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Previous: APPLIED RESEARCH CORP, NT 10-Q, 1999-01-13 |
Next: ELDORADO ARTESIAN SPRINGS INC, DEF 14A, 1999-01-13 |
(FIDELITY_LOGO)(registered trademark)
FIDELITY ADVISOR
BALANCED FUND -
CLASS A, CLASS T, CLASS B
AND CLASS C
ANNUAL REPORTS
OCTOBER 31, 1998
AND THE ONE-MONTH
PERIOD ENDED
NOVEMBER 30, 1998
(FIDELITY_LOGO)
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 20 The managers' review of fund performance,
strategy and outlook.
INVESTMENT CHANGES 23 A summary of major shifts in the fund's
investments.
INVESTMENTS NOVEMBER 30, 1998 24 A complete list of the fund's investments
with their market values.
INVESTMENTS OCTOBER 31, 1998 55 A complete list of the fund's investments
with their market values.
FINANCIAL STATEMENTS 85 Statements of assets and liabilities,
operations, and changes in net assets, as
well as financial highlights.
NOTES 94 Notes to the financial statements.
REPORT OF INDEPENDENT ACCOUNTANTS 106 The auditors' opinion.
DISTRIBUTIONS 107
</TABLE>
NOTE TO SHAREHOLDERS: The fiscal year end for Fidelity Advisor
Balanced Fund recently changed from October 31 to November 30. This
change was made in order to align the fund's fiscal year end more
closely with other similar Fidelity funds. To reduce expenses and
provide you with a comprehensive report covering both periods ended
October 31 and November 30, we've combined both annual reports into
one document.
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:
The month of November proved to be a strong one for the stock and bond
markets. The Dow Jones Industrial Average reached a record high.
Merger activity, which had lulled during the summer correction, has
increased significantly. Small-cap stocks posted their third
consecutive month of positive returns, as did emerging markets. While
bond returns generally were not at the levels of their equity
counterparts, they were mostly positive nonetheless.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR 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 shares' 0.50% 12b-1 fee (0.65% prior to
January 1, 1996). If Fidelity had not reimbursed certain class
expenses, the past five years and past 10 years total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED NOVEMBER 30, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL A 14.18% 64.35% 244.60%
FIDELITY ADV BALANCED - CL A (INCL. 5.75% 7.61% 54.90% 224.78%
SALES CHARGE)
Fidelity Balanced Composite 18.48% 116.57% 306.79%
S&P 500 (registered trademark) 23.66% 181.25% 457.74%
LB Aggregate Bond 9.45% 42.40% 141.94%
Balanced Funds Average 11.31% 88.42% 235.21%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class A's returns to the performance of the
Fidelity Balanced Composite Index, a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. 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 one year average
represents a peer group of 393 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED NOVEMBER 30, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL A 14.18% 10.45% 13.17%
FIDELITY ADV BALANCED - CL A (INCL. 5.75% 7.61% 9.15% 12.50%
SALES CHARGE)
Fidelity Balanced Composite 18.48% 16.71% 15.06%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' cumulative return
and show you what would have happened if Class A shares had performed
at a constant rate each year.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$10,000 OVER 10 YEARS
FA Balanced -CL A FID Balanced Composite S&P 500 LB Aggregate Bond
00249 F0021 SP001 LB001
1988/11/30 9425.00 10000.00 10000.00 10000.00
1988/12/31 9537.94 10109.40 10175.00 10011.00
1989/01/31 9913.17 10611.63 10919.81 10155.16
1989/02/28 9948.08 10422.54 10647.91 10082.04
1989/03/31 10115.50 10586.17 10896.00 10125.39
1989/04/30 10521.88 11004.32 11461.51 10337.01
1989/05/31 10866.43 11387.49 11925.70 10608.88
1989/06/30 11016.22 11487.02 11857.72 10931.39
1989/07/31 11516.55 12207.26 12928.47 11164.23
1989/08/31 11695.24 12278.55 13181.87 10999.00
1989/09/30 11713.49 12273.39 13127.82 11055.09
1989/10/31 11532.87 12223.31 12823.26 11327.05
1989/11/30 11767.68 12419.38 13084.85 11434.65
1989/12/31 11883.98 12611.63 13398.89 11465.53
1990/01/31 11309.11 12043.85 12499.82 11329.09
1990/02/28 11338.84 12152.49 12661.07 11365.34
1990/03/31 11497.55 12349.12 12996.59 11373.30
1990/04/30 11347.06 12118.43 12671.68 11268.66
1990/05/31 11768.43 12970.84 13907.16 11602.21
1990/06/30 11818.36 13001.46 13812.60 11789.01
1990/07/31 11787.90 13048.26 13768.40 11951.70
1990/08/31 11067.02 12270.58 12523.73 11791.55
1990/09/30 10811.58 11952.78 11913.83 11889.41
1990/10/31 10708.71 11982.66 11862.60 12040.41
1990/11/30 11192.20 12550.16 12628.92 12299.28
1990/12/31 11534.24 12838.56 12981.27 12491.15
1991/01/31 12129.76 13238.10 13547.25 12646.04
1991/02/28 12840.20 13851.02 14515.88 12753.53
1991/03/31 13166.33 14090.37 14867.16 12841.53
1991/04/30 13419.53 14171.53 14902.84 12980.22
1991/05/31 13978.67 14571.73 15546.65 13055.50
1991/06/30 13692.17 14168.38 14834.61 13048.98
1991/07/31 14277.76 14643.31 15525.90 13230.36
1991/08/31 14639.77 14978.05 15893.87 13516.13
1991/09/30 14747.55 14949.60 15628.44 13790.51
1991/10/31 15177.20 15136.17 15837.86 13943.58
1991/11/30 14822.74 14825.88 15199.60 14071.86
1991/12/31 15511.42 16019.66 16938.43 14489.80
1992/01/31 15613.46 15753.73 16623.37 14292.74
1992/02/29 15942.29 15917.57 16839.48 14385.64
1992/03/31 15885.69 15695.68 16511.11 14305.08
1992/04/30 16011.50 16017.75 16996.54 14408.08
1992/05/31 16331.73 16185.94 17079.82 14680.39
1992/06/30 16183.23 16130.58 16825.33 14882.98
1992/07/31 16655.82 16658.05 17513.49 15186.59
1992/08/31 16655.82 16520.46 17154.46 15339.98
1992/09/30 16793.61 16716.06 17356.88 15522.52
1992/10/31 16735.54 16662.23 17417.63 15316.07
1992/11/30 16840.07 17004.48 18011.57 15319.14
1992/12/31 16938.40 17238.12 18233.11 15562.71
1993/01/31 17257.99 17457.39 18386.27 15861.51
1993/02/28 17626.75 17722.04 18636.33 16139.09
1993/03/31 18292.04 17976.17 19029.55 16206.88
1993/04/30 18812.54 17765.49 18569.04 16320.32
1993/05/31 19171.94 18060.40 19066.69 16341.54
1993/06/30 19048.50 18222.58 19121.98 16637.32
1993/07/31 19248.35 18220.40 19045.49 16732.15
1993/08/31 19947.84 18762.27 19767.32 17024.97
1993/09/30 19761.34 18695.85 19615.11 17070.93
1993/10/31 20025.66 18955.73 20021.14 17134.10
1993/11/30 19761.34 18783.23 19830.94 16988.46
1993/12/31 20267.66 18960.17 20070.89 17080.19
1994/01/31 20831.01 19449.34 20753.30 17310.78
1994/02/28 20464.18 18997.72 20190.89 17009.57
1994/03/31 19646.89 18313.05 19310.57 16589.43
1994/04/30 19488.45 18395.09 19557.74 16456.72
1994/05/31 19567.67 18575.36 19878.49 16455.07
1994/06/30 19196.31 18285.96 19391.47 16418.87
1994/07/31 19567.51 18791.38 20027.51 16745.61
1994/08/31 19806.13 19262.67 20848.63 16765.70
1994/09/30 19673.78 18866.24 20337.84 16519.25
1994/10/31 19487.80 19114.15 20795.44 16504.38
1994/11/30 19222.12 18679.64 20038.07 16468.07
1994/12/31 19235.40 18897.41 20335.24 16581.70
1995/01/31 19181.82 19341.08 20862.53 16910.02
1995/02/28 19516.70 19977.44 21675.54 17312.47
1995/03/31 19840.97 20379.91 22315.19 17418.08
1995/04/30 20057.07 20854.15 22972.37 17661.93
1995/05/31 20448.76 21677.10 23890.58 18345.45
1995/06/30 20694.25 22042.53 24445.56 18479.37
1995/07/31 21007.39 22461.69 25256.17 18438.72
1995/08/31 21061.85 22604.23 25319.56 18661.83
1995/09/30 21265.33 23264.27 26388.05 18842.85
1995/10/31 21018.06 23335.42 26293.84 19087.80
1995/11/30 21608.76 24090.08 27448.14 19374.12
1995/12/31 21940.29 24503.37 27976.80 19645.36
1996/01/31 22135.81 25068.52 28929.13 19775.02
1996/02/29 21772.70 25033.47 29197.30 19430.93
1996/03/31 21606.11 25108.02 29478.47 19294.92
1996/04/30 21577.98 25273.84 29912.98 19186.86
1996/05/31 21690.51 25644.71 30684.44 19148.49
1996/06/30 21817.71 25840.78 30801.34 19405.08
1996/07/31 21363.76 25183.71 29440.54 19457.47
1996/08/31 21533.99 25485.25 30061.44 19424.40
1996/09/30 22373.01 26523.22 31753.30 19762.38
1996/10/31 22959.89 27197.65 32629.06 20201.10
1996/11/30 24190.90 28617.20 35095.49 20546.54
1996/12/31 23762.53 28170.60 34400.24 20355.46
1997/01/31 24575.92 29261.60 36549.57 20418.56
1997/02/28 24953.56 29428.50 36836.12 20469.61
1997/03/31 24090.07 28572.31 35322.52 20242.40
1997/04/30 25085.28 29767.21 37431.28 20546.03
1997/05/31 26095.13 30967.66 39710.10 20741.22
1997/06/30 27089.31 31947.47 41489.11 20988.04
1997/07/31 28546.83 33817.74 44790.40 21554.72
1997/08/31 27280.70 32566.08 42281.24 21371.50
1997/09/30 28385.62 33829.06 44596.98 21687.80
1997/10/31 27778.21 33347.33 43107.44 22002.27
1997/11/30 28444.88 34334.88 45102.89 22103.48
1997/12/31 29013.45 34827.31 45877.30 22326.73
1998/01/31 29284.90 35236.74 46384.71 22612.51
1998/02/28 30370.71 36750.23 49729.97 22594.42
1998/03/31 31428.07 37929.40 52276.64 22671.24
1998/04/30 31637.16 38237.23 52802.54 22789.13
1998/05/31 31588.91 37988.16 51894.87 23005.63
1998/06/30 32284.54 39043.16 54002.84 23201.18
1998/07/31 32219.75 38826.47 53427.71 23249.90
1998/08/31 28866.56 35711.50 45703.13 23628.87
1998/09/30 30390.40 37418.37 48630.87 24181.79
1998/10/31 31401.78 39165.21 52586.51 24053.63
1998/11/30 32478.42 40678.79 55773.78 24194.00
IMATRL PRASUN SHR__CHT 19981130 19981230 145229 R00000000000123
</TABLE>
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class A on November 30,
1988, and the current 5.75% sales charge was paid. As the chart shows,
by November 30, 1998, the value of the investment would have grown to
$32,478 - a 224.78% increase on the initial investment. For
comparison, look at how both the Standard & Poor's 500 Index, a widely
recognized, unmanaged index of common stocks, and 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, did over the same period. With
dividends and capital gains, if any, reinvested, the Standard & Poor's
500 Index would have grown to $55,774 - a 457.74% increase. If $10,000
was invested in the Lehman Brothers Aggregate Bond Index, it would
have grown to $24,194 - a 141.94% increase. You can also look at how
the Fidelity Balanced Composite Index did over the same period. The
composite index combines the total returns of the Standard & Poor's
500 Index (60%) and the Lehman Brothers Aggregate Bond Index (40%).
With dividends and interest, if any, reinvested, the same $10,000
would have grown to $40,679 - a 306.79% increase.
(CHECKMARK)
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.
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL T 14.09% 64.73% 245.39%
FIDELITY ADV BALANCED - CL T (INCL. 3.50% 10.10% 58.97% 233.30%
SALES CHARGE)
Fidelity Balanced Composite 18.48% 116.57% 306.79%
S&P 500 23.66% 181.25% 457.74%
LB Aggregate Bond 9.45% 42.40% 141.94%
Balanced Funds Average 11.31% 88.42% 235.21%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class T's returns to the performance of the
Fidelity Balanced Composite Index, a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. 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 one year average
represents a peer group of 393 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL T 14.09% 10.50% 13.20%
FIDELITY ADV BALANCED - CL T (INCL. 3.50% 10.10% 9.71% 12.79%
SALES CHARGE)
Fidelity Balanced Composite 18.48% 16.71% 15.06%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' cumulative return
and show you what would have happened if Class T shares had performed
at a constant rate each year.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$10,000 OVER 10 YEARS
FA Balanced -CL T FID Balanced Composite S&P 500 LB Aggregate Bond
00170 F0021 SP001 LB001
1988/11/30 9650.00 10000.00 10000.00 10000.00
1988/12/31 9765.63 10109.40 10175.00 10011.00
1989/01/31 10149.82 10611.63 10919.81 10155.16
1989/02/28 10185.56 10422.54 10647.91 10082.04
1989/03/31 10356.98 10586.17 10896.00 10125.39
1989/04/30 10773.07 11004.32 11461.51 10337.01
1989/05/31 11125.84 11387.49 11925.70 10608.88
1989/06/30 11279.20 11487.02 11857.72 10931.39
1989/07/31 11791.48 12207.26 12928.47 11164.23
1989/08/31 11974.43 12278.55 13181.87 10999.00
1989/09/30 11993.13 12273.39 13127.82 11055.09
1989/10/31 11808.19 12223.31 12823.26 11327.05
1989/11/30 12048.61 12419.38 13084.85 11434.65
1989/12/31 12167.68 12611.63 13398.89 11465.53
1990/01/31 11579.09 12043.85 12499.82 11329.09
1990/02/28 11609.53 12152.49 12661.07 11365.34
1990/03/31 11772.03 12349.12 12996.59 11373.30
1990/04/30 11617.94 12118.43 12671.68 11268.66
1990/05/31 12049.38 12970.84 13907.16 11602.21
1990/06/30 12100.49 13001.46 13812.60 11789.01
1990/07/31 12069.30 13048.26 13768.40 11951.70
1990/08/31 11331.22 12270.58 12523.73 11791.55
1990/09/30 11069.68 11952.78 11913.83 11889.41
1990/10/31 10964.36 11982.66 11862.60 12040.41
1990/11/30 11459.39 12550.16 12628.92 12299.28
1990/12/31 11809.59 12838.56 12981.27 12491.15
1991/01/31 12419.33 13238.10 13547.25 12646.04
1991/02/28 13146.73 13851.02 14515.88 12753.53
1991/03/31 13480.64 14090.37 14867.16 12841.53
1991/04/30 13739.89 14171.53 14902.84 12980.22
1991/05/31 14312.38 14571.73 15546.65 13055.50
1991/06/30 14019.04 14168.38 14834.61 13048.98
1991/07/31 14618.61 14643.31 15525.90 13230.36
1991/08/31 14989.26 14978.05 15893.87 13516.13
1991/09/30 15099.62 14949.60 15628.44 13790.51
1991/10/31 15539.52 15136.17 15837.86 13943.58
1991/11/30 15176.60 14825.88 15199.60 14071.86
1991/12/31 15881.72 16019.66 16938.43 14489.80
1992/01/31 15986.20 15753.73 16623.37 14292.74
1992/02/29 16322.87 15917.57 16839.48 14385.64
1992/03/31 16264.93 15695.68 16511.11 14305.08
1992/04/30 16393.74 16017.75 16996.54 14408.08
1992/05/31 16721.61 16185.94 17079.82 14680.39
1992/06/30 16569.57 16130.58 16825.33 14882.98
1992/07/31 17053.44 16658.05 17513.49 15186.59
1992/08/31 17053.44 16520.46 17154.46 15339.98
1992/09/30 17194.52 16716.06 17356.88 15522.52
1992/10/31 17135.06 16662.23 17417.63 15316.07
1992/11/30 17242.08 17004.48 18011.57 15319.14
1992/12/31 17342.77 17238.12 18233.11 15562.71
1993/01/31 17669.99 17457.39 18386.27 15861.51
1993/02/28 18047.55 17722.04 18636.33 16139.09
1993/03/31 18728.72 17976.17 19029.55 16206.88
1993/04/30 19261.65 17765.49 18569.04 16320.32
1993/05/31 19629.63 18060.40 19066.69 16341.54
1993/06/30 19503.24 18222.58 19121.98 16637.32
1993/07/31 19707.86 18220.40 19045.49 16732.15
1993/08/31 20424.05 18762.27 19767.32 17024.97
1993/09/30 20233.10 18695.85 19615.11 17070.93
1993/10/31 20503.73 18955.73 20021.14 17134.10
1993/11/30 20233.10 18783.23 19830.94 16988.46
1993/12/31 20751.50 18960.17 20070.89 17080.19
1994/01/31 21328.31 19449.34 20753.30 17310.78
1994/02/28 20952.71 18997.72 20190.89 17009.57
1994/03/31 20115.91 18313.05 19310.57 16589.43
1994/04/30 19953.69 18395.09 19557.74 16456.72
1994/05/31 20034.80 18575.36 19878.49 16455.07
1994/06/30 19654.57 18285.96 19391.47 16418.87
1994/07/31 20034.63 18791.38 20027.51 16745.61
1994/08/31 20278.96 19262.67 20848.63 16765.70
1994/09/30 20143.44 18866.24 20337.84 16519.25
1994/10/31 19953.03 19114.15 20795.44 16504.38
1994/11/30 19681.00 18679.64 20038.07 16468.07
1994/12/31 19694.60 18897.41 20335.24 16581.70
1995/01/31 19639.74 19341.08 20862.53 16910.02
1995/02/28 19982.62 19977.44 21675.54 17312.47
1995/03/31 20314.62 20379.91 22315.19 17418.08
1995/04/30 20535.89 20854.15 22972.37 17661.93
1995/05/31 20936.92 21677.10 23890.58 18345.45
1995/06/30 21188.28 22042.53 24445.56 18479.37
1995/07/31 21508.89 22461.69 25256.17 18438.72
1995/08/31 21564.65 22604.23 25319.56 18661.83
1995/09/30 21772.99 23264.27 26388.05 18842.85
1995/10/31 21519.82 23335.42 26293.84 19087.80
1995/11/30 22124.62 24090.08 27448.14 19374.12
1995/12/31 22464.06 24503.37 27976.80 19645.36
1996/01/31 22664.25 25068.52 28929.13 19775.02
1996/02/29 22292.47 25033.47 29197.30 19430.93
1996/03/31 22121.91 25108.02 29478.47 19294.92
1996/04/30 22093.11 25273.84 29912.98 19186.86
1996/05/31 22208.32 25644.71 30684.44 19148.49
1996/06/30 22338.56 25840.78 30801.34 19405.08
1996/07/31 21873.77 25183.71 29440.54 19457.47
1996/08/31 22048.07 25485.25 30061.44 19424.40
1996/09/30 22906.69 26523.22 31753.30 19762.38
1996/10/31 23521.44 27197.65 32629.06 20201.10
1996/11/30 24780.21 28617.20 35095.49 20546.54
1996/12/31 24356.91 28170.60 34400.24 20355.46
1997/01/31 25189.62 29261.60 36549.57 20418.56
1997/02/28 25576.24 29428.50 36836.12 20469.61
1997/03/31 24691.72 28572.31 35322.52 20242.40
1997/04/30 25726.16 29767.21 37431.28 20546.03
1997/05/31 26760.61 30967.66 39710.10 20741.22
1997/06/30 27793.98 31947.47 41489.11 20988.04
1997/07/31 29302.88 33817.74 44790.40 21554.72
1997/08/31 28005.23 32566.08 42281.24 21371.50
1997/09/30 29152.92 33829.06 44596.98 21687.80
1997/10/31 28545.25 33347.33 43107.44 22002.27
1997/11/30 29213.68 34334.88 45102.89 22103.48
1997/12/31 29796.72 34827.31 45877.30 22326.73
1998/01/31 30075.04 35236.74 46384.71 22612.51
1998/02/28 31171.95 36750.23 49729.97 22594.42
1998/03/31 32272.29 37929.40 52276.64 22671.24
1998/04/30 32486.56 38237.23 52802.54 22789.13
1998/05/31 32437.11 37988.16 51894.87 23005.63
1998/06/30 33133.19 39043.16 54002.84 23201.18
1998/07/31 33066.82 38826.47 53427.71 23249.90
1998/08/31 29632.39 35711.50 45703.13 23628.87
1998/09/30 31193.06 37418.37 48630.87 24181.79
1998/10/31 32228.37 39165.21 52586.51 24053.63
1998/11/30 33330.48 40678.79 55773.78 24194.00
IMATRL PRASUN SHR__CHT 19981130 19981230 150820 R00000000000123
</TABLE>
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class T on November 30,
1988, and the current 3.50% sales charge was paid. As the chart shows,
by November 30, 1998, the value of the investment would have grown to
$33,330 - a 233.30% increase on the initial investment. For
comparison, look at how both the Standard & Poor's 500 Index, a widely
recognized, unmanaged index of common stocks, and 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, did over the same period. With
dividends and capital gains, if any, reinvested, the Standard & Poor's
500 index would have grown to $55,774 - a 457.74% increase. If $10,000
was invested in the Lehman Brothers Aggregate Bond Index, it would
have grown to $24,194 - a 141.94% increase. You can also look at how
the Fidelity Balanced Composite Index did over the same period. The
composite index combines the total returns of the Standard & Poor's
500 Index (60%) and the Lehman Brothers Aggregate Bond Index (40%).
With dividends and interest, if any, reinvested, the same $10,000
would have grown to $40,679 - a 306.79% increase.
(CHECKMARK)
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.
FIDELITY 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. Class B shares bear a 1.00% 12b-1 fee. Returns prior to
December 31, 1996 are those of Class T, the original class of the
fund, and reflect Class T shares' 0.50% 12b-1 fee (0.65% prior to
January 1, 1996). Had Class B shares' 12b-1 fee been reflected,
returns prior to December 31, 1996 would have been lower. Class B
shares' contingent deferred sales charges included in the past one
year, past five years and past 10 years total return figures are 5%,
2% and 0%, respectively.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL B 13.44% 62.61% 240.94%
FIDELITY ADV BALANCED - CL B (INCL. 8.44% 60.61% 240.94%
CONTINGENT DEFERRED SALES CHARGE)
Fidelity Balanced Composite 18.48% 116.57% 306.79%
S&P 500 23.66% 181.25% 457.74%
LB Aggregate Bond 9.45% 42.40% 141.94%
Balanced Funds Average 11.31% 88.42% 235.21%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class B's returns to the performance of the
Fidelity Balanced Composite Index, a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. 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 one year average
represents a peer group of 393 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL B 13.44% 10.21% 13.05%
FIDELITY ADV BALANCED - CL B (INCL. 8.44% 9.94% 13.05%
CONTINGENT DEFERRED SALES CHARGE)
Fidelity Balanced Composite 18.48% 16.71% 15.06%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' cumulative return
and show you what would have happened if Class B shares had performed
at a constant rate each year.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$10,000 OVER 10 YEARS
FA Balanced -CL B FID Balanced Composite S&P 500 LB Aggregate Bond
00241 F0021 SP001 LB001
1988/11/30 10000.00 10000.00 10000.00 10000.00
1988/12/31 10119.83 10109.40 10175.00 10011.00
1989/01/31 10517.95 10611.63 10919.81 10155.16
1989/02/28 10554.99 10422.54 10647.91 10082.04
1989/03/31 10732.62 10586.17 10896.00 10125.39
1989/04/30 11163.80 11004.32 11461.51 10337.01
1989/05/31 11529.37 11387.49 11925.70 10608.88
1989/06/30 11688.29 11487.02 11857.72 10931.39
1989/07/31 12219.15 12207.26 12928.47 11164.23
1989/08/31 12408.74 12278.55 13181.87 10999.00
1989/09/30 12428.11 12273.39 13127.82 11055.09
1989/10/31 12236.47 12223.31 12823.26 11327.05
1989/11/30 12485.60 12419.38 13084.85 11434.65
1989/12/31 12609.00 12611.63 13398.89 11465.53
1990/01/31 11999.05 12043.85 12499.82 11329.09
1990/02/28 12030.60 12152.49 12661.07 11365.34
1990/03/31 12198.99 12349.12 12996.59 11373.30
1990/04/30 12039.32 12118.43 12671.68 11268.66
1990/05/31 12486.40 12970.84 13907.16 11602.21
1990/06/30 12539.37 13001.46 13812.60 11789.01
1990/07/31 12507.05 13048.26 13768.40 11951.70
1990/08/31 11742.19 12270.58 12523.73 11791.55
1990/09/30 11471.17 11952.78 11913.83 11889.41
1990/10/31 11362.03 11982.66 11862.60 12040.41
1990/11/30 11875.01 12550.16 12628.92 12299.28
1990/12/31 12237.92 12838.56 12981.27 12491.15
1991/01/31 12869.77 13238.10 13547.25 12646.04
1991/02/28 13623.55 13851.02 14515.88 12753.53
1991/03/31 13969.58 14090.37 14867.16 12841.53
1991/04/30 14238.22 14171.53 14902.84 12980.22
1991/05/31 14831.48 14571.73 15546.65 13055.50
1991/06/30 14527.50 14168.38 14834.61 13048.98
1991/07/31 15148.82 14643.31 15525.90 13230.36
1991/08/31 15532.91 14978.05 15893.87 13516.13
1991/09/30 15647.27 14949.60 15628.44 13790.51
1991/10/31 16103.13 15136.17 15837.86 13943.58
1991/11/30 15727.05 14825.88 15199.60 14071.86
1991/12/31 16457.74 16019.66 16938.43 14489.80
1992/01/31 16566.01 15753.73 16623.37 14292.74
1992/02/29 16914.90 15917.57 16839.48 14385.64
1992/03/31 16854.85 15695.68 16511.11 14305.08
1992/04/30 16988.33 16017.75 16996.54 14408.08
1992/05/31 17328.09 16185.94 17079.82 14680.39
1992/06/30 17170.53 16130.58 16825.33 14882.98
1992/07/31 17671.95 16658.05 17513.49 15186.59
1992/08/31 17671.95 16520.46 17154.46 15339.98
1992/09/30 17818.15 16716.06 17356.88 15522.52
1992/10/31 17756.54 16662.23 17417.63 15316.07
1992/11/30 17867.44 17004.48 18011.57 15319.14
1992/12/31 17971.78 17238.12 18233.11 15562.71
1993/01/31 18310.87 17457.39 18386.27 15861.51
1993/02/28 18702.13 17722.04 18636.33 16139.09
1993/03/31 19408.00 17976.17 19029.55 16206.88
1993/04/30 19960.26 17765.49 18569.04 16320.32
1993/05/31 20341.58 18060.40 19066.69 16341.54
1993/06/30 20210.61 18222.58 19121.98 16637.32
1993/07/31 20422.66 18220.40 19045.49 16732.15
1993/08/31 21164.82 18762.27 19767.32 17024.97
1993/09/30 20966.94 18695.85 19615.11 17070.93
1993/10/31 21247.39 18955.73 20021.14 17134.10
1993/11/30 20966.94 18783.23 19830.94 16988.46
1993/12/31 21504.15 18960.17 20070.89 17080.19
1994/01/31 22101.87 19449.34 20753.30 17310.78
1994/02/28 21712.66 18997.72 20190.89 17009.57
1994/03/31 20845.50 18313.05 19310.57 16589.43
1994/04/30 20677.40 18395.09 19557.74 16456.72
1994/05/31 20761.45 18575.36 19878.49 16455.07
1994/06/30 20367.43 18285.96 19391.47 16418.87
1994/07/31 20761.28 18791.38 20027.51 16745.61
1994/08/31 21014.47 19262.67 20848.63 16765.70
1994/09/30 20874.04 18866.24 20337.84 16519.25
1994/10/31 20676.71 19114.15 20795.44 16504.38
1994/11/30 20394.82 18679.64 20038.07 16468.07
1994/12/31 20408.92 18897.41 20335.24 16581.70
1995/01/31 20352.07 19341.08 20862.53 16910.02
1995/02/28 20707.37 19977.44 21675.54 17312.47
1995/03/31 21051.42 20379.91 22315.19 17418.08
1995/04/30 21280.71 20854.15 22972.37 17661.93
1995/05/31 21696.29 21677.10 23890.58 18345.45
1995/06/30 21956.77 22042.53 24445.56 18479.37
1995/07/31 22289.01 22461.69 25256.17 18438.72
1995/08/31 22346.79 22604.23 25319.56 18661.83
1995/09/30 22562.69 23264.27 26388.05 18842.85
1995/10/31 22300.33 23335.42 26293.84 19087.80
1995/11/30 22927.07 24090.08 27448.14 19374.12
1995/12/31 23278.82 24503.37 27976.80 19645.36
1996/01/31 23486.27 25068.52 28929.13 19775.02
1996/02/29 23101.01 25033.47 29197.30 19430.93
1996/03/31 22924.26 25108.02 29478.47 19294.92
1996/04/30 22894.41 25273.84 29912.98 19186.86
1996/05/31 23013.81 25644.71 30684.44 19148.49
1996/06/30 23148.76 25840.78 30801.34 19405.08
1996/07/31 22667.12 25183.71 29440.54 19457.47
1996/08/31 22847.74 25485.25 30061.44 19424.40
1996/09/30 23737.51 26523.22 31753.30 19762.38
1996/10/31 24374.55 27197.65 32629.06 20201.10
1996/11/30 25678.98 28617.20 35095.49 20546.54
1996/12/31 25240.32 28170.60 34400.24 20355.46
1997/01/31 26104.29 29261.60 36549.57 20418.56
1997/02/28 26474.57 29428.50 36836.12 20469.61
1997/03/31 25557.90 28572.31 35322.52 20242.40
1997/04/30 26598.86 29767.21 37431.28 20546.03
1997/05/31 27655.36 30967.66 39710.10 20741.22
1997/06/30 28695.31 31947.47 41489.11 20988.04
1997/07/31 30241.76 33817.74 44790.40 21554.72
1997/08/31 28882.76 32566.08 42281.24 21371.50
1997/09/30 30023.73 33829.06 44596.98 21687.80
1997/10/31 29379.91 33347.33 43107.44 22002.27
1997/11/30 30055.13 34334.88 45102.89 22103.48
1997/12/31 30641.14 34827.31 45877.30 22326.73
1998/01/31 30911.41 35236.74 46384.71 22612.51
1998/02/28 32043.13 36750.23 49729.97 22594.42
1998/03/31 33143.72 37929.40 52276.64 22671.24
1998/04/30 33347.47 38237.23 52802.54 22789.13
1998/05/31 33279.55 37988.16 51894.87 23005.63
1998/06/30 33996.03 39043.16 54002.84 23201.18
1998/07/31 33910.65 38826.47 53427.71 23249.90
1998/08/31 30359.08 35711.50 45703.13 23628.87
1998/09/30 31947.97 37418.37 48630.87 24181.79
1998/10/31 32977.99 39165.21 52586.51 24053.63
1998/11/30 34093.85 40678.79 55773.78 24194.00
IMATRL PRASUN SHR__CHT 19981130 19981230 140200 R00000000000123
</TABLE>
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class B on November 30,
1988. As the chart shows, by November 30, 1998, the value of the
investment would have grown to $34,094 - a 240.94% increase on the
initial investment. For comparison, look at how both the Standard &
Poor's 500 Index, a widely recognized, unmanaged index of common
stocks, and 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, did
over the same period. With dividends and capital gains, if any,
reinvested, the Standard & Poor's 500 Index would have grown to
$55,774 - a 457.74% increase. If $10,000 was invested in the Lehman
Brothers Aggregate Bond Index, it would have grown to $24,194 - a
141.94% increase. You can also look at how the Fidelity Balanced
Composite Index did over the same period. The composite index combines
the total returns of the Standard & Poor's 500 Index (60%) and the
Lehman Brothers Aggregate Bond Index (40%). With dividends and
interest, if any, reinvested, the same $10,000 would have grown to
$40,679 - a 306.79% increase.
(CHECKMARK)
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.
FIDELITY ADVISOR BALANCED FUND - CLASS C
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). The initial offering of Class C shares took place on November
3, 1997. Class C shares bear a 1.00% 12b-1 fee. Returns between
December 31, 1996 and November 3, 1997 are those of Class B shares and
reflect Class B shares' 1.00% 12b-1 fee. Returns prior to December 31,
1996 are those of Class T, the original class of the fund, and reflect
Class T shares' 0.50% 12b-1 fee (0.65% prior to January 1, 1996). Had
Class C shares' 12b-1 fee been reflected, returns prior to December
31, 1996 would have been lower. Class C shares' contingent deferred
sales charge included in the past one year, past five years and past
10 years total return figures are 1%, 0% and 0%, respectively. If
Fidelity had not reimbursed certain class expenses, the total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL C 13.41% 62.64% 241.01%
FIDELITY ADV BALANCED - CL C (INCL. 12.41% 62.64% 241.01%
CONTINGENT DEFERRED SALES CHARGE)
Fidelity Balanced Composite 18.48% 116.57% 306.79%
S&P 500 23.66% 181.25% 457.74%
LB Aggregate Bond 9.45% 42.40% 141.94%
Balanced Funds Average 11.31% 88.42% 235.21%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class C's returns to the performance of the
Fidelity Balanced Composite Index, a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. To measure how Class C'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 one year average
represents a peer group of 393 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL C 13.41% 10.22% 13.05%
FIDELITY ADV BALANCED - CL C (INCL. 12.41% 10.22% 13.05%
CONTINGENT DEFERRED SALES CHARGE)
Fidelity Balanced Composite 18.48% 16.71% 15.06%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS take Class C shares' cumulative return
and show you what would have happened if Class C shares had performed
at a constant rate each year.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
$10,000 OVER 10 YEARS
FA Balanced -CL C FID Balanced Composite S&P 500 LB Aggregate Bond
00478 F0021 SP001 LB001
1988/11/30 10000.00 10000.00 10000.00 10000.00
1988/12/31 10119.83 10109.40 10175.00 10011.00
1989/01/31 10517.95 10611.63 10919.81 10155.16
1989/02/28 10554.99 10422.54 10647.91 10082.04
1989/03/31 10732.62 10586.17 10896.00 10125.39
1989/04/30 11163.80 11004.32 11461.51 10337.01
1989/05/31 11529.37 11387.49 11925.70 10608.88
1989/06/30 11688.29 11487.02 11857.72 10931.39
1989/07/31 12219.15 12207.26 12928.47 11164.23
1989/08/31 12408.74 12278.55 13181.87 10999.00
1989/09/30 12428.11 12273.39 13127.82 11055.09
1989/10/31 12236.47 12223.31 12823.26 11327.05
1989/11/30 12485.60 12419.38 13084.85 11434.65
1989/12/31 12609.00 12611.63 13398.89 11465.53
1990/01/31 11999.05 12043.85 12499.82 11329.09
1990/02/28 12030.60 12152.49 12661.07 11365.34
1990/03/31 12198.99 12349.12 12996.59 11373.30
1990/04/30 12039.32 12118.43 12671.68 11268.66
1990/05/31 12486.40 12970.84 13907.16 11602.21
1990/06/30 12539.37 13001.46 13812.60 11789.01
1990/07/31 12507.05 13048.26 13768.40 11951.70
1990/08/31 11742.19 12270.58 12523.73 11791.55
1990/09/30 11471.17 11952.78 11913.83 11889.41
1990/10/31 11362.03 11982.66 11862.60 12040.41
1990/11/30 11875.01 12550.16 12628.92 12299.28
1990/12/31 12237.92 12838.56 12981.27 12491.15
1991/01/31 12869.77 13238.10 13547.25 12646.04
1991/02/28 13623.55 13851.02 14515.88 12753.53
1991/03/31 13969.58 14090.37 14867.16 12841.53
1991/04/30 14238.22 14171.53 14902.84 12980.22
1991/05/31 14831.48 14571.73 15546.65 13055.50
1991/06/30 14527.50 14168.38 14834.61 13048.98
1991/07/31 15148.82 14643.31 15525.90 13230.36
1991/08/31 15532.91 14978.05 15893.87 13516.13
1991/09/30 15647.27 14949.60 15628.44 13790.51
1991/10/31 16103.13 15136.17 15837.86 13943.58
1991/11/30 15727.05 14825.88 15199.60 14071.86
1991/12/31 16457.74 16019.66 16938.43 14489.80
1992/01/31 16566.01 15753.73 16623.37 14292.74
1992/02/29 16914.90 15917.57 16839.48 14385.64
1992/03/31 16854.85 15695.68 16511.11 14305.08
1992/04/30 16988.33 16017.75 16996.54 14408.08
1992/05/31 17328.09 16185.94 17079.82 14680.39
1992/06/30 17170.53 16130.58 16825.33 14882.98
1992/07/31 17671.95 16658.05 17513.49 15186.59
1992/08/31 17671.95 16520.46 17154.46 15339.98
1992/09/30 17818.15 16716.06 17356.88 15522.52
1992/10/31 17756.54 16662.23 17417.63 15316.07
1992/11/30 17867.44 17004.48 18011.57 15319.14
1992/12/31 17971.78 17238.12 18233.11 15562.71
1993/01/31 18310.87 17457.39 18386.27 15861.51
1993/02/28 18702.13 17722.04 18636.33 16139.09
1993/03/31 19408.00 17976.17 19029.55 16206.88
1993/04/30 19960.26 17765.49 18569.04 16320.32
1993/05/31 20341.58 18060.40 19066.69 16341.54
1993/06/30 20210.61 18222.58 19121.98 16637.32
1993/07/31 20422.66 18220.40 19045.49 16732.15
1993/08/31 21164.82 18762.27 19767.32 17024.97
1993/09/30 20966.94 18695.85 19615.11 17070.93
1993/10/31 21247.39 18955.73 20021.14 17134.10
1993/11/30 20966.94 18783.23 19830.94 16988.46
1993/12/31 21504.15 18960.17 20070.89 17080.19
1994/01/31 22101.87 19449.34 20753.30 17310.78
1994/02/28 21712.66 18997.72 20190.89 17009.57
1994/03/31 20845.50 18313.05 19310.57 16589.43
1994/04/30 20677.40 18395.09 19557.74 16456.72
1994/05/31 20761.45 18575.36 19878.49 16455.07
1994/06/30 20367.43 18285.96 19391.47 16418.87
1994/07/31 20761.28 18791.38 20027.51 16745.61
1994/08/31 21014.47 19262.67 20848.63 16765.70
1994/09/30 20874.04 18866.24 20337.84 16519.25
1994/10/31 20676.71 19114.15 20795.44 16504.38
1994/11/30 20394.82 18679.64 20038.07 16468.07
1994/12/31 20408.92 18897.41 20335.24 16581.70
1995/01/31 20352.07 19341.08 20862.53 16910.02
1995/02/28 20707.37 19977.44 21675.54 17312.47
1995/03/31 21051.42 20379.91 22315.19 17418.08
1995/04/30 21280.71 20854.15 22972.37 17661.93
1995/05/31 21696.29 21677.10 23890.58 18345.45
1995/06/30 21956.77 22042.53 24445.56 18479.37
1995/07/31 22289.01 22461.69 25256.17 18438.72
1995/08/31 22346.79 22604.23 25319.56 18661.83
1995/09/30 22562.69 23264.27 26388.05 18842.85
1995/10/31 22300.33 23335.42 26293.84 19087.80
1995/11/30 22927.07 24090.08 27448.14 19374.12
1995/12/31 23278.82 24503.37 27976.80 19645.36
1996/01/31 23486.27 25068.52 28929.13 19775.02
1996/02/29 23101.01 25033.47 29197.30 19430.93
1996/03/31 22924.26 25108.02 29478.47 19294.92
1996/04/30 22894.41 25273.84 29912.98 19186.86
1996/05/31 23013.81 25644.71 30684.44 19148.49
1996/06/30 23148.76 25840.78 30801.34 19405.08
1996/07/31 22667.12 25183.71 29440.54 19457.47
1996/08/31 22847.74 25485.25 30061.44 19424.40
1996/09/30 23737.51 26523.22 31753.30 19762.38
1996/10/31 24374.55 27197.65 32629.06 20201.10
1996/11/30 25678.98 28617.20 35095.49 20546.54
1996/12/31 25240.32 28170.60 34400.24 20355.46
1997/01/31 26104.29 29261.60 36549.57 20418.56
1997/02/28 26474.57 29428.50 36836.12 20469.61
1997/03/31 25557.90 28572.31 35322.52 20242.40
1997/04/30 26598.86 29767.21 37431.28 20546.03
1997/05/31 27655.36 30967.66 39710.10 20741.22
1997/06/30 28695.31 31947.47 41489.11 20988.04
1997/07/31 30241.76 33817.74 44790.40 21554.72
1997/08/31 28882.76 32566.08 42281.24 21371.50
1997/09/30 30023.73 33829.06 44596.98 21687.80
1997/10/31 29379.91 33347.33 43107.44 22002.27
1997/11/30 30069.86 34334.88 45102.89 22103.48
1997/12/31 30670.29 34827.31 45877.30 22326.73
1998/01/31 30923.20 35236.74 46384.71 22612.51
1998/02/28 32052.89 36750.23 49729.97 22594.42
1998/03/31 33152.02 37929.40 52276.64 22671.24
1998/04/30 33355.61 38237.23 52802.54 22789.13
1998/05/31 33287.75 37988.16 51894.87 23005.63
1998/06/30 33986.60 39043.16 54002.84 23201.18
1998/07/31 33901.30 38826.47 53427.71 23249.90
1998/08/31 30352.49 35711.50 45703.13 23628.87
1998/09/30 31940.05 37418.37 48630.87 24181.79
1998/10/31 32969.26 39165.21 52586.51 24053.63
1998/11/30 34101.40 40678.79 55773.78 24194.00
IMATRL PRASUN SHR__CHT 19981130 19981230 141508 R00000000000123
</TABLE>
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class C on November 30,
1988. As the chart shows, by November 30, 1998, the value of the
investment would have grown to $34,101 - a 241.01% increase on the
initial investment. For comparison, look at how both the Standard &
Poor's 500 Index, a widely recognized, unmanaged index of common
stocks, and 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, did
over the same period. With dividends and capital gains, if any,
reinvested, the Standard & Poor's 500 Index would have grown to
$55,774 - a 457.74% increase. If $10,000 was invested in the Lehman
Brothers Aggregate Bond Index, it would have grown to $24,194 - a
141.94% increase. You can also look at how the Fidelity Balanced
Composite Index did over the same period. The composite index combines
the total returns of the Standard & Poor's 500 Index (60%) and the
Lehman Brothers Aggregate Bond Index (40%). With dividends and
interest, if any, reinvested, the same $10,000 would have grown to
$40,679 - a 306.79% increase.
(CHECKMARK)
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.
