(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
HIGH INCOME MUNICIPAL
FUND - CLASS A, CLASS T
(FORMERLY CLASS A), AND CLASS B
ANNUAL REPORT
OCTOBER 31, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 15 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 18 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 19 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 34 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 41 Notes to the financial statements.
REPORT OF INDEPENDENT 47 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 48
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:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and 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, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR HIGH INCOME MUNICIPAL 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at income 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's 0.25% 12b-1 fee. If Fidelity had not reimbursed certain
class expenses during the periods shown, the total returns and dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - Class A 4.43% 39.80% 121.64%
Advisor High Income Municipal - Class A -0.01% 33.86% 112.22%
(incl. max. 4.25% sales charge)
Lehman Brothers 70% Municipal/ 5.55% n/a n/a
30% Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 5.74% 40.72% n/a
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on September 16, 1987. 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 70% Municipal/30% Non-Investment Grade Composite Index. With a
Municipal Bond Index weight of 70% and a Non-Investment Grade Bond Index
weight of 30%, this index is a total return performance benchmark for both
investment-grade and non-investment-grade municipal bonds. To measure how
Class A's performance stacked up against its peers, you can compare it to
the high-yield municipal debt funds average, which reflects the performance
of 43 mutual funds with similar objectives tracked by Lipper Analytical
Services, Inc. over the past 12 months. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effects of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - Class A 4.43% 6.93% 9.10%
Advisor High Income Municipal - Class A -0.01% 6.01% 8.59%
(incl. max. 4.25% sales charge)
Lehman Brothers 70% Municipal/ 5.55% n/a n/a
30% Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 5.74% 7.06% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' actual (or cumulative)
return and show you what would have happened if Class A shares had
performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA High Inc Class A LB Lehman Brothers Muni Bond
00257 LB015
1987/09/30 9575.00 10000.00
1987/10/31 9606.00 10035.40
1987/11/30 9769.00 10297.42
1987/12/31 9936.00 10446.84
1988/01/31 10302.00 10818.96
1988/02/29 10416.00 10933.31
1988/03/31 10295.00 10806.49
1988/04/30 10346.00 10888.62
1988/05/31 10398.00 10857.15
1988/06/30 10591.00 11015.99
1988/07/31 10625.00 11087.81
1988/08/31 10661.00 11097.57
1988/09/30 10824.00 11298.44
1988/10/31 10972.00 11497.29
1988/11/30 10983.00 11391.97
1988/12/31 11109.00 11508.51
1989/01/31 10249.00 11746.51
1989/02/28 11260.00 11612.48
1989/03/31 11347.00 11584.73
1989/04/30 11606.00 11859.75
1989/05/31 11796.00 12106.08
1989/06/30 11931.00 12270.48
1989/07/31 12036.00 12437.48
1989/08/31 12129.00 12315.71
1989/09/30 12165.00 12279.01
1989/10/31 12294.00 12429.19
1989/11/30 12445.00 12646.70
1989/12/31 12563.00 12750.15
1990/01/31 12583.00 12689.84
1990/02/28 12673.00 12802.78
1990/03/31 12753.00 12806.62
1990/04/30 12636.00 12713.90
1990/05/31 12895.00 12991.44
1990/06/30 13047.00 13105.64
1990/07/31 13248.00 13298.29
1990/08/31 13159.00 13105.20
1990/09/30 13253.00 13112.67
1990/10/31 13434.00 13350.53
1990/11/30 13768.00 13619.01
1990/12/31 13856.00 13678.26
