As filed with the Securities and Exchange Commission
on December 23, 1999
Registration No. 33-___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
Fidelity Advisor Series II
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Offices)
Registrant's Telephone Number (617) 563-7000
Eric D. Roiter, Secretary
82 Devonshire Street
Boston, MA 02109
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective under the
Securities Act of 1933.
The Registrant has registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Section 24(f) under the
Investment Company Act of 1940; accordingly, no fee is payable
herewith because of reliance upon Section 24(f). Pursuant to Rule 429,
this Registration Statement relates to shares previously registered on
Form N-1A.
It is proposed that this filing will become effective on January 28,
2000, pursuant to Rule 488.
Fidelity Advisor Municipal Income Fund
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and
documents:
Facing Page
Contents of Registration Statement
Solicitation Letter to Shareholders
Form of Proxy Card
Notice of Special Meeting
Part A - Proxy Statement and Prospectus
Part B- Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
IMPORTANT PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
Dear Shareholder:
I am writing to ask you for your vote on an important proposal to
merge Fidelity Advisor Intermediate Municipal Income Fund into
Fidelity Advisor Municipal Income Fund. A shareholder meeting is
scheduled for April 19, 2000. Votes received in time to be counted at
the meeting will decide whether the merger takes place. This package
contains information about the proposal and includes all the materials
you will need to vote by mail.
The fund's Board of Trustees has reviewed the proposed merger and has
recommended that the proposed merger be presented to shareholders.
The Trustees, most of whom are not affiliated with Fidelity, are
responsible for protecting your interests as a shareholder. The
Trustees have determined that the proposed merger is in shareholders'
best interest. However, the final decision is up to you.
The proposed merger would give shareholders of Fidelity Advisor
Intermediate Municipal Income Fund the opportunity to participate in a
larger fund with generally similar investment policies. The combined
fund would also have lower expenses. As you know, in anticipation of
the proposed merger, Fidelity Advisor Intermediate Municipal Income
Fund was closed to new investments at the close of business on
December 29, 1999. We have attached a Q&A to assist you in
understanding the proposal. The enclosed proxy statement includes a
detailed description of the proposed merger.
Please read the enclosed materials and promptly cast your vote on the
proxy card. You are entitled to one vote for each dollar of net asset
value you own of the fund on the record date, which is February 23,
2000. Your vote is extremely important, no matter how large or small
your holdings may be.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED.
To cast your vote, simply complete the proxy card enclosed in this
package. Be sure to sign the card before mailing it in the
postage-paid envelope provided.
If you have any questions before you vote, please call us at
1-800-522-7297. We will be glad to help you get your vote in quickly.
Thank you for your participation in this important initiative for your
fund.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Important information to help you understand and vote on the proposal
Please read the full text of the enclosed proxy statement. Below is a
brief overview of the proposal to be voted upon. Your vote is
important. We appreciate you placing your trust in Fidelity and look
forward to helping you achieve your financial goals.
WHAT PROPOSAL AM I BEING ASKED TO VOTE ON?
You are being asked to approve a merger of Fidelity Advisor
Intermediate Municipal Income Fund into Fidelity Advisor Municipal
Income Fund.
WHAT IS THE REASON FOR AND ADVANTAGES OF THIS MERGER?
The proposed merger would combine a small fund into a larger fund and
provide shareholders of Advisor Intermediate Municipal Income Fund
with a fund that has lower annual expenses. The proposed merger is
part of a wider strategy by Fidelity to consolidate the municipal bond
fund product line and increase operational efficiencies.
ARE THE FUNDS MANAGED SIMILARLY?
Both funds are managed similarly, except that Advisor Intermediate
Municipal Income Fund has a more conservative investment objective and
shorter maturity than Advisor Municipal Income Fund. Advisor
Intermediate Municipal Fund seeks the highest level of income exempt
from federal income taxes that can be obtained consistent with the
preservation of capital. Advisor Municipal Income Fund seeks to
provide a high current yield exempt from federal income tax. Each
fund normally invests at least 80% of assets in municipal securities
whose interest is exempt from federal income tax.
HOW DO THE EXPENSE AND LOAD STRUCTURES OF THE FUNDS COMPARE?
Fidelity Advisor Intermediate Municipal Income Fund and Fidelity
Advisor Municipal Income Fund have similar expense structures in that
each fund pays a management fee and other expenses. Each fund offers
five classes of shares and certain classes of each fund pay
distribution fees. The sum of the management fee, the distribution
fee (if applicable), and other expenses is a class's total expenses.
As of October 31, 1999, the total expenses of each class of Fidelity
Advisor Municipal Income Fund were below the total expenses of each
class of Fidelity Advisor Intermediate Municipal Income Fund.
Therefore, the reorganization would provide Fidelity Advisor
Intermediate Municipal Income shareholders with a fund with lower
total expenses for each class.
Fidelity Advisor Intermediate Municipal Income Fund generally has
lower loads and contingent deferred sales charges than Fidelity
Advisor Municipal Income Fund. The higher loads and contingent
deferred sales charges of Fidelity Advisor Municipal Income Fund will
affect additional investments made after the merger.
IS THE MERGER A TAXABLE EVENT FOR FEDERAL INCOME TAX PURPOSES?
Typically, the exchange of shares in a merger is not a taxable event
(i.e., no gain or loss is recognized for federal income tax purposes)
to the fund's shareholders.
WHAT WILL BE THE NAME OF THE COMBINED FUND AFTER THE MERGER IS
COMPLETED?
If shareholders of Fidelity Advisor Intermediate Municipal Income Fund
approve the merger of their fund into Fidelity Advisor Municipal
Income Fund, the combined fund's name will remain Fidelity Advisor
Municipal Income Fund.
WHAT WILL BE THE SIZE OF FIDELITY ADVISOR MUNICIPAL INCOME FUND AFTER
THE MERGER?
If the proposal is approved, the combined fund is anticipated to have
over $475 million in assets, based on current asset levels.
HOW WILL YOU DETERMINE THE NUMBER OF SHARES OF FIDELITY ADVISOR
MUNICIPAL INCOME FUND THAT I WILL RECEIVE?
Shareholders will receive the number of full and fractional shares of
the corresponding class of Fidelity Advisor Municipal Income Fund that
is equal in value to the net asset value of their shares of Fidelity
Advisor Intermediate Municipal Income Fund as determined on the
Closing Date of the merger. The anticipated Closing Date is May 25,
2000.
WHAT IF THERE ARE NOT ENOUGH VOTES TO REACH QUORUM BY THE SCHEDULED
SHAREHOLDER MEETING DATE?
In that case, Fidelity, or D.F. King & Co., Inc. or Management
Information Services Corp., proxy solicitation firms, may contact you
by mail or telephone. Therefore, we encourage shareholders to vote as
soon as they review the enclosed proxy materials to avoid additional
mailings or telephone calls.
If there are not sufficient votes to approve the proposal by the time
of the shareholder meeting (April 19, 2000), the meeting may be
adjourned to permit further solicitation of proxy votes.
HAS THE FUND'S BOARD OF TRUSTEES APPROVED THE PROPOSAL?
Yes. The Board of Trustees has unanimously approved the proposal and
recommends that you vote to approve it.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each dollar of net
asset value you own of Fidelity Advisor Intermediate Municipal Income
Fund on the record date. The record date is February 23, 2000.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card, and mailing it in the enclosed postage paid envelope. If you
need any assistance, or have any questions regarding the proposal or
how to vote your shares, please call Fidelity at 800-522-7297.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the proxy card.
JOINT ACCOUNTS: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust should sign, "Ann B.
Collins, Trustee."
PROTOTYPE FOR STANDARD MERGER PROXY CARD
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ---------------------------------------------------------------------
FIDELITY ADVISOR SERIES II:
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Eric Roiter, and Gerald McDonough, or any one or more
of them, attorneys, with full power of substitution, to vote all
shares of Fidelity Advisor Series II: Fidelity Advisor Intermediate
Municipal Income Fund, which the undersigned is entitled to vote at
the Special Meeting of Shareholders of the fund to be held at an
office of the trust at 27 State Street, 10th Floor, Boston, MA 02109,
on April 19, 2000, at 11:15 a.m. Eastern time and at any adjournments
thereof. All powers may be exercised by a majority of said proxy
holders or substitutes voting or acting or, if only one votes and
acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side.
Receipt of the Notice of the Meeting and the accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears
on this Proxy. When signing in a fiduciary
capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so
indicate. Corporate and partnership proxies
should be signed by an authorized person
indicating the person's title.
Date
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
CUSIP # 315917807/fund #262
CUSIP # 315917401/fund #289
CUSIP # 315917609/fund #689 CUSIP # 315917872/fund #525 CUSIP #
315917302/fund #089
Please refer to the Proxy Statement discussion of this matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSAL.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
- ----------------------------------------------------------------------
_____________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. To approve an Agreement and FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
Plan of Reorganization
between Fidelity Advisor
Intermediate Municipal
Income Fund and Fidelity
Advisor Municipal Income Fund.
</TABLE>
MET-PXC-0200 CUSIP # 315917807/fund #262
CUSIP # 315917401/fund #289
CUSIP # 315917609/fund #689 CUSIP # 315917872/fund #525 CUSIP #
315917302/fund #089
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND
A FUND OF
FIDELITY ADVISOR SERIES II
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
CLASS A, CLASS T, CLASS B, CLASS C, AND INSTITUTIONAL CLASS
1-800-522-7297
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Fidelity Advisor Intermediate Municipal Income
Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Advisor Intermediate Municipal Income Fund will
be held at an office of Fidelity Advisor Series II (the trust), 27
State Street, 10th Floor, Boston, Massachusetts 02109 on April 19,
2000, at 11:15 a.m. Eastern time. The purpose of the Meeting is to
consider and act upon the following proposal, and to transact such
other business as may properly come before the Meeting or any
adjournments thereof.
(1) To approve an Agreement and Plan of Reorganization between
Fidelity Advisor Intermediate Municipal Income Fund and Fidelity
Advisor Municipal Income Fund, another fund of the trust, providing
for the transfer of all of the assets of Fidelity Advisor Intermediate
Municipal Income Fund to Fidelity Advisor Municipal Income Fund in
exchange solely for shares of beneficial interest in Class A, Class T,
Class B, Class C, and Institutional Class of Fidelity Advisor
Municipal Income Fund and the assumption by Fidelity Advisor Municipal
Income Fund of Fidelity Advisor Intermediate Municipal Income Fund's
liabilities, followed by the distribution of such shares to
shareholders of the corresponding class of Fidelity Advisor
Intermediate Municipal Income Fund in liquidation of Fidelity Advisor
Intermediate Municipal Income Fund.
The Board of Trustees has fixed the close of business on February 23,
2000 as the record date for the determination of the shareholders of
Fidelity Advisor Intermediate Municipal Income Fund entitled to notice
of, and to vote at, such Meeting and any adjournments thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
February 23, 2000
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN
IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE
ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy card. For
example:
REGISTRATION VALID SIGNATURE
A. 1) ABC Corp. John Smith, Treasurer
2) ABC Corp. John Smith, Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins, Trustee
2) ABC Trust Ann B. Collins, Trustee
3) Ann B. Collins, Trustee u/t/d Ann B. Collins, Trustee
12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND
A FUND OF
FIDELITY ADVISOR SERIES II
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-522-7297
PROXY STATEMENT AND PROSPECTUS
FEBRUARY 23, 2000
This Proxy Statement and Prospectus (Proxy Statement) is being
furnished to shareholders of Fidelity Advisor Intermediate Municipal
Income Fund (Intermediate Municipal), a fund of Fidelity Advisor
Series II (the trust), in connection with the solicitation of proxies
by the trust's Board of Trustees for use at the Special Meeting of
Shareholders of Intermediate Municipal and at any adjournments thereof
(the Meeting). The Meeting will be held on Wednesday, April 19, 2000,
at 11:15 a.m. Eastern time at 27 State Street, 10th Floor, Boston,
Massachusetts 02109, an office of the trust.
As more fully described in this Proxy Statement, the purpose of the
Meeting is to vote on a proposed reorganization (Reorganization).
Pursuant to an Agreement and Plan of Reorganization (the Agreement),
Intermediate Municipal would transfer all of its assets to Fidelity
Advisor Municipal Income Fund (Municipal Income), another fund of the
trust, in exchange solely for shares of beneficial interest of Class
A, Class T, Class B, Class C, and Institutional Class shares of
Municipal Income and the assumption by Municipal Income of
Intermediate Municipal's liabilities. The number of shares to be
issued in the proposed Reorganization will be based upon the relative
net asset values of the outstanding shares of Class A, Class T, Class
B, Class C, and Institutional Class of Intermediate Municipal and the
corresponding class of Municipal Income at the time of the exchange.
As provided in the Agreement, Intermediate Municipal will distribute
Class A, Class T, Class B, Class C, and Institutional Class shares of
Municipal Income to its shareholders of the corresponding class in
liquidation of Intermediate Municipal on May 25, 2000, or such other
date as the parties may agree (the Closing Date). Shareholders of
Class A, Class T, Class B, Class C, and Institutional Class of
Intermediate Municipal will receive shares of the corresponding class
of Municipal Income equal in value to the shares of Intermediate
Municipal they are surrendering, based upon the relative net asset
values of Class A (Intermediate Municipal) to Class A (Municipal
Income), Class T (Intermediate Municipal) to Class T (Municipal
Income), Class B (Intermediate Municipal) to Class B (Municipal
Income), Class C (Intermediate Municipal) to Class C (Municipal
Income), and Institutional Classs (Intermediate Municipal) to
Institutional Class (Municipal Income), respectively, as of the
Closing Date.
Municipal Income, a municipal bond fund, is a diversified fund of
Fidelity Advisor Series II, an open-end management investment company
organized as a Massachusetts business trust on April 23, 1986.
Municipal Income's investment objective is to seek to provide a high
current yield exempt from federal income tax. Municipal Income
normally invests at leasts 80% of its assets in municipal securities
whose interest is exempt from federal income tax.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Proxy Statement, which should be retained for future reference,
sets forth concisely the information about the Reorganization and
Municipal Income that a shareholder should know before voting on the
proposed Reorganization. The Statement of Additional Information dated
February 23, 2000 relating to this Proxy Statement has been filed with
the Securities and Exchange Commission (SEC) and is incorporated
herein by reference. This Proxy Statement is accompanied by the
Prospectuses dated December 29, 1999, which offers shares of Municipal
Income. The Statement of Additional Information for Class A, Class T,
Class B, Class C, and Institutional Class of Municipal Income dated
December 29, 1999 [and supplemented January 4, 2000,] is available
upon request. Attachment 1 contains excerpts from the Annual Reports
of Class A, Class T, Class B, Class C, and Institutional Class of
Municipal Income, dated October 31, 1999. The financial statements and
financial highlights for Intermediate Municipal for the fiscal year
ended October 31, 1999, and report of the auditor are incorporated
herein by reference. The Prospectuses and Statement of Additional
Information for Municipal Income have been filed with the SEC and are
incorporated herein by reference. Prospectuses and Statement of
Additional Information for Intermediate Municipal, both dated December
29, 1999 [and supplemented (date)], have been filed with the SEC.
Copies of documents for Municipal Income may be obtained without
charge by contacting the trust at Client Services at 1-800-843-3001.
Copies of documents for Intermediate Municipal are available on the
SEC's Internet Web site (http://www.sec.gov) or by paying a
duplicating fee, by writing the Public Reference Section of the SEC,
Washington, D.C. 20549-6009.
TABLE OF CONTENTS
Voting Information 2
Synopsis 7
Comparison of Other Policies of The Funds 20
Comparison of Principal Risk Factors 24
The Proposed Transaction 27
Additional Information About Municipal Income 33
Miscellaneous 38
Attachment 1. Excerpts from the Annual Reports of Municipal Income
Dated October 31, 1999 39
Attachment 2. Intermediate Municipal - Supplemental Information 44
Exhibit 1. Form of Agreement and Plan of Reorganization
between Fidelity Advisor Intermediate Municipal Fund and
Fidelity Advisor Municipal Income Fund 73
PROXY STATEMENT AND PROSPECTUS
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY INTERMEDIATE MUNICIPAL INCOME FUND
A FUND OF
FIDELITY ADVISOR SERIES II
TO BE HELD ON APRIL 19, 2000
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-522-7297
VOTING INFORMATION
This Proxy Statement and Prospectus (Proxy Statement) is furnished in
connection with a solicitation of proxies made by, and on behalf of,
the Board of Trustees of Fidelity Advisor Series II (the trust) to be
used at the Special Meeting of Shareholders of Fidelity Advisor
Intermediate Municipal Income Fund (Intermediate Municipal) and at any
adjournments thereof (the Meeting), to be held on Wednesday, April 19,
2000 at 11:15 a.m. Eastern Time at 27 State Street, 10th Floor,
Boston, Massachusetts 02109, an office of the trust and Fidelity
Management & Research Company (FMR), the fund's investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about February 23,
2000. Supplementary solicitations may be made by mail, telephone,
telegraph, facsimile, electronic means or by personal interview by
representatives of the trust. In addition, D.F. King & Co., Inc.
and/or Management Information Services Corp. may be paid on a per-call
basis to solicit shareholders on behalf of the fund at an anticipated
cost of approximately $2,100. Intermediate Municipal may also arrange
to have votes recorded by telephone. D.F King & Co., Inc. may be paid
on a per-call basis for vote-by-phone solicitations on behalf of the
fund at an anticipated cost of approximately $1,950. If the fund
records votes by telephone, it will use procedures designed to
authenticate shareholders' indentities, to allow shareholders to
authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been
properly recorded. Proxies given by telephone may be revoked at any
time before they are voted in the same manner that proxies voted by
mail may be revoked.
The expenses in connection with preparing this Proxy Statement and
its enclosures and of all solicitations, including telephone voting,
will be paid by the fund, provided the expenses do not exceed the
fund's voluntary annual expense caps for Class A, Class T, Class B,
Class C, and Institutional Class of 0.85%, 0.90%, 1.60%, 1.70%, and
0.70%, respectively. Expenses exceeding each class's voluntary expense
cap will be paid by FMR. The fund will reimburse brokerage firms and
others for their reasonable expenses in forwarding solicitation
material to the beneficial owners of shares.
If the enclosed proxy card is executed and returned, it may
nevertheless be revoked at any time prior to its use by written
notification received by the trust, by the execution of a later-dated
proxy card, or by attending the Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and which
are not revoked, will be voted at the Meeting. Shares represented by
such proxies will be voted in accordance with the instructions
thereon. If no specification is made on a proxy card, it will be voted
FOR the matters specified on the proxy card. Only proxies that are
voted will be counted toward establishing a quorum. Broker non-votes
are not considered voted for this purpose. Shareholders should note
that while votes to ABSTAIN will count toward establishing a quorum,
passage of any proposal being considered at the Meeting will occur
only if a sufficient number of votes are cast FOR the proposal.
Accordingly, votes to ABSTAIN and votes AGAINST will have the same
effect in determining whether the proposal is approved.
With respect to fund shares held in Fidelity individual retirement
accounts (including Traditional, Rollover, SEP, SAR-SEP, Roth and
SIMPLE IRAs), the IRA Custodian will vote those shares for which it
has received instructions from shareholders only in accordance with
such instructions. [The Custodian will vote fund shares for which it
has not received such instructions in the same proportion as it votes
the shares held in IRAs for which it has received instructions, but
only to the extent necessary for the fund to reach quorum.
Accordingly, if Fidelity IRA shareholders do not vote their shares,
the Custodian will vote their shares for them, in the same proportion
as other Fidelity IRA shareholders have voted, but only to the extent
necessary to reach quorum at the Meeting.]
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents may propose
one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, unless directed
to vote AGAINST the item, in which case such shares will be voted
against the proposed adjournment with respect to that item. A
shareholder vote may be taken on one or more of the items in this
Proxy Statement or on any other business properly presented at the
Meeting prior to such adjournment if sufficient votes have been
received and it is otherwise appropriate.
Shares of each class of Intermediate Municipal and Municipal Income
issued and outstanding as of November 30, 1999 are listed below.
Intermediate Municipal
Class A 276,301.86
Class T 4,815,956.27
Class B 1,012,821.74
Class C 243,457.76
Institutional Class 585,457.76
Municipal Income
Class A 912,843.37
Class T 27,825,688.43
Class B 5,394,659.173
Class C 1,152,630.199
Institutional Class 295,846.939
Intermediate Municipal shareholders of record at the close of
business on February 23, 2000 will be entitled to vote at the Meeting.
Approval of the Reorganization will be determined by the shareholders
of each class of Intermediate Municipal voting in the aggregate rather
than by each class separately. Each such shareholder will be entitled
to one vote for each dollar of net asset value held on that date.
As of November 30, 1999, the Trustees, Members of the Advisory
Board, and officers of each fund owned, in the aggregate, less than 1%
of each fund's total outstanding shares. As of November 30, 1999, the
Trustees, Members of the Advisory Board, and officers of each fund
owned, in the aggregate, less than 1% of each class's total
outstanding shares. As of November 30, 1999, the following owned of
record or beneficially 5% or more of each fund or a class's
outstanding shares:
Fidelity Advisor Intermediate Municipal Income Fund: Class A:
PaineWebber, Inc., New York, NY (19.42%); BMA Financial Services,
Inc., Westwood, KS (17.36%); The Guardian, Phoenix, AZ (10.44%);
Southwest Securities, Dallas, TX (8.70%).
Fidelity Advisor Intermediate Municipal Income Fund: Class T:
SunAmerica, New York, NY (7.78%); Aetna Inc., Torrance, CA (5.93%);
Citigroup, Inc., New York, NY (5.56%).
Fidelity Advisor Intermediate Municipal Income Fund: Class B:
Merrill, Lynch, Pierce, Fenner and Smith, Jacksonville, FL, (13.33%);
Prudential, New York, NY (6.20%).
Fidelity Advisor Intermediate Municipal Income Fund: Class C:
Merrill, Lynch, Pierce, Fenner, and Smith, Jacksonville, FL (13.85%);
PaineWebber, Inc., New York, NY (10.07%); First Union Corp., Roanoke,
VA (9.54%); Allmerica Financial Corp., Worcester, MA (9.40%); Terra
Securities Corporation, Springfield, IL (7.20%); First Allied
Securities, San Diego, CA (6.43%); Investacorp, Inc., Amherst, NH
(5.61%).
Fidelity Advisor Intermediate Municipal Income Fund: Institutional
Class: Drovers & Mechanics Bank, York, PA (17.59%); South Holland
Bancorp, South Holland, IL (9.27%); Laird Norton Company, Seattle, WA
(9.15%); First National Bank of Springdale, Springdale, AR (8.95%);
Wells Fargo Bank, San Francisco, CA (8.10%); Citizen's National Bank
of Evansville, IN (6.30%).
Fidelity Advisor Municipal Income Fund: Class A: Raymond James
Financial Services, Inc., Saint Petersburg, FL (9.26%).
Fidelity Advisor Municipal Income Fund: Class T: Citigroup, Inc., New
York, NY (8.44%); A.G. Edwards & Sons Inc., Saint Louis, MO (6.50%).
Fidelity Advisor Municipal Income Fund: Class B: Merrill, Lynch,
Pierce, Fenner and Smith, Jacksonville, FL (9.76%).
Fidelity Advisor Municipal Income Fund: Class C: Merrill, Lynch,
Pierce, Fenner and Smith, Jacksonville, FL (18.75%); Citigroup, Inc.,
New York, NY (5.62%).
Fidelity Advisor Municipal Income Fund: Class Institutional Class:
Tompkins County Trust Company, Ithaca, NY (11.81%); Century Bank &
Trust, Rochester, PA (10.73%); Grand Premier Trust Services, Freeport,
IL (8.63%); Arvest Trust Company, Rogers, AR (6.77%); Invest Financial
Corporation, Indianapolis, IN (5.52%).
As of November 30, 1999, the following owned of record or
beneficially 5% or more of Fidelity Advisor Municipal Income Fund's
outstanding shares: Citigroup, Inc., New York, NY (6.78%).
To the knowledge of the trust, no other shareholder owned of record
or beneficially 5% or more of the outstanding shares of any class or
of either fund on that date. If the Reorganization became effective on
November 30, 1999, Citigroup, Inc. of New York, NY would have owned of
record or beneficially 5% or more of the outstanding classes of the
combined fund.
It is anticipated that the following shareholders will own of record
or beneficially 5% or more of the outstanding classes of Fidelity
Advisor Municipal Income Fund as a result of the Reorganization:
Fidelity Advisor Municipal Income Fund Class A: Raymond James, St.
Petersburg, FL (7.33%).
Fidelity Advisor Municipal Income Fund Class T: Citigroup, Inc., New
York, NY (7.34%); A.G. Edwards, St. Louis, MO (5.66%).
Fidelity Advisor Municipal Income Fund Class B: Merrill, Lynch,
Pierce, Fenner and Smith, Jacksonville, FL (10.26%).
Fidelity Advisor Municipal Income Fund Class C: Merrill, Lynch,
Pierce, Fenner and Smith, Jacksonville, FL (17.99%).
Fidelity Advisor Municipal Income Fund Institutional Class: Drovers &
Mechanic Bank, York, PA (11.13%); South Holland Bancorp, South
Holland, IL (5.86%); Laird Norton Company, Seattle, WA (5.79%); First
National Bank of Springdale, Springdale, AR (5.66%); Wells Fargo Bank,
San Francisco, CA (5.12%).
VOTE REQUIRED: APPROVAL OF THE REORGANIZATION REQUIRES THE AFFIRMATIVE
VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF
INTERMEDIATE MUNICIPAL. UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE
1940 ACT), THE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" MEANS THE AFFIRMATIVE VOTE OF THE LESSER OF (A) 67% OR
MORE OF THE VOTING SECURITIES PRESENT AT THE MEETING OR REPRESENTED BY
PROXY IF THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING VOTING
SECURITIES ARE PRESENT OR REPRESENTED BY PROXY OR (B) MORE THAN 50% OF
THE OUTSTANDING VOTING SECURITIES. BROKER NON-VOTES ARE NOT CONSIDERED
"PRESENT" FOR THIS PURPOSE.
SYNOPSIS
The following is a summary of certain information contained elsewhere
in this Proxy Statement, in the Agreement, and in the Prospectuses of
Intermediate Municipal and Municipal Income. The Prospectuses of
Municipal Income are incorporated by this reference. Shareholders
should read the entire Proxy Statement and the applicable Prospectus
of Municipal Income carefully for more complete information.
The proposed reorganization (the Reorganization) would merge
Intermediate Municipal into Municipal Income, a municipal bond fund
also managed by FMR. If the Reorganization is approved, Intermediate
Municipal will cease to exist and current Class A, Class T, Class B,
Class C, and Institutional Class shareholders of the fund will become
shareholders of the corresponding class of Municipal Income instead.
Approval of the Reorganization will be determined solely by approval
of the shareholders of each class of Intermediate Municipal voting in
the aggregate rather than by vote of each class separately.
INVESTMENT OBJECTIVES AND POLICIES
Each fund is managed similarly, however, Intermediate Municipal has a
more conservative objective and a shorter maturity than Municipal
Income. Intermediate Municipal seeks the highest level of income
exempt from federal income taxes that can be obtained consistent with
the preservation of capital. Municipal Income seeks to provide a high
current yield exempt from federal income tax.
Each fund normally invests at least 80% of assets in municipal
securities whose interest is exempt from federal income tax. Each fund
may invest all of its assets in municipal securities whose interest is
subject to the federal alternative minimum tax.
Intermediate Municipal normally maintains a dollar-weighted average
maturity between three and 10 years and is managed to have similar
overall interest rate risk to the Lehman Brothers 1-17 Year Municipal
Bond Index. Municipal Income is managed to have overall interest rate
risk similar to the Lehman Brothers 3 Plus Year Municipal Bond Index.
As of October 31, 1999, the dollar-weighted average maturity for
Intermediate Municipal and Municipal Income was 7.2 years and 12.9
years, respectively.
EXPENSE AND SALES LOAD STRUCTURES
Intermediate Municipal and Municipal Income have similar expense
structures. Each fund pays a management fee. In addition, certain
classes of each fund pay distribution fees and each class of each fund
pays other expenses. The sum of the management fee, the distribution
fee (if applicable), and other expenses is a class's gross expenses.
FMR has voluntarily agreed to reimburse the gross expenses of each
class of each fund to the extent that they exceed a voluntary expense
cap applicable to that class. As of October 31, 1999, the gross
expenses of each class of Municipal Income were below the voluntary
expense cap. The funds also have different load and contingent
deferred sales charge (CDSC) structures.
The Reorganization would provide Intermediate Municipal shareholders
with a fund with lower total expenses for each class.
MANAGEMENT FEE
Each fund pays the same management fee. The management fee is the
same for all classes of shares of a fund.
DISTRIBUTION FEES
Each fund offers five classes of shares: Class A, Class T, Class B,
Class C, and Institutional Class.
Class A, Class T, Class B, Class C, and Institutional Class of each
fund have adopted a Distribution and Service Plan (the Plans) pursuant
to Rule 12b-1 of the Investment Company Act of 1940 (the 1940 Act).
[Under the Plans, Class A, Class T, Class B, and Class C of each fund
are authorized to pay Fidelity Distributors Corporation (FDC) a
monthly distribution fee as compensation for its services and expenses
in connection with the distribution of Class A, Class T, Class B, and
Class C shares.]
Class A of each fund may pay FDC a distribution fee at an annual rate
of 0.40% of its average net assets throughout the month, or such
lesser amount as the fund's Board of Trustees may determine from time
to time. Class A of both Intermediate Municipal and Municipal Income
currently pays a distribution fee of 0.15% of its average net assets
throughout the month.
Class T of each fund may pay FDC a distribution fee at an annual rate
of 0.40% of its average net assets throughout the month, or such
lesser amount as the fund's Board of Trustees may determine from time
to time. Class T of both Intermediate Municipal and Municipal Income
currently pays a distribution fee of 0.25% of its average net assets
throughout the month.
Class B of each fund may pay FDC a distribution fee at an annual rate
of 0.75% of its average net assets throughout the month, or such
lesser amount as the fund's Board of Trustees may determine from time
to time. Class B of both Intermediate Municipal and Municipal Income
currently pays a distribution fee at an annual rate of 0.65% of its
average net assets throughout the month.
Class C of each fund currently pays FDC a distribution fee at an
annual rate of 0.75% of its average net assets throughout the month.
In addition, Class B and Class C of each fund pay FDC a monthly
service fee at an annual rate of 0.25% of the respective class's
average net assets throughout the month for providing shareholder
support services.
Institutional Class of both Intermediate Municipal and Municipal
Income does not pay a distribution fee.
The Distribution and Service Plan of each class specifically
recognizes that FMR may make payments from its management fee revenue,
past profits, or other resources (not from a fund's or class's assets)
to compensate financial intermediaries (including FDC) for expenses
incurred in connection with providing services intended to result in
the sale of the applicable class's shares and/or shareholder support
services, including payments made to intermediaries that provide those
services.
TOTAL OPERATING EXPENSES AND EXPENSE REIMBURSEMENT
In addition to management fees and distribution fees, there are also
other operating expenses such as legal, audit, custodian, transfer
agency, dividend disbursing, and shareholder servicing expenses. Such
expenses are paid by each class of each fund.
FMR has voluntarily agreed to reimburse each class of each fund to
the extent that total operating expenses, as a percentage of their
respective net assets, exceed a voluntary expense cap (excluding
interest, taxes, brokerage commissions, and extraordinary expenses).
The table below shows each class's expense cap, which differ across
classes of each fund, and operating expenses, as of October 31, 1999.
Intermediate Municipal Municipal Income Expense
Expense Caps Caps
Class A 0.85% 0.90%
Class T 0.90% 1.00%
Class B 1.60% 1.65%
Class C 1.70% 1.75%
Institutional Class 0.70% 0.75%
Intermediate Municipal Municipal Income Operating
Operating Expenses (before Expenses
reimbursement)
Class A 1.00% 0.72%
Class T 1.07% 0.81%
Class B 1.71% 1.46%
Class C 1.85% 1.56%
Institutional Class 0.84% 0.60%
As shown in the above tables, the expenses paid by each class of
Municipal Income are lower than those paid by the corresponding class
of Intermediate Municipal.
SALES LOADS
Class A and Class T of each fund have a front-end sales load. Class B
and Class C of each fund have a CDSC. Institutional Class of each fund
has neither a front-end sales load nor a CDSC. Class A and Class T of
Intermediate Municipal have maximum sales loads of 3.75% and 2.75%,
respectively. Class A and Class T of Municipal Income have maximum
sales loads of 4.75% and 3.50%, respectively.
For both Intermediate Municipal and Municipal Income, on eligible
purchases of (i) Class A shares in amounts of $1 million or more that
qualify for a Class A load waiver, (ii) Class A shares in amounts of
$25 million or more, and (iii) Class T shares in amounts of $1 million
or more, investment professionals will be compensated with a fee at
the rate of 0.25% of the purchase amount. Any assets on which a
finder's fee was paid will bear a CDSC if they do not remain in Class
A or Class T shares of Fidelity Advisor funds, or Daily Money Class
shares of Treasury Fund, Prime Fund, and Tax-Exempt Fund, for a period
of at least one uninterrupted year.
Class B and Class C shares of each fund may, upon redemption, be
assessed a CDSC. The CDSC for Class B shares of Intermediate Municipal
declines over three years from 3% to 0%. After a holding period of
four years, Class B shares of Intermediate Municipal will convert
automatically to Class A shares of Intermediate Municipal. The CDSC
for Class B shares of Municipal Income declines over six years from 5%
to 0%. After a holding period of seven years, Class B shares of
Municipal Income will convert automatically to Class A shares of
Municipal Income. Class C shares of each fund redeemed within one year
of purchase are assessed a CDSC of 1.00%.
Existing Class A, Class T, Class B, and Class C shares of
Intermediate Municipal will retain their CDSC schedule (including a
finder's fee CDSC) and conversion and holding periods after the
merger. Additional purchases of shares following the merger will be
subject to higher loads, CDSCs and longer conversion and holding
periods, as applicable.
THE PROPOSED REORGANIZATION
Shareholders of Intermediate Municipal will be asked at the Meeting
to vote upon and approve the Reorganization and the Agreement, which
provide for the acquisition by Municipal Income of all of the assets
of Intermediate Municipal in exchange solely for Class A, Class T,
Class B, Class C, and Institutional Class shares of Municipal Income
(Municipal Income Class Shares) and the assumption by Municipal Income
of the liabilities of Intermediate Municipal. Intermediate Municipal
will then distribute Municipal Income Class Shares to its shareholders
of the corresponding class, so that each shareholder will receive the
number of full and fractional Municipal Income Class Shares equal in
value to the net asset value of the shareholder's shares of the
corresponding class of Intermediate Municipal on the Closing Date
(defined below). The exchange of Intermediate Municipal's assets for
Municipal Income Class Shares will occur as of the close of business
of the New York Stock Exchange (NYSE) on May 25, 2000, or such other
time and date as the parties may agree (the Closing Date).
Intermediate Municipal will then be liquidated as soon as practicable
thereafter. Approval of the Reorganization will be determined solely
by approval of the shareholders of each class of Intermediate
Municipal voting in aggregate rather than by vote of each class
separately.
The funds have received an opinion of counsel that, except with
respect to Section 1256 contracts, the Reorganization will not result
in any gain or loss for federal income tax purposes either to
Intermediate Municipal, or Municipal Income or to the shareholders of
either fund. The rights and privileges of the former shareholders of
Intermediate Municipal will be effectively unchanged by the
Reorganization.
The Board of Trustees believes that the Reorganization would benefit
Intermediate Municipal's shareholders and recommends that shareholders
vote in favor of the Reorganization.
COMPARATIVE FEE TABLES
Each fund pays a management fee to FMR for managing its investments
and business affairs which is calculated and paid to FMR every month.
Each fund's management fee is calculated by adding a group fee rate to
an individual fund fee rate, dividing by twelve, and multiplying the
result by each fund's monthly average net assets throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR.
In addition to the management fee payable by the funds, each class of
each fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and
financial reports. The expenses of each class of Municipal Income are
below current expense caps and are not being reimbursed. The expenses
of each class of Intermediate Municipal exceed the respective current
expense caps; therefore, FMR reimburses each class of the fund to the
extent its total operating expenses exceed its expense caps. As
indicated in the table below, Municipal Income's actual class expenses
are significantly lower than the corresponding class expenses of
Intermediate Municipal after reimbursement.
The following tables show (i) the shareholder transaction expenses
that each shareholder of each class of Intermediate Municipal and
Municipal Income currently incurs, and the shareholder expenses that
shareholders of each class of the combined fund will incur after
giving effect to the Reorganization, and (ii) the current fees and
expenses of Class A, Class T, Class B, Class C, and Institutional
Class of Intermediate Municipal and Municipal Income for the year
ended October 31, 1999, excluding the effect of FMR's voluntary
expense limitation for Class A, Class T, Class B, Class C, and
Institutional Class for Intermediate Municipal, and pro forma fees for
the combined fund and classes based on the same time period after
giving effect to the Reorganization.
If shareholders approve the Reorganization, the combined fund will
retain Municipal Income's expense structure, requiring payment by each
class of a management fee and other operating expenses for each class.
If the proposed Reorganization is not approved, Intermediate Municipal
will maintain its current fee structure. For more information about
the current fees for Intermediate Municipal, see Attachment 2. For
more information about the current fees for Municipal Income, refer to
its applicable Prospectus.
SHAREHOLDER TRANSACTION AND ANNUAL CLASS OPERATING EXPENSES
Shareholder transaction expenses are charges that shareholders may
pay when they buy, hold, or sell Class A, Class T, Class B, Class C,
and Institutional Class shares of a fund.
Annual class operating expenses are paid out of each class's assets.
Expenses are factored into each class's share price or dividends and
are not charged directly to shareholder accounts. The following
figures are based on historical expenses of each class as of October
31, 1999, and are calculated as a percentage of average net assets of
the applicable class of each fund. The figures for the combined fund
are estimated, based on historical expenses, adjusted to reflect
current fees, of each class of Intermediate Municipal and Municipal
Income as of October 31, 1999, and are calculated as a percentage of
average net assets of the applicable class of the combined fund. The
following figures for Intermediate Municipal do not reflect the effect
of any expense reimbursement on each class as of October 31, 1999.
CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal MunicipalIncome Combined Fund
Maximum sales charge on 3.75%A 4.75%A 4.75%A
purchases (as a % of
offering price)
Maximum CDSC (as a % of the noneB noneB noneB
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on none none none
reinvested distributions
</TABLE>
A LOWER FRONT-END SALES CHARGE FOR CLASS A MAY BE AVAILABLE WITH
PURCHASE OF $50,000 OR MORE.
B A CDSC OF 0.25% IS ASSESSED ON CERTAIN REDEMPTIONS OF CLASS A SHARES
ON WHICH A FINDER'S FEE WAS PAID.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income CombinedFund
Management fee 0.38% 0.38% 0.38%
Distribution and Service 0.15% 0.15% 0.15%
(12b-1) fee
Other expenses 0.47% 0.19% 0.19%
TOTAL CLASS OPERATING EXPENSES 1.00%A 0.72%B 0.72%B
</TABLE>
A EFFECTIVE DECEMBER 1, 1998, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
CLASS A OF INTERMEDIATE MUNICIPAL TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 0.85%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
B EFFECTIVE AUGUST 30, 1996, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
CLASS A OF MUNICIPAL INCOME TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 0.90%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal MunicipalIncome Combined Fund
Maximum sales charge on 2.75%A 3.50%A 3.50%A
purchases (as a % of
offering price)
Maximum CDSC (as a % of the noneB noneB noneB
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on none none none
reinvested distributions
</TABLE>
A LOWER FRONT-END SALES CHARGE FOR CLASS T MAY BE AVAILABLE WITH
PURCHASE OF $50,000 OR MORE.
B A CDSC OF 0.25% IS ASSESSED ON CERTAIN REDEMPTIONS OF CLASS T SHARES
ON WHICH A FINDER'S FEE WAS PAID.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income CombinedFund
Management fee 0.38% 0.38% 0.38%
Distribution and Service 0.25% 0.25% 0.25%
(12b-1) fee
Other expenses 0.44% 0.18% 0.17%
TOTAL CLASS OPERATING EXPENSES 1.07%A 0.81%B 0.80%B
</TABLE>
A EFFECTIVE MAY 29, 1998, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
CLASS T OF INTERMEDIATE MUNICIPAL TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 0.90%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
B EFFECTIVE JULY 1, 1995, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
CLASS T OF MUNICIPAL INCOME TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 1.00%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal MunicipalIncome Combined Fund
Maximum sales charge on none none none
purchases (as a % of
offering price)
Maximum CDSC (as a % of the 3.00%A 5.00%B 5.00%B
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on none none none
reinvested distributions
</TABLE>
A DECLINES OVER 3 YEARS FROM 3.00% TO 0%.
B DECLINES OVER 6 YEARS FROM 5.00% TO 0%.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income CombinedFund
Management fee 0.38% 0.38% 0.38%
Distribution and Service 0.90% 0.90% 0.90%
(12b-1) fee (including 0.25%
Service fee)
Other expenses 0.43% 0.18% 0.17%
TOTAL CLASS OPERATING EXPENSES 1.71%A 1.46%B 1.45%B
</TABLE>
A EFFECTIVE DECEMBER 1, 1998, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
CLASS B OF INTERMEDIATE MUNICIPAL TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 1.60%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
B EFFECTIVE JANUARY 1, 1996, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
CLASS B OF MUNICIPAL INCOME TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 1.65%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal MunicipalIncome Combined Fund
Maximum sales charge on none none none
purchases (as a % of
offering price)
Maximum CDSC (as a % of the 1.00%A 1.00A 1.00A
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on none none none
reinvested distributions
</TABLE>
A ON CLASS C SHARES REDEEMED WITHIN ONE YEAR OF PURCHASE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income CombinedFund
Management fee 0.38% 0.38% 0.38%
Distribution and Service 1.00% 1.00% 1.00%
(12b-1) fee (including 0.25%
Service fee)
Other expenses 0.47% 0.18% 0.18%
TOTAL CLASS OPERATING EXPENSES 1.85%A 1.56%B 1.56%B
</TABLE>
A EFFECTIVE DECEMBER 1, 1998, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
CLASS C OF INTERMEDIATE MUNICIPAL TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 1.70%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
B EFFECTIVE NOVEMBER 1, 1997, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
CLASS C OF MUNICIPAL INCOME TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 1.75%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal MunicipalIncome Combined Fund
Sales charge (load) on none none none
purchases and reinvested
distributions
Deferred sales charge (load) none none none
on redemptions
Intermediate Municipal Municipal Income CombinedFund
Management fee 0.38% 0.38% 0.38%
Distribution and Service none none none
(12b-1) fee
Other expenses 0.46% 0.22% 0.21%
TOTAL CLASS OPERATING EXPENSES 0.84%A 0.60%B 0.59%B
</TABLE>
A EFFECTIVE DECEMBER 1, 1998, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
INSTITUTIONAL CLASS OF INTERMEDIATE MUNICIPAL TO THE EXTENT THAT TOTAL
OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS,
AND EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET
ASSETS, EXCEED 0.70%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT
ANY TIME.
B EFFECTIVE JULY 1, 1995, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
INSTITUTIONAL CLASS OF MUNICIPAL INCOME TO THE EXTENT THAT TOTAL
OPERATING EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS,
AND EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET
ASSETS, EXCEED 0.75%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT
ANY TIME.
EXAMPLES OF EFFECT OF FUND EXPENSES
The following table illustrates the expenses on a hypothetical
$10,000 investment in each class of each fund under the current and
pro forma (combined fund) expenses calculated at the rates stated
above, assuming a 5% annual return. Total expenses shown below include
shareholder transaction expenses, such as the current maximum
front-end sales charge or maximum CDSC, as applicable, on shares of
each class of each fund, and a class's annual operating expenses. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years indicated
and if you leave your account open:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
After 1 Year After 3 Years After 5 Years
Account Open Account Closed Account Open Account Closed Account Open Account Closed
Intermediate Municipal: $473 $473 $681 $681 $907 $907
Class A
Class T $381 $381 $606 $606 $849 $849
Class B $174 $474A $539 $639A $846B $846B
Class C $188 $288A $582 $582 $1001 $1,001
Institutional Class $86 $86 $268 $268 $466 $466
Municipal Income:
Class A $545 $545 $694 $694 $857 $857
Class T $430 $430 $600 $600 $784 $784
Class B $149 $649A $462 $762A $797 $997A
Class C $159 $259A $493 $493 $850 $850
Institutional Class $61 $61 $192 $192 $335 $335
Combined Fund
Class A $545 $545 $694 $694 $857 $857
Class T $429 $429 $597 $597 $779 $779
Class B $148 $648A $459 $759A $792 $992A
Class C $159 $259A $493 $493 $850 $850
Institutional Class $60 $60 $189 $189 $329 $329
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
After 10 Years
Account Open Account Closed
Intermediate Municipal: $1,554 $1,554
Class A
Class T $1,545 $1,545
Class B $1,500B $1,500B
Class C $2,169 $2,169
Institutional Class $1,037 $1,037
Municipal Income:
Class A $1,327 $1,327
Class T $1,317 $1,317
Class B $1,451C $1,451C
Class C $1,856 $1,856
Institutional Class $750 $750
Combined Fund
Class A $1,327 $1,327
Class T $1,305 $1,305
Class B $1,444C $1,444C
Class C $1,856 $1,856
Institutional Class $738 $738
</TABLE>
A REFLECTS DEDUCTION OF APPLICABLE CDSC.
B REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER A
MAXIMUM OF FOUR YEARS.
C REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER A
MAXIMUM OF SEVEN YEARS.
These examples assume that all dividends and other distributions are
reinvested and that the percentage amounts listed under Shareholder
Transaction and Annual Class Operating Expenses remain the same in the
years shown. These examples illustrate the effect of expenses, but are
not meant to suggest actual or expected expenses, which may vary. The
assumed return of 5% is not a prediction of, and does not represent,
actual or expected performance of any class.
FORMS OF ORGANIZATION
Intermediate Municipal and Municipal Income are diversified funds of
Fidelity Advisor Series II, an open-end management investment company
organized as a Massachusetts business trust on April 23, 1986. The
trust is authorized to issue an unlimited number of shares of
beneficial interest. Because the funds are series of the same
Massachusetts trust, organized under the same Declaration of Trust,
the rights of the security holders of Intermediate Municipal under
state law and the governing documents are expected to remain unchanged
after the Reorganization. For more information regarding shareholder
rights, refer to the section of Municipal Income's Statement of
Additional Information (SAI) called "Description of the Trust."
INVESTMENT OBJECTIVES AND POLICIES
Intermediate Municipal and Municipal Income have substantially
similar investment strategies. Each fund is managed similarly,
however, Intermediate Municipal has a more conservative investment
objective than Municipal Income. Intermediate Municipal seeks the
highest level of income exempt from federal income taxes that can be
obtained consistent with the preservation of capital. Municipal Income
seeks to provide a high current yield exempt from federal income tax.
Each fund normally invests at least 80% of total assets in
investment-grade municipal debt securities (those of medium and high
quality) whose interest is exempt from federal income tax. However,
each fund may invest all of its assets in municipal securities whose
interest is subject to the federal alternative minimum tax. In
addition, each fund potentially invests more than 25% of its total
assets in municipal securities that finance similar projects, such as
those relating to education, health care, transportation and
utilities. Each fund's assets are allocated among different market
sectors (for example, general obligation bonds of a state or bonds
financing a specific project) and different maturities, depending on
the relative value of each sector and maturity. In buying and selling
securities, each security's structural features and current price
compared to its its estimated long-term value, any short-term trading
opportunities resulting from market inefficiencies, and the credit
quality of its issuer are analyzed. Each fund may use different
techniques, such as buying and selling futures contracts, to increase
or decrease each fund's exposure to factors that affect security
values. If a fund's strategies do not work as intended, that fund may
not achieve its objective.
The funds differ in the their average maturities and their benchmark
indexes. Intermediate Municipal normally maintains a dollar-weighted
average maturity between three and 10 years and its benchmark index is
the Lehman Brothers 1-17 Year Municipal Bond Index, a market
value-weighted index of investment-grade municipal bonds with
maturities between one and 17 years. Municipal Income has no set
average maturity policy and its benchmark is the Lehman Brothers 3
Plus Year Municipal Bond Index, a market value-weighted index for
investment-grade municipal bonds with maturities of three years or
more. As of October 31, 1999, the dollar-weighted average maturities
of Intermediate Municipal and Municipal Income were 7.2 years and 12.9
years, respectively.
Each fund can currently invest all of its assets in municipal
securities whose interest is subject to the federal alternative
minimum tax. As of October 31, 1999, 12.14% of Intermediate
Municipal's and 18.03% of Municipal Income's exempt-interest dividends
were subject to the federal alternative minimum tax.
Certain policies of each fund are fundamental and may not be changed
without the approval of a vote of at least a majority of the
outstanding voting securities of the fund. As a matter of fundamental
policy, Intermediate Municipal seeks the highest level of income
exempt from federal income taxes that can be obtained consistent with
the preservation of capital. As a matter of fundamental policy,
Municipal Income seeks to provide a high current yield by investing in
a diversified portfolio of municipal obligations whose interest is not
included in gross income for purposes of calculating federal income
tax. In addition, as a matter of fundamental policy, each fund
normally invests at least 80% of its assets in securities whose
interest is exempt from federal income tax. There can be no assurance
that either fund will achieve its objective. With the exception of
fundamental policies, investment policies of the funds can be changed
without shareholder approval. The differences between the funds
discussed above, except as noted, could be changed without a vote of
shareholders.
PERFORMANCE COMPARISONS OF THE FUNDS
The following table compares the funds' annual total returns for the
periods indicated (excluding the effect of sales loads) for Class T of
each fund. Please note that total returns are based on past results
and are not an indication of future performance.
Annual Total Returns for
Class T
(periods ended December 31)*
1996 1997 1998 1999**
Intermediate Municipal 3.89% 7.80% 5.08% -1.50%
Municipal Income 2.95% 10.13% 6.22% -2.93%
* Excluding sales charges.
** Through October 31, 1999.
The following table compares the cumulative total returns for Class T
of Intermediate Municipal to those for Class T of Municipal Income for
the periods indicated (excluding the effect of sales loads). Please
note that total returns are based on past results and are not an
indication of future performance.
Cumulative Total Returns for
Class T
(periods ended October 31,
1999)*
1 year 3 years
Intermediate Municipal -1.11% 13.07%
Municipal Income -2.53% 14.78%
* Excluding sales charges.
If FMR had not reimbursed certain class expenses, the total returns
for Class T of Intermediate Municipal would have been lower.
The tables above show that Municipal Income has generally experienced
slightly higher returns than Intermediate Municipal in recent years,
although Municipal Income's longer maturity may also involve greater
volatility and interest rate risk. The differential in performance can
be attributed primarily to the funds' historical differences in
portfolio holdings resulting from differences in investment policies
regarding average maturity. See "Comparison of Principal Risk Factors"
for more information on average maturity.
The following graph shows the value of a hypothetical $10,000
investment in Class T of each fund made on January 1, 1996, assuming
all distributions are reinvested. The graph compares the cumulative
returns of Class T of each fund on a monthly basis from January 1,
1996 to October 31, 1999, and illustrates the relative volatility of
their performance over shorter periods of time.
[INSERT GRAPH]
For additional information regarding the performance of Intermediate
Municipal, see Attachment 2. For additional information regarding the
performance of Municipal Income, see its applicable Prospectus.
COMPARISON OF OTHER POLICIES OF THE FUNDS
DIVERSIFICATION. Each fund is a diversified fund. As a matter of
fundamental policy, with respect to 75% of each fund's total assets, a
fund may not invest more than 5% of its total assets in the securities
of a single issuer, and a fund may not hold more than 10% of the
outstanding voting securities of a single issuer. These limitations do
not apply to U.S. Government securities.
BORROWING. As a matter of fundamental policy, each fund may borrow
money for temporary or emergency purposes, but not in an amount
exceeding 33-1/3% of its total assets. For these purposes, each fund
may borrow money from banks or from other funds advised by FMR, or
through reverse repurchase agreements.
LENDING. Neither fund currently intends to lend assets other than
securities, except lending up to 15% of assets to a fund advised by
FMR or an affiliate or by acquiring loans, loan participations, or
other forms of direct debt instruments and, in connection therewith,
assuming any associated unfunded commitment of the sellers. As a
matter of fundamental policy, each fund may not lend more than 33-1/3%
of its total assets to other parties, but this limitation does not
apply to purchases of debt securities or to repurchase agreements.
TEMPORARY DEFENSIVE POLICIES. FMR normally invests each fund's assets
according to the fund's investment strategy. Each fund also reserves
the right to invest without limitation in short-term instruments, to
hold a substantial amount of uninvested cash, or to invest more than
normally permitted in federally taxable obligations for temporary,
defensive purposes.
For more information about the risks and restrictions associated with
these policies for Intermediate Municipal, see Attachment 2. For more
information about the risks and restrictions associated with these
policies for Municipal Income, see its Prospectuses, and for a more
detailed discussion of Municipal Income's investments, see the fund's
SAI. Municipal Income's SAI and Prospectuses are incorporated herein
by reference.
OPERATIONS OF MUNICIPAL INCOME FOLLOWING THE REORGANIZATION
FMR does not expect Municipal Income to revise its investment
policies as a result of the Reorganization. In addition, FMR does not
anticipate significant changes to the fund's management or to agents
that provide the fund with services. Specifically, the Trustees and
officers, the investment adviser, distributor, and other agents will
continue to serve Municipal Income in their current capacities.
Christine Thompson is the current Portfolio Manager of Municipal
Income.
All of the current investments of Intermediate Municipal are
permissible investments for Municipal Income. As explained above,
however, Intermediate Municipal maintains a shorter average maturity
than Municipal Income. If shareholders approve the Reorganization, FMR
may sell certain of Intermediate Municipal's securities and invest in
securities with longer maturities during the period between
shareholder approval and the Closing Date. As a result, the average
maturity of Intermediate Municipal may exceed its average maturity
policy of between three and 10 years during that period. Transaction
costs associated with portfolio adjustments to Intermediate Municipal
and Municipal Income that occur between shareholder approval and the
Closing Date will be borne by the fund that incurred them. Transaction
costs associated with such adjustments that occur after the Closing
Date will be borne by Municipal Income. The funds may recognize a
taxable gain or loss on the disposition of securities pursuant to
these portfolio adjustments.
PURCHASES AND REDEMPTIONS
Each fund is open for business each day the NYSE is open.
Except for the differences in sales charges across classes, the
purchase policies for Class A, Class T, Class B, Class C, and
Institutional Class of Intermediate Municipal and Municipal Income are
identical. The redemption policies for each class of both funds are
also identical, with the exception for the differences in CDSCs across
classes.
The price to buy one share of Class A or Class T of each fund is the
class's offering price or the class's net asset value (NAV), depending
on whether you pay a front-end sales charge. The offering price of
Class A or Class T is its NAV divided by the difference between one
and the applicable front-end sales charge percentage. When you buy
Class A or Class T shares at the offering price, Fidelity deducts the
appropriate sales charge and invests the rest in Class A or Class T
shares of the applicable fund. If you qualify for a front-end sales
charge waiver, your price will be Class A's or Class T's NAV.
The price to buy one share of Class B, Class C, or Institutional
Class is the class's NAV.
Shares are purchased at the next offering price or NAV, as
applicable, calculated after your investment is received in proper
form. A class's NAV is the value of a single share. Each class's NAV
is normally calculated each business day at 4:00 p.m. Eastern time.
However, NAV may be calculated earlier if trading on the NYSE is
restricted or as permitted by the Securities and Exchange Commission
(the SEC).
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of a fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
Each fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations. If market
quotations or information furnished by a pricing service is not
readily available for a security or if a security's value has been
materially affected by events occurring after the close of the market
on which the security is principally traded, that security may be
valued by another method that the Board of Trustees believes
accurately reflects fair value. A security's valuation may differ
depending on the method used for determining value.
The price to sell one share of each class of each fund is the class's
NAV, minus any applicable CDSC. Any applicable CDSC is calculated
based on the original redemption amount. Shares will be sold at the
next NAV, minus any applicable CDSC, calculated after your order is
received in proper form, normally calculated each business day at 4:00
p.m. Eastern time. Shareholders of Class B of Intermediate Municipal
may, upon redemption, be assessed a CDSC which declines over 3 years
from 3.00% to 0%.
Shareholders of Class B of Municipal Income may, upon redemption, be
assessed a CDSC which declines over 6 years from 5.00% to 0%.
Shareholders of Class C of both funds may, upon redemption, be
assessed a CDSC of 1.00% if they redeem within one year of the
purchase date. For Class A purchases of both funds in the amount of
$25 million or more, Class T purchases of both funds in the amount of
$1 million or more, investment professionals will be compensated with
a finder's fee at the rate of 0.25% of the purchase amount. Any assets
on which a finder's fee was paid will bear a CDSC of 0.25% if they do
not remain in Class A or Class T shares of the Fidelity Advisor Funds,
or Daily Money Class shares of Treasury Fund, Prime Fund, and
Tax-Exempt Fund, for a period of at least one uninterrupted year.
It is the responsibility of your investment professional to transmit
your order to buy or sell shares to Fidelity before the close of
business on the day you place your order.
For each class of each fund, the minimum initial investment amount is
$2,500 and the minimum additional investment amount is $100. The
minimum investment and balance requirements for shareholders of
Intermediate Municipal will remain unchanged by the fund's
Reorganization.
On December 29, 1999, Class A, Class T, Class B, Class C, and
Institutional Class of Intermediate Municipal closed to all new
investments (except dividend reinvestments), pending the
Reorganization. Shareholders of each class of Intermediate Municipal
as of that date will no longer be able to purchase shares of each
class of the fund except through the reinvestment of dividends and
other distributions. Shareholders of each class of Intermediate
Municipal may redeem shares through the Closing Date of the fund's
Reorganization. If the Reorganization is approved, the purchase and
redemption policies of the combined fund will remain unchanged.
For additional information regarding purchases and redemptions for
Intermediate Municipal, see Attachment 2. For additional information
regarding purchases and redemption for Municipal Income, see its
applicable Prospectus.
EXCHANGES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
The exchange privilege currently offered by each corresponding class
of Intermediate Municipal and Municipal Income is the same and is not
expected to change after the Reorganization. Class A and Class T
shares of each fund may be exchanged for the same class of shares of
other Fidelity Advisor funds at NAV or for Daily Money Class shares of
Treasury Fund, Prime Fund, or Tax-Exempt Fund. If Class T shares of
Intermediate Municipal or Municipal Income were purchased through
certain investment professionals that have signed an agreement with
FDC, those shareholders also have the privilege of exchanging Class T
shares for shares of Fidelity Capital Appreciation Fund. Class B
shares of each fund may be exchanged for the same class of shares of
other Fidelity Advisor funds or Advisor B Class shares of Treasury
Fund. Class C shares of each fund may be exchanged for the same class
of shares of other Fidelity Advisor funds or Advisor C Class shares of
Treasury Fund. Institutional Class shares of each fund may be
exchanged for Institutional Class shares of other Fidelity Advisor
funds or for shares of Fidelity funds. Shareholders may be limited to
four exchanges per calendar year out of a fund. Neither fund currently
imposes a redemption fee. Shares that are exchanged retain the CDSC
schedule in effect when they were originally bought, as applicable.
For further information regarding exchanges for Intermediate
Municipal, see Attachment 2. For further information regarding
exchanges for Municipal Income, see its applicable prospectus.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each fund earns interest, dividends, and other income from its
investments, and distributes substantially all of this income (less
expenses) to shareholders as dividends. Each fund also realizes
capital gains from its investments and distributes these gains (less
any losses) to shareholders. Each fund declares income dividends daily
and pays them monthly. Each fund normally pays capital gain
distributions, if any, in December. On or before the Closing Date,
Intermediate Municipal may declare additional dividends or other
distributions in order to distribute substantially all of its
investment company taxable income and net realized capital gain.
Intermediate Municipal will be required to recognize gain or loss on
Section 1256 contracts held by the fund on the last day of its taxable
year which is October 31. If the Reorganization is approved, gains or
losses of Section 1256 contracts held on the Closing Date will be
recognized on the Closing Date.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
Each fund has received an opinion of its counsel, Kirkpatrick &
Lockhart LLP, that the Reorganization will constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the Code). Accordingly,
except with respect to Section 1256 contracts, no gain or loss will be
recognized by the funds or their shareholders as a result of the
Reorganization. Please see the section entitled "Federal Income Tax
Considerations" for more information.
As of October 31, 1999, Intermediate Municipal and Municipal Income
had net unrealized losses of approximately $846,000 and and
$5,007,000, respectively. During the period between shareholder
approval and the Closing Date, FMR may sell certain securities to make
portfolio adjustments in connection with the Reorganization. Selling
these securities may result in realization of capital gains by the
selling fund, which, when distributed, would be taxable to the selling
fund's shareholders.
As of October 31, 1999, Intermediate Municipal had no capital loss
carryforwards for federal income tax purposes. As of October 31, 1999,
Municipal Income had a capital loss carryforward for federal income
tax purposes of approximately $13,685,000. Under current federal tax
law, Municipal Income may be limited to using only a portion, if any,
of its capital loss carryforward or the capital loss carryforwards
transferred by Intermediate Municipal at the time of the
Reorganization ("capital loss carryforwards"). There is no assurance
that Municipal Income will be able to realize sufficient capital gains
to use the capital loss carryforwards before they expire. The capital
loss carryforward attributable to Municipal Income will expire between
between October 31, 2003 and October 31, 2004.
COMPARISON OF PRINCIPAL RISK FACTORS
Many factors affect each fund's performance. Each fund's yield and
share price change daily based on changes in interest rates and market
conditions and in response to other economic, political or financial
developments. Each fund's reaction to these developments will be
affected by the types and maturities of securities in which the fund
invests, the financial condition, industry and economic sector, and
geographic location of an issuer, and the fund's level of investment
in the securities of that issuer. When you sell your shares of each
fund, they could be worth more or less than what you paid for them.
The main difference in the level of risk between the funds is the
funds' interest rate risk. As noted above, Intermediate Municipal
maintains a shorter average maturity than Municipal Income. FMR
generally manages Intermediate Municipal so that it reacts to changes
in interest rates similarly to municipal bonds with maturities between
three and 10 years. Interest rate sensitivity refers to how much a
fund is affected by changes in interest rates. Generally, bond prices
go down when interest rates go up and vice versa. The effects of
interest rate sensitivity generally are more pronounced for
longer-term securities, and therefore generally more pronounced for
funds which invest in longer-term securities. Thus, Municipal Income
may have better performance than Intermediate Municipal during periods
of falling interest rates but may have worse performance during
periods of rising interest rates.
The following factors can significantly affect each fund's
performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation and utilities,
conditions in those sectors can affect the overall municipal market.
In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities can be more
sensitive to interest rate changes. In other words, the longer the
maturity of a security, the greater the impact a change in interest
rates could have on the security's price. In addition, short-term and
long-term interest rates do not necessarily move in the same amount or
the same direction. Short-term securities tend to react to changes in
short-term interest rates, and long-term securities tend to react to
changes in long-term interest rates.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. Lower-quality debt securities (those
of less than investment-grade quality) tend to be more sensitive to
these changes than higher-quality debt securities. Municipal
securities backed by current or anticipated revenues from a specific
project or specific assets can be negatively affected by the
discontinuance of the taxation supporting the project or assets or the
inability to collect revenues for the project or from the assets. If
the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest
from the security could become taxable and the security could decline
significantly in value.
In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance, and a fund could distribute income subject to federal
income tax.
THE PROPOSED TRANSACTION
TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN
INTERMEDIATE MUNICIPAL AND MUNICIPAL INCOME.
REORGANIZATION PLAN
The terms and conditions under which the proposed transaction may be
consummated are set forth in the Agreement. Significant provisions of
the Agreement are summarized below; however, this summary is qualified
in its entirety by reference to the Agreement, a copy of which is
attached at Exhibit 1 to this Proxy Statement.
The Agreement contemplates (a) Municipal Income acquiring as of the
Closing Date all of the assets of Intermediate Municipal in exchange
solely for Municipal Income Class Shares in each case based on the net
asset value attributable to the corresponding class of Intermediate
Municipal and the assumption by Municipal Income of Intermediate
Municipal's liabilities; and (b) the distribution of Municipal Income
Class Shares to the shareholders of the corresponding class of
Intermediate Municipal as provided for in the Agreement.
The assets of Intermediate Municipal to be acquired by Municipal
Income include all cash, cash equivalents, securities, receivables
(including interest or dividends receivables), claims, choses in
action, and other property owned by Intermediate Municipal, and any
deferred or prepaid expenses shown as an asset on the books of
Intermediate Municipal on the Closing Date. Municipal Income will
assume from Intermediate Municipal all liabilities, debts,
obligations, and duties of Intermediate Municipal of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether
or not arising in the ordinary course of business, whether or not
determinable on the Closing Date, and whether or not specifically
referred to in the Agreement; provided, however, that Intermediate
Municipal will use its best efforts, to the extent practicable, to
discharge all of its known liabilities prior to the Closing Date,
other than liabilities incurred in the ordinary course of business.
Municipal Income also will deliver to Intermediate Municipal the
number of full and fractional Municipal Income Class Shares having a
net asset value equal to the value of the net assets of the
corresponding class of Intermediate Municipal less the liabilities of
Intermediate Municipal as of the Closing Date.
The value of Intermediate Municipal's assets to be acquired by
Municipal Income and the amount of its liabilities to be assumed by
Municipal Income will be determined as of the close of business of the
NYSE on the Closing Date, using the valuation procedures set forth in
Attachment 2. The net asset value per share of Municipal Income Class
Shares will be determined as of the same time using the valuation
procedures set forth in the then-current Prospectuses and SAI of
Municipal Income.
As of the Closing Date, Intermediate Municipal will distribute to its
shareholders of record the Class A, Class T, Class B, Class C, and
Institutional Class Shares of Municipal Income it received, so that
each shareholder of the corresponding class of Intermediate Municipal
will receive the number of full and fractional Class A, Class T, Class
B, Class C, and Institutional Class shares of Municipal Income equal
in value to the net asset value of shares of the corresponding class
of Intermediate Municipal held by such shareholder on the Closing
Date. Intermediate Municipal will be liquidated as soon as practicable
thereafter. Such distribution will be accomplished by opening accounts
on the books of Municipal Income in the names of the Intermediate
Municipal shareholders and by transferring thereto the Municipal
Income Class Shares. Shareholders of Class A, Class T, Class B, Class
C, and Institutional Class of Intermediate Municipal will receive
shares of the corresponding class of Municipal Income equal in value
to the shares of Intermediate Municipal they are surrendering, based
upon the relative net asset values of Class A (Intermediate Municipal)
to Class A (Municipal Income), Class T (Intermediate Municipal) to
Class T (Municipal Income), Class B (Intermediate Municipal) to Class
B (Municipal Income), Class C (Intermediate Municipal) to Class C
(Municipal Income), and Institutional Class (Intermediate Municipal)
to Institutional Class (Municipal Income), respectively, as of the
Closing Date. Each Intermediate Municipal shareholder's account shall
be credited with the respective number of full and fractional shares
(rounded to the third decimal place) of Municipal Income due that
shareholder. Municipal Income shall not issue certificates
representing its shares in connection with such exchange.
Accordingly, immediately after the Reorganization, each former
Intermediate Municipal Class A, Class T, Class B, Class C, and
Institutional Class shareholder will own shares of Class A, Class T,
Class B, Class C, and Institutional Class, respectively, of Municipal
Income equal to the net asset value of that shareholder's shares of
Class A, Class T, Class B, Class C, and Institutional Class of
Intermediate Municipal immediately prior to the Reorganization. The
net asset value per share of each class of Municipal Income will be
unchanged by the transaction. Thus, the Reorganization will not result
in a dilution of any shareholder interest.
Any transfer taxes payable upon issuance of Municipal Income Class
Shares in a name other than that of the registered holder of the
shares on the books of Intermediate Municipal as of that time shall be
paid by the person to whom such shares are to be issued as a condition
of such transfer. Any reporting responsibility of Intermediate
Municipal is and will continue to be its responsibility up to and
including the Closing Date and such later date on which Intermediate
Municipal is liquidated.
Pursuant to its management contract with FMR, Intermediate Municipal
will bear the cost of the Reorganization, including professional fees,
expenses associated with the filing of registration statements, and
the cost of soliciting proxies for the Meeting, which will consist
principally of printing and mailing prospectuses and proxy statements,
together with the cost of any supplementary solicitation, provided the
expenses do not exceed each class's voluntary expense cap. Expenses
exceeding each class's voluntary expense cap will be paid by FMR. In
addition, there may be some transaction costs associated with
portfolio adjustments to Intermediate Municipal and Municipal Income
due to the Reorganization prior to the Closing Date which will be
borne by Intermediate Municipal and Municipal Income, respectively.
Any transaction costs associated with portfolio adjustments to
Intermediate Municipal and Municipal Income due to the Reorganization
which occur after the Closing Date and any additional merger-related
costs attributable to Municipal Income which occur after the Closing
Date will be borne by Municipal Income. The funds may recognize a
taxable gain or loss on the disposition of securities pursuant to
these portfolio adjustments. See the section entitled "Federal Income
Tax Considerations."
The consummation of the Reorganization is subject to a number of
conditions set forth in the Agreement, some of which may be waived by
a fund. In addition, the Agreement may be amended in any mutually
agreeable manner, except that no amendment that may have a materially
adverse effect on the shareholders' interests may be made subsequent
to the Meeting.
REASONS FOR THE REORGANIZATION
The Board of Trustees (the Board) of the funds have determined that
the Reorganization is in the best interests of the shareholders of
both funds and that the Reorganization will not result in a dilution
of the interests of shareholders of either fund.
In considering the Reorganization, the Board considered a number of
factors, including the following:
(1) the compatibility of the funds' investment objectives and
policies;
(2) the historical performance of each class of the funds;
(3) the relative expense ratios of each class of the funds;
(4) the costs to be incurred by each fund as a result of the
Reorganization;
(5) the tax consequences of the Reorganization;
(6) the relative size of the funds;
(7) the consolidation of similar funds;
(8) the impact of changes to the Advisor Funds' offerings on the
funds and their shareholders; and
(9) the benefit to FMR and to the shareholders of the funds.
FMR recommended the Reorganization to the Board at a meeting of the
Board on October 14, 1999. In recommending the Reorganization, FMR
advised the Board that the funds have generally similar investment
policies and are generally managed similarly, except that Intermediate
Municipal has a shorter maturity and a more conservative investment
objective. FMR advised the Board that with its larger asset base,
Municipal Income has been able to achieve lower expenses in all
classes than Intermediate Municipal. FMR also advised the Board that
Municipal Income's longer maturity may involve greater volatility and
interest rate risk.
The Board considered that the proposed merger would provide
shareholders of Intermediate Municipal with a fund that has lower
annual expenses and slightly stronger historical performance on a
cumulative basis.
The Board also considered that former shareholders of Intermediate
Municipal will receive Municipal Income Class Shares equal to the
value of their shares in the corresponding class of Intermediate
Municipal. In addition, the Board considered that combining the funds
may result in lower gross expenses.
Finally, the Board considered the proposed Reorganization in the
context of the general goal of consolidating the Advisor municipal
bond fund product line. While the reduction of similar funds and funds
with lower assets would potentially benefit FMR, it should also
benefit shareholders by facilitating increased operational
efficiencies.
DESCRIPTION OF THE SECURITIES TO BE ISSUED
The trust is registered with the SEC as an open-end management
investment company. The trust's Trustees are authorized to issue an
unlimited number of shares of beneficial interest of separate series.
Municipal Income is one of nine funds of the trust. Each share of a
class of Municipal Income represents an equal proportionate interest
with each other share of that class of the fund, and each share of
that class of Municipal Income is entitled to equal voting, dividend,
liquidation, and redemption rights. Each shareholder of the fund is
entitled to one vote for each dollar value of net asset value of the
fund that the shareholder owns. Shares of Municipal Income have no
preemptive or conversion rights (other than shares of Class B of
Municipal Income that convert to shares of Class A of Municipal Income
after seven years). The voting and dividend rights, the right of
redemption, and the privilege of exchange for Intermediate Municipal,
are described in Attachment 2, and for Municipal Income, in the fund's
Prospectuses. Shares are fully paid and nonassessable, except as set
forth in Municipal Income's SAI under the heading "Shareholder
Liability" and Attachment 2 under the heading "Shareholder Liability."
The trust does not hold annual meetings of shareholders. There will
normally be no meetings of shareholders for the purpose of electing
Trustees unless less than a majority of the Trustees holding office
have been elected by shareholders, at which time the Trustees then in
office will call a shareholder meeting for the election of Trustees.
Under the 1940 Act, shareholders of record of at least two-thirds of
the outstanding shares of an investment company may remove a Trustee
by votes cast in person or by proxy at a meeting called for that
purpose. The Trustees are required to call a meeting of shareholders
for the purpose of voting upon the question of removal of any Trustee
when requested in writing to do so by the shareholders of record
holding at least 10% of the trust's outstanding shares.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Intermediate Municipal's assets for Municipal Income
Class Shares and the assumption of the liabilities of Intermediate
Municipal by Municipal Income is intended to qualify for federal
income tax purposes as a tax-free reorganization under the Code. With
respect to the Reorganization, the participating funds have received
an opinion from Kirkpatrick & Lockhart LLP, counsel to Intermediate
Municipal and Municipal Income, substantially to the effect that:
(i) The acquisition by Municipal Income of all of the assets of
Intermediate Municipal solely in exchange for Municipal Income Class
Shares and the assumption by Municipal Income of Intermediate
Municipal's liabilities, followed by the distribution by Intermediate
Municipal of Municipal Income Class Shares to the shareholders of the
corresponding class of Intermediate Municipal pursuant to the
liquidation of Intermediate Municipal and constructively in exchange
for their Intermediate Municipal shares, will constitute a
reorganization within the meaning of section 368(a)(1)(C) of the Code,
and Intermediate Municipal and Municipal Income will each be "a party
to a reorganization" within the meaning of section 368(b) of the Code;
(ii) No gain or loss will be recognized by Intermediate Municipal
upon the transfer of all of its assets to Municipal Income in exchange
solely for Municipal Income Class Shares and Municipal Income's
assumption of Intermediate Municipal's liabilities, followed by
Intermediate Municipal's subsequent distribution of those shares to
shareholders of the corresponding class in liquidation of Intermediate
Municipal;
(iii) No gain or loss will be recognized by Municipal Income upon
the receipt of the assets of Intermediate Municipal in exchange solely
for Municipal Income Class Shares and its assumption of Intermediate
Municipal's liabilities;
(iv) The shareholders of each class of Intermediate Municipal will
recognize no gain or loss upon the exchange of their Intermediate
Municipal shares solely for Municipal Income Class Shares of the
corresponding class;
(v) The basis of Intermediate Municipal's assets in the hands of
Municipal Income will be the same as the basis of those assets in the
hands of Intermediate Municipal immediately prior to the
Reorganization, and the holding period of those assets in the hands of
Municipal Income will include the holding period of those assets in
the hands of Intermediate Municipal;
(vi) The basis of Intermediate Municipal shareholders in Municipal
Income Class Shares will be the same as their basis in Intermediate
Municipal shares of the corresponding class to be surrendered in
exchange therefor; and
(vii) The holding period of the Municipal Income Class Shares to be
received by the Intermediate Municipal shareholders will include the
period during which the Intermediate Municipal shares of the
corresponding class to be surrendered in exchange therefor were held,
provided such Intermediate Municipal shares were held as capital
assets by those shareholders on the date of the Reorganization.
Shareholders of Intermediate Municipal should consult their tax
advisers regarding the effect, if any, of the proposed Reorganization
in light of their individual circumstances. Because the foregoing
discussion only relates to the federal income tax consequences of the
Reorganization, those shareholders also should consult their tax
advisers as to state and local tax consequences, if any, of the
Reorganization.
CAPITALIZATION
The following table shows the capitalization of the funds as of
October 31, 1999 and on a pro forma combined basis (unaudited) as of
that date giving effect to the Reorganization.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NET ASSETS NET ASSET VALUE PER SHARE SHARES OUTSTANDING
Intermediate Municipal: $ 2,572,343 $ 10.15 253,436
Class A
Class T $ 50,431,715 $ 10.15 4,968,378
Class B $ 10,387,389 $ 10.14 1,024,065
Class C $ 2,561,719 $ 10.15 252,268
Institutional Class $ 5,996,833 $ 10.15 590,849
Municipal Income
Class A $ 10,721,810 $ 11.69 917,460
Class T $ 329,926,390 $ 11.70 28,197,578
Class B $ 63,464,208 $ 11.67 5,438,241
Class C $ 13,071,301 $ 11.70 1,117,056
Institutional Class $ 3,430,780 $ 11.65 294,537
Pro Forma Combined Fund
Class A $ 13,294,153 $ 11.69 1,137,506
Class T $ 380,358,105 $ 11.70 32,507,981
Class B $ 73,851,597 $ 11.67 6,328,334
Class C $ 15,633,020 $ 11.70 1,336,006
Institutional Class $ 9,427,613 $ 11.65 809,287
</TABLE>
CONCLUSION
The Agreement and the transactions provided for therein were approved
by the Board at a meeting held on October 14, 1999. The Board of
Trustees of Fidelity Advisor Series II determined that the proposed
Reorganization is in the best interests of shareholders of each fund
and that the interests of existing shareholders of Intermediate
Municipal and Municipal Income would not be diluted as a result of the
Reorganization. In the event that the Reorganization is not
consummated, Intermediate Municipal will continue to engage in
business as a fund of a registered investment company and FMR and the
Board of Fidelity Advisor Series II will consider other proposals for
the reorganization or liquidation of the fund.
ADDITIONAL INFORMATION ABOUT MUNICIPAL INCOME
The applicable Prospectus for Municipal Income, dated December 29,
1999, is enclosed with this Proxy Statement. Municipal Income's
Prospectuses are incorporated herein by reference. The Prospectuses
contain additional information about the fund including its investment
objective and policies, investment adviser, advisory fees and
expenses, organization, and procedures for purchasing and redeeming
shares. The Prospectuses also contains Municipal Income's financial
highlights for the fiscal year ended October 31, 1999, as shown below:
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.540 $ 12.150 $ 11.740 $ 11.630
period
Income from Investment
Operations
Net interest income .567 .571 .583 D .105 D, E
Net realized and unrealized (.850) .390 .445 .109
gain (loss)
Total from investment (.283) .961 1.028 .214
operations
Less Distributions
From net interest income (.567) (.571) (.616) E (.104)
In excess of net interest - - (.002) -
income
Total distributions (.567) (.571) (.618) (.104)
Net asset value, end of period $ 11.690 $ 12.540 $ 12.150 $ 11.740
TOTAL RETURN B, C (2.36)% 8.07% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,722 $ 6,721 $ 3,755 $ 202
(000 omitted)
Ratio of expenses to average .72% .90% G .90% G .90% A, G
net assets
Ratio of net interest income 4.62% 4.57% 4.87% 5.73% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996
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.
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.560 $ 12.150 $ 11.760 $ 11.880 $ 11.220
of period
Income from Investment
Operations
Net interest income .555 .571 .597 B .677 B, C .700
Net realized and unrealized (.860) .410 .407 (.136) .660
gain (loss)
Total from investment (.305) .981 1.004 .541 1.360
operations
Less Distributions
From net interest income (.555) (.571) (.612) C (.661) (.700)
In excess of net interest - - (.002) - -
income
Total distributions (.555) (.571) (.614) (.661) (.700)
Net asset value, end of period $ 11.700 $ 12.560 $ 12.150 $ 11.760 $ 11.880
TOTAL RETURN A (2.53)% 8.15% 8.89% 4.68% 12.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 329,926 $ 380,325 $ 392,075 $ 480,432 $ 565,131
(000 omitted)
Ratio of expenses to average .81% .87% .89% .89% .91%
net assets
Ratio of net interest income 4.51% 4.62% 5.04% 5.74% 6.06%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.530 $ 12.130 $ 11.740 $ 11.860 $ 11.210
of period
Income from Investment
Operations
Net interest income .476 .491 .515 C .596 C, D .612
Net realized and unrealized (.860) .400 .416 (.136) .650
gain (loss)
Total from investment (.384) .891 .931 .460 1.262
operations
Less Distributions
From net interest income (.476) (.491) (.539) D (.580) (.612)
In excess of net interest - - (.002) - -
income
Total distributions (.476) (.491) (.541) (.580) (.612)
Net asset value, end of period $ 11.670 $ 12.530 $ 12.130 $ 11.740 $ 11.860
TOTAL RETURN A, B (3.16)% 7.47% 8.15% 3.98% 11.57%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 63,464 $ 55,032 $ 41,024 $ 39,389 $ 32,395
(000 omitted)
Ratio of expenses to average 1.46% 1.53% 1.56% 1.57% 1.86% E
net assets
Ratio of net interest income 3.88% 3.96% 4.35% 5.06% 5.18%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
FINANCIAL HIGHLIGHTS - CLASS C
YEARS ENDED OCTOBER 31, 1999 1998 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.560 $ 12.130
period
Income from Investment
Operations
Net interest income .465 .455
Net realized and unrealized (.860) .430
gain (loss)
Total from investment (.395) .885
operations
Less Distributions
From net interest income (.465) (.455)
Net asset value, end of period $ 11.700 $ 12.560
TOTAL RETURN B, C (3.24)% 7.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 13,071 $ 7,031
(000 omitted)
Ratio of expenses to average 1.56% 1.75% A, E
net assets
Ratio of net interest income 3.79% 3.60% A
to average net assets
Portfolio turnover rate 23% 36%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.510 $ 12.120 $ 11.720 $ 11.880 $ 11.700
of period
Income from Investment
Operations
Net interest income .584 .592 .609 D .707 D, E .232
Net realized and unrealized (.860) .390 .464 (.197) .180
gain (loss)
Total from investment (.276) .982 1.073 .510 .412
operations
Less Distributions
From net interest income (.584) (.592) (.671) E (.670) (.232)
In excess of net interest - - (.002) - -
income
Total distributions (.584) (.592) (.673) (.670) (.232)
Net asset value, end of period $ 11.650 $ 12.510 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C (2.31)% 8.28% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,431 $ 3,741 $ 1,511 $ 927 $ 154
(000 omitted)
Ratio of expenses to average .60% .75% G .75% G .75% G .75% A, G
net assets
Ratio of net interest income 4.75% 4.75% 5.11% 5.88% 5.89% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
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.
MISCELLANEOUS
LEGAL MATTERS. Certain legal matters in connection with the issuance
of Municipal Income Class A, Class T, Class B, Class C, and
Institutional Class shares have been passed upon by Kirkpatrick &
Lockhart LLP, counsel to the trust.
EXPERTS. The audited financial statements of Intermediate Municipal
and Municipal Income have been examined by PricewaterhouseCoopers LLP,
independent accountants, whose report thereon is included in the
Annual Report to Shareholders for the fiscal year ended October 31,
1999. The financial statements audited by PricewaterhouseCoopers LLP,
have been incorporated by reference in reliance on their reports given
on their authority as experts in auditing and accounting.
AVAILABLE INFORMATION. Fidelity Advisor Series II is subject to the
informational requirements of the Securities and Exchange Act of 1934
and the 1940 Act, and in accordance therewith files reports, proxy
material, and other information with the SEC. Such reports, proxy
material, and other information can be inspected and copied at the
Public Reference Room maintained by the SEC at 450 Fifth Street, N.W.,
Washington D.C. 20549 and 7 World Trade Center, New York, NY 10048.
Copies of such material can also be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington D.C. 20549, at
prescribed rates.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR
NOMINEES. Please advise Fidelity Advisor Series II, in care of Client
Services at 1-800-843-3001, whether other persons are beneficial
owners of shares for which proxies are being solicited and, if so, the
number of copies of the Proxy Statement you wish to receive in order
to supply copies to the beneficial owners of the respective shares.
ATTACHMENT 1
EXCERPTS FROM THE ANNUAL REPORTS OF FIDELITY ADVISOR
MUNICIPAL INCOME FUND
DATED OCTOBER 31, 1999
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -2.36% 6.22% 7.20%
- - CL A
FIDELITY ADV MUNICIPAL INCOME -6.99% 5.19% 6.68%
- - CL A (INCL. 4.75% SALES
CHARGE)
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
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
FA Municipal Income -CL A LB Municipal Bond
00257 LB015
1989/10/31 9525.00 10000.00
1989/11/30 9642.26 10175.00
1989/12/31 9733.93 10258.23
1990/01/31 9749.29 10209.71
1990/02/28 9819.16 10300.58
1990/03/31 9880.76 10303.67
1990/04/30 9790.39 10229.07
1990/05/31 9991.02 10452.37
1990/06/30 10108.74 10544.24
1990/07/31 10264.65 10699.25
1990/08/31 10195.39 10543.89
1990/09/30 10267.89 10549.90
1990/10/31 10408.86 10741.28
1990/11/30 10667.13 10957.28
1990/12/31 10735.18 11004.95
1991/01/31 10860.12 11152.64
1991/02/28 10943.62 11249.66
1991/03/31 11007.96 11253.71
1991/04/30 11187.20 11403.39
1991/05/31 11325.48 11504.76
1991/06/30 11351.84 11493.37
1991/07/31 11498.63 11633.36
1991/08/31 11602.47 11786.57
1991/09/30 11738.56 11940.04
1991/10/31 11868.63 12047.50
1991/11/30 11913.28 12081.11
1991/12/31 12042.85 12340.37
1992/01/31 12176.34 12368.51
1992/02/29 12242.49 12372.46
1992/03/31 12303.91 12377.04
1992/04/30 12414.96 12487.20
1992/05/31 12526.33 12634.17
1992/06/30 12698.09 12846.17
1992/07/31 13140.25 13231.30
1992/08/31 13038.49 13102.30
1992/09/30 13119.86 13187.98
1992/10/31 12961.53 13058.35
1992/11/30 13221.30 13292.22
1992/12/31 13380.71 13427.94
1993/01/31 13607.04 13584.10
1993/02/28 14087.51 14075.44
1993/03/31 13940.58 13926.66
1993/04/30 14088.41 14067.18
1993/05/31 14205.08 14146.24
1993/06/30 14432.83 14382.34
1993/07/31 14443.55 14401.18
1993/08/31 14815.55 14701.01
1993/09/30 15020.71 14868.46
1993/10/31 15028.77 14897.15
1993/11/30 14881.89 14765.91
1993/12/31 15225.54 15077.62
1994/01/31 15402.83 15249.80
1994/02/28 14995.73 14854.83
1994/03/31 14196.41 14249.95
1994/04/30 14290.61 14370.79
1994/05/31 14375.12 14495.38
1994/06/30 14322.20 14406.81
1994/07/31 14580.55 14670.89
1994/08/31 14603.45 14721.65
1994/09/30 14374.69 14505.54
1994/10/31 14122.70 14247.92
1994/11/30 13668.66 13990.32
1994/12/31 13999.94 14298.24
1995/01/31 14472.89 14706.89
1995/02/28 14862.84 15134.56
1995/03/31 14940.99 15308.46
1995/04/30 14990.10 15326.52
1995/05/31 15469.80 15815.59
1995/06/30 15348.45 15678.00
1995/07/31 15398.45 15826.63
1995/08/31 15554.23 16027.31
1995/09/30 15679.66 16128.76
1995/10/31 15888.38 16363.27
1995/11/30 16188.26 16634.74
1995/12/31 16331.19 16794.60
1996/01/31 16420.27 16921.40
1996/02/29 16394.84 16807.18
1996/03/31 16048.42 16592.38
1996/04/30 15984.31 16545.43
1996/05/31 15965.46 16538.81
1996/06/30 16151.45 16718.92
1996/07/31 16257.01 16871.06
1996/08/31 16292.40 16867.01
1996/09/30 16437.73 17103.15
1996/10/31 16599.97 17296.58
1996/11/30 16890.01 17613.11
1996/12/31 16827.29 17539.14
1997/01/31 16903.32 17572.28
1997/02/28 17054.66 17733.60
1997/03/31 16866.51 17497.21
1997/04/30 17008.53 17643.66
1997/05/31 17211.58 17909.02
1997/06/30 17427.39 18099.75
1997/07/31 17924.95 18601.12
1997/08/31 17761.26 18426.82
1997/09/30 17994.87 18645.55
1997/10/31 18097.79 18765.44
1997/11/30 18214.66 18875.78
1997/12/31 18508.35 19151.18
1998/01/31 18686.48 19348.82
1998/02/28 18692.48 19354.62
1998/03/31 18751.95 19371.66
1998/04/30 18655.47 19284.29
1998/05/31 18940.70 19589.56
1998/06/30 19009.91 19666.74
1998/07/31 19051.06 19716.11
1998/08/31 19338.44 20020.72
1998/09/30 19563.06 20270.18
1998/10/31 19558.88 20269.77
1998/11/30 19631.21 20340.92
1998/12/31 19658.83 20392.18
1999/01/31 19875.77 20634.64
1999/02/28 19754.51 20544.47
1999/03/31 19753.05 20573.03
1999/04/30 19795.75 20624.25
1999/05/31 19666.19 20504.84
1999/06/30 19357.01 20209.57
1999/07/31 19418.29 20283.13
1999/08/31 19269.45 20120.87
1999/09/30 19295.71 20129.12
1999/10/29 19098.05 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094513 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class A on
October 31, 1989, and the current 4.75% sales charge was paid. As the
chart shows, by October 31, 1999, the value of the investment would
have grown to $19,098 - a 90.98% increase on the initial investment.
For comparison, look at how the Lehman Brothers Municipal Bond Index
did over the same period. With dividends reinvested, the same $10,000
would have grown to $19,911 - a 99.11% increase.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -2.53% 6.21% 7.20%
- - CL T
FIDELITY ADV MUNICIPAL INCOME -5.95% 5.46% 6.82%
- - CL T (INCL. 3.50% SALES
CHARGE)
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
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
FA Municipal Income -CL T LB Municipal Bond
00169 LB015
1989/10/31 9650.00 10000.00
1989/11/30 9768.80 10175.00
1989/12/31 9861.67 10258.23
1990/01/31 9877.23 10209.71
1990/02/28 9948.02 10300.58
1990/03/31 10010.43 10303.67
1990/04/30 9918.87 10229.07
1990/05/31 10122.14 10452.37
1990/06/30 10241.40 10544.24
1990/07/31 10399.36 10699.25
1990/08/31 10329.19 10543.89
1990/09/30 10402.64 10549.90
1990/10/31 10545.46 10741.28
1990/11/30 10807.12 10957.28
1990/12/31 10876.06 11004.95
1991/01/31 11002.64 11152.64
1991/02/28 11087.24 11249.66
1991/03/31 11152.42 11253.71
1991/04/30 11334.01 11403.39
1991/05/31 11474.11 11504.76
1991/06/30 11500.82 11493.37
1991/07/31 11649.53 11633.36
1991/08/31 11754.73 11786.57
1991/09/30 11892.61 11940.04
1991/10/31 12024.39 12047.50
1991/11/30 12069.62 12081.11
1991/12/31 12200.89 12340.37
1992/01/31 12336.14 12368.51
1992/02/29 12403.16 12372.46
1992/03/31 12465.38 12377.04
1992/04/30 12577.88 12487.20
1992/05/31 12690.72 12634.17
1992/06/30 12864.73 12846.17
1992/07/31 13312.69 13231.30
1992/08/31 13209.60 13102.30
1992/09/30 13292.04 13187.98
1992/10/31 13131.63 13058.35
1992/11/30 13394.81 13292.22
1992/12/31 13556.31 13427.94
1993/01/31 13785.61 13584.10
1993/02/28 14272.39 14075.44
1993/03/31 14123.53 13926.66
1993/04/30 14273.30 14067.18
1993/05/31 14391.50 14146.24
1993/06/30 14622.24 14382.34
1993/07/31 14633.10 14401.18
1993/08/31 15009.98 14701.01
1993/09/30 15217.84 14868.46
1993/10/31 15226.00 14897.15
1993/11/30 15077.19 14765.91
1993/12/31 15425.35 15077.62
1994/01/31 15604.97 15249.80
1994/02/28 15192.53 14854.83
1994/03/31 14382.72 14249.95
1994/04/30 14478.15 14370.79
1994/05/31 14563.77 14495.38
1994/06/30 14510.15 14406.81
1994/07/31 14771.89 14670.89
1994/08/31 14795.10 14721.65
1994/09/30 14563.33 14505.54
1994/10/31 14308.04 14247.92
1994/11/30 13848.04 13990.32
1994/12/31 14183.66 14298.24
1995/01/31 14662.82 14706.89
1995/02/28 15057.90 15134.56
1995/03/31 15137.07 15308.46
1995/04/30 15186.82 15326.52
1995/05/31 15672.82 15815.59
1995/06/30 15549.87 15678.00
1995/07/31 15600.53 15826.63
1995/08/31 15758.35 16027.31
1995/09/30 15885.43 16128.76
1995/10/31 16096.89 16363.27
1995/11/30 16400.70 16634.74
1995/12/31 16545.51 16794.60
1996/01/31 16635.76 16921.40
1996/02/29 16610.00 16807.18
1996/03/31 16259.03 16592.38
1996/04/30 16194.08 16545.43
1996/05/31 16174.98 16538.81
1996/06/30 16363.41 16718.92
1996/07/31 16470.36 16871.06
1996/08/31 16506.21 16867.01
1996/09/30 16654.34 17103.15
1996/10/31 16850.26 17296.58
1996/11/30 17099.26 17613.11
1996/12/31 17033.52 17539.14
1997/01/31 17109.98 17572.28
1997/02/28 17277.37 17733.60
1997/03/31 17087.14 17497.21
1997/04/30 17230.58 17643.66
1997/05/31 17436.13 17909.02
1997/06/30 17654.41 18099.75
1997/07/31 18158.02 18601.12
1997/08/31 18007.37 18426.82
1997/09/30 18229.05 18645.55
1997/10/31 18348.67 18765.44
1997/11/30 18449.05 18875.78
1997/12/31 18759.65 19151.18
1998/01/31 18940.44 19348.82
1998/02/28 18961.30 19354.62
1998/03/31 19007.24 19371.66
1998/04/30 18910.32 19284.29
1998/05/31 19200.14 19589.56
1998/06/30 19270.68 19666.74
1998/07/31 19313.18 19716.11
1998/08/31 19605.05 20020.72
1998/09/30 19832.99 20270.18
1998/10/31 19844.33 20269.77
1998/11/30 19900.07 20340.92
1998/12/31 19926.10 20392.18
1999/01/31 20143.76 20634.64
1999/02/28 20019.22 20544.47
1999/03/31 20016.13 20573.03
1999/04/30 20057.74 20624.25
1999/05/31 19924.84 20504.84
1999/06/30 19610.01 20209.57
1999/07/31 19686.66 20283.13
1999/08/31 19534.44 20120.87
1999/09/30 19543.06 20129.12
1999/10/29 19341.54 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094545 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class T on
October 31, 1989, and the current 3.50% sales charge was paid. As the
chart shows, by October 31, 1999, the value of the investment would
have grown to $19,342 - a 93.42% increase on the initial investment.
For comparison, look at how the Lehman Brothers Municipal Bond Index
did over the same period. With dividends reinvested, the same $10,000
would have grown to $19,911 - a 99.11% increase.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -2.31% 6.36% 7.27%
- - INST CL
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
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
FA Municipal Income -CL I LB Municipal Bond
00679 LB015
1989/10/31 10000.00 10000.00
1989/11/30 10123.11 10175.00
1989/12/31 10219.35 10258.23
1990/01/31 10235.47 10209.71
1990/02/28 10308.83 10300.58
1990/03/31 10373.50 10303.67
1990/04/30 10278.62 10229.07
1990/05/31 10489.26 10452.37
1990/06/30 10612.85 10544.24
1990/07/31 10776.54 10699.25
1990/08/31 10703.82 10543.89
1990/09/30 10779.93 10549.90
1990/10/31 10927.93 10741.28
1990/11/30 11199.08 10957.28
1990/12/31 11270.53 11004.95
1991/01/31 11401.70 11152.64
1991/02/28 11489.36 11249.66
1991/03/31 11556.91 11253.71
1991/04/30 11745.09 11403.39
1991/05/31 11890.27 11504.76
1991/06/30 11917.94 11493.37
1991/07/31 12072.05 11633.36
1991/08/31 12181.07 11786.57
1991/09/30 12323.95 11940.04
1991/10/31 12460.51 12047.50
1991/11/30 12507.38 12081.11
1991/12/31 12643.41 12340.37
1992/01/31 12783.56 12368.51
1992/02/29 12853.01 12372.46
1992/03/31 12917.49 12377.04
1992/04/30 13034.08 12487.20
1992/05/31 13151.00 12634.17
1992/06/30 13331.33 12846.17
1992/07/31 13795.53 13231.30
1992/08/31 13688.71 13102.30
1992/09/30 13774.13 13187.98
1992/10/31 13607.90 13058.35
1992/11/30 13880.63 13292.22
1992/12/31 14047.99 13427.94
1993/01/31 14285.60 13584.10
1993/02/28 14790.04 14075.44
1993/03/31 14635.78 13926.66
1993/04/30 14790.98 14067.18
1993/05/31 14913.47 14146.24
1993/06/30 15152.58 14382.34
1993/07/31 15163.83 14401.18
1993/08/31 15554.38 14701.01
1993/09/30 15769.78 14868.46
1993/10/31 15778.24 14897.15
1993/11/30 15624.03 14765.91
1993/12/31 15984.82 15077.62
1994/01/31 16170.95 15249.80
1994/02/28 15743.55 14854.83
1994/03/31 14904.37 14249.95
1994/04/30 15003.27 14370.79
1994/05/31 15091.99 14495.38
1994/06/30 15036.43 14406.81
1994/07/31 15307.66 14670.89
1994/08/31 15331.71 14721.65
1994/09/30 15091.53 14505.54
1994/10/31 14826.98 14247.92
1994/11/30 14350.30 13990.32
1994/12/31 14698.10 14298.24
1995/01/31 15194.64 14706.89
1995/02/28 15604.04 15134.56
1995/03/31 15686.08 15308.46
1995/04/30 15737.64 15326.52
1995/05/31 16241.26 15815.59
1995/06/30 16113.86 15678.00
1995/07/31 16169.29 15826.63
1995/08/31 16336.27 16027.31
1995/09/30 16499.20 16128.76
1995/10/31 16693.85 16363.27
1995/11/30 17024.88 16634.74
1995/12/31 17175.96 16794.60
1996/01/31 17270.83 16921.40
1996/02/29 17231.94 16807.18
1996/03/31 16882.51 16592.38
1996/04/30 16814.21 16545.43
1996/05/31 16753.01 16538.81
1996/06/30 16950.12 16718.92
1996/07/31 17062.62 16871.06
1996/08/31 17101.51 16867.01
1996/09/30 17256.28 17103.15
1996/10/31 17429.81 17296.58
1996/11/30 17768.23 17613.11
1996/12/31 17707.29 17539.14
1997/01/31 17764.39 17572.28
1997/02/28 17946.91 17733.60
1997/03/31 17758.06 17497.21
1997/04/30 17901.01 17643.66
1997/05/31 18123.66 17909.02
1997/06/30 18359.30 18099.75
1997/07/31 18890.63 18601.12
1997/08/31 18724.08 18426.82
1997/09/30 18961.09 18645.55
1997/10/31 19075.95 18765.44
1997/11/30 19202.93 18875.78
1997/12/31 19517.78 19151.18
1998/01/31 19710.75 19348.82
1998/02/28 19735.47 19354.62
1998/03/31 19769.01 19371.66
1998/04/30 19669.58 19284.29
1998/05/31 19973.88 19589.56
1998/06/30 20049.58 19666.74
1998/07/31 20095.74 19716.11
1998/08/31 20402.45 20020.72
1998/09/30 20659.14 20270.18
1998/10/31 20656.16 20269.77
1998/11/30 20718.50 20340.92
1998/12/31 20749.72 20392.18
1999/01/31 20981.34 20634.64
1999/02/28 20855.35 20544.47
1999/03/31 20856.37 20573.03
1999/04/30 20904.11 20624.25
1999/05/31 20769.09 20504.84
1999/06/30 20443.43 20209.57
1999/07/31 20510.64 20283.13
1999/08/31 20355.29 20120.87
1999/09/30 20385.45 20129.12
1999/10/29 20178.22 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094814 R00000000000123
Fidelity Adv Municipal Income - Inst CL LB Municipal Bond
$20,178
$19,911
$
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Institutional
Class on October 31, 1989. As the chart shows, by October 31, 1999,
the value of the investment would have grown to $20,178 - a 101.78%
increase on the initial investment. For comparison, look at how the
Lehman Brothers Municipal Bond Index did over the same period. With
dividends reinvested, the same $10,000 would have grown to $19,911 - a
99.11% increase.
An interview with Christine Thompson, Portfolio Manager of Fidelity
Advisor Municipal Income Fund
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. For the 12-month period that ended October 31, 1999, the fund's
Class A, Class T, Class B and Class C shares had total returns
of-2.36%, -2.53%, -3.16% and -3.24%, respectively. To get a sense of
how the fund did relative to its competitors, the general municipal
debt funds average returned -4.18% for the same 12-month period,
according to Lipper Inc. Additionally, the Lehman Brothers Municipal
Bond Index, which tracks the types of securities in which the fund
invests, returned -1.77% for the same 12-month period.
A. For the 12-month period that ended October 31, 1999, the fund's
Institutional Class shares had a total return of -2.31%. To get a
sense of how the fund did relative to its competitors, the general
municipal debt funds average returned -4.18% for the same 12-month
period, according to Lipper Inc. Additionally, the Lehman Brothers
Municipal Bond Index, which tracks the types of securities in which
the fund invests, returned -1.77% for the same 12-month period.
Q. RISING INTEREST RATES MADE IT A FAIRLY DIFFICULT AND VOLATILE YEAR
FOR MUNICIPAL BONDS. WHY DID THE FUND OUTPERFORM ITS PEERS?
A. The fund's outperformance of its peers was in part due to duration
management. In keeping with Fidelity's investment approach, I managed
the fund's duration - a measure of its interest-rate sensitivity - to
be in line with the municipal market as a whole, as reflected by the
Lehman Brothers Municipal Bond Index. As a result, I don't lengthen or
shorten duration based on where I think interest rates will be at some
point down the road, because I don't believe that anyone can do so
with any accuracy over time. But other funds in the peer group do
actively manage duration and some increased their interest-rate
sensitivity, which likely caused their returns to suffer when interest
rates rose.
Q. WHICH BOND MATURITIES DID YOU FAVOR?
A. I emphasized intermediate-maturity bonds - those set to mature
within five to 15 years - which also was a plus for the fund's
performance. Although they were a disappointment early on, they
bounced back more recently. Initially, intermediates suffered
primarily from reduced demand and increased supply at the hands of
relatively heavy selling from some specific types of institutional
investors. In contrast, relatively strong demand from individual
investors helped to support the performance of shorter- and
longer-term bonds. Based on Fidelity's quantitative models,
intermediates offered the most attractive value for their given
interest-rate sensitivity and their total return potential. The fund's
focus on this maturity range worked in its favor during the past
several months because institutional investors came back into the
market with purchases of intermediate securities.
Q. THE FUND ALSO HAD A RELATIVELY LARGE EXPOSURE TO "PREMIUM" BONDS.
WHAT ARE PREMIUMS AND WHY WERE THEY ATTRACTIVE?
A. Premium coupon bonds pay interest rates above prevailing market
rates and trade at prices above face - or par - value. One appealing
aspect of premiums was that they were insulated from unfavorable tax
treatment that negatively affected the prices of lower coupon bonds as
interest rates rose.
Q. WHERE DID YOU FIND ATTRACTIVE OPPORTUNITIES?
A. I found some attractive opportunities in the education sector and
bought bonds backed by colleges and universities. Education bonds
offer diversification from the economically sensitive areas of the
market - such as general obligation bonds. In addition, demographic
trends support a growing number of students seeking to obtain advanced
degrees over the next several years. I also found opportunities in the
health care and utilities sectors, both of which are undergoing a wave
of consolidation. I looked for bonds I felt could benefit from
consolidation, either by being acquired or affiliating with a stronger
entity, through the restructuring of debt.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET AND THE FUND?
A. At the end of the period, municipals were priced attractively
compared to their Treasury counterparts. To the extent that investors
realize and act on that relative cheapness, municipals could gain
ground on Treasuries. Of course, the major determinant of the bond
market's performance will be the direction of interest rates, which I
don't spend time trying to forecast. Rather, I look for attractively
priced bonds that I believe will outperform, no matter where interest
rates end up.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH OCTOBER 31, 1999. THE MANAGER'S VIEWS ARE SUBJECT
TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS.
ATTACHMENT 2
INTERMEDIATE MUNICIPAL- SUPPLEMENTAL INFORMATION
This Attachment contains supplemental information about Fidelity
Advisor Intermediate Municipal Income Fund (the fund or Intermediate
Municipal), including policies, investment adviser, advisory fees and
expenses, organization, and procedures for purchasing and redeeming
shares.
PERFORMANCE
The following information illustrates the changes in Intermediate
Municipal's performance from year to year and compares Class T's and
Institutional Class's performance to the performance of a market index
and an average of the performance of similar funds over various
periods of time. The fund also compares its performance to the
performance of an additional index over various periods of time. Data
for the additional index is available only from June 30, 1993 to the
present. Returns are based on past results and are not an indication
of future performance.
The following information illustrates the changes in Intermediate
Municipal's performance from year to year and compares Class T's and
Institutional Class's performance to the performance of a market index
and an average of the performance of similar funds over various
periods of time. The fund also compares its performance to the
performance of an additional index over various periods of time. Data
for the additional index is available only from June 30, 1993 to the
present. Returns are based on past results and are not an indication
of future performance.
YEAR-BY-YEAR RETURNS
The returns in the chart for Class T shares do not include the effect
of Class T's front-end sales charge. If the effect of the sales charge
were reflected, returns for Class T shares would be lower than those
shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- CLASS T
Calendar Years 1993 1994 1995 1996 1997 1998
9.43% -5.68% 14.20% 3.89% 7.80% 5.08%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: 9.43
Row: 6, Col: 1, Value: -5.68
Row: 7, Col: 1, Value: 14.2
Row: 8, Col: 1, Value: 3.89
Row: 9, Col: 1, Value: 7.8
Row: 10, Col: 1, Value: 5.08
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS T OF ADVISOR
INTERMEDIATE MUNICIPAL INCOME, THE HIGHEST RETURN FOR A QUARTER WAS
6.27% (QUARTER ENDING MARCH 31, 1995) AND THE LOWEST RETURN FOR A
QUARTER WAS -5.44% (QUARTER ENDING MARCH 31, 1994).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR CLASS T OF
ADVISOR INTERMEDIATE MUNICIPAL INCOME WAS -0.88%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL CLASS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
7.79% 6.37% 9.64% 7.28% 9.94% -5.43% 14.37% 4.15% 8.07% 5.29%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 7.79
Row: 2, Col: 1, Value: 6.37
Row: 3, Col: 1, Value: 9.639999999999999
Row: 4, Col: 1, Value: 7.28
Row: 5, Col: 1, Value: 9.94
Row: 6, Col: 1, Value: -5.430000000000001
Row: 7, Col: 1, Value: 14.37
Row: 8, Col: 1, Value: 4.15
Row: 9, Col: 1, Value: 8.07
Row: 10, Col: 1, Value: 5.29
DURING THE PERIODS SHOWN IN THE CHART FOR INSTITUTIONAL CLASS OF
ADVISOR INTERMEDIATE MUNICIPAL INCOME, THE HIGHEST RETURN FOR A
QUARTER WAS 6.22% (QUARTER ENDING MARCH 31, 1995) AND THE LOWEST
RETURN FOR A QUARTER WAS -5.46% (QUARTER ENDING MARCH 31, 1994).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR INSTITUTIONAL
CLASS OF ADVISOR INTERMEDIATE MUNICIPAL INCOME WAS -0.74%.
AVERAGE ANNUAL RETURNS
The returns in the following table include the effect of Class A's
and Class T's maximum applicable front-end sales charge and Class B's
and Class C's maximum applicable contingent deferred sales charge
(CDSC).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the periods ended Past 1 year Past 5 years Past 10 years/Life of Class
December 31, 1998
Advisor Intermediate 1.18% n/a 5.31%A
Municipal Income-Class A
Advisor Intermediate 2.19% 4.27% 5.12%B
Municipal Income-Class T
Advisor Intermediate 1.35% n/a 5.81%C, E
Municipal Income-Class B
Advisor Intermediate 3.32% n/a 5.32%D
Municipal Income-Class C
Advisor Intermediate 5.29% 5.09% 6.63%
Municipal Income-
Institutional Class
Lehman Brothers Municipal 6.48% 6.22% 8.22%
Bond Index
Lehman Brothers 1-17 Year 6.28% 5.92% n/a
Municipal Bond Index
Lipper Intermediate Municipal 5.35 % 5.17% 6.88%
Debt Funds Average
</TABLE>
A FROM SEPTEMBER 3, 1996.
B FROM SEPTEMBER 10, 1992.
C FROM JUNE 30, 1994.
D FROM NOVEMBER 3, 1997.
E RETURNS REFLECT THE CONVERSION OF CLASS B TO CLASS A SHARES AFTER A
MAXIMUM OF FOUR YEARS.
If Fidelity Management & Research Company (FMR) had not reimbursed
certain class expenses during these periods, the returns for Class A,
Class T, Class B, Class C, and Institutional Class would have been
lower.
The Lehman Brothers 1-17 Year Municipal Bond Index is a market
value-weighted index of investment-grade municipal bond with
maturities between one and 17 years.
The Lehman Brothers Municipal Bond Index is a market value-weighted
index of investment-grade municipal bonds with maturities of one year
or more.
Lipper Intermediate Municipal Debt Funds Average reflects the
performance (excluding sales charges) of mutual funds with similar
objectives.
BUYING AND SELLING SHARES
GENERAL INFORMATION
For account, product and service information, please use the
following phone numbers:
(small solid bullet) If you are investing through a broker-dealer or
insurance representative, 1-800-522-7297 (8:30 a.m. - 7:00 p.m.
Eastern time, Monday through Friday).
(small solid bullet) If you are investing through a bank
representative, 1-800-843-3001 (8:30 a.m. - 7:00 p.m. Eastern time,
Monday through Friday).
Please use the following addresses:
BUYING OR SELLING SHARES
Fidelity Investments(registered trademark)
P.O. Box 770002
Cincinnati, OH 45277-0081
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH2A
Hebron, KY 41048
You may buy or sell Class A, Class T, Class B, Class C, and
Institutional Class shares of the fund through an investment
professional. When you invest through an investment professional, the
procedures for buying, selling, and exchanging Class A, Class T, Class
B, Class C, and Institutional Class shares of the fund and the account
features and policies may differ. Additional fees may also apply to
your investment in Class A, Class T, Class B, Class C, and
Institutional Class shares of the fund, including a transaction fee if
you buy or sell Class A, Class T, Class B, Class C, and Institutional
Class shares of the fund through a broker or other investment
professional.
Certain methods of contacting Fidelity, such as by telephone, may be
unavailable or delayed (for example, during periods of unusual market
activity).
The different ways to set up (register) your account with Fidelity
are listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS OR
OTHER GROUPS
BUYING SHARES
When you place an order to buy shares, note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Fidelity reserves the right to limit the number
of checks processed at one time.
(small solid bullet) Fidelity must receive payment within three
business days after an order for shares is placed; otherwise your
purchase order may be canceled and you could be liable for any losses
or fees the fund or Fidelity has incurred.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees the fund or
Fidelity has incurred.
Shares can be bought or sold through investment professionals using
an automated order placement and settlement system that guarantees
payment for orders on a specified date.
Certain financial institutions that meet creditworthiness criteria
established by FDC may enter confirmed purchase orders on behalf of
customers by phone, with payment to follow no later than close of
business on the next business day. If payment is not received by that
time, the order will be canceled and the financial institution will be
liable for any losses.
Short-term or excessive trading into and out of the fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, the fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
the fund. For these purposes, FMR may consider an investor's trading
history in the fund or other Fidelity funds, and accounts under common
ownership or control.
The fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
Institutional Class shares are offered only to:
1. Broker-dealer managed account programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. In addition, employee
benefit plans (as defined in the Employee Retirement Income Security
Act), 403(b) programs and plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) must have at least $50 million in plan assets;
2. Registered investment adviser managed account programs, provided
the registered investment adviser is not part of an organization
primarily engaged in the brokerage business, and the program (i)
charges an asset-based fee and (ii) will have at least $1 million
invested in the Institutional Class of the Advisor funds. In addition,
accounts other than an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly a Keogh/H.R. 10 plan) in the
program must be managed on a discretionary basis;
3. Trust institution and bank trust department managed account
programs that (i) charge an asset-based fee and (ii) will have at
least $1 million invested in the Institutional Class of the Advisor
funds. Accounts managed by third parties are not eligible to purchase
Institutional Class shares;
4. Insurance company separate accounts that will have at least $1
million invested in the Institutional Class of the Advisor funds;
5. Fidelity Trustees and employees; and
6. Insurance company programs for employee benefit plans, 403(b)
programs or plans covering sole-proprietors (formerly Keogh/H.R. 10
plans) that (i) charge an asset-based fee and (ii) will have at least
$1 million invested in the Institutional Class of the Advisor funds.
Insurance company programs for employee benefit plans, 403(b) programs
and plans covering sole-proprietors (formerly Keogh/H.R. 10 plans)
include such programs offered by a broker-dealer affiliate of an
insurance company, provided that the affiliate is not part of an
organization primarily engaged in the brokerage business.
For purchases made by managed account programs, insurance company
separate accounts or insurance company programs for employee benefit
plans, 403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans), Fidelity may waive the requirement that $1
million be invested in the Institutional Class of the Advisor funds.
MINIMUMS
TO OPEN AN ACCOUNT $2,500
Through regular investment plansA $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
A AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $100, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED.
The fund may waive or lower purchase minimums.
Purchase and account minimums are waived for purchases of Class T
shares with distributions from a Fidelity Defined Trust account.
PURCHASE AMOUNTS OF MORE THAN $250,000 WILL NOT BE ACCEPTED FOR CLASS
B SHARES.
PURCHASE AMOUNTS OF MORE THAN $1 MILLION WILL NOT BE ACCEPTED FOR
CLASS C SHARES.
KEY INFORMATION
PHONE TO OPEN AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from certain other
Fidelity funds. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information," above.
TO ADD TO AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from certain other
Fidelity funds. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information," above.
MAIL FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770002 CINCINNATI, (small solid bullet) Complete
OH 45277-0081 and sign the application.
Make your check payable to
the complete name of the
fund and note the applicable
class. Mail to your
investment professional or
to the address at left.
TO ADD TO AN ACCOUNT
(small solid bullet) Make
your check payable to the
complete name of the fund
and note the applicable
class. Indicate your fund
account number on your check
and mail to your investment
professional or to the
address at left.
(small solid bullet) Exchange
from the same class of other
Fidelity Advisor funds or
from certain other Fidelity
funds. Send a letter of
instruction to your
investment professional or
to the address at left,
including your name, the
funds' names, the applicable
class names, the fund
account numbers, and the
dollar amount or number of
shares to be exchanged.
IN PERSON TO OPEN AN ACCOUNT
(small solid bullet) Bring
your application and check
to your investment
professional.
TO ADD TO AN ACCOUNT
(small solid bullet) Bring
your check to your
investment professional.
WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information,"
above, to set up your
account and to arrange a
wire transaction.
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your new
fund account number and your
name.
TO ADD TO AN ACCOUNT
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your fund
account number and your name.
AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Advisor Systematic
Investment Program.
(small solid bullet) Use
Fidelity Advisor Systematic
Exchange Program (for Class
A, Class T, Class B, and
Class C) to exchange from
certain Fidelity money
market funds or a Fidelity
Advisor fund.
SELLING SHARES
If appropriate to protect shareholders, the fund may impose a
redemption fee (trading fee) on redemptions from the fund.
Certain requests must include a signature guarantee. It is designed
to protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to sell more than $100,000 worth of
shares;
(small solid bullet) Your account registration has changed within the
last 15 or 30 days, depending on the type of account;
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);
(small solid bullet) The check is being made payable to someone other
than the account owner; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
shares, leave at least $1,000 worth of shares in the account to keep
it open, except accounts not subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
the fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other property rather than in cash if FMR determines it is in the best
interests of the fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
To sell shares issued with certificates, call Fidelity for
instructions. The fund no longer issues share certificates.
KEY INFORMATION
PHONE (small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information,"
above, to initiate a wire
transaction or to request a
check for your redemption.
(small solid bullet) Exchange
to the same class of other
Fidelity Advisor funds or to
certain other Fidelity
funds. Call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information," above.
MAIL FIDELITY INVESTMENTS INDIVIDUAL, JOINT TENANT,
P.O. BOX 770002 CINCINNATI, SOLE PROPRIETORSHIP, UGMA,
OH 45277-0081 UTMA
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including your name, the
fund's name, the applicable
class name, your fund
account number, and the
dollar amount or number of
shares to be sold. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on the
account.
TRUST
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the trust's name,
the fund's name, the
applicable class name, the
trust's fund account number,
and the dollar amount or
number of shares to be sold.
The trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the account
registration, provide a copy
of the trust document
certified within the last 60
days.
BUSINESS OR ORGANIZATION
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the firm's name,
the fund's name, the
applicable class name, the
firm's fund account number,
and the dollar amount or
number of shares to be sold.
At least one person
authorized by corporate
resolution to act on the
account must sign the letter
of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" for
instructions.
IN PERSON INDIVIDUAL, JOINT TENANT,
SOLE PROPRIETORSHIP, UGMA,
UTMA
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The letter of
instruction must be signed
by all persons required to
sign for transactions,
exactly as their names
appear on the account.
TRUST
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The trustee
must sign the letter of
instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR ORGANIZATION
(small solid bullet) Bring a
letter of instruction to
your investment
professional. At least one
person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
AUTOMATICALLY (small solid bullet) Use
Fidelity Advisor Systematic
Exchange Program to exchange
to the same class of another
Fidelity Advisor fund or to
certain Fidelity funds (for
Class A, Class T, Class B,
and Class T only).
(small solid bullet) Use
Fidelity Advisor Systematic
Withdrawal Program to set up
periodic redemptions from
your Class A, Class T, Class
B, Class C, and
Institutional Class account.
EXCHANGING SHARES
You should note the following policies and restrictions governing
exchanges:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) The fund may temporarily or permanently terminate
the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control will be counted together for purposes of the four
exchange limit.
(small solid bullet) The fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Any exchanges of Class A, Class T, Class B and
Class C shares are not subject to a CDSC.
The fund may terminate or modify the exchange privileges in the
future.
Other funds may have different exchange restrictions, and may impose
trading fees of up to 3.00% of the amount exchanged. Check each fund's
prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
fund.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses,
and other long-term financial goals. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY ADVISOR SYSTEMATIC
INVESTMENT PROGRAM TO MOVE
MONEY FROM YOUR BANK ACCOUNT
TO THE FUND.
Minimum Minimum FREQUENCY PROCEDURES
Initial Additional Monthly, bimonthly, (small solid bullet) To set
$100 $100 quarterly, or semi-annually up for a new account,
complete the appropriate
section on the application.
(small solid bullet) To set
up for existing accounts,
call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information," above, for an
application.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information,"
above. Call at least 10
business days prior to your
next scheduled investment
date.
TO DIRECT DISTRIBUTIONS FROM
A FIDELITY DEFINED TRUST TO
CLASS T OF THE FUND.
Minimum Minimum PROCEDURES
Initial Additional (small solid bullet) To set
Not Applicable Not Applicable up for a new or existing
account, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information,"
above, for the appropriate
enrollment form.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information," above.
FIDELITY ADVISOR SYSTEMATIC
EXCHANGE PROGRAM TO MOVE
MONEY FROM CERTAIN FIDELITY
MONEY MARKET FUNDS TO CLASS
A, CLASS T, CLASS B OR CLASS
C OF THE FUND OR FROM CLASS
A, CLASS T, CLASS B OR CLASS
C OF THE FUND TO THE SAME
CLASS OF ANOTHER FIDELITY
ADVISOR FUND.
MINIMUM FREQUENCY PROCEDURES
$100 Monthly, quarterly, (small solid bullet) To set
semi-annually, or annually up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information," above, after
both accounts are opened.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information,"
above. Call at least 2
business days prior to your
next scheduled exchange date.
(small solid bullet) The
account from which the
exchanges are to be
processed must have a
minimum balance of $10,000.
The account into which the
exchange is being processed
must have a minimum balance
of $1,000.
</TABLE>
FIDELITY ADVISOR SYSTEMATIC
WITHDRAWAL PROGRAM TO SET UP
PERIODIC REDEMPTIONS FROM
YOUR CLASS A, CLASS T, CLASS
B, CLASS C, OR INSTITUTIONAL
CLASS ACCOUNT TO YOU OR TO
YOUR BANK CHECKING ACCOUNT.
MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Class A, Class T, and (small solid bullet) Accounts
Institutional Class: with a value of $10,000 or
Monthly, quarterly, or more in Class A, Class T,
semi-annually Class B and Class B, Class C, or
Class C: Monthly or Institutional Class shares
quarterly are eligible for this program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information," above, for
instructions.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information,"
above. Call at least 10
business days prior to your
next scheduled withdrawal
date.
(small solid bullet)
Aggregate redemptions per
12-month period from your
Class B or Class C account
may not exceed 10% of the
account value and are not
subject to a CDSC; and you
may set your withdrawal
amount as a percentage of
the value of your account or
a fixed dollar amount.
(small solid bullet) Because
of Class A's and Class T's
front-end sales charge, you
may not want to set up a
systematic withdrawal plan
during a period when you are
buying Class A or Class T
shares on a regular basis.
OTHER FEATURES. The following other features are also available to
buy and sell shares of the fund.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account.
(small solid bullet) Call your investment professional or call
Fidelity at the appropriate number found in "General Information,"
above, before your first use to verify that this feature is set up on
your account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid bullet) To add the wire feature or to change the bank
account designated to receive redemption proceeds at any time prior to
making a redemption request, you should send a letter of instruction,
including a signature guarantee, to your investment professional or to
Fidelity at the address found in "General Information," above.
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(small solid bullet) Financial reports (every six months).
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
the fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require the fund to withhold 31% of your taxable distributions and
redemptions.
If your ACCOUNT BALANCE falls below $1,000 (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold at the NAV, minus any applicable CDSC, on the day
your account is closed.
Fidelity may charge a FEE FOR CERTAIN SERVICES, such as providing
historical account documents.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
EARNING DIVIDENDS
Shares purchased by an automated purchase order begin to earn
dividends on the day your payment is received. Shares purchased by all
other purchase orders begin to earn dividends on the first business
day following the day your payment is received.
Shares earn dividends until, but not including, the next business day
following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each class's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gain distributions
will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gain distributions will be
paid in cash.
4. DIRECTED DIVIDENDS OPTION. Your dividends will be automatically
invested in the same class of shares of another identically registered
Fidelity Advisor fund or shares of certain identically registered
Fidelity funds. Your capital gain distributions will be automatically
invested in the same class of shares of another identically registered
Fidelity Advisor fund or shares of certain identically registered
Fidelity funds, automatically reinvested in additional shares of the
same class of the fund, or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, contact your investment
professional directly or call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in the fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS. The fund seeks to earn income and pay
dividends exempt from federal income tax.
Income exempt from federal income tax may be subject to state or
local tax. A portion of the dividends you receive may be subject to
federal and state income taxes and also may be subject to the federal
alternative minimum tax. You may also receive taxable distributions
attributable to the fund's sale of municipal bonds.
For federal tax purposes, the fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ordinary income. The fund's
distributions of long-term capital gains are taxable to you generally
as capital gains.
If the fund's distributions exceed its income and capital gains
realized in any year, all or a portion of those distributions may be
treated as a return of capital to shareholders for tax purposes. A
return of capital will generally not be taxable to you, but will
reduce the cost basis of your shares and result in a higher reported
capital gain or a lower reported capital loss when you sell your
shares.
If you buy shares when the fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a potentially taxable distribution.
Any taxable distributions you receive from the fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in the same class of shares of another
Fidelity Advisor fund or shares of certain Fidelity funds, you will
receive certain December distributions in January, but those
distributions will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in the fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND MANAGEMENT
FMR is the fund's manager. Its address is 82 Devonshire Street,
Boston, MA 02109.
As of March 25, 1999, FMR had approximately $521.7 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the fund's
investments and handling its business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is primarily
responsible for choosing investments for the fund.
FIMM is an affiliate of FMR. As of March 29, 1999, FIMM had
approximately $159.8 billion in discretionary assets under management.
Norm Lind is vice president and manager of Intermediate Municipal,
which he has managed since January 1998. He also manages several other
Fidelity funds. Since joining Fidelity in 1986, Mr. Lind has worked as
an analyst and manager.
The fund's management fee is calculated by adding a group fee rate to
an individual fund fee rate, dividing by twelve, and multiplying the
result by the fund's average net assets throughout the month. The
group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above 0.37%, and it drops
as total assets under management increase.
For October 1999, the group fee rate was 0.1289%. The individual fund
fee rate is 0.25%.
The total management fee for the fiscal year ended October 31, 1999
was 0.38% of the fund's average net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse a class for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a class if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be discontinued by FMR at any time, can decrease a class's
expenses and boost its performance.
From time to time a manager, analyst, or other Fidelity employee may
express views regarding a particular company, security, industry, or
market sector. The views expressed by any such person are the views of
only that individual as of the time expressed and do not necessarily
represent the views of Fidelity or any other person in the Fidelity
organization. Any such views are subject to change at any time based
upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for a Fidelity
fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
FUND DISTRIBUTION
The fund is composed of multiple classes of shares. All classes of
the fund have a common investment objective and investment portfolio.
Fidelity Distributors Corporation (FDC) distributes each class's
shares.
You may pay a sales charge when you buy or sell your Class A, Class
T, Class B, and Class C shares.
FDC collects the sales charge.
The front-end sales charge will be reduced for purchases of Class A
and Class T shares according to the sales charge schedules below.
SALES CHARGES AND CONCESSIONS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 3.75% 3.91% 3.00%
$50,000 to $99,999 3.00% 3.10% 2.25%
$100,000 to $249,999 2.25% 2.30% 1.75%
$250,000 to $499,999 1.75% 1.78% 1.50%
$500,000 to $999,999 1.50% 1.52% 1.25%
$1,000,000 to $24,999,999 0.50% 0.50% 0.50%
$25,000,000 or more None* None* *
</TABLE>
* See "Finder's Fee" section below.
SALES CHARGES AND CONCESSIONS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 2.75% 2.83% 2.25%
$50,000 to $99,999 2.25% 2.30% 2.00%
$100,000 to $249,999 1.75% 1.78% 1.50%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
* See "Finder's Fee" section below.
Class A or Class T shares purchased by an individual or company
through the Combined Purchase, Rights of Accumulation or Letter of
Intent program may receive a reduced front-end sales charge according
to the sales charge schedules above. To qualify for a Class A or Class
T front-end sales charge reduction under one of these programs, you
must notify Fidelity in advance of your purchase.
COMBINED PURCHASE. To receive a Class A or Class T front-end sales
charge reduction, if you are a new shareholder, you may combine your
purchase of Class A or Class T shares with purchases of: (i) Class A,
Class T, Class B and Class C shares of any Fidelity Advisor fund and
(ii) Advisor B Class shares and Advisor C Class shares of Treasury
Fund.
RIGHTS OF ACCUMULATION. To receive a Class A or Class T front-end
sales charge reduction, if you are an existing shareholder, you may
add to your purchase of Class A or Class T shares the current value of
your holdings in: (i) Class A, Class T, Class B and Class C shares of
any Fidelity Advisor fund, (ii) Advisor B Class shares and Advisor C
Class shares of Treasury Fund and (iii) Daily Money Class shares of
Treasury Fund, Prime Fund or Tax-Exempt Fund acquired by exchange from
any Fidelity Advisor fund.
LETTER OF INTENT. You may receive a Class A or Class T front-end
sales charge reduction on your purchases of Class A and Class T shares
made during a 13-month period by signing a Letter of Intent (Letter).
Each Class A or Class T purchase you make after you sign the Letter
will be entitled to the reduced front-end sales charge applicable to
the total investment indicated in the Letter. Purchases of the
following may be aggregated for the purpose of completing your Letter:
(i) Class A and Class T shares of any Fidelity Advisor fund (except
those acquired by exchange from Daily Money Class shares of Treasury
Fund, Prime Fund or Tax-Exempt Fund that had been previously exchanged
from a Fidelity Advisor fund), (ii) Class B and Class C shares of any
Fidelity Advisor fund and (iii) Advisor B Class shares and Advisor C
Class shares of Treasury Fund. Reinvested income and capital gain
distributions will not be considered purchases for the purpose of
completing your Letter.
Class B shares may, upon redemption, be assessed a CDSC based on the
following schedule:
From Date of Purchase Contingent Deferred Sales
Charge
Less than 1 year 3%
1 year to less than 2 years 2%
2 years to less than 3 years 1%
3 years to less than 4 years A 0%
A AFTER A MAXIMUM OF FOUR YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE FUND.
When exchanging Class B shares of one fund for Class B shares of
another Fidelity Advisor fund or Advisor B Class shares of Treasury
Fund, your Class B shares retain the CDSC schedule in effect when they
were originally bought.
Except as provided below, investment professionals receive as
compensation from FDC, at the time of sale, a concession equal to
2.00% of your purchase of Class B shares. For purchases of Class B
shares through reinvested dividends or capital gain distributions,
investment professionals do not receive a concession at the time of
sale.
Class C shares may, upon redemption within one year of purchase, be
assessed a CDSC of 1.00%.
Except as provided below, investment professionals will receive as
compensation from FDC, at the time of the sale, a concession equal to
1.00% of your purchase of Class C shares. For purchases of Class C
shares made for an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 plan) or through
reinvested dividends or capital gain distributions, investment
professionals do not receive a concession at the time of sale.
The CDSC for Class B and Class C shares will be calculated based on
the lesser of the cost of the Class B or Class C shares, as
applicable, at the initial date of purchase or the value of those
Class B or Class C shares, as applicable, at redemption, not including
any reinvested dividends or capital gains. Class B and Class C shares
acquired through reinvestment of dividends or capital gain
distributions will not be subject to a CDSC. In determining the
applicability and rate of any CDSC at redemption, Class B or Class C
shares representing reinvested dividends and capital gains will be
redeemed first, followed by those Class B or Class C shares that have
been held for the longest period of time.
A front-end sales charge will not apply to the following Class A
shares:
1. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program with at
least $25 million or more in plan assets;
2. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an insurance company separate account used to fund
annuity contracts;
3. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through a trust institution, bank trust department or
insurance company, or any such institution's broker-dealer affiliate
that is not part of an organization primarily engaged in the brokerage
business. Employee benefit plans (except SIMPLE IRA, SEP, and SARSEP
plans and plans covering self-employed individuals and their employees
(formerly Keogh/H.R. 10 plans)) and 403(b) programs that participate
in the Advisor Retirement Connection do not qualify for this waiver;
4. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an investment professional sponsored program that
requires the participating employee benefit plan to invest initially
in Class C or Class B shares and, upon meeting certain criteria,
subsequently requires the plan to invest in Class A shares;
5. Purchased by a trust institution or bank trust department for a
managed account that is charged an asset-based fee. Employee benefit
plans (except SIMPLE IRA, SEP, and SARSEP plans and plans covering
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans)), 403(b) programs and accounts managed by third parties do not
qualify for this waiver;
6. Purchased by a broker-dealer for a managed account that is charged
an asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do
not qualify for this waiver;
7. Purchased by a registered investment adviser that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP, and
SARSEP plans and plans covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do not
qualify for this waiver;
8. Purchased with proceeds from the sale of front-end load shares of a
non-Advisor mutual fund for an account participating in the FundSelect
by Nationwide program;
9. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC. A member of the
immediate family of a bank trust officer, a registered representative
or other employee of investment professionals having agreements with
FDC, is a spouse of one of those individuals, an account for which one
of those individuals is acting as custodian for a minor child, and a
trust account that is registered for the sole benefit of a minor child
of one of those individuals; or
10. Purchased by the Fidelity Investments Charitable Gift Fund.
A front-end sales charge will not apply to the following Class T
shares:
1. Purchased for an insurance company separate account used to fund
annuity contracts for employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) or 403(b) programs;
2. Purchased by a trust institution or bank trust department for a
managed account that is charged an asset-based fee. Accounts managed
by third parties do not qualify for this waiver;
3. Purchased by a broker-dealer for a managed account that is charged
an asset-based fee;
4. Purchased by a registered investment adviser that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee;
5. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program;
6. Purchased for a Fidelity or Fidelity Advisor account with the
proceeds of a distribution from (i) an insurance company separate
account used to fund annuity contracts for employee benefit plans,
403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) that are invested in Fidelity Advisor or Fidelity
funds, or (ii) an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 plan) that is
invested in Fidelity Advisor or Fidelity funds. (Distributions other
than those transferred to an IRA account must be transferred directly
into a Fidelity account.);
7. Purchased for any state, county, or city, or any governmental
instrumentality, department, authority or agency;
8. Purchased with redemption proceeds from other mutual fund complexes
on which you have previously paid a front-end sales charge or CDSC;
9. Purchased by a current or former trustee or officer of a Fidelity
fund or a current or retired officer, director or regular employee of
FMR Corp. or Fidelity International Limited or their direct or
indirect subsidiaries (a Fidelity trustee or employee), the spouse of
a Fidelity trustee or employee, a Fidelity trustee or employee acting
as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity trustee or
employee;
10. Purchased by a charitable organization (as defined for purposes of
Section 501(c)(3) of the Internal Revenue Code, but excluding the
Fidelity Investments Charitable Gift Fund) investing $100,000 or more.
A member of the immediate family of a bank trust officer, a registered
representative or other employee of investment professionals having
agreements with FDC, is a spouse of one of those individuals, an
account for which one of those individuals is acting as custodian for
a minor child, and a trust account that is registered for the sole
benefit of a minor child of one of those individuals;
11. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC;
12. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined
for purposes of Section 501(c)(3) of the Internal Revenue Code);
13. Purchased with distributions of income, principal, and capital
gains from Fidelity Defined Trusts; or
14. Purchased by the Fidelity Investments Charitable Gift Fund.
The Class B or Class C CDSC will not apply to the redemption of
shares:
1. For disability or death, provided that the shares are sold within
one year following the death or the initial determination of
disability;
2. That are permitted without penalty at age 70 1/2 pursuant to the
Internal Revenue Code from retirement plans or accounts (other than of
shares purchased on or after February 11, 1999 for Traditional IRAs,
Roth IRAs and Rollover IRAs);
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs
and Rollover IRAs purchased on or after February 11, 1999;
4. Through the Fidelity Advisor Systematic Withdrawal Program; or
5. (Applicable to Class C only) From an employee benefit plan, 403(b)
program or plan covering a sole-proprietor (formerly Keogh/H.R. 10
plan).
To qualify for a Class A or Class T front-end sales charge reduction
or waiver, you must notify Fidelity in advance of your purchase.
To qualify for a Class B or Class C CDSC waiver, you must notify
Fidelity in advance of your redemption.
FINDER'S FEE. Shares held by an insurance company separate account
will be aggregated at the client (e.g., the contract holder or plan
sponsor) level, not at the separate account level. Upon request,
anyone claiming eligibility for the 0.25% fee with respect to shares
held by an insurance company separate account must provide Fidelity
access to records detailing purchases at the client level.
Except as provided below, any assets on which a finder's fee has been
paid will bear a CDSC (Class A or Class T CDSC) if they do not remain
in Class A or Class T shares of the Fidelity Advisor funds, or Daily
Money Class shares of Treasury Fund, Prime Fund or Tax-Exempt Fund,
for a period of at least one uninterrupted year. The Class A or Class
T CDSC will be 0.25% of the lesser of the cost of the Class A or Class
T shares at the initial date of purchase or the value of those Class A
or Class T shares, as applicable, at redemption, not including any
reinvested dividends or capital gains. Class A and Class T shares
acquired through reinvestment of dividends or capital gain
distributions will not be subject to a Class A or Class T CDSC. In
determining the applicability and rate of any Class A or Class T CDSC
at redemption, Class A or Class T shares representing reinvested
dividends and capital gains will be redeemed first, followed by those
Class A or Class T CDSC shares that have been held for the longest
period of time.
The Class A or Class T CDSC will not apply to the redemption of
shares:
1. Held by insurance company separate accounts;
2. For plan loans or distributions or exchanges to non-Advisor fund
investment options from employee benefit plans (except shares of
SIMPLE IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)
purchased on or after February 11, 1999) and 403(b) programs; or
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs,
SIMPLE IRAs, SEPs, SARSEPs and plans covering a sole-proprietor or
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans).
To qualify for a Class A or Class T finder's fee or CDSC waiver, you
must notify Fidelity in advance of your purchase or redemption,
respectively.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class
A, Class T, Class B or Class C shares of the fund, you may reinvest an
amount equal to all or a portion of the redemption proceeds in the
same class of the fund or another Fidelity Advisor fund, at the NAV
next determined after receipt in proper form of your investment order,
provided that such reinvestment is made within 90 days of redemption.
Under these circumstances, the dollar amount of the CDSC you paid, if
any, on shares will be reimbursed to you by reinvesting that amount in
Class A, Class T, Class B or Class C shares, as applicable. You must
reinstate your Class A, Class T, Class B or Class C shares into an
account with the same registration. This privilege may be exercised
only once by a shareholder with respect to the fund and certain
restrictions may apply. For purposes of the CDSC schedule, the holding
period will continue as if the Class A, Class T, Class B or Class C
shares had not been redeemed.
To qualify for the reinstatement privilege, you must notify Fidelity
in writing in advance of your reinvestment.
CONVERSION FEATURE. After a maximum of four years from the initial
date of purchase, Class B shares and any capital appreciation
associated with those shares, convert automatically to Class A shares
of the fund. Conversion to Class A shares will be made at NAV. At the
time of conversion, a portion of the Class B shares bought through the
reinvestment of dividends or capital gains (Dividend Shares) will also
convert to Class A shares. The portion of Dividend Shares that will
convert is determined by the ratio of your converting Class B
non-Dividend Shares to your total Class B non-Dividend Shares.
DISTRIBUTION AND SERVICE PLANS. FDC may reallow to intermediaries
(such as banks, broker-dealers and other service-providers), including
its affiliates, up to the full amount of the Class A and Class T 12b-1
fee, for providing services intended to result in the sale of Class A
or Class T shares and/or shareholder support services.
FDC may reallow up to the full amount of the Class B 12b-1 (service)
fee to intermediaries (such as banks, broker-dealers and other
service-providers) for providing shareholder support services.
Normally, after the first year of investment, FDC may reallow up to
the full amount of the Class C 12b-1 (distribution) fees to
intermediaries (such as banks, broker-dealers and other
service-providers) for providing services intended to result in the
sale of Class C shares and may reallow up to the full amount of the
Class C 12b-1 (service) fee to intermediaries for providing
shareholder support services.
For purchases of Class C shares made for an employee benefit plan,
403(b) program or plan covering a sole-proprietor (formerly Keogh/H.R.
10 plan) or through reinvestment of dividends or capital gain
distributions, during the first year of investment and thereafter, FDC
may reallow up to the full amount of the Class C 12b-1 (distribution)
fee paid by such shares to intermediaries, including its affiliates,
for providing services intended to result in the sale of Class C
shares and may reallow up to the full amount of the Class C 12b-1
(service) fee paid by such shares to intermediaries, including its
affiliates, for providing shareholder support services.
Because 12b-1 fees are paid out of the assets of Class A, Class T,
Class B, and Class C on an ongoing basis, they will increase the cost
of your investment and may cost you more than paying other types of
sales charges.
In addition, each Distribution and Service Plan specifically
recognizes that FMR may make payments from its management fee revenue,
past profits, or other resources to FDC Currently, the Board of
Trustees of the fund has authorized such payments for Class A, Class
T, Class B, and Class C.
To receive sales concessions, finder's fees and payments made
pursuant to a Distribution and Service Plan, intermediaries must sign
the appropriate agreement with FDC in advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Fidelity Advisor funds, provided
that the fund receives brokerage services and commission rates
comparable to those of other broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in the fund's Prospectus and in the related
Statement of Additional Information. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund or FDC.
SHAREHOLDER LIABILITY. The Declaration of Trust for Fidelity Advisor
Series II contains an express disclaimer of shareholder liability for
the debts, liabilities, obligations, and expenses of the trust or
fund. The Declaration of Trust provides that the trust shall not have
any claim against shareholders except for the payment of the purchase
price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or the Trustees
relating to the trust or to a fund shall include a provision limiting
the obligations created thereby to the trust or to one or more funds
and its or their assets. The Declaration of Trust further provides
that shareholders of a fund shall not have a claim on or right to any
assets belonging to any other fund.
The Declaration of Trust provides for indemnification out of the
fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. The Declaration of
Trust also provides that the fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote. Claims asserted against one class of shares may subject
holders of another class of shares to certain liabilities.
FINANCIAL HIGHLIGHTS
Intermediate Municipal's financial highlights for the fiscal year
ended October 31, 1999, are shown below:
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31, 1999 1998 H 1997 G 1996 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.600 $ 10.410 $ 10.160
period
Income from Investment
Operations
Net interest income .431 .411 .459 .113
Net realized and unrealized (.540) .200 .191 .250
gain (loss)
Total from investment (.109) .611 .650 .363
operations
Less Distributions
From net interest income (.431) (.411) (.459) (.113)
From net realized gain (.080) (.030) (.001) -
Total distributions (.511) (.441) (.460) (.113)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.600 $ 10.410
TOTAL RETURN B, C (1.07)% 5.89% 6.42% 3.59%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,572 $ 1,082 $ 442 $ 103
(000 omitted)
Ratio of expenses to average .85% E .90% A, E .90% E .90% A, E
net assets
Ratio of net interest income 4.17% 4.19% A 4.37% 4.60% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G YEAR ENDED NOVEMBER 30
H ELEVEN MONTHS ENDED OCTOBER 31
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, 1999 1998 F 1997 G 1996 G 1995 G 1994 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460
period
Income from Invest- ment
Operations
Net interest income .427 .407 .449 .461 .451 .455
Net realized and unrealized (.540) .210 .181 .030 .980 (1.040)
gain (loss)
Total from investment (.113) .617 .630 .491 1.431 (.585)
operations
Less Distributions
From net interest income (.427) (.407) (.449) (.461) (.451) (.455)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.507) (.437) (.450) (.461) (.451) (.475)
Net asset value, end of $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400
period
TOTAL RETURN B, C (1.11)% 5.94% 6.21% 4.89% 15.49% (5.78)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 50,432 $ 60,070 $ 48,830 $ 56,729 $ 62,852 $ 57,382
(000 omitted)
Ratio of expenses to average .90% D .95% A, D 1.00% D 1.00% D .94% D .90% D
net assets
Ratio of net interest income 4.12% 4.15% A 4.32% 4.42% 4.56% 4.49%
to aver- age net assets
Portfolio turnover rate 19% 26% A, E 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
F ELEVEN MONTHS ENDED OCTOBER 31
G YEAR ENDED NOVEMBER 30
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 9.890
period
Income from Investment
Operations
Net interest income .353 .339 .382 .394 .373 .155
Net realized and unrealized (.540) .200 .181 .030 .980 (.490)
gain (loss)
Total from investment (.187) .539 .563 .424 1.353 (.335)
operations
Less Distributions
From net interest income (.353) (.339) (.382) (.394) (.373) (.155)
From net realized gain (.080) (.030) (.001) - - -
Total distributions (.433) (.369) (.383) (.394) (.373) (.155)
Net asset value, end of $ 10.140 $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400
period
TOTAL RETURN B, C (1.81)% 5.17% 5.54% 4.21% 14.60% (3.44)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,387 $ 11,134 $ 7,917 $ 7,445 $ 6,226 $ 1,682
(000 omitted)
Ratio of expenses to average 1.60% E 1.65% A, E 1.65% E 1.66% E 1.68% E 1.65% A, E
net assets
Ratio of net interest income 3.43% 3.45% A 3.67% 3.76% 3.71% 3.74% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1994.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
H YEAR ENDED NOVEMBER 30
FINANCIAL HIGHLIGHTS - CLASS C
YEARS ENDED OCTOBER 31, 1999 1998 G 1997 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.550
period
Income from Investment
Operations
Net interest income .342 .328 .027
Net realized and unrealized (.540) .210 .040
gain (loss)
Total from investment (.198) .538 .067
operations
Less Distributions
From net interest income (.342) (.328) (.027)
From net realized gain (.080) (.030) -
Total distributions (.422) (.358) (.027)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.590
TOTAL RETURN B, C (1.91)% 5.16% .63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,562 $ 1,137 $ 13
(000 omitted)
Ratio of expenses to average 1.70% E 1.75% A, E 1.75% A, E
net assets
Ratio of net interest income 3.34% 3.29% A 3.33% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO NOVEMBER 30, 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 H
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460
period
Income from Investment
Operations
Net interest income .448 .427 .475 .487 .477 .481
Net realized and unrealized (.540) .210 .181 .050 .950 (1.030)
gain (loss)
Total from investment (.092) .637 .656 .537 1.427 (.549)
operations
Less Distributions
From net interest income (.448) (.427) (.475) (.487) (.477) (.481)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.528) (.457) (.476) (.487) (.477) (.501)
Net asset value, end of $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410
period
TOTAL RETURN B, C (.92)% 6.14% 6.48% 5.36% 15.44% (5.43)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,997 $ 6,328 $ 6,098 $ 6,455 $ 11,085 $ 11,702
(000 omitted)
Ratio of expenses to average .70% D .75% A, D .75% D .75% D .70% D .65% D
net assets
Ratio of expenses to average .70% .75% A .75% .74% E .70% .65%
net assets after expense
reductions
Ratio of net interest income 4.32% 4.36% A 4.57% 4.68% 4.96% 4.75%
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
H YEAR ENDED NOVEMBER 30
EXHIBIT 1
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as
of February 23, 2000, by and between Fidelity Advisor Intermediate
Municipal Income Fund (Intermediate Municipal) and Fidelity Advisor
Municipal Income Fund (Municipal Income), funds of Fidelity Advisor
Series II (the trust). The trust is a duly organized business trust
under the laws of the Commonwealth of Massachusetts with its principal
place of business at 82 Devonshire Street, Boston, Massachusetts
02109. Municipal Income and Intermediate Municipal may be referred to
herein collectively as the Funds or each individually as the Fund.