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 shares' 0.50% 12b-1 fee (0.65% prior to
January 1, 1996). If Fidelity had not reimbursed certain class
expenses, the past five years and past 10 years total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL A 13.04% 56.81% 229.86%
FIDELITY ADV BALANCED - CL A (INCL. 5.75% 6.54% 47.79% 210.90%
SALES CHARGE)
Fidelity Balanced Composite 17.45% 106.61% 286.38%
S&P 500 21.99% 162.65% 418.35%
LB Aggregate Bond 9.34% 40.39% 137.66%
Balanced Funds Average 9.13% 79.44% 218.25%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class A's returns to the performance of the
Fidelity Balanced Composite Index, a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. 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 one year average
represents a peer group of 395 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL A 13.04% 9.41% 12.68%
FIDELITY ADV BALANCED - CL A (INCL. 5.75% 6.54% 8.13% 12.01%
SALES CHARGE)
Fidelity Balanced Composite 17.45% 15.62% 14.47%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FA Balanced -CL A S&P 500 LB Aggregate Bond FID Balanced Composite
00249 SP001 LB001 F0021
1988/10/31 9425.00 10000.00 10000.00 10000.00
1988/11/30 9331.35 9857.00 9878.00 9865.40
1988/12/31 9443.16 10029.50 9888.87 9973.33
1989/01/31 9814.66 10763.66 10031.27 10468.80
1989/02/28 9849.22 10495.64 9959.04 10282.25
1989/03/31 10014.98 10740.19 10001.86 10443.68
1989/04/30 10417.33 11297.61 10210.90 10856.20
1989/05/31 10758.45 11755.16 10479.45 11234.22
1989/06/30 10906.75 11688.15 10798.03 11332.41
1989/07/31 11402.11 12743.59 11028.02 12042.95
1989/08/31 11579.02 12993.37 10864.81 12113.28
1989/09/30 11597.10 12940.10 10920.22 12108.19
1989/10/31 11418.27 12639.89 11188.86 12058.79
1989/11/30 11650.75 12897.74 11295.15 12252.21
1989/12/31 11765.89 13207.29 11325.65 12441.88
1990/01/31 11196.73 12321.08 11190.87 11881.74
1990/02/28 11226.17 12480.02 11226.68 11988.92
1990/03/31 11383.30 12810.74 11234.54 12182.90
1990/04/30 11234.30 12490.47 11131.18 11955.32
1990/05/31 11651.49 13708.29 11460.67 12796.26
1990/06/30 11700.92 13615.08 11645.18 12826.46
1990/07/31 11670.76 13571.51 11805.89 12872.63
1990/08/31 10957.05 12344.64 11647.69 12105.42
1990/09/30 10704.15 11743.46 11744.36 11791.89
1990/10/31 10602.30 11692.96 11893.52 11821.37
1990/11/30 11080.98 12448.33 12149.23 12381.23
1990/12/31 11419.63 12795.64 12338.76 12665.75
1991/01/31 12009.23 13353.53 12491.76 13059.91
1991/02/28 12712.61 14308.30 12597.94 13664.59
1991/03/31 13035.50 14654.56 12684.86 13900.71
1991/04/30 13286.18 14689.73 12821.86 13980.78
1991/05/31 13839.77 15324.33 12896.23 14375.59
1991/06/30 13556.12 14622.48 12889.78 13977.68
1991/07/31 14135.89 15303.88 13068.95 14446.21
1991/08/31 14494.29 15666.59 13351.23 14776.45
1991/09/30 14601.01 15404.95 13622.26 14748.37
1991/10/31 15026.38 15611.38 13773.47 14932.43
1991/11/30 14675.45 14982.24 13900.19 14626.32
1991/12/31 15357.28 16696.21 14313.02 15804.03
1992/01/31 15458.32 16385.66 14118.37 15541.68
1992/02/29 15783.87 16598.67 14210.14 15703.32
1992/03/31 15727.84 16275.00 14130.56 15484.41
1992/04/30 15852.40 16753.48 14232.30 15802.15
1992/05/31 16169.44 16835.58 14501.29 15968.08
1992/06/30 16022.42 16584.73 14701.41 15913.47
1992/07/31 16490.31 17263.04 15001.32 16433.84
1992/08/31 16490.31 16909.15 15152.83 16298.09
1992/09/30 16626.74 17108.68 15333.15 16491.06
1992/10/31 16569.24 17168.56 15129.22 16437.96
1992/11/30 16672.73 17754.01 15132.24 16775.60
1992/12/31 16770.09 17972.38 15372.85 17006.09
1993/01/31 17086.51 18123.35 15668.00 17222.41
1993/02/28 17451.60 18369.83 15942.19 17483.50
1993/03/31 18110.27 18757.43 16009.15 17734.22
1993/04/30 18625.61 18303.50 16121.22 17526.37
1993/05/31 18981.43 18794.03 16142.17 17817.31
1993/06/30 18859.22 18848.54 16434.35 17977.31
1993/07/31 19057.09 18773.14 16528.02 17975.15
1993/08/31 19749.62 19484.64 16817.26 18509.73
1993/09/30 19564.98 19334.61 16862.67 18444.21
1993/10/31 19826.67 19734.84 16925.06 18700.58
1993/11/30 19564.98 19547.36 16781.20 18530.41
1993/12/31 20066.26 19783.88 16871.82 18704.96
1994/01/31 20624.02 20456.53 17099.59 19187.55
1994/02/28 20260.83 19902.16 16802.05 18742.02
1994/03/31 19451.66 19034.43 16387.04 18066.55
1994/04/30 19294.79 19278.07 16255.95 18147.49
1994/05/31 19373.23 19594.23 16254.32 18325.34
1994/06/30 19005.56 19114.17 16218.56 18039.83
1994/07/31 19373.07 19741.11 16541.31 18538.45
1994/08/31 19609.33 20550.50 16561.16 19003.39
1994/09/30 19478.29 20047.01 16317.71 18612.30
1994/10/31 19294.16 20498.07 16303.02 18856.87
1994/11/30 19031.11 19751.53 16267.16 18428.21
1994/12/31 19044.27 20044.45 16379.40 18643.05
1995/01/31 18991.22 20564.20 16703.71 19080.75
1995/02/28 19322.77 21365.58 17101.26 19708.55
1995/03/31 19643.81 21996.08 17205.58 20105.60
1995/04/30 19857.77 22643.87 17446.46 20573.45
1995/05/31 20245.56 23548.94 18121.64 21385.32
1995/06/30 20488.62 24095.98 18253.92 21745.84
1995/07/31 20798.64 24895.01 18213.77 22159.36
1995/08/31 20852.56 24957.49 18434.15 22299.98
1995/09/30 21054.02 26010.70 18612.96 22951.14
1995/10/31 20809.21 25917.84 18854.93 23021.32
1995/11/30 21394.04 27055.64 19137.76 23765.83
1995/12/31 21722.27 27576.73 19405.68 24173.56
1996/01/31 21915.85 28515.44 19533.76 24731.10
1996/02/29 21556.35 28779.78 19193.87 24696.52
1996/03/31 21391.42 29056.93 19059.52 24770.07
1996/04/30 21363.57 29485.23 18952.78 24933.65
1996/05/31 21474.98 30245.65 18914.88 25299.53
1996/06/30 21600.91 30360.89 19168.34 25492.97
1996/07/31 21151.48 29019.54 19220.09 24844.73
1996/08/31 21320.02 29631.56 19187.42 25142.22
1996/09/30 22150.69 31299.23 19521.28 26166.22
1996/10/31 22731.74 32162.46 19954.65 26831.57
1996/11/30 23950.52 34593.62 20295.88 28232.02
1996/12/31 23526.41 33908.32 20107.12 27791.43
1997/01/31 24331.71 36026.91 20169.46 28867.73
1997/02/28 24705.61 36309.36 20219.88 29032.40
1997/03/31 23850.69 34817.41 19995.44 28187.73
1997/04/30 24836.02 36896.01 20295.37 29366.54
1997/05/31 25835.83 39142.24 20488.18 30550.83
1997/06/30 26820.13 40895.81 20731.99 31517.46
1997/07/31 28263.17 44149.89 21291.75 33362.56
1997/08/31 27009.62 41676.62 21110.77 32127.74
1997/09/30 28103.56 43959.24 21423.21 33373.72
1997/10/31 27502.18 42491.01 21733.85 32898.48
1997/11/30 28162.23 44457.91 21833.82 33872.73
1997/12/31 28725.15 45221.26 22054.34 34358.54
1998/01/31 28993.90 45721.40 22336.64 34762.45
1998/02/28 30068.92 49018.83 22318.77 36255.57
1998/03/31 31115.78 51529.09 22394.65 37418.87
1998/04/30 31322.79 52047.47 22511.11 37722.56
1998/05/31 31275.02 51152.77 22724.96 37476.83
1998/06/30 31963.74 53230.60 22918.12 38517.64
1998/07/31 31899.59 52663.69 22966.25 38303.87
1998/08/31 28579.72 45049.58 23340.60 35230.83
1998/09/30 30088.42 47935.45 23886.77 36914.72
1998/10/30 31089.75 51834.52 23760.17 38638.04
IMATRL PRASUN SHR__CHT 19981031 19981113 145921 R00000000000123
</TABLE>
Fidelity Adv Balanced - CL A LB Aggregate Bond
S&P 500 Fidelity Balanced Composite
$51,835
$38,638
$31,090
$23,766
$
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class A on October 31,
1988, and the current 5.75% sales charge was paid. As the chart shows,
by October 31, 1998, the value of the investment would have grown to
$31,090 - a 210.90% increase on the initial investment. For
comparison, look at how both the Standard & Poor's 500 Index, a widely
recognized, unmanaged index of common stocks, and 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, did over the same period. With
dividends and capital gains, if any, reinvested, the Standard & Poor's
500 Index would have grown to $51,835 - a 418.35% increase. If $10,000
was invested in the Lehman Brothers Aggregate Bond Index, it would
have grown to $23,766 - a 137.66% increase. You can also look at how
the Fidelity Balanced Composite Index did over the same period. The
composite index combines the total returns of the Standard & Poor's
500 Index (60%) and the Lehman Brothers Aggregate Bond Index (40%).
With dividends and interest, if any, reinvested, the same $10,000
would have grown to $38,638 - a 286.38% increase.
(CHECKMARK)
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.
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL T 12.90% 57.18% 230.65%
FIDELITY ADV BALANCED - CL T (INCL. 3.50% 8.95% 51.68% 219.08%
SALES CHARGE)
Fidelity Balanced Composite 17.45% 106.61% 286.38%
S&P 500 21.99% 162.65% 418.35%
LB Aggregate Bond 9.34% 40.39% 137.66%
Balanced Funds Average 9.13% 79.44% 218.25%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class T's returns to the performance of the
Fidelity Balanced Composite Index, a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. 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 one year average
represents a peer group of 395 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL T 12.90% 9.47% 12.70%
FIDELITY ADV BALANCED - CL T (INCL. 3.50% 8.95% 8.69% 12.30%
SALES CHARGE)
Fidelity Balanced Composite 17.45% 15.62% 14.47%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FA Balanced -CL T S&P 500 LB Aggregate Bond FID Balanced Composite
00170 SP001 LB001 F0021
1988/10/31 9650.00 10000.00 10000.00 10000.00
1988/11/30 9554.11 9857.00 9878.00 9865.40
1988/12/31 9668.59 10029.50 9888.87 9973.33
1989/01/31 10048.97 10763.66 10031.27 10468.80
1989/02/28 10084.35 10495.64 9959.04 10282.25
1989/03/31 10254.07 10740.19 10001.86 10443.68
1989/04/30 10666.02 11297.61 10210.90 10856.20
1989/05/31 11015.29 11755.16 10479.45 11234.22
1989/06/30 11167.12 11688.15 10798.03 11332.41
1989/07/31 11674.31 12743.59 11028.02 12042.95
1989/08/31 11855.45 12993.37 10864.81 12113.28
1989/09/30 11873.95 12940.10 10920.22 12108.19
1989/10/31 11690.85 12639.89 11188.86 12058.79
1989/11/30 11928.88 12897.74 11295.15 12252.21
1989/12/31 12046.77 13207.29 11325.65 12441.88
1990/01/31 11464.03 12321.08 11190.87 11881.74
1990/02/28 11494.17 12480.02 11226.68 11988.92
1990/03/31 11655.05 12810.74 11234.54 12182.90
1990/04/30 11502.50 12490.47 11131.18 11955.32
1990/05/31 11929.65 13708.29 11460.67 12796.26
1990/06/30 11980.25 13615.08 11645.18 12826.46
1990/07/31 11949.38 13571.51 11805.89 12872.63
1990/08/31 11218.62 12344.64 11647.69 12105.42
1990/09/30 10959.69 11743.46 11744.36 11791.89
1990/10/31 10855.41 11692.96 11893.52 11821.37
1990/11/30 11345.52 12448.33 12149.23 12381.23
1990/12/31 11692.24 12795.64 12338.76 12665.75
1991/01/31 12295.92 13353.53 12491.76 13059.91
1991/02/28 13016.09 14308.30 12597.94 13664.59
1991/03/31 13346.69 14654.56 12684.86 13900.71
1991/04/30 13603.36 14689.73 12821.86 13980.78
1991/05/31 14170.16 15324.33 12896.23 14375.59
1991/06/30 13879.74 14622.48 12889.78 13977.68
1991/07/31 14473.35 15303.88 13068.95 14446.21
1991/08/31 14840.31 15666.59 13351.23 14776.45
1991/09/30 14949.57 15404.95 13622.26 14748.37
1991/10/31 15385.10 15611.38 13773.47 14932.43
1991/11/30 15025.79 14982.24 13900.19 14626.32
1991/12/31 15723.90 16696.21 14313.02 15804.03
1992/01/31 15827.35 16385.66 14118.37 15541.68
1992/02/29 16160.68 16598.67 14210.14 15703.32
1992/03/31 16103.31 16275.00 14130.56 15484.41
1992/04/30 16230.83 16753.48 14232.30 15802.15
1992/05/31 16555.45 16835.58 14501.29 15968.08
1992/06/30 16404.92 16584.73 14701.41 15913.47
1992/07/31 16883.98 17263.04 15001.32 16433.84
1992/08/31 16883.98 16909.15 15152.83 16298.09
1992/09/30 17023.66 17108.68 15333.15 16491.06
1992/10/31 16964.80 17168.56 15129.22 16437.96
1992/11/30 17070.75 17754.01 15132.24 16775.60
1992/12/31 17170.44 17972.38 15372.85 17006.09
1993/01/31 17494.41 18123.35 15668.00 17222.41
1993/02/28 17868.22 18369.83 15942.19 17483.50
1993/03/31 18542.62 18757.43 16009.15 17734.22
1993/04/30 19070.25 18303.50 16121.22 17526.37
1993/05/31 19434.57 18794.03 16142.17 17817.31
1993/06/30 19309.44 18848.54 16434.35 17977.31
1993/07/31 19512.03 18773.14 16528.02 17975.15
1993/08/31 20221.10 19484.64 16817.26 18509.73
1993/09/30 20032.04 19334.61 16862.67 18444.21
1993/10/31 20299.99 19734.84 16925.06 18700.58
1993/11/30 20032.04 19547.36 16781.20 18530.41
1993/12/31 20545.30 19783.88 16871.82 18704.96
1994/01/31 21116.37 20456.53 17099.59 19187.55
1994/02/28 20744.51 19902.16 16802.05 18742.02
1994/03/31 19916.02 19034.43 16387.04 18066.55
1994/04/30 19755.41 19278.07 16255.95 18147.49
1994/05/31 19835.72 19594.23 16254.32 18325.34
1994/06/30 19459.27 19114.17 16218.56 18039.83
1994/07/31 19835.56 19741.11 16541.31 18538.45
1994/08/31 20077.45 20550.50 16561.16 19003.39
1994/09/30 19943.28 20047.01 16317.71 18612.30
1994/10/31 19754.76 20498.07 16303.02 18856.87
1994/11/30 19485.44 19751.53 16267.16 18428.21
1994/12/31 19498.90 20044.45 16379.40 18643.05
1995/01/31 19444.59 20564.20 16703.71 19080.75
1995/02/28 19784.05 21365.58 17101.26 19708.55
1995/03/31 20112.76 21996.08 17205.58 20105.60
1995/04/30 20331.83 22643.87 17446.46 20573.45
1995/05/31 20728.88 23548.94 18121.64 21385.32
1995/06/30 20977.74 24095.98 18253.92 21745.84
1995/07/31 21295.16 24895.01 18213.77 22159.36
1995/08/31 21350.37 24957.49 18434.15 22299.98
1995/09/30 21556.64 26010.70 18612.96 22951.14
1995/10/31 21305.98 25917.84 18854.93 23021.32
1995/11/30 21904.78 27055.64 19137.76 23765.83
1995/12/31 22240.84 27576.73 19405.68 24173.56
1996/01/31 22439.04 28515.44 19533.76 24731.10
1996/02/29 22070.96 28779.78 19193.87 24696.52
1996/03/31 21902.09 29056.93 19059.52 24770.07
1996/04/30 21873.57 29485.23 18952.78 24933.65
1996/05/31 21987.65 30245.65 18914.88 25299.53
1996/06/30 22116.58 30360.89 19168.34 25492.97
1996/07/31 21656.42 29019.54 19220.09 24844.73
1996/08/31 21828.98 29631.56 19187.42 25142.22
1996/09/30 22679.08 31299.23 19521.28 26166.22
1996/10/31 23287.72 32162.46 19954.65 26831.57
1996/11/30 24533.98 34593.62 20295.88 28232.02
1996/12/31 24114.88 33908.32 20107.12 27791.43
1997/01/31 24939.32 36026.91 20169.46 28867.73
1997/02/28 25322.10 36309.36 20219.88 29032.40
1997/03/31 24446.36 34817.41 19995.44 28187.73
1997/04/30 25470.53 36896.01 20295.37 29366.54
1997/05/31 26494.69 39142.24 20488.18 30550.83
1997/06/30 27517.80 40895.81 20731.99 31517.46
1997/07/31 29011.71 44149.89 21291.75 33362.56
1997/08/31 27726.95 41676.62 21110.77 32127.74
1997/09/30 28863.23 43959.24 21423.21 33373.72
1997/10/31 28261.60 42491.01 21733.85 32898.48
1997/11/30 28923.39 44457.91 21833.82 33872.73
1997/12/31 29500.64 45221.26 22054.34 34358.54
1998/01/31 29776.19 45721.40 22336.64 34762.45
1998/02/28 30862.21 49018.83 22318.77 36255.57
1998/03/31 31951.61 51529.09 22394.65 37418.87
1998/04/30 32163.75 52047.47 22511.11 37722.56
1998/05/31 32114.79 51152.77 22724.96 37476.83
1998/06/30 32803.95 53230.60 22918.12 38517.64
1998/07/31 32738.25 52663.69 22966.25 38303.87
1998/08/31 29337.94 45049.58 23340.60 35230.83
1998/09/30 30883.10 47935.45 23886.77 36914.72
1998/10/30 31908.13 51834.52 23760.17 38638.04
IMATRL PRASUN SHR__CHT 19981031 19981113 151252 R00000000000123
</TABLE>
Fidelity Adv Balanced - CL T LB Aggregate Bond
S&P 500 Fidelity Balanced Composite
$51,835
$38,638
$31,908
$23,766
$
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class T on October 31,
1988, and the current 3.50% sales charge was paid. As the chart shows,
by October 31, 1998, the value of the investment would have grown to
$31,908 - a 219.08% increase on the initial investment. For
comparison, look at how both the Standard & Poor's 500 Index, a widely
recognized, unmanaged index of common stocks, and 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, did over the same period. With
dividends and capital gains, if any, reinvested, the Standard & Poor's
500 index would have grown to $51,835 - a 418.35% increase. If $10,000
was invested in the Lehman Brothers Aggregate Bond Index, it would
have grown to $23,766 - a 137.66% increase. You can also look at how
the Fidelity Balanced Composite Index did over the same period. The
composite index combines the total returns of the Standard & Poor's
500 Index (60%) and the Lehman Brothers Aggregate Bond Index (40%).
With dividends and interest, if any, reinvested, the same $10,000
would have grown to $38,638 - a 286.38% increase.
(CHECKMARK)
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.
FIDELITY 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. Class B shares bear a 1.00% 12b-1 fee. Returns prior to
December 31, 1996 are those of Class T, the original class of the
fund, and reflect Class T shares' 0.50% 12b-1 fee (0.65% prior to
January 1, 1996). Had Class B shares' 12b-1 fee been reflected,
returns prior to December 31, 1996 would have been lower. Class B
shares' contingent deferred sales charges included in the past one
year, past five years and past 10 years total return figures are 5%,
2% and 0%, respectively.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL B 12.25% 55.21% 226.50%
FIDELITY ADV BALANCED - CL B (INCL. 7.25% 53.21% 226.50%
CONTINGENT DEFERRED SALES CHARGE)
Fidelity Balanced Composite 17.45% 106.61% 286.38%
S&P 500 21.99% 162.65% 418.35%
LB Aggregate Bond 9.34% 40.39% 137.66%
Balanced Funds Average 9.13% 79.44% 218.25%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class B's returns to the performance of the
Fidelity Balanced Composite Index, a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. 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 one year average
represents a peer group of 395 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL B 12.25% 9.19% 12.56%
FIDELITY ADV BALANCED - CL B (INCL. 7.25% 8.91% 12.56%
CONTINGENT DEFERRED SALES CHARGE)
Fidelity Balanced Composite 17.45% 15.62% 14.47%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FA Balanced -CL B S&P 500 LB Aggregate Bond FID Balanced Composite
00241 SP001 LB001 F0021
1988/10/31 10000.00 10000.00 10000.00 10000.00
1988/11/30 9900.63 9857.00 9878.00 9865.40
1988/12/31 10019.27 10029.50 9888.87 9973.33
1989/01/31 10413.44 10763.66 10031.27 10468.80
1989/02/28 10450.10 10495.64 9959.04 10282.25
1989/03/31 10625.98 10740.19 10001.86 10443.68
1989/04/30 11052.87 11297.61 10210.90 10856.20
1989/05/31 11414.80 11755.16 10479.45 11234.22
1989/06/30 11572.15 11688.15 10798.03 11332.41
1989/07/31 12097.73 12743.59 11028.02 12042.95
1989/08/31 12285.44 12993.37 10864.81 12113.28
1989/09/30 12304.61 12940.10 10920.22 12108.19
1989/10/31 12114.87 12639.89 11188.86 12058.79
1989/11/30 12361.54 12897.74 11295.15 12252.21
1989/12/31 12483.70 13207.29 11325.65 12441.88
1990/01/31 11879.82 12321.08 11190.87 11881.74
1990/02/28 11911.06 12480.02 11226.68 11988.92
1990/03/31 12077.77 12810.74 11234.54 12182.90
1990/04/30 11919.69 12490.47 11131.18 11955.32
1990/05/31 12362.33 13708.29 11460.67 12796.26
1990/06/30 12414.77 13615.08 11645.18 12826.46
1990/07/31 12382.77 13571.51 11805.89 12872.63
1990/08/31 11625.51 12344.64 11647.69 12105.42
1990/09/30 11357.19 11743.46 11744.36 11791.89
1990/10/31 11249.13 11692.96 11893.52 11821.37
1990/11/30 11757.01 12448.33 12149.23 12381.23
1990/12/31 12116.31 12795.64 12338.76 12665.75
1991/01/31 12741.89 13353.53 12491.76 13059.91
1991/02/28 13488.18 14308.30 12597.94 13664.59
1991/03/31 13830.77 14654.56 12684.86 13900.71
1991/04/30 14096.74 14689.73 12821.86 13980.78
1991/05/31 14684.11 15324.33 12896.23 14375.59
1991/06/30 14383.15 14622.48 12889.78 13977.68
1991/07/31 14998.29 15303.88 13068.95 14446.21
1991/08/31 15378.56 15666.59 13351.23 14776.45
1991/09/30 15491.79 15404.95 13622.26 14748.37
1991/10/31 15943.11 15611.38 13773.47 14932.43
1991/11/30 15570.77 14982.24 13900.19 14626.32
1991/12/31 16294.20 16696.21 14313.02 15804.03
1992/01/31 16401.40 16385.66 14118.37 15541.68
1992/02/29 16746.82 16598.67 14210.14 15703.32
1992/03/31 16687.36 16275.00 14130.56 15484.41
1992/04/30 16819.52 16753.48 14232.30 15802.15
1992/05/31 17155.91 16835.58 14501.29 15968.08
1992/06/30 16999.92 16584.73 14701.41 15913.47
1992/07/31 17496.35 17263.04 15001.32 16433.84
1992/08/31 17496.35 16909.15 15152.83 16298.09
1992/09/30 17641.10 17108.68 15333.15 16491.06
1992/10/31 17580.10 17168.56 15129.22 16437.96
1992/11/30 17689.90 17754.01 15132.24 16775.60
1992/12/31 17793.20 17972.38 15372.85 17006.09
1993/01/31 18128.92 18123.35 15668.00 17222.41
1993/02/28 18516.29 18369.83 15942.19 17483.50
1993/03/31 19215.15 18757.43 16009.15 17734.22
1993/04/30 19761.92 18303.50 16121.22 17526.37
1993/05/31 20139.45 18794.03 16142.17 17817.31
1993/06/30 20009.78 18848.54 16434.35 17977.31
1993/07/31 20219.72 18773.14 16528.02 17975.15
1993/08/31 20954.51 19484.64 16817.26 18509.73
1993/09/30 20758.60 19334.61 16862.67 18444.21
1993/10/31 21036.26 19734.84 16925.06 18700.58
1993/11/30 20758.60 19547.36 16781.20 18530.41
1993/12/31 21290.47 19783.88 16871.82 18704.96
1994/01/31 21882.25 20456.53 17099.59 19187.55
1994/02/28 21496.90 19902.16 16802.05 18742.02
1994/03/31 20638.37 19034.43 16387.04 18066.55
1994/04/30 20471.93 19278.07 16255.95 18147.49
1994/05/31 20555.15 19594.23 16254.32 18325.34
1994/06/30 20165.05 19114.17 16218.56 18039.83
1994/07/31 20554.98 19741.11 16541.31 18538.45
1994/08/31 20805.65 20550.50 16561.16 19003.39
1994/09/30 20666.62 20047.01 16317.71 18612.30
1994/10/31 20471.25 20498.07 16303.02 18856.87
1994/11/30 20192.16 19751.53 16267.16 18428.21
1994/12/31 20206.12 20044.45 16379.40 18643.05
1995/01/31 20149.83 20564.20 16703.71 19080.75
1995/02/28 20501.61 21365.58 17101.26 19708.55
1995/03/31 20842.24 21996.08 17205.58 20105.60
1995/04/30 21069.25 22643.87 17446.46 20573.45
1995/05/31 21480.70 23548.94 18121.64 21385.32
1995/06/30 21738.59 24095.98 18253.92 21745.84
1995/07/31 22067.53 24895.01 18213.77 22159.36
1995/08/31 22124.73 24957.49 18434.15 22299.98
1995/09/30 22338.49 26010.70 18612.96 22951.14
1995/10/31 22078.74 25917.84 18854.93 23021.32
1995/11/30 22699.25 27055.64 19137.76 23765.83
1995/12/31 23047.50 27576.73 19405.68 24173.56
1996/01/31 23252.89 28515.44 19533.76 24731.10
1996/02/29 22871.46 28779.78 19193.87 24696.52
1996/03/31 22696.47 29056.93 19059.52 24770.07
1996/04/30 22666.91 29485.23 18952.78 24933.65
1996/05/31 22785.13 30245.65 18914.88 25299.53
1996/06/30 22918.74 30360.89 19168.34 25492.97
1996/07/31 22441.89 29019.54 19220.09 24844.73
1996/08/31 22620.71 29631.56 19187.42 25142.22
1996/09/30 23501.63 31299.23 19521.28 26166.22
1996/10/31 24132.35 32162.46 19954.65 26831.57
1996/11/30 25423.81 34593.62 20295.88 28232.02
1996/12/31 24989.51 33908.32 20107.12 27791.43
1997/01/31 25844.90 36026.91 20169.46 28867.73
1997/02/28 26211.49 36309.36 20219.88 29032.40
1997/03/31 25303.94 34817.41 19995.44 28187.73
1997/04/30 26334.55 36896.01 20295.37 29366.54
1997/05/31 27380.55 39142.24 20488.18 30550.83
1997/06/30 28410.17 40895.81 20731.99 31517.46
1997/07/31 29941.26 44149.89 21291.75 33362.56
1997/08/31 28595.76 41676.62 21110.77 32127.74
1997/09/30 29725.39 43959.24 21423.21 33373.72
1997/10/31 29087.97 42491.01 21733.85 32898.48
1997/11/30 29756.48 44457.91 21833.82 33872.73
1997/12/31 30336.67 45221.26 22054.34 34358.54
1998/01/31 30604.25 45721.40 22336.64 34762.45
1998/02/28 31724.73 49018.83 22318.77 36255.57
1998/03/31 32814.38 51529.09 22394.65 37418.87
1998/04/30 33016.10 52047.47 22511.11 37722.56
1998/05/31 32948.86 51152.77 22724.96 37476.83
1998/06/30 33658.22 53230.60 22918.12 38517.64
1998/07/31 33573.69 52663.69 22966.25 38303.87
1998/08/31 30057.41 45049.58 23340.60 35230.83
1998/09/30 31630.51 47935.45 23886.77 36914.72
1998/10/30 32650.30 51834.52 23760.17 38638.04
IMATRL PRASUN SHR__CHT 19981031 19981113 150433 R00000000000123
</TABLE>
Fidelity Adv Balanced - CL B LB Aggregate Bond
S&P 500 Fidelity Balanced Composite
$51,835
$38,638
$32,650
$23,766
$
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class B on October 31,
1988. As the chart shows, by October 31, 1998, the value of the
investment would have grown to $32,650 - a 226.50% increase on the
initial investment. For comparison, look at how both the Standard &
Poor's 500 Index, a widely recognized, unmanaged index of common
stocks, and 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, did
over the same period. With dividends and capital gains, if any,
reinvested, the Standard & Poor's 500 Index would have grown to
$51,835 - a 418.35% increase. If $10,000 was invested in the Lehman
Brothers Aggregate Bond Index, it would have grown to $23,766 - a
137.66% increase. You can also look at how the Fidelity Balanced
Composite Index did over the same period. The composite index combines
the total returns of the Standard & Poor's 500 Index (60%) and the
Lehman Brothers Aggregate Bond Index (40%). With dividends and
interest, if any, reinvested, the same $10,000 would have grown to
$38,638 - a 286.38% increase.
(CHECKMARK)
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.
FIDELITY ADVISOR BALANCED FUND - CLASS C
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). The initial offering of Class C shares took place on November
3, 1997. Class C shares bear a 1.00% 12b-1 fee. Returns between
December 31, 1996 and November 3, 1997 are those of Class B shares and
reflect Class B shares' 1.00% 12b-1 fee. Returns prior to December 31,
1996 are those of Class T, the original class of the fund, and reflect
Class T shares' 0.50% 12b-1 fee (0.65% prior to January 1, 1996). Had
Class C shares' 12b-1 fee been reflected, returns prior to December
31, 1996 would have been lower. Class C shares' contingent deferred
sales charge included in the past one year, past five years and past
10 years total return figures are 1%, 0% and 0%, respectively. If
Fidelity had not reimbursed certain class expenses, the total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL C 12.22% 55.17% 226.42%
FIDELITY ADV BALANCED - CL C (INCL. 11.22% 55.17% 226.42%
CONTINGENT DEFERRED SALES CHARGE)
Fidelity Balanced Composite 17.45% 106.61% 286.38%
S&P 500 21.99% 162.65% 418.35%
LB Aggregate Bond 9.34% 40.39% 137.66%
Balanced Funds Average 9.13% 79.44% 218.25%
</TABLE>
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class C's returns to the performance of the
Fidelity Balanced Composite Index, a hypothetical combination of
unmanaged indices. The composite index combines the total returns of
the Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond
Index. To measure how Class C'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 one year average
represents a peer group of 395 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - CL C 12.22% 9.18% 12.56%
FIDELITY ADV BALANCED - CL C (INCL. 11.22% 9.18% 12.56%
CONTINGENT DEFERRED SALES CHARGE)
Fidelity Balanced Composite 17.45% 15.62% 14.47%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS take Class C shares' cumulative return
and show you what would have happened if Class C shares had performed
at a constant rate each year.
$10,000 OVER 10 YEARS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FA Balanced -CL C S&P 500 LB Aggregate Bond FID Balanced Composite
00478 SP001 LB001 F0021
1988/10/31 10000.00 10000.00 10000.00 10000.00
1988/11/30 9900.63 9857.00 9878.00 9865.40
1988/12/31 10019.27 10029.50 9888.87 9973.33
1989/01/31 10413.44 10763.66 10031.27 10468.80
1989/02/28 10450.10 10495.64 9959.04 10282.25
1989/03/31 10625.98 10740.19 10001.86 10443.68
1989/04/30 11052.87 11297.61 10210.90 10856.20
1989/05/31 11414.80 11755.16 10479.45 11234.22
1989/06/30 11572.15 11688.15 10798.03 11332.41
1989/07/31 12097.73 12743.59 11028.02 12042.95
1989/08/31 12285.44 12993.37 10864.81 12113.28
1989/09/30 12304.61 12940.10 10920.22 12108.19
1989/10/31 12114.87 12639.89 11188.86 12058.79
1989/11/30 12361.54 12897.74 11295.15 12252.21
1989/12/31 12483.70 13207.29 11325.65 12441.88
1990/01/31 11879.82 12321.08 11190.87 11881.74
1990/02/28 11911.06 12480.02 11226.68 11988.92
1990/03/31 12077.77 12810.74 11234.54 12182.90
1990/04/30 11919.69 12490.47 11131.18 11955.32
1990/05/31 12362.33 13708.29 11460.67 12796.26
1990/06/30 12414.77 13615.08 11645.18 12826.46
1990/07/31 12382.77 13571.51 11805.89 12872.63
1990/08/31 11625.51 12344.64 11647.69 12105.42
1990/09/30 11357.19 11743.46 11744.36 11791.89
1990/10/31 11249.13 11692.96 11893.52 11821.37
1990/11/30 11757.01 12448.33 12149.23 12381.23
1990/12/31 12116.31 12795.64 12338.76 12665.75
1991/01/31 12741.89 13353.53 12491.76 13059.91
1991/02/28 13488.18 14308.30 12597.94 13664.59
1991/03/31 13830.77 14654.56 12684.86 13900.71
1991/04/30 14096.74 14689.73 12821.86 13980.78
1991/05/31 14684.11 15324.33 12896.23 14375.59
1991/06/30 14383.15 14622.48 12889.78 13977.68
1991/07/31 14998.29 15303.88 13068.95 14446.21
1991/08/31 15378.56 15666.59 13351.23 14776.45
1991/09/30 15491.79 15404.95 13622.26 14748.37
1991/10/31 15943.11 15611.38 13773.47 14932.43
1991/11/30 15570.77 14982.24 13900.19 14626.32
1991/12/31 16294.20 16696.21 14313.02 15804.03
1992/01/31 16401.40 16385.66 14118.37 15541.68
1992/02/29 16746.82 16598.67 14210.14 15703.32
1992/03/31 16687.36 16275.00 14130.56 15484.41
1992/04/30 16819.52 16753.48 14232.30 15802.15
1992/05/31 17155.91 16835.58 14501.29 15968.08
1992/06/30 16999.92 16584.73 14701.41 15913.47
1992/07/31 17496.35 17263.04 15001.32 16433.84
1992/08/31 17496.35 16909.15 15152.83 16298.09
1992/09/30 17641.10 17108.68 15333.15 16491.06
1992/10/31 17580.10 17168.56 15129.22 16437.96
1992/11/30 17689.90 17754.01 15132.24 16775.60
1992/12/31 17793.20 17972.38 15372.85 17006.09
1993/01/31 18128.92 18123.35 15668.00 17222.41
1993/02/28 18516.29 18369.83 15942.19 17483.50
1993/03/31 19215.15 18757.43 16009.15 17734.22
1993/04/30 19761.92 18303.50 16121.22 17526.37
1993/05/31 20139.45 18794.03 16142.17 17817.31
1993/06/30 20009.78 18848.54 16434.35 17977.31
1993/07/31 20219.72 18773.14 16528.02 17975.15
1993/08/31 20954.51 19484.64 16817.26 18509.73
1993/09/30 20758.60 19334.61 16862.67 18444.21
1993/10/31 21036.26 19734.84 16925.06 18700.58
1993/11/30 20758.60 19547.36 16781.20 18530.41
1993/12/31 21290.47 19783.88 16871.82 18704.96
1994/01/31 21882.25 20456.53 17099.59 19187.55
1994/02/28 21496.90 19902.16 16802.05 18742.02
1994/03/31 20638.37 19034.43 16387.04 18066.55
1994/04/30 20471.93 19278.07 16255.95 18147.49
1994/05/31 20555.15 19594.23 16254.32 18325.34
1994/06/30 20165.05 19114.17 16218.56 18039.83
1994/07/31 20554.98 19741.11 16541.31 18538.45
1994/08/31 20805.65 20550.50 16561.16 19003.39
1994/09/30 20666.62 20047.01 16317.71 18612.30
1994/10/31 20471.25 20498.07 16303.02 18856.87
1994/11/30 20192.16 19751.53 16267.16 18428.21
1994/12/31 20206.12 20044.45 16379.40 18643.05
1995/01/31 20149.83 20564.20 16703.71 19080.75
1995/02/28 20501.61 21365.58 17101.26 19708.55
1995/03/31 20842.24 21996.08 17205.58 20105.60
1995/04/30 21069.25 22643.87 17446.46 20573.45
1995/05/31 21480.70 23548.94 18121.64 21385.32
1995/06/30 21738.59 24095.98 18253.92 21745.84
1995/07/31 22067.53 24895.01 18213.77 22159.36
1995/08/31 22124.73 24957.49 18434.15 22299.98
1995/09/30 22338.49 26010.70 18612.96 22951.14
1995/10/31 22078.74 25917.84 18854.93 23021.32
1995/11/30 22699.25 27055.64 19137.76 23765.83
1995/12/31 23047.50 27576.73 19405.68 24173.56
1996/01/31 23252.89 28515.44 19533.76 24731.10
1996/02/29 22871.46 28779.78 19193.87 24696.52
1996/03/31 22696.47 29056.93 19059.52 24770.07
1996/04/30 22666.91 29485.23 18952.78 24933.65
1996/05/31 22785.13 30245.65 18914.88 25299.53
1996/06/30 22918.74 30360.89 19168.34 25492.97
1996/07/31 22441.89 29019.54 19220.09 24844.73
1996/08/31 22620.71 29631.56 19187.42 25142.22
1996/09/30 23501.63 31299.23 19521.28 26166.22
1996/10/31 24132.35 32162.46 19954.65 26831.57
1996/11/30 25423.81 34593.62 20295.88 28232.02
1996/12/31 24989.51 33908.32 20107.12 27791.43
1997/01/31 25844.90 36026.91 20169.46 28867.73
1997/02/28 26211.49 36309.36 20219.88 29032.40
1997/03/31 25303.94 34817.41 19995.44 28187.73
1997/04/30 26334.55 36896.01 20295.37 29366.54
1997/05/31 27380.55 39142.24 20488.18 30550.83
1997/06/30 28410.17 40895.81 20731.99 31517.46
1997/07/31 29941.26 44149.89 21291.75 33362.56
1997/08/31 28595.76 41676.62 21110.77 32127.74
1997/09/30 29725.39 43959.24 21423.21 33373.72
1997/10/31 29087.97 42491.01 21733.85 32898.48
1997/11/30 29771.06 44457.91 21833.82 33872.73
1997/12/31 30365.52 45221.26 22054.34 34358.54
1998/01/31 30615.93 45721.40 22336.64 34762.45
1998/02/28 31734.39 49018.83 22318.77 36255.57
1998/03/31 32822.59 51529.09 22394.65 37418.87
1998/04/30 33024.17 52047.47 22511.11 37722.56
1998/05/31 32956.98 51152.77 22724.96 37476.83
1998/06/30 33648.89 53230.60 22918.12 38517.64
1998/07/31 33564.43 52663.69 22966.25 38303.87
1998/08/31 30050.89 45049.58 23340.60 35230.83
1998/09/30 31622.67 47935.45 23886.77 36914.72
1998/10/30 32641.66 51834.52 23760.17 38638.04
IMATRL PRASUN SHR__CHT 19981031 19981124 131657 R00000000000123
</TABLE>
Fidelity Adv Balanced - CL C LB Aggregate Bond
S&P 500 Fidelity Balanced Composite
$51,835
$38,638
$32,642
$23,766
$
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Class C on October 31,
1988. As the chart shows, by October 31, 1998, the value of the
investment would have grown to $32,642 - a 226.42% increase on the
initial investment. For comparison, look at how both the Standard &
Poor's 500 Index, a widely recognized, unmanaged index of common
stocks, and 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, did
over the same period. With dividends and capital gains, if any,
reinvested, the Standard & Poor's 500 Index would have grown to
$51,835 - a 418.35% increase. If $10,000 was invested in the Lehman
Brothers Aggregate Bond Index, it would have grown to $23,766 - a
137.66% increase. You can also look at how the Fidelity Balanced
Composite Index did over the same period. The composite index combines
the total returns of the Standard & Poor's 500 Index (60%) and the
Lehman Brothers Aggregate Bond Index (40%). With dividends and
interest, if any, reinvested, the same $10,000 would have grown to
$38,638 - a 286.38% increase.
(CHECKMARK)
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.
FUND TALK: THE MANAGERS' OVERVIEW
MARKET RECAP
The year-long inclination for
volatility continued in the U.S.
financial markets, as demonstrated
by unfolding events during the
12-month period ending November
30, 1998. The resurgent Dow Jones
Industrial Average - an index of
30 blue-chip stocks - rallied to a
record 9374.27 on November 23,
1998, eclipsing its previous
highwater mark set in July. For the
12-month period ending November
30, 1998, the Dow returned
18.56%. The large-cap weighted
Standard & Poor's 500 Index
returned 23.66% during the same
period. Meanwhile, small-cap stocks
continued to struggle, with the
Russell 2000 showing a one-year
return of -6.62%. The
taxable-bond market, which had
benefited from a flight to safety
from the bearish equity markets
during the summer and early fall,
saw investors turn back to stocks as
the equity market rallied late in the
period. The Lehman Brothers
Aggregate Bond Index - a widely
followed measure of taxable bond
performance - returned 9.45%
during the period. The yield on the
benchmark 30-year Treasury fell to
5.07% - one of its lowest levels in
30 years - due in part to the three
interest-rate cuts made late in the
period by the Federal Reserve
Board. These cuts were designed
to stem the tide of a slowing U.S.
economy, and helped spark the
equity market rally.
(PHOTO OF John Avery)
(Photo of Kevin Grant)
An interview with John Avery (left), Lead Portfolio Manager of
Fidelity Advisor Balanced Fund, and Kevin Grant, manager for
fixed-income investments
Q. HOW DID THE FUND PERFORM, JOHN?
J.A. For the 12 months that ended October 31, 1998, the fund's Class
A, Class T, Class B and Class C shares returned 13.04%, 12.90%, 12.25%
and 12.22%, respectively. By comparison, the balanced funds average
tracked by Lipper Analytical Services returned 9.13% over the same
period. Given the mix of equities and fixed-income securities owned by
the fund, its returns typically fall somewhere between those of its
two benchmark indexes - the Standard & Poor's 500 Index and the Lehman
Brothers Aggregate Bond Index. Those two indexes had 12-month returns
of 21.99% and 9.34%, respectively. Shareholders should be aware that
the fund's fiscal year-end has changed to November 30. For the 12
months that ended November 30, 1998, the fund's Class A, Class T,
Class B and Class C shares returned 14.18%, 14.09%, 13.44% and 13.41%,
respectively. The respective returns for the balanced funds average,
S&P 500 and Lehman Brothers Index over the same period were 11.31%,
23.66% and 9.45%, respectively.
Q. WHAT FACTORS ENABLED THE FUND TO OUTPERFORM THE LIPPER AVERAGE IN
SUCH A VOLATILE INVESTMENT ENVIRONMENT?
J.A. The period was one of the most challenging we've seen in quite a
while due to the extreme volatility in the U.S. equity and bond
markets in the late summer and early fall. However, the fund's
emphasis on the stocks of large companies with strong management,
dominant market share and consistent earnings growth helped to shield
it somewhat during the market's plunge. That emphasis also helped many
of the fund's holdings recover quickly during October and November,
when the stock market staged a vigorous rally.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE DURING THE PERIOD COVERED
BY THE REPORT?
J.A. Freddie Mac was one of the top contributors. Lower mortgage rates
spurred a fresh wave of refinancing, providing the company with a
steady supply of mortgages to buy and resell. In addition, Freddie
Mac's business is focused solely on the U.S., which attracted
investors looking to minimize their exposure to emerging markets. The
stock of Pitney Bowes - a manufacturer of postage meters - also helped
performance. Investors were attracted to the earnings growth expected
from the multi-year, nationwide changeover now underway from
mechanical to electronic postage meters.
Q. WHAT STOCKS DETRACTED FROM THE FUND'S PERFORMANCE?
J.A. Citicorp was the biggest detractor. The company suffered huge
trading losses from its investments in Russia and Asia. Another
lackluster performer was Alcatel, a French telecommunications company
that saw much of its business in emerging markets dry up when those
economies contracted.
Q. TURNING TO YOU, KEVIN, HOW DID THE DRAMATIC EVENTS OF THE LATE
SUMMER AND EARLY FALL AFFECT THE FUND'S BOND SUBPORTFOLIO?
K.G. The Russian currency devaluation and default on the country's
debt forced many hedge funds to sell their corporate bonds and
mortgage securities. At the same time, investors flocked to U.S.
Treasury bonds because of their reputation for safety. As a result,
the spread, or difference, between the yields of Treasuries and other
fixed income securities widened, as Treasury-bond yields dropped to
levels not seen in more than 30 years and the prices of Treasuries
soared. The fund's bond subportfolio contains primarily high-quality
corporate bonds and mortgage securities, so it was hurt by these
developments. However, the fallout from overseas events appeared to
have run its course by the end of September, and I took advantage of
the opportunity to upgrade the fund's holdings of corporate and
mortgage issues. This should benefit the fund over the long term.
Q. JOHN, THE FUND'S FISCAL YEAR-END HAS BEEN CHANGED FROM OCTOBER 31
TO NOVEMBER 30. CAN YOU RECAP HOW THE FUND WAS AFFECTED BY MARKET
EVENTS IN NOVEMBER?
J.A. The fund's stock and bond subportfolios both did well in
November. U.S. stocks extended their rally off the October lows, as
both the Dow Jones Industrial Average and the S&P 500 slightly
exceeded their previous all-time highs at the end of November. The
large-cap issues on which the fund concentrates continued to do well,
with health care and technology being two stellar sectors for the
fund. In the bond market, greater investor demand for high-yield
issues resulted in that portion of the fund's bond subportfolio
performing well.
Q. WHAT'S YOUR OUTLOOK, JOHN?
J.A. Earnings growth is still the key area of concern for stock
investors, as it becomes clearer that the United States economy is
slowing. If we get slower economic growth without an actual recession,
the environment for stocks could still be favorable. By lowering
short-term interest rates in September, October and November, the
Federal Reserve Board demonstrated that it is serious about trying to
prevent a recession in the U.S. Therefore, I am relatively optimistic
about the stocks in the fund's portfolio, especially in light of the
stock selection criteria I mentioned earlier.
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.
(checkmark)
FUND FACTS
GOAL: both income and growth
of capital by investing in a
diversified portfolio of equity
and fixed-income securities
START DATE: January 6, 1987
SIZE: as of November 30,
1998, more than $3.1
billion
MANAGERS: John Avery, since
1998, and Kevin Grant,
since 1996; John Avery
joined Fidelity in 1995;
Kevin Grant joined Fidelity in
1993
JOHN AVERY ON INVESTING IN
LARGE COMPANIES:
"I like investing in the stocks of
large companies, and you'll see
that preference reflected in the
fund's holdings. Large companies
tend to have dominant market
positions - they tend to rank first
or second in sales and earnings in
their particular industries.
"Having the biggest market share
does two things. First, it enables
a company to take advantage of
economies of scale in providing
its goods or services. That is,
those firms that produce the
largest quantities of something
can typically do so at the lowest
cost, and therefore can sell their
products profitably at a lower
price than their smaller
competitors. That's especially
important in an economic
environment like the current one,
where there's minimal inflation
and therefore less opportunity to
raise prices.