1991/01/31 14017.00 13861.82
1991/02/28 14124.69 13982.42
1991/03/31 14207.73 13987.45
1991/04/30 14439.07 14173.48
1991/05/31 14617.55 14299.48
1991/06/30 14651.57 14285.33
1991/07/31 14841.02 14459.32
1991/08/31 14975.05 14649.75
1991/09/30 15150.70 14840.49
1991/10/31 15318.59 14974.06
1991/11/30 15376.21 15015.83
1991/12/31 15543.44 15338.07
1992/01/31 15715.74 15373.04
1992/02/29 15801.12 15377.96
1992/03/31 15880.39 15383.65
1992/04/30 16023.71 15520.57
1992/05/31 16167.46 15703.25
1992/06/30 16389.15 15966.75
1992/07/31 16959.83 16445.43
1992/08/31 16828.50 16285.09
1992/09/30 16933.52 16391.59
1992/10/31 16729.16 16230.46
1992/11/30 17064.45 16521.15
1992/12/31 17270.19 16689.83
1993/01/31 17562.30 16883.93
1993/02/28 18182.45 17494.62
1993/03/31 17992.80 17309.71
1993/04/30 18183.61 17484.36
1993/05/31 18334.19 17582.62
1993/06/30 18628.14 17876.08
1993/07/31 18641.97 17899.49
1993/08/31 19122.11 18272.16
1993/09/30 19386.91 18480.28
1993/10/31 19397.30 18515.95
1993/11/30 19207.73 18352.82
1993/12/31 19651.27 18740.25
1994/01/31 19880.10 18954.27
1994/02/28 19354.66 18463.35
1994/03/31 18323.00 17711.52
1994/04/30 18444.58 17861.72
1994/05/31 18553.66 18016.58
1994/06/30 18485.34 17906.50
1994/07/31 18818.79 18234.72
1994/08/31 18848.36 18297.81
1994/09/30 18553.09 18029.20
1994/10/31 18227.86 17709.00
1994/11/30 17641.84 17388.82
1994/12/31 18069.41 17771.55
1995/01/31 18679.84 18279.46
1995/02/28 19183.15 18811.03
1995/03/31 19284.01 19027.17
1995/04/30 19347.40 19049.62
1995/05/31 19966.53 19657.49
1995/06/30 19809.91 19486.47
1995/07/31 19874.45 19671.21
1995/08/31 20075.50 19920.64
1995/09/30 20237.39 20046.73
1995/10/31 20506.79 20338.21
1995/11/30 20893.83 20675.63
1995/12/31 21078.31 20874.32
1996/01/31 21193.28 21031.92
1996/02/29 21160.46 20889.95
1996/03/31 20713.35 20622.98
1996/04/30 20630.60 20564.62
1996/05/31 20606.27 20556.39
1996/06/30 20846.32 20780.25
1996/07/31 20982.57 20969.35
1996/08/31 21028.24 20964.32
1996/09/30 21206.14 21257.82
1996/10/31 21415.44 21498.24
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor High Income Municipal Fund - Class A on
September 30, 1987, shortly after the fund started, and the current maximum
4.25% sales charge was paid. As the chart shows, by October 31, 1996, the
value of the investment would have grown to $21,415 - a 114.15% increase on
the initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index, a total return performance benchmark for
investment-grade municipal bonds with maturities of at least one year, did
over the same period. With dividends reinvested, the same $10,000 would
have grown to $21,498 - a 114.98% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
Dividend return 5.61% 6.62% 5.27% 6.49% 7.01%
Capital appreciation return -1.18% 5.88% -11.30% 9.46% 2.20%
Total return 4.43% 12.50% -6.03% 15.95% 9.21%
</TABLE>
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any, and exclude the effects of sales charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1996 PAST LIFE OF
MONTH CLASS
Dividends per share 5.53(cents) 10.37(cents)
Annualized dividend rate 5.56% 5.58%
30-day annualized yield n/a -
30-day annualized tax-equivalent yield n/a -
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $11.72
over the past month, and $11.69 over the life of the class, you can compare
the class' income over these two periods. The 30-day annualized YIELD is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. Yield
information will be reported once Class A has a longer, more stable,
operating history.
ADVISOR HIGH INCOME MUNICIPAL 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at income to
measure performance. If Fidelity had not reimbursed certain class expenses,
the past five years and life of fund total returns would have been lower.