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the Code). The
reorganization will comprise: (a) the transfer of all of the assets of
Intermediate Municipal to Municipal Income solely in exchange for
shares of beneficial interest in Class A, Class T, Class B, Class C,
and Institutional Class of Municipal Income (the Municipal Income
Class Shares) in each case based upon the net asset value attributable
to the corresponding class of Intermediate Municipal and the
assumption by Municipal Income of Intermediate Municipal's
liabilities; and (b) the constructive distribution of such shares by
Intermediate Municipal to its shareholders of the corresponding class
in complete liquidation and termination of Intermediate Municipal in
exchange for all of Intermediate Municipal's outstanding shares.
Intermediate Municipal shall receive shares of Class A, Class T, Class
B, Class C, and Institutional Class of Municipal Income having a net
asset value equal to the value of the net assets of Class A, Class T,
Class B, Class C, and Institutional Class of Intermediate Municipal,
respectively, on the Closing Date (as defined in Section 6), which
shares of Intermediate Municipal shall then distribute to its
shareholders of the corresponding class. Shareholders of Class A,
Class T, Class B, Class C, and Institutional Class of Intermediate
Municipal will receive shares of the corresponding class of Municipal
Income equal in value to the shares of Intermediate Municipal they are
surrendering, based upon the relative net asset values of Class A
(Intermediate Municipal) to Class A (Municipal Income), Class T
(Intermediate Municipal) to Class T (Municipal Income), Class B
(Intermediate Municipal) to Class B (Municipal Income), Class C
(Intermediate Municipal) to Class C (Municipal Income), and
Institutional Class (Intermediate Municipal) to Institutional Class
(Municipal Income), respectively, as of the Closing Date. The
foregoing transactions are referred to herein as the "Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF INTERMEDIATE MUNICIPAL.
Intermediate Municipal represents and warrants to and agrees with
Municipal Income that:
(a) Intermediate Municipal is a series of Fidelity Advisor Series II,
a business trust duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Massachusetts, and has
the power to own all of its properties and assets and to carry out its
obligations under this Agreement. It has all necessary federal, state,
and local authorizations to carry on its business as now being
conducted and to carry out this Agreement;
(b) Fidelity Advisor Series II is an open-end, management investment
company duly registered under the Investment Company Act of 1940, as
amended (the 1940 Act), and such registration is in full force and
effect;
(c) The Prospectuses and Statement of Additional Information of
Intermediate Municipal, (both dated December 29, 1999), previously
furnished to Municipal Income, did not and do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Intermediate Municipal, threatened
against Intermediate Municipal which assert liability on the part of
Intermediate Municipal. Intermediate Municipal knows of no facts which
might form the basis for the institution of such proceedings;
(e) Intermediate Municipal is not in, and the execution, delivery,
and performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws,
or, to the knowledge of Intermediate Municipal, of any agreement,
indenture, instrument, contract, lease, or other undertaking to which
Intermediate Municipal is a party or by which Intermediate Municipal
is bound or result in the acceleration of any obligation or the
imposition of any penalty under any agreement, judgment or decree to
which Intermediate Municipal is a party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of
Operations, the Statement of Changes in Net Assets, Financial
Highlights (of each class), and the Schedule of Investments (including
market values) of Intermediate Municipal at October 31, 1999, have
been audited by PricewaterhouseCoopers LLP, independent accountants,
and have been furnished to Municipal Income. Said Statement of Assets
and Liabilities and Schedule of Investments fairly present the Fund's
financial position as of such date and said Statement of Operations,
Statement of Changes in Net Assets, and Financial Highlights (of each
class) fairly reflect its results of operations, changes in financial
position, and financial highlights for the periods covered thereby in
conformity with generally accepted accounting principles consistently
applied;
(g) Intermediate Municipal has no known liabilities of a material
nature, contingent or otherwise, other than those shown as belonging
to it on its statement of assets and liabilities as of October 31,
1999 and those incurred in the ordinary course of Intermediate
Municipal's business as an investment company since October 31, 1999;
(h) The registration statement (Registration Statement) filed with
the Securities and Exchange Commission (Commission) by Fidelity
Advisor Series II on Form N-14 relating to the shares of Municipal
Income issuable hereunder and the proxy statement of Intermediate
Municipal included therein (Proxy Statement), on the effective date of
the Registration Statement and insofar as they relate to Intermediate
Municipal (i) comply in all material respects with the provisions of
the Securities Act of 1933, as amended (the 1933 Act), the Securities
Exchange Act of 1934, as amended (the 1934 Act), and the 1940 Act, and
the rules and regulations thereunder, and (ii) do not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and at the time of the shareholders' meeting
referred to in Section 7 and on the Closing Date, the prospectus filed
under the 1940 Act on December 29, 1999 (the Prospectus), [as amended
or supplemented], insofar as it relates to Intermediate Municipal,
does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading;
(i) All material contracts and commitments of Intermediate Municipal
(other than this Agreement) will be terminated without liability to
Intermediate Municipal prior to the Closing Date (other than those
made in connection with redemptions of Class A, Class T, Class B,
Class C, and Institutional Class shares and the purchase and sale of
portfolio securities made in the ordinary course of business);
(j) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by
Intermediate Municipal of the transactions contemplated by this
Agreement, except such as have been obtained under the 1933 Act, the
1934 Act, the 1940 Act, and state securities or blue sky laws (which
term as used herein shall include the District of Columbia and Puerto
Rico);
(k) Intermediate Municipal has filed or will file all federal and
state tax returns which, to the knowledge of Intermediate Municipal's
officers, are required to be filed by Intermediate Municipal and has
paid or will pay all federal and state taxes shown to be due on said
returns or provision shall have been made for the payment thereof,
and, to the best of Intermediate Municipal's knowledge, no such return
is currently under audit and no assessment has been asserted with
respect to such returns;
(l) Intermediate Municipal has met the requirements of Subchapter M
of the Code for qualification and treatment as a regulated investment
company for all prior taxable years and intends to meet such
requirements for its current taxable year ending on the Closing Date;
(m) All of the issued and outstanding Class A, Class T, Class B,
Class C, and Institutional Class shares of Intermediate Municipal are,
and at the Closing Date will be, duly and validly issued and
outstanding and fully paid and nonassessable as a matter of
Massachusetts law (except as disclosed in the Fund's Statement of
Additional Information), and have been offered for sale and in
conformity with all applicable federal securities laws. All of the
issued and outstanding Class A, Class T, Class B, Class C, and
Institutional Class shares of Intermediate Municipal will, at the
Closing Date, be held by the persons and in the amounts set forth in
the list of shareholders of each class submitted to Municipal Income
in accordance with this Agreement;
(n) As of both the Valuation Time (as defined in Section 4) and the
Closing Date, Intermediate Municipal will have the full right, power,
and authority to sell, assign, transfer, and deliver its portfolio
securities and any other assets of Intermediate Municipal to be
transferred to Municipal Income pursuant to this Agreement. As of the
Closing Date, subject only to the delivery of Intermediate Municipal's
portfolio securities and any such other assets as contemplated by this
Agreement, Municipal Income will acquire Intermediate Municipal's
portfolio securities and any such other assets subject to no
encumbrances, liens, or security interests (except for those that may
arise in the ordinary course and are disclosed to Municipal Income)
and without any restrictions upon the transfer thereof; and
(o) The execution, performance, and delivery of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of Intermediate Municipal, and this
Agreement constitutes a valid and binding obligation of Intermediate
Municipal enforceable in accordance with its terms, subject to
shareholder approval.
2. REPRESENTATIONS AND WARRANTIES OF MUNICIPAL INCOME. Municipal
Income represents and warrants to and agrees with Intermediate
Municipal that:
(a) Municipal Income is a series of Fidelity Advisor Series II, a
business trust duly organized, validly existing, and in good standing
under the laws of the Commonwealth of Massachusetts, and has the power
to own all of its properties and assets and to carry out its
obligations under this Agreement. It has all necessary federal, state,
and local authorizations to carry on its business as now being
conducted and to carry out this Agreement;
(b) Fidelity Advisor Series II is an open-end, management investment
company duly registered under the 1940 Act, and such registration is
in full force and effect;
(c) The Prospectuses and Statement of Additional Information of
Municipal Income, (both dated December 29, 1999), previously furnished
to Intermediate Municipal did not and do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Municipal Income, threatened against
Municipal Income which assert liability on the part of Municipal
Income. Municipal Income knows of no facts which might form the basis
for the institution of such proceedings;
(e) Municipal Income is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws,
or, to the knowledge of Municipal Income, of any agreement, indenture,
instrument, contract, lease, or other undertaking to which Municipal
Income is a party or by which Municipal Income is bound or result in
the acceleration of any obligation or the imposition of any penalty
under any agreement, judgment, or decree to which Municipal Income is
a party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of
Operations, the Statement of Changes in Net Assets, Financial
Highlights (of each class), and the Schedule of Investments (including
market values) of Municipal Income at October 31, 1999, have been
audited by PricewaterhouseCoopers, independent accountants, and have
been furnished to Intermediate Municipal. Said Statement of Assets and
Liabilities and Schedule of Investments fairly present its financial
position as of such date and said Statement of Operations, Statement
of Changes in Net Assets, and Financial Highlights (of each class)
fairly reflect its results of operations, changes in financial
position, and financial highlights for the periods covered thereby in
conformity with generally accepted accounting principles consistently
applied;
(g) Municipal Income has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of October 31, 1999 and
those incurred in the ordinary course of Municipal Income's business
as an investment company since October 31, 1999;
(h) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Municipal
Income of the transactions contemplated by this Agreement, except such
as have been obtained under the 1933 Act, the 1934 Act, the 1940 Act,
and state securities or blue sky laws (which term as used herein shall
include the District of Columbia and Puerto Rico);
(i) Municipal Income has filed or will file all federal and state tax
returns which, to the knowledge of Municipal Income's officers, are
required to be filed by Municipal Income and has paid or will pay all
federal and state taxes shown to be due on said returns or provision
shall have been made for the payment thereof, and, to the best of
Municipal Income's knowledge, no such return is currently under audit
and no assessment has been asserted with respect to such returns;
(j) Municipal Income has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment company
for all prior taxable years and intends to meet such requirements for
its current taxable year ending on October 31, 2000;
(k) As of the Closing Date, the Municipal Income Class Shares of
beneficial interest of Municipal Income to be issued to Intermediate
Municipal will have been duly authorized and, when issued and
delivered pursuant to this Agreement, will be legally and validly
issued and will be fully paid and nonassessable (except as disclosed
in the Fund's Statement of Additional Information) by Municipal
Income, and no shareholder of any class of Municipal Income will have
any preemptive right of subscription or purchase in respect thereof;
(l) The execution, performance, and delivery of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of Municipal Income, and this Agreement
constitutes a valid and binding obligation of Municipal Income
enforceable in accordance with its terms, subject to approval by the
shareholders of Intermediate Municipal;
(m) The Registration Statement and the Proxy Statement, on the
effective date of the Registration Statement and insofar as they
relate to Municipal Income, (i) will comply in all material respects
with the provisions of the 1933 Act, the 1934 Act, and the 1940 Act,
and the rules and regulations thereunder, and (ii) will not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and at the time of the shareholders' meeting
referred to in Section 7 and on the Closing Date, the Prospectus, as
amended or supplemented, insofar as it relates to Municipal Income,
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading;
(n) The issuance of the Municipal Income Class Shares pursuant to
this Agreement will be in compliance with all applicable federal
securities laws; and
(o) All of the issued and outstanding shares of beneficial interest
of Municipal Income have been offered for sale and sold in conformity
with the federal securities laws.
3. REORGANIZATION.
(a) Subject to the requisite approval of the shareholders of
Intermediate Municipal and to the other terms and conditions contained
herein, Intermediate Municipal agrees to assign, sell, convey,
transfer, and deliver to Municipal Income as of the Closing Date all
of the assets of Intermediate Municipal of every kind and nature
existing on the Closing Date. Municipal Income agrees in exchange
therefor: (i) to assume all of Intermediate Municipal's liabilities
existing on or after the Closing Date, whether or not determinable on
the Closing Date, and (ii) to issue and deliver to Intermediate
Municipal the number of full and fractional Municipal Income Class
Shares having a net asset value equal to the value of the net assets
of the corresponding class of Intermediate Municipal transferred
hereunder, less the value of the liabilities of Intermediate
Municipal, determined as provided for under Section 4.
(b) The assets of Intermediate Municipal to be acquired by Municipal
Income shall include, without limitation, all cash, cash equivalents,
securities, receivables (including interest or dividends receivables),
claims, choses in action, and other property owned by Intermediate
Municipal, and any deferred or prepaid expenses shown as an asset on
the books of Intermediate Municipal on the Closing Date. Intermediate
Municipal will pay or cause to be paid to Municipal Income any
dividend or interest payments received by it on or after the Closing
Date with respect to the assets transferred to Municipal Income
hereunder, and Municipal Income will retain any dividend or interest
payments received by it after the Valuation Time with respect to the
assets transferred hereunder without regard to the payment date
thereof.
(c) The liabilities of Intermediate Municipal to be assumed by
Municipal Income shall include (except as otherwise provided for
herein) all of Intermediate Municipal's liabilities, debts,
obligations, and duties, of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the
ordinary course of business, whether or not determinable on the
Closing Date, and whether or not specifically referred to in this
Agreement. Notwithstanding the foregoing, Intermediate Municipal
agrees to use its best efforts to discharge all of its known
liabilities prior to the Closing Date, other than liabilities incurred
in the ordinary course of business.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable, Intermediate Municipal will constructively
distribute to its shareholders of record, determined as of the
Valuation Time on the Closing Date, the Class A, Class T, Class B,
Class C, and Institutional Class shares in exchange for such
shareholders' shares of beneficial interest in the corresponding class
of Intermediate Municipal and Intermediate Municipal will be
liquidated in accordance with Intermediate Municipal's Amended and
Restated Declaration of Trust. Shareholders of Class A, Class T, Class
B, Class C, and Institutional Class of Intermediate Municipal will
receive shares of the corresponding class of Municipal Income equal in
value to the shares of Intermediate Municipal they are surrendering,
based upon the relative net asset values of Class A (Intermediate
Municipal) to Class A (Municipal Income), Class T (Intermediate
Municipal) to Class T (Municipal Income), Class B (Intermediate
Municipal) to Class B (Municipal Income), Class C (Intermediate
Municipal) to Class C (Municipal Income), and Institutional Class
(Intermediate Municipal) to Institutional Class (Municipal Income),
respectively, as of the Closing Date. Such distribution shall be
accomplished by the Funds' transfer agent opening accounts on
Municipal Income's share transfer books in the names of the
Intermediate Municipal shareholders and transferring the Municipal
Income Class Shares shares thereto. Each Intermediate Municipal
shareholder's account shall be credited with the respective number of
full and fractional (rounded to the third decimal place) Municipal
Income Class Shares due that shareholder. All outstanding Intermediate
Municipal shares, including any represented by certificates, shall
simultaneously be canceled on Intermediate Municipal's share transfer
records. Municipal Income shall not issue certificates representing
the Municipal Income Class Shares in connection with the
Reorganization.
(e) Any reporting responsibility of Intermediate Municipal is and
shall remain its responsibility up to and including the date on which
it is terminated.
(f) Any transfer taxes payable upon issuance of the Municipal Income
Class Shares in a name other than that of the registered holder on
Intermediate Municipal's books of the Intermediate Municipal shares
constructively exchanged for the Municipal Income Class Shares shall
be paid by the person to whom such Municipal Income Class Shares are
to be issued, as a condition of such transfer.
4. VALUATION.
(a) The Valuation Time shall be as of the close of business of the
New York Stock Exchange on the Closing Date, or such other date as may
be mutually agreed upon in writing by the parties hereto (the
Valuation Time).
(b) As of the Closing Date, Municipal Income will deliver to
Intermediate Municipal the number of Municipal Income Class Shares
having a net asset value equal to the value of the net assets
attributable to the corresponding class of Intermediate Municipal
transferred hereunder less the liabilities of Intermediate Municipal,
determined as provided in this Section 4.
(c) The net asset value per share of each class of the Municipal
Income Class Shares to be delivered to Intermediate Municipal, the
value of the assets of Intermediate Municipal transferred hereunder,
the value of the liabilities of Intermediate Municipal to be assumed
hereunder, and the net asset value per share of each class of
Intermediate Municipal to be transferred hereunder shall in each case
be determined as of the Valuation Time.
(d) The net asset value per share of each class of the Municipal
Income Class Shares shall be computed in the manner set forth in the
then-current Prospectus and Statement of Additional Information of
each class of Municipal Income, and the value of the assets and
liabilities of Intermediate Municipal shall be computed in the manner
set forth in the then-current Prospectuses and Statement of Additional
Information of each class of Intermediate Municipal.
(e) All computations pursuant to this Section shall be made by or
under the direction of Fidelity Service Company, Inc., a wholly-owned
subsidiary of FMR Corp., in accordance with its regular practice as
pricing agent for Intermediate Municipal and Municipal Income.
5. FEES; EXPENSES.
(a) Intermediate Municipal shall be responsible for all expenses,
fees and other charges in connection with the transactions
contemplated by this Agreement, provided that they do not exceed each
class's expense caps, as applicable. Expenses exceeding each class's
expense cap will be paid by FMR (but not including costs incurred in
connection with the purchase or sale of portfolio securities).
(b) Each of Municipal Income and Intermediate Municipal represents
that there is no person who has dealt with it who by reason of such
dealings is entitled to any broker's or finder's or other similar fee
or commission arising out of the transactions contemplated by this
Agreement.
6. CLOSING DATE.
(a) The Reorganization, together with related acts necessary to
consummate the same (the Closing), unless otherwise provided herein,
shall occur at the principal office of the Trust, 82 Devonshire
Street, Boston, Massachusetts, as of the Valuation Time on May 25,
2000, or at some other time, date, and place agreed to by Intermediate
Municipal and Municipal Income (the Closing Date).
(b) In the event that on the Closing Date: (i) any of the markets for
securities held by the Funds is closed to trading, or (ii) trading
thereon is restricted, or (iii) trading or the reporting of trading on
said market or elsewhere is disrupted, all so that accurate appraisal
of the total net asset value of each class of Intermediate Municipal
and the net asset value per share of each class of Municipal Income is
impracticable, the Valuation Time and the Closing Date shall be
postponed until the first business day after the day when such trading
shall have been fully resumed and such reporting shall have been
restored, or such other date as the parties may agree.
7. SHAREHOLDER MEETING AND TERMINATION OF INTERMEDIATE MUNICIPAL.
(a) Intermediate Municipal agrees to call a meeting of its
shareholders after the effective date of the Registration Statement,
to consider transferring its assets to Municipal Income as herein
provided, adopting this Agreement, and authorizing the liquidation of
Intermediate Municipal.
(b) Intermediate Municipal agrees that as soon as reasonably
practicable after distribution of the Municipal Income Class Shares,
Intermediate Municipal shall be terminated as a series of Fidelity
Advisor Series II pursuant to its Amended and Restated Declaration of
Trust, any further actions shall be taken in connection therewith as
required by applicable law, and on and after the Closing Date
Intermediate Municipal shall not conduct any business except in
connection with its liquidation and termination.
8. CONDITIONS TO OBLIGATIONS OF MUNICIPAL INCOME.
(a) That Intermediate Municipal furnishes to Municipal Income a
statement, dated as of the Closing Date, signed by an officer of
Fidelity Advisor Series II, certifying that as of the Valuation Time
and the Closing Date all representations and warranties of
Intermediate Municipal made in this Agreement are true and correct in
all material respects and that Intermediate Municipal has complied
with all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to such dates;
(b) That Intermediate Municipal furnishes Municipal Income with
copies of the resolutions, certified by an officer of Fidelity Advisor
Series II, evidencing the adoption of this Agreement and the approval
of the transactions contemplated herein by the requisite vote of the
holders of the outstanding shares of beneficial interest of
Intermediate Municipal;
(c) That, on or prior to the Closing Date, Intermediate Municipal
will declare one or more dividends or distributions which, together
with all previous such dividends or distributions attributable to its
current taxable year, shall have the effect of distributing to the
shareholders of Intermediate Municipal substantially all of
Intermediate Municipal's investment company taxable income and all of
its net realized capital gain, if any, as of the Closing Date;
(d) That Intermediate Municipal shall deliver to Municipal Income at
the Closing a statement of its assets and liabilities, together with a
list of its portfolio securities showing each such security's adjusted
tax basis and holding period by lot, with values determined as
provided in Section 4 of this Agreement, all as of the Valuation Time,
certified on Intermediate Municipal's behalf by its Treasurer or
Assistant Treasurer;
(e) That Intermediate Municipal's custodian shall deliver to
Municipal Income a certificate identifying the assets of Intermediate
Municipal held by such custodian as of the Valuation Time on the
Closing Date and stating that as of the Valuation Time: (i) the assets
held by the custodian will be transferred to Municipal Income; (ii)
Intermediate Municipal's assets have been duly endorsed in proper form
for transfer in such condition as to constitute good delivery thereof;
and (iii) to the best of the custodian's knowledge, all necessary
taxes in conjunction with the delivery of the assets, including all
applicable federal and state stock transfer stamps, if any, have been
paid or provision for payment has been made;
(f) That Intermediate Municipal's transfer agent shall deliver to
Municipal Income at the Closing a certificate setting forth the number
of shares of each class of Intermediate Municipal outstanding as of
the Valuation Time and the name and address of each holder of record
of any such shares and the number of shares held of record by each
such shareholder;
(g) That Intermediate Municipal calls a meeting of its shareholders
to be held after the effective date of the Registration Statement, to
consider transferring its assets to Municipal Income as herein
provided, adopting this Agreement, and authorizing the liquidation and
termination of Intermediate Municipal;
(h) That Intermediate Municipal delivers to Municipal Income a
certificate of an officer of Fidelity Advisor Series II, dated as of
the Closing Date, that there has been no material adverse change in
Intermediate Municipal's financial position since October 31, 1999,
other than changes in the market value of its portfolio securities, or
changes due to net redemptions of its shares, dividends paid, or
losses from operations; and
(i) That all of the issued and outstanding shares of beneficial
interest of Intermediate Municipal shall have been offered for sale
and sold in conformity with all applicable state securities laws and,
to the extent that any audit of the records of Intermediate Municipal
or its transfer agent by Municipal Income or its agents shall have
revealed otherwise, Intermediate Municipal shall have taken all
actions that in the opinion of Municipal Income are necessary to
remedy any prior failure on the part of Intermediate Municipal to have
offered for sale and sold such shares in conformity with such laws.
9. CONDITIONS TO OBLIGATIONS OF INTERMEDIATE MUNICIPAL.
(a) That Municipal Income shall have executed and delivered to
Intermediate Municipal an Assumption of Liabilities, certified by an
officer of Fidelity Advisor Series II, dated as of the Closing Date
pursuant to which Municipal Income will assume all of the liabilities
of Intermediate Municipal existing at the Valuation Time in connection
with the transactions contemplated by this Agreement;
(b) That Municipal Income furnishes to Intermediate Municipal a
statement, dated as of the Closing Date, signed by an officer of
Fidelity Advisor Series II, certifying that as of the Valuation Time
and the Closing Date all representations and warranties of Municipal
Income made in this Agreement are true and correct in all material
respects, and Municipal Income has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to such dates; and
(c) That Intermediate Municipal shall have received an opinion of
Kirkpatrick & Lockhart LLP, counsel to Intermediate Municipal and
Municipal Income, to the effect that the Municipal Income Class Shares
are duly authorized and upon delivery to Intermediate Municipal as
provided in this Agreement will be validly issued and will be fully
paid and nonassessable by Municipal Income (except as disclosed in
Municipal Income's Statement of Additional Information) and no
shareholder of Municipal Income has any preemptive right of
subscription or purchase in respect thereof.
10. CONDITIONS TO OBLIGATIONS OF MUNICIPAL INCOME AND INTERMEDIATE
MUNICIPAL.
(a) That this Agreement shall have been adopted and the transactions
contemplated herein shall have been approved by the requisite vote of
the holders of the outstanding shares of beneficial interest of
Intermediate Municipal;
(b) That all consents of other parties and all other consents,
orders, and permits of federal, state, and local regulatory
authorities (including those of the Commission and of state Blue Sky
and securities authorities, which term as used herein shall include
the District of Columbia and Puerto Rico, and including "no action"
positions of such federal or state authorities) deemed necessary by
Municipal Income or Intermediate Municipal to permit consummation, in
all material respects, of the transactions contemplated hereby shall
have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect
on the assets or properties of Municipal Income or Intermediate
Municipal, provided that either party hereto may for itself waive any
of such conditions;
(c) That all proceedings taken by either Fund in connection with the
transactions contemplated by this Agreement and all documents
incidental thereto shall be satisfactory in form and substance to it
and its counsel, Kirkpatrick & Lockhart LLP;
(d) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement;
(e) That the Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall
have been instituted or, to the knowledge of Municipal Income and
Intermediate Municipal, threatened by the Commission; and
(f) That Municipal Income and Intermediate Municipal shall have
received an opinion of Kirkpatrick & Lockhart LLP satisfactory to
Municipal Income and Intermediate Municipal that for federal income
tax purposes:
(i) The Reorganization will be a reorganization under section
368(a)(1)(C) of the Code, and Intermediate Municipal and Municipal
Income will each be parties to the Reorganization under section 368(b)
of the Code;
(ii) No gain or loss will be recognized by Intermediate Municipal
upon the transfer of all of its assets to Municipal Income in exchange
solely for the Municipal Income Class Shares and the assumption of
Intermediate Municipal's liabilities followed by the distribution of
those Municipal Income Class Shares to the shareholders of the
corresponding class of Intermediate Municipal in liquidation of
Intermediate Municipal;
(iii) No gain or loss will be recognized by Municipal Income on the
receipt of Intermediate Municipal's assets in exchange solely for the
Municipal Income Class Shares and the assumption of Intermediate
Municipal's liabilities;
(iv) The basis of Intermediate Municipal's assets in the hands of
Municipal Income will be the same as the basis of such assets in
Intermediate Municipal's hands immediately prior to the
Reorganization;
(v) Municipal Income's holding period in the assets to be received
from Intermediate Municipal will include Intermediate Municipal's
holding period in such assets;
(vi) An Intermediate Municipal shareholder will recognize no gain or
loss on the exchange of each class of his or her shares of beneficial
interest in Intermediate Municipal for the Municipal Income Class
Shares of the corresponding class in the Reorganization;
(vii) An Intermediate Municipal shareholder's basis in the Municipal
Income Class Shares to be received by him or her will be the same as
his or her basis in the Intermediate Municipal shares of the
corresponding class exchanged therefor; and
(viii) An Intermediate Municipal shareholder's holding period for
his or her Municipal Income Class Shares will include the holding
period of Intermediate Municipal shares of the corresponding class
exchanged, provided that those Intermediate Municipal shares were held
as capital assets on the date of the Reorganization.
Notwithstanding anything herein to the contrary, neither Intermediate
Municipal nor Municipal Income may waive the conditions set forth in
this subsection 10(f).
11. COVENANTS OF MUNICIPAL INCOME AND INTERMEDIATE MUNICIPAL.
(a) Municipal Income and Intermediate Municipal each covenants to
operate its respective business in the ordinary course between the
date hereof and the Closing Date, it being understood that such
ordinary course of business will include the payment of customary
dividends and distributions;
(b) Intermediate Municipal covenants that it is not acquiring the
Municipal Income Class Shares for the purpose of making any
distribution other than in accordance with the terms of this
Agreement;
(c) Intermediate Municipal covenants that it will assist Municipal
Income in obtaining such information as Municipal Income reasonably
requests concerning the beneficial ownership of Intermediate
Municipal's shares; and
(d) Intermediate Municipal covenants that its liquidation and
termination will be effected in the manner provided in its Amended and
Restated Declaration of Trust in accordance with applicable law and
after the Closing Date, Intermediate Municipal will not conduct any
business except in connection with its liquidation and termination.
12. TERMINATION; WAIVER.
Municipal Income and Intermediate Municipal may terminate this
Agreement by mutual agreement. In addition, either Municipal Income or
Intermediate Municipal may at its option terminate this Agreement at
or prior to the Closing Date because:
(i) of a material breach by the other of any representation,
warranty, or agreement contained herein to be performed at or prior to
the Closing Date; or
(ii) a condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
In the event of any such termination, there shall be no liability for
damages on the part of Intermediate Municipal or Municipal Income, or
their respective Trustees or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES.
(a) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter
hereof, constitutes the only understanding with respect to such
subject matter, may not be changed except by a letter of agreement
signed by each party hereto and shall be construed in accordance with
and governed by the laws of the Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the respective
President, any Vice President, or Treasurer of Municipal Income or
Intermediate Municipal; provided, however, that following the
shareholders' meeting called by Intermediate Municipal pursuant to
Section 7 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of Municipal Income
Class Shares to be paid to shareholders of each class of Intermediate
Municipal under this Agreement to the detriment of such shareholders
without their further approval.
(c) Either Fund may waive any condition to its obligations hereunder,
provided that such waiver does not have any material adverse effect on
the interests of such Fund's shareholders.
The representations, warranties, and covenants contained in the
Agreement, or in any document delivered pursuant hereto or in
connection herewith, shall survive the consummation of the
transactions contemplated hereunder.
14. DECLARATIONS OF TRUST.
A copy of each Fund's Declaration of Trust, as restated and amended,
is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of each Fund as trustees and not
individually and that the obligations of each Fund under this
instrument are not binding upon any of such Fund's Trustees, officers,
or shareholders individually but are binding only upon the assets and
property of such Fund. Each Fund agrees that its obligations hereunder
apply only to such Fund and not to its shareholders individually or to
the Trustees of such Fund.
15. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer of any rights or obligations hereunder shall be made by
any party without the written consent of the other parties. Nothing
herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation other than the
parties hereto and their respective successors and assigns any rights
or remedies under or by reason of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by an appropriate officer.
[SIGNATURE LINES OMITTED]
FIDELITY(registered trademark) ADVISOR
MUNICIPAL INCOME
FUND
CLASS A
(Fund 257, CUSIP 315916833)
CLASS T
(Fund 169, CUSIP 315916205)
CLASS B
(Fund 669, CUSIP 315916304)
CLASS C
(Fund 490, CUSIP 315916791)
PROSPECTUS
DECEMBER 29, 1999
(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
FUND SUMMARY 2 INVESTMENT SUMMARY
2 PERFORMANCE
4 FEE TABLE
FUND BASICS 6 INVESTMENT DETAILS
6 VALUING SHARES
SHAREHOLDER INFORMATION 7 BUYING AND SELLING SHARES
13 EXCHANGING SHARES
14 ACCOUNT FEATURES AND POLICIES
18 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS
18 TAX CONSEQUENCES
FUND SERVICES 19 FUND MANAGEMENT
19 FUND DISTRIBUTION
APPENDIX 24 FINANCIAL HIGHLIGHTS
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield
exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal
investment strategies include:
(small solid bullet) Normally investing in investment-grade
municipal debt securities (those of medium and high quality) .
(small solid bullet) Normally investing at least 80% of assets
in municipal securities whose interest is exempt from federal income
tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers 3 Plus Yea r Municipal
Bond Index.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features
and current pricing , trading opportunities, and the credit
quality of its issuer to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently
from the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in the fund's
performance from year to year as represented by the performance of
Class T, and compares each class's performance to the performance of a
market index and an average of the performance of similar funds over
various periods of time. Returns are based on past results and are not
an indication of future performance.
YEAR-BY-YEAR RETURNS
The returns in the chart do not include the effect of Class T's
front-end sales charge. If the effect of the sales charge were
reflected, returns would be lower than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME -
CLASS T
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
13.09% 10.29% 12.18% 11.11% 13.79% -8.05% 16.65% 2.95% 10.13% 6.22%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 13.09
Row: 2, Col: 1, Value: 10.29
Row: 3, Col: 1, Value: 12.18
Row: 4, Col: 1, Value: 11.11
Row: 5, Col: 1, Value: 13.79
Row: 6, Col: 1, Value: -8.050000000000001
Row: 7, Col: 1, Value: 16.65
Row: 8, Col: 1, Value: 2.95
Row: 9, Col: 1, Value: 10.13
Row: 10, Col: 1, Value: 6.22
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS T OF ADVISOR
MUNICIPAL INCOME, THE HIGHEST RETURN FOR A QUARTER WAS 6.72%
(QUARTER ENDING MARCH 31, 1995 ) AND THE LOWEST RETURN FOR A
QUARTER WAS -6.76% (QUARTER ENDING MARCH 31, 1994).
THE YEAR-TO-DATE RETURN AS OF S EPTEMBER 30, 1999 FOR CLASS T OF
ADVISOR MUNICIPAL INCOME WAS -1.92 %.
AVERAGE ANNUAL RETURNS
The returns in the following table include the effect of Class A's and
Class T's maximum applicable front-end sales charge and Class B's and
Class C's maximum applicable contingent deferred sales charge (CDSC).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the periods ended Past 1 year Past 5 years Past 10 years/Life of class
December 31, 1998
Advisor Municipal Income - 1.17% n/a 6.14%A
Class A
Advisor Municipal Income - 2.50% 4.51% 8.23%
Class T
Advisor Municipal Income - 0.55% n/a 6.13%B
Class B
Advisor Municipal Income - 4.30% n/a 6.63%C
Class C
Lehman Brothers Municipal 6.48% 6.22% 8.22%
Bond Index
Lipper General Municipal Debt 5.32% 5.43% 7.68%
Funds Average
</TABLE>
A FROM SEPTEMBER 3, 1996.
B FROM JUNE 30, 1994.
C FROM NOVEMBER 3, 1997.
If FMR had not reimbursed certain class expenses during these periods,
Class A's, Class T's, Class B's, and Class C' s returns would
have been lower.
The Lehman Brothers Municipal Bond Index is a market
value-weighted index of investment-grade municipal bonds with
maturities of one year or more.
Lipper General Municipal Debt Funds Average reflects the
performance (excluding sales charges) of mutual funds with similar
objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold , or sell Class A, Class T, Class B, and
Class C shares of the fund. The annual class operating expenses
provided below for each class are based on historical expenses.
SHAREHOLDER F EES (PAID BY THE INVESTOR DIRECTLY)
Class A Class T Class B Class C
Maximum sales charge (load) 4.75%A 3.50%B None None
on purchases (as a % of
offering price)
Maximum CDSC (as a % of the NoneC NoneC 5.00%D 1.00%E
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on None None None None
reinvested distributions
A LOWER FRONT-END SALES CHARGES FOR CLASS A MAY BE AVAILABLE WITH
PURCHASE OF $50,000 OR MORE.
B LOWER FRONT-END SALES CHARGES FOR CLASS T MAY BE AVAILABLE WITH
PURCHASE OF $50,000 OR MORE.
C A CDSC OF 0.25% IS ASSESSED ON CERTAIN REDEMPTIONS OF CLASS A
AND CLASS T SHARES ON WHICH A FINDER'S FEE WAS PAID.
D DECLINES OVER 6 YEARS FROM 5.00% TO 0%.
E ON CLASS C SHARES REDEEMED WITHIN ONE YEAR OF PURCHASE.
ANNUAL CLASS OPERATING EXPENSES (PAID FROM CLASS ASSETS)
Class A Class T Class B Class C
Management fee 0.38% 0.38% 0.38% 0.38%
Distribution and Service 0.15% 0.25% 0.90% 1.00%
(12b-1) fee (including 0.25%
Service fee only for Class
B and Class C)
Other expenses 0.19% 0.18% 0.18% 0.18%
Total annual class operating 0.72% 0.81% 1.46% 1.56%
expensesA
A FMR HAS VOLUNTARILY AGREED TO REIMBURSE CLASS A, CLASS T, CLASS B,
AND CLASS C OF THE FUND TO THE EXTENT THAT TOTAL OPERATING EXPENSES
(EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND EXTRAORDINARY
EXPENSES), AS A PERCENTAGE OF THEIR RESPECTIVE AVERAGE NET ASSETS,
EXCEED THE FOLLOWING RATES:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Effective Date Class T Effective Date Class B Effective Date Class C Effective Date
Advisor Municipal Income 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96 1.75% 11/1/97
</TABLE>
THESE ARRANGEMENTS CAN BE DISCONTINUED BY FMR AT ANY TIME.
This EXAMPLE helps you compare the cost of investing in the fund with
the cost of investing in other mutual funds.
Let's say, hypothetically, that each class's annual return is 5% and
that your shareholder fees and each class's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years indicated
and if you leave your account open:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A Class T Class B Class C
Account open Account closed Account open Account closed Account open Account closed Account open
1 year $ 545 $ 545 $ 430 $ 430 $ 149 $ 649 $ 159
3 years $ 694 $ 694 $ 600 $ 600 $ 462 $ 762 $ 493
5 years $ 857 $ 857 $ 784 $ 784 $ 797 $ 997 $ 850
10 years $ 1,327 $ 1,327 $ 1,317 $ 1,317 $ 1,451A $ 1,451A $ 1,856
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Account closed
1 year $ 259
3 years $ 493
5 years $ 850
10 years $ 1,856
</TABLE>
A REFLECTS CONVERSION TO CLASS A SHARES AFTER A MAXIMUM OF
SEVEN YEARS.
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield
exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets in investment-grade municipal
debt securities (those of medium and high quality).
FMR normally invests at least 80% of the fund's assets in municipal
securities whose interest is exempt from federal income tax. Although
FMR does not currently intend to invest the fund's assets in municipal
securities whose interest is subject to federal income tax, FMR may
invest all of the fund's assets in municipal securities whose interest
is subject to the federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation , and utilities.
FMR uses the Lehman Brothers 3 Plus Yea r Municipal Bond Index
as a guide in structuring the fund and selecting its investments. FMR
manages the fund to have similar overall interest rate risk to the
index. As of October 31, 1999, the dollar-weighted average maturity of
the fund and the index was approximately 12.9 and 14.6 year s,
respectively.
FMR allocates the fund's assets among different market sectors (for
example, general obligation bonds of a state or bonds financing a
specific project) and different maturities based on its view of the
relative value of each sector and maturity.
In buying and selling securities for the fund, FMR analyzes a
security's structural features and current price compared to
its estimated long-term value, any short-term trading
opportunities resulting from market inefficiencies, and the credit
quality of its issuer.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates , or other factors that affect
security values. If FMR's strategies do not work as intended, the fund
may not achieve its objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fix ed, variable, or floating rate of interest,
and must repay the amount borrowed at the maturity of the security.
Some debt securities, such as zero coupon b onds, do not pay
current interest but are sold at a discount from their face values.
Municipal debt securities include general obligation bonds of
municipalities, local or state governments, project or
revenue-specific bonds, or pre-refunded or escrowed bonds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees , or insurance.
PRINCIPAL INVESTMENT RISKS
Many factors affect the fund's performance. The fund's yield and share
price change daily based on changes in interest rates and market
conditions and in resp onse to other economi c, political, or
financial developments. The fund's reaction to these developments will
be affec ted by the types and maturities of securities in which
the fund invests, the financial condition, industry and economic
sector, and geographic location of an issuer, and the fund's level of
investment in the securities of that issuer. When you sell your shares
of the fund, they could be worth more or less than what you paid for
them.
The following factors can significantly affect the fund's
performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation , and
utilities, conditions in those sectors can affect the overall
municipal market. In addition, changes in the financial condition of
an individual municipal insurer can affect the overall municipal
market.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities can be more
sensitive to interest rate changes. In other words, the longer the
maturity of a security, the greater the impact a change in interest
rates could have on the security's price. In addition, short-term and
long-term interest rates do not necessarily move in the same amount or
the same direction. Short-term securities tend to react to changes in
short-term interest rates, and long-term securities tend to react to
changes in long-term interest rates.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in
general economic or political conditions can affect the credit quality
or value of an issuer's securities. Lower-quality debt securities
(those of less than investment-grade quality) tend to be more
sensitive to these changes than higher-quality debt securities.
Municipal securities backed by current or anticipated revenues from a
specific project or specific assets can be negatively affected by the
discontinuance of the taxation supporting the project or assets or the
inability to collect revenues for the project or from the assets. If
the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest
from the security could become taxable and the security could decline
significantly in value.
In response to market, economic, political , or other
conditions, FMR may temporarily use a different investment strategy
for defensive purposes. If FMR does so, different factors could affect
the fund's performance, and the fund could distribute income
subject to federal income tax.
FUNDAMENTAL INVESTMENT POLICIES
The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
VALUING SHARES
The fund is open for business each day the New York Stock Exchange
(NYSE) is open.
A class's net asset value per share (NAV) is the value of a single
share. Fidelity normally calculates each class's NAV as of the
close of business of the NYSE, normally 4:00 p.m. Eastern time.
However, NAV may be calculated earlier if trading on the NYSE is
restricted or as permitted by the Securities and Exchange Commission
(SEC). The fund's assets are valued as of this time for the purpose of
computing each class's NAV.
To the extent that the fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of the fund's assets may not occur on days when the
fund is open for business.
The fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations . If market
quotations or information furnished by a pricing service is not
readily available for a security or if a security's value has been
materially affected by events occurring after the close of the market
on which the security is principally traded , that security may
be valued by another method that the Board of Trustees believes
accurately reflects fair value. A security's valuation may differ
depending on the method used for determining value.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
For account, product and service information, please use the following
phone numbers:
(small solid bullet) If you are investing through a broker-dealer or
insurance representative, 1-800-522-7297 (8:30 a.m. - 7:00 p.m.
Eastern time, Monday through Friday).
(small solid bullet) If you are investing through a bank
representative, 1-800-843-3001 (8:30 a.m. - 7:00 p.m. Eastern time,
Monday through Friday).
Please use the following addresses:
BUYING OR SELLING SHARES
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH2A
Hebron, KY 41048
You may buy or sell Class A, Class T, Class B, and Class C shares of
the fund through an investment professional. When you invest through
an investment professional, the procedures for buying, selling ,
and exchanging Class A, Class T, Class B, and Class C shares of
the fund and the account features and policies may differ.
Additional fees may also apply to your investment in Class A, Class T,
Class B, and Class C shares of the fund, including a transaction fee
if you buy or sell Class A, Class T, Class B, and Class C shares of
the fund through a broker or other investment professional.
Certain methods of contacting Fidelity, such as by telephone, may be
unavailable or delayed (for example, during periods of unusual market
activity).
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS OR
OTHER GROUPS
BUYING SHARES
The price to buy one share of Class A or Class T is the class's
offering price or the class's NAV, depending on whether you pay a
front-end sales charge.
For Class B and Class C, the price to buy one share is the class's
NAV. Class B and Class C shares are sold without a front-end sales
charge, but may be subject to a CDSC upon redemption.
If you pay a front-end sales charge, your price will be Class A's or
Class T's offering price. When you buy Class A or Class T shares at
the offering price, Fidelity deducts the appropriate sales charge and
invests the rest in Class A or Class T shares of the fund. If you
qualify for a front-end sales charge waiver, your price will be Class
A's or Class T's NAV.
The offering price of Class A or Class T is its NAV divided by the
difference between one and the applicable front-end sales charge
percentage. Class A has a maximum front-end sales charge of 4.75% of
the offering price. Class T has a maximum front-end sales charge of
3.50% of the offering price.
Your shares will be bought at the next offering price or NAV, as
applicable, calculated after your order is received in proper form.
It is the responsibility of your investment professional to transmit
your order to buy shares to Fidelity before the close of business on
the day you place your order.
Short-term or excessive trading into and out of the fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, the fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
the fund. For these purposes, FMR may consider an investor's trading
history in the fund or other Fidelity funds, and accounts under common
ownership or control.
The fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Fidelity reserves the right to limit the number
of checks processed at one time.
(small solid bullet) Fidelity must receive payment within three
business days after an order for shares is placed; otherwise your
purchase order may be canceled and you could be liable for any losses
or fees the fund or Fidelity has incurred.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees the fund or
Fidelity has incurred.
Shares can be bought or sold through investment professionals using an
automated order placement and settlement system that guarantees
payment for orders on a specified date.
Certain financial institutions that meet creditworthiness criteria
established by Fidelity Distributors Corporation (FDC) may enter
confirmed purchase orders on behalf of customers by phone, with
payment to follow no later than close of business on the next business
day. If payment is not received by that time, the order will be
canceled and the financial institution will be liable for any losses.
MINIMUMS
TO OPEN AN ACCOUNT $2,500
Through regular investment plansA $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
A AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $100, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED.
The fund may waive or lower purchase minimums .
Purchase and account minimums are waived for purchases of Class T
shares with distributions from a Fidelity Defined Trust account.
PURCHASE AMOUNTS OF MORE THAN $250,000 WILL NOT BE ACCEPTED FOR CLASS
B SHARES.
PURCHASE AMOUNTS OF MORE THAN $1 MILLION WILL NOT BE ACCEPTED FOR
CLASS C SHARES. THIS LIMIT DOES NOT APPLY TO PURCHASES OF CLASS C
SHARES MADE BY AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT), 403(B) PROGRAM OR PLAN COVERING A
SOLE-PROPRIETOR (FORMERLY KEOGH/H.R. 10 PLAN).
KEY INFORMATION
PHONE TO OPEN AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from certain other
Fidelity funds. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
TO ADD TO AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from certain other
Fidelity funds. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
MAIL FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770002 CINCINNATI, (small solid bullet) Complete
OH 45277-0081 and sign the application.
Make your check payable to
the complete name of the
fund and note the applicable
class. Mail to your
investment professional or
to the address at left.
TO ADD TO AN ACCOUNT
(small solid bullet) Make
your check payable to the
complete name of the fund
and note the applicable
class. Indicate your fund
account number on your check
and mail to your investment
professional or to the
address at left.
(small solid bullet) Exchange
from the same class of other
Fidelity Advisor funds or
from certain other Fidelity
funds. Send a letter of
instruction to your
investment professional or
to the address at left,
including your name, the
funds' names, the applicable
class names, the fund
account numbers, and the
dollar amount or number of
shares to be exchanged.
IN PERSON TO OPEN AN ACCOUNT
(small solid bullet) Bring
your application and check
to your investment
professional.
TO ADD TO AN ACCOUNT
(small solid bullet) Bring
your check to your
investment professional.
WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to set
up your account and to
arrange a wire transaction.
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your new
fund account number and your
name.
TO ADD TO AN ACCOUNT
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your fund
account number and your name.
AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Advisor Systematic
Investment Program.
(small solid bullet) Use
Fidelity Advisor Systematic
Exchange Program to exchange
from certain Fidelity money
market funds or a Fidelity
Advisor fund.
SELLING SHARES
The price to sell one share of Class A, Class T, Class B, or Class C
is the class's NAV, minus any applicable CDSC.
If appropriate to protect shareholders, the fund may impose a
redemption fee (trading fee) on redemptions from the fund.
Any applicable CDSC is calculated based on your original redemption
amount.
Your shares will be sold at the next NAV calculated after your order
is received in proper form, minus any applicable CDSC.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to sell more than $100,000 worth of
shares;
(small solid bullet) Your account registration has changed within the
last 15 or 30 days, depending on the type of account;
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);
(small solid bullet) The check is being made payable to someone other
than the account owner; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
shares, leave at least $1,000 worth of shares in the account to keep
it open, except accounts not subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
the fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other property rather than in cash if FMR determines it
is in the best interests of the fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
To sell shares issued with certificates, call Fidelity for
instructions. The fund no longer issues share certificates.
KEY INFORMATION
PHONE (small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to
initiate a wire transaction
or to request a check for
your redemption.
(small solid bullet) Exchange
to the same class of other
Fidelity Advisor funds or to
certain other Fidelity
funds. Call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information."
MAIL FIDELITY INVESTMENTS INDIVIDUAL, JOINT TENANT,
P.O. BOX 770002 CINCINNATI, SOLE PROPRIETORSHIP, UGMA,
OH 45277-0081 UTMA
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including your name, the
fund's name, the applicable
class name, your fund
account number, and the
dollar amount or number of
shares to be sold. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on the
account.
TRUST
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the trust's name,
the fund's name, the
applicable class name, the
trust's fund account number,
and the dollar amount or
number of shares to be sold.
The trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the account
registration, provide a copy
of the trust document
certified within the last 60
days.
BUSINESS OR ORGANIZATION
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the firm's name,
the fund's name, the
applicable class name, the
firm's fund account number,
and the dollar amount or
number of shares to be sold.
At least one person
authorized by corporate
resolution to act on the
account must sign the letter
of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" for
instructions.
IN PERSON INDIVIDUAL, JOINT TENANT,
SOLE PROPRIETORSHIP, UGMA,
UTMA
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The letter of
instruction must be signed
by all persons required to
sign for transactions,
exactly as their names
appear on the account.
TRUST
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The trustee
must sign the letter of
instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR ORGANIZATION
(small solid bullet) Bring a
letter of instruction to
your investment
professional. At least one
person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
AUTOMATICALLY (small solid bullet) Use
Fidelity Advisor Systematic
Exchange Program to exchange
to the same class of another
Fidelity Advisor fund or to
certain Fidelity funds.
(small solid bullet) Use
Fidelity Advisor Systematic
Withdrawal Program to set up
periodic redemptions from
your Class A, Class T, Class
B, or Class C account.
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As a Class A shareholder, you have the privilege of exchanging Class A
shares of the fund for the same class of shares of other Fidelity
Advisor funds at NAV or for Daily Money Class shares of Treasury Fund,
Prime Fund or Tax-Exempt Fund.
As a Class T shareholder, you have the privilege of exchanging Class T
shares of the fund for the same class of shares of other Fidelity
Advisor funds at NAV or for Daily Money Class shares of Treasury Fund,
Prime Fund or Tax-Exempt Fund. If you purchased your Class T shares
through certain investment professionals that have signed an agreement
with FDC, you also have the privilege of exchanging your Class T
shares for shares of Fidelity Capital Appreciation Fund.
As a Class B shareholder, you have the privilege of exchanging Class B
shares of the fund for the same class of shares of other Fidelity
Advisor funds or for Advisor B Class shares of Treasury Fund.
As a Class C shareholder, you have the privilege of exchanging Class C
shares of the fund for the same class of shares of other Fidelity
Advisor funds or for Advisor C Class shares of Treasury Fund.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) The fund may temporarily or permanently terminate
the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control will be counted together for purposes of the four
exchange limit.
(small solid bullet) The fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Any exchanges of Class A, Class T, Class
B , and Class C shares are not subject to a CDSC.
The fund may terminate or modify the exchange privilege in the future.
Other funds may have different exchange restrictions, and may
impose trading fees of up to 1.00% of the amount exchanged.
Check each fund's prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
fund.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses,
and other long-term financial goals. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY ADVISOR SYSTEMATIC
INVESTMENT PROGRAM TO MOVE
MONEY FROM YOUR BANK ACCOUNT
TO A FIDELITY ADVISOR FUND.
MINIMUM MINIMUM FREQUENCY PROCEDURES
INITIAL ADDITIONAL Monthly, bimonthly, (small solid bullet) To set
$100 $100 quarterly, or semi-annually up for a new account,
complete the appropriate
section on the application.
(small solid bullet) To set
up for existing accounts,
call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for an
application.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
investment date.
TO DIRECT DISTRIBUTIONS FROM
A FIDELITY DEFINED TRUST TO
CLASS T OF A FIDELITY
ADVISOR FUND.
MINIMUM MINIMUM PROCEDURES
INITIAL ADDITIONAL (small solid bullet) To set
Not Applicable Not Applicable up for a new or existing
account, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information" for
the appropriate enrollment
form.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
FIDELITY ADVISOR SYSTEMATIC
EXCHANGE PROGRAM TO MOVE
MONEY FROM CERTAIN FIDELITY
MONEY MARKET FUNDS TO CLASS
A, CLASS T, CLASS B, OR
CLASS C OF A FIDELITY
ADVISOR FUND OR FROM CLASS
A, CLASS T, CLASS B, OR
CLASS C OF A FIDELITY
ADVISOR FUND TO THE SAME
CLASS OF ANOTHER FIDELITY
ADVISOR FUND.
MINIMUM FREQUENCY PROCEDURES
$100 Monthly, quarterly, (small solid bullet) To set
semi-annually, or annually up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" after both
accounts are opened.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 2 business days
prior to your next scheduled
exchange date.
(small solid bullet) The
account from which the
exchanges are to be
processed must have a
minimum balance of $10,000.
The account into which the
exchange is being processed
must have a minimum balance
of $1,000.
</TABLE>
FIDELITY ADVISOR SYSTEMATIC
WITHDRAWAL PROGRAM TO SET UP
PERIODIC REDEMPTIONS FROM
YOUR CLASS A, CLASS T, CLASS
B, OR CLASS C ACCOUNT TO YOU
OR TO YOUR BANK CHECKING
ACCOUNT.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Class A and Class T: Monthly, (small solid bullet) Accounts
quarterly, or semi-annually with a value of $10,000 or
Class B and Class C: Monthly more in Class A, Class T,
or quarterly Class B, or Class C shares
are eligible for this program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for instructions.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
withdrawal date.
(small solid bullet)
Aggregate redemptions per
12-month period from your
Class B or Class C account
may not exceed 10% of the
account value and are not
subject to a CDSC; and you
may set your withdrawal
amount as a percentage of
the value of your account or
a fixed dollar amount.
(small solid bullet) Because
of Class A's and Class T's
front-end sales charge, you
may not want to set up a
systematic withdrawal plan
during a period when you are
buying Class A or Class T
shares on a regular basis.
</TABLE>
OTHER FEATURES. The following other features are also available to buy
and sell shares of the fund.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account.
(small solid bullet) Call your investment professional or call
Fidelity at the appropriate number found in "General Information"
before your first use to verify that this feature is set up on your
account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid bullet) To add the wire feature or to change the bank
account designated to receive redemption proceeds at any time prior to
making a redemption request, you should send a letter of instruction,
including a signature guarantee, to your investment professional or to
Fidelity at the address found in "General Information."
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(small solid bullet) Financial reports (every six months).
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
the fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require the fund to withhold 31% of your taxable distributions and
redemptions.
If your ACCOUNT BALANCE falls below $1,000 (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold at the NAV, minus any applicable CDSC, on the day
your account is closed.
Fidelity may charge a FEE FOR CERTAIN SERVICES, such as
providing historical account documents .
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The fund earns interest, dividends, and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. The fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gain distributions.
The fund normally declares dividends daily and pays them monthly. The
fund normally pays capital gain distributions in December.
EARNING DIVIDENDS
Shares purchased by an automated purchase order begin to earn
dividends on the day your payment is received.
Shares purchased by all other purchase orders begin to earn dividends
on the first business day following the day your payment is received.
Shares earn dividends until, but not including, the next business day
following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each class's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gain
distributions will be automatically reinvested in additional shares of
the same class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will
be automatically reinvested in additional shares of the same class of
the fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gain distributions
will be paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in the same class of shares of another
identically registered Fidelity Advisor fund or shares of certain
identically registered Fidelity funds. Your capital gain distributions
will be automatically reinvested in additional shares of the
same class of the fund, or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, contact your investment
professional directly or call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in the fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS. The fund seeks to earn income and pay
dividends exempt from federal income tax.
Income exempt from federal income tax may be subject to state or local
tax. A portion of the dividends you receive may be subject to federal
and state income taxes and also may be subject to the federal
alternative minimum tax . You may also receive taxable
distributions attributable to the fund's sale of municipal bond s.
For federal tax purposes, the fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ordinary income , while the
fund's distributions of long-term capital gains are taxable to you
generally as capital gains.
If a fund's distributions exceed its income and capital gains realized
in any year, all or a portion of those distributions may be treated as
a return of capital to shareholders for tax purposes. A return of
capital generally will not be taxable to you but will reduce
the cost basis of your shares and result in a higher reported capital
gain or a lower reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a potentially taxable distribution.
Any taxable distributions you receive from the fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in the same class of shares of another
Fidelity Advisor fund or shares of certain Fidelity funds, you will
receive certain December distributions in January, but those
distributions will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in the fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Advisor Municipal Income is a mutual fund, an investment that pools
shareholders' money and invests it toward a specified goal.
FMR is the fund's manager.
As o f March 25, 1999, FMR had approximately $521.7 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is primarily
responsible for choosing investments for the fund.
FIMM is an affiliate of FMR. As of M arch 29, 1999, FIMM had
approximately $159.8 billi on in discretionary assets under
management.
The fund could be adversely affected if the computer systems used by
FMR and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised the fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on the fund.
Christine Thompson is vice president and manager of Advisor Municipal
Income, which she has managed since July 1998. She also manages
other Fidelity funds. Since joining Fidelity in 1985, Ms. Thompson
has worked as a senior analyst and portfolio manager.
From time to time a manager, analyst, or other Fidelity employee
may express views regarding a particular company, security, industry,
or market sector. The views expressed by any such person are the views
of only that individual as of the time expressed and do not
necessarily represent the views of Fidelity or any other person in the
Fidelity organization. Any such views are subject to change at any
time based upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for a Fidelity
fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
The fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fee is calculated by
adding a group fee rate to an individual fund fee rate, dividing by
twelve, and multiplying the result by the fund's average net assets
throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.
For October 1999 , the group fee rate was 0. 1289%. The
individual fund fee rate is 0.25%.
The total management fee for the fiscal year ended October 31,
1999, was 0.38% of the fund's average net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse a class for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a class if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be discontinued by FMR at any time, can decrease a
class's expenses and boost its performance.
FUND DISTRIBUTION
The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio.
FDC distributes each class's shares.
You may pay a sales charge when you buy or sell your Class A, Class
T, Class B, or Class C shares.
FDC collects the sales charge.
The front-end sales charge will be reduced for purchases of Class A
and Class T shares according to the sales charge schedules below.
SALES CHARGES AND CONCESSIONS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 4.75% 4.99% 4.25%
$50,000 to $99,999 4.50% 4.71% 4.00%
$100,000 to $249,999 3.50% 3.63% 3.00%
$250,000 to $499,999 2.50% 2.56% 2.25%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 to $24,999,999 0.50% 0.50% 0.50%
$25,000,000 or more None* None* *
</TABLE>
* SEE "FINDER'S FEE" SECTION ON PAGE 30.
SALES CHARGES AND CONCESSIONS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 3.50% 3.63% 3.00%
$50,000 to $99,999 3.00% 3.09% 2.50%
$100,000 to $249,999 2.50% 2.56% 2.00%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
* SEE "FINDER'S FEE" SECTION ON PAGE 30 .
Class A or Class T shares purchased by an individual or company
through the Combined Purchase, Rights of Accumulation or Letter of
Intent program may receive a reduced front-end sales charge according
to the sales charge schedules above. To qualify for a Class A or Class
T front-end sales charge reduction under one of these programs, you
must notify Fidelity in advance of your purchase. More detailed
information about these programs is contained in the statement of
additional information (SAI).
COMBINED PURCHASE. To receive a Class A or Class T front-end sales
charge reduction, if you are a new shareholder, you may combine your
purchase of Class A or Class T shares with purchases of: (i) Class A,
Class T, Class B , and Class C shares of any Fidelity Advisor
fund and (ii) Advisor B Class shares and Advisor C Class shares of
Treasury Fund.
RIGHTS OF ACCUMULATION. To receive a Class A or Class T front-end
sales charge reduction, if you are an existing shareholder, you may
add to your purchase of Class A or Class T shares the current value of
your holdings in: (i) Class A, Class T, Class B , and Class C
shares of any Fidelity Advisor fund, (ii) Advisor B Class shares and
Advisor C Class shares of Treasury Fund and (iii) Daily Money Class
shares of Treasury Fund, Prime Fund or Tax-Exempt Fund acquired by
exchange from any Fidelity Advisor fund.
LETTER OF INTENT. You may receive a Class A or Class T front-end sales
charge reduction on your purchases of Class A and Class T shares made
during a 13-month period by signing a Letter of Intent (Letter). Each
Class A or Class T purchase you make after you sign the Letter will be
entitled to the reduced front-end sales charge applicable to the total
investment indicated in the Letter. Purchases of the following may be
aggregated for the purpose of completing your Letter: (i) Class A and
Class T shares of any Fidelity Advisor fund (except those acquired by
exchange from Daily Money Class shares of Treasury Fund, Prime Fund or
Tax-Exempt Fund that had been previously exchanged from a Fidelity
Advisor fund), (ii) Class B and Class C shares of any Fidelity Advisor
fund and (iii) Advisor B Class shares and Advisor C Class shares of
Treasury Fund. Reinvested income and capital gain distributions will
not be considered purchases for the purpose of completing your Letter.
Class B shares may, upon redemption, be assessed a contingent deferred
sales charge (CDSC) based on the following schedule:
From Date of Purchase Contingent Deferred Sales
Charge
Less than 1 year 5%
1 year to less than 2 years 4%
2 years to less than 3 years 3%
3 years to less than 4 years 3%
4 years to less than 5 years 2%
5 years to less than 6 years 1%
6 years to less than 7 yearsA 0%
A AFTER A MAXIMUM OF S EVEN YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE SAME FIDELITY ADVISOR FUND.
When exchanging Class B shares of one fund for Class B shares of
another Fidelity Advisor fund or Advisor B Class shares of Treasury
Fund, your Class B shares retain the CDSC schedule in effect when they
were originally bought.
Except as provided below, investment professionals receive as
compensation from FDC, at the time of sale, a concession equal to
4.00% of your purchase of Class B shares. For purchases of Class B
shares through reinvested dividends or capital gain
distributions, investment professionals do not receive a concession at
the time of sale.
Class C shares may, upon redemption within one year of purchase, be
assessed a CDSC of 1.00%.
Except as provided below, investment professionals will receive as
compensation from FDC, at the time of the sale, a concession equal to
1.00% of your purchase of Class C shares. For purchases of Class C
shares made for an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 plan) or through
reinvested dividends or capital gain distributions, investment
professionals do not receive a concession at the time of sale.
The CDSC for Class B and Class C shares will be calculated based on
the lesser of the cost of the Class B or Class C shares, as
applicable, at the initial date of purchase or the value of those
Class B or Class C shares, as applicable, at redemption, not including
any reinvested dividends or capital gains. Class B and Class C shares
acquired through reinvestment of dividends or capital gain
distributions will not be subject to a CDSC. In determining the
applicability and rate of any CDSC at redemption, Class B or Class C
shares representing reinvested dividends and capital gains will be
redeemed first, followed by those Class B or Class C shares that have
been held for the longest period of time.
A front-end sales charge will not apply to the following Class A
shares:
1. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program with at
least $25 million or more in plan assets;
2. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an insurance company separate account used to fund
annuity contracts;
3. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through a trust institution, bank trust department or
insurance company, or any such institution's broker-dealer affiliate
that is not part of an organization primarily engaged in the brokerage
business. Employee benefit plans (except SIMPLE IRA, SEP, and SARSEP
plans and plans covering self-employed individuals and their employees
(formerly Keogh/H.R. 10 plans)) and 403(b) programs that participate
in the Advisor Retirement Connection do not qualify for this waiver;
4. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self- employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an investment professional sponsored program that
requires the participating employee benefit plan to invest initially
in Class C or Class B shares and, upon meeting certain criteria,
subsequently requires the plan to invest in Class A shares;
5. Purchased by a trust institution or bank trust department for a
managed account that is charged an asset-based fee. Employee benefit
plans (except SIMPLE IRA, SEP, and SARSEP plans and plans covering
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans)), 403(b) programs and accounts managed by third parties do not
qualify for this waiver;
6. Purchased by a broker-dealer for a managed account that is charged
an asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do
not qualify for this waiver;
7. Purchased by a registered investment adviser that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP, and
SARSEP plans and plans covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do not
qualify for this waiver;
8. Purchased with proceeds from the sale of front-end load shares of a
non-Advisor mutual fund for an account participating in the FundSelect
by Nationwide program;
9. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC. A member of
the immediate family of a bank trust officer, a registered
representative or other employee of investment professionals having
agreements with FDC, is a spouse of one of those individuals, an
account for which one of those individuals is acting as custodian for
a minor child, and a trust account that is registered for the sole
benefit of a minor child of one of those individuals; or
10. Purchased by the Fidelity Investments Charitable Gift
Fund.
A front-end sales charge will not apply to the following Class T
shares:
1. Purchased for an insurance company separate account used to fund
annuity contracts for employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) or 403(b) programs;
2. Purchased by a trust institution or bank trust department for a
managed account that is charged an asset-based fee. Accounts managed
by third parties do not qualify for this waiver;
3. Purchased by a broker-dealer for a managed account that is charged
an asset-based fee;
4. Purchased by a registered investment adviser that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee;
5. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program;
6. Purchased for a Fidelity or Fidelity Advisor account with the
proceeds of a distribution from (i) an insurance company separate
account used to fund annuity contracts for employee benefit plans,
403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) that are invested in Fidelity Advisor or Fidelity
funds, or (ii) an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 plan) that is
invested in Fidelity Advisor or Fidelity funds. (Distributions other
than those transferred to an IRA account must be transferred directly
into a Fidelity account.);
7. Purchased for any state, county, or city, or any governmental
instrumentality, department, authority or agency;
8. Purchased with redemption proceeds from other mutual fund complexes
on which you have previously paid a front-end sales charge or CDSC;
9. Purchased by a current or former trustee or officer of a Fidelity
fund or a current or retired officer, director or regular employee of
FMR Corp. or Fidelity International Limited or their direct or
indirect subsidiaries (a Fidelity trustee or employee), the spouse of
a Fidelity trustee or employee, a Fidelity trustee or employee acting
as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity trustee or
employee;
10. Purchased by a charitable organization (as defined for purposes of
Section 501(c)(3) of the Internal Revenue Code , but excluding the
Fidelity Investments Charitable Gift Fund ) investing $100,000 or
more;
11. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC. A member of
the immediate family of a bank trust officer, a registered
representative or other employee of investment professionals having
agreements with FDC, is a spouse of one of those individuals, an
account for which one of those individuals is acting as custodian for
a minor child, and a trust account that is registered for the sole
benefit of a minor child of one of those individuals;
12. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined
for purposes of Section 501(c)(3) of the Internal Revenue Code);
13. Purchased with distributions of income, principal, and capital
gains from Fidelity Defined Trusts ; or
14. Purchased by the Fidelity Investments Charitable Gift
Fund.
The Class B or Class C CDSC will not apply to the redemption of
shares:
1. For disability or death, provided that the shares are sold within
one year following the death or the initial determination of
disability;
2. That are permitted without penalty at age 70 1/2 pursuant to the
Internal Revenue Code from retirement plans or accounts (other than of
shares purchased on or after February 11, 1999 for Traditional IRAs,
Roth IRAs and Rollover IRAs);
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs
and Rollover IRAs purchased on or after February 11, 1999;
4. Through the Fidelity Advisor Systematic Withdrawal Program; or
5. (Applicable to Class C only) From an employee benefit plan, 403(b)
program or plan covering a sole-proprietor (formerly Keogh/H.R. 10
plan).
To qualify for a Class A or Class T front-end sales charge reduction
or waiver, you must notify Fidelity in advance of your purchase.
To qualify for a Class B or Class C CDSC waiver, you must notify
Fidelity in advance of your redemption.
FINDER'S FEE. On eligible purchases of (i) Class A shares in amounts
of $1 million or more that qualify for a Class A load waiver, (ii)
Class A shares in amounts of $25 million or more, and (iii) Class T
shares in amounts of $1 million or more, investment professionals will
be compensated with a fee at the rate of 0.25% of the purchase amount.
Shares held by an insurance company separate account will be
aggregated at the client (e.g., the contract holder or plan sponsor)
level, not at the separate account level. Upon request, anyone
claiming eligibility for the 0.25% fee with respect to shares held by
an insurance company separate account must provide Fidelity access to
records detailing purchases at the client level.
Except as provided below, any assets on which a finder's fee has been
paid will bear a contingent deferred sales charge (Class A or Class T
CDSC) if they do not remain in Class A or Class T shares of the
Fidelity Advisor funds, or Daily Money Class shares of Treasury Fund,
Prime Fund or Tax-Exempt Fund, for a period of at least one
uninterrupted year. The Class A or Class T CDSC will be 0.25% of the
lesser of the cost of the Class A or Class T shares, as applicable, at
the initial date of purchase or the value of those Class A or Class T
shares, as applicable, at redemption, not including any reinvested
dividends or capital gains. Class A and Class T shares acquired
through reinvestment of dividends or capital gain distributions
will not be subject to a Class A or Class T CDSC. In determining the
applicability and rate of any Class A or Class T CDSC at redemption,
Class A or Class T shares representing reinvested dividends and
capital gains will be redeemed first, followed by those Class A or
Class T CDSC shares that have been held for the longest period of
time.
The Class A or Class T CDSC will not apply to the redemption of
shares:
1. Held by insurance company separate accounts;
2. For plan loans or distributions or exchanges to non-Advisor fund
investment options from employee benefit plans (except shares of
SIMPLE IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)
purchased on or after February 11, 1999) and 403(b) programs; or
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs,
SIMPLE IRAs, SEPs, SARSEPs and plans covering a sole - proprietor
or self-employed individuals and their employees (formerly Keogh/H.R.
10 plans).
To qualify for a Class A or Class T finder's fee or CDSC waiver, you
must notify Fidelity in advance of your purchase or redemption,
respectively.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class A,
Class T, Class B , or Class C shares of the fund, you may
reinvest an amount equal to all or a portion of the redemption
proceeds in the same class of the fund or another Fidelity Advisor
fund, at the NAV next determined after receipt in proper form of your
investment order, provided that such reinvestment is made within 90
days of redemption. Under these circumstances, the dollar amount of
the CDSC you paid, if any, on shares will be reimbursed to you by
reinvesting that amount in Class A, Class T, Class B , or Class
C shares, as applicable. You must reinstate your Class A, Class T,
Class B , or Class C shares into an account with the same
registration. This privilege may be exercised only once by a
shareholder with respect to the fund and certain restrictions may
apply. For purposes of the CDSC schedule, the holding period will
continue as if the Class A, Class T, Class B , or Class C shares
had not been redeemed.
To qualify for the reinstatement privilege, you must notify
Fidelity in writing in advance of your reinvestment.
CONVERSION FEATURE. After a maximum of seven years from the
initial date of purchase, Class B shares and any capital appreciation
associated with those shares, convert automatically to Class A shares
of the fund. Conversion to Class A shares will be made at NAV. At the
time of conversion, a portion of the Class B shares bought through the
reinvestment of dividends or capital gains (Dividend Shares) will also
convert to Class A shares. The portion of Dividend Shares that will
convert is determined by the ratio of your converting Class B
non-Dividend Shares to your total Class B non-Dividend Shares.
Class A of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class A of the fund is authorized to pay FDC a monthly 12b-1
fee as compensation for providing services intended to result in the
sale of Class A shares and/or shareholder support services. Class A of
the fund may pay FDC a 12b-1 fee at an annual rate of 0.40% of its
average net assets, or such lesser amount as the Trustees may
determine from time to time. Class A of the fund currently pays FDC a
monthly 12b-1 fee at an annual rate of 0.15% of its average net assets
throughout the month. Class A's 12b-1 fee rate may be increased only
when the Trustees believe that it is in the best interests of Class A
shareholders to do so.
Class T of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class T of the fund is authorized to pay FDC a monthly 12b-1
fee as compensation for providing services intended to result in the
sale of Class T shares and/or shareholder support services. Class T of
the fund may pay FDC a 12b-1 fee at an annual rate of 0.40% of its
average net assets, or such lesser amount as the Trustees may
determine from time to time. Class T of the fund currently pays FDC a
monthly 12b-1 fee at an annual rate of 0.25% of its average net assets
throughout the month. Class T's 12b-1 fee rate may be increased only
when the Trustees believe that it is in the best interests of Class T
shareholders to do so.
FDC may reallow to intermediaries (such as banks, broker-dealers and
other service-providers), including its affiliates, up to the full
amount of the Class A and Class T 12b-1 fee, for providing services
intended to result in the sale of Class A or Class T shares and/or
shareholder support services.
Class B of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class B of the fund is authorized to pay FDC a monthly 12b-1
(distribution) fee as compensation for providing services intended to
result in the sale of Class B shares. Class B of the fund may pay FDC
a 12b-1 (distribution) fee at an annual rate of 0.75% of its average
net assets, or such lesser amount as the Trustees may determine from
time to time. Class B of the fund currently pays FDC a monthly 12b-1
(distribution) fee at an annual rate of 0.65% of its average net
assets throughout the month. Class B's 12b-1 (distribution) fee rate
may be increased only when the Trustees believe that it is in the best
interests of Class B shareholders to do so.
In addition, pursuant to the Class B plan, Class B pays FDC a monthly
12b-1 (service) fee at an annual rate of 0.25% of Class B's average
net assets throughout the month for providing shareholder support
services.
FDC may reallow up to the full amount of the Class B 12b-1 (service)
fee to intermediaries (such as banks, broker-dealers and other
service-providers) for providing shareholder support services.
Class C of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class C of the fund is authorized to pay FDC a monthly 12b-1
(distribution) fee as compensation for providing services intended to
result in the sale of Class C shares. Class C of the fund currently
pays FDC a monthly 12b-1 (distribution) fee at an annual rate of 0.75%
of its average net assets throughout the month.
In addition, pursuant to the Class C plan, Class C pays FDC a monthly
12b-1 (service) fee at an annual rate of 0.25% of Class C's average
net assets throughout the month for providing shareholder support
services.
Normally, after the first year of investment, FDC may reallow up to
the full amount of the Class C 12b-1 (distribution) fees to
intermediaries (such as banks, broker-dealers and other
service-providers) for providing services intended to result in the
sale of Class C shares and may reallow up to the full amount of the
Class C 12b-1 (service) fee to intermediaries for providing
shareholder support services.
For purchases of Class C shares made for an employee benefit plan,
403(b) program or plan covering a sole-proprietor (formerly Keogh/H.R.
10 plan) or through reinvestment of dividends or capital gain
distributions, during the first year of investment and thereafter, FDC
may reallow up to the full amount of the Class C 12b-1 (distribution)
fee paid by such shares to intermediaries, including its affiliates,
for providing services intended to result in the sale of Class C
shares and may reallow up to the full amount of the Class C 12b-1
(service) fee paid by such shares to intermediaries, including its
affiliates, for providing shareholder support services.
Because 12b-1 fees are paid out of each class's assets on an
ongoing basis, they will increase the cost of your investment and may
cost you more than paying other types of sales charges.
In addition, each plan specifically recognizes that FMR may make
payments from its management fee revenue, past profits, or other
resources to FDC for expenses incurred in connection with providing
services intended to result in the sale of the applicable class's
shares and/or shareholder support services, including payments made to
intermediaries that provide those services. Currently, the Board of
Trustees of the fund has authorized such payments for Class A, Class
T, Class B, and Class C.
To receive sales concessions, finder's fees and payments made pursuant
to a Distribution and Service Plan, intermediaries must sign the
appropriate agreement with FDC in advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Fidelity Advisor funds, provided
that the fund receives brokerage services and commission rates
comparable to those of other broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this prospectus and in the related SAI,
in connection with the offer contained in this prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the fund or FDC. This prospectus and
the related SAI do not constitute an offer by the fund or by FDC to
sell shares of the fund to or to buy shares of the fund
from any person to whom it is unlawful to make such offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand
each class's financial history for the past 5 years or, if shorter,
the period of the class's operations. Certain information reflects
financial results for a single class share. The total returns in
the table represent the rate that an investor would have earned (or
lost) on an investment in the class (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP , independent accountants, whose
report, along with the fund's financial highlights and financial
statements, are included in the fund's annual report. A free copy of
the annual report is available upon request.
ADVISOR MUNICIPAL INCOME FUND - CLASS A
Years ended October 31, 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.540 $ 12.150 $ 11.740 $ 11.630
period
Income from Investment
Operations
Net interest income .567 .571 .583 D .105 D, E
Net realized and unrealized (.850) .390 .445 .109
gain (loss)
Total from investment (.283) .961 1.028 .214
operations
Less Distributions
From net interest income (.567) (.571) (.616) E (.104)
In excess of net interest - - (.002) -
income
Total distributions (.567) (.571) (.618) (.104)
Net asset value, end of period $ 11.690 $ 12.540 $ 12.150 $ 11.740
TOTAL RETURN B, C (2.36)% 8.07% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,722 $ 6,721 $ 3,755 $ 202
(000 omitted)
Ratio of expenses to average .72% .90% G .90% G .90% A, G
net assets
Ratio of net interest income 4.62% 4.57% 4.87% 5.73% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
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.
ADVISOR MUNICIPAL INCOME FUND - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended October 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.560 $ 12.150 $ 11.760 $ 11.880 $ 11.220
period
Income from Investment
Operations
Net interest income .555 .571 .597 B .677 B, C .700
Net realized and unrealized (.860) .410 .407 (.136) .660
gain (loss)
Total from investment (.305) .981 1.004 .541 1.360
operations
Less Distributions
From net interest income (.555) (.571) (.612) C (.661) (.700)
In excess of net interest - - (.002) - -
income
Total distributions (.555) (.571) (.614) (.661) (.700)
Net asset value, end of period $ 11.700 $ 12.560 $ 12.150 $ 11.760 $ 11.880
TOTAL RETURN A (2.53)% 8.15% 8.89% 4.68% 12.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 329,926 $ 380,325 $ 392,075 $ 480,432 $ 565,131
(000 omitted)
Ratio of expenses to average .81% .87% .89% .89% .91%
net assets
Ratio of net interest income 4.51% 4.62% 5.04% 5.74% 6.06%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
C NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
ADVISOR MUNICIPAL INCOME FUND - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended October 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.530 $ 12.130 $ 11.740 $ 11.860 $ 11.210
period
Income from Investment
Operations
Net interest income .476 .491 .515 C .596 C, D .612
Net realized and unrealized (.860) .400 .416 (.136) .650
gain (loss)
Total from investment (.384) .891 .931 .460 1.262
operations
Less Distributions
From net interest income (.476) (.491) (.539) D (.580) (.612)
In excess of net interest - - (.002) - -
income
Total distributions (.476) (.491) (.541) (.580) (.612)
Net asset value, end of period $ 11.670 $ 12.530 $ 12.130 $ 11.740 $ 11.860
TOTAL RETURN A, B (3.16)% 7.47% 8.15% 3.98% 11.57%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 63,464 $ 55,032 $ 41,024 $ 39,389 $ 32,395
(000 omitted)
Ratio of expenses to average 1.46% 1.53% 1.56% 1.57% 1.86% E
net assets
Ratio of net interest income 3.88% 3.96% 4.35% 5.06% 5.18%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
D NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
ADVISOR MUNICIPAL INCOME FUND - CLASS C
Years ended October 31, 1999 1998 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.560 $ 12.130
period
Income from Investment
Operations
Net interest income .465 .455
Net realized and unrealized (.860) .430
gain (loss)
Total from investment (.395) .885
operations
Less Distributions
From net interest income (.465) (.455)
Net asset value, end of period $ 11.700 $ 12.560
TOTAL RETURN B, C (3.24)% 7.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 13,071 $ 7,031
(000 omitted)
Ratio of expenses to average 1.56% 1.75% A, E
net assets
Ratio of net interest income 3.79% 3.60% A
to average net assets
Portfolio turnover rate 23% 36%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
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.
You can obtain additional information about the fund. The fund's SAI
includes more detailed information about the fund and its investments.
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). The fund's annual and semi-annual reports include a
discussion of the fund's holdings and recent market conditions and the
fund's investment strategies that affected performance.
For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175.
The SAI, the fund's annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the fund, including the fund's SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER 811-4707
Fidelity, Fidelity Investments & (Pyramid) Design, Fidelity
Investments , and Directed Dividends are registered trademarks of
FMR Corp.
The third party marks appearing above are the marks of their
respective owners.
1.728703.100 HIM-pro-1299
Like securities of all mutual
funds, these securities have
not been approved or
disapproved by the
Securities and Exchange
Commission, and the
Securities and Exchange
Commission has not
determined if this
prospectus is accurate or
complete. Any
representation to the
contrary is a criminal
offense.
FIDELITY(registered trademark) ADVISOR
MUNICIPAL INCOME
FUND
INSTITUTIONAL CLASS
(Fund 679, CUSIP 315916882)
PROSPECTUS
DECEMBER 29, 1999
(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
FUND SUMMARY 2 INVESTMENT SUMMARY
2 PERFORMANCE
3 FEE TABLE
FUND BASICS 4 INVESTMENT DETAILS
5 VALUING SHARES
SHAREHOLDER INFORMATION 5 BUYING AND SELLING SHARES
8 EXCHANGING SHARES
9 ACCOUNT FEATURES AND POLICIES
12 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS
12 TAX CONSEQUENCES
FUND SERVICES 13 FUND MANAGEMENT
13 FUND DISTRIBUTION
APPENDIX 18 FINANCIAL HIGHLIGHTS
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield
exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Normally investing in investment-grade
municipal debt securities (those of medium and high quality) .
(small solid bullet) Normally investing at least 80% of assets
in municipal securities whose interest is exempt from federal income
tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers 3 Plus Year Municipal
Bond Index.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features
and current pricing , trading opportunities, and the credit
quality of its issuer to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently
from the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in the fund's
performance from year to year and compares Institutional Class's
performance to the performance of a market index and an average of the
performance of similar funds over various periods of time. Returns are
based on past results and are not an indication of future performance.
YEAR-BY-YEAR RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME -
INSTITUTIONAL CLASS
Calendar Years 1996 1997 1998
3.09% 10.22% 6.31%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: nil
Row: 6, Col: 1, Value: nil
Row: 7, Col: 1, Value: nil
Row: 8, Col: 1, Value: 3.09
Row: 9, Col: 1, Value: 10.22
Row: 10, Col: 1, Value: 6.31
DURING THE PERIODS SHOWN IN THE CHART FOR INSTITUTIONAL CLASS OF
ADVISOR MUNICIPAL INCOME, THE HIGHEST RETURN FOR A QUARTER WAS 3.39%
(QUARTER ENDING JUNE 30, 1997) AND THE LOWEST RETURN FOR A QUARTER WAS
- -1.71% (QUARTER ENDING MARCH 31, 1996).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR
INSTITUTIONAL CLASS OF ADVISOR MUNICIPAL INCOME WAS -1.76 %.
AVERAGE ANNUAL RETURNS
For the periods ended Past 1 year Life of classA
December 31, 1998
Advisor Municipal Income - 6.31% 7.48%
Institutional Class
Lehman Brothers Municipal 6.48% 7.36%
Bond Index
Lipper General Municipal Debt 5.32% n/a
Funds Average
A FROM JULY 3, 1995.
If FMR had not reimbursed certain class expenses during these periods,
Institutional Class's returns would have been lower.
The Lehman Brothers Municipal Bond Index is a market
value-weighted index of investment-grade municipal bonds with
maturities of one year or more.
Lipper General Municipal Debt Funds Average reflects the
performance (excluding sales charges) of mutual funds with similar
objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold , or sell Institutional Class shares of the
fund. The annual class operating expenses provided below for
Institutional Class are based on historical expenses.
SHAREHOLDER F EES (PAID BY THE INVESTOR DIRECTLY)
Institutional Class
Sales charge (load) on None
purchases and reinvested
distributions
Deferred sales charge (load) None
on redemptions
ANNUAL CLASS OPERATING EXPENSES (PAID FROM CLASS ASSETS)
Institutional Class
Management fee 0.38%
Distribution and Service None
(12b-1) fee
Other expenses 0.22%
Total annual class operating 0.60%
expensesA
A EFFECTIVE JULY 1, 1995, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
INSTITUTIONAL CLASS OF THE FUND TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 0.75%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY
TIME.
This EXAMPLE helps you compare the cost of investing in the fund with
the cost of investing in other mutual funds.
Let's say, hypothetically, that Institutional class's annual return is
5% and that your shareholder fees and Institutional Class's annual
operating expenses are exactly as described in the fee table. This
example illustrates the effect of fees and expenses, but is not meant
to suggest actual or expected fees and expenses or returns, all of
which may vary. For every $10,000 you invested, here's how much you
would pay in total expenses if you close your account after the number
of years indicated:
Institutional Class
1 year $ 61
3 years $ 192
5 years $ 335
10 years $ 750
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield
exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets in investment-grade municipal
debt securities (those of medium and high quality) .
FMR normally invests at least 80% of the fund's assets in municipal
securities whose interest is exempt from federal income tax. Although
FMR does not currently intend to invest the fund's assets in municipal
securities whose interest is subject to federal income tax, FMR may
invest all of the fund's assets in municipal securities whose interest
is subject to the federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation , and utilities.
FMR uses the Lehman Brothers 3 Plus Year Municipal Bond Index
as a guide in structuring the fund and selecting its investments. FMR
manages the fund to have similar overall interest rate risk to the
index. As of October 31, 1999, the dollar-weighted average maturity of
the fund and the index was approximately 12.9 and 14.6
years, respectively.
FMR allocates the fund's assets among different market sectors (for
example, general obligation bonds of a state or bonds financing a
specific project) and different maturities based on its view of the
relative value of each sector and maturity.
In buying and selling securities for the fund, FMR analyzes a
security's structural features and current price compared to
its estimated long-term value, any short-term trading
opportunities resulting from market inefficiencies, and the credit
quality of its issuer.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates , or other factors that affect
security values. If FMR's strategies do not work as intended, the fund
may not achieve its objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable, or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current
interest but are sold at a discount from their face values.
Municipal debt securities include general obligation bonds of
municipalities, local or state governments, project or
revenue-specific bonds, or pre-refunded or escrowed bonds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees , or insurance.
PRINCIPAL INVESTMENT RISKS
Many factors affect the fund's performance. The fund's yield and share
price change daily based on changes in interest rates and market
conditions and in r esponse to other economic, political, or
financial developments. The fund's reaction to these developments will
be a ffected by the types and maturities of securities in which
the fund invests, the financial condition, industry and economic
sector, and geographic location of an issuer, and the fund's level of
investment in the securities of that issuer. When you sell your shares
of the fund, they could be worth more or less than what you paid for
them.
The following factors can significantly affect the fund's
performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation , and
utilities, conditions in those sectors can affect the overall
municipal market. In addition, changes in the financial condition of
an individual municipal insurer can affect the overall municipal
market.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities can be more
sensitive to interest rate changes. In other words, the longer the
maturity of a security, the greater the impact a change in interest
rates could have on the security's price. In addition, short-term and
long-term interest rates do not necessarily move in the same amount or
the same direction. Short-term securities tend to react to changes in
short-term interest rates, and long-term securities tend to react to
changes in long-term interest rates.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in
general economic or political conditions can affect the credit quality
or value of an issuer's securities. Lower-quality debt securities
(those of less than investment-grade quality) tend to be more
sensitive to these changes than higher-quality debt securities.
Municipal securities backed by current or anticipated revenues from a
specific project or specific assets can be negatively affected by the
discontinuance of the taxation supporting the project or assets or the
inability to collect revenues for the project or from the assets. If
the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest
from the security could become taxable and the security could decline
significantly in value.
In response to market, economic, political , or other
conditions, FMR may temporarily use a different investment strategy
for defensive purposes. If FMR does so, different factors could affect
the fund's performance, and the fund could distribute income
subject to federal income tax.
FUNDAMENTAL INVESTMENT POLICIES
The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
VALUING SHARES
The fund is open for business each day the New York Stock Exchange
(NYSE) is open.
A class's net asset value per share (NAV) is the value of a single
share. Fidelity normally calculates Institutional Class's NAV
as of the close of business of the NYSE, normally 4:00 p.m. Eastern
time. However, NAV may be calculated earlier if trading on the NYSE is
restricted or as permitted by the Securities and Exchange Commission
(SEC). The fund's assets are valued as of this time for the purpose of
computing Institutional Class's NAV.
To the extent that the fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of the fund's assets may not occur on days when the
fund is open for business.
The fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations . If market
quotations or information furnished by a pricing service is not
readily available for a security or if a security's value has been
materially affected by events occurring after the close of the
market on which the security is principally traded , that
security may be valued by another method that the Board of Trustees
believes accurately reflects fair value. A security's valuation may
differ depending on the method used for determining value.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
For account, product and service information, please use the following
phone numbers:
(small solid bullet) If you are investing through a broker-dealer or
insurance representative, 1-800-522-7297 (8:30 a.m. - 7:00 p.m.
Eastern time, Monday through Friday).
(small solid bullet) If you are investing through a bank
representative, 1-800-843-3001 (8:30 a.m. - 7:00 p.m. Eastern time,
Monday through Friday).
Please use the following addresses:
BUYING OR SELLING SHARES
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH2A
Hebron, KY 41048
You may buy or sell Institutional Class shares of the fund through an
investment professional. When you invest through an investment
professional, the procedures for buying, selling , and
exchanging Institutional Class shares of the fund and the account
features and policies may differ. Additional fees may also apply to
your investment in Institutional Class shares of the fund, including a
transaction fee if you buy or sell Institutional Class shares of the
fund through a broker or other investment professional.
Certain methods of contacting Fidelity, such as by telephone, may be
unavailable or delayed (for example, during periods of unusual market
activity).
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS OR
OTHER GROUPS
BUYING SHARES
Institutional Class shares are offered to:
1. Broker-dealer managed account programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. In addition, employee
benefit plans (as defined in the Employee Retirement Income Security
Act), 403(b) programs and plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) must have at least $50 million in plan assets;
2. Registered investment adviser managed account programs, provided
the registered investment adviser is not part of an organization
primarily engaged in the brokerage business, and the program (i)
charges an asset-based fee and (ii) will have at least $1 million
invested in the Institutional Class of the Advisor funds. In addition,
accounts other than an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly a Keogh/H.R. 10 plan) in the
program must be managed on a discretionary basis;
3. Trust institution and bank trust department managed account
programs that (i) charge an asset-based fee and (ii) will have at
least $1 million invested in the Institutional Class of the Advisor
funds. Accounts managed by third parties are not eligible to purchase
Institutional Class shares;
4. Insurance company separate accounts that will have at least $1
million invested in the Institutional Class of the Advisor funds;
5. Fidelity Trustees and employees; and
6. Insurance company programs for employee benefit plans, 403(b)
programs or plans covering sole-proprietors (formerly Keogh/H.R. 10
plans) that (i) charge an asset-based fee and (ii) will have at least
$1 million invested in the Institutional Class of the Advisor funds.
Insurance company programs for employee benefit plans, 403(b) programs
and plans covering sole-proprietors (formerly Keogh/H.R. 10 plans)
include such programs offered by a broker-dealer affiliate of an
insurance company, provided that the affiliate is not part of an
organization primarily engaged in the brokerage business.
For purchases made by managed account programs, insurance company
separate accounts or insurance company programs for employee benefit
plans, 403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans), Fidelity may waive the requirement that $1
million be invested in the Institutional Class of the Advisor funds.
The price to buy one share of Institutional Class is the class's NAV.
Institutional Class shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your order
is received in proper form.
It is the responsibility of your investment professional to transmit
your order to buy shares to Fidelity before the close of business on
the day you place your order.
Short-term or excessive trading into and out of the fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, the fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
the fund. For these purposes, FMR may consider an investor's trading
history in the fund or other Fidelity funds, and accounts under common
ownership or control.
The fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Fidelity reserves the right to limit the number
of checks processed at one time.
(small solid bullet) Fidelity must receive payment within three
business days after an order for shares is placed; otherwise your
purchase order may be canceled and you could be liable for any losses
or fees the fund or Fidelity has incurred.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees the fund or
Fidelity has incurred.
Institutional Class shares can be bought or sold through investment
professionals using an automated order placement and settlement system
that guarantees payment for orders on a specified date.
Certain financial institutions that meet creditworthiness criteria
established by Fidelity Distributors Corporation (FDC) may enter
confirmed purchase orders on behalf of customers by phone, with
payment to follow no later than close of business on the next business
day. If payment is not received by that time, the order will be
canceled and the financial institution will be liable for any losses.
MINIMUMS
TO OPEN AN ACCOUNT $2,500
Through regular investment plansA $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
A AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $100, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED.
The fund may waive or lower purchase minimums .
KEY INFORMATION
PHONE TO OPEN AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from another
Fidelity fund. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
TO ADD TO AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from another
Fidelity fund. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
MAIL FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770002 CINCINNATI, (small solid bullet) Complete
OH 45277-0081 and sign the application.
Make your check payable to
the complete name of the
fund and note the applicable
class. Mail to your
investment professional or
to the address at left.
TO ADD TO AN ACCOUNT
(small solid bullet) Make
your check payable to the
complete name of the fund
and note the applicable
class. Indicate your fund
account number on your check
and mail to your investment
professional or to the
address at left.
(small solid bullet) Exchange
from the same class of other
Fidelity Advisor funds or
from another Fidelity fund.
Send a letter of instruction
to your investment
professional or to the
address at left, including
your name, the funds' names,
the applicable class names,
the fund account numbers,
and the dollar amount or
number of shares to be
exchanged.
IN PERSON TO OPEN AN ACCOUNT
(small solid bullet) Bring
your application and check
to your investment
professional.
TO ADD TO AN ACCOUNT
(small solid bullet) Bring
your check to your
investment professional.
WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to set
up your account and to
arrange a wire transaction.
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your new
fund account number and your
name.
TO ADD TO AN ACCOUNT
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your fund
account number and your name.
AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Advisor Systematic
Investment Program.
SELLING SHARES
The price to sell one share of Institutional Class is the class's NAV.
If appropriate to protect shareholders, the fund may impose a
redemption fee (trading fee) on redemptions from the fund.
Your shares will be sold at the next NAV calculated after your order
is received in proper form.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to sell more than $100,000 worth of
shares;
(small solid bullet) Your account registration has changed within the
last 15 or 30 days, depending on the type of account;
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);
(small solid bullet) The check is being made payable to someone other
than the account owner; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
shares, leave at least $1,000 worth of shares in the account to keep
it open, except accounts not subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
the fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other property rather than in cash if FMR determines it
is in the best interests of the fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
To sell shares issued with certificates, call Fidelity for
instructions. The fund no longer issues share certificates.
KEY INFORMATION
PHONE (small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to
initiate a wire transaction
or to request a check for
your redemption.
(small solid bullet) Exchange
to the same class of other
Fidelity Advisor funds or to
another Fidelity fund. Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information."
MAIL FIDELITY INVESTMENTS INDIVIDUAL, JOINT TENANT,
P.O. BOX 770002 CINCINNATI, SOLE PROPRIETORSHIP, UGMA,
OH 45277-0081 UTMA
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including your name, the
fund's name, the applicable
class name, your fund
account number, and the
dollar amount or number of
shares to be sold. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on the
account.
TRUST
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the trust's name,
the fund's name, the
applicable class name, the
trust's fund account number,
and the dollar amount or
number of shares to be sold.
The trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the account
registration, provide a copy
of the trust document
certified within the last 60
days.
BUSINESS OR ORGANIZATION
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the firm's name,
the fund's name, the
applicable class name, the
firm's fund account number,
and the dollar amount or
number of shares to be sold.
At least one person
authorized by corporate
resolution to act on the
account must sign the letter
of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" for
instructions.
IN PERSON INDIVIDUAL, JOINT TENANT,
SOLE PROPRIETORSHIP, UGMA,
UTMA
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The letter of
instruction must be signed
by all persons required to
sign for transactions,
exactly as their names
appear on the account.
TRUST
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The trustee
must sign the letter of
instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR ORGANIZATION
(small solid bullet) Bring a
letter of instruction to
your investment
professional. At least one
person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
AUTOMATICALLY (small solid bullet) Use
Fidelity Advisor Systematic
Withdrawal Program to set up
periodic redemptions from
your Institutional Class
account.
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As an Institutional Class shareholder, you have the privilege of
exchanging your Institutional Class shares for Institutional Class
shares of other Fidelity Advisor funds or for shares of Fidelity
funds.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) The fund may temporarily or permanently terminate
the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control will be counted together for purposes of the four
exchange limit.
(small solid bullet) The fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
The fund may terminate or modify the exchange privilege in the future.
Other funds may have different exchange restrictions, and may
impose trading fees of up to 3.00% of the amount exchanged.
Check each fund's prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
fund.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses,
and other long-term financial goals. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY ADVISOR SYSTEMATIC
INVESTMENT PROGRAM TO MOVE
MONEY FROM YOUR BANK ACCOUNT
TO A FIDELITY ADVISOR FUND.
MINIMUM MINIMUM FREQUENCY PROCEDURES
INITIAL ADDITIONAL Monthly, bimonthly, (small solid bullet) To set
$100 $100 quarterly, or semi-annually up for a new account,
complete the appropriate
section on the application.
(small solid bullet) To set
up for existing accounts,
call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for an
application.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
investment date.
FIDELITY ADVISOR SYSTEMATIC
WITHDRAWAL PROGRAM TO SET UP
PERIODIC REDEMPTIONS FROM
YOUR INSTITUTIONAL CLASS
ACCOUNT TO YOU OR TO YOUR
BANK CHECKING ACCOUNT.
MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Monthly, quarterly, or (small solid bullet) Accounts
semi-annually with a value of $10,000 or
more in Institutional Class
shares are eligible for this
program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for instructions.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
withdrawal date.
</TABLE>
OTHER FEATURES. The following other features are also available to buy
and sell shares of the fund.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account.
(small solid bullet) Call your investment professional or call
Fidelity at the appropriate number found in "General Information"
before your first use to verify that this feature is set up on your
account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid bullet) To add the wire feature or to change the bank
account designated to receive redemption proceeds at any time prior to
making a redemption request, you should send a letter of instruction,
including a signature guarantee, to your investment professional or to
Fidelity at the address found in "General Information."
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(small solid bullet) Financial reports (every six months).
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
the fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require the fund to withhold 31% of your taxable distributions and
redemptions.
If your ACCOUNT BALANCE falls below $1,000 (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold at the NAV on the day your account is closed.
Fidelity may charge a FEE FOR CERTAIN SERVICES, such as
providing historical account documents .
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The fund earns interest, dividends, and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. The fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gain distributions.
The fund normally declares dividends daily and pays them monthly. The
fund normally pays capital gain distributions in December.
EARNING DIVIDENDS
Shares purchased by an automated purchase order begin to earn
dividends on the day your payment is received.
Shares purchased by all other purchase orders begin to earn dividends
on the first business day following the day your payment is received.
Shares earn dividends until, but not including, the next business day
following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
Institutional Class's distributions:
5. REINVESTMENT OPTION. Your dividends and capital gain
distributions will be automatically reinvested in additional
Institutional Class shares of the fund. If you do not indicate a
choice on your application, you will be assigned this option.
6. INCOME-EARNED OPTION. Your capital gain distributions will
be automatically reinvested in additional Institutional Class shares
of the fund. Your dividends will be paid in cash.
7. CASH OPTION. Your dividends and capital gain distributions
will be paid in cash.
8. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in Institutional Class shares of
another identically registered Fidelity Advisor fund or shares of
identically registered Fidelity funds. Your capital gain
distributions will be automatically invested in Institutional Class
shares of another identically registered Fidelity Advisor fund or
shares of identically registered Fidelity funds, automatically
reinvested in additional Institutional Class shares of the fund, or
paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, contact your investment
professional directly or call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in the fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS. The fund seeks to earn income and pay
dividends exempt from federal income tax.
Income exempt from federal income tax may be subject to state or local
tax. A portion of the dividends you receive may be subject to federal
and state income taxes and also may be subject to the federal
alternative minimum tax. You may also receive taxable
distributions attributable to the fund's sale of municipal bonds.
For federal tax purposes, the fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ordinary income, while the
fund's distributions of long-term capital gains are taxable to you
generally as capital gains.
If a fund's distributions exceed its income and capital gains realized
in any year, all or a portion of those distributions may be treated as
a return of capital to shareholders for tax purposes. A return of
capital generally will not be taxable to you but will reduce
the cost basis of your shares and result in a higher reported capital
gain or a lower reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a potentially taxable distribution.
Any taxable distributions you receive from the fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in Institutional Class shares of another
Fidelity Advisor fund or shares of Fidelity funds, you will receive
certain December distributions in January, but those distributions
will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in the fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Advisor Municipal Income is a mutual fund, an investment that pools
shareholders' money and invests it toward a specified goal.
FMR is the fund's manager.
As of March 25, 1999 , FMR had approximately $521.7 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is primarily
responsible for choosing investments for the fund.
FIMM is an affiliate of FMR. As of March 29, 1999 , FIMM had
approximately $ 159.8 billion in discretionary assets under
management.
The fund could be adversely affected if the computer systems used by
FMR and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised the fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on the fund.
Christine Thompson is vice president and manager of Advisor Municipal
Income, which she has managed since July 1998. She also manages
other Fidelity funds. Since joining Fidelity in 1985, Ms. Thompson
has worked as a senior analyst and portfolio manager.
From time to time a manager, analyst, or other Fidelity employee
may express views regarding a particular company, security, industry,
or market sector. The views expressed by any such person are the views
of only that individual as of the time expressed and do not
necessarily represent the views of Fidelity or any other person in the
Fidelity organization. Any such views are subject to change at any
time based upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for a Fidelity
fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
The fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fee is calculated by
adding a group fee rate to an individual fund fee rate, dividing by
twelve, and multiplying the result by the fund's average net assets
throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.
For October 1999 , the group fee rate was 0.1289 %. The
individual fund fee rate is 0.25%.
The total management fee for the fiscal year ended October 31,
1999, was 0.38 % of the fund's average net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse a class for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a class if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be discontinued by FMR at any time, can decrease a
class's expenses and boost its performance.
FUND DISTRIBUTION
The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio.
FDC distributes Institutional Class's shares.
Institutional Class has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 that
recognizes that FMR may use its management fee revenues, as well as
its past profits or its resources from any other source, to pay FDC
for expenses incurred in connection with providing services intended
to result in the sale of Institutional Class shares and/or shareholder
support services. FMR, directly or through FDC, may pay
intermediaries, such as banks, broker-dealers and other
service-providers, that provide those services. Currently, the Board
of Trustees has authorized such payments for Institutional Class.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Fidelity Advisor funds, provided
that the fund receives brokerage services and commission rates
comparable to those of other broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this prospectus and in the related
statement of additional information (SAI), in connection with the
offer contained in this prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund or FDC. This prospectus and the related SAI do
not constitute an offer by the fund or by FDC to sell shares of the
fund to or to buy shares of the fund from any person to
whom it is unlawful to make such offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand
Institutional Class's financial history for the period of the class's
operations. Certain information reflects financial results for a
single class share. The total returns in the table represent the
rate that an investor would have earned (or lost) on an investment in
the class (assuming reinvestment of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers
LLP , independent accountants, whose report, along with the fund's
financial highlights and financial statements, are included in the
fund's annual report. A free copy of the annual report is available
upon request.
SELECTED PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended October 31, 1999 1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.510 $ 12.120 $ 11.720 $ 11.880 $ 11.700
period
Income from Investment
Operations
Net interest income .584 .592 .609 D .707 D, E .232
Net realized and unrealized (.860) .390 .464 (.197) .180
gain (loss)
Total from investment (.276) .982 1.073 .510 .412
operations
Less Distributions
From net interest income (.584) (.592) (.671) E (.670) (.232)
In excess of net interest - - (.002) - -
income
Total distributions (.584) (.592) (.673) (.670) (.232)
Net asset value, end of period $ 11.650 $ 12.510 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C (2.31)% 8.28% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,431 $ 3,741 $ 1,511 $ 927 $ 154
(000 omitted)
Ratio of expenses to average .60% .75% G .75% G .75% G .75% A, G
net assets
Ratio of net interest income 4.75% 4.75% 5.11% 5.88% 5.89% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO OCTOBER 31, 1995.
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.
You can obtain additional information about the fund. The fund's SAI
includes more detailed information about the fund and its investments.
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). The fund's annual and semi-annual reports include a
discussion of the fund's holdings and recent market conditions and the
fund's investment strategies that affected performance.
For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175.
The SAI, the fund's annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the fund, including the fund's SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER, 811-4707
Fidelity, Fidelity Investments & (Pyramid) Design, Fidelity
Investments, and Directed Dividends are registered trademarks of
FMR Corp.
The third party marks appearing above are the marks of their
respective owners.
1.728704.100 HIM-pro- 1299
FIDELITY ADVISOR LATIN AMERICA FUND, FIDELITY ADVISOR EMERGING ASIA
FUND, FIDELITY ADVISOR JAPAN FUND,
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND, FIDELITY
ADVISOR EUROPE CAPITAL APPRECIATION FUND,
FIDELITY ADVISOR OVERSEAS FUND, FIDELITY ADVISOR DIVERSIFIED
INTERNATIONAL FUND, FIDELITY ADVISOR GLOBAL EQUITY FUND, FIDELITY
ADVISOR HIGH YIELD FUND, FIDELITY ADVISOR HIGH INCOME FUND, FIDELITY
ADVISOR GOVERNMENT INVESTMENT FUND, FIDELITY ADVISOR MORTGAGE
SECURITIES FUND, FIDELITY ADVISOR INTERMEDIATE BOND FUND,
FIDELITY ADVISOR SHORT-FIXED INCOME FUND, AND FIDELITY ADVISOR
MUNICIPAL INCOME FUND
FUNDS OF FIDELITY ADVISOR SERIES II AND FIDELITY ADVISOR SERIES VIII
CLASS A, CLASS T, CLASS B, CLASS C, INSTITUTIONAL CLASS, AND INITIAL
CLASS
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 29, 1999
This statement of additional information (SAI) is not a prospectus.
Portions of each fund's annual reports are incorporated herein. The
annual reports are supplied with this SAI.
To obtain a free additional copy of a prospectus, dated December 29,
1999, or an annual report for Class A, Class T, Class B, Class C, and
Institutional Class of each fund, please call Fidelity(registered
trademark) at 1-888-622-3175. To obtain a free additional copy of a
prospectus for the Initial Class of Fidelity Advisor Mortgage
Securities Fund, dated December 29, 1999, or an annual report for the
Initial Class of Fidelity Advisor Mortgage Securities Fund, please
call Fidelity at 1-800-544-8544 or visit Fidelity's Web site at
www.fidelity.com.
TABLE OF CONTENTS PAGE
Investment Policies and 3
Limitations
Special Considerations 21
Regarding Canada
Special Considerations 21
Regarding Europe
Special Considerations 22
Regarding Japan
Special Considerations 22
Regarding Asia Pacific
Region (ex Japan)
Special Considerations 22
Regarding Latin America
Special Considerations 23
Regarding Russia
Special Considerations 23
Regarding Africa
Portfolio Transactions 23
Valuation 33
Performance 33
Prior Performance of Similar 147
Funds
Additional Purchase, Exchange 156
and Redemption Information
Distributions and Taxes 158
Trustees and Officers 159
Control of Investment Advisers 167
Management Contracts 169
Distribution Services 178
Transfer and Service Agent 197
Agreements
Description of the Trusts 200
Financial Statements 200
Appendix 200
For more information on any Fidelity fund, including charges and
expenses, call Fidelity at the number indicated above for a free
prospectus. Read it carefully before you invest or send money.
ACOM10-ptb-1299
1. 730173.100
(fidelity_logo_graphic)(registered trademark)
82 Devonshire Street, Boston, MA 02109
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (the
1940 Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF ADVISOR LATIN AMERICA FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry, except that
the fund may purchase the securities of any issuer if, as a result, no
more than 35% of the fund's total assets would be invested in any
industry that accounts for more than 20% of the Latin American market
as a whole, as measured by an index determined by FMR to be an
appropriate measure of the Latin American market;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 17.
For purposes of normally investing at least 65% of the fund's total
assets in securities of Latin American issuers, FMR interprets "total
assets" to exclude collateral received for securities lending
transactions.
INVESTMENT LIMITATIONS OF ADVISOR EMERGING ASIA FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940.
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in companies whose principal business
activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or representing interests in real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by or indexed to, or representing interests in, physical commodities
or investing or trading in derivative investments); or
(7) make any loan if, as a result, more than 33 1/3% of its total
assets would be lent to other parties, but this limitation does not
apply to purchases of debt securities or to repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless its owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)).
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 18.
For purposes of normally investing at least 65% of the fund's total
assets in securities of Asian emerging market issuers, FMR interprets
"total assets" to exclude collateral received for securities lending
transactions.
INVESTMENT LIMITATIONS OF ADVISOR JAPAN FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 19.
For purposes of normally investing at least 65% of the fund's total
assets in securities of Japanese issuers, FMR interprets "total
assets" to exclude collateral received for securities lending
transactions.
INVESTMENT LIMITATIONS OF ADVISOR INTERNATIONAL CAPITAL APPRECIATION
FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 20.
For purposes of normally investing at least 65% of the fund's total
assets in foreign securities, including securities of issuers located
in emerging markets, FMR interprets "total assets" to exclude
collateral received for securities lending transactions.
INVESTMENT LIMITATIONS OF ADVISOR EUROPE CAPITAL APPRECIATION FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 22.
For purposes of normally investing at least 65% of the fund's total
assets in securities of issuers that have their principal activities
in Europe, FMR interprets "total assets" to exclude collateral
received for securities lending transactions.
INVESTMENT LIMITATIONS OF ADVISOR OVERSEAS FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government, or any of its agencies or instrumentalities,
or securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 23.
For purposes of normally investing at least 65% of the fund's total
assets in foreign securities, FMR interprets "total assets" to exclude
collateral received for securities lending transactions.
INVESTMENT LIMITATIONS OF ADVISOR DIVERSIFIED INTERNATIONAL FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 24.
For purposes of normally investing at least 65% of the fund's total
assets in foreign securities, FMR interprets "total assets" to exclude
collateral received for securities lending transactions.
INVESTMENT LIMITATIONS OF ADVISOR GLOBAL EQUITY FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 25.
For purposes of normally investing at least 65% of the fund's total
assets in common stocks, FMR interprets "total assets" to exclude
collateral received for securities lending transactions.
INVESTMENT LIMITATIONS OF ADVISOR HIGH YIELD FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 26.
For purposes of normally investing at least 65% of the fund's total
assets in income-producing debt securities, preferred stocks and
convertible securities, with an emphasis on lower-quality debt
securities, FMR interprets "total assets" to exclude collateral
received for securities lending transactions.
INVESTMENT LIMITATIONS OF ADVISOR HIGH INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or a registered
investment company or portfolio for which FMR or an affiliate serves
as investment adviser or (b) by engaging in reverse repurchase
agreements with any party (reverse repurchase agreements are treated
as borrowings for purposes of fundamental investment limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money up to 15% of
the fund's net assets to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets were invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 27.
For purposes of investing at least 65% of total assets in
income-producing debt securities, preferred stocks and convertible
securities, FMR interprets "total assets" to exclude collateral
received for securities lending transactions.
INVESTMENT LIMITATIONS OF ADVISOR GOVERNMENT INVESTMENT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other investments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies in the real estate
business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 28.
For purposes of normally investing at least 65% of the fund's total
assets in U.S. Government securities, FMR interprets "total assets" to
exclude collateral received for securities lending transactions.
The fund has been advised that the Staff of the Securities and
Exchange Commission (SEC) does not consider proprietary strips of
securities issued by the U.S. Government or its agencies or
instrumentalities, and privately sponsored collateralized mortgage
obligations (CMOs) backed by the U.S. Government or its agencies or
instrumentalities to be U.S. Government securities for purposes of
investment limitation (5). Accordingly, the fund may establish the
following four industry groups: (1) custodian banks for proprietary
strips of obligations of the U.S. Government and its agencies and
instrumentalities that are backed by the full faith and credit of the
U.S. Government; (2) custodian banks for proprietary strips of
obligations of the U.S. Government and its agencies and
instrumentalities that are not backed by the full faith and credit of
the U.S. Government; (3) custodian banks for CMOs that are backed by
the full faith and credit of the U.S. Government; (4) custodian banks
for CMOs that are backed by U.S. Government agencies and
instrumentalities but not by the full faith and credit of the U.S.
Government. If the fund concludes that, under applicable legal
principles, any of these securities is a Government security, it will
exclude the security from investment limitation (5).
INVESTMENT LIMITATIONS OF ADVISOR MORTGAGE SECURITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase any security if, as a result thereof, more than 25% of
the value of its total assets would be invested in the securities of
companies having their principal business activities in the same
industry (this limitation does not apply to securities issued or
guaranteed by the United States government, its agencies or
instrumentalities);
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 30.
For purposes of normally investing at least 65% of the fund's total
assets in investment-grade mortgage-related securities, FMR interprets
"total assets" to exclude collateral received for securities lending
transactions.
The fund has been advised that the Staff of the Securities and
Exchange Commission (SEC) does not consider proprietary strips of
securities issued by the U.S. Government or its agencies or
instrumentalities, and privately sponsored collateralized mortgage
obligations (CMOs) backed by the U.S. Government or its agencies or
instrumentalities to be U.S. Government securities for purposes of
investment limitation (5). Accordingly, the fund may establish the
following four industry groups: (1) custodian banks for proprietary
strips of obligations of the U.S. Government and its agencies and
instrumentalities that are backed by the full faith and credit of the
U.S. Government; (2) custodian banks for proprietary strips of
obligations of the U.S. Government and its agencies and
instrumentalities that are not backed by the full faith and credit of
the U.S. Government; (3) custodian banks for CMOs that are backed by
the full faith and credit of the U.S. Government; (4) custodian banks
for CMOs that are backed by U.S. Government agencies and
instrumentalities but not by the full faith and credit of the U.S.
Government. If the fund concludes that, under applicable legal
principles, any of these securities is a Government security, it will
exclude the security from investment limitation (5).
INVESTMENT LIMITATIONS OF ADVISOR INTERMEDIATE BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment), in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of the fund's total assets would be lent to other parties
(but this limitation does not apply to purchases of debt securities or
to repurchase agreements).
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 31.
INVESTMENT LIMITATIONS OF ADVISOR SHORT FIXED-INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 15% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 32.
INVESTMENT LIMITATIONS OF ADVISOR MUNICIPAL INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others (except to the extent that
the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of investment limitations (1) and (5), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 33.
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. FMR may not buy all of these instruments or use all of these
techniques unless it believes that doing so will help a fund achieve
its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the 1940 Act. These
transactions may involve repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50
largest U.S. banks (measured by deposits); municipal securities; U.S.
Government securities with affiliated financial institutions that are
primary dealers in these securities; short-term currency transactions;
and short-term borrowings. In accordance with exemptive orders issued
by the Securities and Exchange Commission (SEC), the Board of Trustees
has established and periodically reviews procedures applicable to
transactions involving affiliated financial institutions.
ASSET-BACKED SECURITIES represent interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities, mortgages, loans, receivables or other assets. Payment
of interest and repayment of principal may be largely dependent upon
the cash flows generated by the assets backing the securities and, in
certain cases, supported by letters of credit, surety bonds, or other
credit enhancements. Asset-backed security values may also be affected
by other factors including changes in interest rates, the availability
of information concerning the pool and its structure, the
creditworthiness of the servicing agent for the pool, the originator
of the loans or receivables, or the entities providing the credit
enhancement. In addition, these securities may be subject to
prepayment risk.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR or its affiliates, or through reverse repurchase agreements. If
a fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off. If a fund makes
additional investments while borrowings are outstanding, this may be
considered a form of leverage.
CASH MANAGEMENT. A fund can hold uninvested cash or can invest it in
cash equivalents such as money market securities, repurchase
agreements or shares of money market funds. Generally, these
securities offer less potential for gains than other types of
securities.
CENTRAL CASH FUNDS are money market funds managed by FMR or its
affiliates that seek to earn a high level of current income (free from
federal income tax in the case of a municipal money market fund) while
maintaining a stable $1.00 share price. The funds comply with
industry-standard requirements for money market funds regarding the
quality, maturity , and diversification of their investments.
COMMON STOCK represents an equity or ownership interest in an issuer.
In the event an issuer is liquidated or declares bankruptcy, the
claims of owners of bonds and preferred stock take precedence over the
claims of those who own common stock.
CONVERTIBLE SECURITIES are bonds, debentures, notes, preferred stocks
or other securities that may be converted or exchanged (by the holder
or by the issuer) into shares of the underlying common stock (or cash
or securities of equivalent value) at a stated exchange ratio. A
convertible security may also be called for redemption or conversion
by the issuer after a particular date and under certain circumstances
(including a specified price) established upon issue. If a convertible
security held by a fund is called for redemption or conversion, the
fund could be required to tender it for redemption, convert it into
the underlying common stock, or sell it to a third party.
Convertible securities generally have less potential for gain or loss
than common stocks. Convertible securities generally provide yields
higher than the underlying common stocks, but generally lower than
comparable non-convertible securities. Because of this higher yield,
convertible securities generally sell at prices above their
"conversion value," which is the current market value of the stock to
be received upon conversion. The difference between this conversion
value and the price of convertible securities will vary over time
depending on changes in the value of the underlying common stocks and
interest rates. When the underlying common stocks decline in value,
convertible securities will tend not to decline to the same extent
because of the interest or dividend payments and the repayment of
principal at maturity for certain types of convertible securities.
However, securities that are convertible other than at the option of
the holder generally do not limit the potential for loss to the same
extent as securities convertible at the option of the holder. When the
underlying common stocks rise in value, the value of convertible
securities may also be expected to increase. At the same time,
however, the difference between the market value of convertible
securities and their conversion value will narrow, which means that
the value of convertible securities will generally not increase to the
same extent as the value of the underlying common stocks. Because
convertible securities may also be interest-rate sensitive, their
value may increase as interest rates fall and decrease as interest
rates rise. Convertible securities are also subject to credit risk,
and are often lower-quality securities.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay interest but are
sold at a deep discount from their face values. Debt securities
include corporate bonds, government securities, and mortgage and other
asset-backed securities.
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value
of each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a
stated final maturity basis, although there are some exceptions to
this rule.
For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. When a municipal bond issuer has committed to call
an issue of bonds, and has established an independent escrow account
that is sufficient to, and is pledged to, refund that issue, the
number of days to maturity for the pre-refunded bond is considered to
be the number of days to the announced call date of the bonds. The
maturities of mortgage securities, including collateralized mortgage
obligations, and some asset-backed securities are determined on a
weighted average life basis, which is the average time for principal
to be repaid. For a mortgage security, this average time is calculated
by estimating the timing of principal payments, including unscheduled
prepayments, during the life of the mortgage. The weighted average
life of these securities is likely to be substantially shorter than
their stated final maturity.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve significant risks in addition to the risks
inherent in U.S. investments.
Foreign investments involve risks relating to local political,
economic, regulatory, or social instability, military action or
unrest, or adverse diplomatic developments, and may be affected by
actions of foreign governments adverse to the interests of U.S.
investors. Such actions may include expropriation or nationalization
of assets, confiscatory taxation, restrictions on U.S. investment or
on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. Additionally, governmental
issuers of foreign debt securities may be unwilling to pay interest
and repay principal when due and may require that the conditions for
payment be renegotiated. There is no assurance that FMR will be able
to anticipate these potential events or counter their effects. In
addition, the value of securities denominated in foreign currencies
and of dividends and interest paid with respect to such securities
will fluctuate based on the relative strength of the U.S. dollar.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter (OTC)
markets located outside of the United States. Foreign stock markets,
while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement
where fund assets may be released prior to receipt of payment) are
often less developed than those in U.S. markets, and may result in
increased risk or substantial delays in the event of a failed trade or
the insolvency of, or breach of duty by, a foreign broker-dealer,
securities depository or foreign subcustodian. For example, many
foreign countries are less prepared than the United States to properly
process and calculate information related to dates from and after
January 1, 2000. As a result, some foreign markets, brokers, banks or
securities depositories could experience at least temporary
disruptions, which could result in difficulty buying and selling
securities in certain foreign markets and pricing foreign investments,
and foreign issuers could fail to pay timely dividends, interest or
principal. In addition, the costs associated with foreign investments,
including withholding taxes, brokerage commissions and custodial
costs, are generally higher than with U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and
standards of practice comparable to those applicable to U.S. issuers.
Adequate public information on foreign issuers may not be available,
and it may be difficult to secure dividends and information regarding
corporate actions on a timely basis. In general, there is less overall
governmental supervision and regulation of securities exchanges,
brokers, and listed companies than in the United States. OTC markets
tend to be less regulated than stock exchange markets and, in certain
countries, may be totally unregulated. Regulatory enforcement may be
influenced by economic or political concerns, and investors may have
difficulty enforcing their legal rights in foreign countries.
Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such
transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject
to such restrictions.
American Depositary Receipts (ADRs) as well as other "hybrid" forms of
ADRs, including European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs), are certificates evidencing ownership of
shares of a foreign issuer. These certificates are issued by
depository banks and generally trade on an established market in the
United States or elsewhere. The underlying shares are held in trust by
a custodian bank or similar financial institution in the issuer's home
country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various
services, including forwarding dividends and interest and corporate
actions. ADRs are alternatives to directly purchasing the underlying
foreign securities in their national markets and currencies. However,
ADRs continue to be subject to many of the risks associated with
investing directly in foreign securities. These risks include foreign
exchange risk as well as the political and economic risks of the
underlying issuer's country.
The risks of foreign investing may be magnified for investments in
emerging markets. Security prices in emerging markets can be
significantly more volatile than those in more developed markets,
reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets
may have relatively unstable governments, may present the risks of
nationalization of businesses, restrictions on foreign ownership and
prohibitions on the repatriation of assets, and may have less
protection of property rights than more developed countries. The
economies of countries with emerging markets may be based on only a
few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt
burdens or inflation rates. Local securities markets may trade a small
number of securities and may be unable to respond effectively to
increases in trading volume, potentially making prompt liquidation of
holdings difficult or impossible at times.
FOREIGN CURRENCY TRANSACTIONS. A fund may conduct foreign currency
transactions on a spot (i.e., cash) or forward basis (i.e., by
entering into forward contracts to purchase or sell foreign
currencies). Although foreign exchange dealers generally do not charge
a fee for such conversions, they do realize a profit based on the
difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency at one rate, while offering a lesser rate of exchange should
the counterparty desire to resell that currency to the dealer. Forward
contracts are customized transactions that require a specific amount
of a currency to be delivered at a specific exchange rate on a
specific date or range of dates in the future. Forward contracts are
generally traded in an interbank market directly between currency
traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the
contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.
The following discussion summarizes the principal currency management
strategies involving forward contracts that could be used by a fund. A
fund may also use swap agreements, indexed securities, and options and
futures contracts relating to foreign currencies for the same
purposes.
A "settlement hedge" or "transaction hedge" is designed to protect a
fund against an adverse change in foreign currency values between the
date a security is purchased or sold and the date on which payment is
made or received. Entering into a forward contract for the purchase or
sale of the amount of foreign currency involved in an underlying
security transaction for a fixed amount of U.S. dollars "locks in" the
U.S. dollar price of the security. Forward contracts to purchase or
sell a foreign currency may also be used by a fund in anticipation of
future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected
by FMR.
A fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For
example, if a fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return
for U.S. dollars to hedge against possible declines in the pound's
value. Such a hedge, sometimes referred to as a "position hedge,"
would tend to offset both positive and negative currency fluctuations,
but would not offset changes in security values caused by other
factors. A fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would
not hedge currency exposure as effectively as a direct hedge into U.S.
dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged
securities are denominated.
A fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting
exposure from U.S. dollars to a foreign currency, or from one foreign
currency to another foreign currency. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to
the currency that is sold, and increase exposure to the currency that
is purchased, much as if a fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the
hedged currency, but will cause a fund to assume the risk of
fluctuations in the value of the currency it purchases.
Successful use of currency management strategies will depend on FMR's
skill in analyzing currency values. Currency management strategies may
substantially change a fund's investment exposure to changes in
currency exchange rates and could result in losses to a fund if
currencies do not perform as FMR anticipates. For example, if a
currency's value rose at a time when FMR had hedged a fund by selling
that currency in exchange for dollars, a fund would not participate in
the currency's appreciation. If FMR hedges currency exposure through
proxy hedges, a fund could realize currency losses from both the hedge
and the security position if the two currencies do not move in tandem.
Similarly, if FMR increases a fund's exposure to a foreign currency
and that currency's value declines, a fund will realize a loss. There
is no assurance that FMR's use of currency management strategies will
be advantageous to a fund or that it will hedge at appropriate times.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements involve
an agreement to purchase a foreign security and to sell that security
back to the original seller at an agreed-upon price in either
U.S. dollars or foreign currency. Unlike typical U.S. repurchase
agreements, foreign repurchase agreements may not be fully
collateralized at all times. The value of a security purchased by a
fund may be more or less than the price at which the counterparty has
agreed to repurchase the security. In the event of default by the
counterparty, the fund may suffer a loss if the value of the security
purchased is less than the agreed-upon repurchase price, or if the
fund is unable to successfully assert a claim to the collateral under
foreign laws. As a result, foreign repurchase agreements may involve
higher credit risks than repurchase agreements in U.S. markets, as
well as risks associated with currency fluctuations. In addition, as
with other emerging market investments, repurchase agreements with
counterparties located in emerging markets or relating to emerging
markets may involve issuers or counterparties with lower credit
ratings than typical U.S. repurchase agreements.
FUNDS' RIGHTS AS SHAREHOLDERS. The funds do not intend to direct or
administer the day-to-day operations of any company. A fund, however,
may exercise its rights as a shareholder and may communicate its views
on important matters of policy to management, the Board of Directors,
and shareholders of a company when FMR determines that such matters
could have a significant effect on the value of the fund's investment
in the company. The activities in which a fund may engage, either
individually or in conjunction with others, may include, among others,
supporting or opposing proposed changes in a company's corporate
structure or business activities; seeking changes in a company's
directors or management; seeking changes in a company's direction or
policies; seeking the sale or reorganization of the company or a
portion of its assets; or supporting or opposing third-party takeover
efforts. This area of corporate activity is increasingly prone to
litigation and it is possible that a fund could be involved in
lawsuits related to such activities. FMR will monitor such activities
with a view to mitigating, to the extent possible, the risk of
litigation against a fund and the risk of actual liability if a fund
is involved in litigation. No guarantee can be made, however, that
litigation against a fund will not be undertaken or liabilities
incurred.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options: Combined Positions, Correlation of Price Changes, Futures
Contracts, Futures Margin Payments, Limitations on Futures and Options
Transactions, Liquidity of Options and Futures Contracts, Options and
Futures Relating to Foreign Currencies, OTC Options, Purchasing Put
and Call Options, and Writing Put and Call Options.
COMBINED POSITIONS involve purchasing and writing options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, purchasing a put option and writing a
call option on the same underlying instrument would construct a
combined position whose risk and return characteristics are similar to
selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call
option at a lower price, to reduce the risk of the written call option
in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction
costs and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. A fund may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests, which involves a risk that the
options or futures position will not track the performance of the
fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. In purchasing a futures contract, the buyer agrees
to purchase a specified underlying instrument at a specified future
date. In selling a futures contract, the seller agrees to sell a
specified underlying instrument at a specified future date. The price
at which the purchase and sale will take place is fixed when the buyer
and seller enter into the contract. Some currently available futures
contracts are based on specific securities, such as U.S. Treasury
bonds or notes, and some are based on indices of securities prices,
such as the Standard & Poor's 500 Index (S&P 500) or the Bond Buyer
Municipal Bond Index. Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is
available.
Futures may be based on foreign indexes such as the CAC 40 (France),
DAX 30 (Germany), EuroTop 100 (Europe), IBEX (Spain), FTSE 100 (United
Kingdom), All Ordinary (Australia), Hang Seng (Hong Kong), and Nikkei
225, Nikkei 300 and TOPIX (Japan).
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
Although futures exchanges generally operate similarly in the United
States and abroad, foreign futures exchanges may follow trading,
settlement and margin procedures that are different from those for
U.S. exchanges. Futures contracts traded outside the United States may
involve greater risk of loss than U.S.-traded contracts, including
potentially greater risk of losses due to insolvency of a futures
broker, exchange member or other party that may owe initial or
variation margin to a fund. Because initial and variation margin
payments may be measured in foreign currency, a futures contract
traded outside the United States may also involve the risk of foreign
currency fluctuation.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The funds intend to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to which
the funds can commit assets to initial margin deposits and option
premiums.
In addition, each equity fund will not: (a) sell futures contracts,
purchase put options, or write call options if, as a result, more than
25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the fund's total obligations upon
settlement or exercise of purchased futures contracts and written put
options would exceed 25% of its total assets under normal conditions;
or (c) purchase call options if, as a result, the current value of
option premiums for call options purchased by the fund would exceed 5%
of the fund's total assets. These limitations do not apply to options
attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
In addition, each bond fund will not: (a) sell futures contracts,
purchase put options, or write call options if, as a result, more than
25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the fund's total obligations upon
settlement or exercise of purchased futures contracts and written put
options would exceed 25% of its total assets; or (c) purchase call
options if, as a result, the current value of option premiums for call
options purchased by the fund would exceed 5% of the fund's total
assets. These limitations do not apply to options attached to or
acquired or traded together with their underlying securities, and do
not apply to securities that incorporate features similar to options.
Each bond fund further limits its options and futures investments to
options and futures contracts relating to U.S. Government securities.
The above limitations on the funds' investments in futures contracts
and options, and the funds' policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible to enter into new positions or close out
existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could
prevent prompt liquidation of unfavorable positions, and potentially
could require a fund to continue to hold a position until delivery or
expiration regardless of changes in its value. As a result, a fund's
access to other assets held to cover its options or futures positions
could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except
that they are traded on exchanges (and have margin requirements) and
are standardized as to contract size and delivery date. Most currency
futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency,
which generally is purchased or delivered in exchange for U.S.
dollars, or may be a futures contract. The purchaser of a currency
call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying
currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed
above. A fund may purchase and sell currency futures and may purchase
and write currency options to increase or decrease its exposure to
different foreign currencies. Currency options may also be purchased
or written in conjunction with each other or with currency futures or
forward contracts. Currency futures and options values can be expected
to correlate with exchange rates, but may not reflect other factors
that affect the value of a fund's investments. A currency hedge, for
example, should protect a Yen-denominated security from a decline in
the Yen, but will not protect a fund against a price decline resulting
from deterioration in the issuer's creditworthiness. Because the value
of a fund's foreign-denominated investments changes in response to
many factors other than exchange rates, it may not be possible to
match the amount of currency options and futures to the value of the
fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the purchaser or writer greater flexibility
to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed
by the clearing organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
purchaser obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for
this right, the purchaser pays the current market price for the option
(known as the option premium). Options have various types of
underlying instruments, including specific securities, indices of
securities prices, and futures contracts. The purchaser may terminate
its position in a put option by allowing it to expire or by exercising
the option. If the option is allowed to expire, the purchaser will
lose the entire premium. If the option is exercised, the purchaser
completes the sale of the underlying instrument at the strike price. A
purchaser may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary
market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. The writer of a put or call option takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the writer assumes the obligation
to pay the strike price for the option's underlying instrument if the
other party to the option chooses to exercise it. The writer may seek
to terminate a position in a put option before exercise by closing out
the option in the secondary market at its current price. If the
secondary market is not liquid for a put option, however, the writer
must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes. When writing an option on
a futures contract, a fund will be required to make margin payments to
an FCM as described above for futures contracts.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the writer to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options
are similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the
effects of a price decline. At the same time, because a call writer
must be prepared to deliver the underlying instrument in return for
the strike price, even if its current value is greater, a call writer
gives up some ability to participate in security price increases.
ILLIQUID SECURITIES cannot be sold or disposed of in the ordinary
course of business at approximately the prices at which they are
valued. Difficulty in selling securities may result in a loss or may
be costly to a fund. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and, through
reports from FMR, the Board monitors investments in illiquid
securities. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency and volume
of trades and quotations, (2) the number of dealers and prospective
purchasers in the marketplace, (3) dealer undertakings to make a
market, and (4) the nature of the security and the market in which it
trades (including any demand, put or tender features, the mechanics
and other requirements for transfer, any letters of credit or other
credit enhancement features, any ratings, the number of holders, the
method of soliciting offers, the time required to dispose of the
security, and the ability to assign or offset the rights and
obligations of the security).
INDEXED SECURITIES are instruments whose prices are indexed to the
prices of other securities, securities indices, currencies, or other
financial indicators. Indexed securities typically, but not always,
are debt securities or deposits whose value at maturity or coupon rate
is determined by reference to a specific instrument or statistic.
Indexed securities may have principal payments as well as coupon
payments that depend on the performance of one or more interest rates.
Their coupon rates or principal payments may change by several
percentage points for every 1% interest rate change.
Mortgage-indexed securities, for example, could be structured to
replicate the performance of mortgage securities and the
characteristics of direct ownership.
Currency-indexed securities typically are short-term to
intermediate-term debt securities whose maturity values or interest
rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities. Currency-indexed securities may be
positively or negatively indexed; that is, their maturity value may
increase when the specified currency value increases, resulting in a
security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a
put on the underlying currency. Currency-indexed securities may also
have prices that depend on the values of a number of different foreign
currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which
they are indexed, and may also be influenced by interest rate changes
in the United States and abroad. Indexed securities may be more
volatile than the underlying instruments. Indexed securities are also
subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government
agencies.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and borrow money
from, other funds advised by FMR or its affiliates. Advisor Municipal
Income currently intends to participate in this program only as
borrowers. A fund will borrow through the program only when the costs
are equal to or lower than the costs of bank loans, and will lend
through the program only when the returns are higher than those
available from an investment in repurchase agreements. Interfund loans
and borrowings normally extend overnight, but can have a maximum
duration of seven days. Loans may be called on one day's notice. A
fund may have to borrow from a bank at a higher interest rate if an
interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or
additional borrowing costs.
INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from movements in prevailing short-term
interest rate levels - rising when prevailing short-term interest
rates fall, and vice versa. The prices of inverse floaters can be
considerably more volatile than the prices of bonds with comparable
maturities.
INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities are
medium and high-quality securities. Some may possess speculative
characteristics and may be more sensitive to economic changes and to
changes in the financial conditions of issuers. A debt security is
considered to be investment-grade if it is rated investment-grade by
Moody's Investors Service, Standard & Poor's, Duff & Phelps Credit
Rating Co., or Fitch IBCA Inc., or is unrated but considered to be of
equivalent quality by FMR.
ISSUER LOCATION. FMR determines where an issuer is located by looking
at such factors as the issuer's country of organization, the primary
trading market for the issuer's securities, and the location of the
issuer's assets, personnel, sales, and earnings. The issuer of a
security is considered to be located in a particular country if (1)
the security is issued or guaranteed by the government of the country
or any of its agencies, political subdivisions, or instrumentalities;
(2) the security has its primary trading market in that country; or
(3) the issuer is organized under the laws of that country, derives at
least 50% of its revenues or profits from goods sold, investments
made, or services performed in the country, or has at least 50% of its
assets located in the country.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other
borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or
other receivables), or to other parties. Direct debt instruments
involve a risk of loss in case of default or insolvency of the
borrower and may offer less legal protection to the purchaser in the
event of fraud or misrepresentation, or there may be a requirement
that a fund supply additional cash to a borrower on demand.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
interest and repayment of principal. If scheduled interest or
principal payments are not made, the value of the instrument may be
adversely affected. Loans that are fully secured provide more
protections than an unsecured loan in the event of failure to make
scheduled interest or principal payments. However, there is no
assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral could be
liquidated. Indebtedness of borrowers whose creditworthiness is poor
involves substantially greater risks and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off
their indebtedness, or may pay only a small fraction of the amount
owed. Direct indebtedness of developing countries also involves a risk
that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal
when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional
risks. For example, if a loan is foreclosed, the purchaser could
become part owner of any collateral, and would bear the costs and
liabilities associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal theories of
lender liability, a purchaser could be held liable as a co-lender.
Direct debt instruments may also involve a risk of insolvency of the
lending bank or other intermediary.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of
the loan, as specified in the loan agreement. Unless, under the terms
of the loan or other indebtedness, the purchaser has direct recourse
against the borrower, the purchaser may have to rely on the agent to
apply appropriate credit remedies against a borrower. If assets held
by the agent for the benefit of a purchaser were determined to be
subject to the claims of the agent's general creditors, the purchaser
might incur certain costs and delays in realizing payment on the loan
or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness may include letters of credit, revolving credit
facilities, or other standby financing commitments that obligate
purchasers to make additional cash payments on demand. These
commitments may have the effect of requiring a purchaser to increase
its investment in a borrower at a time when it would not otherwise
have done so, even if the borrower's condition makes it unlikely that
the amount will ever be repaid.
Each fund limits the amount of total assets that it will invest in any
one issuer or in issuers within the same industry (see each fund's
investment limitations). For purposes of these limitations, a fund
generally will treat the borrower as the "issuer" of indebtedness held
by the fund. In the case of loan participations where a bank or other
lending institution serves as financial intermediary between a fund
and the borrower, if the participation does not shift to the fund the
direct debtor-creditor relationship with the borrower, SEC
interpretations require a fund, in appropriate circumstances, to treat
both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an
issuer of indebtedness may restrict a fund's ability to invest in
indebtedness related to a single financial intermediary, or a group of
intermediaries engaged in the same industry, even if the underlying
borrowers represent many different companies and industries.
LOWER-QUALITY DEBT SECURITIES. Lower-quality debt securities have poor
protection with respect to the payment of interest and repayment of
principal, or may be in default. These securities are often considered
to be speculative and involve greater risk of loss or price changes
due to changes in the issuer's capacity to pay. The market prices of
lower-quality debt securities may fluctuate more than those of
higher-quality debt securities and may decline significantly in
periods of general economic difficulty, which may follow periods of
rising interest rates.
The market for lower-quality debt securities may be thinner and less
active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. Adverse
publicity and changing investor perceptions may affect the liquidity
of lower-quality debt securities and the ability of outside pricing
services to value lower-quality debt securities.
Because the risk of default is higher for lower-quality debt
securities, FMR's research and credit analysis are an especially
important part of managing securities of this type. FMR will attempt
to identify those issuers of high-yielding securities whose financial
condition is adequate to meet future obligations, has improved, or is
expected to improve in the future. FMR's analysis focuses on relative
values based on such factors as interest or dividend coverage, asset
coverage, earnings prospects, and the experience and managerial
strength of the issuer.
A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
MORTGAGE SECURITIES are issued by government and non-government
entities such as banks, mortgage lenders, or other institutions. A
mortgage security is an obligation of the issuer backed by a mortgage
or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage securities, such as collateralized mortgage
obligations (or "CMOs"), make payments of both principal and interest
at a range of specified intervals; others make semiannual interest
payments at a predetermined rate and repay principal at maturity (like
a typical bond). Mortgage securities are based on different types of
mortgages, including those on commercial real estate or residential
properties. Stripped mortgage securities are created when the interest
and principal components of a mortgage security are separated and sold
as individual securities. In the case of a stripped mortgage security,
the holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage, while the holder
of the "interest-only" security (IO) receives interest payments from
the same underlying mortgage.
Fannie Maes and Freddie Macs are pass-through securities issued by
Fannie Mae and Freddie Mac, respectively. Fannie Mae and Freddie Mac,
which guarantee payment of interest and repayment of principal on
Fannie Maes and Freddie Macs, respectively, are federally chartered
corporations supervised by the U.S. Government that act as
governmental instrumentalities under authority granted by Congress.
Fannie Mae is authorized to borrow from the U.S. Treasury to meet its
obligations. Fannie Maes and Freddie Macs are not backed by the full
faith and credit of the U.S. Government.
The value of mortgage securities may change due to shifts in the
market's perception of issuers and changes in interest rates. In
addition, regulatory or tax changes may adversely affect the mortgage
securities market as a whole. Non-government mortgage securities may
offer higher yields than those issued by government entities, but also
may be subject to greater price changes than government issues.
Mortgage securities are subject to prepayment risk, which is the risk
that early principal payments made on the underlying mortgages,
usually in response to a reduction in interest rates, will result in
the return of principal to the investor, causing it to be invested
subsequently at a lower current interest rate. Alternatively, in a
rising interest rate environment, mortgage security values may be
adversely affected when prepayments on underlying mortgages do not
occur as anticipated, resulting in the extension of the security's
effective maturity and the related increase in interest rate
sensitivity of a longer-term instrument. The prices of stripped
mortgage securities tend to be more volatile in response to changes in
interest rates than those of non-stripped mortgage securities.
To earn additional income for a fund, FMR may use a trading strategy
that involves selling mortgage securities and simultaneously agreeing
to purchase similar securities on a later date at a set price. This
trading strategy may result in an increased portfolio turnover rate
which increases costs and may increase taxable gains.
MUNICIPAL INSURANCE. A municipal bond may be covered by insurance that
guarantees the bond's scheduled payment of interest and repayment of
principal. This type of insurance may be obtained by either (i) the
issuer at the time the bond is issued (primary market insurance), or
(ii) another party after the bond has been issued (secondary market
insurance).
Both primary and secondary market insurance guarantee timely and
scheduled repayment of all principal and payment of all interest on a
municipal bond in the event of default by the issuer, and cover a
municipal bond to its maturity, enhancing its credit quality and
value.
Municipal bond insurance does not insure against market fluctuations
or fluctuations in a fund's share price. In addition, a municipal bond
insurance policy will not cover: (i) repayment of a municipal bond
before maturity (redemption), (ii) prepayment or payment of an
acceleration premium (except for a mandatory sinking fund redemption)
or any other provision of a bond indenture that advances the maturity
of the bond, or (iii) nonpayment of principal or interest caused by
negligence or bankruptcy of the paying agent. A mandatory sinking fund
redemption may be a provision of a municipal bond issue whereby part
of the municipal bond issue may be retired before maturity.
Because a significant portion of the municipal securities issued and
outstanding is insured by a small number of insurance companies, an
event involving one or more of these insurance companies could have a
significant adverse effect on the value of the securities insured by
that insurance company and on the municipal markets as a whole.
FMR may decide to retain an insured municipal bond that is in default,
or, in FMR's view, in significant risk of default. While a fund holds
a defaulted, insured municipal bond, the fund collects interest
payments from the insurer and retains the right to collect principal
from the insurer when the municipal bond matures, or in connection
with a mandatory sinking fund redemption.
PRINCIPAL MUNICIPAL BOND INSURERS. The various insurance companies
providing primary and secondary market insurance policies for
municipal bonds are described below. Ratings reflect each respective
rating agency's assessment of the creditworthiness of an insurer and
the insurer's ability to pay claims on its insurance policies at the
time of the assessment.
Ambac Assurance Corp., a wholly-owned subsidiary of Ambac Financial
Group Inc., is authorized to provide bond insurance in the 50 U.S.
states, the District of Columbia, and the Commonwealth of Puerto Rico.
Bonds insured by Ambac Assurance Corp. are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.
Connie Lee Insurance Co. is a wholly-owned subsidiary of Connie Lee
Holdings Inc., which is a wholly-owned subsidiary of Ambac Assurance
Corp. All losses incurred by Connie Lee Insurance Co. that would cause
its statutory capital to drop below $75 million would be covered by
Ambac Assurance Corp. Connie Lee Insurance Co. is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and the Commonwealth of Puerto Rico. Bonds insured by Connie Lee
Insurance Co. are rated "AAA" by Standard & Poor's.
Financial Guaranty Insurance Co. (FGIC), a wholly-owned subsidiary of
GE Capital Services, is authorized to provide bond insurance in the 50
U.S. states and the District of Columbia. Bonds insured by FGIC are
rated "Aaa" by Moody's Investor Service and "AAA" by Standard &
Poor's.