"As low-cost producers, large
companies also have advantages
that enable them to grow their
businesses more effectively. Their
higher return on investment and
greater cash flow allow them to
spend more on research and
development, insuring a healthy
pipeline of new products. More
cash also permits the required
expenditures for advertising and
promotion that are so crucial to
maintaining sales and earnings
growth."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TOP FIVE STOCKS AS OF NOVEMBER 30, 1998
% OF FUND'S INVESTMENTS AS OF
NOVEMBER 30, 1998 OCTOBER 31, 1998 APRIL 30, 1998
Pitney Bowes, Inc. 2.0 2.1 1.8
Freddie Mac 1.9 1.9 1.5
General Electric Co. 1.8 1.9 2.0
MCI WorldCom, Inc. 1.8 1.8 1.3
Wells Fargo & Co. 1.5 1.0 1.0
TOP FIVE BOND ISSUERS AS OF NOVEMBER 30, 1998
(WITH MATURITIES MORE THAN ONE YEAR) % OF FUND'S INVESTMENTS AS OF
NOVEMBER 30, 1998 OCTOBER 31, 1998 APRIL 30, 1998
Fannie Mae 7.9 8.7 9.3
U.S. Treasury 2.1 2.2 1.0
Government National Mortgage Association 1.7 1.8 2.0
Time Warner, Inc. 0.6 0.7 0.7
Lockheed Martin Corp. 0.5 0.5 0.5
TOP FIVE MARKET SECTORS AS OF NOVEMBER 30,
1998
% OF FUND'S INVESTMENTS AS OF
NOVEMBER 30, 1998 OCTOBER 31, 1998 APRIL 30, 1998
FINANCE 18.0 17.8 22.8
UTILITIES 10.3 9.8 9.7
TECHNOLOGY 7.7 7.5 5.9
HEALTH 6.9 6.6 8.1
ENERGY 5.8 6.1 6.3
</TABLE>
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1998 *
Row: 1, Col: 1, Value: 58.5
Row: 1, Col: 2, Value: 31.8
Row: 1, Col: 3, Value: 1.7
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 6.5
Stocks 60.9%
Bonds 31.8%
Convertible
securities 0.7%
Certificates of
deposit 0.1%
Short-term
investments 6.5%
*FOREIGN
INVESTMENTS 7.0%
AS OF OCTOBER 31, 1998 **
Row: 1, Col: 1, Value: 57.7
Row: 1, Col: 2, Value: 32.7
Row: 1, Col: 3, Value: 1.7
Row: 1, Col: 4, Value: 1.0
Row: 1, Col: 5, Value: 6.9
Stocks 59.6%
Bonds 32.7%
Convertible
securities 0.7%
Certificates of
deposit 0.1%
Short-term
investments 6.9%
**FOREIGN
INVESTMENTS 6.5%
AS OF APRIL 30, 1998 ***
Row: 1, Col: 1, Value: 62.6
Row: 1, Col: 2, Value: 31.9
Row: 1, Col: 3, Value: 2.2
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 1.8
Stocks 65.0%
Bonds 33.3%
Convertible
securities 1.2%
Certificates of
deposit 0.1%
Short-term
investments 0.4%
***FOREIGN
INVESTMENTS 8.7%
INVESTMENTS NOVEMBER 30, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS - 59.7%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 2.7%
AEROSPACE & DEFENSE - 1.5%
Harsco Corp. 248,900 $ 8,058
Lockheed Martin Corp. 122,000 12,658
Textron, Inc. 368,400 28,620
49,336
DEFENSE ELECTRONICS - 0.7%
Raytheon Co. Class B 385,800 21,364
SHIP BUILDING & REPAIR - 0.5%
General Dynamics Corp. 277,400 16,107
TOTAL AEROSPACE & DEFENSE 86,807
BASIC INDUSTRIES - 3.0%
CHEMICALS & PLASTICS - 2.3%
Dow Chemical Co. 68,300 6,651
du Pont (E.I.) de Nemours & Co. 81,500 4,788
Hanna (M.A.) Co. 247,300 3,478
Hoechst AG 287,600 12,309
ICI (Imperial Chemical Industries) PLC Class 705,600 6,681
L
Lyondell Petrochemical Co. 269,800 5,025
Monsanto Co. 359,600 16,294
Potash Corp. of Saskatchewan 136,600 8,376
Praxair, Inc. 148,200 5,659
Solutia, Inc. 246,600 5,518
74,779
METALS & MINING - 0.5%
Aluminum Co. of America 219,900 16,300
PAPER & FOREST PRODUCTS - 0.2%
Willamette Industries, Inc. 121,700 4,252
TOTAL BASIC INDUSTRIES 95,331
CONSTRUCTION & REAL ESTATE - 1.4%
BUILDING MATERIALS - 0.3%
Masco Corp. 347,400 10,031
REAL ESTATE - 0.2%
Stewart Enterprises, Inc. Class A 292,800 6,533
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - 0.9%
Boston Properties, Inc. 186,300 $ 5,880
Equity Residential Properties Trust (SBI) 232,800 9,850
Public Storage, Inc. 192,900 5,124
Starwood Hotels & Resorts Trust 205,200 6,233
27,087
TOTAL CONSTRUCTION & REAL ESTATE 43,651
DURABLES - 0.7%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Ford Motor Co. 130,400 7,205
HOME FURNISHINGS - 0.5%
Leggett & Platt, Inc. 747,300 16,954
TOTAL DURABLES 24,159
ENERGY - 5.4%
OIL & GAS - 5.4%
British Petroleum Co. PLC 3,036,730 46,626
Chevron Corp. 192,800 16,123
Elf Aquitaine SA sponsored ADR 221,600 13,795
Exxon Corp. 328,000 24,621
Texaco, Inc. 354,900 20,429
Total SA:
Class B 212,000 25,917
sponsored ADR 53,800 3,289
USX-Marathon Group 814,200 23,103
173,903
FINANCE - 13.1%
BANKS - 5.1%
Bank of New York Co., Inc. 1,222,600 41,874
Bank One Corp. 381,460 19,574
BankAmerica Corp. 151,188 9,856
U.S. Bancorp 1,262,700 46,483
Wells Fargo & Co. 1,330,100 47,884
165,671
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 2.4%
American Express Co. 313,500 $ 31,370
Associates First Capital Corp. 336,269 26,187
Citigroup, Inc. 359,900 18,062
Olympic Financial Ltd. warrants 3/15/07 (a) 46 0
75,619
FEDERAL SPONSORED CREDIT - 3.0%
Fannie Mae 469,500 34,156
Freddie Mac 1,007,100 60,930
95,086
INSURANCE - 2.6%
Allstate Corp. 257,000 10,473
American International Group, Inc. 420,100 39,489
Aon Corp. 229,200 13,208
Hartford Financial Services Group, Inc. 394,800 21,788
84,958
TOTAL FINANCE 421,334
HEALTH - 6.7%
DRUGS & PHARMACEUTICALS - 5.9%
American Home Products Corp. 534,300 28,451
Bristol-Myers Squibb Co. 253,540 31,074
Elan Corp. PLC ADR (a) 249,300 16,984
Lilly (Eli) & Co. 199,400 17,884
Merck & Co., Inc. 204,200 31,625
Schering-Plough Corp. 257,300 27,370
Sigma-Aldrich Corp. 199,200 6,399
Warner-Lambert Co. 399,900 30,192
189,979
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Johnson & Johnson 208,800 16,965
McKesson Corp. 143,300 10,201
27,166
TOTAL HEALTH 217,145
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 4.4%
ELECTRICAL EQUIPMENT - 2.2%
Emerson Electric Co. 196,300 $ 12,760
General Electric Co. 654,400 59,223
Loral Space & Communications Ltd. (a) 300 6
71,989
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
Caterpillar, Inc. 147,100 7,272
Tyco International Ltd. 704,378 46,357
53,629
POLLUTION CONTROL - 0.5%
Waste Management, Inc. 387,500 16,614
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 142,232
MEDIA & LEISURE - 2.0%
BROADCASTING - 1.6%
Benedek Communications Corp. warrants 7/1/07 10,500 21
(a)
CBS Corp. 294,500 8,780
CS Wireless Systems, Inc. (a)(e) 109 0
Loral Orion Network Systems, Inc.:
warrants 1/15/07 (CV ratio .47) (a) 6,760 57
warrants 1/15/07 (CV ratio .6) (a) 1,445 16
NTL, Inc. warrants 12/31/08 (a) 2,137 32
Orbital Imaging Corp. warrants 3/1/05 (a)(e) 120 1
Tele-Communications, Inc. (TCI Group) Series 294,600 12,447
A (a)
Teletrac Holdings, Inc. warrants 8/1/07 (a) 380 0
Time Warner, Inc. 300,328 31,760
UIH Australia/Pacific, Inc. warrants 5/15/06 4,430 13
(a)
53,127
LODGING & GAMING - 0.0%
Aladdin Gaming Enterprises, Inc. warrants 7,100 0
3/1/10 (a)(e)
PUBLISHING - 0.4%
McGraw-Hill Companies, Inc. 140,600 12,584
TOTAL MEDIA & LEISURE 65,711
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONDURABLES - 3.6%
AGRICULTURE - 0.1%
Delta & Pine Land Co. 65,000 $ 2,462
FOODS - 1.0%
Heinz (H.J.) Co. 282,100 16,450
Sara Lee Corp. 284,100 16,584
33,034
HOUSEHOLD PRODUCTS - 1.1%
Procter & Gamble Co. 200,000 17,525
Renaissance Cosmetics, Inc. warrants 8/31/06 2,250 0
(a)(e)
Unilever NV (NY shares) 220,700 17,063
34,588
TOBACCO - 1.4%
Philip Morris Companies, Inc. 840,900 47,038
TOTAL NONDURABLES 117,122
RETAIL & WHOLESALE - 1.8%
APPAREL STORES - 0.2%
Mothers Work, Inc. (a)(g) 70 1
TJX Companies, Inc. 259,109 6,640
6,641
DRUG STORES - 0.7%
CVS Corp. 147,800 7,298
Rite Aid Corp. 320,400 14,859
22,157
GENERAL MERCHANDISE STORES - 0.9%
Wal-Mart Stores, Inc. 378,200 28,483
TOTAL RETAIL & WHOLESALE 57,281
SERVICES - 1.0%
PRINTING - 0.5%
Donnelley (R.R.) & Sons Co. 406,600 17,255
SERVICES - 0.5%
Modis Professional Services, Inc. (a) 195,400 2,333
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Service Corp. International 238,200 $ 8,903
ServiceMaster Co. 169,500 3,644
14,880
TOTAL SERVICES 32,135
TECHNOLOGY - 6.9%
COMPUTER SERVICES & SOFTWARE - 1.0%
Concentric Network Corp. warrants 12/15/07 420 50
(a)(e)
Microsoft Corp. (a) 279,700 34,123
34,173
COMPUTERS & OFFICE EQUIPMENT - 3.5%
Compaq Computer Corp. 291,900 9,487
International Business Machines Corp. 179,700 29,651
Pitney Bowes, Inc. 1,145,300 64,137
Xerox Corp. 96,900 10,417
113,692
ELECTRONICS - 2.4%
AMP, Inc. 260,716 12,612
Intel Corp. 213,700 22,999
Motorola, Inc. 395,500 24,521
Texas Instruments, Inc. 209,900 16,031
76,163
TOTAL TECHNOLOGY 224,028
UTILITIES - 7.0%
CELLULAR - 0.0%
American Mobile Satellite Corp. warrants 310 2
4/1/08 (a)
McCaw International Ltd. warrants 4/15/07 6,190 31
(a)(e)
Microcell Telecommunications, Inc. warrants 21,520 277
6/1/06 (a)(e)
310
ELECTRIC UTILITY - 1.0%
CMS Energy Corp. 290,500 14,162
Duke Energy Corp. 195,200 12,212
PG&E Corp. 198,600 6,144
32,518
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 6.0%
ALLTEL Corp. 384,500 $ 20,379
AT&T Corp. 370,900 23,112
Bell Atlantic Corp. 294,500 16,382
Covad Communications Group, Inc. warrants 1,340 13
3/15/98 (a)(e)
DTI Holdings, Inc. warrants 3/1/08 (a)(e) 4,000 0
Firstworld Communications, Inc. warrants 510 5
4/15/08 (a)
GTE Corp. 399,000 24,738
KMC Telecom Holdings, Inc. warrants 2/15/08 610 2
(a)
MCI WorldCom, Inc. (a) 998,313 58,900
Pathnet, Inc. warrants 4/15/08 (a)(e) 450 5
Rhythms Netconnections, Inc. warrants 4,940 37
5/15/08 (a)(e)
SBC Communications, Inc. 631,000 30,249
Sprint Corp. 247,400 17,998
Sprint Corp. (a) 900 14
191,834
TOTAL UTILITIES 224,662
TOTAL COMMON STOCKS 1,925,501
PREFERRED STOCKS - 1.7%
CONVERTIBLE PREFERRED STOCKS - 0.5%
BASIC INDUSTRIES - 0.2%
CHEMICALS & PLASTICS - 0.2%
Monsanto Co. $1.625 ACES (a) 113,800 5,149
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Republic Industries, Inc. $1.55 ACES 74,000 1,300
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.2%
Loral Space & Communications Ltd. Series C, 85,000 4,548
$3.00 (e)
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Host Marriott Financial Trust $3.375 QUIPS 85,000 $ 3,745
(e)
TOTAL CONVERTIBLE PREFERRED STOCKS 14,742
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.1%
Fresenius Medical Care Capital Trust II 1,861 1,858
7.875%
INSURANCE - 0.0%
American Annuity Group Capital Trust II 8.75% 1,000 898
TOTAL FINANCE 2,756
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.3%
Adelphia Communications Corp. $13.00 5,170 597
Citadel Broadcasting Co. Series B, 13.25% 6,120 730
pay-in-kind
CSC Holdings, Inc. Series H, 11.75% 8,525 985
pay-in-kind (a)
CSC Holdings, Inc. 11.125% pay-in-kind 38,541 4,336
Echostar Communications Corp. 12.125% 1,301 1,431
pay-in-kind
Granite Broadcasting Corp. 12.75% pay-in-kind 891 820
8,899
PUBLISHING - 0.1%
PRIMEDIA, Inc.:
8.625% 7,700 747
Series D, $10.00 28,400 2,876
3,623
TOTAL MEDIA & LEISURE 12,522
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Renaissance Cosmetics, Inc. 14% pay-in-kind 2,871 4
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
TECHNOLOGY - 0.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc. 13.5% 4,448 $ 4,581
pay-in-kind (a)
COMPUTER SERVICES & SOFTWARE - 0.0%
Concentric Network Corp. 13.5% pay-in-kind 435 370
TOTAL TECHNOLOGY 4,951
UTILITIES - 0.6%
CELLULAR - 0.2%
Nextel Communications, Inc. 11.125% 3,557 3,308
pay-in-kind
Nextel Communications, Inc. Series D, 13% 2,720 2,897
pay-in-kind
6,205
TELEPHONE SERVICES - 0.4%
e.spire Communications, Inc.:
12.75% pay-in-kind 1,004 653
14.75% pay-in-kind 301 241
Hyperion Telecommunication, Inc. 12.875% 1,467 1,218
pay-in-kind
ICG Holdings, Inc.:
14% pay-in-kind (a) 476 469
14.25% pay-in-kind 2,300 2,346
IXC Communications, Inc. 12.5% pay-in-kind 576 600
NEXTLINK Communications, Inc. 14% pay-in-kind 109,736 5,871
Viatel, Inc. 10% (a)(e) 164 16
WinStar Communications, Inc. 14.25% (a) 608 529
11,943
TOTAL UTILITIES 18,148
TOTAL NONCONVERTIBLE PREFERRED STOCKS 38,381
TOTAL PREFERRED STOCKS 53,123
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CORPORATE BONDS - 16.6%
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CONVERTIBLE BONDS - 0.2%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
POLLUTION CONTROL - 0.1%
WMX Technologies, Inc. 2% 1/24/05 Ba1 $ 4,340 $ 4,042
TECHNOLOGY - 0.1%
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Unisys Corp. 8.25% 3/15/06 B 800 3,316
TOTAL CONVERTIBLE BONDS 7,358
NONCONVERTIBLE BONDS - 16.4%
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.5%
BE Aerospace, Inc. 9.5% 11/1/08 (e) B1 330 348
Lockheed Martin Corp. 7.2% 5/1/36 A3 15,000 15,967
16,315
DEFENSE ELECTRONICS - 0.3%
Raytheon Co. 6.45% 8/15/02 Baa1 8,000 8,168
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, Inc. 9.25% 12/1/06 B1 450 476
TOTAL AEROSPACE & DEFENSE 24,959
BASIC INDUSTRIES - 0.7%
CHEMICALS & PLASTICS - 0.1%
Atlantis Group, Inc. 11% 2/15/03 B2 40 41
Huntsman Corp.:
9.5% 7/1/07 (e) B2 2,470 2,470
9.5% 7/1/07 (e) - 510 510
Koppers Industries, Inc. 9.875% 12/1/07 B2 740 725
3,746
IRON & STEEL - 0.0%
GS Technologies Operating, Inc. 12.25% B2 620 434
10/1/05
WHX Corp. 10.5% 4/15/05 B3 790 754
1,188
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 0.1%
Doe Run Resources Corp.:
11.25% 3/15/05 B3 $ 230 $ 166
11.6963% 3/15/03 (e)(f) B3 300 216
Interlake Corp. 12.125% 3/1/02 B3 1,780 1,780
Kaiser Aluminum & Chemical Corp.:
Series B, 10.875% 10/15/06 B1 30 31
Series D, 10.875% 10/15/06 B1 300 309
12.75% 2/1/03 B2 640 640
3,142
PACKAGING & CONTAINERS - 0.3%
Owens-Illinois, Inc.:
7.15% 5/15/05 Ba1 2,800 2,811
7.35% 5/15/08 Ba1 2,600 2,602
7.8% 5/15/18 Ba1 3,200 3,203
8,616
PAPER & FOREST PRODUCTS - 0.2%
Ainsworth Lumber Co. Ltd. 12.5% 7/15/07 B3 190 188
pay-in-kind
APP Finance II Mauritius Ltd. 12% 3/15/04 Caa 2,265 1,359
Container Corp. of America gtd. 9.75% 4/1/03 B2 110 111
Doman Industries Ltd. yankee 8.75% 3/15/04 B1 570 485
Indah Kiat Finance Mauritius Ltd. 10% 7/1/07 Caa1 380 247
Mail-Well Corp. 10.5% 2/15/04 B+ 190 196
Malette, Inc. yankee 12.25% 7/15/04 Ba3 1,010 1,088
Millar Western Forest Products Ltd. 9.875% B3 1,310 1,048
5/15/08
Pindo Deli Finance Mauritius Ltd. 10.25% Caa1 330 201
10/1/02
Stone Container Corp.:
10.75% 10/1/02 B1 650 679
12.58% 8/1/16 (f) B2 111 119
Tembec Finance Corp. yankee 9.875% 9/30/05 Ba3 480 514
Tjiwi Kimia Finance Mauritius Ltd. 10% 8/1/04 Ba3 610 390
6,625
TOTAL BASIC INDUSTRIES 23,317
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.1%
American Standard Cos., Inc.:
7.375% 2/1/08 Ba3 $ 1,380 $ 1,390
7.625% 2/15/10 Ba3 120 122
Schuff Steel Co. 10.5% 6/1/08 B3 130 114
1,626
CONSTRUCTION - 0.0%
Great Lakes Dredge & Dock Corp. 11.25% B3 730 741
8/15/08 (e)
REAL ESTATE - 0.1%
LNR Property Corp. 9.375% 3/15/08 B1 2,820 2,679
REAL ESTATE INVESTMENT TRUSTS - 0.1%
CenterPoint Properties Trust 6.75% 4/1/05 Baa2 1,190 1,125
EOP Operating LP:
6.625% 2/15/05 Baa1 1,250 1,227
6.75% 2/15/08 Baa1 2,310 2,266
4,618
TOTAL CONSTRUCTION & REAL ESTATE 9,664
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Blue Bird Body Co. 10.75% 11/15/06 B2 290 299
Breed Technologies, Inc. 9.25% 4/15/08 (e) B3 1,150 989
Federal-Mogul Corp. 7.875% 7/1/10 Ba2 200 197
Morris Material Handling, Inc. 9.5% 4/1/08 B2 1,090 828
2,313
CONSUMER DURABLES - 0.0%
Corning Consumer Products Co. 9.625% 5/1/08 B3 620 422
HOME FURNISHINGS - 0.0%
Omega Cabinets Ltd. 10.5% 6/15/07 B3 290 276
TEXTILES & APPAREL - 0.3%
Cluett American Corp. 10.125% 5/15/08 (e) B3 390 371
Levi Strauss & Co. 6.8% 11/1/03 (e) Baa3 5,560 5,533
Polymer Group, Inc. 9% 7/1/07 B2 1,540 1,532
Synthetic Industries, Inc. 9.25% 2/15/07 B2 990 1,020
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
WestPoint Stevens, Inc. 7.875% 6/15/08 Ba3 $ 1,060 $ 1,093
Worldtex, Inc. 9.625% 12/15/07 B1 825 734
10,283
TOTAL DURABLES 13,294
ENERGY - 0.4%
COAL - 0.0%
P&L Coal Holdings Corp. 9.625% 5/15/08 B2 1,630 1,663
ENERGY SERVICES - 0.1%
Bayard Drilling Technologies, Inc. 11% B2 190 211
6/30/05
DI Industries, Inc. 8.875% 7/1/07 B1 250 198
Grey Wolf, Inc. 8.875% 7/1/07 B1 760 600
Ocean Rig Norway AS 10.25% 6/1/08 B3 580 516
Pool Energy Services Co. 8.625% 4/1/08 B2 810 770
Pride International, Inc. 9.375% 5/1/07 Ba3 410 402
2,697
OIL & GAS - 0.3%
Canadian Forest Oil Ltd. 8.75% 9/15/07 B2 570 547
Chesapeake Energy Corp. 9.625% 5/1/05 B1 290 262
Cross Timbers Oil Co. 9.25% 4/1/07 B2 50 49
Flores & Rucks, Inc. 9.75% 10/1/06 B1 680 731
Great Lakes Carbon Corp. 10.25% 5/15/08 B3 1,560 1,576
pay-in-kind
Hurricane Hydrocarbons Ltd. 11.75% 11/1/04 B3 370 185
(e)
Occidental Petroleum Corp. 6.39% 11/9/00 Baa3 1,000 1,010
Ocean Energy, Inc. 8.375% 7/1/08 B1 640 653
Petroleum Geo-Services ASA 7.125% 3/30/28 Baa3 3,910 3,687
Plains Resources, Inc.:
Series D, 10.25% 3/15/06 B2 230 237
10.25% 3/15/06 B2 630 649
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Seven Seas Petroleum, Inc. 12.5% 5/15/05 Caa1 $ 300 $ 204
Southwest Royalties, Inc. 10.5% 10/15/04 Caa2 80 42
9,832
TOTAL ENERGY 14,192
FINANCE - 4.8%
BANKS - 2.7%
ABN-Amro Bank NV, Chicago 6.625% 10/31/01 Aa3 5,000 5,136
Bank of New York Institutional Capital Trust A1 10,000 10,880
A 7.78% 12/1/26 (e)
BankAmerica Corp. 10% 2/1/03 Aa3 350 405
BanPonce Corp. 5.75% 3/1/99 A3 880 881
BanPonce Financial Corp.:
6.69% 9/21/00 A3 2,250 2,274
6.75% 8/9/01 A3 3,850 3,889
6.88% 6/16/00 A3 2,500 2,535
Barclays Bank PLC yankee:
5.875% 7/15/00 A1 4,500 4,519
5.95% 7/15/01 A1 5,500 5,547
Capital One Bank:
6.375% 2/15/03 Baa3 2,700 2,700
6.42% 11/12/99 Baa3 5,000 4,989
Capital One Financial Corp. 7.125% 8/1/08 Ba1 2,550 2,436
Central Fidelity Banks, Inc. 8.15% 11/15/02 A1 9,045 9,875
First Chicago NBD Institutional Capital B A1 6,000 6,427
7.75% 12/1/26 (e)
First Tennessee National Corp. 6.75% 11/15/05 Baa1 720 759
Kansallis-Osake-Pankki, New York 10% 5/1/02 A3 710 800
MBNA Corp.:
6.34% 6/2/03 Baa2 850 825
6.875% 11/15/02 Baa2 3,700 3,855
NB Capital Trust IV 8.25% 4/15/27 Aa2 3,315 3,773
Provident Bank 6.125% 12/15/00 A3 3,420 3,438
Summit Bancorp 8.625% 12/10/02 BBB+ 1,250 1,380
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Union Planters Corp. 6.75% 11/1/05 Baa2 $ 400 $ 417
Wachovia Corp. 6.605% 10/1/25 A1 7,550 7,887
85,627
CREDIT & OTHER FINANCE - 1.7%
Ahmanson Capital Trust I 8.36% 12/1/26 (e) A3 2,700 3,056
Anthony Crane Rentals LP/Anthony Credit B3 410 400
Capital Corp. 10.375% 8/1/08 (e)
Arcadia Financial Ltd. 11.5% 3/15/07 B2 540 405
Associates Corp. of North America 6% 4/15/03 Aa3 2,450 2,498
AT&T Capital Corp.:
6.25% 5/15/01 Baa3 6,560 6,489
6.41% 8/13/99 Baa3 1,000 1,007
7.5% 11/15/00 Baa3 3,940 3,978
BankBoston Capital Trust II 7.75% 12/15/26 A2 8,000 8,228
ContiFinancial Corp. 8.125% 4/1/08 B1 210 160
Delta Financial Corp. 9.5% 8/1/04 B3 390 308
ERP Operating LP 6.55% 11/15/01 A3 850 847
First Security Capital I 8.41% 12/15/26 A3 1,280 1,422
First Union Institutional Capital I 8.04% BBB+ 2,300 2,499
12/1/26
Fleet Capital Trust II 7.92% 12/11/26 A2 600 657
General Electric Capital Corp. 6.94% 4/13/09 Aaa 4,700 4,725
(d)
GS Escrow Corp. 7.125% 8/1/05 (e) Ba1 4,500 4,398
Imperial Credit Capital Trust I 10.25% B2 510 383
6/14/02
Imperial Credit Industries 9.875% 1/15/07 B2 1,500 1,125
MCN Investment Corp. 6.03% 2/1/01 Baa3 2,350 2,378
Morgan (J.P.) Capital Trust II 7.95% 2/1/27 Aa3 2,230 2,458
Nordstrom Credit, Inc. 7.25% 4/30/02 A2 3,100 3,260
Ocwen Capital Trust 10.875% 8/1/27 B2 515 402
Olympic Financial Ltd. 11.5% 3/15/07 B2 540 405
ORBCOMM Global L.P./ORBCOMM Capital Co. 14% B3 30 30
8/15/04
Sprint Capital Corp. 5.7% 11/15/03 Baa1 1,910 1,908
Time Warner Telecom LLC/Time Warner Telecom, B2 370 390
Inc. 9.75% 7/15/08
53,816
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
INSURANCE - 0.4%
SunAmerica, Inc. 6.2% 10/31/99 Baa1 $ 13,750 $ 13,845
SAVINGS & LOANS - 0.0%
Long Island Savings Bank FSB 6.2% 4/2/01 Baa3 1,700 1,687
TOTAL FINANCE 154,975
HEALTH - 0.2%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Graham-Field Health Products, Inc. 9.75% Caa1 280 165
8/15/07
Wright Medical Technology, Inc. 11.75% Caa3 1,191 774
7/1/00 (f)
939
MEDICAL FACILITIES MANAGEMENT - 0.2%
Fountain View, Inc. 11.25% 4/15/08 Caa1 570 496
Harborside Healthcare Corp. 0% 8/1/08 (c)(e) B3 585 295
Oxford Health Plans, Inc. 11% 5/15/05 (e) Caa1 1,080 1,004
Tenet Healthcare Corp.:
8% 1/15/05 Ba1 620 642
8.125% 12/1/08 (e) Ba3 3,220 3,317
5,754
TOTAL HEALTH 6,693
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.1%
Advanced Lighting Technologies, Inc. 8% B2 390 355
3/15/08 (e)
Motors & Gears, Inc. 10.75% 11/15/06 B3 2,310 2,379
Telex Communications, Inc. 10.5% 5/1/07 B2 550 443
3,177
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Continental Global Group, Inc. 11% 4/1/07 B2 410 353
Thermadyne Holdings Corp. 0% 6/1/08 (c) Caa1 1,080 518
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Thermadyne Manufacturing LLC 9.875% 6/1/08 B3 $ 940 $ 902
Tyco International Group SA yankee 6.125% Baa1 4,000 4,052
6/15/01
5,825
POLLUTION CONTROL - 0.0%
Envirosource, Inc. 9.75% 6/15/03 B3 660 607
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 9,609
MEDIA & LEISURE - 2.8%
BROADCASTING - 2.0%
ACME Television LLC/ACME Financial Corp. 0% B3 970 774
9/30/04 (c)
Adelphia Communications Corp.:
9.5% 2/15/04 pay-in-kind B2 1,060 1,080
9.875% 3/1/05 B2 2,235 2,419
9.875% 3/1/07 B2 720 787
American Mobile Satellite Corp. 12.25% 4/1/08 - 310 203
Ascent Entertainment Group, Inc. 0% 12/15/04 B3 2,680 1,608
(c)
CapStar Broadcasting Partners, Inc. 0% B3 270 221
2/1/09 (c)
CBS Radio, Inc. 11.375% 1/15/09 pay-in-kind - 2,471 2,867
Chancellor Media Corp.:
8% 11/1/08 (e) Ba2 840 861
9% 10/1/08 (e) B1 260 275
Classic Communications, Inc. 0% 8/1/09 unit Caa1 110 67
(c)(e)
Clear Channel Communications, Inc. 7.25% Baa3 4,200 4,261
10/15/27
Continental Cablevision, Inc.:
8.3% 5/15/06 Baa3 325 363
9% 9/1/08 Baa3 2,510 2,951
International Cabletel, Inc. 0% 2/1/06 (c) B3 2,120 1,749
Iridium Operating LLC/Iridium Capital Corp.:
10.875% 7/15/05 B3 2,500 2,100
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Iridium Operating LLC/Iridium Capital Corp.:
- - continued
11.25% 7/15/05 B3 $ 1,040 $ 884
Metromedia Fiber Network, Inc. 10% 11/15/08 B2 930 964
(e)
NTL, Inc.:
0% 4/1/08 (c)(e) B3 6,180 3,893
10% 2/15/07 B3 740 766
11.5% 10/1/08 B3 610 679
Olympus Communications LP/Olympus Capital B1 1,690 1,855
Corp. 10.625% 11/15/06
Orbital Imaging Corp. 11.625% 3/1/05 - 120 119
Orion Network Systems, Inc.:
0% 1/15/07 (c) B2 5,770 3,577
11.25% 1/15/07 B2 1,275 1,221
Renaissance Media Group LLC/Renaissance 0% B3 400 274
4/15/08 (c)
Rogers Cablesystems Ltd. yankee 10.125% Ba3 170 187
9/1/12
Satelites Mexicanos SA de CV:
9.06% 6/30/04 (e)(f) - 1,188 1,093
10.125% 11/1/04 (e) B3 1,730 1,453
Telewest Communications PLC 11.25% 11/1/08 B1 140 159
(e)
Telewest PLC:
yankee 0% 10/1/07 (c) B1 2,985 2,507
9.625% 10/1/06 B1 210 218
Time Warner, Inc.:
6.85% 1/15/26 Baa3 7,120 7,354
6.875% 6/15/18 Baa3 2,750 2,884
7.75% 6/15/05 Baa3 8,000 8,801
UIH Australia/Pacific, Inc.:
Series B 0% 5/15/06 (c) B2 3,780 1,928
Series D 0% 5/15/06 (c) B2 430 219
United International Holdings, Inc. 0% B3 1,650 949
2/15/08 (c)
64,570
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - 0.2%
AMC Entertainment, Inc. 9.5% 3/15/09 B2 $ 1,070 $ 1,094
Premier Parks, Inc.:
0% 4/1/08 (c) B3 880 603
9.25% 4/1/06 B3 70 73
Regal Cinemas, Inc. 9.5% 6/1/08 (e) B3 310 326
Viacom, Inc.:
7.75% 6/1/05 Baa3 750 815
8% 7/7/06 Ba2 3,290 3,405
6,316
LODGING & GAMING - 0.3%
Aladdin Gaming Holdings/Aladdin Capital Caa2 710 199
Corp. 0% 3/1/10 (c)
Circus Circus Enterprises, Inc.:
7% 11/15/36 Baa3 1,410 1,304
7.625% 7/15/13 Ba2 330 290
9.25% 12/1/05 Ba2 590 608
HMH Properties, Inc.:
7.875% 8/1/05 Ba2 1,840 1,817
7.875% 8/1/08 Ba2 190 186
KSL Recreation Group, Inc. 10.25% 5/1/07 B3 380 380
Signature Resorts, Inc.:
9.25% 5/15/06 B2 1,060 986
9.75% 10/1/07 B3 1,590 1,352
Station Casinos, Inc.:
8.875% 12/1/08 (e) B2 340 343
10.125% 3/15/06 B2 510 539
Sun International Hotels Ltd./Sun Ba3 570 593
International North America, Inc. yankee 9%
3/15/07
8,597
PUBLISHING - 0.1%
Big Flower Press Holdings, Inc. 8.875% 7/1/07 B2 2,080 2,132
News America, Inc. 6.625% 1/9/08 Baa3 615 625
2,757
RESTAURANTS - 0.2%
AFC Enterprises, Inc. 10.25% 5/15/07 B3 1,000 1,045
Darden Restaurants, Inc. 6.375% 2/1/06 Baa1 1,450 1,401
Host Marriott Travel Plazas, Inc. 9.5% Ba3 160 165
5/15/05
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
Nebraska Restaurant, Inc. 10.75% 7/15/08 (e) B3 $ 430 $ 443
SC International Services, Inc. Series B, B2 470 472
9.25% 9/1/07
Wendy's International, Inc. 6.35% 12/15/05 Baa1 5,000 5,001
8,527
TOTAL MEDIA & LEISURE 90,767
NONDURABLES - 0.6%
FOODS - 0.2%
ConAgra, Inc. 7.125% 10/1/26 Baa1 3,600 3,729
Del Monte Corp. 12.25% 4/15/07 Caa1 380 431
4,160
HOUSEHOLD PRODUCTS - 0.1%
AKI Holding Corp. 0% 7/1/09 (c)(e) Caa1 180 72
AKI, Inc. 10.5% 7/1/08 (e) B2 200 192
Revlon Consumer Products Corp.:
8.125% 2/1/06 B2 820 808
8.625% 2/1/08 B3 880 869
9% 11/1/06 (e) B2 1,810 1,864
3,805
TOBACCO - 0.3%
Philip Morris Companies, Inc. 6.95% 6/1/06 A2 10,000 10,547
TOTAL NONDURABLES 18,512
PRECIOUS METALS - 0.1%
Centaur Mining & Exploration Ltd. 11% 12/1/07 B1 550 502
Great Central Mines Ltd. 8.875% 4/1/08 Ba2 1,300 1,313
TOTAL PRECIOUS METALS 1,815
RETAIL & WHOLESALE - 0.8%
APPAREL STORES - 0.1%
Mothers Work, Inc. 12.625% 8/1/05 B3 240 248
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Specialty Retailers, Inc.:
8.5% 7/15/05 Ba3 $ 790 $ 703
9% 7/15/07 B2 1,270 1,102
2,053
GENERAL MERCHANDISE STORES - 0.3%
Dayton Hudson Corp. 6.4% 2/15/03 A3 425 435
Federated Department Stores, Inc.:
6.79% 7/15/27 Baa2 7,000 7,216
8.5% 6/15/03 Baa2 3,000 3,316
10,967
GROCERY STORES - 0.2%
American Stores Co. 7.5% 5/1/37 Baa2 1,000 1,104
Kroger Co. 6% 7/1/00 Baa3 3,530 3,555
Pathmark Stores, Inc. 9.625% 5/1/03 Caa1 1,490 1,490
6,149
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Amazon.com, Inc. 0% 5/1/08 (c) Caa2 2,895 1,954
Guitar Center, Inc. 11% 7/1/06 B1 670 710
HMV Media Group PLC 10.25% 5/15/08 (e) B3 590 590
J. Crew Group, Inc. 0% 10/15/08 (c) Caa3 2,000 910
J. Crew Operating Corp. 10.375% 10/15/07 Caa1 1,220 1,086
Metals USA, Inc. 8.625% 2/15/08 B2 1,140 1,094
U.S. Office Products Co. 9.75% 6/15/08 (e) B3 380 274
6,618
TOTAL RETAIL & WHOLESALE 25,787
SERVICES - 0.2%
LEASING & RENTAL - 0.1%
AP Holdings, Inc. 0% 3/15/08 (c) Caa2 370 196
Apcoa, Inc. 9.25% 3/15/08 Caa1 1,120 1,030
Hollywood Entertainment Corp. 10.625% 8/15/04 B3 1,430 1,451
Renters Choice, Inc. 11% 8/15/08 (e) B2 450 458
3,135
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
SERVICES - CONTINUED
PRINTING - 0.1%
Sullivan Graphics, Inc. 12.75% 8/1/05 Caa1 $ 1,810 $ 1,837
SERVICES - 0.0%
Coach USA, Inc. 9.375% 7/1/07 B1 50 52
Iron Mountain, Inc. 8.75% 9/30/09 B3 185 190
Medaphis Corp. 9.5% 2/15/05 B2 1,240 893
SITEL Corp. 9.25% 3/15/06 B2 120 107
1,242
TOTAL SERVICES 6,214
TECHNOLOGY - 0.6%
COMMUNICATIONS EQUIPMENT - 0.0%
Intermedia Communications, Inc.:
8.5% 1/15/08 B2 130 126
8.6% 6/1/08 B2 640 622
Jordan Telecommunication Products, Inc.:
0% 8/1/07 (c) B3 990 757
9.875% 8/1/07 B3 290 289
1,794
COMPUTER SERVICES & SOFTWARE - 0.1%
Concentric Network Corp. 12.75% 12/15/07 - 590 602
DecisionOne Corp. 9.75% 8/1/07 B3 360 162
DecisionOne Holdings Corp. 0% 8/1/08 unit (c) Caa1 930 214
ICG Services, Inc.:
0% 2/15/08 (c) - 2,050 1,110
0% 5/1/08 (c) - 210 110
2,198
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Comdisco, Inc.:
5.75% 2/15/01 Baa1 6,000 5,895
6.1% 6/5/01 Baa1 3,000 3,042
6.375% 11/30/01 Baa1 4,500 4,469
13,406
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - 0.0%
Fisher Scientific International, Inc. 9% B3 $ 280 $ 280
2/1/08 (e)
Telecommunications Techniques Co. LLC 9.75% B3 1,030 1,030
5/15/08
1,310
ELECTRONICS - 0.1%
Communications Instruments, Inc. 10% 9/15/04 B3 400 372
Hadco Corp. 9.5% 6/15/08 B2 860 860
Insilco Corp. 12% 8/15/07 unit (e) B3 670 690
1,922
TOTAL TECHNOLOGY 20,630
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.1%
Atlas Air, Inc. 9.25% 4/15/08 B3 410 409
Atlas Air, Inc. Pass Through Trust 12.25% Ba3 860 920
12/1/02
Delta Air Lines, Inc. equipment trust Baa1 729 794
certificate 8.54% 1/2/07
Kitty Hawk, Inc. 9.95% 11/15/04 B1 2,400 2,358
4,481
RAILROADS - 0.5%
Burlington Northern Santa Fe Corp.:
6.875% 12/1/27 Baa2 5,000 4,981
7.29% 6/1/36 Baa2 4,360 4,786
Norfolk Southern Corp. 7.05% 5/1/37 Baa1 5,800 6,160
15,927
SHIPPING - 0.1%
Amer Reefer Co. Ltd. 10.25% 3/1/08 (e) B1 150 113
Holt Group, Inc. 9.75% 1/15/06 (e) Caa1 1,730 1,185
Hvide Marine, Inc. 8.375% 2/15/08 B1 50 41
1,339
TOTAL TRANSPORTATION 21,747
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - 2.7%
CELLULAR - 1.0%
360 Degrees Communications Co.:
7.125% 3/1/03 Baa1 $ 1,560 $ 1,642
7.5% 3/1/06 Baa1 1,850 2,030
Cable & Wireless Communications PLC 6.375% Baa1 3,770 3,792
3/6/03
Cellnet Data Systems, Inc. 0% 10/1/07 (c) - 1,670 317
Dial Call Communications, Inc. 0% 12/15/05 B2 350 341
(c)
Iridium LLC/Iridium Capital Corp. 13% 7/15/05 B3 170 155
McCaw International Ltd. 0% 4/15/07 (c) Caa1 6,050 3,388
Millicom International Cellular SA 0% 6/1/06 Caa1 11,510 8,086
(c)
Nextel Communications, Inc.:
0% 8/15/04 (c) B2 1,170 1,150
0% 2/15/08 (c) B2 4,240 2,597
Nextel International, Inc. 0% 4/15/08 (c) Caa1 2,350 1,116
PageMart Nationwide, Inc. 0% 2/1/05 (c) B3 860 765
PageMart Wireless, Inc. 0% 2/1/08 (c) Caa2 700 324
Rogers Communications, Inc. 8.875% 7/15/07 B2 2,110 2,131
Telesystem International Wireless, Inc.:
0% 6/30/07 (c) Caa1 1,410 642
0% 11/1/07 (c) Caa1 2,080 832
Teligent, Inc. 0% 3/1/08 (c) Caa1 1,440 738
30,046
ELECTRIC UTILITY - 0.6%
AES Corp. 10.25% 7/15/06 Ba1 1,460 1,555
Avon Energy Partners Holdings 6.46% 3/4/08 Baa2 3,500 3,519
(e)
DR Investments UK PLC yankee 7.1% 5/15/02 (e) A2 5,000 5,202
Israel Electric Corp. Ltd. 7.75% 12/15/27 (e) A3 7,040 6,498
Niagara Mohawk Power Corp. 7.75% 10/1/08 Ba3 630 671
Texas Utilities Co. 6.375% 1/1/08 Baa3 2,780 2,799
20,244
GAS - 0.2%
Columbia Gas System, Inc. 6.61% 11/28/02 A3 6,000 6,164
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - 0.9%
Covad Communications Group, Inc. 0% 3/15/08 - $ 1,340 $ 630
(c)
Dobson Wireline Co. 12.25% 6/15/08 (e) - 930 856
DTI Holdings, Inc. 0% 3/1/08 (c) - 800 216
Firstworld Communications, Inc. 0% 4/15/08 - 510 148
(c)(e)
Flag Ltd. 8.25% 1/30/08 Ba3 190 192
GCI, Inc. 9.75% 8/1/07 B2 150 145
Global TeleSystems Group, Inc. 9.875% 2/15/05 Caa2 210 193
GST Network Funding, Inc. 0% 5/1/08 (c)(e) - 1,610 773
GST Telecommunications, Inc. 12.75% 11/15/07 - 1,060 986
Hyperion Telecommunications, Inc. 0% 4/15/03 B3 1,620 1,199
(c)
ICG Holdings, Inc. 0% 9/15/05 (c) - 880 735
IXC Communications, Inc. 9% 4/15/08 B3 1,630 1,646
KMC Telecom Holdings, Inc. 0% 2/15/08 (c)(e) - 510 245
Level 3 Communications, Inc. 9.125% 5/1/08 B3 1,900 1,895
MCI WorldCom, Inc.:
6.4% 8/15/05 Baa2 3,215 3,344
8.875% 1/15/06 Baa2 5,667 6,225
9.375% 1/15/04 Baa2 1,228 1,276
McLeodUSA, Inc.:
0% 3/1/07 (c) B2 1,800 1,393
9.25% 7/15/07 B2 160 166
Netia Holdings BV:
0% 11/1/07 (c) B3 230 140
10.25% 11/1/07 B3 300 261
NEXTLINK Communications LLC 12.5% 4/15/06 B3 320 352
NEXTLINK Communications, Inc.:
9% 3/15/08 B3 210 204
9.625% 10/1/07 B3 320 317
10.75% 11/15/08 (e) B3 1,880 1,948
Pathnet, Inc. 12.25% 4/15/08 - 450 344
Rhythms Netconnections, Inc. 0% 5/15/08 (c) - 1,235 519
Viatel, Inc.:
0% 4/15/08 (c) Caa1 140 81
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Viatel, Inc.: - continued
11.25% 4/15/08 Caa1 $ 190 $ 190
WinStar Communications, Inc.:
0% 10/15/05 (c) Caa1 660 482
0% 10/15/05 (c) Caa1 1,570 1,754
0% 3/15/08 (c) CCC 1,275 988
Winstar Equipment Corp. 12.5% 3/15/04 B3 60 62
29,905
TOTAL UTILITIES 86,359
TOTAL NONCONVERTIBLE BONDS 528,534
TOTAL CORPORATE BONDS 535,892
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - 3.3%
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.2%
Fannie Mae:
5.75% 6/15/05 Aaa 4,140 4,289
8.625% 6/30/04 Aaa 4,000 4,657
Farm Credit Systems Financial Assistance Aaa 3,400 3,998
Corp. 9.375% 7/21/03
Federal Agricultural Mortgage Corp. 7.01% Aaa 1,720 1,866
2/10/04
Federal Home Loan Bank:
7.36% 7/1/04 Aaa 1,590 1,755
7.38% 8/5/04 Aaa 3,790 4,192
7.56% 9/1/04 Aaa 5,530 6,172
7.7% 9/20/04 Aaa 1,170 1,315
Government Trust Certificates (assets of
Trust guaranteed by U.S. Government through
Defense Security Assistance Agency):
Class 1-C, 9.25% 11/15/01 Aaa 1,331 1,423
Class 2-E, 9.4% 5/15/02 Aaa 1,295 1,373
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Guaranteed Export Trust Certificates (assets
of Trust guaranteed by U.S. Government
through Export-Import Bank):
Series 1993 C, 5.2% 10/15/04 Aaa $ 340 $ 340
Series 1993 D, 5.23% 5/15/05 Aaa 597 598
Series 1994 A, 7.12% 4/15/06 Aaa 597 631
Guaranteed Trade Trust Certificates (assets Aaa 493 533
of Trust guaranteed by U.S. Government
through Export-Import Bank) Series 1994-B,
7.5% 1/26/06
Overseas Private Investment Corp. U.S.
