are realized upon the expiration
or closing of the futures contracts. 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 $15,869,034 and $20,934,072, respectively.
The market value of futures contracts opened and closed during the
period amounted to $15,909,407 and $14,563,151, 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 periods ended October
31, 1998 and November 30, 1997, the management fee was equivalent to
an annualized rate of .38% and an annual rate of .39%, respectively,
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. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
periods, this fee was based on the following annual rates of the
average net assets of each applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the periods, each class paid FDC the following amounts, a portion
of which was retained by FDC:
ELEVEN MONTHS ENDED
OCTOBER 31, 1998
PAID TO RETAINED
FDC BY FDC
CLASS A $ 1,130 $ 214
CLASS T 121,547 1,926
CLASS B 69,603 50,270
CLASS C 4,630 4,611
$ 196,910 $ 57,021
YEAR ENDED
NOVEMBER 30, 1997
PAID TO RETAINED
FDC BY FDC
CLASS A $ 521 $ -
CLASS T 127,082 -
CLASS B 67,287 48,596
CLASS C 6 6
$ 194,896 $ 48,602
Under the Plans, FMR 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. For the
period ended October 31, 1998, the following amounts were paid to
third parties under the Plans:
CLASS A $ 182
CLASS T 6,183
CLASS B 1,941
CLASS C 611
INSTITUTIONAL CLASS 674
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD. FDC receives a front-end sales charge of up to 3.75% for
selling Class A shares, and 2.75% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within three years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 3% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% 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. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
For the period ended October 31, 1998, sales charge amounts paid to
and retained by FDC were as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 11,024 $ 4,498
CLASS T 15,232 4,671
CLASS B 8,419 8,419 *
CLASS C 534 534*
$ 35,209 $ 18,122
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS 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, Class C, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
such payments. FIIOC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. For the periods, each
class paid the following transfer agent fees:
ELEVEN MONTHS ENDED
OCTOBER 31, 1998
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 2,121 .28*
CLASS T 88,831 .18*
CLASS B 12,448 .16*
CLASS C 1,263 .27*
INSTITUTIONAL CLASS 9,711 .17*
$ 114,374
YEAR ENDED
NOVEMBER 30, 1997
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 1,254 .36
CLASS T 99,245 .20
CLASS B 14,216 .19
CLASS C 5 .64*
INSTITUTIONAL CLASS 12,291 .18
$ 127,011
* 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 of the following classes:
FMR ELEVEN MONTHS ENDED YEAR ENDED
EXPENSE OCTOBER 31, NOVEMBER 30,
LIMITATIONS 1998 1997
CLASS A .90% $ 7,051 $ 29,398
CLASS T .90% 51,409 19,986
CLASS B 1.65% 9,298 15,147
CLASS C 1.75% 24,925 1,250
INSTITUTIONAL CLASS .75% 10,609 14,954
$ 103,292 $ 80,735
5. EXPENSE REDUCTIONS - CONTINUED
Effective May 29, 1998, Class T's expense limitation was changed from
1.00% to .90% of Class T's average net assets.
Effective December 1, 1998, Class A's, Class B's, Class C's and
Institutional Class' expense limitations were changed to .85%, 1.60%,
1.70% and .70% of each class' average net assets, respectively.