Financial Security Assurance Inc. (FSA), a wholly-owned subsidiary of
Financial Security Assurance Holdings Ltd., is authorized to provide
bond insurance in 49 U.S. states, the District of Columbia, and three
U.S. territories. Bonds insured by FSA are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.
Municipal Bond Investors Assurance Corp. (MBIA Insurance Corp.), a
wholly-owned subsidiary of MBIA Inc., a publicly-owned company, is
authorized to provide bond insurance in the 50 U.S. states, the
District of Columbia, and the Commonwealth of Puerto Rico. Bonds
insured by MBIA Insurance Corp. are rated "Aaa" by Moody's Investor
Service and "AAA" by Standard & Poor's.
MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities. Generally,
a fund will not hold these obligations directly as a lessor of the
property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest
gives the purchaser a specified, undivided interest in the obligation
in proportion to its purchased interest in the total amount of the
issue.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance
limitations. If a municipality stops making payments or transfers its
obligations to a private entity, the obligation could lose value or
become taxable.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal securities
may be affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event
of a bankruptcy. Proposals to restrict or eliminate the federal income
tax exemption for interest on municipal securities are introduced
before Congress from time to time. Proposals also may be introduced
before state legislatures that would affect the state tax treatment of
a municipal fund's distributions. If such proposals were enacted, the
availability of municipal securities and the value of a municipal
fund's holdings would be affected and the Trustees would reevaluate
the fund's investment objectives and policies. Municipal bankruptcies
are relatively rare, and certain provisions of the U.S. Bankruptcy
Code governing such bankruptcies are unclear and remain untested.
Further, the application of state law to municipal issuers could
produce varying results among the states or among municipal securities
issuers within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific segments of
the market, or the relative credit quality of particular securities.
Any of these effects could have a significant impact on the prices of
some or all of the municipal securities held by a fund.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student
loans. Bonds issued to supply educational institutions with funds are
subject to the risk of unanticipated revenue decline, primarily the
result of decreasing student enrollment or decreasing state and
federal funding. Among the factors that may lead to declining or
insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general
economic conditions. Student loan revenue bonds are generally offered
by state (or substate) authorities or commissions and are backed by
pools of student loans. Underlying student loans may be guaranteed by
state guarantee agencies and may be subject to reimbursement by the
United States Department of Education through its guaranteed student
loan program. Others may be private, uninsured loans made to parents
or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student
loan revenue bonds are impacted by numerous factors, including the
rate of student loan defaults, seasoning of the loan portfolio, and
student repayment deferral periods of forbearance. Other risks
associated with student loan revenue bonds include potential changes
in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and
other program subsidies currently in effect.
ELECTRIC UTILITIES. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open
transmission access to any electricity supplier, although it is not
presently known to what extent competition will evolve. Other risks
include: (a) the availability and cost of fuel, (b) the availability
and cost of capital, (c) the effects of conservation on energy demand,
(d) the effects of rapidly changing environmental, safety, and
licensing requirements, and other federal, state, and local
regulations, (e) timely and sufficient rate increases, and (f)
opposition to nuclear power.
HEALTH CARE. The health care industry is subject to regulatory action
by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for
the health care industry is payments from the Medicare and Medicaid
programs. As a result, the industry is sensitive to legislative
changes and reductions in governmental spending for such programs.
Numerous other factors may affect the industry, such as general and
local economic conditions; demand for services; expenses (including
malpractice insurance premiums); and competition among health care
providers. In the future, the following elements may adversely affect
health care facility operations: adoption of legislation proposing a
national health insurance program; other state or local health care
reform measures; medical and technological advances which dramatically
alter the need for health services or the way in which such services
are delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; and efforts by employers, insurers,
and governmental agencies to reduce the costs of health insurance and
health care services.
HOUSING. Housing revenue bonds are generally issued by a state,
county, city, local housing authority, or other public agency. They
generally are secured by the revenues derived from mortgages purchased
with the proceeds of the bond issue. It is extremely difficult to
predict the supply of available mortgages to be purchased with the
proceeds of an issue or the future cash flow from the underlying
mortgages. Consequently, there are risks that proceeds will exceed
supply, resulting in early retirement of bonds, or that homeowner
repayments will create an irregular cash flow. Many factors may affect
the financing of multi-family housing projects, including acceptable
completion of construction, proper management, occupancy and rent
levels, economic conditions, and changes to current laws and
regulations.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways, or other transit
facilities. Airport bonds are dependent on the general stability of
the airline industry and on the stability of a specific carrier who
uses the airport as a hub. Air traffic generally follows broader
economic trends and is also affected by the price and availability of
fuel. Toll road bonds are also affected by the cost and availability
of fuel as well as toll levels, the presence of competing roads and
the general economic health of an area. Fuel costs and availability
also affect other transportation-related securities, as do the
presence of alternate forms of transportation, such as public
transportation.
WATER AND SEWER. Water and sewer revenue bonds are often considered to
have relatively secure credit as a result of their issuer's
importance, monopoly status, and generally unimpeded ability to raise
rates. Despite this, lack of water supply due to insufficient rain,
run-off, or snow pack is a concern that has led to past defaults.
Further, public resistance to rate increases, costly environmental
litigation, and Federal environmental mandates are challenges faced by
issuers of water and sewer bonds.
PREFERRED STOCK represents an equity or ownership interest in an
issuer that pays dividends at a specified rate and that has precedence
over common stock in the payment of dividends. In the event an issuer
is liquidated or declares bankruptcy, the claims of owners of bonds
take precedence over the claims of those who own preferred and common
stock.
PUT FEATURES entitle the holder to sell a security back to the issuer
at any time or at specified intervals. In exchange for this benefit, a
fund may accept a lower interest rate. Securities with put features
are subject to the risk that the put provider is unable to honor the
put feature (purchase the security). Demand features and standby
commitments are types of put features.
REAL ESTATE INVESTMENT TRUSTS. Equity real estate investment trusts
own real estate properties, while mortgage real estate investment
trusts make construction, development, and long-term mortgage loans.
Their value may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property
taxes, interest rates, and tax and regulatory requirements, such as
those relating to the environment. Both types of trusts are dependent
upon management skill, are not diversified, and are subject to heavy
cash flow dependency, defaults by borrowers, self-liquidation, and the
possibility of failing to qualify for tax-free status of income under
the Internal Revenue Code and failing to maintain exemption from the
1940 Act.
REFUNDING CONTRACTS. Securities may be purchased on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and a
purchaser to buy refunded municipal obligations at a stated price and
yield on a settlement date that may be several months or several years
in the future. A purchaser generally will not be obligated to pay the
full purchase price if the issuer fails to perform under a refunding
contract. Instead, refunding contracts generally provide for payment
of liquidated damages to the issuer. A purchaser may secure its
obligations under a refunding contract by depositing collateral or a
letter of credit equal to the liquidated damages provisions of the
refunding contract.
REPURCHASE AGREEMENTS involve an agreement to purchase a security and
to sell that security back to the original seller at an agreed-upon
price. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate
or maturity of the purchased security. As protection against the risk
that the original seller will not fulfill its obligation, the
securities are held in a separate account at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus
the accrued incremental amount. The value of the security purchased
may be more or less than the price at which the counterparty has
agreed to purchase the security. In addition, delays or losses could
result if the other party to the agreement defaults or becomes
insolvent. The funds will engage in repurchase agreement transactions
with parties whose creditworthiness has been reviewed and found
satisfactory by FMR.
RESTRICTED SECURITIES are subject to legal restrictions on their sale.
Difficulty in selling securities may result in a loss or be costly to
a fund. Restricted securities generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933, or in a registered public offering.
Where registration is required, the holder of a registered security
may be obligated to pay all or part of the registration expense and a
considerable period may elapse between the time it decides to seek
registration and the time it may be permitted to sell a security under
an effective registration statement. If, during such a period, adverse
market conditions were to develop, the holder might obtain a less
favorable price than prevailed when it decided to seek registration of
the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. The funds will enter into
reverse repurchase agreements with parties whose creditworthiness has
been reviewed and found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of fund assets and a fund's
yield and may be viewed as a form of leverage.
SECURITIES OF OTHER INVESTMENT COMPANIES, including shares of
closed-end investment companies, unit investment trusts, and open-end
investment companies, represent interests in professionally managed
portfolios that may invest in any type of instrument. Investing in
other investment companies involves substantially the same risks as
investing directly in the underlying instruments, but may involve
additional expenses at the investment company-level, such as portfolio
management fees and operating expenses. Certain types of investment
companies, such as closed-end investment companies, issue a fixed
number of shares that trade on a stock exchange or over-the-counter at
a premium or a discount to their net asset value. Others are
continuously offered at net asset value, but may also be traded in the
secondary market.
The extent to which a fund can invest in securities of other
investment companies is limited by federal securities laws.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or other institutions, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange
(NYSE) and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, earn additional income. The borrower
provides the fund with collateral in an amount at least equal to the
value of the securities loaned. The fund maintains the ability to
obtain the right to vote or consent on proxy proposals involving
material events affecting securities loaned. If the borrower defaults
on its obligation to return the securities loaned because of
insolvency or other reasons, a fund could experience delays and costs
in recovering the securities loaned or in gaining access to the
collateral. These delays and costs could be greater for foreign
securities. If a fund is not able to recover the securities loaned, a
fund may sell the collateral and purchase a replacement investment in
the market. The value of the collateral could decrease below the value
of the replacement investment by the time the replacement investment
is purchased. Loans will be made only to parties deemed by FMR to be
in good standing and when, in FMR's judgment, the income earned would
justify the risks.
Cash received as collateral through loan transactions may be invested
in other eligible securities. Investing this cash subjects that
investment, as well as the securities loaned, to market appreciation
or depreciation.
SHORT SALES "AGAINST THE BOX" are short sales of securities that a
fund owns or has the right to obtain (equivalent in kind or amount to
the securities sold short). If a fund enters into a short sale against
the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities
convertible or exchangeable into such securities) and will be required
to hold such securities while the short sale is outstanding. The fund
will incur transaction costs, including interest expenses, in
connection with opening, maintaining, and closing short sales against
the box.
SHORT SALES. Stocks underlying a fund's convertible security holdings
can be sold short. For example, if FMR anticipates a decline in the
price of the stock underlying a convertible security held by a fund,
it may sell the stock short. If the stock price subsequently declines,
the proceeds of the short sale could be expected to offset all or a
portion of the effect of the stock's decline on the value of the
convertible security. Each fund currently intends to hedge no more
than 15% of its total assets with short sales on equity securities
underlying its convertible security holdings under normal
circumstances.
A fund will be required to set aside securities equivalent in kind and
amount to those sold short (or securities convertible or exchangeable
into such securities) and will be required to hold them aside while
the short sale is outstanding. A fund will incur transaction costs,
including interest expenses, in connection with opening, maintaining,
and closing short sales.
SOURCES OF LIQUIDITY OR CREDIT SUPPORT. Issuers may employ various
forms of credit and liquidity enhancements, including letters of
credit, guarantees, puts, and demand features, and insurance provided
by domestic or foreign entities such as banks and other financial
institutions. FMR may rely on its evaluation of the credit of the
liquidity or credit enhancement provider in determining whether to
purchase a security supported by such enhancement. In evaluating the
credit of a foreign bank or other foreign entities, FMR will consider
whether adequate public information about the entity is available and
whether the entity may be subject to unfavorable political or economic
developments, currency controls, or other government restrictions that
might affect its ability to honor its commitment. Changes in the
credit quality of the entity providing the enhancement could affect
the value of the security or a fund's share price.
SOVEREIGN DEBT OBLIGATIONS are issued or guaranteed by foreign
governments or their agencies, including debt of Latin American
nations or other developing countries. Sovereign debt may be in the
form of conventional securities or other types of debt instruments
such as loans or loan participations. Sovereign debt of developing
countries may involve a high degree of risk, and may be in default or
present the risk of default. Governmental entities responsible for
repayment of the debt may be unable or unwilling to repay principal
and pay interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of
principal and payment of interest may depend on political as well as
economic factors. Although some sovereign debt, such as Brady Bonds,
is collateralized by U.S. Government securities, repayment of
principal and payment of interest is not guaranteed by the U.S.
Government.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. A fund may acquire standby commitments to enhance the
liquidity of portfolio securities.
Ordinarily a fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a
third party at any time. A fund may purchase standby commitments
separate from or in conjunction with the purchase of securities
subject to such commitments. In the latter case, the fund would pay a
higher price for the securities acquired, thus reducing their yield to
maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to purchase an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.
Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at the
time the commitments are exercised; the fact that standby commitments
are not generally marketable; and the possibility that the maturities
of the underlying securities may be different from those of the
commitments.
STRIPPED SECURITIES are the separate income or principal components of
a debt security. The risks associated with stripped securities are
similar to those of other debt securities, although stripped
securities may be more volatile, and the value of certain types of
stripped securities may move in the same direction as interest rates.
U.S. Treasury securities that have been stripped by a Federal Reserve
Bank are obligations issued by the U.S. Treasury.
Privately stripped government securities are created when a dealer
deposits a U.S. Treasury security or other U.S. Government security
with a custodian for safekeeping. The custodian issues separate
receipts for the coupon payments and the principal payment, which the
dealer then sells.
SWAP AGREEMENTS can be individually negotiated and structured to
include exposure to a variety of different types of investments or
market factors. Depending on their structure, swap agreements may
increase or decrease a fund's exposure to long- or short-term interest
rates (in the United States or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such
as security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap
obtains the right to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from
one type of investment to another. For example, if the fund agreed to
exchange payments in dollars for payments in foreign currency, the
swap agreement would tend to decrease the fund's exposure to U.S.
interest rates and increase its exposure to foreign currency and
interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a fund's investments
and its share price and yield.
The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors
that determine the amounts of payments due to and from a fund. If a
swap agreement calls for payments by the fund, the fund must be
prepared to make such payments when due. In addition, if the
counterparty's creditworthiness declined, the value of a swap
agreement would be likely to decline, potentially resulting in losses.
A fund may be able to eliminate its exposure under a swap agreement
either by assignment or other disposition, or by entering into an
offsetting swap agreement with the same party or a similarly
creditworthy party.
TEMPORARY DEFENSIVE POLICIES. Each of Advisor Latin America, Advisor
Japan, Advisor Europe Capital Appreciation, Advisor International
Capital Appreciation, Advisor Overseas, Advisor Diversified
International, Advisor Global Equity, and Advisor Emerging Asia
reserves the right to invest without limitation in preferred stocks
and investment-grade debt instruments for temporary, defensive
purposes.
Each of Advisor Government Investment, Advisor Mortgage Securities,
Advisor Intermediate Bond, and Advisor Short Fixed-Income reserves the
right to invest without limitation in investment-grade money market or
short-term debt instruments for temporary, defensive purposes.
Advisor Municipal Income reserves the right to invest without
limitation in short-term instruments, to hold a substantial amount of
uninvested cash, or to invest more than normally permitted in
federally taxable obligations for temporary, defensive purposes.
Each of Advisor High Yield and Advisor High Income reserves the right
to invest without limitation in investment-grade securities for
temporary, defensive purposes.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, municipal bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder
the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees
equal to the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, a fund
effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds, FMR will consider the creditworthiness of the issuer of the
underlying bond, the custodian, and the third party provider of the
tender option. In certain instances, a sponsor may terminate a tender
option if, for example, the issuer of the underlying bond defaults on
interest payments.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments
in the interest rate paid on the security. Variable rate securities
provide for a specified periodic adjustment in the interest rate,
while floating rate securities have interest rates that change
whenever there is a change in a designated benchmark rate. Some
variable or floating rate securities are structured with put features
that permit holders to demand payment of the unpaid principal balance
plus accrued interest from the issuers or certain financial
intermediaries.
In many instances bonds and participation interests have tender
options or demand features that permit the holder to tender (or put)
the bonds to an institution at periodic intervals and to receive the
principal amount thereof. Variable rate instruments structured in this
fashion are considered to be essentially equivalent to other variable
rate securities. The IRS has not ruled whether the interest on these
instruments is tax-exempt. Fixed-rate bonds that are subject to third
party puts and participation interests in such bonds held by a bank in
trust or otherwise may have similar features.
WARRANTS. Warrants are instruments which entitle the holder to buy an
equity security at a specific price for a specific period of time.
Changes in the value of a warrant do not necessarily correspond to
changes in the value of its underlying security. The price of a
warrant may be more volatile than the price of its underlying
security, and a warrant may offer greater potential for capital
appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with
respect to the underlying security and do not represent any rights in
the assets of the issuing company. A warrant ceases to have value if
it is not exercised prior to its expiration date. These factors can
make warrants more speculative than other types of investments.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS involve a
commitment to purchase or sell specific securities at a predetermined
price or yield in which payment and delivery take place after the
customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities pursuant to one of these transactions, the
purchaser assumes the rights and risks of ownership, including the
risks of price and yield fluctuations and the risk that the security
will not be issued as anticipated. Because payment for the securities
is not required until the delivery date, these risks are in addition
to the risks associated with a fund's investments. If a fund remains
substantially fully invested at a time when a purchase is outstanding,
the purchases may result in a form of leverage. When a fund has sold a
security pursuant to one of these transactions, the fund does not
participate in further gains or losses with respect to the security.
If the other party to a delayed-delivery transaction fails to deliver
or pay for the securities, a fund could miss a favorable price or
yield opportunity or suffer a loss.
A fund may renegotiate a when-issued or forward transaction and may
sell the underlying securities before delivery, which may result in
capital gains or losses for the fund.
ZERO COUPON BONDS do not make interest payments; instead, they are
sold at a discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be more volatile than other types of
fixed-income securities when interest rates change. In calculating a
fund's dividend, a portion of the difference between a zero coupon
bond's purchase price and its face value is considered income.
SPECIAL CONSIDERATIONS REGARDING CANADA
POLITICAL. Canada's parliamentary system of government is, in general,
stable. However, from time to time, some provinces, but particularly
Quebec, have called for a revamping of the legal and financial
relationship between the federal government in Ottawa and the
provinces. To date, referendums on Quebec sovereignty have been
defeated, but the issue remains unresolved. The Supreme Court of
Canada decided in August 1998 that if there was a "clear answer" to a
"clear question" in a referendum, then the federal government would be
obliged to negotiate with Quebec.
ECONOMIC. Canada is a major producer of commodities such as forest
products, metals, agricultural products, and energy related products
like oil, gas, and hydroelectricity. Accordingly, changes in the
supply and demand of industrial and basic materials, both domestically
and internationally, can have a significant effect on Canadian market
performance.
In addition, Canada relies considerably on the health of the United
States' economy, its biggest trading partner and largest foreign
investor. The expanding economic and financial integration of the
United States and Canada will likely make the Canadian economy and
securities market increasingly sensitive to U.S. economic and market
events.
CURRENCY. For U.S. investors, investing in any foreign currency
entails an additional risk that is not faced when investing in the
domestic market. Since Canada let its currency float in 1970, its
value has been in a steady decline against the U.S. dollar. While the
decline has helped Canada stay competitive in export markets, U.S.
investors have seen their investment returns eroded by the impact of
currency conversion.
SPECIAL CONSIDERATIONS REGARDING EUROPE
On January 1, 1999, eleven of the fifteen member countries of the
European Union (EU) fixed their currencies irrevocably to the euro,
the new unit of currency of the European Economic and Monetary Union
(EMU). At that time each member's currency was converted at a fixed
rate to the euro. Initially, use of the euro will be confined mainly
to the wholesale financial markets, while its widespread use in the
retail sector will follow the circulation of euro banknotes and coins
on January 1, 2002. At that time, the national banknotes and coins of
participating member countries will cease to be legal tender. In
addition to adopting a single currency, member countries will no
longer control their own monetary policies. Instead, the authority to
direct monetary policy will be exercised by the new European Central
Bank.
While economic and monetary convergence in the European Union may
offer new opportunities for those investing in the region, investors
should be aware that the success of the union is not wholly assured.
Europe must grapple with a number of challenges, any one of which
could threaten the survival of this monumental undertaking. Eleven
disparate economies must adjust to a unified monetary system, the
absence of exchange rate flexibility, and the loss of economic
sovereignty. The Continent's economies are diverse, its governments
decentralized, and its cultures differ widely. Unemployment is
historically high and could pose political risk. One or more member
countries might exit the union, placing the currency and banking
system in jeopardy.
POLITICAL. For those countries in Western and Eastern Europe that were
not included in the first round of the EU implementation, the
prospects for eventual membership serve as a strong political impetus
for many governments to employ tight fiscal and monetary policies.
Particularly for the Eastern European countries, aspirations to join
the EU are likely to push governments to act decisively.
At the same time, there could become an increasingly widening gap
between rich and poor within the aspiring countries, those countries
who are close to meeting membership criteria, and those who are not
likely to join the EMU. Realigning traditional alliances could alter
trading relationships and potentially provoke divisive socioeconomic
splits. Despite relative calm in Western Europe in recent years, the
risk of regional conflict or targeted terrorist activity could disrupt
European markets.
In the transition to the single economic system, significant political
decisions will be made which will effect the market regulation,
subsidization, and privatization across all industries, from
agricultural products to telecommunications.
ECONOMIC. As economic conditions across member states vary from robust
to dismal, there is continued concern about national-level support for
the currency and the accompanying coordination of fiscal and wage
policy among the eleven EMU member nations. According to the Maastrich
treaty, member countries must maintain inflation below 3.3%, public
debt below 60% of GDP, and a deficit of 3% or less of GDP to qualify
for participation in the euro. These requirements severely limit
member countries' ability to implement monetary policy to address
regional economic conditions. Countries that did not qualify for the
euro, such as Greece, risk being left farther behind.
FOREIGN TRADE. The EU has recently been involved in a number of trade
disputes with major trading partners, including the United States.
Tariffs and embargoes have been levied upon imports of agricultural
products and meat that have resulted in the affected nation levying
retaliatory tariffs upon imports from Europe. These disputes can
adversely affect the valuations of the European companies that export
the targeted products.
CURRENCY. For U.S. investors, investing in any foreign currency
entails an additional risk that is not faced when investing in the
domestic market. However, investing in euro-denominated securities
entails risk of being exposed to a new currency that may not fully
reflect the strengths and weaknesses of the disparate economies that
make up the Union. This has been the case in the first six months of
1999, when the initial exchange rates of the euro versus many of the
world's major currencies steadily declined. In this environment, U.S.
and other foreign investors experienced erosion of their investment
returns in the region. In addition, many European countries rely
heavily upon export dependent businesses and any strength in the
exchange rate between the euro and the dollar can have either a
positive or a negative effect upon corporate profits.
GERMANY. The German economy is heavily industrialized, with a strong
emphasis on manufacturing and exports. Therefore, Germany's economic
growth is heavily dependent on the prosperity of its trading partners
and on currency exchange rates. Germany is closely tied to a number of
Eastern European emerging market economies and weakness in these
economies will likely dampen demand for German exports. Germany
continues to struggle with its incorporation of former East Germany
and the country as a whole faces high labor costs and high
unemployment.
FRANCE. In recent years, the country's economic growth has been hit by
a series of general strikes. France's strong labor unions reacted
negatively to government cuts driven by the country's effort to meet
EMU membership criteria. Recently, unions have demanded a lower
retirement age and a shorter work week. Economic growth also is
limited by the country's pay-as-you-go pension system; spending on
pensions accounts for about 10% of GDP.
NORDIC COUNTRIES. Faced with stronger global competition, the Nordic
countries- Norway, Finland, Denmark, and Sweden- have had to scale
down their historically generous welfare programs, resulting in drops
in domestic demand and increased unemployment. Major industries in the
region, such as forestry, agriculture, and oil, are heavily resource
dependent and face pressure as a result of high labor costs. Pension
reform, union regulation, and further cuts in liberal social programs
will likely need to be addressed as the Nordic countries face
increased international competition.
UNITED KINGDOM. The United Kingdom continues to be overtly less
enthusiastic about EMU than other countries in Europe and has not
committed itself to joining the euro. While the UK views independence
from the EMU as a competitive advantage, the country may not benefit
from its independence if economic conditions on the continent improve.
If the continental European stock markets make more compelling
prospects for economic growth, there is concern that the UK market may
lag its European counterparts.
EASTERN EUROPE. Investing in the securities of Eastern European
issuers is highly speculative and involves risks not usually
associated with investing in the more developed markets of Western
Europe.
The economies of the Eastern European nations are embarking on the
transition from communism at different paces with appropriately
different characteristics. Most Eastern European markets suffer from
thin trading activity, dubious investor protections, and often, a
dearth of reliable corporate information. Information and transaction
costs, differential taxes, and sometimes political or transfer risk
give a comparative advantage to the domestic investor rather than the
foreign investor. In addition, these markets are particularly
sensitive to political, economic, and currency events in Russia and
have recently suffered heavy losses as a result of their trading and
investment links to the troubled Russian economy and currency.
SPECIAL CONSIDERATIONS REGARDING JAPAN
Fueled by public investment, protectionist trade policies, and
innovative management styles, the Japanese economy has transformed
itself since World War II into the world's second largest economy.
Despite its impressive history, investors face special risks when
investing in Japan.
ECONOMIC. Since Japan's bubble economy collapsed eight years ago, the
nation has drifted between modest growth and recession. By mid-year
1998, the world's second largest economy had slipped into its deepest
recession since World War II. Much of the blame can be placed on
government inaction in implementing long-neglected structural reforms
despite strong and persistent prodding from the International Monetary
Fund and the G7 member nations. Steps have been taken to deregulate
and liberalize protected areas of the economy, but the pace of change
has been disappointedly slow.
The most pressing need for action is the daunting task of overhauling
the nation's financial institutions and securing public support for
taxpayer-funded bailouts. Banks, in particular, must dispose of their
huge overhang of bad loans and trim their balance sheets in
preparation for greater competition from foreign institutions as more
areas of the financial sector are opened. Successful financial sector
reform would allow Japan's financial institutions to act as a catalyst
for economic recovery at home and across the troubled Asian region.
FOREIGN TRADE. Much of Japan's economy is dependent upon international
trade. The country is a leading exporter of automobiles and industrial
machinery as well as industrial and consumer electronics. While the
United States is Japan's largest single trading partner, close to half
of Japan's trade is conducted with developing nations, almost all of
which are in Southeast Asia. For the past two years, Southeast Asia's
economies have been mired in economic stagnation causing a steep
decline in Japan's exports to the area. Much of Japan's hopes for
economic recovery and renewed export growth is largely dependent upon
the pace of economic recovery in Southeast Asia.
NATURAL RESOURCE DEPENDENCY. An island nation with limited natural
resources, Japan is also heavily dependent upon imports of essential
products such as oil, forest products, and industrial metals.
Accordingly, Japan's industrial sector and domestic economy are highly
sensitive to fluctuations in international commodity prices. In
addition, many of these commodities are traded in U.S. dollars and any
strength in the exchange rate between the yen and the dollar can have
either a positive or a negative effect upon corporate profits.
NATURAL DISASTERS. The Japanese islands have been subjected to
periodic natural disasters including earthquakes, monsoons, and tidal
waves. These events have often inflicted substantial economic
disruption upon the nation's populace and industries.
SPECIAL CONSIDERATIONS REGARDING ASIA PACIFIC REGION (EX JAPAN)
Many countries in the region have historically faced political
uncertainty, corruption, military intervention, and social unrest.
Examples include the ethnic, sectarian, and separatist violence found
in Indonesia, and the nuclear arms threats between India and Pakistan.
To the extent that such events continue in the future, they can be
expected to have a negative effect on economic and securities market
conditions in the region.
ECONOMIC. The economic health of the region depends, in great part, on
each country's respective ability to carry out fiscal and monetary
reforms and its ability to address the International Monetary Fund's
mandated benchmarks. The majority of the countries in the region can
be characterized as either developing or newly industrialized
economies, which tend to experience more volatile economic cycles than
developed countries. In addition, a number of countries in the region
have historically faced hyperinflation, a deterrent to productivity
and economic growth.
CURRENCY. For U.S. investors, investing in any currency entails an
additional risk that is not faced when investing in the domestic
market. Some countries in the region may impose restrictions on
converting local currency, effectively preventing foreigners from
selling assets and repatriating funds. While flexible exchange rates
through most of the region should allow greater control of domestic
liquidity conditions, the region's currencies generally face
above-average volatility with potentially negative implications for
economic and security market conditions.
NATURAL DISASTERS. The Asia Pacific region has been subjected to
periodic natural disasters such as earthquakes, monsoons, and tidal
waves. These events have often inflicted substantial economic
disruption upon the nation's populace and industry.
CHINA AND HONG KONG. As with all transition economies, China's ability
to develop and sustain a credible legal, regulatory, monetary, and
socioeconomic system could influence the course of outside investment.
Hong Kong is closely tied to China, economically and through China's
1997 acquisition of the country as a Special Autonomous Region (SAR).
Hong Kong's success depends, in large part, on its ability to retain
the legal, financial and monetary systems that allow economic freedom
and market expansion.
SPECIAL CONSIDERATIONS REGARDING LATIN AMERICA
As an emerging market, Latin America has long suffered from political,
economic, and social instability. For investors, this has meant
additional risk caused by periods of regional conflict, political
corruption, totalitarianism, protectionist measures, nationalization,
hyperinflation, debt crises, and currency devaluation. However, much
has changed in the past decade. Democracy is beginning to become well
established in some countries. A move to a more mature and accountable
political environment is well under way. Domestic economies have been
deregulated and have enjoyed sound levels of growth. Privatization of
state-owned companies is almost completed. Foreign trade restrictions
have been relaxed. Large fiscal deficits have been reduced and
inflation controlled. Nonetheless, the volatile stock markets of 1998
have clearly demonstrated that investors in the region continue to
face a number of potential risks.
The telephone company industry comprises a major segment of the Latin
American market, as a whole as currently represented by the MSCI
Emerging Markets Free - Latin America Index. The pace of the
privatization of most Latin America's telephone companies has been
accelerating and is generally expected to ameliorate the industry's
worsening infrastructure problems and substantially expand and improve
services to the consumer. Following the privatization and breakup of
many of Latin America's telecommunications monopolies, telephone
companies are now faced with an increasingly competitive operating
environment that could substantially affect their profit margins
adversely. In addition, because these companies are regulated
providers of a highly visible basic service, in a sovereign stress
scenario, a company may not be permitted to pass on increased
operating expenses or devaluation-related price increases directly and
immediately to consumers. Attempts by management to undertake
restructuring initiatives, such as cutting employment overhead, could
also meet with strong government and union opposition. Latin America
countries have periodically experienced sharp economic slowdowns, high
interest rates, and spiraling inflation. In this environment, the
earnings and profits of telephone companies could be particularly
vulnerable. Access to capital could be substantially restricted by the
market's reaction to regional or global economic crisis. Because
telephone companies issue among Latin America's most liquid stocks,
they may be among the first companies whose shares will be sold by
foreign investors seeking to repatriate their overseas investments in
times of regional or global crisis. Accordingly, shares of telephone
companies may be subject to a high degree of price volatility in these
situations.
POLITICAL. While investors recently have benefited from friendlier
forms of government, the Latin American political climate is still
vulnerable to sudden changes. Many countries in the region have been
in recession and have faced high unemployment. Corruption remains part
of the political landscape. This could lead to social unrest and
changes in governments that are less favorable to investors. The
investor friendly trends of social, economic, and market reforms seen
over the past several years could be reversed. Also, as has
historically been the case, the stock markets may be subject to
increased volatility as some countries approach elections: Argentina,
Chile, Mexico, and Peru.
SOCIAL UNREST. Latin America continues to suffer from one of the most
inequitable distributions of wealth in the world, as well as rampant
delinquency and street crime. The recent reforms and the move to
democracy, which were initially welcomed by the population, so far
have failed to significantly improve the living conditions of the
majority of people. This could lead to social unrest, occasional labor
strikes, rebellion, or civil war.
ECONOMIC. Many countries in the region have experienced periods of
hyperinflation which adversely impacted and may continue to impact
their economies and local stock markets. Despite signs that inflation
has been tamed, the risk of hyperinflation persists.
FOREIGN TRADE. One key to the recent economic growth in the region has
been the reduction of trade barriers and a series of free-trade
agreements. These are currently under pressure given the recent
macro-economic imbalances between many trading partners. One example
would be Mercosur, which includes Argentina, Brazil, Uruguay, and
Paraguay. As long as the economies perform well and the regimes
maintain similar economic and currency policies, all will benefit from
this agreement. However, the recent devaluation of Brazil's currency,
combined with recessions in the region, has created tension between
the largest trading partners, Brazil and Argentina. This could
threaten the pace of vital trade integration and regional economic
stability.
CURRENCY. For U.S. investors, investing in any foreign market entails
the risk of currency fluctuations; any weakness in the local currency
could erode the investment returns to U.S. investors upon currency
conversion. As is typical of emerging markets, Latin America has a
long history of currency devaluation, evidenced by the Mexican peso
crisis and the more recent Brazilian devaluation. The region remains
exposed to currency speculators, particularly if the economic or
political conditions worsen. Countries where the currency is
artificially pegged to the dollar are most at risk. For example,
predatory speculation may shift to Argentina if the cost of
maintaining the currency board reaches an unsustainable level given
the negative impact of the Brazilian devaluation, the economic
recession, the deterioration of the foreign trade balances, and the
mounting fiscal deficit.
SOVEREIGN DEBT. Although austerity programs in many countries have
significantly reduced fiscal deficits, the region is still facing
significant debt. Interest on the debt is subject to market conditions
and may reach levels that would impair economic activity and create a
difficult and costly environment for borrowers. In addition,
governments may be forced to reschedule or freeze their debt
repayment, which could negatively impact the stock market.
NATURAL RESOURCES DEPENDENCY. Commodities such as agricultural
products, minerals, and metals account for a significant percentage of
exports of many Latin American countries. As a result, these economies
have been particularly sensitive to the fluctuation of commodity
prices. As an example, Chile has been affected by the change in the
prices of copper and pulp, which has adversely affected its economy
and stock market. Similarly, because the U.S. is Mexico's largest
trading partner - accounting for more than four-fifths of its exports
- - any economic downturn in the U.S. economy could adversely impact the
Mexican economy and stock market.
NATURAL DISASTERS. The region has been subjected to periodic natural
disasters, such as earthquakes and floods. These events have often
inflicted substantial damage upon the populations and the economy.
More recently, weather disorders attributed to the "El Nino" effect
have placed a serious drag on the economy of some countries, such as
Peru and Ecuador.
FINANCIAL REPORTING STANDARDS. As is typical of many emerging markets,
many companies in the region are still controlled by families and
their associates. Accordingly, these owners may not always act in the
best interests of public shareholders. In addition, rules for
disclosing financial information are less stringent, which increases
the difficulty of accessing reliable and viable information.
SPECIAL CONSIDERATIONS REGARDING RUSSIA
Investing in Russian securities is highly speculative and involves
greater risks than generally encountered when investing in the
securities markets of the U.S. and most other developed countries.
Over the past century, Russia has experienced political and economic
turbulence and has endured decades of communist rule under which tens
of millions of its citizens were collectivized into state agricultural
and industrial enterprises. For most of the past decade, Russia's
government has been faced with the daunting task of stabilizing its
domestic economy, while transforming it into a modern and efficient
structure able to compete in international markets and respond to the
needs of its citizens. However, to date, many of the country's
economic reform initiatives have floundered as the proceeds of IMF and
other economic assistance have been squandered or stolen. In this
environment, there is always the risk that the nation's government
will abandon the current program of economic reform and replace it
with radically different political and economic policies that would be
detrimental to the interests of foreign investors. This could entail a
return to a centrally planned economy and nationalization of private
enterprises similar to what existed under the old Soviet Union. As
recently as 1998, the government imposed a moratorium on the repayment
of its international debt and the restructuring of the repayment
terms.
Foreign investors also face a high degree of currency risk when
investing in Russian securities. In a surprise move in August 1998,
Russia devalued the ruble, defaulted on short-term domestic bonds, and
declared a moratorium on commercial debt payments. In light of these
and other recent government actions, foreign investors face the
possibility of further devaluations. In addition, there is the risk
the government may impose capital controls on foreign portfolio
investments in the event of extreme financial or political crisis.
Such capital controls would prevent the sale of a portfolio of foreign
assets and the repatriation of proceeds.
Many of Russia's businesses have failed to mobilize the available
factors of production because the country's privatization program
virtually ensured the predominance of the old management teams that
are largely non-market-oriented in their management approach. A
combination of poor accounting standards, inept management, endemic
corruption, and limited shareholder rights pose a significant risk,
particularly to foreign investors.
Compared to most national stock markets, the Russian securities market
suffers from a variety of problems not encountered in more developed
markets. Among these are thin trading activity, inadequate regulatory
protection for the rights of investors, and lax custody procedures.
Additionally, there is a dearth of solid corporate information
available to investors.
The Russian economy is heavily dependent upon the export of a range of
commodities including most industrial metals, forestry products, oil,
and gas. Accordingly, it is strongly affected by international
commodity prices and is particularly vulnerable to any weakening in
global demand for these products.
SPECIAL CONSIDERATIONS REGARDING AFRICA
Africa is a highly diverse and politically unstable continent of over
50 countries and 840 million people. Civil wars, coups, and even
genocidal warfare have beset much of this region in recent years.
Nevertheless, the continent is home to an abundance of natural
resources, including natural gas, aluminum, crude oil, copper, iron,
bauxite, cotton, diamonds, and timber. Wealthier African countries
generally have strong connections to European partners; evidence of
these relationships is seen in the growing market capitalization and
foreign investment. Economic performance remains closely tied to world
commodity markets, particularly oil, as well as agricultural
conditions, such as drought.
Several Northern African countries have substantial oil reserves and,
accordingly, their economies react strongly to world oil prices. They
share a regional and sometimes religious identification with the oil
producing nations of the Middle East and can be strongly affected by
political and economic developments in those countries. As in the
south, weather conditions have a strong impact on many of their
natural resources, as was the case in 1995, when severe drought
adversely affected economic growth.
Several African countries have active equity markets, many established
since 1989. The oldest market, in Egypt, was established in 1883,
while the youngest, in Zambia, was established in 1994. The mean age
for all equity markets is 40 years old. A total of 1,830 firms are
listed on the respective exchanges. With the exception of the
relatively large and liquid South African stock market, sub-Saharan
Africa is probably the riskiest of all the world's emerging markets.
During the past two decades, sub-Saharan Africa has lagged behind
other developing regions in economic growth. The area attracts only a
modest share of foreign direct investment and remains highly dependent
on foreign aid. The financial markets are small and underdeveloped and
offer little regulatory protection for investors. Except for South
Africa, the most fundamental problems in all of the countries in the
region are the absence of an effective court system to ensure the
enforceability of contracts. Investors in the area generally face a
high risk of continuing political and economic instability as well as
currency exchange rate volatility.
SOUTH AFRICA. South Africa has a highly developed and industrialized
economy. It is rich in mineral resources and is the world's largest
producer and exporter of gold. The nation's new government has made
remarkable progress in consolidating the nation's peaceful transition
to democracy and in redressing the socioeconomic disparities created
by apartheid. It has a sophisticated financial structure with a large
and active stock exchange that ranks 19th in the world in terms of
market capitalization. Nevertheless, investors in South Africa face a
number of risks common to other developing regions. The nation's heavy
dependence upon the export of natural resources makes its economy and
stock market vulnerable to weak global demand and declines in
commodity prices. The country's currency reserves have been a constant
problem and its currency can be vulnerable to devaluation. There is
also the risk that ethnic and civic conflict could result in the
abandonment of many of the nation's free market reforms to the
detriment of shareholders.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and investment
accounts for which it or its affiliates act as investment adviser. In
selecting broker-dealers, subject to applicable limitations of the
federal securities laws, FMR considers various relevant factors,
including, but not limited to: the size and type of the transaction;
the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability,
and financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; the reasonableness
of any commissions; and, if applicable, arrangements for payment of
fund expenses.
If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contracts"), that sub-adviser is
authorized to place orders for the purchase and sale of portfolio
securities, and will do so in accordance with the policies described
above.
Generally, commissions for investments traded on foreign exchanges
will be higher than for investments traded on U.S. exchanges and may
not be subject to negotiation.
Each fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other
investment accounts over which FMR or its affiliates exercise
investment discretion. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing, or
selling securities; and the availability of securities or the
purchasers or sellers of securities. In addition, such broker-dealers
may furnish analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and
performance of investment accounts; and effect securities transactions
and perform functions incidental thereto (such as clearance and
settlement).
The selection of such broker-dealers for transactions in equity
securities is generally made by FMR (to the extent possible consistent
with execution considerations) in accordance with a ranking of
broker-dealers determined periodically by FMR's investment staff based
upon the quality of research and execution services provided.
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering investment
management services to that fund or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to a fund. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, a
fund may pay a broker-dealer commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause a fund to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided
by such executing broker-dealers, viewed in terms of a particular
transaction or FMR's overall responsibilities to that fund or its
other clients. In reaching this determination, FMR will not attempt to
place a specific dollar value on the brokerage and research services
provided, or to determine what portion of the compensation should be
related to those services.
To the extent permitted by applicable law, FMR is authorized to
allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to use the research services of brokerage and
other firms that have provided such assistance. FMR may use research
services provided by and place agency transactions with National
Financial Services Corporation (NFSC) and Fidelity Brokerage Services
Japan LLC (FBSJ), indirect subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions
charged by non-affiliated, qualified brokerage firms for similar
services. Prior to December 9, 1997, FMR used research services
provided by and placed agency transactions with Fidelity Brokerage
Services (FBS), an indirect subsidiary of FMR Corp.
FMR may allocate brokerage transactions to broker-dealers (including
affiliates of FMR) who have entered into arrangements with FMR under
which the broker-dealer allocates a portion of the commissions paid by
a fund toward the reduction of that fund's expenses. The transaction
quality must, however, be comparable to those of other qualified
broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for investment accounts which they or their affiliates manage, unless
certain requirements are satisfied. Pursuant to such requirements, the
Board of Trustees has authorized NFSC to execute portfolio
transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules.
The Trustees of each fund periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions paid by
the fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
For the fiscal periods ended October 31, 1999 and 1998, the portfolio
turnover rates for each fund are presented in the table below.
Variations in turnover rate may be due to fluctuating volume of
shareholder purchase and redemption orders, market conditions, or
changes in FMR's investment outlook.
Fiscal Period Ended Portfolio Turnover Rate
Advisor Latin America
1999+ October 31 50%*
Advisor Emerging Asia
1999 October 31 62%
Advisor Japan
1999++ October 31 152%*
Advisor International Capital
Appreciation
1999 October 31 218%
1998+++ October 31 199%*
Advisor Europe Capital
Appreciation
1999++ October 31 164%*
Advisor Overseas
1999 October 31 85%
1998 October 31 74%
Advisor Diversified
International
1999++ October 31 78%*
Advisor Global Equity
1999++ October 31 69%*
Advisor High Yield
1999 October 31 61%
1998 October 31 75%
Advisor High Income
1999++++ October 31 331%*
Advisor Government Investment
1999 October 31 174%
1998 October 31 243%
Advisor Mortgage Securities
1999 October 31 183%
1998 October 31 262%
Advisor Intermediate Bond
1999 October 31 138%
12/1/97-10/31/98 October 31 176%*
Advisor Short Fixed-Income
1999 October 31 139%
1998 October 31 124%
Advisor Municipal Income
1999 October 31 23%
1998 October 31 36%
* Annualized
+ Advisor Latin America commenced operations on December 21, 1998.
++ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
+++ Advisor International Capital Appreciation commenced operations on
November 3, 1997.
++++ Advisor High Income commenced operations on September 7, 1999.
Prior to June 16, 1999, Advisor Emerging Asia operated as Fidelity
Advisor Emerging Asia, Inc. (Closed-End Fund), a closed-end fund. On
June 15, 1999, the Closed-End Fund was reorganized as an open-end fund
through a transfer of all its assets and liabilities to Advisor
Emerging Asia. Shareholders of the Closed-End Fund received Class A
shares of Advisor Emerging Asia in exchange for their shares of the
Closed-End Fund.
Significant changes in brokerage commissions paid by the Closed-End
Fund and those paid by Advisor Emerging Asia may result from
its reorganization as an open-end fund, which must continuously meet
redemptions.
The following tables show the brokerage commissions paid by the funds.
Significant changes in brokerage commissions paid by a fund from year
to year may result from changing asset levels throughout the year. A
fund may pay both commissions and spreads in connection with the
placement of portfolio transactions.
The following table shows the total amount of brokerage commissions
paid by each fund.
Fiscal Year Ended Total Amount Paid
Advisor Latin America October 31
1999+ $ 14,837
Advisor Emerging Asia October 31
1999 486,161
1998 270,016
1997 678,317
Advisor Japan October 31
1999++ 119,713
Advisor International Capital October 31
Appreciation
1999 304,587
1998+++ 176,523
Advisor Europe Capital October 31
Appreciation
1999++ 102,306
Advisor Overseas October 31
1999 3,471,595
1998 3,132,182
1997 2,761,658
Advisor Diversified October 31
International
1999++ 103,668
Advisor Global Equity October 31
1999++ 13,316
Advisor High Yield October 31
1999 163,687
1998 238,891
1997 269,517
Advisor High Income October 31
1999++++ 600
+ Advisor Latin America commenced operations on December 21, 1998.
++ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
+++ Advisor International Capital Appreciation commenced operations on
November 3, 1997.
++++ Advisor High Income commenced operations on September 7, 1999.
Of the following tables, the first shows the total amount of brokerage
commissions paid by each fund to NFSC and, in the case of certain
taxable funds, FBS and FBSJ, as applicable, for the past three fiscal
years. The second table shows the approximate percentage of aggregate
brokerage commissions paid by a fund to NFSC and FBS and FBSJ for
transactions involving the approximate percentage of the aggregate
dollar amount of transactions for which the fund paid brokerage
commissions for the fiscal year ended 1999. NFSC, FBS, and FBSJ are
paid on a commission basis.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total Amount Paid
Fiscal Year Ended To NFSC To FBS To FBSJ
Advisor Japan October 31
1999+ $ 0 $ 0 $ 290
Advisor International Capital October 31
Appreciation
1999 0 0 518
1998++ 0 105 0
Advisor Europe Capital October 31
Appreciation
1999+ 8 0 0
Advisor Overseas October 31
1999 1,854 0 132
1998 8,154 29,509 0
1997 5,510 198,192 0
Advisor Diversified October 31
International
1999+ 685 0 0
Advisor Global Equity October 31
1999+ 222 0 0
Advisor High Yield October 31
1999 4,035 0 0
1998 15,062 0 0
1997 12,656 0 0
</TABLE>
+ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
++ Advisor International Capital Appreciation commenced operations on
November 3, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Year Ended 1999 % of Aggregate Commissions % of Aggregate Dollar Amount
Paid to NFSC of Transactions Effected
through NFSC
Advisor Japan+ October 31 0% 0%
Advisor International Capital October 31 0% 0%
Appreciation
Advisor Europe Capital October 31 0.01% 0.12%
Appreciation+,(dagger)
Advisor Overseas(dagger) October 31 0.05% 0.19%
Advisor Diversified October 31 0.66% 0.68%
International+,(dagger)
Advisor Global Equity+,(dagger) October 31 1.67% 6.59%
Advisor High Yield October 31 2.47% 1.77%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
% of Aggregate Commissions % of Aggregate Dollar Amount % of Aggregate Commissions
Paid to FBS of Transactions Effected Paid to FBSJ
through FBS
Advisor Japan+ 0% 0% 0.24%
Advisor International Capital 0% 0% 0.17%
Appreciation
Advisor Europe Capital 0% 0% 0%
Appreciation+,(dagger)
Advisor Overseas(dagger) 0% 0% 0%
Advisor Diversified 0% 0% 0%
International+,(dagger)
Advisor Global Equity+,(dagger) 0% 0% 0%
Advisor High Yield 0% 0% 0%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
% of Aggregate Dollar Amount
of Transactions Effected
through FBSJ
Advisor Japan+ 0.36%
Advisor International Capital 0.43%
Appreciation
Advisor Europe Capital 0%
Appreciation+,(dagger)
Advisor Overseas(dagger) 0.01%
Advisor Diversified 0%
International+,(dagger)
Advisor Global Equity+,(dagger) 0%
Advisor High Yield 0%
</TABLE>
+ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International and Advisor Global Equity commenced
operations on December 17, 1998.
(dagger) The difference between the percentage of aggregate brokerage
commissions paid to, and the percentage of the aggregate dollar amount
of transactions effected through NFSC is a result of the low
commission rates charged by NFSC.
The following table shows the dollar amount of brokerage commissions
paid to firms that provided research services and the approximate
dollar amount of the transactions involved for the fiscal year ended
1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Year Ended 1999 $ Amount of Commissions Paid $ Amount of Brokerage
to Firms that Provided Transactions Involved*
Research Services*
Advisor Latin America+ October 31 $ 9,689 $ 3,556,432
Advisor Emerging Asia October 31 197,329 45,928,456
Advisor Japan++ October 31 99,339 97,553,867
Advisor International Capital October 31 247,828 143,973,563
Appreciation
Advisor Europe Capital October 31 86,029 44,377,089
Appreciation++
Advisor Overseas October 31 2,985,875 1,672,624,495
Advisor Diversified October 31 85,222 50,737,604
International++
Advisor Global Equity++ October 31 8,638 5,107,723
Advisor High Yield October 31 147,615 78,480,045
Advisor High Income+++ October 31 600 144,104
</TABLE>
* The provision of research services was not necessarily a factor in
the placement of all this business with such firms.
+ Advisor Latin America commenced operations on December 21, 1998.
++ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
+++ Advisor High Income commenced operations on September 7, 1999.
For the fiscal year ended October 31, 1999 Advisor Government
Investment, Advisor Mortgage Securities, Advisor Intermediate Bond,
Advisor Short-Fixed Income, and Advisor Municipal Income paid no
brokerage commissions to firms that provided research services.
The Trustees of each fund have approved procedures in conformity with
Rule 10f-3 under the 1940 Act whereby a fund may purchase securities
that are offered in underwritings in which an affiliate of FMR
participates. These procedures prohibit the funds from directly or
indirectly benefiting an FMR affiliate in connection with such
underwritings. In addition, for underwritings where an FMR affiliate
participates as a principal underwriter, certain restrictions may
apply that could, among other things, limit the amount of securities
that the funds could purchase in the underwriting.
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR or its affiliates,
investment decisions for each fund are made independently from those
of other funds managed by FMR or investment accounts managed by FMR
affiliates. It sometimes happens that the same security is held in the
portfolio of more than one of these funds or investment accounts.
Simultaneous transactions are inevitable when several funds and
investment accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or investment account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
Each class's net asset value per share (NAV) is the value of a single
share. The NAV of each class is computed by adding the class's pro
rata share of the value of the applicable fund's investments, cash,
and other assets, subtracting the class's pro rata share of the
applicable fund's liabilities, subtracting the liabilities allocated
to the class, and dividing the result by the number of shares of that
class that are outstanding.
GROWTH FUNDS. Portfolio securities are valued by various methods
depending on the primary market or exchange on which they trade. Most
equity securities for which the primary market is the United States
are valued at last sale price or, if no sale has occurred, at the
closing bid price. Most equity securities for which the primary market
is outside the United States are valued using the official closing
price or the last sale price in the principal market in which they are
traded. If the last sale price (on the local exchange) is unavailable,
the last evaluated quote or closing bid price normally is used.
Securities of other open-end investment companies are valued at their
respective NAVs.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Independent brokers or quotation services provide prices of foreign
securities in their local currency. FSC gathers all exchange rates
daily at the close of the NYSE using the last quoted price on the
local currency and then translates the value of foreign securities
from their local currencies into U.S. dollars. Any changes in the
value of forward contracts due to exchange rate fluctuations and days
to maturity are included in the calculation of NAV. If an event that
is expected to materially affect the value of a portfolio security
occurs after the close of an exchange or market on which that security
is traded, then that security will be valued in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value.
The procedures set forth above need not be used to determine the value
of the securities owned by a fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method would more
accurately reflect the fair value of such securities. For example,
securities and other assets for which there is no readily available
market value may be valued in good faith by a committee appointed by
the Board of Trustees. In making a good faith determination of the
value of a security, the committee may review price movements in
futures contracts and ADRs, market and trading trends, the bid/ask
quotes of brokers and off-exchange institutional trading.
TAXABLE BOND FUNDS. Portfolio securities are valued by various methods
depending on the primary market or exchange on which they trade.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Most equity securities for which the primary market is the United
States are valued at last sale price or, if no sale has occurred, at
the closing bid price. Most equity securities for which the primary
market is outside the United States are valued using the official
closing price or the last sale price in the principal market in which
they are traded. If the last sale price (on the local exchange) is
unavailable, the last evaluated quote or closing bid price normally is
used.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAVs.
Independent brokers or quotation services provide prices of foreign
securities in their local currency. FSC gathers all exchange rates
daily at the close of the NYSE using the last quoted price on the
local currency and then translates the value of foreign securities
from their local currencies into U.S. dollars. Any changes in the
value of forward contracts due to exchange rate fluctuations and days
to maturity are included in the calculation of NAV. If an event that
is expected to materially affect the value of a portfolio security
occurs after the close of an exchange or market on which that security
is traded, then that security will be valued in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value.
The procedures set forth above need not be used to determine the value
of the securities owned by a fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method would more
accurately reflect the fair value of such securities. For example,
securities and other assets for which there is no readily available
market value may be valued in good faith by a committee appointed by
the Board of Trustees. In making a good faith determination of the
value of a security, the committee may review price movements in
futures contracts and ADRs, market and trading trends, the bid/ask
quotes of brokers and off-exchange institutional trading.
TAX-FREE BOND FUNDS. Portfolio securities are valued by various
methods. If quotations are not available, fixed-income securities are
usually valued on the basis of information furnished by a pricing
service that uses a valuation matrix which incorporates both
dealer-supplied valuations and electronic data processing techniques.
Use of pricing services has been approved by the Board of Trustees. A
number of pricing services are available, and the funds may use
various pricing services or discontinue the use of any pricing
service.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAVs.
The procedures set forth above need not be used to determine the value
of the securities owned by a fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method would more
accurately reflect the fair value of such securities. For example,
securities and other assets for which there is no readily available
market value may be valued in good faith by a committee appointed by
the Board of Trustees. In making a good faith determination of the
value of a security, the committee may review price movements in
futures contracts and ADRs, market and trading trends, the bid/ask
quotes of brokers and off-exchange institutional trading.
PERFORMANCE
A class may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is
not intended to indicate future returns. Each class's share price,
yield, and return fluctuate in response to market conditions and other
factors, and the value of fund shares when redeemed may be more or
less than their original cost.
YIELD CALCULATIONS. Yields for a class are computed by dividing a
class's pro rata share of the fund's interest and dividend income for
a given 30-day or one-month period, net of expenses, by the average
number of shares of that class entitled to receive distributions
during the period, dividing this figure by the class's NAV or offering
price, as applicable, at the end of the period, and annualizing the
result (assuming compounding of income) in order to arrive at an
annual percentage rate. Income is calculated for purposes of yield
quotations in accordance with standardized methods applicable to all
stock and bond funds. Dividends from equity investments are treated as
if they were accrued on a daily basis, solely for the purposes of
yield calculations. In general, interest income is reduced with
respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and
is increased with respect to bonds trading at a discount by adding a
portion of the discount to daily income. For a fund's investments
denominated in foreign currencies, income and expenses are calculated
first in their respective currencies, and then are converted to U.S.
dollars, either when they are actually converted or at the end of the
30-day or one month period, whichever is earlier. Income is adjusted
to reflect gains and losses from principal repayments received by a
fund with respect to mortgage-related securities and other
asset-backed securities. Other capital gains and losses generally are
excluded from the calculation as are gains and losses from currency
exchange rate fluctuations.
Income calculated for the purposes of calculating a class's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, a class's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
In calculating a class's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing a class's yield.
Yield information may be useful in reviewing a class's performance and
in providing a basis for comparison with other investment
alternatives. However, a class's yield fluctuates, unlike investments
that pay a fixed interest rate over a stated period of time. When
comparing investment alternatives, investors should also note the
quality and maturity of the portfolio securities of respective
investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
a class's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates a class's yield will
tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to a fund from the continuous sale of its
shares will likely be invested in instruments producing lower yields
than the balance of the fund's holdings, thereby reducing a class's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
The tax-equivalent yield of a class of a municipal fund is the rate an
investor would have to earn from a fully taxable investment before
taxes to equal a class's tax-free yield. Tax-equivalent yields are
calculated by dividing a class's yield by the result of one minus a
specified federal income tax rate. If only a portion of a class's
yield is tax-exempt, only that portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 2000. It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of
hypothetical federally tax-exempt obligations yielding from 2 %
to 9 %. Of course, no assurance can be given that a class of the
municipal fund will achieve any specific tax-exempt yield. While the
municipal fund invests principally in obligations whose interest is
exempt from federal income tax, other income received by the fund may
be taxable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 TAX RATES AND TAX-EQUIVALENT YIELDS
Federal If individual tax-exempt
yield is:
Taxable Income* Marginal 2% 3% 4% 5%
Single Return Joint Return Rate** Then taxable-equivalent yield
is:
$ 0 - 26,250 $ 0 - 43,850 15.0% 2.35% 3.53% 4.71% 5.88%
$ 26,251 - 63,550 $ 43,851 - 105,950 28.0% 2.78% 4.17% 5.56% 6.94%
$ 63,551 - 132,600 $ 105,951 - 161,450 31.0% 2.90% 4.35% 5.80% 7.25%
$ 132,601 - 288,350 $ 161,451 - 288,350 36.0% 3.13% 4.69% 6.25% 7.81%
$ 288,351 - and over $ 288,351 - and over 39.6% 3.31% 4.97% 6.62% 8.28%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 TAX RATES AND TAX-EQUIVALENT YIELDS
Federal If individual tax-exempt
yield is:
Taxable Income* Marginal 6% 7% 8% 9%
Single Return Joint Return Rate** Then taxable-equivalent yield
is:
$ 0 - 26,250 $ 0 - 43,850 15.0% 7.06% 8.24% 9.41% 10.59%
$ 26,251 - 63,550 $ 43,851 - 105,950 28.0% 8.33% 9.72% 11.11% 12.50%
$ 63,551 - 132,600 $ 105,951 - 161,450 31.0% 8.70% 10.14% 11.59% 13.04%
$ 132,601 - 288,350 $ 161,451 - 288,350 36.0% 9.38% 10.94% 12.50% 14.06%
$ 288,351 - and over $ 288,351 - and over 39.6% 9.93% 11.59% 13.25% 14.90%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
The municipal fund may invest a portion of its assets in obligations
that are subject to federal income tax. When the municipal fund
invests in these obligations, its tax-equivalent yields will be lower.
In the table above, tax-equivalent yields are calculated assuming
investments are 100% federally tax-free.
Prior to June 16, 1999, Advisor Emerging Asia operated as the
Closed-End Fund. The closed-end fund had the same investment objective
and substantially similar investment policies as Advisor Emerging
Asia. On June 15, 1999, the Closed-End Fund was reorganized as an
open-end fund through a transfer of all its assets and liabilities to
Advisor Emerging Asia. Shareholders of the Closed-End Fund received
Class A shares of Advisor Emerging Asia in exchange for their shares
of the Closed-End Fund.
Class A, Class T, Class B, Class C, and Institutional Class shares of
Advisor Emerging Asia were not offered prior to June 16, 1999. The
returns presented below for Advisor Emerging Asia for periods prior to
June 16, 1999 do not reflect Class A, Class T, Class B, Class C, or
Institutional Class total expenses. If the effect of Class A, Class T,
Class B, Class C, and Institutional Class total expenses was
reflected, returns may be lower than those shown because Class A,
Class T, Class B, Class C, and Institutional Class shares of Advisor
Emerging Asia may have higher total expenses than the Closed-End Fund.
RETURN CALCULATIONS. Returns quoted in advertising reflect all aspects
of a class's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in a class's NAV over a
stated period. A class's return may be calculated by using the
performance data of a previously existing class prior to the date that
the new class commenced operations, adjusted to reflect differences in
sales charges but not 12b-1 fees. A cumulative return reflects actual
performance over a stated period of time. Average annual returns are
calculated by determining the growth or decline in value of a
hypothetical historical investment in a class over a stated period,
and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative
return of 100% over ten years would produce an average annual return
of 7.18%, which is the steady annual rate of return that would equal
100% growth on a compounded basis in ten years. Average annual returns
covering periods of less than one year are calculated by determining a
class's return for the period, extending that return for a full year
(assuming that return remains constant over the year), and quoting the
result as an annual return. While average annual returns are a
convenient means of comparing investment alternatives, investors
should realize that a class's performance is not constant over time,
but changes from year to year, and that average annual returns
represent averaged figures as opposed to the actual year-to-year
performance of a class.
In addition to average annual returns, a class may quote unaveraged or
cumulative returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative returns
may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a
series of redemptions, over any time period. Returns may be broken
down into their components of income and capital (including capital
gains and changes in share price) in order to illustrate the
relationship of these factors and their contributions to return.
Returns may be quoted on a before-tax or after-tax basis. Returns may
or may not include the effect of a class's maximum sales charge.
Excluding a class's sales charge from a return calculation produces a
higher return figure. Returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using a class's NAVs, adjusted
NAVs, and benchmark indexes may be used to exhibit performance. An
adjusted NAV includes any distributions paid by a fund and reflects
all elements of a class's return. Unless otherwise indicated, a
class's adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. An equity fund may illustrate performance using
moving averages. A long-term moving average is the average of each
week's adjusted closing NAV for a specified period. A short-term
moving average is the average of each day's adjusted closing NAV for a
specified period. Moving Average Activity Indicators combine adjusted
closing NAVs from the last business day of each week with moving
averages for a specified period to produce indicators showing when an
NAV has crossed, stayed above, or stayed below its moving average. The
13-week and 39-week long-term moving averages for each class of each
fund are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C>
Fund 13-Week Long-Term Moving 39-Week Long-Term Moving
Average* Average*
Advisor Latin America - Class A 11.26 11.46
Advisor Latin America - Class T 11.24 11.45
Advisor Latin America - Class B 11.20 11.43
Advisor Latin America - Class C 11.20 11.43
Advisor Latin America - 11.28 11.48
Institutional Class
Advisor Emerging Asia - Class A 14.93 13.64
Advisor Emerging Asia - Class T 14.92 13.64
Advisor Emerging Asia - Class B 14.90 13.63
Advisor Emerging Asia - Class C 14.90 13.63
Advisor Emerging Asia - 14.93 13.64
Institutional Class
Advisor Japan - Class A 17.04 13.63
Advisor Japan - Class T 17.01 13.61
Advisor Japan - Class B 16.94 13.57
Advisor Japan - Class C 16.95 13.58
Advisor Japan - Institutional 17.08 13.65
Advisor International Capital 14.19 12.95
Appreciation - Class A
Advisor International Capital 14.15 12.91
Appreciation - Class T
Advisor International Capital 13.98 12.78
Appreciation - Class B
Advisor International Capital 13.98 12.77
Appreciation - Class C
Advisor International Capital 14.22 12.98
Appreciation - Institutional
Class
Advisor Europe Capital 10.27 10.15
Appreciation - Class A
Advisor Europe Capital 10.26 10.14
Appreciation - Class T
Advisor Europe Capital 10.21 10.11
Appreciation - Class B
Advisor Europe Capital 10.21 10.11
Appreciation - Class C
Advisor Europe Capital 10.28 10.16
Appreciation - Institutional
Class
Advisor Overseas - Class A 19.71 18.72
Advisor Overseas - Class T 19.95 18.96
Advisor Overseas - Class B 19.40 18.46
Advisor Overseas - Class C 19.71 18.76
Advisor Overseas - 19.73 18.72
Institutional
Advisor Diversified 12.48 11.68
International - Class A
Advisor Diversified 12.46 11.67
International - Class T
Advisor Diversified 12.41 11.64
International - Class B
Advisor Diversified 12.41 11.64
International - Class C
Advisor Diversified 12.50 11.70
International -
Institutional Class
</TABLE>
* On October 29, 1999.
<TABLE>
<CAPTION>
<S> <C> <C>
Fund 13-Week Long-Term Moving 39-Week Long-Term Moving
Average* Average*
Advisor Global Equity - Class A 11.31 11.00
Advisor Global Equity - Class T 11.29 10.99
Advisor Global Equity - Class B 11.24 10.96
Advisor Global Equity - Class C 11.24 10.96
Advisor Global Equity - 11.32 11.01
Institutional
</TABLE>
* On October 29, 1999.
HISTORICAL EQUITY FUND RESULTS. The following table shows each class's
return for the fiscal periods ended October 31, 1999.
Class A and Class T have a maximum front-end sales charge of 5.75% and
3.50%, respectively, which is included in the average annual and
cumulative returns. Class B and Class C have a maximum CDSC of 5.00%
and 1.00%, respectively, which is included in the average annual and
cumulative returns.
Class A, Class T, Class B, and Class C have a 12b-1 fee of 0.25%,
0.50%, 1.00%, and 1.00%, respectively, which is included in the
average annual and cumulative returns.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Average Annual Returns1 Cumulative Returns1
One Year Five Years Life of Fund* One Year Five Years
Advisor Latin America - Class A N/A N/A N/A N/A N/A
Advisor Latin America - Class T N/A N/A N/A N/A N/A
Advisor Latin America - Class B N/A N/A N/A N/A N/A
Advisor Latin America - Class C N/A N/A N/A N/A N/A
Advisor Latin America - N/A N/A N/A N/A N/A
Institutional Class
Advisor Emerging Asia - Class A 47.21% -0.81% 1.53% 47.21% -3.98%
Advisor Emerging Asia - Class T 50.72% -0.34% 1.96% 50.72% -1.69%
Advisor Emerging Asia - Class B 50.88% -0.04% 2.41% 50.88% -0.20%
Advisor Emerging Asia - Class C 54.78% 0.32% 2.56% 54.78% 1.61%
Advisor Emerging Asia - 56.40% 0.40% 2.63% 56.40% 2.01%
Institutional Class
Advisor Japan - Class A N/A N/A N/A N/A N/A
Advisor Japan - Class T N/A N/A N/A N/A N/A
Advisor Japan - Class B N/A N/A N/A N/A N/A
Advisor Japan - Class C N/A N/A N/A N/A N/A
Advisor Japan - Institutional N/A N/A N/A N/A N/A
Class
Advisor International Capital 40.95% N/A 19.22% 40.95% N/A
Appreciation - Class A
Advisor International Capital 44.37% N/A 20.48% 44.37% N/A
Appreciation - Class T
Advisor International Capital 43.35% N/A 20.17% 43.35% N/A
Appreciation - Class B
Advisor International Capital 47.60% N/A 21.87% 47.60% N/A
Appreciation - Class C
Advisor International Capital 49.55% N/A 22.94% 49.55% N/A
Appreciation - Institutional
Class
Advisor Europe Capital N/A N/A N/A N/A N/A
Appreciation - Class A
Advisor Europe Capital N/A N/A N/A N/A N/A
Appreciation - Class T
Advisor Europe Capital N/A N/A N/A N/A N/A
Appreciation - Class B
Advisor Europe Capital N/A N/A N/A N/A N/A
Appreciation - Class C
Advisor Europe Capital N/A N/A N/A N/A N/A
Appreciation - Institutional
Class
Advisor Overseas - Class A 20.69% 10.07% 9.40% 20.69% 61.55%
Advisor Overseas - Class T 23.27% 10.54% 9.64% 23.27% 65.02%
Advisor Overseas - Class B 22.00% 10.49% 9.76% 22.00% 64.69%
Advisor Overseas - Class C 26.21% 10.76% 9.76% 26.21% 66.71%
Advisor Overseas - 28.30% 11.71% 10.25% 28.30% 73.98%
Institutional Class
Advisor Diversified N/A N/A N/A N/A N/A
International - Class A
Advisor Diversified N/A N/A N/A N/A N/A
International - Class T
Advisor Diversified N/A N/A N/A N/A N/A
International - Class B
Advisor Diversified N/A N/A N/A N/A N/A
International - Class C
Advisor Diversified N/A N/A N/A N/A N/A
International -
Institutional Class
Advisor Global Equity - Class A N/A N/A N/A N/A N/A
Advisor Global Equity - Class T N/A N/A N/A N/A N/A
Advisor Global Equity - Class B N/A N/A N/A N/A N/A
Advisor Global Equity - Class C N/A N/A N/A N/A N/A
Advisor Global Equity - N/A N/A N/A N/A N/A
Institutional Class
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cumulative Returns1
Life of Fund*
Advisor Latin America - Class A 9.71%
Advisor Latin America - Class T 12.13%
Advisor Latin America - Class B 10.80%
Advisor Latin America - Class C 14.70%
Advisor Latin America - 16.70%
Institutional Class
Advisor Emerging Asia - Class A 8.87%
Advisor Emerging Asia - Class T 11.47%
Advisor Emerging Asia - Class B 14.28%
Advisor Emerging Asia - Class C 15.21%
Advisor Emerging Asia - 15.67%
Institutional Class
Advisor Japan - Class A 79.45%
Advisor Japan - Class T 83.45%
Advisor Japan - Class B 84.20%
Advisor Japan - Class C 88.30%
Advisor Japan - Institutional 90.90%
Class
Advisor International Capital 41.94%
Appreciation - Class A
Advisor International Capital 44.94%
Appreciation - Class T
Advisor International Capital 44.20%
Appreciation - Class B
Advisor International Capital 48.30%
Appreciation - Class C
Advisor International Capital 50.90%
Appreciation - Institutional
Class
Advisor Europe Capital -0.47%
Appreciation - Class A
Advisor Europe Capital 1.71%
Appreciation - Class T
Advisor Europe Capital -0.20%
Appreciation - Class B
Advisor Europe Capital 3.90%
Appreciation - Class C
Advisor Europe Capital 5.80%
Appreciation - Institutional
Class
Advisor Overseas - Class A 135.34%
Advisor Overseas - Class T 140.39%
Advisor Overseas - Class B 142.82%
Advisor Overseas - Class C 142.85%
Advisor Overseas - 153.44%
Institutional Class
Advisor Diversified 23.00%
International - Class A
Advisor Diversified 25.64%
International - Class T
Advisor Diversified 24.60%
International - Class B
Advisor Diversified 28.60%
International - Class C
Advisor Diversified 30.80%
International -
Institutional Class
Advisor Global Equity - Class A 11.12%
Advisor Global Equity - Class T 13.58%
Advisor Global Equity - Class B 12.10%
Advisor Global Equity - Class C 16.10%
Advisor Global Equity - 18.10%
Institutional Class
</TABLE>
* Life of fund figures are from commencement of operations
(December 21, 1998 for Advisor Latin America; December 17, 1998 for
Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity; November 3, 1997
for Advisor International Capital Appreciation; April 23, 1990 for
Advisor Overseas) through the fiscal periods ended October 31, 1999.
Life of fund figures for Advisor Emerging Asia are from March 25, 1994
(commencement of operations of the Closed-End Fund) through the fiscal
period ended 1999.
Initial offering of each class of Advisor Emerging Asia took place
on June 16, 1999. Returns prior to June 16, 1999 are those of the
Closed-End Fund, which has no 12b-1 fee. If Class A's, Class T's,
Class B's and Class C's total expenses, including 12b-1 fees, had been
reflected, returns may have been lower.
1 Initial offering of Class A for Advisor Overseas took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T which reflect a 12b-1 fee of 0.50% (0.65% prior to
January 1, 1996). If Class A's 12b-1 fee had been reflected, returns
prior to September 3, 1996 would have been higher.
Initial offering of Class B of Advisor Overseas took place on July
3, 1995. Class B returns prior to July 3, 1995, are those of Class T
which reflect a 12b-1 fee of 0.65%. If Class B's 12b-1 fee had been
reflected, returns prior to July 3, 1995 would have been lower. Prior
to December 1, 1992, Advisor Overseas operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
Initial Offering of Class C of Advisor Overseas took place on
November 3, 1997. Class C returns prior to November 3, 1997 through
July 3, 1995 are those of Class B which reflect a 12b-1 fee of 1.00%.
Class C returns prior to July 3, 1995 are those of Class T which
reflect a 12b-1 fee of 0.65%. If Class C's 12b-1 fee had been
reflected, returns prior to July 3, 1995 would have been lower.
Prior to December 1, 1992, Advisor Overseas operated under a
different investment objective. Accordingly, the fund's historical
performance may not represent its current investment policies.
Note: If FMR had not reimbursed certain class expenses during
these periods, Class A's, Class T's, except for Advisor Overseas Class
B's, Class C's, and Institutional Class's returns would have been
lower.
HISTORICAL BOND FUND RESULTS. The following table shows each class's
yield, tax-equivalent yield, and returns for the fiscal period ended
October 31, 1999.
Class A and Class T of Advisor High Yield, Advisor High Income,
Advisor Government Investment, Advisor Mortgage Securities, and
Advisor Municipal Income have a maximum front-end sales charge of
4.75% and 3.50%, respectively, which is included in the yield, tax
equivalent yield, and average annual and cumulative returns. Class A
and Class T of Advisor Intermediate Bond has a maximum front-end sales
charge of 3.75% and 2.75%, respectively, which is included in the
yield and average annual and cumulative returns. Class A and Class T
of Advisor Short Fixed-Income has a maximum front-end sales charge of
1.50% which is included in the yield and average annual and cumulative
returns. Class B and Class C have a maximum CDSC of 5.00% and 1.00%,
respectively, which is included in the average annual and cumulative
returns.
Class A, Class T, Class B, and Class C of Advisor High Yield, Advisor
High Income, Advisor Government Investment, Advisor Intermediate Bond,
and Advisor Municipal Income have a 12b-1 fee of 0.15%, 0.25%, 0.90%
and 1.00%, respectively, which is included in the yield and average
annual and cumulative returns. Class A, Class T, and Class B of
Advisor Mortgage Securities have a 12b-1 fee of 0.15%, 0.25% and
0.90%, respectively, which is included in the yield and average annual
and cumulative returns. Class A, Class T, and Class C of Advisor Short
Fixed-Income have a 12b-1 fee of 0.15%, 0.15% and 1.00%, respectively,
which is included in the yield and average annual and cumulative
returns.
The tax-equivalent yield for Advisor Municipal Income is based on a
36 % federal income tax rate. Note that the municipal fund may
invest in securities whose income is subject to the federal
alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Average Annual Returns1
Thirty-Day Yield Tax Equivalent Yield One Year Five Years
Advisor High Yield - Class A 9.70% N/A 6.66% 8.75%
Advisor High Yield - Class T 9.73% N/A 7.91% 9.05%
Advisor High Yield - Class B 9.46% N/A 6.10% 8.77%
Advisor High Yield - Class C 9.35% N/A 10.00% 8.98%
Advisor High Yield - 10.54% N/A 12.05% 9.86%
Institutional Class
Advisor High Income - Class A N/A N/A N/A N/A
Advisor High Income - Class T N/A N/A N/A N/A
Advisor High Income - Class B N/A N/A N/A N/A
Advisor High Income - Class C N/A N/A N/A N/A
Advisor High Income - N/A N/A N/A N/A
Institutional Class
Advisor Government Investment 5.72% N/A -6.21% 5.94%
- - Class A
Advisor Government Investment 5.72% N/A -5.15% 6.12%
- - Class T
Advisor Government Investment 5.30% N/A -6.88% 5.88%
- - Class B
Advisor Government Investment 5.20% N/A -3.36% 6.13%
- - Class C
Advisor Government Investment 6.24% N/A -1.55% 7.07%
- - Institutional Class
Advisor Mortgage Securities - N/A N/A -1.96% 6.73%
Class A
Advisor Mortgage Securities - 6.01% N/A -0.78% 6.96%
Class T
Advisor Mortgage Securities - 5.66% N/A -2.49% 7.05%
Class B
Advisor Mortgage Securities - 6.53% N/A 3.09% 7.85%
Institutional Class
Advisor Mortgage Securities - 6.57% N/A 3.14% 7.91%
Initial Class
Advisor Intermediate Bond - 5.86% N/A -2.78% 5.27%
Class A
Advisor Intermediate Bond - 5.84% N/A -1.80% 5.46%
Class T
Advisor Intermediate Bond - 5.37% N/A -2.51% 5.34%
Class B
Advisor Intermediate Bond - 5.29% N/A -0.77% 5.24%
Class C
Advisor Intermediate Bond - 6.32% N/A 1.19% 6.33%
Institutional Class
Advisor Short Fixed-Income - 5.93% N/A 1.57% 5.02%
Class A
Advisor Short Fixed-Income - 5.91% N/A 1.57% 5.06%
Class T
Advisor Short Fixed-Income - 5.07% N/A 1.33% 5.03%
Class C
Advisor Short Fixed-Income - 6.20% N/A 3.27% 5.50%
Institutional Class
Advisor Municipal Income - 4.57% 7.14% -6.99% 5.19%
Class A
Advisor Municipal Income - 4.55% 7.11% -5.95% 5.46%
Class T
Advisor Municipal Income - 4.08% 6.38% -7.82% 5.16%
Class B
Advisor Municipal Income - 3.97% 6.20% -4.17% 5.41%
Class C
Advisor Municipal Income - 4.92% 7.69% -2.31% 6.36%
Institutional Class
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Cumulative Returns1
Ten Years/ Life of Fund One Year Five Years Ten Years/ Life of Fund
Advisor High Yield - Class A 12.75% 6.66% 52.14% 231.92%
Advisor High Yield - Class T 12.90% 7.91% 54.19% 236.38%
Advisor High Yield - Class B 12.84% 6.10% 52.24% 234.80%
Advisor High Yield - Class C 12.81% 10.00% 53.74% 233.76%
Advisor High Yield - 13.32% 12.05% 60.03% 249.13%
Institutional Class
Advisor High Income - Class A N/A N/A N/A -4.51%*
Advisor High Income - Class T N/A N/A N/A -3.27%*
Advisor High Income - Class B N/A N/A N/A -4.77%*
Advisor High Income - Class C N/A N/A N/A -0.91%*
Advisor High Income - N/A N/A N/A 0.28%*
Institutional Class
Advisor Government Investment 6.35% -6.21% 33.46% 85.13%
- - Class A
Advisor Government Investment 6.44% -5.15% 34.58% 86.68%
- - Class T
Advisor Government Investment 6.44% -6.88% 33.09% 86.61%
- - Class B
Advisor Government Investment 6.40% -3.36% 34.64% 85.98%
- - Class C
Advisor Government Investment 6.92% -1.55% 40.74% 95.23%
- - Institutional Class
Advisor Mortgage Securities - 7.24% -1.96% 38.46% 101.23%
Class A
Advisor Mortgage Securities - 7.36% -0.78% 39.98% 103.44%
Class T
Advisor Mortgage Securities - 7.56% -2.49% 40.61% 107.27%
Class B
Advisor Mortgage Securities - 7.81% 3.09% 45.92% 112.06%
Institutional Class
Advisor Mortgage Securities - 7.84% 3.14% 46.31% 112.63%
Initial Class
Advisor Intermediate Bond - 6.50% -2.78% 29.30% 87.73%
Class A
Advisor Intermediate Bond - 6.60% -1.80% 30.45% 89.40%
Class T
Advisor Intermediate Bond - 6.49% -2.51% 29.71% 87.54%
Class B
Advisor Intermediate Bond - 6.44% -0.77% 29.09% 86.64%
Class C
Advisor Intermediate Bond - 7.15% 1.19% 35.95% 99.52%
Institutional Class
Advisor Short Fixed-Income - 6.07% 1.57% 27.75% 80.35%
Class A
Advisor Short Fixed-Income - 6.09% 1.57% 27.98% 80.67%
Class T
Advisor Short Fixed-Income - 6.08% 1.33% 27.81% 80.43%
Class C
Advisor Short Fixed-Income - 6.32% 3.27% 30.68% 84.49%
Institutional Class
Advisor Municipal Income - 6.68% -6.99% 28.81% 90.98%
Class A
Advisor Municipal Income - 6.82% -5.95% 30.45% 93.42%
Class T
Advisor Municipal Income - 6.78% -7.82% 28.58% 92.69%
Class B
Advisor Municipal Income - 6.74% -4.17% 30.12% 92.01%
Class C
Advisor Municipal Income - 7.27% -2.31% 36.09% 101.78%
Institutional Class
</TABLE>
* For Advisor High Income, life of fund figures are from
commencement of operations (September 7, 1999) through the fund's
fiscal period ended October 31, 1999.
1 Initial offering of Class A for each fund (except Advisor High
Income and Advisor Mortgage Securities) took place on September 3,
1996. Class A returns prior to September 3, 1996 (except for Advisor
Intermediate Bond) are those of Class T which reflect a 12b-1 fee of
0.25% for Advisor High Yield, Advisor Government Investment, and
Advisor Municipal Income and 0.15% for Advisor Short Fixed-Income. If
Class A's 12b-1 fee had been reflected, returns prior to September 3,
1996 for Advisor High Yield, Advisor Government Investment, and
Advisor Municipal Income would have been higher. For Advisor
Intermediate Bond returns from September 3, 1996 through September 10,
1992 are those of Class T which reflect a 12b-1 fee of 0.25%. Class A
returns prior to September 10, 1992 are those of Institutional Class,
which has no 12b-1 fee. If Class A's 12b-1 fee had been reflected,
returns prior to September 3, 1996 through September 10, 1992 would
have been higher and returns prior to September 10, 1992 would have
been lower.
Initial offering of Class A, Class T, and Class B of Advisor Mortgage
Securities took place on March 3, 1997. Class A, Class T, and Class B
returns prior to March 3, 1997 are those of Initial Class which has no
12b-1 fee. If Class A's, Class T's, and Class B's respective 12b-1
fees had been reflected, returns prior to March 3, 1997 would have
been lower.
Initial offering of Class T of Advisor Intermediate Bond took place
on September 10, 1992. Class T returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class T's
12b-1 fee had been reflected, returns prior to September 10, 1992
would have been lower.
Initial offering of Class B of Advisor High Yield, Advisor Government
Investment, and Advisor Municipal Income took place on June 30, 1994.
Class B returns prior to June 30, 1994 are those of Class T which
reflect a 12b-1 fee of 0.25%. If Class B's 12b-1 fee had been
reflected, returns prior to June 30, 1994 would have been lower.
Initial offering of Class B of Advisor Intermediate Bond took place
on June 30, 1994. Class B returns prior to June 30, 1994 through
September 10, 1992 are those of Class T which reflect a 12b-1 fee of
0.25%. Class B returns prior to September 10, 1992 are those of
Institutional Class which has no 12b-1 fee. If Class B's 12b-1 fee had
been reflected, returns prior to June 30, 1994 would have been lower.
Initial offering of Class C for each fund (except Advisor High Income
and Advisor Mortgage Securities) took place on November 3, 1997.
Class C returns for Advisor High Yield, Advisor Government
Investment, and Advisor Municipal Income prior to November 3, 1997
through June 30, 1994 are those of Class B which reflect a 12b-1 fee
of 0.90% (1.00% prior to January 1, 1996). Class C returns prior to
June 30, 1994 are those of Class T which reflect a 12b-1 fee of 0.25%.
If Class C's 12b-1 fee had been reflected, returns prior to November
3, 1997 through January 1, 1996 and prior to June 30, 1994 would have
been lower.
Class C returns for Advisor Intermediate Bond prior to November 3,
1997 through June 30, 1994 are those of Class B which reflect a 12b-1
fee of 0.90% (1.00% prior to January 1, 1996). Class C returns prior
to June 30, 1994 through September 10, 1992 are those of Class T which
reflect a 12b-1 fee of 0.25%. Returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class C's
12b-1 fee had been reflected, returns prior to November 3, 1997
through January 1, 1996 and prior to June 30, 1994 would have been
lower.
Class C returns for Advisor Short Fixed-Income prior to November 3,
1997 are those of Class T which reflect a 12b-1 fee of 0.15%. If Class
C's 12b-1 fee had been reflected, returns would have been lower.
Initial offering of Institutional Class of Advisor High Yield,
Advisor Government Investment, Advisor Short Fixed-Income, and Advisor
Municipal Income took place on July 3, 1995. Institutional Class
returns prior to July 3, 1995 are those of Class T which reflect a
12b-1 fee of 0.25% for Advisor High Yield, Advisor Government
Investment, and Advisor Municipal Income; and 0.15% for Advisor Short
Fixed-Income. If Class T's 12b-1 fee had not been reflected, returns
prior to July 3, 1995 would have been higher.
Initial offering of Institutional Class of Advisor Mortgage
Securities took place on March 3, 1997. Institutional Class returns
prior to March 3, 1997 are those of Initial Class which has no 12b-1
fee.
Note: If FMR had not reimbursed certain class expenses during these
periods, Class A's, Class T's, Class B's, Class C's, and
Institutional Class's returns would have been lower.
The following tables show the income and capital elements of each
class's cumulative return. The tables compare each class's return to
the record of the S&P 500, the Dow Jones Industrial Average (DJIA),
and the cost of living, as measured by the Consumer Price Index (CPI),
over the same period. The S&P 500 and DJIA comparisons are provided to
show how each class's return compared to the record of a market
capitalization-weighted index of common stocks and a narrower set of
stocks of major industrial companies, respectively, over the same
period. Because each of Advisor High Yield, Advisor High Income,
Advisor Government Investment, Advisor Mortgage Securities, Advisor
Intermediate Bond, Advisor Short Fixed-Income, and Advisor Municipal
Income invests in fixed-income securities, common stocks represent a
different type of investment from the funds. Common stocks generally
offer greater growth potential than the funds, but generally
experience greater price volatility, which means greater potential for
loss. In addition, common stocks generally provide lower income than
fixed-income investments such as the funds. Each of Advisor Latin
America, Advisor Japan, Advisor Europe Capital Appreciation, Advisor
International Capital Appreciation, Advisor Overseas, Advisor
Diversified International, Advisor Global Equity and Advisor Emerging
Asia has the ability to invest in securities not included in either
index, and its investment portfolio may or may not be similar in
composition to the indexes. The S&P 500 and DJIA returns are based on
the prices of unmanaged groups of stocks and, unlike each class's
returns, do not include the effect of brokerage commissions or other
costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each class of each fund during the 10-year
period ended October 31, 1999 or life of each fund, as applicable,
assuming all distributions were reinvested. Returns are based on past
results and are not an indication of future performance. Tax
consequences of different investments (with the exception of foreign
tax withholdings) have not been factored into the figures below.
During the period from December 21, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class A of
Advisor Latin America would have grown to $ 10,971 , including
the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR LATIN AMERICA - CLASS A
Period Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 10,971 $ 0 $ 0 $ 10,971
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR LATIN AMERICA - CLASS A INDEXES
Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,454 $ 12,097 $ 10,262
</TABLE>
* From December 21, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Latin America on December 21, 1998, assuming the maximum sales
charge had been in effect, the net amount invested in Class A shares
was $ 9,425 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 21, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class T of
Advisor Latin America would have grown to $ 11,213 , including
the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR LATIN AMERICA - CLASS T
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 11,213 $ 0 $ 0 $ 11,213
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR LATIN AMERICA - CLASS T INDEXES
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,454 $ 12,097 $ 10,262
</TABLE>
* From December 21, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Latin America on December 21, 1998, assuming the maximum sales
charge had been in effect, the net amount invested in Class T shares
was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 21, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class B of
Advisor Latin America would have grown to $ 11,080 , including
the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR LATIN AMERICA - CLASS B
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 11,080 $ 0 $ 0 $ 11,080
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR LATIN AMERICA - CLASS B INDEXES
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,454 $ 12,097 $ 10,262
</TABLE>
* From December 21, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Latin America on December 21, 1998, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 21, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class C of
Advisor Latin America would have grown to $ 11,470 , including
the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR LATIN AMERICA - CLASS C
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 11,470 $ 0 $ 0 $ 11,470
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR LATIN AMERICA - CLASS C INDEXES
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,454 $ 12,097 $ 10,262
</TABLE>
* From December 21, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Latin America on December 21, 1998, the net amount invested in
Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 21, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in
Institutional Class of Advisor Latin America would have grown to $
11,670 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR LATIN AMERICA -
InstitutionaL CLASS
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 11,670 $ 0 $ 0 $ 11,670
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR LATIN AMERICA - INDEXES
InstitutionaL CLASS
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,454 $ 12,097 $ 10,262
</TABLE>
* From December 21, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Latin America on December 21, 1998, the
net amount invested in Class C shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 10,000 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 0 for dividends and $ 0 for capital gain distributions.
During the period from March 25, 1994 (commencement of operations
of the Closed-End Fund) to October 31, 1999, a hypothetical
$10,000 investment in Class A of Advisor Emerging Asia would have
grown to $ 10,887 , including the effect of Class A's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR EMERGING ASIA - CLASS A
Period Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
October 31 Investment Distributions Gain Distributions
1999 $ 10,033 $ 260 $ 594 $ 10,887
1998 $ 6,424 $ 166 $ 380 $ 6,970
1997 $ 7,747 $ 111 $ 288 $ 8,146
1996 $ 10,655 $ 145 $ 94 $ 10,894
1995 $ 9,318 $ 88 $ 82 $ 9,488
1994* $ 10,702 $ 0 $ -15 $ 10,687
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR EMERGING ASIA - CLASS A INDEXES
Period Ended S&P 500 DJIA Cost of Living**
October 31
1999 $ 33,137 $ 31,854 $ 11,426
1998 $ 26,368 $ 25,113 $ 11,141
1997 $ 21,615 $ 21,386 $ 10,978
1996 $ 16,361 $ 17,010 $ 10,754
1995 $ 13,184 $ 13,130 $ 10,442
1994* $ 10,427 $ 10,524 $ 10,156
</TABLE>
* From March 25, 1994 (commencement of operations of the Closed-End
Fund) .
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Emerging Asia on March 25, 1994, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,425 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,685 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 196 for
dividends and $ 480 for capital gain distributions. Initial
offering of Class A of Advisor Emerging Asia took place on June 16,
1999. Returns prior to June 16, 1999 are those of the Closed-End Fund,
which had no 12b-1 fee. If Class A's total expenses, including 12b-1
fee, had been reflected, returns may have been lower.
During the period from March 25, 1994 (commencemen t of operations
of the Closed-End Fund ) to October 31, 1999, a hypothetical
$10,000 investment in Class T of Advisor Emerging Asia would have
grown to $ 11,147 , including the effect of Class T's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR EMERGING ASIA - CLASS T
Period Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,273 $ 266 $ 608 $ 11,147
1998 $ 6,577 $ 171 $ 389 $ 7,137
1997 $ 7,932 $ 113 $ 295 $ 8,340
1996 $ 10,909 $ 149 $ 96 $ 11,154
1995 $ 9,540 $ 91 $ 84 $ 9,715
1994* $ 10,957 $ 0 $ -15 $ 10,942
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR EMERGING ASIA - CLASS T INDEXES
Period Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 33,137 $ 31,854 $ 11,426
1998 $ 26,368 $ 25,113 $ 11,141
1997 $ 21,615 $ 21,386 $ 10,978
1996 $ 16,361 $ 17,010 $ 10,754
1995 $ 13,184 $ 13,130 $ 10,442
1994* $ 10,427 $ 10,524 $ 10,156
</TABLE>
* From March 25, 1994 (commencement of operations of the Closed-End
Fund ).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Emerging Asia on March 25, 1994, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,702 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 198 for
dividends and $ 486 for capital gain distributions. Initial
offering of Class T of Advisor Emerging Asia took place on June
16, 1999. Returns prior to June 16, 1999 are those of the Closed-End
Fund, which had no 12b-1 fee. If Class T's total expenses, including
12b-1 fee, had been reflected, returns may have been lower.
During the period from March 25, 1994 (commencement of operations
of the Closed-End Fund ) to October 31, 1999, a hypothetical
$10,000 investment in Class B of Advisor Emerging Asia would have
grown to $ 11,428 , including the effect of Class B's maximum
CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR EMERGING ASIA - CLASS B
Period Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,524 $ 275 $ 629 $ 11,428
1998 $ 6,816 $ 176 $ 404 $ 7,396
1997 $ 8,220 $ 118 $ 305 $ 8,643
1996 $ 11,305 $ 153 $ 100 $ 11,558
1995 $ 9,887 $ 93 $ 87 $ 10,067
1994* $ 11,355 $ 0 $ -16 $ 11,339
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR EMERGING ASIA - CLASS B INDEXES
Period Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 33,137 $ 31,854 $ 11,426
1998 $ 26,368 $ 25,113 $ 11,141
1997 $ 21,615 $ 21,386 $ 10,978
1996 $ 16,361 $ 17,010 $ 10,754
1995 $ 13,184 $ 13,130 $ 10,442
1994* $ 10,427 $ 10,524 $ 10,156
</TABLE>
* From March 25, 1994 (commencement of operations of the Closed-End
Fund ).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Emerging Asia on March 25, 1994, the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 10,727 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 206 for
dividends and $ 504 for capital gain distributions. Initial
offering of Class B of Advisor Emerging Asia took place on June 16,
1999. Returns prior to June 16, 1999 are those of the Closed-End Fund,
which had no 12b-1 fee. If Class B's total expenses, including 12b-1
fee, had been reflected, returns may have been lower.
During the period from March 25, 1994 (commencement of operation s
of the Closed-End Fund ) to October 31, 1999, a hypothetical
$10,000 investment in Class C of Advisor Emerging Asia would have
grown to $ 11,521 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR EMERGING ASIA - CLASS C
Period Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,617 $ 275 $ 629 $ 11,521
1998 $ 6,816 $ 176 $ 404 $ 7,396
1997 $ 8,220 $ 118 $ 305 $ 8,643
1996 $ 11,305 $ 153 $ 100 $ 11,558
1995 $ 9,887 $ 93 $ 87 $ 10,067
1994* $ 11,355 $ 0 $ -16 $ 11,339
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR EMERGING ASIA - CLASS C INDEXES
Period Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 33,137 $ 31,854 $ 11,426
1998 $ 26,368 $ 25,113 $ 11,141
1997 $ 21,615 $ 21,386 $ 10,978
1996 $ 16,361 $ 17,010 $ 10,754
1995 $ 13,184 $ 13,130 $ 10,442
1994* $ 10,427 $ 10,524 $ 10,156
</TABLE>
* From Ma rch 25, 1994 (commencement of operations of the
Closed-End Fund).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C
of Advisor Emerging Asia on March 25, 1994, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 10,727
. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $ 206
for dividends and $ 504 for capital gain distributions. Initial
offering of Class C of Advisor Emerging Asia too k place on June
16, 1999. Returns prior to June 16, 1999 are those of the Closed-End
Fund, which had no 12b-1 fee. If Class C's total expenses, including
12b-1 fee, had been reflected, returns may have been lower.
During the period from March 25, 1994 (commencement of operations
of the Closed-End Fund) to October 31, 1999, a hypothetical
$10,000 investment in Institutional Class of Advisor Emerging Asia
would have grown to $ 11,567 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR EMERGING ASIA -
INSTITUTIONAL CLASS
Period Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,660 $ 276 $ 631 $ 11,567
1998 $ 6,816 $ 176 $ 404 $ 7,396
1997 $ 8,220 $ 118 $ 305 $ 8,643
1996 $ 11,305 $ 153 $ 100 $ 11,558
1995 $ 9,887 $ 93 $ 87 $ 10,067
1994* $ 11,355 $ 0 $ -16 $ 11,339
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR EMERGING ASIA - INDEXES
INSTITUTIONAL CLASS
Period Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 33,137 $ 31,854 $ 11,426
1998 $ 26,368 $ 25,113 $ 11,141
1997 $ 21,615 $ 21,386 $ 10,978
1996 $ 16,361 $ 17,010 $ 10,754
1995 $ 13,184 $ 13,130 $ 10,442
1994* $ 10,427 $ 10,524 $ 10,156
</TABLE>
* From March 25, 1994 (commencement of operations of the Closed-End
Fund).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Emerging Asia on March 25, 1994,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 10,727 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 206 for dividends and $ 504 for capital gain
distributions. Initial offering of Institutional Class of Advisor
Emerging Asia took place on June 16, 1999. Returns prior to June
16, 1999 are those of the Closed-End Fund.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class A of
Advisor Japan would have grown to $ 17,945 , including the effect
of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR JAPAN - CLASS A
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 17,945 $ 0 $ 0 $ 17,945
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR JAPAN - CLASS A INDEXES
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Japan on December 17, 1998, assuming the maximum sales charge
had been in effect, the net amount invested in Class A shares was $
9,425 . The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 10,000 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 0 for dividends and $ 0 for
capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class T of
Advisor Japan would have grown to $ 18,345 , including the effect
of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR JAPAN - CLASS T
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 18,345 $ 0 $ 0 $ 18,345
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR JAPAN - CLASS T INDEXES
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Japan on December 17, 1998, assuming the maximum sales charge
had been in effect, the net amount invested in Class T shares was $
9,650 . The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 10,000 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 0 for dividends and $ 0 for
capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class B of
Advisor Japan would have grown to $ 18,420 , including the effect
of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR JAPAN - CLASS B
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 18,420 $ 0 $ 0 $ 18,420
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR JAPAN - CLASS B INDEXES
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Japan on December 17, 1998, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class C of
Advisor Japan would have grown to $ 18,830 , including the effect
of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR JAPAN - CLASS C
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 18,830 $ 0 $ 0 $ 18,830
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR JAPAN - CLASS C INDEXES
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Japan on December 17, 1998, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in
Institutional Class of Advisor Japan would have grown to $ 19,090
.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR JAPAN - InstitutionaL
CLASS
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 19,090 $ 0 $ 0 $ 19,090
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR JAPAN - InstitutionaL INDEXES
CLASS
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Japan on December 17, 1998, the net
amount invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 10,000
. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $ 0 for
dividends and $ 0 for capital gain distributions.
During the period from November 3, 1997 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class A of
Advisor International Capital Appreciation would have amounted to $
14,194 , including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor International Capital
Appreciation - CLASS A
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 14,194 $ 0 $ 0 $ 14,194
1998* $ 9,491 $ 0 $ 0 $ 9,491
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor International Capital INDEXES
Appreciation - CLASS A
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 14,930 $ 14,442 $ 10,408
1998* $ 11,880 $ 11,385 $ 10,149
</TABLE>
* From November 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor International Capital Appreciation on November 3, 1997,
assuming the maximum sales charge had been in effect, the net amount
invested in Class A shares was $ 9,425 . The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $10,000. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from November 3, 1997 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class T of
Advisor International Capital Appreciation would have amounted to $
14,494 , including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor International Capital
Appreciation - CLASS T
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 14,494 $ 0 $ 0 $ 14,494
1998* $ 9,689 $ 0 $ 0 $ 9,689
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor International Capital INDEXES
Appreciation - CLASS T
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 14,930 $ 14,442 $ 10,408
1998* $ 11,880 $ 11,385 $ 10,149
</TABLE>
* From November 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor International Capital Appreciation on November 3, 1997,
assuming the maximum sales charge had been in effect, the net amount
invested in Class T shares was $ 9,650 . The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $10,000. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from November 3, 1997 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class B of
Advisor International Capital Appreciation would have amounted to $
14,420 , including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor International Capital
Appreciation - CLASS B
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 14,420 $ 0 $ 0 $ 14,420
1998* $ 9,990 $ 0 $ 0 $ 9,990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor International Capital INDEXES
Appreciation - CLASS B
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 14,930 $ 14,442 $ 10,408
1998* $ 11,880 $ 11,385 $ 10,149
</TABLE>
* From November 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor International Capital Appreciation on November 3, 1997, the
net amount invested in Class B shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 10,000 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 0 for dividends and $ 0 for capital gain distributions.
During the period from November 3, 1997 (commencement of operations)
to October 31, 1998, a hypothetical $10,000 investment in Class C of
Advisor International Capital Appreciation would have amounted to $
14,830.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor International Capital
Appreciation - CLASS C
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 14,830 $ 0 $ 0 $ 14,830
1998* $ 9,980 $ 0 $ 0 $ 9,980
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor International Capital INDEXES
Appreciation - CLASS C
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 14,930 $ 14,442 $ 10,408
1998* $ 11,880 $ 11,385 $ 10,149
</TABLE>
* From November 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor International Capital Appreciation on November 3, 1997, the
net amount invested in Class C shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $10,000. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $ 0 for
dividends and $ 0 for capital gain distributions.
During the period from November 3, 1997 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in
Institutional Class of Advisor International Capital Appreciation
would have grown to $ 15,090 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor International Capital
Appreciation -
INSTITUTIONAL CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 15,090 $ 0 $ 0 $ 15,090
1998* $ 10,090 $ 0 $ 0 $ 10,090
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor International Capital INDEXES
Appreciation -
INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 14,930 $ 14,442 $ 10,408
1998* $ 11,880 $ 11,385 $ 10,149
</TABLE>
* From November 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor International Capital Appreciation on
November 3, 1997, the net amount invested in Institutional Class
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $10,000. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 0 for dividends and $ 0 for
capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class A of
Advisor Europe Capital Appreciation would have amounted to $ 9,953
, including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR EUROPE CAPITAL
APPRECIATION - CLASS A
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 9,953 $ 0 $ 0 $ 9,953
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR EUROPE CAPITAL INDEXES
APPRECIATION - CLASS A
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Europe Capital Appreciation on December 17, 1998, assuming the
maximum sales charge had been in effect, the net amount invested in
Class A shares was $ 9,425 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class T of
Advisor Europe Capital Appreciation would have grown to $ 10,171
, including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR EUROPE CAPITAL
APPRECIATION - CLASS T
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 10,171 $ 0 $ 0 $ 10,171
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR EUROPE CAPITAL INDEXES
APPRECIATION - CLASS T
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Europe Capital Appreciation on December 17, 1998, assuming the
maximum sales charge had been in effect, the net amount invested in
Class T shares was $ 9,650 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class B of
Advisor Europe Capital Appreciation would have amounted to $ 9,980
, including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR Europe Capital
Appreciation - CLASS B
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 9,980 $ 0 $ 0 $ 9,980
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR Europe Capital INDEXES
Appreciation - CLASS B
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Europe Capital Appreciation on December 17, 1998, the net
amount invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 10,000
. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $ 0 for
dividends and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class C of
Advisor Europe Capital Appreciation would have grown to $ 10,390
, including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR Europe Capital
Appreciation - CLASS C
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 10,390 $ 0 $ 0 $ 10,390
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR Europe Capital INDEXES
Appreciation - CLASS C
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Europe Capital Appreciation on December 17, 1998, the net
amount invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 10,000
. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $ 0 for
dividends and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in
Institutional Class of Advisor Europe Capital Appreciation would have
grown to $ 10,580 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR Europe Capital
Appreciation - InstitutionaL
CLASS
Fiscal Period
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 10,580 $ 0 $ 0 $ 10,580
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR Europe Capital INDEXES
Appreciation - InstitutionaL
CLASS
Fiscal Period Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Europe Capital Appreciation on December
17, 1998, the net amount invested in Institutional Class shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 10,000 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 0 for dividends and $ 0 for
capital gain distributions.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1999, a hypothetical $10,000 investment in
Class A of Advisor Overseas would have grown to $ 23,534 ,
including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor OVERSEAS - CLASS A
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 19,406 $ 1,607 $ 2,521 $ 23,534
1998 $ 15,382 $ 1,153 $ 1,844 $ 18,379
1997 $ 15,919 $ 959 $ 840 $ 17,718
1996 $ 14,411 $ 616 $ 123 $ 15,150
1995 $ 13,120 $ 472 $ 103 $ 13,695
1994 $ 13,252 $ 478 $ 0 $ 13,730
1993 $ 12,187 $ 419 $ 0 $ 12,606
1992 $ 8,548 $ 199 $ 0 $ 8,747
1991 $ 9,218 $ 76 $ 0 $ 9,294
1990* $ 9,001 $ 0 $ 0 $ 9,001
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor OVERSEAS - CLASS A INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 52,137 $ 51,048 $ 13,049
1998 $ 41,487 $ 40,245 $ 12,723
1997 $ 34,008 $ 34,273 $ 12,537
1996 $ 25,742 $ 27,259 $ 12,281
1995 $ 20,744 $ 21,042 $ 11,924
1994 $ 16,406 $ 16,865 $ 11,598
1993 $ 15,795 $ 15,458 $ 11,303
1992 $ 13,741 $ 13,162 $ 11,001
1991 $ 12,495 $ 12,158 $ 10,659
1990* $ 9,359 $ 9,347 $ 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Overseas on April 23, 1990, assuming the maximum sales charge
had been in effect, the net amount invested in Class A shares was $
9,425 . The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 12,901 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 943 for dividends and $ 1,734 for
capital gain distributions. Initial offering of Class A of Overseas
took place on September 3, 1996. Class A returns prior to September 3,
1996 are those of Class T, which reflect a 12b-1 fee of 0.50% (0.65%
prior to January 1, 1996). If Class A's 12b-1 fee had been reflected,
returns prior to September 3, 1996 would have been higher. Prior to
December 1, 1992, Advisor Overseas operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1999, a hypothetical $10,000 investment in
Class T of Advisor Overseas would have grown to $ 24,039 ,
including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor OVERSEAS - CLASS T
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 20,101 $ 1,360 $ 2,578 $ 24,039
1998 $ 15,903 $ 1,032 $ 1,884 $ 18,819
1997 $ 16,424 $ 885 $ 862 $ 18,171
1996 $ 14,765 $ 631 $ 126 $ 15,522
1995 $ 13,433 $ 484 $ 105 $ 14,022
1994 $ 13,568 $ 489 $ 0 $ 14,057
1993 $ 12,477 $ 430 $ 0 $ 12,907
1992 $ 8,753 $ 202 $ 0 $ 8,955
1991 $ 9,438 $ 77 $ 0 $ 9,515
1990* $ 9,216 $ 0 $ 0 $ 9,216
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor OVERSEAS - CLASS T INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 52,137 $ 51,048 $ 13,049
1998 $ 41,487 $ 40,245 $ 12,723
1997 $ 34,008 $ 34,273 $ 12,537
1996 $ 25,742 $ 27,259 $ 12,281
1995 $ 20,744 $ 21,042 $ 11,924
1994 $ 16,406 $ 16,865 $ 11,598
1993 $ 15,795 $ 15,458 $ 11,303
1992 $ 13,741 $ 13,162 $ 11,001
1991 $ 12,495 $ 12,158 $ 10,659
1990* $ 9,359 $ 9,347 $ 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Overseas on April 23, 1990, assuming the maximum sales charge
had been in effect, the net amount invested in Class T shares was $
9,650 . The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 12,736 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 762 for dividends and $ 1,776 for
capital gain distributions. Prior to December 1, 1992, Advisor
Overseas operated under a different investment objective. Accordingly,
the fund's historical performance may not represent its current
investment policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1999, a hypothetical $10,000 investment in
Class B of Advisor Overseas would have grown to $ 24,282 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor OVERSEAS - CLASS B
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 20,250 $ 1,376 $ 2,656 $ 24,282
1998 $ 16,080 $ 1,092 $ 1,948 $ 19,120
1997 $ 16,690 $ 981 $ 891 $ 18,562
1996 $ 15,060 $ 756 $ 129 $ 15,945
1995 $ 13,920 $ 502 $ 109 $ 14,531
1994 $ 14,060 $ 507 $ 0 $ 14,567
1993 $ 12,930 $ 445 $ 0 $ 13,375
1992 $ 9,070 $ 210 $ 0 $ 9,280
1991 $ 9,780 $ 80 $ 0 $ 9,860
1990* $ 9,550 $ 0 $ 0 $ 9,550
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor OVERSEAS - CLASS B INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 52,137 $ 51,048 $ 13,049
1998 $ 41,487 $ 40,245 $ 12,723
1997 $ 34,008 $ 34,273 $ 12,537
1996 $ 25,742 $ 27,259 $ 12,281
1995 $ 20,744 $ 21,042 $ 11,924
1994 $ 16,406 $ 16,865 $ 11,598
1993 $ 15,795 $ 15,458 $ 11,303
1992 $ 13,741 $ 13,162 $ 11,001
1991 $ 12,495 $ 12,158 $ 10,659
1990* $ 9,359 $ 9,347 $ 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Overseas on April 23, 1990, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 12,829 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 780 for
dividends and $ 1,840 for capital gain distributions. Initial
offering of Advisor Class B of Advisor Overseas took place on July 3,
1995. Class B returns prior to July 3, 1995 are those of Class T which
reflect a 12b-1 fee of 0.65%. If Class B's 12b-1 fee had been
reflected, returns prior to July 3, 1995 would have been lower. Prior
to December 1, 1992, Advisor Overseas operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1999 a hypothetical $10,000 investment in
Class C of Advisor Overseas would have grown to $ 24,285 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor OVERSEAS - CLASS C
Fiscal Year Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 20,174 $ 1,494 $ 2,617 $ 24,285
1998 $ 16,047 $ 1,120 $ 1,923 $ 19,090
1997 $ 16,690 $ 980 $ 892 $ 18,562
1996 $ 15,060 $ 756 $ 129 $ 15,945
1995 $ 13,920 $ 502 $ 109 $ 14,531
1994 $ 14,060 $ 507 $ 0 $ 14,567
1993 $ 12,930 $ 445 $ 0 $ 13,375
1992 $ 9,070 $ 210 $ 0 $ 9,280
1991 $ 9,780 $ 80 $ 0 $ 9,860
1990* $ 9,550 $ 0 $ 0 $ 9,550
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor OVERSEAS - CLASS C INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 52,137 $ 51,048 $ 13,049
1998 $ 41,487 $ 40,245 $ 12,723
1997 $ 34,008 $ 34,273 $ 12,537
1996 $ 25,742 $ 27,259 $ 12,281
1995 $ 20,744 $ 21,042 $ 11,924
1994 $ 16,406 $ 16,865 $ 11,598
1993 $ 15,795 $ 15,458 $ 11,303
1992 $ 13,741 $ 13,162 $ 11,001
1991 $ 12,495 $ 12,158 $ 10,659
1990* $ 9,359 $ 9,347 $ 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Overseas on April 23, 1990, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 12,905 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 866 for
dividends and $ 1,818 for capital gain distributions. Initial
offering of Class C of Advisor Overseas took place on November 3,
1997. Class C returns prior to November 3, 1997 through July 3, 1995
are those of Class B which reflect a 12b-1 fee of 1.00%. Class C
returns prior to July 3, 1995 are those of Class T which reflect a
12b-1 fee of 0.65%. If Class C's 12b-1 fee had been reflected, returns
prior to July 3, 1995 would have been lower. Prior to December 1,
1992, Advisor Overseas operated under a different investment
objective. Accordingly, the fund's historical performance may not
represent its current investment policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1999, a hypothetical $10,000 investment in
Institutional Class of Advisor Overseas would have grown to $ 25,344
.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor OVERSEAS -
INSTITUTIONAL CLASS
Fiscal Year Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 20,620 $ 2,019 $ 2,705 $ 25,344
1998 $ 16,360 $ 1,412 $ 1,981 $ 19,753
1997 $ 16,920 $ 1,151 $ 902 $ 18,973
1996 $ 15,200 $ 785 $ 130 $ 16,115
1995 $ 13,970 $ 504 $ 109 $ 14,583
1994 $ 14,060 $ 507 $ 0 $ 14,567
1993 $ 12,930 $ 445 $ 0 $ 13,375
1992 $ 9,070 $ 210 $ 0 $ 9,280
1991 $ 9,780 $ 80 $ 0 $ 9,860
1990* $ 9,550 $ 0 $ 0 $ 9,550
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor OVERSEAS - INDEXES
INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 52,137 $ 51,048 $ 13,049
1998 $ 41,487 $ 40,245 $ 12,723
1997 $ 34,008 $ 34,273 $ 12,537
1996 $ 25,742 $ 27,259 $ 12,281
1995 $ 20,744 $ 21,042 $ 11,924
1994 $ 16,406 $ 16,865 $ 11,598
1993 $ 15,795 $ 15,458 $ 11,303
1992 $ 13,741 $ 13,162 $ 11,001
1991 $ 12,495 $ 12,158 $ 10,659
1990* $ 9,359 $ 9,347 $ 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Overseas on April 23, 1990, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 13,319 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 1,200 for dividends and $ 1,840 for capital gain
distributions. Initial offering of Institutional Class of Advisor
Overseas took place on July 3, 1995. Institutional Class returns prior
to July 3, 1995 are those of Class T which reflect a 12b-1 fee of
0.65%. Returns for Institutional Class prior to July 3, 1995 would
have been higher if Class T's 12b-1 fee had not been reflected. Prior
to December 1, 1992, Advisor Overseas operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class A of
Advisor Diversified International would have amounted to $ 12,300
, including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor DIVERSIFIED
International - CLASS A
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 12,300 $ 0 $ 0 $ 12,300
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor DIVERSIFIED INDEXES
International - CLASS A
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Diversified International on December 17, 1998, assuming the
maximum sales charge had been in effect, the net amount invested in
Class A shares was $ 9,425 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $10,000. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $ 0 for dividends and $ 0
for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class T of
Advisor Diversified International would have amounted to $ 12,564
, including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor DIVERSIFIED
International - CLASS T
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 12,564 $ 0 $ 0 $ 12,564
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor DIVERSIFIED INDEXES
International - CLASS T
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Diversified International on December 17, 1998,
assuming the maximum sales charge had been in effect, the net amount
invested in Class T shares was $ 9,650 . The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $10,000. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class B of
Advisor Diversified International would have amounted to $ 12,460
, including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor DIVERSIFIED
International - CLASS B
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 12,460 $ 0 $ 0 $ 12,460
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor DIVERSIFIED INDEXES
International - CLASS B
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Diversified International on December 17, 1998, the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $10,000. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class C of
Advisor Diversified International would have amounted to $ 12,860
, including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor DIVERSIFIED
International - CLASS C
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 12,860 $ 0 $ 0 $ 12,860
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor DIVERSIFIED INDEXES
International - CLASS C
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Diversified International on December 17, 1998, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $10,000. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in
Institutional Class of Advisor Diversified International would have
grown to $ 13,080 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor DIVERSIFIED
International -
INSTITUTIONAL CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 13,080 $ 0 $ 0 $ 13,080
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor DIVERSIFIED INDEXES
International -
INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Diversified International on December
17, 1998, the net amount invested in Institutional Class shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $10,000. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 0 for dividends and $ 0 for
capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class A of
Advisor Global Equity would have amounted to $ 11,112 , including
the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor GLOBAL EQUITY - CLASS A
Fiscal Year Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 11,112 $ 0 $ 0 $ 11,112
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor GLOBAL EQUITY - CLASS A INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Global Equity on December 17, 1998, assuming the
maximum sales charge had been in effect, the net amount invested in
Class A shares was $ 9,425 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $10,000. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $ 0 for dividends and $ 0
for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class T of
Advisor Global Equity would have amounted to $ 11,358 , including
the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor GLOBAL EQUITY - CLASS T
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 11,358 $ 0 $ 0 $ 11,358
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor GLOBAL EQUITY - CLASS T INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Global Equity on December 17, 1998, assuming the
maximum sales charge had been in effect, the net amount invested in
Class T shares was $ 9,650 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $10,000. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $ 0 for dividends and $ 0
for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class B of
Advisor Global Equity would have amounted to $ 11,210 , including
the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor GLOBAL EQUITY - CLASS B
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 11,210 $ 0 $ 0 $ 11,210
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor GLOBAL EQUITY - CLASS B INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Global Equity on December 17, 1998, the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $10,000. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in Class C of
Advisor Global Equity would have amounted to $ 11,610 , including
the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor GLOBAL EQUITY - CLASS C
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 11,610 $ 0 $ 0 $ 11,610
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor GLOBAL EQUITY - CLASS C INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Global Equity on December 17, 1998, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $10,000. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 17, 1998 (commencement of operations)
to October 31, 1999, a hypothetical $10,000 investment in
Institutional Class of Advisor Global Equity would have grown to $
11,810 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Advisor GLOBAL EQUITY -
INSTITUTIONAL CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999* $ 11,810 $ 0 $ 0 $ 11,810
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisor GLOBAL EQUITY - INDEXES
INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living**
1999* $ 11,677 $ 12,253 $ 10,262
</TABLE>
* From December 17, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Global Equity on December 17, 1998
, the net amount invested in Institutional Class shares was $10,000.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $10,000. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $ 0 for dividends and $ 0 for capital
gain distributions.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class A of Advisor High Yield would have grown
to $ 33,192 , including the effect of Class A's maximum sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS A
Fiscal Year Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 11,808 $ 19,521 $ 1,863 $ 33,192
1998 $ 11,776 $ 16,342 $ 1,523 $ 29,641
1997 $ 13,730 $ 16,282 $ 1,041 $ 31,053
1996 $ 13,061 $ 13,041 $ 858 $ 26,960
1995 $ 12,647 $ 10,431 $ 831 $ 23,909
1994 $ 11,914 $ 8,083 $ 783 $ 20,780
1993 $ 12,753 $ 7,102 $ 390 $ 20,245
1992 $ 11,755 $ 5,051 $ 0 $ 16,806
1991 $ 10,746 $ 3,034 $ 0 $ 13,780
1990 $ 8,654 $ 1,212 $ 0 $ 9,866
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS A INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor High Yield on November 1, 1989, assuming the maximum sales
charge had been in effect, the net amount invested in Class A shares
was $ 9,525 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 31,777 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 11,117 for
dividends and $ 1,041 for capital gain distributions. Initial
offering of Class A of Advisor High Yield took place on September 3,
1996. Class A returns prior to September 3, 1996 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class A's 12b-1 fee had been
reflected, returns prior to September 3, 1996 would have been higher.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class T of Advisor High Yield would have grown
to $ 33,638 , including the effect of Class T's maximum sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS T
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 11,985 $ 19,763 $ 1,890 $ 33,638
1998 $ 11,952 $ 16,582 $ 1,546 $ 30,080
1997 $ 13,921 $ 16,535 $ 1,056 $ 31,512
1996 $ 13,243 $ 13,239 $ 870 $ 27,352
1995 $ 12,813 $ 10,567 $ 842 $ 24,222
1994 $ 12,071 $ 8,189 $ 793 $ 21,053
1993 $ 12,920 $ 7,196 $ 395 $ 20,511
1992 $ 11,909 $ 5,117 $ 0 $ 17,026
1991 $ 10,887 $ 3,073 $ 0 $ 13,960
1990 $ 8,768 $ 1,227 $ 0 $ 9,995
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS T INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor High Yield on November 1, 1989, assuming the maximum sales
charge had been in effect, the net amount invested in Class T shares
was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 32,021 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 11,248 for
dividends and $ 1,054 for capital gain distributions.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class B of Advisor High Yield would have grown
to $ 33,480 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS B
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 12,363 $ 19,192 $ 1,925 $ 33,480
1998 $ 12,341 $ 16,215 $ 1,580 $ 30,136
1997 $ 14,370 $ 16,299 $ 1,088 $ 31,757
1996 $ 13,690 $ 13,184 $ 899 $ 27,773
1995 $ 13,255 $ 10,649 $ 871 $ 24,775
1994 $ 12,497 $ 8,391 $ 821 $ 21,709
1993 $ 13,389 $ 7,457 $ 409 $ 21,255
1992 $ 12,341 $ 5,303 $ 0 $ 17,644
1991 $ 11,282 $ 3,185 $ 0 $ 14,467
1990 $ 9,086 $ 1,272 $ 0 $ 10,358
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS B INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor High Yield on November 1, 1989, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 31,467 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 11,161 for
dividends and $ 1,093 for capital gain distributions. Initial
offering of Class B of Advisor High Yield took place on June 30, 1994.
Class B returns prior to June 30, 1994 are those of Class T which
reflect a 12b-1 fee of 0.25%. If Class B's 12b-1 fee had been
reflected, returns prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class C of Advisor High Yield would have grown
to $ 33,376 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS C
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 12,357 $ 19,098 $ 1,921 $ 33,376
1998 $ 12,335 $ 16,155 $ 1,578 $ 30,068
1997 $ 14,370 $ 16,299 $ 1,088 $ 31,757
1996 $ 13,690 $ 13,184 $ 899 $ 27,773
1995 $ 13,255 $ 10,649 $ 871 $ 24,775
1994 $ 12,497 $ 8,391 $ 821 $ 21,709
1993 $ 13,389 $ 7,457 $ 409 $ 21,255
1992 $ 12,341 $ 5,303 $ 0 $ 17,644
1991 $ 11,282 $ 3,185 $ 0 $ 14,467
1990 $ 9,086 $ 1,272 $ 0 $ 10,358
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS C INDEXES
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor High Yield on November 1, 1989, the net amount invested in
Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 31,367 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 11,125 for
dividends and $ 1,091 for capital gain distributions. Initial
offering of Class C of Advisor High Yield took place on November 3,
1997. Class C returns prior to November 3, 1997 through June 30, 1994
are those of Class B which reflect a 12b-1 fee of 0.90% (1.00% prior
to January 1, 1996). Class C returns prior to June 30, 1994 are those
of Class T which reflect a 12b-1 fee of 0.25%. If Class C's 12b-1 fee
had been reflected, returns prior to November 3, 1997 through January
1, 1996 and prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Institutional Class of Advisor High Yield would
have grown to $ 34,913 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR HIGH YIELD -
INSTITUTIONAL CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 12,152 $ 20,806 $ 1,955 $ 34,913
1998 $ 12,152 $ 17,409 $ 1,596 $ 31,157
1997 $ 14,169 $ 17,277 $ 1,079 $ 32,525
1996 $ 13,512 $ 13,781 $ 888 $ 28,181
1995 $ 13,110 $ 11,009 $ 861 $ 24,980
1994 $ 12,508 $ 8,487 $ 822 $ 21,817
1993 $ 13,389 $ 7,457 $ 409 $ 21,255
1992 $ 12,341 $ 5,303 $ 0 $ 17,644
1991 $ 11,282 $ 3,185 $ 0 $ 14,467
1990 $ 9,086 $ 1,272 $ 0 $ 10,358
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR HIGH YIELD - INDEXES
INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor High Yield on November 1, 1989, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 33,476 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 11,874 for dividends and $ 1,093 for capital gain
distributions. Initial offering of Institutional Class of Advisor High
Yield took place on July 3, 1995. Institutional Class returns prior to
July 3, 1995 are those of Class T which reflect a 12b-1 fee of 0.25%.
If Class T's 12b-1 fee had not been reflected, returns prior to July
3, 1995 for Institutional Class would have been higher.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class A of Advisor Government Investment would
have grown to $ 18,513 including the effect of Class A's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT
- - CLASS A
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,525 $ 8,543 $ 445 $ 18,513
1998 $ 10,251 $ 8,071 $ 479 $ 18,801
1997 $ 9,893 $ 6,776 $ 463 $ 17,132
1996 $ 9,709 $ 5,687 $ 454 $ 15,850
1995 $ 9,893 $ 4,827 $ 463 $ 15,183
1994 $ 9,167 $ 3,616 $ 429 $ 13,212
1993 $ 10,374 $ 3,302 $ 271 $ 13,947
1992 $ 9,955 $ 2,439 $ 0 $ 12,394
1991 $ 9,811 $ 1,614 $ 0 $ 11,425
1990 $ 9,361 $ 781 $ 0 $ 10,142
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT INDEXES
- - CLASS A
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Government Investment on November 1, 1989, assuming the
maximum sales charge had been in effect, the net amount invested in
Class A shares was $ 9,525 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 19,192 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,125 for
dividends and $ 358 for capital gain distributions. Initial
offering of Class A for Advisor Government Investment took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T which reflect a 12b-1 fee of 0.25%. If Class A's
12b-1 fee had been reflected, returns prior to September 3, 1996 would
have been higher.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class T of Advisor Government Investment would
have grown to $ 18,668 , including the effect of Class T's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT
- - CLASS T
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,640 $ 8,577 $ 451 $ 18,668
1998 $ 10,386 $ 8,122 $ 486 $ 18,994
1997 $ 10,023 $ 6,844 $ 469 $ 17,336
1996 $ 9,837 $ 5,758 $ 460 $ 16,055
1995 $ 10,023 $ 4,890 $ 469 $ 15,382
1994 $ 9,287 $ 3,665 $ 434 $ 13,386
1993 $ 10,510 $ 3,345 $ 275 $ 14,130
1992 $ 10,085 $ 2,472 $ 0 $ 12,557
1991 $ 9,940 $ 1,635 $ 0 $ 11,575
1990 $ 9,484 $ 791 $ 0 $ 10,275
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT INDEXES
- - CLASS T
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Government Investment on November 1, 1989, assuming the
maximum sales charge had been in effect, the net amount invested in
Class T shares was $ 9,650 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 19,242 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,169 for
dividends and $ 363 for capital gain distributions.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class B of Advisor Government Investment would
have grown to $ 18,661 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT
- - CLASS B
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,989 $ 8,205 $ 467 $ 18,661
1998 $ 10,752 $ 7,833 $ 503 $ 19,088
1997 $ 10,376 $ 6,671 $ 485 $ 17,532
1996 $ 10,193 $ 5,685 $ 477 $ 16,355
1995 $ 10,387 $ 4,900 $ 486 $ 15,773
1994 $ 9,613 $ 3,750 $ 450 $ 13,813
1993 $ 10,892 $ 3,466 $ 285 $ 14,643
1992 $ 10,451 $ 2,561 $ 0 $ 13,012
1991 $ 10,301 $ 1,693 $ 0 $ 11,994
1990 $ 9,828 $ 820 $ 0 $ 10,648
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT INDEXES
- - CLASS B
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Government Investment on November 1, 1989, the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 18,875
. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $ 6,022
for dividends and $ 376 for capital gain distributions. Initial
offering of Class B of Advisor Government Investment took place on
June 30, 1994. Class B returns prior to June 30, 1994 are those of
Class T which reflect a 12b-1 fee of 0.25%. If Class B's 12b-1 fee had
been reflected, returns prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class C of Advisor Government Investment would
have grown to $ 18,598 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT
- - CLASS C
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,979 $ 8,152 $ 467 $ 18,598
1998 $ 10,751 $ 7,808 $ 503 $ 19,062
1997 $ 10,376 $ 6,671 $ 485 $ 17,532
1996 $ 10,193 $ 5,685 $ 477 $ 16,355
1995 $ 10,387 $ 4,900 $ 486 $ 15,773
1994 $ 9,613 $ 3,750 $ 450 $ 13,813
1993 $ 10,892 $ 3,466 $ 285 $ 14,643
1992 $ 10,451 $ 2,561 $ 0 $ 13,012
1991 $ 10,301 $ 1,693 $ 0 $ 11,994
1990 $ 9,828 $ 820 $ 0 $ 10,648
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT INDEXES
- - CLASS C
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Government Investment on November 1, 1989, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 18,829
. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $ 5,997
for dividends and $ 376 for capital gain distributions. Initial
offering of Class C of Advisor Government Investment took place on
November 3, 1997. Class C returns prior to November 3, 1997 through
June 30, 1994 are those of Class B which reflect a 12b-1 fee of 0.90%
(1.00% prior to January 1, 1996). Class C returns prior to June 30,
1994 are those of Class T which reflect a 12b-1 fee of 0.25%. If Class
C's 12b-1 fee had been reflected, returns prior to November 3, 1997
through January 1, 1996 and prior to June 30, 1994 would have been
lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Institutional Class of Advisor Government
Investment would have grown to $ 19,523 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT
- - INSTITUTIONAL CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,957 $ 9,100 $ 466 $ 19,523
1998 $ 10,741 $ 8,586 $ 502 $ 19,829
1997 $ 10,365 $ 7,200 $ 485 $ 18,050
1996 $ 10,183 $ 6,027 $ 476 $ 16,686
1995 $ 10,387 $ 5,083 $ 486 $ 15,956
1994 $ 9,624 $ 3,797 $ 450 $ 13,871
1993 $ 10,892 $ 3,466 $ 285 $ 14,643
1992 $ 10,451 $ 2,561 $ 0 $ 13,012
1991 $ 10,301 $ 1,693 $ 0 $ 11,994
1990 $ 9,828 $ 820 $ 0 $ 10,648
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT INDEXES
- - INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Government Investment on November 1,
1989, the net amount invested in Institutional Class shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 19,817 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 6,516 for dividends and $ 376 for
capital gain distributions. Initial offering of Institutional Class of
Advisor Government Investment took place on July 3, 1995.
Institutional Class returns prior to July 3, 1995 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class T's 12b-1 fee had not
been reflected, returns prior to July 3, 1995 for Institutional Class
would have been higher.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class A of Advisor Mortgage Securities would
have grown to $ 20,123 , including the effect of Class A's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES -
CLASS A
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,806 $ 9,427 $ 890 $ 20,123
1998 $ 10,255 $ 8,636 $ 659 $ 19,550
1997 $ 10,311 $ 7,582 $ 612 $ 18,505
1996 $ 10,161 $ 6,386 $ 471 $ 17,018
1995 $ 10,292 $ 5,393 $ 259 $ 15,944
1994 $ 9,656 $ 4,039 $ 148 $ 13,843
1993 $ 10,077 $ 3,421 $ 62 $ 13,560
1992 $ 9,993 $ 2,585 $ 0 $ 12,578
1991 $ 10,077 $ 1,760 $ 0 $ 11,837
1990 $ 9,478 $ 802 $ 0 $ 10,280
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES - INDEXES
CLASS A
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Mortgage Securities on November 1, 1989, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,525 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 20,542 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,648 for
dividends and $ 552 for capital gain distributions. Initial
offering of Class A of Advisor Mortgage Securities took place on March
3, 1997. Class A returns prior to March 3, 1997 are those of Initial
Class which has no 12b-1 fee. If Class A's 12b-1 fee had been
reflected, returns prior to March 3, 1997 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class T of Advisor Mortgage Securities would
have grown to $ 20,344 , including the effect of Class T's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES -
CLASS T
Fiscal Year Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,934 $ 9,509 $ 901 $ 20,344
1998 $ 10,389 $ 8,728 $ 668 $ 19,785
1997 $ 10,446 $ 7,671 $ 620 $ 18,737
1996 $ 10,295 $ 6,469 $ 478 $ 17,242
1995 $ 10,427 $ 5,464 $ 262 $ 16,153
1994 $ 9,783 $ 4,092 $ 150 $ 14,025
1993 $ 10,209 $ 3,466 $ 63 $ 13,738
1992 $ 10,124 $ 2,619 $ 0 $ 12,743
1991 $ 10,209 $ 1,784 $ 0 $ 11,993
1990 $ 9,603 $ 812 $ 0 $ 10,415
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES - INDEXES
CLASS T
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Mortgage Securities on November 1, 1989, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 20,637 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,714 for
dividends and $ 559 for capital gain distributions. Initial
offering of Class T of Advisor Mortgage Securities took place on March
3, 1997. Class T returns prior to March 3, 1997 are those of Initial
Class which has no 12b-1 fee. If Class T's 12b-1 fee had been
reflected, returns prior to March 3, 1997 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class B of Advisor Mortgage Securities would
have grown to $ 20,727 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES -
CLASS B
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,295 $ 9,502 $ 930 $ 20,727
1998 $ 10,756 $ 8,815 $ 691 $ 20,262
1997 $ 10,825 $ 7,865 $ 642 $ 19,332
1996 $ 10,668 $ 6,704 $ 495 $ 17,867
1995 $ 10,806 $ 5,661 $ 272 $ 16,739
1994 $ 10,138 $ 4,239 $ 156 $ 14,533
1993 $ 10,580 $ 3,591 $ 65 $ 14,236
1992 $ 10,491 $ 2,714 $ 0 $ 13,205
1991 $ 10,580 $ 1,847 $ 0 $ 12,427
1990 $ 9,951 $ 842 $ 0 $ 10,793
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES - INDEXES
CLASS B
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Mortgage Securities on November 1, 1989, the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 20,653
. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $ 6,775
for dividends and $ 580 for capital gain distributions. Initial
offering of Class B of Advisor Mortgage Securities took place on March
3, 1997. Class B returns prior to March 3, 1997 are those of Initial
Class which has no 12b-1 fee. If Class B's 12b-1 fees had been
reflected, returns prior to March 3, 1997 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Institutional Class of Advisor Mortgage
Securities would have grown to $ 21,206 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES -
INSTITUTIONAL CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,285 $ 9,986 $ 935 $ 21,206
1998 $ 10,756 $ 9,123 $ 692 $ 20,571
1997 $ 10,815 $ 7,974 $ 642 $ 19,431
1996 $ 10,668 $ 6,704 $ 495 $ 17,867
1995 $ 10,806 $ 5,661 $ 272 $ 16,739
1994 $ 10,138 $ 4,239 $ 156 $ 14,533
1993 $ 10,580 $ 3,591 $ 65 $ 14,236
1992 $ 10,491 $ 2,714 $ 0 $ 13,205
1991 $ 10,580 $ 1,847 $ 0 $ 12,427
1990 $ 9,951 $ 842 $ 0 $ 10,793
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES - INDEXES
INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Mortgage Securities on November 1,
1989, the net amount invested in Institutional Class shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 21,169 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 7,029 for dividends and $ 580 for
capital gain distributions. Initial offering of Institutional Class of
Advisor Mortgage Securities took place on March 3, 1997. Returns prior
to March 3, 1997 are those of Initial Class which has no 12b-1 fee.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Initial Class of Advisor Mortgage Securities
would have grown to $ 21,263 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MORTGAGE SECURITIES - INITIAL
CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,305 $ 10,022 $ 936 $ 21,263
1998 $ 10,776 $ 9,147 $ 693 $ 20,616
1997 $ 10,825 $ 7,982 $ 643 $ 19,450
1996 $ 10,668 $ 6,704 $ 495 $ 17,867
1995 $ 10,806 $ 5,661 $ 272 $ 16,739
1994 $ 10,138 $ 4,239 $ 156 $ 14,533
1993 $ 10,580 $ 3,591 $ 65 $ 14,236
1992 $ 10,491 $ 2,714 $ 0 $ 13,205
1991 $ 10,580 $ 1,847 $ 0 $ 12,427
1990 $ 9,951 $ 842 $ 0 $ 10,793
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MORTGAGE SECURITIES - INITIAL INDEXES
CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Initial
Class of Advisor Mortgage Securities on November 1, 1989, the net
amount invested in Initial Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 21,191 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 7,040 for dividends and $ 580 for capital gain
distributions.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class A of Advisor Intermediate Bond would have
grown to $ 18,773 , including the effect of Class A's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND -
CLASS A
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,532 $ 9,241 $ 0 $ 18,773
1998 $ 9,967 $ 8,620 $ 0 $ 18,587
1997 $ 9,801 $ 7,503 $ 0 $ 17,304
1996 $ 9,736 $ 6,461 $ 0 $ 16,197
1995 $ 9,893 $ 5,542 $ 0 $ 15,435
1994 $ 9,514 $ 4,461 $ 0 $ 13,975
1993 $ 10,421 $ 4,027 $ 0 $ 14,448
1992 $ 9,884 $ 2,852 $ 0 $ 12,736
1991 $ 9,736 $ 1,863 $ 0 $ 11,599
1990 $ 9,292 $ 863 $ 0 $ 10,155
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - INDEXES
CLASS A
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Intermediate Bond on November 1, 1989, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,625 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 19,455 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,619 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class A of Advisor Intermediate Bond took place on
September 3, 1996. Class A returns from September 3, 1996 through
September 10, 1992 are those of Class T which reflect a 12b-1 fee of
0.25%. Class A returns prior to September 10, 1992 are those of
Institutional Class which has no 12b-1 fee. If Class A's 12b-1 fee had
been reflected, returns prior to September 3, 1996 through September
10, 1992 would have been higher and returns prior to September 10,
1992 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class T of Advisor Intermediate Bond would have
grown to $ 18,940 , including the effect of Class T's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND -
CLASS T
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,641 $ 9,299 $ 0 $ 18,940
1998 $ 10,071 $ 8,686 $ 0 $ 18,757
1997 $ 9,912 $ 7,578 $ 0 $ 17,490
1996 $ 9,847 $ 6,533 $ 0 $ 16,380
1995 $ 9,996 $ 5,600 $ 0 $ 15,596
1994 $ 9,613 $ 4,507 $ 0 $ 14,120
1993 $ 10,529 $ 4,069 $ 0 $ 14,598
1992 $ 9,987 $ 2,882 $ 0 $ 12,869
1991 $ 9,837 $ 1,882 $ 0 $ 11,719
1990 $ 9,388 $ 873 $ 0 $ 10,261
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - INDEXES
CLASS T
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Intermediate Bond on November 1, 1989, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,725 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 19,508 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,665 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class T of Advisor Intermediate Bond took place on
September 10, 1992. Class T returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class T's
12b-1 fee had been reflected, returns prior to September 10, 1992
would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class B of Advisor Intermediate Bond would have
grown to $ 18,754 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND -
CLASS B
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,904 $ 8,850 $ 0 $ 18,754
1998 $ 10,346 $ 8,340 $ 0 $ 18,686
1997 $ 10,173 $ 7,351 $ 0 $ 17,524
1996 $ 10,115 $ 6,425 $ 0 $ 16,540
1995 $ 10,269 $ 5,585 $ 0 $ 15,854
1994 $ 9,875 $ 4,584 $ 0 $ 14,459
1993 $ 10,827 $ 4,184 $ 0 $ 15,011
1992 $ 10,269 $ 2,964 $ 0 $ 13,233
1991 $ 10,115 $ 1,936 $ 0 $ 12,051
1990 $ 9,654 $ 897 $ 0 $ 10,551
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - INDEXES
CLASS B
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Intermediate Bond on November 1, 1989, the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 19,053 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,476 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class B of Advisor Intermediate Bond took place on June
30, 1994. Class B returns prior to June 30, 1994 through September 10,
1992 are those of Class T which reflect a 12b-1 fee of 0.25%. Class B
returns prior to September 10, 1992 are those of Institutional Class
which has no 12b-1 fee. If Class B's 12b-1 fee had been reflected,
returns prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class C of Advisor Intermediate Bond would have
grown to $ 18,664 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND -
CLASS C
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,876 $ 8,788 $ 0 $ 18,664
1998 $ 10,327 $ 8,302 $ 0 $ 18,629
1997 $ 10,173 $ 7,351 $ 0 $ 17,524
1996 $ 10,115 $ 6,425 $ 0 $ 16,540
1995 $ 10,269 $ 5,585 $ 0 $ 15,854
1994 $ 9,875 $ 4,584 $ 0 $ 14,459
1993 $ 10,827 $ 4,184 $ 0 $ 15,011
1992 $ 10,269 $ 2,964 $ 0 $ 13,233
1991 $ 10,115 $ 1,936 $ 0 $ 12,051
1990 $ 9,654 $ 897 $ 0 $ 10,551
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - INDEXES
CLASS C
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Intermediate Bond on November 1, 1989, the net amount invested
in Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 19,013 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,454 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class C of Advisor Intermediate Bond took place on
November 3, 1997. Class C returns prior to November 3, 1997 through
June 30, 1994 are those of Class B which reflect a 12b-1 fee of 0.90%
(1.00% prior to January 1, 1996). Class C returns prior to June 30,
1994 through September 10, 1992 are those of Class T which reflect a
12b-1 fee of 0.25%. Class C returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class C's
12b-1 fee had been reflected, returns prior to November 3, 1997
through January 1, 1996 and prior to June 30, 1994 would have been
lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Institutional Class of Advisor Intermediate Bond
would have grown to $ 19,952 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND -
INSTITUTIONAL CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,913 $ 10,039 $ 0 $ 19,952
1998 $ 10,365 $ 9,353 $ 0 $ 19,718
1997 $ 10,192 $ 8,123 $ 0 $ 18,315
1996 $ 10,135 $ 6,985 $ 0 $ 17,120
1995 $ 10,288 $ 5,966 $ 0 $ 16,254
1994 $ 9,894 $ 4,782 $ 0 $ 14,676
1993 $ 10,837 $ 4,267 $ 0 $ 15,104
1992 $ 10,269 $ 2,981 $ 0 $ 13,250
1991 $ 10,115 $ 1,936 $ 0 $ 12,051
1990 $ 9,654 $ 897 $ 0 $ 10,551
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - INDEXES
INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Intermediate Bond on November 1, 1989,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 20,273 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 7,105 for dividends and $ 0 for capital gain
distributions.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class A of Advisor Short Fixed-Income would have
grown to $ 18,035 , including the effect of Class A's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME -
CLASS A
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,058 $ 8,977 $ 0 $ 18,035
1998 $ 9,286 $ 8,203 $ 0 $ 17,489
1997 $ 9,216 $ 7,194 $ 0 $ 16,410
1996 $ 9,276 $ 6,258 $ 0 $ 15,534
1995 $ 9,375 $ 5,372 $ 0 $ 14,747
1994 $ 9,385 $ 4,520 $ 0 $ 13,905
1993 $ 9,989 $ 3,947 $ 0 $ 13,936
1992 $ 9,850 $ 2,921 $ 0 $ 12,771
1991 $ 9,771 $ 1,898 $ 0 $ 11,669
1990 $ 9,523 $ 878 $ 0 $ 10,401
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME - INDEXES
CLASS A
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Short Fixed-Income on November 1, 1989, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,850 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 19,397 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,579 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class A of Advisor Short Fixed-Income took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T which reflect a 12b-1 fee of 0.15%.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class T of Advisor Short Fixed-Income would have
grown to $ 18,067 , including the effect of Class T's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME -
CLASS T
Fiscal Year Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,058 $ 9,009 $ 0 $ 18,067
1998 $ 9,286 $ 8,235 $ 0 $ 17,521
1997 $ 9,256 $ 7,223 $ 0 $ 16,479
1996 $ 9,286 $ 6,265 $ 0 $ 15,551
1995 $ 9,375 $ 5,372 $ 0 $ 14,747
1994 $ 9,385 $ 4,520 $ 0 $ 13,905
1993 $ 9,989 $ 3,947 $ 0 $ 13,936
1992 $ 9,850 $ 2,921 $ 0 $ 12,771
1991 $ 9,771 $ 1,898 $ 0 $ 11,669
1990 $ 9,523 $ 878 $ 0 $ 10,401
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME - INDEXES
CLASS T
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Short Fixed-Income on November 1, 1989, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,850 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 19,435 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,598 for
dividends and $ 0 for capital gain distributions.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class C of Advisor Short Fixed-Income would have
grown to $ 18,043 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME -
CLASS C
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,206 $ 8,837 $ 0 $ 18,043
1998 $ 9,427 $ 8,209 $ 0 $ 17,636
1997 $ 9,397 $ 7,333 $ 0 $ 16,730
1996 $ 9,427 $ 6,361 $ 0 $ 15,788
1995 $ 9,518 $ 5,453 $ 0 $ 14,971
1994 $ 9,528 $ 4,589 $ 0 $ 14,117
1993 $ 10,141 $ 4,007 $ 0 $ 14,148
1992 $ 10,000 $ 2,965 $ 0 $ 12,965
1991 $ 9,920 $ 1,927 $ 0 $ 11,847
1990 $ 9,668 $ 891 $ 0 $ 10,559
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME - INDEXES
CLASS C
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Short Fixed-Income on November 1, 1989, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 19,255
. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $ 6,534
for dividends and $ 0 for capital gain distributions. Initial
offering of Class C Advisor Short Fixed-Income took place on November
3, 1997. Class C returns prior to November 3, 1997 are those of Class
T which reflect a 12b-1 fee of 0.15%. If Class C's 12b-1 fee had been
reflected, returns would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Institutional Class of Advisor Short
Fixed-Income would have grown to $ 18,449 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME -
INSTITUTIONAL CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 9,196 $ 9,253 $ 0 $ 18,449
1998 $ 9,427 $ 8,438 $ 0 $ 17,865
1997 $ 9,397 $ 7,383 $ 0 $ 16,780
1996 $ 9,417 $ 6,377 $ 0 $ 15,794
1995 $ 9,518 $ 5,460 $ 0 $ 14,978
1994 $ 9,528 $ 4,589 $ 0 $ 14,117
1993 $ 10,141 $ 4,007 $ 0 $ 14,148
1992 $ 10,000 $ 2,965 $ 0 $ 12,965
1991 $ 9,920 $ 1,927 $ 0 $ 11,847
1990 $ 9,668 $ 891 $ 0 $ 10,559
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME - INDEXES
INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Short Fixed-Income on November 1, 1989,
the net amount invested Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 19,687 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 6,753 for dividends and $ 0 for capital gain
distributions. Initial offering of Institutional Class of Advisor
Short Fixed-Income took place on July 3, 1995. Institutional Class
returns prior to July 3, 1995 are those of Class T which reflect a
12b-1 fee of 0.15%. If Class T's 12b-1 fee had not been reflected,
returns prior to July 3, 1995 for Institutional Class would have been
higher.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class A of Advisor Municipal Income would have
grown to $ 19,098 , including the effect of Class A's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME -
CLASS A
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,291 $ 8,463 $ 344 $ 19,098
1998 $ 11,039 $ 8,151 $ 369 $ 19,559
1997 $ 10,696 $ 7,044 $ 358 $ 18,098
1996 $ 10,335 $ 5,922 $ 343 $ 16,600
1995 $ 10,458 $ 5,083 $ 347 $ 15,888
1994 $ 9,877 $ 3,918 $ 328 $ 14,123
1993 $ 11,198 $ 3,544 $ 287 $ 15,029
1992 $ 10,256 $ 2,476 $ 230 $ 12,962
1991 $ 10,044 $ 1,610 $ 215 $ 11,869
1990 $ 9,569 $ 751 $ 89 $ 10,409
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - INDEXES
CLASS A
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Municipal Income on November 1, 1989, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,525 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 18,845 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,076 for
dividends and $ 292 for capital gain distributions. Initial
offering of Class A of Advisor Municipal Income took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T which reflect a 12b-1 fee of 0.25%. If Class A's
12b-1 fee had been reflected, returns prior to September 3, 1996 would
have been higher.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class T of Advisor Municipal Income would have
grown to $ 19,342 , including the effect of Class T's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME -
CLASS T
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,435 $ 8,558 $ 349 $ 19,342
1998 $ 11,202 $ 8,268 $ 374 $ 19,844
1997 $ 10,845 $ 7,141 $ 363 $ 18,349
1996 $ 10,488 $ 6,014 $ 348 $ 16,850
1995 $ 10,595 $ 5,150 $ 352 $ 16,097
1994 $ 10,007 $ 3,969 $ 332 $ 14,308
1993 $ 11,345 $ 3,591 $ 290 $ 15,226
1992 $ 10,390 $ 2,509 $ 233 $ 13,132
1991 $ 10,176 $ 1,631 $ 217 $ 12,024
1990 $ 9,695 $ 760 $ 90 $ 10,545
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - INDEXES
CLASS T
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Municipal Income on November 1, 1989, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 18,938 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,144 for
dividends and $ 296 for capital gain distributions.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class B of Advisor Municipal Income would have
grown to $ 19,269 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME -
CLASS B
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,786 $ 8,123 $ 360 $ 19,269
1998 $ 11,580 $ 7,931 $ 387 $ 19,898
1997 $ 11,211 $ 6,929 $ 375 $ 18,515
1996 $ 10,850 $ 5,908 $ 361 $ 17,119
1995 $ 10,961 $ 5,139 $ 364 $ 16,464
1994 $ 10,360 $ 4,052 $ 345 $ 14,757
1993 $ 11,756 $ 3,721 $ 301 $ 15,778
1992 $ 10,767 $ 2,600 $ 241 $ 13,608
1991 $ 10,545 $ 1,690 $ 226 $ 12,461
1990 $ 10,046 $ 788 $ 94 $ 10,928
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - INDEXES
CLASS B
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Municipal Income on November 1, 1989, the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 18,514 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 5,955 for
dividends and $ 307 for capital gain distributions. Initial
offering of Class B of Advisor Municipal Income took place on June 30,
1994. Class B returns prior to June 30, 1994 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class B's 12b-1 fee had been
reflected, returns prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class C of Advisor Municipal Income would have
grown to $ 19,201 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME -
CLASS C
Fiscal Year Ended
October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,787 $ 8,054 $ 360 $ 19,201
1998 $ 11,579 $ 7,878 $ 387 $ 19,844
1997 $ 11,211 $ 6,929 $ 375 $ 18,515
1996 $ 10,850 $ 5,909 $ 360 $ 17,119
1995 $ 10,961 $ 5,139 $ 364 $ 16,464
1994 $ 10,360 $ 4,053 $ 344 $ 14,757
1993 $ 11,756 $ 3,721 $ 301 $ 15,778
1992 $ 10,767 $ 2,600 $ 241 $ 13,608
1991 $ 10,545 $ 1,691 $ 225 $ 12,461
1990 $ 10,046 $ 788 $ 94 $ 10,928
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - INDEXES
CLASS C
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Municipal Income on November 1, 1989, the net amount invested
in Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 18,441 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 5,913 for
dividends and $ 307 for capital gain distributions. Initial
offering of Class C of Advisor Municipal Income took place on November
3, 1997. Class C returns prior to November 3, 1997 through June 30,
1994 are those of Class B which reflect a 12b-1 fee of 0.90% (1.00%
prior to January 1, 1996). Class C returns prior to June 30, 1994 are
those of Class T which reflect a 12b-1 fee of 0.25%. If Class C's
12b-1 fee had been reflected, returns prior to November 3, 1997
through January 1, 1996 and prior to June 30, 1994 would have been
lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Institutional Class of Advisor Municipal Income
would have grown to $ 20,178 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME -
INSTITUTIONAL CLASS
Fiscal Year
Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 10,767 $ 9,051 $ 360 $ 20,178
1998 $ 11,562 $ 8,707 $ 387 $ 20,656
1997 $ 11,201 $ 7,500 $ 375 $ 19,076
1996 $ 10,832 $ 6,239 $ 359 $ 17,430
1995 $ 10,980 $ 5,350 $ 364 $ 16,694
1994 $ 10,370 $ 4,113 $ 344 $ 14,827
1993 $ 11,756 $ 3,721 $ 301 $ 15,778
1992 $ 10,767 $ 2,600 $ 241 $ 13,608
1991 $ 10,545 $ 1,691 $ 225 $ 12,461
1990 $ 10,046 $ 788 $ 94 $ 10,928
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - INDEXES
INSTITUTIONAL CLASS
Fiscal Year Ended October 31 S&P 500 DJIA Cost of Living
1999 $ 51,536 $ 52,414 $ 13,392
1998 $ 41,009 $ 41,322 $ 13,057
1997 $ 33,617 $ 35,190 $ 12,866
1996 $ 25,445 $ 27,989 $ 12,604
1995 $ 20,505 $ 21,605 $ 12,237
1994 $ 16,217 $ 17,317 $ 11,903
1993 $ 15,613 $ 15,871 $ 11,600
1992 $ 13,583 $ 13,514 $ 11,290
1991 $ 12,351 $ 12,484 $ 10,939
1990 $ 9,251 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Municipal Income on November 1, 1989,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 19,481 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 6,484 for dividends and $ 307 for capital gain
distributions. Initial offering of Institutional Class of Advisor
Municipal Income took place on July 3, 1995. Institutional Class
returns prior to July 3, 1995 are those of Class T which reflect a
12b-1 fee of 0.25%. If Class T's 12b-1 fee had not been reflected,
returns prior to July 3, 1995 for Institutional Class would have been
higher.