Government guaranteed participation
certificate:
Series 1994 195, 6.08% 8/15/04 (callable) Aaa 1,635 1,689
Series 1996-A1, 6.726% 9/15/10 (callable) - 5,000 5,304
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 40,135
U.S. TREASURY OBLIGATIONS - 2.1%
U.S. Treasury Bond:
6.125% 11/15/27 Aaa 3,200 3,609
6.375% 8/15/27 Aaa 485 562
6.875% 8/15/25 Aaa 10,235 12,484
7.625% 2/15/25 Aaa 9,930 13,151
8.75% 5/15/17 Aaa 10,700 15,007
U.S. Treasury Notes 7% 7/15/06 Aaa 19,050 21,675
TOTAL U.S. TREASURY OBLIGATIONS 66,488
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY 106,623
OBLIGATIONS
U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES
- - 9.6%
FANNIE MAE - 7.7%
5.5% 2/1/11 to 4/1/11 Aaa 15,682 15,458
6% 6/1/11 to 12/1/28 (j) Aaa 40,134 39,928
U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES
- - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
FANNIE MAE - CONTINUED
6.5% 2/1/24 to 12/1/28 (j) Aaa $ 187,024 $ 188,087
7% 7/1/25 to 7/1/28 Aaa 5,566 5,682
TOTAL FANNIE MAE 249,155
FREDDIE MAC - 0.2%
5.5% 4/1/03 to 5/1/03 Aaa 3,147 3,145
7% 7/1/99 to 8/1/01 Aaa 2,009 2,018
TOTAL FREDDIE MAC 5,163
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -
1.7%
7% 12/15/25 to 7/15/28 Aaa 2,504 2,563
7.5% 2/15/23 to 8/15/28 Aaa 39,919 41,232
8% 11/15/21 to 12/15/26 Aaa 10,530 10,955
TOTAL GOVERNMENT NATIONAL MORTGAGE 54,750
ASSOCIATION
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE 309,068
SECURITIES
ASSET-BACKED SECURITIES - 1.3%
Airplanes Pass Through Trust 10.875% 3/15/19 Ba2 1,570 1,664
Capital Equipment Receivables Trust 6.11% Aaa 5,081 5,084
7/15/99
Chase Manhattan Grantor Trust:
6.61% 9/15/02 Aaa 2,846 2,885
6.76% 9/15/02 A3 711 719
Chevy Chase Auto Receivables Trust:
5.9% 7/15/03 Aaa 2,610 2,615
5.91% 12/15/04 Aaa 1,434 1,444
6.6% 12/15/02 Aaa 864 870
Ford Credit Auto Owner Trust:
6.2% 12/15/02 Baa3 1,970 1,983
6.4% 5/15/02 A1 2,710 2,748
6.4% 12/15/02 Baa3 1,090 1,098
Ford Credit Grantor Trust 5.9% 10/15/00 Aaa 316 316
Green Tree Financial Corp. 6.1% 4/15/27 Aaa 590 590
ASSET-BACKED SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Key Auto Finance Trust:
6.3% 10/15/03 A2 $ 2,670 $ 2,675
6.65% 10/15/03 Baa3 783 791
MBNA Master Credit Card Trust II 6.55% Aaa 9,000 9,491
1/15/07
Sears Credit Account Master Trust II 6.5% Aaa 6,280 6,298
10/15/03
TOTAL ASSET-BACKED SECURITIES 41,271
COMMERCIAL MORTGAGE SECURITIES - 0.8%
Berkeley Federal Bank & Trust FSB Series - 1,836 1,363
1994 Class 1-B 7.6626% 8/1/24 (e)(f)
CS First Boston Mortgage Securities Corp.:
Series 1997-C2 Class D, 7.27% 1/17/35 Baa2 3,070 2,854
Series 1998 FLI Class E, 6.5063% 1/10/13 Baa2 5,360 5,214
(e)(f)
DLJ Mortgage Acceptance Corp. Series - 700 698
1993-MF12 Class B-2, 10.1% 9/18/03 (e)
First Chicago/Lennar Trust I Series 1997-CHL1:
Class D, 8.1117% 4/13/39 (f) - 700 593
Class E, 8.1117% 4/1/39 (f) - 650 498
General Motors Acceptance Corp. Commercial Ba3 500 413
Mortgage Securities, Inc. Series 1996-C1
Class F, 7.86% 10/15/28 (e)
GS Mortgage Securities Corp. II Series Baa3 2,600 2,346
1998-GLII Class E, 6.9697% 4/13/31 (e)(f)
Morgan Stanley Capital I, Inc.:
Series 1996-MBL1 Class E, 8.2465% 5/25/21 - 737 725
(e)(f)
Series 1998-CF1:
Class D, 7.35% 1/15/12 Baa2 2,451 2,363
Class E, 7.35% 12/15/12 Baa3 850 748
Penn Mutual Life Insurance Co. (The)/Penn - 1,250 786
Insurance & Annuity Co. Series 1996-PML
Class K, 7.9% 11/15/26 (e)
Resolution Trust Corp. Series 1991-M2 Class Ba3 270 218
A-3, 7.2498% 9/25/20 (f)
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Structured Asset Securities Corp.:
sequential pay Series 1996 Class A-2A, 7.75% AAA $ 659 $ 664
2/25/28
Series 1993-C1 Class E, 6.6% 10/25/24 (e) B 500 225
Series 1995-C1 Class E, 7.375% 9/25/24 (e) BB 1,000 968
Thirteen Affiliates of General Growth Aaa 4,500 4,710
Properties, Inc. sequential pay Series A-2,
6.602% 12/15/10 (e)
Wells Fargo Capital Markets Apartment Aaa 1,727 1,748
Financing Trust Series APT Class 1, 6.56%
12/29/05 (e)
TOTAL COMMERCIAL MORTGAGE SECURITIES 27,134
FOREIGN GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - 0.3%
Quebec Province yankee 6.86% 4/15/26 (d)(i) A2 8,000 8,706
(Cost $7,698)
SUPRANATIONAL OBLIGATIONS - 0.1%
Inter American Development Bank yankee 6.29% Aaa 4,000 4,206
7/16/27 (Cost $3,975)
CERTIFICATES OF DEPOSIT - 0.1%
Canadian Imperial Bank of Commerce, New York 3,000 3,035
yankee 6.2% 8/1/00 (Cost $3,005)
CASH EQUIVALENTS - 6.5%
SHARES
Taxable Central Cash Fund (b) (Cost $210,674) 210,673,975 210,674
TOTAL INVESTMENT IN SECURITIES - 100% $ 3,225,233
</TABLE>
SECURITY TYPE ABBREVIATIONS
ACES - Automatic Common Exchange
Securities
QUIPS - Quarterly Income Preferred
Securities
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.
(d) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.
(e) 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 $104,198,000 or 3.3% of net assets.
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(g) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
SECURITY ACQUISTION DATE ACQUISITION COST (000S)
Mothers Work, Inc. 6/18/98 1
(h) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(i) 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 advisor, based principally on S&P and Moody's
ratings of the sovereign credit of the issuing government.
(j) A portion of the security purchased on a delayed delivery or
when-issued basis (see Note 2 of Notes to Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 19.0% AAA, AA, A 18.1%
Baa 6.3% BBB 6.8%
Ba 1.3% BB 1.3%
B 3.6% B 3.7%
Caa 1.1% CCC 1.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
for the sovereign credit of the issuing government. The percentage not
rated by Moody's or S&P amounted to 0.7%. FMR has determined that
unrated debt securities that are lower quality account for 0.1% of the
total value of investment in securities.
INCOME TAX INFORMATION
At November 30, 1998, the aggregate cost of investment securities for
income tax purposes was $2,717,099,000. Net unrealized appreciation
aggregated $508,134,000, of which $578,947,000 related to appreciated
investment securities and $70,813,000 related to depreciated
investment securities.
The fund hereby designates approximately $112,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 58.4%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 2.9%
AEROSPACE & DEFENSE - 1.6%
Harsco Corp. 248,900 $ 8,151
Lockheed Martin Corp. 122,000 13,588
Textron, Inc. 368,400 27,400
49,139
DEFENSE ELECTRONICS - 0.7%
Raytheon Co. Class B 385,800 22,401
SHIP BUILDING & REPAIR - 0.6%
General Dynamics Corp. 277,400 16,419
TOTAL AEROSPACE & DEFENSE 87,959
BASIC INDUSTRIES - 2.2%
CHEMICALS & PLASTICS - 1.6%
du Pont (E.I.) de Nemours & Co. 154,600 8,890
Hanna (M.A.) Co. 247,300 3,632
Hoechst AG 287,600 12,125
Monsanto Co. 359,600 14,609
Praxair, Inc. 148,200 5,965
Solutia, Inc. 246,600 5,410
50,631
METALS & MINING - 0.6%
Aluminum Co. of America 219,900 17,427
TOTAL BASIC INDUSTRIES 68,058
CONSTRUCTION & REAL ESTATE - 1.4%
BUILDING MATERIALS - 0.3%
Masco Corp. 347,400 9,792
REAL ESTATE - 0.2%
Stewart Enterprises, Inc. Class A 292,800 6,753
REAL ESTATE INVESTMENT TRUSTS - 0.9%
Boston Properties, Inc. 186,300 5,310
Equity Residential Properties Trust (SBI) 232,800 9,778
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Public Storage, Inc. 192,900 $ 5,148
Starwood Hotels & Resorts Trust 205,200 5,810
26,046
TOTAL CONSTRUCTION & REAL ESTATE 42,591
DURABLES - 0.8%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Ford Motor Co. 130,400 7,074
HOME FURNISHINGS - 0.6%
Leggett & Platt, Inc. 747,300 17,468
TOTAL DURABLES 24,542
ENERGY - 5.7%
OIL & GAS - 5.7%
British Petroleum Co. PLC 3,010,052 44,355
Chevron Corp. 192,800 15,713
Elf Aquitaine sponsored ADR 221,600 12,853
Exxon Corp. 328,000 23,370
Texaco, Inc. 354,900 21,050
Total SA:
Class B 212,000 24,804
sponsored ADR 53,800 3,147
USX-Marathon Group 814,200 26,614
171,906
FINANCE - 12.9%
BANKS - 5.2%
Bank of New York Co., Inc. 1,222,600 38,588
Bank One Corp. 381,460 18,644
BankAmerica Corp. 105,988 6,088
Norwest Corp. 540,100 20,085
U.S. Bancorp 1,262,700 46,089
Wells Fargo & Co. 79,000 29,230
158,724
CREDIT & OTHER FINANCE - 2.1%
American Express Co. 313,500 27,706
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Associates First Capital Corp. 336,269 $ 23,707
Citigroup, Inc. 263,000 12,377
Olympic Financial Ltd. warrants 3/15/07 (a) 46 0
63,790
FEDERAL SPONSORED CREDIT - 3.0%
Fannie Mae 469,500 33,246
Freddie Mac 1,007,100 57,908
91,154
INSURANCE - 2.6%
Allstate Corp. 257,000 11,067
American International Group, Inc. 420,100 35,814
Aon Corp. 229,200 14,210
Hartford Financial Services Group, Inc. 373,000 19,816
80,907
TOTAL FINANCE 394,575
HEALTH - 6.4%
DRUGS & PHARMACEUTICALS - 5.5%
American Home Products Corp. 534,300 26,047
Bristol-Myers Squibb Co. 351,840 38,900
Elan Corp. PLC ADR (a) 249,300 17,467
Merck & Co., Inc. 156,000 21,099
Schering-Plough Corp. 257,300 26,470
Sigma-Aldrich Corp. 199,200 6,157
Warner-Lambert Co. 399,900 31,342
167,482
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
Johnson & Johnson 208,800 17,017
McKesson Corp. 143,300 11,034
28,051
TOTAL HEALTH 195,533
INDUSTRIAL MACHINERY & EQUIPMENT - 4.5%
ELECTRICAL EQUIPMENT - 2.3%
Emerson Electric Co. 196,300 12,956
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
General Electric Co. 654,400 $ 57,260
Loral Space & Communications Ltd. (a) 300 6
70,222
INDUSTRIAL MACHINERY & EQUIPMENT - 1.6%
Caterpillar, Inc. 147,100 6,620
Tyco International Ltd. 704,378 43,627
50,247
POLLUTION CONTROL - 0.6%
Waste Management, Inc. 387,500 17,486
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 137,955
MEDIA & LEISURE - 2.0%
BROADCASTING - 1.6%
Benedek Communications Corp. warrants 7/1/07 10,500 21
(a)
CBS Corp. 294,500 8,228
CS Wireless Systems, Inc. (a)(f) 109 0
Loral Orion Network Systems, Inc.:
warrants 1/15/07 (CV ratio .47) (a) 6,760 53
warrants 1/15/07 (CV ratio .6) (a) 1,445 15
Orbital Imaging Corp. warrants 3/1/05 (a)(f) 120 1
Tele-Communications, Inc. (TCI Group) Series 294,600 12,410
A (a)
Teletrac Holdings, Inc. warrants 8/1/07 (a) 380 0
Time Warner, Inc. 300,328 27,874
UIH Australia/Pacific, Inc. warrants 5/15/06 4,430 13
(a)
48,615
LODGING & GAMING - 0.0%
Aladdin Gaming Enterprises, Inc. warrants 7,100 0
3/1/10 (a)(f)
PUBLISHING - 0.4%
McGraw-Hill Companies, Inc. 140,600 12,645
TOTAL MEDIA & LEISURE 61,260
NONDURABLES - 3.6%
AGRICULTURE - 0.1%
Delta & Pine Land Co. 65,000 2,169
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONDURABLES - CONTINUED
FOODS - 1.1%
Heinz (H.J.) Co. 282,100 $ 16,397
Sara Lee Corp. 284,100 16,957
33,354
HOUSEHOLD PRODUCTS - 1.0%
Procter & Gamble Co. 200,000 17,775
Renaissance Cosmetics, Inc. warrants 8/31/06 2,250 0
(a)(f)
Unilever NV (NY shares) 175,300 13,191
30,966
TOBACCO - 1.4%
Philip Morris Companies, Inc. 840,900 42,991
TOTAL NONDURABLES 109,480
RETAIL & WHOLESALE - 1.6%
APPAREL STORES - 0.0%
Mothers Work, Inc. (a)(h) 70 1
DRUG STORES - 0.6%
CVS Corp. 147,800 6,753
Rite Aid Corp. 320,400 12,716
19,469
GENERAL MERCHANDISE STORES - 1.0%
Federated Department Stores, Inc. (a) 71,966 2,766
Wal-Mart Stores, Inc. 378,200 26,096
28,862
TOTAL RETAIL & WHOLESALE 48,332
SERVICES - 1.1%
PRINTING - 0.6%
Donnelley (R.R.) & Sons Co. 406,600 17,535
SERVICES - 0.5%
Modis Professional Services, Inc. (a) 195,400 3,444
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Service Corp. International 277,900 $ 9,900
ServiceMaster Co. 169,500 3,581
16,925
TOTAL SERVICES 34,460
TECHNOLOGY - 6.6%
COMPUTER SERVICES & SOFTWARE - 1.0%
Concentric Network Corp. warrants 12/15/07 420 37
(a)(f)
Microsoft Corp. (a) 279,700 29,613
29,650
COMPUTERS & OFFICE EQUIPMENT - 3.5%
Compaq Computer Corp. 291,900 9,231
International Business Machines Corp. 179,700 26,674
Pitney Bowes, Inc. 1,145,300 63,063
Xerox Corp. 96,900 9,387
108,355
ELECTRONICS - 2.1%
AMP, Inc. 260,716 10,706
Intel Corp. 213,700 19,059
Motorola, Inc. 395,500 20,566
Texas Instruments, Inc. 209,900 13,420
63,751
TOTAL TECHNOLOGY 201,756
UTILITIES - 6.7%
CELLULAR - 0.0%
American Mobile Satellite Corp. warrants 310 1
4/1/08 (a)(f)
McCaw International Ltd. warrants 4/15/07 6,190 31
(a)(f)
Microcell Telecommunications, Inc. warrants 21,520 237
6/1/06 (a)(f)
269
ELECTRIC UTILITY - 1.0%
CMS Energy Corp. 290,500 12,800
Duke Energy Corp. 195,200 12,627
PG&E Corp. 198,600 6,045
31,472
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 5.7%
ALLTEL Corp. 196,400 $ 9,194
AT&T Corp. 370,900 23,089
Bell Atlantic Corp. 294,500 15,645
Covad Communications Group, Inc. warrants 1,340 13
3/15/98 (a)(f)
DTI Holdings, Inc. warrants 3/1/08 (a)(f) 4,000 0
GTE Corp. 399,000 23,416
KMC Telecom Holdings, Inc. warrants 2/15/08 610 2
(a)(f)
MCI WorldCom, Inc. (a) 998,313 55,157
Pathnet, Inc. warrants 4/15/08 (a)(f) 530 5
SBC Communications, Inc. 631,000 29,223
Sprint Corp. 225,600 17,315
173,059
TOTAL UTILITIES 204,800
TOTAL COMMON STOCKS 1,783,207
PREFERRED STOCKS - 1.6%
CONVERTIBLE PREFERRED STOCKS - 0.4%
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Republic Industries, Inc. $1.55 ACES 74,000 1,226
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Loral Space & Communications Ltd. Series C, 85,000 4,505
$3.00 (f)
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Host Marriott Financial Trust $3.375 QUIPS 85,000 3,469
(f)
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.2%
TJX Companies, Inc. Series E, $7.00 12,000 4,908
TOTAL CONVERTIBLE PREFERRED STOCKS 14,108
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.1%
Fresenius Medical Care Capital Trust II 1,811 $ 1,729
7.875%
INSURANCE - 0.0%
American Annuity Group Capital Trust II 1,000 890
8.75% (a)
TOTAL FINANCE 2,619
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.3%
Adelphia Communications Corp. $13.00 5,170 596
Citadel Broadcasting Co. Series B, 13.25% 6,120 692
pay-in-kind
CSC Holdings, Inc. Series H, 11.75% 8,525 938
pay-in-kind
CSC Holdings, Inc. 11.125% pay-in-kind 38,541 4,182
Echostar Communications Corp. 12.125% 1,301 1,223
pay-in-kind
Granite Broadcasting Corp. 12.75% pay-in-kind 891 713
8,344
PUBLISHING - 0.1%
PRIMEDIA, Inc.:
8.625% (a) 7,700 708
Series D, $10.00 28,400 2,805
3,513
TOTAL MEDIA & LEISURE 11,857
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Renaissance Cosmetics, Inc. 14% pay-in-kind 2,871 4
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.2%
Intermedia Communications, Inc. 13.5% 4,448 4,537
pay-in-kind
COMPUTER SERVICES & SOFTWARE - 0.0%
Concentric Network Corp. 13.5% pay-in-kind 421 314
TOTAL TECHNOLOGY 4,851
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - 0.5%
CELLULAR - 0.2%
Nextel Communications, Inc.:
11.125% pay-in-kind 3,461 $ 2,907
Series D, 13% pay-in-kind 3,020 2,869
5,776
TELEPHONE SERVICES - 0.3%
e.spire Communications, Inc.:
12.75% pay-in-kind 1,037 705
14.75% pay-in-kind 301 265
Hyperion Telecommunication, Inc. 12.875% 1,466 909
pay-in-kind
ICG Holdings, Inc.:
14% pay-in-kind 460 419
14.25% pay-in-kind 2,300 2,128
IXC Communications, Inc. 12.5% pay-in-kind 576 588
NEXTLINK Communications, Inc. 14% pay-in-kind 109,736 5,158
Viatel, Inc. 10% (a)(f) 164 10
WinStar Communications, Inc. 14.25% (a) 608 541
10,723
TOTAL UTILITIES 16,499
TOTAL NONCONVERTIBLE PREFERRED STOCKS 35,830
TOTAL PREFERRED STOCKS 49,938
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 16.4%
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S)
CONVERTIBLE BONDS - 0.3%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc. 2% 1/24/05 Ba1 $ 4,340 4,134
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.1%
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Unisys Corp. 8.25% 3/15/06 B $ 800 $ 3,120
TOTAL CONVERTIBLE BONDS 7,254
NONCONVERTIBLE BONDS - 16.1%
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.5%
BE Aerospace, Inc. 9.5% 11/1/08 (f) B1 330 337
Lockheed Martin Corp. 7.2% 5/1/36 A3 15,000 16,337
16,674
DEFENSE ELECTRONICS - 0.3%
Raytheon Co. 6.45% 8/15/02 Baa1 8,000 8,250
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, Inc. 9.25% 12/1/06 B1 450 477
TOTAL AEROSPACE & DEFENSE 25,401
BASIC INDUSTRIES - 0.7%
CHEMICALS & PLASTICS - 0.1%
Atlantis Group, Inc. (Trivest/Winston) 11% B2 40 41
2/15/03
Huntsman Corp. 9.5% 7/1/07 (f) B2 2,470 2,371
Koppers Industries, Inc. 9.875% 12/1/07 B2 740 673
3,085
IRON & STEEL - 0.1%
GS Technologies Operating, Inc. 12.25% B2 620 434
10/1/05
Republic Engineered Steels, Inc. 9.875% Caa1 1,360 1,346
12/15/01
WHX Corp. 10.5% 4/15/05 B3 880 774
2,554
METALS & MINING - 0.1%
Doe Run Resources Corp.:
11.25% 3/15/05 B3 230 159
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
Doe Run Resources Corp.: - continued
11.6963% 3/15/03 (g) B3 $ 300 $ 207
Interlake Corp. 12.125% 3/1/02 B3 1,780 1,673
2,039
PACKAGING & CONTAINERS - 0.3%
Owens-Illinois, Inc.:
7.15% 5/15/05 Ba1 2,800 2,786
7.35% 5/15/08 Ba1 2,600 2,562
7.8% 5/15/18 Ba1 3,200 3,029
8,377
PAPER & FOREST PRODUCTS - 0.1%
Ainsworth Lumber Co. Ltd. 12.5% 7/15/07 B3 190 168
pay-in-kind
APP Finance II Mauritius Ltd. 12% 3/15/04 Caa 2,265 1,133
Doman Industries Ltd. yankee 8.75% 3/15/04 B1 570 405
Indah Kiat Finance Mauritius Ltd. 10% 7/1/07 Caa1 380 203
Mail-Well Corp. 10.5% 2/15/04 B+ 190 194
Malette, Inc. yankee 12.25% 7/15/04 Ba3 1,010 1,089
Millar Western Forest Products Ltd. 9.875% B3 570 359
5/15/08
Pindo Deli Finance Mauritius Ltd. 10.25% Caa1 330 152
10/1/02
Stone Container Corp.:
10.75% 10/1/02 B1 450 452
12.58% 8/1/16 (g) B2 111 111
Tembec Finance Corp. yankee 9.875% 9/30/05 Ba3 480 485
Tjiwi Kimia Finance Mauritius Ltd. 10% 8/1/04 Ba3 610 305
5,056
TOTAL BASIC INDUSTRIES 21,111
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.1%
American Standard Cos., Inc. 7.375% 2/1/08 Ba3 1,350 1,337
Schuff Steel Co. 10.5% 6/1/08 B3 130 104
1,441
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 0.0%
Great Lakes Dredge & Dock Corp. 11.25% B3 $ 730 $ 708
8/15/08 (f)
REAL ESTATE - 0.0%
LNR Property Corp. 9.375% 3/15/08 B1 1,320 1,181
REAL ESTATE INVESTMENT TRUSTS - 0.2%
CenterPoint Properties Trust 6.75% 4/1/05 Baa2 1,190 1,139
EOP Operating LP:
6.625% 2/15/05 Baa1 1,250 1,219
6.75% 2/15/08 Baa1 2,310 2,203
4,561
TOTAL CONSTRUCTION & REAL ESTATE 7,891
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Blue Bird Body Co. 10.75% 11/15/06 B2 290 287
Breed Technologies, Inc. 9.25% 4/15/08 (f) B3 1,580 1,232
Morris Material Handling, Inc. 9.5% 4/1/08 B2 860 585
2,104
CONSUMER DURABLES - 0.0%
Corning Consumer Products Co. 9.625% 5/1/08 B3 860 662
HOME FURNISHINGS - 0.0%
Omega Cabinets Ltd. 10.5% 6/15/07 B3 100 80
TEXTILES & APPAREL - 0.3%
Cluett American Corp. 10.125% 5/15/08 (f) B3 330 294
Levi Strauss & Co. 6.8% 11/1/03 (f) Baa2 5,560 5,604
Polymer Group, Inc. 9% 7/1/07 B2 1,540 1,448
Synthetic Industries, Inc. 9.25% 2/15/07 B2 990 955
WestPoint Stevens, Inc. 7.875% 6/15/08 Ba3 1,060 1,073
Worldtex, Inc. 9.625% 12/15/07 B1 825 660
10,034
TOTAL DURABLES 12,880
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - 0.4%
COAL - 0.0%
P&L Coal Holdings Corp. 9.625% 5/15/08 (f) B2 $ 1,220 $ 1,208
ENERGY SERVICES - 0.1%
Bayard Drilling Technologies, Inc. 11% B2 190 205
6/30/05
DI Industries, Inc. 8.875% 7/1/07 B1 250 181
Grey Wolf, Inc. 8.875% 7/1/07 B1 760 551
Ocean Rig Norway AS 10.25% 6/1/08 B3 580 415
Pool Energy Services Co. 8.625% 4/1/08 B2 810 745
2,097
OIL & GAS - 0.3%
Canadian Forest Oil Ltd. 8.75% 9/15/07 B2 570 507
Chesapeake Energy Corp. 9.625% 5/1/05 B1 730 613
Flores & Rucks, Inc. 9.75% 10/1/06 B1 680 704
Gothic Production Corp. 11.125% 5/1/05 B3 280 182
Great Lakes Carbon Corp. 10.25% 5/15/08 B3 650 631
pay-in-kind (f)
Hurricane Hydrocarbons Ltd. 11.75% 11/1/04 B3 370 185
(f)
Occidental Petroleum Corp. 6.39% 11/9/00 Baa3 1,000 1,020
Ocean Energy, Inc. 8.375% 7/1/08 B1 640 608
Petroleum Geo-Services ASA 7.125% 3/30/28 Baa3 3,910 3,537
Plains Resources, Inc.:
Series D, 10.25% 3/15/06 B2 230 228
10.25% 3/15/06 B2 630 624
Seven Seas Petroleum, Inc. 12.5% 5/15/05 Caa1 300 204
Southwest Royalties, Inc. 10.5% 10/15/04 Caa2 80 42
9,085
TOTAL ENERGY 12,390
FINANCE - 4.8%
BANKS - 2.8%
ABN-Amro Bank NV, Chicago 6.625% 10/31/01 Aa3 5,000 5,193
Bank of New York Institutional Capital Trust A1 10,000 10,508
A 7.78% 12/1/26 (f)
BankAmerica Corp. 10% 2/1/03 Aa3 350 404
BanPonce Corp. 5.75% 3/1/99 A3 880 881
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
BanPonce Financial Corp.:
6.69% 9/21/00 A3 $ 2,250 $ 2,299
6.75% 8/9/01 A3 3,850 3,936
6.88% 6/16/00 A3 2,500 2,563
Barclays Bank PLC yankee:
5.875% 7/15/00 A1 4,500 4,547
5.95% 7/15/01 A1 5,500 5,590
Capital One Bank:
6.375% 2/15/03 Baa3 2,700 2,726
6.42% 11/12/99 Baa3 5,000 5,031
Capital One Financial Corp. 7.125% 8/1/08 Ba1 2,550 2,467
Central Fidelity Banks, Inc. 8.15% 11/15/02 A1 9,045 9,951
First Chicago NBD Institutional Capital B A1 6,000 6,237
7.75% 12/1/26 (f)
First Tennessee National Corp. 6.75% 11/15/05 Baa1 720 768
Kansallis-Osake-Pankki, New York 10% 5/1/02 A3 710 809
MBNA Corp.:
6.34% 6/2/03 Baa2 850 830
6.875% 11/15/02 Baa2 3,700 3,897
NB Capital Trust IV 8.25% 4/15/27 Aa2 3,315 3,577
Provident Bank 6.125% 12/15/00 A3 3,420 3,445
Summit Bancorp 8.625% 12/10/02 BBB+ 1,250 1,393
Union Planters Corp. 6.75% 11/1/05 Baa2 400 394
Wachovia Corp. 6.605% 10/1/25 A1 7,550 7,933
85,379
CREDIT & OTHER FINANCE - 1.5%
Ahmanson Capital Trust I 8.36% 12/1/26 (f) A3 2,700 2,914
Anthony Crane Rentals LP/Anthony Credit B3 410 381
Capital Corp. 10.375% 8/1/08 (f)
Arcadia Financial Ltd. 11.5% 3/15/07 B2 310 195
Associates Corp. of North America 6% 4/15/03 Aa3 2,450 2,500
AT&T Capital Corp.:
6.25% 5/15/01 Baa3 6,560 6,509
6.41% 8/13/99 Baa3 1,000 1,010
BankBoston Capital Trust II 7.75% 12/15/26 A2 8,000 7,804
Delta Financial Corp. 9.5% 8/1/04 B3 420 235
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
ERP Operating LP 6.55% 11/15/01 A3 $ 850 $ 850
First Security Capital I 8.41% 12/15/26 A3 1,280 1,405
First Union Institutional Capital I 8.04% BBB+ 2,000 2,147
12/1/26
General Electric Capital Corp. 6.94% 4/13/09 Aaa 4,700 4,733
(e)
GS Escrow Corp. 7.125% 8/1/05 (f) Ba1 4,500 4,394
Imperial Credit Capital Trust I 10.25% B2 510 326
6/14/02
Imperial Credit Industries 9.875% 1/15/07 B2 1,500 885
MCN Investment Corp. 6.03% 2/1/01 Baa3 2,350 2,398
Morgan (J.P.) Capital Trust II 7.95% 2/1/27 Aa3 3,130 3,251
Nordstrom Credit, Inc. 7.25% 4/30/02 A2 3,100 3,283
Ocwen Capital Trust 10.875% 8/1/27 B2 515 386
Olympic Financial Ltd. 11.5% 3/15/07 B2 540 346
Time Warner Telecom LLC/Time Warner Telecom, B2 370 368
Inc. 9.75% 7/15/08
46,320
INSURANCE - 0.4%
SunAmerica, Inc. 6.2% 10/31/99 Baa1 13,750 13,887
SAVINGS & LOANS - 0.1%
Long Island Savings Bank FSB 6.2% 4/2/01 Baa3 1,700 1,698
TOTAL FINANCE 147,284
HEALTH - 0.2%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Graham-Field Health Products, Inc. 9.75% Caa1 280 132
8/15/07
Wright Medical Technology, Inc. 11.75% Caa3 1,191 863
7/1/00 (g)
995
MEDICAL FACILITIES MANAGEMENT - 0.2%
Fountain View, Inc. 11.25% 4/15/08 Caa1 310 242
Harborside Healthcare Corp. 0% 8/1/08 (d)(f) B3 585 281
Oxford Health Plans, Inc. 11% 5/15/05 (f) Caa1 1,080 940
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
Tenet Healthcare Corp.:
8% 1/15/05 Ba1 $ 620 $ 634
8.125% 12/1/08 (f) Ba3 3,220 3,268
5,365
TOTAL HEALTH 6,360
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.1%
Motors & Gears, Inc. 10.75% 11/15/06 B3 2,310 2,287
Telex Communications, Inc. 10.5% 5/1/07 B2 550 385
2,672
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Continental Global Group, Inc. 11% 4/1/07 B2 550 451
Thermadyne Holdings Corp. 0% 6/1/08 (d) Caa1 1,080 421
Thermadyne Manufacturing LLC 9.875% 6/1/08 B3 940 837
Tyco International Group SA yankee 6.125% Baa1 4,000 4,081
6/15/01
5,790
POLLUTION CONTROL - 0.0%
Envirosource, Inc. 9.75% 6/15/03 B3 600 510
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 8,972
MEDIA & LEISURE - 2.7%
BROADCASTING - 1.9%
ACME Television LLC/ACME Financial Corp. 0% B3 970 718
9/30/04 (d)
Adelphia Communications Corp.:
9.5% 2/15/04 pay-in-kind B2 1,060 1,070
9.875% 3/1/05 B2 2,235 2,364
9.875% 3/1/07 B2 720 770
American Mobile Satellite Corp. 12.25% 4/1/08 - 310 149
Ascent Entertainment Group, Inc. 0% 12/15/04 B3 1,680 949
(d)
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
CBS Radio, Inc. 11.375% 1/15/09 pay-in-kind - $ 2,471 $ 2,867
Chancellor Media Corp. 9% 10/1/08 (f) Ba3 260 261
Classic Communications, Inc. 0% 8/1/09 unit Caa1 110 57
(d)(f)
Clear Channel Communications, Inc. 7.25% Baa3 4,200 3,839
10/15/27
Continental Cablevision, Inc.:
8.3% 5/15/06 Baa3 325 356
9% 9/1/08 Baa3 2,510 2,938
International Cabletel, Inc. 0% 2/1/06 (d) B3 2,120 1,611
Iridium Operating LLC/Iridium Capital Corp.:
10.875% 7/15/05 B3 2,570 1,928
11.25% 7/15/05 B3 1,040 790
NTL, Inc.:
0% 4/1/08 (d)(f) B3 6,180 3,399
10% 2/15/07 B3 740 703
11.5% 10/1/08 (f) B3 610 631
Olympus Communications LP/Olympus Capital B1 1,690 1,817
Corp. 10.625% 11/15/06
Orbital Imaging Corp. 11.625% 3/1/05 - 120 106
Orion Network Systems, Inc.:
0% 1/15/07 (d) B2 5,770 3,375
11.25% 1/15/07 B2 1,275 1,122
Renaissance Media Group LLC/Renaissance 0% B3 400 252
4/15/08 (d)
Rogers Cablesystems Ltd. yankee 10.125% Ba3 170 184
9/1/12
Satelites Mexicanos SA de CV:
9.06% 6/30/04 (f)(g) - 1,188 1,045
10.125% 11/1/04 (f) B3 1,710 1,163
Telewest PLC:
yankee 0% 10/1/07 (d) B1 2,930 2,315
9.625% 10/1/06 B1 210 206
Time Warner, Inc.:
6.85% 1/15/26 Baa3 7,120 7,375
6.875% 6/15/18 Baa3 2,750 2,736
7.75% 6/15/05 Baa3 8,000 8,752
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
UIH Australia/Pacific, Inc.:
0% 5/15/06 Series B (d) B2 $ 3,780 $ 1,474
0% 5/15/06 Series D (d) B2 430 168
United International Holdings, Inc. 0% B3 1,650 776
2/15/08 (d)
58,266
ENTERTAINMENT - 0.2%
AMC Entertainment, Inc. 9.5% 3/15/09 B2 970 941
Premier Parks, Inc.:
0% 4/1/08 (d) B3 880 541
9.25% 4/1/06 B3 70 71
Viacom, Inc.:
7.75% 6/1/05 Baa3 750 808
8% 7/7/06 Ba2 3,290 3,389
5,750
LODGING & GAMING - 0.2%
Aladdin Gaming Holdings/Aladdin Capital Caa2 710 195
Corp. 0% 3/1/10 (d)
HMH Properties, Inc.:
7.875% 8/1/05 Ba2 1,840 1,794
7.875% 8/1/08 Ba2 190 183
KSL Recreation Group, Inc. 10.25% 5/1/07 B3 350 347
Signature Resorts, Inc.:
9.25% 5/15/06 B2 740 629
9.75% 10/1/07 B3 1,590 1,193
Station Casinos, Inc. 10.125% 3/15/06 B2 510 510
Sun International Hotels Ltd./Sun Ba3 570 587
International North America, Inc. yankee 9%
3/15/07
5,438
PUBLISHING - 0.1%
Big Flower Press Holdings, Inc. 8.875% 7/1/07 B2 2,080 2,049
News America, Inc. 6.625% 1/9/08 Baa3 615 612
2,661
RESTAURANTS - 0.3%
AFC Enterprises, Inc. 10.25% 5/15/07 B3 1,000 1,005
Darden Restaurants, Inc. 6.375% 2/1/06 Baa1 2,700 2,628
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
Host Marriott Travel Plazas, Inc. 9.5% Ba3 $ 160 $ 160
5/15/05
Nebraska Restaurant, Inc. 10.75% 7/15/08 (f) B3 430 409
SC International Services, Inc. 9.25% 9/1/07 B2 470 456
Wendy's International, Inc. 6.35% 12/15/05 Baa1 5,000 4,998
9,656
TOTAL MEDIA & LEISURE 81,771
NONDURABLES - 0.5%
FOODS - 0.1%
ConAgra, Inc. 7.125% 10/1/26 Baa1 3,600 3,771
Del Monte Corp. 12.25% 4/15/07 Caa1 270 289
4,060
HOUSEHOLD PRODUCTS - 0.1%
AKI Holding Corp. 0% 7/1/09 (d)(f) Caa1 180 68
AKI, Inc. 10.5% 7/1/08 (f) B2 120 114
Revlon Consumer Products Corp.:
8.125% 2/1/06 B2 820 795
8.625% 2/1/08 B3 880 801
1,778
TOBACCO - 0.3%
Philip Morris Companies, Inc. 6.95% 6/1/06 A2 10,000 10,471
TOTAL NONDURABLES 16,309
PRECIOUS METALS - 0.1%
Centaur Mining & Exploration Ltd. 11% 12/1/07 B1 550 462
Great Central Mines Ltd. 8.875% 4/1/08 Ba2 1,300 1,248
TOTAL PRECIOUS METALS 1,710
RETAIL & WHOLESALE - 0.9%
APPAREL STORES - 0.1%
Mothers Work, Inc. 12.625% 8/1/05 B3 240 239
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Specialty Retailers, Inc.:
8.5% 7/15/05 Ba3 $ 790 $ 743
9% 7/15/07 B2 1,270 1,143
2,125
GENERAL MERCHANDISE STORES - 0.4%
Dayton Hudson Corp.:
6.4% 2/15/03 A3 425 441
6.8% 10/1/01 A3 1,400 1,450
Federated Department Stores, Inc.:
6.79% 7/15/27 Baa2 7,000 7,282
8.5% 6/15/03 Baa2 3,000 3,302
12,475
GROCERY STORES - 0.2%
American Stores Co. 7.5% 5/1/37 Baa2 1,000 1,111
Kroger Co. 6% 7/1/00 Baa3 3,530 3,585
Pathmark Stores, Inc. 9.625% 5/1/03 Caa1 1,660 1,627
6,323
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Amazon.com, Inc. 0% 5/1/08 (d) Caa2 2,895 1,686
Guitar Center, Inc. 11% 7/1/06 B1 670 690
HMV Media Group PLC 10.25% 5/15/08 (f) B3 590 502
Home Interiors & Gifts, Inc. 10.125% 6/1/08 B2 650 601
(f)
J. Crew Group, Inc. 0% 10/15/08 (d) Caa3 2,080 749
J. Crew Operating Corp. 10.375% 10/15/07 Caa1 1,220 927
Metals USA, Inc. 8.625% 2/15/08 B2 1,020 867
U.S. Office Products Co. 9.75% 6/15/08 (f) B3 380 300
6,322
TOTAL RETAIL & WHOLESALE 27,245
SERVICES - 0.2%
LEASING & RENTAL - 0.1%
AP Holdings, Inc. 0% 3/15/08 (d) Caa2 370 167
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
SERVICES - CONTINUED
LEASING & RENTAL - CONTINUED
Apcoa, Inc. 9.25% 3/15/08 Caa1 $ 1,120 $ 997
Hollywood Entertainment Corp. 10.625% 8/15/04 B3 1,280 1,216
2,380
PRINTING - 0.1%
Sullivan Graphics, Inc. 12.75% 8/1/05 Caa1 1,810 1,792
SERVICES - 0.0%
Iron Mountain, Inc. 8.75% 9/30/09 B3 185 183
Medaphis Corp. 9.5% 2/15/05 B2 1,350 1,040
SITEL Corp. 9.25% 3/15/06 B2 120 89
1,312
TOTAL SERVICES 5,484
TECHNOLOGY - 0.6%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc.:
8.5% 1/15/08 B2 130 123
8.6% 6/1/08 B2 640 606
Jordan Telecommunication Products, Inc.:
0% 8/1/07 (d) B3 990 688
9.875% 8/1/07 B3 290 260
1,677
COMPUTER SERVICES & SOFTWARE - 0.1%
Concentric Network Corp. 12.75% 12/15/07 - 590 534
DecisionOne Corp. 9.75% 8/1/07 B3 360 180
DecisionOne Holdings Corp. 0% 8/1/08 unit (d) Caa1 930 233
ICG Services, Inc.:
0% 2/15/08 (d) - 2,050 1,005
0% 5/1/08 (d) - 210 99
2,051
COMPUTERS & OFFICE EQUIPMENT - 0.4%
CHS Electronics, Inc. 9.875% 4/15/05 B2 80 70
Comdisco, Inc.:
5.75% 2/15/01 Baa1 6,000 5,919
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Comdisco, Inc.: - continued
6.1% 6/5/01 Baa1 $ 3,000 $ 3,068
6.375% 11/30/01 Baa1 4,500 4,491
13,548
ELECTRONIC INSTRUMENTS - 0.0%
Telecommunications Techniques Co. 9.75% B3 900 765
5/15/08 (f)
ELECTRONICS - 0.0%
Communications Instruments, Inc. 10% 9/15/04 B3 320 282
Hadco Corp. 9.5% 6/15/08 (f) B2 800 696
Insilco Corp. 10.25% 8/15/07 B3 390 394
1,372
TOTAL TECHNOLOGY 19,413
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.1%
Atlas Air, Inc. 9.25% 4/15/08 B3 410 379
Atlas Air, Inc. Pass Through Trust 12.25% Ba3 860 912
12/1/02
Delta Air Lines, Inc. equipment trust Baa1 729 803
certificate 8.54% 1/2/07
Kitty Hawk, Inc. 9.95% 11/15/04 B1 1,090 1,046
3,140
RAILROADS - 0.5%
Burlington Northern Santa Fe Corp.:
6.875% 12/1/27 Baa2 5,000 4,969
7.29% 6/1/36 Baa2 4,360 4,780
Norfolk Southern Corp. 7.05% 5/1/37 Baa1 5,800 6,231
15,980
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - CONTINUED
SHIPPING - 0.0%
Amer Reefer Co. Ltd. 10.25% 3/1/08 B1 $ 190 $ 143
Holt Group, Inc. 9.75% 1/15/06 (f) Caa1 820 541
684
TOTAL TRANSPORTATION 19,804
UTILITIES - 2.6%
CELLULAR - 0.9%
360 Degrees Communications Co.:
7.125% 3/1/03 Baa1 1,560 1,663
7.5% 3/1/06 Baa1 1,850 2,052
Cable & Wireless Communications PLC 6.375% Baa1 3,770 3,843
3/6/03
Cellnet Data Systems, Inc. 0% 10/1/07 (d) - 1,040 260
Dial Call Communications, Inc. 0% 12/15/05 B2 350 333
(d)
Iridium LLC/Iridium Capital Corp. 13% 7/15/05 B3 170 140
McCaw International Ltd. 0% 4/15/07 (d) Caa1 5,800 2,581
Millicom International Cellular SA 0% 6/1/06 Caa1 11,510 6,791
(d)
Nextel Communications, Inc.:
0% 8/15/04 (d) B2 1,810 1,665
0% 2/15/08 (d) B2 3,820 2,072
Nextel International, Inc. 0% 4/15/08 (d) Caa1 2,770 1,025
PageMart Nationwide, Inc. 0% 2/1/05 (d) B3 860 748
PageMart Wireless, Inc. 0% 2/1/08 (d) Caa2 700 329
Rogers Communications, Inc. 8.875% 7/15/07 B2 2,110 2,078
Telesystem International Wireless, Inc.:
0% 6/30/07 (d) Caa1 1,050 336
0% 11/1/07 (d) Caa1 2,080 562
Teligent, Inc. 0% 3/1/08 (d) Caa1 1,440 601
27,079
ELECTRIC UTILITY - 0.6%
Avon Energy Partners Holdings 6.46% 3/4/08 Baa2 3,500 3,527
(f)
DR Investments UK PLC yankee 7.1% 5/15/02 (f) A2 5,000 5,252
Israel Electric Corp. Ltd. 7.75% 12/15/27 (f) A3 7,040 6,497
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Niagara Mohawk Power Corp. 7.75% 10/1/08 Ba3 $ 630 $ 665
Texas Utilities Co. 6.375% 1/1/08 Baa3 2,780 2,832
18,773
GAS - 0.2%
Columbia Gas System, Inc. 6.61% 11/28/02 A3 6,000 6,229
TELEPHONE SERVICES - 0.9%
Covad Communications Group, Inc. 0% 3/15/08 - 1,340 469
(d)
Dobson Wireline Co. 12.25% 6/15/08 (f) - 930 777
DTI Holdings, Inc. 0% 3/1/08 (d) - 800 256
Firstworld Communications, Inc. 0% 4/15/08 - 170 49
unit (d)(f)
GST Network Funding, Inc. 0% 5/1/08 (d)(f) - 1,680 722
GST Telecommunications, Inc. 12.75% 11/15/07 - 1,060 890
Hyperion Telecommunications, Inc. 0% 4/15/03 B3 1,620 1,102
(d)
ICG Holdings, Inc. 0% 9/15/05 (d) - 880 680
IXC Communications, Inc. 9% 4/15/08 B3 1,810 1,787
KMC Telecom Holdings, Inc. 0% 2/15/08 (d) - 510 227
Level 3 Communications, Inc. 9.125% 5/1/08 B3 2,580 2,428
McLeodUSA, Inc.:
0% 3/1/07 (d) B2 1,800 1,278
9.25% 7/15/07 B2 160 162
Netia Holdings BV:
0% 11/1/07 (d) B3 450 221
10.25% 11/1/07 B3 300 234
NEXTLINK Communications LLC 12.5% 4/15/06 B3 320 338
NEXTLINK Communications, Inc.:
0% 4/15/08 (d) B3 250 134
9.625% 10/1/07 B3 320 302
Pathnet, Inc. 12.25% 4/15/08 - 530 376
Rhythms Netconnections, Inc. 0% 5/15/08 unit - 1,235 445
(d)(f)
Viatel, Inc.:
0% 4/15/08 (d) Caa1 140 68
11.25% 4/15/08 Caa1 190 171
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
WinStar Communications, Inc.:
0% 10/15/05 (d) Caa1 $ 630 $ 460
0% 10/15/05 (d) Caa1 1,140 1,231
0% 3/15/08 (d) CCC 1,185 901
MCI WorldCom, Inc.:
6.4% 8/15/05 Baa2 3,215 3,340
8.875% 1/15/06 Baa2 5,667 6,210
9.375% 1/15/04 Baa2 1,228 1,278
26,536
TOTAL UTILITIES 78,617
TOTAL NONCONVERTIBLE BONDS 492,642
TOTAL CORPORATE BONDS 499,896
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - 3.5%
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.3%
Fannie Mae:
5.75% 6/15/05 Aaa 4,140 4,318
8.625% 6/30/04 Aaa 4,000 4,701
Farm Credit Systems Financial Assistance Aaa 3,400 4,050
Corp. 9.375% 7/21/03
Federal Agricultural Mortgage Corp. 7.01% Aaa 1,720 1,872
2/10/04
Federal Home Loan Bank:
7.36% 7/1/04 Aaa 1,590 1,776
7.38% 8/5/04 Aaa 3,790 4,242
7.56% 9/1/04 Aaa 5,530 6,245
7.7% 9/20/04 Aaa 1,170 1,331
Government Trust Certificates (assets of
Trust guaranteed by U.S. Government through
Defense Security Assistance Agency):
Class 1-C, 9.25% 11/15/01 Aaa 1,549 1,652
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Government Trust Certificates (assets of
Trust guaranteed by U.S. Government through
Defense Security Assistance Agency): -
continued
Class 2-E, 9.4% 5/15/02 Aaa $ 1,527 $ 1,621
Guaranteed Export Trust Certificates (assets
of Trust guaranteed by U.S. Government
through Export-Import Bank):
Series 1993-C, 5.2% 10/15/04 Aaa 340 343
Series 1993-D, 5.23% 5/15/05 Aaa 620 625
Series 1994-A, 7.12% 4/15/06 Aaa 597 645
Guaranteed Trade Trust Certificates (assets Aaa 493 537
of Trust guaranteed by U.S. Government
through Export-Import Bank) Series 1994-B,
7.5% 1/26/06
Overseas Private Investment Corp. U.S.
