SUPPLEMENT TO THE FIDELITY ADVISOR BALANCED FUND - CLASS A, CLASS T
AND CLASS B APRIL 30, 1997 SEMIANNUAL REPORT
The following information replaces similar information found in
"Performance: The Bottom Line" on pages 8 and 9.
FIDELITY ADVISOR BALANCED FUND - CLASS B
THE FOLLOWING INFORMATION REPLACES THE FIRST QUESTION
AND ANSWER FOUND IN "FUND TALK: THE MANAGER'S
OVERVIEW" ON PAGE 10.
Q. HOW DID THE FUND PERFORM, BETTINA?
A. FOR THE SIX MONTHS THAT ENDED
APRIL 30, 1997, THE FUND'S CLASS A, CLASS T
AND CLASS B SHARES POSTED TOTAL RETURNS OF
9.26%, 9.37% AND 9.13%, RESPECTIVELY,
SIGNIFICANTLY OUTPERFORMING THE 6.22%
RETURN FOR THE BALANCED FUNDS AVERAGE
TRACKED BY LIPPER ANALYTICAL SERVICES.
GIVEN THE STRUCTURE OF THE FUND -
NAMELY ITS MIX OF EQUITIES AND FIXED-INCOME
SECURITIES - PERFORMANCE TYPICALLY FALLS
BETWEEN ITS TWO BENCHMARK INDEXES, THE
STANDARD & POOR'S 500 INDEX AND THE
LEHMAN BROTHERS AGGREGATE BOND INDEX.
IN THIS RESPECT, PERFORMANCE OVER THE PAST
SIX MONTHS WAS IN LINE WITH MY
EXPECTATIONS; WHILE THE FUND OUTPERFORMED
THE LEHMAN BROTHERS INDEX, WHICH
RETURNED 1.70% OVER THE SIX MONTHS, IT
UNDERPERFORMED THE S&P 500, WHICH
GAINED 14.72%. FOR THE 12 MONTHS THAT ENDED
APRIL 30, 1997, THE FUND'S CLASS A, CLASS T
AND CLASS B SHARES RETURNED 16.25%, 16.44%
AND 16.18%, RESPECTIVELY, WHILE THE BALANCED
FUNDS AVERAGE RETURNED 12.71%, THE
LEHMAN BROTHERS INDEX RETURNED 7.09%
AND THE S&P 500 RETURNED 25.13%.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
ADVISOR BALANCED - CLASS B 9.13% 16.18% 56.57% 188.20%
ADVISOR BALANCED - CLASS B 4.13% 11.18% 54.57% 188.20%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR BALANCED - CLASS B 16.18% 9.38% 11.17%
ADVISOR BALANCED - CLASS B 11.18% 9.10% 11.17%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
$10,000 OVER 10 YEARS
Standard & Poor's 500
Fidelity Adv Balanced - CL B Lehman Brothers Aggregate Bond Index
$37,542
$28,820
$23,018
$
'97
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class B on April 30,
1987. As the chart shows, by April 30, 1997, the value of the
investment would have grown to $28,820 - a 188.20% increase on the
initial investment. For comparison, look at how both the S&P 500 and
the Lehman Brothers Aggregate Bond Index did over the same period.
With dividends reinvested, the same $10,000 investment in the S&P 500
would have grown to $37,542 - a 275.42% increase. If you had put
$10,000 in the bond index, it would have grown to $23,018 - a 130.18%
increase.
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(REGISTERED TRADEMARK)
BALANCED FUND
(FORMERLY ADVISOR INCOME & GROWTH FUND) -
CLASS A, CLASS T AND CLASS B
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 10 THE MANAGERS' REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 14 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 15 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 42 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 50 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 58 THE AUDITORS' OPINION.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES
AND EXPENSES, CONTACT YOUR
INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets
experienced the kind of short-term volatility that can affect them
from time to time. After climbing steadily upward for more than two
years, stock prices saw a sharp correction in late March and early
April. Returns in the bond market were essentially stagnant as the
Federal Reserve Board implemented a long-expected increase in
short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. If you have a short investment time horizon, you might want to
consider moving some of your investment into a money market fund,
which seeks income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR BALANCED 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). The initial offering of Class A shares took place on September
3, 1996. Class A shares bear a 0.25% 12b-1 fee. Returns prior to
September 3, 1996 are those of Class T, the original class of the
fund, and reflect Class T's 0.50% 12b-1fee (0.65% prior to January 1,
1996). If Fidelity had not reimbursed certain class expenses, the
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
ADVISOR BALANCED - CLASS A 9.26% 16.25% 56.67% 188.38%
ADVISOR BALANCED - CLASS A 3.52% 10.15% 48.45% 173.24%
(INCL. MAX. 5.25% SALES CHARGE)
S&P 500(REGISTERED TRADEMARK) 14.72% 25.13% 120.23% 275.42%
LEHMAN BROTHERS AGGREGATE BOND INDEX 1.70% 7.09% 42.63% 130.18%
BALANCED FUNDS AVERAGE 6.22% 12.71% 71.26% 170.48%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class A's returns to the performance
of the Standard & Poor's 500 Index - a widely recognized, unmanaged
index of common stocks - and the performance of the Lehman Brothers
Aggregate Bond Index - a market value weighted performance benchmark
for investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of at least one year. To measure how Class A's performance
stacked up against its peers, you can compare it to the balanced funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six
months average represents a peer group of 328 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 APRIL 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR BALANCED - CLASS A 16.25% 9.39% 11.17%
ADVISOR BALANCED - CLASS A 10.15% 8.22% 10.57%
(INCL. MAX. 5.25% SALES CHARGE)
S&P 500 25.13% 17.10% 14.14%
LEHMAN BROTHERS AGGREGATE BOND INDEX 7.09% 7.36% 8.69%
BALANCED FUNDS AVERAGE 12.71% 11.30% 10.41%
AVERAGE ANNUAL TOTAL RETURNS take Class A's cumulative return and show
you what would have happened if Class A shares had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19970430 19970515 082826 S00000000000001
FA Balanced -CL A SP Standard & Poor 500
LB Aggregate Bond
00249 SP001
LB001
1987/04/30 9475.00 10000.00
10000.00
1987/05/31 9448.68 10087.00
9960.88
1987/06/30 9676.64 10596.39
10097.97
1987/07/31 10144.15 11133.63
10090.21
1987/08/31 10355.86 11548.92
10036.21
1987/09/30 10179.75 11295.99
9822.50
1987/10/31 8385.41 8862.84
10172.33
1987/11/30 8234.40 8132.54
10253.81
1987/12/31 8594.37 8751.43
10393.48
1988/01/31 9098.87 9119.86
10758.83
1988/02/29 9477.23 9544.85
10886.55
1988/03/31 9504.26 9249.91
10784.38
1988/04/30 9668.60 9352.58
10726.18
1988/05/31 9705.12 9433.95
10654.08
1988/06/30 10107.66 9866.97
10911.12
1988/07/31 10070.67 9829.48
10853.89
1988/08/31 10033.68 9495.27
10882.34
1988/09/30 10219.47 9899.77
11128.71
1988/10/31 10369.34 10174.99
11338.23
1988/11/30 10266.30 10029.48
11200.49
1988/12/31 10389.32 10205.00
11213.10
1989/01/31 10798.05 10952.01
11374.44
1989/02/28 10836.07 10679.30
11291.99
1989/03/31 11018.44 10928.13
11340.81
1989/04/30 11461.10 11495.30
11578.13
1989/05/31 11836.40 11960.86
11882.38
1989/06/30 11999.56 11892.68
12244.17
1989/07/31 12544.55 12966.59
12504.45
1989/08/31 12739.19 13220.73
12319.18
1989/09/30 12759.07 13166.53
12382.23
1989/10/31 12562.33 12861.07
12687.12
1989/11/30 12818.10 13123.43
12808.04
1989/12/31 12944.78 13438.39
12842.32
1990/01/31 12318.59 12536.68
12689.71
1990/02/28 12350.98 12698.40
12730.77
1990/03/31 12523.85 13034.91
12740.15
1990/04/30 12359.93 12709.04
12623.43
1990/05/31 12818.92 13948.17
12997.19
1990/06/30 12873.30 13853.32
13205.73
1990/07/31 12840.12 13808.99
13388.41
1990/08/31 12054.89 12560.66
13209.61
1990/09/30 11776.66 11948.95
13318.89
1990/10/31 11664.60 11897.57
13487.99
1990/11/30 12191.25 12666.15
13778.33
1990/12/31 12563.82 13019.54
13993.02
1991/01/31 13212.50 13587.19
14165.99
1991/02/28 13986.35 14558.68
14286.92
1991/03/31 14341.59 14911.00
14385.20
1991/04/30 14617.39 14946.78
14541.05
1991/05/31 15226.45 15592.48
14626.08
1991/06/30 14914.38 14878.35
14618.64
1991/07/31 15552.24 15571.68
14821.37
1991/08/31 15946.55 15940.73
15142.10
1991/09/30 16063.96 15674.52
15448.93
1991/10/31 16531.96 15884.56
15620.94
1991/11/30 16145.86 15244.41
15764.17
1991/12/31 16896.01 16988.37
16232.34
1992/01/31 17007.17 16672.39
16011.51
1992/02/29 17365.35 16889.13
16115.62
1992/03/31 17303.70 16559.79
16024.77
1992/04/30 17440.73 17046.65
16140.52
1992/05/31 17789.55 17130.18
16445.08
1992/06/30 17627.79 16874.94
16671.41
1992/07/31 18142.56 17565.12
17011.54
1992/08/31 18142.56 17205.04
17183.87
1992/09/30 18292.66 17408.05
17387.57
1992/10/31 18229.41 17468.98
17157.04
1992/11/30 18343.26 18064.68
17160.92
1992/12/31 18450.37 18286.87
17433.80
1993/01/31 18798.49 18440.48
17768.11
1993/02/28 19200.17 18691.27
18079.15
1993/03/31 19924.84 19085.66
18154.48
1993/04/30 20491.81 18623.78
18280.90
1993/05/31 20883.28 19122.90
18304.18
1993/06/30 20748.83 19178.36
18635.91
1993/07/31 20966.52 19101.64
18741.31
1993/08/31 21728.44 19825.60
19069.81
1993/09/30 21525.30 19672.94
19122.18
1993/10/31 21813.21 20080.17
19193.64
1993/11/30 21525.30 19889.41
19030.36
1993/12/31 22076.81 20130.07
19133.50
1994/01/31 22690.45 20814.49
19391.83
1994/02/28 22290.87 20250.42
19054.93
1994/03/31 21400.63 19367.50
18585.15
1994/04/30 21228.04 19615.41
18436.74
1994/05/31 21314.34 19937.10
18434.16
1994/06/30 20909.83 19448.64
18393.42
1994/07/31 21314.16 20086.55
18758.77
1994/08/31 21574.09 20910.10
18782.05
1994/09/30 21429.92 20397.81
18505.61
1994/10/31 21227.34 20856.76
18489.12
1994/11/30 20937.94 20097.15
18448.06
1994/12/31 20952.41 20395.19