In addition, the fund has entered into an arrangement with each class'
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the year
ended November 30, 1997, Class T's expenses were reduced by $1,385
under the transfer agent arrangement:
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
ELEVEN MONTHS ENDED YEARS ENDED
OCTOBER 31, NOVEMBER 30,
1998 1997 B 1996 A
FROM NET INTEREST INCOME
CLASS A $ 31,705 $ 15,189 $ 1,046
CLASS T 2,019,325 2,195,690 2,699,983
CLASS B 267,333 274,703 269,283
CLASS C 15,339 26 -
INSTITUTIONAL CLASS 242,842 308,745 479,181
TOTAL $ 2,576,544 $ 2,794,353 $ 3,449,493
FROM NET REALIZED GAIN
CLASS A $ 1,246 $ 24 $ -
CLASS T 136,882 5,310 -
CLASS B 22,913 767 -
CLASS C 35 - -
INSTITUTIONAL CLASS 11,719 620 -
TOTAL $ 172,795 $ 6,721 $ -
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
B DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SHARES DOLLARS
ELEVEN MONTHS YEAR ENDED YEAR ENDED ELEVEN MONTHS YEAR ENDED YEAR ENDED
ENDED NOVEMBER 30, NOVEMBER 30, ENDED NOVEMBER 30, NOVEMBER 30,
OCTOBER 31, 1997 B 1996 A OCTOBER 31, 1997 B 1996 A
1998 1998
CLASS A 72,895 37,401 9,815 $ 774,852 $ 388,486 $ 99,788
SHARES SOLD
ISSUE IN EXCHANGE 52,153 - - 554,907 - -
FOR THE SHARES OF
FIDELITY ADVISOR
SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND CLASS A
REINVESTMENT OF 2,327 1,437 108 24,853 14,999 1,046
DISTRIBUTIONS
SHARES REDEEMED (68,581) (7,082) - (732,634) (74,532) -
NET INCREASE 58,794 31,756 9,923 $ 621,978 $ 328,953 $ 100,834
(DECREASE)
CLASS T 833,212 1,237,934 2,035,422 $ 8,684,653 $ 12,868,543 $ 20,912,410
SHARES SOLD
ISSUE IN EXCHANGE 1,639,675 - - 17,446,147 - -
FOR THE SHARES OF
FIDELITY ADVISOR
SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND CLASS T
REINVESTMENT OF 146,958 150,942 189,811 1,569,314 1,571,556 1,947,724
DISTRIBUTIONS
SHARES REDEEMED (1,651,570) (2,228,549) (2,833,821) (17,602,042) (23,132,793) (28,990,305)
NET INCREASE 968,275 (839,673) (608,588) $ 10,098,072 $ (8,692,694) $ (6,130,171)
(DECREASE)
CLASS B 412,030 162,293 326,024 $ 4,400,752 $ 1,686,065 $ 3,345,475
SHARES SOLD
REINVESTMENT OF 17,176 17,600 17,066 183,295 183,295 175,043
DISTRIBUTIONS
SHARES REDEEMED (142,402) (147,606) (227,839) (1,517,988) (1,530,078) (2,324,198)
NET INCREASE 286,804 32,287 115,251 $ 3,066,059 $ 339,282 $ 1,196,320
(DECREASE)
CLASS C 123,360 1,185 - $ 1,314,301 $ 12,505 $ -
SHARES SOLD
REINVESTMENT OF 1,212 2 - 12,987 25 -
DISTRIBUTIONS
SHARES REDEEMED (20,180) - - (217,401) - -
NET INCREASE 104,392 1,187 - $ 1,109,887 $ 12,530 $ -
(DECREASE)
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1996.
B SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
7. SHARE TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SHARES DOLLARS
ELEVEN MONTHS YEAR ENDED YEAR ENDED ELEVEN MONTHS YEAR ENDED YEAR ENDED
ENDED NOVEMBER 30, NOVEMBER 30, ENDED NOVEMBER 30, NOVEMBER 30,
OCTOBER 31, 1997 1996 OCTOBER 31, 1997 1996
1998 1998
INSTITUTIONAL 344,786 221,521 476,090 $ 3,651,862 $ 2,293,637 $ 4,887,410
CLASS
SHARES SOLD
ISSUE IN EXCHANGE 41,426 - - 440,774 - -
FOR THE SHARES OF
FIDELITY ADVISOR
SHORT-INTERMEDIATE
MUNICIPAL INCOME
FUND INSTITUTIONAL
CLASS
REINVESTMENT OF 3,754 5,385 6,443 40,053 55,968 66,083
DISTRIBUTIONS
SHARES REDEEMED (378,091) (271,323) (932,023) (4,030,847) (2,832,902) (9,523,460)
NET INCREASE 11,875 (44,417) (449,490) $ 101,842 $ (483,297) $ (4,569,967)
(DECREASE)