INTERNATIONAL INDEXES, MARKET CAPITALIZATION, AND NATIONAL
STOCK MARKET RETURN
The following tables show the total market capitalization of certain
countries according to the Morgan Stanley Capital International
indexes database, the total market capitalization of Latin American
countries according to the International Finance Corporation Emerging
Markets database, and the performance of national stock markets as
measured in U.S. dollars by the Morgan Stanley Capital International
stock market indexes for the twelve months ended October 31, 1999.
Of course, these results are not indicative of future stock market
performance or the funds' performance. Market conditions during the
periods measured fluctuated widely. Brokerage commissions and other
fees are not factored into the values of the indexes.
MARKET CAPITALIZATION. Companies outside the United States now make up
nearly two-thirds of the world's stock market capitalization.
According to Morgan Stanley Capital International, the size of the
markets as measured in U.S. dollars grew from $6,981 billion in
October 1998 to $9,147 billion in October 1999.
The following table measures the total market capitalization of
certain countries according to the Morgan Stanley Capital
International indexes database. The value of each market is measured
in billions of U.S. dollars as of October 31, 1999.
TOTAL MARKET CAPITALIZATION
Australia $ 210.6 Japan $ 2,509.3
Austria $ 22.0 Malaysia $ 66.8
Belgium $ 104.2 Netherlands $ 470.7
Canada $ 372.6 Norway $ 34.1
Denmark $ 67.9 Singapore $ 87.8
France $ 838.7 Spain $ 235.4
Germany $ 838.1 Sweden $ 201.8
Hong Kong $ 192.6 Switzerland $ 561.0
Italy $ 334.2 United Kingdom $ 1,783.8
United States $ 9,316.0
The following table measures the total market capitalization of Latin
American countries according to the International Finance Corporation
Emerging Markets database. The value of each market is measured in
billions of U.S. dollars as of October 31, 1999.
TOTAL MARKET CAPITALIZATION - LATIN AMERICA
Argentina $ 22.0
Brazil $ 87.4
Chile $ 32.6
Colombia $ 3.3
Mexico $ 98.7
Venezuela $ 6.8
Peru $ 7.0
Total Latin America $ 257.8
NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents
the performance of national stock markets as measured in U.S. dollars
by the Morgan Stanley Capital International stock market indexes for
the twelve months ended October 31 , 1999 . The second table
shows the same performance as measured in local currency. Each table
measures return based on the period's change in price, dividends paid
on stocks in the index, and the effect of reinvesting dividends net of
any applicable foreign taxes. These are unmanaged indexes composed of
a sampling of selected companies representing an approximation of the
market structure of the designated country.
STOCK MARKET PERFORMANCE
MEASURED IN U.S. DOLLARS
Australia 11.43% Japan 58.40%
Austria -14.33% Malaysia 184.38%
Belgium -5.05% Netherlands 12.31%
Canada 35.31% Norway 3.11%
Denmark 7.20% Singapore 90.23%
France 24.30% Spain 0.85%
Germany 7.48% Sweden 47.73%
Hong Kong 27.24% Switzerland -0.59%
Italy 1.55% United Kingdom 13.25%
United States 26.21%
STOCK MARKET PERFORMANCE
MEASURED IN LOCAL CURRENCY
Australia 8.80% Japan 41.86%
Austria -3.75% Malaysia 99.02%
Belgium 6.69% Netherlands 26.08%
Canada 28.65% Norway 9.71%
Denmark 20.41% Singapore 94.38%
France 39.60% Spain 13.13%
Germany 20.76% Sweden 55.68%
Hong Kong 27.63% Switzerland 11.85%
Italy 14.20% United Kingdom 15.58%
United States 26.21%
The following table shows the average annualized stock market returns
measured in U.S. dollars as of October 31.
STOCK MARKET PERFORMANCE
Five Years Ended 1999 Ten Years Ended 1999
Germany 15.87% 13.41%
Hong Kong 6.06% 18.32%
Japan -0.90% -1.39%
Spain 23.55% 11.99%
United Kingdom 17.59% 15.18%
United States 26.88% 17.59%
PERFORMANCE COMPARISONS. A class's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Inc. (Lipper), an
independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Generally, Lipper rankings are based on
return, assume reinvestment of distributions, do not take sales
charges or trading fees into consideration, and are prepared without
regard to tax consequences. Lipper may also rank based on yield. In
addition to the mutual fund rankings, a class's performance may be
compared to stock, bond, and money market mutual fund performance
indexes prepared by Lipper or other organizations. When comparing
these indexes, it is important to remember the risk and return
characteristics of each type of investment. For example, while stock
mutual funds may offer higher potential returns, they also carry the
highest degree of share price volatility. Likewise, money market funds
may offer greater stability of principal, but generally do not offer
the higher potential returns available from stock mutual funds.
From time to time, a class's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, a class may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising. A bond fund may advertise risk
ratings, including symbols or numbers, prepared by independent rating
agencies.
A class's performance may also be compared to that of each index
representing the universe of securities in which the fund may invest.
The return of each index reflects reinvestment of all dividends and
capital gains paid by securities included in each index. Unlike a
class's returns, however, each index's returns do not reflect
brokerage commissions, transaction fees, or other costs of investing
directly in the securities included in the index.
Each of Advisor Overseas and Advisor Diversified International may
compare its performance to that of the Morgan Stanley Capital
International Europe, Australasia and Far East (EAFE) Index, a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets outside of the United States
and Canada. The index returns for periods after January 1, 1997 are
adjusted for tax withholding rates applicable to U.S.-based mutual
funds organized as Massachusetts business trusts. Effective October 1,
1998, the country of Malaysia was removed from this index. The index
returns reflect the inclusion of Malaysia prior to October 1, 1998.
Advisor Global Equity may compare its performance to that of the
Morgan Stanley Capital International World Index, a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets throughout the world. Effective
October 1, 1998, the country of Malaysia was removed from this index.
The index returns reflect the inclusion of Malaysia prior to October
1, 1998.
Advisor Latin America Fund may compare its performance to that of the
Morgan Stanley Capital International Emerging Markets Free - Latin
America Index, a market capitalization-weighted index of approximately
160 stocks traded in seven Latin American markets.
Advisor Emerging Asia may compare its performance to that of the
Morgan Stanley Capital International AC (All Country) Asia Free ex
Japan Index, a market capitalization-weighted index of over 500 stocks
traded in 11 Asian markets, excluding Japan. Effective October 1,
1998, the country of Malaysia was removed from this index. The index
returns reflect the inclusion of Malaysia prior to October 1, 1998.
Advisor Japan Fund may compare its performance to that of the Tokyo
Stock Exchange Index, a market capitalization-weighted index of over 1
, 300 stocks traded in the Japanese market.
Advisor International Capital Appreciation may compare its performance
to that of the Morgan Stanley Capital International AC (All Country)
World Index Free ex USA, a market capitalization-weighted equity index
comprising 47 countries, 21 developed markets and 26 emerging markets.
Advisor Europe Capital Appreciation Fund may compare its performance
to that of the Morgan Stanley Capital International Europe Index, a
market capitalization-weighted index that is designed to represent the
performance of developed stock markets in Europe. The index returns
for periods after January 1, 1997 are adjusted for tax withholding
rates applicable to U.S.-based mutual funds organized as Massachusetts
business trusts. Stocks are selected for the Morgan Stanley Capital
International (MSCI) indexes on the basis of industry representation,
liquidity, sufficient float, and avoidance of cross-ownership. The
MSCI Free index excludes those stocks that cannot be purchased by
foreign investors in otherwise free markets.
Advisor High Yield may compare its performance to that of the Merrill
Lynch High Yield Master Index, a market value-weighted index of all
domestic and yankee high-yield bonds with an outstanding par value of
at least $50 million and maturities of at least one year. Issues
included in the index have a credit rating lower than BBB-/Baa3 but
are not in default (DDD1 or lower). Split-rated issues (i.e., rated
investment-grade by one rating agency and high-yield by another) are
included in the index based on the issue's corresponding composite
rating. Structured-note issues, deferred interest bonds, and
pay-in-kind bonds are excluded.
Each of Advisor High Yield and Advisor High Income may compare its
performance to that of the Merrill Lynch High Yield Master II Index, a
market value-weighted index of all domestic and yankee high-yield
bonds, including deferred interest bonds and payment-in-kind
securities. Issues included in the index have maturities of one year
or more and have a credit rating lower than BBB-/Baa3, but are not in
default. Issues must have an outstanding par value of at least $50
million to be included in the index.
Advisor Mortgage Securities may compare its performance to that of the
Lehman Brothers Mortgage-Backed Securities Index, a market
value-weighted index of fixed-rate securities that represent interests
in pools of mortgage loans with original terms of 15 and 30 years that
are issued by the Government National Mortgage Association (GNMA), the
Federal National Mortgage Association (FNMA), and the Federal Home
Loan Mortgage Corporation (FHLMC), and balloon mortgages with
fixed-rate coupons. Buydowns, manufactured homes, and graduated equity
mortgages are not included in the index.
Advisor Government Investment may compare its performance to that of
the Lehman Brothers Government Bond Index, a market value-weighted
index of U.S. Government and government agency securities (other than
mortgage securities) with maturities of one year or more. Issues
include all public obligations of the U.S. Treasury (excluding flower
bonds and foreign-targeted issues) and U.S. Government agencies and
quasi-federal corporations, and corporate debt guaranteed by the U.S.
Government.
Advisor Intermediate Bond may compare its performance to that of the
Lehman Brothers Intermediate Government/Corporate Bond Index, a market
value-weighted index for government and corporate fixed-rate debt
issues. Issues included in the index have an outstanding par value of
at least $100 million and maturities between one and 10 years.
Government and corporate issues include all public obligations of the
U.S. Treasury (excluding flower bonds and foreign-targeted issues) and
U.S. Government agencies, as well as nonconvertible investment-grade,
SEC-registered corporate debt.
Advisor Short Fixed-Income may compare its performance to that of the
Lehman Brothers 1-3 Year Government/Corporate Bond Index, a market
value-weighted index for government and corporate fixed-rate debt
issues. Issues included in the index have an outstanding par value of
at least $100 million and maturities between one and three years.
Government and corporate issues include all public obligations of the
U.S. Treasury (excluding flower bonds and foreign-targeted issues) and
U.S. Government agencies, as well as nonconvertible investment-grade,
SEC-registered corporate debt.
The municipal bond fund may compare its performance to the Lehman
Brothers Municipal Bond Index, a market value-weighted index for
investment-grade municipal bonds with maturities of one year or more.
Issues included in the index have been issued after December 31, 1990
and have been issued as part of an offering of at least $50 million.
After December 31, 1995, zero coupon bonds and issues subject to
the alternative minimum tax are included in the index. I
ssues included in the index prior to January 1, 2000 have an
outstanding par value of at least $3 million; while issues included in
the index after January 1, 2000 have an outstanding par value of at
least $5 million .
Advisor Municipal Income may also compare its performance to that
of the Lehman Brothers 3 Plus Year Municipal Bond Index, a market
value-weighted index for investment-grade municipal bonds with
maturities of three years or more. Issues included in the index have
been issued after December 31, 1990 and have been issued as part of an
offering of at least $50 million. After December 31, 1995, zero coupon
bonds and issues subject to the alternative minimum tax are included
in the index. Issues included in the index prior to January 1, 2000
have an outstanding par value of at least $3 million; while issues
included in the index after January 1, 2000 have an outstanding par
value of at least $5 million.
A class may be compared in advertising to Certificates of Deposit
(CDs) or other investments issued by banks or other depository
institutions. Mutual funds differ from bank investments in several
respects. For example, a fund may offer greater liquidity or higher
potential returns than CDs, a fund does not guarantee your principal
or your return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indexes.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates returns in the
same method as the funds. The funds may also compare performance to
that of other compilations or indexes that may be developed and made
available in the future.
A municipal bond fund may compare and contrast in advertising the
relative advantages of investing in a mutual fund versus an individual
municipal bond. Unlike municipal bond mutual funds, individual
municipal bonds offer a stated rate of interest and, if held to
maturity, repayment of principal. Although some individual municipal
bonds might offer a higher return, they do not offer the reduced risk
of a mutual fund that invests in many different securities. The sales
charges of many municipal bond mutual funds are lower than the
purchase cost of individual municipal bonds, which are generally
subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; model portfolios or allocations; and saving for
college or other goals. In addition, Fidelity may quote or reprint
financial or business publications and periodicals, as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products.
Each fund may be advertised as part of certain asset allocation
programs involving other Fidelity or non-Fidelity mutual funds. These
asset allocation programs may advertise a model portfolio and its
performance results.
Each fund may be advertised as part of a no transaction fee (NTF)
program in which Fidelity and non-Fidelity mutual funds are offered.
An NTF program may advertise performance results.
A class may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote the fund's current portfolio
manager.
VOLATILITY. A class may quote various measures of volatility and
benchmark correlation in advertising. In addition, the class may
compare these measures to those of other funds. Measures of volatility
seek to compare a class's historical share price fluctuations or
returns to those of a benchmark. Measures of benchmark correlation
indicate how valid a comparative benchmark may be. All measures of
volatility and correlation are calculated using averages of historical
data. In advertising, a fund may also discuss or illustrate examples
of interest rate sensitivity.
MOMENTUM INDICATORS indicate a class's price movements over specific
periods of time. Each point on the momentum indicator represents a
class's percentage change in price movements over that period.
A fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a
$1,000 investment earning a taxable return of 10% annually would have
an after-tax value of $1,949 after ten years, assuming tax was
deducted from the return each year at a 31% rate. An equivalent
tax-deferred investment would have an after-tax value of $2,100 after
ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.
As of October 31, 1999, FMR advised over $ 33 billion in
municipal fund assets, $ 136 billion in taxable fixed-income
fund assets, $ 140 billion in money market fund assets, $ 567
billion in equity fund assets, $ 18 billion in international
fund assets, and $ 43 billion in Spartan fund assets. The funds
may reference the growth and variety of money market mutual funds and
the adviser's innovation and participation in the industry. The equity
funds under management figure represents the largest amount of equity
fund assets under management by a mutual fund investment adviser in
the United States, making FMR America's leading equity (stock) fund
manager. FMR, its subsidiaries, and affiliates maintain a worldwide
information and communications network for the purpose of researching
and managing investments abroad.
In addition to performance rankings, each class of a bond fund may
compare its total expense ratio to the average total expense ratio of
similar funds tracked by Lipper. A class's total expense ratio is a
significant factor in comparing bond and money market investments
because of its effect on yield.
PRIOR PERFORMANCE OF SIMILAR FUNDS
Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, and Advisor Diversified International (Corresponding
Funds) have investment objectives and policies that are substantially
identical in all material respects to the following funds ,
which are managed by , respectively: Fidelity Latin America,
Fidelity Japan, Fidelity Europe Capital Appreciation, and Fidelity
Diversified International (Related Funds). FMR also may manage
other substantially similar funds and accounts that may have better or
worse performance than the Related Funds.
Below you will find information about the prior performance of the
Related Funds, not the performance of the Corresponding Funds . The
Related Funds also have different expenses and are sold through
different distribution channels . The performance information
for the Related Funds is based on past results.
Y ou should not assume that each class of the
Corresponding Funds will have the same performance as the Related
Funds. The performance of each class of a Corresponding Fund
may be better or worse than the performance of its Related Fund due
to, among other things, differences in portfolio holdings,
sales charges, expenses, asset sizes , and cash flows between
each class of a Corresponding Fund and its Related Fund.
MOVING AVERAGES. Like the Corresponding Funds, the Related Fund
s may illustrate performance using moving averages. A
long-term moving average is the average of each week's adjusted
closing NAV for a specified period. A short-term moving average is the
average of each day's adjusted closing NAV for a specified period.
Moving Average Activity Indicators combine adjusted closing NAVs from
the last business day of each week with moving averages for a
specified period to produce indicators showing when a NAV has crossed,
stayed above, or stayed below its moving average. T he 13-week and
39-week long-term moving averages for each Related Fund are shown
in the table below.
13-Week Long-Term Moving 13-Week Long-Term Moving
Average Average
Fidelity Latin America* $ 11.81 $ 12.03
Fidelity Japan* $ 19.55 $ 15.55
Fidelity Europe Capital $ 18.11 $ 17.84
Appreciation*
Fidelity Diversified $ 20.41 $ 19.28
International*
* On October 31, 1999.
HISTORICAL FUND RESULTS. The following table show s each Related
Fund 's returns for the fiscal period ended October 31,
1999. Fidelity Latin America, Fidelity Japan, and Fidelity Europe
Capital Appreciation have a maximum front-end sales charge of 3%,
which is included in the average annual and cumulative returns. Return
s do not include the effect of Fidelity Latin America's, Fidelity
Japan's, or Fidelity Europe Capital Appreciation's $25 exchange fee,
which was in effect from December 1, 1987 through October 23, 1989, or
other charges for special transactions or services, such as Fidelity
Europe Capital Appreciation's 1.00% short-term trading fee ,
applicable to shares held less than 90 days, or Fidelity Latin
America's or Fidelity Japan's 1.5% short-term trading fee ,
applicable to shares held less than 90 days.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Returns Cumulative Returns
One Year Five Years Ten Years/ Life of Fund* One Year Five Years
Fidelity Latin America 13.93% -4.70% 3.89% 13.93% -21.38%
Fidelity Japan 109.86% 9.21% 12.33% 109.86% 55.36%
Fidelity Europe Capital 11.06% 15.98% 15.96% 11.06% 109.89%
Appreciation
Fidelity Diversified 29.12% 15.86% 13.26% 29.12% 108.76%
International
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Cumulative Returns
Ten Years/ Life of Fund*
Fidelity Latin America 28.29%
Fidelity Japan 129.08%
Fidelity Europe Capital 138.22%
Appreciation
Fidelity Diversified 165.73%
International
</TABLE>
* F rom commencement of operations (April 19, 1993 for Fidelity
Latin America, September 15, 1992 for Fidelity Japan, December 21,
1993 for Fidelity Europe Capital Appreciation, and December 27, 1991
for Fidelity Diversified International).
Note: If FMR had not reimbursed certain fund expenses during these
periods, Fidelity Japan's returns would have been lower.
The following tables show the income and capital elements of each
Related Fund's cumulative return. The tables compare each Related
Fund's return to the record of the S&P 500, the DJIA, and the cost of
living, as measured by the CPI, over the same period. The S&P 500 and
DJIA comparisons are provided to show how each Related Fund's return
compared to the record of a market capitalization-weighted
index of common stocks and a narrower set of stocks of major
industrial companies, respectively, over the same period. Each Related
Fund has the ability to invest in securities not included in either
index, and its investment portfolio may or may not be similar in
composition to the indexes. The S&P 500 and DJIA returns are based on
the prices of unmanaged groups of stocks and, unlike each Related
Fund's returns, do not include the effect of brokerage commissions or
other costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each Related Fund during the 10-year period
ended October 31, 1999 or life of each Related F und,
as applicable, assuming all distributions were reinvested. Returns are
based on past results and are not an indication of future performance.
Tax consequences of different investments (with the exception of
foreign tax withholdings) have not been factored into the figures
below.
FIDELITY LATIN AMERICA: During the period from April 19, 1993
(commencement of operations) to October 31, 1999, a hypothetical
$10,000 investment in Fidelity Latin America would have grown to $
12,829 , including the effect of the fund's maximum sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FIDELITY LATIN AMERICA
Period Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 11,941 $ 848 $ 40 $ 12,829
1998 $ 10,408 $ 480 $ 35 $ 10,923
1997 $ 15,045 $ 510 $ 51 $ 15,606
1996 $ 12,212 $ 190 $ 41 $ 12,443
1995 $ 9,458 $ 31 $ 32 $ 9,521
1994 $ 15,724 $ 53 $ 53 $ 15,830
1993* $ 12,882 $ 0 $ 0 $ 12,882
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY LATIN AMERICA INDEXES
Period Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 35,028 $ 35,588 $ 11,681
1998 $ 27,873 $ 28,057 $ 11,389
1997 $ 22,848 $ 23,893 $ 11,222
1996 $ 17,295 $ 19,004 $ 10,993
1995 $ 13,937 $ 14,670 $ 10,674
1994 $ 11,022 $ 11,758 $ 10,382
1993* $ 10,612 $ 10,776 $ 10,118
</TABLE>
* From April 19, 1993 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Latin America on April 19, 1993, assuming the maximum sales
charge had been in effect, the net amount invested in fund shares was
$ 10,000 . The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 10,898 . If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $ 825 for dividends and $ 49 for
capital gain distributions. The figures in the table do not include
the effect of the Related F und's 1.5% short-term trading fee
applicable to shares held less than 90 days.
FIDELITY JAPAN: During the period from September 15, 1992
(commencement of operations) to October 31, 1999, a hypothetical
$10,000 investment in Fidelity Japan would have grown to $ 22,908
, including the effect of the fund's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FIDELITY JAPAN
Period Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 21,117 $ 471 $ 1,320 $ 22,908
1998 $ 9,787 $ 189 $ 612 $ 10,588
1997 $ 10,767 $ 9 $ 673 $ 11,449
1996 $ 11,330 $ 0 $ 708 $ 12,038
1995 $ 11,718 $ 0 $ 732 $ 12,450
1994 $ 13,842 $ 0 $ 461 $ 14,303
1993 $ 12,950 $ 0 $ 0 $ 12,950
1992* $ 9,545 $ 0 $ 0 $ 9,545
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY JAPAN INDEXES
Period Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 37,947 $ 37,749 $ 11,904
1998 $ 30,195 $ 29,760 $ 11,607
1997 $ 24,752 $ 25,344 $ 11,437
1996 $ 18,736 $ 20,158 $ 11,203
1995 $ 15,098 $ 15,560 $ 10,878
1994 $ 11,941 $ 12,472 $ 10,580
1993 $ 11,496 $ 11,431 $ 10,311
1992* $ 10,001 $ 9,733 $ 10,035
</TABLE>
* From September 15, 1992 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Japan on September 15, 1992, assuming the maximum sales charge
had been in effect, the net amount investment in fund shares was $
10,000 . The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 10,967 . If distributions had
not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments for the period
would have amounted to $ 213 for dividends and $ 728 for
capital gain distributions. The figures in the table do not include
the effect of the Related F und's 1.5% short-term trading fee
applicable to shares held less than 90 days.
FIDELITY EUROPE CAPITAL APPRECIATION: During the period from December
21, 1993 (commencement of operations) to October 31, 1999, a
hypothetical $10,000 investment in Fidelity Europe Capital
Appreciation would have grown to $ 23,822 , including the effect
of the fund's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FIDELITY EUROPE CAPITAL
APPRECIATION
Period Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 18,081 $ 908 $ 4,833 $ 23,822
1998 $ 15,792 $ 793 $ 4,221 $ 20,806
1997 $ 16,073 $ 603 $ 1,630 $ 18,306
1996 $ 13,648 $ 266 $ 0 $ 13,914
1995 $ 11,718 $ 0 $ 0 $ 11,718
1994* $ 11,010 $ 0 $ 0 $ 11,010
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY EUROPE CAPITAL INDEXES
APPRECIATION
Period Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 33,029 $ 32,336 $ 11,536
1998 $ 26,282 $ 25,493 $ 11,248
1997 $ 21,544 $ 21,710 $ 11,084
1996 $ 16,308 $ 17,267 $ 10,857
1995 $ 13,141 $ 13,329 $ 10,542
1994* $ 10,393 $ 10,683 $ 10,254
</TABLE>
* From December 21, 1993 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Europe Capital Appreciation on December 21, 1993, assuming the
maximum sales charge had been in effect, the net amount invested
in fund shares was $ 10,000 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 14,212 . If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $ 601 for
dividends and $ 3,279 for capital gain distributions. The
figures in the table do not include the effect of the Related F
und's 1.0% short-term trading fee applicable to shares held less than
90 days.
FIDELITY DIVERSIFIED INTERNATIONAL: During the period from December
27, 1991 (commencement of operations) to October 31, 1999, a
hypothetical $10,000 investment in Fidelity Diversified International
would have grown to $ 26,573.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FIDELITY DIVERSIFIED
INTERNATIONAL
Period Ended October 31 Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value
Investment Distributions Gain Distributions
1999 $ 21,340 $ 1,611 $ 3,622 $ 26,573
1998 $ 17,210 $ 1,020 $ 2,351 $ 20,581
1997 $ 16,570 $ 757 $ 1,779 $ 19,106
1996 $ 14,380 $ 491 $ 1,144 $ 16,015
1995 $ 12,730 $ 197 $ 569 $ 13,496
1994 $ 12,460 $ 158 $ 111 $ 12,729
1993 $ 11,320 $ 133 $ 0 $ 11,453
1992* $ 8,460 $ 0 $ 0 $ 8,460
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY DIVERSIFIED INDEXES
INTERNATIONAL
Period Ended October 31 S&P 500 DJIA Cost of Living**
1999 $ 40,049 $ 41,357 $ 12,197
1998 $ 31,868 $ 32,604 $ 11,893
1997 $ 26,124 $ 27,766 $ 11,719
1996 $ 19,774 $ 22,084 $ 11,479
1995 $ 15,934 $ 17,047 $ 11,146
1994 $ 12,602 $ 13,663 $ 10,841
1993 $ 12,133 $ 12,523 $ 10,566
1992* $ 10,555 $ 10,663 $ 10,283
</TABLE>
* From December 27, 1991 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Fidelity
Diversified International on December 27, 1991, the net amount
invested in fund shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 13,405
. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $ 930
for dividends and $ 2,140 for capital gain distributions.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
Pursuant to Rule 22d-1 under the 1940 Act, FDC exercises its right to
waive Class A and Class T's front-end sales charge on shares acquired
through reinvestment of dividends and capital gain distributions or in
connection with a fund's merger with or acquisition of any investment
company or trust. In addition, FDC has chosen to waive Class A and
Class T's front-end sales charge in certain instances due to sales
efficiencies and competitive considerations. The sales charge will not
apply:
CLASS A SHARES ONLY
1. to shares purchased for an employee benefit plan (as defined in the
Employee Retirement Income Security Act) (except a SIMPLE IRA, SEP, or
SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program with at
least $25 million or more in plan assets;
2. to shares purchased for an employee benefit plan (except a SIMPLE
IRA, SEP, or SARSEP plan or a plan covering self-employed individuals
and their employees (formerly Keogh/H.R. 10 plans)) or a 403(b)
program investing through an insurance company separate account used
to fund annuity contracts;
3. to shares purchased for an employee benefit plan (except a SIMPLE
IRA, SEP, or SARSEP plan or a plan covering self-employed individuals
and their employees (formerly Keogh/H.R. 10 plans)) or a 403(b)
program investing through a trust institution, bank trust department
or insurance company, or any such institution's broker-dealer
affiliate that is not part of an organization primarily engaged in the
brokerage business. Employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs
that participate in the Advisor Retirement Connection do not qualify
for this waiver;
4. to shares purchased for an employee benefit plan (except a SIMPLE
IRA, SEP, or SARSEP plan or a plan covering self-employed individuals
and their employees (formerly Keogh/H.R. 10 plans)) or a 403(b)
program investing through an investment professional sponsored program
that requires the participating employee benefit plan to initially
invest in Class C or Class B shares and, upon meeting certain
criteria, subsequently requires the plan to invest in Class A shares;
5. to shares purchased by a trust institution or bank trust department
for a managed account that is charged an asset-based fee. Employee
benefit plans (except SIMPLE IRA, SEP, and SARSEP plans and plans
covering self-employed individuals and their employees (formerly
Keogh/H.R. 10 plans)), 403(b) programs and accounts managed by third
parties do not qualify for this waiver;
6. to shares purchased by a broker-dealer for a managed account that
is charged an asset-based fee. Employee benefit plans (except SIMPLE
IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)) and
403(b) programs do not qualify for this waiver;
7. to shares purchased by a registered investment adviser that is not
part of an organization primarily engaged in the brokerage business
for an account that is managed on a discretionary basis and is charged
an asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do
not qualify for this waiver;
8. to shares purchased with proceeds from the sale of front-end load
shares of a non-Advisor mutual fund for an account participating in
the FundSelect by Nationwide program;
9. to shares purchased by a bank trust officer, registered
representative, or other employee (or a member of one of their
immediate families) of investment professionals having agreements with
FDC . A member of the immediate family of a bank trust officer, a
registered representative or other employee of investment
professionals having agreements with FDC, is a spouse of one of those
individuals, an account for which one of those individuals is acting
as custodian for a minor child, and a trust account that is registered
for the sole benefit of a minor child of one of those individuals; or
10. to shares purchased by the Fidelity Investments Charitable Gift
Fund.
A sales load waiver form must accompany these transactions.
CLASS T SHARES ONLY
1. to shares purchased for an insurance company separate account used
to fund annuity contracts for employee benefit plans (except SIMPLE
IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)) or
403(b) programs;
2. to shares purchased by a trust institution or bank trust
department for a managed account that is charged an asset-based fee.
Accounts managed by third parties do not qualify for this waiver;
3. to shares purchased by a broker-dealer for a managed account that
is charged an asset-based fee;
4. to shares purchased by a registered investment adviser that is not
part of an organization primarily engaged in the brokerage business
for an account that is managed on a discretionary basis and is charged
an asset-based fee;
5. to shares purchased for an employee benefit plan (except a SIMPLE
IRA, SEP, or SARSEP plan or a plan covering self-employed individuals
and their employees (formerly Keogh/H.R. 10 plans)) or a 403(b)
program;
6. to shares purchased for a Fidelity or Fidelity Advisor account
(including purchases by exchange) with the proceeds of a distribution
from (i) an insurance company separate account used to fund annuity
contracts for employee benefit plans, 403(b) programs or plans
covering sole-proprietors (formerly Keogh/H.R. 10 plans) that are
invested in Fidelity Advisor or Fidelity funds or (ii) an employee
benefit plan, 403(b) program or plan covering a sole-proprietor
(formerly Keogh/H.R. 10 plan) that is invested in Fidelity Advisor or
Fidelity funds. (Distributions other than those transferred to an IRA
account must be transferred directly into a Fidelity account.);
7. to shares purchased for any state, county, or city, or any
governmental instrumentality, department, authority or agency;
8. to shares purchased with redemption proceeds from other mutual fund
complexes on which the investor has paid a front-end or contingent
deferred sales charge;
9. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or Fidelity International Limited (FIL) or their
direct or indirect subsidiaries (a Fidelity Trustee or employee), the
spouse of a Fidelity Trustee or employee, a Fidelity Trustee or
employee acting as custodian for a minor child, or a person acting as
trustee of a trust for the sole benefit of the minor child of a
Fidelity Trustee or employee;
10. to shares purchased by a charitable organization (as defined for
purposes of Section 501(c)(3) of the Internal Revenue Code, but
excluding the Fidelity Investments Charitable Gift Fund) investing
$100,000 or more;
11. to shares purchased by a bank trust officer, registered
representative, or other employee (or a member of one of their
immediate families) of investment professionals having agreements with
FDC . A member of the immediate family of a bank trust officer, a
registered representative or other employee of investment
professionals having agreements with FDC, is a spouse of one of those
individuals, an account for which one of those individuals is acting
as custodian for a minor child, and a trust account that is registered
for the sole benefit of a minor child of one of those individuals;
12. to shares purchased for a charitable remainder trust or life
income pool established for the benefit of a charitable organization
(as defined for purposes of Section 501(c)(3) of the Internal Revenue
Code);
13. to shares purchased with distributions of income, principal, and
capital gains from Fidelity Defined Trusts; or
14. to shares purchased by the Fidelity Investments Charitable Gift
Fund.
A sales load waiver form must accompany these transactions.
CLASS B AND CLASS C SHARES ONLY
The Class B or Class C contingent deferred sales charge (CDSC) will
not apply to the redemption of shares:
1. For disability or death, provided that the shares are sold within
one year following the death or the initial determination of
disability;
2. That are permitted without penalty at age 70 1/2 pursuant to the
Internal Revenue Code from retirement plans or accounts (other than of
shares purchased on or after February 11, 1999 for Traditional IRAs,
Roth IRAs and Rollover IRAs);
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs
and Rollover IRAs purchased on or after February 11, 1999;
4. Through the Fidelity Advisor Systematic Withdrawal Program; or
5. (Applicable to Class C only) From an employee benefit plan, 403(b)
program or plan covering a sole-proprietor (formerly Keogh/H.R. 10
plan).
A waiver form must accompany these transactions.
INSTITUTIONAL CLASS SHARES ONLY
Institutional Class shares are offered to:
1. Broker-dealer managed account programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. In addition, employee
benefit plans, 403(b) programs and plans covering sole-proprietors
(formerly Keogh/H.R. 10 plans) must have at least $50 million in plan
assets;
2. Registered investment adviser managed account programs, provided
the registered investment adviser is not part of an organization
primarily engaged in the brokerage business and the program (i)
charges an asset-based fee and (ii) will have at least $1 million
invested in the Institutional Class of the Advisor funds. In addition,
accounts other than an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly a Keogh/H.R. 10 plan) in the
program must be managed on a discretionary basis;
3. Trust institution and bank trust department managed account
programs that (i) charge an asset-based fee and (ii) will have at
least $1 million invested in the Institutional Class of the Advisor
funds. Accounts managed by third parties are not eligible to purchase
Institutional Class shares;
4. Insurance company separate accounts that will have at least $1
million invested in the Institutional Class of the Advisor funds;
5. Current or former Trustees or officers of a Fidelity fund or
current or retired officers, directors, or regular employees of FMR
Corp. or FIL or their direct or indirect subsidiaries (Fidelity
Trustee or employee), spouses of Fidelity Trustees or employees,
Fidelity Trustees or employees acting as a custodian for a minor
child, or persons acting as trustee of a trust for the sole benefit of
the minor child of a Fidelity Trustee or employee; and
6. Insurance company programs for employee benefit plans, 403(b)
programs or plans covering sole-proprietors (formerly Keogh/H.R. 10
plans) that (i) charge an asset-based fee and (ii) will have at least
$1 million invested in the Institutional Class of the Advisor funds.
Insurance company programs for employee benefit plans, 403(b) programs
and plans covering sole-proprietors (formerly Keogh/H.R. 10 plans)
include such programs offered by a broker-dealer affiliate of an
insurance company, provided that the affiliate is not part of an
organization primarily engaged in the brokerage business.
For purchases made by managed account programs, insurance company
separate accounts or insurance company programs for employee benefit
plans, 403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans), Fidelity reserves the right to waive the
requirement that $1 million be invested in the Institutional Class of
the Advisor funds.
FOR CLASS A AND CLASS T SHARES ONLY
FINDER'S FEE. For all funds except Advisor Short Fixed-Income, on
eligible purchases of (i) Class A shares in amounts of $1 million or
more that qualify for a Class A load waiver, (ii) Class A shares in
amounts of $25 million or more, or (iii) Class T shares in amounts of
$1 million or more, investment professionals will be compensated with
a fee at the rate of 0.25% of the purchase amount. Except as provided
below, Class A eligible purchases are the following purchases made
through broker-dealers and banks: an individual trade of $25 million
or more; an individual trade of $1 million or more that is load
waived; a trade which brings the value of the accumulated account(s)
of an investor (including an employee benefit plan (except a SEP or
SARSEP plan or a plan covering self-employed individuals and their
employees (formerly a Keogh/H.R. 10 plan)) or 403(b) program) past $25
million; a load waived trade that brings the value of the accumulated
account(s) of an investor (including an employee benefit plan (except
a SEP or SARSEP plan or a plan covering self-employed individuals and
their employees (formerly a Keogh/H.R. 10 plan)) or 403(b) program)
past $1 million; a trade for an investor with an accumulated account
value of $25 million or more; a load waived trade for an investor with
an accumulated account value of $1 million or more; an incremental
trade toward an investor's $25 million "Letter of Intent;" and an
incremental load waived trade toward an investor's $1 million "Letter
of Intent." Except as provided below, Class T eligible purchases are
the following purchases made through broker-dealers and banks: an
individual trade of $1 million or more; a trade which brings the value
of the accumulated account(s) of an investor (including an employee
benefit plan (except a SEP or SARSEP plan or a plan covering
self-employed individuals and their employees (formerly a Keogh/H.R.
10 plan)) or 403(b) program) past $1 million; a trade for an investor
with an accumulated account value of $1 million or more; and an
incremental trade toward an investor's $1 million "Letter of Intent."
For Short Fixed-Income, on eligible purchases of (i) Class A shares in
amounts of $1 million or more, or (ii) Class T shares in amounts of $1
million or more, investment professionals will be compensated with a
fee at the rate of 0.25% of the purchase amount. Except as provided
below, Class A eligible purchases are the following purchases made
through broker-dealers and banks: an individual trade of $1 million or
more; a trade which brings the value of the accumulated account(s) of
an investor (including an employee benefit plan (except a SEP or
SARSEP plan or a plan covering self-employed individuals and their
employees (formerly a Keogh/H.R. 10 plan)) or 403(b) program) past $1
million; a trade for an investor with an accumulated account value of
$1 million or more; and an incremental trade toward an investor's $1
million "Letter of Intent." Except as provided below, Class T eligible
purchases are the following purchases made through broker-dealers and
banks: an individual trade of $1 million or more; a trade which brings
the value of the accumulated account(s) of an investor (including an
employee benefit plan (except a SEP or SARSEP plan or a plan covering
self-employed individuals and their employees (formerly a Keogh/H.R.
10 plan)) or 403(b) program) past $1 million; a trade for an investor
with an accumulated account value of $1 million or more; and an
incremental trade toward an investor's $1 million "Letter of Intent."
Shares held by an insurance company separate account will be
aggregated at the client (e.g., the contract holder or plan sponsor)
level, not at the separate account level. Upon request, anyone
claiming eligibility for the 0.25% fee with respect to shares held by
an insurance company separate account must provide FDC access to
records detailing purchases at the client level.
For the purpose of determining the availability of Class A or Class T
finder's fees, purchases of Class A or Class T shares made (i) with
the proceeds from the redemption of shares of any Fidelity fund or
(ii) by the Fidelity Investments Charitable Gift Fund, will not be
considered "eligible purchases."
Except as provided below, any assets on which a finder's fee has been
paid will bear a contingent deferred sales charge (Class A or Class T
CDSC) if they do not remain in Class A or Class T shares of the
Fidelity Advisor Funds, or Daily Money Class shares of Treasury Fund,
Prime Fund or Tax-Exempt Fund, for a period of at least one
uninterrupted year. The Class A or Class T CDSC will be 0.25% of the
lesser of the cost of the Class A or Class T shares, as applicable, at
the initial date of purchase or the value of those Class A or Class T
shares, as applicable, at redemption, not including any reinvested
dividends or capital gains. Class A and Class T shares acquired
through distributions (dividends or capital gains) will not be subject
to a Class A or Class T CDSC. In determining the applicability and
rate of any Class A or Class T CDSC at redemption, Class A or Class T
shares representing reinvested dividends and capital gains will be
redeemed first, followed by those Class A or Class T shares that have
been held for the longest period of time.
Investment professionals must notify FDC in advance of a purchase
eligible for a finder's fee, and may be required to enter into an
agreement with FDC in order to receive the finder's fee.
The Class A or Class T CDSC will not apply to the redemption of
shares:
1. Held by insurance company separate accounts;
2. For plan loans or distributions or exchanges to non-Advisor fund
investment options from employee benefit plans (except shares of
SIMPLE IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)
purchased on or after February 11, 1999) and 403(b) programs; or
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs,
SIMPLE IRAs, SEPs, SARSEPS and plans covering a sole proprietor or
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans).
A waiver form must accompany these transactions.
CLASS A AND CLASS T SHARES ONLY
COMBINED PURCHASE, RIGHTS OF ACCUMULATION AND LETTER OF INTENT
PROGRAMS. The following qualify as an "individual" or "company" for
the purposes of determining eligibility for the Combined Purchase,
Rights of Accumulation or Letter of Intent program: an individual,
spouse and their children under age 21 purchasing for his/her or their
own account; a trustee, administrator or other fiduciary purchasing
for a single trust estate or a single fiduciary account or for a
single or parent-subsidiary group of "employee benefit plans" (except
SEP and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs;
and tax-exempt organizations (as defined in Section 501(c)(3) of the
Internal Revenue Code).
COMBINED PURCHASE. For your purchases to be aggregated for the purpose
of qualifying for the Combined Purchase program, they must be made on
the same day through one investment professional.
RIGHTS OF ACCUMULATION. The current value of your holdings is
determined at the NAV at the close of business on the day you purchase
the Class A or Class T shares to which the current value of your
holdings will be added. For your purchases and holdings to be
aggregated for the purpose of qualifying for the Rights of
Accumulation program, they must have been made through one investment
professional.
LETTER OF INTENT. You must file your Letter of Intent (Letter) with
Fidelity within 90 days of the start of your purchases toward
completing your Letter. For your purchases to be aggregated for the
purpose of completing your Letter, they must be made through one
investment professional. Your initial purchase toward completing your
Letter must be at least 5% of the total investment specified in your
Letter. Class A and Class T shares acquired through an employee
benefit plan, a Traditional IRA, a Roth IRA, a rollover IRA, a 403(b)
program or a plan covering a sole-proprietor (formerly Keogh/H.R. 10
plan) will be included for purposes of completing your Letter but may
not be used to meet the initial investment minimum of 5% of the total
investment specification in your Letter. Fidelity will register
Class A or Class T shares equal to 5% of the total investment
specified in your Letter in your name and will hold those shares in
escrow. You will earn income, dividends and capital gain distributions
on escrowed Class A and Class T shares. The escrow will be released
when you complete your Letter. You are not obligated to complete your
Letter. If you do not complete your Letter, you must pay the increased
front-end sales charges due. If you do not pay the increased front-end
sales charges within 20 days after the date your letter expires,
Fidelity will redeem sufficient escrowed Class A or Class T shares to
pay any applicable front-end sales charges. If you purchase more than
the amount specified in your Letter and qualify for additional Class A
or Class T front-end sales charge reductions, the front-end sales
charge will be adjusted to reflect your total purchase at the end of
13 months and the surplus amount will be applied to your purchase of
additional Class A or Class T shares at the then-current offering
price applicable to the total investment.
ALL CLASSES
A fund may make redemption payments in whole or in part in
readily marketable securities or other property, valued for this
purpose as they are valued in computing each class's NAV, if FMR
determines it is in the best interest of the fund . Shareholders
that receive securities or other property on redemption may
realize a gain or loss for tax purposes, and will incur any costs of
sale, as well as the associated inconveniences.
DISTRIBUTIONS AND TAXES
DIVIDENDS. Because Advisor Latin America, Advisor Emerging Asia,
Advisor Japan, Advisor Europe Capital Appreciation, Advisor
International Capital Appreciation, Advisor Overseas, Advisor
Diversified International, and Advisor Global Equity invest
significantly in foreign securities, corporate shareholders should not
expect fund dividends to qualify for the dividends-received deduction.
For those funds whose income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders. To
the extent that a municipal fund's income is designated as federally
tax-exempt interest, the dividends declared by the fund are also
federally tax-exempt. Short-term capital gains are taxable as
dividends, but do not qualify for the dividends-received deduction.
The municipal fund purchases municipal securities whose interest FMR
believes is free from federal income tax. Generally, issuers or other
parties have entered into covenants requiring continuing compliance
with federal tax requirements to preserve the tax-free status of
interest payments over the life of the security. If at any time the
covenants are not complied with, or if the IRS otherwise determines
that the issuer did not comply with relevant tax requirements,
interest payments from a security could become federally taxable
retroactive to the date the security was issued. For certain types of
structured securities, the tax status of the pass-through of tax-free
income may also be based on the federal tax treatment of the
structure.
Interest on certain "private activity" securities is subject to the
federal alternative minimum tax (AMT), although the interest continues
to be excludable from gross income for other tax purposes. Interest
from private activity securities is a tax preference item for the
purposes of determining whether a taxpayer is subject to the AMT and
the amount of AMT to be paid, if any.
A portion of the gain on municipal bonds purchased at market discount
after April 30, 1993 is taxable to shareholders as ordinary income,
not as capital gains.
CAPITAL GAIN DISTRIBUTIONS. Each fund's long-term capital gain
distributions are federally taxable to shareholders generally as
capital gains.
As of October 31, 1999, Advisor Latin America had a capital loss
carryforward aggregating approximately $6,000. This loss carryforward,
all of which will expire on October 31, 2007, is available to offset
future capital gains.
As of October 31, 1999, Advisor Emerging Asia had a capital loss
carryforward aggregating approximately $9,407,000. This loss
carryforward, all of which will expire on October 31, 2006, is
available to offset future capital gains.
As of October 31, 1999, Advisor Europe Capital Appreciation had a
capital loss carryforward aggregating approximately $697,000. This
loss carryforward, all of which will expire on October 31, 2007, is
available to offset future capital gains.
As of October 31, 1999, Advisor High Yield had a capital loss
carryforward aggregating approximately $34,789,000. This loss
carryforward, all of which will expire on October 31, 2007, is
available to offset future capital gains.
As of October 31, 1999, Advisor High Income had a capital loss
carryforward aggregating approximately $7,000. This loss carryforward,
all of which will expire on October 31, 2007, is available to offset
future capital gains.
As of October 31, 1999, Advisor Government Investment had a capital
loss carryforward aggregating approximately $8,649,000. This loss
carryforward, all of which will expire on October 31, 2007, is
available to offset future capital gains.
As of October 31, 1999, Advisor Mortgage Securities had a capital
loss carryforward aggregating approximately $5,050,000. This loss
carryforward, all of which will expire on October 31, 2007, is
available to offset future capital gains.
As of October 31, 1999, Advisor Intermediate Bond had a capital
loss carryforward aggregating approximately $14,756,000. This loss
carryforward, of which $9,361,000, $1,410,000, and $3,985,000, will
expire on October 31, 2004, 2005, and 2007, respectively, is available
to offset future capital gains.
As of October 31, 1999, Advisor Short Fixed-Income had a capital
loss carryforward aggregating approximately $45,403,000. This loss
carryforward, of which $38,000, $336,000, $17,691,000, $19,457,000,
$2,265,000, $3,149,000, and $2,467,000 will expire on October 31,
2000, 2001, 2002, 2003, 2004, 2005, and 2007, respectively, is
available to offset future capital gains.
As of October 31, 1999, Advisor Municipal Income had a capital loss
carryforward aggregating approximately $13,685,000. This loss
carryforward, of which $7,417,000 and $6,268,000 will expire on
October 31, 2003 and 2004, respectively, is available to offset future
capital gains.
RETURNS OF CAPITAL. If a fund's distributions exceed its taxable
income and capital gains realized during a taxable year, all or a
portion of the distributions made in the same taxable year may be
recharacterized as a return of capital to shareholders. A return of
capital distribution will generally not be taxable, but will reduce
each shareholder's cost basis in the fund and result in a higher
reported capital gain or lower reported capital loss when those shares
on which the distribution was received are sold.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business
trusts, state law provides for a pass-through of the state and local
income tax exemption afforded to direct owners of U.S. Government
securities. Some states limit this pass-through to mutual funds that
invest a certain amount in U.S. Government securities, and some types
of securities, such as repurchase agreements and some agency-backed
securities, may not qualify for this benefit. The tax treatment of
your dividends from a fund will be the same as if you directly owned a
proportionate share of the U.S. Government securities. Because the
income earned on certain U.S. Government securities is exempt from
state and local personal income taxes, the portion of dividends from a
fund attributable to these securities will also be free from state and
local personal income taxes. The exemption from state and local
personal income taxation does not preclude states from assessing other
taxes on the ownership of U.S. Government securities.
FOREIGN TAX CREDIT OR DEDUCTION. Foreign governments may withhold
taxes on dividends and interest earned by a fund with respect to
foreign securities. Foreign governments may also impose taxes on other
payments or gains with respect to foreign securities. If, at the close
of its fiscal year, more than 50% of a fund's total assets is invested
in securities of foreign issuers, the fund may elect to pass through
eligible foreign taxes paid and thereby allow shareholders to take a
deduction or, if they meet certain holding period requirements with
respect to fund shares, a credit on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code so that it will not be liable for federal tax on income
and capital gains distributed to shareholders. In order to qualify as
a regulated investment company, and avoid being subject to federal
income or excise taxes at the fund level, each fund intends to
distribute substantially all of its net investment income and net
realized capital gains within each calendar year as well as on a
fiscal year basis, and intends to comply with other tax rules
applicable to regulated investment companies.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to you. In addition to federal income
taxes, shareholders may be subject to state and local taxes on fund
distributions, and shares may be subject to state and local personal
property taxes. Investors should consult their tax advisers to
determine whether a fund is suitable to their particular tax
situation.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trusts are listed below. The Board of Trustees governs each fund
and is responsible for protecting the interests of shareholders. The
Trustees are experienced executives who meet periodically throughout
the year to oversee each fund's activities, review contractual
arrangements with companies that provide services to each fund, and
review each fund's performance. Except as indicated, each individual
has held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR or its affiliates. The business address of each
Trustee, Member of the Advisory Board, and officer who is an
"interested person" (as defined in the 1940 Act) is 82 Devonshire
Street, Boston, Massachusetts 02109, which is also the address of FMR.
The business address of all the other Trustees is Fidelity
Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235. Those
Trustees who are "interested persons" by virtue of their affiliation
with either the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (69), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.; and a Director of FDC. Abigail Johnson,
Member of the Advisory Board of Fidelity Advisor Series II and
Fidelity Advisor Series VIII, is Mr. Johnson's daughter.
ABIGAIL P. JOHNSON (37), Member of the Advisory Board of Fidelity
Advisor Series II and Fidelity Advisor Series VIII (1999), is Vice
President of certain Equity Funds (1997), and is a Director of FMR
Corp. (1994). Before assuming her current responsibilities, Ms.
Johnson managed a number of Fidelity funds. Edward C. Johnson 3d,
Trustee and President of the Funds, is Ms. Johnson's father.
J. GARY BURKHEAD (58), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments and Brokerage Group
(1997). Previously, Mr. Burkhead served as President of Fidelity
Management & Research Company.
RALPH F. COX (67), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Waste Management
, Inc. (non-hazardous waste, 1993), CH2M Hill Companies
(engineering), and Bonneville Pacific (independent power and
petroleum production) . In addition, he is a member of advisory
boards of Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (67), Trustee. Mrs. Davis is retired from Avon
Products, Inc. where she held various positions including Senior
Vice President of Corporate Affairs and Group Vice President of
U.S. sales, distribution, and manufacturing . She is currently a
Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing), and the TJX Companies, Inc. (retail
stores), and previously served as a Director of Hallmark Cards, Inc.
, and Standard Brands, Inc. In addition, she is a member
of the Board of Directors of the Southampton Hospital in
Southampton, N.Y. (1998) .
ROBERT M. GATES (56), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is a Director of Charles Stark Draper
Laboratory (non-profit), NACCO Industries, Inc. (mining and
manufacturing), and TRW Inc. (automotive, space, defense, and
information technology). Mr. Gates previously served as a Director of
Lucas Varity PLC (automotive components and diesel engines). He is
currently serving as Dean of the George Bush School of Government and
Public Service at Texas A&M University (1999-2000). Mr. Gates also
is a Trustee of the Forum for International Policy and of the
Endowment Association of the College of William and Mary. In addition,
he is a member of the National Executive Board of the Boy Scouts of
America.
E. BRADLEY JONES (71), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. ( automotive, space, defense, and
information technology ), CSX Corporation (freight
transportation), Birmingham Steel Corporation (producer of
steel and steel products) , and RPM, Inc. (manufacturer of chemical
products), and he previously served as a Director of NACCO Industries,
Inc. (mining and manufacturing, 1985-1995), Hyster-Yale Materials
Handling, Inc. (1985-1995), and Cleveland-Cliffs Inc (mining ,
1985-1997 ), and as a Trustee of First Union Real Estate
Investments (1986-1997) . In addition, he serves as a Trustee of
the Cleveland Clinic Foundation, where he has also been a member of
the Executive Committee as well as Chairman of the Board and
President, a Trustee of University School (Cleveland), and a
Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (66), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business. From 1987 to January
1995, Mr. Kirk was a Professor at Columbia University Graduate School
of Business. Prior to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk previously served as a Director
of General Re Corporation (reinsurance, 1987-1998) and as a
Director of Valuation Research Corp. (appraisals and valuations,
1993-1995). He serves as Chairman of the Board of Directors of
National Arts Stabilization Inc., Chairman of the Board of Trustees of
the Greenwich Hospital Association, Director of the Yale-New Haven
Health Services Corp. (1998), Vice Chairman of the Public
Oversight Board of the American Institute of Certified Public
Accountants' SEC Practice Section (1995), and as a Public Governor of
the National Association of Securities Dealers, Inc. (1996).
*PETER S. LYNCH (56), Trustee, is Vice Chairman and Director of FMR.
Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). In addition, he
serves as a Trustee of Boston College, Massachusetts Eye & Ear
Infirmary, Historic Deerfield (1989) and Society for the Preservation
of New England Antiquities, and as an Overseer of the Museum of Fine
Arts of Boston.
WILLIAM O. McCOY (66), Trustee (1997), is the Interim Chancellor
for the University of North Carolina at Chapel Hill. Previously he had
served from 1995 through 1998 as Vice President of Finance for the
University of North Carolina (16-school system). Prior to his
retirement in December 1994, Mr. McCoy was Vice Chairman of the Board
of BellSouth Corporation (telecommunications, 1984) and President of
BellSouth Enterprises (1986). He is currently a Director of Liberty
Corporation (holding company, 1984), Duke- Weeks Realty
Corporation (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), the Kenan Transport Company (trucking,
1996), and Dynatech Corporation (electronics, 1999) . Previously,
he was a Director of First American Corporation (bank holding company,
1979-1996). In addition, Mr. McCoy serve d as a member of the
Board of Visitors for the University of North Carolina at Chapel Hill
(1994 -1998 ) and currently serves on the Board of Visitors of
the Kenan-Flager Business School (University of North Carolina at
Chapel Hill, 1988).
GERALD C. McDONOUGH (71), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director and Chairman of the Board
of York International Corp. (air conditioning and refrigeration),
Commercial Intertech Corp. (hydraulic systems, building systems, and
metal products, 1992), CUNO, Inc. (liquid and gas filtration products,
1996), and Associated Estates Realty Corporation (a real estate
investment trust, 1993). Mr. McDonough served as a Director of
ACME-Cleveland Corp. (metal working, telecommunications, and
electronic products) from 1987-1996 and Brush-Wellman Inc. (metal
refining) from 1983-1997.
MARVIN L. MANN (66), Trustee (1993), is Chairman Emeritus of
the Board of Lexmark International, Inc. (office machines, 1991)
where he still remains a member of the Board . Prior to 1991, he
held the positions of Vice President of International Business
Machines Corporation ("IBM") and President and General Manager of
various IBM divisions and subsidiaries. Mr. Mann is a Director of M.A.
Hanna Company (chemicals, 1993), Imation Corp. (imaging and
information storage, 1997). He is a Board member of Dynatech
Corporation (electronics, 1999).
*ROBERT C. POZEN (53), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc. (1997), and Fidelity
Management & Research (Far East) Inc. (1997). Previously, Mr. Pozen
served as General Counsel, Managing Director, and Senior Vice
President of FMR Corp.
THOMAS R. WILLIAMS (71), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
of National Life Insurance Company of Vermont and American
Software, Inc. Mr. Williams was previously a Director of ConAgra,
Inc. (agricultural products), Georgia Power Company (electric
utility), and AppleSouth, Inc. (restaurants, 1992).
DWIGHT D. CHURCHILL (45), is Vice President of Bond Funds, Group
Leader of the Bond Group, Senior Vice President of FMR (1997), and
Vice President of FIMM (1998). Mr. Churchill joined Fidelity in 1993
as Vice President and Group Leader of Taxable Fixed-Income
Investments.
FRED L. HENNING, JR. (60), is Vice President of Fidelity's
Fixed-Income Group (1995), Senior Vice President of FMR (1995), and
Senior Vice President of FIMM (1998). Before assuming his current
responsibilities, Mr. Henning was head of Fidelity's Money Market
Division.
ROBERT A. LAWRENCE (47), is Vice President of certain Equity Funds
(1997), Vice President of Fidelity Real Estate High Income Fund (1995)
and Fidelity Real Estate High Income Fund II (1996), and Senior Vice
President of FMR (1993).
RICHARD A. SPILLANE, JR. (48), is Vice President of certain Equity
Funds and Senior Vice President of FMR (1997). Since joining Fidelity,
Mr. Spillane is Chief Investment Officer for Fidelity International,
Limited. Prior to that position, Mr. Spillane served as Director of
Research.
ANDREW J. DUDLEY (34), is Vice President of Fidelity Advisor Short
Fixed-Income Fund (1998) and other funds advised by FMR. Prior to
joining Fidelity as a portfolio manager in 1996, Mr. Dudley worked as
a quantitative analyst and portfolio manager at Putnam Investments for
five years.
MARGARET L. EAGLE (50), is Vice President of Fidelity Advisor High
Yield Fund. Ms. Eagle is also a senior vice president of Fidelity
Management Trust Company, the unit of Fidelity which serves
institutional investment businesses worldwide by managing assets for
corporate and public employee retirement funds, endowments,
foundations, and other major institutions. Prior to her current
responsibilities, she managed several Fidelity funds.
GREGORY FRASER (39), is Vice President of Fidelity Advisor Diversified
International Fund (1998) and another fund advised by Fidelity. Prior
to his current responsibilities, Mr. Fraser managed a variety of
Fidelity funds.
DAVID L. GLANCY (38), is Vice President of Fidelity Advisor High
Income Fund (1999) and another fund advised by FMR. Prior to his
current responsibilities, Mr. Glancy managed a variety of Fidelity
funds.
RICHARD C. HABERMANN (59), is Vice President of Fidelity Advisor
Global Equity (1998) and other funds advised by FMR. He is also Senior
Vice President of FMR (1993). Prior to his current responsibilities,
Mr. Habermann managed a variety of Fidelity funds.
KEVIN R. MCCAREY (39), is Vice President of Fidelity Advisor Europe
Capital Appreciation Fund (1998), Fidelity Advisor International
Capital Appreciation Fund (1997), and other funds advised by FMR.
Prior to his current responsibilities, Mr. McCarey managed a variety
of Fidelity funds.
RICHARD R. MACE, JR. (37), is Vice President of Fidelity Advisor
Overseas Fund (1996) and other funds advised by FMR. Prior to his
current responsibilities, Mr. Mace managed a variety of Fidelity
funds.
PATRICIA SATTERTHWAITE (40), is Vice President of Fidelity Advisor
Latin America Fund (1998) and another fund advised by FMRity. Prior to
her current responsibilities, she managed several Fidelity funds.
THOMAS J. SILVIA (38), is Vice President of Fidelity Advisor Mortgage
Securities (1998), Fidelity Advisor Government Investment Fund (1998),
and other funds advised by FMR. Since joining Fidelity in 1993, Mr.
Silvia was a senior mortgage trader and co-managed another Fidelity
fund.
CHRISTINE JONES THOMPSON (41), is Vice President of Fidelity Advisor
Municipal Income Fund (1998) and other funds advised by FMR. Prior to
her current responsibilities, Ms. Thompson managed a variety of
Fidelity funds.
ERIC D. ROITER (50), Secretary (1998), is Vice President (1998) and
General Counsel of FMR (1998) and Vice President and Clerk of FDC
(1998). Prior to joining Fidelity, Mr. Roiter was with the law firm of
Debevoise & Plimpton, as an associate (1981-1984) and as a partner
(1985-1997), and served as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981). Mr. Roiter was an
Adjunct Member, Faculty of Law, at Columbia University Law School
(1996-1997).
RICHARD A. SILVER (52), Treasurer (1997), is Treasurer of the Fidelity
funds and is an employee of FMR (1997). Before joining FMR, Mr. Silver
served as Executive Vice President, Fund Accounting & Administration
at First Data Investor Services Group, Inc. (1996-1997). Prior to
1996, Mr. Silver was Senior Vice President and Chief Financial Officer
at The Colonial Group, Inc. Mr. Silver also served as Chairman of the
Accounting/Treasurer's Committee of the Investment Company Institute
(1987-1993).
MATTHEW N. KARSTETTER (38), Deputy Treasurer (1998), is Deputy
Treasurer of the Fidelity funds and is an employee of FMR (1998).
Before joining FMR, Mr. Karstetter served as Vice President of
Investment Accounting and Treasurer of IDS Mutual Funds at American
Express Financial Advisors (1996-1998). Prior to 1996, Mr. Karstetter
was Vice President, Mutual Fund Services at State Street Bank & Trust
(1991-1996).
STANLEY N. GRIFFITH (53), Assistant Vice President (1998), is
Assistant Vice President of Fidelity's Fixed-Income Funds (1998) and
an employee of FMR Corp.
JOHN H. COSTELLO (53), Assistant Treasurer, is an employee of FMR.
NED C. LAUTENBACH (55), Member of the Advisory Board (1999), has been
a partner of Clayton, Dubilier & Rice, Inc. (private equity investment
firm) since September 1998. Mr. Lautenbach was Senior Vice President
of IBM Corporation from 1992 until his retirement in July 1998. From
1993 to 1995 he was Chairman of IBM World Trade Corporation. He also
was a member of IBM's Corporate Executive Committee from 1994 to July
1998. He is a Director of PPG Industries Inc. (glass, coating and
chemical manufacturer), Dynatech Corporation (global communications
equipment), Eaton Corporation (global manufacturer of highly
engineered products) and ChoicePoint Inc. (data identification,
retrieval, storage, and analysis).
THOMAS J. SIMPSON (41), Assistant Treasurer (1996), is Assistant
Treasurer of Fidelity's Fixed-Income Funds (1998) and an employee of
FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and
Fund Controller of Liberty Investment Services (1987-1995).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended in 1998, or calendar year
ended December 31, 1998, as applicable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COMPENSATION TABLE
AGGREGATE COMPENSATION FROM A Edward C. Johnson 3d** Abigail P. Johnson ** J. Gary Burkhead** Ralph F. Cox
FUND
Advisor Latin AmericaB,+ $ 0 $ 0 $ 0 $ 1
Advisor Emerging Asia B,+ $ 0 $ 0 $ 0 $ 20
Advisor JapanB,+ $ 0 $ 0 $ 0 $ 5
Advisor International Capital $ 0 $ 0 $ 0 $ 10
AppreciationB
Advisor Europe Capital $ 0 $ 0 $ 0 $ 4
AppreciationB,+
Advisor OverseasB $ 0 $ 0 $ 0 $ 403
Advisor Diversified $ 0 $ 0 $ 0 $ 5
InternationalB,+
Advisor Global EquityB,+ $ 0 $ 0 $ 0 $ 2
Advisor High YieldB,C,D $ 0 $ 0 $ 0 $ 1,218
Advisor High IncomeB,+ $ 0 $ 0 $ 0 $ 1
Advisor Government InvestmentB $ 0 $ 0 $ 0 $ 106
Advisor Mortgage SecuritiesB $ 0 $ 0 $ 0 $ 147
Advisor Intermediate BondB $ 0 $ 0 $ 0 $ 161
Advisor Short Fixed- IncomeB $ 0 $ 0 $ 0 $ 101
Advisor Municipal IncomeB $ 0 $ 0 $ 0 $ 134
TOTAL COMPENSATION FROM THE $ 0 $ 0 $ 0 $ 223,500
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
COMPENSATION TABLE
AGGREGATE COMPENSATION
FROM A Phyllis Burke Davis Robert M. Gates E. Bradley Jones Donald J. Kirk Ned C. Lautenbach***
FUND
Advisor Latin AmericaB,+ $ 1 $ 1 $ 1 $ 1 $ 0
Advisor Emerging Asia B,+ $ 20 $ 20 $ 20 $ 20 $ 2
Advisor JapanB,+ $ 5 $ 5 $ 5 $ 5 $ 1
Advisor International Capital $ 10 $ 10 $ 10 $ 10 $ 2
AppreciationB
Advisor Europe Capital $ 4 $ 4 $ 4 $ 4 $ 1
AppreciationB,+
Advisor OverseasB $ 387 $ 400 $ 400 $ 397 $ 38
Advisor Diversified $ 5 $ 5 $ 5 $ 5 $ 1
InternationalB,+
Advisor Global EquityB,+ $ 2 $ 2 $ 2 $ 2 $ 0
Advisor High YieldB,C,D $ 1,167 $ 1,210 $ 1,209 $ 1,201 $ 97
Advisor High IncomeB,+ $ 1 $ 1 $ 1 $ 1 $ 0
Advisor Government InvestmentB $ 102 $ 105 $ 105 $ 105 $ 9
Advisor Mortgage SecuritiesB $ 141 $ 146 $ 146 $ 145 $ 11
Advisor Intermediate BondB $ 155 $ 160 $ 160 $ 159 $ 13
Advisor Short Fixed- IncomeB $ 97 $ 100 $ 100 $ 99 $ 8
Advisor Municipal IncomeB $ 128 $ 133 $ 133 $ 132 $ 10
TOTAL COMPENSATION FROM THE $ 220,500 $ 223,500 $ 222,000 $ 226,500 $ 0
FUND COMPLEX*,A
</TABLE>
<TABLE>
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COMPENSATION TABLE
AGGREGATE COMPENSATION
FROM A Peter S. Lynch** William O. McCoy Gerald C. Mc-Donough Marvin L. Mann Robert C. Pozen**
FUND
Advisor Latin AmericaB,+ $ 0 $ 1 $ 1 $ 1 $ 0
Advisor Emerging Asia B,+ $ 0 $ 20 $ 25 $ 20 $ 0
Advisor JapanB,+ $ 0 $ 5 $ 6 $ 5 $ 0
Advisor International Capital $ 0 $ 10 $ 12 $ 10 $ 0
AppreciationB
Advisor Europe Capital $ 0 $ 4 $ 5 $ 4 $ 0
AppreciationB,+
Advisor OverseasB $ 0 $ 400 $ 495 $ 400 $ 0
Advisor Diversified $ 0 $ 5 $ 6 $ 5 $ 0
InternationalB,+
Advisor Global EquityB,+ $ 0 $ 2 $ 3 $ 2 $ 0
Advisor High YieldB,C,D $ 0 $ 1,210 $ 1,495 $ 1,210 $ 0
Advisor High IncomeB,+ $ 0 $ 1 $ 1 $ 1 $ 0
Advisor Government InvestmentB $ 0 $ 105 $ 130 $ 105 $ 0
Advisor Mortgage SecuritiesB $ 0 $ 146 $ 181 $ 146 $ 0
Advisor Intermediate BondB $ 0 $ 160 $ 198 $ 160 $ 0
Advisor Short Fixed- IncomeB $ 0 $ 100 $ 124 $ 100 $ 0
Advisor Municipal IncomeB $ 0 $ 133 $ 164 $ 133 $ 0
TOTAL COMPENSATION FROM THE $ 0 $223,500 $ 273,500 $220,500 $ 0
FUND COMPLEX*,A
</TABLE>
<TABLE>
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<S> <C>
COMPENSATION TABLE
AGGREGATE COMPENSATION FROM A Thomas R. Williams
FUND
Advisor Latin AmericaB,+ $ 1
Advisor Emerging Asia B,+ $ 20
Advisor JapanB,+ $ 5
Advisor International Capital $ 10
AppreciationB
Advisor Europe Capital $ 4
AppreciationB,+
Advisor OverseasB $ 392
Advisor Diversified $ 5
InternationalB,+
Advisor Global EquityB,+ $ 2
Advisor High YieldB,C,D $ 1,184
Advisor High IncomeB,+ $ 1
Advisor Government InvestmentB $ 103
Advisor Mortgage SecuritiesB $ 143
Advisor Intermediate BondB $ 157
Advisor Short Fixed- IncomeB $ 98
Advisor Municipal IncomeB $ 130
TOTAL COMPENSATION FROM THE $ 223,500
FUND COMPLEX*,A
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested trustees of the funds, Ms. Johnson and Mr. Burkhead are
compensated by FMR.
*** Effective October 14, 1999, Mr. Lautenbach serves as a Member of
the Advisory Board.
+ Estimated
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; Marvin L. Mann, $55,039; Thomas R.
Williams, $63,433; and William O. McCoy, $55,039.
B Compensation figures include cash, and may include amounts required
to be deferred and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $564; Phyllis Burke Davis, $564;
Robert M. Gates, $564; E. Bradley Jones, $564; Donald J. Kirk, $564;
William O. McCoy, $564; Gerald C. McDonough, $658; Marvin L. Mann,
$564; and Thomas R. Williams, $564.
D Certain of the non-interested trustees' aggregate compensation from
certain funds includes accrued voluntary deferred compensation as
follows: Ralph F. Cox, $471; Marvin L. Mann, $80; William O. McCoy,
$471, and Thomas R. Williams, $ 471.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (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 fees. Amounts deferred under the
Plan are subject to vesting and are treated as though equivalent
dollar amounts had been invested in shares of a cross-section of
Fidelity funds including funds in each major investment discipline and
representing a majority of Fidelity's assets under management (the
Reference Funds). The amounts ultimately received by the Trustees
under the Plan will be directly linked to the investment performance
of the Reference Funds. Deferral of fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate a fund to retain the services
of any Trustee or to pay any particular level of compensation to the
Trustee. A fund may invest in the Reference Funds under the Plan
without shareholder approval.
As of October 31, 1999, approximately 59.25% of Advisor Latin
America's, approximately 18.87% of Advisor Emerging Asia's,
approximately 5.35% of Advisor Japan's, approximately 11.12% of
Advisor International Capital Appreciation's, approximately 9.34% of
Advisor Europe Capital Appreciation's, approximately 1.27% of Advisor
Overseas', approximately 14.33% of Advisor Diversified
International's, approximately 52.03% of Advisor Global Equity's,
approximately 1.90% of Advisor High Yield's, approximately 38.79% of
Advisor High Income's, approximately 1.11% of Advisor Government
Investment's, and approximately 1.09% of Advisor Municipal Income's
total outstanding shares were held by FMR affiliates. FMR Corp. is the
ultimate parent company of these FMR affiliates. By virtue of their
ownership interest in FMR Corp., as described in the "Control of
Investment Advisors" section on page 240, Mr. Edward C. Johnson 3d,
President and Trustee of the funds, and Ms. Abigail P. Johnson, Member
of the Advisory Board of the funds, may be deemed to be a beneficial
owner of these shares. As of the above date, with the exception of Mr.
Johnson 3d's and Ms. Johnson's deemed ownership of Advisor Latin
America's, Advisor Emerging Asia's, Advisor Japan's, Advisor
International Capital Appreciation's, Advisor International Capital
Appreciation's, Advisor Europe Capital Appreciation's, Advisor
Overseas', Advisor Diversified International's, Advisor Global
Equity's, Advisor High Yield's, Advisor High Income's, Advisor
Government Investment's, and Advisor Municipal Income's shares, the
Trustees, Members of the Advisory Board, and officers of the funds
owned, in the aggregate, less than 1% of each fund's total outstanding
shares.
As of October 31, 1999, the following owned of record or
beneficially 5% or more (up to and including 25%) of each class's
outstanding shares:
Advisor Latin America Class A: Fidelity Investments, Boston, MA
(61.62%); KeyCorp, Inc., Cleveland, OH (9.42%); First Union Corp.,
Roanoke, VA (8.83%).
Advisor Latin America Class T: Fidelity Investments, Boston, MA
(43.66%); Equity Services, Inc., Montpelier, VT (10.24%); Berkshire
Equity Sales, Inc., Pittsfield, MA (8.38%).
Advisor Latin America Class B: Fidelity Investments Distributors
Corp., Boston, MA (50.28%); The Guardian, Phoenix, AZ (10.68%); FFP
Securities, Inc., Chesterfield, MO (6.18%).
Advisor Latin America Class C: Fidelity Investments Distributors
Corp., Boston, MA (65.36%); PaineWebber, Inc., New York, NY (6.07%);
LPL Financial Services, Inc., San Diego, CA (5.51%).
Advisor Latin America Institutional Class: Fidelity Investments,
Boston, MA (98.96%).
Advisor Emerging Asia Class A: Fidelity Investments, Boston, MA
(9.94%); Northern Trust Company, Chicago, IL (8.71%); Brown Brothers
Harriman, New York, NY (6.52%); Merrill Lynch, Pierce, Fenner & Smith
Inc., Jacksonville, FL (6.04%).
Advisor Emerging Asia Class T: Merrill Lynch, Pierce, Fenner &
Smith Inc., Jacksonville, FL (21.26%); A.G. Edwards & Sons Inc., Saint
Louis, MO (8.51%); ProEquities Inc., Birmingham, AL (8.15%);
PaineWebber, Inc., New York, NY (7.88%); Citigroup, Inc., New York, NY
(5.98%).
Advisor Emerging Asia Class B: Citigroup, Inc., Long Island City,
NY (15.48%); Fidelity Investments Distributors Corp., Boston, MA
(10.76%); Transamerica Life Insurance & Annuity, Los Angeles, CA
(8.99%); Protected Investors of America, San Francisco, CA (6.73%);
Bank One Corporation, Westerville, OH (5.47%); BISYS Brokerage
Services, Inc., Rhinebeck, NY (5.37%).
Advisor Emerging Asia Class C: Merrill Lynch, Pierce, Fenner &
Smith Inc., Jacksonville, FL (24.08%); Fidelity Investments
Distributors Corp., Boston, MA (16.90%); Dain Rauscher Inc.,
Minneapolis, MN (10.07%); Lehman Brothers Inc., New York, NY (8.18%);
Bear Stearns & Company, Inc., Brooklyn, NY (5.70%); A.G. Edwards &
Sons Inc., Saint Louis, MO (5.22%).
Advisor Emerging Asia Institutional Class: Citigroup, Inc., New
York, NY (60.75%); Merrill Lynch, Pierce, Fenner & Smith Inc.,
Jacksonville, FL (33.46%).
Advisor Japan Class A: Fidelity Investments, Boston, MA (10.70%);
Bear Stearns, New York, NY, (6.42%); SunAmerica, New York, NY (6.39%);
Merrill Lynch, Pierce, Fenner & Smith Inc., Jacksonville, FL (6.12%);
Fleet Financial Group Inc., Boston, MA (5.48%); Sentra Securities
Corporation, San Diego, CA (5.44%).
Advisor Japan Class T: Securities America, Omaha, NE (18.21%);
Advanced Financial Planning Securities, Brentwood, TN (8.21%).
Advisor Japan Class B: Merrill Lynch, Pierce, Fenner & Smith Inc.,
Jacksonville, FL (8.52%); Citigroup, Inc., Long Island City, NY
(6.97%); Prudential, New York, NY (6.15%); A.G. Edwards & Sons Inc.,
Saint Louis, MO (5.11%).
Advisor Japan Class C: Merrill Lynch, Pierce, Fenner & Smith Inc.,
Jacksonville, FL (36.00%); Legg Mason Wood Walker, Inc., Baltimore, MD
(8.53%); Lifemark Securities Corp., Pittsfield, NY (8.50%).
Advisor Japan Institutional Class: Merrill Lynch, Pierce, Fenner &
Smith Inc., Jacksonville, FL (42.37%); Fidelity Investments, Boston,
MA (25.66%); Meeder Advisory Assoc., Inc., Dublin, OH (6.47%).
Advisor International Capital Appreciation Class A: Legend Equities
Corporation, Palm Beach Garden, FL (6.66%); Protected Investors of
America, San Francisco, CA (6.27%).
Advisor International Capital Appreciation Class T: SunAmerica, New
York, NY (6.24%); PaineWebber, Inc., New York, NY (5.89%).
Advisor International Capital Appreciation Class B: Merrill Lynch,
Pierce, Fenner & Smith Inc., Jacksonville, FL (13.05%); Dain Rauscher
Inc., Minneapolis, MN (5.54%).
Advisor International Capital Appreciation Class C: SunAmerica,
Atlanta, GA (6.61%); Merrill Lynch, Pierce, Fenner & Smith Inc.,
Jacksonville, FL (5.84%); Mutual Service Corporation, West Palm Beach,
FL (5.66%); Capital Financial Services, Inc., Madison, WI (5.48%).
Advisor International Capital Appreciation Institutional Class:
Fidelity Investments, Boston, MA (97.79%).
Advisor Europe Capital Appreciation Class A: Fidelity Investments,
Boston, MA (20.51%); Comerica Bank, Detroit, MI (9.68%); First Union
Corp., Roanoke, VA (6.66%).
Advisor Europe Capital Appreciation Class T: PMG Securities
Corporation, New York, NY (37.35%); ING America Life Group, Atlanta,
GA (12.57%); SunAmercia, Atlanta, GA (5.95%).
Advisor Europe Capital Appreciation Class B: Fidelity Investments
Distributors Corp., Boston, MA (11.19%).
Advisor Europe Capital Appreciation Class C: US Bancorp,
Minneapolis, MN (36.12%); Fidelity Investments Distributors Corp.,
Boston, MA (10.77%); Merrill Lynch, Pierce, Fenner & Smith Inc.,
Jacksonville, FL (10.55%).
Advisor Europe Capital Appreciation Institutional Class: Fidelity
Investments, Boston, MA (50.36%); Merrill Lynch, Pierce, Fenner &
Smith Inc., Jacksonville, FL (36.75%).
Advisor Overseas Class A: Citigroup, Inc., Long Island City, NY
(5.52%).
Advisor Overseas Class T: Manulife Financial Group, Toronto, ON
(13.49%); Great West Life and Annuity Insurance Co., Englewood, CO
(7.39%); Citibank, Inc., New York, NY (5.54%).
Advisor Overseas Class B: Merrill Lynch, Pierce, Fenner & Smith
Inc., Jacksonville, FL (8.22%).
Advisor Overseas Class C: Citigroup, Inc., New York, NY (30.49%);
Merrill Lynch, Pierce, Fenner & Smith Inc., Jacksonville, FL (8.90%).
Advisor Overseas Institutional Class: Merrill Lynch, Pierce, Fenner
& Smith Inc., Jacksonville, FL (43.34%); Mercantile Investment
Services, Jonesboro, AR (7.59%); Bingham, Dana & Gould, Boston, MA
(5.44%).
Advisor Diversified International Class A: Fidelity Investments,
Boston, MA (34.03%).
Advisor Diversified International Class T: ING America Life Group,
Atlanta, GA (7.37%); Fidelity Investment Advisor Group (FIAG), Boston,
MA (5.64%); A.G. Edwards & Sons Inc., Saint Louis, MO (5.48%).
Advisor Diversified International Class B: Fidelity Investments
Distributors Corp., Boston, MA (12.08%); Merrill Lynch, Pierce, Fenner
& Smith Inc., Jacksonville, FL (10.83%); Aetna Inc., Torrance, CA
(6.97%).
Advisor Diversified International Class C: Merrill Lynch, Pierce,
Fenner & Smith Inc., Jacksonville, FL (16.61%); Fidelity Investments
Distributors Corp., Boston, MA (16.04%); Allmerica Financial Corp.,
Worcester, MA (5.34%).
Advisor Diversified International Institutional Class: FTC & CO,
Denver, CO (49.09%); Fidelity Investments, Boston, MA (32.01%);
Merrill Lynch, Pierce, Fenner & Smith Inc., Jacksonville, FL (7.39%).
Advisor Global Equity Class A: Fidelity Investments, Boston, MA
(63.61%); Prudential, New York, NY (8.18%).
Advisor Global Equity Class T: Fidelity Investments, Boston, MA
(36.73%).
Advisor Global Equity Class B: Fidelity Investments Distributors
Corp., Boston, MA (51.70%); Legend Equities Corporation, Palm Beach
Garden, FL (6.64%); Prime Capital Services, Inc., Poughkeepsie, NY
(5.30%).
Advisor Global Equity Class C: Fidelity Investments Distributors
Corp., Boston, MA (44.23%); Merrill Lynch, Pierce, Fenner & Smith
Inc., Jacksonville, FL (22.24%); Capital Financial Services, Inc.,
Madison, WI (7.78%); HRC Services, Inc., Glenwood Landing, NY (7.03%).
Advisor Global Equity Institutional Class: Fidelity Investments,
Boston, MA (99.91%).
Advisor High Yield Class A: Merrill Lynch, Pierce, Fenner & Smith
Inc., Jacksonville, FL (13.84%); Fleet Financial Group Inc., Boston,
MA (5.72%); Commonwealth Financial Network, Waltham, MA (5.44%).
Advisor High Yield Class T: Manulife Financial Group, Toronto, ON
(6.54%); Citigroup, Inc., New York, NY (5.81%).
Advisor High Yield Class B: Merrill Lynch, Pierce, Fenner & Smith
Inc., Jacksonville, FL (12.10%); Citigroup, Inc., New York, NY
(5.40%).
Advisor High Yield Class C: Merrill Lynch, Pierce, Fenner & Smith
Inc., Jacksonville, FL (24.25%); Citigroup, Inc., New York, NY
(7.99%).
Advisor High Yield Institutional Class: LPL Financial Services,
Inc., San Diego, CA (18.24%); Charles Schwab & Co., Inc., San
Francisco, CA (9.17%); Aetna Inc., Torrance, CA (8.75%); Merrill
Lynch, Pierce, Fenner & Smith Inc., Jacksonville, FL (5.35%).
Advisor High Income Class A: Fidelity Investments Distributors
Corp., Boston, MA (81.93%).
Advisor High Income Class T: Fidelity Investments Distributors
Corp., Boston, MA (25.07%); SunAmerica, Atlanta, GA (18.43%); Marion
Bass Securities Corp., Charlotte, NC (17.20%); SunAmerica, New York,
NY (7.79%).
Advisor High Income Class B: Fidelity Investments Distributors
Corp., Boston, MA (28.87%); Merrill Lynch, Pierce, Fenner & Smith
Inc., Jacksonville, FL (12.47%); Metropolitan Life Insurance Company,
New York, NY (6.23%); Marion Bass Securities Corp., Charlotte, NC
(5.25%).
Advisor High Income Class C: Fidelity Investments Distributors
Corp., Boston, MA (32.98%); Offerman & Company, Inc., Houston, TX
(19.11%); PaineWebber, Inc., New York, NY (11.20%); SunAmerica, New
York, NY (10.90%); Merrill Lynch, Pierce, Fenner & Smith Inc.,
Jacksonville, FL (5.20%).
Advisor High Income Institutional Class: FMR Capital, Boston, MA
(84.34%); Aetna Inc., Torrance, Ca (14.04%).
Advisor Government Investment Class A: G. W. & Wade Asset
Management Co., Wellesley, MA (10.18%); KeyCorp, Inc., Cleveland, OH
(7.27%).
Advisor Government Investment Class T: Citigroup, Inc., New York,
NY (5.15%); Fleet Financial Group Inc., Boston, MA (5.05%).
Advisor Government Investment Class B: G. W. & Wade Asset
Management Co., Wellesley, MA (13.87%); Merrill Lynch, Pierce, Fenner
& Smith Inc., Jacksonville, FL (12.38%).
Advisor Government Investment Class C: Merrill Lynch, Pierce,
Fenner & Smith Inc., Jacksonville, FL (28.36%).
Advisor Government Investment Institutional Class: First Hawaiian
Bank, Honolulu, HI (66.33%); First American Bank & Trust Co., Fort
Atkinson, WI (5.07%).
Advisor Mortgage Securities Class A: Prudential, New York, NY
(8.46%); BankBoston Corporation, Boston, MA (7.43%); Gilford
Securities, Inc., New York, NY (6.15%); Aetna Inc., Torrance, CA
(5.85%).
Advisor Mortgage Securities Class T: Commonwealth Financial
Network, Waltham, MA (11.53%); US Bancorp, Minneapolis, MN (5.79%);
ING America Life Group, Atlanta, GA (5.60%).
Advisor Mortgage Securities Class B: Wells Fargo Bank, San
Francisco, CA (9.79%).
Advisor Mortgage Securities Institutional Class: Union Planters
Bank, Memphis, TN (34.71%); Reliance Financial Services, Defiance, OH
(22.78%).
Advisor Intermediate Bond Class A: Fleet Financial Group Inc.,
Boston, MA (14.12%); Scott & Stringfellow, Inc., Richmond, VA (5.21%).
Advisor Intermediate Bond Class T: PaineWebber, Inc., New York, NY
(5.59%); Citigroup, Inc., New York, NY (5.53%).
Advisor Intermediate Bond Class B: Merrill Lynch, Pierce, Fenner &
Smith Inc., Jacksonville, FL (6.99%); Fleet Financial Group Inc.,
Boston, MA (6.26%).
Advisor Intermediate Bond Class C: Merrill Lynch, Pierce, Fenner &
Smith Inc., Jacksonville, FL (17.35%); Boone County National Bank,
Columbia, MO (5.34%).
Advisor Intermediate Bond Institutional Class: Mercantile
Investment Services, Jonesboro, AR (31.01%); First Merit Bank, N.A.,
Akron, OH (5.45%).
Advisor Short-Fixed Income Class A: Jackson National Life, Menasha,
WI (25.57%); Fleet Financial Group Inc., Boston, MA (15.03%); Brown
Brothers Harriman, New York, NY (8.72%).
Advisor Short-Fixed Income Class T: PaineWebber, Inc., New York, NY
(7.23%); Securities America, Omaha, NE (6.84%); SunAmerica, New York,
NY (6.79%); Citigroup, Inc., New York, NY (5.85%).
Advisor Short-Fixed Income Class C: Securities America, Omaha, NE
(38.47%); Merrill Lynch, Pierce, Fenner & Smith Inc., Jacksonville, FL
(6.01%).
Advisor Short-Fixed Income Institutional Class: First Hawaiian
Bank, Honolulu, HI (42.47%); South Holland Bancorp, South Holland, IL
(17.35%); First National Bank of Springdale, Springdale, AZ (7.93%);
Mercantile Investment Services, Jonesboro, AR (6.44%).
Advisor Municipal Income Class A: Raymond James Financial Services,
Inc., Saint Petersburg, FL (9.74%); Hudson Trader Investment Services,
Middletown, NY (6.04%).
Advisor Municipal Income Class T: Citigroup, Inc., New York, NY
(8.55%); A.G. Edwards & Sons Inc., Saint Louis, MO (6.48%).
Advisor Municipal Income Class B: Merrill Lynch, Pierce, Fenner &
Smith Inc., Jacksonville, FL (9.45%).
Advisor Municipal Income Class C: Merrill Lynch, Pierce, Fenner &
Smith Inc., Jacksonville, FL (19.16%); Investacorp, Inc., Amherst, NH
(6.68%); Citigroup, Inc., New York, NY (5.04%).
Advisor Municipal Income Institutional Class: Tompkins County Trust
Company, Ithaca, NY (11.88%); Century Bank & Trust, Rochester, PA
(10.81%); Grand Premier Trust Services, Freeport, IL (8.82%); Arvest
Trust Company, Rogers, AR (6.82%).
A shareholder owning of record or beneficially more than 25% of a
fund's outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other shareholders.
CONTROL OF INVESTMENT ADVISERS
FMR Corp., organized in 1972, is the ultimate parent company of FMR,
FIMM, FMR U.K., and FMR Far East. The voting common stock of FMR Corp.
is divided into two classes. Class B is held predominantly by members
of the Edward C. Johnson 3d family and is entitled to 49% of the vote
on any matter acted upon by the voting common stock. Class A is held
predominantly by non-Johnson family member employees of FMR Corp. and
its affiliates and is entitled to 51% of the vote on any such matter.
The Johnson family group and all other Class B shareholders have
entered into a shareholders' voting agreement under which all Class B
shares will be voted in accordance with the majority vote of Class B
shares. Under the 1940 Act, control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting
common stock and the execution of the shareholders' voting agreement,
members of the Johnson family may be deemed, under the 1940 Act, to
form a controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity International Limited (FIL), a Bermuda company formed in
1968, is the ultimate parent company of FIIA, FIJ, and FIIA(U.K.)L.
Edward C. Johnson 3d, Johnson family members, and various trusts for
the benefit of the Johnson family own, directly or indirectly, more
than 25% of the voting common stock of FIL. FIL provides investment
advisory services to non-U.S. investment companies and institutional
investors investing in securities throughout the world.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that sets forth all
employees' fiduciary responsibilities regarding the funds, establishes
procedures for personal investing and restricts certain transactions.
For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
MANAGEMENT CONTRACTS
Each fund has entered into a management contract with FMR, pursuant to
which FMR furnishes investment advisory and other services.
MANAGEMENT SERVICES. Under the terms of its management contract with
each fund, FMR acts as investment adviser and, subject to the
supervision of the Board of Trustees, directs the investments of the
fund in accordance with its investment objective, policies and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trusts or of FMR, and all personnel of
each fund or FMR performing services relating to research, statistical
and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent, pricing and bookkeeping agent, and the
cost associated with securities lending as applicable, each fund or
each class thereof, as applicable, pays all of its expenses that are
not assumed by those parties. Each fund pays for the typesetting,
printing, and mailing of its proxy materials to shareholders, legal
expenses, and the fees of the custodian, auditor, and non-interested
Trustees. Each fund's management contract further provides that the
fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices, and reports to
shareholders; however, under the terms of each fund's transfer agent
agreement, the transfer agent bears the costs of providing these
services to existing shareholders of the applicable classes. Other
expenses paid by each fund include interest, taxes, brokerage
commissions, the fund's proportionate share of insurance premiums and
Investment Company Institute dues, and the costs of registering shares
under federal securities laws and making necessary filings under state
securities laws. Each fund is also liable for such non-recurring
expenses as may arise, including costs of any litigation to which the
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
MANAGEMENT FEES. For the services of FMR under the management
contract, Advisor Latin America, Advisor Japan, Advisor International
Capital Appreciation, Advisor Europe Capital Appreciation, Advisor
Diversified International, Advisor Global Equity, Advisor Emerging
Asia, Advisor High Yield, Advisor Government Investment, Advisor
Mortgage Securities, Advisor Intermediate Bond, Advisor Short
Fixed-Income, Advisor Municipal Income, and Advisor High Income each
pays FMR a monthly management fee which has two components: a group
fee rate and an individual fund fee rate.
For the services of FMR under the management contract, Advisor
Overseas pays FMR a monthly management fee which has two components: a
basic fee, which is the sum of a group fee rate and an individual fund
fee rate, and a performance adjustment based on a comparison of
Advisor Overseas' performance to that of Morgan Stanley Capital
International Europe, Australasia, Far East Index (EAFE).
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
The following is the fee schedule for the bond funds.
<TABLE>
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BOND FUNDS
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .3700% $ 1 billion .3700%
3 - 6 .3400 50 .2188
6 - 9 .3100 100 .1869
9 - 12 .2800 150 .1736
12 - 15 .2500 200 .1652
15 - 18 .2200 250 .1587
18 - 21 .2000 300 .1536
21 - 24 .1900 350 .1494
24 - 30 .1800 400 .1459
30 - 36 .1750 450 .1427
36 - 42 .1700 500 .1399
42 - 48 .1650 550 .1372
48 - 66 .1600 600 .1349
66 - 84 .1550 650 .1328
84 - 120 .1500 700 .1309
120 - 156 .1450 750 .1291
156 - 192 .1400 800 .1275
192 - 228 .1350 850 .1260
228 - 264 .1300 900 .1246
264 - 300 .1275 950 .1233
300 - 336 .1250 1,000 .1220
336 - 372 .1225 1,050 .1209
372 - 408 .1200 1,100 .1197
408 - 444 .1175 1,150 .1187
444 - 480 .1150 1,200 .1177
480 - 516 .1125 1,250 .1167
516 - 587 .1100 1,300 .1158
587 - 646 .1080 1,350 .1149
646 - 711 .1060 1,400 .1141
711 - 782 .1040
782 - 860 .1020
860 - 946 .1000
946 - 1,041 .0980
1,041 - 1,145 .0960
1,145 - 1,260 .0940
over - 1,260 .0920
</TABLE>
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $757 billion of group net assets - the approximate
level for October 1999 - was 0.1289% , which is the weighted
average of the respective fee rates for each level of group net assets
up to $757 billion.
The following is the fee schedule for the equity funds.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
EQUITY FUNDS
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .5200% $ 1 billion .5200%
3 - 6 .4900 50 .3823
6 - 9 .4600 100 .3512
9 - 12 .4300 150 .3371
12 - 15 .4000 200 .3284
15 - 18 .3850 250 .3219
18 - 21 .3700 300 .3163
21 - 24 .3600 350 .3113
24 - 30 .3500 400 .3067
30 - 36 .3450 450 .3024
36 - 42 .3400 500 .2982
42 - 48 .3350 550 .2942
48 - 66 .3250 600 .2904
66 - 84 .3200 650 .2870
84 - 102 .3150 700 .2838
102 - 138 .3100 750 .2809
138 - 174 .3050 800 .2782
174 - 210 .3000 850 .2756
210 - 246 .2950 900 .2732
246 - 282 .2900 950 .2710
282 - 318 .2850 1,000 .2689
318 - 354 .2800 1,050 .2669
354 - 390 .2750 1,100 .2649
390 - 426 .2700 1,150 .2631
426 - 462 .2650 1,200 .2614
462 - 498 .2600 1,250 .2597
498 - 534 .2550 1,300 .2581
534 - 587 .2500 1,350 .2566
587 - 646 .2463 1,400 .2551
646 - 711 .2426
711 - 782 .2389
782 - 860 .2352
860 - 946 .2315
946 - 1,041 .2278
1,041 - 1,145 .2241
1,145 - 1,260 .2204
over - 1,260 .2167
</TABLE>
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $757 billion of group net assets - the approximate
level for October 1999 - was 0.2805 %, which is the weighted
average of the respective fee rates for each level of group net assets
up to $757 billion.
The individual fund fee rate for each fund (except Advisor Overseas)
is set forth in the following chart. Based on the average group net
assets of the funds advised by FMR for October 1999, each fund's
annual management fee rate would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
Advisor Latin America 0.2805% + 0.45% = 0.7305%
Advisor Emerging Asia 0.2805% + 0.45% = 0.7305%
Advisor Japan 0.2805% + 0.45% = 0.7305%
Advisor International Capital 0.2805% + 0.45% = 0.7305%
Appreciation
Advisor Europe Capital 0.2805% + 0.45% = 0.7305%
Appreciation
Advisor Diversified 0.2805% + 0.45% = 0.7305%
International
Advisor Global Equity 0.2805% + 0.45% = 0.7305%
Advisor High Yield 0.1289% + 0.45% = 0.5789%
Advisor High Income 0.1289% + 0.45% = 0.5789%
Advisor Government Investment 0.1289% + 0.30% = 0.4289%
Advisor Mortgage Securities 0.1289% + 0.30% = 0.4289%
Advisor Intermediate Bond 0.1289% + 0.30% = 0.4289%
Advisor Short Fixed-Income 0.1289% + 0.30% = 0.4289%
Advisor Municipal Income 0.1289% + 0.25% = 0.3789%
</TABLE>
The individual fund fee rate for Advisor Overseas is 0.45% .
Based on the average group net assets of the funds advised by FMR for
October 1999, each fund's annual basic fee rate would be calculated as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
Advisor Overseas 0.2805% + 0.45% = 0.7305%
</TABLE>
One-twelfth of the basic fee rate or the management fee rate, as
applicable, is applied to each fund's average net assets for the
month, giving a dollar amount which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for Advisor
Overseas is subject to upward or downward adjustment, depending upon
whether, and to what extent, the fund's investment performance for the
performance period exceeds, or is exceeded by, the record over the
same period of cap-weighted EAFE. The performance period consists of
the most recent month plus the previous 35 months.
Each percentage point of difference, calculated to the nearest 0.01%
(for Advisor Overseas) (up to a maximum difference of
(plus/minus)10.00) is multiplied by a performance adjustment rate of
0.02%.
For the purposes of calculating the performance adjustment for Advisor
Overseas, the fund's investment performance will be based on the
average performance of all classes of the fund weighted according to
their average assets for each month in the performance period.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to the fund's average net
assets throughout the month, giving a dollar amount which will be
added to (or subtracted from) the basic fee.
The maximum annualized performance adjustment rate is
(plus/minus)0.20% (for Advisor Overseas) of the fund's average net
assets over the performance period.
A class's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the class are treated as if
reinvested in that class's shares at the NAV as of the record date for
payment.
The record of the Index is based on change in value and is adjusted
for any cash distributions from the companies whose securities compose
the Index. Because the adjustment to the basic fee is based on Advisor
Overseas' performance compared to the investment record of the Index,
the controlling factor is not whether the fund's performance is up or
down per se, but whether it is up or down more or less than the record
of the Index. Moreover, the comparative investment performance of the
fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of time.
For Morgan Stanley Capital International Europe, Australasia, Far East
Index, the index returns for periods prior to January 1, 1997 are
adjusted for tax withholding at non-treaty rates. The index returns
for periods after January 1, 1997 are adjusted for tax withholding at
treaty rates applicable to U.S.-based mutual funds organized as
Massachusetts business trusts.
The following table shows the amount of management fees paid by each
fund to FMR for the past three fiscal years, and the amount of
negative or positive performance adjustments to the management fees
paid by Advisor Overseas.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Fiscal Years Ended October 31 Performance Adjustment Management Fees Paid to FMR
Advisor Latin America 1999+ N/A $ 19,333
Advisor Emerging Asia 1999 N/A 248,875
1998 N/A N/A
1997 N/A N/A
Advisor Japan 1999++ N/A 151,192
Advisor International Capital 1999 N/A 278,914
Appreciation
1998+++ N/A 116,243
Advisor Europe Capital 1999++ N/A 98,482
Appreciation
Advisor Overseas 1999 2,336,270 (upward) 12,651,751*
1998 1,911,058 (upward) 11,334,456*
1997 734,731 (upward) 9,515,372*
Advisor Diversified 1999++ N/A 142,982
International
Advisor Global Equity 1999++ N/A 50,032
Advisor High Yield 1999 N/A 24,193,202
1998 N/A 20,940,502
1997 N/A 14,787,091
Advisor High Income 1999++++ N/A 4,502
Advisor Government Investment 1999 N/A 1,558,916
1998 N/A 964,623
1997 N/A 930,159
Advisor Mortgage Securities 1999 N/A 2,110,419
1998 N/A 2,226,557
8/1/97 - 10/31/97 N/A 578,471
1997 N/A 2,273,788
Advisor Intermediate Bond 1999 N/A 2,359,875
12/1/97 - 10/31/98 N/A 1,941,732
11/30/97 N/A 2,095,786
Advisor Short Fixed-Income 1999 N/A 1,459,500
1998 N/A 1,531,459
1997 N/A 1,715,958
Advisor Municipal Income 1999 N/A 1,695,763
1998 N/A 1,699,469
1997 N/A 1,826,656
</TABLE>
+ Advisor Latin America commenced operations on December 21,
1998.
++ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
+++ Advisor International Capital Appreciation commenced
operations on November 3, 1997.
++++ Advisor High Income commenced operations on September 7,
1999.
* Including the amount of the performance adjustment.
FMR may, from time to time, voluntarily reimburse all or a portion of
a class's operating expenses (exclusive of interest, taxes, securities
lending costs, brokerage commissions, and extraordinary expenses),
which is subject to revision or discontinuance. FMR retains the
ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal
year.
Expense reimbursements by FMR will increase a class's returns and
yield, and repayment of the reimbursement by a class will lower its
returns and yield.
SUB-ADVISERS. On behalf of Advisor Government Investment, Advisor
Mortgage Securities, Advisor Intermediate Bond, Advisor Short
Fixed-Income, and Advisor Municipal Income, FMR has entered into a
sub-advisory agreement with FIMM pursuant to which FIMM has primary
responsibility for choosing investments for each fund.
Under the terms of the sub-advisory agreements for Advisor Government
Investment, Advisor Mortgage Securities, Advisor Intermediate Bond,
Advisor Short Fixed-Income, and Advisor Municipal Income, FMR pays
FIMM fees equal to 50% of the management fee payable to FMR under its
management contract with each fund. The fees paid to FIMM are not
reduced by any voluntary or mandatory expense reimbursements that may
be in effect from time to time.
Fees paid to FIMM by FMR on behalf of Advisor Government Investment,
Advisor Mortgage Securities, Advisor Intermediate Bond, Advisor Short
Fixed-Income, and Advisor Municipal Income for the past fiscal year
are shown in the table below.
Fund Fiscal Year Ended October 31 Fees Paid to FIMM
Advisor Government Investment 1999 $ 779,458
Advisor Mortgage Securities 1999 $ 872,801
Advisor Intermediate Bond 1999 $ 994,805
Advisor Short Fixed-Income 1999 $ 608,924
Advisor Municipal Income 1999 $ 703,641
On behalf of Advisor High Yield, Advisor High Income, Advisor Mortgage
Securities, Advisor Intermediate Bond, and Advisor Short Fixed-Income,
FMR has entered into sub-advisory agreements with FMR U.K. and FMR Far
East. On behalf of Advisor Latin America, Advisor Japan, Advisor
International Capital Appreciation, Advisor Europe Capital
Appreciation, Advisor Overseas, Advisor Diversified International,
Advisor Global Equity, and Advisor Emerging Asia, FMR has entered into
sub-advisory agreements with FMR U.K., FMR Far East, and FIIA. FIIA,
in turn, has entered into a sub-advisory agreement with FIIA(U.K.)L.
On behalf of Advisor Emerging Asia, Advisor Japan, Advisor
International Capital Appreciation, Advisor Overseas, and Advisor
Diversified International, FMR has entered into sub-advisory
agreements with FIJ. Pursuant to the sub-advisory agreements, FMR
may receive from the sub-advisers investment research and
advice on issuers outside the United States and FMR may grant the
sub-advisers investment management authority as well as the authority
to buy and sell securities if FMR believes it would be beneficial to
the funds.
Effective January 1, 2000, on behalf of each fund except Advisor
Government Investment and Advisor Municipal Income, FMR Far East will
enter into a sub-advisory agreement with FIJ, pursuant to which FMR
Far East may receive from FIJ investment research and advice relating
to Japanese issuers (and such other Asian issuers as FMR Far East may
designate).
For providing non-discretionary investment advice and research
services the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal to
110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
(small solid bullet) FMR pays FIIA and FIJ fees equal to 30% of FMR's
monthly management fee with respect to the average net assets held by
the fund for which the sub-adviser has provided FMR with investment
advice and research services.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing investment
advice and research services.
(small solid bullet) FMR Far East pays FIJ a fee equal to 100% of
FIJ's costs incurred in connection with providing investment advice
and research services for a fund to FMR Far East.
For providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East a fee equal to
50% of its monthly management fee (including any performance
adjustment) with respect to the fund's average net assets managed by
the sub-adviser on a discretionary basis.
(small solid bullet) FMR pays FIJ and FIIA a fee equal to 57% of its
monthly management fee (including any performance adjustment) with
respect to the fund's average net assets managed by the sub-adviser on
a discretionary basis.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
For providing investment advice and research services, fees paid to
FMR UK, and FMR Far East, on behalf of Advisor Overseas for the
past three fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended October 31 FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
Advisor Overseas
1999 $ 1,471,773 $ 925,624 $ 0 $ 0 $ 0
1998 $ 157,996 $ 144,557 $ 0 $ 0 $ 0
1997 $ 627,390 $ 594,643 $ 0 $ 0 $ 0
</TABLE>
Currently, FIJ is primarily responsible for choosing investments for
Advisor Japan and FIIA is primarily responsible for choosing
investments for Advisor Emerging Asia.
For discretionary investment management and execution of portfolio
transactions, fees paid to FMR UK, FMR Far East, FIJ FIIA and
FIIA(U.K.)L on behalf of Advisor Global Equity and Advisor Japan
for the past three fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended October 31 FMR U.K. FMR Far East FIIA** FIIA(U.K.)L FIJ**
Advisor Global Equity
1999* $ 0 $ 0 $ 6,673 $ 0 $ 0
Fiscal Year Ended October 31 FMR U.K. FMR Far East FIIA* FIIA(U.K.)L FIJ*
Advisor Japan
1999* $ 0 $ 0 $ 82,730 $ 0 $ 0
</TABLE>
* From December 17, 1998 (commencement of operations).
* * Prior to August 1, 1999, FMR paid FIIA and FIJ a fee
equal to 50% of its monthly management fee with respect to the fund's
average net assets managed by the sub-adviser on a discretionary
basis.
DISTRIBUTION SERVICES
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreements
call for FDC to use all reasonable efforts, consistent with its other
business, to secure purchasers for shares of the fund, which are
continuously offered. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
Sales charge revenues collected and retained by FDC for the past three
fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Sales Charge Revenue CDSC Revenue
Fiscal Year Ended Amount Paid to FDC Amount Retained by FDC Amount Paid to FDC
Advisor Latin America - Oct. 31, 1999+ $ 1,172 $ 786 $ 0
Class A
Advisor Latin America - Oct. 31, 1999+ 1,574 236 0
Class T
Advisor Latin America - Oct. 31, 1999+ N/A N/A 765
Class B
Advisor Latin America - Oct. 31, 1999+ N/A N/A 1,120
Class C
Advisor Emerging Asia - Oct. 31, 1999 6,092 1,360 0
Class A
Advisor Emerging Asia - Oct. 31, 1999 3,504 706 0
Class T
Advisor Emerging Asia - Oct. 31, 1999 N/A N/A 0
Class B
Advisor Emerging Asia - Oct. 31, 1999 N/A N/A 0
Class C
Advisor Japan - Class A Oct. 31, 1999++ 37,716 22,618 0
Advisor Japan - Class T Oct. 31, 1999++ 46,244 19,283 0
Advisor Japan - Class B Oct. 31, 1999++ N/A N/A 24,304
Advisor Japan - Class C Oct. 31, 1999++ N/A N/A 5,016
Advisor International Capital Oct. 31, 1999 21,896 8,307 500
Appreciation - Class A
Oct. 31, 1998+++ 16,408 5,206 0
Advisor International Capital Oct. 31, 1999 69,434 20,281 55
Appreciation - Class T
Oct. 31, 1998+++ 68,287 18,616 0
Advisor International Capital Oct. 31, 1999 N/A N/A 13,971
Appreciation - Class B
Oct. 31, 1998+++ N/A N/A 5,042
Advisor International Capital Oct. 31, 1999 N/A N/A 2,028
Appreciation - Class C
Oct. 31, 1998+++ N/A N/A 1,231
Advisor Europe Capital Oct. 31, 1999++ 22,916 10,160 0
Appreciation - Class A
Advisor Europe Capital Oct. 31, 1999++ 48,724 15,624 0
Appreciation - Class T
Advisor Europe Capital Oct. 31, 1999++ N/A N/A 6,305
Appreciation - Class B
Advisor Europe Capital Oct. 31, 1999++ N/A N/A 871
Appreciation - Class C
Advisor Overseas - Class A Oct. 31, 1999 $ 112,000 $ 44,000 $ 0
Oct. 31, 1998 123,000 42,000 0
Oct. 31, 1997 93,000 25,000 0
Advisor Overseas - Class T Oct. 31, 1999 441,000 136,000 5,000
Oct. 31, 1998 618,000 174,000 0
Oct. 31, 1997 748,000 202,000 0
Advisor Overseas - Class B Oct. 31, 1999 N/A N/A 213,000
Oct. 31, 1998 N/A N/A 124,000
Oct. 31, 1997 N/A N/A 86,000
Advisor Overseas - Class C Oct. 31, 1999 N/A N/A 13,000
Oct. 31, 1998*** N/A N/A 4,000
Advisor Diversified Oct. 31, 1999++ 31,240 11,489 0
International - Class A
Advisor Diversified Oct. 31, 1999++ 105,261 32,178 0
International - Class T
Advisor Diversified Oct. 31, 1999++ N/A N/A 6,226
International - Class B
Advisor Diversified Oct. 31, 1999++ N/A N/A 449
International - Class C
Advisor Global Equity - Class A Oct. 31, 1999++ 7,852 4,267 0
Advisor Global Equity - Class T Oct. 31, 1999++ 8,125 2,655 0
Advisor Global Equity - Class B Oct. 31, 1999++ N/A N/A 354
Advisor Global Equity - Class C Oct. 31, 1999++ N/A N/A 27
Advisor High Yield - Class A Oct. 31, 1999 831,000 324,000 0
Oct. 31, 1998 923,000 346,000 0
Oct. 31, 1997 609,000 162,000 0
Advisor High Yield - Class T Oct. 31, 1999 1,840,000 819,000 8,000
Oct. 31, 1998 2,889,000 1,263,000 0
Oct. 31, 1997 2,978,000 979,000 0
Advisor High Yield - Class B Oct. 31, 1999 N/A N/A 3,139,000
Oct. 31, 1998 N/A N/A 1,774,000
Oct. 31, 1997 N/A N/A 1,076,000
Advisor High Yield - Class C Oct. 31, 1999 N/A N/A 180,000
Oct. 31, 1998*** N/A N/A 54,000
Advisor High Income - Class A Oct. 31, 1999++++ 1,541 341 0
Advisor High Income - Class T Oct. 31, 1999++++ 1,877 1,162 0
Advisor High Income - Class B Oct. 31, 1999++++ N/A N/A 0
Advisor High Income - Class C Oct. 31, 1999++++ N/A N/A 0
Advisor Government Investment Oct. 31, 1999 $ 129,786 $ 42,713 $ 0
- - Class A
Oct. 31, 1998 41,422 12,554 0
Oct. 31, 1997 31,629 6,913 0
Advisor Government Investment Oct. 31, 1999 283,622 88,854 5,034
- - Class T
Oct. 31, 1998 105,994 31,145 0
Oct. 31, 1997 76,261 20,512 0
Advisor Government Investment Oct. 31, 1999 N/A N/A 330,686
- - Class B
Oct. 31, 1998 N/A N/A 76,288
Oct. 31, 1997 N/A N/A 87,840
Advisor Government Investment Oct. 31, 1999 N/A N/A 30,008
- - Class C
Oct. 31, 1998*** N/A N/A 14,911
Advisor Mortgage Securities - Oct. 31, 1999 29,751 10,398 0
Class A
Oct. 31, 1998 15,729 5,230 0
Oct. 31, 1997* 263 180 0
Advisor Mortgage Securities - Oct. 31, 1999 74,991 27,421 0
Class T
Oct. 31, 1998 32,042 9,363 0
Oct. 31, 1997* 8,746 1,749 0
Advisor Mortgage Securities - Oct. 31, 1999 N/A N/A 68,549
Class B
Oct. 31, 1998 N/A N/A 7,660
Oct. 31, 1997* N/A N/A 72
Advisor Intermediate Bond - Oct. 31, 1999 139,199 63,030 0
Class A
Oct. 31, 1998** 49,160 28,254 0
Nov. 30, 1997 68,475 24,480 0
Advisor Intermediate Bond - Oct. 31, 1999 180,734 60,024 6,817
Class T
Oct. 31, 1998** 83,240 32,737 0
Nov. 30, 1997 109,296 31,882 0
Advisor Intermediate Bond - Oct. 31, 1999 N/A N/A 126,253
Class B
Oct. 31, 1998** N/A N/A 90,580
Nov. 30, 1997 N/A N/A 68,602
Advisor Intermediate Bond - Oct. 31, 1999 N/A N/A 15,221
Class C
Oct. 31, 1998** N/A N/A 3,720
Nov. 30, 1997**** N/A N/A 0
Advisor Short Fixed-Income - Oct. 31, 1999 $ 56,679 $ 14,321 $ 0
Class A
Oct. 31, 1998 30,218 7,274 0
Oct. 31, 1997 15,709 3,424 0
Advisor Short Fixed-Income - Oct. 31, 1999 248,099 79,649 0
Class T
Oct. 31, 1998 221,684 43,309 0
Oct. 31, 1997 278,405 63,127 0
Advisor Short Fixed-Income - Oct. 31, 1999 N/A N/A 26,881
Class C
Oct. 31, 1998*** N/A N/A 6,373
Advisor Municipal Income - Oct. 31, 1999 50,968 28,875 0
Class A
Oct. 31, 1998 38,091 15,167 0
Oct. 31, 1997 57,657 14,649 0
Advisor Municipal Income - Oct. 31, 1999 204,851 72,163 0
Class T
Oct. 31, 1998 179,663 60,942 0
Oct. 31, 1997 173,689 52,646 0
Advisor Municipal Income - Oct. 31, 1999 N/A N/A 209,085
Class B
Oct. 31, 1998 N/A N/A 112,936
Oct. 31, 1997 N/A N/A 174,350
Advisor Municipal Income - Oct. 31, 1999 N/A N/A 16,279
Class C
Oct. 31, 1998*** N/A N/A 6,848
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
CDSC Revenue
Amount Retained by FDC
Advisor Latin America - $ 0
Class A
Advisor Latin America - 0
Class T
Advisor Latin America - 765
Class B
Advisor Latin America - 1,120
Class C
Advisor Emerging Asia - 0
Class A
Advisor Emerging Asia - 0
Class T
Advisor Emerging Asia - 0
Class B
Advisor Emerging Asia - 0
Class C
Advisor Japan - Class A 0
Advisor Japan - Class T 0
Advisor Japan - Class B 24,304
Advisor Japan - Class C 5,016
Advisor International Capital 500
Appreciation - Class A
0
Advisor International Capital 55
Appreciation - Class T
0
Advisor International Capital 13,971
Appreciation - Class B
5,042
Advisor International Capital 2,028
Appreciation - Class C
1,231
Advisor Europe Capital 0
Appreciation - Class A
Advisor Europe Capital 0
Appreciation - Class T
Advisor Europe Capital 6,305
Appreciation - Class B
Advisor Europe Capital 871
Appreciation - Class C
Advisor Overseas - Class A $ 0
0
0
Advisor Overseas - Class T 5,000
0
0
Advisor Overseas - Class B 213,000
124,000
86,000
Advisor Overseas - Class C 13,000
4,000
Advisor Diversified 0
International - Class A
Advisor Diversified 0
International - Class T
Advisor Diversified 6,226
International - Class B
Advisor Diversified 449
International - Class C
Advisor Global Equity - Class A 0
Advisor Global Equity - Class T 0
Advisor Global Equity - Class B 354
Advisor Global Equity - Class C 27
Advisor High Yield - Class A 0
0
0
Advisor High Yield - Class T 8,000
0
0
Advisor High Yield - Class B 3,139,000
1,774,000
1,076,000
Advisor High Yield - Class C 180,000
54,000
Advisor High Income - Class A 0
Advisor High Income - Class T 0
Advisor High Income - Class B 0
Advisor High Income - Class C 0
Advisor Government Investment $ 0
- - Class A
0
0
Advisor Government Investment 5,034
- - Class T
0
0
Advisor Government Investment 330,686
- - Class B
76,288
87,840
Advisor Government Investment 30,008
- - Class C
14,911
Advisor Mortgage Securities - 0
Class A
0
0
Advisor Mortgage Securities - 0
Class T
0
0
Advisor Mortgage Securities - 68,549
Class B
7,660
72
Advisor Intermediate Bond - 0
Class A
0
0
Advisor Intermediate Bond - 6,817
Class T
0
0
Advisor Intermediate Bond - 126,253
Class B
90,580
68,602
Advisor Intermediate Bond - 15,221
Class C
3,720
0
Advisor Short Fixed-Income - $ 0
Class A
0
0
Advisor Short Fixed-Income - 0
Class T
0
0
Advisor Short Fixed-Income - 26,881
Class C
6,373
Advisor Municipal Income - 0
Class A
0
0
Advisor Municipal Income - 0
Class T
0
0
Advisor Municipal Income - 209,085
Class B
112,936
174,350
Advisor Municipal Income - 16,279
Class C
6,848
</TABLE>
+ Advisor Latin America commenced operations on December 21, 1998.
++ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
+++ Advisor International Capital Appreciation commenced
operations on November 3, 1997.
++++ Advisor High Income commenced operations on September 7, 1999.
* For the fiscal period August 1, 1997 through October 31, 1997.
** For the fiscal period December 1, 1997 through October 31, 1998.
*** For the fiscal period November 3, 1997 through October 31,
1998.
**** For the fiscal period November 3, 1997 through November 30,
1997.
The Trustees have approved a Distribution and Service Plans on behalf
of Class A, Class T, Class B, Class C, Institutional Class and Initial
Class of each fund (the Plans) pursuant to Rule 12b-1 under the 1940
Act (the Rule). The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow Class A, Class T, Class B,
Class C, Institutional Class and Initial Class and FMR to incur
certain expenses that might be considered to constitute direct or
indirect payment by the funds of distribution expenses.
Pursuant to the Class A Plan for Advisor Latin America, Advisor
Emerging Asia, Advisor Japan, Advisor International Capital
Appreciation, Advisor Europe Capital Appreciation, Advisor Overseas,
Advisor Diversified International, and Advisor Global Equity, (the
Equity Funds), FDC is paid a monthly fee at an annual rate of up to
0.75% of Class A's average net assets determined at the close of each
business day throughout the month. Pursuant to the Class A Plan for
Advisor High Yield, Advisor High Income, Advisor Government
Investment, Advisor Mortgage Securities, and Advisor Municipal Income
(the Bond Funds), and Advisor Intermediate Bond (the Intermediate-Term
Bond Fund), and Advisor Short Fixed-Income (the Short-Term Bond Fund),
FDC is paid a monthly fee at an annual rate of up to 0.40% of Class
A's average net assets determined at the close of each business day
throughout the month. Currently, the Trustees have approved a monthly
12b-1 fee for Class A of each of the Equity Funds at an annual rate of
0.25% of its average net assets; and for Class A of each of the Bond
Funds, Intermediate-Term Bond Funds, and Short-Term Bond Fund at an
annual rate of 0.15% of its average net assets. This fee rate may be
increased only when, in the opinion of the Trustees, it is in the best
interests of the shareholders of the applicable class to do so.
Currently, FDC may reallow to intermediaries (such as banks,
broker-dealers and other service-providers), including its affiliates,
up to the full amount of 12b-1 fees paid by Class A for providing
services intended to result in the sale of Class A shares and/or
shareholder support services.
Pursuant to the Class T Plan for Advisor Latin America, Advisor
Emerging Asia, Advisor Japan, Advisor International Capital
Appreciation, Advisor Europe Capital Appreciation, Advisor Diversified
International, and Advisor Global Equity, FDC is paid a monthly 12b-1
fee at an annual rate of up to 0.75% of Class T's average net assets
determined at the close of business on each day throughout the month.
Pursuant to the Class T Plan for Advisor Overseas, FDC is paid a
monthly 12b-1 fee at an annual rate of up to 0.65% of Class T's
average net assets determined at the close of business on each day
throughout the month. Pursuant to the Class T Plan for the Bond Funds
and Intermediate-Term Bond Funds, FDC is paid a monthly 12b-1 fee at
an annual rate of up to 0.40% of Class T's average net assets
determined at the close of business on each day throughout the month.
Pursuant to the Class T Plan for the Short-Term Bond Fund, FDC is paid
a monthly 12b-1 fee at an annual rate of up to 0.15% of Class T's
average net assets determined at the close of business on each day
throughout the month. Currently, the Trustees have approved a monthly
12b-1 fee for Class T of each of the Equity Funds at an annual rate of
0.50% of its average net assets; for Class T of each of the Bond Funds
and the Intermediate-Term Bond Funds at an annual rate of 0.25% of its
average net assets; and for Class T of the Short-Term Bond Fund at an
annual rate of 0.15% of its average net assets. This fee rate may be
increased only when, in the opinion of the Trustees, it is in the best
interests of the shareholders of the applicable class to do so.
Currently, FDC may reallow to intermediaries (such as banks,
broker-dealers and other service-providers), including its affiliates,
up to the full amount of 12b-1 fees paid by Class T for providing
services intended to result in the sale of Class T shares and/or
shareholder support services.
Pursuant to the Class B Plan for each fund, FDC is paid a monthly
12b-1 (distribution) fee at an annual rate of up to 0.75% of Class B's
average net assets determined at the close of business on each day
throughout the month. Currently, the Trustees have approved a monthly
12b-1 (distribution) fee for Class B of the Equity Funds at an annual
rate of 0.75% of its average net assets; and for Class B of the Bond
Funds and the Intermediate Bond Funds at an annual rate of 0.65% of
its average net assets. This fee rate may be increased only when, in
the opinion of the Trustees, it is in the best interests of the
shareholders of the class to do so.
Pursuant to the Class B Plan for each fund, FDC is also paid a monthly
12b-1 (service) fee at an annual rate of 0.25% of Class B's average
net assets determined at the close of business on each day throughout
the month.
Currently, FDC retains the full amount of 12b-1 (distribution) fees
paid by Class B as compensation for providing services intended to
result in the sale of Class B shares, and FDC may reallow up to the
full amount of 12b-1 (service) fees paid by Class B to intermediaries
(such as banks, broker-dealers and other service-providers) for
providing shareholder support services.
Pursuant to the Class C Plan for each fund, FDC is paid a monthly
12b-1 (distribution) fee at an annual rate of 0.75% of Class C's
average net assets determined at the close of business on each day
throughout the month.
Pursuant to the Class C Plan for each fund, FDC is also paid a monthly
12b-1 (service) fee at an annual rate of 0.25% of Class C's average
net assets determined at the close of business on each day throughout
the month.
Currently and except as provided below, for the first year of
investment, FDC retains the full amount of 12b-1 (distribution) fees
paid by Class C as compensation for providing services intended to
result in the sale of Class C shares and retains the full amount of
12b-1 (service) fees paid by Class C for providing shareholder support
services. Normally, after the first year of investment, FDC may
reallow up to the full amount of 12b-1 (distribution) fees paid by
Class C to intermediaries (such as banks, broker-dealers and other
service-providers) for providing services intended to result in the
sale of Class C shares and may reallow up to the full amount of 12b-1
(service) fees paid by Class C to intermediaries for providing
shareholder support services. For purchases of Class C shares made for
an employee benefit plan, 403(b) program or plan covering a
sole-proprietor (formerly Keogh/H.R. 10 plan) or through reinvestment
of dividends or capital gain distributions, during the first year of
investment and thereafter, FDC may reallow up to the full amount of
12b-1 (distribution) fees paid by such Class C shares to
intermediaries, including its affiliates, for providing services
intended to result in the sale of Class C shares and may reallow up to
the full amount of 12b-1 (service) fees paid by such Class C shares to
intermediaries, including its affiliates, for providing shareholder
support services.
The table below shows the distribution fees paid by Class A for the
fiscal years ended 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS A DISTRIBUTION FEES
Fees Paid to FDC Paid by FDC to Intermediaries Retained by FDC*
Advisor Latin America+ $ 1,221 $ 272 $ 949
Advisor Emerging Asia 83,642 55,938 27,704
Advisor Japan++ 5,006 3,971 1,035
Advisor International Capital 3,945 3,686 259
Appreciation
Advisor Europe Capital 3,256 2,405 851
Appreciation++
Advisor Overseas 41,214 41,084 130
Advisor Diversified 4,141 1,715 2,426
International++
Advisor Global Equity++ 3,050 696 2,354
Advisor High Yield 251,670 251,461 209
Advisor High Income+++ 146 15 131
Advisor Government Investment 18,505 18,484 21
Advisor Mortgage Securities 3,865 3,719 146
Advisor Intermediate Bond 23,701 23,701 0
Advisor Short Fixed-Income 19,542 19,542 0
Advisor Municipal Income 14,240 14,169 71
</TABLE>
+ Advisor Latin America commenced operations on December 21, 1998.
++ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
+++ Advisor High Income commenced operations on September 7, 1999.
* Amounts retained by FDC represent fees paid to FDC but not yet
reallowed to intermediaries as of the close of the period reported and
fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
The table below shows the distribution fees paid by Class T for the
fiscal years ended 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS T DISTRIBUTION FEES
Fees Paid to FDC Paid by FDC to Intermediaries Retained by FDC*
Advisor Latin America+ $ 3,231 $ 1,337 $ 1,894
Advisor Emerging Asia 1,338 1,200 138
Advisor Japan++ 35,922 34,566 1,356
Advisor International Capital 104,765 101,577 3,188
Appreciation
Advisor Europe Capital 35,955 34,699 1,256
Appreciation++
Advisor Overseas 6,059,913 6,014,458 45,455
Advisor Diversified 50,579 46,271 4,308
International++
Advisor Global Equity++ 9,341 4,697 4,644
Advisor High Yield 6,308,338 6,211,894 96,444
Advisor High Income+++ 570 388 182
Advisor Government Investment 532,422 527,821 4,601
Advisor Mortgage Securities 61,872 56,948 4,924
Advisor Intermediate Bond 760,397 737,083 23,314
Advisor Short Fixed-Income 460,956 457,885 3,071
Advisor Municipal Income 900,188 888,638 11,550
</TABLE>
+ Advisor Latin America commenced operations on December 21, 1998.
++ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
+++ Advisor High Income commenced operations on September 7, 1999.
* Amounts retained by FDC represent fees paid to FDC but not yet
reallowed to intermediaries as of the close of the period reported and
fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
The table below shows the distribution and service fees paid by Class
B for the fiscal years ended 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS B DISTRIBUTION AND SERVICE FEES
Distribution Fees Paid to FDC Distribution Fees Retained by Service Fees Paid to FDC
FDC*
Advisor Latin America+ $ 4,517 $ 4,517 $ 1,504
Advisor Emerging Asia 1,240 1,240 413
Advisor Japan++ 36,806 36,806 12,268
Advisor International Capital 44,758 44,758 14,916
Appreciation
Advisor Europe Capital 16,088 16,088 5,362
Appreciation++
Advisor Overseas 531,123 531,123 177,071
Advisor Diversified 25,980 25,980 8,660
International++
Advisor Global Equity++ 9,773 9,773 3,258
Advisor High Yield 7,347,174 7,347,174 2,825,836
Advisor High Income+++ 1,046 1,046 402
Advisor Government Investment 556,646 556,646 214,093
Advisor Mortgage Securities 89,966 89,966 34,603
Advisor Intermediate Bond 343,651 343,651 132,173
Advisor Municipal Income 398,972 398,972 153,452
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
CLASS B DISTRIBUTION AND SERVICE FEES
Service Fees Paid by FDC to Service Fees Retained by FDC**
Intermediaries
Advisor Latin America+ $ 560 $ 944
Advisor Emerging Asia 330 83
Advisor Japan++ 11,460 808
Advisor International Capital 14,897 19
Appreciation
Advisor Europe Capital 4,547 815
Appreciation++
Advisor Overseas 176,899 172
Advisor Diversified 6,314 2,346
International++
Advisor Global Equity++ 923 2,335
Advisor High Yield 2,822,380 3,456
Advisor High Income+++ 205 197
Advisor Government Investment 213,776 317
Advisor Mortgage Securities 34,603 0
Advisor Intermediate Bond 132,075 98
Advisor Municipal Income 153,324 128
</TABLE>
+ Advisor Latin America commenced operations on December 21, 1998.
++ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
+++ Advisor High Income commenced operations on September 7, 1999.
* These amounts are retained by FDC for use in its capacity as
distributor.
* * Amounts retained by FDC represent fees paid to FDC but not
yet reallowed to intermediaries as of the close of the period reported
and fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
The table below shows the distribution and service fees paid by Class
C for the fiscal years ended 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS C DISTRIBUTION AND SERVICE FEES
Distribution Fees Paid to FDC Distribution Fees Paid by FDC Distribution Fees Retained by
to Intermediaries FDC*
Advisor Latin America+ $ 3,893 $ 164 $ 3,729
Advisor Emerging Asia 929 259 670
Advisor Japan++ 41,310 10,792 30,518
Advisor International Capital 27,918 8,478 19,440
Appreciation
Advisor Europe Capital 16,743 1,665 15,078
Appreciation++
Advisor Overseas 166,355 59,216 107,139
Advisor Diversified 21,683 1,437 20,246
International++
Advisor Global Equity++ 11,229 2,173 9,056
Advisor High Yield 1,628,309 420,115 1,208,194
Advisor High Income+++ 1,446 0 1,446
Advisor Government Investment 203,219 23,799 179,420
Advisor Intermediate Bond***** 84,788 18,687 66,101
Advisor Short Fixed-Income 89,327 12,961 76,366
Advisor Municipal Income 83,327 17,803 65,524
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS C DISTRIBUTION AND SERVICE FEES
Service Fees Paid to FDC Service Fees Paid by FDC to Service Fees Retained by FDC**
Intermediaries
Advisor Latin America+ $ 1,298 $ 55 $ 1,243
Advisor Emerging Asia 310 86 224
Advisor Japan++ 13,770 3,597 10,173
Advisor International Capital 9,306 2,826 6,480
Appreciation
Advisor Europe Capital 5,581 555 5,026
Appreciation++
Advisor Overseas 55,452 19,739 35,713
Advisor Diversified 7,227 479 6,748
International++
Advisor Global Equity++ 3,743 725 3,018
Advisor High Yield 542,770 140,039 402,731
Advisor High Income+++ 482 0 482
Advisor Government Investment 67,740 7,933 59,807
Advisor Intermediate Bond***** 28,263 6,229 22,034
Advisor Short Fixed-Income 29,776 4,321 25,455
Advisor Municipal Income 27,776 5,935 21,841
</TABLE>
+ Advisor Latin America commenced operations on December 21, 1998.
++ Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity commenced
operations on December 17, 1998.
+++ Advisor High Income commenced operations on September 7, 1999.
* These amounts are retained by FDC for use in its capacity as
distributor.
** Amounts retained by FDC represent fees paid to FDC but not yet
reallowed to intermediaries as of the close of the period reported and
fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
Under each Institutional Class and Initial Class Plan, if the payment
of management fees by the fund to FMR is deemed to be indirect
financing by the fund of the distribution of its shares, such payment
is authorized by the Plan. Each Institutional Class and Initial Class
Plan specifically recognizes that FMR may use its management fee
revenue, as well as its past profits or its other resources, to pay
FDC for expenses incurred in connection with providing services
intended to result in the sale of Institutional Class and Initial
Class shares and/or shareholder support services. In addition, each
Institutional Class and Initial Class Plan provides that FMR, directly
or through FDC, may pay intermediaries, such as banks, broker-dealers
and other service-providers, that provide those services. Currently,
the Board of Trustees has authorized such payments for Institutional
Class and Initial Class shares.
Under each Class A, Class T, Class B and Class C Plan, if the payment
of management fees by the fund to FMR is deemed to be indirect
financing by the fund of the distribution of its shares, such payment
is authorized by the Plan. Each Class A, Class T, Class B and Class C
Plan specifically recognizes that FMR may use its management fee
revenue, as well as its past profits or its other resources, to pay
FDC for expenses incurred in connection with providing services
intended to result in the sale of Class A, Class T, Class B and Class
C Plan shares and/or shareholder support services, including payments
made to intermediaries that provide those services. Currently, the
Board of Trustees has authorized such payments for Class A, Class T,
Class B and Class C Plan shares.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the applicable class of of the fund and its shareholders. In
particular, the Trustees noted that each Institutional Class and
Initial Class Plan does not authorize payments by Institutional Class
and Initial Class of the fund other than those made to FMR under its
management contract with the fund. To the extent that each Plan gives
FMR and FDC greater flexibility in connection with the distribution of
Class A, Class T, Class B, Class C, Institutional Class and Initial
Class shares, additional sales of fund shares or stabilization of cash
flows may result. Furthermore, certain shareholder support services
may be provided more effectively under the Plans by local entities
with whom shareholders have other relationships.
Each Class A, Class T, Class B and Class C Plan does not provide for
specific payments by the applicable class of any of the expenses of
FDC, or obligate FDC or FMR to perform any specific type or level of
distribution activities or incur any specific level of expense in
connection with distribution activities.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the funds might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
FDC may compensate intermediaries that satisfy certain criteria
established from time to time by FDC relating to the level or type of
services provided by the intermediary, the sale or expected sale of
significant amounts of shares, or other factors.
TRANSFER AND SERVICE AGENT AGREEMENTS
Class A, Class T, Class B, Class C, and Institutional Class of Advisor
Latin America, Advisor Emerging Asia, Advisor Japan, Advisor
International Capital Appreciation, Advisor Europe Capital
Appreciation, Advisor Overseas, Advisor Diversified International,
Advisor Global Equity, Advisor High Yield, Advisor High Income,
Advisor Strategic Income, Advisor Government Investment, Advisor
Mortgage Securities, Advisor Intermediate Bond, and Advisor Short
Fixed-Income has entered into a transfer agent agreement with FIIOC,
an affiliate of FMR. Initial Class of Mortgage Securities has entered
into a transfer agent agreement with FSC, an affiliate of FMR. Under
the terms of the agreements, FIIOC and FSC perform transfer agency,
dividend disbursing, and shareholder services for Class A, Class T,
Class B, Class C, Institutional Class, and Initial Class of each fund.
Each class of Advisor Municipal Income has entered into a transfer
agent agreement with Citibank, N.A. (Citibank), which is located at
111 Wall Street, New York, New York. Under the terms of the
agreements, Citibank provides transfer agency, dividend disbursing,
and shareholder services for each class of each fund. Citibank in turn
has entered into sub-transfer agent agreements with FSC. Under the
terms of the sub-agreements, FSC performs all processing activities
associated with providing these services for each class of each fund
and receives all related transfer agency fees paid to Citibank.
For providing transfer agency services, FSC and FIIOC receive an
account fee and an asset-based fee each paid monthly with respect to
each account in a fund. For retail accounts and certain institutional
accounts, these fees are based on account size and fund type. For
certain institutional retirement accounts, these fees are based on
fund type. For certain other institutional retirement accounts, these
fees are based on account type and fund type. The account fees are
subject to increase based on postage rate changes.
For Advisor Latin America, Advisor Emerging Asia, Advisor Japan,
Advisor International Capital Appreciation, Advisor Europe Capital
Appreciation, Advisor Overseas, Advisor Diversified International, and
Advisor Global Equity, the asset-based fees are subject to adjustment
if the year-to-date total return of the S&P 500 exceeds a positive or
negative 15%.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
FSC and FIIOC pay out-of-pocket expenses associated with providing
transfer agent services. In addition, FSC and FIIOC bear the expense
of typesetting, printing, and mailing prospectuses, statements of
additional information, and all other reports, notices, and statements
to existing shareholders, with the exception of proxy statements.
Each of Advisor Latin America, Advisor Emerging Asia, Advisor Japan,
Advisor International Capital Appreciation, Advisor Europe Capital
Appreciation, Advisor Overseas, Advisor Diversified International,
Advisor Global Equity, Advisor High Yield, Advisor High Income,
Advisor Government Investment, Advisor Mortgage Securities, Advisor
Intermediate Bond, and Advisor Short Fixed-Income has also entered
into a service agent agreement with FSC. Under the terms of the
agreements, FSC calculates the NAV and dividends for each class of
each fund, maintains each fund's portfolio and general accounting
records, and administers each fund's securities lending program.
Advisor Municipal Income has also entered into a service agent
agreement with Citibank. Under the terms of the agreements, Citibank
provides pricing and bookkeeping services for each fund. Citibank in
turn has entered into sub-service agent agreements with FSC. Under the
terms of the sub-agreements, FSC performs all processing activities
associated with providing these services, including calculating the
NAV and dividends for each class of each fund and maintaining each
fund's portfolio and general accounting records, and receives all
related pricing and bookkeeping fees paid to Citibank.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month.
The annual rates for pricing and bookkeeping services for Advisor
Latin America, Advisor Emerging Asia, Advisor Japan, Advisor
International Capital Appreciation, Advisor Europe Capital
Appreciation, Advisor Overseas, Advisor Diversified International, and
Advisor Global Equity are 0.0550% of the first $500 million of average
net assets, 0.0425% of average net assets between $500 million and $3
billion, and 0.0010% of average net assets in excess of $3 billion.
The fee, not including reimbursement for out-of-pocket expenses, is
limited to a minimum of $60,000 per year.
The annual rates for pricing and bookkeeping services for Advisor
Government Investment, Advisor Mortgage Securities, Advisor
Intermediate Bond, Advisor Short Fixed-Income, and Advisor Municipal
Income are 0.0275% of the first $500 million of average net assets,
0.0175% of average net assets between $500 million and $3 billion, and
0.0010% of average net assets in excess of $3 billion. The fee, not
including reimbursement for out-of-pocket expenses, is limited to a
minimum of $60,000 per year.
The annual rates for pricing and bookkeeping services for Advisor High
Yield and Advisor High Income are 0.0475% of the first $500 million of
average net assets, 0.0275% of average net assets between $500 million
and $3 billion, and 0.0010% of average net assets in excess of $3
billion. The fee, not including reimbursement for out-of-pocket
expenses, is limited to a minimum of $60,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by the funds to FSC for the past three
fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fiscal Year End 1999 1998 1997
Advisor Latin America 10/31 $ 51,600+ N/A N/A
Advisor Emerging Asia 10/31 22,821 N/A N/A
Advisor Japan 10/31 52,086++ N/A N/A
Advisor International Capital 10/31 60,363 $ 60,181+++ N/A
Appreciation
Advisor Europe Capital 10/31 52,090++ N/A N/A
Appreciation
Advisor Overseas 10/31 676,473 669,432 $ 629,811
Advisor Diversified 10/31 52,097++ N/A N/A
International
Advisor Global Equity 10/31 52,067++ N/A N/A
Advisor High Yield 10/31 926,567 821,873 821,882
Advisor High Income 10/31 8,833++++ N/A N/A
Advisor Government Investment 10/31 111,672 90,466 87,365
Advisor Mortgage Securities 10/31 161,159 205,166 52,896*
Advisor Intermediate Bond 10/31 164,670 181,249** N/A
11/30 N/A N/A 195,556
Advisor Short Fixed-Income 10/31 105,213 142,365 159,567
Advisor Municipal Income 10/31 141,615 184,252 191,896
</TABLE>
+ Advisor Latin America commenced operations on December 21, 199 8
.
++ Advisor Japan, Europe Capital Appreciation, Advisor Diversified
International, and Global Equity commenced operations on December 17,
1998.
+++ Advisor International Capital Appreciation commenced operations on
November 3, 1997.
++++ Advisor High Income commenced operations on September 7, 1999.
* For the fiscal period August 1, 1997 through October 31, 1997.
** For the fiscal period December 1, 1997 through October 31, 1998.
For administering the securities lending program for the Taxable
Funds, FSC is paid based on the number and duration of individual
securities loans.
For the fiscal years ended October 31, 1999, 1998, and 1997,
Advisor Latin America, Advisor Emerging Asia, Advisor Japan, Advisor
International Capital Appreciation, Advisor Europe Capital
Appreciation, Advisor Diversified International, Advisor Global
Equity, Advisor High Yield, Advisor High Income, Advisor Government
Investment, Advisor Mortgage Securities, Advisor Intermediate Bond,
Advisor Short Fixed-Income, and Advisor Municipal Income did not pay
FSC for securities lending.