18575.45
1995/01/31 20894.05 20924.04
18943.06
1995/02/28 21258.82 21739.45
19393.45
1995/03/31 21612.03 22380.98
19512.43
1995/04/30 21847.42 23040.10
19784.99
1995/05/31 22274.07 23961.02
20550.62
1995/06/30 22541.48 24517.63
20701.28
1995/07/31 22882.57 25330.63
20655.05
1995/08/31 22941.89 25394.21
20904.33
1995/09/30 23163.54 26465.85
21107.70
1995/10/31 22894.20 26371.37
21382.20
1995/11/30 23537.63 27529.07
21702.61
1995/12/31 23898.74 28059.28
22007.18
1996/01/31 24111.72 29014.42
22153.32
1996/02/29 23716.19 29283.38
21768.24
1996/03/31 23534.74 29565.38
21616.93
1996/04/30 23504.10 30001.17
21495.36
1996/05/31 23626.67 30774.90
21451.71
1996/06/30 23765.22 30892.16
21739.79
1996/07/31 23270.76 29527.34
21799.28
1996/08/31 23456.18 30150.07
21762.75
1996/09/30 24370.09 31846.92
22142.00
1996/10/31 25009.36 32725.26
22632.48
1996/11/30 26350.26 35198.96
23020.14
1996/12/31 25883.65 34501.67
22806.10
1997/01/31 26769.64 36657.33
22875.94
1997/02/28 27180.99 36944.73
22932.85
1997/03/31 26240.42 35426.67
22678.72
1997/04/30 27324.47 37541.64
23018.20
IMATRL PRASUN SHR__CHT 19970430 19970515 082830 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class A on April 30,
1987, and the current maximum 5.25% sales charge was paid. As the
chart shows, by April 30, 1997, the value of the investment would have
grown to $27,324 - a 173.24% increase on the initial investment. For
comparison, look at how both the S&P 500 and the Lehman Brothers
Aggregate Bond Index did over the same period. With dividends
reinvested, the same $10,000 investment in the S&P 500 would have
grown to $37,542 - a 275.42% increase. If you had put $10,000 in the
bond index, it would have grown to $23,018 - a 130.18% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks or
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)
FIDELITY ADVISOR BALANCED 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).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
ADVISOR BALANCED - CLASS T 9.37% 16.44% 56.93% 188.86%
ADVISOR BALANCED - CLASS T 5.55% 12.37% 51.43% 178.75%
(INCL. MAX. 3.50% SALES CHARGE)
S&P 500(REGISTERED TRADEMARK) 14.72% 25.13% 120.23% 275.42%
LEHMAN BROTHERS AGGREGATE BOND INDEX 1.70% 7.09% 42.63% 130.18%
BALANCED FUNDS AVERAGE 6.22% 12.71% 71.26% 170.48%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class T's returns to the performance
of the Standard & Poor's 500 Index - a widely recognized, unmanaged
index of common stocks - and the performance of the Lehman Brothers
Aggregate Bond Index - a market value weighted performance benchmark
for investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of at least one year. To measure how Class T's performance
stacked up against its peers, you can compare it to the balanced funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six
months average represents a peer group of 328 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 APRIL 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
ADVISOR BALANCED - CLASS T 16.44% 9.43% 11.19%
ADVISOR BALANCED - CLASS T 12.37% 8.65% 10.80%
(INCL. MAX. 3.50% SALES CHARGE)
S&P 500 25.13% 17.10% 14.14%
LEHMAN BROTHERS AGGREGATE BOND INDEX 7.09% 7.36% 8.69%
BALANCED FUNDS AVERAGE 12.71% 11.30% 10.41%
AVERAGE ANNUAL TOTAL RETURNS take Class T's cumulative return and show
you what would have happened if Class T shares had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19970430 19970515 084228 S00000000000001
FA Balanced -CL T SP Standard & Poor 500
LB Aggregate Bond
00170 SP001
LB001
1987/04/30 9650.00 10000.00
10000.00
1987/05/31 9623.19 10087.00
9960.88
1987/06/30 9855.36 10596.39
10097.97
1987/07/31 10331.51 11133.63
10090.21
1987/08/31 10547.13 11548.92
10036.21
1987/09/30 10367.76 11295.99
9822.50
1987/10/31 8540.29 8862.84
10172.33
1987/11/30 8386.49 8132.54
10253.81
1987/12/31 8753.11 8751.43
10393.48
1988/01/31 9266.92 9119.86
10758.83
1988/02/29 9652.28 9544.85
10886.55
1988/03/31 9679.80 9249.91
10784.38
1988/04/30 9847.18 9352.58
10726.18
1988/05/31 9884.37 9433.95
10654.08
1988/06/30 10294.35 9866.97
10911.12
1988/07/31 10256.67 9829.48
10853.89
1988/08/31 10219.00 9495.27
10882.34
1988/09/30 10408.22 9899.77
11128.71
1988/10/31 10560.86 10174.99
11338.23
1988/11/30 10455.92 10029.48
11200.49
1988/12/31 10581.21 10205.00
11213.10
1989/01/31 10997.49 10952.01
11374.44
1989/02/28 11036.21 10679.30
11291.99
1989/03/31 11221.94 10928.13
11340.81
1989/04/30 11672.78 11495.30
11578.13
1989/05/31 12055.01 11960.86
11882.38
1989/06/30 12221.18 11892.68
12244.17
1989/07/31 12776.24 12966.59
12504.45
1989/08/31 12974.48 13220.73
12319.18
1989/09/30 12994.73 13166.53
12382.23
1989/10/31 12794.35 12861.07
12687.12
1989/11/30 13054.84 13123.43
12808.04
1989/12/31 13183.86 13438.39
12842.32
1990/01/31 12546.11 12536.68
12689.71
1990/02/28 12579.10 12698.40
12730.77
1990/03/31 12755.17 13034.91
12740.15
1990/04/30 12588.21 12709.04
12623.43
1990/05/31 13055.68 13948.17
12997.19
1990/06/30 13111.06 13853.32
13205.73
1990/07/31 13077.27 13808.99
13388.41
1990/08/31 12277.54 12560.66
13209.61
1990/09/30 11994.17 11948.95
13318.89
1990/10/31 11880.05 11897.57
13487.99
1990/11/30 12416.42 12666.15
13778.33
1990/12/31 12795.87 13019.54
13993.02
1991/01/31 13456.53 13587.19
14165.99
1991/02/28 14244.68 14558.68
14286.92
1991/03/31 14606.48 14911.00
14385.20
1991/04/30 14887.37 14946.78
14541.05
1991/05/31 15507.68 15592.48
14626.08
1991/06/30 15189.84 14878.35
14618.64
1991/07/31 15839.48 15571.68
14821.37
1991/08/31 16241.08 15940.73
15142.10
1991/09/30 16360.66 15674.52
15448.93
1991/10/31 16837.30 15884.56
15620.94
1991/11/30 16444.07 15244.41
15764.17
1991/12/31 17208.07 16988.37
16232.34
1992/01/31 17321.29 16672.39
16011.51
1992/02/29 17686.08 16889.13
16115.62
1992/03/31 17623.29 16559.79
16024.77
1992/04/30 17762.86 17046.65
16140.52
1992/05/31 18118.11 17130.18
16445.08
1992/06/30 17953.37 16874.94
16671.41
1992/07/31 18477.65 17565.12
17011.54
1992/08/31 18477.65 17205.04
17183.87
1992/09/30 18630.52 17408.05
17387.57
1992/10/31 18566.10 17468.98
17157.04
1992/11/30 18682.05 18064.68
17160.92
1992/12/31 18791.15 18286.87
17433.80
1993/01/31 19145.70 18440.48
17768.11
1993/02/28 19554.79 18691.27
18079.15
1993/03/31 20292.85 19085.66
18154.48
1993/04/30 20870.28 18623.78
18280.90
1993/05/31 21268.99 19122.90
18304.18
1993/06/30 21132.05 19178.36
18635.91
1993/07/31 21353.76 19101.64
18741.31
1993/08/31 22129.76 19825.60
19069.81
1993/09/30 21922.86 19672.94
19122.18
1993/10/31 22216.10 20080.17
19193.64
1993/11/30 21922.86 19889.41
19030.36
1993/12/31 22484.56 20130.07
19133.50
1994/01/31 23109.54 20814.49
19391.83
1994/02/28 22702.58 20250.42
19054.93
1994/03/31 21795.89 19367.50
18585.15
1994/04/30 21620.12 19615.41
18436.74
1994/05/31 21708.00 19937.10
18434.16
1994/06/30 21296.02 19448.64
18393.42
1994/07/31 21707.83 20086.55
18758.77
1994/08/31 21972.55 20910.10
18782.05
1994/09/30 21825.72 20397.81
18505.61
1994/10/31 21619.40 20856.76
18489.12
1994/11/30 21324.66 20097.15
18448.06
1994/12/31 21339.40 20395.19
18575.45
1995/01/31 21279.96 20924.04
18943.06
1995/02/28 21651.46 21739.45
19393.45
1995/03/31 22011.20 22380.98
19512.43
1995/04/30 22250.94 23040.10
19784.99
1995/05/31 22685.47 23961.02
20550.62
1995/06/30 22957.82 24517.63
20701.28
1995/07/31 23305.21 25330.63
20655.05
1995/08/31 23365.62 25394.21
20904.33
1995/09/30 23591.36 26465.85
21107.70
1995/10/31 23317.04 26371.37
21382.20
1995/11/30 23972.36 27529.07
21702.61
1995/12/31 24340.14 28059.28
22007.18
1996/01/31 24557.05 29014.42
22153.32
1996/02/29 24154.22 29283.38
21768.24
1996/03/31 23969.42 29565.38
21616.93
1996/04/30 23938.21 30001.17
21495.36
1996/05/31 24063.05 30774.90
21451.71
1996/06/30 24204.16 30892.16
21739.79
1996/07/31 23700.56 29527.34
21799.28
1996/08/31 23889.41 30150.07
21762.75
1996/09/30 24819.75 31846.92
22142.00
1996/10/31 25485.83 32725.26
22632.48
1996/11/30 26849.73 35198.96
23020.14
1996/12/31 26391.07 34501.67
22806.10
1997/01/31 27293.33 36657.33
22875.94
1997/02/28 27712.24 36944.73
22932.85
1997/03/31 26753.84 35426.67
22678.72
1997/04/30 27874.68 37541.64
23018.20
IMATRL PRASUN SHR__CHT 19970430 19970515 084231 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class T on April 30,
1987, and the current maximum 3.50% sales charge was paid. As the
chart shows, by April 30, 1997, the value of the investment would have
grown to $27,875 - a 178.75% increase on the initial investment. For
comparison, look at how both the S&P 500 and the Lehman Brothers
Aggregate Bond Index did over the same period. With dividends
reinvested, the same $10,000 investment in the S&P 500 would have
grown to $37,542 - a 275.42% increase. If you had put $10,000 in the
bond index, it would have grown to $23,018 - a 130.18% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks or
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)
ADVISOR BALANCED 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). The initial offering of Class B shares took place on December
31, 1996. Returns prior to December 31, 1996 are those of Class T, the
original class of the fund, and reflect Class T's 0.50% 12b-1fee
(0.65% prior to January 1, 1996). Had Class B's 12b-1 fee been
reflected, returns prior to December 31, 1996 would have been lower.