Effective January 1, 1996, the maximum 4.75% sales charge on Class T shares
was reduced to 3.50%.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - Class T 4.68% 40.13% 122.17%
Advisor High Income Municipal - Class T 1.02% 35.23% 114.39%
(incl. max. 3.50% sales charge)
Lehman Brothers 70% Municipal/ 5.55% n/a n/a
30% Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 5.74% 40.72% n/a
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on September 16, 1987. 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 70% Municipal/30% Non-Investment Grade Composite Index. With a
Municipal Bond Index weight of 70% and a Non-Investment Grade Bond Index
weight of 30%, this index is a total return performance benchmark for both
investment-grade and non-investment-grade municipal bonds. To measure how
Class T's performance stacked up against its peers, you can compare it to
the high-yield municipal debt funds average, which reflects the performance
of 43 mutual funds with similar objectives tracked by Lipper Analytical
Services, Inc. over the past 12 months. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effects of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - Class T 4.68% 6.98% 9.13%
Advisor High Income Municipal - Class T 1.02% 6.22% 8.71%
(incl. max. 3.50% sales charge)
Lehman Brothers 70% Municipal/ 5.55% n/a n/a
30% Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 5.74% 7.06% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' actual (or cumulative)
return and show you what would have happened if Class T shares had
performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA High Inc Class T LB Lehman Brothers Muni Bond
00220 LB015
1987/09/30 9650.00 10000.00
1987/10/31 9681.25 10035.40
1987/11/30 9845.49 10297.42
1987/12/31 10014.15 10446.84
1988/01/31 10382.45 10818.96
1988/02/29 10497.60 10933.31
1988/03/31 10375.89 10806.49
1988/04/30 10426.79 10888.62
1988/05/31 10478.97 10857.15
1988/06/30 10674.23 11015.99
1988/07/31 10708.22 11087.81
1988/08/31 10744.75 11097.57
1988/09/30 10908.51 11298.44
1988/10/31 11057.55 11497.29
1988/11/30 11069.50 11391.97
1988/12/31 11196.10 11508.51
1989/01/31 11337.08 11746.51
1989/02/28 11348.45 11612.48
1989/03/31 11435.78 11584.73
1989/04/30 11697.12 11859.75
1989/05/31 11888.22 12106.08
1989/06/30 12024.38 12270.48
1989/07/31 12129.87 12437.48
1989/08/31 12223.70 12315.71
1989/09/30 12260.56 12279.01
1989/10/31 12390.00 12429.19
1989/11/30 12542.53 12646.70
1989/12/31 12661.78 12750.15
1990/01/31 12681.76 12689.84
1990/02/28 12772.64 12802.78
1990/03/31 12852.77 12806.62
1990/04/30 12735.22 12713.90
1990/05/31 12996.20 12991.44
1990/06/30 13149.32 13105.64
1990/07/31 13352.13 13298.29
1990/08/31 13262.04 13105.20
1990/09/30 13356.34 13112.67
1990/10/31 13539.71 13350.53
1990/11/30 13875.67 13619.01
1990/12/31 13964.19 13678.26
1991/01/31 14126.71 13861.82
1991/02/28 14235.33 13982.42
1991/03/31 14319.02 13987.45
1991/04/30 14552.17 14173.48
1991/05/31 14732.05 14299.48
1991/06/30 14766.34 14285.33
1991/07/31 14957.27 14459.32
1991/08/31 15092.35 14649.75
1991/09/30 15269.37 14840.49
1991/10/31 15438.57 14974.06
1991/11/30 15496.65 15015.83
1991/12/31 15665.19 15338.07
1992/01/31 15838.84 15373.04
1992/02/29 15924.89 15377.96
1992/03/31 16004.78 15383.65
1992/04/30 16149.22 15520.57
1992/05/31 16294.10 15703.25
1992/06/30 16517.52 15966.75
1992/07/31 17092.67 16445.43
1992/08/31 16960.31 16285.09
1992/09/30 17066.16 16391.59
1992/10/31 16860.20 16230.46
1992/11/30 17198.11 16521.15
1992/12/31 17405.46 16689.83
1993/01/31 17699.87 16883.93
1993/02/28 18324.87 17494.62
1993/03/31 18133.74 17309.71
1993/04/30 18326.04 17484.36
1993/05/31 18477.80 17582.62
1993/06/30 18774.05 17876.08
1993/07/31 18787.99 17899.49
1993/08/31 19271.89 18272.16
1993/09/30 19538.76 18480.28
1993/10/31 19549.24 18515.95
1993/11/30 19358.19 18352.82
1993/12/31 19805.20 18740.25
1994/01/31 20035.82 18954.27
1994/02/28 19506.27 18463.35
1994/03/31 18466.52 17711.52
1994/04/30 18589.05 17861.72
1994/05/31 18698.98 18016.58
1994/06/30 18630.14 17906.50
1994/07/31 18966.20 18234.72
1994/08/31 18995.99 18297.81
1994/09/30 18698.42 18029.20
1994/10/31 18370.64 17709.00
1994/11/30 17780.02 17388.82
1994/12/31 18210.95 17771.55
1995/01/31 18826.16 18279.46
1995/02/28 19333.41 18811.03