For the fiscal years ended October 31, 1999, 1998, and 1997,
Advisor Overseas paid FSC $ 111 , $ 0, and $0 ,
respectively , for securities lending.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Advisor High Yield, Advisor High Income, Advisor
Government Investment, Advisor Mortgage Securities, Advisor
Intermediate Bond, Advisor Short Fixed-Income, and Advisor Municipal
Income, are funds of Fidelity Advisor Series II, an open-end
management investment company organized as a Massachusetts business
trust on April 23, 1986. On January 1, 1996, Advisor Intermediate Bond
changed its name from Advisor Limited Term Bond Fund to Advisor
Intermediate Bond Fund. On January 16, 1998, Advisor Municipal Income
changed its name from Advisor High Income Municipal Fund to Advisor
Municipal Income Fund. Currently, there are seven funds in Fidelity
Advisor Series II: Advisor High Yield, Advisor Strategic Income,
Advisor Government Investment, Advisor Mortgage Securities, Advisor
Intermediate Bond, Advisor Short Fixed-Income, and Advisor Municipal
Income. The Trustees are permitted to create additional funds in the
trust and to create additional classes of the funds.
Advisor Latin America, Advisor Japan, Advisor International Capital
Appreciation, Advisor Europe Capital Appreciation, Advisor Overseas,
Advisor Diversified International, Advisor Global Equity, and Advisor
Emerging Asia are funds of Fidelity Advisor Series VIII, an open-end
management investment company organized as a Massachusetts business
trust on September 23, 1983. Currently, there are eight funds in
Fidelity Advisor Series VIII: Advisor Latin America, Advisor Japan,
Advisor Europe Capital Appreciation, Advisor International Capital
Appreciation, Advisor Overseas, Advisor Diversified International,
Advisor Global Equity, and Advisor Emerging Asia. The Trustees are
permitted to create additional funds in the trust and to create
additional classes of the funds.
The assets of each trust received for the issue or sale of shares of
each of its funds and all income, earnings, profits, and proceeds
thereof, subject to the rights of creditors, are allocated to such
fund, and constitute the underlying assets of such fund. The
underlying assets of each fund in a trust shall be charged with the
liabilities and expenses attributable to such fund, except that
liabilities and expenses may be allocated to a particular class. Any
general expenses of the respective trusts shall be allocated between
or among any one or more of its funds or classes.
SHAREHOLDER LIABILITY. The trust is an entity commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust.
The Declaration of Trust for Fidelity Advisor Series II contains an
express disclaimer of shareholder liability for the debts,
liabilities, obligations, and expenses of the trust or fund. The
Declaration of Trust for Fidelity Advisor Series II provides that the
trust shall not have any claim against shareholders except for the
payment of the purchase price of shares and requires that each
agreement, obligation, or instrument entered into or executed by the
trust or the Trustees relating to the trust or to a fund shall include
a provision limiting the obligations created thereby to the trust or
to one or more funds and its or their assets. The Declaration of Trust
for Fidelity Advisor Series II further provides that shareholders of a
fund shall not have a claim on or right to any assets belonging to any
other fund. The Declaration of Trust for Advisor Series VIII provides
that the trust shall not have any claim against shareholders except
for the payment of the purchase price of shares and requires that each
agreement, obligation, or instrument entered into or executed by the
trust or the Trustees relating to the trust shall include a provision
limiting the obligations created thereby to the trust and its assets.
Each Declaration of Trust provides for indemnification out of each
fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. The Declaration of
Trust also provides that each fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote. Claims asserted against one class of shares may subject
holders of another class of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you are entitled to one vote for each
dollar of net asset value that you own. The voting rights of
shareholders can be changed only by a shareholder vote. Shares may be
voted in the aggregate, by fund and by class.
The shares have no preemptive or, for Class A, Class T, Class C,
Institutional Class, and Initial Class shares, conversion rights.
Shares are fully paid and nonassessable, except as set forth under the
heading "Shareholder Liability" above.
Fidelity Advisor Series VIII or any of its funds may be terminated
upon the sale of its assets to another open-end management investment
company, or upon liquidation and distribution of its assets, if
approved by a vote of shareholders of the trust or the fund. In the
event of the dissolution or liquidation of the trust, shareholders of
each of its funds are entitled to receive the underlying assets of
such fund available for distribution. In the event of the dissolution
or liquidation of a fund, shareholders of that fund are entitled to
receive the underlying assets of the fund available for distribution.
Fidelity Advisor Series II or any of its funds may be terminated upon
the sale of its assets to, or merger with, another open-end management
investment company or series thereof, or upon liquidation and
distribution of its assets. Generally, the merger of a trust or a fund
with another entity or the sale of substantially all of the assets of
the trust or a fund to another entity requires approval by a vote of
shareholders of the trust or the fund. The Trustees may, however,
reorganize or terminate the trust or any of its funds without prior
shareholder approval. In the event of the dissolution or liquidation
of a trust, shareholders of each of its funds are entitled to receive
the underlying assets of such fund available for distribution. In the
event of the dissolution or liquidation of a fund, shareholders of
that fund are entitled to receive the underlying assets of the fund
available for distribution.
CUSTODIANS. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of Advisor International
Capital Appreciation and Advisor Emerging Asia. State Street Bank and
Trust Company, 1776 Heritage Drive, Quincy, Massachusetts, is
custodian of the assets of Advisor Latin America, Advisor Japan,
Advisor Europe Capital Appreciation, Advisor Diversified
International, and Advisor Global Equity. The Chase Manhattan Bank, 1
Chase Manhattan Plaza, New York, New York is custodian of the assets
of Advisor Overseas. The Bank of New York, 110 Washington Street, New
York, New York, is custodian of the assets of Advisor High Yield,
Advisor High Income, Advisor Government Investment, Advisor
Intermediate Bond, Advisor Mortgage Securities, and Advisor Short
Fixed-Income. Citibank, N.A., 111 Wall Street, New York, New York, is
custodian of the assets of Advisor Municipal Income. Each custodian is
responsible for the safekeeping of a fund's assets and the appointment
of any subcustodian banks and clearing agencies. The Bank of New York
and The Chase Manhattan Bank, each headquartered in New York, also may
serve as special purpose custodians of certain assets of the taxable
funds in connection with repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and members
of the Board of Trustees may, from time to time, conduct transactions
with various banks, including banks serving as custodians for certain
funds advised by FMR. The Boston branch of the custodian bank of
Advisor International Capital Appreciation and Advisor Emerging Asia
leases its office space from an affiliate of FMR at a lease payment
which, when entered into, was consistent with prevailing market rates.
Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. PricewaterhouseCoopers LLP, 160 Federal Street, Boston,
Massachusetts, serves as independent accountant for Advisor Latin
America, Advisor Emerging Asia, Advisor Japan, Advisor Overseas,
Advisor Diversified International, Advisor Global Equity, Advisor
Mortgage Securities, Advisor Intermediate Bond, and Advisor Municipal
Income. The auditor examines financial statements for the funds and
provides other audit, tax, and related services.
Deloitte & Touche LLP, 200 Berkeley Street, Boston, Massachusetts,
serves as independent accountant for Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation,
Advisor High Yield, Advisor High Income, Advisor Government
Investment, and Advisor Short Fixed-Income. The auditor examines
financial statements for the funds and provides other audit, tax, and
related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the
fiscal year ended October 31, 1999, and report of the auditor, are
included in the fund's annual report and are incorporated herein by
reference.
APPENDIX
Fidelity, Fidelity Investments & (Pyramid) Design, Fidelity
Investments, Magellan, and Fidelity Focus are registered trademarks of
FMR Corp.
THE THIRD PARTY MARKS APPEARING ABOVE ARE THE MARKS OF THEIR
RESPECTIVE OWNERS.
SUPPLEMENT TO THE
FIDELITY ADVISOR LATIN AMERICA FUND, FIDELITY ADVISOR JAPAN FUND,
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND, FIDELITY
ADVISOR EUROPE CAPITAL APPRECIATION FUND, FIDELITY ADVISOR OVERSEAS
FUND, FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND, FIDELITY
ADVISOR GLOBAL EQUITY FUND, FIDELITY ADVISOR EMERGING ASIA FUND,
FIDELITY ADVISOR HIGH YIELD FUND, FIDELITY ADVISOR HIGH INCOME FUND,
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND, FIDELITY ADVISOR MORTGAGE
SECURITIES FUND, FIDELITY ADVISOR INTERMEDIATE BOND FUND, FIDELITY
ADVISOR SHORT-FIXED INCOME FUND, AND FIDELITY ADVISOR MUNICIPAL INCOME
FUND
FUNDS OF FIDELITY ADVISOR SERIES II AND FIDELITY ADVISOR SERIES VIII
CLASS A, CLASS T, CLASS B, CLASS C, INSTITUTIONAL CLASS, AND INITIAL
CLASS
DECEMBER 29, 1999
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION HAS BEEN REMOVED FROM THE "TRUSTEES AND
OFFICERS" SECTION BEGINNING ON PAGE 92.
E. BRADLEY JONES (71), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (automotive, space, defense, and
information technology), CSX Corporation (freight transportation),
Birmingham Steel Corporation (producer of steel and steel products),
and RPM, Inc. (manufacturer of chemical products), and he previously
served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining, 1985-1997), and as a
Trustee of First Union Real Estate Investments (1986-1997). In
addition, he serves as a Trustee of the Cleveland Clinic Foundation,
where he has also been a member of the Executive Committee as well as
Chairman of the Board and President, a Trustee of University School
(Cleveland), and a Trustee of Cleveland Clinic Florida.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 92.
ANDREW J. DUDLEY (34), is Vice President of Fidelity Advisor Short
Fixed-Income Fund (1998), Fidelity Advisor Intermediate Bond Fund
(1999), and other funds advised by FMR. Prior to joining Fidelity as a
portfolio manager in 1996, Mr. Dudley worked as a quantitative analyst
and portfolio manager at Putnam Investments for five years.
THE FOLLOWING INFORMATION SUPPLEMENTS THE SIMILAR INFORMATION FOUND IN
THE "TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 92.
NED C. LAUTENBACH (55), Trustee (2000), has been a partner of Clayton,
Dubilier & Rice, Inc. (private equity investment firm) since September
1998. Mr. Lautenbach was Senior Vice President of IBM Corporation from
1992 until his retirement in July 1998. From 1993 to 1995 he was
Chairman of IBM World Trade Corporation. He also was a member of IBM's
Corporate Executive Committee from 1994 to July 1998. He is a Director
of PPG Industries Inc. (glass, coating and chemical manufacturer),
Dynatech Corporation (global communications equipment), Eaton
Corporation (global manufacturer of highly engineered products) and
ChoicePoint Inc. (data identification, retrieval, storage, and
analysis).
MARIA F. DWYER (41), Deputy Treasurer (2000), is Deputy Treasurer of
the Fidelity funds and is a Vice President (1999) and an employee
(1996) of FMR. Prior to joining Fidelity, Ms. Dwyer served as Director
of Compliance for MFS Investment Management.
THE FOLLOWING INFORMATION REPLACES THE COMPENSATION TABLE FOUND IN THE
"TRUSTEES AND OFFICERS" SECTION BEGINNING ON PAGE 92.
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended in 1998, or calendar year
ended December 31, 1998, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION FROM A Edward C. Johnson 3d** Abigail P. Johnson ** J. Gary Burkhead** Ralph F. Cox
FUND
<S> <C> <C> <C> <C>
Advisor Latin AmericaB,+ $ 0 $ 0 $ 0 $ 1
Advisor Emerging Asia B,+ $ 0 $ 0 $ 0 $ 20
Advisor JapanB,+ $ 0 $ 0 $ 0 $ 5
Advisor International Capital $ 0 $ 0 $ 0 $ 10
AppreciationB
Advisor Europe Capital $ 0 $ 0 $ 0 $ 4
AppreciationB,+
Advisor OverseasB $ 0 $ 0 $ 0 $ 403
Advisor Diversified $ 0 $ 0 $ 0 $ 5
InternationalB,+
Advisor Global EquityB,+ $ 0 $ 0 $ 0 $ 2
Advisor High YieldB,C,D $ 0 $ 0 $ 0 $ 1,218
Advisor High IncomeB,+ $ 0 $ 0 $ 0 $ 1
Advisor Government InvestmentB $ 0 $ 0 $ 0 $ 106
Advisor Mortgage SecuritiesB $ 0 $ 0 $ 0 $ 147
Advisor Intermediate BondB $ 0 $ 0 $ 0 $ 161
Advisor Short Fixed- IncomeB $ 0 $ 0 $ 0 $ 101
Advisor Municipal IncomeB $ 0 $ 0 $ 0 $ 134
TOTAL COMPENSATION FROM THE $ 0 $ 0 $ 0 $ 223,500
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION
FROM A Phyllis Burke Davis Robert M. Gates E. Bradley Jones **** Donald J. Kirk Ned C. Lautenbach***
FUND
<S> <C> <C> <C> <C> <C>
Advisor Latin AmericaB,+ $ 1 $ 1 $ 1 $ 1 $ 0
Advisor Emerging Asia
B,+ $ 20 $ 20 $ 20 $ 20 $ 2
Advisor JapanB,+ $ 5 $ 5 $ 5 $ 5 $ 1
Advisor International
Capital $ 10 $ 10 $ 10 $ 10 $ 2
AppreciationB
Advisor Europe Capital $ 4 $ 4 $ 4 $ 4 $ 1
AppreciationB,+
Advisor OverseasB $ 387 $ 400 $ 400 $ 397 $ 38
Advisor Diversified $ 5 $ 5 $ 5 $ 5 $ 1
InternationalB,+
Advisor Global
EquityB,+ $ 2 $ 2 $ 2 $ 2 $ 0
Advisor High YieldB,C,D $ 1,167 $ 1,210 $ 1,209 $ 1,201 $ 97
Advisor High IncomeB,+ $ 1 $ 1 $ 1 $ 1 $ 0
Advisor Government
InvestmentB $ 102 $ 105 $ 105 $ 105 $ 9
Advisor Mortgage
SecuritiesB $ 141 $ 146 $ 146 $ 145 $ 11
Advisor Intermediate
BondB $ 155 $ 160 $ 160 $ 159 $ 13
Advisor Short Fixed-
IncomeB $ 97 $ 100 $ 100 $ 99 $ 8
Advisor Municipal
IncomeB $ 128 $ 133 $ 133 $ 132 $ 10
TOTAL COMPENSATION
FROM THE $ 220,500 $ 223,500 $ 222,000 $ 226,500 $ 0
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION
FROM A Peter S. Lynch** William O. McCoy Gerald C. Mc-Donough Marvin L. Mann Robert C. Pozen**
FUND
<S> <C> <C> <C> <C> <C>
Advisor Latin AmericaB,+ $ 0 $ 1 $ 1 $ 1 $ 0
Advisor Emerging Asia B,+ $ 0 $ 20 $ 25 $ 20 $ 0
Advisor JapanB,+ $ 0 $ 5 $ 6 $ 5 $ 0
Advisor International Capital $ 0 $ 10 $ 12 $ 10 $ 0
AppreciationB
Advisor Europe Capital $ 0 $ 4 $ 5 $ 4 $ 0
AppreciationB,+
Advisor OverseasB $ 0 $ 400 $ 495 $ 400 $ 0
Advisor Diversified $ 0 $ 5 $ 6 $ 5 $ 0
InternationalB,+
Advisor Global EquityB,+ $ 0 $ 2 $ 3 $ 2 $ 0
Advisor High YieldB,C,D $ 0 $ 1,210 $ 1,495 $ 1,210 $ 0
Advisor High IncomeB,+ $ 0 $ 1 $ 1 $ 1 $ 0
Advisor Government
InvestmentB $ 0 $ 105 $ 130 $ 105 $ 0
Advisor Mortgage SecuritiesB $ 0 $ 146 $ 181 $ 146 $ 0
Advisor Intermediate BondB $ 0 $ 160 $ 198 $ 160 $ 0
Advisor Short Fixed- IncomeB $ 0 $ 100 $ 124 $ 100 $ 0
Advisor Municipal IncomeB $ 0 $ 133 $ 164 $ 133 $ 0
TOTAL COMPENSATION FROM THE $ 0 $223,500 $ 273,500 $220,500 $ 0
FUND COMPLEX*,A
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION FROM A Thomas R. Williams
FUND
<S> <C>
Advisor Latin AmericaB,+ $ 1
Advisor Emerging Asia B,+ $ 20
Advisor JapanB,+ $ 5
Advisor International Capital $ 10
AppreciationB
Advisor Europe Capital $ 4
AppreciationB,+
Advisor OverseasB $ 392
Advisor Diversified $ 5
InternationalB,+
Advisor Global EquityB,+ $ 2
Advisor High YieldB,C,D $ 1,184
Advisor High IncomeB,+ $ 1
Advisor Government InvestmentB $ 103
Advisor Mortgage SecuritiesB $ 143
Advisor Intermediate BondB $ 157
Advisor Short Fixed- IncomeB $ 98
Advisor Municipal IncomeB $ 130
TOTAL COMPENSATION FROM THE $ 223,500
FUND COMPLEX*,A
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested trustees of the funds, Ms. Johnson and Mr. Burkhead are
compensated by FMR.
*** During the period from October 14, 1999 through December 31, 1999,
Mr. Lautenbach served as a Member of the Advisory Board. Effective
January 1, 2000, Mr. Lautenbach serves as a Member of the Board of
Trustees.
**** Mr. Jones served on the Board of Trustees through December 31,
1999.
+ Estimated
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; Marvin L. Mann, $55,039; Thomas R.
Williams, $63,433; and William O. McCoy, $55,039.
B Compensation figures include cash, and may include amounts required
to be deferred and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $564; Phyllis Burke Davis, $564;
Robert M. Gates, $564; E. Bradley Jones, $564; Donald J. Kirk, $564;
William O. McCoy, $564; Gerald C. McDonough, $658; Marvin L. Mann,
$564; and Thomas R. Williams, $564.
D Certain of the non-interested trustees' aggregate compensation from
certain funds includes accrued voluntary deferred compensation as
follows: Ralph F. Cox, $471; Marvin L. Mann, $80; William O. McCoy,
$471, and Thomas R. Williams, $471.
Like securities of all mutual
funds, these securities have
not been approved or
disapproved by the
Securities and Exchange
Commission, and the
Securities and Exchange
Commission has not
determined if this
prospectus is accurate or
complete. Any
representation to the
contrary is a criminal
offense.
FIDELITY(registered trademark) ADVISOR
INTERMEDIATE
MUNICIPAL INCOME
FUND
CLASS A
(Fund 262, cusip 315917807)
CLASS T
(Fund 289, cusip 315917401)
CLASS B
(Fund 689, cusip 315917609)
CLASS C
(Fund 525, cusip 315917872)
PROSPECTUS
DECEMBER 29, 1999
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
FUND SUMMARY 2 INVESTMENT SUMMARY
3 PERFORMANCE
5 FEE TABLE
FUND BASICS 7 INVESTMENT DETAILS
7 VALUING SHARES
SHAREHOLDER INFORMATION 8 BUYING AND SELLING SHARES
14 EXCHANGING SHARES
15 ACCOUNT FEATURES AND POLICIES
19 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS
19 TAX CONSEQUENCES
FUND SERVICES 20 FUND MANAGEMENT
20 FUND DISTRIBUTION
APPENDIX 24 FINANCIAL HIGHLIGHTS
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of
income exempt from federal income taxes that can be obtained
consistent with the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Normally investing in investment-grade municipal
debt securities (those of medium and high quality).
(small solid bullet) Normally investing at least 80% of assets in
municipal securities whose interest is exempt from federal income tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers 1-17 Year Municipal Bond
Index.
(small solid bullet) Normally maintaining a dollar-weighted average
maturity between three and 10 years.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features and
current pricing, trading opportunities, and the credit quality of its
issuer to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently from
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in the fund's
performance from year to year as represented by the performance of
Class T, and compares each class's performance to the performance of a
market index and an average of the performance of similar funds over
various periods of time. Each class of the fund also compares its
performance to the performance of an additional index over various
periods of time. Data for the additional index is available only from
June 30, 1993 to the present. Returns are based on past results and
are not an indication of future performance.
YEAR-BY-YEAR RETURNS
The returns in the chart do not include the effect of Class T's
front-end sales charge. If the effect of the sales charge were
reflected, returns would be lower than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE
MUNICIPAL INCOME - CLASS T
Calendar Years 1993 1994 1995 1996 1997 1998
9.43% -5.68% 14.20% 3.89% 7.80% 5.08%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: 9.43
Row: 6, Col: 1, Value: -5.68
Row: 7, Col: 1, Value: 14.2
Row: 8, Col: 1, Value: 3.89
Row: 9, Col: 1, Value: 7.8
Row: 10, Col: 1, Value: 5.08
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS T OF ADVISOR
INTERMEDIATE MUNICIPAL INCOME, THE HIGHEST RETURN FOR A QUARTER WAS
6.27% (QUARTER ENDING MARCH 31, 1995) AND THE LOWEST RETURN FOR A
QUARTER WAS -5.44% (QUARTER ENDING MARCH 31, 1994).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR CLASS T OF
ADVISOR INTERMEDIATE MUNICIPAL INCOME WAS -0.88%.
AVERAGE ANNUAL RETURNS
The returns in the following table include the effect of Class A's and
Class T's maximum applicable front-end sales charge and Class B's and
Class C's maximum applicable contingent deferred sales charge (CDSC).
For the periods ended Past 1 year Past 5 years Life of Class
December 31, 1998
Advisor Intermediate 1.18% n/a 5.31%A
Municipal Income - Class A
Advisor Intermediate 2.19% 4.27% 5.12%B
Municipal Income - Class T
Advisor Intermediate 1.35% n/a 5.81%C,E
Municipal Income - Class B
Advisor Intermediate 3.32% n/a 5.32%D
Municipal Income - Class C
Lehman Brothers Municipal 6.48% 6.22% n/a
Bond Index
Lehman Brothers 1-17 Year 6.28% 5.92% n/a
Municipal Bond Index
Lipper Intermediate Municipal 5.35% 5.17% n/a
Debt Funds Average
A FROM SEPTEMBER 3, 1996.
B FROM SEPTEMBER 10, 1992.
C FROM JUNE 30, 1994.
D FROM NOVEMBER 3, 1997.
E RETURNS REFLECT THE CONVERSION OF CLASS B TO CLASS A SHARES AFTER A
MAXIMUM OF FOUR YEARS.
If FMR had not reimbursed certain class expenses during these periods,
Class A's, Class T's, Class B's, and Class C's returns would have been
lower.
The Lehman Brothers Municipal Bond Index is a market value-weighted
index of investment-grade municipal bonds with maturities of one year
or more.
The Lehman Brothers 1-17 Year Municipal Bond Index is a market
value-weighted index of investment-grade municipal bonds with
maturities between one and 17 years.
Lipper Intermediate Municipal Debt Funds Average reflects the
performance (excluding sales charges) of mutual funds with similar
objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold, or sell Class A, Class T, Class B, and Class C
shares of the fund. The annual class operating expenses provided below
for each class do not reflect the effect of any expense reimbursements
during the period.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
Class A Class T Class B Class C
Maximum sales charge (load) 3.75%A 2.75%B None None
on purchases (as a % of
offering price)
Maximum CDSC (as a % of the NoneC NoneC 3.00%D 1.00%E
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on None None None None
reinvested distributions
A LOWER FRONT-END SALES CHARGES FOR CLASS A MAY BE AVAILABLE WITH
PURCHASE OF $50,000 OR MORE.
B LOWER FRONT-END SALES CHARGES FOR CLASS T MAY BE AVAILABLE WITH
PURCHASE OF $50,000 OR MORE.
C A CDSC OF 0.25% IS ASSESSED ON CERTAIN REDEMPTIONS OF CLASS A AND
CLASS T SHARES ON WHICH A FINDER'S FEE WAS PAID.
D DECLINES OVER 3 YEARS FROM 3.00% TO 0%.
E ON CLASS C SHARES REDEEMED WITHIN ONE YEAR OF PURCHASE.
ANNUAL CLASS OPERATING EXPENSES (PAID FROM CLASS ASSETS)
Class A Class T Class B Class C
Management fee 0.38% 0.38% 0.38% 0.38%
Distribution and Service 0.15% 0.25% 0.90% 1.00%
(12b-1) fee (including 0.25%
Service fee only for Class B
and Class C)
Other expenses 0.47% 0.44% 0.43% 0.47%
Total annual class operating 1.00% 1.07% 1.71% 1.85%
expensesA
A FMR HAS VOLUNTARILY AGREED TO REIMBURSE CLASS A, CLASS T, CLASS B,
AND CLASS C OF THE FUND TO THE EXTENT THAT TOTAL OPERATING EXPENSES
(EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND EXTRAORDINARY
EXPENSES), AS A PERCENTAGE OF THEIR RESPECTIVE AVERAGE NET ASSETS,
EXCEED THE FOLLOWING RATES:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Effective Date Class T Effective Date Class B Effective Date Class C Effective Date
Advisor Intermediate 0.85% 12/1/98 0.90% 5/29/98 1.60% 12/1/98 1.70% 12/1/98
Municipal Income
</TABLE>
THESE ARRANGEMENTS CAN BE DISCONTINUED BY FMR AT ANY TIME.
This EXAMPLE helps you compare the cost of investing in the fund with
the cost of investing in other mutual funds.
Let's say, hypothetically, that each class's annual return is 5% and
that your shareholder fees and each class's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years indicated
and if you leave your account open:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A Class T Class B Class C
Account open Account closed Account open Account closed Account open Account closed Account open
1 year $ 473 $ 473 $ 381 $ 381 $ 174 $ 474 $ 188
3 years $ 681 $ 681 $ 606 $ 606 $ 539 $ 639 $ 582
5 years $ 907 $ 907 $ 849 $ 849 $ 846A $ 846A $ 1,001
10 years $ 1,554 $ 1,554 $ 1,545 $ 1,545 $ 1,500A $ 1,500A $ 2,169
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Class C
Account closed
1 year $ 288
3 years $ 582
5 years $ 1,001
10 years $ 2,169
</TABLE>
A REFLECTS CONVERSION TO CLASS A SHARES AFTER A MAXIMUM OF FOUR YEARS.
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of
income exempt from federal income taxes that can be obtained
consistent with the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets in investment-grade municipal
debt securities (those of medium and high quality).
FMR normally invests at least 80% of the fund's assets in municipal
securities whose interest is exempt from federal income tax. Although
FMR does not currently intend to invest the fund's assets in municipal
securities whose interest is subject to federal income tax, FMR may
invest all of the fund's assets in municipal securities whose interest
is subject to the federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation, and utilities.
FMR uses the Lehman Brothers 1-17 Year Municipal Bond Index as a guide
in structuring the fund and selecting its investments. FMR manages the
fund to have similar overall interest rate risk to the index. In
addition, the fund normally maintains a dollar-weighted average
maturity between three and 10 years. As of October 31, 1999, the
dollar-weighted average maturity of the fund and the index was
approximately 7.2 and 7.8 years, respectively.
FMR allocates the fund's assets among different market sectors (for
example, general obligation bonds of a state or bonds financing a
specific project) and different maturities based on its view of the
relative value of each sector and maturity.
In buying and selling securities for the fund, FMR analyzes a
security's structural features and current price compared to its
estimated long-term value, any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates, or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable, or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current interest but
are sold at a discount from their face values. Municipal debt
securities include general obligation bonds of municipalities, local
or state governments, project or revenue-specific bonds, or
pre-refunded or escrowed bonds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees, or insurance.
PRINCIPAL INVESTMENT RISKS
Many factors affect the fund's performance. The fund's yield and share
price change daily based on changes in interest rates and market
conditions and in response to other economic, political, or financial
developments. The fund's reaction to these developments will be
affected by the types and maturities of securities in which the fund
invests, the financial condition, industry and economic sector, and
geographic location of an issuer, and the fund's level of investment
in the securities of that issuer. When you sell your shares of the
fund, they could be worth more or less than what you paid for them.
The following factors can significantly affect the fund's performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation, and utilities,
conditions in those sectors can affect the overall municipal market.
In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities can be more
sensitive to interest rate changes. In other words, the longer the
maturity of a security, the greater the impact a change in interest
rates could have on the security's price. In addition, short-term and
long-term interest rates do not necessarily move in the same amount or
the same direction. Short-term securities tend to react to changes in
short-term interest rates, and long-term securities tend to react to
changes in long-term interest rates.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. Lower-quality debt securities (those
of less than investment-grade quality) tend to be more sensitive to
these changes than higher-quality debt securities. Municipal
securities backed by current or anticipated revenues from a specific
project or specific assets can be negatively affected by the
discontinuance of the taxation supporting the project or assets or the
inability to collect revenues for the project or from the assets. If
the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest
from the security could become taxable and the security could decline
significantly in value.
In response to market, economic, political, or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect the fund's
performance, and the fund could distribute income subject to federal
income tax.
FUNDAMENTAL INVESTMENT POLICIES
The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of
income exempt from federal income taxes that can be obtained
consistent with the preservation of capital. The fund normally invests
at least 80% of its assets in securities whose interest is free from
federal income tax.
VALUING SHARES
The fund is open for business each day the New York Stock Exchange
(NYSE) is open.
A class's net asset value per share (NAV) is the value of a single
share. Fidelity normally calculates each class's NAV as of the close
of business of the NYSE, normally 4:00 p.m. Eastern time. However, NAV
may be calculated earlier if trading on the NYSE is restricted or as
permitted by the Securities and Exchange Commission (SEC). The fund's
assets are valued as of this time for the purpose of computing each
class's NAV.
To the extent that the fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of the fund's assets may not occur on days when the
fund is open for business.
The fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations. If market
quotations or information furnished by a pricing service is not
readily available for a security or if a security's value has been
materially affected by events occurring after the close of the market
on which the security is principally traded, that security may be
valued by another method that the Board of Trustees believes
accurately reflects fair value. A security's valuation may differ
depending on the method used for determining value.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
For account, product and service information, please use the following
phone numbers:
(small solid bullet) If you are investing through a broker-dealer or
insurance representative, 1-800-522-7297 (8:30 a.m. - 7:00 p.m.
Eastern time, Monday through Friday).
(small solid bullet) If you are investing through a bank
representative, 1-800-843-3001 (8:30 a.m. - 7:00 p.m. Eastern time,
Monday through Friday).
Please use the following addresses:
BUYING OR SELLING SHARES
Fidelity Investments(registered trademark)
P.O. Box 770002
Cincinnati, OH 45277-0081
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH2A
Hebron, KY 41048
You may buy or sell Class A, Class T, Class B, and Class C shares of
the fund through an investment professional. When you invest through
an investment professional, the procedures for buying, selling, and
exchanging Class A, Class T, Class B, and Class C shares of the fund
and the account features and policies may differ. Additional fees may
also apply to your investment in Class A, Class T, Class B, and Class
C shares of the fund, including a transaction fee if you buy or sell
Class A, Class T, Class B, and Class C shares of the fund through a
broker or other investment professional.
Certain methods of contacting Fidelity, such as by telephone, may be
unavailable or delayed (for example, during periods of unusual market
activity).
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS OR
OTHER GROUPS
BUYING SHARES
The price to buy one share of Class A or Class T is the class's
offering price or the class's NAV, depending on whether you pay a
front-end sales charge.
For Class B and Class C, the price to buy one share is the class's
NAV. Class B and Class C shares are sold without a front-end sales
charge, but may be subject to a CDSC upon redemption.
If you pay a front-end sales charge, your price will be Class A's or
Class T's offering price. When you buy Class A or Class T shares at
the offering price, Fidelity deducts the appropriate sales charge and
invests the rest in Class A or Class T shares of the fund. If you
qualify for a front-end sales charge waiver, your price will be Class
A's or Class T's NAV.
The offering price of Class A or Class T is its NAV divided by the
difference between one and the applicable front-end sales charge
percentage. Class A has a maximum front-end sales charge of 3.75% of
the offering price. Class T has a maximum front-end sales charge of
2.75% of the offering price.
Your shares will be bought at the next offering price or NAV, as
applicable, calculated after your order is received in proper form.
It is the responsibility of your investment professional to transmit
your order to buy shares to Fidelity before the close of business on
the day you place your order.
Short-term or excessive trading into and out of the fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, the fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
the fund. For these purposes, FMR may consider an investor's trading
history in the fund or other Fidelity funds, and accounts under common
ownership or control.
The fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Fidelity reserves the right to limit the number
of checks processed at one time.
(small solid bullet) Fidelity must receive payment within three
business days after an order for shares is placed; otherwise your
purchase order may be canceled and you could be liable for any losses
or fees the fund or Fidelity has incurred.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees the fund or
Fidelity has incurred.
Shares can be bought or sold through investment professionals using an
automated order placement and settlement system that guarantees
payment for orders on a specified date.
Certain financial institutions that meet creditworthiness criteria
established by Fidelity Distributors Corporation (FDC) may enter
confirmed purchase orders on behalf of customers by phone, with
payment to follow no later than close of business on the next business
day. If payment is not received by that time, the order will be
canceled and the financial institution will be liable for any losses.
MINIMUMS
TO OPEN AN ACCOUNT $2,500
Through regular investment plansA $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
A AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $100, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED.
The fund may waive or lower purchase minimums.
Purchase and account minimums are waived for purchases of Class T
shares with distributions from a Fidelity Defined Trust account.
PURCHASE AMOUNTS OF MORE THAN $250,000 WILL NOT BE ACCEPTED FOR CLASS
B SHARES.
PURCHASE AMOUNTS OF MORE THAN $1 MILLION WILL NOT BE ACCEPTED FOR
CLASS C SHARES. THIS LIMIT DOES NOT APPLY TO PURCHASES OF CLASS C
SHARES MADE BY AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT), 403(B) PROGRAM OR PLAN COVERING A
SOLE-PROPRIETOR (FORMERLY KEOGH/H.R. 10 PLAN).
KEY INFORMATION
PHONE TO OPEN AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from certain other
Fidelity funds. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
TO ADD TO AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from certain other
Fidelity funds. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
MAIL FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770002 CINCINNATI, (small solid bullet) Complete
OH 45277-0081 and sign the application.
Make your check payable to
the complete name of the
fund and note the applicable
class. Mail to your
investment professional or
to the address at left.
TO ADD TO AN ACCOUNT
(small solid bullet) Make
your check payable to the
complete name of the fund
and note the applicable
class. Indicate your fund
account number on your check
and mail to your investment
professional or to the
address at left.
(small solid bullet) Exchange
from the same class of other
Fidelity Advisor funds or
from certain other Fidelity
funds. Send a letter of
instruction to your
investment professional or
to the address at left,
including your name, the
funds' names, the applicable
class names, the fund
account numbers, and the
dollar amount or number of
shares to be exchanged.
IN PERSON TO OPEN AN ACCOUNT
(small solid bullet) Bring
your application and check
to your investment
professional.
TO ADD TO AN ACCOUNT
(small solid bullet) Bring
your check to your
investment professional.
WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to set
up your account and to
arrange a wire transaction.
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your new
fund account number and your
name.
TO ADD TO AN ACCOUNT
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your fund
account number and your name.
AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Advisor Systematic
Investment Program.
(small solid bullet) Use
Fidelity Advisor Systematic
Exchange Program to exchange
from certain Fidelity money
market funds or a Fidelity
Advisor fund.
SELLING SHARES
The price to sell one share of Class A, Class T, Class B, or Class C
is the class's NAV, minus any applicable CDSC.
If appropriate to protect shareholders, the fund may impose a
redemption fee (trading fee) on redemptions from the fund.
Any applicable CDSC is calculated based on your original redemption
amount.
Your shares will be sold at the next NAV calculated after your order
is received in proper form, minus any applicable CDSC.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to sell more than $100,000 worth of
shares;
(small solid bullet) Your account registration has changed within the
last 15 or 30 days, depending on your account;
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);
(small solid bullet) The check is being made payable to someone other
than the account owner; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
shares, leave at least $1,000 worth of shares in the account to keep
it open, except accounts not subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
the fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other property rather than in cash if FMR determines it is in the best
interests of the fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
To sell shares issued with certificates, call Fidelity for
instructions. The fund no longer issues share certificates.
KEY INFORMATION
PHONE (small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to
initiate a wire transaction
or to request a check for
your redemption.
(small solid bullet) Exchange
to the same class of other
Fidelity Advisor funds or to
certain other Fidelity
funds. Call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information."
MAIL FIDELITY INVESTMENTS INDIVIDUAL, JOINT TENANT,
P.O. BOX 770002 CINCINNATI, SOLE PROPRIETORSHIP, UGMA,
OH 45277-0081 UTMA
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including your name, the
fund's name, the applicable
class name, your fund
account number, and the
dollar amount or number of
shares to be sold. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on the
account.
TRUST
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the trust's name,
the fund's name, the
applicable class name, the
trust's fund account number,
and the dollar amount or
number of shares to be sold.
The trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the account
registration, provide a copy
of the trust document
certified within the last 60
days.
BUSINESS OR ORGANIZATION
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the firm's name,
the fund's name, the
applicable class name, the
firm's fund account number,
and the dollar amount or
number of shares to be sold.
At least one person
authorized by corporate
resolution to act on the
account must sign the letter
of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" for
instructions.
IN PERSON INDIVIDUAL, JOINT TENANT,
SOLE PROPRIETORSHIP, UGMA,
UTMA
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The letter of
instruction must be signed
by all persons required to
sign for transactions,
exactly as their names
appear on the account.
TRUST
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The trustee
must sign the letter of
instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR ORGANIZATION
(small solid bullet) Bring a
letter of instruction to
your investment
professional. At least one
person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
AUTOMATICALLY (small solid bullet) Use
Fidelity Advisor Systematic
Exchange Program to exchange
to the same class of another
Fidelity Advisor fund or to
certain Fidelity funds.
(small solid bullet) Use
Fidelity Advisor Systematic
Withdrawal Program to set up
periodic redemptions from
your Class A, Class T, Class
B, and Class C account.
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As a Class A shareholder, you have the privilege of exchanging Class A
shares of the fund for the same class of shares of other Fidelity
Advisor funds at NAV or for Daily Money Class shares of Treasury Fund,
Prime Fund or Tax-Exempt Fund.
As a Class T shareholder, you have the privilege of exchanging Class T
shares of the fund for the same class of shares of other Fidelity
Advisor funds at NAV or for Daily Money Class shares of Treasury Fund,
Prime Fund or Tax-Exempt Fund. If you purchased your Class T shares
through certain investment professionals that have signed an agreement
with FDC, you also have the privilege of exchanging your Class T
shares for shares of Fidelity Capital Appreciation Fund.
As a Class B shareholder, you have the privilege of exchanging Class B
shares of the fund for the same class of shares of other Fidelity
Advisor funds or for Advisor B Class shares of Treasury Fund.
As a Class C shareholder, you have the privilege of exchanging Class C
shares of the fund for the same class of shares of other Fidelity
Advisor funds or for Advisor C Class shares of Treasury Fund.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) The fund may temporarily or permanently terminate
the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control will be counted together for purposes of the four
exchange limit.
(small solid bullet) The fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Any exchanges of Class A, Class T, Class B and
Class C shares are not subject to a CDSC.
The fund may terminate or modify the exchange privileges in the
future.
Other funds may have different exchange restrictions, and may impose
trading fees of up to 1.00% of the amount exchanged. Check each fund's
prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
fund.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses,
and other long-term financial goals. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY ADVISOR SYSTEMATIC
INVESTMENT PROGRAM TO MOVE
MONEY FROM YOUR BANK ACCOUNT
TO A FIDELITY ADVISOR FUND.
MINIMUM MINIMUM
INITIAL ADDITIONAL FREQUENCY PROCEDURES
Monthly, bimonthly, (small solid bullet) To set
$100 $100 quarterly, or semi-annually up for a new account,
complete the appropriate
section on the application.
(small solid bullet) To set
up for existing accounts,
call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for an
application.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
investment date.
TO DIRECT DISTRIBUTIONS FROM
A FIDELITY DEFINED TRUST TO
CLASS T OF A FIDELITY
ADVISOR FUND.
MINIMUM MINIMUM PROCEDURES
INITIAL ADDITIONAL (small solid bullet) To set
Not Not Applicable up for a new or existing
Applicable account, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information" for
the appropriate enrollment
form.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
FIDELITY ADVISOR SYSTEMATIC
EXCHANGE PROGRAM TO MOVE
MONEY FROM CERTAIN FIDELITY
MONEY MARKET FUNDS TO CLASS
A, CLASS T, CLASS B OR CLASS
C OF A FIDELITY ADVISOR FUND
OR FROM CLASS A, CLASS T,
CLASS B OR CLASS C OF A
FIDELITY ADVISOR FUND TO THE
SAME CLASS OF ANOTHER
FIDELITY ADVISOR FUND.
MINIMUM FREQUENCY PROCEDURES
$100 Monthly, quarterly, (small solid bullet) To set
semi-annually, or annually up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" after both
accounts are opened.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 2 business days
prior to your next scheduled
exchange date.
(small solid bullet) The
account from which the
exchanges are to be
processed must have a
minimum balance of $10,000.
The account into which the
exchange is being processed
must have a minimum balance
of $1,000.
</TABLE>
FIDELITY ADVISOR SYSTEMATIC
WITHDRAWAL PROGRAM TO SET UP
PERIODIC REDEMPTIONS FROM
YOUR CLASS A, CLASS T, CLASS
B OR CLASS C ACCOUNT TO YOU
OR TO YOUR BANK CHECKING
ACCOUNT.
<TABLE>
<CAPTION>
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MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Class A and Class T: Monthly, (small solid bullet) Accounts
quarterly, or semi-annually with a value of $10,000 or
Class B and Class C: Monthly more in Class A, Class T,
or quarterly Class B or Class C shares
are eligible for this program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for instructions.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
withdrawal date.
(small solid bullet)
Aggregate redemptions per
12-month period from your
Class B or Class C account
may not exceed 10% of the
account value and are not
subject to a CDSC; and you
may set your withdrawal
amount as a percentage of
the value of your account or
a fixed dollar amount.
(small solid bullet) Because
of Class A's and Class T's
front-end sales charge, you
may not want to set up a
systematic withdrawal plan
during a period when you are
buying Class A or Class T
shares on a regular basis.
</TABLE>
OTHER FEATURES. The following other features are also available to buy
and sell shares of the fund.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account.
(small solid bullet) Call your investment professional or call
Fidelity at the appropriate number found in "General Information"
before your first use to verify that this feature is set up on your
account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid bullet) To add the wire feature or to change the bank
account designated to receive redemption proceeds at any time prior to
making a redemption request, you should send a letter of instruction,
including a signature guarantee, to your investment professional or to
Fidelity at the address found in "General Information."
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(small solid bullet) Financial reports (every six months).
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
the fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require the fund to withhold 31% of your taxable distributions and
redemptions.
If your ACCOUNT BALANCE falls below $1,000 (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold at the NAV, minus any applicable CDSC, on the day
your account is closed.
Fidelity may charge a FEE FOR CERTAIN SERVICES, such as providing
historical account documents.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The fund earns interest, dividends, and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. The fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gain distributions.
The fund normally declares dividends daily and pays them monthly. The
fund normally pays capital gain distributions in December.
EARNING DIVIDENDS
Shares purchased by an automated purchase order begin to earn
dividends on the day your payment is received.
Shares purchased by all other purchase orders begin to earn dividends
on the first business day following the day your payment is received.
Shares earn dividends until, but not including, the next business day
following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each class's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gain distributions
will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gain distributions will be
paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in the same class of shares of another
identically registered Fidelity Advisor fund or shares of certain
identically registered Fidelity funds. Your capital gain distributions
will be automatically invested in the same class of shares of another
identically registered Fidelity Advisor fund or shares of certain
identically registered Fidelity funds, automatically reinvested in
additional shares of the same class of the fund, or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, contact your investment
professional directly or call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in the fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS. The fund seeks to earn income and pay
dividends exempt from federal income tax.
Income exempt from federal income tax may be subject to state or local
tax. A portion of the dividends you receive may be subject to federal
and state income taxes and also may be subject to the federal
alternative minimum tax. You may also receive taxable distributions
attributable to the fund's sale of municipal bonds.
For federal tax purposes, the fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ordinary income, while the fund's
distributions of long-term capital gains are taxable to you generally
as capital gains.
If a fund's distributions exceed its income and capital gains realized
in any year, all or a portion of those distributions may be treated as
a return of capital to shareholders for tax purposes. A return of
capital generally will not be taxable to you but will reduce the cost
basis of your shares and result in a higher reported capital gain or a
lower reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a potentially taxable distribution.
Any taxable distributions you receive from the fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in the same class of shares of another
Fidelity Advisor fund or shares of certain Fidelity funds, you will
receive certain December distributions in January, but those
distributions will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in the fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Advisor Intermediate Municipal Income is a mutual fund, an
investment that pools shareholders' money and invests it toward a
specified goal.
FMR is the fund's manager.
As of March 25, 1999, FMR had approximately $521.7 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is primarily
responsible for choosing investments for the fund.
FIMM is an affiliate of FMR. As of March 29, 1999, FIMM had
approximately $159.8 billion in discretionary assets under management.
The fund could be adversely affected if the computer systems used by
FMR and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised the fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on the fund.
Norm Lind is vice president and manager of Advisor Intermediate
Municipal Income, which he has managed since January 1998. He also
manages several other Fidelity funds. Since joining Fidelity in 1986,
Mr. Lind has worked as an analyst and manager.
From time to time a manager, analyst, or other Fidelity employee may
express views regarding a particular company, security, industry, or
market sector. The views expressed by any such person are the views of
only that individual as of the time expressed and do not necessarily
represent the views of Fidelity or any other person in the Fidelity
organization. Any such views are subject to change at any time based
upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for a Fidelity
fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
The fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fee is calculated by
adding a group fee rate to an individual fund fee rate, dividing by
twelve, and multiplying the result by the fund's average net assets
throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.
For October 1999, the group fee rate was 0.1289%. The individual fund
fee rate is 0.25%.
The total management fee for the fiscal year ended October 31, 1999
was 0.38% of the fund's average net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse a class for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a class if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be discontinued by FMR at any time, can decrease a class's
expenses and boost its performance.
FUND DISTRIBUTION
The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio.
FDC distributes each class's shares.
You may pay a sales charge when you buy or sell your Class A, Class T,
Class B, and Class C shares.
FDC collects the sales charge.
The front-end sales charge will be reduced for purchases of Class A
and Class T shares according to the sales charge schedules below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SALES CHARGES AND CONCESSIONS - CLASS A
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 3.75% 3.91% 3.00%
$50,000 to $99,999 3.00% 3.10% 2.25%
$100,000 to $249,999 2.25% 2.30% 1.75%
$250,000 to $499,999 1.75% 1.78% 1.50%
$500,000 to $999,999 1.50% 1.52% 1.25%
$1,000,000 to $24,999,999 0.50% 0.50% 0.50%
$25,000,000 or more None* None* *
</TABLE>
* SEE "FINDER'S FEE" SECTION ON PAGE 29.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SALES CHARGES AND CONCESSIONS - CLASS T
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 2.75% 2.83% 2.25%
$50,000 to $99,999 2.25% 2.30% 2.00%
$100,000 to $249,999 1.75% 1.78% 1.50%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
* SEE "FINDER'S FEE" SECTION ON PAGE 29.
Class A or Class T shares purchased by an individual or company
through the Combined Purchase, Rights of Accumulation or Letter of
Intent program may receive a reduced front-end sales charge according
to the sales charge schedules above. To qualify for a Class A or Class
T front-end sales charge reduction under one of these programs, you
must notify Fidelity in advance of your purchase. More detailed
information about these programs is contained in the statement of
additional information (SAI).
COMBINED PURCHASE. To receive a Class A or Class T front-end sales
charge reduction, if you are a new shareholder, you may combine your
purchase of Class A or Class T shares with purchases of: (i) Class A,
Class T, Class B and Class C shares of any Fidelity Advisor fund and
(ii) Advisor B Class shares and Advisor C Class shares of Treasury
Fund.
RIGHTS OF ACCUMULATION. To receive a Class A or Class T front-end
sales charge reduction, if you are an existing shareholder, you may
add to your purchase of Class A or Class T shares the current value of
your holdings in: (i) Class A, Class T, Class B and Class C shares of
any Fidelity Advisor fund, (ii) Advisor B Class shares and Advisor C
Class shares of Treasury Fund and (iii) Daily Money Class shares of
Treasury Fund, Prime Fund or Tax-Exempt Fund acquired by exchange from
any Fidelity Advisor fund.
LETTER OF INTENT. You may receive a Class A or Class T front-end sales
charge reduction on your purchases of Class A and Class T shares made
during a 13-month period by signing a Letter of Intent (Letter). Each
Class A or Class T purchase you make after you sign the Letter will be
entitled to the reduced front-end sales charge applicable to the total
investment indicated in the Letter. Purchases of the following may be
aggregated for the purpose of completing your Letter: (i) Class A and
Class T shares of any Fidelity Advisor fund (except those acquired by
exchange from Daily Money Class shares of Treasury Fund, Prime Fund or
Tax-Exempt Fund that had been previously exchanged from a Fidelity
Advisor fund), (ii) Class B and Class C shares of any Fidelity Advisor
fund and (iii) Advisor B Class shares and Advisor C Class shares of
Treasury Fund. Reinvested income and capital gain distributions will
not be considered purchases for the purpose of completing your Letter.
Class B shares may, upon redemption, be assessed a CDSC based on the
following schedule:
From Date of Purchase Contingent Deferred Sales
Charge
Less than 1 year 3%
1 year to less than 2 years 2%
2 years to less than 3 years 1%
3 years to less than 4 years A 0%
A AFTER A MAXIMUM OF FOUR YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE SAME FIDELITY ADVISOR FUND.
When exchanging Class B shares of one fund for Class B shares of
another Fidelity Advisor fund or Advisor B Class shares of Treasury
Fund, your Class B shares retain the CDSC schedule in effect when they
were originally bought.
Except as provided below, investment professionals receive as
compensation from FDC, at the time of sale, a concession equal to
2.00% of your purchase of Class B shares. For purchases of Class B
shares through reinvested dividends or capital gain distributions,
investment professionals do not receive a concession at the time of
sale.
Class C shares may, upon redemption within one year of purchase, be
assessed a CDSC of 1.00%.
Except as provided below, investment professionals will receive as
compensation from FDC, at the time of the sale, a concession equal to
1.00% of your purchase of Class C shares. For purchases of Class C
shares made for an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 plan) or through
reinvested dividends or capital gain distributions, investment
professionals do not receive a concession at the time of sale.
The CDSC for Class B and Class C shares will be calculated based on
the lesser of the cost of the Class B or Class C shares, as
applicable, at the initial date of purchase or the value of those
Class B or Class C shares, as applicable, at redemption, not including
any reinvested dividends or capital gains. Class B and Class C shares
acquired through reinvestment of dividends or capital gain
distributions will not be subject to a CDSC. In determining the
applicability and rate of any CDSC at redemption, Class B or Class C
shares representing reinvested dividends and capital gains will be
redeemed first, followed by those Class B or Class C shares that have
been held for the longest period of time.
A front-end sales charge will not apply to the following Class A
shares:
1. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program with at
least $25 million or more in plan assets;
2. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an insurance company separate account used to fund
annuity contracts;
3. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through a trust institution, bank trust department or
insurance company, or any such institution's broker-dealer affiliate
that is not part of an organization primarily engaged in the brokerage
business. Employee benefit plans (except SIMPLE IRA, SEP, and SARSEP
plans and plans covering self-employed individuals and their employees
(formerly Keogh/H.R. 10 plans)) and 403(b) programs that participate
in the Advisor Retirement Connection do not qualify for this waiver;
4. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an investment professional sponsored program that
requires the participating employee benefit plan to invest initially
in Class C or Class B shares and, upon meeting certain criteria,
subsequently requires the plan to invest in Class A shares;
5. Purchased by a trust institution or bank trust department for a
managed account that is charged an asset-based fee. Employee benefit
plans (except SIMPLE IRA, SEP, and SARSEP plans and plans covering
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans)), 403(b) programs and accounts managed by third parties do not
qualify for this waiver;
6. Purchased by a broker-dealer for a managed account that is charged
an asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do
not qualify for this waiver;
7. Purchased by a registered investment adviser that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP, and
SARSEP plans and plans covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do not
qualify for this waiver;
8. Purchased with proceeds from the sale of front-end load shares of a
non-Advisor mutual fund for an account participating in the FundSelect
by Nationwide program;
9. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC. A member of the
immediate family of a bank trust officer, a registered representative
or other employee of investment professionals having agreements with
FDC, is a spouse of one of those individuals, an account for which one
of those individuals is acting as custodian for a minor child, and a
trust account that is registered for the sole benefit of a minor child
of one of those individuals; or
10. Purchased by the Fidelity Investments Charitable Gift Fund.
A front-end sales charge will not apply to the following Class T
shares:
1. Purchased for an insurance company separate account used to fund
annuity contracts for employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) or 403(b) programs;
2. Purchased by a trust institution or bank trust department for a
managed account that is charged an asset-based fee. Accounts managed
by third parties do not qualify for this waiver;
3. Purchased by a broker-dealer for a managed account that is charged
an asset-based fee;
4. Purchased by a registered investment adviser that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee;
5. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program;
6. Purchased for a Fidelity or Fidelity Advisor account with the
proceeds of a distribution from (i) an insurance company separate
account used to fund annuity contracts for employee benefit plans,
403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) that are invested in Fidelity Advisor or Fidelity
funds, or (ii) an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 plan) that is
invested in Fidelity Advisor or Fidelity funds. (Distributions other
than those transferred to an IRA account must be transferred directly
into a Fidelity account.);
7. Purchased for any state, county, or city, or any governmental
instrumentality, department, authority or agency;
8. Purchased with redemption proceeds from other mutual fund complexes
on which you have previously paid a front-end sales charge or CDSC;
9. Purchased by a current or former trustee or officer of a Fidelity
fund or a current or retired officer, director or regular employee of
FMR Corp. or Fidelity International Limited or their direct or
indirect subsidiaries (a Fidelity trustee or employee), the spouse of
a Fidelity trustee or employee, a Fidelity trustee or employee acting
as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity trustee or
employee;
10. Purchased by a charitable organization (as defined for purposes of
Section 501(c)(3) of the Internal Revenue Code, but excluding the
Fidelity Investments Charitable Gift Fund) investing $100,000 or more;
11. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC. A member of the
immediate family of a bank trust officer, a registered representative
or other employee of investment professionals having agreements with
FDC, is a spouse of one of those individuals, an account for which one
of those individuals is acting as custodian for a minor child, and a
trust account that is registered for the sole benefit of a minor child
of one of those individuals;
12. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined
for purposes of Section 501(c)(3) of the Internal Revenue Code);
13. Purchased with distributions of income, principal, and capital
gains from Fidelity Defined Trusts; or
14. Purchased by the Fidelity Investments Charitable Gift Fund.
The Class B or Class C CDSC will not apply to the redemption of
shares:
1. For disability or death, provided that the shares are sold within
one year following the death or the initial determination of
disability;
2. That are permitted without penalty at age 701/2 pursuant to the
Internal Revenue Code from retirement plans or accounts (other than of
shares purchased on or after February 11, 1999 for Traditional IRAs,
Roth IRAs and Rollover IRAs);
3. For disability, payment of death benefits, or minimum required
distributions starting at age 701/2 from Traditional IRAs, Roth IRAs
and Rollover IRAs purchased on or after February 11, 1999;
4. Through the Fidelity Advisor Systematic Withdrawal Program; or
5. (Applicable to Class C only) From an employee benefit plan, 403(b)
program or plan covering a sole-proprietor (formerly Keogh/H.R. 10
plan).
To qualify for a Class A or Class T front-end sales charge reduction
or waiver, you must notify Fidelity in advance of your purchase.
To qualify for a Class B or Class C CDSC waiver, you must notify
Fidelity in advance of your redemption.
FINDER'S FEE. On eligible purchases of (i) Class A shares in amounts
of $1 million or more that qualify for a Class A load waiver, (ii)
Class A shares in amounts of $25 million or more, and (iii) Class T
shares in amounts of $1 million or more, investment professionals will
be compensated with a fee at the rate of 0.25% of the purchase amount.
Shares held by an insurance company separate account will be
aggregated at the client (e.g., the contract holder or plan sponsor)
level, not at the separate account level. Upon request, anyone
claiming eligibility for the 0.25% fee with respect to shares held by
an insurance company separate account must provide Fidelity access to
records detailing purchases at the client level.
Except as provided below, any assets on which a finder's fee has been
paid will bear a CDSC (Class A or Class T CDSC) if they do not remain
in Class A or Class T shares of the Fidelity Advisor funds, or Daily
Money Class shares of Treasury Fund, Prime Fund or Tax-Exempt Fund,
for a period of at least one uninterrupted year. The Class A or Class
T CDSC will be 0.25% of the lesser of the cost of the Class A or Class
T shares, as applicable, at the initial date of purchase or the value
of those Class A or Class T shares, as applicable, at redemption, not
including any reinvested dividends or capital gains. Class A and Class
T shares acquired through reinvestment of dividends or capital gain
distributions will not be subject to a Class A or Class T CDSC. In
determining the applicability and rate of any Class A or Class T CDSC
at redemption, Class A or Class T shares representing reinvested
dividends and capital gains will be redeemed first, followed by those
Class A or Class T CDSC shares that have been held for the longest
period of time.
The Class A or Class T CDSC will not apply to the redemption of
shares:
1. Held by insurance company separate accounts;
2. For plan loans or distributions or exchanges to non-Advisor fund
investment options from employee benefit plans (except shares of
SIMPLE IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)
purchased on or after February 11, 1999) and 403(b) programs; or
3. For disability, payment of death benefits, or minimum required
distributions starting at age 701/2 from Traditional IRAs, Roth IRAs,
SIMPLE IRAs, SEPs, SARSEPs and plans covering a sole-proprietor or
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans).
To qualify for a Class A or Class T finder's fee or CDSC waiver, you
must notify Fidelity in advance of your purchase or redemption,
respectively.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class A,
Class T, Class B or Class C shares of the fund, you may reinvest an
amount equal to all or a portion of the redemption proceeds in the
same class of the fund or another Fidelity Advisor fund, at the NAV
next determined after receipt in proper form of your investment order,
provided that such reinvestment is made within 90 days of redemption.
Under these circumstances, the dollar amount of the CDSC you paid, if
any, on shares will be reimbursed to you by reinvesting that amount in
Class A, Class T, Class B or Class C shares, as applicable. You must
reinstate your Class A, Class T, Class B or Class C shares into an
account with the same registration. This privilege may be exercised
only once by a shareholder with respect to the fund and certain
restrictions may apply. For purposes of the CDSC schedule, the holding
period will continue as if the Class A, Class T, Class B or Class C
shares had not been redeemed.
To qualify for the reinstatement privilege, you must notify Fidelity
in writing in advance of your reinvestment.
CONVERSION FEATURE. After a maximum of four years from the initial
date of purchase, Class B shares and any capital appreciation
associated with those shares, convert automatically to Class A shares
of the fund. Conversion to Class A shares will be made at NAV. At the
time of conversion, a portion of the Class B shares bought through the
reinvestment of dividends or capital gains (Dividend Shares) will also
convert to Class A shares. The portion of Dividend Shares that will
convert is determined by the ratio of your converting Class B
non-Dividend Shares to your total Class B non-Dividend Shares.
Class A of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class A of the fund is authorized to pay FDC a monthly 12b-1
fee as compensation for providing services intended to result in the
sale of Class A shares and/or shareholder support services. Class A of
the fund may pay FDC a 12b-1 fee at an annual rate of 0.40% of its
average net assets, or such lesser amount as the Trustees may
determine from time to time. Class A of the fund currently pays FDC a
monthly 12b-1 fee at an annual rate of 0.15% of its average net assets
throughout the month. Class A's 12b-1 fee rate may be increased only
when the Trustees believe that it is in the best interests of Class A
shareholders to do so.
Class T of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class T of the fund is authorized to pay FDC a monthly 12b-1
fee as compensation for providing services intended to result in the
sale of Class T shares and/or shareholder support services. Class T of
the fund may pay FDC a 12b-1 fee at an annual rate of 0.40% of its
average net assets, or such lesser amount as the Trustees may
determine from time to time. Class T of the fund currently pays FDC a
monthly 12b-1 fee at an annual rate of 0.25% of its average net assets
throughout the month. Class T's 12b-1 fee rate may be increased only
when the Trustees believe that it is in the best interests of Class T
shareholders to do so.
FDC may reallow to intermediaries (such as banks, broker-dealers and
other service-providers), including its affiliates, up to the full
amount of the Class A and Class T 12b-1 fee, for providing services
intended to result in the sale of Class A or Class T shares and/or
shareholder support services.
Class B of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class B of the fund is authorized to pay FDC a monthly 12b-1
(distribution) fee as compensation for providing services intended to
result in the sale of Class B shares. Class B of the fund may pay FDC
a 12b-1 (distribution) fee at an annual rate of 0.75% of its average
net assets, or such lesser amount as the Trustees may determine from
time to time. Class B of the fund currently pays FDC a monthly 12b-1
(distribution) fee at an annual rate of 0.65% of its average net
assets throughout the month. Class B's 12b-1 (distribution) fee rate
may be increased only when the Trustees believe that it is in the best
interests of Class B shareholders to do so.
In addition, pursuant to the Class B plan, Class B pays FDC a monthly
12b-1 (service) fee at an annual rate of 0.25% of Class B's average
net assets throughout the month for providing shareholder support
services.
FDC may reallow up to the full amount of the Class B 12b-1 (service)
fee to intermediaries (such as banks, broker-dealers and other
service-providers) for providing shareholder support services.
Class C of the fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class C of the fund is authorized to pay FDC a monthly 12b-1
(distribution) fee as compensation for providing services intended to
result in the sale of Class C shares. Class C of the fund currently
pays FDC a monthly 12b-1 (distribution) fee at an annual rate of 0.75%
of its average net assets throughout the month.
In addition, pursuant to the Class C plan, Class C pays FDC a monthly
12b-1 (service) fee at an annual rate of 0.25% of Class C's average
net assets throughout the month for providing shareholder support
services.
Normally, after the first year of investment, FDC may reallow up to
the full amount of the Class C 12b-1 (distribution) fees to
intermediaries (such as banks, broker-dealers and other
service-providers) for providing services intended to result in the
sale of Class C shares and may reallow up to the full amount of the
Class C 12b-1 (service) fee to intermediaries for providing
shareholder support services.
For purchases of Class C shares made for an employee benefit plan,
403(b) program or plan covering a sole-proprietor (formerly Keogh/H.R.
10 plan) or through reinvestment of dividends or capital gain
distributions, during the first year of investment and thereafter, FDC
may reallow up to the full amount of the Class C 12b-1 (distribution)
fee paid by such shares to intermediaries, including its affiliates,
for providing services intended to result in the sale of Class C
shares and may reallow up to the full amount of the Class C 12b-1
(service) fee paid by such shares to intermediaries, including its
affiliates, for providing shareholder support services.
Because 12b-1 fees are paid out of each class's assets on an ongoing
basis, they will increase the cost of your investment and may cost you
more than paying other types of sales charges.
In addition, each plan specifically recognizes that FMR may make
payments from its management fee revenue, past profits, or other
resources to FDC for expenses incurred in connection with providing
services intended to result in the sale of the applicable class's
shares and/or shareholder support services, including payments made to
intermediaries that provide those services. Currently, the Board of
Trustees of the fund has authorized such payments for Class A, Class
T, Class B, and Class C.
To receive sales concessions, finder's fees and payments made pursuant
to a Distribution and Service Plan, intermediaries must sign the
appropriate agreement with FDC in advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Fidelity Advisor funds, provided
that the fund receives brokerage services and commission rates
comparable to those of other broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this prospectus and in the related SAI,
in connection with the offer contained in this prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the fund or FDC. This prospectus and
the related SAI do not constitute an offer by the fund or by FDC to
sell shares of the fund to or to buy shares of the fund from any
person to whom it is unlawful to make such offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand
each class's financial history for the past 5 years or, if shorter,
the period of the class's operations. Certain information reflects
financial results for a single class share. The total returns in the
table represent the rate that an investor would have earned (or lost)
on an investment in the class (assuming reinvestment of all dividends
and distributions). This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report,
along with the fund's financial highlights and financial statements,
are included in the fund's annual report. A free copy of the annual
report is available upon request.
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - CLASS A
Years ended October 31, 1999 1998 H 1997 G 1996 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.600 $ 10.410 $ 10.160
period
Income from Investment
Operations
Net interest income .431 .411 .459 .113
Net realized and unrealized (.540) .200 .191 .250
gain (loss)
Total from investment (.109) .611 .650 .363
operations
Less Distributions
From net interest income (.431) (.411) (.459) (.113)
From net realized gain (.080) (.030) (.001) -
Total distributions (.511) (.441) (.460) (.113)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.600 $ 10.410
TOTAL RETURN B, C (1.07)% 5.89% 6.42% 3.59%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,572 $ 1,082 $ 442 $ 103
(000 omitted)
Ratio of expenses to average .85% E .90% A, E .90% E .90% A, E
net assets
Ratio of net interest income 4.17% 4.19% A 4.37% 4.60% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G YEAR ENDED NOVEMBER 30
H ELEVEN MONTHS ENDED OCTOBER 31
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - CLASS T
Years ended October 31, 1999 1998 F 1997 G 1996 G 1995 G 1994 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460
period
Income from Investment
Operations
Net interest income .427 .407 .449 .461 .451 .455
Net realized and unrealized (.540) .210 .181 .030 .980 (1.040)
gain (loss)
Total from investment (.113) .617 .630 .491 1.431 (.585)
operations
Less Distributions
From net interest income (.427) (.407) (.449) (.461) (.451) (.455)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.507) (.437) (.450) (.461) (.451) (.475)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400
TOTAL RETURN B, C (1.11)% 5.94% 6.21% 4.89% 15.49% (5.78)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 50,432 $ 60,070 $ 48,830 $ 56,729 $ 62,852 $ 57,382
(000 omitted)
Ratio of expenses to average .90% D .95% A,D 1.00% D 1.00% D .94% D .90% D
net assets
Ratio of net interest income 4.12% 4.15% A 4.32% 4.42% 4.56% 4.49%
to average net assets
Portfolio turnover rate 19% 26% A, E 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
F ELEVEN MONTHS ENDED OCTOBER 31
G YEAR ENDED NOVEMBER 30
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - CLASS B
Years ended October 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 9.890
period
Income from Investment
Operations
Net interest income .353 .339 .382 .394 .373 .155
Net realized and unrealized (.540) .200 .181 .030 .980 (.490)
gain (loss)
Total from investment (.187) .539 .563 .424 1.353 (.335)
operations
Less Distributions
From net interest income (.353) (.339) (.382) (.394) (.373) (.155)
From net realized gain (.080) (.030) (.001) - - -
Total distributions (.433) (.369) (.383) (.394) (.373) (.155)
Net asset value, end of period $ 10.140 $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400
TOTAL RETURN B, C (1.81)% 5.17% 5.54% 4.21% 14.60% (3.44)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,387 $ 11,134 $ 7,917 $ 7,445 $ 6,226 $ 1,682
(000 omitted)
Ratio of expenses to average 1.60% E 1.65% A, E 1.65% E 1.66% E 1.68% E 1.65% A, E
net assets
Ratio of net interest income 3.43% 3.45% A 3.67% 3.76% 3.71% 3.74% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1994.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
H YEAR ENDED NOVEMBER 30
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - CLASS C
Years ended October 31, 1999 1998 G 1997 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.550
period
Income from Investment
Operations
Net interest income .342 .328 .027
Net realized and unrealized (.540) .210 .040
gain (loss)
Total from investment (.198) .538 .067
operations
Less Distributions
From net interest income (.342) (.328) (.027)
From net realized gain (.080) (.030) -
Total distributions (.422) (.358) (.027)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.590
TOTAL RETURN B, C (1.91)% 5.16% .63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,562 $ 1,137 $ 13
(000 omitted)
Ratio of expenses to average 1.70% E 1.75% A, E 1.75% A, E
net assets
Ratio of net interest income 3.34% 3.29% A 3.33% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO NOVEMBER 30, 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
You can obtain additional information about the fund. The fund's SAI
includes more detailed information about the fund and its investments.
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). The fund's annual and semi-annual reports include a
discussion of the fund's holdings and recent market conditions and the
fund's investment strategies that affected performance.
For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175.
The SAI, the fund's annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the fund, including the fund's SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER, 811-4707
Fidelity, Fidelity Investments & (Pyramid) Design, Fidelity
Investments and Directed Dividends are registered trademarks of FMR
Corp.
LTTE-pro- 1299
Like securities of all mutual
funds, these securities have
not been approved or
disapproved by the
Securities and Exchange
Commission, and the
Securities and Exchange
Commission has not
determined if this
prospectus is accurate or
complete. Any
representation to the
contrary is a criminal
offense.
FIDELITY(registered trademark) ADVISOR
INTERMEDIATE
MUNICIPAL INCOME
FUND
INSTITUTIONAL CLASS
(Fund 089, CUSIP 315917302)
PROSPECTUS
DECEMBER 29, 1999
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
FUND SUMMARY 2 INVESTMENT SUMMARY
3 PERFORMANCE
4 FEE TABLE
FUND BASICS 25 INVESTMENT DETAILS
6 VALUING SHARES
SHAREHOLDER INFORMATION 6 BUYING AND SELLING SHARES
9 EXCHANGING SHARES
9 ACCOUNT FEATURES AND POLICIES
12 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS
12 TAX CONSEQUENCES
FUND SERVICES 13 FUND MANAGEMENT
13 FUND DISTRIBUTION
APPENDIX 37 FINANCIAL HIGHLIGHTS
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of
income exempt from federal income taxes that can be obtained
consistent with the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Normally investing in investment-grade municipal
debt securities (those of medium and high quality).
(small solid bullet) Normally investing at least 80% of assets in
municipal securities whose interest is exempt from federal income tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers 1-17 Year Municipal Bond
Index.
(small solid bullet) Normally maintaining a dollar-weighted average
maturity between three and 10 years.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features and
current pricing, trading opportunities, and the credit quality of its
issuer to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently from
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in the fund's
performance from year to year and compares Institutional Class's
performance to the performance of a market index and an average of the
performance of similar funds over various periods of time. The fund
also compares its performance to the performance of an additional
index over various periods of time. Data for the additional index is
available only from June 30, 1993 to the present. Returns are based on
past results and are not an indication of future performance.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR-BY-YEAR RETURNS
ADVISOR INTERMEDIATE
MUNICIPAL INCOME -
INSTITUTIONAL CLASS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
7.79% 6.37% 9.64% 7.28% 9.94% -5.43% 14.37% 4.15% 8.07% 5.29%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 7.79
Row: 2, Col: 1, Value: 6.37
Row: 3, Col: 1, Value: 9.639999999999999
Row: 4, Col: 1, Value: 7.28
Row: 5, Col: 1, Value: 9.94
Row: 6, Col: 1, Value: -5.430000000000001
Row: 7, Col: 1, Value: 14.37
Row: 8, Col: 1, Value: 4.15
Row: 9, Col: 1, Value: 8.07
Row: 10, Col: 1, Value: 5.29
DURING THE PERIODS SHOWN IN THE CHART FOR INSTITUTIONAL CLASS OF
ADVISOR INTERMEDIATE MUNICIPAL INCOME, THE HIGHEST RETURN FOR A
QUARTER WAS 6.22% (QUARTER ENDING MARCH 31, 1995) AND THE LOWEST
RETURN FOR A QUARTER WAS -5.46% (QUARTER ENDING MARCH 31, 1994).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR INSTITUTIONAL
CLASS OF ADVISOR INTERMEDIATE MUNICIPAL INCOME WAS -0.74%.
AVERAGE ANNUAL RETURNS
For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998
Advisor Intermediate 5.29% 5.09% 6.63%
Municipal Income
Lehman Brothers Municipal 6.48% 6.22% 8.22%
Bond Index
Lehman Brothers 1-17 Year 6.28% 5.92% n/a
Municipal Bond Index
Lipper Intermediate Municipal 5.35% 5.17% 6.88%
Debt Funds Average
If FMR had not reimbursed certain class expenses during these periods,
Institutional Class's returns would have been lower.
The Lehman Brothers Municipal Bond Index is a market value-weighted
index of investment-grade municipal bonds with maturities of one year
or more.
The Lehman Brothers 1-17 Year Municipal Bond Index is a market
value-weighted index of investment-grade municipal bonds with
maturities between one and 17 years.
Lipper Intermediate Municipal Debt Funds Average reflects the
performance (excluding sales charges) of mutual funds with similar
objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold, or sell Institutional Class shares of the fund.
The annual class operating expenses provided below for Institutional
Class do not reflect the effect of any expense reimbursements during
the period.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
Institutional Class
Sales charge (load) on None
purchases and reinvested
distributions
Deferred sales charge (load) None
on redemptions
ANNUAL CLASS OPERATING EXPENSES (PAID FROM CLASS ASSETS)
Institutional Class
Management fee 0.38%
Distribution and Service None
(12b-1) fee
Other expenses 0.46%
Total annual class operating 0.84%
expensesA
A EFFECTIVE DECEMBER 1, 1998, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
INSTITUTIONAL CLASS OF THE FUND TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 0.70%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
This EXAMPLE helps you compare the cost of investing in the fund with
the cost of investing in other mutual funds.
Let's say, hypothetically, that Institutional Class's annual return is
5% and that your shareholder fees and Institutional Class's annual
operating expenses are exactly as described in the fee table. This
example illustrates the effect of fees and expenses, but is not meant
to suggest actual or expected fees and expenses or returns, all of
which may vary. For every $10,000 you invested, here's how much you
would pay in total expenses if you close your account after the number
of years indicated:
Institutional Class
1 year $ 86
3 years $ 268
5 years $ 466
10 years $ 1,037
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of
income exempt from federal income taxes that can be obtained
consistent with the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets in investment-grade municipal
debt securities (those of medium and high quality).
FMR normally invests at least 80% of the fund's assets in municipal
securities whose interest is exempt from federal income tax. Although
FMR does not currently intend to invest the fund's assets in municipal
securities whose interest is subject to federal income tax, FMR may
invest all of the fund's assets in municipal securities whose interest
is subject to the federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation, and utilities.
FMR uses the Lehman Brothers 1-17 Year Municipal Bond Index as a guide
in structuring the fund and selecting its investments. FMR manages the
fund to have similar overall interest rate risk to the index. In
addition, the fund normally maintains a dollar-weighted average
maturity between three and 10 years. As of October 31, 1999, the
dollar-weighted average maturity of the fund and the index was
approximately 7.2 and 7.8 years, respectively.
FMR allocates the fund's assets among different market sectors (for
example, general obligation bonds of a state or bonds financing a
specific project) and different maturities based on its view of the
relative value of each sector and maturity.
In buying and selling securities for the fund, FMR analyzes a
security's structural features and current price compared to its
estimated long-term value, any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates, or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable, or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current interest but
are sold at a discount from their face values. Municipal debt
securities include general obligation bonds of municipalities, local
or state governments, project or revenue-specific bonds, or
pre-refunded or escrowed bonds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees, or insurance.
PRINCIPAL INVESTMENT RISKS
Many factors affect the fund's performance. The fund's yield and share
price change daily based on changes in interest rates and market
conditions and in response to other economic, political, or financial
developments. The fund's reaction to these developments will be
affected by the types and maturities of securities in which the fund
invests, the financial condition, industry and economic sector, and
geographic location of an issuer, and the fund's level of investment
in the securities of that issuer. When you sell your shares of the
fund, they could be worth more or less than what you paid for them.
The following factors can significantly affect the fund's performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation, and utilities,
conditions in those sectors can affect the overall municipal market.
In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities can be more
sensitive to interest rate changes. In other words, the longer the
maturity of a security, the greater the impact a change in interest
rates could have on the security's price. In addition, short-term and
long-term interest rates do not necessarily move in the same amount or
the same direction. Short-term securities tend to react to changes in
short-term interest rates, and long-term securities tend to react to
changes in long-term interest rates.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. Lower-quality debt securities (those
of less than investment-grade quality) tend to be more sensitive to
these changes than higher-quality debt securities. Municipal
securities backed by current or anticipated revenues from a specific
project or specific assets can be negatively affected by the
discontinuance of the taxation supporting the project or assets or the
inability to collect revenues for the project or from the assets. If
the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest
from the security could become taxable and the security could decline
significantly in value.
In response to market, economic, political, or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect the fund's
performance, and the fund could distribute income subject to federal
income tax.
FUNDAMENTAL INVESTMENT POLICIES
The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.
ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of
income exempt from federal income taxes that can be obtained
consistent with the preservation of capital. The fund normally invests
at least 80% of its assets in securities whose interest is free from
federal income tax.
VALUING SHARES
The fund is open for business each day the New York Stock Exchange
(NYSE) is open.
A class's net asset value per share (NAV) is the value of a single
share. Fidelity normally calculates Institutional Class's NAV as of
the close of business of the NYSE, normally 4:00 p.m. Eastern time.
However, NAV may be calculated earlier if trading on the NYSE is
restricted or as permitted by the Securities and Exchange Commission
(SEC). The fund's assets are valued as of this time for the purpose of
computing the class's NAV.
To the extent that the fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of the fund's assets may not occur on days when the
fund is open for business.
The fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations. If market
quotations or information furnished by a pricing service is not
readily available for a security or if a security's value has been
materially affected by events occurring after the close of the market
on which the security is principally traded, that security may be
valued by another method that the Board of Trustees believes
accurately reflects fair value. A security's valuation may differ
depending on the method used for determining value.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
For account, product and service information, please use the following
phone numbers:
(small solid bullet) If you are investing through a broker-dealer or
insurance representative, 1-800-522-7297 (8:30 a.m. - 7:00 p.m.
Eastern time, Monday through Friday).
(small solid bullet) If you are investing through a bank
representative, 1-800-843-3001 (8:30 a.m. - 7:00 p.m. Eastern time,
Monday through Friday).
Please use the following addresses:
BUYING OR SELLING SHARES
Fidelity Investments(registered trademark)
P.O. Box 770002
Cincinnati, OH 45277-0081
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH2A
Hebron, KY 41048
You may buy or sell Institutional Class shares of the fund through an
investment professional. When you invest through an investment
professional, the procedures for buying, selling, and exchanging
Institutional Class shares of the fund and the account features and
policies may differ. Additional fees may also apply to your investment
in Institutional Class shares of the fund, including a transaction fee
if you buy or sell Institutional Class shares of the fund through a
broker or other investment professional.
Certain methods of contacting Fidelity, such as by telephone, may be
unavailable or delayed (for example, during periods of unusual market
activity).
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS OR
OTHER GROUPS
BUYING SHARES
Institutional Class shares are offered to:
1. Broker-dealer managed account programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. In addition, employee
benefit plans (as defined in the Employee Retirement Income Security
Act), 403(b) programs and plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) must have at least $50 million in plan assets;
2. Registered investment adviser managed account programs, provided
the registered investment adviser is not part of an organization
primarily engaged in the brokerage business, and the program (i)
charges an asset-based fee and (ii) will have at least $1 million
invested in the Institutional Class of the Advisor funds. In addition,
accounts other than an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly a Keogh/H.R. 10 plan) in the
program must be managed on a discretionary basis;
3. Trust institution and bank trust department managed account
programs that (i) charge an asset-based fee and (ii) will have at
least $1 million invested in the Institutional Class of the Advisor
funds. Accounts managed by third parties are not eligible to purchase
Institutional Class shares;
4. Insurance company separate accounts that will have at least $1
million invested in the Institutional Class of the Advisor funds;
5. Fidelity Trustees and employees; and
6. Insurance company programs for employee benefit plans, 403(b)
programs or plans covering sole-proprietors (formerly Keogh/H.R. 10
plans) that (i) charge an asset-based fee and (ii) will have at least
$1 million invested in the Institutional Class of the Advisor funds.
Insurance company programs for employee benefit plans, 403(b) programs
and plans covering sole-proprietors (formerly Keogh/H.R. 10 plans)
include such programs offered by a broker-dealer affiliate of an
insurance company, provided that the affiliate is not part of an
organization primarily engaged in the brokerage business.
For purchases made by managed account programs, insurance company
separate accounts or insurance company programs for employee benefit
plans, 403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans), Fidelity may waive the requirement that $1
million be invested in the Institutional Class of the Advisor funds.
The price to buy one share of the class is the class's NAV. The
class's shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your order
is received in proper form.
It is the responsibility of your investment professional to transmit
your order to buy shares to Fidelity before the close of business on
the day you place your order.
Short-term or excessive trading into and out of the fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, the fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
the fund. For these purposes, FMR may consider an investor's trading
history in the fund or other Fidelity funds, and accounts under common
ownership or control.
The fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Fidelity reserves the right to limit the number
of checks processed at one time.
(small solid bullet) Fidelity must receive payment within three
business days after an order for shares is placed; otherwise your
purchase order may be canceled and you could be liable for any losses
or fees the fund or Fidelity has incurred.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees the fund or
Fidelity has incurred.
Shares can be bought or sold through investment professionals using an
automated order placement and settlement system that guarantees
payment for orders on a specified date.
Certain financial institutions that meet creditworthiness criteria
established by Fidelity Distributors Corporation (FDC) may enter
confirmed purchase orders on behalf of customers by phone, with
payment to follow no later than close of business on the next business
day. If payment is not received by that time, the order will be
canceled and the financial institution will be liable for any losses.
MINIMUMS
TO OPEN AN ACCOUNT $2,500
Through regular investment plansA $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
A AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $100, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED.
The fund may waive or lower purchase minimums.
KEY INFORMATION
PHONE TO OPEN AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from another
Fidelity fund. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
TO ADD TO AN ACCOUNT
(small solid bullet) Exchange
from the same class of
another Fidelity Advisor
fund or from another
Fidelity fund. Call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information."
MAIL FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770002 CINCINNATI, (small solid bullet) Complete
OH 45277-0081 and sign the application.
Make your check payable to
the complete name of the
fund and note the applicable
class. Mail to your
investment professional or
to the address at left.
TO ADD TO AN ACCOUNT
(small solid bullet) Make
your check payable to the
complete name of the fund
and note the applicable
class. Indicate your fund
account number on your check
and mail to your investment
professional or to the
address at left.
(small solid bullet) Exchange
from the same class of other
Fidelity Advisor funds or
from another Fidelity fund.
Send a letter of instruction
to your investment
professional or to the
address at left, including
your name, the funds' names,
the applicable class names,
the fund account numbers,
and the dollar amount or
number of shares to be
exchanged.
IN PERSON TO OPEN AN ACCOUNT
(small solid bullet) Bring
your application and check
to your investment
professional.
TO ADD TO AN ACCOUNT
(small solid bullet) Bring
your check to your
investment professional.
WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to set
up your account and to
arrange a wire transaction.
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your new
fund account number and your
name.
TO ADD TO AN ACCOUNT
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your fund
account number and your name.
AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Advisor Systematic
Investment Program.
SELLING SHARES
The price to sell one share of the class is the class's NAV.
If appropriate to protect shareholders, the fund may impose a
redemption fee (trading fee) on redemptions from the fund.
Your shares will be sold at the next NAV calculated after your order
is received in proper form.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to sell more than $100,000 worth of
shares;
(small solid bullet) Your account registration has changed within the
last 15 or 30 days, depending on your account;
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address);
(small solid bullet) The check is being made payable to someone other
than the account owner; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
shares, leave at least $1,000 worth of shares in the account to keep
it open, except accounts not subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
the fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other property rather than in cash if FMR determines it is in the best
interests of the fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
To sell shares issued with certificates, call Fidelity for
instructions. The fund no longer issues share certificates.
KEY INFORMATION
PHONE (small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" to
initiate a wire transaction
or to request a check for
your redemption.
(small solid bullet) Exchange
to the same class of other
Fidelity Advisor funds or to
another Fidelity fund. Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information."
MAIL FIDELITY INVESTMENTS INDIVIDUAL, JOINT TENANT,
P.O. BOX 770002 CINCINNATI, SOLE PROPRIETORSHIP, UGMA,
OH 45277-0081 UTMA
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including your name, the
fund's name, the applicable
class name, your fund
account number, and the
dollar amount or number of
shares to be sold. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on the
account.
TRUST
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the trust's name,
the fund's name, the
applicable class name, the
trust's fund account number,
and the dollar amount or
number of shares to be sold.
The trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the account
registration, provide a copy
of the trust document
certified within the last 60
days.
BUSINESS OR ORGANIZATION
(small solid bullet) Send a
letter of instruction to
your investment professional
or to the address at left,
including the firm's name,
the fund's name, the
applicable class name, the
firm's fund account number,
and the dollar amount or
number of shares to be sold.
At least one person
authorized by corporate
resolution to act on the
account must sign the letter
of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information" for
instructions.
IN PERSON INDIVIDUAL, JOINT TENANT,
SOLE PROPRIETORSHIP, UGMA,
UTMA
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The letter of
instruction must be signed
by all persons required to
sign for transactions,
exactly as their names
appear on the account.
TRUST
(small solid bullet) Bring a
letter of instruction to
your investment
professional. The trustee
must sign the letter of
instruction indicating
capacity as trustee. If the
trustee's name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR ORGANIZATION
(small solid bullet) Bring a
letter of instruction to
your investment
professional. At least one
person authorized by
corporate resolution to act
on the account must sign the
letter of instruction.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
AUTOMATICALLY (small solid bullet) Use
Fidelity Advisor Systematic
Withdrawal Program to set up
periodic redemptions from
your Institutional Class
account.
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As an Institutional Class shareholder, you have the privilege of
exchanging your Institutional Class shares for Institutional Class
shares of other Fidelity Advisor funds or for shares of Fidelity
funds.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) The fund may temporarily or permanently terminate
the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control will be counted together for purposes of the four
exchange limit.
(small solid bullet) The fund may refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to
invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
The fund may terminate or modify the exchange privilege in the future.
Other funds may have different exchange restrictions, and may impose
trading fees of up to 3.00% of the amount exchanged. Check each fund's
prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
fund.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses,
and other long-term financial goals. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY ADVISOR SYSTEMATIC
INVESTMENT PROGRAM TO MOVE
MONEY FROM YOUR BANK ACCOUNT
TO A FIDELITY ADVISOR FUND.
MINIMUM MINIMUML FREQUENCY PROCEDURES
INITIAL ADDITIONAL Monthly, bimonthly, (small solid bullet) To set
$100 $100 quarterly, or semi-annually up for a new account,
complete the appropriate
section on the application.
(small solid bullet) To set
up for existing accounts,
call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for an
application.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
investment date.
FIDELITY ADVISOR SYSTEMATIC
WITHDRAWAL PROGRAM TO SET UP
PERIODIC REDEMPTIONS FROM
YOUR INSTITUTIONAL CLASS
ACCOUNT TO YOU OR TO YOUR
BANK CHECKING ACCOUNT.
MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Monthly, quarterly, or (small solid bullet) Accounts
semi-annually with a value of $10,000 or
more in Institutional Class
shares are eligible for this
program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for instructions.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information." Call
at least 10 business days
prior to your next scheduled
withdrawal date.
</TABLE>
OTHER FEATURES. The following other features are also available to buy
and sell shares of the fund.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account.
(small solid bullet) Call your investment professional or call
Fidelity at the appropriate number found in "General Information"
before your first use to verify that this feature is set up on your
account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid bullet) To add the wire feature or to change the bank
account designated to receive redemption proceeds at any time prior to
making a redemption request, you should send a letter of instruction,
including a signature guarantee, to your investment professional or to
Fidelity at the address found in "General Information."
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(small solid bullet) Financial reports (every six months).
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
the fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
When you sign your ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require the fund to withhold 31% of your taxable distributions and
redemptions.
If your ACCOUNT BALANCE falls below $1,000 (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold at the NAV on the day your account is closed.
Fidelity may charge a FEE FOR CERTAIN SERVICES, such as providing
historical account documents.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The fund earns interest, dividends, and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. The fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gain distributions.
The fund normally declares dividends daily and pays them monthly. The
fund normally pays capital gain distributions in December.
EARNING DIVIDENDS
Shares purchased by an automated purchase order begin to earn
dividends on the day your payment is received.
Shares purchased by all other purchase orders begin to earn dividends
on the first business day following the day your payment is received.
Shares earn dividends until, but not including, the next business day
following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
Institutional Class's distributions:
5. REINVESTMENT OPTION. Your dividends and capital gain distributions
will be automatically reinvested in additional Institutional Class
shares of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
6. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional Institutional Class shares of
the fund. Your dividends will be paid in cash.
7. CASH OPTION. Your dividends and capital gain distributions will be
paid in cash.
8. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in Institutional Class shares of
another identically registered Fidelity Advisor fund or shares of
identically registered Fidelity funds. Your capital gain distributions
will be automatically invested in Institutional Class shares of
another identically registered Fidelity Advisor fund or shares of
identically registered Fidelity funds, automatically reinvested in
additional Institutional Class shares of the fund, or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, contact your investment
professional directly or call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in the fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS. The fund seeks to earn income and pay
dividends exempt from federal income tax.
Income exempt from federal income tax may be subject to state or local
tax. A portion of the dividends you receive may be subject to federal
and state income taxes and also may be subject to the federal
alternative minimum tax. You may also receive taxable distributions
attributable to the fund's sale of municipal bonds.
For federal tax purposes, the fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ordinary income, while the fund's
distributions of long-term capital gains are taxable to you generally
as capital gains.
If a fund's distributions exceed its income and capital gains realized
in any year, all or a portion of those distributions may be treated as
a return of capital to shareholders for tax purposes. A return of
capital generally will not be taxable to you but will reduce the cost
basis of your shares and result in a higher reported capital gain or a
lower reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a potentially taxable distribution.
Any taxable distributions you receive from the fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in Institutional Class shares of another
Fidelity Advisor fund or shares of Fidelity funds, you will receive
certain December distributions in January, but those distributions
will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in the fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Advisor Intermediate Municipal Income is a mutual fund, an
investment that pools shareholders' money and invests it toward a
specified goal.
FMR is the fund's manager.
As of March 25, 1999, FMR had approximately $521.7 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is primarily
responsible for choosing investments for the fund.
FIMM is an affiliate of FMR. As of March 29, 1999, FIMM had
approximately $159.8 billion in discretionary assets under management.
The fund could be adversely affected if the computer systems used by
FMR and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised the fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on the fund.
Norm Lind is vice president and manager of Advisor Intermediate
Municipal Income, which he has managed since January 1998. He also
manages several other Fidelity funds. Since joining Fidelity in 1986,
Mr. Lind has worked as an analyst and manager.
From time to time a manager, analyst, or other Fidelity employee may
express views regarding a particular company, security, industry, or
market sector. The views expressed by any such person are the views of
only that individual as of the time expressed and do not necessarily
represent the views of Fidelity or any other person in the Fidelity
organization. Any such views are subject to change at any time based
upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for a Fidelity
fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
The fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. The fee is calculated by
adding a group fee rate to an individual fund fee rate, dividing by
twelve, and multiplying the result by the fund's average net assets
throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.
For October 1999, the group fee rate was 0.1289%. The individual fund
fee rate is 0.25%.
The total management fee for the fiscal year ended October 31, 1999
was 0.38% of the fund's average net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse a class for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a class if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be discontinued by FMR at any time, can decrease a class's
expenses and boost its performance.
FUND DISTRIBUTION
The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio.
FDC distributes the class's shares.
Institutional Class has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 that
recognizes that FMR may use its management fee revenues, as well as
its past profits or its resources from any other source, to pay FDC
for expenses incurred in connection with providing services intended
to result in the sale of Institutional Class shares and/or shareholder
support services. FMR, directly or through FDC, may pay
intermediaries, such as banks, broker-dealers and other
service-providers, that provide those services. Currently, the Board
of Trustees has authorized such payments for Institutional Class.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Fidelity Advisor funds, provided
that the fund receives brokerage services and commission rates
comparable to those of other broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this prospectus and in the related
statement of additional information (SAI), in connection with the
offer contained in this prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund or FDC. This prospectus and the related SAI do
not constitute an offer by the fund or by FDC to sell shares of the
fund to or to buy shares of the fund from any person to whom it is
unlawful to make such offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand
Institutional Class's financial history for the past 5 years. Certain
information reflects financial results for a single class share. The
total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the class (assuming
reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, independent accountants,
whose report, along with the fund's financial highlights and financial
statements, are included in the fund's annual report. A free copy of
the annual report is available upon request.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA AND RATIOS
Years ended October 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 H
SELECTED PER-SHARE DATA
Net asset value,beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460
period
Income from Investment
Operations
Net interest income .448 .427 .475 .487 .477 .481
Net realized and unrealized (.540) .210 .181 .050 .950 (1.030)
gain (loss)
Total from investment (.092) .637 .656 .537 1.427 (.549)
operations
Less Distributions
From net interest income (.448) (.427) (.475) (.487) (.477) (.481)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.528) (.457) (.476) (.487) (.477) (.501)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410
TOTAL RETURN B, C (.92)% 6.14% 6.48% 5.36% 15.44% (5.43)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,997 $ 6,328 $ 6,098 $ 6,455 $ 11,085 $ 11,702
(000 omitted)
Ratio of expenses to average .70% D .75% A, D .75% D .75% D .70% D .65% D
net assets
Ratio of expenses to average .70% .75% A .75% .74% E .70% .65%
net assets after expense
reductions
Ratio of net interest income 4.32% 4.36% A 4.57% 4.68% 4.96% 4.75%
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
H YEAR ENDED NOVEMBER 30
You can obtain additional information about the fund. The fund's SAI
includes more detailed information about the fund and its investments.
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). The fund's annual and semi-annual reports include a
discussion of the fund's holdings and recent market conditions and the
fund's investment strategies that affected performance.
For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175.
The SAI, the fund's annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the fund, including the fund's SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER, 811-4707
Fidelity, Fidelity Investments & (Pyramid) Design, Fidelity
Investments, and Directed Dividends are registered trademarks of FMR
Corp.
LTTE-pro- 1299
FIDELITY(registered trademark) ADVISOR INTERMEDIATE MUNICIPAL INCOME
FUND
A FUND OF FIDELITY ADVISOR SERIES II
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 29, 1999
This statement of additional information (SAI) is not a prospectus.
Portions of the fund's annual reports are incorporated herein. The
annual reports are supplied with this SAI.
To obtain a free additional copy of a prospectus, dated December 29,
1999, or an annual report, please call Fidelity at 1-888-622-3175.
TABLE OF CONTENTS PAGE
Investment Policies and 36
Limitations
Portfolio Transactions 40
Valuation 41
Performance 41
Additional Purchase, Exchange 54
and Redemption Information
Distributions and Taxes 56
Trustees and Officers 56
Control of Investment Advisers 60
Management Contract 60
Distribution Services 63
Transfer and Service Agent 66
Agreements
Description of the Trust 66
Financial Statements 67
Appendix 67
LTTEB-ptb- 1299
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
82 DEVONSHIRE STREET, BOSTON, MA 02109
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of the fund's assets that
may be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (the
1940 Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except in connection with the insurance
program established by the fund pursuant to an exemptive order issued
by the Securities and Exchange Commission or as otherwise permitted
under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in the
securities of companies whose principal business activities are in the
same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities);
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)).
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitations (1) and (5), FMR identifies the issuer of
a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets were invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 68.
The following pages contain more detailed information about types of
instruments in which the fund may invest, strategies Fidelity
Management & Research Company (FMR) may employ in pursuit of the
fund's investment objective, and a summary of related risks. FMR may
not buy all of these instruments or use all of these techniques unless
it believes that doing so will help the fund achieve its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the 1940 Act. These
transactions may involve repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50
largest U.S. banks (measured by deposits); municipal securities; U.S.
Government securities with affiliated financial institutions that are
primary dealers in these securities; short-term currency transactions;
and short-term borrowings. In accordance with exemptive orders issued
by the Securities and Exchange Commission (SEC), the Board of Trustees
has established and periodically reviews procedures applicable to
transactions involving affiliated financial institutions.
ASSET-BACKED SECURITIES represent interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities. Payment of interest and repayment of principal may be
largely dependent upon the cash flows generated by the assets backing
the securities and, in certain cases, supported by letters of credit,
surety bonds, or other credit enhancements. Asset-backed security
values may also be affected by other factors including changes in
interest rates, the availability of information concerning the pool
and its structure, the creditworthiness of the servicing agent for the
pool, the originator of the loans or receivables, or the entities
providing the credit enhancement. In addition, these securities may be
subject to prepayment risk.
BORROWING. The fund may borrow from banks or from other funds advised
by FMR or its affiliates, or through reverse repurchase agreements. If
the fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off. If the fund makes
additional investments while borrowings are outstanding, this may be
considered a form of leverage.
CASH MANAGEMENT. A fund can hold uninvested cash or can invest it in
cash equivalents such as money market securities, repurchase
agreements or shares of money market funds. Generally, these
securities offer less potential for gains than other types of
securities.
CENTRAL CASH FUNDS are money market funds managed by FMR or its
affiliates that seek to earn a high level of current income (free from
federal income tax in the case of a municipal money market fund) while
maintaining a stable $1.00 share price. The funds comply with
industry-standard requirements for money market funds regarding the
quality, maturity, and diversification of their investments.
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value
of each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a
stated final maturity basis, although there are some exceptions to
this rule.
For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. When a municipal bond issuer has committed to call
an issue of bonds and has established an independent escrow account
that is sufficient to, and is pledged to, refund that issue, the
number of days to maturity for the prerefunded bond is considered to
be the number of days to the announced call date of the bonds.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options: Combined Positions, Correlation of Price Changes, Futures
Contracts, Futures Margin Payments, Limitations on Futures and Options
Transactions, Liquidity of Options and Futures Contracts, OTC Options,
Purchasing Put and Call Options, and Writing Put and Call Options.
COMBINED POSITIONS involve purchasing and writing options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, purchasing a put option and writing a
call option on the same underlying instrument would construct a
combined position whose risk and return characteristics are similar to
selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call
option at a lower price, to reduce the risk of the written call option
in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction
costs and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. A fund may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests, which involves a risk that the
options or futures position will not track the performance of the
fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. In purchasing a futures contract, the buyer agrees
to purchase a specified underlying instrument at a specified future
date. In selling a futures contract, the seller agrees to sell a
specified underlying instrument at a specified future date. The price
at which the purchase and sale will take place is fixed when the buyer
and seller enter into the contract. Some currently available futures
contracts are based on specific securities, such as U.S. Treasury
bonds or notes, and some are based on indices of securities prices,
such as the Bond Buyer Municipal Bond Index. Futures can be held until
their delivery dates, or can be closed out before then if a liquid
secondary market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The fund intends to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to which
the fund can commit assets to initial margin deposits and option
premiums.
In addition, the fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of
the fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options
if, as a result, the fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options
purchased by the fund would exceed 5% of the fund's total assets.
These limitations do not apply to options attached to or acquired or
traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options.
The above limitations on the fund's investments in futures contracts
and options, and the fund's policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible to enter into new positions or close out
existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could
prevent prompt liquidation of unfavorable positions, and potentially
could require a fund to continue to hold a position until delivery or
expiration regardless of changes in its value. As a result, a fund's
access to other assets held to cover its options or futures positions
could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the purchaser or writer greater flexibility
to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed
by the clearing organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
purchaser obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for
this right, the purchaser pays the current market price for the option
(known as the option premium). Options have various types of
underlying instruments, including specific securities, indices of
securities prices, and futures contracts. The purchaser may terminate
its position in a put option by allowing it to expire or by exercising
the option. If the option is allowed to expire, the purchaser will
lose the entire premium. If the option is exercised, the purchaser
completes the sale of the underlying instrument at the strike price. A
purchaser may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary
market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. The writer of a put or call option takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the writer assumes the obligation
to pay the strike price for the option's underlying instrument if the
other party to the option chooses to exercise it. The writer may seek
to terminate a position in a put option before exercise by closing out
the option in the secondary market at its current price. If the
secondary market is not liquid for a put option, however, the writer
must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes. When writing an option on
a futures contract, a fund will be required to make margin payments to
an FCM as described above for futures contracts.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the writer to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options
are similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the
effects of a price decline. At the same time, because a call writer
must be prepared to deliver the underlying instrument in return for
the strike price, even if its current value is greater, a call writer
gives up some ability to participate in security price increases.
ILLIQUID SECURITIES cannot be sold or disposed of in the ordinary
course of business at approximately the prices at which they are
valued. Difficulty in selling securities may result in a loss or may
be costly to a fund. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and, through
reports from FMR, the Board monitors investments in illiquid
securities. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency and volume
of trades and quotations, (2) the number of dealers and prospective
purchasers in the marketplace, (3) dealer undertakings to make a
market, and (4) the nature of the security and the market in which it
trades (including any demand, put or tender features, the mechanics
and other requirements for transfer, any letters of credit or other
credit enhancement features, any ratings, the number of holders, the
method of soliciting offers, the time required to dispose of the
security, and the ability to assign or offset the rights and
obligations of the security).
INDEXED SECURITIES are instruments whose prices are indexed to the
prices of other securities, securities indices, or other financial
indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. Indexed
securities may have principal payments as well as coupon payments that
depend on the performance of one or more interest rates. Their coupon
rates or principal payments may change by several percentage points
for every 1% interest rate change.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are
indexed, and may also be influenced by interest rate changes. Indexed
securities may be more volatile than the underlying instruments.
Indexed securities are also subject to the credit risks associated
with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and borrow money
from, other funds advised by FMR or its affiliates; however, municipal
funds currently intend to participate in this program only as
borrowers. A fund will borrow through the program only when the costs
are equal to or lower than the costs of bank loans. Interfund
borrowings normally extend overnight, but can have a maximum duration
of seven days. Loans may be called on one day's notice. A fund may
have to borrow from a bank at a higher interest rate if an interfund
loan is called or not renewed.
INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from movements in prevailing short-term
interest rate levels - rising when prevailing short-term interest
rates fall, and vice versa. The prices of inverse floaters can be
considerably more volatile than the prices of bonds with comparable
maturities.
INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities are
medium and high-quality securities. Some may possess speculative
characteristics and may be more sensitive to economic changes and to
changes in the financial conditions of issuers. A debt security is
considered to be investment-grade if it is rated investment-grade by
Moody's Investor Service, Standard & Poor's, Duff & Phelps Credit
Rating Co., or Fitch IBCA Inc., or is unrated but considered to be of
equivalent quality by FMR.
LOWER-QUALITY DEBT SECURITIES. Lower-quality debt securities have poor
protection with respect to the payment of interest and repayment of
principal, or may be in default. These securities are often considered
to be speculative and involve greater risk of loss or price changes
due to changes in the issuer's capacity to pay. The market prices of
lower-quality debt securities may fluctuate more than those of
higher-quality debt securities and may decline significantly in
periods of general economic difficulty, which may follow periods of
rising interest rates.
The market for lower-quality debt securities may be thinner and less
active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. Adverse
publicity and changing investor perceptions may affect the liquidity
of lower-quality debt securities and the ability of outside pricing
services to value lower-quality debt securities.
A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
MUNICIPAL INSURANCE. A municipal bond may be covered by insurance that
guarantees the bond's scheduled payment of interest and repayment of
principal. This type of insurance may be obtained by either (i) the
issuer at the time the bond is issued (primary market insurance), or
(ii) another party after the bond has been issued (secondary market
insurance).
Both primary and secondary market insurance guarantee timely and
scheduled repayment of all principal and payment of all interest on a
municipal bond in the event of default by the issuer, and cover a
municipal bond to its maturity, enhancing its credit quality and
value.
Municipal bond insurance does not insure against market fluctuations
or fluctuations in a fund's share price. In addition, a municipal bond
insurance policy will not cover: (i) repayment of a municipal bond
before maturity (redemption), (ii) prepayment or payment of an
acceleration premium (except for a mandatory sinking fund redemption)
or any other provision of a bond indenture that advances the maturity
of the bond, or (iii) nonpayment of principal or interest caused by
negligence or bankruptcy of the paying agent. A mandatory sinking fund
redemption may be a provision of a municipal bond issue whereby part
of the municipal bond issue may be retired before maturity.
Because a significant portion of the municipal securities issued and
outstanding is insured by a small number of insurance companies, an
event involving one or more of these insurance companies could have a
significant adverse effect on the value of the securities insured by
that insurance company and on the municipal markets as a whole.
FMR may decide to retain an insured municipal bond that is in default,
or, in FMR's view, in significant risk of default. While a fund holds
a defaulted, insured municipal bond, the fund collects interest
payments from the insurer and retains the right to collect principal
from the insurer when the municipal bond matures, or in connection
with a mandatory sinking fund redemption.
PRINCIPAL MUNICIPAL BOND INSURERS. The various insurance companies
providing primary and secondary market insurance policies for
municipal bonds are described below. Ratings reflect each respective
rating agency's assessment of the creditworthiness of an insurer and
the insurer's ability to pay claims on its insurance policies at the
time of the assessment.
Ambac Assurance Corp., a wholly-owned subsidiary of Ambac Financial
Group Inc., is authorized to provide bond insurance in the 50 U.S.
states, the District of Columbia, and the Commonwealth of Puerto Rico.
Bonds insured by Ambac Assurance Corp. are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.
Connie Lee Insurance Co. is a wholly-owned subsidiary of Connie Lee
Holdings Inc., which is a wholly-owned subsidiary of Ambac Assurance
Corp. All losses incurred by Connie Lee Insurance Co. that would cause
its statutory capital to drop below $75 million would be covered by
Ambac Assurance Corp. Connie Lee Insurance Co. is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and the Commonwealth of Puerto Rico. Bonds insured by Connie Lee
Insurance Co. are rated "AAA" by Standard & Poor's.
Financial Guaranty Insurance Co. (FGIC), a wholly-owned subsidiary of
GE Capital Services, is authorized to provide bond insurance in the 50
U.S. states and the District of Columbia. Bonds insured by FGIC are
rated "Aaa" by Moody's Investor Service and "AAA" by Standard &
Poor's.
Financial Security Assurance Inc. (FSA), a wholly-owned subsidiary of
Financial Security Assurance Holdings Ltd., is authorized to provide
bond insurance in 49 U.S. states, the District of Columbia, and three
U.S. territories. Bonds insured by FSA are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.
Municipal Bond Investors Assurance Corp. (MBIA Insurance Corp.), a
wholly-owned subsidiary of MBIA Inc., a publicly-owned company, is
authorized to provide bond insurance in the 50 U.S. states, the
District of Columbia, and the Commonwealth of Puerto Rico. Bonds
insured by MBIA Insurance Corp. are rated "Aaa" by Moody's Investor
Service and "AAA" by Standard & Poor's.
MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities. Generally,
a fund will not hold these obligations directly as a lessor of the
property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest
gives the purchaser a specified, undivided interest in the obligation
in proportion to its purchased interest in the total amount of the
issue.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance
limitations. If a municipality stops making payments or transfers its
obligations to a private entity, the obligation could lose value or
become taxable.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal securities
may be affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event
of a bankruptcy. Proposals to restrict or eliminate the federal income
tax exemption for interest on municipal securities are introduced
before Congress from time to time. Proposals also may be introduced
before state legislatures that would affect the state tax treatment of
a municipal fund's distributions. If such proposals were enacted, the
availability of municipal securities and the value of a municipal
fund's holdings would be affected and the Trustees would reevaluate
the fund's investment objectives and policies. Municipal bankruptcies
are relatively rare, and certain provisions of the U.S. Bankruptcy
Code governing such bankruptcies are unclear and remain untested.
Further, the application of state law to municipal issuers could
produce varying results among the states or among municipal securities
issuers within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific segments of
the market, or the relative credit quality of particular securities.
Any of these effects could have a significant impact on the prices of
some or all of the municipal securities held by a fund.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student
loans. Bonds issued to supply educational institutions with funds are
subject to the risk of unanticipated revenue decline, primarily the
result of decreasing student enrollment or decreasing state and
federal funding. Among the factors that may lead to declining or
insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general
economic conditions. Student loan revenue bonds are generally offered
by state (or substate) authorities or commissions and are backed by
pools of student loans. Underlying student loans may be guaranteed by
state guarantee agencies and may be subject to reimbursement by the
United States Department of Education through its guaranteed student
loan program. Others may be private, uninsured loans made to parents
or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student
loan revenue bonds are impacted by numerous factors, including the
rate of student loan defaults, seasoning of the loan portfolio, and
student repayment deferral periods of forbearance. Other risks
associated with student loan revenue bonds include potential changes
in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and
other program subsidies currently in effect.
ELECTRIC UTILITIES. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open
transmission access to any electricity supplier, although it is not
presently known to what extent competition will evolve. Other risks
include: (a) the availability and cost of fuel, (b) the availability
and cost of capital, (c) the effects of conservation on energy demand,
(d) the effects of rapidly changing environmental, safety, and
licensing requirements, and other federal, state, and local
regulations, (e) timely and sufficient rate increases, and (f)
opposition to nuclear power.
PUT FEATURES entitle the holder to sell a security back to the issuer
at any time or at specified intervals. In exchange for this benefit, a
fund may accept a lower interest rate. Securities with put features
are subject to the risk that the put provider is unable to honor the
put feature (purchase the security). Demand features and standby
commitments are types of put features.
REFUNDING CONTRACTS. Securities may be purchased on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and a
purchaser to buy refunded municipal obligations at a stated price and
yield on a settlement date that may be several months or several years
in the future. A purchaser generally will not be obligated to pay the
full purchase price if the issuer fails to perform under a refunding
contract. Instead, refunding contracts generally provide for payment
of liquidated damages to the issuer. A purchaser may secure its
obligations under a refunding contract by depositing collateral or a
letter of credit equal to the liquidated damages provisions of the
refunding contract.
REPURCHASE AGREEMENTS involve an agreement to purchase a security and
to sell that security back to the original seller at an agreed-upon
price. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate
or maturity of the purchased security. As protection against the risk
that the original seller will not fulfill its obligation, the
securities are held in a separate account at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus
the accrued incremental amount. The value of the security purchased
may be more or less than the price at which the counterparty has
agreed to purchase the security. In addition, delays or losses could
result if the other party to the agreement defaults or becomes
insolvent. The fund will engage in repurchase agreement transactions
with parties whose creditworthiness has been reviewed and found
satisfactory by FMR.
RESTRICTED SECURITIES are subject to legal restrictions on their sale.
Difficulty in selling securities may result in a loss or be costly to
a fund. Restricted securities generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933, or in a registered public offering.
Where registration is required, the holder of a registered security
may be obligated to pay all or part of the registration expense and a
considerable period may elapse between the time it decides to seek
registration and the time it may be permitted to sell a security under
an effective registration statement. If, during such a period, adverse
market conditions were to develop, the holder might obtain a less
favorable price than prevailed when it decided to seek registration of
the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. The fund will enter into
reverse repurchase agreements with parties whose creditworthiness has
been reviewed and found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of fund assets and a fund's
yield and may be viewed as a form of leverage.
SOURCES OF LIQUIDITY OR CREDIT SUPPORT. Issuers may employ various
forms of credit and liquidity enhancements, including letters of
credit, guarantees, puts, and demand features, and insurance provided
by domestic or foreign entities such as banks and other financial
institutions. FMR may rely on its evaluation of the credit of the
liquidity or credit enhancement provider in determining whether to
purchase a security supported by such enhancement. In evaluating the
credit of a foreign bank or other foreign entities, FMR will consider
whether adequate public information about the entity is available and
whether the entity may be subject to unfavorable political or economic
developments, currency controls, or other government restrictions that
might affect its ability to honor its commitment. Changes in the
credit quality of the entity providing the enhancement could affect
the value of the security or a fund's share price.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. A fund may acquire standby commitments to enhance the
liquidity of portfolio securities.
Ordinarily a fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a
third party at any time. A fund may purchase standby commitments
separate from or in conjunction with the purchase of securities
subject to such commitments. In the latter case, the fund would pay a
higher price for the securities acquired, thus reducing their yield to
maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to purchase an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.
Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at the
time the commitments are exercised; the fact that standby commitments
are not generally marketable; and the possibility that the maturities
of the underlying securities may be different from those of the
commitments.
TEMPORARY DEFENSIVE POLICIES. The fund reserves the right to invest
without limitation in short-term instruments, to hold a substantial
amount of uninvested cash, or to invest more than normally permitted
in federally taxable obligations for temporary, defensive purposes.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, municipal bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder
the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees
equal to the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, a fund
effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds, FMR will consider the creditworthiness of the issuer of the
underlying bond, the custodian, and the third party provider of the
tender option. In certain instances, a sponsor may terminate a tender
option if, for example, the issuer of the underlying bond defaults on
interest payments.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments
in the interest rate paid on the security. Variable rate securities
provide for a specified periodic adjustment in the interest rate,
while floating rate securities have interest rates that change
whenever there is a change in a designated benchmark rate. Some
variable or floating rate securities are structured with put features
that permit holders to demand payment of the unpaid principal balance
plus accrued interest from the issuers or certain financial
intermediaries.
In many instances bonds and participation interests have tender
options or demand features that permit the holder to tender (or put)
the bonds to an institution at periodic intervals and to receive the
principal amount thereof. Variable rate instruments structured in this
fashion are considered to be essentially equivalent to other variable
rate securities. The IRS has not ruled whether the interest on these
instruments is tax-exempt. Fixed-rate bonds that are subject to third
party puts and participation interests in such bonds held by a bank in
trust or otherwise may have similar features.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS involve a
commitment to purchase or sell specific securities at a predetermined
price or yield in which payment and delivery take place after the
customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities pursuant to one of these transactions, the
purchaser assumes the rights and risks of ownership, including the
risks of price and yield fluctuations and the risk that the security
will not be issued as anticipated. Because payment for the securities
is not required until the delivery date, these risks are in addition
to the risks associated with a fund's investments. If a fund remains
substantially fully invested at a time when a purchase is outstanding,
the purchases may result in a form of leverage. When a fund has sold a
security pursuant to one of these transactions, the fund does not
participate in further gains or losses with respect to the security.
If the other party to a delayed-delivery transaction fails to deliver
or pay for the securities, a fund could miss a favorable price or
yield opportunity or suffer a loss.
A fund may renegotiate a when-issued or forward transaction and may
sell the underlying securities before delivery, which may result in
capital gains or losses for the fund.
ZERO COUPON BONDS do not make interest payments; instead, they are
sold at a discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be more volatile than other types of
fixed-income securities when interest rates change. In calculating a
fund's dividend, a portion of the difference between a zero coupon
bond's purchase price and its face value is considered income.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of the fund by FMR pursuant to authority contained in the
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and investment
accounts for which it or its affiliates act as investment adviser. In
selecting broker-dealers, subject to applicable limitations of the
federal securities laws, FMR considers various relevant factors,
including, but not limited to: the size and type of the transaction;
the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability,
and financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; the reasonableness
of any commissions; and, if applicable, arrangements for payment of
fund expenses.
If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contract"), that sub-adviser is
authorized to place orders for the purchase and sale of portfolio
securities, and will do so in accordance with the policies described
above.
The fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other
investment accounts over which FMR or its affiliates exercise
investment discretion. Such services may include advice concerning the
value of securities; the advisability of investing in, purchasing, or
selling securities; and the availability of securities or the
purchasers or sellers of securities. In addition, such broker-dealers
may furnish analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and
performance of investment accounts; and effect securities transactions
and perform functions incidental thereto (such as clearance and
settlement).
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering investment
management services to that fund or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to a fund. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, the
fund may pay a broker-dealer commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause the fund to pay such higher commissions,
FMR must determine in good faith that such commissions are reasonable
in relation to the value of the brokerage and research services
provided by such executing broker-dealers, viewed in terms of a
particular transaction or FMR's overall responsibilities to that fund
or its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation
should be related to those services.
To the extent permitted by applicable law, FMR is authorized to
allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to use the research services of brokerage and
other firms that have provided such assistance. FMR may use research
services provided by and place agency transactions with National
Financial Services Corporation (NFSC), an indirect subsidiary of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services.
FMR may allocate brokerage transactions to broker-dealers (including
affiliates of FMR) who have entered into arrangements with FMR under
which the broker-dealer allocates a portion of the commissions paid by
a fund toward the reduction of that fund's expenses. The transaction
quality must, however, be comparable to those of other qualified
broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for investment accounts which they or their affiliates manage, unless
certain requirements are satisfied. Pursuant to such requirements, the
Board of Trustees has authorized NFSC to execute portfolio
transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules.
The Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions paid by
the fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
For the fiscal periods ended October 31, 1999 and 1998, the fund's
portfolio turnover rates were 19% and 26% (ANNUALIZED), respectively.
The fund may pay both commissions and spreads in connection with the
placement of portfolio transactions. For the fiscal year ended October
31, 1999, the eleven-month fiscal period ended October 31, 1998, and
the fiscal year ended November 30, 1997, the fund paid no brokerage
commissions.
During the fiscal year ended October 31, 1999, the fund paid no
brokerage commissions to firms that provided research services.
The Trustees of the fund have approved procedures in conformity with
Rule 10f-3 under the 1940 Act whereby a fund may purchase securities
that are offered in underwritings in which an affiliate of FMR
participates. These procedures prohibit the fund from directly or
indirectly benefiting an FMR affiliate in connection with such
underwritings. In addition, for underwritings where an FMR affiliate
participates as a principal underwriter, certain restrictions may
apply that could, among other things, limit the amount of securities
that the fund could purchase in the underwriting.
From time to time the Trustees will review whether the recapture for
the benefit of the fund of some portion of the brokerage commissions
or similar fees paid by the fund on portfolio transactions is legally
permissible and advisable. The fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the
same as those of other funds managed by FMR or its affiliates,
investment decisions for the fund are made independently from those of
other funds managed by FMR or investment accounts managed by FMR
affiliates. It sometimes happens that the same security is held in the
portfolio of more than one of these funds or investment accounts.
Simultaneous transactions are inevitable when several funds and
investment accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or investment account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as the fund is
concerned. In other cases, however, the ability of the fund to
participate in volume transactions will produce better executions and
prices for the fund. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to the fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
Each class's net asset value per share (NAV) is the value of a single
share. The NAV of each class is computed by adding the class's pro
rata share of the value of the fund's investments, cash, and other
assets, subtracting the class's pro rata share of the fund's
liabilities, subtracting the liabilities allocated to the class, and
dividing the result by the number of shares of that class that are
outstanding.
Portfolio securities are valued by various methods. If quotations are
not available, fixed-income securities are usually valued on the basis
of information furnished by a pricing service that uses a valuation
matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. Use of pricing services has
been approved by the Board of Trustees. A number of pricing services
are available, and the fund may use various pricing services or
discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAVs.
The procedures set forth above need not be used to determine the value
of the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method would more
accurately reflect the fair value of such securities. For example,
securities and other assets for which there is no readily available
market value may be valued in good faith by a committee appointed by
the Board of Trustees. In making a good faith determination of the
value of a security, the committee may review price movements in
futures contracts and American Depositary Receipts (ADRs), market and
trading trends, the bid/ask quotes of brokers and off-exchange
institutional trading.
PERFORMANCE
A class may quote performance in various ways. All performance
information supplied by the fund in advertising is historical and is
not intended to indicate future returns. Each class's share price,
yield and return fluctuate in response to market conditions and other
factors, and the value of fund shares when redeemed may be more or
less than their original cost.
YIELD CALCULATIONS. Yields for a class are computed by dividing a
class's pro rata share of the fund's interest and income for a given
30-day or one-month period, net of expenses, by the average number of
shares of that class entitled to receive distributions during the
period, dividing this figure by the class's NAV or offering price, as
applicable, at the end of the period, and annualizing the result
(assuming compounding of income) in order to arrive at an annual
percentage rate. Income is calculated for purposes of yield quotations
in accordance with standardized methods applicable to all stock and
bond funds. In general, interest income is reduced with respect to
bonds trading at a premium over their par value by subtracting a
portion of the premium from income on a daily basis, and is increased
with respect to bonds trading at a discount by adding a portion of the
discount to daily income. Capital gains and losses generally are
excluded from the calculation.
Income calculated for the purposes of calculating a class's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, a class's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
Yield information may be useful in reviewing a class's performance and
in providing a basis for comparison with other investment
alternatives. However, a class's yield fluctuates, unlike investments
that pay a fixed interest rate over a stated period of time. When
comparing investment alternatives, investors should also note the
quality and maturity of the portfolio securities of respective
investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
a class's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates a class's yield will
tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to the fund from the continuous sale of its
shares will likely be invested in instruments producing lower yields
than the balance of the fund's holdings, thereby reducing a class's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
The tax-equivalent yield of a class of a fund is the rate an investor
would have to earn from a fully taxable investment before taxes to
equal a class's tax-free yield. Tax-equivalent yields are calculated
by dividing a class's yield by the result of one minus a specified
federal income tax rate. If only a portion of a class's yield is
tax-exempt, only that portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1999. It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of
hypothetical federally tax-exempt obligations yielding from 2% to 9%.
Of course, no assurance can be given that a class of the fund will
achieve any specific tax-exempt yield. While the fund invests
principally in obligations whose interest is exempt from federal
income tax, other income received by the fund may be taxable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1999 TAX RATES AND TAX-EQUIVALENT YIELDS
If individual tax-exempt yield is:
Taxable Income* 2% 3%
Single Return Joint Return Federal
Marginal
Rate** Then taxable-equivalent yield
is:
$ 0 - $ 25,750 $ 0 - $43,050 15.0% 2.35% 3.53%
$ 25,751 - $ 62,450 $ 43,051 - $ 104,050 28.0% 2.78% 4.17%
$ 62,451 - $ 130,250 $ 104,051 - $ 158,550 31.0% 2.90% 4.35%
$ 130,251 - $ 283,150 $ 158,551 - $ 283,150 36.0% 3.13% 4.69%
$ 283,151 and over $ 283,151 and over 39.6% 3.31% 4.97%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 TAX RATES AND TAX-EQUIVALENT YIELDS
If individual tax-exempt
yield is:
Taxable Income* 4% 5% 6% 7% 8% 9%
Single Return Joint Return Federal Then taxable-equivalent yield
Marginal is:
Rate**
$ 0 - $ 25,750 $ 0 - $43,050 15.0% 4.71% 5.88% 7.06% 8.24% 9.41% 10.59%
$ 25,751 - $ 62,450 $ 43,051 - $ 104,050 28.0% 5.56% 6.94% 8.33% 9.72% 11.11% 12.50%
$ 62,451 - $ 130,250 $ 104,051 - $ 158,550 31.0% 5.80% 7.25% 8.70% 10.14% 11.59% 13.04%
$ 130,251 - $ 283,150 $ 158,551 - $ 283,150 36.0% 6.25% 7.81% 9.38% 10.94% 12.50% 14.06%
$ 283,151 and over $ 283,151 and over 39.6% 6.62% 8.28% 9.93% 11.59% 13.25% 14.90%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
The fund may invest a portion of its assets in obligations that are
subject to federal income tax. When the fund invests in these
obligations, its tax-equivalent yields will be lower. In the table
above, tax-equivalent yields are calculated assuming investments are
100% federally tax-free.
RETURN CALCULATIONS. Returns quoted in advertising reflect all aspects
of a class's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in a class's NAV over a
stated period. A class's return may be calculated by using the
performance data of a previously existing class prior to the date that
the new class commenced operations, adjusted to reflect differences in
sales charges but not 12b-1 fees. A cumulative return reflects actual
performance over a stated period of time. Average annual returns are
calculated by determining the growth or decline in value of a
hypothetical historical investment in a class over a stated period,
and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative
return of 100% over ten years would produce an average annual return
of 7.18%, which is the steady annual rate of return that would equal
100% growth on a compounded basis in ten years. While average annual
returns are a convenient means of comparing investment alternatives,
investors should realize that a class's performance is not constant
over time, but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual
year-to-year performance of a class.
In addition to average annual returns, a class may quote unaveraged or
cumulative returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative returns
may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a
series of redemptions, over any time period. Returns may be broken
down into their components of income and capital (including capital
gains and changes in share price) in order to illustrate the
relationship of these factors and their contributions to return.
Returns may be quoted on a before-tax or after-tax basis. Returns may
or may not include the effect of a class's maximum sales charge.
Excluding a class's sales charge from a return calculation produces a
higher return figure. Returns, yields and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using a class's NAVs, adjusted
NAVs, and benchmark indexes may be used to exhibit performance. An
adjusted NAV includes any distributions paid by the fund and reflects
all elements of a class's return. Unless otherwise indicated, a
class's adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following table shows each class's yield,
tax-equivalent yield, and returns for the fiscal periods ended October
31, 1999.
Class A and Class T have a maximum front-end sales charge of 3.75% and
2.75%, respectively, which is included in the yield, tax equivalent
yield, and average annual and cumulative returns. Class B and Class C
have a maximum contingent deferred sales charge (CDSC) of 3.00% and
1.00%, respectively, which is included in the average annual and
cumulative returns.
Class A, Class T, Class B, and Class C have a 12b-1 fee of 0.15%,
0.25%, 0.90%, and 1.00%, respectively, which is included in the yield,
tax-equivalent yield, and average annual and cumulative returns.
The tax-equivalent yields for the fund are based on a 36% federal
income tax rate. Note that the fund may invest in securities whose
income is subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Average Annual Returns
Thirty-Day Yield Tax Equivalent Yield One Year Five Years Ten Years/Life of Fund*
Advisor Intermediate 4.19% 6.55% -4.78% 4.92% 5.34%
Municipal Income - Class A
Advisor Intermediate 4.18% 6.53% -3.83% 5.09% 5.43%
Municipal Income - Class T
Advisor Intermediate 3.61% 5.64% -4.64% 4.93% 5.31%
Municipal Income - Class B
Advisor Intermediate N/A N/A -2.85% 4.91% 5.30%
Municipal Income - Class C
Advisor Intermediate 4.50% 7.03% -0.92% 5.93% 5.90%
Municipal Income -
Institutional Class
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Cumulative Returns
One Year Five Years Ten Years/Life of Fund*
Advisor Intermediate -4.78% 27.16% 68.26%
Municipal Income - Class A
Advisor Intermediate -3.83% 28.20% 69.64%
Municipal Income - Class T
Advisor Intermediate -4.64% 27.22% 67.80%
Municipal Income - Class B
Advisor Intermediate -2.85% 27.07% 67.60%
Municipal Income - Class C
Advisor Intermediate -0.92% 33.38% 77.46%
Municipal Income -
Institutional Class
</TABLE>
* Initial offering of Class A took place on September 3, 1996. Class A
returns from September 3, 1996 through September 10, 1992 are those of
Class T which reflect a 12b-1 fee of 0.25%. Class A returns prior to
September 10, 1992 are those of Institutional Class, which has no
12b-1 fee. If Class A's 12b-1 fee had been reflected, returns prior to
September 3, 1996 through September 10, 1992 would have been higher
and returns prior to September 10, 1992 would have been lower.
Initial offering of Class T took place on September 10, 1992. Class T
returns prior to September 10, 1992 are those of Institutional Class
which has no 12b-1 fee. If Class T's 12b-1 fee had been reflected,
returns prior to September 10, 1992 would have been lower.
Initial offering of Class B took place on June 30, 1994. Class B
returns prior to June 30, 1994 through September 10, 1992 are those of
Class T which reflect a 12b-1 fee of 0.25%. Class B returns prior to
September 10, 1992 are those of Institutional Class which has no 12b-1
fee. If Class B's 12b-1 fee had been reflected, returns prior to June
30, 1994 would have been lower.
Initial offering of Class C took place on November 3, 1997. Class C
returns prior to November 3, 1997 through June 30, 1994 are those of
Class B which reflect a 12b-1 fee of 0.90% (1.00% prior to January 1,
1996). Class C returns prior to June 30, 1994 through September 10,
1992 are those of Class T which reflect a 12b-1 fee of 0.25%. Returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class C's 12b-1 fee had been reflected, returns prior
to November 3, 1997 through January 1, 1996 and prior to June 30, 1994
would have been lower.
Note: If FMR had not reimbursed certain class expenses during these
periods, Class A's, Class T's, Class B's, Class C's, and Institutional
Class's returns would have been lower.
Note: If FMR had not reimbursed certain class expenses during these
periods, Class A's yield and tax equivalent yield would have been
4.11% and 6.42%, respectively; Class T's yield and tax equivalent
yield would have been 4.06% and 6.34%, respectively; Class B's yield
and tax-equivalent yield would have been 3.55% and 5.55%,
respectively; and Institutional Class's yield and tax equivalent yield
would have been 4.41% and 6.89%, respectively.
The following tables show the income and capital elements of each
class's cumulative return. The tables compare each class's return to
the record of the Standard & Poor's 500SM Index (S&P 500(registered
trademark)), the Dow Jones Industrial Average (DJIA), and the cost of
living, as measured by the Consumer Price Index (CPI), over the same
period. The S&P 500 and DJIA comparisons are provided to show how each
class's return compared to the record of a market
capitalization-weighted index of common stocks and a narrower set of
stocks of major industrial companies, respectively, over the same
period. Because the fund invests in fixed-income securities, common
stocks represent a different type of investment from the fund. Common
stocks generally offer greater growth potential than the fund, but
generally experience greater price volatility, which means greater
potential for loss. In addition, common stocks generally provide lower
income than a fixed-income investment such as the fund. The S&P 500
and DJIA returns are based on the prices of unmanaged groups of stocks
and, unlike each class's returns, do not include the effect of
brokerage commissions or other costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each class of Advisor Intermediate Municipal
Income during the 10-year period ended October 31, 1999, assuming all
distributions were reinvested. Returns are based on past results and
are not an indication of future performance. Tax consequences of
different investments have not been factored into the figures below.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class A of Advisor Intermediate Municipal Income
would have grown to $16,826, including the effect of Class A's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE INDEXES
MUNICIPAL INCOME - CLASS A
Fiscal Year
Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
1999 $ 9,260 $ 6,401 $ 1,165 $ 16,826 $ 51,536
1998 $ 9,826 $ 6,074 $ 1,109 $ 17,009 $ 41,009
1997 $ 9,652 $ 5,281 $ 1,044 $ 15,977 $ 33,617
1996 $ 9,370 $ 4,455 $ 1,012 $ 14,837 $ 25,445
1995 $ 9,397 $ 3,811 $ 1,015 $ 14,223 $ 20,505
1994 $ 8,804 $ 2,981 $ 951 $ 12,736 $ 16,217
1993 $ 9,652 $ 2,657 $ 1,017 $ 13,326 $ 15,613
1992 $ 9,972 $ 2,082 $ 0 $ 12,054 $ 13,583
1991 $ 9,880 $ 1,356 $ 0 $ 11,236 $ 12,351
1990 $ 9,607 $ 645 $ 0 $ 10,252 $ 9,251
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ADVISOR INTERMEDIATE
MUNICIPAL INCOME - CLASS A
INDEXES
Fiscal Year Ended DJIA Cost of Living
1999 $ 52,414 $ 13,392
1998 $ 41,322 $ 13,057
1997 $ 35,190 $ 12,866
1996 $ 27,989 $ 12,604
1995 $ 21,605 $ 12,237
1994 $ 17,317 $ 11,903
1993 $ 15,871 $ 11,600
1992 $ 13,514 $ 11,290
1991 $ 12,484 $ 10,939
1990 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
the fund on November 1, 1989, assuming the maximum sales charge had
been in effect, the net amount invested in Class A shares was $9,625.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $17,767. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $4,806 for dividends and $922 for capital gain
distributions. Initial offering of Class A of Advisor Intermediate
Municipal Income took place on September 3, 1996. Class A returns from
September 3, 1996 through September 10, 1992 are those of Class T
which reflect a 12b-1 fee of 0.25%. Class A returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class A's 12b-1 fee had been reflected, returns prior to September 3,
1996 through September 10, 1992 would have been higher and returns
prior to September 10, 1992 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class T of Advisor Intermediate Municipal Income
would have grown to $16,964, including the effect of Class T's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE INDEXES
MUNICIPAL INCOME - CLASS T
Fiscal Year
Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
1999 $ 9,356 $ 6,431 $ 1,177 $ 16,964 $ 51,536
1998 $ 9,928 $ 6,108 $ 1,120 $ 17,156 $ 41,009
1997 $ 9,743 $ 5,311 $ 1,054 $ 16,108 $ 33,617
1996 $ 9,476 $ 4,503 $ 1,024 $ 15,003 $ 25,445
1995 $ 9,495 $ 3,851 $ 1,025 $ 14,371 $ 20,505
1994 $ 8,895 $ 3,013 $ 961 $ 12,869 $ 16,217
1993 $ 9,753 $ 2,683 $ 1,028 $ 13,464 $ 15,613
1992 $ 10,075 $ 2,104 $ 0 $ 12,179 $ 13,583
1991 $ 9,983 $ 1,370 $ 0 $ 11,353 $ 12,351
1990 $ 9,707 $ 651 $ 0 $ 10,358 $ 9,251
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ADVISOR INTERMEDIATE
MUNICIPAL INCOME - CLASS T
INDEXES
Fiscal Year Ended DJIA Cost of Living
1999 $ 52,414 $ 13,392
1998 $ 41,322 $ 13,057
1997 $ 35,190 $ 12,866
1996 $ 27,989 $ 12,604
1995 $ 21,605 $ 12,237
1994 $ 17,317 $ 11,903
1993 $ 15,871 $ 11,600
1992 $ 13,514 $ 11,290
1991 $ 12,484 $ 10,939
1990 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
the fund on November 1, 1989, assuming the maximum sales charge had
been in effect, the net amount invested in Class T shares was $9,725.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $17,811. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $4,835 for dividends and $932 for capital gain
distributions. Initial offering of Class T of Advisor Intermediate
Municipal Income took place on September 10, 1992. Class T returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class T's 12b-1 fee had been reflected, returns prior
to September 10, 1992 would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class B of Advisor Intermediate Municipal Income
would have grown to $16,780.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE INDEXES
MUNICIPAL INCOME - CLASS B
Fiscal Year
Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
1999 $ 9,611 $ 5,965 $ 1,204 $ 16,780 $ 51,536
1998 $ 10,199 $ 5,740 $ 1,150 $ 17,089 $ 41,009
1997 $ 10,019 $ 5,069 $ 1,084 $ 16,172 $ 33,617
1996 $ 9,735 $ 4,357 $ 1,051 $ 15,143 $ 25,445
1995 $ 9,763 $ 3,799 $ 1,054 $ 14,616 $ 20,505
1994 $ 9,147 $ 3,055 $ 988 $ 13,190 $ 16,217
1993 $ 10,028 $ 2,760 $ 1,057 $ 13,845 $ 15,613
1992 $ 10,360 $ 2,163 $ 0 $ 12,523 $ 13,583
1991 $ 10,265 $ 1,409 $ 0 $ 11,674 $ 12,351
1990 $ 9,981 $ 670 $ 0 $ 10,651 $ 9,251
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ADVISOR INTERMEDIATE
MUNICIPAL INCOME - CLASS B
INDEXES
Fiscal Year Ended DJIA Cost of Living
1999 $ 52,414 $ 13,392
1998 $ 41,322 $ 13,057
1997 $ 35,190 $ 12,866
1996 $ 27,989 $ 12,604
1995 $ 21,605 $ 12,237
1994 $ 17,317 $ 11,903
1993 $ 15,871 $ 11,600
1992 $ 13,514 $ 11,290
1991 $ 12,484 $ 10,939
1990 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
the fund on November 1, 1989, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $17,371. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $4,601 for dividends and $958 for capital gain
distributions. Initial offering of Class B of Advisor Intermediate
Municipal Income took place on June 30, 1994. Class B returns prior to
June 30, 1994 through September 10, 1992 are those of Class T which
reflect a 12b-1 fee of 0.25%. Class B returns prior to September 10,
1992 are those of Institutional Class which has no 12b-1 fee. If Class
B's 12b-1 fee had been reflected, returns prior to June 30, 1994 would
have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Class C of Advisor Intermediate Municipal Income
would have grown to $16,760.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE INDEXES
MUNICIPAL INCOME - CLASS C
Fiscal Year
Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
1999 $ 9,621 $ 5,934 $ 1,205 $ 16,760 $ 51,536
1998 $ 10,209 $ 5,726 $ 1,151 $ 17,086 $ 41,009
1997 $ 10,019 $ 5,069 $ 1,084 $ 16,172 $ 33,617
1996 $ 9,734 $ 4,358 $ 1,051 $ 15,143 $ 25,445
1995 $ 9,763 $ 3,799 $ 1,054 $ 14,616 $ 20,505
1994 $ 9,147 $ 3,055 $ 988 $ 13,190 $ 16,217
1993 $ 10,028 $ 2,760 $ 1,057 $ 13,845 $ 15,613
1992 $ 10,360 $ 2,163 $ 0 $ 12,523 $ 13,583
1991 $ 10,265 $ 1,408 $ 0 $ 11,674 $ 12,351
1990 $ 9,981 $ 670 $ 0 $ 10,651 $ 9,251
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ADVISOR INTERMEDIATE
MUNICIPAL INCOME - CLASS C
INDEXES
Fiscal Year Ended DJIA Cost of Living
1999 $ 52,414 $ 13,392
1998 $ 41,322 $ 13,057
1997 $ 35,190 $ 12,866
1996 $ 27,989 $ 12,604
1995 $ 21,605 $ 12,237
1994 $ 17,317 $ 11,903
1993 $ 15,871 $ 11,600
1992 $ 13,514 $ 11,290
1991 $ 12,484 $ 10,939
1990 $ 9,597 $ 10,629
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
the fund on November 1, 1989, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $17,333. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $4,579 for dividends and $958 for capital gain
distributions. Initial offering of Class C of Advisor Intermediate
Municipal Income took place on November 3, 1997. Class C returns prior
to November 3, 1997 through June 30, 1994 are those of Class B which
reflect a 12b-1 fee of 0.90% (1.00% prior to January 1, 1996). Class C
returns prior to June 30, 1994 through September 10, 1992 are those of
Class T which reflect a 12b-1 fee of 0.25%. Class C returns prior to
September 10, 1992 are those of Institutional Class which has no 12b-1
fee. If Class C's 12b-1 fee had been reflected, returns prior to
November 3, 1997 through January 1, 1996 and prior to June 30, 1994
would have been lower.
During the 10-year period ended October 31, 1999, a hypothetical
$10,000 investment in Institutional Class of Advisor Intermediate
Municipal Income would have grown to $17,746.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE INDEXES
MUNICIPAL INCOME -
INSTITUTIONAL CLASS
Fiscal Year
Ended Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Investment Distributions Gain Distributions
1999 $ 9,621 $ 6,912 $ 1,213 $ 17,746 $ 51,536
1998 $ 10,209 $ 6,549 $ 1,153 $ 17,911 $ 41,009
1997 $ 10,019 $ 5,679 $ 1,084 $ 16,782 $ 33,617
1996 $ 9,744 $ 4,794 $ 1,053 $ 15,591 $ 25,445
1995 $ 9,763 $ 4,078 $ 1,055 $ 14,896 $ 20,505
1994 $ 9,147 $ 3,170 $ 988 $ 13,305 $ 16,217
1993 $ 10,028 $ 2,799 $ 1,057 $ 13,884 $ 15,613
1992 $ 10,360 $ 2,166 $ 0 $ 12,526 $ 13,583
1991 $ 10,265 $ 1,409 $ 0 $ 11,674 $ 12,351
1990 $ 9,981 $ 670 $ 0 $ 10,651 $ 9,251
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ADVISOR INTERMEDIATE
MUNICIPAL INCOME -
INSTITUTIONAL CLASS
INDEXES
Fiscal Year Ended DJIA Cost of Living
1999 $ 52,414 $ 13,392
1998 $ 41,322 $ 13,057
1997 $ 35,190 $ 12,866
1996 $ 27,989 $ 12,604
1995 $ 21,605 $ 12,237
1994 $ 17,317 $ 11,903
1993 $ 15,871 $ 11,600
1992 $ 13,514 $ 11,290
1991 $ 12,484 $ 10,939
1990 $ 9,597 $ 10,629
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Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of the fund on November 1, 1989, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $18,339. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $5,140 for
dividends and $958 for capital gain distributions.
PERFORMANCE COMPARISONS. A class's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Inc. (Lipper), an
independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Generally, Lipper rankings are based on
return, assume reinvestment of distributions, do not take sales
charges or trading fees into consideration, and are prepared without
regard to tax consequences. Lipper may also rank based on yield. In
addition to the mutual fund rankings, a class's performance may be
compared to stock, bond, and money market mutual fund performance
indexes prepared by Lipper or other organizations. When comparing
these indexes, it is important to remember the risk and return
characteristics of each type of investment. For example, while stock
mutual funds may offer higher potential returns, they also carry the
highest degree of share price volatility. Likewise, money market funds
may offer greater stability of principal, but generally do not offer
the higher potential returns available from stock mutual funds.
From time to time, a class's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, a class may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising. The fund may advertise risk
ratings, including symbols or numbers, prepared by independent rating
agencies.
A class's performance may also be compared to that of each index
representing the universe of securities in which the fund may invest.
The return of each index reflects reinvestment of all dividends and
capital gains paid by securities included in each index. Unlike a
class's returns, however, each index's returns do not reflect
brokerage commissions, transaction fees, or other costs of investing
directly in the securities included in the index.
The fund may compare its performance to the Lehman Brothers Municipal
Bond Index, a market value-weighted index for investment-grade
municipal bonds with maturities of one year or more. Issues included
in the index have been issued after December 31, 1990, have an
outstanding par value of at least $3 million, and have been issued as
part of an offering of at least $50 million. Subsequent to December
31, 1995, zero coupon bonds and issues subject to the alternative
minimum tax were excluded from the index.
The fund may also compare its performance to that of the Lehman
Brothers 1-17 Year Municipal Bond Index, a market value-weighted index
for investment-grade municipal bonds with maturities between one and
17 years.
A class may be compared in advertising to Certificates of Deposit
(CDs) or other investments issued by banks or other depository
institutions. Mutual funds differ from bank investments in several
respects. For example, the fund may offer greater liquidity or higher
potential returns than CDs, the fund does not guarantee your principal
or your return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indexes.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates returns in the
same method as the funds. The funds may also compare performance to
that of other compilations or indexes that may be developed and made
available in the future.
The fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual
municipal bond. Unlike municipal bond mutual funds, individual
municipal bonds offer a stated rate of interest and, if held to
maturity, repayment of principal. Although some individual municipal
bonds might offer a higher return, they do not offer the reduced risk
of a mutual fund that invests in many different securities. The sales
charges of many municipal bond mutual funds are lower than the
purchase cost of individual municipal bonds, which are generally
subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; model portfolios or allocations; and saving for
college or other goals. In addition, Fidelity may quote or reprint
financial or business publications and periodicals, as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products.
The fund may be advertised as part of certain asset allocation
programs involving other Fidelity or non-Fidelity mutual funds. These
asset allocation programs may advertise a model portfolio and its
performance results.
The fund may be advertised as part of a no transaction fee (NTF)
program in which Fidelity and non-Fidelity mutual funds are offered.
An NTF program may advertise performance results.
A class may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote the fund's current portfolio
manager.
VOLATILITY. A class may quote various measures of volatility and
benchmark correlation in advertising. In addition, the class may
compare these measures to those of other funds. Measures of volatility
seek to compare a class's historical share price fluctuations or
returns to those of a benchmark. Measures of benchmark correlation
indicate how valid a comparative benchmark may be. All measures of
volatility and correlation are calculated using averages of historical
data. In advertising, the fund may also discuss or illustrate examples
of interest rate sensitivity.
MOMENTUM INDICATORS indicate a class's price movements over specific
periods of time. Each point on the momentum indicator represents a
class's percentage change in price movements over that period.
The fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
As of October 31, 1999, FMR advised over $33 billion in municipal fund
assets, $136 billion in taxable fixed-income fund assets, $140 billion
in money market fund assets, $567 billion in equity fund assets, $18
billion in international fund assets, and $43 billion in
Spartan(registered trademark) fund assets. The fund may reference the
growth and variety of money market mutual funds and the adviser's
innovation and participation in the industry. The equity funds under
management figure represents the largest amount of equity fund assets
under management by a mutual fund investment adviser in the United
States, making FMR America's leading equity (stock) fund manager. FMR,
its subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, each class of the fund may
compare its total expense ratio to the average total expense ratio of
similar funds tracked by Lipper. A class's total expense ratio is a
significant factor in comparing bond and money market investments
because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
Pursuant to Rule 22d-1 under the 1940 Act, Fidelity Distributors
Corporation (FDC) exercises its right to waive Class A's and Class T's
front-end sales charge on shares acquired through reinvestment of
dividends and capital gain distributions or in connection with a
fund's merger with or acquisition of any investment company or trust.