Class B's contingent deferred sales charges included in the past six
months, past one year, past five years and past 10 years total return
figures are 5%, 5%, 2% and 0%, respectively. If Fidelity had not
reimbursed certain class expenses, the total returns would have been
lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
ADVISOR BALANCED - CLASS B 8.99% 16.04% 56.38% 187.85%
ADVISOR BALANCED - CLASS B 3.99% 11.04% 54.38% 187.85%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500(REGISTERED TRADEMARK) 14.72% 25.13% 120.23% 275.42%
LEHMAN BROTHERS AGGREGATE BOND INDEX 1.70% 7.09% 42.63% 130.18%
BALANCED FUNDS AVERAGE 6.22% 12.71% 71.26% 170.48%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class B's returns to the performance
of the Standard & Poor's 500 Index - a widely recognized, unmanaged
index of common stocks - and the performance of the Lehman Brothers
Aggregate Bond Index - a market value weighted performance benchmark
for investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities, with
maturities of at least one year. To measure how Class B's performance
stacked up against its peers, you can compare it to the balanced funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six
months average represents a peer group of 328 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 APRIL 30, 1997 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
ADVISOR BALANCED - CLASS B 16.04% 9.35% 11.15%
ADVISOR BALANCED - CLASS B 11.04% 9.07% 11.15%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
S&P 500 25.13% 17.10% 14.14%
LEHMAN BROTHERS AGGREGATE BOND INDEX 7.09% 7.36% 8.69%
BALANCED FUNDS AVERAGE 12.71% 11.30% 10.41%
AVERAGE ANNUAL TOTAL RETURNS take Class B's cumulative return and show
you what would have happened if Class B shares had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19970430 19970515 084719 S00000000000001
FA Balanced -CL B SP Standard & Poor 500
LB Aggregate Bond
00241 SP001
LB001
1987/04/30 10000.00 10000.00
10000.00
1987/05/31 9972.22 10087.00
9960.88
1987/06/30 10212.81 10596.39
10097.97
1987/07/31 10706.23 11133.63
10090.21
1987/08/31 10929.66 11548.92
10036.21
1987/09/30 10743.79 11295.99
9822.50
1987/10/31 8850.04 8862.84
10172.33
1987/11/30 8690.66 8132.54
10253.81
1987/12/31 9070.58 8751.43
10393.48
1988/01/31 9603.02 9119.86
10758.83
1988/02/29 10002.36 9544.85
10886.55
1988/03/31 10030.88 9249.91
10784.38
1988/04/30 10204.33 9352.58
10726.18
1988/05/31 10242.87 9433.95
10654.08
1988/06/30 10667.72 9866.97
10911.12
1988/07/31 10628.68 9829.48
10853.89
1988/08/31 10589.64 9495.27
10882.34
1988/09/30 10785.72 9899.77
11128.71
1988/10/31 10943.90 10174.99
11338.23
1988/11/30 10835.15 10029.48
11200.49
1988/12/31 10964.98 10205.00
11213.10
1989/01/31 11396.36 10952.01
11374.44
1989/02/28 11436.49 10679.30
11291.99
1989/03/31 11628.96 10928.13
11340.81
1989/04/30 12096.15 11495.30
11578.13
1989/05/31 12492.24 11960.86
11882.38
1989/06/30 12664.44 11892.68
12244.17
1989/07/31 13239.63 12966.59
12504.45
1989/08/31 13445.05 13220.73
12319.18
1989/09/30 13466.04 13166.53
12382.23
1989/10/31 13258.39 12861.07
12687.12
1989/11/30 13528.34 13123.43
12808.04
1989/12/31 13662.03 13438.39
12842.32
1990/01/31 13001.15 12536.68
12689.71
1990/02/28 13035.34 12698.40
12730.77
1990/03/31 13217.79 13034.91
12740.15
1990/04/30 13044.78 12709.04
12623.43
1990/05/31 13529.20 13948.17
12997.19
1990/06/30 13586.59 13853.32
13205.73
1990/07/31 13551.58 13808.99
13388.41
1990/08/31 12722.84 12560.66
13209.61
1990/09/30 12429.19 11948.95
13318.89
1990/10/31 12310.93 11897.57
13487.99
1990/11/30 12866.75 12666.15
13778.33
1990/12/31 13259.97 13019.54
13993.02
1991/01/31 13944.59 13587.19
14165.99
1991/02/28 14761.32 14558.68
14286.92
1991/03/31 15136.25 14911.00
14385.20
1991/04/30 15427.33 14946.78
14541.05
1991/05/31 16070.13 15592.48
14626.08
1991/06/30 15740.77 14878.35
14618.64
1991/07/31 16413.97 15571.68
14821.37
1991/08/31 16830.14 15940.73
15142.10
1991/09/30 16954.05 15674.52
15448.93
1991/10/31 17447.98 15884.56
15620.94
1991/11/30 17040.49 15244.41
15764.17
1991/12/31 17832.20 16988.37
16232.34
1992/01/31 17949.52 16672.39
16011.51
1992/02/29 18327.54 16889.13
16115.62
1992/03/31 18262.48 16559.79
16024.77
1992/04/30 18407.10 17046.65
16140.52
1992/05/31 18775.25 17130.18
16445.08
1992/06/30 18604.53 16874.94
16671.41
1992/07/31 19147.82 17565.12
17011.54
1992/08/31 19147.82 17205.04
17183.87
1992/09/30 19306.24 17408.05
17387.57
1992/10/31 19239.48 17468.98
17157.04
1992/11/30 19359.64 18064.68
17160.92
1992/12/31 19472.69 18286.87
17433.80
1993/01/31 19840.10 18440.48
17768.11
1993/02/28 20264.03 18691.27
18079.15
1993/03/31 21028.86 19085.66
18154.48
1993/04/30 21627.24 18623.78
18280.90
1993/05/31 22040.41 19122.90
18304.18
1993/06/30 21898.50 19178.36
18635.91
1993/07/31 22128.25 19101.64
18741.31
1993/08/31 22932.39 19825.60
19069.81
1993/09/30 22717.99 19672.94
19122.18
1993/10/31 23021.86 20080.17
19193.64
1993/11/30 22717.99 19889.41
19030.36
1993/12/31 23300.07 20130.07
19133.50
1994/01/31 23947.71 20814.49
19391.83
1994/02/28 23525.99 20250.42
19054.93
1994/03/31 22586.41 19367.50
18585.15
1994/04/30 22404.27 19615.41
18436.74
1994/05/31 22495.34 19937.10
18434.16
1994/06/30 22068.42 19448.64
18393.42
1994/07/31 22495.16 20086.55
18758.77
1994/08/31 22769.49 20910.10
18782.05
1994/09/30 22617.33 20397.81
18505.61
1994/10/31 22403.53 20856.76
18489.12
1994/11/30 22098.09 20097.15
18448.06
1994/12/31 22113.36 20395.19
18575.45
1995/01/31 22051.77 20924.04
18943.06
1995/02/28 22436.75 21739.45
19393.45
1995/03/31 22809.53 22380.98
19512.43
1995/04/30 23057.97 23040.10
19784.99
1995/05/31 23508.26 23961.02
20550.62
1995/06/30 23790.48 24517.63
20701.28
1995/07/31 24150.47 25330.63
20655.05
1995/08/31 24213.08 25394.21
20904.33
1995/09/30 24447.01 26465.85
21107.70
1995/10/31 24162.74 26371.37
21382.20
1995/11/30 24841.82 27529.07
21702.61
1995/12/31 25222.95 28059.28
22007.18
1996/01/31 25447.72 29014.42
22153.32
1996/02/29 25030.28 29283.38
21768.24
1996/03/31 24838.78 29565.38
21616.93
1996/04/30 24806.43 30001.17
21495.36
1996/05/31 24935.80 30774.90
21451.71
1996/06/30 25082.03 30892.16
21739.79
1996/07/31 24560.17 29527.34
21799.28
1996/08/31 24755.86 30150.07
21762.75
1996/09/30 25719.94 31846.92
22142.00
1996/10/31 26410.19 32725.26
22632.48
1996/11/30 27823.55 35198.96
23020.14
1996/12/31 27314.87 34501.67
22806.10
1997/01/31 28249.85 36657.33
22875.94
1997/02/28 28650.56 36944.73
22932.85
1997/03/31 27658.55 35426.67
22678.72
1997/04/30 28785.07 37541.64
23018.20
IMATRL PRASUN SHR__CHT 19970430 19970515 084723 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class B on April 30,
1987. As the chart shows, by April 30, 1997, the value of the
investment would have grown to $28,785 - a 187.85% increase on the
initial investment. For comparison, look at how both the S&P 500 and
the Lehman Brothers Aggregate Bond Index did over the same period.
With dividends reinvested, the same $10,000 investment in the S&P 500
would have grown to $37,542 - a 275.42% increase. If you had put
$10,000 in the bond index, it would have grown to $23,018 - a 130.18%
increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks or
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGERS' OVERVIEW
An interview with Bettina Doulton (left), Lead Portfolio Manager of
Fidelity Advisor Balanced Fund, and Kevin Grant, manager for
fixed-income investments
Q. HOW DID THE FUND PERFORM, BETTINA?
A. For the six months that ended April 30, 1997, the fund's Class A,
Class T and Class B shares posted total returns of 9.26%, 9.37% and
8.99%, respectively, significantly outperforming the 6.22% return for
the balanced funds average tracked by Lipper Analytical Services.
Given the structure of the fund - namely its mix of equities and
fixed-income securities - performance typically falls between its two
benchmark indexes, the Standard & Poor's 500 Index and the Lehman
Brothers Aggregate Bond Index. In this respect, performance over the
past six months was in line with my expectations; while the fund
outperformed the Lehman Brothers index, which returned 1.70% over the
six months, it underperformed the S&P 500, which gained 14.72%. For
the 12 months that ended April 30, 1997, the fund's Class A, Class T
and Class B shares returned 16.25%, 16.44% and 16.04%, respectively,
while the balanced funds average returned 12.71%, the Lehman Brothers
index returned 7.09% and the S&P 500 returned 25.13%.
Q. WHAT KEY STRATEGIES HELPED THE FUND OUTPERFORM THE LIPPER AVERAGE
OVER THE PAST SIX MONTHS?
B.D. Because the asset allocation of the fund generally will
approximate 60% equities and 40% fixed-income, the strategy is to add
value through security selection within each of the asset classes.
This approach clearly benefited performance during the past six
months. In fact, the equity portion of the fund outperformed the S&P
500 over that period. Within the equity sub-portfolio, my
concentration on selected larger-capitalization stocks within the
finance, nondurables and health sectors - all of which were among the
best performing during the period - was very helpful. Another
beneficial strategy was my decision to underemphasize the large
utilities sector, which dramatically underperformed amid uncertainty
regarding the deregulation of both the electric and telecommunications
sectors.
Q. HOW WOULD YOU DESCRIBE THE MARKET ENVIRONMENT DURING THE PAST SIX
MONTHS?
B.D. Looking beyond the 14.72% six-month return for the S&P 500 -
which substantially exceeded its historical average ANNUAL return of
about 11% - one of the most noticeable trends has been a dramatic rise
in the stock market's volatility. Interestingly, the bull market
during much of the '90s has been accompanied by below-average
volatility; only over the past few months has volatility reached
levels last seen in 1990-1991. One of the most significant factors
responsible for the recent upswing in volatility has been increasing
uncertainty over the direction of interest rates. Remarks by Federal
Reserve Board Chairman Alan Greenspan warning of "irrational
exuberance" in the stock market - widely interpreted as an indication
that the Fed would take actions to increase short-term interest rates
- - were largely responsible for a 5% correction in the S&P 500 during
December. A more significant correction, just short of 10%, followed
in March and April as interest rate concerns again became a focus of
attention. Notably, the market rebounded strongly from both
corrections, helped in part by continued strong earnings reports. At
the end of April, the S&P 500 nearly had regained the high it had
reached before the more recent correction.
Q. WHAT TYPES OF EQUITY INVESTMENTS WERE MOST ATTRACTIVE OVER THE
PERIOD?
B.D. Overall, stock selection remained company-specific, focused on
firms with competitive advantages or catalysts for positive change -
including dominant market positions, cost-structure reductions or new
products - and outstanding, shareholder-friendly management. The
combination of some or all of these attributes typically translates
into solid earnings and generous free cash flow. Of course, my
decision to invest in a particular stock also is contingent on an
attractive valuation. Over the past six months, a significant
proportion of companies meeting these criteria have been
large-capitalization diversified financials and "consumer growth
companies," mainly pharmaceuticals and nondurables firms. Two stocks
that I found particularly attractive during the period were
BankAmerica and Unilever. BankAmerica, the fund's fourth-largest
equity position, exemplifies many of the fund's finance investments.
This bank is in the process of aggressively reducing its cost
structure, achieving improving returns on capital and utilizing excess
capital to repurchase its shares. In addition, the firm has been the
beneficiary of an improving California economy. Unilever, the large
consumer products company, is a good example of my ongoing interest in
restructuring stories. Under the direction of a new CEO, this company
has focused on improving its relatively lackluster returns by
redeploying capital away from weak businesses and into
strong-performing units, particularly those in rapidly growing
emerging markets.
Q. HOW DID SOME OF THE OTHER LARGER STOCK HOLDINGS PERFORM?
B.D. Most of the fund's top five stocks performed well during the
six-month period, including both BankAmerica and Citicorp. Their solid
business prospects shone through in the face of a rather volatile
environment for financials brought on by concerns that interest rates
would be on the rise. General Electric and Philip Morris also were
positive contributors. The upward revaluation of GE continued as
investors were attracted to its global business franchise, consistent
growth prospects and stable free cash flow. Philip Morris' underlying
business prospects remained good , and the market seemed more
optimistic that there might be some resolution on the litigation and
regulatory fronts. British Petroleum proved to be the relative laggard
in the group, as softening oil prices caused most of the energy sector
to surrender some of the gains we saw in 1996.
Q. WERE THERE ANY DISAPPOINTMENTS?
B.D. Relative to the S&P 500, the fund's most significant detractor
was an underrepresentation within the very strong technology sector.
However, given the fund's conservative, income-driven objective, it's
typically difficult to justify significant technology exposure. In
addition, the fund's aerospace and defense investments were
disappointing, as they weakened early in 1997 after outperforming for
most of 1996.
Q. TURNING TO YOU, KEVIN, HOW HAVE YOU STRUCTURED THE BOND PORTION OF
THE FUND?
K.G. I've maintained an interest rate posture in line with the overall
bond market as measured by the Lehman Brothers Aggregate Bond Index.
And, during the past six months, the bond portfolio outperformed the
index because of security selection. In particular, I've been
attracted to corporate bonds issued by companies that I felt wouldn't
be affected by shifts in the economy, including bonds issued by banks.
Historically, bank earnings were quite sensitive to interest rates.
However, over the past several years, banks have increased the
fee-based portions of their business, making them less sensitive to
interest rates and loans. Bonds issued by energy companies also proved
to be positive performers for the fund, helped by an upward spike in
energy prices in the winter. This rise in prices helped increase the
companies' cash flow, which they used to pay down debt. In the
corporate area overall, I've focused on shorter maturities in the two-
to four-year range. These bonds offer a yield advantage over
Treasuries, but are short enough in maturity that they shouldn't
markedly underperform Treasuries if the market becomes nervous about
credit risk.
Q. WERE THERE OTHER TYPES OF CORPORATE BONDS THAT INTERESTED YOU?
K.G. Yes. Bank bonds known as capital securities presented an
opportunity during the period. Because of a change brought about by
the Federal Reserve Board last fall, banks were given the ability to
issue these long-term bonds for which the interest payments are
tax-deductible to the banks. A new market was created, as banks sought
to issue as many capital securities as possible before Congress had
the chance to close this tax loophole. A flood of securities came to
market very cheaply, so I added some to the fund.