</TABLE>
8. REGISTRATION FEES.
For the periods, each class paid the following amounts to register its
shares for sale:
ELEVEN MONTHS YEAR ENDED
OCTOBER 31, NOVEMBER 30,
1998 1997
CLASS A $ 6,152 $ 28,753
CLASS T 19,311 14,768
CLASS B 10,543 14,527
CLASS C 24,408 1,253
INSTITUTIONAL CLASS 10,094 14,998
$ 70,508 $ 74,299
9. MERGER INFORMATION.
On May 28, 1998, Class A, Class T, and Institutional Class of the fund
acquired all of the assets and assumed all of the liabilities of
Fidelity Advisor Short-Intermediate Municipal Income Fund Class A,
Class T, and Institutional Class, respectively. Each acquisition was
approved by the shareholders of each class of Fidelity Advisor
Short-Intermediate Municipal Income Fund on May 4, 1998. Based on the
opinion of fund counsel, the reorganization qualified as a tax-free
reorganization for federal income tax purposes with no gain or loss
recognized to the funds or their shareholders.
9. MERGER INFORMATION - CONTINUED
Class A's acquisition of Fidelity Advisor Short-Intermediate Class A
was accomplished by an exchange of 52,123 shares of Class A for the
54,832 shares then outstanding of Fidelity Advisor Short-Intermediate
Class A (each valued at $10.12). Class T's acquisition of Fidelity
Advisor Short-Intermediate Class T was accomplished by an exchange of
1,639,675 shares of Class T for the 1,722,226 shares then outstanding
of Fidelity Advisor Short-Intermediate Class T (each valued at
$10.13). Institutional Class' acquisition of Fidelity Advisor
Short-Intermediate Institutional Class was accomplished by an exchange
of 41,426 shares of Institutional Class for the 43,512 shares then
outstanding of Fidelity Advisor Short-Intermediate Institutional Class
(each valued at $10.13).
Fidelity Advisor Short-Intermediate Municipal Income Fund's net
assets, including $276,190 of unrealized appreciation, were combined
with the fund for total net assets after the acquisition of
$77,174,506.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VI and the Shareholders of
Fidelity Advisor Intermediate Municipal Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Intermediate Municipal Income Fund (a fund of
Fidelity Advisor Series VI) at October 31, 1998, and the results of
its operations for the eleven month period then ended and the year
ended November 30, 1997, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fidelity Advisor
Intermediate Municipal Income Fund's management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at October 31, 1998 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 8, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Intermediate Municipal
Income Fund Institutional Class voted to pay to shareholders of record
at the opening of business on record date, the following distributions
derived from capital gains realized from sales of portfolio
securities, and dividends derived from net investment income:
PAY DATE 12/29/97 12/7/98
RECORD DATE 12/26/97 12/4/98
DIVIDENDS $- $-
SHORT-TERM
CAPITAL GAINS $- $-
LONG-TERM
CAPITAL GAINS $.03 $.08
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate - -
20% rate 100% 100%
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
During fiscal year ended 1998, 100% of the fund's income dividends was
free from federal income tax, and 12.78% of the fund's income
dividends was subject to the federal alternative minimum tax.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on October 7,
1998. The results of votes taken among shareholders on proposals
before them are reported below. Each vote reported represents one
dollar of net asset value held on the record date for the meeting.
PROPOSAL 1
To approve an amended management contract for the fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 34,867,170.38 87.284
AGAINST 2,146,147.59 5.373
ABSTAIN 2,933,345.14 7.343
TOTAL 39,946,663.11 100.000
PROPOSAL 2
To amend the fund's fundamental investment limitation concerning
diversification.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 36,036,081.55 90.210
AGAINST 812,448.21 2.034
ABSTAIN 3,098,133.35 7.756
TOTAL 39,946,663.11 100.000
PROPOSAL 3
To approve an agreement and plan providing for the reorganization of
the fund from a separate series of one Massachusetts business trust to
another.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 35,992,091.07 90.616
AGAINST 760,732.69 1.916
ABSTAIN 2,966,334.87 7.468
TOTAL 39,719,158.63 100.000
BROKER 227,504.48
NON-VOTES
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Stanley N. Griffith, Assistant Vice President
Norman U. Lind, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
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 International Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuantSM
Growth Fund
Fidelity Advisor Small Cap 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
LTTEI-ANN-1298 67028
1.539402.101
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