In addition, FDC has chosen to waive Class A's and Class T's front-end
sales charge in certain instances due to sales efficiencies and
competitive considerations. The sales charge will not apply:
CLASS A SHARES ONLY
1. to shares purchased for an employee benefit plan (as defined in the
Employee Retirement Income Security Act) (except a SIMPLE IRA, SEP, or
SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program with at
least $25 million or more in plan assets;
2. to shares purchased for an employee benefit plan (except a SIMPLE
IRA, SEP, or SARSEP plan or a plan covering self-employed individuals
and their employees (formerly Keogh/H.R. 10 plans)) or a 403(b)
program investing through an insurance company separate account used
to fund annuity contracts;
3. to shares purchased for an employee benefit plan (except a SIMPLE
IRA, SEP, or SARSEP plan or a plan covering self-employed individuals
and their employees (formerly Keogh/H.R. 10 plans)) or a 403(b)
program investing through a trust institution, bank trust department
or insurance company, or any such institution's broker-dealer
affiliate that is not part of an organization primarily engaged in the
brokerage business. Employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs
that participate in the Advisor Retirement Connection do not qualify
for this waiver;
4. to shares purchased for an employee benefit plan (except a SIMPLE
IRA, SEP, or SARSEP plan or a plan covering self-employed individuals
and their employees (formerly Keogh/H.R. 10 plans)) or a 403(b)
program investing through an investment professional sponsored program
that requires the participating employee benefit plan to initially
invest in Class C or Class B shares and, upon meeting certain
criteria, subsequently requires the plan to invest in Class A shares;
5. to shares purchased by a trust institution or bank trust department
for a managed account that is charged an asset-based fee. Employee
benefit plans (except SIMPLE IRA, SEP, and SARSEP plans and plans
covering self-employed individuals and their employees (formerly
Keogh/H.R. 10 plans)), 403(b) programs and accounts managed by third
parties do not qualify for this waiver;
6. to shares purchased by a broker-dealer for a managed account that
is charged an asset-based fee. Employee benefit plans (except SIMPLE
IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)) and
403(b) programs do not qualify for this waiver;
7. to shares purchased by a registered investment adviser that is not
part of an organization primarily engaged in the brokerage business
for an account that is managed on a discretionary basis and is charged
an asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do
not qualify for this waiver;
8. to shares purchased with proceeds from the sale of front-end load
shares of a non-Advisor mutual fund for an account participating in
the FundSelect by Nationwide program;
9. to shares purchased by a bank trust officer, registered
representative, or other employee (or a member of one of their
immediate families) of investment professionals having agreements with
FDC. A member of the immediate family of a bank trust officer, a
registered representative or other employee of investment
professionals having agreements with FDC, is a spouse of one of those
individuals, an account for which one of those individuals is acting
as custodian for a minor child, and a trust account that is registered
for the sole benefit of a minor child of one of those individuals; or
10. to shares purchased by the Fidelity Investments Charitable Gift
Fund.
A sales load waiver form must accompany these transactions.
CLASS T SHARES ONLY
1. to shares purchased for an insurance company separate account used
to fund annuity contracts for employee benefit plans (except SIMPLE
IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)) or
403(b) programs;
2. to shares purchased by a trust institution or bank trust department
for a managed account that is charged an asset-based fee. Accounts
managed by third parties do not qualify for this waiver;
3. to shares purchased by a broker-dealer for a managed account that
is charged an asset-based fee;
4. to shares purchased by a registered investment adviser that is not
part of an organization primarily engaged in the brokerage business
for an account that is managed on a discretionary basis and is charged
an asset-based fee;
5. to shares purchased for an employee benefit plan (except a SIMPLE
IRA, SEP, or SARSEP plan or a plan covering self-employed individuals
and their employees (formerly Keogh/H.R. 10 plans)) or a 403(b)
program;
6. to shares purchased for a Fidelity or Fidelity Advisor account
(including purchases by exchange) with the proceeds of a distribution
from (i) an insurance company separate account used to fund annuity
contracts for employee benefit plans, 403(b) programs or plans
covering sole-proprietors (formerly Keogh/H.R. 10 plans) that are
invested in Fidelity Advisor or Fidelity funds or (ii) an employee
benefit plan, 403(b) program or plan covering a sole-proprietor
(formerly Keogh/H.R. 10 plan) that is invested in Fidelity Advisor or
Fidelity funds. (Distributions other than those transferred to an IRA
account must be transferred directly into a Fidelity account.);
7. to shares purchased for any state, county, or city, or any
governmental instrumentality, department, authority or agency;
8. to shares purchased with redemption proceeds from other mutual fund
complexes on which the investor has paid a front-end or contingent
deferred sales charge;
9. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or Fidelity International Limited (FIL) or their
direct or indirect subsidiaries (a Fidelity Trustee or employee), the
spouse of a Fidelity Trustee or employee, a Fidelity Trustee or
employee acting as custodian for a minor child, or a person acting as
trustee of a trust for the sole benefit of the minor child of a
Fidelity Trustee or employee;
10. to shares purchased by a charitable organization (as defined for
purposes of Section 501(c)(3) of the Internal Revenue Code, but
excluding the Fidelity Investments Charitable Gift Fund) investing
$100,000 or more;
11. to shares purchased by a bank trust officer, registered
representative, or other employee (or a member of one of their
immediate families) of investment professionals having agreements with
FDC. A member of the immediate family of a bank trust officer, a
registered representative or other employee of investment
professionals having agreements with FDC, is a spouse of one of those
individuals, an account for which one of those individuals is acting
as custodian for a minor child, and a trust account that is registered
for the sole benefit of a minor child of one of those individuals;
12. to shares purchased for a charitable remainder trust or life
income pool established for the benefit of a charitable organization
(as defined for purposes of Section 501(c)(3) of the Internal Revenue
Code);
13. to shares purchased with distributions of income, principal, and
capital gains from Fidelity Defined Trusts; or
14. to shares purchased by the Fidelity Investments Charitable Gift
Fund.
A sales load waiver form must accompany these transactions.
CLASS B AND CLASS C SHARES ONLY
The Class B or Class C CDSC will not apply to the redemption of
shares:
1. For disability or death, provided that the shares are sold within
one year following the death or the initial determination of
disability;
2. That are permitted without penalty at age 70 1/2 pursuant to the
Internal Revenue Code from retirement plans or accounts (other than of
shares purchased on or after February 11, 1999 for Traditional IRAs,
Roth IRAs and Rollover IRAs);
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs
and Rollover IRAs purchased on or after February 11, 1999;
4. Through the Fidelity Advisor Systematic Withdrawal Program; or
5. (Applicable to Class C only) From an employee benefit plan, 403(b)
program or plan covering a sole-proprietor (formerly Keogh/H.R. 10
plan).
A waiver form must accompany these transactions.
INSTITUTIONAL CLASS SHARES ONLY
Institutional Class shares are offered to:
1. Broker-dealer managed account programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. In addition, employee
benefit plans, 403(b) programs and plans covering sole-proprietors
(formerly Keogh/H.R. 10 plans) must have at least $50 million in plan
assets;
2. Registered investment adviser managed account programs, provided
the registered investment adviser is not part of an organization
primarily engaged in the brokerage business and the program (i)
charges an asset-based fee and (ii) will have at least $1 million
invested in the Institutional Class of the Advisor funds. In addition,
accounts other than an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly a Keogh/H.R. 10 plan) in the
program must be managed on a discretionary basis;
3. Trust institution and bank trust department managed account
programs that (i) charge an asset-based fee and (ii) will have at
least $1 million invested in the Institutional Class of the Advisor
funds. Accounts managed by third parties are not eligible to purchase
Institutional Class shares;
4. Insurance company separate accounts that will have at least $1
million invested in the Institutional Class of the Advisor funds;
5. Current or former Trustees or officers of a Fidelity fund or
current or retired officers, directors, or regular employees of FMR
Corp. or FIL or their direct or indirect subsidiaries (Fidelity
Trustee or employee), spouses of Fidelity Trustees or employees,
Fidelity Trustees or employees acting as a custodian for a minor
child, or persons acting as trustee of a trust for the sole benefit of
the minor child of a Fidelity Trustee or employee; and
6. Insurance company programs for employee benefit plans, 403(b)
programs or plans covering sole-proprietors (formerly Keogh/H.R. 10
plans) that (i) charge an asset-based fee and (ii) will have at least
$1 million invested in the Institutional Class of the Advisor funds.
Insurance company programs for employee benefit plans, 403(b) programs
and plans covering sole-proprietors (formerly Keogh/H.R. 10 plans)
include such programs offered by a broker-dealer affiliate of an
insurance company, provided that the affiliate is not part of an
organization primarily engaged in the brokerage business.
For purchases made by managed account programs, insurance company
separate accounts or insurance company programs for employee benefit
plans, 403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans), Fidelity reserves the right to waive the
requirement that $1 million be invested in the Institutional Class of
the Advisor funds.
FOR CLASS A AND CLASS T SHARES ONLY
FINDER'S FEE. For all funds, on eligible purchases of (i) Class A
shares in amounts of $1 million or more that qualify for a Class A
load waiver, (ii) Class A shares in amounts of $25 million or more, or
(iii) Class T shares in amounts of $1 million or more, investment
professionals will be compensated with a fee at the rate of 0.25% of
the purchase amount. Except as provided below, Class A eligible
purchases are the following purchases made through broker-dealers and
banks: an individual trade of $25 million or more; an individual trade
of $1 million or more that is load waived; a trade which brings the
value of the accumulated account(s) of an investor (including an
employee benefit plan (except a SEP or SARSEP plan or a plan covering
self-employed individuals and their employees (formerly a Keogh/H.R.
10 plan)) or 403(b) program) past $25 million; a load waived trade
that brings the value of the accumulated account(s) of an investor
(including an employee benefit plan (except a SEP or SARSEP plan or a
plan covering self-employed individuals and their employees (formerly
a Keogh/H.R. 10 plan)) or 403(b) program) past $1 million; a trade for
an investor with an accumulated account value of $25 million or more;
a load waived trade for an investor with an accumulated account value
of $1 million or more; an incremental trade toward an investor's $25
million "Letter of Intent;" and an incremental load waived trade
toward an investor's $1 million "Letter of Intent." Except as provided
below, Class T eligible purchases are the following purchases made
through broker-dealers and banks: an individual trade of $1 million or
more; a trade which brings the value of the accumulated account(s) of
an investor (including an employee benefit plan (except a SEP or
SARSEP plan or a plan covering self-employed individuals and their
employees (formerly a Keogh/H.R. 10 plan)) or 403(b) program) past $1
million; a trade for an investor with an accumulated account value of
$1 million or more; and an incremental trade toward an investor's $1
million "Letter of Intent."
Shares held by an insurance company separate account will be
aggregated at the client (e.g., the contract holder or plan sponsor)
level, not at the separate account level. Upon request, anyone
claiming eligibility for the 0.25% fee with respect to shares held by
an insurance company separate account must provide FDC access to
records detailing purchases at the client level.
For the purpose of determining the availability of Class A or Class T
finder's fees, purchases of Class A or Class T shares made (i) with
the proceeds from the redemption of shares of any Fidelity fund or
(ii) by the Fidelity Investments Charitable Gift Fund, will not be
considered "eligible purchases."
Except as provided below, any assets on which a finder's fee has been
paid will bear a contingent deferred sales charge (Class A or Class T
CDSC) if they do not remain in Class A or Class T shares of the
Fidelity Advisor Funds, or Daily Money Class shares of Treasury Fund,
Prime Fund or Tax-Exempt Fund, for a period of at least one
uninterrupted year. The Class A or Class T CDSC will be 0.25% of the
lesser of the cost of the Class A or Class T shares, as applicable, at
the initial date of purchase or the value of those Class A or Class T
shares, as applicable, at redemption, not including any reinvested
dividends or capital gains. Class A and Class T shares acquired
through distributions (dividends or capital gains) will not be subject
to a Class A or Class T CDSC. In determining the applicability and
rate of any Class A or Class T CDSC at redemption, Class A or Class T
shares representing reinvested dividends and capital gains will be
redeemed first, followed by those Class A or Class T shares that have
been held for the longest period of time.
Investment professionals must notify FDC in advance of a purchase
eligible for a finder's fee, and may be required to enter into an
agreement with FDC in order to receive the finder's fee.
The Class A or Class T CDSC will not apply to the redemption of
shares:
1. Held by insurance company separate accounts;
2. For plan loans or distributions or exchanges to non-Advisor fund
investment options from employee benefit plans (except shares of
SIMPLE IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)
purchased on or after February 11, 1999) and 403(b) programs; or
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs,
SIMPLE IRAs, SEPs, SARSEPs and plans covering a sole-proprietor or
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans).
A waiver form must accompany these transactions.
CLASS A AND CLASS T SHARES ONLY
COMBINED PURCHASE, RIGHTS OF ACCUMULATION AND LETTER OF INTENT
PROGRAMS. The following qualify as an "individual" or "company" for
the purposes of determining eligibility for the Combined Purchase,
Rights of Accumulation or Letter of Intent program: an individual,
spouse and their children under age 21 purchasing for his/her or their
own account; a trustee, administrator or other fiduciary purchasing
for a single trust estate or a single fiduciary account or for a
single or parent-subsidiary group of "employee benefit plans" (except
SEP and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs;
and tax-exempt organizations (as defined in Section 501(c)(3) of the
Internal Revenue Code).
COMBINED PURCHASE. For your purchases to be aggregated for the purpose
of qualifying for the Combined Purchase program, they must be made on
the same day through one investment professional.
RIGHTS OF ACCUMULATION. The current value of your holdings is
determined at the NAV at the close of business on the day you purchase
the Class A or Class T shares to which the current value of your
holdings will be added. For your purchases and holdings to be
aggregated for the purpose of qualifying for the Rights of
Accumulation program, they must have been made through one investment
professional.
LETTER OF INTENT. You must file your Letter of Intent (Letter) with
Fidelity within 90 days of the start of your purchases toward
completing your Letter. For your purchases to be aggregated for the
purpose of completing your Letter, they must be made through one
investment professional. Your initial purchase toward completing your
Letter must be at least 5% of the total investment specified in your
Letter. Class A and Class T shares acquired through an employee
benefit plan, a Traditional IRA, a Roth IRA, a Rollover IRA, a 403(b)
program or a plan covering a sole-proprietor (formerly Keogh/H.R. 10
plan) will be included for purposes of completing your Letter but may
not be used to meet the initial investment minimum of 5% of the total
investment specified in your Letter. Fidelity will register Class A or
Class T shares equal to 5% of the total investment specified in your
Letter in your name and will hold those shares in escrow. You will
earn income, dividends and capital gain distributions on escrowed
Class A and Class T shares. The escrow will be released when you
complete your Letter. You are not obligated to complete your Letter.
If you do not complete your Letter, you must pay the increased
front-end sales charges due. If you do not pay the increased front-end
sales charges within 20 days after the date your Letter expires,
Fidelity will redeem sufficient escrowed Class A or Class T shares to
pay any applicable front-end sales charges. If you purchase more than
the amount specified in your Letter and qualify for additional Class A
or Class T front-end sales charge reductions, the front-end sales
charge will be adjusted to reflect your total purchase at the end of
13 months and the surplus amount will be applied to your purchase of
additional Class A or Class T shares at the then-current offering
price applicable to the total investment.
ALL CLASSES
The fund may make redemption payments in whole or in part in readily
marketable securities or other property, valued for this purpose as
they are valued in computing each class's NAV, if FMR determines it is
in the best interests of the fund. Shareholders that receive
securities or other property on redemption may realize a gain or loss
for tax purposes, and will incur any costs of sale, as well as the
associated inconveniences.
DISTRIBUTIONS AND TAXES
DIVIDENDS. To the extent that the fund's income is designated as
federally tax-exempt interest, the dividends declared by the fund are
also federally tax-exempt. Short-term capital gains are taxable as
dividends, but do not qualify for the dividends-received deduction.
The fund purchases municipal securities whose interest FMR believes is
free from federal income tax. Generally, issuers or other parties have
entered into covenants requiring continuing compliance with federal
tax requirements to preserve the tax-free status of interest payments
over the life of the security. If at any time the covenants are not
complied with, or if the IRS otherwise determines that the issuer did
not comply with relevant tax requirements, interest payments from a
security could become federally taxable retroactive to the date the
security was issued. For certain types of structured securities, the
tax status of the pass-through of tax-free income may also be based on
the federal tax treatment of the structure.
Interest on certain "private activity" securities is subject to the
federal alternative minimum tax (AMT), although the interest continues
to be excludable from gross income for other tax purposes. Interest
from private activity securities is a tax preference item for the
purposes of determining whether a taxpayer is subject to the AMT and
the amount of AMT to be paid, if any.
A portion of the gain on municipal bonds purchased at market discount
after April 30, 1993 is taxable to shareholders as ordinary income,
not as capital gains.
CAPITAL GAIN DISTRIBUTIONS. The fund's long-term capital gain
distributions are federally taxable to shareholders generally as
capital gains.
TAX STATUS OF THE FUND. The fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code so that it will not be liable for federal tax on income
and capital gains distributed to shareholders. In order to qualify as
a regulated investment company, and avoid being subject to federal
income or excise taxes at the fund level, the fund intends to
distribute substantially all of its net investment income and net
realized capital gains within each calendar year as well as on a
fiscal year basis, and intends to comply with other tax rules
applicable to regulated investment companies.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting the fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. It is up to you or your tax preparer to determine
whether the sale of shares of the fund resulted in a capital gain or
loss or other tax consequence to you. In addition to federal income
taxes, shareholders may be subject to state and local taxes on fund
distributions, and shares may be subject to state and local personal
property taxes. Investors should consult their tax advisers to
determine whether a fund is suitable to their particular tax
situation.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. The Board of Trustees governs the fund and
is responsible for protecting the interests of shareholders. The
Trustees are experienced executives who meet periodically throughout
the year to oversee the fund's activities, review contractual
arrangements with companies that provide services to the fund, and
review the fund's performance. Except as indicated, each individual
has held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR or its affiliates. The business address of each
Trustee, Member of the Advisory Board, and officer who is an
"interested person" (as defined in the 1940 Act) is 82 Devonshire
Street, Boston, Massachusetts 02109, which is also the address of FMR.
The business address of all the other Trustees is Fidelity
Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235. Those
Trustees who are "interested persons" by virtue of their affiliation
with either the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (69), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.; and a Director of FDC. Abigail Johnson,
Member of the Advisory Board of Fidelity Advisor Series II, is Mr.
Johnson's daughter.
ABIGAIL P. JOHNSON (37), Member of the Advisory Board of Fidelity
Advisor Series II (1999), is Vice President of certain Equity Funds
(1997), and is a Director of FMR Corp. (1994). Before assuming her
current responsibilities, Ms. Johnson managed a number of Fidelity
funds. Edward C. Johnson 3d, Trustee and President of the Funds, is
Ms. Johnson's father.
J. GARY BURKHEAD (58), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments and Brokerage Group
(1997). Previously, Mr. Burkhead served as President of Fidelity
Management & Research Company.
RALPH F. COX (67), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Waste Management
Inc. (non-hazardous waste, 1993), CH2M Hill Companies (engineering),
and Bonneville Pacific (independent power and petroleum production).
In addition, he is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (67), Trustee. Mrs. Davis is retired from Avon
Products, Inc. where she held various positions including Senior Vice
President of Corporate Affairs and Group Vice President of U.S. sales,
distribution, and manufacturing. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing), and the TJX Companies, Inc. (retail stores), and
previously served as a Director of Hallmark Cards, Inc., Nabisco
Brands, Inc., and Standard Brands, Inc. In addition, she is a member
of the Board of Directors of the Southampton Hospital in Southampton,
N.Y. (1998).
ROBERT M. GATES (56), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is a Director of Charles Stark Draper
Laboratory (non-profit), NACCO Industries, Inc. (mining and
manufacturing), and TRW Inc. (automotive, space, defense, and
information technology). Mr. Gates previously served as a Director of
LucasVarity PLC (automotive components and diesel engines). He is
currently serving as Dean of the George Bush School of Government and
Public Service at Texas A & M University (1999-2000). Mr. Gates also
is a Trustee of the Forum for International Policy and of the
Endowment Association of the College of William and Mary. In addition,
he is a member of the National Executive Board of the Boy Scouts of
America.
E. BRADLEY JONES (71), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (automotive, space, defense, and
information technology), CSX Corporation (freight transportation),
Birmingham Steel Corporation (producer of steel and steel products),
and RPM, Inc. (manufacturer of chemical products), and he previously
served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining, 1985-1997), and as a
Trustee of First Union Real Estate Investments (1986-1997). In
addition, he serves as a Trustee of the Cleveland Clinic Foundation,
where he has also been a member of the Executive Committee as well as
Chairman of the Board and President, a Trustee of University School
(Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (66), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business. From 1987 to January
1995, Mr. Kirk was a Professor at Columbia University Graduate School
of Business. Prior to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk previously served as a Director
of General Re Corporation (reinsurance, 1987-1998) and as a Director
of Valuation Research Corp. (appraisals and valuations, 1993-1995). He
serves as Chairman of the Board of Directors of National Arts
Stabilization Inc., Chairman of the Board of Trustees of the Greenwich
Hospital Association, Director of the Yale-New Haven Health Services
Corp. (1998), Vice Chairman of the Public Oversight Board of the
American Institute of Certified Public Accountants' SEC Practice
Section (1995), and as a Public Governor of the National Association
of Securities Dealers, Inc. (1996).
NED C. LAUTENBACH (55), Member of the Advisory Board (1999), has been
a partner of Clayton, Dubilier & Rice, Inc. (private equity investment
firm) since September 1998. Mr. Lautenbach was Senior Vice President
of IBM Corporation from 1992 until his retirement in July 1998. From
1993 to 1995 he was Chairman of IBM World Trade Corporation. He also
was a member of IBM's Corporate Executive Committee from 1994 to July
1998. He is a Director of PPG Industries Inc. (glass, coating and
chemical manufacturer), Dynatech Corporation (global communications
equipment), Eaton Corporation (global manufacturer of highly
engineered products) and ChoicePoint Inc. (data identification,
retrieval, storage, and analysis).
*PETER S. LYNCH (56), Trustee, is Vice Chairman and Director of FMR.
Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan(registered trademark) Fund and FMR
Growth Group Leader; and Managing Director of FMR Corp. Mr. Lynch was
also Vice President of Fidelity Investments Corporate Services
(1991-1992). In addition, he serves as a Trustee of Boston College,
Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and
Society for the Preservation of New England Antiquities, and as an
Overseer of the Museum of Fine Arts of Boston.
WILLIAM O. McCOY (66), Trustee (1997), is the Interim Chancellor for
the University of North Carolina at Chapel Hill. Previously he had
served from 1995 through 1998 as Vice President of Finance for the
University of North Carolina (16-school system). Prior to his
retirement in December 1994, Mr. McCoy was Vice Chairman of the Board
of BellSouth Corporation (telecommunications, 1984) and President of
BellSouth Enterprises (1986). He is currently a Director of Liberty
Corporation (holding company, 1984), Duke-Weeks Realty Corporation
(real estate, 1994), Carolina Power and Light Company (electric
utility, 1996), the Kenan Transport Company (trucking, 1996), and
Dynatech Corporation (electronics, 1999). Previously, he was a
Director of First American Corporation (bank holding company,
1979-1996). In addition, Mr. McCoy served as a member of the Board of
Visitors for the University of North Carolina at Chapel Hill
(1994-1998) and currently serves on the Board of Visitors of the
Kenan-Flager Business School (University of North Carolina at Chapel
Hill, 1988).
GERALD C. McDONOUGH (71), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director and Chairman of the Board of
York International Corp. (air conditioning and refrigeration),
Commercial Intertech Corp. (hydraulic systems, building systems, and
metal products, 1992), CUNO, Inc. (liquid and gas filtration products,
1996), and Associated Estates Realty Corporation (a real estate
investment trust, 1993). Mr. McDonough served as a Director of
ACME-Cleveland Corp. (metal working, telecommunications, and
electronic products) from 1987-1996 and Brush-Wellman Inc. (metal
refining) from 1983-1997.
MARVIN L. MANN (66), Trustee (1993), is Chairman Emeritus, of Lexmark
International, Inc. (office machines, 1991) where he still remains a
member of the Board. Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993), Imation Corp. (imaging and information storage, 1997). He is a
Board member of Dynatech Corporation (electronics, 1999).
*ROBERT C. POZEN (53), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc. (1997), and Fidelity
Management & Research (Far East) Inc. (1997). Previously, Mr. Pozen
served as General Counsel, Managing Director, and Senior Vice
President of FMR Corp.
THOMAS R. WILLIAMS (71), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
National Life Insurance Company of Vermont and American Software, Inc.
Mr. Williams was previously a Director of ConAgra, Inc. (agricultural
products), Georgia Power Company (electric utility), and Avado, Inc.
(restaurants).
DWIGHT D. CHURCHILL (45), is Vice President of Bond Funds, Group
Leader of the Bond Group, Senior Vice President of FMR (1997), and
Vice President of FIMM (1998). Mr. Churchill joined Fidelity in 1993
as Vice President and Group Leader of Taxable Fixed-Income
Investments.
FRED L. HENNING, JR. (60), is Vice President of Fidelity's
Fixed-Income Group (1995), Senior Vice President of FMR (1995), and
Senior Vice President of FIMM (1998). Before assuming his current
responsibilities, Mr. Henning was head of Fidelity's Money Market
Division.
NORMAN U. LIND (43), is Vice President of Fidelity Advisor
Intermediate Municipal Income Fund (1998) and other funds advised by
FMR. Prior to his current responsibilities, Mr. Lind managed a variety
of Fidelity funds.
ERIC D. ROITER (50), Secretary (1998), is Vice President (1998) and
General Counsel of FMR (1998) and Vice President and Clerk of FDC
(1998). Prior to joining Fidelity, Mr. Roiter was with the law firm of
Debevoise & Plimpton, as an associate (1981-1984) and as a partner
(1985-1997), and served as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981). Mr. Roiter was an
Adjunct Member, Faculty of Law, at Columbia University Law School
(1996-1997).
RICHARD A. SILVER (52), Treasurer (1997), is Treasurer of the Fidelity
funds and is an employee of FMR (1997). Before joining FMR, Mr. Silver
served as Executive Vice President, Fund Accounting & Administration
at First Data Investor Services Group, Inc. (1996-1997). Prior to
1996, Mr. Silver was Senior Vice President and Chief Financial Officer
at The Colonial Group, Inc. Mr. Silver also served as Chairman of the
Accounting/Treasurer's Committee of the Investment Company Institute
(1987-1993).
MATTHEW N. KARSTETTER (38), Deputy Treasurer (1998), is Deputy
Treasurer of the Fidelity funds and is an employee of FMR (1998).
Before joining FMR, Mr. Karstetter served as Vice President of
Investment Accounting and Treasurer of IDS Mutual Funds at American
Express Financial Advisors (1996-1998). Prior to 1996, Mr. Karstetter
was Vice President, Mutual Fund Services at State Street Bank & Trust
(1991-1996).
STANLEY N. GRIFFITH (53), Assistant Vice President (1998), is
Assistant Vice President of Fidelity's Fixed-Income Funds (1998) and
an employee of FMR Corp.
JOHN H. COSTELLO (53), Assistant Treasurer, is an employee of FMR.
THOMAS J. SIMPSON (41), Assistant Treasurer (1996), is Assistant
Treasurer of Fidelity's Fixed-Income Funds (1998) and an employee of
FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and
Fund Controller of Liberty Investment Services (1987-1995).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of the fund for his
or her services for the fiscal year ended October 31, 1999, or
calendar year ended December 31, 1998, as applicable.
<TABLE>
<CAPTION>
<S> <C> <C>
COMPENSATION TABLE
Trustees and Members of the Aggregate Compensation from Total Compensation from the
Advisory Board Advisor Intermediate Fund Complex*,A
Municipal IncomeB
Edward C. Johnson 3d** $ 0 $ 0
Abigail P. Johnson** $ 0 $ 0
J. Gary Burkhead** $ 0 $ 0
Ralph F. Cox $ 23 $ 223,500
Phyllis Burke Davis $ 22 $ 220,500
Robert M. Gates $ 23 $ 223,500
E. Bradley Jones $ 23 $ 222,000
Donald J. Kirk $ 23 $ 226,500
Ned C. Lautenbach*** $ 2 $ 0
Peter S. Lynch** $ 0 $ 0
William O. McCoy $ 23 $ 223,500
Gerald C. McDonough $ 28 $ 273,500
Marvin L. Mann $ 23 $ 220,500
Robert C. Pozen** $ 0 $ 0
Thomas R. Williams $ 23 $ 223,500
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the fund, Ms. Johnson and Mr. Burkhead are
compensated by FMR.
*** During the period from October 14, 1999 through October 31, 1999,
Mr. Lautenbach served as a Member of the Advisory Board.
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox,
$75,000; Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E.
Bradley Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy,
$75,000; Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and
Thomas R. Williams, $75,000. Certain of the non-interested Trustees
elected voluntarily to defer a portion of their compensation as
follows: Ralph F. Cox, $55,039; Marvin L. Mann, $55,039; Thomas R.
Williams, $63,433; and William O. McCoy, $55,039.
B Compensation figures include cash, and may include amounts required
to be deferred and amounts deferred at the election of Trustees.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (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 fees. Amounts deferred under the
Plan are subject to vesting and are treated as though equivalent
dollar amounts had been invested in shares of a cross-section of
Fidelity funds including funds in each major investment discipline and
representing a majority of Fidelity's assets under management (the
Reference Funds). The amounts ultimately received by the Trustees
under the Plan will be directly linked to the investment performance
of the Reference Funds. Deferral of fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate a fund to retain the services
of any Trustee or to pay any particular level of compensation to the
Trustee. A fund may invest in the Reference Funds under the Plan
without shareholder approval.
As of October 31, 1999, approximately 2.78% of the fund's total
outstanding shares were held by FMR affiliates. FMR Corp. is the
ultimate parent company of these FMR affiliates. By virtue of their
ownership interest in FMR Corp., as described in the "Control of
Investment Advisers" section on page 114, Mr. Edward C. Johnson 3d,
President and Trustee of the fund, and Ms. Abigail P. Johnson, Member
of the Advisory Board of the fund, may be deemed to be a beneficial
owner of these shares. As of the above date, with the exception of Mr.
Johnson 3d's and Ms. Johnson's deemed ownership of the fund's shares,
the Trustees, Members of the Advisory Board, and officers of the fund
owned, in the aggregate, less than 1% of the fund's total outstanding
shares.
As of October 31, 1999, the following owned of record or beneficially
5% or more (up to and including 25%) of each class's outstanding
shares:
Advisor Intermediate Municipal Income Class A: PaineWebber, Inc, New
York, NY (21.14%); BMA Financial Services, Inc., Westwood, KS
(18.90%); The Guardian, Phoenix, AZ (11.42); Citigroup, Inc., Long
Island City, NY (10.32%).
Advisor Intermediate Municipal Income Class T: SunAmerica, New York,
NY (7.68%); Citigroup, Inc., New York, NY (5.91%); Aetna Inc.,
Torrance, CA (5.81%).
Advisor Intermediate Municipal Income Class B: Merrill Lynch, Pierce,
Fenner & Smith Inc., Jacksonville, FL (14.90%); Prudential, New York,
NY (6.14%).
Advisor Intermediate Municipal Income Class C: Merrill Lynch, Pierce,
Fenner & Smith Inc., Jackson, FL (15.90%); Allmerica Financial Corp.,
Worcester, MA (11.65%); PaineWebber, Inc., New York, NY (9.64%); First
Union Corp., Roanoke, VA (9.12%); Terra Securities Corporation,
Springfield, IL (6.86%); First Allied Securities, San Diego, CA
(6.12%); Investacorp, Inc., Amherst, NH (5.34%); A.G. Edwards & Sons
Inc., Saint Louis, MO (5.02%).
Advisor Intermediate Municipal Income Institutional Class: Drovers &
Mechanics Bank, York, PA (17.34%); First National Bank of Springdale,
Springdale, AZ (9.84%); South Holland Bancorp, South Holland, IL
(9.18%); Laird Norton Company, Seattle, WA (9.07%); Wells Fargo Bank,
San Francisco, CA (8.03%); Citizens National Bank of Evansville,
Evansville, IN (7.95%).
CONTROL OF INVESTMENT ADVISERS
FMR Corp., organized in 1972, is the ultimate parent company of FMR
and FIMM. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the 1940 Act, control of a company is presumed where one individual or
group of individuals owns more than 25% of the voting stock of that
company. Therefore, through their ownership of voting common stock and
the execution of the shareholders' voting agreement, members of the
Johnson family may be deemed, under the 1940 Act, to form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that sets forth all
employees' fiduciary responsibilities regarding the funds, establishes
procedures for personal investing and restricts certain transactions.
For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
MANAGEMENT CONTRACT
The fund has entered into a management contract with FMR, pursuant to
which FMR furnishes investment advisory and other services.
MANAGEMENT SERVICES. Under the terms of its management contract with
the fund, FMR acts as investment adviser and, subject to the
supervision of the Board of Trustees, directs the investments of the
fund in accordance with its investment objective, policies and
limitations. FMR also provides the fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of the fund and all Trustees who are
"interested persons" of the trust or of FMR, and all personnel of the
fund or FMR performing services relating to research, statistical and
investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of the fund. These services include
providing facilities for maintaining the fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters and other persons dealing with the fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining the fund's records and the
registration of the fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for the fund; and furnishing
reports, evaluations and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent and pricing and bookkeeping agent, the
fund or each class thereof, as applicable, pays all of its expenses
that are not assumed by those parties. The fund pays for the
typesetting, printing, and mailing of its proxy materials to
shareholders, legal expenses, and the fees of the custodian, auditor,
and non-interested Trustees. The fund's management contract further
provides that the fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices, and
reports to shareholders; however, under the terms of the fund's
transfer agent agreement, the transfer agent bears the costs of
providing these services to existing shareholders of the applicable
classes. Other expenses paid by the fund include interest, taxes,
brokerage commissions, the fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal securities laws and making necessary
filings under state securities laws. The fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation
to which the fund may be a party, and any obligation it may have to
indemnify its officers and Trustees with respect to litigation.
MANAGEMENT FEE. For the services of FMR under the management contract,
the fund pays FMR a monthly management fee which has two components: a
group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Assets Annualized Rate Group Net Assets Effective Annual Fee Rate
0 - $3 billion .3700% $ 1 billion .3700%
3 - 6 .3400 50 .2188
6 - 9 .3100 100 .1869
9 - 12 .2800 150 .1736
12 - 15 .2500 200 .1652
15 - 18 .2200 250 .1587
18 - 21 .2000 300 .1536
21 - 24 .1900 350 .1494
24 - 30 .1800 400 .1459
30 - 36 .1750 450 .1427
36 - 42 .1700 500 .1399
42 - 48 .1650 550 .1372
48 - 66 .1600 600 .1349
66 - 84 .1550 650 .1328
84 - 120 .1500 700 .1309
120 - 156 .1450 750 .1291
156 - 192 .1400 800 .1275
192 - 228 .1350 850 .1260
228 - 264 .1300 900 .1246
264 - 300 .1275 950 .1233
300 - 336 .1250 1,000 .1220
336 - 372 .1225 1,050 .1209
372 - 408 .1200 1,100 .1197
408 - 444 .1175 1,150 .1187
444 - 480 .1150 1,200 .1177
480 - 516 .1125 1,250 .1167
516 - 587 .1100 1,300 .1158
587 - 646 .1080 1,350 .1149
646 - 711 .1060 1,400 .1141
711 - 782 .1040
782 - 860 .1020
860 - 946 .1000
946 - 1,041 .0980
1,041 - 1,145 .0960
1,145 - 1,260 .0940
Over 1,260 .0920
</TABLE>
The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $757 billion of group net assets - the approximate level for
October 1999 - was 0.1289%, which is the weighted average of the
respective fee rates for each level of group net assets up to $757
billion.
The fund's individual fund fee rate is 0.25%. Based on the average
group net assets of the funds advised by FMR for October 1999, the
fund's annual management fee rate would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
Advisor Intermediate 0.1289% + 0.25% = 0.3789%
Municipal Income
</TABLE>
One-twelfth of the management fee rate is applied to the fund's
average net assets for the month, giving a dollar amount which is the
fee for that month.
For the fiscal year ended October 31, 1999, the eleven-month fiscal
period ended October 31, 1998, and the fiscal year ended November 30,
1997, the fund paid FMR management fees of $293,995, $242,984, and
$255,140, respectively.
FMR may, from time to time, voluntarily reimburse all or a portion of
a class's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses), which is subject to revision
or discontinuance. FMR retains the ability to be repaid for these
expense reimbursements in the amount that expenses fall below the
limit prior to the end of the fiscal year.
Expense reimbursements by FMR will increase a class's returns and
yield, and repayment of the reimbursement by a class will lower its
returns and yield.
SUB-ADVISER. FMR has entered into a sub-advisory agreement with FIMM
pursuant to which FIMM has primary responsibility for choosing
investments for the fund.
Under the terms of the sub-advisory agreement, FMR pays FIMM fees
equal to 50% of the management fee payable to FMR under its management
contract with the fund. The fees paid to FIMM are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect
from time to time.
On behalf of the fund, for the fiscal year ended October 31, 1999, FMR
paid FIMM fees of $121,904.
DISTRIBUTION SERVICES
The fund has entered into a distribution agreement with FDC, an
affiliate of FMR. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreement
calls for FDC to use all reasonable efforts, consistent with its other
business, to secure purchasers for shares of the fund, which are
continuously offered. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
Sales charge revenues collected and retained by FDC for the past three
fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Sales Charge Revenue CDSC Revenue
Fiscal Year Ended Amount Paid to FDC Amount Retained by FDC Amount Paid to FDC
Advisor Intermediate Oct. 31, 1999 $ 8,353 $ 2,999 $ 0
Municipal Income - Class A
Oct. 31, 1998* 11,024 4,498 0
Nov. 30, 1997 5,742 1,250 0
Advisor Intermediate Oct. 31, 1999 22,401 9,014 0
Municipal Income - Class T
Oct. 31, 1998* 15,232 4,671 0
Nov. 30, 1997 21,915 6,612 0
Advisor Intermediate Oct. 31, 1999 N/A N/A 30,967
Municipal Income - Class B
Oct. 31, 1998* N/A N/A 8,419
Nov. 30, 1997 N/A N/A 19,218
Advisor Intermediate Oct. 31, 1999 N/A N/A 946
Municipal Income - Class C
Oct. 31, 1998* N/A N/A 534
Nov. 30, 1997** N/A N/A 0
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
CDSC Revenue
Amount Retained by FDC
Advisor Intermediate $ 0
Municipal Income - Class A
0
0
Advisor Intermediate 0
Municipal Income - Class T
0
0
Advisor Intermediate 30,967
Municipal Income - Class B
8,419
19,218
Advisor Intermediate 946
Municipal Income - Class C
534
0
</TABLE>
* For the fiscal period December 1, 1997 through October 31, 1998.
** For the fiscal period November 3, 1997 through November 30, 1997.
The Trustees have approved Distribution and Service Plans on behalf of
Class A, Class T, Class B, Class C, and Institutional Class of the
fund (the Plans) pursuant to Rule 12b-1 under the 1940 Act (the Rule).
The Rule provides in substance that a mutual fund may not engage
directly or indirectly in financing any activity that is primarily
intended to result in the sale of shares of the fund except pursuant
to a plan approved on behalf of the fund under the Rule. The Plans, as
approved by the Trustees, allow Class A, Class T, Class B, Class C,
Institutional Class, and FMR to incur certain expenses that might be
considered to constitute direct or indirect payment by the fund of
distribution expenses.
Pursuant to the Class A Plan for the fund, FDC is paid a monthly 12b-1
fee at an annual rate of up to 0.40% of Class A's average net assets
determined at the close of business on each day throughout the month.
Currently, the Trustees have approved a monthly 12b-1 fee for Class A
of the fund at an annual rate of 0.15% of its average net assets. This
fee rate may be increased only when, in the opinion of the Trustees,
it is in the best interests of the shareholders of the applicable
class to do so.
Currently, FDC may reallow to intermediaries (such as banks,
broker-dealers and other service-providers), including its affiliates,
up to the full amount of 12b-1 fees paid by Class A for providing
services intended to result in the sale of Class A shares and/or
shareholder support services.
Pursuant to the Class T Plan for the fund, FDC is paid a monthly 12b-1
fee at an annual rate of up to 0.40% of Class T's average net assets
determined at the close of business on each day throughout the month.
Currently, the Trustees have approved a monthly 12b-1 fee for Class T
of the fund at an annual rate of 0.25% of its average net assets. This
fee rate may be increased only when, in the opinion of the Trustees,
it is in the best interests of the shareholders of the applicable
class to do so.
Currently, FDC may reallow to intermediaries (such as banks,
broker-dealers and other service-providers), including its affiliates,
up to the full amount of 12b-1 fees paid by Class T for providing
services intended to result in the sale of Class T shares and/or
shareholder support services.
Pursuant to the Class B Plan for the fund, FDC is paid a monthly 12b-1
(distribution) fee at an annual rate of up to 0.75% of Class B's
average net assets determined at the close of business on each day
throughout the month. Currently, the Trustees have approved a monthly
12b-1 (distribution) fee for Class B of the fund at an annual rate of
0.65% of its average net assets. This fee rate may be increased only
when, in the opinion of the Trustees, it is in the best interests of
the shareholders of the class to do so.
Pursuant to the Class B Plan for the fund, FDC is also paid a monthly
12b-1 (service) fee at an annual rate of 0.25% of Class B's average
net assets determined at the close of business on each day throughout
the month.
Currently, FDC retains the full amount of 12b-1 (distribution) fees
paid by Class B as compensation for providing services intended to
result in the sale of Class B shares, and FDC may reallow up to the
full amount of 12b-1 (service) fees paid by Class B to intermediaries
(such as banks, broker-dealers and other service-providers) for
providing shareholder support services.
Pursuant to the Class C Plan for the fund, FDC is paid a monthly 12b-1
(distribution) fee at an annual rate of 0.75% of Class C's average net
assets determined at the close of business on each day throughout the
month.
Pursuant to the Class C Plan for the fund, FDC is also paid a monthly
12b-1 (service) fee at an annual rate of 0.25% of Class C's average
net assets determined at the close of business on each day throughout
the month.
Currently and except as provided below, for the first year of
investment, FDC retains the full amount of 12b-1 (distribution) fees
paid by Class C as compensation for providing services intended to
result in the sale of Class C shares and retains the full amount of
12b-1 (service) fees paid by Class C for providing shareholder support
services. Normally, after the first year of investment, FDC may
reallow up to the full amount of 12b-1 (distribution) fees paid by
Class C to intermediaries (such as banks, broker-dealers and other
service-providers) for providing services intended to result in the
sale of Class C shares and may reallow up to the full amount of 12b-1
(service) fees paid by Class C to intermediaries for providing
shareholder support services. For purchases of Class C shares made for
an employee benefit plan, 403(b) program or plan covering a
sole-proprietor (formerly Keogh/H.R. 10 plan) or through reinvestment
of dividends or capital gain distributions, during the first year of
investment and thereafter, FDC may reallow up to the full amount of
12b-1 (distribution) fees paid by such Class C shares to
intermediaries, including its affiliates, for providing services
intended to result in the sale of Class C shares and may reallow up to
the full amount of 12b-1 (service) fees paid by such Class C shares to
intermediaries, including its affiliates, for providing shareholder
support services.
For the fiscal year ended October 31, 1999, Class A paid FDC 12b-1
fees of $3,322, of which FDC paid $3,011 to intermediaries and
retained $311. Amounts retained by FDC represent fees paid to FDC but
not yet reallowed to intermediaries as of the close of the period
reported and fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
For the fiscal year ended October 31, 1999, Class T paid FDC 12b-1
fees of $140,713, of which FDC paid $138,126 to intermediaries and
retained $2,587. Amounts retained by FDC represent fees paid to FDC
but not yet reallowed to intermediaries as of the close of the period
reported and fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
For the fiscal year ended October 31, 1999, Class B paid FDC 12b-1
(distribution) fees of $67,860, of which FDC paid $0 to intermediaries
and retained $67,860. These amounts are retained by FDC for use in its
capacity as distributor.
In addition, for the fiscal year ended October 31, 1999, Class B paid
FDC 12b-1 (service) fees of $26,101, of which FDC paid $26,044 to
intermediaries and retained $57. Amounts retained by FDC represent
fees paid to FDC but not yet reallowed to intermediaries as of the
close of the period reported and fees paid to FDC that are not
eligible to be reallowed to intermediaries. Amounts not eligible for
reallowance are retained by FDC for use in its capacity as
distributor.
For the fiscal year ended October 31, 1999, Class C paid FDC 12b-1
(distribution) fees of $13,270, of which FDC paid $2,482 to
intermediaries and retained $10,788. Amounts retained by FDC represent
fees paid to FDC but not yet reallowed to intermediaries as of the
close of the period reported and fees paid to FDC that are not
eligible to be reallowed to intermediaries. Amounts not eligible for
reallowance are retained by FDC for use in its capacity as
distributor.
In addition, for the fiscal year ended October 31, 1999, Class C paid
FDC 12b-1 (service) fees of $4,423, of which FDC paid $828 to
intermediaries and retained $3,595. Amounts retained by FDC represent
fees paid to FDC but not yet reallowed to intermediaries as of the
close of the period reported and fees paid to FDC that are not
eligible to be reallowed to intermediaries. Amounts not eligible for
reallowance are retained by FDC for use in its capacity as
distributor.
Under the Institutional Class Plan, if the payment of management fees
by the fund to FMR is deemed to be indirect financing by the fund of
the distribution of its shares, such payment is authorized by the
Plan. The Institutional Class Plan specifically recognizes that FMR
may use its management fee revenue, as well as its past profits or its
other resources, to pay FDC for expenses incurred in connection with
providing services intended to result in the sale of Institutional
Class shares and/or shareholder support services. In addition, the
Institutional Class Plan provides that FMR, directly or through FDC,
may pay intermediaries, such as banks, broker-dealers and other
service-providers, that provide those services. Currently, the Board
of Trustees has authorized such payments for Institutional Class
shares.
Under each Class A, Class T, Class B, and Class C Plan, if the payment
of management fees by the fund to FMR is deemed to be indirect
financing by the fund of the distribution of its shares, such payment
is authorized by the Plan. Each Class A, Class T, Class B, and Class C
Plan specifically recognizes that FMR may use its management fee
revenue, as well as its past profits or its other resources, to pay
FDC for expenses incurred in connection with providing services
intended to result in the sale of Class A, Class T, Class B, and Class
C shares and/or shareholder support services, including payments made
to intermediaries that provide those services. Currently, the Board of
Trustees has authorized such payments for Class A, Class T, Class B,
and Class C shares.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the applicable class of the fund and its shareholders. In
particular, the Trustees noted that the Institutional Class Plan does
not authorize payments by Institutional Class of the fund other than
those made to FMR under its management contract with the fund. To the
extent that each Plan gives FMR and FDC greater flexibility in
connection with the distribution of shares of the applicable class,
additional sales of fund shares or stabilization of cash flows may
result. Furthermore, certain shareholder support services may be
provided more effectively under the Plans by local entities with whom
shareholders have other relationships.
Each Class A, Class T, Class B, and Class C Plan does not provide for
specific payments by the applicable class of any of the expenses of
FDC, or obligate FDC or FMR to perform any specific type or level of
distribution activities or incur any specific level of expense in
connection with distribution activities.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the fund might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
The fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
FDC may compensate intermediaries that satisfy certain criteria
established from time to time by FDC relating to the level or type of
services provided by the intermediary, the sale or expected sale of
significant amounts of shares, or other factors.
TRANSFER AND SERVICE AGENT AGREEMENTS
Each class of the fund has entered into a transfer agent agreement
with Citibank, N.A. (Citibank), which is located at 111 Wall Street,
New York, New York. Under the terms of the agreement, Citibank
provides transfer agency, dividend disbursing, and shareholder
services for each class of the fund. Citibank in turn has entered into
a sub-transfer agent agreement with Fidelity Investments Institutional
Operations Company, Inc. (FIIOC), an affiliate of FMR. Under the terms
of the sub-agreement, FIIOC performs all processing activities
associated with providing these services for each class of the fund
and receives all related transfer agency fees paid to Citibank.
For providing transfer agency services, FIIOC receives an account fee
and an asset-based fee each paid monthly with respect to each account
in the fund. For retail accounts and certain institutional accounts,
these fees are based on account size and fund type. For certain
institutional retirement accounts, these fees are based on fund type.
For certain other institutional retirement accounts, these fees are
based on account type and fund type. The account fees are subject to
increase based on postage rate changes.
FIIOC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FIIOC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
The fund has also entered into a service agent agreement with
Citibank. Under the terms of the agreement, Citibank provides pricing
and bookkeeping services for the fund. Citibank in turn has entered
into a sub-service agent agreement with Fidelity Service Company, Inc.
(FSC), an affiliate of FMR. Under the terms of the sub-agreement, FSC
performs all processing activities associated with providing these
services, including calculating the NAV and dividends for each class
of the fund and maintaining the fund's portfolio and general
accounting records, and receives all related pricing and bookkeeping
fees paid to Citibank.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on the fund's average daily net assets throughout the month.
The annual rates for pricing and bookkeeping services for the fund are
0.0275% of the first $500 million of average net assets, 0.0175% of
average net assets between $500 million and $3 billion, and 0.0010% of
average net assets in excess of $3 billion. The fee, not including
reimbursement for out-of-pocket expenses, is limited to a minimum of
$60,000 per year.
For the fiscal year ended October 31, 1999, the eleven-month fiscal
period ended October 31, 1998, and the fiscal year ended November 30,
1997, the fund paid FSC pricing and bookkeeping fees, including
reimbursement for related out-of-pocket expenses, of $64,808, $57,149,
and $0, respectively.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Advisor Intermediate Municipal Income
Fund is a fund of Fidelity Advisor Series II, an open-end management
investment company organized as a Massachusetts business trust on
April 23, 1986. On January 1, 1996, Advisor Intermediate Municipal
Income changed its name from Advisor Limited Term Tax-Exempt Bond Fund
to Advisor Intermediate Municipal Income Fund. Currently, there are
eight funds in the trust: Fidelity Advisor High Yield Fund, Fidelity
Advisor Strategic Income Fund, Fidelity Advisor Government Investment
Fund, Fidelity Advisor Mortgage Securities Fund, Fidelity Advisor
Intermediate Bond Fund, Fidelity Advisor Short Fixed-Income Fund,
Fidelity Advisor Municipal Income Fund, and Fidelity Advisor
Intermediate Municipal Income Fund. The Trustees are permitted to
create additional funds in the trust and to create additional classes
of the fund.
The assets of the trust received for the issue or sale of shares of
each fund and all income, earnings, profits, and proceeds thereof,
subject to the rights of creditors, are allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets
of each fund in the trust shall be charged with the liabilities and
expenses attributable to such fund, except that liabilities and
expenses may be allocated to a particular class. Any general expenses
of the trust shall be allocated between or among any one or more of
the funds or classes.
SHAREHOLDER LIABILITY. The trust is an entity commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust.
The Declaration of Trust contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations, and expenses of the
trust or fund. The Declaration of Trust provides that the trust shall
not have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation,
or instrument entered into or executed by the trust or the Trustees
relating to the trust or to a fund shall include a provision limiting
the obligations created thereby to the trust or to one or more funds
and its or their assets. The Declaration of Trust further provides
that shareholders of a fund shall not have a claim on or right to any
assets belonging to any other fund.
The Declaration of Trust provides for indemnification out of each
fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. The Declaration of
Trust also provides that each fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote. Claims asserted against one class of shares may subject
holders of another class of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you are entitled to one vote for each
dollar of net asset value that you own. The voting rights of
shareholders can be changed only by a shareholder vote. Shares may be
voted in the aggregate, by fund and by class.
The shares have no preemptive or, for Class A, Class T, Class C, and
Institutional Class shares, conversion rights. Shares are fully paid
and nonassessable, except as set forth under the heading "Shareholder
Liability" above.
The trust or any of its funds may be terminated upon the sale of its
assets to, or merger with, another open-end management investment
company or series thereof, or upon liquidation and distribution of its
assets. Generally, the merger of the trust or a fund with another
entity or the sale of substantially all of the assets of the trust or
a fund to another entity requires approval by a vote of shareholders
of the trust or the fund. The Trustees may, however, reorganize or
terminate the trust or any of its funds without prior shareholder
approval. In the event of the dissolution or liquidation of the trust,
shareholders of each of its funds are entitled to receive the
underlying assets of such fund available for distribution. In the
event of the dissolution or liquidation of a fund, shareholders of
that fund are entitled to receive the underlying assets of the fund
available for distribution.
CUSTODIAN. Citibank, N.A., 111 Wall Street, New York, New York, is
custodian of the assets of the fund. The custodian is responsible for
the safekeeping of a fund's assets and the appointment of any
subcustodian banks and clearing agencies.
FMR, its officers and directors, its affiliated companies, and members
of the Board of Trustees may, from time to time, conduct transactions
with various banks, including banks serving as custodians for certain
funds advised by FMR. Transactions that have occurred to date include
mortgages and personal and general business loans. In the judgment of
FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund
relationships.
AUDITOR. PricewaterhouseCoopers LLP, 160 Federal Street, Boston,
Massachusetts, serves as independent accountant for the fund. The
auditor examines financial statements for the fund and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the
fiscal year ended October 31, 1999, and report of the auditor, are
included in the fund's annual reports and are incorporated herein by
reference.
APPENDIX
Fidelity, Fidelity Investments & (Pyramid) Design, Spartan, and
Magellan are registered trademarks of FMR Corp.
THE THIRD PARTY MARKS APPEARING ABOVE ARE THE MARKS OF THEIR
RESPECTIVE OWNERS.
(2_FIDELITY_LOGOS)(registered trademark)
FIDELITY(REGISTERED TRADEMARK) ADVISOR
MUNICIPAL INCOME FUND -
CLASS A, CLASS T, CLASS B
AND CLASS C
ANNUAL REPORT
OCTOBER 31, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 19 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 22 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 23 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 37 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 46 Notes to the financial
statements.
REPORT OF INDEPENDENT 53 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 54
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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:
All major U.S. equity market indexes posted positive returns for the
month of October, led by the technology-heavy NASDAQ Index, which
climbed to a record high close during the month. Domestic bonds,
however, turned in relatively flat performance, due in large part to
lingering fears of a potential interest rate hike by the Federal
Reserve Board, and its adoption of a tightening bias during the first
week of the month.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 MUNICIPAL INCOME FUND - CLASS A
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class A shares
took place on September 3, 1996. Class A shares bear a 0.15% 12b-1
fee. Returns prior to September 3, 1996 are those of Class T, the
original class of the fund, and reflect Class T shares' 0.25% 12b-1
fee. If Fidelity had not reimbursed certain class expenses, the past
five years and past ten years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -2.36% 35.23% 100.50%
- - CL A
FIDELITY ADV MUNICIPAL INCOME -6.99% 28.81% 90.98%
- - CL A (INCL. 4.75% SALES
CHARGE)
LB Municipal Bond -1.77% 39.75% 99.11%
General Municipal Debt Funds -4.18% 33.04% 86.71%
Average
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class A's returns to those of the Lehman
Brothers Municipal Bond Index - a market value-weighted index of
investment-grade municipal bonds with maturities of one year or more.
To measure how Class A's performance stacked up against its peers, you
can compare it to the general municipal debt funds average, which
reflects the performance of mutual funds with similar objectives
tracked by Lipper Inc. The past one year average represents a peer
group of 263 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -2.36% 6.22% 7.20%
- - CL A
FIDELITY ADV MUNICIPAL INCOME -6.99% 5.19% 6.68%
- - CL A (INCL. 4.75% SALES
CHARGE)
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
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
FA Municipal Income -CL A LB Municipal Bond
00257 LB015
1989/10/31 9525.00 10000.00
1989/11/30 9642.26 10175.00
1989/12/31 9733.93 10258.23
1990/01/31 9749.29 10209.71
1990/02/28 9819.16 10300.58
1990/03/31 9880.76 10303.67
1990/04/30 9790.39 10229.07
1990/05/31 9991.02 10452.37
1990/06/30 10108.74 10544.24
1990/07/31 10264.65 10699.25
1990/08/31 10195.39 10543.89
1990/09/30 10267.89 10549.90
1990/10/31 10408.86 10741.28
1990/11/30 10667.13 10957.28
1990/12/31 10735.18 11004.95
1991/01/31 10860.12 11152.64
1991/02/28 10943.62 11249.66
1991/03/31 11007.96 11253.71
1991/04/30 11187.20 11403.39
1991/05/31 11325.48 11504.76
1991/06/30 11351.84 11493.37
1991/07/31 11498.63 11633.36
1991/08/31 11602.47 11786.57
1991/09/30 11738.56 11940.04
1991/10/31 11868.63 12047.50
1991/11/30 11913.28 12081.11
1991/12/31 12042.85 12340.37
1992/01/31 12176.34 12368.51
1992/02/29 12242.49 12372.46
1992/03/31 12303.91 12377.04
1992/04/30 12414.96 12487.20
1992/05/31 12526.33 12634.17
1992/06/30 12698.09 12846.17
1992/07/31 13140.25 13231.30
1992/08/31 13038.49 13102.30
1992/09/30 13119.86 13187.98
1992/10/31 12961.53 13058.35
1992/11/30 13221.30 13292.22
1992/12/31 13380.71 13427.94
1993/01/31 13607.04 13584.10
1993/02/28 14087.51 14075.44
1993/03/31 13940.58 13926.66
1993/04/30 14088.41 14067.18
1993/05/31 14205.08 14146.24
1993/06/30 14432.83 14382.34
1993/07/31 14443.55 14401.18
1993/08/31 14815.55 14701.01
1993/09/30 15020.71 14868.46
1993/10/31 15028.77 14897.15
1993/11/30 14881.89 14765.91
1993/12/31 15225.54 15077.62
1994/01/31 15402.83 15249.80
1994/02/28 14995.73 14854.83
1994/03/31 14196.41 14249.95
1994/04/30 14290.61 14370.79
1994/05/31 14375.12 14495.38
1994/06/30 14322.20 14406.81
1994/07/31 14580.55 14670.89
1994/08/31 14603.45 14721.65
1994/09/30 14374.69 14505.54
1994/10/31 14122.70 14247.92
1994/11/30 13668.66 13990.32
1994/12/31 13999.94 14298.24
1995/01/31 14472.89 14706.89
1995/02/28 14862.84 15134.56
1995/03/31 14940.99 15308.46
1995/04/30 14990.10 15326.52
1995/05/31 15469.80 15815.59
1995/06/30 15348.45 15678.00
1995/07/31 15398.45 15826.63
1995/08/31 15554.23 16027.31
1995/09/30 15679.66 16128.76
1995/10/31 15888.38 16363.27
1995/11/30 16188.26 16634.74
1995/12/31 16331.19 16794.60
1996/01/31 16420.27 16921.40
1996/02/29 16394.84 16807.18
1996/03/31 16048.42 16592.38
1996/04/30 15984.31 16545.43
1996/05/31 15965.46 16538.81
1996/06/30 16151.45 16718.92
1996/07/31 16257.01 16871.06
1996/08/31 16292.40 16867.01
1996/09/30 16437.73 17103.15
1996/10/31 16599.97 17296.58
1996/11/30 16890.01 17613.11
1996/12/31 16827.29 17539.14
1997/01/31 16903.32 17572.28
1997/02/28 17054.66 17733.60
1997/03/31 16866.51 17497.21
1997/04/30 17008.53 17643.66
1997/05/31 17211.58 17909.02
1997/06/30 17427.39 18099.75
1997/07/31 17924.95 18601.12
1997/08/31 17761.26 18426.82
1997/09/30 17994.87 18645.55
1997/10/31 18097.79 18765.44
1997/11/30 18214.66 18875.78
1997/12/31 18508.35 19151.18
1998/01/31 18686.48 19348.82
1998/02/28 18692.48 19354.62
1998/03/31 18751.95 19371.66
1998/04/30 18655.47 19284.29
1998/05/31 18940.70 19589.56
1998/06/30 19009.91 19666.74
1998/07/31 19051.06 19716.11
1998/08/31 19338.44 20020.72
1998/09/30 19563.06 20270.18
1998/10/31 19558.88 20269.77
1998/11/30 19631.21 20340.92
1998/12/31 19658.83 20392.18
1999/01/31 19875.77 20634.64
1999/02/28 19754.51 20544.47
1999/03/31 19753.05 20573.03
1999/04/30 19795.75 20624.25
1999/05/31 19666.19 20504.84
1999/06/30 19357.01 20209.57
1999/07/31 19418.29 20283.13
1999/08/31 19269.45 20120.87
1999/09/30 19295.71 20129.12
1999/10/29 19098.05 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094513 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class A on
October 31, 1989, and the current 4.75% sales charge was paid. As the
chart shows, by October 31, 1999, the value of the investment would
have grown to $19,098 - a 90.98% increase on the initial investment.
For comparison, look at how the Lehman Brothers Municipal Bond Index
did over the same period. With dividends reinvested, the same $10,000
would have grown to $19,911 - a 99.11% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return and yield
of a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31, SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF
CLASS A SHARES) TO OCTOBER 31,
1999 1998 1997 1996
Dividend returns 4.42% 4.86% 5.51% 0.89%
Capital returns -6.78% 3.21% 3.51% 0.95%
Total returns -2.36% 8.07% 9.02% 1.84%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.85(cents) 28.63(cents) 56.75(cents)
Annualized dividend rate 4.87% 4.73% 4.64%
30-day annualized yield 4.57% - -
30-day annualized 7.14% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average share price of $11.73 over the past one
month, $12.00 over the past six months and $12.24 over the past one
year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The offering share price
used in the calculation of the yield includes the effect of Class A's
current 4.75% sales charge. The tax-equivalent yield shows what you
would have to earn on a taxable investment to equal the class'
tax-free yield, if you're in the 36% federal tax bracket, but does not
reflect payment of the federal alternative minimum tax, if applicable.
FIDELITY ADVISOR MUNICIPAL INCOME FUND - CLASS T
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. If Fidelity had not reimbursed certain
class expenses, the past 10 years total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -2.53% 35.18% 100.43%
- - CL T
FIDELITY ADV MUNICIPAL INCOME -5.95% 30.45% 93.42%
- - CL T (INCL. 3.50% SALES
CHARGE)
LB Municipal Bond -1.77% 39.75% 99.11%
General Municipal Debt Funds -4.18% 33.04% 86.71%
Average
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class T's returns to those of the Lehman
Brothers Municipal Bond Index - a market value-weighted index of
investment-grade municipal bonds with maturities of one year or more.
To measure how Class T's performance stacked up against its peers, you
can compare it to the general municipal debt funds average, which
reflects the performance of mutual funds with similar objectives
tracked by Lipper Inc. The past one year average represents a peer
group of 263 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -2.53% 6.21% 7.20%
- - CL T
FIDELITY ADV MUNICIPAL INCOME -5.95% 5.46% 6.82%
- - CL T (INCL. 3.50% SALES
CHARGE)
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
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
FA Municipal Income -CL T LB Municipal Bond
00169 LB015
1989/10/31 9650.00 10000.00
1989/11/30 9768.80 10175.00
1989/12/31 9861.67 10258.23
1990/01/31 9877.23 10209.71
1990/02/28 9948.02 10300.58
1990/03/31 10010.43 10303.67
1990/04/30 9918.87 10229.07
1990/05/31 10122.14 10452.37
1990/06/30 10241.40 10544.24
1990/07/31 10399.36 10699.25
1990/08/31 10329.19 10543.89
1990/09/30 10402.64 10549.90
1990/10/31 10545.46 10741.28
1990/11/30 10807.12 10957.28
1990/12/31 10876.06 11004.95
1991/01/31 11002.64 11152.64
1991/02/28 11087.24 11249.66
1991/03/31 11152.42 11253.71
1991/04/30 11334.01 11403.39
1991/05/31 11474.11 11504.76
1991/06/30 11500.82 11493.37
1991/07/31 11649.53 11633.36
1991/08/31 11754.73 11786.57
1991/09/30 11892.61 11940.04
1991/10/31 12024.39 12047.50
1991/11/30 12069.62 12081.11
1991/12/31 12200.89 12340.37
1992/01/31 12336.14 12368.51
1992/02/29 12403.16 12372.46
1992/03/31 12465.38 12377.04
1992/04/30 12577.88 12487.20
1992/05/31 12690.72 12634.17
1992/06/30 12864.73 12846.17
1992/07/31 13312.69 13231.30
1992/08/31 13209.60 13102.30
1992/09/30 13292.04 13187.98
1992/10/31 13131.63 13058.35
1992/11/30 13394.81 13292.22
1992/12/31 13556.31 13427.94
1993/01/31 13785.61 13584.10
1993/02/28 14272.39 14075.44
1993/03/31 14123.53 13926.66
1993/04/30 14273.30 14067.18
1993/05/31 14391.50 14146.24
1993/06/30 14622.24 14382.34
1993/07/31 14633.10 14401.18
1993/08/31 15009.98 14701.01
1993/09/30 15217.84 14868.46
1993/10/31 15226.00 14897.15
1993/11/30 15077.19 14765.91
1993/12/31 15425.35 15077.62
1994/01/31 15604.97 15249.80
1994/02/28 15192.53 14854.83
1994/03/31 14382.72 14249.95
1994/04/30 14478.15 14370.79
1994/05/31 14563.77 14495.38
1994/06/30 14510.15 14406.81
1994/07/31 14771.89 14670.89
1994/08/31 14795.10 14721.65
1994/09/30 14563.33 14505.54
1994/10/31 14308.04 14247.92
1994/11/30 13848.04 13990.32
1994/12/31 14183.66 14298.24
1995/01/31 14662.82 14706.89
1995/02/28 15057.90 15134.56
1995/03/31 15137.07 15308.46
1995/04/30 15186.82 15326.52
1995/05/31 15672.82 15815.59
1995/06/30 15549.87 15678.00
1995/07/31 15600.53 15826.63
1995/08/31 15758.35 16027.31
1995/09/30 15885.43 16128.76
1995/10/31 16096.89 16363.27
1995/11/30 16400.70 16634.74
1995/12/31 16545.51 16794.60
1996/01/31 16635.76 16921.40
1996/02/29 16610.00 16807.18
1996/03/31 16259.03 16592.38
1996/04/30 16194.08 16545.43
1996/05/31 16174.98 16538.81
1996/06/30 16363.41 16718.92
1996/07/31 16470.36 16871.06
1996/08/31 16506.21 16867.01
1996/09/30 16654.34 17103.15
1996/10/31 16850.26 17296.58
1996/11/30 17099.26 17613.11
1996/12/31 17033.52 17539.14
1997/01/31 17109.98 17572.28
1997/02/28 17277.37 17733.60
1997/03/31 17087.14 17497.21
1997/04/30 17230.58 17643.66
1997/05/31 17436.13 17909.02
1997/06/30 17654.41 18099.75
1997/07/31 18158.02 18601.12
1997/08/31 18007.37 18426.82
1997/09/30 18229.05 18645.55
1997/10/31 18348.67 18765.44
1997/11/30 18449.05 18875.78
1997/12/31 18759.65 19151.18
1998/01/31 18940.44 19348.82
1998/02/28 18961.30 19354.62
1998/03/31 19007.24 19371.66
1998/04/30 18910.32 19284.29
1998/05/31 19200.14 19589.56
1998/06/30 19270.68 19666.74
1998/07/31 19313.18 19716.11
1998/08/31 19605.05 20020.72
1998/09/30 19832.99 20270.18
1998/10/31 19844.33 20269.77
1998/11/30 19900.07 20340.92
1998/12/31 19926.10 20392.18
1999/01/31 20143.76 20634.64
1999/02/28 20019.22 20544.47
1999/03/31 20016.13 20573.03
1999/04/30 20057.74 20624.25
1999/05/31 19924.84 20504.84
1999/06/30 19610.01 20209.57
1999/07/31 19686.66 20283.13
1999/08/31 19534.44 20120.87
1999/09/30 19543.06 20129.12
1999/10/29 19341.54 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094545 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class T on
October 31, 1989, and the current 3.50% sales charge was paid. As the
chart shows, by October 31, 1999, the value of the investment would
have grown to $19,342 - a 93.42% increase on the initial investment.
For comparison, look at how the Lehman Brothers Municipal Bond Index
did over the same period. With dividends reinvested, the same $10,000
would have grown to $19,911 - a 99.11% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return and yield
of a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
1999 1998 1997 1996 1995
Dividend returns 4.32% 4.86% 5.47% 5.69% 6.62%
Capital returns -6.85% 3.29% 3.42% -1.01% 5.88%
Total returns -2.53% 8.15% 8.89% 4.68% 12.50%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.76(cents) 28.03(cents) 55.47(cents)
Annualized dividend rate 4.77% 4.63% 4.52%
30-day annualized yield 4.55% - -
30-day annualized 7.11% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average share price of $11.74 over the past one
month, $12.01 over the past six months and $12.26 over the past one
year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The offering share price
used in the calculation of the yield includes the effect of Class T's
current 3.50% sales charge. The tax-equivalent yield shows what you
would have to earn on a taxable investment to equal the class'
tax-free yield, if you're in the 36% federal tax bracket, but does not
reflect payment of the federal alternative minimum tax, if applicable.
FIDELITY ADVISOR MUNICIPAL INCOME FUND - CLASS B
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class B shares
took place on June 30, 1994. Class B shares bear a 0.90% 12b-1 fee
(1.00% prior to January 1, 1996). Returns prior to June 30, 1994 are
those of Class T, the original class of the fund, and reflect Class T
shares' 0.25% 12b-1 fee. Had Class B shares' 12b-1 fee been reflected,
returns prior to June 30, 1994 would have been lower. Class B shares'
contingent deferred sales charges included in the past one year, past
five years and past 10 years total return figures are 5%, 2% and 0%,
respectively. 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
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -3.16% 30.58% 92.69%
- - CL B
FIDELITY ADV MUNICIPAL INCOME -7.82% 28.58% 92.69%
- - CL B (INCL. CONTINGENT
DEFERRED SALES CHARGE)
LB Municipal Bond -1.77% 39.75% 99.11%
General Municipal Debt Funds -4.18% 33.04% 86.71%
Average
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 those of the Lehman
Brothers Municipal Bond Index - a market value-weighted index of
investment-grade municipal bonds with maturities of one year or more.
To measure how Class B's performance stacked up against its peers, you
can compare it to the general municipal debt funds average, which
reflects the performance of mutual funds with similar objectives
tracked by Lipper Inc. The past one year average represents a peer
group of 263 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -3.16% 5.48% 6.78%
- - CL B
FIDELITY ADV MUNICIPAL INCOME -7.82% 5.16% 6.78%
- - CL B (INCL. CONTINGENT
DEFERRED SALES CHARGE)
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
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
FA Municipal Income -CL B LB Municipal Bond
00669 LB015
1989/10/31 10000.00 10000.00
1989/11/30 10123.11 10175.00
1989/12/31 10219.35 10258.23
1990/01/31 10235.47 10209.71
1990/02/28 10308.83 10300.58
1990/03/31 10373.50 10303.67
1990/04/30 10278.62 10229.07
1990/05/31 10489.26 10452.37
1990/06/30 10612.85 10544.24
1990/07/31 10776.54 10699.25
1990/08/31 10703.82 10543.89
1990/09/30 10779.93 10549.90
1990/10/31 10927.93 10741.28
1990/11/30 11199.08 10957.28
1990/12/31 11270.53 11004.95
1991/01/31 11401.70 11152.64
1991/02/28 11489.36 11249.66
1991/03/31 11556.91 11253.71
1991/04/30 11745.09 11403.39
1991/05/31 11890.27 11504.76
1991/06/30 11917.94 11493.37
1991/07/31 12072.05 11633.36
1991/08/31 12181.07 11786.57
1991/09/30 12323.95 11940.04
1991/10/31 12460.51 12047.50
1991/11/30 12507.38 12081.11
1991/12/31 12643.41 12340.37
1992/01/31 12783.56 12368.51
1992/02/29 12853.01 12372.46
1992/03/31 12917.49 12377.04
1992/04/30 13034.08 12487.20
1992/05/31 13151.00 12634.17
1992/06/30 13331.33 12846.17
1992/07/31 13795.53 13231.30
1992/08/31 13688.71 13102.30
1992/09/30 13774.13 13187.98
1992/10/31 13607.90 13058.35
1992/11/30 13880.63 13292.22
1992/12/31 14047.99 13427.94
1993/01/31 14285.60 13584.10
1993/02/28 14790.04 14075.44
1993/03/31 14635.78 13926.66
1993/04/30 14790.98 14067.18
1993/05/31 14913.47 14146.24
1993/06/30 15152.58 14382.34
1993/07/31 15163.83 14401.18
1993/08/31 15554.38 14701.01
1993/09/30 15769.78 14868.46
1993/10/31 15778.24 14897.15
1993/11/30 15624.03 14765.91
1993/12/31 15984.82 15077.62
1994/01/31 16170.95 15249.80
1994/02/28 15743.55 14854.83
1994/03/31 14904.37 14249.95
1994/04/30 15003.27 14370.79
1994/05/31 15091.99 14495.38
1994/06/30 15036.43 14406.81
1994/07/31 15288.20 14670.89
1994/08/31 15312.55 14721.65
1994/09/30 15058.64 14505.54
1994/10/31 14756.76 14247.92
1994/11/30 14272.68 13990.32
1994/12/31 14622.83 14298.24
1995/01/31 15094.05 14706.89
1995/02/28 15491.15 15134.56
1995/03/31 15562.65 15308.46
1995/04/30 15590.25 15326.52
1995/05/31 16079.86 15815.59
1995/06/30 15943.22 15678.00
1995/07/31 15984.94 15826.63
1995/08/31 16136.65 16027.31
1995/09/30 16257.20 16128.76
1995/10/31 16464.28 16363.27
1995/11/30 16765.80 16634.74
1995/12/31 16903.86 16794.60
1996/01/31 16987.41 16921.40
1996/02/29 16952.21 16807.18
1996/03/31 16584.07 16592.38
1996/04/30 16507.54 16545.43
1996/05/31 16477.26 16538.81
1996/06/30 16659.38 16718.92
1996/07/31 16759.01 16871.06
1996/08/31 16786.68 16867.01
1996/09/30 16928.31 17103.15
1996/10/31 17118.79 17296.58
1996/11/30 17364.34 17613.11
1996/12/31 17289.09 17539.14
1997/01/31 17343.66 17572.28
1997/02/28 17519.57 17733.60
1997/03/31 17317.42 17497.21
1997/04/30 17439.37 17643.66
1997/05/31 17654.06 17909.02
1997/06/30 17851.47 18099.75
1997/07/31 18351.93 18601.12
1997/08/31 18188.33 18426.82
1997/09/30 18403.16 18645.55
1997/10/31 18514.58 18765.44
1997/11/30 18621.70 18875.78
1997/12/31 18910.33 19151.18
1998/01/31 19097.25 19348.82
1998/02/28 19092.60 19354.62
1998/03/31 19128.41 19371.66
1998/04/30 19020.07 19284.29
1998/05/31 19302.13 19589.56
1998/06/30 19362.87 19666.74
1998/07/31 19395.31 19716.11
1998/08/31 19678.75 20020.72
1998/09/30 19897.64 20270.18
1998/10/31 19898.49 20269.77
1998/11/30 19943.98 20340.92
1998/12/31 19959.54 20392.18
1999/01/31 20167.53 20634.64
1999/02/28 20031.83 20544.47
1999/03/31 20018.03 20573.03
1999/04/30 20049.00 20624.25
1999/05/31 19905.14 20504.84
1999/06/30 19579.32 20209.57
1999/07/31 19629.21 20283.13
1999/08/31 19466.50 20120.87
1999/09/30 19481.10 20129.12
1999/10/29 19269.32 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094519 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class B on
October 31, 1989. As the chart shows, by October 31, 1999, the value
of the investment would have grown to $19,269 - a 92.69% increase on
the initial investment. For comparison, look at how the Lehman
Brothers Municipal Bond Index did over the same period. With dividends
reinvested, the same $10,000 would have grown to $19,911 - a 99.11%
increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the share
price, return and yield of a
fund that invests in bonds will
vary. That means if you sell
your shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
1999 1998 1997 1996 1995
Dividend returns 3.69% 4.17% 4.81% 4.99% 5.77%
Capital returns -6.85% 3.30% 3.34% -1.01% 5.80%
Total returns -3.16% 7.47% 8.15% 3.98% 11.57%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.13(cents) 24.17(cents) 47.62(cents)
Annualized dividend rate 4.15% 4.00% 3.89%
30-day annualized yield 4.08% - -
30-day annualized 6.38% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average share price of $11.71 over the past one
month, $11.98 over the past six months, and $12.23 over the past one
year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The offering share price
used in the calculation of the yield excludes the effect of Class B's
contingent deferred sales charge. The tax-equivalent yield shows what
you would have to earn on a taxable investment to equal the class'
tax-free yield, if you're in the 36% federal tax bracket, but does not
reflect payment of the federal alternative minimum tax, if applicable.
FIDELITY ADVISOR MUNICIPAL INCOME FUND - CLASS C
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class C shares
took place on November 3, 1997. Class C shares bear a 1.00% 12b-1 fee.
Returns between June 30, 1994 and November 3, 1997 are those of Class
B shares and reflect Class B shares' 0.90% (1.00% prior to January 1,
1996) 12b-1 fee. Returns prior to June 30, 1994 are those of Class T,
the original class of the fund, and reflect Class T shares' 0.25%
12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns
between November 3, 1997 and January 1, 1996 and prior to June 30,
1994 would have been lower. Class C shares' contingent deferred sales
charge included in the past one year, past five year and past 10 year
total return figures are 1%, 0%, and 0%, respectively. 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
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -3.24% 30.12% 92.01%
- - CL C
FIDELITY ADV MUNICIPAL INCOME -4.17% 30.12% 92.01%
- - CL C (INCL. CONTINGENT
DEFERRED SALES CHARGE)
LB Municipal Bond -1.77% 39.75% 99.11%
General Municipal Debt Funds -4.18% 33.04% 86.71%
Average
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 those of the Lehman
Brothers Municipal Bond Index - a market value-weighted index of
investment-grade municipal bonds with maturities of one year or more.
To measure how Class C's performance stacked up against its peers, you
can compare it to the general municipal debt funds average, which
reflects the performance of mutual funds with similar objectives
tracked by Lipper Inc. The past one year average represents a peer
group of 263 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -3.24% 5.41% 6.74%
- - CL C
FIDELITY ADV MUNICIPAL INCOME -4.17% 5.41% 6.74%
- - CL C (INCL. CONTINGENT
DEFERRED SALES CHARGE)
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
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
FA Municipal Income -CL C LB Municipal Bond
00490 LB015
1989/10/31 10000.00 10000.00
1989/11/30 10123.11 10175.00
1989/12/31 10219.35 10258.23
1990/01/31 10235.47 10209.71
1990/02/28 10308.83 10300.58
1990/03/31 10373.50 10303.67
1990/04/30 10278.62 10229.07
1990/05/31 10489.26 10452.37
1990/06/30 10612.85 10544.24
1990/07/31 10776.54 10699.25
1990/08/31 10703.82 10543.89
1990/09/30 10779.93 10549.90
1990/10/31 10927.93 10741.28
1990/11/30 11199.08 10957.28
1990/12/31 11270.53 11004.95
1991/01/31 11401.70 11152.64
1991/02/28 11489.36 11249.66
1991/03/31 11556.91 11253.71
1991/04/30 11745.09 11403.39
1991/05/31 11890.27 11504.76
1991/06/30 11917.94 11493.37
1991/07/31 12072.05 11633.36
1991/08/31 12181.07 11786.57
1991/09/30 12323.95 11940.04
1991/10/31 12460.51 12047.50
1991/11/30 12507.38 12081.11
1991/12/31 12643.41 12340.37
1992/01/31 12783.56 12368.51
1992/02/29 12853.01 12372.46
1992/03/31 12917.49 12377.04
1992/04/30 13034.08 12487.20
1992/05/31 13151.00 12634.17
1992/06/30 13331.33 12846.17
1992/07/31 13795.53 13231.30
1992/08/31 13688.71 13102.30
1992/09/30 13774.13 13187.98
1992/10/31 13607.90 13058.35
1992/11/30 13880.63 13292.22
1992/12/31 14047.99 13427.94
1993/01/31 14285.60 13584.10
1993/02/28 14790.04 14075.44
1993/03/31 14635.78 13926.66
1993/04/30 14790.98 14067.18
1993/05/31 14913.47 14146.24
1993/06/30 15152.58 14382.34
1993/07/31 15163.83 14401.18
1993/08/31 15554.38 14701.01
1993/09/30 15769.78 14868.46
1993/10/31 15778.24 14897.15
1993/11/30 15624.03 14765.91
1993/12/31 15984.82 15077.62
1994/01/31 16170.95 15249.80
1994/02/28 15743.55 14854.83
1994/03/31 14904.37 14249.95
1994/04/30 15003.27 14370.79
1994/05/31 15091.99 14495.38
1994/06/30 15036.43 14406.81
1994/07/31 15288.20 14670.89
1994/08/31 15312.55 14721.65
1994/09/30 15058.64 14505.54
1994/10/31 14756.76 14247.92
1994/11/30 14272.68 13990.32
1994/12/31 14622.83 14298.24
1995/01/31 15094.05 14706.89
1995/02/28 15491.15 15134.56
1995/03/31 15562.65 15308.46
1995/04/30 15590.25 15326.52
1995/05/31 16079.86 15815.59
1995/06/30 15943.22 15678.00
1995/07/31 15984.94 15826.63
1995/08/31 16136.65 16027.31
1995/09/30 16257.20 16128.76
1995/10/31 16464.28 16363.27
1995/11/30 16765.80 16634.74
1995/12/31 16903.86 16794.60
1996/01/31 16987.41 16921.40
1996/02/29 16952.21 16807.18
1996/03/31 16584.07 16592.38
1996/04/30 16507.54 16545.43
1996/05/31 16477.26 16538.81
1996/06/30 16659.38 16718.92
1996/07/31 16759.01 16871.06
1996/08/31 16786.68 16867.01
1996/09/30 16928.31 17103.15
1996/10/31 17118.79 17296.58
1996/11/30 17364.34 17613.11
1996/12/31 17289.09 17539.14
1997/01/31 17343.66 17572.28
1997/02/28 17519.57 17733.60
1997/03/31 17317.42 17497.21
1997/04/30 17439.37 17643.66
1997/05/31 17654.06 17909.02
1997/06/30 17851.47 18099.75
1997/07/31 18351.93 18601.12
1997/08/31 18188.33 18426.82
1997/09/30 18403.16 18645.55
1997/10/31 18514.58 18765.44
1997/11/30 18603.32 18875.78
1997/12/31 18900.90 19151.18
1998/01/31 19068.36 19348.82
1998/02/28 19076.88 19354.62
1998/03/31 19107.24 19371.66
1998/04/30 18995.56 19284.29
1998/05/31 19271.89 19589.56
1998/06/30 19328.46 19666.74
1998/07/31 19356.32 19716.11
1998/08/31 19634.21 20020.72
1998/09/30 19864.11 20270.18
1998/10/31 19844.45 20269.77
1998/11/30 19888.51 20340.92
1998/12/31 19902.95 20392.18
1999/01/31 20108.86 20634.64
1999/02/28 19972.43 20544.47
1999/03/31 19957.13 20573.03
1999/04/30 19986.23 20624.25
1999/05/31 19841.48 20504.84
1999/06/30 19532.11 20209.57
1999/07/31 19580.12 20283.13
1999/08/31 19416.66 20120.87
1999/09/30 19413.21 20129.12
1999/10/29 19201.07 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094525 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class C on
October 31, 1989. As the chart shows, by October 31, 1999, the value
of the investment would have grown to $19,201 - a 92.01% increase on
the initial investment. For comparison, look at how the Lehman
Brothers Municipal Bond Index did over the same period. With dividends
reinvested, the same $10,000 would have grown to $19,911 - a 99.11%
increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the share
price, return and yield of a
fund that invests in bonds will
vary. That means if you sell
your shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
TOTAL RETURN COMPONENTS
YEAR ENDED OCTOBER 31 NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF
CLASS C SHARES) TO OCTOBER 31
1999 1998
Dividend returns 3.61% 3.87%
Capital returns -6.85% 3.54%
Total returns -3.24% 7.41%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.03(cents) 23.57(cents) 46.52(cents)
Annualized dividend rate 4.04% 3.89% 3.79%
30-day annualized yield 3.97% - -
30-day annualized 6.20% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average share price of $11.74 over the past one
month, $12.01 over the past six months, and $12.26 over the past one
year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The offering share price
used in the calculation of the yield excludes the effect of Class C's
contingent deferred sales charge. The tax-equivalent yield shows what
you would have to earn on a taxable investment to equal the class'
tax-free yield, if you're in the 36% federal tax bracket, but does
not reflect payment of the federal alternative minimum tax, if
applicable.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a municipal bond market
rally late in the period spurred by
attractively priced issues and yields
higher than they've been since
1997, munis produced lackluster
results during the 12-month period
ending October 31, 1999.
Following the global financial crisis
in the fall of 1998 and interest rate
jitters through most of 1999, the
Lehman Brothers Municipal Bond
Index - an index of approximately
50,000 investment-grade, fixed-rate,
tax-
exempt bonds - declined 1.77%
during the period. In comparison,
the Lehman Brothers Aggregate
Bond Index - a broad measure of
the taxable bond market - posted a
marginally positive return of
0.53%. In general, the negative
environment of increasing interest
rates and investors' persistent
concerns about inflation hit the
Lehman Brothers Long-Term
Government Bond Index the hardest,
as it fell 6.10% during the period.
While the supply of municipals was
relatively light during the period -
particularly compared to 1998's
near-record levels of issuance -
demand was similarly muted,
especially among institutional
investors. Muni bonds came under
further downward pressure in the
second half of the period following
two interest-rate hikes by the
Federal Reserve Board and
widespread belief among investors
that there would be a third hike in
November.
(photograph of Christine Thompson)
An interview with Christine Thompson, Portfolio Manager of Fidelity
Advisor Municipal Income Fund
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. For the 12-month period that ended October 31, 1999, the fund's
Class A, Class T, Class B and Class C shares had total returns
of-2.36%, -2.53%, -3.16% and -3.24%, respectively. To get a sense of
how the fund did relative to its competitors, the general municipal
debt funds average returned -4.18% for the same 12-month period,
according to Lipper Inc. Additionally, the Lehman Brothers Municipal
Bond Index, which tracks the types of securities in which the fund
invests, returned -1.77% for the same 12-month period.
Q. RISING INTEREST RATES MADE IT A FAIRLY DIFFICULT AND VOLATILE YEAR
FOR MUNICIPAL BONDS. WHY DID THE FUND OUTPERFORM ITS PEERS?
A. The fund's outperformance of its peers was in part due to duration
management. In keeping with Fidelity's investment approach, I managed
the fund's duration - a measure of its interest-rate sensitivity - to
be in line with the municipal market as a whole, as reflected by the
Lehman Brothers Municipal Bond Index. As a result, I don't lengthen or
shorten duration based on where I think interest rates will be at some
point down the road, because I don't believe that anyone can do so
with any accuracy over time. But other funds in the peer group do
actively manage duration and some increased their interest-rate
sensitivity, which likely caused their returns to suffer when interest
rates rose.
Q. WHICH BOND MATURITIES DID YOU FAVOR?
A. I emphasized intermediate-maturity bonds - those set to mature
within five to 15 years - which also was a plus for the fund's
performance. Although they were a disappointment early on, they
bounced back more recently. Initially, intermediates suffered
primarily from reduced demand and increased supply at the hands of
relatively heavy selling from some specific types of institutional
investors. In contrast, relatively strong demand from individual
investors helped to support the performance of shorter- and
longer-term bonds. Based on Fidelity's quantitative models,
intermediates offered the most attractive value for their given
interest-rate sensitivity and their total return potential. The fund's
focus on this maturity range worked in its favor during the past
several months because institutional investors came back into the
market with purchases of intermediate securities.
Q. THE FUND ALSO HAD A RELATIVELY LARGE EXPOSURE TO "PREMIUM" BONDS.
WHAT ARE PREMIUMS AND WHY WERE THEY ATTRACTIVE?
A. Premium coupon bonds pay interest rates above prevailing market
rates and trade at prices above face - or par - value. One appealing
aspect of premiums was that they were insulated from unfavorable tax
treatment that negatively affected the prices of lower coupon bonds as
interest rates rose.
Q. WHERE DID YOU FIND ATTRACTIVE OPPORTUNITIES?
A. I found some attractive opportunities in the education sector and
bought bonds backed by colleges and universities. Education bonds
offer diversification from the economically sensitive areas of the
market - such as general obligation bonds. In addition, demographic
trends support a growing number of students seeking to obtain advanced
degrees over the next several years. I also found opportunities in the
health care and utilities sectors, both of which are undergoing a wave
of consolidation. I looked for bonds I felt could benefit from
consolidation, either by being acquired or affiliating with a stronger
entity, through the restructuring of debt.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET AND THE FUND?
A. At the end of the period, municipals were priced attractively
compared to their Treasury counterparts. To the extent that investors
realize and act on that relative cheapness, municipals could gain
ground on Treasuries. Of course, the major determinant of the bond
market's performance will be the direction of interest rates, which I
don't spend time trying to forecast. Rather, I look for attractively
priced bonds that I believe will outperform, no matter where interest
rates end up.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: seeks to provide a high
current yield exempt from
federal income tax
START DATE: September 16,
1987
SIZE: as of October 31,
1999, more than $420
million
MANAGER: Christine Thompson,
since 1998; joined Fidelity
in 1985
CHRISTINE THOMPSON ON
MUNICIPAL BOND DEMAND:
"The demand for municipals can vary
a great deal in response to the
behavior of various market
participants. Corporations, individual
investors and trust accounts tend to
favor short-term securities, which are
less interest-rate sensitive and,
therefore, less volatile. Individual
investors, along with mutual funds
and insurance companies - which
invest the insurance premiums they
collect in bonds - are the primary
purchasers of intermediate-maturity
bonds. Longer-term securities, which
are the most volatile, generally are
the domain of long-term mutual funds,
hedge funds and other investors
known as `arbitrageurs,' who seek to
exploit small differences between
various fixed-income investments. At
various points in time, a given
municipal bond maturity may look
cheap or expensive as different
categories of investors embrace them
or step away from them. With the help
of Fidelity's research team, I try to
take advantage of the anomalies that
can occur by investing in the bond
maturities that look cheap and selling
those that have performed well in
response to strong demand."
NOTE TO SHAREHOLDERS: The fund is
managed to have similar overall
interest-rate risk to a benchmark
index that serves as a proxy for the
market in which the fund invests.
Through the current fiscal year, the
fund used the Lehman Brothers
Municipal Bond Index for this purpose.
Going forward the fund will use a new
benchmark, the Lehman Brothers
3+ Year Municipal Bond Index. The
new benchmark excludes securities
with maturities of less than three
years, and is more representative of
the fund's investment universe.
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF OCTOBER
31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
New York 18.0 19.0
Texas 8.4 3.6
Massachusetts 6.5 6.8
Colorado 5.3 5.2
Washington 5.1 4.9
TOP FIVE SECTORS AS OF
OCTOBER 31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 19.3 20.7
Electric Utilities 15.9 17.6
Transportation 14.4 12.6
Health Care 13.4 14.0
Education 8.0 5.5
AVERAGE YEARS TO MATURITY AS
OF OCTOBER 31, 1999
6 MONTHS AGO
Years 12.9 12.9
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF OCTOBER 31, 1999
6 MONTHS AGO
Years 6.7 6.4
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES.
IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A FIVE-YEAR DURATION IS
LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS ALSO CAN INFLUENCE
A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY, A BOND FUND'S
ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION
(MOODY'S RATINGS)
AS OF OCTOBER 31, 1999
Aaa 46.7%
Aa, A 24.3%
Baa 22.4%
Not Rated 4.7%
Short-term
Investments 1.9%
Row: 1, Col: 1, Value: 46.7
Row: 1, Col: 2, Value: 24.3
Row: 1, Col: 3, Value: 22.4
Row: 1, Col: 4, Value: 4.7
Row: 1, Col: 5, Value: 1.9
AS OF APRIL 30, 1999
Aaa 43.9%
Aa, A 28.6%
Baa 20.8%
Not Rated 4.8%
Short-term
Investments 1.9%
Row: 1, Col: 1, Value: 43.9
Row: 1, Col: 2, Value: 28.6
Row: 1, Col: 3, Value: 20.8
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 5, Value: 1.9
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P (registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS OCTOBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 97.6%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
ALABAMA - 1.0%
Shelby County Gen. Oblig. - $ 4,000,000 $ 4,266,000
Series A, 7.7% 8/1/17
ALASKA - 2.0%
Alaska Hsg. Fin. Corp. Rfdg. Aa2 5,490,000 5,307,732
Series A, 5.4% 12/1/13
Alaska Student Ln. Corp.
Student Ln. Rev. Series A:
5.25% 7/1/07 (AMBAC Insured) Aaa 1,500,000 1,505,520
(e)
5.45% 7/1/09 (AMBAC Insured) Aaa 1,500,000 1,505,460
(e)
8,318,712
ARIZONA - 1.3%
Arizona Student Ln. Aquistion Aaa 1,300,000 1,274,676
Auth. Rev. Series A1, 5.875%
5/1/18 (e)
Maricopa County Ind. Dev. Baa1 4,495,000 4,262,923
Auth. Health Facilities Rev.
Rfdg. (Catholic Healthcare
West Proj.) Series A, 4.1%
7/1/03
5,537,599
ARKANSAS - 0.2%
Little Rock Arpt. Passenger Aaa 680,000 674,825
Facilities Charge Rev. 5.65%
5/1/16 (AMBAC Insured) (e)
CALIFORNIA - 3.8%
California Dept. of Wtr. Aa2 2,190,000 2,244,005
Resources Wtr. Sys. Rev.
(Central Valley Proj.)
Series J 2, 6.125% 12/1/13
California Hsg. Fin. Agcy.
Rev. (Home Mtg.):
Series B, 5.2% 8/1/26 (MBIA Aaa 850,000 852,491
Insured) (e)
Series R, 6.15% 8/1/27 (MBIA Aaa 1,500,000 1,497,165
Insured) (e)
California Pub. Works Board A1 2,000,000 1,989,700
Lease Rev. Rfdg. (California
Univ. Proj.) Series A, 5.5%
10/1/13
Central Valley Fing. Auth. BBB- 4,500,000 4,589,010
Cogeneration Proj. Rev.
(Carson Ice Gen. Proj.) 6%
7/1/09
Foothill/Eastern Trans. Aaa 2,000,000 891,200
Corridor Agcy. Toll Road
Rev. (Cap. Appreciation) Sr.
Lien Series A, 0% 1/1/14
Northern California Pwr. Aaa 750,000 804,053
Agcy. Pub. Pwr. Rev. (Proj.
No. 3) 5.85% 7/1/10 (AMBAC
Insured) (Escrowed to
Maturity) (f)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
CALIFORNIA - CONTINUED
Sacramento City Fing. Auth. Aaa $ 1,225,000 $ 642,721
Rev. (Cap. Appreciation)
Series B, 0% 11/1/11 (MBIA
Insured)
Sacramento City Fing. Auth. Aaa 2,000,000 1,908,100
Lease Rev. Rfdg. Series A,
5.4% 11/1/20 (AMBAC Insured)
Sacramento Cogeneration Auth. BBB- 500,000 522,885
Cogeneration Proj. Rev.
(Procter & Gamble Proj.)
6.375% 7/1/10
15,941,330
COLORADO - 5.3%
Arapaho County Cap. Impt. Aaa 14,000,000 2,175,460
Trust Fund Hwy. Rev. (Cap.
Appreciation) Series C, 0%
8/31/26 (Pre-Refunded to
8/31/05 @ 20.8626) (f)
Colorado Health Facilities
Auth. Rev.:
(Nat'l. Benevolent Assoc. Baa2 1,360,000 1,341,518
Proj.) Series A, 6.5% 6/1/25
Rfdg. (Rocky Mountain
Adventist):
6.625% 2/1/13 Baa2 6,900,000 6,476,616
6.625% 2/1/22 Baa2 4,000,000 3,648,840
Colorado Springs Arpt. Rev.
(Cap. Appreciation) Series C:
0% 1/1/06 (MBIA Insured) Aaa 1,405,000 1,034,656
0% 1/1/08 (MBIA Insured) Aaa 870,000 568,867
Denver City & County Arpt.
Rev.:
(Cap. Appreciation):
Series A, 0% 11/15/02 (MBIA Aaa 2,115,000 1,841,911
Insured) (e)
Series D, 0% 11/15/04 (MBIA Aaa 1,700,000 1,328,941
Insured) (e)
Series A:
7.5% 11/15/23 (e) Baa1 2,070,000 2,240,672
7.5% 11/15/23 (Pre-Refunded Aaa 430,000 487,719
to 11/15/04 @ 102) (e)(f)
Series C, 6.55% 11/15/02 (e) Baa1 1,000,000 1,036,560
22,181,760
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
CONNECTICUT - 1.2%
Connecticut Health & Edl. AAA $ 2,170,000 $ 2,321,683
Facilities Auth. Rev. (New
Britain Memorial Hosp.)
Series A, 7.5% 7/1/06
(Pre-Refunded to 7/1/02 @
102) (f)
Eastern Connecticut Resources BBB 3,350,000 2,923,612
Recovery Auth. Solid Waste
Rev. (Wheelabrator Lisbon
Proj.) Series A, 5.5% 1/1/20
(e)
5,245,295
DISTRICT OF COLUMBIA - 3.1%
District of Columbia Gen.
Oblig. Rfdg.:
Series A:
6% 6/1/07 (MBIA Insured) Aaa 1,850,000 1,944,054
6% 6/1/07 (MBIA Insured) Aaa 150,000 159,164
(Escrowed to Maturity) (f)
Series B, 5% 6/1/05 (MBIA Aaa 3,635,000 3,644,342
Insured)
District of Columbia Hosp. - 940,000 980,495
Rev. (Hosp. for Sick
Children) Series A, 8.875%
1/1/21
District of Columbia Redev.
Land Agcy. Washington D.C.
Sports Arena Spl. Tax Rev.:
5.3% 11/1/99 Baa 1,700,000 1,700,000
5.625% 11/1/10 Baa 485,000 490,616
District of Columbia Rev.:
(Nat'l. Academy of Science Aaa 2,500,000 2,170,575
Proj.) Series A, 5% 1/1/19
(AMBAC Insured)
Rfdg. (Georgetown Univ.) Aaa 2,000,000 2,026,820
Series A, 5.95% 4/1/14 (MBIA
Insured)
13,116,066
FLORIDA - 2.5%
Broward County Resource A3 545,000 562,533
Recovery Rev. (SES Broward
Co. LP South Proj.) 7.95%
12/1/08
Dade County Aviation Rev. Aaa 5,000,000 5,137,350
Rfdg. Series D, 5.75%
10/1/09 (AMBAC Insured) (e)
Florida Board of Ed. Cap. Aa2 2,100,000 2,007,789
Outlay Rfdg. (Pub. Ed.
Proj.) Series D, 5.75%
6/1/22 (b)
Florida Mid-Bay Bridge Auth. - 2,500,000 2,690,200
Rev. Series A, 7.5% 10/1/17
10,397,872
GEORGIA - 0.2%
Atlanta Wtr. & Wastewtr. Rev. Aaa 700,000 707,182
Rfdg. Series A, 5.5% 11/1/10
(FGIC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
HAWAII - 1.7%
Honolulu City & County Gen.
Oblig. Rfdg. Series C:
5% 7/1/07 (FGIC Insured) Aaa $ 3,500,000 $ 3,490,970
5.125% 7/1/12 (FGIC Insured) Aaa 4,000,000 3,841,560
7,332,530
ILLINOIS - 4.8%
Chicago Midway Arpt. Rev. Aaa 1,500,000 1,377,930
Series A, 5.5% 1/1/29 (MBIA
Insured)
Chicago O'Hare Int'l. Arpt.
Rev.:
(Passenger Facility Charge) Aaa 2,500,000 2,526,025
Series A, 5.6% 1/1/10 (AMBAC
Insured)
Rfdg. (Gen. Arpt. Proj.)
Series A:
6.25% 1/1/09 (AMBAC Insured) Aaa 3,700,000 3,917,227
(e)
6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,453,046
Chicago O'Hare Int'l. Arpt. Baa2 1,000,000 1,121,660
Spl. Facilities Rev. Rfdg.
(American Airlines, Inc.
Proj.) 8.2% 12/1/24
Chicago School Reform Board Aaa 5,000,000 4,721,250
of Ed. (Chicago School
Reform) 5.75% 12/1/27 (AMBAC
Insured)
Du Page County Cmnty. High Aaa 1,640,000 1,726,641
School District #99 (Downers
Grove) Series A, 6% 2/1/06
(AMBAC Insured)
Illinois Edl. Facilities Aaa 1,200,000 1,271,784
Auth. Rev. Rfdg. (DePaul
Univ.) 6% 10/1/05 (AMBAC
Insured)
Illinois Health Facilities
Auth. Rev. (Memorial Hosp.
Proj.):
7.125% 5/1/10 (Pre-Refunded - 1,000,000 1,079,920
to 5/1/02 @ 102) (f)
7.25% 5/1/22 (Pre-Refunded to - 1,000,000 1,082,840
5/1/02 @ 102) (f)
20,278,323
INDIANA - 0.2%
Indianapolis Econ. Dev. Rev. Baa2 1,000,000 1,056,830
Rfdg. (Nat'l. Benevolent
Assoc.) 7.625% 10/1/22
IOWA - 0.8%
Iowa Student Ln. Liquidity Aaa 3,500,000 3,567,900
Corp. Student Ln. Rev. Rfdg.
Series B, 5.75% 12/1/07 (e)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
KANSAS - 0.6%
Kansas Dev. Fin. Auth. Rev.
(Sisters of Charity
Leavenworth):
5% 12/1/13 (MBIA Insured) Aaa $ 2,390,000 $ 2,215,506
5% 12/1/14 (MBIA Insured) Aaa 500,000 455,285
2,670,791
KENTUCKY - 1.9%
Kenton County Arpt. Board
Arpt. Rev.:
(Cincinnati/Northern Kentucky Aaa 5,570,000 5,836,190
Int'l.) Series A, 6% 3/1/05
(MBIA Insured) (e)
(Spl. Facilities Delta Baa3 2,000,000 2,105,940
Airlines, Inc. Proj.)
Series A, 7.5% 2/1/20 (e)
7,942,130
MARYLAND - 1.2%
Maryland Health & Higher Edl.
Facilities Auth. Rev.:
(Good Samaritan Hosp.):
5.75% 7/1/13 (AMBAC Insured) Aaa 1,015,000 1,023,983
(Escrowed to Maturity) (f)
5.75% 7/1/13 (Escrowed to A1 1,665,000 1,694,371
Maturity) (f)
Rfdg. (John Hopkins Univ.) 6% Aa2 2,000,000 2,143,960
7/1/10
4,862,314
MASSACHUSETTS - 6.5%
Massachusetts Health & Edl.
Facilities Auth. Rev.:
(Bentley College) Series J, Aaa 1,265,000 1,120,398
5% 7/1/17 (MBIA Insured)
(Fairview Extended Care) Aaa 5,000,000 5,483,500
Series A, 10.25% 1/1/21
(Pre-Refunded to 1/1/01 @
103) (f)
(Hebrew Rehab. Ctr. for Aged) A 2,000,000 1,807,060
Series C, 5.25% 7/1/17
(New England Med. Ctr. Hosp.) Aaa 500,000 453,405
Series G, 5.375% 7/1/24
(MBIA Insured)
Massachusetts Ind. Fin. Agcy. BBB 1,000,000 968,590
Resource Recovery Rev. Rfdg.
(Ogden Haverhill Proj.)
Series A, 4.7% 12/1/03
Massachusetts Ind. Fin. Agcy.
Rev.:
(Atlanticare Med. Ctr.) - 600,000 612,000
Series B, 10.125% 11/1/14
(Pre-Refunded to 11/1/99 @
102) (f)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy.
Rev.: - continued
(Cap. Appreciation)
(Massachusetts Biomedical)
Series A 2:
0% 8/1/08 A+ $ 800,000 $ 503,608
0% 8/1/10 - 4,500,000 2,464,785
Massachusetts Muni. Wholesale Baa2 1,000,000 1,052,260
Elec. Co. Pwr. Supply Sys.
Rev. Rfdg. Series C, 6.5%
7/1/03
Massachusetts Tpk. Auth. Aaa 5,000,000 4,370,450
Metro. Hwy. Sys. Rev. Series
A, 5.125% 1/1/23 (MBIA
Insured)
Massachusetts Wtr. Poll.
Abatement Trust Rev. (MWRA
Ln. Prog.) Series A:
5.25% 8/1/13 Aa1 100,000 96,728
5.25% 8/1/14 Aa1 300,000 285,105
New England Ed. Ln. Marketing A3 3,880,000 3,971,335
Corp. Massachusetts Rfdg.
(Student Ln. Proj.) Series
F, 5.625% 7/1/04 (e)
New England Ed. Ln. Marketing Aaa 4,005,000 4,103,443
Corp. Massachusetts Student
Ln. Rev. Issue A, 5.8% 3/1/02
27,292,667
MICHIGAN - 2.3%
Michigan Hosp. Fin. Auth.
Rev. Rfdg.:
(Genesys Reg'l. Hosp.) Series Baa2 4,250,000 4,056,923
A, 5.5% 10/1/18 (Escrowed to
Maturity) (f)
(Pontiac Osteopathic Hosp.) Baa2 2,000,000 1,756,600
Series A, 6% 2/1/24
Michigan Strategic Fund Rev. Aaa 1,500,000 1,366,170
Rfdg. (Detroit Edison Co.
Proj.) Series A, 5.55%
9/1/29 (MBIA Insured) (e)
Royal Oak Hosp. Fin. Auth. Aa3 2,310,000 2,435,387
Rev. Rfdg. (William
Beaumont Hosp.) 6.25% 1/1/09
9,615,080
MINNESOTA - 1.3%
Minneapolis & Saint Paul Hsg. Aaa 1,800,000 1,519,110
& Redev. Auth. Health Care
Sys. Rev. Rfdg. (Healthspan
Corp.) Series A, 4.75%
11/15/18 (AMBAC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
MINNESOTA - CONTINUED
Minnesota Hsg. Fin. Agcy. Aa2 $ 2,000,000 $ 2,039,640
Single Family Mtg. (Single
Family Mtg.) Series D, 6.4%
7/1/15 (e)
Rochester Health Care AA+ 2,000,000 1,860,000
Facilities Rev. (Mayo
Foundation) Series A, 5.5%
11/15/27
5,418,750
MISSISSIPPI - 1.0%
Mississippi Gen. Oblig. 6.2% Aaa 3,720,000 3,987,617
2/1/08 (Escrowed to
Maturity) (f)
Mississippi Home Corp. Single Aaa 164,000 170,780
Family Rev. Rfdg. Series A,
9.25% 3/1/12 (FGIC Insured)
4,158,397
NEVADA - 0.6%
Las Vegas Downtown Redev.
Agcy. Tax Increment Rev.
(Fremont Street Proj.)
Series A:
6% 6/15/10 BBB+ 1,500,000 1,478,355
6.1% 6/15/14 BBB+ 1,000,000 999,740
2,478,095
NEW HAMPSHIRE - 0.1%
New Hampshire Higher Edl. & - 480,000 502,354
Health Facilities Auth. Rev.
(Littleton Hosp. Assoc.,
Inc.) Series A, 9.5% 5/1/20
(Pre-Refunded to 5/1/00 @
102) (f)
NEW JERSEY - 2.1%
New Jersey Edl. Facilities
Auth. Rev. Rfdg. (Seton
Hall Univ. Proj.):
5% 7/1/18 (AMBAC Insured) Aaa 1,000,000 886,280
5.25% 7/1/07 (AMBAC Insured) Aaa 1,610,000 1,634,263
New Jersey Trans. Trust Fund Aaa 4,000,000 4,066,920
Auth. Rfdg. (Trans. Sys.)
Series A, 5.5% 6/15/11 (MBIA
Insured)
Passaic County Util. Auth. Aaa 2,500,000 2,253,475
Solid Waste Disp. Rev.
Rfdg. (Cap. Appreciation) 0%
3/1/02 (MBIA Insured)
8,840,938
NEW MEXICO - 1.8%
Albuquerque Arpt. Rev. Rfdg.:
6.7% 7/1/18 (AMBAC Insured) Aaa 3,970,000 4,213,996
(e)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
NEW MEXICO - CONTINUED
Albuquerque Arpt. Rev. Rfdg.:
- - continued
6.75% 7/1/11 (AMBAC Insured) Aaa $ 1,805,000 $ 2,006,420
(e)
New Mexico Edl. Assistance Aaa 1,350,000 1,353,267
Foundation Student Ln. Rev.
Series B, 5.25% 4/1/05
(AMBAC Insured) (e)
7,573,683
NEW YORK - 18.0%
Long Island Pwr. Auth. New Aaa 9,390,000 8,209,959
York Elec. Sys. Rev. Series
A, 5.125% 12/1/22 (FSA
Insured)
Metro. Trans. Auth. Dedicated Aaa 1,000,000 889,050
Tax Fund Series A, 5.25%
4/1/26 (MBIA Insured)
Metro. Trans. Auth. New York
Commuter Facilities Rev.:
Rfdg. (Svc. Contract) Series R:
5% 7/1/02 Baa1 2,370,000 2,394,530
5% 7/1/03 Baa1 2,490,000 2,512,211
Series A:
5.625% 7/1/27 (MBIA Insured) Aaa 200,000 188,896
6.125% 7/1/29 Baa1 6,750,000 6,672,578
Metro. Trans. Auth. New York Baa1 1,010,000 988,245
Svc. Contract Rev. Series P,
5.75% 7/1/15
Metro. Trans. Auth. New York
Trans. Facilities Rev. Rfdg.
(Svc. Contract Proj.) Series
8:
5.25% 7/1/17 Baa1 500,000 448,780
5.375% 7/1/21 (FSA Insured) Aaa 700,000 640,073
New York City:
Rfdg.:
Series A, 7% 8/1/03 A3 2,000,000 2,148,960
Series B:
5.7% 8/15/02 A3 1,130,000 1,163,233
5.7% 8/15/02 (Escrowed to A3 35,000 36,159
Maturity) (f)
6.75% 8/15/03 A3 2,000,000 2,134,700
Series E, 6.5% 2/15/04 (FGIC Aaa 1,000,000 1,064,970
Insured)
Series D, 5.5% 2/15/04 A3 2,000,000 2,050,180
Series H:
6.875% 2/1/02 A3 160,000 167,629
6.875% 2/1/02 (Escrowed to Aaa 80,000 84,233
Maturity) (f)
New York City Ind. Dev. Agcy. Aaa 1,000,000 1,045,910
Ind. Dev. Rev. (Japan
Airlines Co. Ltd. Proj.)
Series 1991, 6% 11/1/15
(FSA Insured) (e)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
NEW YORK - CONTINUED
New York City Ind. Dev. Agcy. A3 $ 8,680,000 $ 8,957,586
Spl. Facilities Rev. (Term.
One Group Assoc. Proj.) 5.9%
1/1/06 (e)
New York City Muni. Wtr. Fin.
Auth. Wtr. & Swr. Sys. Rev.
Series B:
5.5% 6/15/27 (MBIA Insured) Aaa 3,500,000 3,247,370
5.75% 6/15/26 A1 5,000,000 4,745,550
5.75% 6/15/29 A1 4,000,000 3,777,800
New York State Dorm. Auth.
Rev.:
(City Univ. Sys. Baa1 3,000,000 3,108,930
Consolidated) Series A, 5.7%
7/1/05
Rfdg. (Jamaica Hosp.) Series Aaa 6,150,000 5,763,965
F, 5.2% 2/15/14 (MBIA
Insured)
New York State Envir.
Facilities Corp.:
Clean Wtr. & Drinking Rev.
(Revolving Funds) Series F:
4.875% 6/15/18 Aa1 1,000,000 860,480
4.875% 6/15/20 Aa1 1,300,000 1,102,049
5% 6/15/15 Aa1 700,000 627,445
New York State Envir. Aa1 1,000,000 883,850
Facilities Corp. Poll. Cont.
Rev. 5.125% 6/15/19
New York State Local Govt. A3 7,500,000 7,200,000
Assistance Corp. Rfdg.
Series C, 5.5% 4/1/17
New York State Thruway Auth. Baa1 2,000,000 2,090,100
Svc. Contract Rev. (Local
Hwy. & Bridges) 5.9% 4/1/07
Triborough Bridge & Tunnel Aaa 500,000 492,700
Auth. Spl. Oblig. Rfdg.
Series A, 5.25% 1/1/11 (FGIC
Insured)
75,698,121
NORTH CAROLINA - 4.4%
North Carolina Eastern Muni.
Pwr. Agcy. Pwr. Sys. Rev.
Rfdg.:
Series A, 5.5% 1/1/05 (MBIA Aaa 4,000,000 4,112,160
Insured)
Series B:
6% 1/1/06 Baa3 4,175,000 4,218,587
7.25% 1/1/07 Baa3 1,000,000 1,078,380
Series C:
5.125% 1/1/03 Baa1 2,700,000 2,667,708
5.25% 1/1/04 Baa1 1,365,000 1,347,159
5.5% 1/1/07 (MBIA Insured) Aaa 2,000,000 2,044,840
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
NORTH CAROLINA - CONTINUED
North Carolina Muni. Pwr.
Agcy. #1 Catawba Elec. Rev.:
Rfdg. 5.75% 1/1/02 Baa1 $ 1,750,000 $ 1,763,615
6.25% 1/1/17 (AMBAC Insured) Aaa 1,150,000 1,187,801
18,420,250
OHIO - 4.5%
Cincinnati Student Ln. Fdg. - 1,215,000 1,241,208
Corp. Student Ln. Rev.
Series B, 8.875% 8/1/08 (e)
Franklin County Hosp. Rev. Baa3 5,000,000 4,791,300
(Doctor's Ohio Health Corp.)
Series A 4.75% 12/1/03
Gateway Economic Dev. Corp. - 3,000,000 3,003,780
Greater Cleveland Stadium
Rev. 6.5% 9/15/14 (e)
Marion County Hosp. Impt. BBB+ 1,000,000 1,001,720
Rev. Rfdg. (Comnty. Hosp.
Proj.) 5.6% 5/15/01
Ohio Tpk. Commission Rfdg. Aaa 5,000,000 4,749,250
Series A, 5.5% 2/15/24 (FGIC
Insured)
Ohio Wtr. Dev. Auth. Poll.
Cont. Rev. (Wtr. Cont. Ln.
Fund):
State Match Series, 6.5% Aaa 1,835,000 1,988,039
12/1/04 (MBIA Insured)
Wtr. Quality Series, 5.625% Aaa 2,000,000 2,087,260
6/1/06 (MBIA Insured)
18,862,557
OKLAHOMA - 1.2%
Sapulpa Muni. Auth. Util. Aaa 1,000,000 972,360
Rev. Rfdg. 5.75% 4/1/23
(FGIC Insured)
Tulsa Muni. Arpt. Trust Rev. Baa2 4,000,000 4,261,480
(American Airlines Corp.
Proj.) 7.35% 12/1/11
5,233,840
PENNSYLVANIA - 3.8%
Allegheny County Arpt. Rev. Aaa 1,000,000 1,030,000
Rfdg. (Pittsburgh Int'l
Arpt. Proj.) Series A, 5.75%
1/1/07 (MBIA Insured) (e)
Allegheny County Ind. Dev. - 325,000 339,573
Auth. Rev. (YMCA Pittsburgh
Proj.) Series A, 8.75% 3/1/10
Butler County Ind. Dev. Auth. A 3,000,000 2,904,960
Health Ctr. Rev. Rfdg.
(Sherwood Oaks Proj.) 5.75%
6/1/11
Cumberland County Muni. Auth.
Rev. Rfdg. (Carlisle Hosp. &
Health):
6.8% 11/15/14 Baa3 3,250,000 3,283,345
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
PENNSYLVANIA - CONTINUED
Cumberland County Muni. Auth.
Rev. Rfdg. (Carlisle Hosp. &
Health): - continued
6.8% 11/15/23 Baa3 $ 1,000,000 $ 1,004,670
Delaware County Auth. Rev.
(1st. Mtg. Riddle Village
Proj.):
8.25% 6/1/22 (Escrowed to Aaa 2,250,000 2,604,870
Maturity) (f)
8.75% 6/1/10 (Pre-Refunded to Aaa 2,870,000 3,220,743
6/1/02 @ 102) (f)
Pennsylvania Ind. Dev. Auth. Aaa 1,345,000 1,396,635
Rev. (Econ. Dev.) 5.8%
7/1/09 (AMBAC Insured)
15,784,796
RHODE ISLAND - 1.1%
Rhode Island Port Auth. & Aaa 4,000,000 4,506,640
Economic Dev. Corp. Arpt.
Rev. Series A, 7% 7/1/14
(FSA Insured) (e)
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Agcy. Aaa 1,715,000 1,822,805
Elec. Rev. Rfdg. Series A,
6.25% 1/1/05 (FGIC Insured)
TENNESSEE - 0.3%
Metro. Govt. Nashville & Aaa 1,000,000 720,210
Davidson County Elec. Rev.
(Cap. Appreciation) Series
A, 0% 5/15/06 (MBIA Insured)
Tennessee Gen. Oblig. Rfdg. Aaa 400,000 426,564
Series A, 6% 5/1/07
1,146,774
TEXAS - 8.4%
Conroe Independent School Aaa 750,000 457,643
District Rfdg. (Cap.
Appreciation) Series B, 0%
2/15/09
Dallas-Fort Worth Int'l. Baa1 6,000,000 6,247,260
Arpt. Facility Impt. Corp.
Rev. (American Airlines,
Inc.) 7.5% 11/1/25 (e)
Fort Bend Independent School AAA 2,500,000 2,496,675
District Rfdg. 5.25% 2/15/10
Midlothian Independent School Aaa 1,845,000 1,500,317
District Rfdg. (Cap.
Appreciation) 0% 2/15/04
San Antonio Elec. & Gas Rev. Aa1 75,000 77,913
Rfdg. 5.5% 2/1/20
(Pre-Refunded to 2/1/07 @
101) (f)
San Antonio Gen. Oblig. Aa2 1,390,000 1,323,711
Series 2000, 5% 2/1/11 (b)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
TEXAS - CONTINUED
San Antonio Independent Aaa $ 3,650,000 $ 3,808,921
School District 5.75% 8/15/10
Texas Gen. Oblig. (Texas Pub. Aa1 5,000,000 4,602,550
Fing. Auth. Proj.) Series A,
5% 10/1/14
Texas Muni. Pwr. Agcy. Rev. Aaa 3,930,000 2,040,063
Rfdg. (Cap. Appreciation)
0% 9/1/11 (AMBAC Insured)
Travis County Health Aaa 4,000,000 4,058,600
Facilities Dev. Corp. Rev.
(Ascension Health Cr. Prog.)
Series A, 6.25% 11/15/19
(MBIA Insured)
Univ. of Texas Univ. Revs Aa1 6,275,000 6,339,507
Rfdg. (Fing. Sys. Proj.)
Series B, 5.625% 8/15/12
Yselta Independent School Aaa 4,065,000 2,415,423
District Rfdg. (Cap.
Appreciation) 0% 8/15/09
35,368,583
UTAH - 2.6%
Intermountain Pwr. Agcy. Pwr.
Supply Rev.:
Rfdg.:
Series A, 6.5% 7/1/09 (AMBAC Aaa 1,000,000 1,092,440
Insured)
Series B, 5.75% 7/1/16 (MBIA Aaa 2,500,000 2,465,025
Insured)
Rfdg. Spl. Oblig. 6th Series Aaa 7,000,000 7,061,180
B, 6% 7/1/16 (MBIA Insured)
South Salt Lake City Ind. - 250,000 264,948
Rev. (Price Savers Wholesale
Club Proj.) 9% 11/15/13
10,883,593
VIRGINIA - 0.3%
Loudoun County Ind. Dev. - 1,000,000 1,127,590
Auth. Residential Care
Facilities Rev. (Falcons
Landing Proj.) Series A,
9.25% 11/1/04 (Escrowed to
Maturity) (f)
WASHINGTON - 5.1%
King County Gen. Oblig. Aa1 3,990,000 4,111,057
Series D, 5.75% 12/1/11
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
WASHINGTON - CONTINUED
Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #2 Rev.:
Rfdg. Series A:
5% 7/1/05 Aa1 $ 3,050,000 $ 3,045,974
5.9% 7/1/04 Aa1 1,000,000 1,041,160
5.4% 7/1/12 Aa1 14,000,000 13,351,091
21,549,282
TOTAL MUNICIPAL BONDS 410,382,254
(Cost $415,389,508)
</TABLE>
CASH EQUIVALENTS - 1.9%
SHARES
Municipal Central Cash Fund, 8,130,356 8,130,356
3.56% (c)(d) (Cost
$8,130,356)
TOTAL INVESTMENT PORTFOLIO - 418,512,610
99.5%
(Cost $423,519,864)
NET OTHER ASSETS - 0.5% 2,101,879
NET ASSETS - 100% $ 420,614,489
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) Security purchased on a delayed delivery or when-issued basis.
(c) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(d) The rate quoted is the annualized seven-day yield of the fund at
period end.
(e) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(f) Security collateralized by an amount sufficient to pay interest
and principal.
OTHER INFORMATION
The composition of long-term debt holdings as percentage of total
value of investments in securities, is as follows (ratings are
(unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 68.1% AAA, AA, A 63.6%
Baa 19.4% BBB 21.0%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 4.7%.
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 19.3%
Electric Utilities 15.9
Transportation 14.4
Health Care 13.4
Education 8.0
Escrowed/Pre-Refunded 7.9
Industrial Development 6.4
Water & Sewer 5.7
Others (individually less 8.5
than 5%)
Net Other Assets 0.5
100.0%
INCOME TAX INFORMATION
At October 31, 1999, the aggregate cost of investment securities for
income tax purposes was $423,519,864. Net unrealized depreciation
aggregated $5,007,254, of which $6,610,938 related to appreciated
investment securities and $11,618,192 related to depreciated
investment securities.
At October 31, 1999, the fund had a capital loss carryforward of
approximately $13,685,000 of which $7,417,000 and $6,268,000 will
expire on October 31, 2003 and 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
ASSETS
Investment in securities, at $ 418,512,610
value (cost $423,519,864) -
See accompanying schedule
Receivable for investments 10,776,377
sold
Receivable for fund shares 198,989
sold
Interest receivable 7,068,772
Other receivables 22,338
TOTAL ASSETS 436,579,086
LIABILITIES
Payable for investments $ 10,664,053
purchased Regular delivery
Delayed delivery 3,449,619
Payable for fund shares 907,180
redeemed
Distributions payable 600,795
Accrued management fee 132,767
Distribution fees payable 129,306
Other payables and accrued 80,877
expenses
TOTAL LIABILITIES 15,964,597
NET ASSETS $ 420,614,489
Net Assets consist of:
Paid in capital $ 439,900,857
Accumulated undistributed net (14,279,114)
realized gain (loss) on
investments
Net unrealized appreciation (5,007,254)
(depreciation) on investments
NET ASSETS $ 420,614,489
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1999
CALCULATION OF MAXIMUM $11.69
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($10,721,810 (divided by)
917,460 shares)
Maximum offering price per $12.27
share (100/95.25 of $11.69)
CLASS T: NET ASSET VALUE and $11.70
redemption price per share
($329,926,390 (divided by)
28,197,578 shares)
Maximum offering price per $12.12
share (100/96.50 of $11.70)
CLASS B: NET ASSET VALUE and $11.67
offering price per share
($63,464,208 (divided by)
5,438,241 shares) A
CLASS C: NET ASSET VALUE and $11.70
offering price per share
($13,071,301 (divided by)
1,117,056 shares) A
INSTITUTIONAL CLASS: NET $11.65
ASSET VALUE, offering price
and redemption price per
share ($3,430,780 (divided
by) 294,537 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
INTEREST INCOME $ 23,713,018
EXPENSES
Management fee $ 1,695,763
Transfer agent fees 460,510
Distribution fees 1,577,955
Accounting fees and expenses 141,615
Non-interested trustees' 1,358
compensation
Custodian fees and expenses 21,716
Registration fees 117,150
Audit 37,659
Legal 12,407
Total expenses before 4,066,133
reductions
Expense reductions (3,319) 4,062,814
NET INTEREST INCOME 19,650,204
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,459,744
Futures contracts 21,684 2,481,428
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (33,606,253)
Futures contracts (83,889) (33,690,142)
NET GAIN (LOSS) (31,208,714)
NET INCREASE (DECREASE) IN $ (11,558,510)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 19,650,204 $ 20,054,896
Net realized gain (loss) 2,481,428 842,117
Change in net unrealized (33,690,142) 13,362,203
appreciation (depreciation)
NET INCREASE (DECREASE) IN (11,558,510) 34,259,216
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (19,650,204) (20,054,896)
from net interest income
Share transactions - net (1,025,834) 279,500
increase (decrease)
TOTAL INCREASE (DECREASE) (32,234,548) 14,483,820
IN NET ASSETS
NET ASSETS
Beginning of period 452,849,037 438,365,217
End of period $ 420,614,489 $ 452,849,037
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.540 $ 12.150 $ 11.740 $ 11.630
period
Income from Investment
Operations
Net interest income .567 .571 .583 D .105 D, E
Net realized and unrealized (.850) .390 .445 .109
gain (loss)
Total from investment (.283) .961 1.028 .214
operations
Less Distributions
From net interest income (.567) (.571) (.616) E (.104)
In excess of net interest - - (.002) -
income
Total distributions (.567) (.571) (.618) (.104)
Net asset value, end of period $ 11.690 $ 12.540 $ 12.150 $ 11.740
TOTAL RETURN B, C (2.36)% 8.07% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,722 $ 6,721 $ 3,755 $ 202
(000 omitted)
Ratio of expenses to average .72% .90% G .90% G .90% A, G
net assets
Ratio of net interest income 4.62% 4.57% 4.87% 5.73% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.560 $ 12.150 $ 11.760 $ 11.880 $ 11.220
of period
Income from Investment
Operations
Net interest income .555 .571 .597 B .677 B, C .700
Net realized and unrealized (.860) .410 .407 (.136) .660
gain (loss)
Total from investment (.305) .981 1.004 .541 1.360
operations
Less Distributions
From net interest income (.555) (.571) (.612) C (.661) (.700)
In excess of net interest - - (.002) - -
income
Total distributions (.555) (.571) (.614) (.661) (.700)
Net asset value, end of period $ 11.700 $ 12.560 $ 12.150 $ 11.760 $ 11.880
TOTAL RETURN A (2.53)% 8.15% 8.89% 4.68% 12.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 329,926 $ 380,325 $ 392,075 $ 480,432 $ 565,131
(000 omitted)
Ratio of expenses to average .81% .87% .89% .89% .91%
net assets
Ratio of net interest income 4.51% 4.62% 5.04% 5.74% 6.06%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.530 $ 12.130 $ 11.740 $ 11.860 $ 11.210
of period
Income from Investment
Operations
Net interest income .476 .491 .515 C .596 C, D .612
Net realized and unrealized (.860) .400 .416 (.136) .650
gain (loss)
Total from investment (.384) .891 .931 .460 1.262
operations
Less Distributions
From net interest income (.476) (.491) (.539) D (.580) (.612)
In excess of net interest - - (.002) - -
income
Total distributions (.476) (.491) (.541) (.580) (.612)
Net asset value, end of period $ 11.670 $ 12.530 $ 12.130 $ 11.740 $ 11.860
TOTAL RETURN A, B (3.16)% 7.47% 8.15% 3.98% 11.57%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 63,464 $ 55,032 $ 41,024 $ 39,389 $ 32,395
(000 omitted)
Ratio of expenses to average 1.46% 1.53% 1.56% 1.57% 1.86% E
net assets
Ratio of net interest income 3.88% 3.96% 4.35% 5.06% 5.18%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
FINANCIAL HIGHLIGHTS - CLASS C
YEARS ENDED OCTOBER 31, 1999 1998 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.560 $ 12.130
period
Income from Investment
Operations
Net interest income .465 .455
Net realized and unrealized (.860) .430
gain (loss)
Total from investment (.395) .885
operations
Less Distributions
From net interest income (.465) (.455)
Net asset value, end of period $ 11.700 $ 12.560
TOTAL RETURN B, C (3.24)% 7.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 13,071 $ 7,031
(000 omitted)
Ratio of expenses to average 1.56% 1.75% A, E
net assets
Ratio of net interest income 3.79% 3.60% A
to average net assets
Portfolio turnover rate 23% 36%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.510 $ 12.120 $ 11.720 $ 11.880 $ 11.700
of period
Income from Investment
Operations
Net interest income .584 .592 .609 D .707 D, E .232
Net realized and unrealized (.860) .390 .464 (.197) .180
gain (loss)
Total from investment (.276) .982 1.073 .510 .412
operations
Less Distributions
From net interest income (.584) (.592) (.671) E (.670) (.232)
In excess of net interest - - (.002) - -
income
Total distributions (.584) (.592) (.673) (.670) (.232)
Net asset value, end of period $ 11.650 $ 12.510 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C (2.31)% 8.28% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,431 $ 3,741 $ 1,511 $ 927 $ 154
(000 omitted)
Ratio of expenses to average .60% .75% G .75% G .75% G .75% A, G
net assets
Ratio of net interest income 4.75% 4.75% 5.11% 5.88% 5.89% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Municipal Income Fund (the fund) is a fund of
Fidelity Advisor Series II (the trust) (formerly a fund of Fidelity
Advisor Series V) 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. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. Interest income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date. Income dividends
and capital gain distributions are declared separately for each class.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, market discount, capital loss
carryforwards and losses deferred due to futures transactions. The
fund also utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for
income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc. (FIMM), an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place after the
customary settlement period for that security. The price of the
underlying securities is fixed at the time the transaction is
negotiated. The market values of the securities purchased on a
when-issued or forward commitment basis are identified as such in the
fund's schedule of investments. The fund may receive compensation for
interest forgone in the purchase of a when-issued security. With
respect to purchase commitments, the fund identifies securities as
segregated in its records with a value at least equal to the amount of
the commitment. Losses may arise due to changes in the market value of
the underlying securities, if the counterparty does not perform under
the contract, or if the issuer does not issue the securities due to
political, economic, or other factors.
2. OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $100,137,443 and $107,267,340, respectively.
The market value of futures contracts opened and closed during the
period amounted to $0 and $6,962,986, 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 .0920% to .3700% for the
period. The annual individual fund fee rate is .25%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annual rate of .38% of average net assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement with FIMM, a wholly owned subsidiary of FMR.
For its services, FIMM receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of Trustees has 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
institutions for the distribution of each class of shares and
providing shareholder support services. For the period, this fee was
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO FDC RETAINED BY FDC
CLASS A $ 14,240 $ 71
CLASS T 900,188 11,550
CLASS B 552,424 399,100
CLASS C 111,103 87,365
$ 1,577,955 $ 498,086
SALES LOAD. FDC receives a front-end sales charge of up to 4.75% 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 is paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 50,968 $ 28,875
CLASS T 204,851 72,163
CLASS B 209,085 209,085*
CLASS C 16,279 16,279*
$ 481,183 $ 326,402
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT AND ACCOUNTING FEES. Effective June 14, 1999, Citibank,
N.A. (Citibank) replaced UMB Bank, n.a. as the custodian, transfer
agent, and shareholder servicing agent for the fund's Class A, Class
T, Class B, Class C, and Institutional Class shares. Citibank has
entered into a sub-arrangement with Fidelity Investments Institutional
Operations Company, Inc. (FIIOC) with respect to all classes of the
fund to perform the transfer, dividend disbursing, and shareholder
servicing agent functions. FIIOC, an affiliate of FMR, receives
account fees and asset-based fees that vary according to the account
size and type of account of the shareholders of the respective classes
of the fund. All fees are paid to FIIOC by Citibank, which is
reimbursed by each class for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except
proxy statements. For the period, each class paid the following
transfer agent fees:
AMOUNT % OF AVERAGE NET ASSETS
CLASS A $ 11,061 .12
CLASS T 368,638 .10
CLASS B 63,218 .10
CLASS C 12,116 .11
INSTITUTIONAL CLASS 5,477 .15
$ 460,510
Citibank also has a sub-contract with Fidelity Service Company, Inc.
(FSC), an affiliate of FMR, under which FSC maintains the fund's
accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
Through arrangements with the fund's custodian and each class'
transfer agent, credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $694 under the custodian
arrangement, and Class T's transfer agent fees were reduced by $2,625
under the transfer agent arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEARS ENDED OCTOBER 31,
1999 1998 A
FROM NET INTEREST INCOME
Class A $ 439,029 $ 231,309
Class T 16,229,661 17,722,552
Class B 2,381,487 1,865,869
Class C 421,752 106,528
Institutional Class 178,275 128,638
Total $ 19,650,204 $ 20,054,896
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1999 1998 1999 1998
CLASS A Shares sold 565,131 362,699 $ 6,989,179 $ 4,479,496
Reinvestment of
distributions 25,296 11,508 307,568 142,669
Shares redeemed (208,996) (147,406) (2,558,328) (1,811,982)
Net increase (decrease) 381,631 226,801 $ 4,738,419 $ 2,810,183
CLASS T Shares sold 3,793,311 4,799,958 $ 46,774,471 $ 59,544,980
Reinvestment of
distributions 835,205 873,770 10,221,698 10,820,895
Shares redeemed (6,722,556) (7,639,811) (82,551,608) (94,496,816)
Net increase (decrease) (2,094,040) (1,966,083) $ (25,555,439) $ (24,130,941)
</TABLE>
7. SHARE TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1999 1998 A 1999 1998 A
CLASS B Shares sold 2,125,759 1,497,112 $ 26,076,418 $ 18,512,808
Reinvestment of
distributions 115,598 86,162 1,407,504 1,065,255
Shares redeemed (1,196,611) (572,594) (14,568,680) (7,073,528)
Net increase (decrease) 1,044,746 1,010,680 $ 12,915,242 $ 12,504,535
CLASS C Shares sold 871,985 650,179 $ 10,752,375 $ 8,065,902
Reinvestment of
distributions 22,987 4,455 280,065 55,539
Shares redeemed (337,753) (94,797) (4,112,814) (1,177,225)
Net increase (decrease) 557,219 559,837 $ 6,919,626 $ 6,944,216
INSTITUTIONAL CLASS Shares 103,836 238,568 $ 1,286,178 $ 2,943,409
sold
Reinvestment of
distributions 7,731 6,313 93,765 77,958
Shares redeemed (116,192) (70,388) (1,423,625) (869,860)
Net increase (decrease) (4,625) 174,493 $ (43,682) $ 2,151,507
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
8. PROPOSED REORGANIZATION.
The Board of Trustees of Fidelity Advisor Municipal Income Fund (the
fund) has approved an Agreement and Plan of Reorganization
("Agreement") between the fund and Fidelity Advisor Intermediate
Municipal Income Fund ("Reorganization"). The Agreement provides for
the transfer of all of the assets and the assumption of all of the
liabilities of Fidelity Advisor Intermediate Municipal Income Fund in
exchange solely for the number of shares of Class A, Class T, Class B,
Class C and Institutional Class of the fund having the same relative
net asset value as the outstanding shares of Class A, Class T, Class
B, Class C and Institutional Class of Fidelity Advisor Intermediate
Municipal Income Fund as of the close of business of the New York
Stock Exchange on the day that the Reorganization is effective. The
Reorganization can be consummated only if, among other things, it is
approved by the vote of a majority (as defined by the 1940 Act) of
outstanding voting securities of Fidelity Advisor Intermediate
Municipal Income Fund. A Special Meeting of Shareholders ("Meeting")
of Fidelity Advisor Intermediate Municipal Income Fund will be held on
April 19, 2000 to vote on the Agreement. A detailed description of the
proposed transactions and voting information will be sent to
shareholders of Fidelity Advisor Intermediate Municipal Income Fund in
February, 2000. If the Agreement is approved at the Meeting, the
Reorganization is expected to become effective on or about May 25,
2000.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series II and the Shareholders of
Fidelity Advisor Municipal Income Fund (formerly a fund of Fidelity
Advisor Series V):
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Municipal Income Fund (a fund of Fidelity Advisor
Series II, formerly a fund of Fidelity Advisor Series V) at October
31, 1999, 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 Municipal Income Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at October
31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 10, 1999
DISTRIBUTIONS
During fiscal year ended 1999, 100% of the fund's income dividends was
free from federal income tax, and 18.03% of the fund's income
dividends was subject to the federal alternative minimum tax.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments Money
Management, Inc. (FIMM)
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Christine J. Thompson, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
* INDEPENDENT TRUSTEES
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
Ned C. Lautenbach
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Latin America Fund
Fidelity Advisor Emerging Asia 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(registered trademark)
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Value Strategies 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
HIMI-ANN-1299 88209
1.538417.102
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 High Income Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(2_FIDELITY_LOGOS)(registered trademark)
FIDELITY(REGISTERED TRADEMARK) ADVISOR
MUNICIPAL INCOME FUND -
INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 11 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 25 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 34 Notes to the financial
statements.
REPORT OF INDEPENDENT 41 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 42
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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:
All major U.S. equity market indexes posted positive returns for the
month of October, led by the technology-heavy NASDAQ Index, which
climbed to a record high close during the month. Domestic bonds,
however, turned in relatively flat performance, due in large part to
lingering fears of a potential interest rate hike by the Federal
Reserve Board, and its adoption of a tightening bias during the first
week of the month.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 MUNICIPAL INCOME FUND - INSTITUTIONAL CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Institutional
Class shares took place on July 3, 1995. Institutional Class shares
are sold to eligible investors without a sales load or 12b-1 fee.
Returns prior to July 3, 1995 are those of Class T, the original class
of the fund, and reflect Class T shares' 0.25% 12b-1 fee. 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
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -2.31% 36.09% 101.78%
- - INST CL
LB Municipal Bond -1.77% 39.75% 99.11%
General Municipal Debt Funds -4.18% 33.04% 86.71%
Average
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Institutional Class' returns to those
of the Lehman Brothers Municipal Bond Index - a market value-weighted
index of investment-grade municipal bonds with maturities of one year
or more. To measure how Institutional Class' performance stacked up
against its peers, you can compare it to the general municipal debt
funds average, which reflects the performance of mutual funds with
similar objectives tracked by Lipper Inc. The past one year average
represents a peer group of 263 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV MUNICIPAL INCOME -2.31% 6.36% 7.27%
- - INST CL
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
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
FA Municipal Income -CL I LB Municipal Bond
00679 LB015
1989/10/31 10000.00 10000.00
1989/11/30 10123.11 10175.00
1989/12/31 10219.35 10258.23
1990/01/31 10235.47 10209.71
1990/02/28 10308.83 10300.58
1990/03/31 10373.50 10303.67
1990/04/30 10278.62 10229.07
1990/05/31 10489.26 10452.37
1990/06/30 10612.85 10544.24
1990/07/31 10776.54 10699.25
1990/08/31 10703.82 10543.89
1990/09/30 10779.93 10549.90
1990/10/31 10927.93 10741.28
1990/11/30 11199.08 10957.28
1990/12/31 11270.53 11004.95
1991/01/31 11401.70 11152.64
1991/02/28 11489.36 11249.66
1991/03/31 11556.91 11253.71
1991/04/30 11745.09 11403.39
1991/05/31 11890.27 11504.76
1991/06/30 11917.94 11493.37
1991/07/31 12072.05 11633.36
1991/08/31 12181.07 11786.57
1991/09/30 12323.95 11940.04
1991/10/31 12460.51 12047.50
1991/11/30 12507.38 12081.11
1991/12/31 12643.41 12340.37
1992/01/31 12783.56 12368.51
1992/02/29 12853.01 12372.46
1992/03/31 12917.49 12377.04
1992/04/30 13034.08 12487.20
1992/05/31 13151.00 12634.17
1992/06/30 13331.33 12846.17
1992/07/31 13795.53 13231.30
1992/08/31 13688.71 13102.30
1992/09/30 13774.13 13187.98
1992/10/31 13607.90 13058.35
1992/11/30 13880.63 13292.22
1992/12/31 14047.99 13427.94
1993/01/31 14285.60 13584.10
1993/02/28 14790.04 14075.44
1993/03/31 14635.78 13926.66
1993/04/30 14790.98 14067.18
1993/05/31 14913.47 14146.24
1993/06/30 15152.58 14382.34
1993/07/31 15163.83 14401.18
1993/08/31 15554.38 14701.01
1993/09/30 15769.78 14868.46
1993/10/31 15778.24 14897.15
1993/11/30 15624.03 14765.91
1993/12/31 15984.82 15077.62
1994/01/31 16170.95 15249.80
1994/02/28 15743.55 14854.83
1994/03/31 14904.37 14249.95
1994/04/30 15003.27 14370.79
1994/05/31 15091.99 14495.38
1994/06/30 15036.43 14406.81
1994/07/31 15307.66 14670.89
1994/08/31 15331.71 14721.65
1994/09/30 15091.53 14505.54
1994/10/31 14826.98 14247.92
1994/11/30 14350.30 13990.32
1994/12/31 14698.10 14298.24
1995/01/31 15194.64 14706.89
1995/02/28 15604.04 15134.56
1995/03/31 15686.08 15308.46
1995/04/30 15737.64 15326.52
1995/05/31 16241.26 15815.59
1995/06/30 16113.86 15678.00
1995/07/31 16169.29 15826.63
1995/08/31 16336.27 16027.31
1995/09/30 16499.20 16128.76
1995/10/31 16693.85 16363.27
1995/11/30 17024.88 16634.74
1995/12/31 17175.96 16794.60
1996/01/31 17270.83 16921.40
1996/02/29 17231.94 16807.18
1996/03/31 16882.51 16592.38
1996/04/30 16814.21 16545.43
1996/05/31 16753.01 16538.81
1996/06/30 16950.12 16718.92
1996/07/31 17062.62 16871.06
1996/08/31 17101.51 16867.01
1996/09/30 17256.28 17103.15
1996/10/31 17429.81 17296.58
1996/11/30 17768.23 17613.11
1996/12/31 17707.29 17539.14
1997/01/31 17764.39 17572.28
1997/02/28 17946.91 17733.60
1997/03/31 17758.06 17497.21
1997/04/30 17901.01 17643.66
1997/05/31 18123.66 17909.02
1997/06/30 18359.30 18099.75
1997/07/31 18890.63 18601.12
1997/08/31 18724.08 18426.82
1997/09/30 18961.09 18645.55
1997/10/31 19075.95 18765.44
1997/11/30 19202.93 18875.78
1997/12/31 19517.78 19151.18
1998/01/31 19710.75 19348.82
1998/02/28 19735.47 19354.62
1998/03/31 19769.01 19371.66
1998/04/30 19669.58 19284.29
1998/05/31 19973.88 19589.56
1998/06/30 20049.58 19666.74
1998/07/31 20095.74 19716.11
1998/08/31 20402.45 20020.72
1998/09/30 20659.14 20270.18
1998/10/31 20656.16 20269.77
1998/11/30 20718.50 20340.92
1998/12/31 20749.72 20392.18
1999/01/31 20981.34 20634.64
1999/02/28 20855.35 20544.47
1999/03/31 20856.37 20573.03
1999/04/30 20904.11 20624.25
1999/05/31 20769.09 20504.84
1999/06/30 20443.43 20209.57
1999/07/31 20510.64 20283.13
1999/08/31 20355.29 20120.87
1999/09/30 20385.45 20129.12
1999/10/29 20178.22 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094814 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Institutional
Class on October 31, 1989. As the chart shows, by October 31, 1999,
the value of the investment would have grown to $20,178 - a 101.78%
increase on the initial investment. For comparison, look at how the
Lehman Brothers Municipal Bond Index did over the same period. With
dividends reinvested, the same $10,000 would have grown to $19,911 - a
99.11% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return and yield
of a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31, JULY 3, 1995 (COMMENCEMENT
OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31,
1999 1998 1997 1996 1995
Dividend returns 4.56% 5.06% 6.01% 5.76% 2.01%
Capital returns -6.87% 3.22% 3.43% -1.35% 1.54%
Total returns -2.31% 8.28% 9.44% 4.41% 3.55%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.98(cents) 29.42(cents) 58.36(cents)
Annualized dividend rate 5.02% 4.88% 4.78%
30-day annualized yield 4.92% - -
30-day annualized 7.69% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average net asset value of $11.69 over the past
one month, $11.96 over the past six months, and $12.21 over the past
one year, you can compare the class' income over these three periods.
The 30-day annualized YIELD is a standard formula for all bond funds
based on the yields of the bonds in the fund, averaged over the past
30 days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The tax-equivalent yield
shows what you would have to earn on a taxable investment to equal the
class' tax-free yield, if you're in the 36% federal tax bracket, but
does not reflect payment of the federal alternative minimum tax, if
applicable.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a municipal bond market
rally late in the period spurred by
attractively priced issues and yields
higher than they've been since
1997, munis produced lackluster
results during the 12-month period
ending October 31, 1999.