Q. LOOKING AT THE BIG PICTURE, BETTINA, WHAT'S YOUR OUTLOOK FOR THE
NEXT SIX MONTHS?
B.D. In terms of the overall U.S. economy, I believe it's likely there
will be more of the same - moderate growth and low inflation -
although the duration of the current economic expansion has already
exceeded all but two post-war expansions. Many companies that I've
recently met with have indicated that the general business climate
continues to become more competitive than ever. Given continuous
pressure from shareholders to enhance returns and an almost complete
lack of pricing power, company managements' interest in business
restructurings and other self-help measures appears to be rising
again. Increasingly, market share gains, globalization, improved
productivity, capital redeployment and execution will be the critical
success factors. In addition, mergers and acquisitions are likely to
accelerate as companies seek to bolster their position and exploit
both cost-reducing and revenue-enhancing synergies. Given the scenario
I just outlined, I think it's probable that the same stocks that have
recently been market leaders - larger-capitalization financials,
pharmaceuticals and consumer nondurables - will continue to
outperform.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
BETTINA DOULTON ON
LARGE-CAPITALIZATION STOCKS:
"Over the past year, there has been
heated debate over why large-cap
stocks have outperformed their
small-cap counterparts. Many
analysts have contended that
the indexing phenomenon - a
"virtuous circle" of S&P 500 index
fund outperformance begetting
increasing investments in
large-cap companies that
comprise the index, thereby
driving their stocks higher - is
responsible for this
outperformance. However, part of
the reality - overlooked to some
extent - is that larger companies
have generated significantly better
earnings growth in recent years.
Even within the large-cap S&P
500, there has been a wide
disparity in earnings growth rates
by capitalization. Between 1993
and 1996, the largest 100 companies
in the S&P 500 grew their operating
earnings at a rate that was
approximately 2.5 times the rate of
the index's smallest 400
companies. I believe this earnings
differential has been at the heart of
the recent large-cap
outperformance. More importantly,
I see little on the horizon that is
likely to alter this trend.
Globalization and the resulting
need to leverage strong market
positions and brands continue to
favor larger enterprises. In
addition, many larger firms have
been leaders in cost containment
over recent years, which is now
bearing fruit in terms of margin
expansions and rising free cash
flows."
(solid bullet)
(solid bullet)
FUND FACTS
GOAL: seeks both income and
growth of capital by investing
in a diversified portfolio of
equity and fixed-income
securities with income, growth
of income and capital
appreciation potential
START DATE: January 6, 1987
SIZE: as of April 30, 1997
more than $2.8 billion
MANAGER: Bettina Doulton and
Kevin Grant, since 1996;
Bettina Doulton joined Fidelity
in 1986; Kevin Grant joined
Fidelity in 1993
(checkmark)
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
CITICORP 2.4 2.9
PHILIP MORRIS COMPANIES, INC. 2.4 2.7
BRITISH PETROLEUM PLC ORD. 2.3 2.0
BANKAMERICA CORP. 2.1 1.9
GENERAL ELECTRIC CO. 2.1 2.8
TOP FIVE BOND ISSUERS AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
(WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE BOND ISSUERS
6 MONTHS AGO
U.S. TREASURY 6.2 7.3
FEDERAL NATIONAL MORTGAGE ASSOCIATION 5.9 8.7
FEDERAL HOME LOAN MORTGAGE CORPORATION 1.3 1.2
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 1.1 1.3
COMDISCO INC. 0.6 0.4
</TABLE>
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 20.2 19.5
NONDURABLES 8.8 7.5
ENERGY 8.1 9.0
HEALTH 8.1 7.6
INDUSTRIAL MACHINERY & EQUIPMENT 6.2 5.4
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997 * AS OF OCTOBER 31, 1996 **
ROW: 1, COL: 1, VALUE: 0.0
ROW: 1, COL: 2, VALUE: 2.8
ROW: 1, COL: 3, VALUE: 1.8
ROW: 1, COL: 4, VALUE: 35.0
ROW: 1, COL: 5, VALUE: 30.0
ROW: 1, COL: 6, VALUE: 31.4
STOCKS 60.8%
BONDS 34.3%
CONVERTIBLE
SECURITIES 1.8%
SHORT-TERM
INVESTMENTS 3.1%
FOREIGN
INVESTMENTS 11.4%
STOCKS 62.4%
BONDS 34.9%
CONVERTIBLE
SECURITIES 0.8%
SHORT-TERM
INVESTMENTS 1.9%
FOREIGN
INVESTMENTS 11.2%
ROW: 1, COL: 1, VALUE: 3.0
ROW: 1, COL: 2, VALUE: 2.1
ROW: 1, COL: 3, VALUE: 34.3
ROW: 1, COL: 4, VALUE: 30.0
ROW: 1, COL: 5, VALUE: 30.6
*
**
INVESTMENTS APRIL 30, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
COMMON STOCKS - 61.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 5.5%
AEROSPACE & DEFENSE - 4.5%
AlliedSignal, Inc. 522,600 $ 37,757
Boeing Co. 167,699 16,539
Lockheed Martin Corp. 255,900 22,903
Sundstrand Corp. 201,500 9,823
Textron, Inc. 64,700 7,206
United Technologies Corp. 436,500 33,010
127,238
DEFENSE ELECTRONICS - 0.6%
Raytheon Co. 384,100 16,756
SHIP BUILDING & REPAIR - 0.4%
General Dynamics Corp. 151,900 10,823
Newport News Shipbuilding, Inc. 19,380 291
11,114
TOTAL AEROSPACE & DEFENSE 155,108
BASIC INDUSTRIES - 4.4%
CHEMICALS & PLASTICS - 3.4%
Air Products & Chemicals, Inc. 227,300 16,309
du Pont (E.I.) de Nemours & Co. 100,100 10,623
Goodrich (B.F.) Co. 50,300 2,006
Monsanto Co. 685,000 29,284
Nalco Chemical Co. 81,600 2,938
Olin Corp. 162,700 6,691
Praxair, Inc. 573,300 29,597
97,448
METALS & MINING - 0.1%
Aluminum Co. of America 58,800 4,109
PACKAGING & CONTAINERS - 0.2%
Corning, Inc. 88,200 4,256
PAPER & FOREST PRODUCTS - 0.7%
Kimberly-Clark Corp. 376,400 19,291
TOTAL BASIC INDUSTRIES 125,104
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - 0.2%
BUILDING MATERIALS - 0.2%
Masco Corp. 130,600 $ 4,930
DURABLES - 1.7%
AUTOS, TIRES, & ACCESSORIES - 0.5%
Eaton Corp. 113,900 8,528
Johnson Controls, Inc. 137,900 5,292
13,820
CONSUMER DURABLES - 1.0%
Minnesota Mining & Manufacturing Co. 340,200 29,597
CONSUMER ELECTRONICS - 0.2%
Newell Co. 177,600 6,216
TOTAL DURABLES 49,633
ENERGY - 7.1%
ENERGY SERVICES - 0.8%
Halliburton Co. 65,000 4,591
Schlumberger Ltd. 157,800 17,476
22,067
OIL & GAS - 6.3%
Amoco Corp. 80,000 6,690
British Petroleum PLC:
Ord. 5,565,546 63,970
ADR 117,321 16,146
Exxon Corp. 243,600 13,794
Mobil Corp. 133,600 17,368
Royal Dutch Petroleum Co.:
Ord. 29,400 5,257
ADR 156,000 28,119
Texaco, Inc. 177,800 18,758
Total SA:
Class B 49,500 4,106
sponsored ADR 53,800 2,239
USX-Marathon Group 76,600 2,116
Unocal Corp. 55,637 2,121
180,684
TOTAL ENERGY 202,751
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 13.2%
BANKS - 7.1%
BankAmerica Corp. 511,900 $ 59,828
BankBoston Corp. 140,700 10,236
Citicorp 611,900 68,915
National City Corp. 116,504 5,680
NationsBank Corp. 969,400 58,528
203,187
CREDIT & OTHER FINANCE - 1.9%
American Express Co. 684,800 45,111
Associates First Capital Corp. 35,000 1,794
Beneficial Corp. 88,100 5,638
52,543
FEDERAL SPONSORED CREDIT - 2.4%
Federal Home Loan Mortgage Corporation 1,304,800 41,591
Federal National Mortgage Association 626,300 25,757
67,348
INSURANCE - 1.6%
Allstate Corp. 329,100 21,556
ITT Hartford Group, Inc. 161,900 12,062
Loews Corp. 81,500 7,488
St. Paul Companies, Inc. (The) 4,200 281
Travelers Group, Inc. (The) 53,333 2,953
44,340
SAVINGS & LOANS - 0.2%
Great Western Financial Corp. 150,000 6,300
TOTAL FINANCE 373,718
HEALTH - 8.0%
DRUGS & PHARMACEUTICALS - 7.5%
American Home Products Corp. 511,800 33,907
Bristol-Myers Squibb Co. 727,740 47,667
Merck & Co., Inc. 457,200 41,377
Novartis AG (Reg.) 3,400 4,480
Pfizer, Inc. 178,260 17,113
Schering-Plough Corp. 194,900 15,592
SmithKline Beecham PLC ADR 667,200 53,793
213,929
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 0.5%
Baxter International, Inc. 267,100 $ 12,787
TOTAL HEALTH 226,716
HOLDING COMPANIES - 0.0%
CINergy Corp. 36,500 1,214
INDUSTRIAL MACHINERY & EQUIPMENT - 5.6%
ELECTRICAL EQUIPMENT - 2.9%
Emerson Electric Co. 305,400 15,499
General Electric Co. 533,000 59,096
General Signal Corp. 99,900 3,921
Grainger (W.W.), Inc. 25,200 1,899
Honeywell, Inc. 38,800 2,740
83,155
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
Cooper Industries, Inc. 374,629 17,233
Harnischfeger Industries, Inc. 193,900 8,071
Tyco International Ltd. 355,900 21,710
47,014
POLLUTION CONTROL - 1.0%
Browning-Ferris Industries, Inc. 669,600 19,000
WMX Technologies, Inc. 340,800 10,011
29,011
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 159,180
MEDIA & LEISURE - 0.5%
BROADCASTING - 0.0%
Benedek Communications Corp. (warrants) (a) 10,500 21
CS Wireless Systems, Inc. (a)(e) 381 -
21
ENTERTAINMENT - 0.2%
Cedar Fair LP (depositary unit) 150,000 5,963
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - 0.3%
McGraw-Hill, Inc. 145,100 $ 7,382
Times Mirror Co. Class A 3,500 193
7,575
TOTAL MEDIA & LEISURE 13,559
NONDURABLES - 7.8%
BEVERAGES - 0.4%
Anheuser-Busch Companies, Inc. 294,400 12,622
FOODS - 0.7%
Campbell Soup Co. 37,400 1,912
Flowers Industries, Inc. 25,000 609
General Mills, Inc. 49,600 3,075
Heinz (H.J.) Co. 246,700 10,238
Nabisco Holdings Corp. Class A 83,700 3,212
19,046
HOUSEHOLD PRODUCTS - 4.2%
Avon Products, Inc. 151,500 9,336
Clorox Co. 92,800 11,820
Procter & Gamble Co. 313,800 39,460
Renaissance Cosmetics, Inc. (warrants) (a)(e) 2,250 236
Unilever PLC Ord. 483,200 12,716
Unilever NV:
ADR 199,500 39,152
Ord. 30,000 5,837
118,557
TOBACCO - 2.5%
Philip Morris Companies, Inc. 1,694,100 66,705