Government guaranteed participation
certificate:
Series 1994-195, 6.08% 8/15/04 (callable) Aaa 1,693 1,760
Series 1996-A1, 6.726% 9/15/10 (callable) - 5,000 5,336
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 41,054
U.S. TREASURY OBLIGATIONS - 2.2%
U.S. Treasury Bond:
6.375% 8/15/27 Aaa 485 559
6.875% 8/15/25 Aaa 13,235 16,029
7.625% 2/15/25 Aaa 9,930 13,056
U.S. Treasury Notes:
5.875% 11/30/01 Aaa 1,220 1,272
7% 7/15/06 Aaa 28,050 32,301
7.25% 8/15/04 Aaa 2,200 2,510
TOTAL U.S. TREASURY OBLIGATIONS 65,727
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY 106,781
OBLIGATIONS
U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES
- - 10.4%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
FANNIE MAE - 8.4%
5.5% 6/17/03 to 4/1/11 Aaa $ 70,910 $ 70,864
6% 6/1/11 to 11/1/28 Aaa 40,524 40,426
6.5% 2/1/24 to 11/1/28 Aaa 132,149 133,176
7% 7/1/25 to 7/1/28 Aaa 5,756 5,881
8.5% 2/1/28 Aaa 6,000 6,249
TOTAL FANNIE MAE 256,596
FREDDIE MAC - 0.2%
5.5% 5/11/03 Aaa 3,330 3,323
7% 1/22/01 to 8/1/01 Aaa 2,083 2,100
TOTAL FREDDIE MAC 5,423
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -
1.8%
7% 12/15/25 to 7/15/28 Aaa 2,513 2,573
7.5% 2/15/23 to 8/15/28 Aaa 41,413 42,657
8% 11/15/21 to 12/15/26 Aaa 11,081 11,493
TOTAL GOVERNMENT NATIONAL MORTGAGE 56,723
ASSOCIATION
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE 318,742
SECURITIES
ASSET-BACKED SECURITIES - 1.4%
Airplanes Pass Through Trust 10.875% 3/15/19 Ba2 1,570 1,617
Capital Equipment Receivables Trust 6.11% Aaa 6,350 6,359
7/15/99
Chase Manhattan Grantor Trust:
6.61% 9/15/02 Aaa 2,993 3,041
6.76% 9/15/02 A3 748 758
Chevy Chase Auto Receivables Trust:
5.9% 7/15/03 Aaa 2,754 2,766
5.91% 12/15/04 Aaa 1,484 1,493
6.6% 12/15/02 Aaa 917 927
Ford Credit Auto Owner Trust:
6.2% 12/15/02 Baa3 1,970 2,004
6.4% 5/15/02 A1 2,710 2,780
6.4% 12/15/02 Baa3 1,090 1,092
ASSET-BACKED SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Ford Credit Grantor Trust 5.9% 10/15/00 Aaa $ 357 $ 358
Green Tree Financial Corp. 6.1% 4/15/27 Aaa 681 681
Key Auto Finance Trust:
6.3% 10/15/03 A2 2,798 2,811
6.65% 10/15/03 Baa3 822 835
MBNA Master Credit Card Trust II 6.55% Aaa 9,000 9,531
1/15/07
Sears Credit Account Master Trust II 6.5% Aaa 6,280 6,309
10/15/03
TOTAL ASSET-BACKED SECURITIES 43,362
COMMERCIAL MORTGAGE SECURITIES - 0.9%
Berkeley Federal Bank & Trust FSB Series - 1,836 1,421
1994 Class 1-B 7.7149% 8/1/24 (f)(g)
CS First Boston Mortgage Securities Corp.:
Series 1997-C2 Class D, 7.27% 1/17/35 Baa2 3,070 2,874
Series 1998 FLI Class E, 6.1938% 1/10/13 Baa2 5,360 5,211
(f)(g)
DLJ Mortgage Acceptance Corp. Series - 700 705
1993-MF12 Class B-2, 10.1% 9/18/03 (f)
First Chicago/Lennar Trust I Series 1997-CHL1:
Class D, 8.1309% 4/13/39 (g) - 700 597
Class E, 8.1309% 4/1/39 (g) - 650 470
General Motors Acceptance Corp. Commercial Ba3 500 409
Mortgage Securities, Inc. Series 1996-C1
Class F, 7.86% 10/15/28 (f)
GS Mortgage Securities Corp. II Series Baa3 2,600 2,255
1998-GLII Class E, 7.1905% 4/13/31 (f)(g)
Morgan Stanley Capital I, Inc.:
Series 1996-MBL1 Class E, 8.3623% 5/25/21 - 738 725
(f)(g)
Series 1998 - CF1:
Class D, 7.35% 1/15/12 Baa2 2,451 2,330
Class E, 7.35% 12/15/12 Baa3 850 749
Penn Mutual Life Insurance Co. (The)/Penn - 1,250 831
Insurance & Annuity Co. Series 1996-PML
Class K, 7.9% 11/15/26 (f)
Resolution Trust Corp. Series 1991-M2 Class Ba3 270 224
A-3, 7.2498% 9/25/20 (g)
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Structured Asset Securities Corp.:
sequential pay Series 1996 Class A-2A, 7.75% AAA $ 712 $ 716
2/25/28
Series 1993-C1 Class E, 6.6% 10/25/24 (f) B 500 225
Series 1995-C1 Class E, 7.375% 9/25/24 (f) BB 1,000 977
Thirteen Affiliates of General Growth Aaa 4,500 4,606
Properties, Inc. sequential pay Series A-2,
6.602% 12/15/10 (f)
Wells Fargo Capital Markets Apartment Aaa 1,727 1,769
Financing Trust Series APT Class 1, 6.56%
12/29/05 (f)
TOTAL COMMERCIAL MORTGAGE SECURITIES 27,094
FOREIGN GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - 0.3%
Quebec Province yankee 6.86% 4/15/26 (e)(i) A2 8,000 8,273
(Cost $7,698)
SUPRANATIONAL OBLIGATIONS - 0.1%
Inter American Development Bank yankee 6.29% Aaa 4,000 4,256
7/16/27 (Cost $3,975)
CERTIFICATES OF DEPOSIT - 0.1%
Canadian Imperial Bank of Commerce, New York 3,000 3,049
yankee 6.2% 8/1/00 (Cost $3,005)
CASH EQUIVALENTS - 6.9%
SHARES
Taxable Central Cash Fund (c) (Cost $209,376) 209,375,876 209,376
TOTAL INVESTMENT IN SECURITIES - 100% $ 3,053,974
</TABLE>
SECURITY TYPE ABBREVIATIONS
The fund hereby designates approximately $151,292,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
ACES - Automatic Common Exchange
Securities
QUIPS - Quarterly Income Preferred Securities
LEGEND
(a) Non-income producing
(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(c) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(d) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.
(e) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.
(f) 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 $96,759,000 or 3.2% of net assets.
(g) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(h) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
SECURITY ACQUISTION DATE ACQUISITION COST (000S)
Mothers Work, Inc. 6/18/98 1
(i) 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 advisor, based pricipally on S&P and Moody's ratings
of the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 20.3% AAA, AA, A 19.3%
Baa 6.4% BBB 7.1%
Ba 1.3% BB 1.3%
B 3.1% B 3.1%
Caa 1.1% CCC 1.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
for the sovereign credit of the issuing government. The percentage not
rated by Moody's or S&P amounted to 0.7%. FMR has determined that
unrated debt securities that are lower quality account for 0.1% of the
total value of investment in securities.
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $2,637,411,000. Net unrealized appreciation
aggregated $416,563,000, of which $497,635,000 related to appreciated
investment securities and $81,072,000 related to depreciated
investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE
AMOUNTS) NOVEMBER 30, 1998 OCTOBER 31, 1998
ASSETS
Investment in securities, at value (cost $ 3,225,233 $ 3,053,974
$2,716,878 and $2,636,161, respectively) -
See accompanying schedules
Cash 1,054 4
Receivable for investments sold 3,151 24,170
Receivable for fund shares sold 2,888 3,318
Dividends receivable 3,450 2,723
Interest receivable 14,058 15,387
Other receivables 344 374
TOTAL ASSETS 3,250,178 3,099,950
LIABILITIES
Payable for investments purchased Regular $ 9,839 $ 41,890
delivery
Delayed delivery 78,160
Payable for fund shares redeemed 7,449 3,913
Accrued management fee 1,134 1,088
Distribution fees payable 1,298 1,230
Other payables and accrued expenses 577 573
TOTAL LIABILITIES 98,457 48,694
NET ASSETS $ 3,151,721 $ 3,051,256
Net Assets consist of:
Paid in capital $ 2,348,639 $ 2,304,183
Undistributed net investment income 13,757 6,423
Accumulated undistributed net realized gain 280,959 322,776
(loss) on investments and foreign currency
transactions
Net unrealized appreciation (depreciation) 508,366 417,874
on investments and assets and liabilities
in foreign currencies
NET ASSETS $ 3,151,721 $ 3,051,256
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE
AMOUNTS) NOVEMBER 30, 1998 OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE CLASS $19.91 $19.25
A: NET ASSET VALUE and redemption price per
share ($16,859 (divided by) 846.7 shares)
and ($15,517 (divided by) 806 shares),
respectively
Maximum offering price per share (100/94.25 $21.12 $20.42
of $19.91 and $19.25), respectively
CLASS T: NET ASSET VALUE and redemption $19.96 $19.30
price per share ($2,993,364 (divided by)
149,980 shares) and ($2,903,025 (divided
by) 150,451 shares), respectively
Maximum offering price per share (100/96.50 $20.68 $20.00
of $19.96 and $19.30), respectively
CLASS B: NET ASSET VALUE and offering price $19.86 $19.21
per share ($57,263 (divided by) 2,883
shares) A and ($51,226 (divided by) 2,666
shares) A, respectively
CLASS C: NET ASSET VALUE and offering price $19.88 $19.22
per share ($21,099 (divided by) 1,061.5
shares) A and ($20,443 (divided by) 1,063.4
shares) A, respectively
INSTITUTIONAL CLASS: NET ASSET VALUE, $20.03 $19.35
offering price and redemption price per
share ($63,136 (divided by) 3,152.1 shares)
and ($61,045 (divided by) 3,154 shares),
respectively
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 3,359 $ 39,312
Interest 6,845 79,524
TOTAL INCOME 10,204 118,836
EXPENSES
Management fee $ 1,136 $ 13,701
Transfer agent fees 479 5,411
Distribution fees 1,297 15,486
Accounting fees and expenses 67 811
Non-interested trustees' compensation - 18
Custodian fees and expenses 8 119
Registration fees 20 109
Audit 10 93
Legal 3 14
Interest - 16
Reports to shareholders - 243
Miscellaneous - 10
Total expenses before reductions 3,020 36,031
Expense reductions (14) (366)
3,006 35,665
NET INVESTMENT INCOME 7,198 83,171
REALIZED AND UNREALIZED GAIN (LOSS)
Investment securities 7,154 324,836
Foreign currency transactions 8 61
7,162 324,897
Change in net unrealized appreciation
(depreciation) on:
Investment securities 90,542 (33,500)
Assets and liabilities in foreign currencies (50) 39
90,492 (33,461)
NET GAIN (LOSS) 97,654 291,436
NET INCREASE (DECREASE) IN NET ASSETS $ 104,852 $ 374,607
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
INCREASE (DECREASE) IN NET ASSETS
Operations Net investment income $ 7,198 $ 83,171
Net realized gain (loss) 7,162 324,897
Change in net unrealized appreciation 90,492 (33,461)
(depreciation)
NET INCREASE (DECREASE) IN NET ASSETS 104,852 374,607
RESULTING FROM OPERATIONS
Distributions to shareholders From net - (86,685)
investment income
From net realized gain - (198,222)
TOTAL DISTRIBUTIONS - (284,907)
Share transactions - net increase (decrease) (4,387) (2,113)
TOTAL INCREASE (DECREASE) IN NET ASSETS 100,465 87,587
NET ASSETS
Beginning of period 3,051,256 2,963,669
End of period (including undistributed net $ 3,151,721 $ 3,051,256
investment income of $13,757, $6,423 and
$9,114, respectively)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
AMOUNTS IN THOUSANDS YEAR ENDED OCTOBER 31, 1997
INCREASE (DECREASE) IN NET ASSETS
Operations Net investment income $ 87,934
Net realized gain (loss) 229,624
Change in net unrealized appreciation 251,899
(depreciation)
NET INCREASE (DECREASE) IN NET ASSETS 569,457
RESULTING FROM OPERATIONS
Distributions to shareholders From net (90,048)
investment income
From net realized gain (19,449)
TOTAL DISTRIBUTIONS (109,497)
Share transactions - net increase (decrease) (512,007)
TOTAL INCREASE (DECREASE) IN NET ASSETS (52,047)
NET ASSETS
Beginning of period 3,015,716
End of period (including undistributed net $ 2,963,669
investment income of $13,757, $6,423 and
$9,114, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
ONE MONTH ENDED NOVEMBER 30, 1998 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.25 $ 18.75 $ 16.04 $ 15.22
Income from Investment Operations
Net investment income D .05 .53 .48 .08
Net realized and unrealized gain (loss) .61 1.80 2.83 .88
Total from investment operations .66 2.33 3.31 .96
Less Distributions
From net investment income - (.57) (.49) (.14)
From net realized gain - (1.26) (.11) -
Total distributions - (1.83) (.60) (.14)
Net asset value, end of period $ 19.91 $ 19.25 $ 18.75 $ 16.04
TOTAL RETURN B, C 3.43% 13.04% 20.99% 6.34%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 17 $ 16 $ 8 $ 1
Ratio of expenses to average net assets 1.02% A 1.05% 1.41% F 1.50% A, F
Ratio of expenses to average net assets 1.02% A 1.02% G 1.40% G 1.49% A, G
after expense reductions
Ratio of net investment income to average 3.13% A 2.76% 2.68% 3.07% A
net assets
Portfolio turnover 73% A 85% 70% 223%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 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 NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G 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 7 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, YEARS ENDED OCTOBER 31,
1998 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.30 $ 18.79 $ 16.07 $ 15.30 $ 14.67
Income from Investment Operations
Net investment income .05 C .51 C .53 C .51 C .59
Net realized and unrealized gain (loss) .61 1.80 2.84 .88 .54
Total from investment operations .66 2.31 3.37 1.39 1.13
Less Distributions
From net investment income - (.54) (.54) (.59) (.50)
In excess of net investment income - - - - -
From net realized gain - (1.26) (.11) (.03) -
Return of capital - - - - -
Total distributions - (1.80) (.65) (.62) (.50)
Net asset value, end of period $ 19.96 $ 19.30 $ 18.79 $ 16.07 $ 15.30
TOTAL RETURN A, B 3.42% 12.90% 21.36% 9.30% 7.85%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 2,993 $ 2,903 $ 2,901 $ 2,993 $ 3,441
Ratio of expenses to average net assets 1.22% D 1.16% 1.17% 1.26% 1.47%
Ratio of expenses to average net assets 1.22% D 1.15% E 1.17% 1.25% E 1.46% E
after expense reductions
Ratio of net investment income to
average 2.92% D 2.68% 2.98% 3.32% 3.99%
net assets
Portfolio turnover 73% D 85% 70% 223% 297%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 15.91
Income from Investment Operations
Net investment income .38
Net realized and unrealized gain (loss) (.79)
Total from investment operations (.41)
Less Distributions
From net investment income (.28)
In excess of net investment income (.02)
From net realized gain (.49)
Return of capital (.04)
Total distributions (.83)
Net asset value, end of period $ 14.67
TOTAL RETURN A, B (2.69)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 3,129
Ratio of expenses to average net assets 1.59%
Ratio of expenses to average net assets 1.58% E
after expense reductions
Ratio of net investment income to average 3.79%
net assets
Portfolio turnover 202%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D ANNUALIZED
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 7 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, YEARS ENDED OCTOBER 31,
1998 1998 1997 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.21 $ 18.71 $ 16.36
Income from Investment Operations
Net investment income D .04 .38 .29
Net realized and unrealized gain (loss) .61 1.81 2.38
Total from investment operations .65 2.19 2.67
Less Distributions
From net investment income - (.43) (.32)
From net realized gain - (1.26) -
Total distributions - (1.69) (.32)
Net asset value, end of period $ 19.86 $ 19.21 $ 18.71
TOTAL RETURN B, C 3.38% 12.25% 16.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 57 $ 51 $ 16
Ratio of expenses to average net assets 1.80% A 1.74% 2.12% A
Ratio of expenses to average net assets 1.80% A 1.73% F 2.11% A, F
after expense reductions
Ratio of net investment income to average 2.35% A 2.02% 1.88% A
net assets
Portfolio turnover 73% A 85% 70%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO OCTOBER 31, 1997.
F 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 7 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS C
ONE MONTH ENDED NOVEMBER 30, YEAR ENDED OCTOBER 31,
1998 1998 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.22 $ 19.05
Income from Investment Operations
Net investment income D .04 .36
Net realized and unrealized gain (loss) .62 1.56
Total from investment operations .66 1.92
Less Distributions
From net investment income - (.49)
From net realized gain - (1.26)
Total distributions - (1.75)
Net asset value, end of period $ 19.88 $ 19.22
TOTAL RETURN B, C 3.43% 10.62%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 21 $ 20
Ratio of expenses to average net assets 1.77% A 1.80% A, G
Ratio of expenses to average net assets 1.76% A, F 1.79% A, F
after expense reductions
Ratio of net investment income to average 2.37% A 1.89% A
net assets
Portfolio turnover 73% A 85%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
F 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 7 OF NOTES TO FINANCIAL STATEMENTS).
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, YEARS ENDED OCTOBER 31,
1998 1998 1997 1996 1995 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.35 $ 18.85 $ 16.11 $ 15.40 $ 15.23
Income from Investment Operations
Net investment income .05 D .60 D .61 D .54 D .25
Net realized and unrealized gain
(loss) .63 1.81 2.86 .87 .09
Total from investment operations .68 2.41 3.47 1.41 .34
Less Distributions
From net investment income - (.65) (.62) (.67) (.17)
From net realized gain - (1.26) (.11) (.03) -
Total distributions - (1.91) (.73) (.70) (.17)
Net asset value, end of period $ 20.03 $ 19.35 $ 18.85 $ 16.11 $ 15.40
TOTAL RETURN B, C 3.51% 13.45% 21.97% 9.41% 2.22%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $ 63 $ 61 $ 39 $ 22 $ 1
Ratio of expenses to average net
assets .66% A .65% .69% 1.06% .92% A, F
Ratio of expenses to average net
assets .66% A .63% G .69% 1.03% G .91% A, G
after expense reductions
Ratio of net investment income to
average 3.48% A 3.15% 3.42% 3.54% 4.54% A
net assets
Portfolio turnover 73% A 85% 70% 223% 297%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G 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 7 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the periods ended November 30, 1998 and October 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Balanced Fund (the 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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. At a special meeting of the shareholders of the fund held
on May 13, 1998, shareholders approved an Agreement and Plan of
Reorganization, providing for the reorganization of the fund into
Fidelity Advisor Series I, effective on or about February 26, 1999.
Effective November 30, 1998, the Board of Trustees approved a change
in the fiscal year-end of the fund to November 30. Accordingly, the
financial statements of the fund are presented as of and for the year
ended October 31, 1998 and as of and for the one-month period ended
November 30, 1998. 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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
each period's end. Purchases and sales of securities, income receipts
and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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 the fiscal year. The schedules of investments
include 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
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
differing treatments for litigation proceeds, paydown gains/losses on
certain securities, foreign currency transactions, passive foreign
investment companies (PFIC), market discount, partnerships, 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.
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.
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 Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
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 Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end
2. OPERATING POLICIES - CONTINUED
TAXABLE CENTRAL CASH FUND - CONTINUED
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
U.S. Treasury securities and repurchase agreements for these
securities. Income distributions from the Cash Fund are declared daily
and paid monthly from net interest income. Income distributions earned
by the fund are recorded as interest income in the accompanying
financial statements.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the fund, along with other registered investment companies
having management contracts with FMR, may participate in an interfund
lending program. This program provides an alternative credit facility
allowing the fund to borrow from, or lend money to, other
participating funds.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a delayed delivery basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of
the underlying securities and the date when the securities will be
delivered and paid for are fixed at the time the transaction is
negotiated. The market values of the securities purchased or sold on a
delayed delivery basis are identified as such in the fund's schedule
of investments. The fund may receive compensation for interest forgone
in the purchase of a delayed delivery security. With respect to
purchase commitments, the fund identifies securities as segregated in
its custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under
the contract.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of each period, the fund had $1,000 invested in restricted
securities.
3. PURCHASES AND SALES OF INVESTMENTS.
For the one month period ended November 30, 1998, purchases and sales
of securities, other than short-term securities, aggregated
$239,482,000 and $167,735,000, respectively, of which U.S. government
and government agency obligations aggregated $121,356,000 and
$130,743,000, respectively.
3. PURCHASES AND SALES OF INVESTMENTS - CONTINUED
For the year ended October 31, 1998, purchases and sales of
securities, other than short-term securities, aggregated
$2,540,272,000 and $2,881,243,000, respectively, of which U.S.
government and government agency obligations aggregated $781,296,000
and $864,368,000, 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
periods. The annual individual fund fee rate is .15%. In the event
that these rates were lower than the contractual rates in effect
during the periods, FMR voluntarily implemented the above rates, as
they resulted in the same or a lower management fee. For the one month
period ended November 30, 1998, the management fee was equivalent to
an annualized rate of .46% of average net assets. For the year ended
October 31, 1998, the management fee was equivalent to an annual rate
of .44% of average net assets .
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the periods, this fee was 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% *
CLASS C 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 periods, each class paid FDC the following amounts, a portion
of which was retained by FDC:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
PAID TO FDC RETAINED BY FDC PAID TO FDC RETAINED BY FDC
CLASS A $ 3,000 $ 0 $ 29,000 $ 0
CLASS T 1,232,000 22,000 15,039,000 139,000
CLASS B 45,000 34,000 323,000 242,000
CLASS C 17,000 17,000 95,000 95,000
$ 1,297,000 $ 73,000 $ 15,486,000 $ 476,000
</TABLE>
Under the Plans, FMR may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The
Plans also authorize payments to third parties that assist in the sale
of each class' shares or render shareholder support services. For the
periods, the following amounts were paid to third parties under the
Plans:
NOVEMBER 30, 1998 OCTOBER 31, 1998
CLASS A $ 0 $ 5,000
CLASS T 25,000 450,000
CLASS B 1,000 9,000
CLASS C 0 6,000
INSTITUTIONAL CLASS 1,000 12,000
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the periods, sales charge amounts paid to and retained by FDC were
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
PAID TO FDC RETAINED BY FDC PAID TO FDC RETAINED BY FDC
CLASS A $ 22,000 $ 9,000 $ 173,000 $ 57,000
CLASS T 58,000 21,000 940,000 263,000
CLASS B 10,000 10,000* 48,000 48,000*
CLASS C 1,000 1,000* 6,000 6,000 *
$ 91,000 $ 41,000 $ 1,167,000 $ 374,000
</TABLE>
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the periods, the following amounts were paid to FIIOC:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
AMOUNT % OF AVERAGE NET ASSETS* AMOUNT
CLASS A $ 3,000 .26 $ 26,000
CLASS T 454,000 .19 5,221,000
CLASS B 10,000 .25 78,000
CLASS C 4,000 .21 19,000
INSTITUTIONAL CLASS 8,000 .16 67,000
$ 479,000 $ 5,411,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
% OF AVERAGE NET ASSETS
CLASS A .23
CLASS T .17
CLASS B .24
CLASS C .19 *
INSTITUTIONAL CLASS .14
</TABLE>
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, 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 $7,000 and $334,000
for the periods ended November 30, 1998 and October 31, 1998,
respectively.
5. INTERFUND LENDING PROGRAM.
During the fiscal year ended October 31, 1998, the fund participated
in the interfund lending program as a borrower. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $33,770,000 and $24,426,000, respectively. The
weighted average interest rate was 5.70%. Interest expense includes
$8,000 paid under the interfund lending program.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time.
For the fiscal year ended October 31, 1998, the maximum loan and the
average daily loan balance during the period for which the loan was
outstanding amounted to $12,591,000. The weighted average interest
rate was 5.94%. Interest expense includes $8,000 paid under the bank
borrowing program.
7. 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. For the fiscal year ended October 31, 1998,
amounts reimbursed were as follows:
FMR EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 1.05% $ 0
CLASS T 1.30% 0
CLASS B 1.80% 0
CLASS C 1.80% 2,000
INSTITUTIONAL CLASS .80% 0
$ 2,000
Effective December 1, 1998, these expense limitations were eliminated.
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the periods ended November 30,
1998 and October 31, 1998, the fund's expenses were reduced by $14,000
and $345,000, respectively, under this arrangement.
7. EXPENSE REDUCTIONS - CONTINUED
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of expenses. For the
periods ended November 30, 1998 and October 31, 1998, the fund's
custodian fees were reduced by $0 and $16,000, respectively, under the
custodian arrangement, and each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
<TABLE>
<CAPTION>
<S> <C> <C>
TRANSFER AGENT CREDITS NOVEMBER 30, 1998 TRANSFER AGENT CREDITS OCTOBER 31, 1998
CLASS A $ - $ 1,000
INSTITUTIONAL CLASS - 2,000
$ - $ 3,000
</TABLE>
8. BENEFICIAL INTEREST.
For the periods ended November 30, 1998 and October 31, 1998, one
shareholder was record owner of approximately 18.2% of the total
outstanding shares of the fund.
9. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS ONE MONTH ENDED YEARS ENDED
NOVEMBER 30, 1998 OCTOBER 31, 1998 A OCTOBER 31, 1997 B
FROM NET INVESTMENT INCOME
Class A $ - $ 338 $ 111
Class T - 83,919 88,845
Class B - 696 137
Class C - 203 -
Institutional Class - 1,529 955
Total $ - $ 86,685 $ 90,048
FROM NET REALIZED GAIN
Class A $ - $ 553 $ 12
Class T - 193,978 19,290
Class B - 1,214 -
Class C - 13 -
Institutional Class - 2,464 147
Total $ - $ 198,222 $ 19,449
Total $ - $ 284,907 $ 109,497
</TABLE>
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
B DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD DECEMBER 31, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1997.
10. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS SHARES
ONE MONTH YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1998 1998 A 1997 B
CLASS A Shares sold 55 505 398
Reinvestment of distributions - 45 7
Shares redeemed (14) (147) (75)
Net increase (decrease) 41 403 330
CLASS T Shares sold 1,793 25,522 26,574
Reinvestment of distributions - 14,265 5,886
Shares redeemed (2,264) (43,766) (64,227)
Net increase (decrease) (471) (3,979) (31,767)
CLASS B Shares sold 246 2,157 1,099
Reinvestment of distributions - 93 7
Shares redeemed (29) (437) (253)
Net increase (decrease) 217 1,813 853
CLASS C Shares sold 47 1,132 -
Reinvestment of distributions - 9 -
Shares redeemed (49) (78) -
Net increase (decrease) (2) 1,063 -
INSTITUTIONAL CLASS Shares sold 47 2,017 1,168
Reinvestment of distributions - 209 60
Shares redeemed (49) (1,137) (517)
Net increase (decrease) (2) 1,089 711
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD DECEMBER 31, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1997.
10. SHARE TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS DOLLARS
ONE MONTH YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1998 1998 A 1997 B
CLASS A Shares sold $ 1,069 $ 9,665 $ 7,127
Reinvestment of distributions - 832 117
Shares redeemed (275) (2,810) (1,376)
Net increase (decrease) $ 794 $ 7,687 $ 5,868
CLASS T Shares sold $ 35,217 $ 487,737 $ 469,471
Reinvestment of distributions - 263,355 101,958
Shares redeemed (44,571) (837,890) (1,117,978)
Net increase (decrease) $ (9,354) $ (86,798) $ (546,549)
CLASS B Shares sold $ 4,821 $ 41,474 $ 20,123
Reinvestment of distributions - 1,711 128
Shares redeemed (572) (8,440) (4,772)
Net increase (decrease) $ 4,249 $ 34,745 $ 15,479
CLASS C Shares sold $ 924 $ 21,768 $ -
Reinvestment of distributions - 173 -
Shares redeemed (973) (1,484) -
Net increase (decrease) $ (49) $ 20,457 $ -
INSTITUTIONAL CLASS Shares sold $ 933 $ 39,736 $ 21,544
Reinvestment of distributions - 3,869 1,061
Shares redeemed (960) (21,809) (9,410)
Net increase (decrease) $ (27) $ 21,796 $ 13,195
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD DECEMBER 31, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1997.
11. REGISTRATION FEES.
For the periods, each class paid the following amounts to register its
shares for sale:
<TABLE>
<CAPTION>
<S> <C> <C>
ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
CLASS A $ - $ 8,000
CLASS T 20,000 64,000
CLASS B - 10,000
CLASS C - 15,000
INSTITUTIONAL CLASS - 12,000
$ 20,000 $ 109,000
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series II and the Shareholders of
Fidelity Advisor Balanced Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Balanced Fund (a fund of Fidelity Advisor Series II)
at November 30, 1998 and October 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights
for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fidelity Advisor Balanced Fund's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at November 30, 1998 and October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 4, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Balanced Fund voted to pay
to shareholders of record at the opening of business on record date,
the following distributions derived from capital gains realized from
sales of portfolio securities, and dividends derived from net
investment income:
CLASS A
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $.16 $.14
SHORT-TERM
CAPITAL GAINS $.60 $.04
LONG-TERM
CAPITAL GAINS $.66 $1.69
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 52.54% -
20% rate 47.46% 100%
CLASS T
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $.16 $.13
SHORT-TERM
CAPITAL GAINS $.60 $.04
LONG-TERM
CAPITAL GAINS $.66 $1.69
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 52.54% -
20% rate 47.46% 100%
CLASS B
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $.12 $.11
SHORT-TERM
CAPITAL GAINS $.60 $.04
LONG-TERM
CAPITAL GAINS $.66 $1.69
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 52.54% -
20% rate 47.46% 100%
CLASS C
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $.16 $.10
SHORT-TERM
CAPITAL GAINS $.60 $.04
LONG-TERM
CAPITAL GAINS $.66 $1.69
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 52.54% -
20% rate 47.46% 100%
A total of 2.35% of the dividends distributed during the fiscal year
ended October 31, 1998, was derived from interest on U.S. Government
securities which is generally exempt from state income tax.
A total of 23%, 19%, 26%, and 23% of Class A's, Class T's, Class B's
and Class C's dividends distributed during the fiscal year ended
October 31, 1998, qualifies for the dividends-received deductions for
corporate shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
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
Robert C. Pozen, Senior Vice President
Richard A. Spillane, Jr., Vice President
Kevin Grant, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributions Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified
International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant
Growth Fund
SM
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement
Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation 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 Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Funds
AIG-ANN-0199 67049
1.538593.101
(FIDELITY LOGO)
(registered trademark)
(FIDELITY_LOGO)
FIDELITY ADVISOR
BALANCED FUND -
INSTITUTIONAL CLASS
ANNUAL REPORTS
OCTOBER 31, 1998
AND THE ONE-MONTH
PERIOD ENDED
NOVEMBER 30, 1998
(FIDELITY_LOGO)
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 8 The managers' review of fund performance,
strategy and outlook.
INVESTMENT CHANGES 11 A summary of major shifts in the fund's
investments.
INVESTMENTS NOVEMBER 30, 1998 12 A complete list of the fund's investments
with their market values.
INVESTMENTS OCTOBER 31, 1998 43 A complete list of the fund's investments
with their market values.
FINANCIAL STATEMENTS 73 Statements of assets and liabilities,
operations, and changes in net assets, as
well as financial highlights.
NOTES 82 Notes to the financial statements.
REPORT OF INDEPENDENT ACCOUNTANTS 94 The auditors' opinion.
DISTRIBUTIONS 95
</TABLE>
NOTE TO SHAREHOLDERS: The fiscal year end for Fidelity Advisor
Balanced Fund recently changed from October 31 to November 30. This
change was made in order to align the fund's fiscal year end more
closely with other similar Fidelity funds. To reduce expenses and
provide you with a comprehensive report covering both periods ended
October 31 and November 30, we've combined both annual reports into
one document.
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:
The month of November proved to be a strong one for the stock and bond
markets. The Dow Jones Industrial Average reached a record high.
Merger activity, which had lulled during the summer correction, has
increased significantly. Small-cap stocks posted their third
consecutive month of positive returns, as did emerging markets. While
bond returns generally were not at the levels of their equity
counterparts, they were mostly positive nonetheless.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR BALANCED FUND - INSTITUTIONAL CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). Initial offering of Institutional Class shares took place on
July 3, 1995. Institutional Class shares are sold to eligible
investors without a sales load or 12b-1 fee. Returns prior to July 3,
1995 are those of Class T, the original class of the fund, and reflect
Class T shares' prior 0.65% 12b-1 fee. If Fidelity had not reimbursed
certain class expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - INST CL 14.70% 68.08% 252.41%
Fidelity Balanced Composite 18.48% 116.57% 306.79%
S&P 500 (registered trademark) 23.66% 181.25% 457.74%
LB Aggregate Bond 9.45% 42.40% 141.94%
Balanced Funds Average 11.31% 88.42% 235.21%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Institutional Class' returns to the
performance of the Fidelity Balanced Composite Index, a hypothetical
combination of unmanaged indices. The composite index combines the
total returns of the Standard & Poor's 500 Index and the Lehman
Brothers Aggregate Bond Index. To measure how Institutional Class'
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 one year average represents a peer group of 393 mutual funds.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - INST CL 14.70% 10.94% 13.42%
Fidelity Balanced Composite 18.48% 16.71% 15.06%
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class shares'
cumulative return and show you what would have happened if
Institutional Class shares had performed at a constant rate each year.
$10,000 OVER 10 YEARS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FA Balanced -CL I FID Balanced Composite S&P 500 LB Aggregate Bond
00642 F0021 SP001 LB001
1988/11/30 10000.00 10000.00 10000.00 10000.00
1988/12/31 10119.83 10109.40 10175.00 10011.00
1989/01/31 10517.95 10611.63 10919.81 10155.16
1989/02/28 10554.99 10422.54 10647.91 10082.04
1989/03/31 10732.62 10586.17 10896.00 10125.39
1989/04/30 11163.80 11004.32 11461.51 10337.01
1989/05/31 11529.37 11387.49 11925.70 10608.88
1989/06/30 11688.29 11487.02 11857.72 10931.39
1989/07/31 12219.15 12207.26 12928.47 11164.23
1989/08/31 12408.74 12278.55 13181.87 10999.00
1989/09/30 12428.11 12273.39 13127.82 11055.09
1989/10/31 12236.47 12223.31 12823.26 11327.05
1989/11/30 12485.60 12419.38 13084.85 11434.65
1989/12/31 12609.00 12611.63 13398.89 11465.53
1990/01/31 11999.05 12043.85 12499.82 11329.09
1990/02/28 12030.60 12152.49 12661.07 11365.34
1990/03/31 12198.99 12349.12 12996.59 11373.30
1990/04/30 12039.32 12118.43 12671.68 11268.66
1990/05/31 12486.40 12970.84 13907.16 11602.21
1990/06/30 12539.37 13001.46 13812.60 11789.01
1990/07/31 12507.05 13048.26 13768.40 11951.70
1990/08/31 11742.19 12270.58 12523.73 11791.55
1990/09/30 11471.17 11952.78 11913.83 11889.41
1990/10/31 11362.03 11982.66 11862.60 12040.41
1990/11/30 11875.01 12550.16 12628.92 12299.28
1990/12/31 12237.92 12838.56 12981.27 12491.15
1991/01/31 12869.77 13238.10 13547.25 12646.04
1991/02/28 13623.55 13851.02 14515.88 12753.53
1991/03/31 13969.58 14090.37 14867.16 12841.53
1991/04/30 14238.22 14171.53 14902.84 12980.22
1991/05/31 14831.48 14571.73 15546.65 13055.50
1991/06/30 14527.50 14168.38 14834.61 13048.98
1991/07/31 15148.82 14643.31 15525.90 13230.36
1991/08/31 15532.91 14978.05 15893.87 13516.13
1991/09/30 15647.27 14949.60 15628.44 13790.51
1991/10/31 16103.13 15136.17 15837.86 13943.58
1991/11/30 15727.05 14825.88 15199.60 14071.86
1991/12/31 16457.74 16019.66 16938.43 14489.80
1992/01/31 16566.01 15753.73 16623.37 14292.74
1992/02/29 16914.90 15917.57 16839.48 14385.64
1992/03/31 16854.85 15695.68 16511.11 14305.08
1992/04/30 16988.33 16017.75 16996.54 14408.08
1992/05/31 17328.09 16185.94 17079.82 14680.39
1992/06/30 17170.53 16130.58 16825.33 14882.98
1992/07/31 17671.95 16658.05 17513.49 15186.59
1992/08/31 17671.95 16520.46 17154.46 15339.98
1992/09/30 17818.15 16716.06 17356.88 15522.52
1992/10/31 17756.54 16662.23 17417.63 15316.07
1992/11/30 17867.44 17004.48 18011.57 15319.14
1992/12/31 17971.78 17238.12 18233.11 15562.71
1993/01/31 18310.87 17457.39 18386.27 15861.51
1993/02/28 18702.13 17722.04 18636.33 16139.09
1993/03/31 19408.00 17976.17 19029.55 16206.88
1993/04/30 19960.26 17765.49 18569.04 16320.32
1993/05/31 20341.58 18060.40 19066.69 16341.54
1993/06/30 20210.61 18222.58 19121.98 16637.32
1993/07/31 20422.66 18220.40 19045.49 16732.15
1993/08/31 21164.82 18762.27 19767.32 17024.97
1993/09/30 20966.94 18695.85 19615.11 17070.93
1993/10/31 21247.39 18955.73 20021.14 17134.10
1993/11/30 20966.94 18783.23 19830.94 16988.46
1993/12/31 21504.15 18960.17 20070.89 17080.19
1994/01/31 22101.87 19449.34 20753.30 17310.78
1994/02/28 21712.66 18997.72 20190.89 17009.57
1994/03/31 20845.50 18313.05 19310.57 16589.43
1994/04/30 20677.40 18395.09 19557.74 16456.72
1994/05/31 20761.45 18575.36 19878.49 16455.07
1994/06/30 20367.43 18285.96 19391.47 16418.87
1994/07/31 20761.28 18791.38 20027.51 16745.61
1994/08/31 21014.47 19262.67 20848.63 16765.70
1994/09/30 20874.04 18866.24 20337.84 16519.25
1994/10/31 20676.71 19114.15 20795.44 16504.38
1994/11/30 20394.82 18679.64 20038.07 16468.07
1994/12/31 20408.92 18897.41 20335.24 16581.70
1995/01/31 20352.07 19341.08 20862.53 16910.02
1995/02/28 20707.37 19977.44 21675.54 17312.47
1995/03/31 21051.42 20379.91 22315.19 17418.08
1995/04/30 21280.71 20854.15 22972.37 17661.93
1995/05/31 21696.29 21677.10 23890.58 18345.45
1995/06/30 21956.77 22042.53 24445.56 18479.37
1995/07/31 22289.01 22461.69 25256.17 18438.72
1995/08/31 22361.23 22604.23 25319.56 18661.83
1995/09/30 22591.57 23264.27 26388.05 18842.85
1995/10/31 22489.34 23335.42 26293.84 19087.80
1995/11/30 23102.69 24090.08 27448.14 19374.12
1995/12/31 23470.12 24503.37 27976.80 19645.36
1996/01/31 23663.35 25068.52 28929.13 19775.02
1996/02/29 23291.75 25033.47 29197.30 19430.93
1996/03/31 23114.65 25108.02 29478.47 19294.92
1996/04/30 23099.66 25273.84 29912.98 19186.86
1996/05/31 23219.58 25644.71 30684.44 19148.49
1996/06/30 23355.42 25840.78 30801.34 19405.08
1996/07/31 22870.75 25183.71 29440.54 19457.47
1996/08/31 23037.35 25485.25 30061.44 19424.40
1996/09/30 23963.30 26523.22 31753.30 19762.38
1996/10/31 24604.77 27197.65 32629.06 20201.10
1996/11/30 25933.51 28617.20 35095.49 20546.54
1996/12/31 25507.38 28170.60 34400.24 20355.46
1997/01/31 26392.30 29261.60 36549.57 20418.56
1997/02/28 26811.47 29428.50 36836.12 20469.61
1997/03/31 25902.61 28572.31 35322.52 20242.40
1997/04/30 26983.84 29767.21 37431.28 20546.03
1997/05/31 28080.75 30967.66 39710.10 20741.22
1997/06/30 29160.68 31947.47 41489.11 20988.04
1997/07/31 30771.07 33817.74 44790.40 21554.72
1997/08/31 29429.08 32566.08 42281.24 21371.50
1997/09/30 30630.17 33829.06 44596.98 21687.80
1997/10/31 30009.28 33347.33 43107.44 22002.27
1997/11/30 30725.69 34334.88 45102.89 22103.48
1997/12/31 31353.73 34827.31 45877.30 22326.73
1998/01/31 31662.81 35236.74 46384.71 22612.51
1998/02/28 32830.42 36750.23 49729.97 22594.42
1998/03/31 34002.57 37929.40 52276.64 22671.24
1998/04/30 34244.96 38237.23 52802.54 22789.13
1998/05/31 34193.02 37988.16 51894.87 23005.63
1998/06/30 34959.85 39043.16 54002.84 23201.18
1998/07/31 34907.49 38826.47 53427.71 23249.90
1998/08/31 31277.11 35711.50 45703.13 23628.87
1998/09/30 32936.63 37418.37 48630.87 24181.79
1998/10/31 34045.07 39165.21 52586.51 24053.63
1998/11/30 35241.49 40678.79 55773.78 24194.00
IMATRL PRASUN SHR__CHT 19981130 19981222 090434 R00000000000123
</TABLE>
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Institutional Class on
November 30, 1988. As the chart shows, by November 30, 1998, the value
of the investment would have grown to $35,241 - a 252.41% increase on
the initial investment. For comparison, look at how both the Standard
& Poor's 500 Index, a widely recognized, unmanaged index of common
stocks, and 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, did
over the same period. With dividends and capital gains, if any,
reinvested, the Standard & Poor's 500 Index would have grown to
$55,774 - a 457.74% increase. If $10,000 was invested in the Lehman
Brothers Aggregate Bond Index, it would have grown to $24,194 - a
141.94% increase. You can also look at how the Fidelity Balanced
Composite Index did over the same period. The composite index combines
the total returns of the Standard & Poor's 500 Index (60%) and the
Lehman Brothers Aggregate Bond Index (40%). With dividends and
interest, if any, reinvested, the same $10,000 would have grown to
$40,679 - a 306.79% increase.
(CHECKMARK)
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.
FIDELITY ADVISOR BALANCED FUND - INSTITUTIONAL CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). Initial offering of Institutional Class shares took place on
July 3, 1995. Institutional Class shares are sold to eligible
investors without a sales load or 12b-1 fee. Returns prior to July 3,
1995 are those of Class T, the original class of the fund, and reflect
Class T shares' prior 0.65% 12b-1 fee. If Fidelity had not reimbursed
certain class expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - INST CL 13.45% 60.23% 237.07%
Fidelity Balanced Composite 17.45% 106.61% 286.38%
S&P 500 21.99% 162.65% 418.35%
LB Aggregate Bond 9.34% 40.39% 137.66%
Balanced Funds Average 9.13% 79.44% 218.25%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Institutional Class' returns to the
performance of the Fidelity Balanced Composite Index, a hypothetical
combination of unmanaged indices. The composite index combines the
total returns of the Standard & Poor's 500 Index and the Lehman
Brothers Aggregate Bond Index. To measure how Institutional Class'
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 one year average represents a peer group of 395 mutual funds.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV BALANCED - INST CL 13.45% 9.89% 12.92%
Fidelity Balanced Composite 17.45% 15.62% 14.47%
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class shares'
cumulative return and show you what would have happened if
Institutional Class shares had performed at a constant rate each year.