Following the global financial crisis
in the fall of 1998 and interest rate
jitters through most of 1999, the
Lehman Brothers Municipal Bond
Index - an index of approximately
50,000 investment-grade, fixed-rate,
tax-
exempt bonds - declined 1.77%
during the period. In comparison,
the Lehman Brothers Aggregate
Bond Index - a broad measure of
the taxable bond market - posted a
marginally positive return of
0.53%. In general, the negative
environment of increasing interest
rates and investors' persistent
concerns about inflation hit the
Lehman Brothers Long-Term
Government Bond Index the hardest,
as it fell 6.10% during the period.
While the supply of municipals was
relatively light during the period -
particularly compared to 1998's
near-record levels of issuance -
demand was similarly muted,
especially among institutional
investors. Muni bonds came under
further downward pressure in the
second half of the period following
two interest-rate hikes by the
Federal Reserve Board and
widespread belief among investors
that there would be a third hike in
November.
(photograph of Christine Thompson)
An interview with Christine Thompson, Portfolio Manager of Fidelity
Advisor Municipal Income Fund
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. For the 12-month period that ended October 31, 1999, the fund's
Institutional Class shares had a total return of -2.31%. To get a
sense of how the fund did relative to its competitors, the general
municipal debt funds average returned -4.18% for the same 12-month
period, according to Lipper Inc. Additionally, the Lehman Brothers
Municipal Bond Index, which tracks the types of securities in which
the fund invests, returned -1.77% for the same 12-month period.
Q. RISING INTEREST RATES MADE IT A FAIRLY DIFFICULT AND VOLATILE YEAR
FOR MUNICIPAL BONDS. WHY DID THE FUND OUTPERFORM ITS PEERS?
A. The fund's outperformance of its peers was in part due to duration
management. In keeping with Fidelity's investment approach, I managed
the fund's duration - a measure of its interest-rate sensitivity - to
be in line with the municipal market as a whole, as reflected by the
Lehman Brothers Municipal Bond Index. As a result, I don't lengthen or
shorten duration based on where I think interest rates will be at some
point down the road, because I don't believe that anyone can do so
with any accuracy over time. But other funds in the peer group do
actively manage duration and some increased their interest-rate
sensitivity, which likely caused their returns to suffer when interest
rates rose.
Q. WHICH BOND MATURITIES DID YOU FAVOR?
A. I emphasized intermediate-maturity bonds - those set to mature
within five to 15 years - which also was a plus for the fund's
performance. Although they were a disappointment early on, they
bounced back more recently. Initially, intermediates suffered
primarily from reduced demand and increased supply at the hands of
relatively heavy selling from some specific types of institutional
investors. In contrast, relatively strong demand from individual
investors helped to support the performance of shorter- and
longer-term bonds. Based on Fidelity's quantitative models,
intermediates offered the most attractive value for their given
interest-rate sensitivity and their total return potential. The fund's
focus on this maturity range worked in its favor during the past
several months because institutional investors came back into the
market with purchases of intermediate securities.
Q. THE FUND ALSO HAD A RELATIVELY LARGE EXPOSURE TO "PREMIUM" BONDS.
WHAT ARE PREMIUMS AND WHY WERE THEY ATTRACTIVE?
A. Premium coupon bonds pay interest rates above prevailing market
rates and trade at prices above face - or par - value. One appealing
aspect of premiums was that they were insulated from unfavorable tax
treatment that negatively affected the prices of lower coupon bonds as
interest rates rose.
Q. WHERE DID YOU FIND ATTRACTIVE OPPORTUNITIES?
A. I found some attractive opportunities in the education sector and
bought bonds backed by colleges and universities. Education bonds
offer diversification from the economically sensitive areas of the
market - such as general obligation bonds. In addition, demographic
trends support a growing number of students seeking to obtain advanced
degrees over the next several years. I also found opportunities in the
health care and utilities sectors, both of which are undergoing a wave
of consolidation. I looked for bonds I felt could benefit from
consolidation, either by being acquired or affiliating with a stronger
entity, through the restructuring of debt.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET AND THE FUND?
A. At the end of the period, municipals were priced attractively
compared to their Treasury counterparts. To the extent that investors
realize and act on that relative cheapness, municipals could gain
ground on Treasuries. Of course, the major determinant of the bond
market's performance will be the direction of interest rates, which I
don't spend time trying to forecast. Rather, I look for attractively
priced bonds that I believe will outperform, no matter where interest
rates end up.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: seeks to provide a high
current yield exempt from
federal income tax
START DATE: September 16,
1987
SIZE: as of October 31,
1999, more than $420
million
MANAGER: Christine Thompson,
since 1998; joined Fidelity
in 1985
CHRISTINE THOMPSON ON
MUNICIPAL BOND DEMAND:
"The demand for municipals can vary
a great deal in response to the
behavior of various market
participants. Corporations, individual
investors and trust accounts tend to
favor short-term securities, which are
less interest-rate sensitive and,
therefore, less volatile. Individual
investors, along with mutual funds
and insurance companies - which
invest the insurance premiums they
collect in bonds - are the primary
purchasers of intermediate-maturity
bonds. Longer-term securities, which
are the most volatile, generally are
the domain of long-term mutual funds,
hedge funds and other investors
known as `arbitrageurs,' who seek to
exploit small differences between
various fixed-income investments. At
various points in time, a given
municipal bond maturity may look
cheap or expensive as different
categories of investors embrace them
or step away from them. With the help
of Fidelity's research team, I try to
take advantage of the anomalies that
can occur by investing in the bond
maturities that look cheap and selling
those that have performed well in
response to strong demand."
NOTE TO SHAREHOLDERS: The fund is
managed to have similar overall
interest-rate risk to a benchmark
index that serves as a proxy for the
market in which the fund invests.
Through the current fiscal year, the
fund used the Lehman Brothers
Municipal Bond Index for this purpose.
Going forward the fund will use a new
benchmark, the Lehman Brothers
3+ Year Municipal Bond Index. The
new benchmark excludes securities
with maturities of less than three
years, and is more representative of
the fund's investment universe.
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF OCTOBER
31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
New York 18.0 19.0
Texas 8.4 3.6
Massachusetts 6.5 6.8
Colorado 5.3 5.2
Washington 5.1 4.9
TOP FIVE SECTORS AS OF
OCTOBER 31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 19.3 20.7
Electric Utilities 15.9 17.6
Transportation 14.4 12.6
Health Care 13.4 14.0
Education 8.0 5.5
AVERAGE YEARS TO MATURITY AS
OF OCTOBER 31, 1999
6 MONTHS AGO
Years 12.9 12.9
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF OCTOBER 31, 1999
6 MONTHS AGO
Years 6.7 6.4
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES.
IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A FIVE-YEAR DURATION IS
LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS ALSO CAN INFLUENCE
A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY, A BOND FUND'S
ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION
(MOODY'S RATINGS)
AS OF OCTOBER 31, 1999
Aaa 46.7%
Aa, A 24.3%
Baa 22.4%
Not Rated 4.7%
Short-term
Investments 1.9%
Row: 1, Col: 1, Value: 46.7
Row: 1, Col: 2, Value: 24.3
Row: 1, Col: 3, Value: 22.4
Row: 1, Col: 4, Value: 4.7
Row: 1, Col: 5, Value: 1.9
AS OF APRIL 30, 1999
Aaa 43.9%
Aa, A 28.6%
Baa 20.8%
Not Rated 4.8%
Short-term
Investments 1.9%
Row: 1, Col: 1, Value: 43.9
Row: 1, Col: 2, Value: 28.6
Row: 1, Col: 3, Value: 20.8
Row: 1, Col: 4, Value: 4.8
Row: 1, Col: 5, Value: 1.9
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P (registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS OCTOBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 97.6%
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
ALABAMA - 1.0%
Shelby County Gen. Oblig. - $ 4,000,000 $ 4,266,000
Series A, 7.7% 8/1/17
ALASKA - 2.0%
Alaska Hsg. Fin. Corp. Rfdg. Aa2 5,490,000 5,307,732
Series A, 5.4% 12/1/13
Alaska Student Ln. Corp.
Student Ln. Rev. Series A:
5.25% 7/1/07 (AMBAC Insured) Aaa 1,500,000 1,505,520
(e)
5.45% 7/1/09 (AMBAC Insured) Aaa 1,500,000 1,505,460
(e)
8,318,712
ARIZONA - 1.3%
Arizona Student Ln. Aquistion Aaa 1,300,000 1,274,676
Auth. Rev. Series A1, 5.875%
5/1/18 (e)
Maricopa County Ind. Dev. Baa1 4,495,000 4,262,923
Auth. Health Facilities Rev.
Rfdg. (Catholic Healthcare
West Proj.) Series A, 4.1%
7/1/03
5,537,599
ARKANSAS - 0.2%
Little Rock Arpt. Passenger Aaa 680,000 674,825
Facilities Charge Rev. 5.65%
5/1/16 (AMBAC Insured) (e)
CALIFORNIA - 3.8%
California Dept. of Wtr. Aa2 2,190,000 2,244,005
Resources Wtr. Sys. Rev.
(Central Valley Proj.)
Series J 2, 6.125% 12/1/13
California Hsg. Fin. Agcy.
Rev. (Home Mtg.):
Series B, 5.2% 8/1/26 (MBIA Aaa 850,000 852,491
Insured) (e)
Series R, 6.15% 8/1/27 (MBIA Aaa 1,500,000 1,497,165
Insured) (e)
California Pub. Works Board A1 2,000,000 1,989,700
Lease Rev. Rfdg. (California
Univ. Proj.) Series A, 5.5%
10/1/13
Central Valley Fing. Auth. BBB- 4,500,000 4,589,010
Cogeneration Proj. Rev.
(Carson Ice Gen. Proj.) 6%
7/1/09
Foothill/Eastern Trans. Aaa 2,000,000 891,200
Corridor Agcy. Toll Road
Rev. (Cap. Appreciation) Sr.
Lien Series A, 0% 1/1/14
Northern California Pwr. Aaa 750,000 804,053
Agcy. Pub. Pwr. Rev. (Proj.
No. 3) 5.85% 7/1/10 (AMBAC
Insured) (Escrowed to
Maturity) (f)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
CALIFORNIA - CONTINUED
Sacramento City Fing. Auth. Aaa $ 1,225,000 $ 642,721
Rev. (Cap. Appreciation)
Series B, 0% 11/1/11 (MBIA
Insured)
Sacramento City Fing. Auth. Aaa 2,000,000 1,908,100
Lease Rev. Rfdg. Series A,
5.4% 11/1/20 (AMBAC Insured)
Sacramento Cogeneration Auth. BBB- 500,000 522,885
Cogeneration Proj. Rev.
(Procter & Gamble Proj.)
6.375% 7/1/10
15,941,330
COLORADO - 5.3%
Arapaho County Cap. Impt. Aaa 14,000,000 2,175,460
Trust Fund Hwy. Rev. (Cap.
Appreciation) Series C, 0%
8/31/26 (Pre-Refunded to
8/31/05 @ 20.8626) (f)
Colorado Health Facilities
Auth. Rev.:
(Nat'l. Benevolent Assoc. Baa2 1,360,000 1,341,518
Proj.) Series A, 6.5% 6/1/25
Rfdg. (Rocky Mountain
Adventist):
6.625% 2/1/13 Baa2 6,900,000 6,476,616
6.625% 2/1/22 Baa2 4,000,000 3,648,840
Colorado Springs Arpt. Rev.
(Cap. Appreciation) Series C:
0% 1/1/06 (MBIA Insured) Aaa 1,405,000 1,034,656
0% 1/1/08 (MBIA Insured) Aaa 870,000 568,867
Denver City & County Arpt.
Rev.:
(Cap. Appreciation):
Series A, 0% 11/15/02 (MBIA Aaa 2,115,000 1,841,911
Insured) (e)
Series D, 0% 11/15/04 (MBIA Aaa 1,700,000 1,328,941
Insured) (e)
Series A:
7.5% 11/15/23 (e) Baa1 2,070,000 2,240,672
7.5% 11/15/23 (Pre-Refunded Aaa 430,000 487,719
to 11/15/04 @ 102) (e)(f)
Series C, 6.55% 11/15/02 (e) Baa1 1,000,000 1,036,560
22,181,760
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
CONNECTICUT - 1.2%
Connecticut Health & Edl. AAA $ 2,170,000 $ 2,321,683
Facilities Auth. Rev. (New
Britain Memorial Hosp.)
Series A, 7.5% 7/1/06
(Pre-Refunded to 7/1/02 @
102) (f)
Eastern Connecticut Resources BBB 3,350,000 2,923,612
Recovery Auth. Solid Waste
Rev. (Wheelabrator Lisbon
Proj.) Series A, 5.5% 1/1/20
(e)
5,245,295
DISTRICT OF COLUMBIA - 3.1%
District of Columbia Gen.
Oblig. Rfdg.:
Series A:
6% 6/1/07 (MBIA Insured) Aaa 1,850,000 1,944,054
6% 6/1/07 (MBIA Insured) Aaa 150,000 159,164
(Escrowed to Maturity) (f)
Series B, 5% 6/1/05 (MBIA Aaa 3,635,000 3,644,342
Insured)
District of Columbia Hosp. - 940,000 980,495
Rev. (Hosp. for Sick
Children) Series A, 8.875%
1/1/21
District of Columbia Redev.
Land Agcy. Washington D.C.
Sports Arena Spl. Tax Rev.:
5.3% 11/1/99 Baa 1,700,000 1,700,000
5.625% 11/1/10 Baa 485,000 490,616
District of Columbia Rev.:
(Nat'l. Academy of Science Aaa 2,500,000 2,170,575
Proj.) Series A, 5% 1/1/19
(AMBAC Insured)
Rfdg. (Georgetown Univ.) Aaa 2,000,000 2,026,820
Series A, 5.95% 4/1/14 (MBIA
Insured)
13,116,066
FLORIDA - 2.5%
Broward County Resource A3 545,000 562,533
Recovery Rev. (SES Broward
Co. LP South Proj.) 7.95%
12/1/08
Dade County Aviation Rev. Aaa 5,000,000 5,137,350
Rfdg. Series D, 5.75%
10/1/09 (AMBAC Insured) (e)
Florida Board of Ed. Cap. Aa2 2,100,000 2,007,789
Outlay Rfdg. (Pub. Ed.
Proj.) Series D, 5.75%
6/1/22 (b)
Florida Mid-Bay Bridge Auth. - 2,500,000 2,690,200
Rev. Series A, 7.5% 10/1/17
10,397,872
GEORGIA - 0.2%
Atlanta Wtr. & Wastewtr. Rev. Aaa 700,000 707,182
Rfdg. Series A, 5.5% 11/1/10
(FGIC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
HAWAII - 1.7%
Honolulu City & County Gen.
Oblig. Rfdg. Series C:
5% 7/1/07 (FGIC Insured) Aaa $ 3,500,000 $ 3,490,970
5.125% 7/1/12 (FGIC Insured) Aaa 4,000,000 3,841,560
7,332,530
ILLINOIS - 4.8%
Chicago Midway Arpt. Rev. Aaa 1,500,000 1,377,930
Series A, 5.5% 1/1/29 (MBIA
Insured)
Chicago O'Hare Int'l. Arpt.
Rev.:
(Passenger Facility Charge) Aaa 2,500,000 2,526,025
Series A, 5.6% 1/1/10 (AMBAC
Insured)
Rfdg. (Gen. Arpt. Proj.)
Series A:
6.25% 1/1/09 (AMBAC Insured) Aaa 3,700,000 3,917,227
(e)
6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,453,046
Chicago O'Hare Int'l. Arpt. Baa2 1,000,000 1,121,660
Spl. Facilities Rev. Rfdg.
(American Airlines, Inc.
Proj.) 8.2% 12/1/24
Chicago School Reform Board Aaa 5,000,000 4,721,250
of Ed. (Chicago School
Reform) 5.75% 12/1/27 (AMBAC
Insured)
Du Page County Cmnty. High Aaa 1,640,000 1,726,641
School District #99 (Downers
Grove) Series A, 6% 2/1/06
(AMBAC Insured)
Illinois Edl. Facilities Aaa 1,200,000 1,271,784
Auth. Rev. Rfdg. (DePaul
Univ.) 6% 10/1/05 (AMBAC
Insured)
Illinois Health Facilities
Auth. Rev. (Memorial Hosp.
Proj.):
7.125% 5/1/10 (Pre-Refunded - 1,000,000 1,079,920
to 5/1/02 @ 102) (f)
7.25% 5/1/22 (Pre-Refunded to - 1,000,000 1,082,840
5/1/02 @ 102) (f)
20,278,323
INDIANA - 0.2%
Indianapolis Econ. Dev. Rev. Baa2 1,000,000 1,056,830
Rfdg. (Nat'l. Benevolent
Assoc.) 7.625% 10/1/22
IOWA - 0.8%
Iowa Student Ln. Liquidity Aaa 3,500,000 3,567,900
Corp. Student Ln. Rev. Rfdg.
Series B, 5.75% 12/1/07 (e)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
KANSAS - 0.6%
Kansas Dev. Fin. Auth. Rev.
(Sisters of Charity
Leavenworth):
5% 12/1/13 (MBIA Insured) Aaa $ 2,390,000 $ 2,215,506
5% 12/1/14 (MBIA Insured) Aaa 500,000 455,285
2,670,791
KENTUCKY - 1.9%
Kenton County Arpt. Board
Arpt. Rev.:
(Cincinnati/Northern Kentucky Aaa 5,570,000 5,836,190
Int'l.) Series A, 6% 3/1/05
(MBIA Insured) (e)
(Spl. Facilities Delta Baa3 2,000,000 2,105,940
Airlines, Inc. Proj.)
Series A, 7.5% 2/1/20 (e)
7,942,130
MARYLAND - 1.2%
Maryland Health & Higher Edl.
Facilities Auth. Rev.:
(Good Samaritan Hosp.):
5.75% 7/1/13 (AMBAC Insured) Aaa 1,015,000 1,023,983
(Escrowed to Maturity) (f)
5.75% 7/1/13 (Escrowed to A1 1,665,000 1,694,371
Maturity) (f)
Rfdg. (John Hopkins Univ.) 6% Aa2 2,000,000 2,143,960
7/1/10
4,862,314
MASSACHUSETTS - 6.5%
Massachusetts Health & Edl.
Facilities Auth. Rev.:
(Bentley College) Series J, Aaa 1,265,000 1,120,398
5% 7/1/17 (MBIA Insured)
(Fairview Extended Care) Aaa 5,000,000 5,483,500
Series A, 10.25% 1/1/21
(Pre-Refunded to 1/1/01 @
103) (f)
(Hebrew Rehab. Ctr. for Aged) A 2,000,000 1,807,060
Series C, 5.25% 7/1/17
(New England Med. Ctr. Hosp.) Aaa 500,000 453,405
Series G, 5.375% 7/1/24
(MBIA Insured)
Massachusetts Ind. Fin. Agcy. BBB 1,000,000 968,590
Resource Recovery Rev. Rfdg.
(Ogden Haverhill Proj.)
Series A, 4.7% 12/1/03
Massachusetts Ind. Fin. Agcy.
Rev.:
(Atlanticare Med. Ctr.) - 600,000 612,000
Series B, 10.125% 11/1/14
(Pre-Refunded to 11/1/99 @
102) (f)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy.
Rev.: - continued
(Cap. Appreciation)
(Massachusetts Biomedical)
Series A 2:
0% 8/1/08 A+ $ 800,000 $ 503,608
0% 8/1/10 - 4,500,000 2,464,785
Massachusetts Muni. Wholesale Baa2 1,000,000 1,052,260
Elec. Co. Pwr. Supply Sys.
Rev. Rfdg. Series C, 6.5%
7/1/03
Massachusetts Tpk. Auth. Aaa 5,000,000 4,370,450
Metro. Hwy. Sys. Rev. Series
A, 5.125% 1/1/23 (MBIA
Insured)
Massachusetts Wtr. Poll.
Abatement Trust Rev. (MWRA
Ln. Prog.) Series A:
5.25% 8/1/13 Aa1 100,000 96,728
5.25% 8/1/14 Aa1 300,000 285,105
New England Ed. Ln. Marketing A3 3,880,000 3,971,335
Corp. Massachusetts Rfdg.
(Student Ln. Proj.) Series
F, 5.625% 7/1/04 (e)
New England Ed. Ln. Marketing Aaa 4,005,000 4,103,443
Corp. Massachusetts Student
Ln. Rev. Issue A, 5.8% 3/1/02
27,292,667
MICHIGAN - 2.3%
Michigan Hosp. Fin. Auth.
Rev. Rfdg.:
(Genesys Reg'l. Hosp.) Series Baa2 4,250,000 4,056,923
A, 5.5% 10/1/18 (Escrowed to
Maturity) (f)
(Pontiac Osteopathic Hosp.) Baa2 2,000,000 1,756,600
Series A, 6% 2/1/24
Michigan Strategic Fund Rev. Aaa 1,500,000 1,366,170
Rfdg. (Detroit Edison Co.
Proj.) Series A, 5.55%
9/1/29 (MBIA Insured) (e)
Royal Oak Hosp. Fin. Auth. Aa3 2,310,000 2,435,387
Rev. Rfdg. (William
Beaumont Hosp.) 6.25% 1/1/09
9,615,080
MINNESOTA - 1.3%
Minneapolis & Saint Paul Hsg. Aaa 1,800,000 1,519,110
& Redev. Auth. Health Care
Sys. Rev. Rfdg. (Healthspan
Corp.) Series A, 4.75%
11/15/18 (AMBAC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
MINNESOTA - CONTINUED
Minnesota Hsg. Fin. Agcy. Aa2 $ 2,000,000 $ 2,039,640
Single Family Mtg. (Single
Family Mtg.) Series D, 6.4%
7/1/15 (e)
Rochester Health Care AA+ 2,000,000 1,860,000
Facilities Rev. (Mayo
Foundation) Series A, 5.5%
11/15/27
5,418,750
MISSISSIPPI - 1.0%
Mississippi Gen. Oblig. 6.2% Aaa 3,720,000 3,987,617
2/1/08 (Escrowed to
Maturity) (f)
Mississippi Home Corp. Single Aaa 164,000 170,780
Family Rev. Rfdg. Series A,
9.25% 3/1/12 (FGIC Insured)
4,158,397
NEVADA - 0.6%
Las Vegas Downtown Redev.
Agcy. Tax Increment Rev.
(Fremont Street Proj.)
Series A:
6% 6/15/10 BBB+ 1,500,000 1,478,355
6.1% 6/15/14 BBB+ 1,000,000 999,740
2,478,095
NEW HAMPSHIRE - 0.1%
New Hampshire Higher Edl. & - 480,000 502,354
Health Facilities Auth. Rev.
(Littleton Hosp. Assoc.,
Inc.) Series A, 9.5% 5/1/20
(Pre-Refunded to 5/1/00 @
102) (f)
NEW JERSEY - 2.1%
New Jersey Edl. Facilities
Auth. Rev. Rfdg. (Seton
Hall Univ. Proj.):
5% 7/1/18 (AMBAC Insured) Aaa 1,000,000 886,280
5.25% 7/1/07 (AMBAC Insured) Aaa 1,610,000 1,634,263
New Jersey Trans. Trust Fund Aaa 4,000,000 4,066,920
Auth. Rfdg. (Trans. Sys.)
Series A, 5.5% 6/15/11 (MBIA
Insured)
Passaic County Util. Auth. Aaa 2,500,000 2,253,475
Solid Waste Disp. Rev.
Rfdg. (Cap. Appreciation) 0%
3/1/02 (MBIA Insured)
8,840,938
NEW MEXICO - 1.8%
Albuquerque Arpt. Rev. Rfdg.:
6.7% 7/1/18 (AMBAC Insured) Aaa 3,970,000 4,213,996
(e)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
NEW MEXICO - CONTINUED
Albuquerque Arpt. Rev. Rfdg.:
- - continued
6.75% 7/1/11 (AMBAC Insured) Aaa $ 1,805,000 $ 2,006,420
(e)
New Mexico Edl. Assistance Aaa 1,350,000 1,353,267
Foundation Student Ln. Rev.
Series B, 5.25% 4/1/05
(AMBAC Insured) (e)
7,573,683
NEW YORK - 18.0%
Long Island Pwr. Auth. New Aaa 9,390,000 8,209,959
York Elec. Sys. Rev. Series
A, 5.125% 12/1/22 (FSA
Insured)
Metro. Trans. Auth. Dedicated Aaa 1,000,000 889,050
Tax Fund Series A, 5.25%
4/1/26 (MBIA Insured)
Metro. Trans. Auth. New York
Commuter Facilities Rev.:
Rfdg. (Svc. Contract) Series R:
5% 7/1/02 Baa1 2,370,000 2,394,530
5% 7/1/03 Baa1 2,490,000 2,512,211
Series A:
5.625% 7/1/27 (MBIA Insured) Aaa 200,000 188,896
6.125% 7/1/29 Baa1 6,750,000 6,672,578
Metro. Trans. Auth. New York Baa1 1,010,000 988,245
Svc. Contract Rev. Series P,
5.75% 7/1/15
Metro. Trans. Auth. New York
Trans. Facilities Rev. Rfdg.
(Svc. Contract Proj.) Series
8:
5.25% 7/1/17 Baa1 500,000 448,780
5.375% 7/1/21 (FSA Insured) Aaa 700,000 640,073
New York City:
Rfdg.:
Series A, 7% 8/1/03 A3 2,000,000 2,148,960
Series B:
5.7% 8/15/02 A3 1,130,000 1,163,233
5.7% 8/15/02 (Escrowed to A3 35,000 36,159
Maturity) (f)
6.75% 8/15/03 A3 2,000,000 2,134,700
Series E, 6.5% 2/15/04 (FGIC Aaa 1,000,000 1,064,970
Insured)
Series D, 5.5% 2/15/04 A3 2,000,000 2,050,180
Series H:
6.875% 2/1/02 A3 160,000 167,629
6.875% 2/1/02 (Escrowed to Aaa 80,000 84,233
Maturity) (f)
New York City Ind. Dev. Agcy. Aaa 1,000,000 1,045,910
Ind. Dev. Rev. (Japan
Airlines Co. Ltd. Proj.)
Series 1991, 6% 11/1/15
(FSA Insured) (e)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
NEW YORK - CONTINUED
New York City Ind. Dev. Agcy. A3 $ 8,680,000 $ 8,957,586
Spl. Facilities Rev. (Term.
One Group Assoc. Proj.) 5.9%
1/1/06 (e)
New York City Muni. Wtr. Fin.
Auth. Wtr. & Swr. Sys. Rev.
Series B:
5.5% 6/15/27 (MBIA Insured) Aaa 3,500,000 3,247,370
5.75% 6/15/26 A1 5,000,000 4,745,550
5.75% 6/15/29 A1 4,000,000 3,777,800
New York State Dorm. Auth.
Rev.:
(City Univ. Sys. Baa1 3,000,000 3,108,930
Consolidated) Series A, 5.7%
7/1/05
Rfdg. (Jamaica Hosp.) Series Aaa 6,150,000 5,763,965
F, 5.2% 2/15/14 (MBIA
Insured)
New York State Envir.
Facilities Corp.:
Clean Wtr. & Drinking Rev.
(Revolving Funds) Series F:
4.875% 6/15/18 Aa1 1,000,000 860,480
4.875% 6/15/20 Aa1 1,300,000 1,102,049
5% 6/15/15 Aa1 700,000 627,445
New York State Envir. Aa1 1,000,000 883,850
Facilities Corp. Poll. Cont.
Rev. 5.125% 6/15/19
New York State Local Govt. A3 7,500,000 7,200,000
Assistance Corp. Rfdg.
Series C, 5.5% 4/1/17
New York State Thruway Auth. Baa1 2,000,000 2,090,100
Svc. Contract Rev. (Local
Hwy. & Bridges) 5.9% 4/1/07
Triborough Bridge & Tunnel Aaa 500,000 492,700
Auth. Spl. Oblig. Rfdg.
Series A, 5.25% 1/1/11 (FGIC
Insured)
75,698,121
NORTH CAROLINA - 4.4%
North Carolina Eastern Muni.
Pwr. Agcy. Pwr. Sys. Rev.
Rfdg.:
Series A, 5.5% 1/1/05 (MBIA Aaa 4,000,000 4,112,160
Insured)
Series B:
6% 1/1/06 Baa3 4,175,000 4,218,587
7.25% 1/1/07 Baa3 1,000,000 1,078,380
Series C:
5.125% 1/1/03 Baa1 2,700,000 2,667,708
5.25% 1/1/04 Baa1 1,365,000 1,347,159
5.5% 1/1/07 (MBIA Insured) Aaa 2,000,000 2,044,840
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
NORTH CAROLINA - CONTINUED
North Carolina Muni. Pwr.
Agcy. #1 Catawba Elec. Rev.:
Rfdg. 5.75% 1/1/02 Baa1 $ 1,750,000 $ 1,763,615
6.25% 1/1/17 (AMBAC Insured) Aaa 1,150,000 1,187,801
18,420,250
OHIO - 4.5%
Cincinnati Student Ln. Fdg. - 1,215,000 1,241,208
Corp. Student Ln. Rev.
Series B, 8.875% 8/1/08 (e)
Franklin County Hosp. Rev. Baa3 5,000,000 4,791,300
(Doctor's Ohio Health Corp.)
Series A 4.75% 12/1/03
Gateway Economic Dev. Corp. - 3,000,000 3,003,780
Greater Cleveland Stadium
Rev. 6.5% 9/15/14 (e)
Marion County Hosp. Impt. BBB+ 1,000,000 1,001,720
Rev. Rfdg. (Comnty. Hosp.
Proj.) 5.6% 5/15/01
Ohio Tpk. Commission Rfdg. Aaa 5,000,000 4,749,250
Series A, 5.5% 2/15/24 (FGIC
Insured)
Ohio Wtr. Dev. Auth. Poll.
Cont. Rev. (Wtr. Cont. Ln.
Fund):
State Match Series, 6.5% Aaa 1,835,000 1,988,039
12/1/04 (MBIA Insured)
Wtr. Quality Series, 5.625% Aaa 2,000,000 2,087,260
6/1/06 (MBIA Insured)
18,862,557
OKLAHOMA - 1.2%
Sapulpa Muni. Auth. Util. Aaa 1,000,000 972,360
Rev. Rfdg. 5.75% 4/1/23
(FGIC Insured)
Tulsa Muni. Arpt. Trust Rev. Baa2 4,000,000 4,261,480
(American Airlines Corp.
Proj.) 7.35% 12/1/11
5,233,840
PENNSYLVANIA - 3.8%
Allegheny County Arpt. Rev. Aaa 1,000,000 1,030,000
Rfdg. (Pittsburgh Int'l
Arpt. Proj.) Series A, 5.75%
1/1/07 (MBIA Insured) (e)
Allegheny County Ind. Dev. - 325,000 339,573
Auth. Rev. (YMCA Pittsburgh
Proj.) Series A, 8.75% 3/1/10
Butler County Ind. Dev. Auth. A 3,000,000 2,904,960
Health Ctr. Rev. Rfdg.
(Sherwood Oaks Proj.) 5.75%
6/1/11
Cumberland County Muni. Auth.
Rev. Rfdg. (Carlisle Hosp. &
Health):
6.8% 11/15/14 Baa3 3,250,000 3,283,345
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
PENNSYLVANIA - CONTINUED
Cumberland County Muni. Auth.
Rev. Rfdg. (Carlisle Hosp. &
Health): - continued
6.8% 11/15/23 Baa3 $ 1,000,000 $ 1,004,670
Delaware County Auth. Rev.
(1st. Mtg. Riddle Village
Proj.):
8.25% 6/1/22 (Escrowed to Aaa 2,250,000 2,604,870
Maturity) (f)
8.75% 6/1/10 (Pre-Refunded to Aaa 2,870,000 3,220,743
6/1/02 @ 102) (f)
Pennsylvania Ind. Dev. Auth. Aaa 1,345,000 1,396,635
Rev. (Econ. Dev.) 5.8%
7/1/09 (AMBAC Insured)
15,784,796
RHODE ISLAND - 1.1%
Rhode Island Port Auth. & Aaa 4,000,000 4,506,640
Economic Dev. Corp. Arpt.
Rev. Series A, 7% 7/1/14
(FSA Insured) (e)
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Agcy. Aaa 1,715,000 1,822,805
Elec. Rev. Rfdg. Series A,
6.25% 1/1/05 (FGIC Insured)
TENNESSEE - 0.3%
Metro. Govt. Nashville & Aaa 1,000,000 720,210
Davidson County Elec. Rev.
(Cap. Appreciation) Series
A, 0% 5/15/06 (MBIA Insured)
Tennessee Gen. Oblig. Rfdg. Aaa 400,000 426,564
Series A, 6% 5/1/07
1,146,774
TEXAS - 8.4%
Conroe Independent School Aaa 750,000 457,643
District Rfdg. (Cap.
Appreciation) Series B, 0%
2/15/09
Dallas-Fort Worth Int'l. Baa1 6,000,000 6,247,260
Arpt. Facility Impt. Corp.
Rev. (American Airlines,
Inc.) 7.5% 11/1/25 (e)
Fort Bend Independent School AAA 2,500,000 2,496,675
District Rfdg. 5.25% 2/15/10
Midlothian Independent School Aaa 1,845,000 1,500,317
District Rfdg. (Cap.
Appreciation) 0% 2/15/04
San Antonio Elec. & Gas Rev. Aa1 75,000 77,913
Rfdg. 5.5% 2/1/20
(Pre-Refunded to 2/1/07 @
101) (f)
San Antonio Gen. Oblig. Aa2 1,390,000 1,323,711
Series 2000, 5% 2/1/11 (b)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
TEXAS - CONTINUED
San Antonio Independent Aaa $ 3,650,000 $ 3,808,921
School District 5.75% 8/15/10
Texas Gen. Oblig. (Texas Pub. Aa1 5,000,000 4,602,550
Fing. Auth. Proj.) Series A,
5% 10/1/14
Texas Muni. Pwr. Agcy. Rev. Aaa 3,930,000 2,040,063
Rfdg. (Cap. Appreciation)
0% 9/1/11 (AMBAC Insured)
Travis County Health Aaa 4,000,000 4,058,600
Facilities Dev. Corp. Rev.
(Ascension Health Cr. Prog.)
Series A, 6.25% 11/15/19
(MBIA Insured)
Univ. of Texas Univ. Revs Aa1 6,275,000 6,339,507
Rfdg. (Fing. Sys. Proj.)
Series B, 5.625% 8/15/12
Yselta Independent School Aaa 4,065,000 2,415,423
District Rfdg. (Cap.
Appreciation) 0% 8/15/09
35,368,583
UTAH - 2.6%
Intermountain Pwr. Agcy. Pwr.
Supply Rev.:
Rfdg.:
Series A, 6.5% 7/1/09 (AMBAC Aaa 1,000,000 1,092,440
Insured)
Series B, 5.75% 7/1/16 (MBIA Aaa 2,500,000 2,465,025
Insured)
Rfdg. Spl. Oblig. 6th Series Aaa 7,000,000 7,061,180
B, 6% 7/1/16 (MBIA Insured)
South Salt Lake City Ind. - 250,000 264,948
Rev. (Price Savers Wholesale
Club Proj.) 9% 11/15/13
10,883,593
VIRGINIA - 0.3%
Loudoun County Ind. Dev. - 1,000,000 1,127,590
Auth. Residential Care
Facilities Rev. (Falcons
Landing Proj.) Series A,
9.25% 11/1/04 (Escrowed to
Maturity) (f)
WASHINGTON - 5.1%
King County Gen. Oblig. Aa1 3,990,000 4,111,057
Series D, 5.75% 12/1/11
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) PRINCIPAL AMOUNT VALUE (NOTE 1)
(A)
WASHINGTON - CONTINUED
Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #2 Rev.:
Rfdg. Series A:
5% 7/1/05 Aa1 $ 3,050,000 $ 3,045,974
5.9% 7/1/04 Aa1 1,000,000 1,041,160
5.4% 7/1/12 Aa1 14,000,000 13,351,091
21,549,282
TOTAL MUNICIPAL BONDS 410,382,254
(Cost $415,389,508)
</TABLE>
CASH EQUIVALENTS - 1.9%
SHARES
Municipal Central Cash Fund, 8,130,356 8,130,356
3.56% (c)(d) (Cost
$8,130,356)
TOTAL INVESTMENT PORTFOLIO - 418,512,610
99.5%
(Cost $423,519,864)
NET OTHER ASSETS - 0.5% 2,101,879
NET ASSETS - 100% $ 420,614,489
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) Security purchased on a delayed delivery or when-issued basis.
(c) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(d) The rate quoted is the annualized seven-day yield of the fund at
period end.
(e) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(f) Security collateralized by an amount sufficient to pay interest
and principal.
OTHER INFORMATION
The composition of long-term debt holdings as percentage of total
value of investments in securities, is as follows (ratings are
(unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 68.1% AAA, AA, A 63.6%
Baa 19.4% BBB 21.0%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 4.7%.
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 19.3%
Electric Utilities 15.9
Transportation 14.4
Health Care 13.4
Education 8.0
Escrowed/Pre-Refunded 7.9
Industrial Development 6.4
Water & Sewer 5.7
Others (individually less 8.5
than 5%)
Net Other Assets 0.5
100.0%
INCOME TAX INFORMATION
At October 31, 1999, the aggregate cost of investment securities for
income tax purposes was $423,519,864. Net unrealized depreciation
aggregated $5,007,254, of which $6,610,938 related to appreciated
investment securities and $11,618,192 related to depreciated
investment securities.
At October 31, 1999, the fund had a capital loss carryforward of
approximately $13,685,000 of which $7,417,000 and $6,268,000 will
expire on October 31, 2003 and 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
ASSETS
Investment in securities, at $ 418,512,610
value (cost $423,519,864) -
See accompanying schedule
Receivable for investments 10,776,377
sold
Receivable for fund shares 198,989
sold
Interest receivable 7,068,772
Other receivables 22,338
TOTAL ASSETS 436,579,086
LIABILITIES
Payable for investments $ 10,664,053
purchased Regular delivery
Delayed delivery 3,449,619
Payable for fund shares 907,180
redeemed
Distributions payable 600,795
Accrued management fee 132,767
Distribution fees payable 129,306
Other payables and accrued 80,877
expenses
TOTAL LIABILITIES 15,964,597
NET ASSETS $ 420,614,489
Net Assets consist of:
Paid in capital $ 439,900,857
Accumulated undistributed net (14,279,114)
realized gain (loss) on
investments
Net unrealized appreciation (5,007,254)
(depreciation) on investments
NET ASSETS $ 420,614,489
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1999
CALCULATION OF MAXIMUM $11.69
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($10,721,810 (divided by)
917,460 shares)
Maximum offering price per $12.27
share (100/95.25 of $11.69)
CLASS T: NET ASSET VALUE and $11.70
redemption price per share
($329,926,390 (divided by)
28,197,578 shares)
Maximum offering price per $12.12
share (100/96.50 of $11.70)
CLASS B: NET ASSET VALUE and $11.67
offering price per share
($63,464,208 (divided by)
5,438,241 shares) A
CLASS C: NET ASSET VALUE and $11.70
offering price per share
($13,071,301 (divided by)
1,117,056 shares) A
INSTITUTIONAL CLASS: NET $11.65
ASSET VALUE, offering price
and redemption price per
share ($3,430,780 (divided
by) 294,537 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
INTEREST INCOME $ 23,713,018
EXPENSES
Management fee $ 1,695,763
Transfer agent fees 460,510
Distribution fees 1,577,955
Accounting fees and expenses 141,615
Non-interested trustees' 1,358
compensation
Custodian fees and expenses 21,716
Registration fees 117,150
Audit 37,659
Legal 12,407
Total expenses before 4,066,133
reductions
Expense reductions (3,319) 4,062,814
NET INTEREST INCOME 19,650,204
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 2,459,744
Futures contracts 21,684 2,481,428
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (33,606,253)
Futures contracts (83,889) (33,690,142)
NET GAIN (LOSS) (31,208,714)
NET INCREASE (DECREASE) IN $ (11,558,510)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31, 1999 YEAR ENDED OCTOBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 19,650,204 $ 20,054,896
Net realized gain (loss) 2,481,428 842,117
Change in net unrealized (33,690,142) 13,362,203
appreciation (depreciation)
NET INCREASE (DECREASE) IN (11,558,510) 34,259,216
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (19,650,204) (20,054,896)
from net interest income
Share transactions - net (1,025,834) 279,500
increase (decrease)
TOTAL INCREASE (DECREASE) (32,234,548) 14,483,820
IN NET ASSETS
NET ASSETS
Beginning of period 452,849,037 438,365,217
End of period $ 420,614,489 $ 452,849,037
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.540 $ 12.150 $ 11.740 $ 11.630
period
Income from Investment
Operations
Net interest income .567 .571 .583 D .105 D, E
Net realized and unrealized (.850) .390 .445 .109
gain (loss)
Total from investment (.283) .961 1.028 .214
operations
Less Distributions
From net interest income (.567) (.571) (.616) E (.104)
In excess of net interest - - (.002) -
income
Total distributions (.567) (.571) (.618) (.104)
Net asset value, end of period $ 11.690 $ 12.540 $ 12.150 $ 11.740
TOTAL RETURN B, C (2.36)% 8.07% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,722 $ 6,721 $ 3,755 $ 202
(000 omitted)
Ratio of expenses to average .72% .90% G .90% G .90% A, G
net assets
Ratio of net interest income 4.62% 4.57% 4.87% 5.73% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.560 $ 12.150 $ 11.760 $ 11.880 $ 11.220
of period
Income from Investment
Operations
Net interest income .555 .571 .597 B .677 B, C .700
Net realized and unrealized (.860) .410 .407 (.136) .660
gain (loss)
Total from investment (.305) .981 1.004 .541 1.360
operations
Less Distributions
From net interest income (.555) (.571) (.612) C (.661) (.700)
In excess of net interest - - (.002) - -
income
Total distributions (.555) (.571) (.614) (.661) (.700)
Net asset value, end of period $ 11.700 $ 12.560 $ 12.150 $ 11.760 $ 11.880
TOTAL RETURN A (2.53)% 8.15% 8.89% 4.68% 12.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 329,926 $ 380,325 $ 392,075 $ 480,432 $ 565,131
(000 omitted)
Ratio of expenses to average .81% .87% .89% .89% .91%
net assets
Ratio of net interest income 4.51% 4.62% 5.04% 5.74% 6.06%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.530 $ 12.130 $ 11.740 $ 11.860 $ 11.210
of period
Income from Investment
Operations
Net interest income .476 .491 .515 C .596 C, D .612
Net realized and unrealized (.860) .400 .416 (.136) .650
gain (loss)
Total from investment (.384) .891 .931 .460 1.262
operations
Less Distributions
From net interest income (.476) (.491) (.539) D (.580) (.612)
In excess of net interest - - (.002) - -
income
Total distributions (.476) (.491) (.541) (.580) (.612)
Net asset value, end of period $ 11.670 $ 12.530 $ 12.130 $ 11.740 $ 11.860
TOTAL RETURN A, B (3.16)% 7.47% 8.15% 3.98% 11.57%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 63,464 $ 55,032 $ 41,024 $ 39,389 $ 32,395
(000 omitted)
Ratio of expenses to average 1.46% 1.53% 1.56% 1.57% 1.86% E
net assets
Ratio of net interest income 3.88% 3.96% 4.35% 5.06% 5.18%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
FINANCIAL HIGHLIGHTS - CLASS C
YEARS ENDED OCTOBER 31, 1999 1998 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.560 $ 12.130
period
Income from Investment
Operations
Net interest income .465 .455
Net realized and unrealized (.860) .430
gain (loss)
Total from investment (.395) .885
operations
Less Distributions
From net interest income (.465) (.455)
Net asset value, end of period $ 11.700 $ 12.560
TOTAL RETURN B, C (3.24)% 7.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 13,071 $ 7,031
(000 omitted)
Ratio of expenses to average 1.56% 1.75% A, E
net assets
Ratio of net interest income 3.79% 3.60% A
to average net assets
Portfolio turnover rate 23% 36%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.510 $ 12.120 $ 11.720 $ 11.880 $ 11.700
of period
Income from Investment
Operations
Net interest income .584 .592 .609 D .707 D, E .232
Net realized and unrealized (.860) .390 .464 (.197) .180
gain (loss)
Total from investment (.276) .982 1.073 .510 .412
operations
Less Distributions
From net interest income (.584) (.592) (.671) E (.670) (.232)
In excess of net interest - - (.002) - -
income
Total distributions (.584) (.592) (.673) (.670) (.232)
Net asset value, end of period $ 11.650 $ 12.510 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C (2.31)% 8.28% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,431 $ 3,741 $ 1,511 $ 927 $ 154
(000 omitted)
Ratio of expenses to average .60% .75% G .75% G .75% G .75% A, G
net assets
Ratio of net interest income 4.75% 4.75% 5.11% 5.88% 5.89% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Municipal Income Fund (the fund) is a fund of
Fidelity Advisor Series II (the trust) (formerly a fund of Fidelity
Advisor Series V) 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. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. Interest income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date. Income dividends
and capital gain distributions are declared separately for each class.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, market discount, capital loss
carryforwards and losses deferred due to futures transactions. The
fund also utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for
income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc. (FIMM), an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place after the
customary settlement period for that security. The price of the
underlying securities is fixed at the time the transaction is
negotiated. The market values of the securities purchased on a
when-issued or forward commitment basis are identified as such in the
fund's schedule of investments. The fund may receive compensation for
interest forgone in the purchase of a when-issued security. With
respect to purchase commitments, the fund identifies securities as
segregated in its records with a value at least equal to the amount of
the commitment. Losses may arise due to changes in the market value of
the underlying securities, if the counterparty does not perform under
the contract, or if the issuer does not issue the securities due to
political, economic, or other factors.
2. OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $100,137,443 and $107,267,340, respectively.
The market value of futures contracts opened and closed during the
period amounted to $0 and $6,962,986, 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 .0920% to .3700% for the
period. The annual individual fund fee rate is .25%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annual rate of .38% of average net assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement with FIMM, a wholly owned subsidiary of FMR.
For its services, FIMM receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of Trustees has 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
institutions for the distribution of each class of shares and
providing shareholder support services. For the period, this fee was
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO FDC RETAINED BY FDC
CLASS A $ 14,240 $ 71
CLASS T 900,188 11,550
CLASS B 552,424 399,100
CLASS C 111,103 87,365
$ 1,577,955 $ 498,086
SALES LOAD. FDC receives a front-end sales charge of up to 4.75% 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 is paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 50,968 $ 28,875
CLASS T 204,851 72,163
CLASS B 209,085 209,085*
CLASS C 16,279 16,279*
$ 481,183 $ 326,402
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT AND ACCOUNTING FEES. Effective June 14, 1999, Citibank,
N.A. (Citibank) replaced UMB Bank, n.a. as the custodian, transfer
agent, and shareholder servicing agent for the fund's Class A, Class
T, Class B, Class C, and Institutional Class shares. Citibank has
entered into a sub-arrangement with Fidelity Investments Institutional
Operations Company, Inc. (FIIOC) with respect to all classes of the
fund to perform the transfer, dividend disbursing, and shareholder
servicing agent functions. FIIOC, an affiliate of FMR, receives
account fees and asset-based fees that vary according to the account
size and type of account of the shareholders of the respective classes
of the fund. All fees are paid to FIIOC by Citibank, which is
reimbursed by each class for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except
proxy statements. For the period, each class paid the following
transfer agent fees:
AMOUNT % OF AVERAGE NET ASSETS
CLASS A $ 11,061 .12
CLASS T 368,638 .10
CLASS B 63,218 .10
CLASS C 12,116 .11
INSTITUTIONAL CLASS 5,477 .15
$ 460,510
Citibank also has a sub-contract with Fidelity Service Company, Inc.
(FSC), an affiliate of FMR, under which FSC maintains the fund's
accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
Through arrangements with the fund's custodian and each class'
transfer agent, credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $694 under the custodian
arrangement, and Class T's transfer agent fees were reduced by $2,625
under the transfer agent arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEARS ENDED OCTOBER 31,
1999 1998 A
FROM NET INTEREST INCOME
Class A $ 439,029 $ 231,309
Class T 16,229,661 17,722,552
Class B 2,381,487 1,865,869
Class C 421,752 106,528
Institutional Class 178,275 128,638
Total $ 19,650,204 $ 20,054,896
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1999 1998 1999 1998
CLASS A Shares sold 565,331 362,699 $ 6,989,179 $ 4,479,496
Reinvestment of
distributions 25,296 11,508 307,568 142,669
Shares redeemed (208,996) (147,406) (2,558,328) (1,811,982)
Net increase (decrease) 381,631 226,801 $ 4,738,419 $ 2,810,183
CLASS T Shares sold 3,793,311 4,799,958 $ 46,774,471 $ 59,544,980
Reinvestment of
distributions 835,205 873,770 10,221,698 10,820,895
Shares redeemed (6,722,556) (7,639,811) (82,551,608) (94,496,816)
Net increase (decrease) (2,094,040) (1,966,083) $ (25,555,439) $ (24,130,941)
</TABLE>
7. SHARE TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1999 1998 A 1999 1998 A
CLASS B Shares sold 2,125,759 1,497,112 $ 26,076,418 $ 18,512,808
Reinvestment of
distributions 115,598 86,162 1,407,504 1,065,255
Shares redeemed (1,196,611) (572,594) (14,568,680) (7,073,528)
Net increase (decrease) 1,044,746 1,010,680 $ 12,915,242 $ 12,504,535
CLASS C Shares sold 871,985 650,179 $ 10,752,375 $ 8,065,902
Reinvestment of
distributions 22,987 4,455 280,065 55,539
Shares redeemed (337,753) (94,797) (4,112,814) (1,177,225)
Net increase (decrease) 557,219 559,837 $ 6,919,626 $ 6,944,216
INSTITUTIONAL CLASS Shares 103,836 238,568 $ 1,286,178 $ 2,943,409
sold
Reinvestment of
distributions 7,731 6,313 93,765 77,958
Shares redeemed (116,192) (70,388) (1,423,625) (869,860)
Net increase (decrease) (4,625) 174,493 $ (43,682) $ 2,151,507
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
8. PROPOSED REORGANIZATION.
The Board of Trustees of Fidelity Advisor Municipal Income Fund (the
fund) has approved an Agreement and Plan of Reorganization
("Agreement") between the fund and Fidelity Advisor Intermediate
Municipal Income Fund ("Reorganization"). The Agreement provides for
the transfer of all of the assets and the assumption of all of the
liabilities of Fidelity Advisor Intermediate Municipal Income Fund in
exchange solely for the number of shares of Class A, Class T, Class B,
Class C and Institutional Class of the fund having the same relative
net asset value as the outstanding shares of Class A, Class T, Class
B, Class C and Institutional Class of Fidelity Advisor Intermediate
Municipal Income Fund as of the close of business of the New York
Stock Exchange on the day that the Reorganization is effective. The
Reorganization can be consummated only if, among other things, it is
approved by the vote of a majority (as defined by the 1940 Act) of
outstanding voting securities of Fidelity Advisor Intermediate
Municipal Income Fund. A Special Meeting of Shareholders ("Meeting")
of Fidelity Advisor Intermediate Municipal Income Fund will be held on
April 19, 2000 to vote on the Agreement. A detailed description of the
proposed transactions and voting information will be sent to
shareholders of Fidelity Advisor Intermediate Municipal Income Fund in
February, 2000. If the Agreement is approved at the Meeting, the
Reorganization is expected to become effective on or about May 25,
2000.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series II and the Shareholders of
Fidelity Advisor Municipal Income Fund (formerly a fund of Fidelity
Advisor Series V):
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Municipal Income Fund (a fund of Fidelity Advisor
Series II, formerly a fund of Fidelity Advisor Series V) at October
31, 1999, 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 Municipal Income Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at October
31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 10, 1999
DISTRIBUTIONS
During fiscal year ended 1999, 100% of the fund's income dividends was
free from federal income tax, and 18.03% of the fund's income
dividends was subject to the federal alternative minimum tax.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments Money
Management, Inc. (FIMM)
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Christine J. Thompson, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
* INDEPENDENT TRUSTEES
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
Ned C. Lautenbach
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Latin America Fund
Fidelity Advisor Emerging Asia 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(registered trademark)
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Value Strategies 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
HY-ANN-1299 88096
1.538463.102
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 High Income Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(registered trademark)
FIDELITY(REGISTERED TRADEMARK) ADVISOR
INTERMEDIATE MUNICIPAL INCOME FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
ANNUAL REPORT
OCTOBER 31, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 19 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 22 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 23 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 31 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 40 Notes to the financial
statements.
REPORT OF INDEPENDENT 49 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 50
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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:
All major U.S. equity market indexes posted positive returns for the
month of October, led by the technology-heavy NASDAQ Index, which
climbed to a record high close during the month. Domestic bonds,
however, turned in relatively flat performance, due in large part to
lingering fears of a potential interest rate hike by the Federal
Reserve Board, and its adoption of a tightening bias during the first
week of the month.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - CLASS A
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class A shares
took place on September 3, 1996. Class A shares bear a 0.15% 12b-1 fee
that is reflected in returns after September 3, 1996. Returns between
September 10, 1992 (the date Class T shares were first offered) and
September 3, 1996 are those of Class T shares and reflect Class T
shares' 0.25% 12b-1 fee. Returns prior to September 10, 1992 are those
of Institutional Class, the original class of the fund, which does not
bear a 12b-1 fee. Had Class A shares' 12b-1 fee been reflected,
returns prior to September 10, 1992 would have been lower. If Fidelity
had not reimbursed certain class expenses, the total returns and
dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV INT MUNICIPAL -1.07% 32.11% 74.81%
INCOME - CL A
FIDELITY ADV INT MUNICIPAL -4.78% 27.16% 68.26%
INCOME - CL A (INCL. 3.75%
SALES CHARGE)
LB 1-17 Year Municipal Bond -0.07% 37.20% n/a
Intermediate Municipal Debt -1.47% 30.78% 80.53%
Funds Average
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class A's returns to those of the Lehman
Brothers 1-17 Year Municipal Bond Index - a market value-weighted
index of investment-grade municipal bonds with maturities between one
and 17 years. To measure how Class A's performance stacked up against
its peers, you can compare it to the intermediate municipal debt funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Inc. The past one year average represents
a peer group of 132 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV INT MUNICIPAL -1.07% 5.73% 5.74%
INCOME - CL A
FIDELITY ADV INT MUNICIPAL -4.78% 4.92% 5.34%
INCOME - CL A (INCL. 3.75%
SALES CHARGE)
LB 1-17 Year Municipal Bond -0.07% 6.53% n/a
Intermediate Municipal Debt -1.47% 5.51% 6.08%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take Class A's cumulative return and show
you what would have happened if Class A had performed at a constant
rate each year.
$10,000 OVER 10 YEARS
FA Int Muni Inc -CL A LB Municipal Bond
00262 LB015
1989/10/31 9625.00 10000.00
1989/11/30 9730.31 10175.00
1989/12/31 9818.02 10258.23
1990/01/31 9785.99 10209.71
1990/02/28 9872.89 10300.58
1990/03/31 9889.71 10303.67
1990/04/30 9788.01 10229.07
1990/05/31 9966.47 10452.37
1990/06/30 10048.98 10544.24
1990/07/31 10170.25 10699.25
1990/08/31 10111.12 10543.89
1990/09/30 10138.20 10549.90
1990/10/31 10251.58 10741.28
1990/11/30 10415.14 10957.28
1990/12/31 10443.25 11004.95
1991/01/31 10559.86 11152.64
1991/02/28 10656.00 11249.66
1991/03/31 10663.16 11253.71
1991/04/30 10759.83 11403.39
1991/05/31 10846.02 11504.76
1991/06/30 10852.61 11493.37
1991/07/31 10961.32 11633.36
1991/08/31 11048.90 11786.57
1991/09/30 11116.62 11940.04
1991/10/31 11236.00 12047.50
1991/11/30 11264.32 12081.11
1991/12/31 11450.46 12340.37
1992/01/31 11530.45 12368.51
1992/02/29 11543.67 12372.46
1992/03/31 11499.53 12377.04
1992/04/30 11579.97 12487.20
1992/05/31 11706.98 12634.17
1992/06/30 11860.62 12846.17
1992/07/31 12116.05 13231.30
1992/08/31 12026.47 13102.30
1992/09/30 12140.16 13187.98
1992/10/31 12053.78 13058.35
1992/11/30 12274.03 13292.22
1992/12/31 12288.86 13427.94
1993/01/31 12428.59 13584.10
1993/02/28 12773.66 14075.44
1993/03/31 12646.95 13926.66
1993/04/30 12735.90 14067.18
1993/05/31 12789.51 14146.24
1993/06/30 12924.31 14382.34
1993/07/31 12938.99 14401.18
1993/08/31 13177.05 14701.01
1993/09/30 13313.37 14868.46
1993/10/31 13325.87 14897.15
1993/11/30 13221.99 14765.91
1993/12/31 13447.90 15077.62
1994/01/31 13572.67 15249.80
1994/02/28 13233.77 14854.83
1994/03/31 12716.72 14249.95
1994/04/30 12829.28 14370.79
1994/05/31 12944.10 14495.38
1994/06/30 12851.08 14406.81
1994/07/31 13030.13 14670.89
1994/08/31 13079.40 14721.65
1994/09/30 12932.92 14505.54
1994/10/31 12736.26 14247.92
1994/11/30 12457.95 13990.32
1994/12/31 12683.46 14298.24
1995/01/31 13002.64 14706.89
1995/02/28 13332.58 15134.56
1995/03/31 13478.42 15308.46
1995/04/30 13474.55 15326.52
1995/05/31 13782.30 15815.59
1995/06/30 13708.25 15678.00
1995/07/31 13797.49 15826.63
1995/08/31 13983.98 16027.31
1995/09/30 14073.32 16128.76
1995/10/31 14223.43 16363.27
1995/11/30 14387.32 16634.74
1995/12/31 14484.01 16794.60
1996/01/31 14580.65 16921.40
1996/02/29 14533.02 16807.18
1996/03/31 14389.99 16592.38
1996/04/30 14344.05 16545.43
1996/05/31 14342.50 16538.81
1996/06/30 14453.20 16718.92
1996/07/31 14565.98 16871.06
1996/08/31 14564.94 16867.01
1996/09/30 14692.85 17103.15
1996/10/31 14836.60 17296.58
1996/11/30 15093.91 17613.11
1996/12/31 15036.96 17539.14
1997/01/31 15080.36 17572.28
1997/02/28 15206.23 17733.60
1997/03/31 15027.77 17497.21
1997/04/30 15141.99 17643.66
1997/05/31 15302.84 17909.02
1997/06/30 15462.77 18099.75
1997/07/31 15847.96 18601.12
1997/08/31 15711.50 18426.82
1997/09/30 15887.91 18645.55
1997/10/31 15976.78 18765.44
1997/11/30 16062.80 18875.78
1997/12/31 16242.79 19151.18
1998/01/31 16377.19 19348.82
1998/02/28 16368.53 19354.62
1998/03/31 16380.88 19371.66
1998/04/30 16315.63 19284.29
1998/05/31 16529.53 19589.56
1998/06/30 16586.91 19666.74
1998/07/31 16600.50 19716.11
1998/08/31 16831.13 20020.72
1998/09/30 17013.60 20270.18
1998/10/31 17008.52 20269.77
1998/11/30 17048.55 20340.92
1998/12/31 17075.26 20392.18
1999/01/31 17278.42 20634.64
1999/02/28 17187.18 20544.47
1999/03/31 17183.51 20573.03
1999/04/30 17225.81 20624.25
1999/05/31 17137.98 20504.84
1999/06/30 16901.82 20209.57
1999/07/31 16960.21 20283.13
1999/08/31 16887.91 20120.87
1999/09/30 16929.73 20129.12
1999/10/29 16825.79 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 090431 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Class A on October 31, 1989, and the current 3.75% sales charge was
paid. As the chart shows, by October 31, 1999, the value of the
investment would have grown to $16,826 - a 68.26% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index - a market value-weighted index of
investment-grade municipal bonds with maturities of one year or more -
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $19,911 -
a 99.11% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will
do tomorrow. Bond prices, for
example, generally move in the
opposite direction of interest
rates. In turn, the share price,
return and yield of a fund that
invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31, SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF
CLASS A SHARES) TO OCTOBER 31,
1999 1998 1997 1996
Dividend returns 3.98% 4.37% 4.65% 0.75%
Capital returns -5.05% 2.09% 3.03% 1.08%
Total returns -1.07% 6.46% 7.68% 1.83%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 3.71(cents) 21.51(cents) 43.12(cents)
Annualized dividend rate 4.30% 4.13% 4.11%
30-day annualized yield 4.19% - -
30-day annualized 6.55% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $10.17 over the past one month, $10.33 over the past six months and
$10.50 over the past one year, you can compare the class' income over
these three periods. The 30-day annualized YIELD is a standard formula
for all bond funds based on the yields of the bonds in the fund,
averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period.
It also helps you compare funds from different companies on an equal
basis. The offering share price used in the calculation of the yield
includes the effect of Class A's current 3.75% sales charge. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the class' tax-free yield, if you're in the 36%
federal tax bracket, but does not reflect payment of the federal
alternative minimum tax, if applicable. If Fidelity had not reimbursed
certain class expenses, the yield and tax equivalent yield would have
been 4.11% and 6.42%, respectively.
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - CLASS T
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class T shares
took place on September 10, 1992. Class T shares bear a 0.25% 12b-1
fee that is reflected in returns after September 10, 1992. Returns
prior to that date are those of Institutional Class, the original
class of the fund, which does not bear a 12b-1 fee. Had Class T
shares' 12b-1 fee been reflected, returns prior to September 10, 1992
would have been lower. If Fidelity had not reimbursed certain class
expenses, the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV INT MUNICIPAL -1.11% 31.83% 74.44%
INCOME - CL T
FIDELITY ADV INT MUNICIPAL -3.83% 28.20% 69.64%
INCOME - CL T (INCL. 2.75%
SALES CHARGE)
LB 1-17 Year Municipal Bond -0.07% 37.20% n/a
Intermediate Municipal Debt -1.47% 30.78% 80.53%
Funds Average
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class T's returns to those of the Lehman
Brothers 1-17 Year Municipal Bond Index - a market value-weighted
index of investment-grade municipal bonds with maturities between one
and 17 years. To measure how Class T's performance stacked up against
its peers, you can compare it to the intermediate municipal debt funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Inc. The past one year average represents
a peer group of 132 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV INT MUNICIPAL -1.11% 5.68% 5.72%
INCOME - CL T
FIDELITY ADV INT MUNICIPAL -3.83% 5.09% 5.43%
INCOME - CL T (INCL. 2.75%
SALES CHARGE)
LB 1-17 Year Municipal Bond -0.07% 6.53% n/a
Intermediate Municipal Debt -1.47% 5.51% 6.08%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take Class T's cumulative return and show
you
what would have happened if Class T had performed at a constant rate
each year.
$10,000 OVER 10 YEARS
FA Int Muni Inc -CL T LB Municipal Bond
00289 LB015
1989/10/31 9725.00 10000.00
1989/11/30 9831.40 10175.00
1989/12/31 9920.02 10258.23
1990/01/31 9887.66 10209.71
1990/02/28 9975.47 10300.58
1990/03/31 9992.46 10303.67
1990/04/30 9889.70 10229.07
1990/05/31 10070.01 10452.37
1990/06/30 10153.39 10544.24
1990/07/31 10275.92 10699.25
1990/08/31 10216.17 10543.89
1990/09/30 10243.53 10549.90
1990/10/31 10358.09 10741.28
1990/11/30 10523.35 10957.28
1990/12/31 10551.75 11004.95
1991/01/31 10669.57 11152.64
1991/02/28 10766.72 11249.66
1991/03/31 10773.95 11253.71
1991/04/30 10871.62 11403.39
1991/05/31 10958.71 11504.76
1991/06/30 10965.37 11493.37
1991/07/31 11075.20 11633.36
1991/08/31 11163.70 11786.57
1991/09/30 11232.12 11940.04
1991/10/31 11352.74 12047.50
1991/11/30 11381.35 12081.11
1991/12/31 11569.42 12340.37
1992/01/31 11650.24 12368.51
1992/02/29 11663.61 12372.46
1992/03/31 11619.01 12377.04
1992/04/30 11700.28 12487.20
1992/05/31 11828.61 12634.17
1992/06/30 11983.85 12846.17
1992/07/31 12241.94 13231.30
1992/08/31 12151.42 13102.30
1992/09/30 12266.29 13187.98
1992/10/31 12179.02 13058.35
1992/11/30 12401.55 13292.22
1992/12/31 12416.53 13427.94
1993/01/31 12557.72 13584.10
1993/02/28 12906.37 14075.44
1993/03/31 12778.35 13926.66
1993/04/30 12868.22 14067.18
1993/05/31 12922.38 14146.24
1993/06/30 13058.58 14382.34
1993/07/31 13073.42 14401.18
1993/08/31 13313.96 14701.01
1993/09/30 13451.69 14868.46
1993/10/31 13464.32 14897.15
1993/11/30 13359.36 14765.91
1993/12/31 13587.62 15077.62
1994/01/31 13713.69 15249.80
1994/02/28 13371.27 14854.83
1994/03/31 12848.84 14249.95
1994/04/30 12962.57 14370.79
1994/05/31 13078.59 14495.38
1994/06/30 12984.60 14406.81
1994/07/31 13165.51 14670.89
1994/08/31 13215.29 14721.65
1994/09/30 13067.28 14505.54
1994/10/31 12868.59 14247.92
1994/11/30 12587.39 13990.32
1994/12/31 12815.23 14298.24
1995/01/31 13137.73 14706.89
1995/02/28 13471.10 15134.56
1995/03/31 13618.45 15308.46
1995/04/30 13614.55 15326.52
1995/05/31 13925.49 15815.59
1995/06/30 13850.68 15678.00
1995/07/31 13940.84 15826.63
1995/08/31 14129.27 16027.31
1995/09/30 14219.53 16128.76
1995/10/31 14371.20 16363.27
1995/11/30 14536.80 16634.74
1995/12/31 14634.49 16794.60
1996/01/31 14732.14 16921.40
1996/02/29 14684.01 16807.18
1996/03/31 14539.50 16592.38
1996/04/30 14493.08 16545.43
1996/05/31 14491.51 16538.81
1996/06/30 14603.36 16718.92
1996/07/31 14717.31 16871.06
1996/08/31 14716.26 16867.01
1996/09/30 14844.44 17103.15
1996/10/31 15002.96 17296.58
1996/11/30 15247.05 17613.11
1996/12/31 15203.54 17539.14
1997/01/31 15231.32 17572.28
1997/02/28 15356.26 17733.60
1997/03/31 15174.63 17497.21
1997/04/30 15288.72 17643.66
1997/05/31 15464.75 17909.02
1997/06/30 15609.93 18099.75
1997/07/31 15997.40 18601.12
1997/08/31 15858.24 18426.82
1997/09/30 16035.04 18645.55
1997/10/31 16108.16 18765.44
1997/11/30 16193.72 18875.78
1997/12/31 16389.36 19151.18
1998/01/31 16523.57 19348.82
1998/02/28 16513.65 19354.62
1998/03/31 16524.81 19371.66
1998/04/30 16473.29 19284.29
1998/05/31 16672.29 19589.56
1998/06/30 16730.15 19666.74
1998/07/31 16759.58 19716.11
1998/08/31 16976.57 20020.72
1998/09/30 17160.65 20270.18
1998/10/31 17155.59 20269.77
1998/11/30 17196.02 20340.92
1998/12/31 17222.33 20392.18
1999/01/31 17427.10 20634.64
1999/02/28 17318.25 20544.47
1999/03/31 17330.00 20573.03
1999/04/30 17372.01 20624.25
1999/05/31 17282.72 20504.84
1999/06/30 17043.87 20209.57
1999/07/31 17102.14 20283.13
1999/08/31 17028.50 20120.87
1999/09/30 17069.99 20129.12
1999/10/29 16964.45 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 090448 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Class T on October 31, 1989, and the current 2.75% sales charge was
paid. As the chart shows, by October 31, 1999, the value of the
investment would have grown to $16,964 - a 69.64% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index - a market value-weighted index of
investment-grade municipal bonds with maturities of one year or more -
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $19,911 -
a 99.11% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will
do tomorrow. Bond prices,
for example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return and yield
of a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
1999 1998 1997 1996 1995
Dividend returns 3.94% 4.32% 4.54% 4.59% 4.94%
Capital returns -5.05% 2.18% 2.83% -0.19% 6.74%
Total returns -1.11% 6.50% 7.37% 4.40% 11.68%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 3.66(cents) 21.26(cents) 42.70(cents)
Annualized dividend rate 4.24% 4.08% 4.07%
30-day annualized yield 4.18% - -
30-day annualized 6.53% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $10.17 over the past one month, $10.33 over the past six months and
$10.50 over the past one year, you can compare the class' income over
these three periods. The 30-day annualized YIELD is a standard formula
for all bond funds based on the yields of the bonds in the fund,
averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period.
It also helps you compare funds from different companies on an equal
basis. The offering share price used in the calculation of the yield
includes the effect of Class T's current 2.75% sales charge. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the class' tax-free yield, if you're in the 36%
federal tax bracket, but does not reflect payment of the federal
alternative minimum tax, if applicable. If Fidelity had not reimbursed
certain class expenses, the yield and tax-equivalent yield would have
been 4.06% and 6.34%, respectively.
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - CLASS B
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class B shares
took place on June 30, 1994. Class B shares bear a 0.90% 12b-1 fee
(1.00% prior to January 1, 1996) that is reflected in returns after
June 30, 1994. Returns between September 10, 1992 (the date Class T
shares were first offered) and June 30, 1994 are those of Class T
shares and reflect Class T shares' 0.25% 12b-1 fee. Returns prior to
September 10, 1992 are those of Institutional Class, the original
class of the fund, which does not bear a 12b-1 fee. Had Class B
shares' 12b-1 fee been reflected, returns prior to June 30, 1994 would
have been lower. Class B shares' contingent deferred sales charges
included in the past one year, past five year and past 10 year total
return figures are 3%, 0% and 0%, respectively. If Fidelity had not
reimbursed certain class expenses, the total returns and dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV INT MUNICIPAL -1.81% 27.22% 67.80%
INCOME - CL B
FIDELITY ADV INT MUNICIPAL -4.64% 27.22% 67.80%
INCOME - CL B (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
LB 1-17 Year Municipal Bond -0.07% 37.20% n/a
Intermediate Municipal Debt -1.47% 30.78% 80.53%
Funds Average
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 those of the Lehman
Brothers 1-17 Year Municipal Bond Index - a market value-weighted
index of investment-grade municipal bonds with maturities between one
and 17 years. To measure how Class B's performance stacked up against
its peers, you can compare it to the intermediate municipal debt funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Inc. The past one year average represents
a peer group of 132 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, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
FIDELITY ADV INT MUNICIPAL -1.81% 4.93% 5.31%
INCOME - CL B
FIDELITY ADV INT MUNICIPAL -4.64% 4.93% 5.31%
INCOME - CL B (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
LB 1-17 Year Municipal Bond -0.07% 6.53% n/a
Intermediate Municipal Debt -1.47% 5.51% 6.08%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take Class B's cumulative return and show
you what would have happened if Class B had performed at a constant
rate each year.
$10,000 OVER 10 YEARS
FA Int Muni Inc -CL B LB Municipal Bond
00689 LB015
1989/10/31 10000.00 10000.00
1989/11/30 10109.41 10175.00
1989/12/31 10200.54 10258.23
1990/01/31 10167.26 10209.71
1990/02/28 10257.55 10300.58
1990/03/31 10275.02 10303.67
1990/04/30 10169.36 10229.07
1990/05/31 10354.77 10452.37
1990/06/30 10440.50 10544.24
1990/07/31 10566.50 10699.25
1990/08/31 10505.06 10543.89
1990/09/30 10533.20 10549.90
1990/10/31 10650.99 10741.28
1990/11/30 10820.93 10957.28
1990/12/31 10850.13 11004.95
1991/01/31 10971.29 11152.64
1991/02/28 11071.17 11249.66
1991/03/31 11078.61 11253.71
1991/04/30 11179.04 11403.39
1991/05/31 11268.60 11504.76
1991/06/30 11275.44 11493.37
1991/07/31 11388.38 11633.36
1991/08/31 11479.38 11786.57
1991/09/30 11549.74 11940.04
1991/10/31 11673.77 12047.50
1991/11/30 11703.19 12081.11
1991/12/31 11896.58 12340.37
1992/01/31 11979.68 12368.51
1992/02/29 11993.42 12372.46
1992/03/31 11947.57 12377.04
1992/04/30 12031.13 12487.20
1992/05/31 12163.09 12634.17
1992/06/30 12322.72 12846.17
1992/07/31 12588.11 13231.30
1992/08/31 12495.04 13102.30
1992/09/30 12613.15 13187.98
1992/10/31 12523.41 13058.35
1992/11/30 12752.24 13292.22
1992/12/31 12767.64 13427.94
1993/01/31 12912.82 13584.10
1993/02/28 13271.34 14075.44
1993/03/31 13139.69 13926.66
1993/04/30 13232.11 14067.18
1993/05/31 13287.80 14146.24
1993/06/30 13427.85 14382.34
1993/07/31 13443.10 14401.18
1993/08/31 13690.44 14701.01
1993/09/30 13832.07 14868.46
1993/10/31 13845.06 14897.15
1993/11/30 13737.13 14765.91
1993/12/31 13971.85 15077.62
1994/01/31 14101.48 15249.80
1994/02/28 13749.37 14854.83
1994/03/31 13212.18 14249.95
1994/04/30 13329.12 14370.79
1994/05/31 13448.42 14495.38
1994/06/30 13351.77 14406.81
1994/07/31 13524.48 14670.89
1994/08/31 13563.69 14721.65
1994/09/30 13388.81 14505.54
1994/10/31 13189.77 14247.92
1994/11/30 12892.56 13990.32
1994/12/31 13117.45 14298.24
1995/01/31 13437.64 14706.89
1995/02/28 13770.48 15134.56
1995/03/31 13912.16 15308.46
1995/04/30 13899.21 15326.52
1995/05/31 14207.41 15815.59
1995/06/30 14122.00 15678.00
1995/07/31 14218.65 15826.63
1995/08/31 14387.63 16027.31
1995/09/30 14471.07 16128.76
1995/10/31 14616.24 16363.27
1995/11/30 14774.80 16634.74
1995/12/31 14851.05 16794.60
1996/01/31 14957.08 16921.40
1996/02/29 14900.28 16807.18
1996/03/31 14731.36 16592.38
1996/04/30 14691.14 16545.43
1996/05/31 14667.13 16538.81
1996/06/30 14787.12 16718.92
1996/07/31 14894.14 16871.06
1996/08/31 14884.49 16867.01
1996/09/30 15006.18 17103.15
1996/10/31 15143.47 17296.58
1996/11/30 15396.72 17613.11
1996/12/31 15330.23 17539.14
1997/01/31 15365.45 17572.28
1997/02/28 15483.91 17733.60
1997/03/31 15292.32 17497.21
1997/04/30 15399.15 17643.66
1997/05/31 15552.89 17909.02
1997/06/30 15705.72 18099.75
1997/07/31 16071.68 18601.12
1997/08/31 15938.16 18426.82
1997/09/30 16107.32 18645.55
1997/10/31 16171.88 18765.44
1997/11/30 16249.13 18875.78
1997/12/31 16436.71 19151.18
1998/01/31 16562.63 19348.82
1998/02/28 16543.72 19354.62
1998/03/31 16545.80 19371.66
1998/04/30 16469.86 19284.29
1998/05/31 16675.37 19589.56
1998/06/30 16722.96 19666.74
1998/07/31 16726.02 19716.11
1998/08/31 16947.87 20020.72
1998/09/30 17121.22 20270.18
1998/10/31 17089.48 20269.77
1998/11/30 17119.07 20340.92
1998/12/31 17151.13 20392.18
1999/01/31 17344.85 20634.64
1999/02/28 17227.20 20544.47
1999/03/31 17228.69 20573.03
1999/04/30 17244.30 20624.25
1999/05/31 17145.30 20504.84
1999/06/30 16898.37 20209.57
1999/07/31 16946.17 20283.13
1999/08/31 16879.54 20120.87
1999/09/30 16894.48 20129.12
1999/10/29 16780.00 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 090439 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Class B on October 31, 1989. As the chart shows, by October 31, 1999,
the value of the investment would have been $16,780 - a 67.80%
increase on the initial investment. For comparison, look at how the
Lehman Brothers Municipal Bond Index - a market value-weighted index
of investment-grade municipal bonds with maturities of one year or
more - did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 would have grown to $19,911 - a
99.11% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will
do tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return and yield
of a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
1999 1998 1997 1996 1995
Dividend returns 3.24% 3.58% 3.86% 3.90% 4.07%
Capital returns -5.05% 2.09% 2.93% -0.29% 6.74%
Total returns -1.81% 5.67% 6.79% 3.61% 10.81%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 3.06(cents) 17.62(cents) 35.29(cents)
Annualized dividend rate 3.55% 3.39% 3.36%
30-day annualized yield 3.61% - -
30-day annualized 5.64% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $10.16 over the past one month, $10.32 over the past six months and
$10.50 over the past one year, you can compare the class' income over
these three periods. The 30-day annualized YIELD is a standard formula
for all bond funds based on the yields of the bonds in the fund,
averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period.
It also helps you compare funds from different companies on an equal
basis. The offering share price used in the calculation of the yield
excludes the effect of Class B's contingent deferred sales charge. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the class' tax-free yield, if you're in the 36%
federal tax bracket, but does not reflect payment of the federal
alternative minimum tax, if applicable. If Fidelity had not reimbursed
certain class expenses, the yield and tax equivalent yield would have
been 3.55% and 5.55%, respectively.
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - CLASS C
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change, or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class C shares
took place on November 3, 1997. Class C shares bear a 1.00% 12b-1 fee
that is reflected in returns after November 3, 1997. Returns between
June 30, 1994 (the date Class B shares were first offered) and
November 3, 1997 are those of Class B shares and reflect Class B
shares' 0.90% 12b-1 fee (1.00% prior to January 1, 1996). Returns
between September 10, 1992 (the date Class T shares were first
offered) and June 30, 1994 are those of Class T shares and reflect
Class T shares' 0.25% 12b-1 fee. Returns prior to September 10, 1992
are those of Institutional Class, the original class of the fund,
which does not bear a 12b-1 fee. Had Class C shares' 12b-1 fee been
reflected, returns between November 3, 1997 and January 1, 1996 and
prior to June 30, 1994 would have been lower. Class C shares'
contingent deferred sales charge included in the past one year, past
five year and past 10 year total return figures are 1%, 0% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV INT MUNICIPAL -1.91% 27.07% 67.60%
INCOME - CL C
FIDELITY ADV INT MUNICIPAL -2.85% 27.07% 67.60%
INCOME - CL C (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
LB 1-17 Year Municipal Bond -0.07% 37.20% n/a
Intermediate Municipal Debt -1.47% 30.78% 80.53%
Funds Average
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 those of the Lehman
Brothers 1-17 Year Municipal Bond Index - a market value-weighted
index of investment-grade municipal bonds with maturities between one
and 17 years. To measure how Class C's performance stacked up against
its peers, you can compare it to the intermediate municipal debt funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Inc. The past one year average represents
a peer group of 132 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV INT MUNICIPAL -1.91% 4.91% 5.30%
INCOME - CL C
FIDELITY ADV INT MUNICIPAL -2.85% 4.91% 5.30%
INCOME - CL C (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
LB 1-17 Year Municipal Bond -0.07% 6.53% n/a
Intermediate Municipal Debt -1.47% 5.51% 6.08%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take Class C's cumulative return and show
you what would have happened if Class C had performed at a constant
rate each year.
$10,000 OVER 10 YEARS
FA Int Muni Inc -CL C LB Municipal Bond
00525 LB015
1989/10/31 10000.00 10000.00
1989/11/30 10109.41 10175.00
1989/12/31 10200.54 10258.23
1990/01/31 10167.26 10209.71
1990/02/28 10257.55 10300.58
1990/03/31 10275.02 10303.67
1990/04/30 10169.36 10229.07
1990/05/31 10354.77 10452.37
1990/06/30 10440.50 10544.24
1990/07/31 10566.50 10699.25
1990/08/31 10505.06 10543.89
1990/09/30 10533.20 10549.90
1990/10/31 10650.99 10741.28
1990/11/30 10820.93 10957.28
1990/12/31 10850.13 11004.95
1991/01/31 10971.29 11152.64
1991/02/28 11071.17 11249.66
1991/03/31 11078.61 11253.71
1991/04/30 11179.04 11403.39
1991/05/31 11268.60 11504.76
1991/06/30 11275.44 11493.37
1991/07/31 11388.38 11633.36
1991/08/31 11479.38 11786.57
1991/09/30 11549.74 11940.04
1991/10/31 11673.77 12047.50
1991/11/30 11703.19 12081.11
1991/12/31 11896.58 12340.37
1992/01/31 11979.68 12368.51
1992/02/29 11993.42 12372.46
1992/03/31 11947.57 12377.04
1992/04/30 12031.13 12487.20
1992/05/31 12163.09 12634.17
1992/06/30 12322.72 12846.17
1992/07/31 12588.11 13231.30
1992/08/31 12495.04 13102.30
1992/09/30 12613.15 13187.98
1992/10/31 12523.41 13058.35
1992/11/30 12752.24 13292.22
1992/12/31 12767.64 13427.94
1993/01/31 12912.82 13584.10
1993/02/28 13271.34 14075.44
1993/03/31 13139.69 13926.66
1993/04/30 13232.11 14067.18
1993/05/31 13287.80 14146.24
1993/06/30 13427.85 14382.34
1993/07/31 13443.10 14401.18
1993/08/31 13690.44 14701.01
1993/09/30 13832.07 14868.46
1993/10/31 13845.06 14897.15
1993/11/30 13737.13 14765.91
1993/12/31 13971.85 15077.62
1994/01/31 14101.48 15249.80
1994/02/28 13749.37 14854.83
1994/03/31 13212.18 14249.95
1994/04/30 13329.12 14370.79
1994/05/31 13448.42 14495.38
1994/06/30 13351.77 14406.81
1994/07/31 13524.48 14670.89
1994/08/31 13563.69 14721.65
1994/09/30 13388.81 14505.54
1994/10/31 13189.77 14247.92
1994/11/30 12892.56 13990.32
1994/12/31 13117.45 14298.24
1995/01/31 13437.64 14706.89
1995/02/28 13770.48 15134.56
1995/03/31 13912.16 15308.46
1995/04/30 13899.21 15326.52
1995/05/31 14207.41 15815.59
1995/06/30 14122.00 15678.00
1995/07/31 14218.65 15826.63
1995/08/31 14387.63 16027.31
1995/09/30 14471.07 16128.76
1995/10/31 14616.24 16363.27
1995/11/30 14774.80 16634.74
1995/12/31 14851.05 16794.60
1996/01/31 14957.08 16921.40
1996/02/29 14900.28 16807.18
1996/03/31 14731.36 16592.38
1996/04/30 14691.14 16545.43
1996/05/31 14667.13 16538.81
1996/06/30 14787.12 16718.92
1996/07/31 14894.14 16871.06
1996/08/31 14884.49 16867.01
1996/09/30 15006.18 17103.15
1996/10/31 15143.47 17296.58
1996/11/30 15396.72 17613.11
1996/12/31 15330.23 17539.14
1997/01/31 15365.45 17572.28
1997/02/28 15483.91 17733.60
1997/03/31 15292.32 17497.21
1997/04/30 15399.15 17643.66
1997/05/31 15552.89 17909.02
1997/06/30 15705.72 18099.75
1997/07/31 16071.68 18601.12
1997/08/31 15938.16 18426.82
1997/09/30 16107.32 18645.55
1997/10/31 16171.88 18765.44
1997/11/30 16247.98 18875.78
1997/12/31 16434.45 19151.18
1998/01/31 16558.37 19348.82
1998/02/28 16538.64 19354.62
1998/03/31 16553.61 19371.66
1998/04/30 16476.23 19284.29
1998/05/31 16680.04 19589.56
1998/06/30 16709.84 19666.74
1998/07/31 16727.32 19716.11
1998/08/31 16931.75 20020.72
1998/09/30 17103.63 20270.18
1998/10/31 17086.22 20269.77
1998/11/30 17114.55 20340.92
1998/12/31 17145.18 20392.18
1999/01/31 17320.97 20634.64
1999/02/28 17218.29 20544.47
1999/03/31 17202.14 20573.03
1999/04/30 17232.37 20624.25
1999/05/31 17131.99 20504.84
1999/06/30 16884.00 20209.57
1999/07/31 16930.05 20283.13
1999/08/31 16861.98 20120.87
1999/09/30 16875.44 20129.12
1999/10/29 16759.60 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 090441 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Class C on October 31, 1989. As the chart shows, by October 31, 1999,
the value of the investment would have been $16,760 - a 67.60%
increase on the initial investment. For comparison, look at how the
Lehman Brothers Municipal Bond Index - a market value-weighted index
of investment-grade municipal bonds with maturities of one year or
more - did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 would have grown to $19,911 - a
99.11% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will
do tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return and yield
of a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
TOTAL RETURN COMPONENTS
YEAR ENDED OCTOBER 31, NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF
CLASS C SHARES) TO OCTOBER
31,
1999 1998
Dividend returns 3.14% 3.44%
Capital returns -5.05% 2.38%
Total returns -1.91% 5.82%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 2.96(cents) 17.03(cents) 34.18(cents)
Annualized dividend rate 3.43% 3.27% 3.26%
30-day annualized yield n/a - -
30-day annualized n/a - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set
period. The annualized dividend rate is based on an average share
price of $10.17 over the past one month, $10.33 over the past six
months and $10.50 over the past one year. The 30-day annualized YIELD
is a standard formula for all bond funds based on the yields of the
bonds in the fund, averaged over the past 30 days. This figure shows
you the yield characteristics of the fund's investments at the end of
the period. It also helps you compare funds from different companies
on an equal basis. The tax equivalent yield shows what you would have
to earn on a taxable investment to equal the class' tax-free yield, if
you're in the 36% federal tax bracket, but does not reflect payment of
the federal alternative minimum tax, if applicable. Yield information
will be reported once Class C has a longer, more stable, operating
history.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a municipal bond market
rally late in the period spurred by
attractively priced issues and yields
higher than they've been since
1997, munis produced lackluster
results during the 12-month period
ending October 31, 1999.
Following the global financial crisis
in the fall of 1998 and interest rate
jitters through most of 1999, the
Lehman Brothers Municipal Bond
Index - an index of approximately
50,000 investment-grade, fixed-rate,
tax-
exempt bonds - declined 1.77%
during the period. In comparison,
the Lehman Brothers Aggregate
Bond Index - a broad measure of
the taxable bond market - posted a
marginally positive return of
0.53%. In general, the negative
environment of increasing interest
rates and investors' persistent
concerns about inflation hit the
Lehman Brothers Long-Term
Government Bond Index the hardest,
as it fell 6.10% during the period.
While the supply of municipals was
relatively light during the period -
particularly compared to 1998's
near-record levels of issuance -
demand was similarly muted,
especially among institutional
investors. Muni bonds came under
further downward pressure in the
second half of the period following
two interest-rate hikes by the
Federal Reserve Board and
widespread belief among investors
that there would be a third hike in
November.
(photograph of Norm Lind)
An interview with Norm Lind, Portfolio Manager of Fidelity Advisor
Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the 12-month period ended October 31, 1999, the fund's Class A,
Class T, Class B and Class C shares had total returns of -1.07%,
- -1.11%, -1.81% and -1.91%, respectively. To get a sense of how the
fund did relative to its competitors, the intermediate municipal debt
funds average returned -1.47% for the same 12-month period, according
to Lipper Inc. Additionally, the Lehman Brothers 1-17 Year Municipal
Bond Index, which tracks the types of securities in which the fund
invests, returned -0.07% for the same 12-month period.
Q. RISING INTEREST RATES MADE THE PAST YEAR PRETTY DIFFICULT FOR ALL
BONDS, INCLUDING MUNICIPAL BONDS. WERE THERE ANY TYPES OF MUNICIPALS
THAT HELD UP WELL AGAINST THE UNFAVORABLE BACKDROP?
A. Yes, the fund benefited from its relatively large position in
premium coupon bonds, which pay interest rates above prevailing
markets rates and trade at prices that are above their face - or par -
value. The primary reason why I favored them is because their premium
gives them DE MINIMIS protection. This protects the bonds' gains from
unfavorable tax treatment that can occur during particular market
environments. In addition, individual investors tend to shy away from
premiums, so I'm often able to purchase them at attractive prices
compared to similarly rated, comparable maturity bonds with coupons at
or below prevailing rates. Separately, the fund was helped by its
emphasis on high-quality bonds, since certain lower-quality securities
- - namely hospital and industrial development bonds - came under
increased pressure as interest rates rose.
Q. WHICH BOND MATURITIES DID YOU EMPHASIZE DURING THE YEAR AND WHAT
EFFECT DID YOUR CHOICES HAVE ON PERFORMANCE?
A. My "barbell" strategy had a mixed effect on performance. Throughout
much of the past year, the fund benefited from its barbelled
positioning, meaning it was heavily weighted toward short- and
longer-term bonds, with a smaller weighting in intermediate-maturity
securities. Early on, longer-term bond yields rose less in response to
rising interest rates, and their prices - which move in the opposite
direction of their yields - fell less. But from August through the end
of October of this year, the reverse was true and the fund's barbell
positioning detracted from its performance.
Q. HOW DID THAT BARBELL STRATEGY AFFECT THE FUND'S DURATION - WHICH
MEASURES ITS INTEREST-RATE SENSITIVITY?
A. Since I offset the fund's longer-term holdings with shorter-term
holdings, I kept the fund's duration in line with the intermediate
municipal market as a whole, as measured by the Lehman Brothers 1-17
Year Municipal Bond Index. More recently, however, I sold some
shorter- and longer-term holdings in favor of intermediate-term
securities, which I viewed as being priced more attractively and
offering the best potential for total return. At the end of the
period, the fund's duration was five years, which remained in line
with the Lehman Brothers index.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET?
A. The main factor affecting the future of municipals will probably be
- - as it has been over the past year - the direction of interest rates.
But since I don't spend time on interest-rate forecasting, I'll look
for attractively priced bonds that I believe can perform well in
relation to other bonds, no matter what the interest-rate backdrop.
From a technical standpoint, the municipal market is in reasonably
good shape. Rising interest rates have curtailed the supply of new
issuance and refundings - or refinancings - of existing debt have
slowed. Given that municipal bonds currently offer attractive values
relative to U.S. Treasury securities, I think we could see better
demand in the months to come.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: to provide high current
income exempt from federal
income tax by investing
normally in investment-grade
municipal debt securities
START DATE: September 19,
1985
SIZE: as of October 31,
1999, more than $71 million
MANAGER: Norm Lind, since
1998; joined Fidelity in
1986
NORM LIND ON SUPPLY AND
DEMAND CHARACTERISTICS OF THE
MUNICIPAL MARKET:
"After the direction of interest rates,
supply and demand are probably the
most important factors determining
municipal bond performance. As a
portfolio manager, I try to take
advantage of seasonal shifts, selling
bonds when supply is light and prices
are fairly advantageous, and buying
when supply is heavy and prices are
relatively cheap. For example,
municipal supply generally slows
down during the summer when
market participants - such as
investment bankers, dealers,
investors and others - go on
vacation, although supply generally
picks up again in the remaining
months of the year. What's more
interesting, in my view, are demand
patterns. With the help of Fidelity's
research team, I look for
opportunities to exploit changes in
investor activity, buying after certain
types of investors have unloaded
municipal bonds and prices are
attractive, and selling when there is
strong demand."
NOTE TO SHAREHOLDERS:
On October 14, 1999, the Board of
Trustees of Fidelity Advisor
Intermediate Municipal Income
Fund voted to present a proposal to
shareholders to merge the fund into
Fidelity Advisor Municipal Income
Fund. A shareholder meeting is
scheduled for April 19, 2000. As of
December 29, 1999, the fund will be
closed to new investments in
anticipation of the proposed
merger. On or about February 23,
2000, shareholders will be sent
proxy materials asking them to vote
on this proposal.
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF OCTOBER
31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
Texas 15.4 11.4
Washington 10.4 7.6
California 10.0 12.7
New York 8.4 8.8
North Carolina 4.9 4.7
TOP FIVE SECTORS AS OF
OCTOBER 31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 27.1 25.3
Education 22.6 21.8
Electric Utilities 19.9 18.2
Health Care 13.5 14.3
Transportation 4.4 4.2
AVERAGE YEARS TO MATURITY AS
OF OCTOBER 31, 1999
6 MONTHS AGO
Years 7.2 7.6
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF OCTOBER 31, 1999
6 MONTHS AGO
Years 5.0 5.2
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION
(MOODY'S RATINGS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AS OF OCTOBER 31, 1999 AS OF APRIL 30, 1999
Aaa 53.5% Aaa 48.3%
Aa, A 34.2% Aa, A 38.3%
Baa 10.8% Baa 11.0%
Short-term Investments 1.5% Short-term Investments 2.4%
Row: 1, Col: 1, Value: 53.5 Row: 1, Col: 1, Value: 48.3
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 34.2 Row: 1, Col: 3, Value: 38.3
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 10.8 Row: 1, Col: 5, Value: 11.0
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 1.5 Row: 1, Col: 8, Value: 2.4
</TABLE>
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P(registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
INVESTMENTS OCTOBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.9%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
ALASKA - 0.4%
Alaska Student Ln. Corp. Aaa $ 300,000 $ 301,773
Student Ln. Rev. Series A,
5% 7/1/03 (AMBAC Insured) (e)
ARIZONA - 1.4%
Maricopa County Cmnty. Aa1 1,000,000 1,001,800
College District Series B,
5.25% 7/1/10
ARKANSAS - 1.2%
Arkansas Gen. Oblig. (Cap. Aa3 1,000,000 892,970
Appreciation) (College
Savings Proj.) Series A, 0%
6/1/02
CALIFORNIA - 10.0%
California Ed. Facilities AAA 225,000 217,310
Auth. Rev. Rfdg. (Chapman
Univ.) 5.375% 10/1/16 (AMBAC
Insured)
California Health Facilities A+ 2,275,000 2,282,189
Fin. Auth. Rev. (Casa de Las
Campanas) Series A, 5.375%
8/1/09
California Hsg. Fin. Agcy. Aaa 1,000,000 1,000,560
Rev. (Home Mtg.) Series R,
5.35% 8/1/07 (MBIA Insured)
(e)
California Poll. Cont. Fing. Baa2 500,000 512,615
Auth. Resource Recovery Rev.
(Waste Mgmt., Inc.) Series
A, 7.15% 2/1/11 (e)
Los Angeles County Ctfs. of A3 970,000 759,432
Prtn. (Disney Parking Proj.)
0% 9/1/04
Sacramento Muni. Util. Aaa 1,000,000 1,031,370
District Elec. Rev. 5.45%
11/15/08 (FGIC Insured)
Sacramento Pwr. Auth.
Cogeneration Proj. Rev.:
6% 7/1/02 BBB- 1,000,000 1,037,920
6.5% 7/1/08 BBB- 300,000 321,714
7,163,110
COLORADO - 1.3%
Arapaho County Cap. Impt. Aaa 3,620,000 562,512
Trust Fund Hwy. Rev. (Cap.
Appreciation) Series C, 0%
8/31/26 (Pre-Refunded to
8/31/05 @ 20.8626) (f)
Colorado Health Facilities Baa2 400,000 385,116
Auth. Rev. Rfdg. (Rocky
Mountain Adventist) 6.25%
2/1/04
947,628
DISTRICT OF COLUMBIA - 0.7%
District of Columbia Redev. Baa 500,000 504,035
Land Agcy. Washington D.C.
Sports Arena Spl. Tax Rev.
5.4% 11/1/00
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
FLORIDA - 2.1%
Broward County Resource A3 $ 460,000 $ 474,798
Recovery Rev. (SES Broward
Co. LP South Proj.) 7.95%
12/1/08
Dade County Aviation Rev. Aaa 500,000 507,690
Rfdg. (Miami Int'l Arpt.)
Series A, 5.25% 10/1/01
(FSA Insured) (e)
Jacksonville Port Auth. Rev. Aaa 500,000 511,710
Rfdg. 5.75% 11/1/09 (MBIA
Insured) (e)
1,494,198
GEORGIA - 0.4%
Atlanta Wtr. & Wastewtr. Rev. Aaa 100,000 101,026
Rfdg. Series A, 5.5% 11/1/10
(FGIC Insured)
Georgia Gen. Oblig. Series B, Aaa 150,000 156,903
5.75% 8/1/10
257,929
ILLINOIS - 2.2%
Chicago Midway Arpt. Rev. Aaa 300,000 312,039
Series B, 6% 1/1/09 (MBIA
Insured) (e)
Metro. Pier & Exposition
Auth. Dedicated Tax Rev.
(Cap. Appreciation):
Series A:
0% 6/15/09 (FGIC Insured) Aaa 435,000 258,342
0% 6/15/09 (FGIC Insured) Aaa 65,000 38,793
(Escrowed to Maturity) (f)
0% 6/15/00 (AMBAC Insured) Aaa 1,000,000 976,400
1,585,574
IOWA - 2.1%
Iowa Student Ln. Liquidity Aa1 1,500,000 1,532,925
Corp. Student Ln. Rev.
Series A, 6.35% 3/1/01
KANSAS - 4.3%
Kansas Dev. Fin. Auth. Rev.:
(Sisters of Charity - Aaa 1,385,000 1,383,213
Leavenworth Health Svc.
Co.) 5.25% 12/1/09 (MBIA
Insured)
(Sisters of Charity Aaa 1,750,000 1,723,138
Leavenworth Health Svc.
Co.) 5.25% 12/1/11 (MBIA
Insured)
3,106,351
LOUISIANA - 2.6%
Louisiana Pub. Facilities Aaa 1,825,000 1,862,759
Auth. Rev. Rfdg. (Student
Ln.) Series A1, 6.2% 3/1/01
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MAINE - 1.4%
Maine Edl. Ln. Marketing Aaa $ 1,000,000 $ 1,000,000
Corp. Student Ln. Rev.
Series A 4, 5.45% 11/1/99 (e)
MASSACHUSETTS - 4.5%
Boston Gen. Oblig. Rev. Aaa 250,000 260,140
(Boston City Hosp.) Series
A, 7.625% 2/15/21
(Pre-Refunded to 8/15/00 @
101.66) (f)
Massachusetts Gen. Oblig. Aa3 250,000 251,588
Rfdg. Series A, 5.5% 2/1/11
Massachusetts Health & Edl. Aaa 700,000 695,226
Facilities Auth. Rev. Rfdg.
(Fairview Extended Care)
Series B, 4.55% 1/1/21 (MBIA
Insured)
Massachusetts Ind. Fin. Agcy. A1 1,600,000 1,407,344
Rev. (Cap. Appreciation)
(Massachusetts Biomedical)
Series A 1, 0% 8/1/02
Massachusetts Tpk. Auth. Aaa 550,000 551,227
Western Tpk. Rev. Series A,
5.55% 1/1/17 (MBIA Insured)
Massachusetts Wtr. Poll. Aa1 100,000 95,035
Abatement Trust Rev. (MWRA
Ln. Prog.) Series A, 5.25%
8/1/14
3,260,560
MICHIGAN - 2.6%
Michigan Hosp. Fin. Auth.
Rev. Rfdg.:
(McLaren Health Care Corp.) A1 2,000,000 1,661,980
Series A, 5% 6/1/19
(Mercy Health Svcs.) Series Aa3 200,000 205,568
S, 5.75% 8/15/05
1,867,548
MINNESOTA - 0.5%
Minneapolis Gen. Oblig. (Cap. Aaa 200,000 174,506
Appreciation) Series B, 0%
12/1/02
Minnesota Higher Ed. Aa3 200,000 200,558
Facilities Auth. Rev.
(MacAlester College) Series
4 C, 5.5% 3/1/12
375,064
MONTANA - 1.7%
Montana Higher Ed. Student A 1,210,000 1,212,069
Assistance Corp. Student Ln.
Rev. Series B, 6.6% 12/1/99
(e)
NEVADA - 0.8%
Clark County School District Aaa 500,000 539,915
Series A, 9.75% 6/1/01 (MBIA
Insured)
NEW JERSEY - 0.7%
New Jersey Gen. Oblig. Series Aa1 500,000 511,065
F, 5.5% 8/1/11
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
NEW MEXICO - 4.5%
Albuquerque Arpt. Rev. Rfdg.:
6.25% 7/1/00 (AMBAC Insured) Aaa $ 250,000 $ 253,765
(e)
6.75% 7/1/09 (AMBAC Insured) Aaa 450,000 498,236
(e)
New Mexico Edl. Assistance Aaa 1,900,000 1,955,043
Foundation Student Ln. Rev.
Series IV A2, 6.65% 3/1/07
Rio Rancho Wtr. & Wastewtr. Aaa 500,000 565,810
Sys. Rev. Series A, 8%
5/15/04 (FSA Insured)
3,272,854
NEW YORK - 8.4%
Buffalo Gen. Oblig. Rfdg. Aaa 1,025,000 985,189
Series C, 5.25% 12/1/13
(FGIC Insured)
New York City Gen. Oblig. A3 1,000,000 984,270
Series H, 5.5% 8/1/12
New York State Dorm. Auth.
Rev.:
(City Univ. Sys. Baa1 500,000 501,210
Consolidated) Series A,
5.75% 7/1/13
(City Univ. Sys.) Series C, Baa1 500,000 562,470
7.5% 7/1/10
Rfdg. (State Univ. Edl. A3 500,000 533,625
Facilities) Series A, 6.5%
5/15/04
New York State Envir. Aa1 500,000 430,240
Facilities Corp. Clean Wtr.
& Drinking Rev. (Revolving
Funds) Series F, 4.875%
6/15/18
New York State Local Govt.
Assistance Corp.:
(Cap. Appreciation) Series A, A3 1,000,000 645,970
0% 4/1/08
Rfdg. Series A, 5.5% 4/1/04 Aaa 100,000 103,105
(AMBAC Insured)
New York State Thruway Auth.
Svc. Contract Rev. (Local
Hwy. & Bridge):
5.4% 4/1/03 Baa1 250,000 255,208
6% 4/1/03 Baa1 200,000 207,906
New York State Urban Dev.
Corp. Rev.:
(Sports Facilities Assistance Aaa 500,000 507,420
Prog.) Series A, 5.5% 4/1/10
(MBIA Insured)
Rfdg. (Correctional Aaa 300,000 308,313
Facilities) 5.625% 1/1/07
(AMBAC Insured)
6,024,926
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
NORTH CAROLINA - 4.9%
North Carolina Eastern Muni.
Pwr. Agcy. Pwr. Sys. Rev.:
Rfdg.:
Series B, 6% 1/1/06 Baa3 $ 1,315,000 $ 1,328,729
Series C, 5.5% 1/1/07 Baa1 700,000 684,096
Series A, 5.625% 1/1/03 Baa3 500,000 501,175
North Carolina Muni. Pwr.
Agcy. #1 Catawba Elec. Rev.
Rfdg.:
5.75% 1/1/02 Baa1 750,000 755,835
5.9% 1/1/03 Baa1 250,000 252,555
3,522,390
OHIO - 1.1%
Ohio Bldg. Auth. (Adult Aaa 500,000 513,295
Correctional) Series A,
5.95% 10/1/14 (MBIA Insured)
Ohio Tpk. Commission Series Aaa 250,000 252,968
A, 5.6% 2/15/12 (MBIA
Insured)
766,263
OREGON - 1.4%
Clackamas County School Aaa 1,000,000 971,280
District #12 5.25% 6/1/13
(FGIC Insured)
PENNSYLVANIA - 3.3%
Pennsylvania Higher Edl. AA- 1,270,000 1,335,380
Facilities Auth. College &
Univ. Rev. Rfdg. (RIDC
Reg'l. Growth- Carnegie
Mellon Univ. Proj.) 6%
11/1/04
Pennsylvania Hsg. Fin. Agcy. Aa3 1,000,000 1,033,670
Rfdg. (Residential Dev.
Section 8) Series A, 7%
7/1/01
2,369,050
RHODE ISLAND - 1.4%
Rhode Island Student Ln. A 1,000,000 1,017,070
Auth. Student Ln. Rev. Rfdg.
Series A, 6.55% 12/1/00
SOUTH CAROLINA - 3.2%
South Carolina Ed. Assistance
Auth. Rev. Rfdg. (Guaranteed
Student Ln. Proj.):
Sr. Lien Series A2, 5.4% AAA 1,250,000 1,264,250
9/1/02
Sub Lien Series B, 5.7% A 1,000,000 1,018,500
9/1/05 (e)
2,282,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
TENNESSEE - 0.5%
Memphis-Shelby County Arpt. Aaa $ 275,000 $ 277,626
Auth. Arpt. Rev. Rfdg.
Series A, 5.25% 2/15/01
(MBIA Insured) (e)
Tennessee Gen. Oblig. Rfdg. Aaa 100,000 106,641
Series A, 6% 5/1/07
384,267
TEXAS - 15.4%
Austin Independent School Aaa 500,000 532,455
District 8.125% 8/1/01
(Escrowed to Maturity) (f)
Brazos Higher Ed. Auth., Inc. Aaa 435,000 447,084
Student Ln. Rev. Rfdg.
Series A 1, 6.05% 12/1/01 (e)
Deer Park Independent School Aaa 200,000 171,596
District Rfdg. 0% 2/15/03
Fort Bend Independent School AAA 1,000,000 1,000,470
District Rfdg. 5.375% 2/15/11
Harris County Gen. Oblig. Aaa 3,000,000 2,644,016
(Cap. Appreciation) (Toll
Road Proj.) Sub Lien Series
A, 0% 8/15/02 (MBIA Insured)
Hurst Euless Bedford Aaa 1,000,000 522,180
Independent School District
Rfdg. (Cap. Appreciation) 0%
8/15/11
Irving Independent School Aaa 250,000 247,213
District (Cap.
Appreciation) 0% 2/15/00
Laredo Gen. Oblig. Rfdg. Aaa 1,000,000 960,120
5.125% 8/15/12 (FGIC Insured)
Northside Independent School Aaa 500,000 505,280
District (School Bldg.)
8.375% 2/1/00
San Antonio Gen. Oblig. Aa2 1,255,000 1,237,807
Series 2000, 5% 2/1/09 (b)
Texas Pub. Fin. Auth. Bldg. Aaa 1,000,000 1,071,800
Rev. Rfdg. (Texas Technical
College) 6.25% 8/1/09 (MBIA
Insured)
Univ. of Texas Permanent
Univ. Fund:
5% 7/1/10 Aaa 250,000 245,015
5.25% 7/1/06 Aaa 1,495,000 1,528,428
11,113,464
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
UTAH - 3.5%
Intermountain Pwr. Agcy. Pwr.
Supply Rev.:
(Cap. Appreciation) Series A, Aaa $ 2,860,000 $ 2,057,370
0% 7/1/06 (MBIA Insured)
Rfdg. (Cap. Appreciation) Aaa 500,000 487,360
Series B, 0% 7/1/00 (MBIA
Insured)
2,544,730
WASHINGTON - 10.4%
Grant County Pub. Util. Aaa 1,715,000 1,602,770
District No. 2 (Priest
Rapids Hydro Elec. Proj.)
Second Series B, 5.375%
1/1/16 (MBIA Insured) (e)
King County Gen. Oblig. Aa1 1,000,000 1,013,100
Series B, 5.9% 12/1/14
Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #2 Rev.:
Rfdg.:
Series A, 0% 7/1/06 (MBIA Aaa 2,700,000 1,927,152
Insured)
Series C, 7.5% 7/1/03 Aa1 525,000 554,274
(Pre-Refunded to 1/1/01 @
102) (f)
5.4% 7/1/12 Aa1 2,000,000 1,907,300
Washington Pub. Pwr. Supply Aa1 500,000 496,215
Sys. Nuclear Proj. #3 Rev.
Rfdg. Series C, 5.1% 7/1/07
7,500,811
TOTAL MUNICIPAL BONDS 71,187,128
(Cost $72,033,544)
</TABLE>
CASH EQUIVALENTS - 1.5%
SHARES
Municipal Central Cash Fund, 1,083,452 1,083,452
3.56% (c)(d) (Cost
$1,083,452)
TOTAL INVESTMENT PORTFOLIO - 72,270,580
100.4% (Cost $73,116,996)
NET OTHER ASSETS - (0.4)% (320,581)
NET ASSETS - 100% $ 71,949,999
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) Security purchased on a delayed delivery or when-issued basis.
(c) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(d) The rate quoted is the annualized seven-day yield of the fund at
period end.
(e) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(f) Security collateralized by an amount sufficient to pay interest
and principal.
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 77.8% AAA, AA, A 69.7%
Baa 8.9% BBB 11.9%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 27.1%
Education 22.6
Electric Utilities 19.9
Health Care 13.5
Others (individually less 17.3
than 5%)
Net Other Assets (0.4)
100.0%
INCOME TAX INFORMATION
At October 31, 1999, the aggregate cost of investment securities for
income tax purposes was $73,116,996. Net unrealized depreciation
aggregated $846,416, of which $548,216 related to appreciated
investment securities and $1,394,632 related to depreciated investment
securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
ASSETS
Investment in securities, at $ 72,270,580
value (cost $73,116,996) -
See accompanying schedule
Cash 34,990
Receivable for fund shares 376,953
sold
Interest receivable 1,035,548
Other receivables 911
TOTAL ASSETS 73,718,982
LIABILITIES
Payable for investments $ 1,286,864
purchased on a delayed
delivery basis
Payable for fund shares 280,543
redeemed
Distributions payable 124,885
Accrued management fee 10,539
Distribution fees payable 20,573
Other payables and accrued 45,579
expenses
TOTAL LIABILITIES 1,768,983
NET ASSETS $ 71,949,999
Net Assets consist of:
Paid in capital $ 72,801,661
Accumulated undistributed net (5,246)
realized gain (loss) on
investments
Net unrealized appreciation (846,416)
(depreciation) on investments
NET ASSETS $ 71,949,999
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1999
CALCULATION OF MAXIMUM $10.15
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($2,572,343 (divided by)
253,436 shares)
Maximum offering price per $10.55
share (100/96.25 of $10.15)
CLASS T: NET ASSET VALUE and $10.15
redemption price per share
($50,431,715 (divided by)
4,968,378 shares)
Maximum offering price per $10.44
share (100/97.25 of $10.15)
CLASS B: NET ASSET VALUE and $10.14
offering price per share
($10,387,389 (divided by)
1,024,065 shares) A
CLASS C: NET ASSET VALUE and $10.15
offering price per share
($2,561,719 (divided by)
252,268 shares) A
INSTITUTIONAL CLASS: NET $10.15
ASSET VALUE, offering price
and redemption price per
share ($5,996,833 (divided
by) 590,849 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
INTEREST INCOME $ 3,879,149
EXPENSES
Management fee $ 293,995
Transfer agent fees 103,028
Distribution fees 255,689
Accounting fees and expenses 64,808
Non-interested trustees' 238
compensation
Custodian fees and expenses 5,121
Registration fees 95,132
Audit 51,521
Legal 11,903
Reports to shareholders 6,711
Miscellaneous 133
Total expenses before 888,279
reductions
Expense reductions (119,127) 769,152
NET INTEREST INCOME 3,109,997
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 25,014
Futures contracts (46,201) (21,187)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (3,986,395)
Futures contracts 38,839 (3,947,556)
NET GAIN (LOSS) (3,968,743)
NET INCREASE (DECREASE) IN $ (858,746)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997
31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 3,109,997 $ 2,576,544 $ 2,794,353
Net realized gain (loss) (21,187) 831,999 875,029
Change in net unrealized (3,947,556) 795,349 192,183
appreciation (depreciation)
NET INCREASE (DECREASE) IN (858,746) 4,203,892 3,861,565
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (3,109,997) (2,576,544) (2,794,353)
From net interest income
From net realized gain (587,640) (172,795) (6,721)
TOTAL DISTRIBUTIONS (3,697,637) (2,749,339) (2,801,074)
Share transactions - net (3,244,402) 14,997,838 (8,495,226)
increase (decrease)
TOTAL INCREASE (DECREASE) (7,800,785) 16,452,391 (7,434,735)
IN NET ASSETS
NET ASSETS
Beginning of period 79,750,784 63,298,393 70,733,128
End of period $ 71,949,999 $ 79,750,784 $ 63,298,393
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31, 1999 1998 H 1997 G 1996 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.600 $ 10.410 $ 10.160
period
Income from Investment
Operations
Net interest income .431 .411 .459 .113
Net realized and unrealized (.540) .200 .191 .250
gain (loss)
Total from investment (.109) .611 .650 .363
operations
Less Distributions
From net interest income (.431) (.411) (.459) (.113)
From net realized gain (.080) (.030) (.001) -
Total distributions (.511) (.441) (.460) (.113)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.600 $ 10.410
TOTAL RETURN B, C (1.07)% 5.89% 6.42% 3.59%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,572 $ 1,082 $ 442 $ 103
(000 omitted)
Ratio of expenses to average .85% E .90% A, E .90% E .90% A, E
net assets
Ratio of net interest income 4.17% 4.19% A 4.37% 4.60% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G YEAR ENDED NOVEMBER 30
H ELEVEN MONTHS ENDED OCTOBER 31
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED OCTOBER 31, 1999 1998 F 1997 G 1996 G 1995 G 1994 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460
period
Income from Invest- ment
Operations
Net interest income .427 .407 .449 .461 .451 .455
Net realized and unrealized (.540) .210 .181 .030 .980 (1.040)
gain (loss)
Total from investment (.113) .617 .630 .491 1.431 (.585)
operations
Less Distributions
From net interest income (.427) (.407) (.449) (.461) (.451) (.455)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.507) (.437) (.450) (.461) (.451) (.475)
Net asset value, end of $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400
period
TOTAL RETURN B, C (1.11)% 5.94% 6.21% 4.89% 15.49% (5.78)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 50,432 $ 60,070 $ 48,830 $ 56,729 $ 62,852 $ 57,382
(000 omitted)
Ratio of expenses to average .90% D .95% A, D 1.00% D 1.00% D .94% D .90% D
net assets
Ratio of net interest income 4.12% 4.15% A 4.32% 4.42% 4.56% 4.49%
to aver- age net assets
Portfolio turnover rate 19% 26% A, E 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
F ELEVEN MONTHS ENDED OCTOBER 31
G YEAR ENDED NOVEMBER 30
<TABLE>
<CAPTION>
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FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED OCTOBER 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 9.890
period
Income from Investment
Operations
Net interest income .353 .339 .382 .394 .373 .155
Net realized and unrealized (.540) .200 .181 .030 .980 (.490)
gain (loss)
Total from investment (.187) .539 .563 .424 1.353 (.335)
operations
Less Distributions
From net interest income (.353) (.339) (.382) (.394) (.373) (.155)
From net realized gain (.080) (.030) (.001) - - -
Total distributions (.433) (.369) (.383) (.394) (.373) (.155)
Net asset value, end of $ 10.140 $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400
period
TOTAL RETURN B, C (1.81)% 5.17% 5.54% 4.21% 14.60% (3.44)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,387 $ 11,134 $ 7,917 $ 7,445 $ 6,226 $ 1,682
(000 omitted)
Ratio of expenses to average 1.60% E 1.65% A, E 1.65% E 1.66% E 1.68% E 1.65% A, E
net assets
Ratio of net interest income 3.43% 3.45% A 3.67% 3.76% 3.71% 3.74% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1994.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
H YEAR ENDED NOVEMBER 30
FINANCIAL HIGHLIGHTS - CLASS C
YEARS ENDED OCTOBER 31, 1999 1998 G 1997 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.550
period
Income from Investment
Operations
Net interest income .342 .328 .027
Net realized and unrealized (.540) .210 .040
gain (loss)
Total from investment (.198) .538 .067
operations
Less Distributions
From net interest income (.342) (.328) (.027)
From net realized gain (.080) (.030) -
Total distributions (.422) (.358) (.027)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.590
TOTAL RETURN B, C (1.91)% 5.16% .63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,562 $ 1,137 $ 13
(000 omitted)
Ratio of expenses to average 1.70% E 1.75% A, E 1.75% A, E
net assets
Ratio of net interest income 3.34% 3.29% A 3.33% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO NOVEMBER 30, 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
<TABLE>
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<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED OCTOBER 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 H
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460
period
Income from Investment
Operations
Net interest income .448 .427 .475 .487 .477 .481
Net realized and unrealized (.540) .210 .181 .050 .950 (1.030)
gain (loss)
Total from investment (.092) .637 .656 .537 1.427 (.549)
operations
Less Distributions
From net interest income (.448) (.427) (.475) (.487) (.477) (.481)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.528) (.457) (.476) (.487) (.477) (.501)
Net asset value, end of $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410
period
TOTAL RETURN B, C (.92)% 6.14% 6.48% 5.36% 15.44% (5.43)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,997 $ 6,328 $ 6,098 $ 6,455 $ 11,085 $ 11,702
(000 omitted)
Ratio of expenses to average .70% D .75% A, D .75% D .75% D .70% D .65% D
net assets
Ratio of expenses to average .70% .75% A .75% .74% E .70% .65%
net assets after expense
reductions
Ratio of net interest income 4.32% 4.36% A 4.57% 4.68% 4.96% 4.75%
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
H YEAR ENDED NOVEMBER 30
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Intermediate Municipal Income Fund (the fund) is a
fund of Fidelity Advisor Series II (the trust) (formerly a fund of
Fidelity Advisor Series VI) 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. Class B shares will automatically
convert to Class A shares after a holding period of four years from
the initial date of purchase. Interest income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date. Income dividends
and capital gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions and losses deferred due to futures
transactions. The fund also utilized earnings and profits distributed
to shareholders on redemption of shares as a part of the dividends
paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission (the SEC), the fund may invest
in the Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc. (FIMM), an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place after the
customary settlement period for that security. The price of the
underlying securities is fixed at the time the transaction is
negotiated. The market values of the securities purchased on a
when-issued or forward commitment basis are identified as such in the
fund's schedule of investments. The fund may receive compensation for
interest forgone in the purchase of a when-issued security. With
respect to purchase commitments, the fund identifies securities as
segregated in its records with a value at least equal to the amount of
the commitment. Losses may arise due
2. OPERATING POLICIES - CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
to changes in the market value of the underlying securities, if the
counterparty does not perform under the contract, or if the issuer
does not issue the securities due to political, economic, or other
factors.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $16,576,179 and $14,786,415, respectively.
The market value of futures contracts opened and closed during the
period amounted to $3,833,875 and $6,387,873, 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 .0920% to .3700% for the
period. The annual individual fund fee rate is .25%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annual rate of .38% of average net assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement with FIMM, a wholly owned subsidiary of FMR.
For its services, FIMM receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of Trustees has 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 period, this fee was based on the following annual rates of
the average net assets of each applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO FDC RETAINED BY FDC
CLASS A $ 3,322 $ 311
CLASS T 140,713 2,587
CLASS B 93,961 67,917
CLASS C 17,693 14,383
$ 255,689 $ 85,198
SALES LOAD. FDC receives a front-end sales charge of up to 3.75% for
selling Class A shares, and 2.75% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within three years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 3% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC is paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 8,353 $ 2,999
CLASS T 22,401 9,014
CLASS B 30,967 30,967*
CLASS C 946 946*
$ 62,667 $ 43,926
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT AND ACCOUNTING FEES. Effective June 14, 1999, Citibank,
N.A.(Citibank) replaced UMB Bank, n.a. as the custodian, transfer
agent, and shareholder servicing agent for the fund's Class A, Class
T, Class B, Class C, and Institutional Class shares. Citibank has
entered into a sub-arrangement with Fidelity Investments Institutional
Operations Company, Inc. (FIIOC) with respect to all classes of the
fund to perform the transfer, dividend disbursing, and shareholder
servicing agent functions. FIIOC, an affiliate of FMR, receives
account fees and asset-based fees that vary according to the account
size and type of account of the shareholders of the respective classes
of the fund. All fees are paid to FIIOC by Citibank, which is
reimbursed by each class for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except
proxy statements. For the period, each class paid the following
transfer agent fees:
AMOUNT % OF AVERAGE NET ASSETS
CLASS A $ 3,662 .17
CLASS T 73,465 .13
CLASS B 12,947 .12
CLASS C 3,001 .17
INSTITUTIONAL CLASS 9,953 .15
$ 103,028
Citibank also has a sub-contract with Fidelity Service Company, Inc.
(FSC), an affiliate of FMR, under which FSC maintains the fund's
accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses, if
any) above the following annual rates or range of annual rates of
average net assets for each of the following classes:
FMR EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A .85% $ 3,290
CLASS T .90% 93,455
CLASS B 1.60% 10,988
CLASS C 1.70% 2,659
INSTITUTIONAL CLASS .70% 8,735
$ 119,127
Effective December 1, 1998, Class A, Class B, Class C, and
Institutional Class expense limitations were changed from .90%, 1.65%,
1.75%, and .75%; to .85%, 1.60%, 1.70%, and .70% of each class'
average net assets, respectively.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED ELEVEN MONTHS ENDED OCTOBER 31, YEAR ENDED NOVEMBER 30,
OCTOBER 31,
1999 1998 1997 A
FROM NET INTEREST INCOME
Class A $ 92,550 $ 31,705 $ 15,189
Class T 2,315,888 2,019,325 2,195,690
Class B 358,623 267,333 274,703
Class C 59,144 15,339 26
Institutional Class 283,792 242,842 308,745
Total $ 3,109,997 $ 2,576,544 $ 2,794,353
FROM NET REALIZED GAIN
Class A $ 8,027 $ 1,246 $ 24
Class T 448,244 136,882 5,310
Class B 74,885 22,913 767
Class C 9,946 35 -
Institutional Class 46,538 11,719 620
Total $ 587,640 $ 172,795 $ 6,721
</TABLE>
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997 A
31, 1998
CLASS A Shares sold 213,824 72,895 37,401
Issue in exchange for the - 52,153 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Class A
Reinvestment of distributions 7,447 2,327 1,437
Shares redeemed (68,308) (68,581) (7,082)
Net increase (decrease) 152,963 58,794 31,756
CLASS T Shares sold 2,607,737 833,212 1,237,934
Issue in exchange for the - 1,639,675 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Class T
Reinvestment of distributions 195,749 146,958 150,942
Shares redeemed (3,412,827) (1,651,570) (2,228,549)
Net increase (decrease) (609,341) 968,275 (839,673)
CLASS B Shares sold 436,062 412,030 162,293
Reinvestment of distributions 24,808 17,176 17,600
Shares redeemed (471,198) (142,402) (147,606)
Net increase (decrease) (10,328) 286,804 32,287
CLASS C Shares sold 258,235 123,360 1,185
Reinvestment of distributions 4,045 1,212 2
Shares redeemed (115,591) (20,180) -
Net increase (decrease) 146,689 104,392 1,187
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DOLLARS
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997 A
31, 1998
CLASS A Shares sold $ 2,273,361 $ 774,852 $ 388,486
Issue in exchange for the - 554,907 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Class A
Reinvestment of distributions 77,827 24,853 14,999
Shares redeemed (711,636) (732,634) (74,532)
Net increase (decrease) $ 1,639,552 $ 621,978 $ 328,953
CLASS T Shares sold $ 27,740,166 $ 8,684,653 $ 12,868,543
Issue in exchange for the - 17,446,147 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Class T
Reinvestment of distributions 2,061,872 1,569,314 1,571,556
Shares redeemed (36,164,059) (17,602,042) (23,132,793)
Net increase (decrease) $ (6,362,021) $ 10,098,072 $ (8,692,694)
CLASS B Shares sold $ 4,584,924 $ 4,400,752 $ 1,686,065
Reinvestment of distributions 260,754 183,295 183,295
Shares redeemed (4,962,734) (1,517,988) (1,530,078)
Net increase (decrease) $ (117,056) $ 3,066,059 $ 339,282
CLASS C Shares sold $ 2,695,857 $ 1,314,301 $ 12,505
Reinvestment of distributions 42,439 12,987 25
Shares redeemed (1,199,769) (217,401) -
Net increase (decrease) $ 1,538,527 $ 1,109,887 $ 12,530
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
7. SHARE TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997
31, 1998
INSTITUTIONAL CLASS Shares 161,716 344,786 221,521
sold
Issue in exchange for the - 41,426 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Institutional
Class
Reinvestment of distributions 7,244 3,754 5,385
Shares redeemed (165,729) (378,091) (271,323)
Net increase (decrease) 3,231 11,875 (44,417)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DOLLARS
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997
31, 1998
INSTITUTIONAL CLASS Shares $ 1,718,233 $ 3,651,862 $ 2,293,637
sold
Issue in exchange for the - 440,774 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Institutional
Class
Reinvestment of distributions 76,239 40,053 55,968
Shares redeemed (1,737,876) (4,030,847) (2,832,902)
Net increase (decrease) $ 56,596 $ 101,842 $ (483,297)
</TABLE>
8. MERGER INFORMATION.
On May 28, 1998, Class A, Class T, and Institutional Class of the fund
acquired all of the assets and assumed all of the liabilities of
Fidelity Advisor Short-Intermediate Municipal Income Fund Class A,
Class T, and Institutional Class, respectively. Each acquisition was
approved by the shareholders of each class of Fidelity Advisor
Short-Intermediate Municipal Income Fund on May 4, 1998. Based on the
opinion of fund counsel, the reorganization qualified as a tax-free
reorganization for federal income tax purposes with no gain or loss
recognized to the funds or their shareholders.
Class A's acquisition of Fidelity Advisor Short-Intermediate Class A
was accomplished by an exchange of 52,123 shares of Class A for the
54,832 shares then outstanding of Fidelity Advisor Short-Intermediate
Class A (each valued at $10.12). Class T's acquisition of Fidelity
Advisor Short-Intermediate Class T was accomplished by an exchange of
1,639,675 shares of Class T for the 1,722,226 shares then outstanding
of Fidelity Advisor Short-Intermediate Class T (each valued at
$10.13). Institutional Class' acquisition of Fidelity Advisor
Short-Intermediate Institutional Class was accomplished by an exchange
of 41,426 shares of Institutional Class for the 43,512 shares then
outstanding of Fidelity Advisor Short-Intermediate Institutional Class
(each valued at $10.13).
Fidelity Advisor Short-Intermediate Municipal Income Fund's net
assets, including $276,190 of unrealized appreciation, were combined
with the fund for total net assets after the acquisition of
$77,174,506.
9. PROPOSED REORGANIZATION
The Board of Trustees of Fidelity Advisor Intermediate Municipal
Income Fund (the fund) has approved an Agreement and Plan of
Reorganization ("Agreement") between the fund and Fidelity Advisor
Municipal Income Fund ("Reorganization"). The Agreement provides for
the transfer of all of the assets of the fund to Fidelity Advisor
Municipal Income Fund in exchange solely for the number of shares of
Class A, Class T, Class B, Class C and Institutional Class of Fidelity
Advisor Municipal Income Fund having the same relative net asset value
as the outstanding shares of Class A, Class T, Class B, Class C and
Institutional Class of the fund as of the close of business of the New
York Stock Exchange on the day that the Reorganization is effective
and the assumption by Fidelity Advisor Municipal Income Fund of all of
the liabilities of the fund. The Reorganization can be consummated
only if, among other things, it is approved by the vote of a majority
(as defined by the 1940 Act) of outstanding voting securities of the
fund. A Special Meeting of Shareholders ("Meeting") of the fund will
be held on April 19, 2000 to vote on the Agreement. A detailed
description of the proposed transactions and voting information will
be sent to shareholders of the fund in February, 2000. If the
Agreement is approved at the Meeting, the Reorganization is expected
to become effective on or about May 25, 2000.
Effective at the close of business on December 29, 1999, Class A,
Class T, Class B, Class C and Institutional Class shares of Fidelity
Advisor Intermediate Municipal Income Fund are no longer available for
purchase or exchange to all accounts pending the proposed
Reorganization.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series II and the Shareholders of
Fidelity Advisor Intermediate Municipal Income Fund (formerly a fund
of Fidelity Advisor Series VI):
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Intermediate Municipal Income Fund (a fund of
Fidelity Advisor Series II, formerly a fund of Fidelity Advisor Series
VI) at October 31, 1999, 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 Intermediate Municipal Income
Fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at October
31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 10, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Intermediate Municipal
Income Fund voted to pay to shareholders of record at the opening of
business on record date, the following distributions derived from
capital gains realized from sales of portfolio securities, and
dividends derived from net investment income:
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS
Class A 12/7/1998 12/4/1998 $- $.08
Class T 12/7/1998 12/4/1998 $- $.08
Class B 12/7/1998 12/4/1998 $- $.08
Class C 12/7/1998 12/4/1998 $- $.08
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
During fiscal year ended 1999, 100% of the fund's income dividends was
free from federal income tax, and 12.14% of the fund's income
dividends was subject to the federal alternative minimum tax.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments Money
Management, Inc. (FIMM)
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Stanley N. Griffith, Assistant Vice President
Norman U. Lind, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
John H. Costello, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
Ned C. Lautenbach
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York ,NY
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York ,NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Latin America Fund
Fidelity Advisor Emerging Asia 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(registered trademark)
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Value Strategies 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 High Income Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(registered trademark)
FIDELITY(REGISTERED TRADEMARK) ADVISOR
INTERMEDIATE MUNICIPAL INCOME FUND - INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 11 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 19 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 28 Notes to the financial
statements.
REPORT OF INDEPENDENT 37 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 38
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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:
All major U.S. equity market indexes posted positive returns for the
month of October, led by the technology-heavy NASDAQ Index, which
climbed to a record high close during the month. Domestic bonds,
however, turned in relatively flat performance, due in large part to
lingering fears of a potential interest rate hike by the Federal
Reserve Board, and its adoption of a tightening bias during the first
week of the month.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND - INSTITUTIONAL
CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. If Fidelity had not reimbursed certain
class expenses, the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV INT MUNICIPAL -0.92% 33.38% 77.46%
INCOME - INST CL
LB 1-17 Year Municipal Bond -0.07% 37.20% n/a
Intermediate Municipal Debt -1.47% 30.78% 80.53%
Funds Average
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Institutional Class' returns to those
of the Lehman Brothers 1-17 Year Municipal Bond Index - a market
value-weighted index of investment-grade municipal bonds with
maturities between one and 17 years. To measure how Institutional
Class' performance stacked up against its peers, you can compare it to
the intermediate municipal debt funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past one year average represents a peer group of 132 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, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY ADV INT MUNICIPAL -0.92% 5.93% 5.90%
INCOME - INST CL
LB 1-17 Year Municipal Bond -0.07% 6.53% n/a
Intermediate Municipal Debt -1.47% 5.51% 6.08%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' cumulative
return and show you what would have happened if Institutional Class
had performed at a constant rate each year.
$10,000 OVER 10 YEARS
FA Int Muni Inc -CL I LB Municipal Bond
00089 LB015
1989/10/31 10000.00 10000.00
1989/11/30 10109.41 10175.00
1989/12/31 10200.54 10258.23
1990/01/31 10167.26 10209.71
1990/02/28 10257.55 10300.58
1990/03/31 10275.02 10303.67
1990/04/30 10169.36 10229.07
1990/05/31 10354.77 10452.37
1990/06/30 10440.50 10544.24
1990/07/31 10566.50 10699.25
1990/08/31 10505.06 10543.89
1990/09/30 10533.20 10549.90
1990/10/31 10650.99 10741.28
1990/11/30 10820.93 10957.28
1990/12/31 10850.13 11004.95
1991/01/31 10971.29 11152.64
1991/02/28 11071.17 11249.66
1991/03/31 11078.61 11253.71
1991/04/30 11179.04 11403.39
1991/05/31 11268.60 11504.76
1991/06/30 11275.44 11493.37
1991/07/31 11388.38 11633.36
1991/08/31 11479.38 11786.57
1991/09/30 11549.74 11940.04
1991/10/31 11673.77 12047.50
1991/11/30 11703.19 12081.11
1991/12/31 11896.58 12340.37
1992/01/31 11979.68 12368.51
1992/02/29 11993.42 12372.46
1992/03/31 11947.57 12377.04
1992/04/30 12031.13 12487.20
1992/05/31 12163.09 12634.17
1992/06/30 12322.72 12846.17
1992/07/31 12588.11 13231.30
1992/08/31 12495.04 13102.30
1992/09/30 12611.74 13187.98
1992/10/31 12525.61 13058.35
1992/11/30 12757.10 13292.22
1992/12/31 12762.90 13427.94
1993/01/31 12923.60 13584.10
1993/02/28 13272.27 14075.44
1993/03/31 13143.47 13926.66
1993/04/30 13238.39 14067.18
1993/05/31 13296.72 14146.24
1993/06/30 13440.07 14382.34
1993/07/31 13471.34 14401.18
1993/08/31 13709.83 14701.01
1993/09/30 13855.03 14868.46
1993/10/31 13884.33 14897.15
1993/11/30 13779.35 14765.91
1993/12/31 14031.13 15077.62
1994/01/31 14164.45 15249.80
1994/02/28 13800.76 14854.83
1994/03/31 13264.78 14249.95
1994/04/30 13384.95 14370.79
1994/05/31 13507.60 14495.38
1994/06/30 13413.40 14406.81
1994/07/31 13603.21 14670.89
1994/08/31 13657.48 14721.65
1994/09/30 13493.74 14505.54
1994/10/31 13304.90 14247.92
1994/11/30 13030.65 13990.32
1994/12/31 13269.12 14298.24
1995/01/31 13591.57 14706.89
1995/02/28 13939.09 15134.56
1995/03/31 14094.63 15308.46
1995/04/30 14093.65 15326.52
1995/05/31 14418.66 15815.59
1995/06/30 14344.17 15678.00
1995/07/31 14454.81 15826.63
1995/08/31 14638.96 16027.31
1995/09/30 14735.89 16128.76
1995/10/31 14896.28 16363.27
1995/11/30 15042.28 16634.74
1995/12/31 15176.09 16794.60
1996/01/31 15280.95 16921.40
1996/02/29 15234.51 16807.18
1996/03/31 15087.81 16592.38
1996/04/30 15043.09 16545.43
1996/05/31 15029.73 16538.81
1996/06/30 15163.76 16718.92
1996/07/31 15285.12 16871.06
1996/08/31 15287.00 16867.01
1996/09/30 15438.23 17103.15
1996/10/31 15591.09 17296.58
1996/11/30 15847.95 17613.11
1996/12/31 15806.02 17539.14
1997/01/31 15838.31 17572.28
1997/02/28 15972.19 17733.60
1997/03/31 15786.76 17497.21
1997/04/30 15908.69 17643.66
1997/05/31 16095.23 17909.02
1997/06/30 16249.64 18099.75
1997/07/31 16656.44 18601.12
1997/08/31 16515.03 18426.82
1997/09/30 16702.54 18645.55
1997/10/31 16782.23 18765.44
1997/11/30 16874.81 18875.78
1997/12/31 17082.16 19151.18
1998/01/31 17225.79 19348.82
1998/02/28 17218.79 19354.62
1998/03/31 17234.15 19371.66
1998/04/30 17167.78 19284.29
1998/05/31 17395.21 19589.56
1998/06/30 17457.90 19666.74
1998/07/31 17474.44 19716.11
1998/08/31 17719.59 20020.72
1998/09/30 17913.90 20270.18
1998/10/31 17910.89 20269.77
1998/11/30 17955.29 20340.92
1998/12/31 17985.85 20392.18
1999/01/31 18202.85 20634.64
1999/02/28 18108.90 20544.47
1999/03/31 18107.26 20573.03
1999/04/30 18154.11 20624.25
1999/05/31 18063.85 20504.84
1999/06/30 17799.98 20209.57
1999/07/31 17881.15 20283.13
1999/08/31 17807.17 20120.87
1999/09/30 17853.45 20129.12
1999/10/29 17746.12 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 090457 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Intermediate Municipal Income Fund -
Institutional Class on October 31, 1989. As the chart shows, by
October 31, 1999, the value of the investment would have grown to
$17,746 - a 77.46% increase on the initial investment. For comparison,
look at how the Lehman Brothers Municipal Bond Index - a market
value-weighted index of investment-grade municipal bonds with
maturities of one year or more - did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $19,911 - a 99.11% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will
do tomorrow. Bond prices,
for example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return and yield
of a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
1999 1998 1997 1996 1995
Dividend returns 4.13% 4.55% 4.81% 4.85% 5.22%
Capital returns -5.05% 2.18% 2.83% -0.19% 6.74%
Total returns -0.92% 6.73% 7.64% 4.66% 11.96%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 3.84(cents) 22.30(cents) 44.76(cents)
Annualized dividend rate 4.45% 4.28% 4.26%
30-day annualized yield 4.50% - -
30-day annualized 7.03% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $10.17 over the past one month, $10.33 over the past six months and
$10.50 over the past one year, you can compare the class' income over
these three periods. The 30-day annualized YIELD is a standard formula
for all bond funds based on the yields of the bonds in the fund,
averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period.
It also helps you compare funds from different companies on an equal
basis. The tax equivalent yield shows what you would have to earn on a
taxable investment to equal the class' tax-free yield, if you're in
the 36% federal tax bracket, but does not reflect payment of the
federal alternative minimum tax, if applicable. If Fidelity had not
reimbursed certain class expenses, the yield and tax equivalent yield
would have been 4.41% and 6.89%, respectively.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a municipal bond market
rally late in the period spurred by
attractively priced issues and yields
higher than they've been since
1997, munis produced lackluster
results during the 12-month period
ending October 31, 1999.
Following the global financial crisis
in the fall of 1998 and interest rate
jitters through most of 1999, the
Lehman Brothers Municipal Bond
Index - an index of approximately
50,000 investment-grade, fixed-rate,
tax-
exempt bonds - declined 1.77%
during the period. In comparison,
the Lehman Brothers Aggregate
Bond Index - a broad measure of
the taxable bond market - posted a
marginally positive return of
0.53%. In general, the negative
environment of increasing interest
rates and investors' persistent
concerns about inflation hit the
Lehman Brothers Long-Term
Government Bond Index the hardest,
as it fell 6.10% during the period.
While the supply of municipals was
relatively light during the period -
particularly compared to 1998's
near-record levels of issuance -
demand was similarly muted,
especially among institutional
investors. Muni bonds came under
further downward pressure in the
second half of the period following
two interest-rate hikes by the
Federal Reserve Board and
widespread belief among investors
that there would be a third hike in
November.
(photograph of Norm Lind)
An interview with Norm Lind, Portfolio Manager of Fidelity Advisor
Intermediate Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the 12-month period ended October 31, 1999, the fund's
Institutional Class shares had a total return of -0.92%. To get a
sense of how the fund did relative to its competitors, the
intermediate municipal debt funds average returned -1.47% for the same
12-month period, according to Lipper Inc. Additionally, the Lehman
Brothers 1-17 Year Municipal Bond Index, which tracks the types of
securities in which the fund invests, returned -0.07% for the same
12-month period.
Q. RISING INTEREST RATES MADE THE PAST YEAR PRETTY DIFFICULT FOR ALL
BONDS, INCLUDING MUNICIPAL BONDS. WERE THERE ANY TYPES OF MUNICIPALS
THAT HELD UP WELL AGAINST THE UNFAVORABLE BACKDROP?
A. Yes, the fund benefited from its relatively large position in
premium coupon bonds, which pay interest rates above prevailing
markets rates and trade at prices that are above their face - or par -
value. The primary reason why I favored them is because their premium
gives them DE MINIMIS protection. This protects the bonds' gains from
unfavorable tax treatment that can occur during particular market
environments. In addition, individual investors tend to shy away from
premiums, so I'm often able to purchase them at attractive prices
compared to similarly rated, comparable maturity bonds with coupons at
or below prevailing rates. Separately, the fund was helped by its
emphasis on high-quality bonds, since certain lower-quality securities
- - namely hospital and industrial development bonds - came under
increased pressure as interest rates rose.
Q. WHICH BOND MATURITIES DID YOU EMPHASIZE DURING THE YEAR AND WHAT
EFFECT DID YOUR CHOICES HAVE ON PERFORMANCE?
A. My "barbell" strategy had a mixed effect on performance. Throughout
much of the past year, the fund benefited from its barbelled
positioning, meaning it was heavily weighted toward short- and
longer-term bonds, with a smaller weighting in intermediate-maturity
securities. Early on, longer-term bond yields rose less in response to
rising interest rates, and their prices - which move in the opposite
direction of their yields - fell less. But from August through the end
of October of this year, the reverse was true and the fund's barbell
positioning detracted from its performance.
Q. HOW DID THAT BARBELL STRATEGY AFFECT THE FUND'S DURATION - WHICH
MEASURES ITS INTEREST-RATE SENSITIVITY?
A. Since I offset the fund's longer-term holdings with shorter-term
holdings, I kept the fund's duration in line with the intermediate
municipal market as a whole, as measured by the Lehman Brothers 1-17
Year Municipal Bond Index. More recently, however, I sold some
shorter- and longer-term holdings in favor of intermediate-term
securities, which I viewed as being priced more attractively and
offering the best potential for total return. At the end of the
period, the fund's duration was five years, which remained in line
with the Lehman Brothers index.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET?
A. The main factor affecting the future of municipals will probably be
- - as it has been over the past year - the direction of interest rates.
But since I don't spend time on interest-rate forecasting, I'll look
for attractively priced bonds that I believe can perform well in
relation to other bonds, no matter what the interest-rate backdrop.
From a technical standpoint, the municipal market is in reasonably
good shape. Rising interest rates have curtailed the supply of new
issuance and refundings - or refinancings - of existing debt have
slowed. Given that municipal bonds currently offer attractive values
relative to U.S. Treasury securities, I think we could see better
demand in the months to come.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: to provide high current
income exempt from federal
income tax by investing
normally in investment-grade
municipal debt securities
START DATE: September 19,
1985
SIZE: as of October 31,
1999, more than $71 million
MANAGER: Norm Lind, since
1998; joined Fidelity in
1986
NORM LIND ON SUPPLY AND
DEMAND CHARACTERISTICS OF THE
MUNICIPAL MARKET:
"After the direction of interest rates,
supply and demand are probably the
most important factors determining
municipal bond performance. As a
portfolio manager, I try to take
advantage of seasonal shifts, selling
bonds when supply is light and prices
are fairly advantageous, and buying
when supply is heavy and prices are
relatively cheap. For example,
municipal supply generally slows
down during the summer when
market participants - such as
investment bankers, dealers,
investors and others - go on
vacation, although supply generally
picks up again in the remaining
months of the year. What's more
interesting, in my view, are demand
patterns. With the help of Fidelity's
research team, I look for
opportunities to exploit changes in
investor activity, buying after certain
types of investors have unloaded
municipal bonds and prices are
attractive, and selling when there is
strong demand."
NOTE TO SHAREHOLDERS:
On October 14, 1999, the Board of
Trustees of Fidelity Advisor
Intermediate Municipal Income
Fund voted to present a proposal to
shareholders to merge the fund into
Fidelity Advisor Municipal Income
Fund. A shareholder meeting is
scheduled for April 19, 2000. As of
December 29, 1999, the fund will be
closed to new investments in
anticipation of the proposed
merger. On or about February 23,
2000, shareholders will be sent
proxy materials asking them to vote
on this proposal.
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF OCTOBER
31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
Texas 15.4 11.4
Washington 10.4 7.6
California 10.0 12.7
New York 8.4 8.8
North Carolina 4.9 4.7
TOP FIVE SECTORS AS OF
OCTOBER 31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 27.1 25.3
Education 22.6 21.8
Electric Utilities 19.9 18.2
Health Care 13.5 14.3
Transportation 4.4 4.2
AVERAGE YEARS TO MATURITY AS
OF OCTOBER 31, 1999
6 MONTHS AGO
Years 7.2 7.6
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF OCTOBER 31, 1999
6 MONTHS AGO
Years 5.0 5.2
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION
(MOODY'S RATINGS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AS OF OCTOBER 31, 1999 AS OF APRIL 30, 1999
Aaa 53.5% Aaa 48.3%
Aa, A 34.2% Aa, A 38.3%
Baa 10.8% Baa 11.0%
Short-term Investments 1.5% Short-term Investments 2.4%
Row: 1, Col: 1, Value: 53.5 Row: 1, Col: 1, Value: 48.3
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 34.2 Row: 1, Col: 3, Value: 38.3
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 10.8 Row: 1, Col: 5, Value: 11.0
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 1.5 Row: 1, Col: 8, Value: 2.4
</TABLE>
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P(registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
INVESTMENTS OCTOBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.9%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
ALASKA - 0.4%
Alaska Student Ln. Corp. Aaa $ 300,000 $ 301,773
Student Ln. Rev. Series A,
5% 7/1/03 (AMBAC Insured) (e)
ARIZONA - 1.4%
Maricopa County Cmnty. Aa1 1,000,000 1,001,800
College District Series B,
5.25% 7/1/10
ARKANSAS - 1.2%
Arkansas Gen. Oblig. (Cap. Aa3 1,000,000 892,970
Appreciation) (College
Savings Proj.) Series A, 0%
6/1/02
CALIFORNIA - 10.0%
California Ed. Facilities AAA 225,000 217,310
Auth. Rev. Rfdg. (Chapman
Univ.) 5.375% 10/1/16 (AMBAC
Insured)
California Health Facilities A+ 2,275,000 2,282,189
Fin. Auth. Rev. (Casa de Las
Campanas) Series A, 5.375%
8/1/09
California Hsg. Fin. Agcy. Aaa 1,000,000 1,000,560
Rev. (Home Mtg.) Series R,
5.35% 8/1/07 (MBIA Insured)
(e)
California Poll. Cont. Fing. Baa2 500,000 512,615
Auth. Resource Recovery Rev.