RJR Nabisco Holdings Corp. 104,400 3,106
69,811
TOTAL NONDURABLES 220,036
RETAIL & WHOLESALE - 2.4%
APPAREL STORES - 0.1%
Footstar, Inc. (a) 89,076 1,848
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
DRUG STORES - 0.8%
CVS Corp. 309,400 $ 15,354
Rite Aid Corp. 214,000 9,844
25,198
GENERAL MERCHANDISE STORES - 1.3%
Dayton Hudson Corp. 66,300 2,984
Sears, Roebuck & Co. 98,400 4,723
Wal-Mart Stores, Inc. 1,036,200 29,273
36,980
GROCERY STORES - 0.2%
American Stores Co. 118,000 5,369
TOTAL RETAIL & WHOLESALE 69,395
SERVICES - 0.4%
LEASING & RENTAL - 0.0%
Hertz Corp. Class A 11,000 319
PRINTING - 0.2%
Deluxe Corp. 199,800 6,119
SERVICES - 0.2%
Block (H&R), Inc. 11,500 371
National Service Industries, Inc. 101,000 4,255
4,626
TOTAL SERVICES 11,064
TECHNOLOGY - 2.5%
COMMUNICATIONS EQUIPMENT - 0.0%
Hyperion Telecommunications, Inc. (warrants) (a)(e) 3,790 114
COMPUTERS & OFFICE EQUIPMENT - 1.7%
Exide Electronics Group, Inc. (warrants) (a)(e) 450 11
International Business Machines Corp. 72,800 11,703
Pitney Bowes, Inc. 549,400 35,161
46,875
ELECTRONICS - 0.5%
Thomas & Betts Corp. 310,400 14,084
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
PHOTOGRAPHIC EQUIPMENT - 0.3%
Eastman Kodak Co. 105,600 $ 8,818
TOTAL TECHNOLOGY 69,891
TRANSPORTATION - 0.5%
RAILROADS - 0.3%
Burlington Northern Santa Fe Corp. 108,600 8,552
TRUCKING & FREIGHT - 0.2%
CNF Transportation, Inc. 205,100 6,102
TOTAL TRANSPORTATION 14,654
UTILITIES - 1.6%
CELLULAR - 0.0%
Microcell Telecommunications, Inc. (a):
(warrants) 25,120 314
(conditional warrants) 25,120 16
330
ELECTRIC UTILITY - 0.1%
Allegheny Power System, Inc. 37,000 971
American Electric Power Co., Inc. 7,700 312
DPL, Inc. 900 21
Edison International 90,000 1,890
3,194
GAS - 0.6%
Consolidated Natural Gas Co. 80,100 4,035
El Paso Natural Gas Co. 9,011 524
Enron Corp. 1,100 41
Williams Companies, Inc. 280,300 12,298
16,898
TELEPHONE SERVICES - 0.9%
ALLTEL Corp. 38,100 1,200
Ameritech Corp. 95,000 5,808
BCE, Inc. 143,800 6,730
MCI Communications Corp. 169,900 6,477
Nextlink Communications, Inc. unit (e) 82,190 3,863
24,078
TOTAL UTILITIES 44,500
TOTAL COMMON STOCKS
(Cost $1,388,001) 1,741,453
PREFERRED STOCKS - 1.5%
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - 0.5%
ENERGY - 0.0%
OIL & GAS - 0.0%
Tosco Financing Trust $2.875 (e) 22,300 $ 1,238
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.2%
Loral Space & Communications Ltd. $3.00 (e) 85,000 4,058
Westinghouse Electric Corp. $1.30 (e) 13,200 200
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,258
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.0%
Benedek Communications Corp. 15% (a) 6,100 638
LODGING & GAMING - 0.2%
Host Marriott Financial Trust $3.375 (e) 85,000 4,824
TOTAL MEDIA & LEISURE 5,462
RETAIL & WHOLESALE - 0.1%
APPAREL STORES - 0.1%
TJX Companies, Inc., Series E, $7.00 12,000 3,060
TOTAL CONVERTIBLE PREFERRED STOCKS 14,018
NONCONVERTIBLE PREFERRED STOCKS - 1.0%
FINANCE - 0.1%
INSURANCE - 0.0%
American Annuity Group Capital Trust II 1,000 995
SAVINGS & LOANS - 0.1%
California Federal Bank FSB 9 1/8% 61,560 1,531
California Federal Bank FSB 11 1/2% 9,200 1,038
2,569
TOTAL FINANCE 3,564
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.5%
American Radio System pay-in-kind 11 3/8% (e) 22,929 $ 2,264
Cablevision System Corp.:
depositary shares 11,853 1,088
Series H, $11.75 pay-in-kind 1,940 184
PanAmSat Corp. 12 3/4% pay-in-kind 420 500
Sinclair Capital 11 5/8% (e) 17,700 1,770
Time Warner, Inc., Series M, 10 1/4% pay-in-kind 8,450 9,126
14,932
PUBLISHING - 0.1%
K-III Communications Corp.:
Series B, $11.625 pay-in-kind 38 4
Series D, $200 28,400 2,783
2,787
TOTAL MEDIA & LEISURE 17,719
NONDURABLES - 0.1%
HOUSEHOLD PRODUCTS - 0.1%
Renaissance Cosmetics, Inc. 14% 2,502 2,189
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc. 13 1/2% (a) 439 4,247
COMPUTER SERVICES & SOFTWARE - 0.1%
ICG Holdings, Inc. 14 1/4% pay-in-kind 2,337 2,197
TOTAL TECHNOLOGY 6,444
TOTAL NONCONVERTIBLE PREFERRED STOCKS 29,916
TOTAL PREFERRED STOCKS
(Cost $42,728) 43,934
CORPORATE BONDS - 18.1%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - 0.3%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
POLLUTION CONTROL - 0.1%
WMX Technologies, Inc. 2%, 1/24/05 A3 $ 4,340 $ 3,744
MEDIA & LEISURE - 0.1%
LEISURE DURABLES & TOYS - 0.1%
Hasbro Corp. 6%, 11/15/98 A3 1,400 1,792
RETAIL & WHOLESALE - 0.1%
GENERAL MERCHANDISE STORES - 0.1%
Federated Department Stores, Inc. 5%, 10/1/03 Ba3 2,460 2,884
TOTAL CONVERTIBLE BONDS 8,420
NONCONVERTIBLE BONDS - 17.8%
AEROSPACE & DEFENSE - 0.6%
AEROSPACE & DEFENSE - 0.6%
Alliant Techsystems, Inc. 11 3/4%, 3/1/03 B2 2,217 2,411
Fairchild Corp. 12%, 10/15/01 Caa 210 213
Lockheed Martin Corp. 7.20%, 5/1/36 A3 15,000 15,160
17,784
DEFENSE ELECTRONICS - 0.0%
Tracor, Inc. 8 1/2%, 3/1/07 (e) B1 110 109
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, Inc.:
8 5/8%, 12/1/06 Ba2 70 70
9 1/4%, 12/1/06 B1 450 460
530
TOTAL AEROSPACE & DEFENSE 18,423
BASIC INDUSTRIES - 1.2%
CHEMICALS & PLASTICS - 0.3%
Astor Corp. 10 1/2%, 10/15/06 B3 150 155
Atlantis Group, Inc. 11%, 2/15/03 B2 790 806
Foamex-JPS Automotive LP/Foamex JPS Capital
Corp. 0%, 7/1/04 (c) Caa 500 435
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
CHEMICALS & PLASTICS - CONTINUED
Foamex LP/Foamex Capital Corp.
9 1/2%, 6/1/00 B1 $ 70 $ 70
Freedom Chemical Co. 10 5/8%, 10/15/06 B3 2,440 2,538
Plastic Specialties & Technologies, Inc.
11 1/4%, 12/1/03 B3 130 138
Sterling Chemicals Holdings, Inc.:
11 3/4%, 8/15/06 B3 2,020 2,131
11 1/4%, 4/1/07 (e) B3 910 937
0%, 8/15/08 (c) Caa 360 229
7,439
IRON & STEEL - 0.1%
GS Technologies Operating, Inc.
12 1/4%, 10/1/05 B2 610 645
Republic Engineered Steels, Inc.
9 7/8%, 12/15/01 Caa 820 750
WCI Steel, Inc. 10%, 12/1/04 B2 1,820 1,838
3,233
METALS & MINING - 0.1%
Commonwealth Aluminum Corp.
10 3/4%, 10/1/06 B2 1,160 1,201
Westmin Resources Ltd. yankee 11%, 3/15/07 (e) B3 720 720
1,921
PACKAGING & CONTAINERS - 0.2%
Crown Cork & Seal, Inc. 5 7/8%, 4/15/98 Baa1 5,000 4,980
Gaylord Container Corp.:
11 1/2%, 5/15/01 B3 140 147
12 3/4%, 5/15/05 Caa 310 333
5,460
PAPER & FOREST PRODUCTS - 0.5%
Asia Pulp & Paper Finance II Mauritius Ltd.
12%, 3/15/04 (e) B3 2,880 2,714
American Pad & Paper Co., Inc.
13%, 11/15/05 B3 820 947
Doman Industries Ltd. yankee 8 3/4%, 3/15/04 Ba3 1,720 1,591
Florida Coast Paper Co. LLC/Florida Coast Paper
Finance Corp., Series B, 12 3/4%, 6/1/03 B3 320 302
Mail-Well Corp. 10 1/2%, 2/15/04 B 190 197
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Repap Wisconsin, Inc.:
9 1/4%, 2/1/02 B2 $ 1,445 $ 1,427
9 7/8%, 5/1/06 Caa 1,545 1,468
Repap New Brunswick, Inc. yankee
10 5/8%, 4/15/05 Caa 1,380 1,301
SD Warren Co., Series B, 12%, 12/15/04 B1 900 990
Stone Container Corp.:
9 7/8%, 2/1/01 B2 660 623
10 3/4%, 10/1/02 B1 870 870
11 7/8%, 8/1/16 B2 1,180 1,204
13,634
TOTAL BASIC INDUSTRIES 31,687
CONSTRUCTION & REAL ESTATE - 0.1%
CONSTRUCTION - 0.1%
McDermott (J Ray) SA 9 3/8%, 7/15/06 B1 1,470 1,430
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Jordan Industries, Inc. 10 3/8%, 8/1/03 B3 910 887
HOME FURNISHINGS - 0.1%
Interlake Corp. 12 1/8%, 3/1/02 B3 1,600 1,680
Knoll, Inc. 10 7/8%, 3/15/06 B3 952 1,034
2,714
TEXTILES & APPAREL - 0.3%
Dan River, Inc. 10 1/8%, 12/15/03 B3 670 690
GFSI, Inc. 9 5/8%, 3/1/07 (e) B3 40 40
Levi Strauss & Co. 6.80%, 11/1/03 (e) Baa2 5,560 5,470
Synthetic Industries, Inc. 9 1/4%, 2/15/07 (e) B2 970 974
7,174
TOTAL DURABLES 10,775
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - 1.0%
ENERGY SERVICES - 0.4%
Petroliam Nasional BHD yankee (e):
6 7/8%, 7/1/03 A1 $ 1,380 $ 1,361
7 1/8%, 8/15/05 A1 11,100 11,007
12,368
OIL & GAS - 0.6%
Chesapeake Energy Corp. 8 1/2%, 3/15/12 (e) Ba2 1,060 1,007
Cross Timbers Oil Co. 9 1/4%, 4/1/07 (e) B2 1,380 1,359
Flores & Rucks, Inc. 9 3/4%, 10/1/06 B3 1,150 1,190
Husky Oil Ltd. yankee 6 7/8%, 11/15/03 Baa3 1,890 1,843
Occidental Petroleum Corp.:
6.39%, 11/9/00 Baa3 1,000 981
8 1/2%, 11/9/01 Baa2 1,180 1,244
Pennzoil Co. 9 5/8%, 11/15/99 Baa3 1,730 1,841
Ras Laffan Liquid Natural Gas Co. Ltd. yankee
8.29%, 3/15/14 (e) A3 7,160 7,263
16,728
TOTAL ENERGY 29,096
FINANCE - 6.9%
ASSET-BACKED SECURITIES - 1.5%
Airplanes Pass Through Trust 10 7/8%, 3/15/19 Ba2 1,570 1,739
Capital Equipment Receivables Trust
6.11%, 7/15/99 Aaa 14,150 14,115
Chase Manhattan Grantor Trust:
6.61%, 9/15/02 Aaa 6,451 6,456
6.76%, 9/15/02 A3 1,613 1,613
Chevy Chase Auto Receivables Trust::
6.60%, 12/15/02 Aaa 2,167 2,174
5.90%, 7/15/03 Aaa 5,840 5,777
Ford Credit Grantor Trust 5.90%, 10/15/00 Aaa 1,059 1,055
Green Tree Financial Corp. 6.10%, 4/15/27 Aaa 2,238 2,214
Sears Credit Account Master Trust II
6 1/2%, 10/15/03 Aaa 6,280 6,280
41,423
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - 3.2%
ABN Amro Bank NV 6 5/8%, 10/31/01 Aa3 $ 5,000 $ 4,935
Bank of New York Institutional Capital Trust A
7.78%, 10/1/26 (e) A1 10,000 9,488
BankBoston Capital Trust II 7 3/4%, 12/15/26 Baa1 8,000 7,538
BanPonce Financial Corp.:
6.88%, 6/16/00 A3 2,500 2,494
6.69%, 9/21/00 A3 2,250 2,230
6 3/4%, 8/9/01 A3 3,850 3,805
BanPonce Corp. 5 3/4%, 3/1/99 A3 880 863
Capital One Bank:
6.74%, 5/31/99 Baa3 2,630 2,620
6.42%, 11/12/99 Baa3 5,000 4,959
Central Fidelity Banks, Inc. 8.15%, 11/15/02 Baa2 9,045 9,408
First Chicago Institutional Capital B 7 3/4%,
12/1/26 (e) A1 6,000 5,641
First Tennessee National Corp.