$10,000 OVER 10 YEARS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FA Balanced -CL I FID Balanced Composite S&P 500 LB Aggregate Bond
00642 F0021 SP001 LB001
1988/11/30 10000.00 10000.00 10000.00 10000.00
1988/12/31 10119.83 10109.40 10175.00 10011.00
1989/01/31 10517.95 10611.63 10919.81 10155.16
1989/02/28 10554.99 10422.54 10647.91 10082.04
1989/03/31 10732.62 10586.17 10896.00 10125.39
1989/04/30 11163.80 11004.32 11461.51 10337.01
1989/05/31 11529.37 11387.49 11925.70 10608.88
1989/06/30 11688.29 11487.02 11857.72 10931.39
1989/07/31 12219.15 12207.26 12928.47 11164.23
1989/08/31 12408.74 12278.55 13181.87 10999.00
1989/09/30 12428.11 12273.39 13127.82 11055.09
1989/10/31 12236.47 12223.31 12823.26 11327.05
1989/11/30 12485.60 12419.38 13084.85 11434.65
1989/12/31 12609.00 12611.63 13398.89 11465.53
1990/01/31 11999.05 12043.85 12499.82 11329.09
1990/02/28 12030.60 12152.49 12661.07 11365.34
1990/03/31 12198.99 12349.12 12996.59 11373.30
1990/04/30 12039.32 12118.43 12671.68 11268.66
1990/05/31 12486.40 12970.84 13907.16 11602.21
1990/06/30 12539.37 13001.46 13812.60 11789.01
1990/07/31 12507.05 13048.26 13768.40 11951.70
1990/08/31 11742.19 12270.58 12523.73 11791.55
1990/09/30 11471.17 11952.78 11913.83 11889.41
1990/10/31 11362.03 11982.66 11862.60 12040.41
1990/11/30 11875.01 12550.16 12628.92 12299.28
1990/12/31 12237.92 12838.56 12981.27 12491.15
1991/01/31 12869.77 13238.10 13547.25 12646.04
1991/02/28 13623.55 13851.02 14515.88 12753.53
1991/03/31 13969.58 14090.37 14867.16 12841.53
1991/04/30 14238.22 14171.53 14902.84 12980.22
1991/05/31 14831.48 14571.73 15546.65 13055.50
1991/06/30 14527.50 14168.38 14834.61 13048.98
1991/07/31 15148.82 14643.31 15525.90 13230.36
1991/08/31 15532.91 14978.05 15893.87 13516.13
1991/09/30 15647.27 14949.60 15628.44 13790.51
1991/10/31 16103.13 15136.17 15837.86 13943.58
1991/11/30 15727.05 14825.88 15199.60 14071.86
1991/12/31 16457.74 16019.66 16938.43 14489.80
1992/01/31 16566.01 15753.73 16623.37 14292.74
1992/02/29 16914.90 15917.57 16839.48 14385.64
1992/03/31 16854.85 15695.68 16511.11 14305.08
1992/04/30 16988.33 16017.75 16996.54 14408.08
1992/05/31 17328.09 16185.94 17079.82 14680.39
1992/06/30 17170.53 16130.58 16825.33 14882.98
1992/07/31 17671.95 16658.05 17513.49 15186.59
1992/08/31 17671.95 16520.46 17154.46 15339.98
1992/09/30 17818.15 16716.06 17356.88 15522.52
1992/10/31 17756.54 16662.23 17417.63 15316.07
1992/11/30 17867.44 17004.48 18011.57 15319.14
1992/12/31 17971.78 17238.12 18233.11 15562.71
1993/01/31 18310.87 17457.39 18386.27 15861.51
1993/02/28 18702.13 17722.04 18636.33 16139.09
1993/03/31 19408.00 17976.17 19029.55 16206.88
1993/04/30 19960.26 17765.49 18569.04 16320.32
1993/05/31 20341.58 18060.40 19066.69 16341.54
1993/06/30 20210.61 18222.58 19121.98 16637.32
1993/07/31 20422.66 18220.40 19045.49 16732.15
1993/08/31 21164.82 18762.27 19767.32 17024.97
1993/09/30 20966.94 18695.85 19615.11 17070.93
1993/10/31 21247.39 18955.73 20021.14 17134.10
1993/11/30 20966.94 18783.23 19830.94 16988.46
1993/12/31 21504.15 18960.17 20070.89 17080.19
1994/01/31 22101.87 19449.34 20753.30 17310.78
1994/02/28 21712.66 18997.72 20190.89 17009.57
1994/03/31 20845.50 18313.05 19310.57 16589.43
1994/04/30 20677.40 18395.09 19557.74 16456.72
1994/05/31 20761.45 18575.36 19878.49 16455.07
1994/06/30 20367.43 18285.96 19391.47 16418.87
1994/07/31 20761.28 18791.38 20027.51 16745.61
1994/08/31 21014.47 19262.67 20848.63 16765.70
1994/09/30 20874.04 18866.24 20337.84 16519.25
1994/10/31 20676.71 19114.15 20795.44 16504.38
1994/11/30 20394.82 18679.64 20038.07 16468.07
1994/12/31 20408.92 18897.41 20335.24 16581.70
1995/01/31 20352.07 19341.08 20862.53 16910.02
1995/02/28 20707.37 19977.44 21675.54 17312.47
1995/03/31 21051.42 20379.91 22315.19 17418.08
1995/04/30 21280.71 20854.15 22972.37 17661.93
1995/05/31 21696.29 21677.10 23890.58 18345.45
1995/06/30 21956.77 22042.53 24445.56 18479.37
1995/07/31 22289.01 22461.69 25256.17 18438.72
1995/08/31 22361.23 22604.23 25319.56 18661.83
1995/09/30 22591.57 23264.27 26388.05 18842.85
1995/10/31 22489.34 23335.42 26293.84 19087.80
1995/11/30 23102.69 24090.08 27448.14 19374.12
1995/12/31 23470.12 24503.37 27976.80 19645.36
1996/01/31 23663.35 25068.52 28929.13 19775.02
1996/02/29 23291.75 25033.47 29197.30 19430.93
1996/03/31 23114.65 25108.02 29478.47 19294.92
1996/04/30 23099.66 25273.84 29912.98 19186.86
1996/05/31 23219.58 25644.71 30684.44 19148.49
1996/06/30 23355.42 25840.78 30801.34 19405.08
1996/07/31 22870.75 25183.71 29440.54 19457.47
1996/08/31 23037.35 25485.25 30061.44 19424.40
1996/09/30 23963.30 26523.22 31753.30 19762.38
1996/10/31 24604.77 27197.65 32629.06 20201.10
1996/11/30 25933.51 28617.20 35095.49 20546.54
1996/12/31 25507.38 28170.60 34400.24 20355.46
1997/01/31 26392.30 29261.60 36549.57 20418.56
1997/02/28 26811.47 29428.50 36836.12 20469.61
1997/03/31 25902.61 28572.31 35322.52 20242.40
1997/04/30 26983.84 29767.21 37431.28 20546.03
1997/05/31 28080.75 30967.66 39710.10 20741.22
1997/06/30 29160.68 31947.47 41489.11 20988.04
1997/07/31 30771.07 33817.74 44790.40 21554.72
1997/08/31 29429.08 32566.08 42281.24 21371.50
1997/09/30 30630.17 33829.06 44596.98 21687.80
1997/10/31 30009.28 33347.33 43107.44 22002.27
1997/11/30 30725.69 34334.88 45102.89 22103.48
1997/12/31 31353.73 34827.31 45877.30 22326.73
1998/01/31 31662.81 35236.74 46384.71 22612.51
1998/02/28 32830.42 36750.23 49729.97 22594.42
1998/03/31 34002.57 37929.40 52276.64 22671.24
1998/04/30 34244.96 38237.23 52802.54 22789.13
1998/05/31 34193.02 37988.16 51894.87 23005.63
1998/06/30 34959.85 39043.16 54002.84 23201.18
1998/07/31 34907.49 38826.47 53427.71 23249.90
1998/08/31 31277.11 35711.50 45703.13 23628.87
1998/09/30 32936.63 37418.37 48630.87 24181.79
1998/10/31 34045.07 39165.21 52586.51 24053.63
IMATRL PRASUN SHR__CHT 19981130 19981222 090434 R00000000000123
</TABLE>
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Balanced Fund - Institutional Class on
October 31, 1988. As the chart shows, by October 31, 1998, the value
of the investment would have grown to $33,707 - a 237.07% increase on
the initial investment. For comparison, look at how both the Standard
& Poor's 500 Index, a widely recognized, unmanaged index of common
stocks, and 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, did
over the same period. With dividends and capital gains, if any,
reinvested, the Standard & Poor's 500 Index would have grown to
$51,835 - a 418.35% increase. If $10,000 was invested in the Lehman
Brothers Aggregate Bond Index, it would have grown to $23,766 - a
137.66% increase. You can also look at how the Fidelity Balanced
Composite Index did over the same period. The composite index combines
the total returns of the Standard & Poor's 500 Index (60%) and the
Lehman Brothers Aggregate Bond Index (40%). With dividends and
interest, if any, reinvested, the same $10,000 would have grown to
$38,638 - a 286.38% increase.
(CHECKMARK)
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.
FUND TALK: THE MANAGERS' OVERVIEW
MARKET RECAP
The year-long inclination for
volatility continued in the U.S.
financial markets, as demonstrated
by unfolding events during the
12-month period ending November
30, 1998. The resurgent Dow Jones
Industrial Average - an index of
30 blue-chip stocks - rallied to a
record 9374.27 on November 23,
1998, eclipsing its previous
highwater mark set in July. For the
12-month period ending November
30, 1998, the Dow returned
18.56%. The large-cap weighted
Standard & Poor's 500 Index
returned 23.66% during the same
period. Meanwhile, small-cap stocks
continued to struggle, with the
Russell 2000 showing a one-year
return of -6.62%. The
taxable-bond market, which had
benefited from a flight to safety
from the bearish equity markets
during the summer and early fall,
saw investors turn back to stocks as
the equity market rallied late in the
period. The Lehman Brothers
Aggregate Bond Index - a widely
followed measure of taxable bond
performance - returned 9.45%
during the period. The yield on the
benchmark 30-year Treasury fell to
5.07% - one of its lowest levels in
30 years - due in part to the three
interest-rate cuts made late in the
period by the Federal Reserve
Board. These cuts were designed
to stem the tide of a slowing U.S.
economy, and helped spark the
equity market rally.
(PHOTO OF JOHN AVERY)
(PHOTO OF KEVIN GRANT)
An interview with John Avery (left), Lead Portfolio Manager of
Fidelity Advisor Balanced Fund, and Kevin Grant, manager for
fixed-income investments
Q. HOW DID THE FUND PERFORM, JOHN?
J.A. For the 12 months that ended October 31, 1998, the fund's
Institutional Class shares returned 13.45%. By comparison, the
balanced funds average tracked by Lipper Analytical Services returned
9.13% over the same period. Given the mix of equities and fixed-income
securities owned by the fund, its returns typically fall somewhere
between those of its two benchmark indexes - the Standard & Poor's 500
Index and the Lehman Brothers Aggregate Bond Index. Those two indexes
had 12-month returns of 21.99% and 9.34%, respectively. Shareholders
should be aware that the fund's year-end has changed to November 30.
For the 12 months that ended November 30, 1998, the fund's
Institutional Class shares returned 14.70%. The respective returns for
the balanced funds average, S&P 500 and Lehman Brothers Index over the
same period were 11.31%, 23.66% and 9.45%, respectively.
Q. WHAT FACTORS ENABLED THE FUND TO OUTPERFORM THE LIPPER AVERAGE IN
SUCH A VOLATILE INVESTMENT ENVIRONMENT?
J.A. The period was one of the most challenging we've seen in quite a
while due to the extreme volatility in the U.S. equity and bond
markets in the late summer and early fall. However, the fund's
emphasis on the stocks of large companies with strong management,
dominant market share and consistent earnings growth helped to shield
it somewhat during the market's plunge. That emphasis also helped many
of the fund's holdings recover quickly during October and November,
when the stock market staged a vigorous rally.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE DURING THE PERIOD COVERED
BY THE REPORT?
J.A. Freddie Mac was one of the top contributors. Lower mortgage rates
spurred a fresh wave of refinancing, providing the company with a
steady supply of mortgages to buy and resell. In addition, Freddie
Mac's business is focused solely on the U.S., which attracted
investors looking to minimize their exposure to emerging markets. The
stock of Pitney Bowes - a manufacturer of postage meters - also helped
performance. Investors were attracted to the earnings growth expected
from the multi-year, nationwide changeover now underway from
mechanical to electronic postage meters.
Q. WHAT STOCKS DETRACTED FROM THE FUND'S PERFORMANCE?
J.A. Citicorp was the biggest detractor. The company suffered huge
trading losses from its investments in Russia and Asia. Another
lackluster performer was Alcatel, a French telecommunications company
that saw much of its business in emerging markets dry up when those
economies contracted.
Q. TURNING TO YOU, KEVIN, HOW DID THE DRAMATIC EVENTS OF THE LATE
SUMMER AND EARLY FALL AFFECT THE FUND'S BOND SUBPORTFOLIO?
K.G. The Russian currency devaluation and default on the country's
debt forced many hedge funds to sell their corporate bonds and
mortgage securities. At the same time, investors flocked to U.S.
Treasury bonds because of their reputation for safety. As a result,
the spread, or difference, between the yields of Treasuries and other
fixed income securities widened, as Treasury-bond yields dropped to
levels not seen in more than 30 years and the prices of Treasuries
soared. The fund's bond subportfolio contains primarily high-quality
corporate bonds and mortgage securities, so it was hurt by these
developments. However, the fallout from overseas events appeared to
have run its course by the end of September, and I took advantage of
the opportunity to upgrade the fund's holdings of corporate and
mortgage issues. This should benefit the fund over the long term.
Q. JOHN, THE FUND'S FISCAL YEAR-END HAS BEEN CHANGED FROM OCTOBER 31
TO NOVEMBER 30. CAN YOU RECAP HOW THE FUND WAS AFFECTED BY MARKET
EVENTS IN NOVEMBER?
J.A. The fund's stock and bond subportfolios both did well in
November. U.S. stocks extended their rally off the October lows, as
both the Dow Jones Industrial Average and the S&P 500 slightly
exceeded their previous all-time highs at the end of November. The
large-cap issues on which the fund concentrates continued to do well,
with health care and technology being two stellar sectors for the
fund. In the bond market, greater investor demand for high-yield
issues resulted in that portion of the fund's bond subportfolio
performing well.
Q. WHAT'S YOUR OUTLOOK, JOHN?
J.A. Earnings growth is still the key area of concern for stock
investors, as it becomes clearer that the United States economy is
slowing. If we get slower economic growth without an actual recession,
the environment for stocks could still be favorable. By lowering
short-term interest rates in September, October and November, the
Federal Reserve Board demonstrated that it is serious about trying to
prevent a recession in the U.S. Therefore, I am relatively optimistic
about the stocks in the fund's portfolio, especially in light of the
stock selection criteria I mentioned earlier.
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.
(CHECKMARK)
FUND FACTS
GOAL: both income and growth
of capital by investing in a
diversified portfolio of equity
and fixed-income securities
START DATE: January 6, 1987
SIZE: as of November 30,
1998, more than $3.1
billion
MANAGERS: John Avery, since
1998, and Kevin Grant,
since 1996; John Avery
joined Fidelity in 1995;
Kevin Grant joined Fidelity in
1993
JOHN AVERY ON INVESTING IN
LARGE COMPANIES:
"I like investing in the stocks of
large companies, and you'll see
that preference reflected in the
fund's holdings. Large companies
tend to have dominant market
positions - they tend to rank first
or second in sales and earnings in
their particular industries.
"Having the biggest market share
does two things. First, it enables
a company to take advantage of
economies of scale in providing
its goods or services. That is,
those firms that produce the
largest quantities of something
can typically do so at the lowest
cost, and therefore can sell their
products profitably at a lower
price than their smaller
competitors. That's especially
important in an economic
environment like the current one,
where there's minimal inflation
and therefore less opportunity to
raise prices.
"As low-cost producers, large
companies also have advantages
that enable them to grow their
businesses more effectively. Their
higher return on investment and
greater cash flow allow them to
spend more on research and
development, insuring a healthy
pipeline of new products. More
cash also permits the required
expenditures for advertising and
promotion that are so crucial to
maintaining sales and earnings
growth."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TOP FIVE STOCKS AS OF NOVEMBER 30, 1998
% OF FUND'S INVESTMENTS AS OF
NOVEMBER 30, 1998 OCTOBER 31, 1998 APRIL 30, 1998
Pitney Bowes, Inc. 2.0 2.1 1.8
Freddie Mac 1.9 1.9 1.5
General Electric Co. 1.8 1.9 2.0
MCI WorldCom, Inc. 1.8 1.8 1.3
Wells Fargo & Co. 1.5 1.0 1.0
TOP FIVE BOND ISSUERS AS OF NOVEMBER 30, 1998
(WITH MATURITIES MORE THAN ONE YEAR) % OF FUND'S INVESTMENTS AS OF
NOVEMBER 30, 1998 OCTOBER 31, 1998 APRIL 30, 1998
Fannie Mae 7.9 8.7 9.3
U.S. Treasury 2.1 2.2 1.0
Government National Mortgage Association 1.7 1.8 2.0
Time Warner, Inc. 0.6 0.7 0.7
Lockheed Martin Corp. 0.5 0.5 0.5
TOP FIVE MARKET SECTORS AS OF NOVEMBER 30,
1998
% OF FUND'S INVESTMENTS AS OF
NOVEMBER 30, 1998 OCTOBER 31, 1998 APRIL 30, 1998
FINANCE 18.0 17.8 22.8
UTILITIES 10.3 9.8 9.7
TECHNOLOGY 7.7 7.5 5.9
HEALTH 6.9 6.6 8.1
ENERGY 5.8 6.1 6.3
</TABLE>
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1998 *
Row: 1, Col: 1, Value: 58.5
Row: 1, Col: 2, Value: 31.8
Row: 1, Col: 3, Value: 1.7
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 6.5
Stocks 60.9%
Bonds 31.8%
Convertible
securities 0.7%
Certificates of
deposit 0.1%
Short-term
investments 6.5%
*FOREIGN
INVESTMENTS 7.0%
AS OF OCTOBER 31, 1998 **
Row: 1, Col: 1, Value: 57.7
Row: 1, Col: 2, Value: 32.7
Row: 1, Col: 3, Value: 1.7
Row: 1, Col: 4, Value: 1.0
Row: 1, Col: 5, Value: 6.9
Stocks 59.6%
Bonds 32.7%
Convertible
securities 0.7%
Certificates of
deposit 0.1%
Short-term
investments 6.9%
**FOREIGN
INVESTMENTS 6.5%
AS OF APRIL 30, 1998 ***
Row: 1, Col: 1, Value: 62.6
Row: 1, Col: 2, Value: 31.9
Row: 1, Col: 3, Value: 2.2
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 1.8
Stocks 65.0%
Bonds 33.3%
Convertible
securities 1.2%
Certificates of
deposit 0.1%
Short-term
investments 0.4%
***FOREIGN
INVESTMENTS 8.7%
INVESTMENTS NOVEMBER 30, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 59.7%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 2.7%
AEROSPACE & DEFENSE - 1.5%
Harsco Corp. 248,900 $ 8,058
Lockheed Martin Corp. 122,000 12,658
Textron, Inc. 368,400 28,620
49,336
DEFENSE ELECTRONICS - 0.7%
Raytheon Co. Class B 385,800 21,364
SHIP BUILDING & REPAIR - 0.5%
General Dynamics Corp. 277,400 16,107
TOTAL AEROSPACE & DEFENSE 86,807
BASIC INDUSTRIES - 3.0%
CHEMICALS & PLASTICS - 2.3%
Dow Chemical Co. 68,300 6,651
du Pont (E.I.) de Nemours & Co. 81,500 4,788
Hanna (M.A.) Co. 247,300 3,478
Hoechst AG 287,600 12,309
ICI (Imperial Chemical Industries) PLC Class 705,600 6,681
L
Lyondell Petrochemical Co. 269,800 5,025
Monsanto Co. 359,600 16,294
Potash Corp. of Saskatchewan 136,600 8,376
Praxair, Inc. 148,200 5,659
Solutia, Inc. 246,600 5,518
74,779
METALS & MINING - 0.5%
Aluminum Co. of America 219,900 16,300
PAPER & FOREST PRODUCTS - 0.2%
Willamette Industries, Inc. 121,700 4,252
TOTAL BASIC INDUSTRIES 95,331
CONSTRUCTION & REAL ESTATE - 1.4%
BUILDING MATERIALS - 0.3%
Masco Corp. 347,400 10,031
REAL ESTATE - 0.2%
Stewart Enterprises, Inc. Class A 292,800 6,533
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - 0.9%
Boston Properties, Inc. 186,300 $ 5,880
Equity Residential Properties Trust (SBI) 232,800 9,850
Public Storage, Inc. 192,900 5,124
Starwood Hotels & Resorts Trust 205,200 6,233
27,087
TOTAL CONSTRUCTION & REAL ESTATE 43,651
DURABLES - 0.7%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Ford Motor Co. 130,400 7,205
HOME FURNISHINGS - 0.5%
Leggett & Platt, Inc. 747,300 16,954
TOTAL DURABLES 24,159
ENERGY - 5.4%
OIL & GAS - 5.4%
British Petroleum Co. PLC 3,036,730 46,626
Chevron Corp. 192,800 16,123
Elf Aquitaine SA sponsored ADR 221,600 13,795
Exxon Corp. 328,000 24,621
Texaco, Inc. 354,900 20,429
Total SA:
Class B 212,000 25,917
sponsored ADR 53,800 3,289
USX-Marathon Group 814,200 23,103
173,903
FINANCE - 13.1%
BANKS - 5.1%
Bank of New York Co., Inc. 1,222,600 41,874
Bank One Corp. 381,460 19,574
BankAmerica Corp. 151,188 9,856
U.S. Bancorp 1,262,700 46,483
Wells Fargo & Co. 1,330,100 47,884
165,671
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 2.4%
American Express Co. 313,500 $ 31,370
Associates First Capital Corp. 336,269 26,187
Citigroup, Inc. 359,900 18,062
Olympic Financial Ltd. warrants 3/15/07 (a) 46 0
75,619
FEDERAL SPONSORED CREDIT - 3.0%
Fannie Mae 469,500 34,156
Freddie Mac 1,007,100 60,930
95,086
INSURANCE - 2.6%
Allstate Corp. 257,000 10,473
American International Group, Inc. 420,100 39,489
Aon Corp. 229,200 13,208
Hartford Financial Services Group, Inc. 394,800 21,788
84,958
TOTAL FINANCE 421,334
HEALTH - 6.7%
DRUGS & PHARMACEUTICALS - 5.9%
American Home Products Corp. 534,300 28,451
Bristol-Myers Squibb Co. 253,540 31,074
Elan Corp. PLC ADR (a) 249,300 16,984
Lilly (Eli) & Co. 199,400 17,884
Merck & Co., Inc. 204,200 31,625
Schering-Plough Corp. 257,300 27,370
Sigma-Aldrich Corp. 199,200 6,399
Warner-Lambert Co. 399,900 30,192
189,979
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
Johnson & Johnson 208,800 16,965
McKesson Corp. 143,300 10,201
27,166
TOTAL HEALTH 217,145
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 4.4%
ELECTRICAL EQUIPMENT - 2.2%
Emerson Electric Co. 196,300 $ 12,760
General Electric Co. 654,400 59,223
Loral Space & Communications Ltd. (a) 300 6
71,989
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
Caterpillar, Inc. 147,100 7,272
Tyco International Ltd. 704,378 46,357
53,629
POLLUTION CONTROL - 0.5%
Waste Management, Inc. 387,500 16,614
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 142,232
MEDIA & LEISURE - 2.0%
BROADCASTING - 1.6%
Benedek Communications Corp. warrants 7/1/07 10,500 21
(a)
CBS Corp. 294,500 8,780
CS Wireless Systems, Inc. (a)(e) 109 0
Loral Orion Network Systems, Inc.:
warrants 1/15/07 (CV ratio .47) (a) 6,760 57
warrants 1/15/07 (CV ratio .6) (a) 1,445 16
NTL, Inc. warrants 12/31/08 (a) 2,137 32
Orbital Imaging Corp. warrants 3/1/05 (a)(e) 120 1
Tele-Communications, Inc. (TCI Group) Series 294,600 12,447
A (a)
Teletrac Holdings, Inc. warrants 8/1/07 (a) 380 0
Time Warner, Inc. 300,328 31,760
UIH Australia/Pacific, Inc. warrants 5/15/06 4,430 13
(a)
53,127
LODGING & GAMING - 0.0%
Aladdin Gaming Enterprises, Inc. warrants 7,100 0
3/1/10 (a)(e)
PUBLISHING - 0.4%
McGraw-Hill Companies, Inc. 140,600 12,584
TOTAL MEDIA & LEISURE 65,711
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONDURABLES - 3.6%
AGRICULTURE - 0.1%
Delta & Pine Land Co. 65,000 $ 2,462
FOODS - 1.0%
Heinz (H.J.) Co. 282,100 16,450
Sara Lee Corp. 284,100 16,584
33,034
HOUSEHOLD PRODUCTS - 1.1%
Procter & Gamble Co. 200,000 17,525
Renaissance Cosmetics, Inc. warrants 8/31/06 2,250 0
(a)(e)
Unilever NV (NY shares) 220,700 17,063
34,588
TOBACCO - 1.4%
Philip Morris Companies, Inc. 840,900 47,038
TOTAL NONDURABLES 117,122
RETAIL & WHOLESALE - 1.8%
APPAREL STORES - 0.2%
Mothers Work, Inc. (a)(g) 70 1
TJX Companies, Inc. 259,109 6,640
6,641
DRUG STORES - 0.7%
CVS Corp. 147,800 7,298
Rite Aid Corp. 320,400 14,859
22,157
GENERAL MERCHANDISE STORES - 0.9%
Wal-Mart Stores, Inc. 378,200 28,483
TOTAL RETAIL & WHOLESALE 57,281
SERVICES - 1.0%
PRINTING - 0.5%
Donnelley (R.R.) & Sons Co. 406,600 17,255
SERVICES - 0.5%
Modis Professional Services, Inc. (a) 195,400 2,333
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Service Corp. International 238,200 $ 8,903
ServiceMaster Co. 169,500 3,644
14,880
TOTAL SERVICES 32,135
TECHNOLOGY - 6.9%
COMPUTER SERVICES & SOFTWARE - 1.0%
Concentric Network Corp. warrants 12/15/07 420 50
(a)(e)
Microsoft Corp. (a) 279,700 34,123
34,173
COMPUTERS & OFFICE EQUIPMENT - 3.5%
Compaq Computer Corp. 291,900 9,487
International Business Machines Corp. 179,700 29,651
Pitney Bowes, Inc. 1,145,300 64,137
Xerox Corp. 96,900 10,417
113,692
ELECTRONICS - 2.4%
AMP, Inc. 260,716 12,612
Intel Corp. 213,700 22,999
Motorola, Inc. 395,500 24,521
Texas Instruments, Inc. 209,900 16,031
76,163
TOTAL TECHNOLOGY 224,028
UTILITIES - 7.0%
CELLULAR - 0.0%
American Mobile Satellite Corp. warrants 310 2
4/1/08 (a)
McCaw International Ltd. warrants 4/15/07 6,190 31
(a)(e)
Microcell Telecommunications, Inc. warrants 21,520 277
6/1/06 (a)(e)
310
ELECTRIC UTILITY - 1.0%
CMS Energy Corp. 290,500 14,162
Duke Energy Corp. 195,200 12,212
PG&E Corp. 198,600 6,144
32,518
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 6.0%
ALLTEL Corp. 384,500 $ 20,379
AT&T Corp. 370,900 23,112
Bell Atlantic Corp. 294,500 16,382
Covad Communications Group, Inc. warrants 1,340 13
3/15/98 (a)(e)
DTI Holdings, Inc. warrants 3/1/08 (a)(e) 4,000 0
Firstworld Communications, Inc. warrants 510 5
4/15/08 (a)
GTE Corp. 399,000 24,738
KMC Telecom Holdings, Inc. warrants 2/15/08 610 2
(a)
MCI WorldCom, Inc. (a) 998,313 58,900
Pathnet, Inc. warrants 4/15/08 (a)(e) 450 5
Rhythms Netconnections, Inc. warrants 4,940 37
5/15/08 (a)(e)
SBC Communications, Inc. 631,000 30,249
Sprint Corp. 247,400 17,998
Sprint Corp. (a) 900 14
191,834
TOTAL UTILITIES 224,662
TOTAL COMMON STOCKS 1,925,501
PREFERRED STOCKS - 1.7%
CONVERTIBLE PREFERRED STOCKS - 0.5%
BASIC INDUSTRIES - 0.2%
CHEMICALS & PLASTICS - 0.2%
Monsanto Co. $1.625 ACES (a) 113,800 5,149
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Republic Industries, Inc. $1.55 ACES 74,000 1,300
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.2%
Loral Space & Communications Ltd. Series C, 85,000 4,548
$3.00 (e)
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Host Marriott Financial Trust $3.375 QUIPS 85,000 $ 3,745
(e)
TOTAL CONVERTIBLE PREFERRED STOCKS 14,742
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.1%
Fresenius Medical Care Capital Trust II 1,861 1,858
7.875%
INSURANCE - 0.0%
American Annuity Group Capital Trust II 8.75% 1,000 898
TOTAL FINANCE 2,756
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.3%
Adelphia Communications Corp. $13.00 5,170 597
Citadel Broadcasting Co. Series B, 13.25% 6,120 730
pay-in-kind
CSC Holdings, Inc. Series H, 11.75% 8,525 985
pay-in-kind (a)
CSC Holdings, Inc. 11.125% pay-in-kind 38,541 4,336
Echostar Communications Corp. 12.125% 1,301 1,431
pay-in-kind
Granite Broadcasting Corp. 12.75% pay-in-kind 891 820
8,899
PUBLISHING - 0.1%
PRIMEDIA, Inc.:
8.625% 7,700 747
Series D, $10.00 28,400 2,876
3,623
TOTAL MEDIA & LEISURE 12,522
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Renaissance Cosmetics, Inc. 14% pay-in-kind 2,871 4
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
TECHNOLOGY - 0.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc. 13.5% 4,448 $ 4,581
pay-in-kind (a)
COMPUTER SERVICES & SOFTWARE - 0.0%
Concentric Network Corp. 13.5% pay-in-kind 435 370
TOTAL TECHNOLOGY 4,951
UTILITIES - 0.6%
CELLULAR - 0.2%
Nextel Communications, Inc. 11.125% 3,557 3,308
pay-in-kind
Nextel Communications, Inc. Series D, 13% 2,720 2,897
pay-in-kind
6,205
TELEPHONE SERVICES - 0.4%
e.spire Communications, Inc.:
12.75% pay-in-kind 1,004 653
14.75% pay-in-kind 301 241
Hyperion Telecommunication, Inc. 12.875% 1,467 1,218
pay-in-kind
ICG Holdings, Inc.:
14% pay-in-kind (a) 476 469
14.25% pay-in-kind 2,300 2,346
IXC Communications, Inc. 12.5% pay-in-kind 576 600
NEXTLINK Communications, Inc. 14% pay-in-kind 109,736 5,871
Viatel, Inc. 10% (a)(e) 164 16
WinStar Communications, Inc. 14.25% (a) 608 529
11,943
TOTAL UTILITIES 18,148
TOTAL NONCONVERTIBLE PREFERRED STOCKS 38,381
TOTAL PREFERRED STOCKS 53,123
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CORPORATE BONDS - 16.6%
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CONVERTIBLE BONDS - 0.2%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
POLLUTION CONTROL - 0.1%
WMX Technologies, Inc. 2% 1/24/05 Ba1 $ 4,340 $ 4,042
TECHNOLOGY - 0.1%
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Unisys Corp. 8.25% 3/15/06 B 800 3,316
TOTAL CONVERTIBLE BONDS 7,358
NONCONVERTIBLE BONDS - 16.4%
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.5%
BE Aerospace, Inc. 9.5% 11/1/08 (e) B1 330 348
Lockheed Martin Corp. 7.2% 5/1/36 A3 15,000 15,967
16,315
DEFENSE ELECTRONICS - 0.3%
Raytheon Co. 6.45% 8/15/02 Baa1 8,000 8,168
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, Inc. 9.25% 12/1/06 B1 450 476
TOTAL AEROSPACE & DEFENSE 24,959
BASIC INDUSTRIES - 0.7%
CHEMICALS & PLASTICS - 0.1%
Atlantis Group, Inc. 11% 2/15/03 B2 40 41
Huntsman Corp.:
9.5% 7/1/07 (e) B2 2,470 2,470
9.5% 7/1/07 (e) - 510 510
Koppers Industries, Inc. 9.875% 12/1/07 B2 740 725
3,746
IRON & STEEL - 0.0%
GS Technologies Operating, Inc. 12.25% B2 620 434
10/1/05
WHX Corp. 10.5% 4/15/05 B3 790 754
1,188
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
METALS & MINING - 0.1%
Doe Run Resources Corp.:
11.25% 3/15/05 B3 $ 230 $ 166
11.6963% 3/15/03 (e)(f) B3 300 216
Interlake Corp. 12.125% 3/1/02 B3 1,780 1,780
Kaiser Aluminum & Chemical Corp.:
Series B, 10.875% 10/15/06 B1 30 31
Series D, 10.875% 10/15/06 B1 300 309
12.75% 2/1/03 B2 640 640
3,142
PACKAGING & CONTAINERS - 0.3%
Owens-Illinois, Inc.:
7.15% 5/15/05 Ba1 2,800 2,811
7.35% 5/15/08 Ba1 2,600 2,602
7.8% 5/15/18 Ba1 3,200 3,203
8,616
PAPER & FOREST PRODUCTS - 0.2%
Ainsworth Lumber Co. Ltd. 12.5% 7/15/07 B3 190 188
pay-in-kind
APP Finance II Mauritius Ltd. 12% 3/15/04 Caa 2,265 1,359
Container Corp. of America gtd. 9.75% 4/1/03 B2 110 111
Doman Industries Ltd. yankee 8.75% 3/15/04 B1 570 485
Indah Kiat Finance Mauritius Ltd. 10% 7/1/07 Caa1 380 247
Mail-Well Corp. 10.5% 2/15/04 B+ 190 196
Malette, Inc. yankee 12.25% 7/15/04 Ba3 1,010 1,088
Millar Western Forest Products Ltd. 9.875% B3 1,310 1,048
5/15/08
Pindo Deli Finance Mauritius Ltd. 10.25% Caa1 330 201
10/1/02
Stone Container Corp.:
10.75% 10/1/02 B1 650 679
12.58% 8/1/16 (f) B2 111 119
Tembec Finance Corp. yankee 9.875% 9/30/05 Ba3 480 514
Tjiwi Kimia Finance Mauritius Ltd. 10% 8/1/04 Ba3 610 390
6,625
TOTAL BASIC INDUSTRIES 23,317
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.1%
American Standard Cos., Inc.:
7.375% 2/1/08 Ba3 $ 1,380 $ 1,390
7.625% 2/15/10 Ba3 120 122
Schuff Steel Co. 10.5% 6/1/08 B3 130 114
1,626
CONSTRUCTION - 0.0%
Great Lakes Dredge & Dock Corp. 11.25% B3 730 741
8/15/08 (e)
REAL ESTATE - 0.1%
LNR Property Corp. 9.375% 3/15/08 B1 2,820 2,679
REAL ESTATE INVESTMENT TRUSTS - 0.1%
CenterPoint Properties Trust 6.75% 4/1/05 Baa2 1,190 1,125
EOP Operating LP:
6.625% 2/15/05 Baa1 1,250 1,227
6.75% 2/15/08 Baa1 2,310 2,266
4,618
TOTAL CONSTRUCTION & REAL ESTATE 9,664
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Blue Bird Body Co. 10.75% 11/15/06 B2 290 299
Breed Technologies, Inc. 9.25% 4/15/08 (e) B3 1,150 989
Federal-Mogul Corp. 7.875% 7/1/10 Ba2 200 197
Morris Material Handling, Inc. 9.5% 4/1/08 B2 1,090 828
2,313
CONSUMER DURABLES - 0.0%
Corning Consumer Products Co. 9.625% 5/1/08 B3 620 422
HOME FURNISHINGS - 0.0%
Omega Cabinets Ltd. 10.5% 6/15/07 B3 290 276
TEXTILES & APPAREL - 0.3%
Cluett American Corp. 10.125% 5/15/08 (e) B3 390 371
Levi Strauss & Co. 6.8% 11/1/03 (e) Baa3 5,560 5,533
Polymer Group, Inc. 9% 7/1/07 B2 1,540 1,532
Synthetic Industries, Inc. 9.25% 2/15/07 B2 990 1,020
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
WestPoint Stevens, Inc. 7.875% 6/15/08 Ba3 $ 1,060 $ 1,093
Worldtex, Inc. 9.625% 12/15/07 B1 825 734
10,283
TOTAL DURABLES 13,294
ENERGY - 0.4%
COAL - 0.0%
P&L Coal Holdings Corp. 9.625% 5/15/08 B2 1,630 1,663
ENERGY SERVICES - 0.1%
Bayard Drilling Technologies, Inc. 11% B2 190 211
6/30/05
DI Industries, Inc. 8.875% 7/1/07 B1 250 198
Grey Wolf, Inc. 8.875% 7/1/07 B1 760 600
Ocean Rig Norway AS 10.25% 6/1/08 B3 580 516
Pool Energy Services Co. 8.625% 4/1/08 B2 810 770
Pride International, Inc. 9.375% 5/1/07 Ba3 410 402
2,697
OIL & GAS - 0.3%
Canadian Forest Oil Ltd. 8.75% 9/15/07 B2 570 547
Chesapeake Energy Corp. 9.625% 5/1/05 B1 290 262
Cross Timbers Oil Co. 9.25% 4/1/07 B2 50 49
Flores & Rucks, Inc. 9.75% 10/1/06 B1 680 731
Great Lakes Carbon Corp. 10.25% 5/15/08 B3 1,560 1,576
pay-in-kind
Hurricane Hydrocarbons Ltd. 11.75% 11/1/04 B3 370 185
(e)
Occidental Petroleum Corp. 6.39% 11/9/00 Baa3 1,000 1,010
Ocean Energy, Inc. 8.375% 7/1/08 B1 640 653
Petroleum Geo-Services ASA 7.125% 3/30/28 Baa3 3,910 3,687
Plains Resources, Inc.:
Series D, 10.25% 3/15/06 B2 230 237
10.25% 3/15/06 B2 630 649
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Seven Seas Petroleum, Inc. 12.5% 5/15/05 Caa1 $ 300 $ 204
Southwest Royalties, Inc. 10.5% 10/15/04 Caa2 80 42
9,832
TOTAL ENERGY 14,192
FINANCE - 4.8%
BANKS - 2.7%
ABN-Amro Bank NV, Chicago 6.625% 10/31/01 Aa3 5,000 5,136
Bank of New York Institutional Capital Trust A1 10,000 10,880
A 7.78% 12/1/26 (e)
BankAmerica Corp. 10% 2/1/03 Aa3 350 405
BanPonce Corp. 5.75% 3/1/99 A3 880 881
BanPonce Financial Corp.:
6.69% 9/21/00 A3 2,250 2,274
6.75% 8/9/01 A3 3,850 3,889
6.88% 6/16/00 A3 2,500 2,535
Barclays Bank PLC yankee:
5.875% 7/15/00 A1 4,500 4,519
5.95% 7/15/01 A1 5,500 5,547
Capital One Bank:
6.375% 2/15/03 Baa3 2,700 2,700
6.42% 11/12/99 Baa3 5,000 4,989
Capital One Financial Corp. 7.125% 8/1/08 Ba1 2,550 2,436
Central Fidelity Banks, Inc. 8.15% 11/15/02 A1 9,045 9,875
First Chicago NBD Institutional Capital B A1 6,000 6,427
7.75% 12/1/26 (e)
First Tennessee National Corp. 6.75% 11/15/05 Baa1 720 759
Kansallis-Osake-Pankki, New York 10% 5/1/02 A3 710 800
MBNA Corp.:
6.34% 6/2/03 Baa2 850 825
6.875% 11/15/02 Baa2 3,700 3,855
NB Capital Trust IV 8.25% 4/15/27 Aa2 3,315 3,773
Provident Bank 6.125% 12/15/00 A3 3,420 3,438
Summit Bancorp 8.625% 12/10/02 BBB+ 1,250 1,380
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
Union Planters Corp. 6.75% 11/1/05 Baa2 $ 400 $ 417
Wachovia Corp. 6.605% 10/1/25 A1 7,550 7,887
85,627
CREDIT & OTHER FINANCE - 1.7%
Ahmanson Capital Trust I 8.36% 12/1/26 (e) A3 2,700 3,056
Anthony Crane Rentals LP/Anthony Credit B3 410 400
Capital Corp. 10.375% 8/1/08 (e)
Arcadia Financial Ltd. 11.5% 3/15/07 B2 540 405
Associates Corp. of North America 6% 4/15/03 Aa3 2,450 2,498
AT&T Capital Corp.:
6.25% 5/15/01 Baa3 6,560 6,489
6.41% 8/13/99 Baa3 1,000 1,007
7.5% 11/15/00 Baa3 3,940 3,978
BankBoston Capital Trust II 7.75% 12/15/26 A2 8,000 8,228
ContiFinancial Corp. 8.125% 4/1/08 B1 210 160
Delta Financial Corp. 9.5% 8/1/04 B3 390 308
ERP Operating LP 6.55% 11/15/01 A3 850 847
First Security Capital I 8.41% 12/15/26 A3 1,280 1,422
First Union Institutional Capital I 8.04% BBB+ 2,300 2,499
12/1/26
Fleet Capital Trust II 7.92% 12/11/26 A2 600 657
General Electric Capital Corp. 6.94% 4/13/09 Aaa 4,700 4,725
(d)
GS Escrow Corp. 7.125% 8/1/05 (e) Ba1 4,500 4,398
Imperial Credit Capital Trust I 10.25% B2 510 383
6/14/02
Imperial Credit Industries 9.875% 1/15/07 B2 1,500 1,125
MCN Investment Corp. 6.03% 2/1/01 Baa3 2,350 2,378
Morgan (J.P.) Capital Trust II 7.95% 2/1/27 Aa3 2,230 2,458
Nordstrom Credit, Inc. 7.25% 4/30/02 A2 3,100 3,260
Ocwen Capital Trust 10.875% 8/1/27 B2 515 402
Olympic Financial Ltd. 11.5% 3/15/07 B2 540 405
ORBCOMM Global L.P./ORBCOMM Capital Co. 14% B3 30 30
8/15/04
Sprint Capital Corp. 5.7% 11/15/03 Baa1 1,910 1,908
Time Warner Telecom LLC/Time Warner Telecom, B2 370 390
Inc. 9.75% 7/15/08
53,816
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
INSURANCE - 0.4%
SunAmerica, Inc. 6.2% 10/31/99 Baa1 $ 13,750 $ 13,845
SAVINGS & LOANS - 0.0%
Long Island Savings Bank FSB 6.2% 4/2/01 Baa3 1,700 1,687
TOTAL FINANCE 154,975
HEALTH - 0.2%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Graham-Field Health Products, Inc. 9.75% Caa1 280 165
8/15/07
Wright Medical Technology, Inc. 11.75% Caa3 1,191 774
7/1/00 (f)
939
MEDICAL FACILITIES MANAGEMENT - 0.2%
Fountain View, Inc. 11.25% 4/15/08 Caa1 570 496
Harborside Healthcare Corp. 0% 8/1/08 (c)(e) B3 585 295
Oxford Health Plans, Inc. 11% 5/15/05 (e) Caa1 1,080 1,004
Tenet Healthcare Corp.:
8% 1/15/05 Ba1 620 642
8.125% 12/1/08 (e) Ba3 3,220 3,317
5,754
TOTAL HEALTH 6,693
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.1%
Advanced Lighting Technologies, Inc. 8% B2 390 355
3/15/08 (e)
Motors & Gears, Inc. 10.75% 11/15/06 B3 2,310 2,379
Telex Communications, Inc. 10.5% 5/1/07 B2 550 443
3,177
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Continental Global Group, Inc. 11% 4/1/07 B2 410 353
Thermadyne Holdings Corp. 0% 6/1/08 (c) Caa1 1,080 518
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
Thermadyne Manufacturing LLC 9.875% 6/1/08 B3 $ 940 $ 902
Tyco International Group SA yankee 6.125% Baa1 4,000 4,052
6/15/01
5,825
POLLUTION CONTROL - 0.0%
Envirosource, Inc. 9.75% 6/15/03 B3 660 607
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 9,609
MEDIA & LEISURE - 2.8%
BROADCASTING - 2.0%
ACME Television LLC/ACME Financial Corp. 0% B3 970 774
9/30/04 (c)
Adelphia Communications Corp.:
9.5% 2/15/04 pay-in-kind B2 1,060 1,080
9.875% 3/1/05 B2 2,235 2,419
9.875% 3/1/07 B2 720 787
American Mobile Satellite Corp. 12.25% 4/1/08 - 310 203
Ascent Entertainment Group, Inc. 0% 12/15/04 B3 2,680 1,608
(c)
CapStar Broadcasting Partners, Inc. 0% B3 270 221
2/1/09 (c)
CBS Radio, Inc. 11.375% 1/15/09 pay-in-kind - 2,471 2,867
Chancellor Media Corp.:
8% 11/1/08 (e) Ba2 840 861
9% 10/1/08 (e) B1 260 275
Classic Communications, Inc. 0% 8/1/09 unit Caa1 110 67
(c)(e)
Clear Channel Communications, Inc. 7.25% Baa3 4,200 4,261
10/15/27
Continental Cablevision, Inc.:
8.3% 5/15/06 Baa3 325 363
9% 9/1/08 Baa3 2,510 2,951
International Cabletel, Inc. 0% 2/1/06 (c) B3 2,120 1,749
Iridium Operating LLC/Iridium Capital Corp.:
10.875% 7/15/05 B3 2,500 2,100
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
Iridium Operating LLC/Iridium Capital Corp.:
- - continued
11.25% 7/15/05 B3 $ 1,040 $ 884
Metromedia Fiber Network, Inc. 10% 11/15/08 B2 930 964
(e)
NTL, Inc.:
0% 4/1/08 (c)(e) B3 6,180 3,893
10% 2/15/07 B3 740 766
11.5% 10/1/08 B3 610 679
Olympus Communications LP/Olympus Capital B1 1,690 1,855
Corp. 10.625% 11/15/06
Orbital Imaging Corp. 11.625% 3/1/05 - 120 119
Orion Network Systems, Inc.:
0% 1/15/07 (c) B2 5,770 3,577
11.25% 1/15/07 B2 1,275 1,221
Renaissance Media Group LLC/Renaissance 0% B3 400 274
4/15/08 (c)
Rogers Cablesystems Ltd. yankee 10.125% Ba3 170 187
9/1/12
Satelites Mexicanos SA de CV:
9.06% 6/30/04 (e)(f) - 1,188 1,093
10.125% 11/1/04 (e) B3 1,730 1,453
Telewest Communications PLC 11.25% 11/1/08 B1 140 159
(e)
Telewest PLC:
yankee 0% 10/1/07 (c) B1 2,985 2,507
9.625% 10/1/06 B1 210 218
Time Warner, Inc.:
6.85% 1/15/26 Baa3 7,120 7,354
6.875% 6/15/18 Baa3 2,750 2,884
7.75% 6/15/05 Baa3 8,000 8,801
UIH Australia/Pacific, Inc.:
Series B 0% 5/15/06 (c) B2 3,780 1,928
Series D 0% 5/15/06 (c) B2 430 219
United International Holdings, Inc. 0% B3 1,650 949
2/15/08 (c)
64,570
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
ENTERTAINMENT - 0.2%
AMC Entertainment, Inc. 9.5% 3/15/09 B2 $ 1,070 $ 1,094
Premier Parks, Inc.:
0% 4/1/08 (c) B3 880 603
9.25% 4/1/06 B3 70 73
Regal Cinemas, Inc. 9.5% 6/1/08 (e) B3 310 326
Viacom, Inc.:
7.75% 6/1/05 Baa3 750 815
8% 7/7/06 Ba2 3,290 3,405
6,316
LODGING & GAMING - 0.3%
Aladdin Gaming Holdings/Aladdin Capital Caa2 710 199
Corp. 0% 3/1/10 (c)
Circus Circus Enterprises, Inc.:
7% 11/15/36 Baa3 1,410 1,304
7.625% 7/15/13 Ba2 330 290
9.25% 12/1/05 Ba2 590 608
HMH Properties, Inc.:
7.875% 8/1/05 Ba2 1,840 1,817
7.875% 8/1/08 Ba2 190 186
KSL Recreation Group, Inc. 10.25% 5/1/07 B3 380 380
Signature Resorts, Inc.:
9.25% 5/15/06 B2 1,060 986
9.75% 10/1/07 B3 1,590 1,352
Station Casinos, Inc.:
8.875% 12/1/08 (e) B2 340 343
10.125% 3/15/06 B2 510 539
Sun International Hotels Ltd./Sun Ba3 570 593
International North America, Inc. yankee 9%
3/15/07
8,597
PUBLISHING - 0.1%
Big Flower Press Holdings, Inc. 8.875% 7/1/07 B2 2,080 2,132
News America, Inc. 6.625% 1/9/08 Baa3 615 625
2,757
RESTAURANTS - 0.2%
AFC Enterprises, Inc. 10.25% 5/15/07 B3 1,000 1,045
Darden Restaurants, Inc. 6.375% 2/1/06 Baa1 1,450 1,401
Host Marriott Travel Plazas, Inc. 9.5% Ba3 160 165
5/15/05
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
Nebraska Restaurant, Inc. 10.75% 7/15/08 (e) B3 $ 430 $ 443
SC International Services, Inc. Series B, B2 470 472
9.25% 9/1/07
Wendy's International, Inc. 6.35% 12/15/05 Baa1 5,000 5,001
8,527
TOTAL MEDIA & LEISURE 90,767
NONDURABLES - 0.6%
FOODS - 0.2%
ConAgra, Inc. 7.125% 10/1/26 Baa1 3,600 3,729
Del Monte Corp. 12.25% 4/15/07 Caa1 380 431
4,160
HOUSEHOLD PRODUCTS - 0.1%
AKI Holding Corp. 0% 7/1/09 (c)(e) Caa1 180 72
AKI, Inc. 10.5% 7/1/08 (e) B2 200 192
Revlon Consumer Products Corp.:
8.125% 2/1/06 B2 820 808
8.625% 2/1/08 B3 880 869
9% 11/1/06 (e) B2 1,810 1,864
3,805
TOBACCO - 0.3%
Philip Morris Companies, Inc. 6.95% 6/1/06 A2 10,000 10,547
TOTAL NONDURABLES 18,512
PRECIOUS METALS - 0.1%
Centaur Mining & Exploration Ltd. 11% 12/1/07 B1 550 502
Great Central Mines Ltd. 8.875% 4/1/08 Ba2 1,300 1,313
TOTAL PRECIOUS METALS 1,815
RETAIL & WHOLESALE - 0.8%
APPAREL STORES - 0.1%
Mothers Work, Inc. 12.625% 8/1/05 B3 240 248
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Specialty Retailers, Inc.:
8.5% 7/15/05 Ba3 $ 790 $ 703
9% 7/15/07 B2 1,270 1,102
2,053
GENERAL MERCHANDISE STORES - 0.3%
Dayton Hudson Corp. 6.4% 2/15/03 A3 425 435
Federated Department Stores, Inc.:
6.79% 7/15/27 Baa2 7,000 7,216
8.5% 6/15/03 Baa2 3,000 3,316
10,967
GROCERY STORES - 0.2%
American Stores Co. 7.5% 5/1/37 Baa2 1,000 1,104
Kroger Co. 6% 7/1/00 Baa3 3,530 3,555
Pathmark Stores, Inc. 9.625% 5/1/03 Caa1 1,490 1,490
6,149
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Amazon.com, Inc. 0% 5/1/08 (c) Caa2 2,895 1,954
Guitar Center, Inc. 11% 7/1/06 B1 670 710
HMV Media Group PLC 10.25% 5/15/08 (e) B3 590 590
J. Crew Group, Inc. 0% 10/15/08 (c) Caa3 2,000 910
J. Crew Operating Corp. 10.375% 10/15/07 Caa1 1,220 1,086
Metals USA, Inc. 8.625% 2/15/08 B2 1,140 1,094
U.S. Office Products Co. 9.75% 6/15/08 (e) B3 380 274
6,618
TOTAL RETAIL & WHOLESALE 25,787
SERVICES - 0.2%
LEASING & RENTAL - 0.1%
AP Holdings, Inc. 0% 3/15/08 (c) Caa2 370 196
Apcoa, Inc. 9.25% 3/15/08 Caa1 1,120 1,030
Hollywood Entertainment Corp. 10.625% 8/15/04 B3 1,430 1,451
Renters Choice, Inc. 11% 8/15/08 (e) B2 450 458
3,135
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
SERVICES - CONTINUED
PRINTING - 0.1%
Sullivan Graphics, Inc. 12.75% 8/1/05 Caa1 $ 1,810 $ 1,837
SERVICES - 0.0%
Coach USA, Inc. 9.375% 7/1/07 B1 50 52
Iron Mountain, Inc. 8.75% 9/30/09 B3 185 190
Medaphis Corp. 9.5% 2/15/05 B2 1,240 893
SITEL Corp. 9.25% 3/15/06 B2 120 107
1,242
TOTAL SERVICES 6,214
TECHNOLOGY - 0.6%
COMMUNICATIONS EQUIPMENT - 0.0%
Intermedia Communications, Inc.:
8.5% 1/15/08 B2 130 126
8.6% 6/1/08 B2 640 622
Jordan Telecommunication Products, Inc.:
0% 8/1/07 (c) B3 990 757
9.875% 8/1/07 B3 290 289
1,794
COMPUTER SERVICES & SOFTWARE - 0.1%
Concentric Network Corp. 12.75% 12/15/07 - 590 602
DecisionOne Corp. 9.75% 8/1/07 B3 360 162
DecisionOne Holdings Corp. 0% 8/1/08 unit (c) Caa1 930 214
ICG Services, Inc.:
0% 2/15/08 (c) - 2,050 1,110
0% 5/1/08 (c) - 210 110
2,198
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Comdisco, Inc.:
5.75% 2/15/01 Baa1 6,000 5,895
6.1% 6/5/01 Baa1 3,000 3,042
6.375% 11/30/01 Baa1 4,500 4,469
13,406
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - 0.0%
Fisher Scientific International, Inc. 9% B3 $ 280 $ 280
2/1/08 (e)
Telecommunications Techniques Co. LLC 9.75% B3 1,030 1,030
5/15/08
1,310
ELECTRONICS - 0.1%
Communications Instruments, Inc. 10% 9/15/04 B3 400 372
Hadco Corp. 9.5% 6/15/08 B2 860 860
Insilco Corp. 12% 8/15/07 unit (e) B3 670 690
1,922
TOTAL TECHNOLOGY 20,630
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.1%
Atlas Air, Inc. 9.25% 4/15/08 B3 410 409
Atlas Air, Inc. Pass Through Trust 12.25% Ba3 860 920
12/1/02
Delta Air Lines, Inc. equipment trust Baa1 729 794
certificate 8.54% 1/2/07
Kitty Hawk, Inc. 9.95% 11/15/04 B1 2,400 2,358
4,481
RAILROADS - 0.5%
Burlington Northern Santa Fe Corp.:
6.875% 12/1/27 Baa2 5,000 4,981
7.29% 6/1/36 Baa2 4,360 4,786
Norfolk Southern Corp. 7.05% 5/1/37 Baa1 5,800 6,160
15,927
SHIPPING - 0.1%
Amer Reefer Co. Ltd. 10.25% 3/1/08 (e) B1 150 113
Holt Group, Inc. 9.75% 1/15/06 (e) Caa1 1,730 1,185
Hvide Marine, Inc. 8.375% 2/15/08 B1 50 41
1,339
TOTAL TRANSPORTATION 21,747
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - 2.7%
CELLULAR - 1.0%
360 Degrees Communications Co.:
7.125% 3/1/03 Baa1 $ 1,560 $ 1,642
7.5% 3/1/06 Baa1 1,850 2,030
Cable & Wireless Communications PLC 6.375% Baa1 3,770 3,792
3/6/03
Cellnet Data Systems, Inc. 0% 10/1/07 (c) - 1,670 317
Dial Call Communications, Inc. 0% 12/15/05 B2 350 341
(c)
Iridium LLC/Iridium Capital Corp. 13% 7/15/05 B3 170 155
McCaw International Ltd. 0% 4/15/07 (c) Caa1 6,050 3,388
Millicom International Cellular SA 0% 6/1/06 Caa1 11,510 8,086
(c)
Nextel Communications, Inc.:
0% 8/15/04 (c) B2 1,170 1,150
0% 2/15/08 (c) B2 4,240 2,597
Nextel International, Inc. 0% 4/15/08 (c) Caa1 2,350 1,116
PageMart Nationwide, Inc. 0% 2/1/05 (c) B3 860 765
PageMart Wireless, Inc. 0% 2/1/08 (c) Caa2 700 324
Rogers Communications, Inc. 8.875% 7/15/07 B2 2,110 2,131
Telesystem International Wireless, Inc.:
0% 6/30/07 (c) Caa1 1,410 642
0% 11/1/07 (c) Caa1 2,080 832
Teligent, Inc. 0% 3/1/08 (c) Caa1 1,440 738
30,046
ELECTRIC UTILITY - 0.6%
AES Corp. 10.25% 7/15/06 Ba1 1,460 1,555
Avon Energy Partners Holdings 6.46% 3/4/08 Baa2 3,500 3,519
(e)
DR Investments UK PLC yankee 7.1% 5/15/02 (e) A2 5,000 5,202
Israel Electric Corp. Ltd. 7.75% 12/15/27 (e) A3 7,040 6,498
Niagara Mohawk Power Corp. 7.75% 10/1/08 Ba3 630 671
Texas Utilities Co. 6.375% 1/1/08 Baa3 2,780 2,799
20,244
GAS - 0.2%
Columbia Gas System, Inc. 6.61% 11/28/02 A3 6,000 6,164
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - 0.9%
Covad Communications Group, Inc. 0% 3/15/08 - $ 1,340 $ 630
(c)
Dobson Wireline Co. 12.25% 6/15/08 (e) - 930 856
DTI Holdings, Inc. 0% 3/1/08 (c) - 800 216
Firstworld Communications, Inc. 0% 4/15/08 - 510 148
(c)(e)
Flag Ltd. 8.25% 1/30/08 Ba3 190 192
GCI, Inc. 9.75% 8/1/07 B2 150 145
Global TeleSystems Group, Inc. 9.875% 2/15/05 Caa2 210 193
GST Network Funding, Inc. 0% 5/1/08 (c)(e) - 1,610 773
GST Telecommunications, Inc. 12.75% 11/15/07 - 1,060 986
Hyperion Telecommunications, Inc. 0% 4/15/03 B3 1,620 1,199
(c)
ICG Holdings, Inc. 0% 9/15/05 (c) - 880 735
IXC Communications, Inc. 9% 4/15/08 B3 1,630 1,646
KMC Telecom Holdings, Inc. 0% 2/15/08 (c)(e) - 510 245
Level 3 Communications, Inc. 9.125% 5/1/08 B3 1,900 1,895
MCI WorldCom, Inc.:
6.4% 8/15/05 Baa2 3,215 3,344
8.875% 1/15/06 Baa2 5,667 6,225
9.375% 1/15/04 Baa2 1,228 1,276
McLeodUSA, Inc.:
0% 3/1/07 (c) B2 1,800 1,393
9.25% 7/15/07 B2 160 166
Netia Holdings BV:
0% 11/1/07 (c) B3 230 140
10.25% 11/1/07 B3 300 261
NEXTLINK Communications LLC 12.5% 4/15/06 B3 320 352
NEXTLINK Communications, Inc.:
9% 3/15/08 B3 210 204
9.625% 10/1/07 B3 320 317
10.75% 11/15/08 (e) B3 1,880 1,948
Pathnet, Inc. 12.25% 4/15/08 - 450 344
Rhythms Netconnections, Inc. 0% 5/15/08 (c) - 1,235 519
Viatel, Inc.:
0% 4/15/08 (c) Caa1 140 81
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Viatel, Inc.: - continued
11.25% 4/15/08 Caa1 $ 190 $ 190
WinStar Communications, Inc.:
0% 10/15/05 (c) Caa1 660 482
0% 10/15/05 (c) Caa1 1,570 1,754
0% 3/15/08 (c) CCC 1,275 988
Winstar Equipment Corp. 12.5% 3/15/04 B3 60 62
29,905
TOTAL UTILITIES 86,359
TOTAL NONCONVERTIBLE BONDS 528,534
TOTAL CORPORATE BONDS 535,892
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - 3.3%
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.2%
Fannie Mae:
5.75% 6/15/05 Aaa 4,140 4,289
8.625% 6/30/04 Aaa 4,000 4,657
Farm Credit Systems Financial Assistance Aaa 3,400 3,998
Corp. 9.375% 7/21/03
Federal Agricultural Mortgage Corp. 7.01% Aaa 1,720 1,866
2/10/04
Federal Home Loan Bank:
7.36% 7/1/04 Aaa 1,590 1,755
7.38% 8/5/04 Aaa 3,790 4,192
7.56% 9/1/04 Aaa 5,530 6,172
7.7% 9/20/04 Aaa 1,170 1,315
Government Trust Certificates (assets of
Trust guaranteed by U.S. Government through
Defense Security Assistance Agency):
Class 1-C, 9.25% 11/15/01 Aaa 1,331 1,423
Class 2-E, 9.4% 5/15/02 Aaa 1,295 1,373
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Guaranteed Export Trust Certificates (assets
of Trust guaranteed by U.S. Government
through Export-Import Bank):
Series 1993 C, 5.2% 10/15/04 Aaa $ 340 $ 340
Series 1993 D, 5.23% 5/15/05 Aaa 597 598
Series 1994 A, 7.12% 4/15/06 Aaa 597 631
Guaranteed Trade Trust Certificates (assets Aaa 493 533
of Trust guaranteed by U.S. Government
through Export-Import Bank) Series 1994-B,
7.5% 1/26/06
Overseas Private Investment Corp. U.S.