1995/03/31 19435.06 19027.17
1995/04/30 19498.94 19049.62
1995/05/31 20122.93 19657.49
1995/06/30 19965.07 19486.47
1995/07/31 20030.12 19671.21
1995/08/31 20232.75 19920.64
1995/09/30 20395.91 20046.73
1995/10/31 20667.41 20338.21
1995/11/30 21057.49 20675.63
1995/12/31 21243.42 20874.32
1996/01/31 21359.29 21031.92
1996/02/29 21326.21 20889.95
1996/03/31 20875.60 20622.98
1996/04/30 20792.20 20564.62
1996/05/31 20767.68 20556.39
1996/06/30 21009.61 20780.25
1996/07/31 21146.93 20969.35
1996/08/31 21192.96 20964.32
1996/09/30 21383.14 21257.82
1996/10/31 21634.69 21498.24
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor High Income Municipal Fund - Class T on
September 30, 1987, shortly after the fund started, and the current maximum
3.50% sales charge was paid. As the chart shows, by October 31, 1996, the
value of the investment would have grown to $21,635 - a 116.35% increase on
the initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index, a total return performance benchmark for
investment-grade municipal bonds with maturities of at least one year, did
over the same period. With dividends reinvested, the same $10,000 would
have grown to $21,498 - a 114.98% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
Dividend return 5.69% 6.62% 5.27% 6.49% 7.01%
Capital appreciation return -1.01% 5.88% -11.30% 9.46% 2.20%
Total return 4.68% 12.50% -6.03% 15.95% 9.21%
</TABLE>
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any, and exclude the effects of sales charges.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.74(cents) 33.42(cents) 66.08(cents)
Annualized dividend rate 5.76% 5.69% 5.60%
30-day annualized yield 5.48% - -
30-day annualized tax-equivalent yield 8.56% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $11.73
over the past month, $11.65 over the past six months and $11.79 over the
past year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The offering share price used in the calculation of the
yield includes the effect of Class T's current maximum 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.
ADVISOR HIGH INCOME MUNICIPAL 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at income to
measure performance. The initial offering of Class B shares took place on
June 30, 1994. Class B shares bear a 0.90% 12b-1/shareholder service fee
(1.00% prior to January 1, 1996). Returns prior to June 30, 1994 are those
of Class T, the original class of the fund, and reflect Class T's 0.25%
12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to June
30, 1994 would have been lower. Class B's contingent deferred sales charges
included in the past one year, past five years and life of fund total
return figures are 4%, 1% and 0%, respectively. If Fidelity had not
reimbursed certain class expenses, the past five years and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - Class B 3.98% 37.36% 117.77%
Advisor High Income Municipal - Class B 0.02% 36.36% 117.77%
(incl. contingent deferred sales charge)
Lehman Brothers 70% Municipal/ 5.55% n/a n/a
30% Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 5.74% 40.72% n/a
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on September 16, 1987. 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 70% Municipal/30% Non-Investment Grade Composite Index. With a
Municipal Bond Index weight of 70% and a Non-Investment Grade Bond Index
weight of 30%, this index is a total return performance benchmark for both
investment-grade and non-investment -grade municipal bonds. To measure how
Class B's performance stacked up against its peers, you can compare it to
the high-yield municipal debt funds average, which reflects the performance
of 43 mutual funds with similar objectives tracked by Lipper Analytical
Services, Inc. over the past 12 months. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effects of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - Class 3.98% 6.55% 8.89%
B
Advisor High Income Municipal - Class B 0.02% 6.40% 8.89%
(incl. contingent deferred sales charge)
Lehman Brothers 70% Municipal/ 5.55% n/a n/a
30% Non-Investment Grade Composite
Index
High-Yield Municipal Debt Funds 5.74% 7.06% n/a
Average
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' actual (or cumulative)