6 3/4%, 11/15/05 Baa1 720 688
First USA Bank 6 1/2%, 12/23/99 Baa3 4,700 4,647
Kansallis-Osake-Pankki 10%, 5/1/02 A3 710 794
Korea Development Bank yankee:
6 1/2%, 11/15/02 A1 2,000 1,934
6 3/4%, 12/1/05 A1 8,670 8,291
Midland Bank PLC yankee
7 5/8%, 6/15/06 A1 3,200 3,253
Provident Bank 6 1/8%, 12/15/00 A3 3,420 3,332
Signet Bank 7.80%, 9/15/06 Baa1 2,500 2,543
Summit Bancorp. 8 5/8%, 12/10/02 BBB 1,250 1,332
Union Planters Corp. 6 3/4%, 11/1/05 Baa2 400 382
Wachovia Corp. 6.605%, 10/1/25 A1 7,550 7,358
88,535
CREDIT & OTHER FINANCE - 1.5%
AT&T Capital Corp.:
6%, 11/13/98 Baa3 1,000 992
6.02%, 12/4/98 Baa3 6,560 6,506
Ahmanson Capital Trust I 8.36%, 12/1/26 (e) Baa3 2,700 2,646
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Associates Corp. of North America
6 1/2%, 9/9/98 Aa3 $ 10,000 $ 10,017
CIT Group Holdings, Inc. 6 1/4%, 9/30/99 Aa3 8,440 8,370
Chrysler Financial Corp. 6 3/8%, 1/28/00 A3 4,750 4,713
First Security Capital I 8.41%, 12/15/26 A3 1,280 1,289
General Electric Capital Corp.
6.94%, 4/13/09 (d) Aaa 4,700 4,728
Imperial Credit Industries, Inc.
9 7/8%, 1/15/06 (e) B1 1,130 1,068
MCN Investment Corp. 6.03%, 2/1/01 Baa2 2,350 2,279
Olympic Financial Ltd. unit 11 1/2%, 3/15/07 B2 1,150 1,104
43,712
INSURANCE - 0.5%
Integon Capital I 10 3/4%, 2/15/07 (e) Ba3 1,700 1,615
SunAmerica, Inc. 6.20%, 10/31/99 Baa1 13,750 13,577
15,192
SAVINGS & LOANS - 0.2%
First Nationwide Holdings, Inc. 10 5/8%, 10/1/03 Ba3 1,360 1,452
First Nationwide Parent Holdings Ltd.
12 1/2%, 4/15/03 B3 3,940 4,334
5,786
TOTAL FINANCE 194,648
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Wright Medical Technology, Inc.
10 3/4%, 7/1/00 B3 1,341 1,287
MEDICAL FACILITIES MANAGEMENT - 0.1%
Columbia/HCA Healthcare Corp.
6 1/2%, 3/15/99 A2 2,470 2,470
Tenet Healthcare Corp.:
8%, 1/15/05 Ba1 620 608
8 5/8%, 1/15/07 Ba3 250 247
3,325
TOTAL HEALTH 4,612
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HOLDING COMPANIES - 0.0%
Gray Communications System, Inc.
10 5/8%, 10/1/06 B3 $ 970 $ 1,014
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.2%
L-3 Communications Corp. 10 3/8%, 5/1/07 (e) B2 80 82
Magnetek, Inc. 10 3/4%, 11/15/98 B1 2,870 2,992
Motors & Gears, Inc. 10 3/4%, 11/15/06 (e) B3 1,820 1,825
4,899
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Calmar, Inc. 11 1/2%, 8/15/05 B3 100 100
Continental Global Group, Inc. 11%, 4/1/07 (e) B2 550 567
Goss Graphic System, Inc. 12%, 10/15/06 B2 620 658
International Knife & Saw, Inc.
11 3/8% 11/15/06 B3 160 162
Mosler, Inc. 11%, 4/15/03 Caa 380 350
1,837
POLLUTION CONTROL - 0.0%
Allied Waste of North America, Inc.
10 1/4%, 12/1/06 (e) B3 350 368
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 7,104
MEDIA & LEISURE - 2.0%
BROADCASTING - 1.0%
Adelphia Communications Corp.
9 7/8%, 3/1/07 (e) - 2,140 2,022
Benedek Communications Corp. 0%, 5/15/06 (c) - 1,440 821
CapStar Broadcasting Partners, Inc.
0%, 2/1/09 (c)(e) CCC 1,470 820
CS Wireless Systems, Inc. 0%, 3/1/06 (c) Caa 1,386 374
Diamond Cable Communications PLC yankee (c):
0%, 12/15/05 B3 250 173
0%, 2/15/07 (e) - 1,680 1,000
Intermedia Capital Partners IV LP/Intermedia
Partners IV Capital Corp. 11 1/4%, 8/1/06 B2 60 62
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Jacor Communications Co. 9 3/4%, 12/15/06 B2 $ 130 $ 132
Lenfest Communications, Inc.:
8 3/8%, 11/1/05 Ba3 310 295
10 1/2%, 6/15/06 B2 210 216
Olympus Communciation LP/Olympus Capital
Corp. 10 5/8%, 11/15/06 (e) B1 1,310 1,330
SFX Broadcasting, Inc. 10 3/4%, 5/15/06 B3 330 344
TCI Communication, Inc. 6.82%, 9/15/10 (f) Ba1 4,000 3,988
Telewest PLC 0%, 10/1/07 (c) B1 1,270 859
Time Warner, Inc.:
7 3/4%, 6/15/05 Ba1 8,000 7,990
6.85%, 1/15/26 Ba1 7,120 6,936
UIH Australia/PAC, Inc., 0%, 5/15/06 (c) B2 3,310 1,622
28,984
ENTERTAINMENT - 0.2%
AMC Entertainment, Inc. 9 1/2%, 3/15/09 (e) B2 1,080 1,067
AMF Group, Inc.:
0%, 3/15/06 (c) B2 360 242
10 7/8%, 3/15/06 B2 755 787
Cinemark USA, Inc. 9 5/8%, 8/1/08 B2 890 881
Viacom, Inc. 8%, 7/7/06 B1 3,660 3,431
6,408
LEISURE DURABLES & TOYS - 0.1%
ICON Health and Fitness, Inc. 13%, 7/15/02 B3 1,960 2,176
ICON Fitness Corp. 0%, 11/15/06 (e) CCC 460 239
2,415
LODGING & GAMING - 0.4%
American Skiing Co. 12%, 7/15/06 B3 1,150 1,173
Casino Magic Financial Corp.
11 1/2%, 10/15/01 B1 390 314
HMC Acquisition Properties, Inc. 9%, 12/15/07 Ba3 2,810 2,785
HMH Properties, Inc. 9 1/2%, 5/15/05 Ba3 2,120 2,165
Hollywood Casino Corp. 12 3/4%, 11/1/03 B2 710 726
Horseshoe Gaming LLC 12 3/4%, 9/30/00 B1 1,990 2,169
KSL Recreation Group, Inc. 10 1/4%,
5/1/07 (e) B3 80 81
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - CONTINUED
Prime Hospitality Corp. 9 3/4%, 4/1/7 (e) B1 $ 280 $ 287
Sun International Hotels Ltd. 9%, 3/15/07 (e) Ba3 1,780 1,762
Wyndham Hotel Corp. 10 1/2%, 5/15/06 B2 90 97
11,559
RESTAURANTS - 0.3%
Darden Restaurants, Inc. 6 3/8%, 2/1/06 Baa1 2,700 2,463
Wendy's International, Inc. 6.35%, 12/15/05 Baa1 5,000 4,683
7,146
TOTAL MEDIA & LEISURE 56,512
NONDURABLES - 0.9%
FOODS - 0.3%
ConAgra, Inc. 7 1/8%, 10/1/26 Baa1 3,600 3,578
International Home Foods, Inc.
10 3/8%, 11/01/06 B2 1,130 1,147
Nabisco, Inc. 8%, 1/15/00 Baa2 3,153 3,239
Specialty Foods Corp.:
10 1/4%, 8/15/01 B3 440 425
11 1/8%, 10/1/02 B3 660 655
9,044
HOUSEHOLD PRODUCTS - 0.2%
Renaissance Cosmetics, Inc. 11 3/4%,
2/15/04 (e) B3 1,470 1,492
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 4,795 5,023
6,515
TOBACCO - 0.4%
Philip Morris Companies, Inc. 6.95%, 6/1/06 A2 10,000 9,967
TOTAL NONDURABLES 25,526
PRECIOUS METALS - 0.0%
Royal Oak Mines, Inc. 11%, 8/15/06 B3 130 130
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - 0.7%
APPAREL STORES - 0.1%
Mothers Work, Inc. 12 5/8%, 8/1/05 B3 $ 310 $ 314
Specialty Retailers, Inc. 10%, 8/15/00 B1 1,355 1,396
1,710
GENERAL MERCHANDISE STORES - 0.3%
Dayton Hudson Corp.:
6.80%, 10/1/01 Baa1 4,500 4,457
6.40%, 2/15/03 Baa1 425 408
Pantry, Inc. 12%, 11/15/00 B2 120 120
Penney (J.C.), Inc. 6.95%, 4/1/00 A2 3,250 3,262
8,247
GROCERY STORES - 0.3%
American Stores Co. 7 1/2%, 5/1/37 Baa2 4,850 4,872
Food-4-Less pay-in-kind 13 5/8%, 6/15/07 - 120 131
Pathmark Stores, Inc. 11 5/8%, 6/15/02 Caa 220 218
Pueblo Xtra International, Inc.:
9 1/2%, 8/1/03 B3 1,220 1,130
9 1/2%, 8/1/03 (e) B3 80 74
Ralph's Grocery Co. 10.45%, 6/15/04 B1 920 978
7,403
RETAIL & WHOLESALE, MISCELLANEOUS - 0.0%
Guitar Center Management Co., Inc.
11%, 7/1/06 B2 300 326
TOTAL RETAIL & WHOLESALE 17,686
SERVICES - 0.2%
PRINTING - 0.0%
Sullivan Graphics, Inc. 12 3/4%, 8/1/05 Caa 1,350 1,370
SERVICES - 0.2%
Orion Network Systems, Inc.:
11 1/4%, 1/15/07 unit B2 1,605 1,605
0%, 1/15/07 unit (c) B2 5,410 2,773
Outsourcing Solutions, Inc. 11%,
11/1/06 (e) B3 420 445
4,823
TOTAL SERVICES 6,193
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 1.1%
COMMUNICATIONS EQUIPMENT - 0.2%
Echostar Satellite Broadcasting Corp.
0%, 3/15/04 (c) Caa $ 1,190 $ 845
Echostar Communications Corp. 0%, 6/1/04 (c) B2 2,240 1,837
Hyperion Telecommunications, Inc., Series B,
0%, 4/15/03 (c) - 3,790 1,923
Intermedia Communications, Inc.
0%, 5/15/06 (c) B3 1,970 1,281
5,886
COMPUTERS & OFFICE EQUIPMENT - 0.7%
Bell & Howell Co. 0%, 3/1/05 (c) B3 2,520 1,991
Comdisco, Inc.:
6.35%, 8/7/98 Baa1 2,500 2,500
6.70%, 8/6/99 Baa1 3,000 2,999
5 3/4%, 2/15/01 Baa1 6,000 5,753
6 3/8%, 11/30/01 Baa1 4,500 4,372
Dictaphone Corp. 11 3/4%, 8/1/05 B3 900 817
Exide Electronics Group, Inc. 11 1/2%, 5/15/06 B3 450 473
Unisys Corp.:
12%, 4/15/03 B1 1,330 1,403
11 3/4%, 10/15/04 B1 80 84
20,392
ELECTRONICS - 0.2%
Fairchild Semiconductor Corp.
10 1/8%, 3/15/07 (e) B2 1,120 1,134
Texas Instruments, Inc. 6 7/8%, 7/15/00 A3 5,370 5,384
6,518
TOTAL TECHNOLOGY 32,796
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.2%
Atlas Air, Inc. pass through trust
12 1/4%, 12/1/02 Ba3 860 942
Delta Air Lines, Inc.
8 1/4%, 12/27/07 (d) Baa3 2,600 2,867
equipment trust certificate 8.54%, 1/2/07 Baa1 765 804
4,613
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - CONTINUED
RAILROADS - 0.1%
Burlington Northern Santa Fe Corp.
7.29%, 6/1/36 Baa2 $ 4,360 $ 4,377
TOTAL TRANSPORTATION 8,990
UTILITIES - 2.0%
CELLULAR - 0.9%
Arch Communications Group, Inc. 0%,
3/15/08 (c) B3 5,670 2,622
McCaw International Ltd. 0%,
4/15/07 unit (c)(e) CCC 5,860 2,864
Microcell Telecommunications, Inc. 0%,
6/1/06 (c) B3 6,280 3,077
Millicom International Cellular SA 0%,
6/1/06 (c) B3 11,920 8,344
Mobile Telecommunications Technologies Corp.