Government guaranteed participation
certificate:
Series 1994 195, 6.08% 8/15/04 (callable) Aaa 1,635 1,689
Series 1996-A1, 6.726% 9/15/10 (callable) - 5,000 5,304
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 40,135
U.S. TREASURY OBLIGATIONS - 2.1%
U.S. Treasury Bond:
6.125% 11/15/27 Aaa 3,200 3,609
6.375% 8/15/27 Aaa 485 562
6.875% 8/15/25 Aaa 10,235 12,484
7.625% 2/15/25 Aaa 9,930 13,151
8.75% 5/15/17 Aaa 10,700 15,007
U.S. Treasury Notes 7% 7/15/06 Aaa 19,050 21,675
TOTAL U.S. TREASURY OBLIGATIONS 66,488
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY 106,623
OBLIGATIONS
U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES
- - 9.6%
FANNIE MAE - 7.7%
5.5% 2/1/11 to 4/1/11 Aaa 15,682 15,458
6% 6/1/11 to 12/1/28 (j) Aaa 40,134 39,928
U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES
- - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
FANNIE MAE - CONTINUED
6.5% 2/1/24 to 12/1/28 (j) Aaa $ 187,024 $ 188,087
7% 7/1/25 to 7/1/28 Aaa 5,566 5,682
TOTAL FANNIE MAE 249,155
FREDDIE MAC - 0.2%
5.5% 4/1/03 to 5/1/03 Aaa 3,147 3,145
7% 7/1/99 to 8/1/01 Aaa 2,009 2,018
TOTAL FREDDIE MAC 5,163
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -
1.7%
7% 12/15/25 to 7/15/28 Aaa 2,504 2,563
7.5% 2/15/23 to 8/15/28 Aaa 39,919 41,232
8% 11/15/21 to 12/15/26 Aaa 10,530 10,955
TOTAL GOVERNMENT NATIONAL MORTGAGE 54,750
ASSOCIATION
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE 309,068
SECURITIES
ASSET-BACKED SECURITIES - 1.3%
Airplanes Pass Through Trust 10.875% 3/15/19 Ba2 1,570 1,664
Capital Equipment Receivables Trust 6.11% Aaa 5,081 5,084
7/15/99
Chase Manhattan Grantor Trust:
6.61% 9/15/02 Aaa 2,846 2,885
6.76% 9/15/02 A3 711 719
Chevy Chase Auto Receivables Trust:
5.9% 7/15/03 Aaa 2,610 2,615
5.91% 12/15/04 Aaa 1,434 1,444
6.6% 12/15/02 Aaa 864 870
Ford Credit Auto Owner Trust:
6.2% 12/15/02 Baa3 1,970 1,983
6.4% 5/15/02 A1 2,710 2,748
6.4% 12/15/02 Baa3 1,090 1,098
Ford Credit Grantor Trust 5.9% 10/15/00 Aaa 316 316
Green Tree Financial Corp. 6.1% 4/15/27 Aaa 590 590
ASSET-BACKED SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Key Auto Finance Trust:
6.3% 10/15/03 A2 $ 2,670 $ 2,675
6.65% 10/15/03 Baa3 783 791
MBNA Master Credit Card Trust II 6.55% Aaa 9,000 9,491
1/15/07
Sears Credit Account Master Trust II 6.5% Aaa 6,280 6,298
10/15/03
TOTAL ASSET-BACKED SECURITIES 41,271
COMMERCIAL MORTGAGE SECURITIES - 0.8%
Berkeley Federal Bank & Trust FSB Series - 1,836 1,363
1994 Class 1-B 7.6626% 8/1/24 (e)(f)
CS First Boston Mortgage Securities Corp.:
Series 1997-C2 Class D, 7.27% 1/17/35 Baa2 3,070 2,854
Series 1998 FLI Class E, 6.5063% 1/10/13 Baa2 5,360 5,214
(e)(f)
DLJ Mortgage Acceptance Corp. Series - 700 698
1993-MF12 Class B-2, 10.1% 9/18/03 (e)
First Chicago/Lennar Trust I Series 1997-CHL1:
Class D, 8.1117% 4/13/39 (f) - 700 593
Class E, 8.1117% 4/1/39 (f) - 650 498
General Motors Acceptance Corp. Commercial Ba3 500 413
Mortgage Securities, Inc. Series 1996-C1
Class F, 7.86% 10/15/28 (e)
GS Mortgage Securities Corp. II Series Baa3 2,600 2,346
1998-GLII Class E, 6.9697% 4/13/31 (e)(f)
Morgan Stanley Capital I, Inc.:
Series 1996-MBL1 Class E, 8.2465% 5/25/21 - 737 725
(e)(f)
Series 1998-CF1:
Class D, 7.35% 1/15/12 Baa2 2,451 2,363
Class E, 7.35% 12/15/12 Baa3 850 748
Penn Mutual Life Insurance Co. (The)/Penn - 1,250 786
Insurance & Annuity Co. Series 1996-PML
Class K, 7.9% 11/15/26 (e)
Resolution Trust Corp. Series 1991-M2 Class Ba3 270 218
A-3, 7.2498% 9/25/20 (f)
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (h) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Structured Asset Securities Corp.:
sequential pay Series 1996 Class A-2A, 7.75% AAA $ 659 $ 664
2/25/28
Series 1993-C1 Class E, 6.6% 10/25/24 (e) B 500 225
Series 1995-C1 Class E, 7.375% 9/25/24 (e) BB 1,000 968
Thirteen Affiliates of General Growth Aaa 4,500 4,710
Properties, Inc. sequential pay Series A-2,
6.602% 12/15/10 (e)
Wells Fargo Capital Markets Apartment Aaa 1,727 1,748
Financing Trust Series APT Class 1, 6.56%
12/29/05 (e)
TOTAL COMMERCIAL MORTGAGE SECURITIES 27,134
FOREIGN GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - 0.3%
Quebec Province yankee 6.86% 4/15/26 (d)(i) A2 8,000 8,706
(Cost $7,698)
SUPRANATIONAL OBLIGATIONS - 0.1%
Inter American Development Bank yankee 6.29% Aaa 4,000 4,206
7/16/27 (Cost $3,975)
CERTIFICATES OF DEPOSIT - 0.1%
Canadian Imperial Bank of Commerce, New York 3,000 3,035
yankee 6.2% 8/1/00 (Cost $3,005)
CASH EQUIVALENTS - 6.5%
SHARES
Taxable Central Cash Fund (b) (Cost $210,674) 210,673,975 210,674
TOTAL INVESTMENT IN SECURITIES - 100% $ 3,225,233
</TABLE>
SECURITY TYPE ABBREVIATIONS
ACES - Automatic Common Exchange
Securities
QUIPS - Quarterly Income Preferred
Securities
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.
(d) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.
(e) 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 $104,198,000 or 3.3% of net assets.
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(g) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
SECURITY ACQUISTION DATE ACQUISITION COST (000S)
Mothers Work, Inc. 6/18/98 1
(h) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(i) 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 advisor, based principally on S&P and Moody's
ratings of the sovereign credit of the issuing government.
(j) A portion of the security purchased on a delayed delivery or
when-issued basis (see Note 2 of Notes to Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 19.0% AAA, AA, A 18.1%
Baa 6.3% BBB 6.8%
Ba 1.3% BB 1.3%
B 3.6% B 3.7%
Caa 1.1% CCC 1.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
for the sovereign credit of the issuing government. The percentage not
rated by Moody's or S&P amounted to 0.7%. FMR has determined that
unrated debt securities that are lower quality account for 0.1% of the
total value of investment in securities.
INCOME TAX INFORMATION
At November 30, 1998, the aggregate cost of investment securities for
income tax purposes was $2,717,099,000. Net unrealized appreciation
aggregated $508,134,000, of which $578,947,000 related to appreciated
investment securities and $70,813,000 related to depreciated
investment securities.
The fund hereby designates approximately $112,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C>
COMMON STOCKS - 58.4%
SHARES VALUE (NOTE 1) (000S)
AEROSPACE & DEFENSE - 2.9%
AEROSPACE & DEFENSE - 1.6%
Harsco Corp. 248,900 $ 8,151
Lockheed Martin Corp. 122,000 13,588
Textron, Inc. 368,400 27,400
49,139
DEFENSE ELECTRONICS - 0.7%
Raytheon Co. Class B 385,800 22,401
SHIP BUILDING & REPAIR - 0.6%
General Dynamics Corp. 277,400 16,419
TOTAL AEROSPACE & DEFENSE 87,959
BASIC INDUSTRIES - 2.2%
CHEMICALS & PLASTICS - 1.6%
du Pont (E.I.) de Nemours & Co. 154,600 8,890
Hanna (M.A.) Co. 247,300 3,632
Hoechst AG 287,600 12,125
Monsanto Co. 359,600 14,609
Praxair, Inc. 148,200 5,965
Solutia, Inc. 246,600 5,410
50,631
METALS & MINING - 0.6%
Aluminum Co. of America 219,900 17,427
TOTAL BASIC INDUSTRIES 68,058
CONSTRUCTION & REAL ESTATE - 1.4%
BUILDING MATERIALS - 0.3%
Masco Corp. 347,400 9,792
REAL ESTATE - 0.2%
Stewart Enterprises, Inc. Class A 292,800 6,753
REAL ESTATE INVESTMENT TRUSTS - 0.9%
Boston Properties, Inc. 186,300 5,310
Equity Residential Properties Trust (SBI) 232,800 9,778
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Public Storage, Inc. 192,900 $ 5,148
Starwood Hotels & Resorts Trust 205,200 5,810
26,046
TOTAL CONSTRUCTION & REAL ESTATE 42,591
DURABLES - 0.8%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Ford Motor Co. 130,400 7,074
HOME FURNISHINGS - 0.6%
Leggett & Platt, Inc. 747,300 17,468
TOTAL DURABLES 24,542
ENERGY - 5.7%
OIL & GAS - 5.7%
British Petroleum Co. PLC 3,010,052 44,355
Chevron Corp. 192,800 15,713
Elf Aquitaine sponsored ADR 221,600 12,853
Exxon Corp. 328,000 23,370
Texaco, Inc. 354,900 21,050
Total SA:
Class B 212,000 24,804
sponsored ADR 53,800 3,147
USX-Marathon Group 814,200 26,614
171,906
FINANCE - 12.9%
BANKS - 5.2%
Bank of New York Co., Inc. 1,222,600 38,588
Bank One Corp. 381,460 18,644
BankAmerica Corp. 105,988 6,088
Norwest Corp. 540,100 20,085
U.S. Bancorp 1,262,700 46,089
Wells Fargo & Co. 79,000 29,230
158,724
CREDIT & OTHER FINANCE - 2.1%
American Express Co. 313,500 27,706
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Associates First Capital Corp. 336,269 $ 23,707
Citigroup, Inc. 263,000 12,377
Olympic Financial Ltd. warrants 3/15/07 (a) 46 0
63,790
FEDERAL SPONSORED CREDIT - 3.0%
Fannie Mae 469,500 33,246
Freddie Mac 1,007,100 57,908
91,154
INSURANCE - 2.6%
Allstate Corp. 257,000 11,067
American International Group, Inc. 420,100 35,814
Aon Corp. 229,200 14,210
Hartford Financial Services Group, Inc. 373,000 19,816
80,907
TOTAL FINANCE 394,575
HEALTH - 6.4%
DRUGS & PHARMACEUTICALS - 5.5%
American Home Products Corp. 534,300 26,047
Bristol-Myers Squibb Co. 351,840 38,900
Elan Corp. PLC ADR (a) 249,300 17,467
Merck & Co., Inc. 156,000 21,099
Schering-Plough Corp. 257,300 26,470
Sigma-Aldrich Corp. 199,200 6,157
Warner-Lambert Co. 399,900 31,342
167,482
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
Johnson & Johnson 208,800 17,017
McKesson Corp. 143,300 11,034
28,051
TOTAL HEALTH 195,533
INDUSTRIAL MACHINERY & EQUIPMENT - 4.5%
ELECTRICAL EQUIPMENT - 2.3%
Emerson Electric Co. 196,300 12,956
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
General Electric Co. 654,400 $ 57,260
Loral Space & Communications Ltd. (a) 300 6
70,222
INDUSTRIAL MACHINERY & EQUIPMENT - 1.6%
Caterpillar, Inc. 147,100 6,620
Tyco International Ltd. 704,378 43,627
50,247
POLLUTION CONTROL - 0.6%
Waste Management, Inc. 387,500 17,486
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 137,955
MEDIA & LEISURE - 2.0%
BROADCASTING - 1.6%
Benedek Communications Corp. warrants 7/1/07 10,500 21
(a)
CBS Corp. 294,500 8,228
CS Wireless Systems, Inc. (a)(f) 109 0
Loral Orion Network Systems, Inc.:
warrants 1/15/07 (CV ratio .47) (a) 6,760 53
warrants 1/15/07 (CV ratio .6) (a) 1,445 15
Orbital Imaging Corp. warrants 3/1/05 (a)(f) 120 1
Tele-Communications, Inc. (TCI Group) Series 294,600 12,410
A (a)
Teletrac Holdings, Inc. warrants 8/1/07 (a) 380 0
Time Warner, Inc. 300,328 27,874
UIH Australia/Pacific, Inc. warrants 5/15/06 4,430 13
(a)
48,615
LODGING & GAMING - 0.0%
Aladdin Gaming Enterprises, Inc. warrants 7,100 0
3/1/10 (a)(f)
PUBLISHING - 0.4%
McGraw-Hill Companies, Inc. 140,600 12,645
TOTAL MEDIA & LEISURE 61,260
NONDURABLES - 3.6%
AGRICULTURE - 0.1%
Delta & Pine Land Co. 65,000 2,169
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONDURABLES - CONTINUED
FOODS - 1.1%
Heinz (H.J.) Co. 282,100 $ 16,397
Sara Lee Corp. 284,100 16,957
33,354
HOUSEHOLD PRODUCTS - 1.0%
Procter & Gamble Co. 200,000 17,775
Renaissance Cosmetics, Inc. warrants 8/31/06 2,250 0
(a)(f)
Unilever NV (NY shares) 175,300 13,191
30,966
TOBACCO - 1.4%
Philip Morris Companies, Inc. 840,900 42,991
TOTAL NONDURABLES 109,480
RETAIL & WHOLESALE - 1.6%
APPAREL STORES - 0.0%
Mothers Work, Inc. (a)(h) 70 1
DRUG STORES - 0.6%
CVS Corp. 147,800 6,753
Rite Aid Corp. 320,400 12,716
19,469
GENERAL MERCHANDISE STORES - 1.0%
Federated Department Stores, Inc. (a) 71,966 2,766
Wal-Mart Stores, Inc. 378,200 26,096
28,862
TOTAL RETAIL & WHOLESALE 48,332
SERVICES - 1.1%
PRINTING - 0.6%
Donnelley (R.R.) & Sons Co. 406,600 17,535
SERVICES - 0.5%
Modis Professional Services, Inc. (a) 195,400 3,444
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
SERVICES - CONTINUED
SERVICES - CONTINUED
Service Corp. International 277,900 $ 9,900
ServiceMaster Co. 169,500 3,581
16,925
TOTAL SERVICES 34,460
TECHNOLOGY - 6.6%
COMPUTER SERVICES & SOFTWARE - 1.0%
Concentric Network Corp. warrants 12/15/07 420 37
(a)(f)
Microsoft Corp. (a) 279,700 29,613
29,650
COMPUTERS & OFFICE EQUIPMENT - 3.5%
Compaq Computer Corp. 291,900 9,231
International Business Machines Corp. 179,700 26,674
Pitney Bowes, Inc. 1,145,300 63,063
Xerox Corp. 96,900 9,387
108,355
ELECTRONICS - 2.1%
AMP, Inc. 260,716 10,706
Intel Corp. 213,700 19,059
Motorola, Inc. 395,500 20,566
Texas Instruments, Inc. 209,900 13,420
63,751
TOTAL TECHNOLOGY 201,756
UTILITIES - 6.7%
CELLULAR - 0.0%
American Mobile Satellite Corp. warrants 310 1
4/1/08 (a)(f)
McCaw International Ltd. warrants 4/15/07 6,190 31
(a)(f)
Microcell Telecommunications, Inc. warrants 21,520 237
6/1/06 (a)(f)
269
ELECTRIC UTILITY - 1.0%
CMS Energy Corp. 290,500 12,800
Duke Energy Corp. 195,200 12,627
PG&E Corp. 198,600 6,045
31,472
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 5.7%
ALLTEL Corp. 196,400 $ 9,194
AT&T Corp. 370,900 23,089
Bell Atlantic Corp. 294,500 15,645
Covad Communications Group, Inc. warrants 1,340 13
3/15/98 (a)(f)
DTI Holdings, Inc. warrants 3/1/08 (a)(f) 4,000 0
GTE Corp. 399,000 23,416
KMC Telecom Holdings, Inc. warrants 2/15/08 610 2
(a)(f)
MCI WorldCom, Inc. (a) 998,313 55,157
Pathnet, Inc. warrants 4/15/08 (a)(f) 530 5
SBC Communications, Inc. 631,000 29,223
Sprint Corp. 225,600 17,315
173,059
TOTAL UTILITIES 204,800
TOTAL COMMON STOCKS 1,783,207
PREFERRED STOCKS - 1.6%
CONVERTIBLE PREFERRED STOCKS - 0.4%
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Republic Industries, Inc. $1.55 ACES 74,000 1,226
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
Loral Space & Communications Ltd. Series C, 85,000 4,505
$3.00 (f)
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Host Marriott Financial Trust $3.375 QUIPS 85,000 3,469
(f)
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.2%
TJX Companies, Inc. Series E, $7.00 12,000 4,908
TOTAL CONVERTIBLE PREFERRED STOCKS 14,108
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONCONVERTIBLE PREFERRED STOCKS - 1.2%
FINANCE - 0.1%
CREDIT & OTHER FINANCE - 0.1%
Fresenius Medical Care Capital Trust II 1,811 $ 1,729
7.875%
INSURANCE - 0.0%
American Annuity Group Capital Trust II 1,000 890
8.75% (a)
TOTAL FINANCE 2,619
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.3%
Adelphia Communications Corp. $13.00 5,170 596
Citadel Broadcasting Co. Series B, 13.25% 6,120 692
pay-in-kind
CSC Holdings, Inc. Series H, 11.75% 8,525 938
pay-in-kind
CSC Holdings, Inc. 11.125% pay-in-kind 38,541 4,182
Echostar Communications Corp. 12.125% 1,301 1,223
pay-in-kind
Granite Broadcasting Corp. 12.75% pay-in-kind 891 713
8,344
PUBLISHING - 0.1%
PRIMEDIA, Inc.:
8.625% (a) 7,700 708
Series D, $10.00 28,400 2,805
3,513
TOTAL MEDIA & LEISURE 11,857
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Renaissance Cosmetics, Inc. 14% pay-in-kind 2,871 4
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.2%
Intermedia Communications, Inc. 13.5% 4,448 4,537
pay-in-kind
COMPUTER SERVICES & SOFTWARE - 0.0%
Concentric Network Corp. 13.5% pay-in-kind 421 314
TOTAL TECHNOLOGY 4,851
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1) (000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - 0.5%
CELLULAR - 0.2%
Nextel Communications, Inc.:
11.125% pay-in-kind 3,461 $ 2,907
Series D, 13% pay-in-kind 3,020 2,869
5,776
TELEPHONE SERVICES - 0.3%
e.spire Communications, Inc.:
12.75% pay-in-kind 1,037 705
14.75% pay-in-kind 301 265
Hyperion Telecommunication, Inc. 12.875% 1,466 909
pay-in-kind
ICG Holdings, Inc.:
14% pay-in-kind 460 419
14.25% pay-in-kind 2,300 2,128
IXC Communications, Inc. 12.5% pay-in-kind 576 588
NEXTLINK Communications, Inc. 14% pay-in-kind 109,736 5,158
Viatel, Inc. 10% (a)(f) 164 10
WinStar Communications, Inc. 14.25% (a) 608 541
10,723
TOTAL UTILITIES 16,499
TOTAL NONCONVERTIBLE PREFERRED STOCKS 35,830
TOTAL PREFERRED STOCKS 49,938
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CORPORATE BONDS - 16.4%
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S)
CONVERTIBLE BONDS - 0.3%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc. 2% 1/24/05 Ba1 $ 4,340 4,134
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.1%
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Unisys Corp. 8.25% 3/15/06 B $ 800 $ 3,120
TOTAL CONVERTIBLE BONDS 7,254
NONCONVERTIBLE BONDS - 16.1%
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.5%
BE Aerospace, Inc. 9.5% 11/1/08 (f) B1 330 337
Lockheed Martin Corp. 7.2% 5/1/36 A3 15,000 16,337
16,674
DEFENSE ELECTRONICS - 0.3%
Raytheon Co. 6.45% 8/15/02 Baa1 8,000 8,250
SHIP BUILDING & REPAIR - 0.0%
Newport News Shipbuilding, Inc. 9.25% 12/1/06 B1 450 477
TOTAL AEROSPACE & DEFENSE 25,401
BASIC INDUSTRIES - 0.7%
CHEMICALS & PLASTICS - 0.1%
Atlantis Group, Inc. (Trivest/Winston) 11% B2 40 41
2/15/03
Huntsman Corp. 9.5% 7/1/07 (f) B2 2,470 2,371
Koppers Industries, Inc. 9.875% 12/1/07 B2 740 673
3,085
IRON & STEEL - 0.1%
GS Technologies Operating, Inc. 12.25% B2 620 434
10/1/05
Republic Engineered Steels, Inc. 9.875% Caa1 1,360 1,346
12/15/01
WHX Corp. 10.5% 4/15/05 B3 880 774
2,554
METALS & MINING - 0.1%
Doe Run Resources Corp.:
11.25% 3/15/05 B3 230 159
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
Doe Run Resources Corp.: - continued
11.6963% 3/15/03 (g) B3 $ 300 $ 207
Interlake Corp. 12.125% 3/1/02 B3 1,780 1,673
2,039
PACKAGING & CONTAINERS - 0.3%
Owens-Illinois, Inc.:
7.15% 5/15/05 Ba1 2,800 2,786
7.35% 5/15/08 Ba1 2,600 2,562
7.8% 5/15/18 Ba1 3,200 3,029
8,377
PAPER & FOREST PRODUCTS - 0.1%
Ainsworth Lumber Co. Ltd. 12.5% 7/15/07 B3 190 168
pay-in-kind
APP Finance II Mauritius Ltd. 12% 3/15/04 Caa 2,265 1,133
Doman Industries Ltd. yankee 8.75% 3/15/04 B1 570 405
Indah Kiat Finance Mauritius Ltd. 10% 7/1/07 Caa1 380 203
Mail-Well Corp. 10.5% 2/15/04 B+ 190 194
Malette, Inc. yankee 12.25% 7/15/04 Ba3 1,010 1,089
Millar Western Forest Products Ltd. 9.875% B3 570 359
5/15/08
Pindo Deli Finance Mauritius Ltd. 10.25% Caa1 330 152
10/1/02
Stone Container Corp.:
10.75% 10/1/02 B1 450 452
12.58% 8/1/16 (g) B2 111 111
Tembec Finance Corp. yankee 9.875% 9/30/05 Ba3 480 485
Tjiwi Kimia Finance Mauritius Ltd. 10% 8/1/04 Ba3 610 305
5,056
TOTAL BASIC INDUSTRIES 21,111
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.1%
American Standard Cos., Inc. 7.375% 2/1/08 Ba3 1,350 1,337
Schuff Steel Co. 10.5% 6/1/08 B3 130 104
1,441
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 0.0%
Great Lakes Dredge & Dock Corp. 11.25% B3 $ 730 $ 708
8/15/08 (f)
REAL ESTATE - 0.0%
LNR Property Corp. 9.375% 3/15/08 B1 1,320 1,181
REAL ESTATE INVESTMENT TRUSTS - 0.2%
CenterPoint Properties Trust 6.75% 4/1/05 Baa2 1,190 1,139
EOP Operating LP:
6.625% 2/15/05 Baa1 1,250 1,219
6.75% 2/15/08 Baa1 2,310 2,203
4,561
TOTAL CONSTRUCTION & REAL ESTATE 7,891
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Blue Bird Body Co. 10.75% 11/15/06 B2 290 287
Breed Technologies, Inc. 9.25% 4/15/08 (f) B3 1,580 1,232
Morris Material Handling, Inc. 9.5% 4/1/08 B2 860 585
2,104
CONSUMER DURABLES - 0.0%
Corning Consumer Products Co. 9.625% 5/1/08 B3 860 662
HOME FURNISHINGS - 0.0%
Omega Cabinets Ltd. 10.5% 6/15/07 B3 100 80
TEXTILES & APPAREL - 0.3%
Cluett American Corp. 10.125% 5/15/08 (f) B3 330 294
Levi Strauss & Co. 6.8% 11/1/03 (f) Baa2 5,560 5,604
Polymer Group, Inc. 9% 7/1/07 B2 1,540 1,448
Synthetic Industries, Inc. 9.25% 2/15/07 B2 990 955
WestPoint Stevens, Inc. 7.875% 6/15/08 Ba3 1,060 1,073
Worldtex, Inc. 9.625% 12/15/07 B1 825 660
10,034
TOTAL DURABLES 12,880
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
ENERGY - 0.4%
COAL - 0.0%
P&L Coal Holdings Corp. 9.625% 5/15/08 (f) B2 $ 1,220 $ 1,208
ENERGY SERVICES - 0.1%
Bayard Drilling Technologies, Inc. 11% B2 190 205
6/30/05
DI Industries, Inc. 8.875% 7/1/07 B1 250 181
Grey Wolf, Inc. 8.875% 7/1/07 B1 760 551
Ocean Rig Norway AS 10.25% 6/1/08 B3 580 415
Pool Energy Services Co. 8.625% 4/1/08 B2 810 745
2,097
OIL & GAS - 0.3%
Canadian Forest Oil Ltd. 8.75% 9/15/07 B2 570 507
Chesapeake Energy Corp. 9.625% 5/1/05 B1 730 613
Flores & Rucks, Inc. 9.75% 10/1/06 B1 680 704
Gothic Production Corp. 11.125% 5/1/05 B3 280 182
Great Lakes Carbon Corp. 10.25% 5/15/08 B3 650 631
pay-in-kind (f)
Hurricane Hydrocarbons Ltd. 11.75% 11/1/04 B3 370 185
(f)
Occidental Petroleum Corp. 6.39% 11/9/00 Baa3 1,000 1,020
Ocean Energy, Inc. 8.375% 7/1/08 B1 640 608
Petroleum Geo-Services ASA 7.125% 3/30/28 Baa3 3,910 3,537
Plains Resources, Inc.:
Series D, 10.25% 3/15/06 B2 230 228
10.25% 3/15/06 B2 630 624
Seven Seas Petroleum, Inc. 12.5% 5/15/05 Caa1 300 204
Southwest Royalties, Inc. 10.5% 10/15/04 Caa2 80 42
9,085
TOTAL ENERGY 12,390
FINANCE - 4.8%
BANKS - 2.8%
ABN-Amro Bank NV, Chicago 6.625% 10/31/01 Aa3 5,000 5,193
Bank of New York Institutional Capital Trust A1 10,000 10,508
A 7.78% 12/1/26 (f)
BankAmerica Corp. 10% 2/1/03 Aa3 350 404
BanPonce Corp. 5.75% 3/1/99 A3 880 881
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
BANKS - CONTINUED
BanPonce Financial Corp.:
6.69% 9/21/00 A3 $ 2,250 $ 2,299
6.75% 8/9/01 A3 3,850 3,936
6.88% 6/16/00 A3 2,500 2,563
Barclays Bank PLC yankee:
5.875% 7/15/00 A1 4,500 4,547
5.95% 7/15/01 A1 5,500 5,590
Capital One Bank:
6.375% 2/15/03 Baa3 2,700 2,726
6.42% 11/12/99 Baa3 5,000 5,031
Capital One Financial Corp. 7.125% 8/1/08 Ba1 2,550 2,467
Central Fidelity Banks, Inc. 8.15% 11/15/02 A1 9,045 9,951
First Chicago NBD Institutional Capital B A1 6,000 6,237
7.75% 12/1/26 (f)
First Tennessee National Corp. 6.75% 11/15/05 Baa1 720 768
Kansallis-Osake-Pankki, New York 10% 5/1/02 A3 710 809
MBNA Corp.:
6.34% 6/2/03 Baa2 850 830
6.875% 11/15/02 Baa2 3,700 3,897
NB Capital Trust IV 8.25% 4/15/27 Aa2 3,315 3,577
Provident Bank 6.125% 12/15/00 A3 3,420 3,445
Summit Bancorp 8.625% 12/10/02 BBB+ 1,250 1,393
Union Planters Corp. 6.75% 11/1/05 Baa2 400 394
Wachovia Corp. 6.605% 10/1/25 A1 7,550 7,933
85,379
CREDIT & OTHER FINANCE - 1.5%
Ahmanson Capital Trust I 8.36% 12/1/26 (f) A3 2,700 2,914
Anthony Crane Rentals LP/Anthony Credit B3 410 381
Capital Corp. 10.375% 8/1/08 (f)
Arcadia Financial Ltd. 11.5% 3/15/07 B2 310 195
Associates Corp. of North America 6% 4/15/03 Aa3 2,450 2,500
AT&T Capital Corp.:
6.25% 5/15/01 Baa3 6,560 6,509
6.41% 8/13/99 Baa3 1,000 1,010
BankBoston Capital Trust II 7.75% 12/15/26 A2 8,000 7,804
Delta Financial Corp. 9.5% 8/1/04 B3 420 235
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
ERP Operating LP 6.55% 11/15/01 A3 $ 850 $ 850
First Security Capital I 8.41% 12/15/26 A3 1,280 1,405
First Union Institutional Capital I 8.04% BBB+ 2,000 2,147
12/1/26
General Electric Capital Corp. 6.94% 4/13/09 Aaa 4,700 4,733
(e)
GS Escrow Corp. 7.125% 8/1/05 (f) Ba1 4,500 4,394
Imperial Credit Capital Trust I 10.25% B2 510 326
6/14/02
Imperial Credit Industries 9.875% 1/15/07 B2 1,500 885
MCN Investment Corp. 6.03% 2/1/01 Baa3 2,350 2,398
Morgan (J.P.) Capital Trust II 7.95% 2/1/27 Aa3 3,130 3,251
Nordstrom Credit, Inc. 7.25% 4/30/02 A2 3,100 3,283
Ocwen Capital Trust 10.875% 8/1/27 B2 515 386
Olympic Financial Ltd. 11.5% 3/15/07 B2 540 346
Time Warner Telecom LLC/Time Warner Telecom, B2 370 368
Inc. 9.75% 7/15/08
46,320
INSURANCE - 0.4%
SunAmerica, Inc. 6.2% 10/31/99 Baa1 13,750 13,887
SAVINGS & LOANS - 0.1%
Long Island Savings Bank FSB 6.2% 4/2/01 Baa3 1,700 1,698
TOTAL FINANCE 147,284
HEALTH - 0.2%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Graham-Field Health Products, Inc. 9.75% Caa1 280 132
8/15/07
Wright Medical Technology, Inc. 11.75% Caa3 1,191 863
7/1/00 (g)
995
MEDICAL FACILITIES MANAGEMENT - 0.2%
Fountain View, Inc. 11.25% 4/15/08 Caa1 310 242
Harborside Healthcare Corp. 0% 8/1/08 (d)(f) B3 585 281
Oxford Health Plans, Inc. 11% 5/15/05 (f) Caa1 1,080 940
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - CONTINUED
Tenet Healthcare Corp.:
8% 1/15/05 Ba1 $ 620 $ 634
8.125% 12/1/08 (f) Ba3 3,220 3,268
5,365
TOTAL HEALTH 6,360
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.1%
Motors & Gears, Inc. 10.75% 11/15/06 B3 2,310 2,287
Telex Communications, Inc. 10.5% 5/1/07 B2 550 385
2,672
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Continental Global Group, Inc. 11% 4/1/07 B2 550 451
Thermadyne Holdings Corp. 0% 6/1/08 (d) Caa1 1,080 421
Thermadyne Manufacturing LLC 9.875% 6/1/08 B3 940 837
Tyco International Group SA yankee 6.125% Baa1 4,000 4,081
6/15/01
5,790
POLLUTION CONTROL - 0.0%
Envirosource, Inc. 9.75% 6/15/03 B3 600 510
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 8,972
MEDIA & LEISURE - 2.7%
BROADCASTING - 1.9%
ACME Television LLC/ACME Financial Corp. 0% B3 970 718
9/30/04 (d)
Adelphia Communications Corp.:
9.5% 2/15/04 pay-in-kind B2 1,060 1,070
9.875% 3/1/05 B2 2,235 2,364
9.875% 3/1/07 B2 720 770
American Mobile Satellite Corp. 12.25% 4/1/08 - 310 149
Ascent Entertainment Group, Inc. 0% 12/15/04 B3 1,680 949
(d)
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
CBS Radio, Inc. 11.375% 1/15/09 pay-in-kind - $ 2,471 $ 2,867
Chancellor Media Corp. 9% 10/1/08 (f) Ba3 260 261
Classic Communications, Inc. 0% 8/1/09 unit Caa1 110 57
(d)(f)
Clear Channel Communications, Inc. 7.25% Baa3 4,200 3,839
10/15/27
Continental Cablevision, Inc.:
8.3% 5/15/06 Baa3 325 356
9% 9/1/08 Baa3 2,510 2,938
International Cabletel, Inc. 0% 2/1/06 (d) B3 2,120 1,611
Iridium Operating LLC/Iridium Capital Corp.:
10.875% 7/15/05 B3 2,570 1,928
11.25% 7/15/05 B3 1,040 790
NTL, Inc.:
0% 4/1/08 (d)(f) B3 6,180 3,399
10% 2/15/07 B3 740 703
11.5% 10/1/08 (f) B3 610 631
Olympus Communications LP/Olympus Capital B1 1,690 1,817
Corp. 10.625% 11/15/06
Orbital Imaging Corp. 11.625% 3/1/05 - 120 106
Orion Network Systems, Inc.:
0% 1/15/07 (d) B2 5,770 3,375
11.25% 1/15/07 B2 1,275 1,122
Renaissance Media Group LLC/Renaissance 0% B3 400 252
4/15/08 (d)
Rogers Cablesystems Ltd. yankee 10.125% Ba3 170 184
9/1/12
Satelites Mexicanos SA de CV:
9.06% 6/30/04 (f)(g) - 1,188 1,045
10.125% 11/1/04 (f) B3 1,710 1,163
Telewest PLC:
yankee 0% 10/1/07 (d) B1 2,930 2,315
9.625% 10/1/06 B1 210 206
Time Warner, Inc.:
6.85% 1/15/26 Baa3 7,120 7,375
6.875% 6/15/18 Baa3 2,750 2,736
7.75% 6/15/05 Baa3 8,000 8,752
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
UIH Australia/Pacific, Inc.:
0% 5/15/06 Series B (d) B2 $ 3,780 $ 1,474
0% 5/15/06 Series D (d) B2 430 168
United International Holdings, Inc. 0% B3 1,650 776
2/15/08 (d)
58,266
ENTERTAINMENT - 0.2%
AMC Entertainment, Inc. 9.5% 3/15/09 B2 970 941
Premier Parks, Inc.:
0% 4/1/08 (d) B3 880 541
9.25% 4/1/06 B3 70 71
Viacom, Inc.:
7.75% 6/1/05 Baa3 750 808
8% 7/7/06 Ba2 3,290 3,389
5,750
LODGING & GAMING - 0.2%
Aladdin Gaming Holdings/Aladdin Capital Caa2 710 195
Corp. 0% 3/1/10 (d)
HMH Properties, Inc.:
7.875% 8/1/05 Ba2 1,840 1,794
7.875% 8/1/08 Ba2 190 183
KSL Recreation Group, Inc. 10.25% 5/1/07 B3 350 347
Signature Resorts, Inc.:
9.25% 5/15/06 B2 740 629
9.75% 10/1/07 B3 1,590 1,193
Station Casinos, Inc. 10.125% 3/15/06 B2 510 510
Sun International Hotels Ltd./Sun Ba3 570 587
International North America, Inc. yankee 9%
3/15/07
5,438
PUBLISHING - 0.1%
Big Flower Press Holdings, Inc. 8.875% 7/1/07 B2 2,080 2,049
News America, Inc. 6.625% 1/9/08 Baa3 615 612
2,661
RESTAURANTS - 0.3%
AFC Enterprises, Inc. 10.25% 5/15/07 B3 1,000 1,005
Darden Restaurants, Inc. 6.375% 2/1/06 Baa1 2,700 2,628
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
RESTAURANTS - CONTINUED
Host Marriott Travel Plazas, Inc. 9.5% Ba3 $ 160 $ 160
5/15/05
Nebraska Restaurant, Inc. 10.75% 7/15/08 (f) B3 430 409
SC International Services, Inc. 9.25% 9/1/07 B2 470 456
Wendy's International, Inc. 6.35% 12/15/05 Baa1 5,000 4,998
9,656
TOTAL MEDIA & LEISURE 81,771
NONDURABLES - 0.5%
FOODS - 0.1%
ConAgra, Inc. 7.125% 10/1/26 Baa1 3,600 3,771
Del Monte Corp. 12.25% 4/15/07 Caa1 270 289
4,060
HOUSEHOLD PRODUCTS - 0.1%
AKI Holding Corp. 0% 7/1/09 (d)(f) Caa1 180 68
AKI, Inc. 10.5% 7/1/08 (f) B2 120 114
Revlon Consumer Products Corp.:
8.125% 2/1/06 B2 820 795
8.625% 2/1/08 B3 880 801
1,778
TOBACCO - 0.3%
Philip Morris Companies, Inc. 6.95% 6/1/06 A2 10,000 10,471
TOTAL NONDURABLES 16,309
PRECIOUS METALS - 0.1%
Centaur Mining & Exploration Ltd. 11% 12/1/07 B1 550 462
Great Central Mines Ltd. 8.875% 4/1/08 Ba2 1,300 1,248
TOTAL PRECIOUS METALS 1,710
RETAIL & WHOLESALE - 0.9%
APPAREL STORES - 0.1%
Mothers Work, Inc. 12.625% 8/1/05 B3 240 239
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
APPAREL STORES - CONTINUED
Specialty Retailers, Inc.:
8.5% 7/15/05 Ba3 $ 790 $ 743
9% 7/15/07 B2 1,270 1,143
2,125
GENERAL MERCHANDISE STORES - 0.4%
Dayton Hudson Corp.:
6.4% 2/15/03 A3 425 441
6.8% 10/1/01 A3 1,400 1,450
Federated Department Stores, Inc.:
6.79% 7/15/27 Baa2 7,000 7,282
8.5% 6/15/03 Baa2 3,000 3,302
12,475
GROCERY STORES - 0.2%
American Stores Co. 7.5% 5/1/37 Baa2 1,000 1,111
Kroger Co. 6% 7/1/00 Baa3 3,530 3,585
Pathmark Stores, Inc. 9.625% 5/1/03 Caa1 1,660 1,627
6,323
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Amazon.com, Inc. 0% 5/1/08 (d) Caa2 2,895 1,686
Guitar Center, Inc. 11% 7/1/06 B1 670 690
HMV Media Group PLC 10.25% 5/15/08 (f) B3 590 502
Home Interiors & Gifts, Inc. 10.125% 6/1/08 B2 650 601
(f)
J. Crew Group, Inc. 0% 10/15/08 (d) Caa3 2,080 749
J. Crew Operating Corp. 10.375% 10/15/07 Caa1 1,220 927
Metals USA, Inc. 8.625% 2/15/08 B2 1,020 867
U.S. Office Products Co. 9.75% 6/15/08 (f) B3 380 300
6,322
TOTAL RETAIL & WHOLESALE 27,245
SERVICES - 0.2%
LEASING & RENTAL - 0.1%
AP Holdings, Inc. 0% 3/15/08 (d) Caa2 370 167
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
SERVICES - CONTINUED
LEASING & RENTAL - CONTINUED
Apcoa, Inc. 9.25% 3/15/08 Caa1 $ 1,120 $ 997
Hollywood Entertainment Corp. 10.625% 8/15/04 B3 1,280 1,216
2,380
PRINTING - 0.1%
Sullivan Graphics, Inc. 12.75% 8/1/05 Caa1 1,810 1,792
SERVICES - 0.0%
Iron Mountain, Inc. 8.75% 9/30/09 B3 185 183
Medaphis Corp. 9.5% 2/15/05 B2 1,350 1,040
SITEL Corp. 9.25% 3/15/06 B2 120 89
1,312
TOTAL SERVICES 5,484
TECHNOLOGY - 0.6%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc.:
8.5% 1/15/08 B2 130 123
8.6% 6/1/08 B2 640 606
Jordan Telecommunication Products, Inc.:
0% 8/1/07 (d) B3 990 688
9.875% 8/1/07 B3 290 260
1,677
COMPUTER SERVICES & SOFTWARE - 0.1%
Concentric Network Corp. 12.75% 12/15/07 - 590 534
DecisionOne Corp. 9.75% 8/1/07 B3 360 180
DecisionOne Holdings Corp. 0% 8/1/08 unit (d) Caa1 930 233
ICG Services, Inc.:
0% 2/15/08 (d) - 2,050 1,005
0% 5/1/08 (d) - 210 99
2,051
COMPUTERS & OFFICE EQUIPMENT - 0.4%
CHS Electronics, Inc. 9.875% 4/15/05 B2 80 70
Comdisco, Inc.:
5.75% 2/15/01 Baa1 6,000 5,919
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
Comdisco, Inc.: - continued
6.1% 6/5/01 Baa1 $ 3,000 $ 3,068
6.375% 11/30/01 Baa1 4,500 4,491
13,548
ELECTRONIC INSTRUMENTS - 0.0%
Telecommunications Techniques Co. 9.75% B3 900 765
5/15/08 (f)
ELECTRONICS - 0.0%
Communications Instruments, Inc. 10% 9/15/04 B3 320 282
Hadco Corp. 9.5% 6/15/08 (f) B2 800 696
Insilco Corp. 10.25% 8/15/07 B3 390 394
1,372
TOTAL TECHNOLOGY 19,413
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.1%
Atlas Air, Inc. 9.25% 4/15/08 B3 410 379
Atlas Air, Inc. Pass Through Trust 12.25% Ba3 860 912
12/1/02
Delta Air Lines, Inc. equipment trust Baa1 729 803
certificate 8.54% 1/2/07
Kitty Hawk, Inc. 9.95% 11/15/04 B1 1,090 1,046
3,140
RAILROADS - 0.5%
Burlington Northern Santa Fe Corp.:
6.875% 12/1/27 Baa2 5,000 4,969
7.29% 6/1/36 Baa2 4,360 4,780
Norfolk Southern Corp. 7.05% 5/1/37 Baa1 5,800 6,231
15,980
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
TRANSPORTATION - CONTINUED
SHIPPING - 0.0%
Amer Reefer Co. Ltd. 10.25% 3/1/08 B1 $ 190 $ 143
Holt Group, Inc. 9.75% 1/15/06 (f) Caa1 820 541
684
TOTAL TRANSPORTATION 19,804
UTILITIES - 2.6%
CELLULAR - 0.9%
360 Degrees Communications Co.:
7.125% 3/1/03 Baa1 1,560 1,663
7.5% 3/1/06 Baa1 1,850 2,052
Cable & Wireless Communications PLC 6.375% Baa1 3,770 3,843
3/6/03
Cellnet Data Systems, Inc. 0% 10/1/07 (d) - 1,040 260
Dial Call Communications, Inc. 0% 12/15/05 B2 350 333
(d)
Iridium LLC/Iridium Capital Corp. 13% 7/15/05 B3 170 140
McCaw International Ltd. 0% 4/15/07 (d) Caa1 5,800 2,581
Millicom International Cellular SA 0% 6/1/06 Caa1 11,510 6,791
(d)
Nextel Communications, Inc.:
0% 8/15/04 (d) B2 1,810 1,665
0% 2/15/08 (d) B2 3,820 2,072
Nextel International, Inc. 0% 4/15/08 (d) Caa1 2,770 1,025
PageMart Nationwide, Inc. 0% 2/1/05 (d) B3 860 748
PageMart Wireless, Inc. 0% 2/1/08 (d) Caa2 700 329
Rogers Communications, Inc. 8.875% 7/15/07 B2 2,110 2,078
Telesystem International Wireless, Inc.:
0% 6/30/07 (d) Caa1 1,050 336
0% 11/1/07 (d) Caa1 2,080 562
Teligent, Inc. 0% 3/1/08 (d) Caa1 1,440 601
27,079
ELECTRIC UTILITY - 0.6%
Avon Energy Partners Holdings 6.46% 3/4/08 Baa2 3,500 3,527
(f)
DR Investments UK PLC yankee 7.1% 5/15/02 (f) A2 5,000 5,252
Israel Electric Corp. Ltd. 7.75% 12/15/27 (f) A3 7,040 6,497
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Niagara Mohawk Power Corp. 7.75% 10/1/08 Ba3 $ 630 $ 665
Texas Utilities Co. 6.375% 1/1/08 Baa3 2,780 2,832
18,773
GAS - 0.2%
Columbia Gas System, Inc. 6.61% 11/28/02 A3 6,000 6,229
TELEPHONE SERVICES - 0.9%
Covad Communications Group, Inc. 0% 3/15/08 - 1,340 469
(d)
Dobson Wireline Co. 12.25% 6/15/08 (f) - 930 777
DTI Holdings, Inc. 0% 3/1/08 (d) - 800 256
Firstworld Communications, Inc. 0% 4/15/08 - 170 49
unit (d)(f)
GST Network Funding, Inc. 0% 5/1/08 (d)(f) - 1,680 722
GST Telecommunications, Inc. 12.75% 11/15/07 - 1,060 890
Hyperion Telecommunications, Inc. 0% 4/15/03 B3 1,620 1,102
(d)
ICG Holdings, Inc. 0% 9/15/05 (d) - 880 680
IXC Communications, Inc. 9% 4/15/08 B3 1,810 1,787
KMC Telecom Holdings, Inc. 0% 2/15/08 (d) - 510 227
Level 3 Communications, Inc. 9.125% 5/1/08 B3 2,580 2,428
McLeodUSA, Inc.:
0% 3/1/07 (d) B2 1,800 1,278
9.25% 7/15/07 B2 160 162
Netia Holdings BV:
0% 11/1/07 (d) B3 450 221
10.25% 11/1/07 B3 300 234
NEXTLINK Communications LLC 12.5% 4/15/06 B3 320 338
NEXTLINK Communications, Inc.:
0% 4/15/08 (d) B3 250 134
9.625% 10/1/07 B3 320 302