return and show you what would have happened if Class B shares had
performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA High Inc Class B LB Lehman Brothers Muni Bond
00669 LB015
1987/09/30 10000.00 10000.00
1987/10/31 10032.38 10035.40
1987/11/30 10202.58 10297.42
1987/12/31 10377.36 10446.84
1988/01/31 10759.02 10818.96
1988/02/29 10878.35 10933.31
1988/03/31 10752.21 10806.49
1988/04/30 10804.96 10888.62
1988/05/31 10859.03 10857.15
1988/06/30 11061.37 11015.99
1988/07/31 11096.60 11087.81
1988/08/31 11134.46 11097.57
1988/09/30 11304.15 11298.44
1988/10/31 11458.60 11497.29
1988/11/30 11470.98 11391.97
1988/12/31 11602.17 11508.51
1989/01/31 11748.27 11746.51
1989/02/28 11760.05 11612.48
1989/03/31 11850.55 11584.73
1989/04/30 12121.36 11859.75
1989/05/31 12319.40 12106.08
1989/06/30 12460.50 12270.48
1989/07/31 12569.81 12437.48
1989/08/31 12667.04 12315.71
1989/09/30 12705.24 12279.01
1989/10/31 12839.38 12429.19
1989/11/30 12997.44 12646.70
1989/12/31 13121.01 12750.15
1990/01/31 13141.72 12689.84
1990/02/28 13235.90 12802.78
1990/03/31 13318.94 12806.62
1990/04/30 13197.12 12713.90
1990/05/31 13467.56 12991.44
1990/06/30 13626.24 13105.64
1990/07/31 13836.41 13298.29
1990/08/31 13743.04 13105.20
1990/09/30 13840.77 13112.67
1990/10/31 14030.79 13350.53
1990/11/30 14378.93 13619.01
1990/12/31 14470.66 13678.26
1991/01/31 14639.07 13861.82
1991/02/28 14751.63 13982.42
1991/03/31 14838.36 13987.45
1991/04/30 15079.97 14173.48
1991/05/31 15266.37 14299.48
1991/06/30 15301.90 14285.33
1991/07/31 15499.76 14459.32
1991/08/31 15639.74 14649.75
1991/09/30 15823.19 14840.49
1991/10/31 15998.52 14974.06
1991/11/30 16058.70 15015.83
1991/12/31 16233.36 15338.07
1992/01/31 16413.30 15373.04
1992/02/29 16502.47 15377.96
1992/03/31 16585.27 15383.65
1992/04/30 16734.95 15520.57
1992/05/31 16885.07 15703.25
1992/06/30 17116.60 15966.75
1992/07/31 17712.61 16445.43
1992/08/31 17575.45 16285.09
1992/09/30 17685.14 16391.59
1992/10/31 17471.71 16230.46
1992/11/30 17821.88 16521.15
1992/12/31 18036.75 16689.83
1993/01/31 18341.83 16883.93
1993/02/28 18989.50 17494.62
1993/03/31 18791.44 17309.71
1993/04/30 18990.71 17484.36
1993/05/31 19147.98 17582.62
1993/06/30 19454.97 17876.08
1993/07/31 19469.42 17899.49
1993/08/31 19970.87 18272.16
1993/09/30 20247.42 18480.28
1993/10/31 20258.28 18515.95
1993/11/30 20060.30 18352.82
1993/12/31 20523.52 18740.25
1994/01/31 20762.50 18954.27
1994/02/28 20213.75 18463.35
1994/03/31 19136.29 17711.52
1994/04/30 19263.27 17861.72
1994/05/31 19377.19 18016.58
1994/06/30 19302.67 17906.50
1994/07/31 19625.88 18234.72
1994/08/31 19657.14 18297.81
1994/09/30 19331.18 18029.20
1994/10/31 18943.66 17709.00
1994/11/30 18322.22 17388.82
1994/12/31 18771.72 17771.55
1995/01/31 19376.64 18279.46
1995/02/28 19886.40 18811.03
1995/03/31 19978.19 19027.17
1995/04/30 20013.63 19049.62
1995/05/31 20642.15 19657.49
1995/06/30 20466.75 19486.47
1995/07/31 20520.31 19671.21
1995/08/31 20715.05 19920.64
1995/09/30 20869.81 20046.73
1995/10/31 21135.65 20338.21
1995/11/30 21522.72 20675.63
1995/12/31 21699.95 20874.32
1996/01/31 21807.20 21031.92
1996/02/29 21762.02 20889.95
1996/03/31 21289.42 20622.98
1996/04/30 21191.17 20564.62
1996/05/31 21152.30 20556.39
1996/06/30 21386.10 20780.25
1996/07/31 21514.00 20969.35
1996/08/31 21549.51 20964.32
1996/09/30 21731.33 21257.82
1996/10/31 21975.86 21498.24
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor High Income Municipal Fund - Class B on
September 30, 1987, shortly after the fund started. As the chart shows, by
October 31, 1996, the value of the investment would have grown to $21,976 -
a 119.76% increase on the initial investment. For comparison, look at how
the Lehman Brothers Municipal Bond Index, a total return performance
benchmark for investment-grade municipal bonds with maturities of at least
one year, did over the same period. With dividends reinvested, the same
$10,000 would have grown to $21,498 - a 114.98% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have
a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
1996 1995 1994 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Dividend return 4.99% 5.77% 4.90% 6.49% 7.01%
Capital appreciation return -1.01% 5.80% -11.37% 9.46% 2.20%
Total return 3.98% 11.57% -6.47% 15.95% 9.21%
</table?