13 1/2%, 12/15/02 B3 1,370 1,346
RSL Communications Ltd./RSL Communications
PLC 12 1/4%, 11/15/06 unit (e) - 930 930
360 Degrees Communications Co.
7 1/8%, 3/1/03 Ba1 6,970 6,850
USA Mobile Communications, Inc. II
9 1/2%, 2/1/04 B2 390 328
26,361
ELECTRIC UTILITY - 0.1%
AES China Generating Ltd. yankee
10 1/8%, 12/15/06 Ba3 600 630
Virginia Electric & Power Co.
6.35%, 6/8/98 A3 3,000 3,004
3,634
GAS - 0.2%
Columbia Gas System, Inc. 6.61%, 11/28/02 Baa1 6,000 5,881
TELEPHONE SERVICES - 0.8%
Brooks Fiber Properties, Inc.:
0%, 3/1/06 (c) - 790 514
11 7/8%, 11/1/06 - 1,000 620
GST USA, Inc. 0%, 12/15/05 (c) - 1,800 1,044
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
MFS Communications, Inc. (c):
0%, 1/15/04 Ba3 $ 1,410 $ 1,276
0%, 1/15/06 Ba3 7,680 5,798
Mcleod, Inc. 0%, 3/1/07 (c)(e) B3 1,120 638
Pagemart, Inc. 0%, 11/1/03 (c) - 2,650 2,120
Shared Technologies Fairchild Communications
Corp. 0%, 3/1/06 (c) Caa 1,990 1,642
Teleport Communications Group, Inc. 8%, 8/1/05 B1 320 220
WorldCom, Inc. 7 3/4%, 4/1/07 Ba1 9,000 8,957
22,829
TOTAL UTILITIES 58,705
TOTAL NONCONVERTIBLE BONDS 505,327
TOTAL CORPORATE BONDS
(Cost $517,185) 513,747
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - 7.9%
U.S. TREASURY OBLIGATIONS - 6.2%
7 3/4%, 12/31/99 Aaa 8,345 8,616
5 3/4%, 10/31/00 Aaa 1,245 1,217
6 5/8%, 6/30/01 Aaa 36,300 36,396
7 7/8%, 8/15/01 Aaa 2,510 2,633
10 3/4%, 5/15/03 Aaa 402 483
12 3/8%, 5/15/04 Aaa 1,315 1,729
7%, 7/15/06 Aaa 68,380 69,534
12 3/4%, 11/15/10 Aaa 30,500 42,033
13 7/8%, 5/15/11 Aaa 1,410 2,071
7 1/4%, 2/15/23 Aaa 9,883 9,971
TOTAL U.S. TREASURY OBLIGATIONS 174,683
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.7%
Federal Agricultural Mortgage Corporation
7.01%, 2/10/04 Aaa $ 1,720 $ 1,730
Federal Home Loan Bank:
7.36%, 7/1/04 Aaa 1,590 1,636
7.38%, 8/5/04 Aaa 3,790 3,892
7.56%, 9/1/04 Aaa 5,530 5,732
7.70%, 9/20/04 Aaa 1,170 1,223
Federal National Mortgage Association
8 5/8%, 6/30/04 Aaa 4,000 4,371
Financing Corp. stripped principal 0%, 6/6/02 Aaa 5,230 3,725
Government Trust Certificates (assets of Trust
guaranteed by U.S. Government through
Defense Security Assistance Agency)
Class 1-C, 9 1/4%, 11/15/01 Aaa 158 167
Class 2-E, 9.40%, 5/15/02 Aaa 2,135 2,254
Guaranteed Export Trust Certificates (assets of
Trust guaranteed by U.S. Government
through Export-Import Bank):
Series 1993-C, 5.20%, 10/15/04 Aaa 425 403
Series 1993-D, 5.23%, 5/15/05 Aaa 758 717
Series 1994-A, 7.12%, 4/15/06 Aaa 683 689
Guaranteed Trade Trust Certificates (assets of
Trust guaranteed by U.S. Government
through Export-Import Bank) Series 1994-B,
7 1/2%, 1/26/06 Aaa 566 580
Overseas Private Investment Corp. (U.S.
Government guaranteed participation
certificate):
Series 1994-195, 6.08%, 8/15/04 (callable) Aaa 1,840 1,786
Series 1996-A1, 6.726%, 9/15/10 - 5,000 4,890
State of Israel (guaranteed by U.S. government
through Agency for International
Development):
7 3/4%, 11/15/99 Aaa 2,660 2,732
8%, 11/15/01 Aaa 1,160 1,216
0%, 11/15/01 Aaa 2,320 1,725
6 1/8%, 3/15/03 Aaa 3,443 3,320
7 5/8%, 8/15/04 Aaa 1,650 1,700
5.89%, 8/15/05 Aaa 3,155 2,944
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
U.S. Department of Housing and Urban
Development Government U.S. guaranteed
participation certificates Series 1995-A,
8.24%, 8/1/04 Aaa $ 2,200 $ 2,358
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 49,790
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $229,297) 224,473
U.S. GOVERNMENT AGENCY - MORTGAGE-BACKED SECURITIES - 6.4%
Federal Home Loan Mortgage Corporation:
7%, 7/1/99 to 7/1/26 Aaa 4,725 4,742
5 1/2%, 10/1/02 to 5/1/03 Aaa 4,372 4,147
Federal National Mortgage Association:
5 1/2%, 2/1/03 to 4/1/26 Aaa 89,938 84,848
6%, 6/1/11 to 9/1/25 Aaa 18,271 16,715
6 1/2%, 2/1/24 to 4/1/26 Aaa 41,238 39,100
7 1/2%, 5/1/27 Aaa 800 794
Government National Mortgage Association:
7%, 12/1/22 to 12/15/25 Aaa 13,855 13,446
8%, 11/15/21 to 12/15/26 Aaa 16,705 16,962
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $184,451) 180,754
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.8%
First Chicago/Lennar Trust (f):
Series 1997-CHL1 Class D 8.106%, 4/1/39 - 700 660
Series 1997-CHL1 Class E 8.106%, 4/1/39 - 350 263
Federal Home Loan Mortgage Corporation:
planned amortization class Series 1645
Class ZA, 5 1/2%, 4/15/05 Aaa 10,792 10,441
planned amortization class Series 1727
Class D, 6 1/2%, 8/15/14 Aaa 8,730 8,744
Z Bond Series 1708Y Class Z, 6%, 3/15/09 Aaa 10,348 8,846
COLLATERALIZED MORTGAGE OBLIGATIONS - CONTINUED
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
Federal National Mortgage Association:
planned amortization class Series 1993-129
Class D, 6.10%, 6/25/05 Aaa $ 5,000 $ 4,935
Z Bond Series 1993-10 Class Z,
6 1/2%, 2/25/08 Aaa 17,667 15,818
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $50,203) 49,707
COMMERCIAL MORTGAGE SECURITIES - 0.4%
American Southwest Financial Securities
Series 1994-C2 Class B2, 12.79%,
12/25/01 (e)(f) - 700 683
Berkeley Federal Bank & Trust FSB Series 1994
Class 1-B, 7.6832%, 8/1/24 (e)(f) - 1,836 1,315
DLJ Mortgage Acceptance Corp. Series 1993-MF12
Class B-2, 10.10%, 9/18/03 (e) - 700 674
General Motors Acceptance Corp. Commercial
Mortgage Securities, Inc. Series 1996-C1 Class F,
7.86%, 11/15/06 (e) Ba3 500 461
Lehman Structured Securities Corp. Series 1996-1
Class E-2, 7.995%, 6/25/26 BB 709 689
Morgan Stanley Capital One, Inc. Series 1996-MBL1
Class E, 8.661%, 5/25/21 (e) - 783 710
Mortgage Capital Funding, Inc. Series 1996-MC1
Class G, 7.15%, 7/15/28 (e) BB 1,000 872
Penn Mutual Life Insurance Co. (The) Series 1996-PML
Class K, 7.90%, 11/15/26 (e) - 1,250 743
Structured Asset Securities Corp.:
Series 1995-C1 Class E, 7 3/8%, 9/25/24 (e) BB 1,000 879
Series 1993-C1 Class E, 6.60%, 10/25/24 (e) B 500 185
sequential pay Series 1995-C4 Class A-1A,
6.90%, 6/25/26 AAA 754 753
sequential pay Series 1996 Class A-2A,
7 3/4%, 2/25/28 AAA 1,482 1,502
Wells Fargo Capital Markets Apartment
Financing Trust 6.56%, 12/29/05 (e) Aaa 3,000 2,932
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $11,817) 12,398
FOREIGN GOVERNMENT OBLIGATIONS (G) - 0.6%
MOODY'S RATINGS (B) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
Export Development Corp. yankee
8 1/8%, 8/10/99 Aa2 $ 1,250 $ 1,291
Manitoba Province yankee 6 3/8%, 10/15/99 A1 4,780 4,756
Mexico Value recovery rights discount A (a) BB+ 1 -
Quebec Province yankee (d):
6.86%, 4/15/26 A2 8,000 7,768
7.22%, 7/22/36 A2 3,200 3,286
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $16,962) 17,101
CASH EQUIVALENTS - 1.9%
SHARES
Taxable Central Cash Fund (h)
(Cost $52,330) 52,329,614 52,330
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $2,492,974) $ 2,835,897
LEGEND
1. Non-income producing
2. Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
3. Debt obligation initially issued in zero coupon form which converts
to coupon form at a specified rate and date.
4. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
5. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $100,478,000 or
3.5% of net assets.
6. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
7. For foreign government obligations not individually rated by S&P or
Moody's, the ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's
ratings of the sovereign credit of the issuing government.
8. At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.45%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 23.2% AAA, AA, A 21.9%
Baa 4.5% BBB 7.0%
Ba 2.2% BB 1.0%
B 3.9% B 3.8%
Caa 0.3% CCC 0.3%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
of the sovereign credit of the issuing government. The percentage not
rated by both S&P and Moody's amounted to 0.7%. FMR has determined
that unrated debt securities that are lower quality account for 0.6%
of the total value of investment in securities.
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 88.8%
United Kingdom 5.4
Netherlands 2.9
Canada 1.0
Others (individually less than 1%) 1.9
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for
income tax purposes was $2,494,195,000. Net unrealized appreciation
aggregated $341,702,000, of which $372,789,000 related to appreciated
investment securities and $31,087,000 related to depreciated
investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) APRIL 30, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $2,492,974) - $ 2,835,897
SEE ACCOMPANYING SCHEDULE
CASH 187
RECEIVABLE FOR INVESTMENTS SOLD 9,378
RECEIVABLE FOR FUND SHARES SOLD 2,198
DIVIDENDS RECEIVABLE 3,232
INTEREST RECEIVABLE 15,894
OTHER RECEIVABLES 10
PREPAID EXPENSES 20
TOTAL ASSETS 2,866,816
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 22,944
PAYABLE FOR FUND SHARES REDEEMED 6,529
ACCRUED MANAGEMENT FEE 1,029
DISTRIBUTION FEES PAYABLE 1,132
OTHER PAYABLES AND ACCRUED EXPENSES 577
TOTAL LIABILITIES 32,211
NET ASSETS $ 2,834,605
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 2,413,499
UNDISTRIBUTED NET INVESTMENT INCOME 3,658
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 74,534
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 342,914
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS $ 2,834,605
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) APRIL 30, 1997
CALCULATION OF MAXIMUM OFFERING PRICE $17.14
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($3,914 (DIVIDED BY) 228.37 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/94.75 OF $17.14) $18.09
CLASS T: $17.16
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($2,801,708 (DIVIDED BY) 163,233 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.50 OF $17.16) $17.78
CLASS B: $17.12
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($3,793 (DIVIDED BY) 221.53 SHARES) A
INSTITUTIONAL CLASS: $17.22
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE ($25,190 (DIVIDED BY) 1,463 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED APRIL 30, 1997
INVESTMENT INCOME $ 20,616
DIVIDENDS
INTEREST 39,508
TOTAL INCOME 60,124
EXPENSES
MANAGEMENT FEE $ 6,543
TRANSFER AGENT FEES 2,704
DISTRIBUTION FEES 7,187
ACCOUNTING FEES AND EXPENSES 403
NON-INTERESTED TRUSTEES' COMPENSATION 17
CUSTODIAN FEES AND EXPENSES 58
REGISTRATION FEES 85
AUDIT 42
LEGAL 10
MISCELLANEOUS 67
TOTAL EXPENSES BEFORE REDUCTIONS 17,116
EXPENSE REDUCTIONS (85) 17,031
NET INVESTMENT INCOME 43,093
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 77,333
FOREIGN CURRENCY TRANSACTIONS 119 77,452
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 143,507
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (29) 143,478
NET GAIN (LOSS) 220,930
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 264,023
FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 43,093 $ 107,896
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 77,452 30,925
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 143,478 144,053
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 264,023 282,874
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (49,846) (124,584)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (19,450) (6,649)
TOTAL DISTRIBUTIONS (69,296) (131,233)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) (375,838) (578,059)
TOTAL INCREASE (DECREASE) IN NET ASSETS (181,111) (426,418)
NET ASSETS
BEGINNING OF PERIOD 3,015,716 3,442,134
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 2,834,605 $ 3,015,716
INCOME OF $3,658 AND $10,411, RESPECTIVELY)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1997 1996 D
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA H
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.04 $ 15.22
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .23 .08
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.24 .88
TOTAL FROM INVESTMENT OPERATIONS 1.47 .96
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.26) (.14)
FROM NET REALIZED GAIN (.11) -
TOTAL DISTRIBUTIONS (.37) (.14)
NET ASSET VALUE, END OF PERIOD $ 17.14 $ 16.04
TOTAL RETURN B, C 9.26% 6.34%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 4 $ 1
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.44% A, E 1.50% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.44% A 1.49% A,
F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.79% A 3.07% A
PORTFOLIO TURNOVER 75% A 223%
AVERAGE COMMISSION RATE G $ .0452 $ .0106
</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 OCTOBER 31, 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 THE NOTES TO FINANCIAL STATEMENTS).