(Waste Mgmt., Inc.) Series
A, 7.15% 2/1/11 (e)
Los Angeles County Ctfs. of A3 970,000 759,432
Prtn. (Disney Parking Proj.)
0% 9/1/04
Sacramento Muni. Util. Aaa 1,000,000 1,031,370
District Elec. Rev. 5.45%
11/15/08 (FGIC Insured)
Sacramento Pwr. Auth.
Cogeneration Proj. Rev.:
6% 7/1/02 BBB- 1,000,000 1,037,920
6.5% 7/1/08 BBB- 300,000 321,714
7,163,110
COLORADO - 1.3%
Arapaho County Cap. Impt. Aaa 3,620,000 562,512
Trust Fund Hwy. Rev. (Cap.
Appreciation) Series C, 0%
8/31/26 (Pre-Refunded to
8/31/05 @ 20.8626) (f)
Colorado Health Facilities Baa2 400,000 385,116
Auth. Rev. Rfdg. (Rocky
Mountain Adventist) 6.25%
2/1/04
947,628
DISTRICT OF COLUMBIA - 0.7%
District of Columbia Redev. Baa 500,000 504,035
Land Agcy. Washington D.C.
Sports Arena Spl. Tax Rev.
5.4% 11/1/00
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
FLORIDA - 2.1%
Broward County Resource A3 $ 460,000 $ 474,798
Recovery Rev. (SES Broward
Co. LP South Proj.) 7.95%
12/1/08
Dade County Aviation Rev. Aaa 500,000 507,690
Rfdg. (Miami Int'l Arpt.)
Series A, 5.25% 10/1/01
(FSA Insured) (e)
Jacksonville Port Auth. Rev. Aaa 500,000 511,710
Rfdg. 5.75% 11/1/09 (MBIA
Insured) (e)
1,494,198
GEORGIA - 0.4%
Atlanta Wtr. & Wastewtr. Rev. Aaa 100,000 101,026
Rfdg. Series A, 5.5% 11/1/10
(FGIC Insured)
Georgia Gen. Oblig. Series B, Aaa 150,000 156,903
5.75% 8/1/10
257,929
ILLINOIS - 2.2%
Chicago Midway Arpt. Rev. Aaa 300,000 312,039
Series B, 6% 1/1/09 (MBIA
Insured) (e)
Metro. Pier & Exposition
Auth. Dedicated Tax Rev.
(Cap. Appreciation):
Series A:
0% 6/15/09 (FGIC Insured) Aaa 435,000 258,342
0% 6/15/09 (FGIC Insured) Aaa 65,000 38,793
(Escrowed to Maturity) (f)
0% 6/15/00 (AMBAC Insured) Aaa 1,000,000 976,400
1,585,574
IOWA - 2.1%
Iowa Student Ln. Liquidity Aa1 1,500,000 1,532,925
Corp. Student Ln. Rev.
Series A, 6.35% 3/1/01
KANSAS - 4.3%
Kansas Dev. Fin. Auth. Rev.:
(Sisters of Charity - Aaa 1,385,000 1,383,213
Leavenworth Health Svc.
Co.) 5.25% 12/1/09 (MBIA
Insured)
(Sisters of Charity Aaa 1,750,000 1,723,138
Leavenworth Health Svc.
Co.) 5.25% 12/1/11 (MBIA
Insured)
3,106,351
LOUISIANA - 2.6%
Louisiana Pub. Facilities Aaa 1,825,000 1,862,759
Auth. Rev. Rfdg. (Student
Ln.) Series A1, 6.2% 3/1/01
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MAINE - 1.4%
Maine Edl. Ln. Marketing Aaa $ 1,000,000 $ 1,000,000
Corp. Student Ln. Rev.
Series A 4, 5.45% 11/1/99 (e)
MASSACHUSETTS - 4.5%
Boston Gen. Oblig. Rev. Aaa 250,000 260,140
(Boston City Hosp.) Series
A, 7.625% 2/15/21
(Pre-Refunded to 8/15/00 @
101.66) (f)
Massachusetts Gen. Oblig. Aa3 250,000 251,588
Rfdg. Series A, 5.5% 2/1/11
Massachusetts Health & Edl. Aaa 700,000 695,226
Facilities Auth. Rev. Rfdg.
(Fairview Extended Care)
Series B, 4.55% 1/1/21 (MBIA
Insured)
Massachusetts Ind. Fin. Agcy. A1 1,600,000 1,407,344
Rev. (Cap. Appreciation)
(Massachusetts Biomedical)
Series A 1, 0% 8/1/02
Massachusetts Tpk. Auth. Aaa 550,000 551,227
Western Tpk. Rev. Series A,
5.55% 1/1/17 (MBIA Insured)
Massachusetts Wtr. Poll. Aa1 100,000 95,035
Abatement Trust Rev. (MWRA
Ln. Prog.) Series A, 5.25%
8/1/14
3,260,560
MICHIGAN - 2.6%
Michigan Hosp. Fin. Auth.
Rev. Rfdg.:
(McLaren Health Care Corp.) A1 2,000,000 1,661,980
Series A, 5% 6/1/19
(Mercy Health Svcs.) Series Aa3 200,000 205,568
S, 5.75% 8/15/05
1,867,548
MINNESOTA - 0.5%
Minneapolis Gen. Oblig. (Cap. Aaa 200,000 174,506
Appreciation) Series B, 0%
12/1/02
Minnesota Higher Ed. Aa3 200,000 200,558
Facilities Auth. Rev.
(MacAlester College) Series
4 C, 5.5% 3/1/12
375,064
MONTANA - 1.7%
Montana Higher Ed. Student A 1,210,000 1,212,069
Assistance Corp. Student Ln.
Rev. Series B, 6.6% 12/1/99
(e)
NEVADA - 0.8%
Clark County School District Aaa 500,000 539,915
Series A, 9.75% 6/1/01 (MBIA
Insured)
NEW JERSEY - 0.7%
New Jersey Gen. Oblig. Series Aa1 500,000 511,065
F, 5.5% 8/1/11
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
NEW MEXICO - 4.5%
Albuquerque Arpt. Rev. Rfdg.:
6.25% 7/1/00 (AMBAC Insured) Aaa $ 250,000 $ 253,765
(e)
6.75% 7/1/09 (AMBAC Insured) Aaa 450,000 498,236
(e)
New Mexico Edl. Assistance Aaa 1,900,000 1,955,043
Foundation Student Ln. Rev.
Series IV A2, 6.65% 3/1/07
Rio Rancho Wtr. & Wastewtr. Aaa 500,000 565,810
Sys. Rev. Series A, 8%
5/15/04 (FSA Insured)
3,272,854
NEW YORK - 8.4%
Buffalo Gen. Oblig. Rfdg. Aaa 1,025,000 985,189
Series C, 5.25% 12/1/13
(FGIC Insured)
New York City Gen. Oblig. A3 1,000,000 984,270
Series H, 5.5% 8/1/12
New York State Dorm. Auth.
Rev.:
(City Univ. Sys. Baa1 500,000 501,210
Consolidated) Series A,
5.75% 7/1/13
(City Univ. Sys.) Series C, Baa1 500,000 562,470
7.5% 7/1/10
Rfdg. (State Univ. Edl. A3 500,000 533,625
Facilities) Series A, 6.5%
5/15/04
New York State Envir. Aa1 500,000 430,240
Facilities Corp. Clean Wtr.
& Drinking Rev. (Revolving
Funds) Series F, 4.875%
6/15/18
New York State Local Govt.
Assistance Corp.:
(Cap. Appreciation) Series A, A3 1,000,000 645,970
0% 4/1/08
Rfdg. Series A, 5.5% 4/1/04 Aaa 100,000 103,105
(AMBAC Insured)
New York State Thruway Auth.
Svc. Contract Rev. (Local
Hwy. & Bridge):
5.4% 4/1/03 Baa1 250,000 255,208
6% 4/1/03 Baa1 200,000 207,906
New York State Urban Dev.
Corp. Rev.:
(Sports Facilities Assistance Aaa 500,000 507,420
Prog.) Series A, 5.5% 4/1/10
(MBIA Insured)
Rfdg. (Correctional Aaa 300,000 308,313
Facilities) 5.625% 1/1/07
(AMBAC Insured)
6,024,926
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
NORTH CAROLINA - 4.9%
North Carolina Eastern Muni.
Pwr. Agcy. Pwr. Sys. Rev.:
Rfdg.:
Series B, 6% 1/1/06 Baa3 $ 1,315,000 $ 1,328,729
Series C, 5.5% 1/1/07 Baa1 700,000 684,096
Series A, 5.625% 1/1/03 Baa3 500,000 501,175
North Carolina Muni. Pwr.
Agcy. #1 Catawba Elec. Rev.
Rfdg.:
5.75% 1/1/02 Baa1 750,000 755,835
5.9% 1/1/03 Baa1 250,000 252,555
3,522,390
OHIO - 1.1%
Ohio Bldg. Auth. (Adult Aaa 500,000 513,295
Correctional) Series A,
5.95% 10/1/14 (MBIA Insured)
Ohio Tpk. Commission Series Aaa 250,000 252,968
A, 5.6% 2/15/12 (MBIA
Insured)
766,263
OREGON - 1.4%
Clackamas County School Aaa 1,000,000 971,280
District #12 5.25% 6/1/13
(FGIC Insured)
PENNSYLVANIA - 3.3%
Pennsylvania Higher Edl. AA- 1,270,000 1,335,380
Facilities Auth. College &
Univ. Rev. Rfdg. (RIDC
Reg'l. Growth- Carnegie
Mellon Univ. Proj.) 6%
11/1/04
Pennsylvania Hsg. Fin. Agcy. Aa3 1,000,000 1,033,670
Rfdg. (Residential Dev.
Section 8) Series A, 7%
7/1/01
2,369,050
RHODE ISLAND - 1.4%
Rhode Island Student Ln. A 1,000,000 1,017,070
Auth. Student Ln. Rev. Rfdg.
Series A, 6.55% 12/1/00
SOUTH CAROLINA - 3.2%
South Carolina Ed. Assistance
Auth. Rev. Rfdg. (Guaranteed
Student Ln. Proj.):
Sr. Lien Series A2, 5.4% AAA 1,250,000 1,264,250
9/1/02
Sub Lien Series B, 5.7% A 1,000,000 1,018,500
9/1/05 (e)
2,282,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
TENNESSEE - 0.5%
Memphis-Shelby County Arpt. Aaa $ 275,000 $ 277,626
Auth. Arpt. Rev. Rfdg.
Series A, 5.25% 2/15/01
(MBIA Insured) (e)
Tennessee Gen. Oblig. Rfdg. Aaa 100,000 106,641
Series A, 6% 5/1/07
384,267
TEXAS - 15.4%
Austin Independent School Aaa 500,000 532,455
District 8.125% 8/1/01
(Escrowed to Maturity) (f)
Brazos Higher Ed. Auth., Inc. Aaa 435,000 447,084
Student Ln. Rev. Rfdg.
Series A 1, 6.05% 12/1/01 (e)
Deer Park Independent School Aaa 200,000 171,596
District Rfdg. 0% 2/15/03
Fort Bend Independent School AAA 1,000,000 1,000,470
District Rfdg. 5.375% 2/15/11
Harris County Gen. Oblig. Aaa 3,000,000 2,644,016
(Cap. Appreciation) (Toll
Road Proj.) Sub Lien Series
A, 0% 8/15/02 (MBIA Insured)
Hurst Euless Bedford Aaa 1,000,000 522,180
Independent School District
Rfdg. (Cap. Appreciation) 0%
8/15/11
Irving Independent School Aaa 250,000 247,213
District (Cap.
Appreciation) 0% 2/15/00
Laredo Gen. Oblig. Rfdg. Aaa 1,000,000 960,120
5.125% 8/15/12 (FGIC Insured)
Northside Independent School Aaa 500,000 505,280
District (School Bldg.)
8.375% 2/1/00
San Antonio Gen. Oblig. Aa2 1,255,000 1,237,807
Series 2000, 5% 2/1/09 (b)
Texas Pub. Fin. Auth. Bldg. Aaa 1,000,000 1,071,800
Rev. Rfdg. (Texas Technical
College) 6.25% 8/1/09 (MBIA
Insured)
Univ. of Texas Permanent
Univ. Fund:
5% 7/1/10 Aaa 250,000 245,015
5.25% 7/1/06 Aaa 1,495,000 1,528,428
11,113,464
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
UTAH - 3.5%
Intermountain Pwr. Agcy. Pwr.
Supply Rev.:
(Cap. Appreciation) Series A, Aaa $ 2,860,000 $ 2,057,370
0% 7/1/06 (MBIA Insured)
Rfdg. (Cap. Appreciation) Aaa 500,000 487,360
Series B, 0% 7/1/00 (MBIA
Insured)
2,544,730
WASHINGTON - 10.4%
Grant County Pub. Util. Aaa 1,715,000 1,602,770
District No. 2 (Priest
Rapids Hydro Elec. Proj.)
Second Series B, 5.375%
1/1/16 (MBIA Insured) (e)
King County Gen. Oblig. Aa1 1,000,000 1,013,100
Series B, 5.9% 12/1/14
Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #2 Rev.:
Rfdg.:
Series A, 0% 7/1/06 (MBIA Aaa 2,700,000 1,927,152
Insured)
Series C, 7.5% 7/1/03 Aa1 525,000 554,274
(Pre-Refunded to 1/1/01 @
102) (f)
5.4% 7/1/12 Aa1 2,000,000 1,907,300
Washington Pub. Pwr. Supply Aa1 500,000 496,215
Sys. Nuclear Proj. #3 Rev.
Rfdg. Series C, 5.1% 7/1/07
7,500,811
TOTAL MUNICIPAL BONDS 71,187,128
(Cost $72,033,544)
</TABLE>
CASH EQUIVALENTS - 1.5%
SHARES
Municipal Central Cash Fund, 1,083,452 1,083,452
3.56% (c)(d) (Cost
$1,083,452)
TOTAL INVESTMENT PORTFOLIO - 72,270,580
100.4% (Cost $73,116,996)
NET OTHER ASSETS - (0.4)% (320,581)
NET ASSETS - 100% $ 71,949,999
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) Security purchased on a delayed delivery or when-issued basis.
(c) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(d) The rate quoted is the annualized seven-day yield of the fund at
period end.
(e) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(f) Security collateralized by an amount sufficient to pay interest
and principal.
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 77.8% AAA, AA, A 69.7%
Baa 8.9% BBB 11.9%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 27.1%
Education 22.6
Electric Utilities 19.9
Health Care 13.5
Others (individually less 17.3
than 5%)
Net Other Assets (0.4)
100.0%
INCOME TAX INFORMATION
At October 31, 1999, the aggregate cost of investment securities for
income tax purposes was $73,116,996. Net unrealized depreciation
aggregated $846,416, of which $548,216 related to appreciated
investment securities and $1,394,632 related to depreciated investment
securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
ASSETS
Investment in securities, at $ 72,270,580
value (cost $73,116,996) -
See accompanying schedule
Cash 34,990
Receivable for fund shares 376,953
sold
Interest receivable 1,035,548
Other receivables 911
TOTAL ASSETS 73,718,982
LIABILITIES
Payable for investments $ 1,286,864
purchased on a delayed
delivery basis
Payable for fund shares 280,543
redeemed
Distributions payable 124,885
Accrued management fee 10,539
Distribution fees payable 20,573
Other payables and accrued 45,579
expenses
TOTAL LIABILITIES 1,768,983
NET ASSETS $ 71,949,999
Net Assets consist of:
Paid in capital $ 72,801,661
Accumulated undistributed net (5,246)
realized gain (loss) on
investments
Net unrealized appreciation (846,416)
(depreciation) on investments
NET ASSETS $ 71,949,999
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1999
CALCULATION OF MAXIMUM $10.15
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($2,572,343 (divided by)
253,436 shares)
Maximum offering price per $10.55
share (100/96.25 of $10.15)
CLASS T: NET ASSET VALUE and $10.15
redemption price per share
($50,431,715 (divided by)
4,968,378 shares)
Maximum offering price per $10.44
share (100/97.25 of $10.15)
CLASS B: NET ASSET VALUE and $10.14
offering price per share
($10,387,389 (divided by)
1,024,065 shares) A
CLASS C: NET ASSET VALUE and $10.15
offering price per share
($2,561,719 (divided by)
252,268 shares) A
INSTITUTIONAL CLASS: NET $10.15
ASSET VALUE, offering price
and redemption price per
share ($5,996,833 (divided
by) 590,849 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
INTEREST INCOME $ 3,879,149
EXPENSES
Management fee $ 293,995
Transfer agent fees 103,028
Distribution fees 255,689
Accounting fees and expenses 64,808
Non-interested trustees' 238
compensation
Custodian fees and expenses 5,121
Registration fees 95,132
Audit 51,521
Legal 11,903
Reports to shareholders 6,711
Miscellaneous 133
Total expenses before 888,279
reductions
Expense reductions (119,127) 769,152
NET INTEREST INCOME 3,109,997
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 25,014
Futures contracts (46,201) (21,187)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (3,986,395)
Futures contracts 38,839 (3,947,556)
NET GAIN (LOSS) (3,968,743)
NET INCREASE (DECREASE) IN $ (858,746)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997
31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 3,109,997 $ 2,576,544 $ 2,794,353
Net realized gain (loss) (21,187) 831,999 875,029
Change in net unrealized (3,947,556) 795,349 192,183
appreciation (depreciation)
NET INCREASE (DECREASE) IN (858,746) 4,203,892 3,861,565
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (3,109,997) (2,576,544) (2,794,353)
From net interest income
From net realized gain (587,640) (172,795) (6,721)
TOTAL DISTRIBUTIONS (3,697,637) (2,749,339) (2,801,074)
Share transactions - net (3,244,402) 14,997,838 (8,495,226)
increase (decrease)
TOTAL INCREASE (DECREASE) (7,800,785) 16,452,391 (7,434,735)
IN NET ASSETS
NET ASSETS
Beginning of period 79,750,784 63,298,393 70,733,128
End of period $ 71,949,999 $ 79,750,784 $ 63,298,393
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31, 1999 1998 H 1997 G 1996 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.600 $ 10.410 $ 10.160
period
Income from Investment
Operations
Net interest income .431 .411 .459 .113
Net realized and unrealized (.540) .200 .191 .250
gain (loss)
Total from investment (.109) .611 .650 .363
operations
Less Distributions
From net interest income (.431) (.411) (.459) (.113)
From net realized gain (.080) (.030) (.001) -
Total distributions (.511) (.441) (.460) (.113)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.600 $ 10.410
TOTAL RETURN B, C (1.07)% 5.89% 6.42% 3.59%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,572 $ 1,082 $ 442 $ 103
(000 omitted)
Ratio of expenses to average .85% E .90% A, E .90% E .90% A, E
net assets
Ratio of net interest income 4.17% 4.19% A 4.37% 4.60% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G YEAR ENDED NOVEMBER 30
H ELEVEN MONTHS ENDED OCTOBER 31
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED OCTOBER 31, 1999 1998 F 1997 G 1996 G 1995 G 1994 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460
period
Income from Invest- ment
Operations
Net interest income .427 .407 .449 .461 .451 .455
Net realized and unrealized (.540) .210 .181 .030 .980 (1.040)
gain (loss)
Total from investment (.113) .617 .630 .491 1.431 (.585)
operations
Less Distributions
From net interest income (.427) (.407) (.449) (.461) (.451) (.455)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.507) (.437) (.450) (.461) (.451) (.475)
Net asset value, end of $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400
period
TOTAL RETURN B, C (1.11)% 5.94% 6.21% 4.89% 15.49% (5.78)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 50,432 $ 60,070 $ 48,830 $ 56,729 $ 62,852 $ 57,382
(000 omitted)
Ratio of expenses to average .90% D .95% A, D 1.00% D 1.00% D .94% D .90% D
net assets
Ratio of net interest income 4.12% 4.15% A 4.32% 4.42% 4.56% 4.49%
to aver- age net assets
Portfolio turnover rate 19% 26% A, E 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
F ELEVEN MONTHS ENDED OCTOBER 31
G YEAR ENDED NOVEMBER 30
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED OCTOBER 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 9.890
period
Income from Investment
Operations
Net interest income .353 .339 .382 .394 .373 .155
Net realized and unrealized (.540) .200 .181 .030 .980 (.490)
gain (loss)
Total from investment (.187) .539 .563 .424 1.353 (.335)
operations
Less Distributions
From net interest income (.353) (.339) (.382) (.394) (.373) (.155)
From net realized gain (.080) (.030) (.001) - - -
Total distributions (.433) (.369) (.383) (.394) (.373) (.155)
Net asset value, end of $ 10.140 $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400
period
TOTAL RETURN B, C (1.81)% 5.17% 5.54% 4.21% 14.60% (3.44)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,387 $ 11,134 $ 7,917 $ 7,445 $ 6,226 $ 1,682
(000 omitted)
Ratio of expenses to average 1.60% E 1.65% A, E 1.65% E 1.66% E 1.68% E 1.65% A, E
net assets
Ratio of net interest income 3.43% 3.45% A 3.67% 3.76% 3.71% 3.74% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1994.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
H YEAR ENDED NOVEMBER 30
FINANCIAL HIGHLIGHTS - CLASS C
YEARS ENDED OCTOBER 31, 1999 1998 G 1997 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.550
period
Income from Investment
Operations
Net interest income .342 .328 .027
Net realized and unrealized (.540) .210 .040
gain (loss)
Total from investment (.198) .538 .067
operations
Less Distributions
From net interest income (.342) (.328) (.027)
From net realized gain (.080) (.030) -
Total distributions (.422) (.358) (.027)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.590
TOTAL RETURN B, C (1.91)% 5.16% .63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,562 $ 1,137 $ 13
(000 omitted)
Ratio of expenses to average 1.70% E 1.75% A, E 1.75% A, E
net assets
Ratio of net interest income 3.34% 3.29% A 3.33% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO NOVEMBER 30, 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED OCTOBER 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 H
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460
period
Income from Investment
Operations
Net interest income .448 .427 .475 .487 .477 .481
Net realized and unrealized (.540) .210 .181 .050 .950 (1.030)
gain (loss)
Total from investment (.092) .637 .656 .537 1.427 (.549)
operations
Less Distributions
From net interest income (.448) (.427) (.475) (.487) (.477) (.481)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.528) (.457) (.476) (.487) (.477) (.501)
Net asset value, end of $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410
period
TOTAL RETURN B, C (.92)% 6.14% 6.48% 5.36% 15.44% (5.43)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,997 $ 6,328 $ 6,098 $ 6,455 $ 11,085 $ 11,702
(000 omitted)
Ratio of expenses to average .70% D .75% A, D .75% D .75% D .70% D .65% D
net assets
Ratio of expenses to average .70% .75% A .75% .74% E .70% .65%
net assets after expense
reductions
Ratio of net interest income 4.32% 4.36% A 4.57% 4.68% 4.96% 4.75%
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31
H YEAR ENDED NOVEMBER 30
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Intermediate Municipal Income Fund (the fund) is a
fund of Fidelity Advisor Series II (the trust) (formerly a fund of
Fidelity Advisor Series VI) 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. Class B shares will automatically
convert to Class A shares after a holding period of four years from
the initial date of purchase. Interest income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date. Income dividends
and capital gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions and losses deferred due to futures
transactions. The fund also utilized earnings and profits distributed
to shareholders on redemption of shares as a part of the dividends
paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission (the SEC), the fund may invest
in the Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc. (FIMM), an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place after the
customary settlement period for that security. The price of the
underlying securities is fixed at the time the transaction is
negotiated. The market values of the securities purchased on a
when-issued or forward commitment basis are identified as such in the
fund's schedule of investments. The fund may receive compensation for
interest forgone in the purchase of a when-issued security. With
respect to purchase commitments, the fund identifies securities as
segregated in its records with a value at least equal to the amount of
the commitment. Losses may arise due
2. OPERATING POLICIES - CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
to changes in the market value of the underlying securities, if the
counterparty does not perform under the contract, or if the issuer
does not issue the securities due to political, economic, or other
factors.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $16,576,179 and $14,786,415, respectively.
The market value of futures contracts opened and closed during the
period amounted to $3,833,875 and $6,387,873, 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 .0920% to .3700% for the
period. The annual individual fund fee rate is .25%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annual rate of .38% of average net assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement with FIMM, a wholly owned subsidiary of FMR.
For its services, FIMM receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of Trustees has 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 period, this fee was based on the following annual rates of
the average net assets of each applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO FDC RETAINED BY FDC
CLASS A $ 3,322 $ 311
CLASS T 140,713 2,587
CLASS B 93,961 67,917
CLASS C 17,693 14,383
$ 255,689 $ 85,198
SALES LOAD. FDC receives a front-end sales charge of up to 3.75% for
selling Class A shares, and 2.75% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within three years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 3% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC is paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 8,353 $ 2,999
CLASS T 22,401 9,014
CLASS B 30,967 30,967*
CLASS C 946 946*
$ 62,667 $ 43,926
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT AND ACCOUNTING FEES. Effective June 14, 1999, Citibank,
N.A.(Citibank) replaced UMB Bank, n.a. as the custodian, transfer
agent, and shareholder servicing agent for the fund's Class A, Class
T, Class B, Class C, and Institutional Class shares. Citibank has
entered into a sub-arrangement with Fidelity Investments Institutional
Operations Company, Inc. (FIIOC) with respect to all classes of the
fund to perform the transfer, dividend disbursing, and shareholder
servicing agent functions. FIIOC, an affiliate of FMR, receives
account fees and asset-based fees that vary according to the account
size and type of account of the shareholders of the respective classes
of the fund. All fees are paid to FIIOC by Citibank, which is
reimbursed by each class for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except
proxy statements. For the period, each class paid the following
transfer agent fees:
AMOUNT % OF AVERAGE NET ASSETS
CLASS A $ 3,662 .17
CLASS T 73,465 .13
CLASS B 12,947 .12
CLASS C 3,001 .17
INSTITUTIONAL CLASS 9,953 .15
$ 103,028
Citibank also has a sub-contract with Fidelity Service Company, Inc.
(FSC), an affiliate of FMR, under which FSC maintains the fund's
accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses, if
any) above the following annual rates or range of annual rates of
average net assets for each of the following classes:
FMR EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A .85% $ 3,290
CLASS T .90% 93,455
CLASS B 1.60% 10,988
CLASS C 1.70% 2,659
INSTITUTIONAL CLASS .70% 8,735
$ 119,127
Effective December 1, 1998, Class A, Class B, Class C, and
Institutional Class expense limitations were changed from .90%, 1.65%,
1.75%, and .75%; to .85%, 1.60%, 1.70%, and .70% of each class'
average net assets, respectively.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED ELEVEN MONTHS ENDED OCTOBER 31, YEAR ENDED NOVEMBER 30,
OCTOBER 31,
1999 1998 1997 A
FROM NET INTEREST INCOME
Class A $ 92,550 $ 31,705 $ 15,189
Class T 2,315,888 2,019,325 2,195,690
Class B 358,623 267,333 274,703
Class C 59,144 15,339 26
Institutional Class 283,792 242,842 308,745
Total $ 3,109,997 $ 2,576,544 $ 2,794,353
FROM NET REALIZED GAIN
Class A $ 8,027 $ 1,246 $ 24
Class T 448,244 136,882 5,310
Class B 74,885 22,913 767
Class C 9,946 35 -
Institutional Class 46,538 11,719 620
Total $ 587,640 $ 172,795 $ 6,721
</TABLE>
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997 A
31, 1998
CLASS A Shares sold 213,824 72,895 37,401
Issue in exchange for the - 52,153 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Class A
Reinvestment of distributions 7,447 2,327 1,437
Shares redeemed (68,308) (68,581) (7,082)
Net increase (decrease) 152,963 58,794 31,756
CLASS T Shares sold 2,607,737 833,212 1,237,934
Issue in exchange for the - 1,639,675 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Class T
Reinvestment of distributions 195,749 146,958 150,942
Shares redeemed (3,412,827) (1,651,570) (2,228,549)
Net increase (decrease) (609,341) 968,275 (839,673)
CLASS B Shares sold 436,062 412,030 162,293
Reinvestment of distributions 24,808 17,176 17,600
Shares redeemed (471,198) (142,402) (147,606)
Net increase (decrease) (10,328) 286,804 32,287
CLASS C Shares sold 258,235 123,360 1,185
Reinvestment of distributions 4,045 1,212 2
Shares redeemed (115,591) (20,180) -
Net increase (decrease) 146,689 104,392 1,187
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DOLLARS
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997 A
31, 1998
CLASS A Shares sold $ 2,273,361 $ 774,852 $ 388,486
Issue in exchange for the - 554,907 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Class A
Reinvestment of distributions 77,827 24,853 14,999
Shares redeemed (711,636) (732,634) (74,532)
Net increase (decrease) $ 1,639,552 $ 621,978 $ 328,953
CLASS T Shares sold $ 27,740,166 $ 8,684,653 $ 12,868,543
Issue in exchange for the - 17,446,147 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Class T
Reinvestment of distributions 2,061,872 1,569,314 1,571,556
Shares redeemed (36,164,059) (17,602,042) (23,132,793)
Net increase (decrease) $ (6,362,021) $ 10,098,072 $ (8,692,694)
CLASS B Shares sold $ 4,584,924 $ 4,400,752 $ 1,686,065
Reinvestment of distributions 260,754 183,295 183,295
Shares redeemed (4,962,734) (1,517,988) (1,530,078)
Net increase (decrease) $ (117,056) $ 3,066,059 $ 339,282
CLASS C Shares sold $ 2,695,857 $ 1,314,301 $ 12,505
Reinvestment of distributions 42,439 12,987 25
Shares redeemed (1,199,769) (217,401) -
Net increase (decrease) $ 1,538,527 $ 1,109,887 $ 12,530
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO NOVEMBER 30, 1997.
7. SHARE TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997
31, 1998
INSTITUTIONAL CLASS Shares 161,716 344,786 221,521
sold
Issue in exchange for the - 41,426 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Institutional
Class
Reinvestment of distributions 7,244 3,754 5,385
Shares redeemed (165,729) (378,091) (271,323)
Net increase (decrease) 3,231 11,875 (44,417)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DOLLARS
YEAR ENDED OCTOBER 31, 1999 ELEVEN MONTHS ENDED OCTOBER YEAR ENDED NOVEMBER 30, 1997
31, 1998
INSTITUTIONAL CLASS Shares $ 1,718,233 $ 3,651,862 $ 2,293,637
sold
Issue in exchange for the - 440,774 -
shares of Fidelity Advisor
Short-Intermediate Municipal
Income Fund Institutional
Class
Reinvestment of distributions 76,239 40,053 55,968
Shares redeemed (1,737,876) (4,030,847) (2,832,902)
Net increase (decrease) $ 56,596 $ 101,842 $ (483,297)
</TABLE>
8. MERGER INFORMATION.
On May 28, 1998, Class A, Class T, and Institutional Class of the fund
acquired all of the assets and assumed all of the liabilities of
Fidelity Advisor Short-Intermediate Municipal Income Fund Class A,
Class T, and Institutional Class, respectively. Each acquisition was
approved by the shareholders of each class of Fidelity Advisor
Short-Intermediate Municipal Income Fund on May 4, 1998. Based on the
opinion of fund counsel, the reorganization qualified as a tax-free
reorganization for federal income tax purposes with no gain or loss
recognized to the funds or their shareholders.
Class A's acquisition of Fidelity Advisor Short-Intermediate Class A
was accomplished by an exchange of 52,123 shares of Class A for the
54,832 shares then outstanding of Fidelity Advisor Short-Intermediate
Class A (each valued at $10.12). Class T's acquisition of Fidelity
Advisor Short-Intermediate Class T was accomplished by an exchange of
1,639,675 shares of Class T for the 1,722,226 shares then outstanding
of Fidelity Advisor Short-Intermediate Class T (each valued at
$10.13). Institutional Class' acquisition of Fidelity Advisor
Short-Intermediate Institutional Class was accomplished by an exchange
of 41,426 shares of Institutional Class for the 43,512 shares then
outstanding of Fidelity Advisor Short-Intermediate Institutional Class
(each valued at $10.13).
Fidelity Advisor Short-Intermediate Municipal Income Fund's net
assets, including $276,190 of unrealized appreciation, were combined
with the fund for total net assets after the acquisition of
$77,174,506.
9. PROPOSED REORGANIZATION
The Board of Trustees of Fidelity Advisor Intermediate Municipal
Income Fund (the fund) has approved an Agreement and Plan of
Reorganization ("Agreement") between the fund and Fidelity Advisor
Municipal Income Fund ("Reorganization"). The Agreement provides for
the transfer of all of the assets of the fund to Fidelity Advisor
Municipal Income Fund in exchange solely for the number of shares of
Class A, Class T, Class B, Class C and Institutional Class of Fidelity
Advisor Municipal Income Fund having the same relative net asset value
as the outstanding shares of Class A, Class T, Class B, Class C and
Institutional Class of the fund as of the close of business of the New
York Stock Exchange on the day that the Reorganization is effective
and the assumption by Fidelity Advisor Municipal Income Fund of all of
the liabilities of the fund. The Reorganization can be consummated
only if, among other things, it is approved by the vote of a majority
(as defined by the 1940 Act) of outstanding voting securities of the
fund. A Special Meeting of Shareholders ("Meeting") of the fund will
be held on April 19, 2000 to vote on the Agreement. A detailed
description of the proposed transactions and voting information will
be sent to shareholders of the fund in February, 2000. If the
Agreement is approved at the Meeting, the Reorganization is expected
to become effective on or about May 25, 2000.
Effective at the close of business on December 29, 1999, Class A,
Class T, Class B, Class C and Institutional Class shares of Fidelity
Advisor Intermediate Municipal Income Fund are no longer available for
purchase or exchange to all accounts pending the proposed
Reorganization.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series II and the Shareholders of
Fidelity Advisor Intermediate Municipal Income Fund (formerly a fund
of Fidelity Advisor Series VI):
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Intermediate Municipal Income Fund (a fund of
Fidelity Advisor Series II, formerly a fund of Fidelity Advisor Series
VI) at October 31, 1999, 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 Intermediate Municipal Income
Fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at October
31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 10, 1999
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Intermediate Municipal
Income Fund voted to pay to shareholders of record at the opening of
business on record date, the following distributions derived from
capital gains realized from sales of portfolio securities, and
dividends derived from net investment income:
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS
Institutional Class 12/7/1998 12/4/1998 $- $.08
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
During fiscal year ended 1999, 100% of the fund's income dividends was
free from federal income tax, and 12.14% of the fund's income
dividends was subject to the federal alternative minimum tax.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments Money
Management, Inc. (FIMM)
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Stanley N. Griffith, Assistant Vice President
Norman U. Lind, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
John H. Costello, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
Ned C. Lautenbach
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Latin America Fund
Fidelity Advisor Emerging Asia 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(registered trademark)
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Value Strategies 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 High Income Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
Fidelity Advisor Intermediate Municipal Income Fund
(A Fund of Fidelity Advisor Series II)
Fidelity Advisor Municipal Income Fund
(A Fund of Fidelity Advisor Series II)
FORM N-14
STATEMENT OF ADDITIONAL INFORMATION
February 23, 2000
This Statement of Additional Information, relates to the proposed
reorganization whereby Fidelity Advisor Municipal Income Fund, a fund
of Fidelity Advisor Series II, would acquire all of the assets of
Fidelity Advisor Intermediate Municipal Income Fund, also a fund of
Fidelity Advisor Series II, and assume all of Fidelity Advisor
Intermediate Municipal Income Fund's liabilities in exchange solely
for shares of beneficial interest in Fidelity Advisor Municipal Income
Fund.
This Statement of Additional Information consists of this cover page
and the following described documents, each of which is incorporated
herein by reference:
1. The Prospectuses and Statement of Additional Information of
Fidelity Advisor Municipal Income Fund dated December 29, 1999, which
was previously filed via EDGAR (Accession No. 0000795422-99-000033).
2. The Financial Statements included in the Annual Reports of
Fidelity Advisor Municipal Income for the fiscal year ended October
31, 1999.
3. The Financial Statements included in the Annual Reports of
Fidelity Advisor Intermediate Municipal Income Fund for the fiscal
year ended October 31, 1999.
4. The Pro Forma Financial Statements for Fidelity Advisor
Intermediate Municipal Income Fund and Fidelity Advisor Municipal
Income Fund for the period ended October 31, 1999.
This Statement of Additional Information is not a prospectus. A Proxy
Statement and Prospectus dated February 23, 2000, relating to the
above-referenced matter may be obtained from Fidelity Distributors
Corporation, 82 Devonshire Street, Boston, Massachusetts, 02109. This
Statement of Additional Information relates to, and should be read in
conjunction with, such Proxy Statement and Prospectus.
PART C. OTHER INFORMATION
Item 15. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification
shall be provided to any past or present Trustee or officer. It states
that the Trust shall indemnify any present or past trustee or officer
to the fullest extent permitted by law against liability, and all
expenses reasonably incurred by him or her in connection with any
claim, action, suit or proceeding in which he or she is involved by
virtue of his or her service as a trustee or officer and against any
amount incurred in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other adjudicatory body to
be liable to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his
or her duties (collectively, "disabling conduct"), or not to have
acted in good faith in the reasonable belief that his or her action
was in the best interest of the Trust. In the event of a settlement,
no indemnification may be provided unless there has been a
determination, as specified in the Declaration of Trust, that the
officer or trustee did not engage in disabling conduct.
Pursuant to Section 11 of the Distribution Agreement, the Trust
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against
any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person
acquiring any shares, based upon the ground that the registration
statement, Prospectus, Statement of Additional Information,
shareholder reports or other information filed or made public by the
Trust (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading
under the 1933 Act, or any other statute or the common law. However,
the Trust does not agree to indemnify the Distributor or hold it
harmless to the extent that the statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust by or on behalf of the Distributor. In no case is the indemnity
of the Trust in favor of the Distributor or any person indemnified to
be deemed to protect the Distributor or any person against any
liability to the Issuer or its security holders to which the
Distributor or such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
Pursuant to the agreement by which Fidelity Investments Institutional
Operations Company, Inc. ("FIIOC") is appointed transfer agent, the
Registrant agrees to indemnify and hold FIIOC harmless against any
losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder, which names FIIOC
and/or the Registrant as a party and is not based on and does not
result from FIIOC's willful misfeasance, bad faith or negligence or
reckless disregard of duties, and arises out of or in connection with
FIIOC's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by FIIOC's willful misfeasance, bad faith or negligence
or reckless disregard of duties) which results from the negligence of
the Registrant, or from FIIOC's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of FIIOC's
acting in reliance upon advice reasonably believed by FIIOC to have
been given by counsel for the Registrant, or as a result of FIIOC's
acting in reliance upon any instrument or stock certificate reasonably
believed by it to have been genuine and signed, countersigned or
executed by the proper person.
Item 16. Exhibits
(1) Amended and Restated Declaration of Trust, dated May 13, 1998, is
incorporated herein by reference to Exhibit a(1) of Post-Effective
Amendment No. 47.
(2) Bylaws of the Trust, as amended and dated May 19, 1994, are
incorporated herein by reference to Exhibit 2(a) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment 87.
(3) Not applicable.
(4) Agreement and Plan of Reorganization between Fidelity Advisor
Series II: Fidelity Advisor Intermediate Municipal Income Fund and
Fidelity Advisor Series II: Fidelity Advisor Municipal Income Fund is
filed herein as Exhibit 1 to the Proxy Statement and Prospectus.
(5) Articles VIII and XII of the Amended and Restated Declaration of
Trust, dated May 13, 1998, are incorporated by reference to Exhibit
a(1) of Post-Effective Amendment
(6)(a) Management Contract between Fidelity Advisor Government
Investment Fund and Fidelity Management & Research Company, dated June
1, 1998, is incorporated herein by reference to Exhibit d(2) of
Post-Effective Amendment No. 43.
(b) Management Contract between Fidelity Advisor High Yield Fund and
Fidelity Management & Research Company, dated June 1, 1998, is
incorporated herein by reference to Exhibit d(3) of Post-Effective
Amendment No. 43.
(c) Management Contract between Fidelity Advisor Intermediate Bond
Fund and Fidelity Management & Research Company, dated February 26,
1999, is incorporated herein by reference to Exhibit d(3) of
Post-Effective Amendment No. 44.
(d) Management Contract between Fidelity Advisor Intermediate
Municipal Income Fund and Fidelity Management & Research Company,
dated February 26, 1999, is incorporated herein by reference to
Exhibit d(4) of Post-Effective Amendment No. 44.
(e) Management Contract between Fidelity Advisor Mortgage Securities
Fund and Fidelity Management & Research Company, dated February 26,
1999, is incorporated herein by reference to Exhibit d(5) of
Post-Effective Amendment No. 44.
(f) Management Contract between Fidelity Advisor Municipal Income Fund
and Fidelity Management & Research Company, dated February 26, 1999,
is incorporated herein by reference to Exhibit d(6) of Post-Effective
Amendment No. 44.
(g) Management Contract between Fidelity Advisor Short Fixed-Income
Fund and Fidelity Management & Research Company, dated June 1, 1998,
is incorporated herein by reference to Exhibit d(8) of Post-Effective
Amendment No. 43.
(h) Management Contract between Fidelity Advisor Strategic Income Fund
and Fidelity Management & Research Company, dated October 31, 1997, is
incorporated herein by reference to Exhibit 5(n) of Post-Effective
Amendment No. 40.
(i) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Government Investment Fund, and
Fidelity Investments Money Management, Inc., dated January 1, 1999, is
incorporated herein by reference to Exhibit d(9) of Post-Effective
Amendment No. 44.
(j) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor High Yield Fund, and Fidelity
Management & Research (U.K.) Inc., dated January 1, 1995, is
incorporated herein by reference to Exhibit 5(k) of Post-Effective
Amendment No. 25.
(k) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor High Yield Fund, and Fidelity
Management & Research (Far East) Inc., dated January 1, 1995, is
incorporated herein by reference to Exhibit 5(g) of Post-Effective
Amendment No. 25.
(l) Form of Sub-Advisory Agreement between Fidelity Management &
Research Company, on behalf of Fidelity Advisor Intermediate Bond
Fund, and Fidelity Management & Research (U.K.) Inc., is incorporated
herein by reference to Exhibit d(14) of Post-Effective Amendment No.
43.
(m) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Intermediate Bond Fund, and
Fidelity Management & Research (Far East) Inc., dated February 26,
1999, is incorporated herein by reference to Exhibit d(13) of
Post-Effective Amendment No. 44.
(n) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Intermediate Bond Fund, and
Fidelity Investments Money Management, Inc., dated February 26, 1999,
is incorporated herein by reference to Exhibit d(14) of Post-Effective
Amendment No. 44.
(o) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Intermediate Municipal Income
Fund, and Fidelity Investments Money Management, Inc., dated February
26, 1999, is incorporated herein by reference to Exhibit d(15) of
Post-Effective Amendment No. 44.
(p) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Mortgage Securities Fund, and
Fidelity Management & Research (U.K.) Inc., dated February 26, 1999,
is incorporated herein by reference to Exhibit d(16) of Post-Effective
Amendment No. 44.
(q) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Mortgage Securities Fund, and
Fidelity Management & Research (Far East) Inc., dated February 26,
1999, is incorporated herein by reference to Exhibit d(17) of
Post-Effective Amendment No. 44.
(r) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Mortgage Securities Fund, and
Fidelity Investments Money Management, Inc., dated February 26, 1999,
is incorporated herein by reference to Exhibit d(18) of Post-Effective
Amendment No. 44.
(s) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Municipal Income Fund, and
Fidelity Investments Money Management, Inc., dated February 26, 1999,
is incorporated herein by reference to Exhibit d(19) of Post-Effective
Amendment No. 44.
(t) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Short Fixed-Income Fund, and
Fidelity Management & Research (U.K.) Inc., dated January 1, 1995, is
incorporated herein by reference to Exhibit 5(m) of Post-Effective
Amendment No. 25.
(u) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Short Fixed-Income Fund, and
Fidelity Management & Research (Far East) Inc., dated January 1, 1995,
is incorporated herein by reference to Exhibit 5(i) of Post-Effective
Amendment No. 25.
(v) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Short Fixed-Income Fund, and
Fidelity Investments Money Management, Inc., dated January 1, 1999, is
incorporated herein by reference to Exhibit d(22) of Post-Effective
Amendment No. 44.
(w) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Strategic Income Fund, and
Fidelity Management & Research (U.K.) Inc., dated October 31, 1997, is
incorporated herein by reference to Exhibit 5(o) of Post-Effective
Amendment No. 40.
(x) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Strategic Income Fund, and
Fidelity Management & Research (Far East) Inc., dated October 31,
1997, is incorporated herein by reference to Exhibit 5(p) of
Post-Effective Amendment No. 40.
(y) Sub-advisory agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Strategic Income Fund, and
Fidelity International Investment Advisors, dated August 1, 1999, is
incorporated herein by reference to Exhibit d(25) of Post-Effective
Amendment No. 46.
(z) Sub-advisory agreement between Fidelity International Investment
Advisors (U.K.) Limited and Fidelity International Investment
Advisors, on behalf of Fidelity Advisor Strategic Income Fund, dated
October 31, 1997, is incorporated herein by reference to Exhibit 5(r)
of Post-Effective Amendment No. 41.
(aa) Sub-advisory agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Strategic Income Fund, and
Fidelity Investments Japan Limited, dated
August 1, 1999, is incorporated herein by reference to Exhibit d(27)
of Post-Effective Amendment No. 46.
(bb) Sub-advisory agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Strategic Income Fund, and
Fidelity Investments Money Management, Inc., dated January 1, 1999, is
incorporated herein by reference to Exhibit d(28) of Post-Effective
Amendment No. 44.
(cc) Management Contract between Fidelity Advisor High Income Fund and
Fidelity Management & Research Company, dated July 15, 1999, is
incorporated herein by reference to Exhibit d(29) of Post-Effective
Amendment No. 46.
(dd) Sub-advisory agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor High Income Fund, and Fidelity
Management & Research (U.K.) Inc., dated July 15, 1999, is
incorporated herein by reference to Exhibit d(30) of Post-Effective
Amendment No. 46.
(ee) Sub-advisory agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor High Income Fund, and Fidelity
Management & Research (Far East) Inc., dated July 15, 1999, is
incorporated herein by reference to Exhibit d(31) of Post-Effective
Amendment No. 46.
(7)(a) General Distribution Agreement between Plymouth Government
Securities Portfolio (currently known as Fidelity Advisor Government
Investment Fund) and Fidelity Distributors Corporation, dated April 1,
1987, is incorporated herein by reference to Exhibit 6(a) of
Post-Effective Amendment No. 27.
(b) General Distribution Agreement between Plymouth Aggressive Income
Portfolio (currently known as Fidelity Advisor High Yield Fund) and
Fidelity Distributors Corporation, dated April 1, 1987, is
incorporated herein by reference to Exhibit 6(b) of Post-Effective
Amendment No. 27.
(c) General Distribution Agreement between Plymouth Short-Term Bond
Portfolio (currently known as Fidelity Advisor Short Fixed-Income
Fund) and Fidelity Distributors Corporation, dated September 1, 1987,
is incorporated herein by reference to Exhibit 6(d) of Post-Effective
Amendment No. 27.
(d) Amendments to the General Distribution Agreements between Plymouth
Government Securities Portfolio (currently known as Fidelity Advisor
Government Investment Fund), Plymouth Aggressive Income Portfolio
(currently known as Fidelity Advisor High Yield Fund), and Plymouth
Short-Term Bond Portfolio (currently known as Fidelity Advisor Short
Fixed-Income Fund), and Fidelity Distributors Corporation, dated
January 1, 1988, is incorporated herein by reference to Exhibit 6(f)
of Post-Effective Amendment No. 27.
(e) Amendments to the General Distribution Agreements, between
Fidelity Advisor Series II on behalf of Fidelity Advisor Government
Investment Fund, Fidelity Advisor High Yield Fund, and Fidelity
Advisor Short Fixed-Income Fund, and Fidelity Distributors
Corporation, dated March 14, 1996 and July 15, 1996, are incorporated
herein by reference to Exhibit 6(a) of Fidelity Court Street Trust's
(File No. 2-58774) Post-Effective Amendment No. 61.
(f) General Distribution Agreement between Fidelity Advisor
Intermediate Bond Fund and Fidelity Distributors Corporation, dated
February 26, 1999, is incorporated herein by reference to Exhibit e(6)
of Post-Effective Amendment No. 44.
(g) General Distribution Agreement between Fidelity Advisor
Intermediate Municipal Income Fund and Fidelity Distributors
Corporation, dated February 26, 1999, is incorporated herein by
reference to Exhibit e(7) of Post-Effective Amendment No. 44.
(h) General Distribution Agreement between Fidelity Advisor Mortgage
Securities Fund and Fidelity Distributors Corporation, dated February
26, 1999, is incorporated herein by reference to Exhibit e(8) of
Post-Effective Amendment No. 44.
(i) General Distribution Agreement between Fidelity Advisor Municipal
Income Fund and Fidelity Distributors Corporation, dated February 26,
1999, is incorporated herein by reference to Exhibit e(9) of
Post-Effective Amendment No. 44.
(j) General Distribution Agreement between Fidelity Advisor Strategic
Income Fund and Fidelity Distributors Corporation, dated October 31,
1997, is incorporated herein by reference to Exhibit 6(i) of
Post-Effective Amendment No. 41.
(k) General Distribution Agreement between Fidelity Advisor High
Income Fund and Fidelity Distributors Corporation, dated July 15,
1999, is incorporated herein by reference to Exhibit e(11) of
Post-Effective Amendment No. 46.
(l) Form of Bank Agency Agreement (most recently revised January,
1997) is incorporated herein by reference to Exhibit 6(h) of
Post-Effective Amendment No. 42.
(m) Form of Selling Dealer Agreement (most recently revised January,
1997) is incorporated hereby reference to Exhibit 6(i) of
Post-Effective Amendment No. 42.
(n) Form of Selling Dealer Agreement for Bank-Related Transactions
(most recently revised January, 1997) is incorporated herein by
reference to Exhibit 6(j) of Post-Effective Amendment No. 42.
(8) The Fee Deferral Plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of September 14, 1995 and
amended through November 14, 1996, is incorporated herein by reference
to Exhibit 7(b) of Fidelity Aberdeen Street Trust's (File No.
33-43529) Post-Effective Amendment No. 19.
(9)(a) Custodian Agreement and Appendix C, dated December 1, 1994,
between The Bank of New York and Fidelity Advisor Series II on behalf
of Fidelity Advisor Government Investment Fund, Fidelity Advisor High
Yield Fund, Fidelity Advisor Intermediate Bond Fund, Fidelity Advisor
Mortgage Securities Fund, Fidelity Advisor Short Fixed-Income Fund,
and Fidelity Advisor Strategic Income Fund are incorporated herein by
reference to Exhibit 8(a) of Fidelity Hereford Street Trust's (File
No. 33-52577) Post-Effective Amendment No. 4.
(b) Appendix A, dated June 23, 1999, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and Fidelity Advisor
Series II on behalf of Fidelity Advisor Government Investment Fund,
Fidelity Advisor High Yield Fund, Fidelity Advisor Intermediate Bond
Fund, Fidelity Advisor Mortgage Securities Fund, Fidelity Advisor
Short Fixed-Income Fund, and Fidelity Advisor Strategic Income Fund is
incorporated herein by reference to Exhibit g(2) of Fidelity Money
Market Trust's (File No. 2-62417) Post-Effective Amendment No. 61.
(c) Appendix B, dated March 18, 1999, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and Fidelity
Advisor Series II on behalf of Fidelity Advisor Government Investment
Fund, Fidelity Advisor High Yield Fund, Fidelity Advisor Intermediate
Bond Fund, Fidelity Advisor Mortgage Securities Fund, Fidelity Advisor
Short Fixed-Income Fund, and Fidelity Advisor Strategic Income Fund is
incorporated herein by reference to Exhibit g(3) of Fidelity Hereford
Street Trust's (File No. 33-52577) Post-Effective Amendment No. 12.
(d) Addendum, dated October 21, 1996, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and Fidelity
Advisor Series II on behalf of Fidelity Advisor Government Investment
Fund, Fidelity Advisor High Yield Fund, Fidelity Advisor Intermediate
Bond Fund, Fidelity Advisor Mortgage Securities Fund, Fidelity Advisor
Short Fixed-Income Fund, and Fidelity Advisor Strategic Income Fund is
incorporated herein by reference to Exhibit g(4) of Fidelity Hereford
Street Trust's (File No. 33-52577) Post-Effective Amendment No. 12.
(e) Form of Custodian Agreement, Appendix B, and Appendix C between
The Bank of New York and Fidelity Advisor Series II on behalf of
Fidelity Advisor High Income Fund is incorporated herein by reference
to Exhibit g(7) of Post-Effective Amendment No. 43.
(f) Form of Addendum, to the Custodian Agreement, between The Bank of
New York and Fidelity Advisor Series II on behalf of Fidelity Advisor
High Income Fund is incorporated herein by reference to Exhibit g(6)
of Post-Effective Amendment No. 46.
(g) Custodian Agreement, Appendix A, Appendix B, and Appendix C, dated
May 1, 1998, between Citibank, N.A. and Fidelity Advisor Series II on
behalf of Fidelity Advisor Intermediate Municipal Income Fund and
Fidelity Advisor Municipal Income Fund are incorporated herein by
reference to Exhibit g(5) of Fidelity Union Street Trust's (File No.
2-50318) Post-Effective Amendment No. 102.
(h) Fidelity Group Repo Custodian Agreement among The Bank of New
York, J. P. Morgan Securities, Inc., and Fidelity Advisor Series II on
behalf of Fidelity Advisor Government Investment Fund, Fidelity
Advisor High Yield Fund, and Fidelity Advisor Short Fixed-Income Fund,
dated February 12, 1996, is incorporated herein by reference to
Exhibit 8(d) of Fidelity Institutional Cash Portfolios' (File No.
2-74808) Post-Effective Amendment No. 31.
(i) Schedule 1 to the Fidelity Group Repo Custodian Agreement between
The Bank of New York and Fidelity Advisor Series II on behalf of
Fidelity Advisor Government Investment Fund, Fidelity Advisor High
Yield Fund, and Fidelity Advisor Short Fixed-Income Fund, dated
February 12, 1996, is incorporated herein by reference to Exhibit 8(e)
of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(j) Fidelity Group Repo Custodian Agreement among Chemical Bank,
Greenwich Capital Markets, Inc., and Fidelity Advisor Series II on
behalf of Fidelity Advisor Government Investment Fund, Fidelity
Advisor High Yield Fund, and Fidelity Advisor Short Fixed-Income Fund,
dated November 13, 1995, is incorporated herein by reference to
Exhibit 8(f) of Fidelity Institutional Cash Portfolios' (File No.
2-74808) Post-Effective Amendment No. 31.
(k) Schedule 1 to the Fidelity Group Repo Custodian Agreement between
Chemical Bank and Fidelity Advisor Series II on behalf of Fidelity
Advisor Government Investment Fund, Fidelity Advisor High Yield Fund,
and Fidelity Advisor Short Fixed-Income Fund, dated November 13, 1995,
is incorporated herein by reference to Exhibit 8(g) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(l) Joint Trading Account Custody Agreement between The Bank of New
York and Fidelity Advisor Series II on behalf of Fidelity Advisor
Government Investment Fund, Fidelity Advisor High Yield Fund, and
Fidelity Advisor Short Fixed-Income Fund, dated May 11, 1995, is
incorporated herein by reference to Exhibit 8(h) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(m) First Amendment to Joint Trading Account Custody Agreement between
The Bank of New York and Fidelity Advisor Series II on behalf of
Fidelity Advisor Government Investment Fund, Fidelity Advisor High
Yield Fund, and Fidelity Advisor Short Fixed-Income Fund, dated July
14, 1995, is incorporated herein by reference to Exhibit 8(i) of
Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(n) Form of Fidelity Group Repo Custodian Agreement and Schedule 1
among The Bank of New York, J.P. Morgan Securities, Inc., and Fidelity
Advisor Series II on behalf of Fidelity Advisor High Income Fund,
Fidelity Advisor Intermediate Bond Fund, Fidelity Advisor Mortgage
Securities Fund, and Fidelity Advisor Strategic Income Fund is
incorporated herein by reference to Exhibit 8(n) of Post-Effective
Amendment No. 42.
(o) Form of Fidelity Group Repo Custodian Agreement and Schedule 1
among Chemical Bank, Greenwich Capital Markets, Inc., and Fidelity
Advisor Series II on behalf of Fidelity Advisor High Income Fund,
Fidelity Advisor Intermediate Bond Fund, Fidelity Advisor Mortgage
Securities Fund, and Fidelity Advisor Strategic Income Fund is
incorporated herein by reference to Exhibit 8(o) of Post-Effective
Amendment No. 42.
(p) Form of Joint Trading Account Custody Agreement and First
Amendment to Joint Trading Account Custody Agreement between The Bank
of New York and Fidelity Advisor Series II on behalf of Fidelity
Advisor High Income Fund, Fidelity Advisor Intermediate Bond Fund,
Fidelity Advisor Mortgage Securities Fund, and Fidelity Advisor
Strategic Income Fund is incorporated herein by reference to Exhibit
8(p) of Post-Effective Amendment No. 42.
(10)(a) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Government Investment Fund: Class A is incorporated
herein by reference to Exhibit m(1) of Post-Effective Amendment No.
46.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Government Investment Fund: Class T (formerly known as Class
A) is incorporated herein by reference to Exhibit m(2) of
Post-Effective Amendment No. 46.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Government Investment Fund: Class B is incorporated herein by
reference to Exhibit m(3) of Post-Effective Amendment No. 46.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Government Investment Fund: Class C is incorporated herein by
reference to Exhibit m(4) of Post-Effective Amendment No. 46.
(e) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Government Investment Fund: Institutional Class is
incorporated herein by reference to Exhibit m(5) of Post-Effective
Amendment No. 46.
(f) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High Yield Fund: Class A is incorporated herein by reference
to Exhibit m(6) of Post-Effective Amendment No. 46.
(g) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High Yield Fund: Class T (formerly known as Class A) is
incorporated herein by reference to Exhibit m(7) of Post-Effective
Amendment No. 46.
(h) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High Yield Fund: Class B is incorporated herein by reference
to Exhibit m(8) of Post-Effective Amendment No. 46.
(i) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High Yield Fund: Class C is incorporated herein by reference
to Exhibit m(9) of Post-Effective Amendment No. 46.
(j) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High Yield Fund: Institutional Class is incorporated herein by
reference to Exhibit m(10) of Post-Effective Amendment No. 46.
(k) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Intermediate Bond Fund: Class A is incorporated herein by
reference to Exhibit m(11) of Post-Effective Amendment No. 46.
(l) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Intermediate Bond Fund: Class T is incorporated herein by
reference to Exhibit m(12) of Post-Effective Amendment No. 46.
(m) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Intermediate Bond Fund: Class B is incorporated herein by
reference to Exhibit m(13) of Post-Effective Amendment No. 46.
(n) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Intermediate Bond Fund: Class C is incorporated herein by
reference to Exhibit m(14) of Post-Effective Amendment No. 46.
(o) Form of Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Intermediate Bond Fund: Institutional Class is
incorporated herein by reference to Exhibit m(15) of Post-Effective
Amendment No. 46.
(p) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Intermediate Municipal Income Fund: Class A is incorporated
herein by reference to Exhibit m(16) of Post-Effective Amendment No.
46.
(q) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Intermediate Municipal Income Fund: Class T is incorporated
herein by reference to Exhibit m(17) of Post-Effective Amendment No.
46.
(r) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Intermediate Municipal Income Fund: Class B is incorporated
herein by reference to Exhibit m(18) of Post-Effective Amendment No.
46.
(s) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Intermediate Municipal Income Fund: Class C is incorporated
herein by reference to Exhibit m(19) of Post-Effective Amendment No.
46.
(t) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Intermediate Municipal Income Fund: Institutional Class is
incorporated herein by reference to Exhibit m(20) of Post-Effective
Amendment No. 46.
(u) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Mortgage Securities Fund: Class A is incorporated herein by
reference to Exhibit m(21) of Post-Effective Amendment No. 46.
(v) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Mortgage Securities Fund: Class T is incorporated herein by
reference to Exhibit m(22) of Post-Effective Amendment No. 46.
(w) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Mortgage Securities Fund: Class B is incorporated herein by
reference to Exhibit m(23) of Post-Effective Amendment No. 46.
(x) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Mortgage Securities Fund: Institutional Class is incorporated
herein by reference to Exhibit m(24) of Post-Effective Amendment No.
46.
(y) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Mortgage Securities Fund: Initial Class is incorporated herein
by reference to Exhibit m(25) of Post-Effective Amendment No. 46.
(z) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Municipal Income Fund: Class A is incorporated herein by
reference to Exhibit m(26) of Post-Effective Amendment No. 46.
(aa) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Municipal Income Fund: Class T is incorporated herein by
reference to Exhibit m(27) of Post-Effective Amendment No. 46.
(bb) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Municipal Income Fund: Class B is incorporated herein by
reference to Exhibit m(28) of Post-Effective Amendment No. 46.
(cc) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Municipal Income Fund: Class C is incorporated herein by
reference to Exhibit m(29) of Post-Effective Amendment No. 46.
(dd) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Municipal Income Fund: Institutional Class is incorporated
herein by reference to Exhibit m(30) of Post-Effective Amendment No.
46.
(ee) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Short Fixed-Income Fund: Class A is incorporated herein by
reference to Exhibit m(31) of Post-Effective Amendment No. 46.
(ff) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Short Fixed-Income Fund: Class T (formerly known as Class A)
is incorporated herein by reference to Exhibit m(32) of Post-Effective
Amendment No. 46.
(gg) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Short Fixed-Income Fund: Class C is incorporated herein by
reference to Exhibit m(33) of Post-Effective Amendment No. 46.
(hh) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Short Fixed-Income Fund: Institutional Class is incorporated
herein by reference to Exhibit m(34) of Post-Effective Amendment No.
46.
(ii) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Strategic Income Fund: Class A is incorporated herein by
reference to Exhibit m(35) of Post-Effective Amendment No. 46.
(jj) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Strategic Income Fund: Class T is incorporated herein by
reference to Exhibit m(36) of Post-Effective Amendment No. 46.
(kk) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Strategic Income Fund: Class B is incorporated herein by
reference to Exhibit m(37) of Post-Effective Amendment No. 46.
(ll) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Strategic Income Fund: Class C is incorporated herein by
reference to Exhibit m(38) of Post-Effective Amendment No. 46.
(mm) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Strategic Income Fund: Institutional Class is incorporated
herein by reference to Exhibit m(39) of Post-Effective Amendment No.
46.
(nn) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High Income Fund: Class A is incorporated herein by reference
to Exhibit m(40) of Post-Effective Amendment No. 46.
(oo) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High
Income Fund: Class T is incorporated herein by reference to Exhibit
m(41) of Post-Effective Amendment No. 46.
(pp) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High Income Fund: Class B is incorporated herein by reference
to Exhibit m(42) of Post-Effective Amendment No. 46.
(qq) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High Income Fund: Class C is incorporated herein by reference
to Exhibit m(43) of Post-Effective Amendment No. 46.
(rr) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor High Income Fund: Institutional Class is incorporated herein
by reference to Exhibit m(44) of Post-Effective Amendment No. 46.
(ss) Multiple Class of Shares Plan pursuant to Rule 18f-3 on behalf of
Fidelity Advisor Government Investment Fund, Fidelity Advisor High
Yield Fund, Fidelity Advisor Intermediate Bond Fund, Fidelity Advisor
Intermediate Municipal Income Fund, Fidelity Advisor Municipal Income
Fund, Fidelity Advisor Short Fixed-Income Fund, and Fidelity Advisor
Strategic Income Fund dated March 19, 1998, is incorporated herein by
reference to Exhibit (o)(1) of Post-Effective Amendment No. 43.
(tt) Schedule 1 to Multiple Class of Shares Plan pursuant to Rule
18f-3 on behalf of Fidelity Advisor Government Investment Fund,
Fidelity Advisor High Income Fund, Fidelity Advisor High Yield Fund,
Fidelity Advisor Intermediate Bond Fund, Fidelity Advisor Intermediate
Municipal Income Fund, Fidelity Advisor Municipal Income Fund,
Fidelity Advisor Short Fixed-Income Fund, and Fidelity Advisor
Strategic Income Fund, dated August 30, 1999, is incorporated herein
by reference to Exhibit o(2) of Post-Effective Amendment No. 46.
(uu) Multiple Class of Shares Plan pursuant to Rule 18f-3, dated March
19, 1998, and Schedule 1 to Multiple Class of Shares Plan pursuant to
Rule 18f-3, dated February 26, 1999, on behalf of Fidelity Advisor
Mortgage Securities Fund is incorporated herein by reference to
Exhibit o(3) of Post-Effective Amendment No. 46.
(11) Opinion and consent of counsel (K&L) as to the legality of shares
being registered is filed herein as Exhibit 11.
(12) Opinion and Consent of counsel (K&L) as to tax matters in
connection with the reorganization of Fidelity Advisor Intermediate
Municipal Income Fund is filed herein as Exhibit 12.
(13) Not applicable.
(14) Consent of PricewaterhouseCoopers LLP is filed herein as Exhibit
14.
(15) Pro Forma Combining Financial Statements are filed herein as
Exhibit 15.
(16) Powers of Attorney, dated December 19, 1996, March 6, 1997, and
July 17, 1997, are filed herein as Exhibit 16.
(17) Not applicable.
Item 17. Undertakings
(1)(a) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of the
prospectus which is a part of this Registration Statement by any
person or party who is deemed to be an underwriter within the meaning
of Rule 145(c) of the Securities Act of 1933, the reoffering
prospectus will contain the information called for by the applicable
registration form for reoffering by persons who may be deemed
underwriters, in addition to the information called for by the other
items of the applicable form.
(b) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as part of an amendment
to the Registration Statement and will not be used until the amendment
is effective, and that, in determining any liability under the
Securities Act of 1933, each Post-Effective Amendment shall be deemed
to be a new Registration Statement for the securities offered therein,
and the offering of securities at that time shall be deemed to be the
initial bona fide offering of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City
of Boston, and Commonwealth of Massachusetts, on the 23rd day of
December 1999.
Fidelity Advisor Series II
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
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<CAPTION>
<S> <C> <C>
(Signature) (Title) (Date)
/s/Edward C. Johnson 3d President and Trustee December 23, 1999
(dagger)
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer December 23, 1999
Richard A. Silver
/s/Robert C. Pozen Trustee December 23, 1999
Robert C. Pozen
/s/Ralph F. Cox Trustee December 23, 1999
*
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee December 23, 1999
Phyllis Burke Davis
/s/Robert M. Gates ** Trustee December 23, 1999
Robert M. Gates
/s/E. Bradley Jones Trustee December 23, 1999
*
E. Bradley Jones
/s/Donald J. Kirk Trustee December 23, 1999
*
Donald J. Kirk
/s/Peter S. Lynch Trustee December 23, 1999
*
Peter S. Lynch
/s/Marvin L. Mann * Trustee December 23 , 1999
Marvin L. Mann
/s/William O. McCoy * Trustee December 23, 1999
William O. McCoy
/s/Gerald C. McDonough * Trustee December 23, 1999
Gerald C. McDonough
/s/Thomas R. Williams * Trustee December 23, 1999
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
Exhibit 11
Kirkpatrick & Lockhart llp 1800 Massachusetts Avenue, NW
Second Floor
Washington, DC 20036-1800
202.778.9000
www.kl.com
December 23, 1999
Fidelity Advisor Series II
82 Devonshire Street
Boston, Massachusetts 02109
Ladies and Gentlemen:
You have requested our opinion regarding certain matters in
connection with the issuance of shares of Fidelity Advisor Municipal
Income Fund, a series of Fidelity Advisor Series II (the "Trust"),
pursuant to a Registration Statement to be filed by the Trust on Form
N-14 ("Registration Statement") under the Securities Act of 1933
("1933 Act") in connection with the proposed acquisition by Fidelity
Advisor Municipal Income Fund of all of the assets of Fidelity Advisor
Intermediate Municipal Income Fund, also a series of the Trust, and
the assumption by Fidelity Advisor Municipal Income Fund of the
liabilities of Fidelity Advisor Intermediate Municipal Income Fund
solely in exchange for Fidelity Advisor Municipal Income Fund shares.
In connection with our services as counsel for the Trust, we have
examined, among other things, originals or copies of such documents,
certificates and corporate and other records as we deemed necessary or
appropriate for purposes of this opinion. We have assumed the
genuineness of all signatures, the authenticity of all documents
submitted to us, the conformity to original documents of all documents
presented to us as copies thereof and the authenticity of the original
documents from which any such copies were made, which assumptions we
have not independently verified. As to various matters of fact
material to this opinion, we have relied upon statements and
certificates of officers of the Trust. Based upon this examination,
we are of the opinion that the shares to be issued pursuant to the
Registration Statement, when issued upon the terms provided in the
Registration Statement, subject to compliance with the 1933 Act, the
Investment Company Act of 1940, and applicable state law regulating
the offer and sale of securities, will be legally issued, fully paid,
and non-assessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of a business
trust may be held personally liable for the obligations of the Trust.
The Trust's Declaration of Trust provides that the Trustees shall have
no power to bind any shareholder personally or to call upon any
shareholder for the payment of any sum of money or assessment
whatsoever other than such as the shareholder may at any time
personally agree to pay by way of subscription for any shares or
otherwise. The Declaration of Trust also requires that every note,
bond, contract or other undertaking issued by or on behalf of the
Trust or the Trustees relating to the Trust shall include a recitation
limiting the obligation represented thereby to the Trust and its
assets (although the omission of such a recitation shall not operate
to bind any shareholder). The Declaration of Trust provides that: (i)
in case any shareholder or any former shareholder of any Series of the
Trust shall be held personally liable solely by reason of his being or
having been a shareholder and not because of his acts or omissions or
for some other reason, the shareholder or former shareholder shall be
entitled out of the assets belonging to the applicable Series to be
held harmless from and indemnified against all loss and expense
arising from such liability; and (ii) a Series shall, upon request by
the shareholder, assume the defense of any claim made against any
shareholder for any act or obligation of that Series and satisfy any
judgment thereon.
We hereby consent to your filing a copy of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
/s/Kirkpatrick & Lockhart LLP
KIRKPATRICK & LOCKHART LLP
Exhibit 12
Kirkpatrick & Lockhart llp
Henry W. Olover Building
535 Smithfield Street
Pittsburgh, PA 15222-2312
202.778.9000
www.kl.com
December 23, 1999
Fidelity Advisor Series II
82 Devonshire Street
Boston, MA 02109
Ladies and Gentlemen:
Fidelity Advisor Series II ("FAS II"), a Massachusetts business
trust, on behalf of Fidelity Advisor Intermediate Municipal Income
Fund ("Acquired") and Fidelity Advisor Municipal Income Fund
("Acquiring"), both series of FAS II, has requested our opinion as to
certain federal income tax consequences of a transaction
("Reorganization") in which Acquiring will acquire all of the assets
and assume all of the liabilities of Acquired in exchange solely for
Class A, Class T, Class B, Class C and Institutional Class shares of
beneficial interest in Acquiring ("Acquiring Shares") pursuant to an
Agreement and Plan of Reorganization ("Agreement") expected to be
entered into between Acquired and Acquiring as of February 23, 2000.
In rendering this opinion, we have examined a draft of the Agreement
("Draft Agreement"), the prospectus/proxy statement to be filed with
the Securities and Exchange Commission in connection with the
Reorganization, the currently effective prospectuses and statements of
additional information of Acquired and Acquiring, and such other
documents as we have deemed necessary. We have also relied, with your
consent, on certificates of officers of FAS II.
OPINION
Based solely on the facts and representations set forth in the
reviewed documents and the certificates of officers of FAS II, and
assuming that (i) those representations are true on the date of the
Reorganization, (ii) the Reorganization is consummated in accordance
with the Agreement, and (iii) the Agreement does not differ materially
from the Draft Agreement, our opinion with respect to the federal
income tax consequences of the Reorganization is as follows:
1. The Reorganization will be a reorganization under Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended
("Code"), and Acquired and Acquiring will each be parties to the
Reorganization under Section 368(b) of the Code.
2. No gain or loss will be recognized by Acquired upon the transfer
of all of its assets to Acquiring in exchange solely for Acquiring
Shares and Acquiring's assumption of Acquired's liabilities followed
by the distribution of those Acquiring Shares to the Acquired
shareholders of the corresponding class in liquidation of Acquired.
3. No gain or loss will be recognized by Acquiring on the receipt of
Acquired's assets in exchange solely for Acquiring Shares and the
assumption of Acquired's liabilities.
4. The basis of Acquired's assets in the hands of Acquiring will be
the same as the basis of such assets in Acquired's hands immediately
prior to the Reorganization.
5. Acquiring's holding period in the assets to be received from
Acquired will include Acquired's holding period in such assets.
6. The Acquired shareholders will recognize no gain or loss on the
exchange of each class of shares of beneficial interest in Acquired
("Acquired Shares") solely for the Acquiring Shares of the
corresponding class in the Reorganization.
7. The Acquired shareholders' basis in the Acquiring Shares to be
received by them will be the same as their basis in the Acquired
Shares of the corresponding class to be surrendered in exchange
therefor.
8. The holding period of the Acquiring Shares to be received by the
Acquired shareholders of the corresponding class will include the
holding period of the Acquired Shares to be surrendered in exchange
therefor, provided those Acquired Shares were held as capital assets
on the date of the Reorganization.
The foregoing opinion is based on, and is conditioned on the
continued applicability of, the provisions of the Code and the
regulations thereunder, case law precedent, and the Internal Revenue
Service pronouncements in existence at the date hereof. We express no
opinion as to whether Acquired will recognize gain or loss in the
Reorganization under Section 1256 of the Code with respect to futures,
forwards or options. Nor do we express any opinion other than those
contained herein.
We consent to the inclusion of this opinion in the Registration
Statement on Form N-14 filed with the Securities and Exchange
Commission and the inclusion of the name "Kirkpatrick &
Lockhart LLP" in the "Federal Income Tax Consequences of the
Reorganization," "Federal Income Tax Considerations" and "Legal
Matters" Sections of that Registration Statement.
Very truly yours,
/s/Kirkpatrick & Lockhart LLP
Kirkpatrick & Lockhart LLP
Exhibit 14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Proxy
Statement and Prospectus (the Proxy/Prospectus) constituting part of
this Registration Statement on Form N-14 (the Registration Statement)
of Fidelity Advisor Series II: Fidelity Advisor Municipal Income Fund
and Fidelity Advisor Series II: Fidelity Advisor Intermediate
Municipal Income Fund, of our reports dated December 10, 1999 on the
financial statements and financial highlights included in the October
31, 1999 Annual Reports to Shareholders of the aforementioned funds.
We also consent to the references to our Firm under the headings
"Experts" and "Financial Highlights" in the Proxy/Prospectus and to
the references to our Firm under the headings "Financial Highlights"
in the Prospectuses and "Auditor" in the Statement of Additional
Information for Fidelity Advisor Series II: Fidelity Advisor Municipal
Income Fund.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 23, 1999
Fidelity Advisor Series II: Fidelity Advisor Municipal Income Fund and
Fidelity Advisor Series II: Fidelity Advisor Intermediate Municipal
Income Fund Merger
Notes to Pro Forma Combining Financial Statements
(Unaudited)
The accompanying unaudited Pro Forma Combining Schedule of
Investments and Statement of Assets and Liabilities as of October 31,
1999 and the unaudited Pro Forma Combining Statement of Operations for
the year ended October 31, 1999 are intended to present the financial
condition and related results of operations of Fidelity Advisor
Municipal Income Fund as if the reorganization with Fidelity Advisor
Intermediate Municipal Income Fund had been consummated on November 1,
1998.
The pro forma adjustments to these pro forma financial statements are
comprised of:
(a) Reflects the conversion of Fidelity Advisor Intermediate Municipal
Income Fund class specific shares as of October 31, 1999.
(b) Decrease in fees reflects contractual rates charged against
combined average net assets.
(c) Decrease in fees reflects Fidelity Advisor Municipal Income Fund's
rate applied to combined funds average net assets.
(d) Decrease in fees reflects net decrease in costs incurred as a
result of the reorganization including savings from duplicate charges.
(e) Decrease in reimbursement reflects voluntary expense limit applied
to Pro Forma Class specific reimbursement schedules.
The unaudited pro forma combining statements should be read in
conjunction with the separate annual audited financial statements as
of October 31, 1999 for Fidelity Advisor Series II: Fidelity Advisor
Municipal Income Fund, and for Fidelity Advisor Series II: Fidelity
Advisor Intermediate Municipal Income Fund, which are incorporated by
reference in the Statement of Additional Information to this Proxy
Statement and Prospectus.
FIDELITY ADVISOR MUNICIPAL INCOME AND ADVISOR INTERMEDIATE MUNICIPAL
INCOME FUND PRO FORMA COMBINING PORFTOLIO
AS OF OCTOBER 31, 1999 (UNAUDITED)
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<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY
ADVISOR
MUNICIPAL
INCOME FUND
MOODY'S RATINGS PRINCIPAL AMOUNT VALUE
(NOTE 1)
MUNICIPAL BONDS - 97.7%
ALABAMA - 0.9%
Shelby County Gen. Oblig. - $ 4,000,000 $ 4,266,000
Series A, 7.7% 8/1/17
4,266,000
ALASKA - 1.8%
Alaska Hsg. Fin. Corp. Rfdg. Aa2 5,490,000 5,307,732
Series A, 5.4% 12/1/13
Alaska Student Ln. Corp.
Student Ln. Rev. Series A:
5% 7/1/03 (AMBAC Insured) (e) Aaa $
5.25% 7/1/07 (AMBAC Aaa 1,500,000 1,505,520
Insured) (e)
5.45% 7/1/09 (AMBAC Aaa 1,500,000 1,505,460
Insured) (e)
8,318,712
ARIZONA - 1.3%
Arizona Student Ln. Aquistion Aaa 1,300,000 1,274,676
Auth. Rev. Series A1, 5.875%
5/1/18 (e)
Maricopa County Cmnty. Aa1
College District Series B,
5.25% 7/1/10
Maricopa County Ind. Dev. Baa1 4,495,000 4,262,923
Auth. Health Facilities Rev.
Rfdg. (Catholic Healthcare
West Proj.) Series A 4.1%
7/1/03
5,537,599
ARKANSAS - 0.3%
Arkansas Gen. Oblig. (Cap. Aa3
Appreciation) (College
Savings Proj.) Series A, 0%
6/1/02
Little Rock Arpt. Passenger Aaa 680,000 674,825
Facilities Charge Rev. 5.65%
5/1/16 (AMBAC Insured) (e)
674,825
CALIFORNIA - 4.7%
California Dept. of Wtr. Aa2 2,190,000 2,244,005
Resources Wtr. Sys. Rev.
(Central Valley Proj.)
Series J 2, 6.125% 12/1/13
California Ed. Facilities AAA
Auth. Rev. Rfdg. (Chapman
Univ.) 5.375% 10/1/16 (AMBAC
Insured)
California Health Facilities A+
Fin. Auth. Rev. (Casa de Las
Campanas) Series A, 5.375%
8/1/09
California Hsg. Fin. Agcy.
Rev. (Home Mtg.):
Series B, 5.2% 8/1/26 (MBIA Aaa 850,000 852,491
Insured) (e)
Series R, 5.35% 8/1/07 Aaa
(MBIA Insured) (e)
Series R, 6.15% 8/1/27 Aaa 1,500,000 1,497,165
(MBIA Insured) (e)
California Poll. Cont. Fing. Baa2
Auth. Resource Recovery Rev.
(Waste Mgmt., Inc.) Series
A, 7.15% 2/1/11 (e)
California Pub. Works Board A1 2,000,000 1,989,700
Lease Rev. Rfdg. (California
Univ. Proj.) Series A, 5.5%
10/1/13
Central Valley Fing. Auth. BBB- 4,500,000 4,589,010
Cogeneration Proj. Rev.
(Carson Ice Gen. Proj.) 6%
7/1/09
Foothill/Eastern Trans. Aaa 2,000,000 891,200
Corridor Agcy. Toll Road
Rev. (Cap. Appreciation) Sr.
Lein Series A, 0% 1/1/14
Los Angeles County Ctfs. of A3
Prtn. (Disney Parking Proj.)
0% 9/1/04
Northern California Pwr. Aaa 750,000 804,053
Agcy. Pub. Pwr. Rev. (Proj.
No. 3) 5.85% 7/1/10 (AMBAC
Insured) (Escrowed to
Maturity) (f)
Sacramento City Fing. Auth. Aaa 1,225,000 642,721
Rev. (Cap. Appreciation)
Series B, 0% 11/1/11 (MBIA
Insured)
Sacramento City Fing. Auth. Aaa 2,000,000 1,908,100
Lease Rev. Rfdg. Series A,
5.4% 11/1/20 (AMBAC Insured)
Sacramento Cogeneration Auth. BBB- 500,000 522,885
Cogeneration Proj. Rev.
(Procter & Gamble Proj.)
6.375% 7/1/10
Sacramento Muni. Util. Aaa
District Elec. Rev. 5.45%
11/15/08 (FGIC Insured)
Sacramento Pwr. Auth.
Cogeneration Proj. Rev.:
6% 7/1/02 BBB-
6.5% 7/1/08 BBB-
15,941,330
COLORADO - 4.7%
Arapaho County Cap. Impt.
Trust Fund Hwy. Rev. (Cap.
Appreciation) Series C, 0%
8/31/26 (Pre-Refunded to Aaa 14,000,000 2,175,460
8/31/05 @ 20.8626) (f)
Colorado Health Facilities
Auth. Rev.:
(Nat'l. Benevolent Assoc. Baa2 1,360,000 1,341,518
Proj.) Series A, 6.5% 6/1/25
Rfdg. (Rocky Mountain
Adventist):
6.25% 2/1/04 Baa2
6.625% 2/1/13 Baa2 6,900,000 6,476,616
6.625% 2/1/22 Baa2 4,000,000 3,648,840
Colorado Springs Arpt. Rev.
(Cap. Appreciation) Series C:
0% 1/1/06 (MBIA Insured) Aaa 1,405,000 1,034,656
0% 1/1/08 (MBIA Insured) Aaa 870,000 568,867
Denver City & County Arpt.
Rev.:
(Cap. Appreciation):
Series A, 0% 11/15/02 Aaa 2,115,000 1,841,911
(MBIA Insured) (e)
Series D, 0% 11/15/04 Aaa 1,700,000 1,328,941
(MBIA Insured) (e)
Series A:
7.5% 11/15/23 (e) Baa1 2,070,000 2,240,672
7.5% 11/15/23 Aaa 430,000 487,719
(Pre-Refunded to 11/15/04 @
102) (e)(f)
Series C, 6.55% 11/15/02 (e) Baa1 1,000,000 1,036,560
22,181,760
CONNECTICUT - 1.1%
Connecticut Health & Edl.
Facilities Auth. Rev. (New
Britain Memorial Hosp.)
Series A, 7.5%
7/1/06 (Pre-Refunded to AAA 2,170,000 2,321,683
7/1/02 @ 102) (f)
Eastern Connecticut Resources
Recovery Auth. Solid Waste
Rev. (Wheelabrator Lisbon
Proj.)
Series A, 5.5% 1/1/20 (e) BBB 3,350,000 2,923,612
5,245,295
DISTRICT OF COLUMBIA - 2.8%
District of Columbia Gen.
Oblig. Rfdg.:
Series A:
6% 6/1/07 (MBIA Insured) Aaa 1,850,000 1,944,054
6% 6/1/07 (MBIA Insured) Aaa 150,000 159,164
(Escrowed to Maturity) (f)
Series B, 5% 6/1/05 (MBIA Aaa 3,635,000 3,644,342
Insured)
District of Columbia Hosp. - 940,000 980,495
Rev. (Hosp. for Sick
Children) Series A, 8.875%
1/1/21
District of Columbia Redev.
Land Agcy. Washington D.C.
Sports Arena Spl. Tax Rev.:
5.3% 11/1/99 Baa 1,700,000 1,700,000
5.4% 11/1/00 Baa
5.625% 11/1/10 Baa 485,000 490,616
District of Columbia Rev.:
(Nat'l. Academy of Science Aaa 2,500,000 2,170,575
Proj.) Series A, 5% 1/1/19
(AMBAC Insured)
Rfdg. (Georgetown Univ.) Aaa 2,000,000 2,026,820
Series A, 5.95% 4/1/14 (MBIA
Insured)
13,116,066
FLORIDA - 2.4%
Broward County Resource A3 545,000 562,533
Recovery Rev. (SES Broward
Co. LP South Proj.) 7.95%
12/1/08
Dade County Aviation Rev. Aaa 5,000,000 5,137,350
Rfdg. Series D, 5.75%
10/1/09 (AMBAC Insured) (e)
Dade County Aviation Rev. Aaa
Rfdg. (Miami Int'l Arpt.)
Series A, 5.25% 10/1/01 (FSA
Insured) (e)
Florida Board of Ed. Cap. Aa2 2,100,000 2,007,789
Outlay Rfdg. (Pub. Ed.
Proj.) Series D, 5.75%
6/1/22 (b)
Florida Mid-Bay Bridge Auth. - 2,500,000 2,690,200
Rev. Series A, 7.5% 10/1/17
Jacksonville Port Auth. Rev. Aaa
Rfdg. 5.75% 11/1/09 (MBIA
Insured) (e)
10,397,872
GEORGIA - 0.2%
Atlanta Wtr. & Wastewtr. Rev. Aaa 700,000 707,182
Rfdg. Series A, 5.5% 11/1/10
(FGIC Insured)
Georgia Gen. Oblig. Series B, Aaa
5.75% 8/1/10
707,182
HAWAII - 1.5%
Honolulu City & County Gen.
Oblig. Rfdg. Series C:
5% 7/1/07 (FGIC Insured) Aaa 3,500,000 3,490,970
5.125% 7/1/12 (FGIC Insured) Aaa 4,000,000 3,841,560
7,332,530
ILLINOIS - 4.4%
Chicago Midway Arpt. Rev. Aaa 1,500,000 1,377,930
Series A, 5.5% 1/1/29 (MBIA
Insured)
Chicago Midway Arpt. Rev. Aaa
Series B, 6% 1/1/09 (MBIA
Insured) (e)
Chicago O'Hare Int'l. Arpt.
Rev.:
(Passenger Facility Charge) Aaa 2,500,000 2,526,025
Series A, 5.6% 1/1/10 (AMBAC
Insured)
Rfdg. (Gen. Arpt. Proj.)
Series A:
6.25% 1/1/09 (AMBAC Aaa 3,700,000 3,917,227
Insured) (e)
6.375% 1/1/15 (MBIA Aaa 1,400,000 1,453,046
Insured)
Chicago O'Hare Int'l. Arpt. Baa2 1,000,000 1,121,660
Spl. Facilities Rev. Rfdg.
(American Airlines, Inc.
Proj.) 8.2% 12/1/24
Chicago School Reform Board Aaa 5,000,000 4,721,250
of Ed. (Chicago School
Reform) 5.75% 12/1/27 (AMBAC
Insured)
Du Page County Cmnty. High Aaa 1,640,000 1,726,641
School District #99 (Downers
Grove) Series A, 6% 2/1/06
(AMBAC Insured)
Illinois Edl. Facilities Aaa 1,200,000 1,271,784
Auth. Rev. Rfdg. (DePaul
Univ.) 6% 10/1/05 (AMBAC
Insured)
Illinois Health Facilities
Auth. Rev. (Memorial Hosp.
Proj.):
7.125% 5/1/10 (Pre-Refunded - 1,000,000 1,079,920
to 5/1/02 @ 102) (f)
7.25% 5/1/22 (Pre-Refunded - 1,000,000 1,082,840
to 5/1/02 @ 102) (f)
Metro. Pier & Exposition
Auth. Dedicated Tax Rev.
(Cap. Appreciation):
Series A:
0% 6/15/09 (FGIC Insured) Aaa
0% 6/15/09 (FGIC Insured) Aaa
(Escrowed to Maturity) (f)
0% 6/15/00 (AMBAC Insured) Aaa
20,278,323
INDIANA - 0.2%
Indianapolis Econ. Dev. Rev. Baa2 1,000,000 1,056,830
Rfdg. (Nat'l. Benevolent
Assoc.) 7.625% 10/1/22
1,056,830
IOWA - 1.0%
Iowa Student Ln. Liquidity Aa1
Corp. Student Ln. Rev.
Series A, 6.35% 3/1/01
Iowa Student Ln. Liquidity Aaa 3,500,000 3,567,900
Corp. Student Ln. Rev. Rfdg.
Series B, 5.75% 12/1/07 (e)
3,567,900
KANSAS - 1.2%
Kansas Dev. Fin. Auth. Rev.
(Sisters of Charity
Leavenworth):
5% 12/1/13 (MBIA Insured) Aaa 2,390,000 2,215,506
5% 12/1/14 (MBIA Insured) Aaa 500,000 455,285
5.25% 12/1/09 (MBIA Insured) Aaa
5.25% 12/1/11 (MBIA Insured) Aaa
2,670,791
KENTUCKY - 1.6%
Kenton County Arpt. Board
Arpt. Rev.:
(Cincinnati/Northern Aaa 5,570,000 5,836,190
Kentucky Int'l.) Series A,
6% 3/1/05 (MBIA Insured) (e)
(Spl. Facilities Delta Baa3 2,000,000 2,105,940
Airlines, Inc. Proj.) Series
A, 7.5% 2/1/20 (e)
7,942,130
LOUISIANA - 0.4%
Louisiana Pub. Facilities Aaa
Auth. Rev. Rfdg. (Student
Ln.) Series A1, 6.2% 3/1/01
-
MAINE - 0.2%
Maine Edl. Ln. Marketing Aaa
Corp. Student Ln. Rev.
Series A 4, 5.45% 11/1/99 (e)
-
MARYLAND - 1.0%
Maryland Health & Higher Edl.
Facilities Auth. Rev.:
(Good Samaritan Hosp.):
5.75% 7/1/13 (AMBAC Aaa 1,015,000 1,023,983
Insured) (Escrowed to
Maturity) (f)
5.75% 7/1/13 (Escrowed to A1 1,665,000 1,694,371
Maturity) (f)
Rfdg. (John Hopkins Univ.) Aa2 2,000,000 2,143,960
6% 7/1/10
4,862,314
MASSACHUSETTS - 6.2%
Boston Gen. Oblig. Rev. Aaa
(Boston City Hosp.) Series
A, 7.625% 2/15/21
(Pre-Refunded to 8/15/00 @
101.66(f)
Massachusetts Gen. Oblig. Aa3
Rfdg. Series A, 5.5% 2/1/11
Massachusetts Health & Edl.
Facilities Auth. Rev.:
(Bentley College) Series J, Aaa 1,265,000 1,120,398
5% 7/1/17 (MBIA Insured)
(Fairview Extended Care) Aaa 5,000,000 5,483,500
Series A, 10.25% 1/1/21
(Pre-Refunded to 1/1/01 @
103) (f)
(Fairview Extended Care) Aaa
Series B, 4.55% 1/1/21 (MBIA
Insured)
(Hebrew Rehab. Ctr. for A 2,000,000 1,807,060
Aged) Series C, 5.25% 7/1/17
(New England Med. Ctr. Aaa 500,000 453,405
Hosp.) Series G, 5.375%
7/1/24 (MBIA Insured)
Massachusetts Ind. Fin. Agcy. BBB 1,000,000 968,590
Resource Recovery Rev. Rfdg.
Series A, 4.7% 12/1/03
Massachusetts Ind. Fin. Agcy.
Rev.:
(Atlanticare Med. Ctr.) - 600,000 612,000
Series B, 10.125% 11/1/14
(Pre-Refunded to 11/1/99 @
102) (f)
(Cap. Appreciation) A1
(Massachusetts Biomedical)
Series A 1, 0% 8/1/02
(Cap. Appreciation)
(Massachusetts Biomedical)
Series A 2:
0% 8/1/08 A+ 800,000 503,608
0% 8/1/10 - 4,500,000 2,464,785
Massachusetts Muni. Wholesale Baa2 1,000,000 1,052,260
Elec. Co. Pwr. Supply Sys.
Rev. Rfdg. Series C, 6.5%
7/1/03
Massachusetts Tpk. Auth. Aaa 5,000,000 4,370,450
Metro. Hwy. Sys. Rev. Series
A, 5.125% 1/1/23 (MBIA
Insured)
Massachusetts Tpk. Auth. Aaa
Western Tpk. Rev. Series A,
5.55% 1/1/17 (MBIA Insured)
Massachusetts Wtr. Poll.
Abatement Trust Rev. (MWRA
Ln. Prog.) Series A:
5.25% 8/1/13 Aa1 100,000 96,728
5.25% 8/1/14 Aa1 300,000 285,105
New England Ed. Ln. Marketing A3 3,880,000 3,971,335
Corp. Massachusetts Rfdg.
(Student Ln. Proj.) Series
F, 5.625% 7/1/04 (e)
New England Ed. Ln. Marketing Aaa 4,005,000 4,103,443
Corp. Massachusetts Student
Ln. Rev. Issue A, 5.8% 3/1/02
27,292,667
MICHIGAN - 2.3%
Michigan Hosp. Fin. Auth.
Rev. Rfdg.:
(Genesys Reg'l. Hosp.) Baa2 4,250,000 4,056,923
Series A, 5.5% 10/1/18
(Escrowed to Maturity) (f)
(McLaren Health Care Corp.) A1
Series A, 5% 6/1/19
(Mercy Health Svcs.) Series Aa3
S, 5.75% 8/15/05
(Pontiac Osteopathic Hosp.) Baa2 2,000,000 1,756,600
Series A, 6% 2/1/24
Michigan Strategic Fund Rev. Aaa 1,500,000 1,366,170
Rfdg. (Detroit Edison Co.
Proj.) Series A, 5.55%
9/1/29 (MBIA Insured) (e)
Royal Oak Hosp. Fin. Auth. Aa3 2,310,000 2,435,387
Rev. Rfdg. (William Beaumont
Hosp.) 6.25% 1/1/09
9,615,080
MINNESOTA - 1.2%
Minneapolis & Saint Paul Hsg.
& Redev. Auth. Health Care
Sys. Rev. Rfdg.
(Healthspan Corp.) Series Aaa 1,800,000 1,519,110
A, 4.75% 11/15/18 (AMBAC
Insured)
Minneapolis Gen. Oblig. (Cap. Aaa
Appreciation) Series B, 0%
12/1/02
Minnesota Higher Ed. Aa3
Facilities Auth. Rev.
(MacAlester College) Series
4 C, 5.5% 3/1/12
Minnesota Hsg. Fin. Agcy. Aa2 2,000,000 2,039,640
Single Family Mtg. (Single
Family Mtg.) Series D, 6.4%
7/1/15 (e)
Rochester Health Care AA+ 2,000,000 1,860,000
Facilities Rev. (Mayo
Foundation) Series A, 5.5%
11/15/27
5,418,750
MISSISSIPPI - 0.8%
Mississippi Gen. Oblig. 6.2% Aaa 3,720,000 3,987,617
2/1/08 (Escrowed to
Maturity) (f)
Mississippi Home Corp. Single Aaa 164,000 170,780
Family Rev. Rfdg. Series A,
9.25% 3/1/12 (FGIC Insured)
4,158,397
MONTANA - 0.2%
Montana Higher Ed. Student A
Assistance Corp. Student Ln.
Rev. Series B, 6.6% 12/1/99
(e)
-
NEVADA - 0.6%
Clark County School District Aaa
Series A, 9.75% 6/1/01 (MBIA
Insured)
Las Vegas Downtown Redev.
Agcy. Tax Increment Rev.
(Fremont Street Proj.)
Series A:
6% 6/15/10 BBB+ 1,500,000 1,478,355
6.1% 6/15/14 BBB+ 1,000,000 999,740
2,478,095
NEW HAMPSHIRE - 0.1%
New Hampshire Higher Edl. &
Health Facilities Auth. Rev.
(Littleton Hosp. Assoc., Inc.)
Series A, 9.5% 5/1/20 - 480,000 502,354
(Pre-Refunded to 5/1/00 @
102) (f)
502,354
NEW JERSEY - 1.9%
New Jersey Edl. Facilities
Auth. Rev. Rfdg. (Seton Hall
Univ. Proj.):
5% 7/1/18 (AMBAC Insured) Aaa 1,000,000 886,280
5.25% 7/1/07 (AMBAC Insured) Aaa 1,610,000 1,634,263
New Jersey Gen. Oblig. Series Aa1
F, 5.5% 8/1/11
New Jersey Trans. Trust Fund Aaa 4,000,000 4,066,920
Auth. Rfdg. (Trans. Sys.)
Series A, 5.5% 6/15/11 (MBIA
Insured)
Passaic County Util. Auth. Aaa 2,500,000 2,253,475
Solid Waste Disp. Rev. Rfdg.
(Cap. Appreciation) 0%
3/1/02 (MBIA Insured)
8,840,938
NEW MEXICO - 2.2%
Albuquerque Arpt. Rev. Rfdg.:
6.25% 7/1/00 (AMBAC Aaa
Insured) (e)
6.7% 7/1/18 (AMBAC Insured) Aaa 3,970,000 4,213,996
(e)
6.75% 7/1/09 (AMBAC Aaa
Insured) (e)
6.75% 7/1/11 (AMBAC Aaa 1,805,000 2,006,420
Insured) (e)
New Mexico Edl. Assistance Aaa 1,350,000 1,353,267
Foundation Student Ln. Rev.
Series B, 5.25% 4/1/05
(AMBAC Insured) (e)
New Mexico Edl. Assistance Aaa
Foundation Student Ln. Rev.
Series IV A2, 6.65% 3/1/07
Rio Rancho Wtr. & Wastewtr. Aaa
Sys. Rev. Series A, 8%
5/15/04 (FSA Insured)
7,573,683
NEW YORK - 16.6%
Buffalo Gen. Oblig. Rfdg. Aaa
Series C, 5.25% 12/1/13
(FGIC Insured)
Long Island Pwr. Auth. New Aaa 9,390,000 8,209,959
York Elec. Sys. Rev. Series
A, 5.125% 12/1/22 (FSA
Insured)
Metro. Trans. Auth. Dedicated Aaa 1,000,000 889,050
Tax Fund Series A, 5.25%
4/1/26 (MBIA Insured)
Metro. Trans. Auth. New York
Commuter Facilities Rev.:
Rfdg. (Svc. Contract Proj.)
Series R:
5% 7/1/02 Baa1 2,370,000 2,394,530
5% 7/1/03 Baa1 2,490,000 2,512,211
Series A:
5.625% 7/1/27 (MBIA Aaa 200,000 188,896
Insured)
6.125% 7/1/29 Baa1 6,750,000 6,672,578
Metro. Trans. Auth. New York Baa1 1,010,000 988,245
Svc. Contract Rev. Series P,
5.75% 7/1/15
Metro. Trans. Auth. New York
Trans. Facilities Rev. Rfdg.
(Svc. Contract Proj.) Series
8:
5.25% 7/1/17 Baa1 500,000 448,780
5.375% 7/1/21 (FSA Insured) Aaa 700,000 640,073
New York City Gen. Oblig.:
Rfdg.:
Series A, 7% 8/1/03 A3 2,000,000 2,148,960
Series B:
5.7% 8/15/02 A3 1,130,000 1,163,233
5.7% 8/15/02 (Escrowed A3 35,000 36,159
to Maturity) (f)
6.75% 8/15/03 A3 2,000,000 2,134,700
Series E, 6.5% 2/15/04 Aaa 1,000,000 1,064,970
(FGIC Insured)
Series D, 5.5% 2/15/04 A3 2,000,000 2,050,180
Series H:
5.5% 8/1/12 A3
6.875% 2/1/02 A3 160,000 167,629
6.875% 2/1/02 (Escrowed Aaa 80,000 84,233
to Maturity) (f)
New York City Ind. Dev. Agcy. Aaa 1,000,000 1,045,910
Ind. Dev. Rev. (Japan
Airlines Co. Ltd. Proj.)
Series 1991, 6% 11/1/15 (FSA
Insured) (e)
New York City Ind. Dev. Agcy. A3 8,680,000 8,957,586
Spl. Facilities Rev. (Term.
One Group Assoc. Proj.) 5.9%
1/1/06 (e)
New York City Muni. Wtr. Fin.
Auth. Wtr. & Swr. Sys. Rev.
Series B:
5.5% 6/15/27 (MBIA Insured) Aaa 3,500,000 3,247,370
5.75% 6/15/26 A1 5,000,000 4,745,550
5.75% 6/15/29 A1 4,000,000 3,777,800
New York State Dorm. Auth.
Rev.:
(City Univ. Sys. Baa1 3,000,000 3,108,930
Consolidated) Series A, 5.7%
7/1/05
(City Univ. Sys.) Series C, Baa1
7.5% 7/1/10
Rfdg. (Jamaica Hosp.) Aaa 6,150,000 5,763,965
Series F, 5.2% 2/15/14 (MBIA
Insured)
Rfdg. (State Univ. Edl. A3
Facilities) Series A, 6.5%
5/15/04
New York State Envir.
Facilities Corp. Clean Wtr.
& Drinking Rev. (Revolving
Funds Proj.) Series F:
4.875% 6/15/18 Aa1 1,000,000 860,480
4.875% 6/15/20 Aa1 1,300,000 1,102,049
5% 6/15/15 Aa1 700,000 627,445
New York State Envir. Aa1 1,000,000 883,850
Facilities Corp. Poll. Cont.
Rev. 5.125% 6/15/19
New York State Local Govt.
Assistance Corp.:
(Cap. Appreciation) Series A3
A, 0% 4/1/08
Rfdg. Series A, 5.5% 4/1/04 Aaa
(AMBAC Insured)
Rfdg. Series C, 5.5% 4/1/17 A3 7,500,000 7,200,000
New York State Thruway Auth.
Svc. Contract Rev. (Local
Hwy. & Bridge):
5.4% 4/1/03 Baa1
5.9% 4/1/07 Baa1 2,000,000 2,090,100
6% 4/1/03 Baa1
New York State Urban Dev.
Corp. Rev.:
(Sports Facilities Aaa
Assistance Prog.) Series A,
5.5% 4/1/10 (MBIA Insured)
Rfdg. (Correctional Aaa
Facilities) 5.625% 1/1/07
(AMBAC Insured)
Triborough Bridge & Tunnel Aaa 500,000 492,700
Auth. Spl. Oblig. Rfdg.
Series A, 5.25% 1/1/11 (FGIC
Insured)
75,698,121
NORTH CAROLINA - 4.5%
North Carolina Eastern Muni.
Pwr. Agcy. Pwr. Sys. Rev.:
Series A, 5.625% 1/1/03 Baa3
Rfdg.:
Series A, 5.5% 1/1/05 Aaa 4,000,000 4,112,160
(MBIA Insured)
Series B:
6% 1/1/06 Baa3 4,175,000 4,218,587
7.25% 1/1/07 Baa3 1,000,000 1,078,380
Series C:
5.125% 1/1/03 Baa1 2,700,000 2,667,708
5.25% 1/1/04 Baa1 1,365,000 1,347,159
5.5% 1/1/07 (MBIA Aaa 2,000,000 2,044,840
Insured)
North Carolina Muni. Pwr.
Agcy. #1 Catawba Elec. Rev.:
Rfdg. 5.75% 1/1/02 Baa1 1,750,000 1,763,615
Rfdg. 5.9% 1/1/03 Baa1
6.25% 1/1/17 (AMBAC Insured) Aaa 1,150,000 1,187,801
18,420,250
OHIO - 4.0%
Cincinnati Student Ln. Fdg. - 1,215,000 1,241,208
Corp. Student Ln. Rev.
Series B, 8.875% 8/1/08 (e)
Franklin County Hosp. Rev. Baa3 5,000,000 4,791,300
(Doctor's Ohio Health Corp.)
Series A 4.75% 12/1/03
Gateway Economic Dev. Corp. - 3,000,000 3,003,780
Greater Cleveland Stadium
Rev. 6.5% 9/15/14 (e)
Marion County Hosp. Impt. BBB+ 1,000,000 1,001,720
Rev. Rfdg. (Comnty. Hosp.
Proj.) 5.6% 5/15/01
Ohio Bldg. Auth. (Adult Aaa
Correctional) Series A,
5.95% 10/1/14 (MBIA Insured)
Ohio Tpk. Commission Series Aaa
A, 5.6% 2/15/12 (MBIA Insured)
Ohio Tpk. Commission Rfdg. Aaa 5,000,000 4,749,250
Series A, 5.5% 2/15/24 (FGIC
Insured)
Ohio Wtr. Dev. Auth. Poll.
Cont. Rev. (Wtr. Cont. Ln.
Fund):
State Match Series, 6.5% Aaa 1,835,000 1,988,039
12/1/04 (MBIA Insured)
Wtr. Quality Series, 5.625% Aaa 2,000,000 2,087,260
6/1/06 (MBIA Insured)
18,862,557
OKLAHOMA - 1.1%
Sapulpa Muni. Auth. Util. Aaa 1,000,000 972,360
Rev. Rfdg. 5.75% 4/1/23
(FGIC Insured)
Tulsa Muni. Arpt. Trust Rev. Baa2 4,000,000 4,261,480
(American Airlines Corp.
Proj.) 7.35% 12/1/11
5,233,840
OREGON - 0.2%
Clackamas County School Aaa
District #12 5.25% 6/1/13
(FGIC Insured)
-
PENNSYLVANIA - 3.7%
Allegheny County Arpt. Rev. Aaa 1,000,000 1,030,000
Rfdg. (Pittsburgh Int'l
Arpt. Proj.) Series A, 5.75%
1/1/07 (MBIA Insured) (e)
Allegheny County Ind. Dev. - 325,000 339,573
Auth. Rev. (YMCA Pittsburgh
Proj.) Series A, 8.75% 3/1/10
Butler County Ind. Dev. Auth. A 3,000,000 2,904,960
Health Ctr. Rev. Rfdg.
(Sherwood Oaks Proj.) 5.75%
6/1/11
Cumberland County Muni. Auth.
Rev. Rfdg. (Carlisle Hosp. &
Health):
6.8% 11/15/14 Baa3 3,250,000 3,283,345
6.8% 11/15/23 Baa3 1,000,000 1,004,670
Delaware County Auth. Rev.
(1st. Mtg. Riddle Village
Proj.):
8.25% 6/1/22 (Escrowed to Aaa 2,250,000 2,604,870
Maturity) (f)
8.75% 6/1/10 (Pre-Refunded Aaa 2,870,000 3,220,743
to 6/1/02 @ 102) (f)
Pennsylvania Higher Edl.
Facilities Auth. College &
Univ. Rev. Rfdg.
(RIDC Reg'l. Growth AA-
-Carnegie Mellon Univ.
Proj.) 6% 11/1/04
Pennsylvania Hsg. Fin. Agcy. Aa3
Rfdg. (Residential Dev.
Section 8) Series A, 7% 7/1/01
Pennsylvania Ind. Dev. Auth. Aaa 1,345,000 1,396,635
Rev. (Econ. Dev.) 5.8%
7/1/09 (AMBAC Insured)
15,784,796
RHODE ISLAND - 1.1%
Rhode Island Port Auth. & Aaa 4,000,000 4,506,640
Economic Dev. Corp. Arpt.
Rev. Series A, 7% 7/1/14
(FSA Insured) (e)
Rhode Island Student Ln. A
Auth. Student Ln. Rev. Rfdg.
Series A, 6.55% 12/1/00
4,506,640
SOUTH CAROLINA - 0.8%
Piedmont Muni. Pwr. Agcy. Aaa 1,715,000 1,822,805
Elec. Rev. Rfdg. Series A,
6.25% 1/1/05 (FGIC Insured)
South Carolina Ed. Assistance
Auth. Rev. Rfdg. (Guaranteed
Student Ln. Proj.):
Sr. Lien Series A2, 5.4% AAA
9/1/02
Sub Lien Series B, 5.7% A
9/1/05 (e)
1,822,805
TENNESSEE - 0.3%
Memphis-Shelby County Arpt. Aaa
Auth. Arpt. Rev. Rfdg.
Series A, 5.25% 2/15/01
(MBIA Insured) (e)
Metro. Govt. Nashville & Aaa 1,000,000 720,210
Davidson County Elec. Rev.
(Cap. Appreciation) Series
A, 0% 5/15/06 (MBIA Insured)
Tennessee Gen. Oblig. Rfdg. Aaa 400,000 426,564
Series A, 6% 5/1/07
1,146,774
TEXAS - 9.4%
Austin Independent School Aaa
District 8.125% 8/1/01
(Escrowed to Maturity) (f)
Brazos Higher Ed. Auth., Inc. Aaa
Student Ln. Rev. Rfdg.
Series A 1, 6.05% 12/1/01 (e)
Conroe Independent School Aaa 750,000 457,643
District Rfdg. (Cap.
Appreciation) Series B, 0%
2/15/09
Dallas-Fort Worth Int'l. Baa1 6,000,000 6,247,260
Arpt. Facility Impt. Corp.
Rev. (American Airlines,
Inc.) 7.5% 11/1/25 (e)
Deer Park Independent School Aaa
District Rfdg. 0% 2/15/03
Fort Bend Independent School AAA 2,500,000 2,496,675
District Rfdg. 5.25% 2/15/10
Fort Bend Independent School AAA
District Rfdg. 5.375% 2/15/11
Harris County Gen. Oblig. Aaa
(Cap. Appreciation) (Toll
Road Proj.) Sub Lien Series
A, 0% 8/15/02 (MBIA Insured)
Hurst Euless Bedford Aaa
Independent School District
Rfdg. (Cap. Appreciation) 0%
8/15/11
Irving Independent School Aaa
District (Cap. Appreciation)
0% 2/15/00
Laredo Gen. Oblig. Rfdg. Aaa
5.125% 8/15/12 (FGIC Insured)
Midlothian Independent School Aaa 1,845,000 1,500,317
District Rfdg. (Cap.
Appreciation) 0% 2/15/04
Northside Independent School Aaa
District (School Bldg.)
8.375% 2/1/00
San Antonio Elec. & Gas Rev. Aa1 75,000 77,913
Rfdg. 5.5% 2/1/20
(Pre-Refunded to 2/1/07 @
101) (f)
San Antonio Gen. Oblig. Aa2 1,390,000 1,323,711
Series 2000, 5% 2/1/11 (b)
San Antonio Independent Aaa 3,650,000 3,808,921
School District 5.75% 8/15/10
Texas Gen. Oblig. (Texas Pub. Aa1 5,000,000 4,602,550
Fing. Auth. Proj.) Series A,
5% 10/1/14
Texas Muni. Pwr. Agcy. Rev. Aaa 3,930,000 2,040,063
Rfdg. 0% 9/1/11 (AMBAC
Insured)
Texas Pub. Fin. Auth. Bldg. Aaa
Rev. Rfdg. (Texas Technical
College) 6.25% 8/1/09 (MBIA
Insured)
Travis County Health Aaa 4,000,000 4,058,600
Facilities Dev. Corp. Rev.
(Ascension Health Cr. Prog.)
Series A, 6.25% 11/15/19
(MBIA Insured)
Univ. of Texas Permanent
Univ. Fund:
5% 7/1/10 Aaa
5.25% 7/1/06 Aaa
Univ. of Texas Univ. Revs Aa1 6,275,000 6,339,507
Rfdg. (Fing. Sys. Proj.)
Series B, 5.625% 8/15/12
Yselta Independent School Aaa 4,065,000 2,415,423
District Rfdg. (Cap.
Appreciation) 0% 8/15/09
35,368,583
UTAH - 2.7%
Intermountain Pwr. Agcy. Pwr.
Supply Rev.:
(Cap. Appreciation) Series Aaa
A, 0% 7/1/06 (MBIA Insured)
Rfdg. (Cap. Appreciation) Aaa
Series B, 0% 7/1/00 (MBIA
Insured)
Rfdg. Series A, 6.5% 7/1/09 Aaa 1,000,000 1,092,440
(AMBAC Insured)
Rfdg. Series B, 5.75% Aaa 2,500,000 2,465,025
7/1/16 (MBIA Insured)
Rfdg. Spl. Oblig. 6th Aaa 7,000,000 7,061,180
Series B, 6% 7/1/16 (MBIA
Insured)
South Salt Lake City Ind. - 250,000 264,948
Rev. (Price Savers Wholesale
Club Proj.) 9% 11/15/13
10,883,593
VIRGINIA - 0.2%
Loudoun County Ind. Dev.
Auth. Residential Care
Facilities Rev. (Falcons
Landing Proj.)
Series A, 9.25% 11/1/04 - 1,000,000 1,127,590
(Escrowed to Maturity) (f)
1,127,590
WASHINGTON - 5.9%
Grant County Pub. Util. Aaa
District No. 2 (Priest
Rapids Hydro Elec. Proj.)
Second Series B, 5.375%
1/1/16 (MBIA Insured) (e)
King County Gen. Oblig. Aa1
Series B, 5.9% 12/1/14
King County Gen. Oblig. Aa1 3,990,000 4,111,057
Series D, 5.75% 12/1/11
Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #2 Rev.:
Rfdg. Series A:
Series A, 0% 7/1/06 (MBIA Aaa
Insured)
5% 7/1/05 Aa1 3,050,000 3,045,974
5.9% 7/1/04 Aa1 1,000,000 1,041,160
Series C, 7.5% 7/1/03 Aa1
(Pre-Refunded to 1/1/01 @
102) (f)
5.4% 7/1/12 Aa1 14,000,000 13,351,091
Washington Pub. Pwr. Supply Aa1
Sys. Nuclear Proj. #3 Rev.
Rfdg. Series C, 5.1% 7/1/07
21,549,282
TOTAL MUNICIPAL BONDS 410,382,254
CASH EQUIVALENTS - 1.9% SHARES
Municipal Central Cash Fund, 8,130,356 8,130,356
3.56% (c)(d)
TOTAL INVESTMENT PORTFOLIO - (COST $423,519,864) $ 418,512,610
99.6%
NET OTHER ASSETS - 0.4% $ 2,101,879
NET ASSETS - 100% $ 420,614,489
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY COMBINED PORTFOLIOS
INTERMEDIATE MUNICIPAL
INCOME FUND
PRINCIPAL AMOUNT VALUE PRINCIPAL AMOUNT VALUE
(NOTE 1) (NOTE 1)
$ 4,000,000 $ 4,266,000
- 4,266,000
5,490,000 5,307,732
300,000 $ 301,773 300,000 301,773
1,500,000 1,505,520
1,500,000 1,505,460
301,773 8,620,485
1,300,000 1,274,676
1,000,000 1,001,800 1,000,000 1,001,800
4,495,000 4,262,923
1,001,800 6,539,399
1,000,000 892,970 1,000,000 892,970
680,000 674,825
892,970 1,567,795
2,190,000 2,244,005
225,000 217,310 225,000 217,310
2,275,000 2,282,189 2,275,000 2,282,189
850,000 852,491
1,000,000 1,000,560 1,000,000 1,000,560
1,500,000 1,497,165
500,000 512,615 500,000 512,615
2,000,000 1,989,700
4,500,000 4,589,010
2,000,000 891,200
970,000 759,432 970,000 759,432
750,000 804,053
1,225,000 642,721
2,000,000 1,908,100
500,000 522,885
1,000,000 1,031,370 1,000,000 1,031,370
1,000,000 1,037,920 1,000,000 1,037,920
300,000 321,714 300,000 321,714
7,163,110 23,104,440
3,620,000 562,512 17,620,000 2,737,972
1,360,000 1,341,518
400,000 385,116 400,000 385,116
6,900,000 6,476,616
4,000,000 3,648,840
1,405,000 1,034,656
870,000 568,867
2,115,000 1,841,911
1,700,000 1,328,941
2,070,000 2,240,672
430,000 487,719
1,000,000 1,036,560
947,628 23,129,388
2,170,000 2,321,683
3,350,000 2,923,612
- 5,245,295
1,850,000 1,944,054
150,000 159,164
3,635,000 3,644,342
940,000 980,495
1,700,000 1,700,000
500,000 504,035 500,000 504,035
485,000 490,616
2,500,000 2,170,575
2,000,000 2,026,820
504,035 13,620,101
460,000 474,798 1,005,000 1,037,331
5,000,000 5,137,350
500,000 507,690 500,000 507,690
2,100,000 2,007,789
2,500,000 2,690,200
500,000 511,710 500,000 511,710
1,494,198 11,892,070
100,000 101,026 800,000 808,208
150,000 156,903 150,000 156,903
257,929 965,111
3,500,000 3,490,970
4,000,000 3,841,560
- 7,332,530
1,500,000 1,377,930
300,000 312,039 300,000 312,039
2,500,000 2,526,025
3,700,000 3,917,227
1,400,000 1,453,046
1,000,000 1,121,660
5,000,000 4,721,250
1,640,000 1,726,641
1,200,000 1,271,784
1,000,000 1,079,920
1,000,000 1,082,840
435,000 258,342 435,000 258,342
65,000 38,793 65,000 38,793
1,000,000 976,400 1,000,000 976,400
1,585,574 21,863,897
1,000,000 1,056,830
- 1,056,830
1,500,000 1,532,925 1,500,000 1,532,925
3,500,000 3,567,900
1,532,925 5,100,825
2,390,000 2,215,506
500,000 455,285
1,385,000 1,383,213 1,385,000 1,383,213
1,750,000 1,723,138 1,750,000 1,723,138
3,106,351 5,777,142
5,570,000 5,836,190
2,000,000 2,105,940
- 7,942,130
1,825,000 1,862,759 1,825,000 1,862,759
1,862,759 1,862,759
1,000,000 1,000,000 1,000,000 1,000,000
1,000,000 1,000,000
1,015,000 1,023,983
1,665,000 1,694,371
2,000,000 2,143,960
- 4,862,314
250,000 260,140 250,000 260,140
250,000 251,588 250,000 251,588
1,265,000 1,120,398
5,000,000 5,483,500
700,000 695,226 700,000 695,226
2,000,000 1,807,060
500,000 453,405
1,000,000 968,590
600,000 612,000
1,600,000 1,407,344 1,600,000 1,407,344
800,000 503,608
4,500,000 2,464,785
1,000,000 1,052,260
5,000,000 4,370,450
550,000 551,227 550,000 551,227
100,000 96,728
100,000 95,035 400,000 380,140
3,880,000 3,971,335
4,005,000 4,103,443
3,260,560 30,553,227
4,250,000 4,056,923
2,000,000 1,661,980 2,000,000 1,661,980
200,000 205,568 200,000 205,568
2,000,000 1,756,600
1,500,000 1,366,170
2,310,000 2,435,387
1,867,548 11,482,628
1,800,000 1,519,110
200,000 174,506 200,000 174,506
200,000 200,558 200,000 200,558
2,000,000 2,039,640
2,000,000 1,860,000
375,064 5,793,814
3,720,000 3,987,617
164,000 170,780
- 4,158,397
1,210,000 1,212,069 1,210,000 1,212,069
1,212,069 1,212,069
500,000 539,915 500,000 539,915
1,500,000 1,478,355
1,000,000 999,740
539,915 3,018,010
480,000 502,354
502,354
1,000,000 886,280
1,610,000 1,634,263
500,000 511,065 500,000 511,065
4,000,000 4,066,920
2,500,000 2,253,475
511,065 9,352,003
250,000 253,765 250,000 253,765
3,970,000 4,213,996
450,000 498,236 450,000 498,236
1,805,000 2,006,420
1,350,000 1,353,267
1,900,000 1,955,043 1,900,000 1,955,043
500,000 565,810 500,000 565,810
3,272,854 10,846,537
1,025,000 985,189 1,025,000 985,189
9,390,000 8,209,959
1,000,000 889,050
2,370,000 2,394,530
2,490,000 2,512,211
200,000 188,896
6,750,000 6,672,578
1,010,000 988,245
500,000 448,780
700,000 640,073
2,000,000 2,148,960
1,130,000 1,163,233
35,000 36,159
2,000,000 2,134,700
1,000,000 1,064,970
2,000,000 2,050,180
1,000,000 984,270 1,000,000 984,270
160,000 167,629
80,000 84,233
1,000,000 1,045,910
8,680,000 8,957,586
3,500,000 3,247,370
5,000,000 4,745,550
4,000,000 3,777,800
500,000 501,210 3,500,000 3,610,140
500,000 562,470 500,000 562,470
6,150,000 5,763,965
500,000 533,625 500,000 533,625
500,000 430,240 1,500,000 1,290,720
1,300,000 1,102,049
700,000 627,445
1,000,000 883,850
1,000,000 645,970 1,000,000 645,970
100,000 103,105 100,000 103,105
7,500,000 7,200,000
250,000 255,208 250,000 255,208
2,000,000 2,090,100
200,000 207,906 200,000 207,906
500,000 507,420 500,000 507,420
300,000 308,313 300,000 308,313
500,000 492,700
6,024,926 81,723,047
500,000 501,175 500,000 501,175
4,000,000 4,112,160
1,315,000 1,328,729 5,490,000 5,547,316
1,000,000 1,078,380
2,700,000 2,667,708
1,365,000 1,347,159
700,000 684,096 2,700,000 2,728,936
750,000 755,835 2,500,000 2,519,450
250,000 252,555 250,000 252,555
1,150,000 1,187,801
3,522,390 21,942,640
1,215,000 1,241,208
5,000,000 4,791,300
3,000,000 3,003,780
1,000,000 1,001,720
500,000 513,295 500,000 513,295
250,000 252,968 250,000 252,968
5,000,000 4,749,250
1,835,000 1,988,039
2,000,000 2,087,260
766,263 19,628,820
1,000,000 972,360
4,000,000 4,261,480
- 5,233,840
1,000,000 971,280 1,000,000 971,280
971,280 971,280
1,000,000 1,030,000
325,000 339,573
3,000,000 2,904,960
3,250,000 3,283,345
1,000,000 1,004,670
2,250,000 2,604,870
2,870,000 3,220,743
1,270,000 1,335,380 1,270,000 1,335,380
1,000,000 1,033,670 1,000,000 1,033,670
1,345,000 1,396,635
2,369,050 18,153,846
4,000,000 4,506,640
1,000,000 1,017,070 1,000,000 1,017,070
1,017,070 5,523,710
1,715,000 1,822,805
1,250,000 1,264,250 1,250,000 1,264,250
1,000,000 1,018,500 1,000,000 1,018,500
2,282,750 4,105,555
275,000 277,626 275,000 277,626
1,000,000 720,210
100,000 106,641 500,000 533,205
384,267 1,531,041
500,000 532,455 500,000 532,455
435,000 447,084 435,000 447,084
750,000 457,643
6,000,000 6,247,260
200,000 171,596 200,000 171,596
2,500,000 2,496,675
1,000,000 1,000,470 1,000,000 1,000,470
3,000,000 2,644,016 3,000,000 2,644,016
1,000,000 522,180 1,000,000 522,180
250,000 247,213 250,000 247,213
1,000,000 960,120 1,000,000 960,120
1,845,000 1,500,317
500,000 505,280 500,000 505,280
75,000 77,913
1,255,000 1,237,807 2,645,000 2,561,518
3,650,000 3,808,921
5,000,000 4,602,550
3,930,000 2,040,063
1,000,000 1,071,800 1,000,000 1,071,800
4,000,000 4,058,600
250,000 245,015 250,000 245,015
1,495,000 1,528,428 1,495,000 1,528,428
6,275,000 6,339,507
4,065,000 2,415,423
11,113,464 46,482,047
2,860,000 2,057,370 2,860,000 2,057,370
500,000 487,360 500,000 487,360
1,000,000 1,092,440
2,500,000 2,465,025
7,000,000 7,061,180
250,000 264,948
2,544,730 13,428,323
1,000,000 1,127,590
- 1,127,590
1,715,000 1,602,770 1,715,000 1,602,770
1,000,000 1,013,100 1,000,000 1,013,100
3,990,000 4,111,057
2,700,000 1,927,152 2,700,000 1,927,152
3,050,000 3,045,974
1,000,000 1,041,160
525,000 554,274 525,000 554,274
2,000,000 1,907,300 16,000,000 15,258,391
500,000 496,215 500,000 496,215
7,500,811 29,050,093
71,187,128 481,569,382
SHARES
1,083,452 1,083,452 9,213,808 9,213,808
(COST $73,116,996) $ 72,270,580 (COST $496,636,860) 490,783,190
$ (320,581) 1,781,298
$ 71,949,999 492,564,488
</TABLE>
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) Security purchased on a delayed delivery or when-issued basis.
(c) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(d) The rate quoted is the annualized seven-day yield of the fund at
period end.
(e) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(f) Security collateralized by an amount sufficient to pay interest
and principal.
CAPITALIZATION
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
The following tables show the
capitalization of each Funds
class' as of October 31,
1999 (unaudited)
and on a pro forma combined
basis (unaudited) as of that
date giving effect to the
Reorganization.
FA MUNICIPAL FA INTERMEDIATE
CLASS A INCOME MUNICIPAL INCOME
Net Assets $ 10,721,810 $ 2,572,343
Net Asset Value Per Share $ 11.69 $ 10.15
Shares Outstanding 917,460 253,436
FA MUNICIPAL FA INTERMEDIATE
CLASS T INCOME MUNICIPAL INCOME
Net Assets $ 329,926,390 $ 50,431,715
Net Asset Value Per Share $ 11.70 $ 10.15
Shares Outstanding 28,197,578 4,968,378
FA MUNICIPAL FA INTERMEDIATE
CLASS B INCOME MUNICIPAL INCOME
Net Assets $ 63,464,208 $ 10,387,389
Net Asset Value Per Share $ 11.67 $ 10.14
Shares Outstanding 5,438,241 1,024,065
FA MUNICIPAL FA INTERMEDIATE
CLASS C INCOME MUNICIPAL INCOME
Net Assets $ 13,071,301 $ 2,561,719
Net Asset Value Per Share $ 11.70 $ 10.15
Shares Outstanding 1,117,056 252,268
FA MUNICIPAL FA INTERMEDIATE
INSTITUTIONAL CLASS INCOME MUNICIPAL INCOME
Net Assets $ 3,430,780 $ 5,996,833
Net Asset Value Per Share $ 11.65 $ 10.15
Shares Outstanding 294,537 590,849
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
The following tables show the
capitalization of each Funds
class' as of October 31,
1999 (unaudited)
and on a pro forma combined
basis (unaudited) as of that
date giving effect to the
Reorganization.
PRO FORMA
CLASS A COMBINED
Net Assets $ 13,294,153
Net Asset Value Per Share $ 11.69
Shares Outstanding 1,137,506
PRO FORMA
CLASS T COMBINED
Net Assets $ 380,358,105
Net Asset Value Per Share $ 11.70
Shares Outstanding 32,507,981
PRO FORMA
CLASS B COMBINED
Net Assets $ 73,851,597
Net Asset Value Per Share $ 11.67
Shares Outstanding 6,328,334
PRO FORMA
CLASS C COMBINED
Net Assets $ 15,633,020
Net Asset Value Per Share $ 11.70
Shares Outstanding 1,336,006
PRO FORMA
INSTITUTIONAL CLASS COMBINED
Net Assets $ 9,427,613
Net Asset Value Per Share $ 11.65
Shares Outstanding 809,287
</TABLE>
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR MUNICIPAL INCOME FUND
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR INTERMEDIATE MUNICIPAL
INCOME FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FA MUNICIPAL FA INTERMEDIATE
INCOME MUNICIPAL INCOME
INTEREST INCOME $ $ 3,879,149
23,713,018
EXPENSES
Management fee
1,695,763 293,995
Transfer agent fees
Class A
11,061 3,662
Class T
368,638 73,465
Class B
63,218 12,947
Class C
12,116 3,001
Institutional Class
5,477 9,953
Distribution fees
Class A
14,240 3,322
Class T
900,188 140,713
Class B
552,424 93,961
Class C
111,103 17,693
Accounting fees and expenses
141,615 64,808
Non-interested trustees'
compensation 1,358 238
Custodian fees and expenses
21,716 5,121
Registration fees
117,150 95,132
Audit
37,659 51,521
Legal
12,407 11,903
Reports to shareholders
6,711
-
Miscellaneous
133
-
Total expenses before
reductions 4,066,133 888,279
Expense reductions
(3,319) (119,127)
Total expenses
4,062,814 769,152
NET INTEREST INCOME 3,109,997
19,650,204
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities
2,459,744 25,014
Futures contracts
21,684 (46,201)
Change in net unrealized
apprecation (depreciation) on:
Investment securities
(33,606,253) (3,986,395)
Futures contracts
(83,889) 38,839
NET GAIN (LOSS)
(31,208,714) (3,968,743)
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $ (11,558,510) $ (858,746)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PRO FORMA
COMBINED ADJUSTMENTS
INTEREST INCOME $ 27,592,167
-
EXPENSES
Management fee
1,989,758 -
Transfer agent fees
Class A 14,723
-
Class T
442,103 -
Class B 76,165
-
Class C 15,117
-
Institutional Class 15,430
-
Distribution fees
Class A 17,562
-
Class T
1,040,901 -
Class B
646,385 -
Class C
128,796 -
Accounting fees and expenses (b)
206,423 (42,918)
Non-interested trustees'
compensation 1,596 -
Custodian fees and expenses 26,837 (b)
(1,357)
Registration fees (d)
212,282 (124,282)
Audit 89,180 (d)
(51,180)
Legal 24,310 (c)
(9,752)
Reports to shareholders
6,711 -
Miscellaneous
133 -
Total expenses before
reductions 4,954,412 (229,489)
Expense reductions (e)
(122,446) 119,127
Total expenses
4,831,966 (110,362)
NET INTEREST INCOME 22,760,201 110,362
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities
2,484,758 -
Futures contracts
(24,517) -
Change in net unrealized
apprecation (depreciation) on:
Investment securities
(37,592,648) -
Futures contracts
(45,050) -
NET GAIN (LOSS)
(35,177,457) -
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS (12,417,256) $ 110,362 $
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
PRO FORMA
COMBINED
INTEREST INCOME $ 27,592,167
EXPENSES
Management fee
1,989,758
Transfer agent fees
Class A 14,723
Class T
442,103
Class B 76,165
Class C 15,117
Institutional Class 15,430
Distribution fees
Class A 17,562
Class T
1,040,901
Class B
646,385
Class C
128,796
Accounting fees and expenses
163,505
Non-interested trustees'
compensation 1,596
Custodian fees and expenses 25,480
Registration fees 88,000
Audit 38,000
Legal 14,558
Reports to shareholders
6,711
Miscellaneous
133
Total expenses before
reductions 4,724,923
Expense reductions
(3,319)
Total expenses
4,721,604
NET INTEREST INCOME 22,870,563
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities
2,484,758
Futures contracts
(24,517)
Change in net unrealized
apprecation (depreciation) on:
Investment securities
(37,592,648)
Futures contracts
(45,050)
NET GAIN (LOSS)
(35,177,457)
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS (12,306,894)
</TABLE>
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR MUNICIPAL INCOME FUND
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR INTERMEDIATE MUNICIPAL
INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES AS OF OCTOBER
31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FA MUNICIPAL FA INTERMEDIATE
INCOME MUNICIPAL INCOME
ASSETS
Investment in securities, at
value
- See accompanying schedule $ 418,512,610 $ 72,270,580
-
Cash 34,990
Receivable for investments
sold 10,776,377 -
Receivable for fund shares
sold 198,989 376,953
Interest receivable 1,035,548
7,068,772
Other receivable
22,338 911
TOTAL ASSETS 73,718,982
436,579,086
LIABILITIES
Payable for investments
purchased:
Regular delivery $ $
-
10,664,053
Delayed delivery
3,449,619 1,286,864
Payable for fund shares
redeemed 907,180
280,543
Distributions payable
600,795
124,885
Accrued management fee
132,767 10,539
Distribution fees payable
129,306 20,573
Other payables and accrued
expenses 80,877 45,579
TOTAL LIABILITIES 1,768,983
15,964,597
NET ASSETS $ 420,614,489 $ 71,949,999
Net Assets consist of:
Paid in capital $ 439,900,857 $ 72,801,661
Accumulated undistributed net
realized gain (loss) on (14,279,114) (5,246)
investments
Net unrealized appreciation
(depreciation) on (846,416)
investments (5,007,254)
NET ASSETS $ 420,614,489 $ 71,949,999 $
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PRO FORMA
COMBINED ADJUSTMENTS
ASSETS
Investment in securities, at
value
- See accompanying schedule $ 490,783,190 $
-
Cash 34,990
-
Receivable for investments
sold 10,776,377
-
Receivable for fund shares
sold 575,942
-
Interest receivable 8,104,320
-
Other receivable
23,249
-
TOTAL ASSETS 510,298,068
-
LIABILITIES
Payable for investments
purchased:
Regular delivery
$10,664,053
-
Delayed delivery
4,736,483
-
Payable for fund shares
redeemed 1,187,723
-
Distributions payable
725,680
-
Accrued management fee
143,306
-
Distribution fees payable
149,879
-
Other payables and accrued
expenses 126,456
-
TOTAL LIABILITIES 17,733,580
-
NET ASSETS 492,564,488 $ $
-
Net Assets consist of:
Paid in capital $ 512,702,518 $
-
Accumulated undistributed net
realized gain (loss) on (14,284,360)
investments
-
Net unrealized appreciation
(depreciation) on (5,853,670)
investments
-
NET ASSETS 492,564,488 $ $
-
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
PRO FORMA
COMBINED
ASSETS
Investment in securities, at
value
- See accompanying schedule 490,783,190
Cash 34,990
Receivable for investments
sold 10,776,377
Receivable for fund shares
sold 575,942
Interest receivable 8,104,320
Other receivable
23,249
TOTAL ASSETS 510,298,068
LIABILITIES
Payable for investments
purchased:
Regular delivery
10,664,053
Delayed delivery
4,736,483
Payable for fund shares
redeemed 1,187,723
Distributions payable
725,680
Accrued management fee
143,306
Distribution fees payable
149,879
Other payables and accrued
expenses 126,456
TOTAL LIABILITIES 17,733,580
NET ASSETS 492,564,488
Net Assets consist of:
Paid in capital 512,702,518
Accumulated undistributed net
realized gain (loss) on (14,284,360)
investments
Net unrealized appreciation
(depreciation) on (5,853,670)
investments
NET ASSETS 492,564,488
</TABLE>
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR MUNICIPAL INCOME FUND
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR INTERMEDIATE MUNICIPAL
INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS & LIABILITIES AS OF OCTOBER
31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CALCULATION OF MAXIMUM
OFFERING PRICE
CLASS A
NET ASSETS $ 10,721,810 $ 2,572,343 $ 13,294,153
NET ASSET VALUE and
redemption price per share $ $ 10.15
11.69
Shares outstanding 917,460 253,436 1,170,896
Maximum offering price per $
share (100/95.25 of $11.69) 12.27
Maximum offering price per $ 10.55
share (100/96.25 of $10.15)
CLASS T
NET ASSETS $ $ 50,431,715 $ 380,358,105
329,926,390
NET ASSET VALUE and
redemption price per share $ $ 10.15
11.70
Shares outstanding 4,968,378 33,165,956
28,197,578
Maximum offering price per $
share (100/96.5 of $11.70) 12.12
Maximum offering price per $ 10.44
share (100/97.25 of $10.15)
CLASS B
NET ASSETS $ 63,464,208 $ 10,387,389 $ 73,851,597
NET ASSET VALUE and offering $ $
price per share 11.67 10.14
Shares outstanding + 5,438,241 1,024,065 6,462,306
CLASS C
NET ASSETS $ 13,071,301 $ 2,561,719 $ 15,633,020
NET ASSET VALUE and offering $ $
price per share 11.70 10.15
Shares outstanding + 1,117,056 252,268 1,369,324
INSTITUTIONAL CLASS
NET ASSETS $ $ 5,996,833 $ 9,427,613
3,430,780
NET ASSET VALUE, offering
price and
redemption price per share $ $ 10.15
11.65
Shares outstanding 294,537 590,849 885,386
+ Redemption price per share
is equal to net asset value
less any applicable
contingent deferred sales
charge.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALCULATION OF MAXIMUM
OFFERING PRICE
CLASS A
NET ASSETS $ $ 13,294,153
-
NET ASSET VALUE and
redemption price per share $ 11.69
Shares outstanding (33,390) a 1,137,506
Maximum offering price per $ 12.27
share (100/95.25 of $11.69)
Maximum offering price per
share (100/96.25 of $10.15)
CLASS T
NET ASSETS $ $ 380,358,105
-
NET ASSET VALUE and
redemption price per share $ 11.70
Shares outstanding (657,975) a 32,507,981
Maximum offering price per $ 12.12
share (100/96.5 of $11.70)
Maximum offering price per
share (100/97.25 of $10.15)
CLASS B
NET ASSETS $ $ 73,851,597
-
NET ASSET VALUE and offering $ 11.67
price per share
Shares outstanding + (133,972) a 6,328,334
CLASS C
NET ASSETS $ $ 15,633,020
-
NET ASSET VALUE and offering 11.70
price per share
Shares outstanding + (33,318) a 1,336,006
INSTITUTIONAL CLASS
NET ASSETS $ $ 9,427,613
-
NET ASSET VALUE, offering
price and
redemption price per share $ 11.65
Shares outstanding (76,099) a 809,287
+ Redemption price per share
is equal to net asset value
less any applicable
contingent deferred sales
charge.
</TABLE>
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash
Fidelity Advisor Series III Portfolios
Fidelity Advisor Series IV Fidelity Institutional
Fidelity Advisor Series V Tax-Exempt Cash Portfolios
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts
Fidelity Beacon Street Trust Municipal Trust
Fidelity Boston Street Trust Fidelity Money Market Trust
Fidelity California Municipal Fidelity Mt. Vernon Street
Trust Trust
Fidelity California Municipal Fidelity Municipal Trust
Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal
Fidelity Charles Street Trust Trust
Fidelity Commonwealth Trust Fidelity New York Municipal
Fidelity Concord Street Trust Trust II
Fidelity Congress Street Fund Fidelity Phillips Street Trust
Fidelity Contrafund Fidelity Puritan Trust
Fidelity Corporate Trust Fidelity Revere Street Trust
Fidelity Court Street Trust Fidelity School Street Trust
Fidelity Court Street Trust II Fidelity Securities Fund
Fidelity Covington Trust Fidelity Select Portfolios
Fidelity Daily Money Fund Fidelity Sterling Performance
Fidelity Destiny Portfolios Portfolio, L.P.
Fidelity Deutsche Mark Fidelity Summer Street Trust
Performance Fidelity Trend Fund
Portfolio, L.P. Fidelity U.S.
Fidelity Devonshire Trust Investments-Bond Fund, L.P.
Fidelity Exchange Fund Fidelity U.S.
Fidelity Financial Trust Investments-Government
Fidelity Fixed-Income Trust Securities
Fidelity Government Fund, L.P.
Securities Fund Fidelity Union Street Trust
Fidelity Hastings Street Trust Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Newbury Street Trust
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
Variable Insurance Products
Fund III
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d July 17, 1997
Edward C. Johnson 3d
POWER OF ATTORNEY
I, the undersigned Director, Trustee, or General Partner, as the case
may be, of the following investment companies:
Fidelity Aberdeen Street Trust Fidelity Government
Fidelity Advisor Annuity Fund Securities Fund
Fidelity Advisor Series I Fidelity Hastings Street Trust
Fidelity Advisor Series II Fidelity Hereford Street Trust
Fidelity Advisor Series III Fidelity Income Fund
Fidelity Advisor Series IV Fidelity Institutional Cash
Fidelity Advisor Series V Portfolios
Fidelity Advisor Series VI Fidelity Institutional
Fidelity Advisor Series VII Tax-Exempt Cash Portfolios
Fidelity Advisor Series VIII Fidelity Institutional Trust
Fidelity Beacon Street Trust Fidelity Investment Trust
Fidelity Boston Street Trust Fidelity Magellan Fund
Fidelity California Municipal Fidelity Massachusetts
Trust Municipal Trust
Fidelity California Municipal Fidelity Money Market Trust
Trust II Fidelity Mt. Vernon Street
Fidelity Capital Trust Trust
Fidelity Charles Street Trust Fidelity Municipal Trust
Fidelity Commonwealth Trust Fidelity Municipal Trust II
Fidelity Congress Street Fund Fidelity New York Municipal
Fidelity Contrafund Trust
Fidelity Corporate Trust Fidelity New York Municipal
Fidelity Court Street Trust Trust II
Fidelity Court Street Trust II Fidelity Phillips Street Trust
Fidelity Covington Trust Fidelity Puritan Trust
Fidelity Daily Money Fund Fidelity Revere Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity School Street Trust
Fidelity Destiny Portfolios Fidelity Securities Fund
Fidelity Deutsche Mark Fidelity Select Portfolios
Performance Fidelity Sterling Performance
Portfolio, L.P. Portfolio, L.P.
Fidelity Devonshire Trust Fidelity Summer Street Trust
Fidelity Exchange Fund Fidelity Trend Fund
Fidelity Financial Trust Fidelity U.S.
Fidelity Fixed-Income Trust Investments-Bond Fund, L.P.
Fidelity U.S.
Investments-Government
Securities
Fund, L.P.
Fidelity Union Street Trust
Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Director, Trustee, or
General Partner (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name
and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after March 1,
1997.
WITNESS my hand on the date set forth below.
/s/Robert M. Gates March 6, 1997
Robert M. Gates
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
Fidelity Aberdeen Street Trust Fidelity Government
Fidelity Advisor Annuity Fund Securities Fund
Fidelity Advisor Series I Fidelity Hastings Street Trust
Fidelity Advisor Series II Fidelity Hereford Street Trust
Fidelity Advisor Series III Fidelity Income Fund
Fidelity Advisor Series IV Fidelity Institutional Cash
Fidelity Advisor Series V Portfolios
Fidelity Advisor Series VI Fidelity Institutional
Fidelity Advisor Series VII Tax-Exempt Cash Portfolios
Fidelity Advisor Series VIII Fidelity Institutional Trust
Fidelity Beacon Street Trust Fidelity Investment Trust
Fidelity Boston Street Trust Fidelity Magellan Fund
Fidelity California Municipal Fidelity Massachusetts
Trust Municipal Trust
Fidelity California Municipal Fidelity Money Market Trust
Trust II Fidelity Mt. Vernon Street
Fidelity Capital Trust Trust
Fidelity Charles Street Trust Fidelity Municipal Trust
Fidelity Commonwealth Trust Fidelity Municipal Trust II
Fidelity Congress Street Fund Fidelity New York Municipal
Fidelity Contrafund Trust
Fidelity Corporate Trust Fidelity New York Municipal
Fidelity Court Street Trust Trust II
Fidelity Court Street Trust II Fidelity Phillips Street Trust
Fidelity Covington Trust Fidelity Puritan Trust
Fidelity Daily Money Fund Fidelity Revere Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity School Street Trust
Fidelity Destiny Portfolios Fidelity Securities Fund
Fidelity Deutsche Mark Fidelity Select Portfolios
Performance Fidelity Sterling Performance
Portfolio, L.P. Portfolio, L.P.
Fidelity Devonshire Trust Fidelity Summer Street Trust
Fidelity Exchange Fund Fidelity Trend Fund
Fidelity Financial Trust Fidelity U.S.
Fidelity Fixed-Income Trust Investments-Bond Fund, L.P.
Fidelity U.S.
Investments-Government
Securities
Fund, L.P.
Fidelity Union Street Trust
Fidelity Union Street Trust II
Fidelity Yen Performance
Portfolio, L.P.
Variable Insurance Products
Fund
Variable Insurance Products
Fund II
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson /s/Peter S.
3d___________ Lynch________________
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary /s/William O.
Burkhead_______________ McCoy______________
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox /s/Gerald C.
__________________ McDonough___________
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke /s/Marvin L.
Davis_____________ Mann________________
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley /s/Thomas R. Williams
Jones________________ ____________
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
__________________
Donald J. Kirk