Pathnet, Inc. 12.25% 4/15/08 - 530 376
Rhythms Netconnections, Inc. 0% 5/15/08 unit - 1,235 445
(d)(f)
Viatel, Inc.:
0% 4/15/08 (d) Caa1 140 68
11.25% 4/15/08 Caa1 190 171
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED)(B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
WinStar Communications, Inc.:
0% 10/15/05 (d) Caa1 $ 630 $ 460
0% 10/15/05 (d) Caa1 1,140 1,231
0% 3/15/08 (d) CCC 1,185 901
MCI WorldCom, Inc.:
6.4% 8/15/05 Baa2 3,215 3,340
8.875% 1/15/06 Baa2 5,667 6,210
9.375% 1/15/04 Baa2 1,228 1,278
26,536
TOTAL UTILITIES 78,617
TOTAL NONCONVERTIBLE BONDS 492,642
TOTAL CORPORATE BONDS 499,896
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - 3.5%
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.3%
Fannie Mae:
5.75% 6/15/05 Aaa 4,140 4,318
8.625% 6/30/04 Aaa 4,000 4,701
Farm Credit Systems Financial Assistance Aaa 3,400 4,050
Corp. 9.375% 7/21/03
Federal Agricultural Mortgage Corp. 7.01% Aaa 1,720 1,872
2/10/04
Federal Home Loan Bank:
7.36% 7/1/04 Aaa 1,590 1,776
7.38% 8/5/04 Aaa 3,790 4,242
7.56% 9/1/04 Aaa 5,530 6,245
7.7% 9/20/04 Aaa 1,170 1,331
Government Trust Certificates (assets of
Trust guaranteed by U.S. Government through
Defense Security Assistance Agency):
Class 1-C, 9.25% 11/15/01 Aaa 1,549 1,652
U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
U.S. GOVERNMENT AGENCY OBLIGATIONS - CONTINUED
Government Trust Certificates (assets of
Trust guaranteed by U.S. Government through
Defense Security Assistance Agency): -
continued
Class 2-E, 9.4% 5/15/02 Aaa $ 1,527 $ 1,621
Guaranteed Export Trust Certificates (assets
of Trust guaranteed by U.S. Government
through Export-Import Bank):
Series 1993-C, 5.2% 10/15/04 Aaa 340 343
Series 1993-D, 5.23% 5/15/05 Aaa 620 625
Series 1994-A, 7.12% 4/15/06 Aaa 597 645
Guaranteed Trade Trust Certificates (assets Aaa 493 537
of Trust guaranteed by U.S. Government
through Export-Import Bank) Series 1994-B,
7.5% 1/26/06
Overseas Private Investment Corp. U.S.
Government guaranteed participation
certificate:
Series 1994-195, 6.08% 8/15/04 (callable) Aaa 1,693 1,760
Series 1996-A1, 6.726% 9/15/10 (callable) - 5,000 5,336
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 41,054
U.S. TREASURY OBLIGATIONS - 2.2%
U.S. Treasury Bond:
6.375% 8/15/27 Aaa 485 559
6.875% 8/15/25 Aaa 13,235 16,029
7.625% 2/15/25 Aaa 9,930 13,056
U.S. Treasury Notes:
5.875% 11/30/01 Aaa 1,220 1,272
7% 7/15/06 Aaa 28,050 32,301
7.25% 8/15/04 Aaa 2,200 2,510
TOTAL U.S. TREASURY OBLIGATIONS 65,727
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY 106,781
OBLIGATIONS
U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES
- - 10.4%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
FANNIE MAE - 8.4%
5.5% 6/17/03 to 4/1/11 Aaa $ 70,910 $ 70,864
6% 6/1/11 to 11/1/28 Aaa 40,524 40,426
6.5% 2/1/24 to 11/1/28 Aaa 132,149 133,176
7% 7/1/25 to 7/1/28 Aaa 5,756 5,881
8.5% 2/1/28 Aaa 6,000 6,249
TOTAL FANNIE MAE 256,596
FREDDIE MAC - 0.2%
5.5% 5/11/03 Aaa 3,330 3,323
7% 1/22/01 to 8/1/01 Aaa 2,083 2,100
TOTAL FREDDIE MAC 5,423
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -
1.8%
7% 12/15/25 to 7/15/28 Aaa 2,513 2,573
7.5% 2/15/23 to 8/15/28 Aaa 41,413 42,657
8% 11/15/21 to 12/15/26 Aaa 11,081 11,493
TOTAL GOVERNMENT NATIONAL MORTGAGE 56,723
ASSOCIATION
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE 318,742
SECURITIES
ASSET-BACKED SECURITIES - 1.4%
Airplanes Pass Through Trust 10.875% 3/15/19 Ba2 1,570 1,617
Capital Equipment Receivables Trust 6.11% Aaa 6,350 6,359
7/15/99
Chase Manhattan Grantor Trust:
6.61% 9/15/02 Aaa 2,993 3,041
6.76% 9/15/02 A3 748 758
Chevy Chase Auto Receivables Trust:
5.9% 7/15/03 Aaa 2,754 2,766
5.91% 12/15/04 Aaa 1,484 1,493
6.6% 12/15/02 Aaa 917 927
Ford Credit Auto Owner Trust:
6.2% 12/15/02 Baa3 1,970 2,004
6.4% 5/15/02 A1 2,710 2,780
6.4% 12/15/02 Baa3 1,090 1,092
ASSET-BACKED SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Ford Credit Grantor Trust 5.9% 10/15/00 Aaa $ 357 $ 358
Green Tree Financial Corp. 6.1% 4/15/27 Aaa 681 681
Key Auto Finance Trust:
6.3% 10/15/03 A2 2,798 2,811
6.65% 10/15/03 Baa3 822 835
MBNA Master Credit Card Trust II 6.55% Aaa 9,000 9,531
1/15/07
Sears Credit Account Master Trust II 6.5% Aaa 6,280 6,309
10/15/03
TOTAL ASSET-BACKED SECURITIES 43,362
COMMERCIAL MORTGAGE SECURITIES - 0.9%
Berkeley Federal Bank & Trust FSB Series - 1,836 1,421
1994 Class 1-B 7.7149% 8/1/24 (f)(g)
CS First Boston Mortgage Securities Corp.:
Series 1997-C2 Class D, 7.27% 1/17/35 Baa2 3,070 2,874
Series 1998 FLI Class E, 6.1938% 1/10/13 Baa2 5,360 5,211
(f)(g)
DLJ Mortgage Acceptance Corp. Series - 700 705
1993-MF12 Class B-2, 10.1% 9/18/03 (f)
First Chicago/Lennar Trust I Series 1997-CHL1:
Class D, 8.1309% 4/13/39 (g) - 700 597
Class E, 8.1309% 4/1/39 (g) - 650 470
General Motors Acceptance Corp. Commercial Ba3 500 409
Mortgage Securities, Inc. Series 1996-C1
Class F, 7.86% 10/15/28 (f)
GS Mortgage Securities Corp. II Series Baa3 2,600 2,255
1998-GLII Class E, 7.1905% 4/13/31 (f)(g)
Morgan Stanley Capital I, Inc.:
Series 1996-MBL1 Class E, 8.3623% 5/25/21 - 738 725
(f)(g)
Series 1998 - CF1:
Class D, 7.35% 1/15/12 Baa2 2,451 2,330
Class E, 7.35% 12/15/12 Baa3 850 749
Penn Mutual Life Insurance Co. (The)/Penn - 1,250 831
Insurance & Annuity Co. Series 1996-PML
Class K, 7.9% 11/15/26 (f)
Resolution Trust Corp. Series 1991-M2 Class Ba3 270 224
A-3, 7.2498% 9/25/20 (g)
COMMERCIAL MORTGAGE SECURITIES - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
Structured Asset Securities Corp.:
sequential pay Series 1996 Class A-2A, 7.75% AAA $ 712 $ 716
2/25/28
Series 1993-C1 Class E, 6.6% 10/25/24 (f) B 500 225
Series 1995-C1 Class E, 7.375% 9/25/24 (f) BB 1,000 977
Thirteen Affiliates of General Growth Aaa 4,500 4,606
Properties, Inc. sequential pay Series A-2,
6.602% 12/15/10 (f)
Wells Fargo Capital Markets Apartment Aaa 1,727 1,769
Financing Trust Series APT Class 1, 6.56%
12/29/05 (f)
TOTAL COMMERCIAL MORTGAGE SECURITIES 27,094
FOREIGN GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS - 0.3%
Quebec Province yankee 6.86% 4/15/26 (e)(i) A2 8,000 8,273
(Cost $7,698)
SUPRANATIONAL OBLIGATIONS - 0.1%
Inter American Development Bank yankee 6.29% Aaa 4,000 4,256
7/16/27 (Cost $3,975)
CERTIFICATES OF DEPOSIT - 0.1%
Canadian Imperial Bank of Commerce, New York 3,000 3,049
yankee 6.2% 8/1/00 (Cost $3,005)
CASH EQUIVALENTS - 6.9%
SHARES
Taxable Central Cash Fund (c) (Cost $209,376) 209,375,876 209,376
TOTAL INVESTMENT IN SECURITIES - 100% $ 3,053,974
</TABLE>
ACES - Automatic Common Exchange
Securities
QUIPS - Quarterly Income Preferred Securities
LEGEND
(a) Non-income producing
(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(c) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(d) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.
(e) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.
(f) 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 $96,759,000 or 3.2% of net assets.
(g) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(h) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
SECURITY ACQUISTION DATE ACQUISITION COST (000S)
Mothers Work, Inc. 6/18/98 1
(i) 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 advisor, based pricipally on S&P and Moody's ratings
of the sovereign credit of the issuing government.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 20.3% AAA, AA, A 19.3%
Baa 6.4% BBB 7.1%
Ba 1.3% BB 1.3%
B 3.1% B 3.1%
Caa 1.1% CCC 1.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings
for the sovereign credit of the issuing government. The percentage not
rated by Moody's or S&P amounted to 0.7%. FMR has determined that
unrated debt securities that are lower quality account for 0.1% of the
total value of investment in securities.
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $2,637,411,000. Net unrealized appreciation
aggregated $416,563,000, of which $497,635,000 related to appreciated
investment securities and $81,072,000 related to depreciated
investment securities.
SECURITY TYPE ABBREVIATIONS
The fund hereby designates approximately $151,292,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE
AMOUNTS) NOVEMBER 30, 1998 OCTOBER 31, 1998
ASSETS
Investment in securities, at value (cost $ 3,225,233 $ 3,053,974
$2,716,878 and $2,636,161, respectively) -
See accompanying schedules
Cash 1,054 4
Receivable for investments sold 3,151 24,170
Receivable for fund shares sold 2,888 3,318
Dividends receivable 3,450 2,723
Interest receivable 14,058 15,387
Other receivables 344 374
TOTAL ASSETS 3,250,178 3,099,950
LIABILITIES
Payable for investments purchased Regular $ 9,839 $ 41,890
delivery
Delayed delivery 78,160
Payable for fund shares redeemed 7,449 3,913
Accrued management fee 1,134 1,088
Distribution fees payable 1,298 1,230
Other payables and accrued expenses 577 573
TOTAL LIABILITIES 98,457 48,694
NET ASSETS $ 3,151,721 $ 3,051,256
Net Assets consist of:
Paid in capital $ 2,348,639 $ 2,304,183
Undistributed net investment income 13,757 6,423
Accumulated undistributed net realized gain 280,959 322,776
(loss) on investments and foreign currency
transactions
Net unrealized appreciation (depreciation) 508,366 417,874
on investments and assets and liabilities
in foreign currencies
NET ASSETS $ 3,151,721 $ 3,051,256
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE
AMOUNTS) NOVEMBER 30, 1998 OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE CLASS $19.91 $19.25
A: NET ASSET VALUE and redemption price per
share ($16,859 (divided by) 846.7 shares)
and ($15,517 (divided by) 806 shares),
respectively
Maximum offering price per share (100/94.25 $21.12 $20.42
of $19.91 and $19.25), respectively
CLASS T: NET ASSET VALUE and redemption $19.96 $19.30
price per share ($2,993,364 (divided by)
149,980 shares) and ($2,903,025 (divided
by) 150,451 shares), respectively
Maximum offering price per share (100/96.50 $20.68 $20.00
of $19.96 and $19.30), respectively
CLASS B: NET ASSET VALUE and offering price $19.86 $19.21
per share ($57,263 (divided by) 2,883
shares) A and ($51,226 (divided by) 2,666
shares) A, respectively
CLASS C: NET ASSET VALUE and offering price $19.88 $19.22
per share ($21,099 (divided by) 1,061.5
shares) A and ($20,443 (divided by) 1,063.4
shares) A, respectively
INSTITUTIONAL CLASS: NET ASSET VALUE, $20.03 $19.35
offering price and redemption price per
share ($63,136 (divided by) 3,152.1 shares)
and ($61,045 (divided by) 3,154 shares),
respectively
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 3,359 $ 39,312
Interest 6,845 79,524
TOTAL INCOME 10,204 118,836
EXPENSES
Management fee $ 1,136 $ 13,701
Transfer agent fees 479 5,411
Distribution fees 1,297 15,486
Accounting fees and expenses 67 811
Non-interested trustees' compensation - 18
Custodian fees and expenses 8 119
Registration fees 20 109
Audit 10 93
Legal 3 14
Interest - 16
Reports to shareholders - 243
Miscellaneous - 10
Total expenses before reductions 3,020 36,031
Expense reductions (14) (366)
3,006 35,665
NET INVESTMENT INCOME 7,198 83,171
REALIZED AND UNREALIZED GAIN (LOSS)
Investment securities 7,154 324,836
Foreign currency transactions 8 61
7,162 324,897
Change in net unrealized appreciation
(depreciation) on:
Investment securities 90,542 (33,500)
Assets and liabilities in foreign currencies (50) 39
90,492 (33,461)
NET GAIN (LOSS) 97,654 291,436
NET INCREASE (DECREASE) IN NET ASSETS $ 104,852 $ 374,607
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
INCREASE (DECREASE) IN NET ASSETS
Operations Net investment income $ 7,198 $ 83,171
Net realized gain (loss) 7,162 324,897
Change in net unrealized appreciation 90,492 (33,461)
(depreciation)
NET INCREASE (DECREASE) IN NET ASSETS 104,852 374,607
RESULTING FROM OPERATIONS
Distributions to shareholders From net - (86,685)
investment income
From net realized gain - (198,222)
TOTAL DISTRIBUTIONS - (284,907)
Share transactions - net increase (decrease) (4,387) (2,113)
TOTAL INCREASE (DECREASE) IN NET ASSETS 100,465 87,587
NET ASSETS
Beginning of period 3,051,256 2,963,669
End of period (including undistributed net $ 3,151,721 $ 3,051,256
investment income of $13,757, $6,423 and
$9,114, respectively)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
AMOUNTS IN THOUSANDS YEAR ENDED OCTOBER 31, 1997
INCREASE (DECREASE) IN NET ASSETS
Operations Net investment income $ 87,934
Net realized gain (loss) 229,624
Change in net unrealized appreciation 251,899
(depreciation)
NET INCREASE (DECREASE) IN NET ASSETS 569,457
RESULTING FROM OPERATIONS
Distributions to shareholders From net (90,048)
investment income
From net realized gain (19,449)
TOTAL DISTRIBUTIONS (109,497)
Share transactions - net increase (decrease) (512,007)
TOTAL INCREASE (DECREASE) IN NET ASSETS (52,047)
NET ASSETS
Beginning of period 3,015,716
End of period (including undistributed net $ 2,963,669
investment income of $13,757, $6,423 and
$9,114, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
ONE MONTH ENDED NOVEMBER 30, 1998 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.25 $ 18.75 $ 16.04 $ 15.22
Income from Investment Operations
Net investment income D .05 .53 .48 .08
Net realized and unrealized gain (loss) .61 1.80 2.83 .88
Total from investment operations .66 2.33 3.31 .96
Less Distributions
From net investment income - (.57) (.49) (.14)
From net realized gain - (1.26) (.11) -
Total distributions - (1.83) (.60) (.14)
Net asset value, end of period $ 19.91 $ 19.25 $ 18.75 $ 16.04
TOTAL RETURN B, C 3.43% 13.04% 20.99% 6.34%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 17 $ 16 $ 8 $ 1
Ratio of expenses to average net assets 1.02% A 1.05% 1.41% F 1.50% A, F
Ratio of expenses to average net assets 1.02% A 1.02% G 1.40% G 1.49% A, G
after expense reductions
Ratio of net investment income to average 3.13% A 2.76% 2.68% 3.07% A
net assets
Portfolio turnover 73% A 85% 70% 223%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 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 NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G 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 7 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, YEARS ENDED OCTOBER 31,
1998 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.30 $ 18.79 $ 16.07 $ 15.30 $ 14.67
Income from Investment Operations
Net investment income .05 C .51 C .53 C .51 C .59
Net realized and unrealized gain (loss) .61 1.80 2.84 .88 .54
Total from investment operations .66 2.31 3.37 1.39 1.13
Less Distributions
From net investment income - (.54) (.54) (.59) (.50)
In excess of net investment income - - - - -
From net realized gain - (1.26) (.11) (.03) -
Return of capital - - - - -
Total distributions - (1.80) (.65) (.62) (.50)
Net asset value, end of period $ 19.96 $ 19.30 $ 18.79 $ 16.07 $ 15.30
TOTAL RETURN A, B 3.42% 12.90% 21.36% 9.30% 7.85%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 2,993 $ 2,903 $ 2,901 $ 2,993 $ 3,441
Ratio of expenses to average net assets 1.22% D 1.16% 1.17% 1.26% 1.47%
Ratio of expenses to average net assets 1.22% D 1.15% E 1.17% 1.25% E 1.46% E
after expense reductions
Ratio of net investment income to average 2.92% D 2.68% 2.98% 3.32% 3.99%
net assets
Portfolio turnover 73% D 85% 70% 223% 297%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 15.91
Income from Investment Operations
Net investment income .38
Net realized and unrealized gain (loss) (.79)
Total from investment operations (.41)
Less Distributions
From net investment income (.28)
In excess of net investment income (.02)
From net realized gain (.49)
Return of capital (.04)
Total distributions (.83)
Net asset value, end of period $ 14.67
TOTAL RETURN A, B (2.69)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 3,129
Ratio of expenses to average net assets 1.59%
Ratio of expenses to average net assets 1.58% E
after expense reductions
Ratio of net investment income to average 3.79%
net assets
Portfolio turnover 202%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D ANNUALIZED
A 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 7 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, YEARS ENDED OCTOBER 31,
1998 1998 1997 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.21 $ 18.71 $ 16.36
Income from Investment Operations
Net investment income D .04 .38 .29
Net realized and unrealized gain (loss) .61 1.81 2.38
Total from investment operations .65 2.19 2.67
Less Distributions
From net investment income - (.43) (.32)
From net realized gain - (1.26) -
Total distributions - (1.69) (.32)
Net asset value, end of period $ 19.86 $ 19.21 $ 18.71
TOTAL RETURN B, C 3.38% 12.25% 16.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 57 $ 51 $ 16
Ratio of expenses to average net assets 1.80% A 1.74% 2.12% A
Ratio of expenses to average net assets 1.80% A 1.73% F 2.11% A, F
after expense reductions
Ratio of net investment income to average 2.35% A 2.02% 1.88% A
net assets
Portfolio turnover 73% A 85% 70%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO OCTOBER 31, 1997.
F 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 7 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS C
ONE MONTH ENDED NOVEMBER 30, YEAR ENDED OCTOBER 31,
1998 1998 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.22 $ 19.05
Income from Investment Operations
Net investment income D .04 .36
Net realized and unrealized gain (loss) .62 1.56
Total from investment operations .66 1.92
Less Distributions
From net investment income - (.49)
From net realized gain - (1.26)
Total distributions - (1.75)
Net asset value, end of period $ 19.88 $ 19.22
TOTAL RETURN B, C 3.43% 10.62%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 21 $ 20
Ratio of expenses to average net assets 1.77% A 1.80% A, G
Ratio of expenses to average net assets 1.76% A, F 1.79% A, F
after expense reductions
Ratio of net investment income to average 2.37% A 1.89% A
net assets
Portfolio turnover 73% A 85%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
F 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 7 OF NOTES TO FINANCIAL STATEMENTS).
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, YEARS ENDED OCTOBER 31,
1998 1998 1997 1996 1995 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.35 $ 18.85 $ 16.11 $ 15.40 $ 15.23
Income from Investment Operations
Net investment income .05 D .60 D .61 D .54 D .25
Net realized and unrealized gain (loss) .63 1.81 2.86 .87 .09
Total from investment operations .68 2.41 3.47 1.41 .34
Less Distributions
From net investment income - (.65) (.62) (.67) (.17)
From net realized gain - (1.26) (.11) (.03) -
Total distributions - (1.91) (.73) (.70) (.17)
Net asset value, end of period $ 20.03 $ 19.35 $ 18.85 $ 16.11 $ 15.40
TOTAL RETURN B, C 3.51% 13.45% 21.97% 9.41% 2.22%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 63 $ 61 $ 39 $ 22 $ 1
Ratio of expenses to average net assets .66% A .65% .69% 1.06% .92% A, F
Ratio of expenses to average net assets .66% A .63% G .69% 1.03% G .91% A, G
after expense reductions
Ratio of net investment income to average 3.48% A 3.15% 3.42% 3.54% 4.54% A
net assets
Portfolio turnover 73% A 85% 70% 223% 297%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
A NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
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
(SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the periods ended November 30, 1998 and October 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Balanced Fund (the 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, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Class B shares will automatically convert
to Class A shares after a holding period of seven years from the
initial date of purchase. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. At a special meeting of the shareholders of the fund held
on May 13, 1998, shareholders approved an Agreement and Plan of
Reorganization, providing for the reorganization of the fund into
Fidelity Advisor Series I, effective on or about February 26, 1999.
Effective November 30, 1998, the Board of Trustees approved a change
in the fiscal year-end of the fund to November 30. Accordingly, the
financial statements of the fund are presented as of and for the year
ended October 31, 1998 and as of and for the one-month period ended
November 30, 1998. 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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
each period's end. Purchases and sales of securities, income receipts
and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. 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 the fiscal year. The schedules of investments
include 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
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
differing treatments for litigation proceeds, paydown gains/losses on
certain securities, foreign currency transactions, passive foreign
investment companies (PFIC), market discount, partnerships, 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.
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.
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 Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
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 Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end
2. OPERATING POLICIES - CONTINUED
TAXABLE CENTRAL CASH FUND - CONTINUED
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
U.S. Treasury securities and repurchase agreements for these
securities. Income distributions from the Cash Fund are declared daily
and paid monthly from net interest income. Income distributions earned
by the fund are recorded as interest income in the accompanying
financial statements.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the fund, along with other registered investment companies
having management contracts with FMR, may participate in an interfund
lending program. This program provides an alternative credit facility
allowing the fund to borrow from, or lend money to, other
participating funds.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a delayed delivery basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of
the underlying securities and the date when the securities will be
delivered and paid for are fixed at the time the transaction is
negotiated. The market values of the securities purchased or sold on a
delayed delivery basis are identified as such in the fund's schedule
of investments. The fund may receive compensation for interest forgone
in the purchase of a delayed delivery security. With respect to
purchase commitments, the fund identifies securities as segregated in
its custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under
the contract.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of each period, the fund had $1,000 invested in restricted
securities.
3. PURCHASES AND SALES OF INVESTMENTS.
For the one month period ended November 30, 1998, purchases and sales
of securities, other than short-term securities, aggregated
$239,482,000 and $167,735,000, respectively, of which U.S. government
and government agency obligations aggregated $121,356,000 and
$130,743,000, respectively.
3. PURCHASES AND SALES OF INVESTMENTS - CONTINUED
For the year ended October 31, 1998, purchases and sales of
securities, other than short-term securities, aggregated
$2,540,272,000 and $2,881,243,000, respectively, of which U.S.
government and government agency obligations aggregated $781,296,000
and $864,368,000, 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
periods. The annual individual fund fee rate is .15%. In the event
that these rates were lower than the contractual rates in effect
during the periods, FMR voluntarily implemented the above rates, as
they resulted in the same or a lower management fee. For the one month
period ended November 30, 1998, the management fee was equivalent to
an annualized rate of .46% of average net assets. For the year ended
October 31, 1998, the management fee was equivalent to an annual rate
of .44% of average net assets .
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the periods, this fee was 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% *
CLASS C 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 periods, each class paid FDC the following amounts, a portion
of which was retained by FDC:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
PAID TO FDC RETAINED BY FDC PAID TO FDC RETAINED BY FDC
CLASS A $ 3,000 $ 0 $ 29,000 $ 0
CLASS T 1,232,000 22,000 15,039,000 139,000
CLASS B 45,000 34,000 323,000 242,000
CLASS C 17,000 17,000 95,000 95,000
$ 1,297,000 $ 73,000 $ 15,486,000 $ 476,000
</TABLE>
Under the Plans, FMR may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The
Plans also authorize payments to third parties that assist in the sale
of each class' shares or render shareholder support services. For the
periods, the following amounts were paid to third parties under the
Plans:
NOVEMBER 30, 1998 OCTOBER 31, 1998
CLASS A $ 0 $ 5,000
CLASS T 25,000 450,000
CLASS B 1,000 9,000
CLASS C 0 6,000
INSTITUTIONAL CLASS 1,000 12,000
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the periods, sales charge amounts paid to and retained by FDC were
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
PAID TO FDC RETAINED BY FDC PAID TO FDC RETAINED BY FDC
CLASS A $ 22,000 $ 9,000 $ 173,000 $ 57,000
CLASS T 58,000 21,000 940,000 263,000
CLASS B 10,000 10,000* 48,000 48,000*
CLASS C 1,000 1,000* 6,000 6,000 *
$ 91,000 $ 41,000 $ 1,167,000 $ 374,000
</TABLE>
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the periods, the following amounts were paid to FIIOC:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
AMOUNT % OF AVERAGE NET ASSETS* AMOUNT
CLASS A $ 3,000 .26 $ 26,000
CLASS T 454,000 .19 5,221,000
CLASS B 10,000 .25 78,000
CLASS C 4,000 .21 19,000
INSTITUTIONAL CLASS 8,000 .16 67,000
$ 479,000 $ 5,411,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
% OF AVERAGE NET ASSETS
CLASS A .23
CLASS T .17
CLASS B .24
CLASS C .19 *
INSTITUTIONAL CLASS .14
</TABLE>
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, 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 $7,000 and $334,000
for the periods ended November 30, 1998 and October 31, 1998,
respectively.
5. INTERFUND LENDING PROGRAM.
During the fiscal year ended October 31, 1998, the fund participated
in the interfund lending program as a borrower. The maximum loan and
the average daily loan balances during the period for which loans were
outstanding amounted to $33,770,000 and $24,426,000, respectively. The
weighted average interest rate was 5.70%. Interest expense includes
$8,000 paid under the interfund lending program.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time.
For the fiscal year ended October 31, 1998, the maximum loan and the
average daily loan balance during the period for which the loan was
outstanding amounted to $12,591,000. The weighted average interest
rate was 5.94%. Interest expense includes $8,000 paid under the bank
borrowing program.
7. 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. For the fiscal year ended October 31, 1998,
amounts reimbursed were as follows:
FMR EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 1.05% $ 0
CLASS T 1.30% 0
CLASS B 1.80% 0
CLASS C 1.80% 2,000
INSTITUTIONAL CLASS .80% 0
$ 2,000
Effective December 1, 1998, these expense limitations were eliminated.
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the periods ended November 30,
1998 and October 31, 1998, the fund's expenses were reduced by $14,000
and $345,000, respectively, under this arrangement.
7. EXPENSE REDUCTIONS - CONTINUED
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances were used to reduce a portion of expenses. For the
periods ended November 30, 1998 and October 31, 1998, the fund's
custodian fees were reduced by $0 and $16,000, respectively, under the
custodian arrangement, and each applicable class' expenses were
reduced as follows under the transfer agent arrangements:
<TABLE>
<CAPTION>
<S> <C> <C>
TRANSFER AGENT CREDITS NOVEMBER 30, 1998 TRANSFER AGENT CREDITS OCTOBER 31, 1998
CLASS A $ - $ 1,000
INSTITUTIONAL CLASS - 2,000
$ - $ 3,000
</TABLE>
8. BENEFICIAL INTEREST.
For the periods ended November 30, 1998 and October 31, 1998, one
shareholder was record owner of approximately 18.2% of the total
outstanding shares of the fund.
9. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS ONE MONTH ENDED YEARS ENDED
NOVEMBER 30, 1998 OCTOBER 31, 1998 A OCTOBER 31, 1997 B
FROM NET INVESTMENT INCOME
Class A $ - $ 338 $ 111
Class T - 83,919 88,845
Class B - 696 137
Class C - 203 -
Institutional Class - 1,529 955
Total $ - $ 86,685 $ 90,048
FROM NET REALIZED GAIN
Class A $ - $ 553 $ 12
Class T - 193,978 19,290
Class B - 1,214 -
Class C - 13 -
Institutional Class - 2,464 147
Total $ - $ 198,222 $ 19,449
Total $ - $ 284,907 $ 109,497
</TABLE>
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
B DISTRIBUTIONS FOR CLASS B ARE FOR THE PERIOD DECEMBER 31, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1997.
10. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS SHARES
ONE MONTH YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1998 1998 A 1997 B
CLASS A Shares sold 55 505 398
Reinvestment of distributions - 45 7
Shares redeemed (14) (147) (75)
Net increase (decrease) 41 403 330
CLASS T Shares sold 1,793 25,522 26,574
Reinvestment of distributions - 14,265 5,886
Shares redeemed (2,264) (43,766) (64,227)
Net increase (decrease) (471) (3,979) (31,767)
CLASS B Shares sold 246 2,157 1,099
Reinvestment of distributions - 93 7
Shares redeemed (29) (437) (253)
Net increase (decrease) 217 1,813 853
CLASS C Shares sold 47 1,132 -
Reinvestment of distributions - 9 -
Shares redeemed (49) (78) -
Net increase (decrease) (2) 1,063 -
INSTITUTIONAL CLASS Shares sold 47 2,017 1,168
Reinvestment of distributions - 209 60
Shares redeemed (49) (1,137) (517)
Net increase (decrease) (2) 1,089 711
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD DECEMBER 31, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1997.
10. SHARE TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS DOLLARS
ONE MONTH YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1998 1998 A 1997 B
CLASS A Shares sold $ 1,069 $ 9,665 $ 7,127
Reinvestment of distributions - 832 117
Shares redeemed (275) (2,810) (1,376)
Net increase (decrease) $ 794 $ 7,687 $ 5,868
CLASS T Shares sold $ 35,217 $ 487,737 $ 469,471
Reinvestment of distributions - 263,355 101,958
Shares redeemed (44,571) (837,890) (1,117,978)
Net increase (decrease) $ (9,354) $ (86,798) $ (546,549)
CLASS B Shares sold $ 4,821 $ 41,474 $ 20,123
Reinvestment of distributions - 1,711 128
Shares redeemed (572) (8,440) (4,772)
Net increase (decrease) $ 4,249 $ 34,745 $ 15,479
CLASS C Shares sold $ 924 $ 21,768 $ -
Reinvestment of distributions - 173 -
Shares redeemed (973) (1,484) -
Net increase (decrease) $ (49) $ 20,457 $ -
INSTITUTIONAL CLASS Shares sold $ 933 $ 39,736 $ 21,544
Reinvestment of distributions - 3,869 1,061
Shares redeemed (960) (21,809) (9,410)
Net increase (decrease) $ (27) $ 21,796 $ 13,195
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
B SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD DECEMBER 31, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1997.
11. REGISTRATION FEES.
For the periods, each class paid the following amounts to register its
shares for sale:
<TABLE>
<CAPTION>
<S> <C> <C>
ONE MONTH ENDED NOVEMBER 30, 1998 YEAR ENDED OCTOBER 31, 1998
CLASS A $ - $ 8,000
CLASS T 20,000 64,000
CLASS B - 10,000
CLASS C - 15,000
INSTITUTIONAL CLASS - 12,000
$ 20,000 $ 109,000
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series II and the Shareholders of
Fidelity Advisor Balanced Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Balanced Fund (a fund of Fidelity Advisor Series II)
at November 30, 1998 and October 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights
for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fidelity Advisor Balanced Fund's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at November 30, 1998 and October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 4, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Balanced Fund voted to pay
to shareholders of record at the opening of business on record date,
the following distributions derived from capital gains realized from
sales of portfolio securities, and dividends derived from net
investment income:
INSTITUTIONAL CLASS
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $.18 $.16
SHORT-TERM
CAPITAL GAINS $.60 $.04
LONG-TERM
CAPITAL GAINS $.66 $1.69
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 52.54% -
20% rate 47.46% 100%
A total of 2.35% of the dividends distributed during the fiscal year
ended October 31, 1998, was derived from interest on U.S. Government
securities which is generally exempt from state income tax.
A total of 19% of Institutional Class' dividends distributed during
the fiscal year ended October 31, 1998, qualifies for the
dividends-received deductions for corporate shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
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
Richard C. Pozen, Senior Vice President
Richard A. Spillane, Jr., Vice President
Kevin Grant, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Richard C. Pozen
Thomas R. Williams *
* INDEPENDENT TRUSTEES
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
AIGI-ANN-0199 67050
1.538596.101
(FIDELITY LOGO)
(registered trademark)
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