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30,
1997 1996 1995 1994 D 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 16.07 $ 15.30 $ 14.67 $ 15.91 $ 14.41 $ 14.13
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .25 G .51 G .59 .38 .48 .50
NET REALIZED AND 1.24 .88 .54 (.79) 2.18 .85
UNREALIZED GAIN (LOSS)
TOTAL FROM 1.49 1.39 1.13 (.41) 2.66 1.35
INVESTMENT OPERATIONS
LESS DISTRIBUTIONS (.29) (.59) (.50) (.28) (.56) (.46)
FROM NET
INVESTMENT INCOME
IN EXCESS OF NET - - - (.02) - -
INVESTMENT INCOME
FROM NET (.11) (.03) - (.49) (.60) (.61)
REALIZED GAIN
RETURN OF CAPITAL - - - (.04) - -
TOTAL DISTRIBUTIONS (.40) (.62) (.50) (.83) (1.16) (1.07)
NET ASSET VALUE, $ 17.16 $ 16.07 $ 15.30 $ 14.67 $ 15.91 $ 14.41
END OF PERIOD
TOTAL RETURN B, C 9.37% 9.30% 7.85% (2.69)% 19.66% 10.27%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 2,802 $ 2,993 $ 3,441 $ 3,129 $ 1,654 $ 398
(IN MILLIONS)
RATIO OF EXPENSES TO 1.21% A 1.26% 1.47% 1.59% 1.52% 1.60%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.20% A, 1.25% E 1.46% E 1.58% E 1.51% E 1.60%
AVERAGE NET ASSETS AFTER E
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT 3.03% A 3.32% 3.99% 3.79% 3.24% 3.97%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER 75% A 223% 297% 202% 200% 389%
AVERAGE COMMISSION $ .0452 $ .0106
RATE F
</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 EFFECTIVE NOVEMBER 1,1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED
APRIL 30,
1997 C
SELECTED PER-SHARE DATA G
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.36
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .10
NET REALIZED AND UNREALIZED GAIN (LOSS) .78
TOTAL FROM INVESTMENT OPERATIONS .88
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.12)
NET ASSET VALUE, END OF PERIOD $ 17.12
TOTAL RETURN B, D 5.38%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 4
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.19% A, E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.97% A
PORTFOLIO TURNOVER 75% A
AVERAGE COMMISSION RATE F $ .0452
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO APRIL 30,1997.
D TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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 FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30,
1997 1996 1995 D
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.11 $ 15.40 $ 15.23
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .28 H .54 H .25
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.26 .87 .09
TOTAL FROM INVESTMENT OPERATIONS 1.54 1.41 .34
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.32) (.67) (.17)
FROM NET REALIZED GAIN (.11) (.03) -
TOTAL DISTRIBUTIONS (.43) (.70) (.17)
NET ASSET VALUE, END OF PERIOD $ 17.22 $ 16.11 $ 15.40
TOTAL RETURN B, C 9.67% 9.41% 2.22%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 25 $ 22 $ 1
RATIO OF EXPENSES TO AVERAGE NET ASSETS .78% A 1.06% .92% A,
E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER .78% A 1.03% F .91% A,
EXPENSE REDUCTIONS F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.45% A 3.54% 4.54% A
PORTFOLIO TURNOVER 75% A 223% 297%
AVERAGE COMMISSION RATE G $ .0452 $ .0106
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED .
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Balanced Fund (the fund)(formerly Fidelity Advisor
Income & Growth Fund) is a fund of Fidelity Advisor Series II (the
trust) and is authorized to issue an unlimited number of shares. The
trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust.
The fund offers Class A, Class T, Class B, and Institutional Class
shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to its
distribution plan. The fund commenced sale of a new Class B of shares
on December 31, 1996. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions are allocated on a pro rata basis to
each class based on the relative net assets of each class to the total
net assets of the fund. Each class of shares differs in its respective
distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Equity securities for which quotations are readily
available are valued at the last sale price, or if no sale price, at
the closing bid price. Debt securities for which quotations are
readily available are valued by a pricing service at their market
values as determined by their most recent bid prices in the principal
market (sales prices if the principal market is an exchange) in which
such securities are normally traded. Securities (including restricted
securities) for which market quotations are not readily available are
valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
between the funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class A and Class B, and shares of Class A and Class B for
distribution under federal and state securities law. These expenses
are borne by Class A and Class B and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for paydown gains/losses on certain securities, foreign
currency transactions, market discount, partnerships, non-taxable
dividends and losses deferred due to wash sales. 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of FMR, may transfer uninvested cash
balances into one or more joint trading accounts. These balances are
invested in one or more repurchase agreements for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, an affiliate of FMR. The Cash Fund is
an open-end money market fund available only to investment companies
and other accounts managed by FMR and its affiliates. The Cash Fund
seeks preservation of capital, liquidity, and current income by
investing
2. OPERATING POLICIES - CONTINUED
TAXABLE CENTRAL CASH FUND - CONTINUED
in U.S. Treasury securities and repurchase agreements for these
securities. Dividends from the Cash Fund are declared daily and paid
monthly from net interest income. Income distributions received by the
fund are recorded as interest income in the accompanying financial
statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,050,321,000 and $1,402,345,000, respectively, of which
U.S. government and government agency obligations aggregated
$329,252,000 and $472,529,000, 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 .2500% to .5200% for the
period. 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.
The annual individual fund fee rate is .15%. For the period, the
management fee was equivalent to an annualized rate of .46% of average
net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. This fee is based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 3,000 $ 3,000
CLASS T 7,179,000 7,179,000
CLASS B 5,000 1,000
$ 7,187,000 $ 7,183,000
Under the Plans, FMR or FDC may use its resources to pay
administrative and promotional expenses related to the sale of each
class' shares. The Plans also authorize payments to third parties that
assist in the sale of each class' shares or render shareholder support
services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the
fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within six years
of purchase (five years prior to January 2, 1997). The Class B charge
is based on declining rates which range from 5% to 1%(4% to 1% prior
to January 2, 1997) 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.
For the period, FDC received the following sales charge amounts
related to each class, a portion of which is paid to securities,
dealers, banks, and other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 160,000 $ 55,000
CLASS T 542,000 398,000
CLASS B 1,000 0 *
$ 703,000 $ 453,000
* WHEN CLASS B SHARES ARE INITIALLY SOLD, FDC PAYS COMMISSIONS FROM
ITS OWN RESOURCES TO DEALERS THROUGH WHICH THE SALES ARE MADE.
TRANSFER AGENT FEES. Each class of the fund has entered into a
separate transfer, dividend disbursing, and shareholder servicing
agent (collectively referred to as the Transfer Agents) contract with
respect to its shares. The Transfer Agents receive
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES - CONTINUED
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. For the period, the following amounts were paid to each
transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC * $ 3,000 .25
CLASS T ** FIIOC * 2,682,000 .19
CLASS B FIIOC * 1,000 .27
INSTITUTIONAL CLASS FIIOC * 18,000 .15
$ 2,704,000
* FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC. (FIIOC)
AN AFFILIATE OF FMR.
** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS
THE TRANSFER AGENT FOR THE FUND'S CLASS T SHARES. STATE STREET,
HOWEVER, HAD DELEGATED CERTAIN TRANSFER, DIVIDEND DISBURSING, AND
SHAREHOLDER SERVICES TO FIIOC FOR WHICH FIIOC RECEIVED ITS ALLOCABLE
SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $148,000 for the
period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.50% $ 4,000
CLASS B 2.25% 11,000
$ 15,000
In addition, FMR agreed to reimburse certain transfer agent,
registration and other class specific expenses for Class A and Class
B. For the period, the reimbursement reduced these expenses by $1,000
and $1,000 for Class A and Class B, respectively.
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $65,000 under this arrangement.
5. EXPENSE REDUCTIONS - CONTINUED
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $3,000.
6. BENEFICIAL INTEREST.
At the end of the period, one shareholder was record owner of
approximately 22.6% of the total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1997 B 1996 A
CLASS A
FROM NET INVESTMENT INCOME $ 38 $ 4
FROM NET REALIZED GAIN 12 -
TOTAL $ 50 $ 4
CLASS T
FROM NET INVESTMENT INCOME $ 49,359 $ 124,292
FROM NET REALIZED GAIN 19,291 6,647
TOTAL $ 68,650 $ 130,939
CLASS B
FROM NET INVESTMENT INCOME $ 13 $ -
INSTITUTIONAL CLASS
FROM NET INVESTMENT INCOME $ 436 $ 288
FROM NET REALIZED GAIN 147 2
TOTAL $ 583 $ 290
$ 69,296 $ 131,233
1. DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
2. DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD DECEMBER 31, 1996
(COMMENCEMENT OF SALE OF SHARES) TO APRIL 30, 1997.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1997 B 1996 A 1997 B 1996 A
CLASS A 178 79 $ 3,002 $ 1,223
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 3 - 49 4
SHARES REDEEMED (27) (5) (466) (76)
NET INCREASE (DECREASE) 154 74 $ 2,585 $ 1,151
CLASS T 14,382 36,300 $ 241,499 $ 563,225
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 3,913 7,921 64,825 122,603
SHARES REDEEMED (41,259) (82,882) (690,291) (1,284,921)
NET INCREASE (DECREASE) (22,964) (38,661) $ (383,967) $ (599,093)
CLASS B 236 - $ 3,980 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1 - 13 -
SHARES REDEEMED (15) - (254) -
NET INCREASE (DECREASE) 222 - $ 3,739 $ -
INSTITUTIONAL CLASS 272 1,421 $ 4,574 $ 21,932
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 34 17 561 270
SHARES REDEEMED (197) (149) (3,330) (2,319)
NET INCREASE (DECREASE) 109 1,289 $ 1,805 $ 19,883
</TABLE>
1. SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
2. SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD DECEMBER 31, 1996
(COMMENCEMENT OF SALE OF SHARES) TO APRIL 30, 1997.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 17,000
CLASS T 47,000
CLASS B 7,000
INSTITUTIONAL CLASS 14,000
$ 85,000
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series II and the Shareholders of
Fidelity Advisor Balanced Fund (formerly Fidelity Advisor Income &
Growth Fund):
We have audited the accompanying statement of assets and liabilities
of Fidelity Advisor Series II: Fidelity Advisor Balanced Fund
(formerly Fidelity Advisor Income & Growth Fund), including the
schedule of portfolio investments, as of April 30, 1997, and the
related statement of operations for the six months then ended, the
statement of changes in net assets for the six months ended April 30,
1997 and for the year ended October 31, 1996 and the financial
highlights of Class A, Class T, Class B and Institutional Class for
each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of April 30, 1997 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Advisor Series II: Fidelity Advisor
Balanced Fund (formerly Fidelity Advisor Income & Growth Fund) as of
April 30, 1997, the results of its operations for the six months then
ended, the changes in its net assets for the six months ended April
30, 1997 and for the year ended October 31, 1996 and the financial
highlights of Class A, Class T, Class B and Institutional Class for
each of the periods indicated therein, in conformity with generally
accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 13, 1997
INVESTMENT ADVISER
Fidelity Management & Research Company Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William S. Hayes, Vice President
Bettina E. Doulton, Vice President
Kevin Grant, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributions Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Funds
(REGISTERED TRADEMARK)