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any, and exclude the effects of sales charges.
DIVIDENDS AND YIELD
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.12(cents) 29.42(cents) 58.00(cents)
Annualized dividend rate 5.15% 5.02% 4.93%
30-day annualized yield 5.08% - -
30-day annualized tax-equivalent yield 7.94% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. The
annualized dividend rate is based on an average net asset value of $11.70
over the past month, $11.62 over the past six months, and $11.77 over the
past year. The 30-day annualized YIELD is a standard formula for all funds
based on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds from
different companies on an equal basis. The offering share price used in the
calculation of the yield excludes the effect of Class B's contingent
deferred sales charge. The tax-equivalent yield shows what you would have
to earn on a taxable investment to equal the class' tax-free yield, if
you're in the 36% federal tax bracket, but does not reflect payment of the
federal alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Municipal bonds benefited from
steady demand and relatively low
supply during much of the year
that ended October 31, 1996.
For the past 12 months, the
Lehman Brothers Municipal Bond
Index - a broad measure of the
municipal bond market - had a
total return of 5.70%. In
comparison, the Lehman
Brothers Aggregate Bond Index
- - a proxy for investment-grade
taxable bonds - had a total
return of 5.85%. Munis
outperformed their
counterparts in the taxable bond
market for the first 10 months
of the period. Factors that helped
munis included a lack of supply of
new issues, strong demand for
municipal bonds from both
insurance companies and
individual investors, and the
diminishing likelihood of
significant tax reform in the near
future. Like most domestic bonds,
munis were hurt by
stronger-than-expected signs of
strength in the economy earlier in
1996. Nevertheless, the market
conditions that supported the
muni market prevailed to the
point that munis entered the last
two months of the period trading
at expensive levels relative to
their taxable counterparts. At that
point and through the end of the
period, the performance of the
municipal market stalled
somewhat, as investor demand
declined and institutional
investors sold off some of their
municipal bond holdings to take
profits.
An interview with Tanya Roy, Portfolio Manager of Fidelity Advisor High
Income Municipal Fund
Q. HOW DID THE FUND PERFORM, TANYA?
A. As of October 31, 1996, the fund's Class A, Class T and Class B shares
had total returns of 4.43%, 4.68% and 3.98%, respectively, for the past 12
months. For the same period, the high-yield municipal debt funds average
had a total return of 5.74%, according to Lipper Analytical Services.
Additionally, the Lehman Brothers 70% Municipal/30% Non-Investment Grade
Composite Index returned 5.55% for the year.
Q. MORE SPECIFICALLY, HOW DID HIGH-YIELD MUNICIPALS - WHICH THE FUND
EMPHASIZES - PERFORM, COMPARED TO INVESTMENT-GRADE MUNICIPALS?
A. Quite well. Fundamental credit quality has improved among many
high-yield issuers due to a healthy economy and improved operating
efficiencies. Also, the rate of growth in municipal issuance this year has
been very manageable, including issuance in the high-yield municipal
sector. Several industries that had been active in the municipal market in
the last few years have reduced their appetite for borrowing because they
have entered a period of consolidation and cost retrenchment. These
industries include investor-owned and municipal utilities, as well as
hospitals and airlines. Another factor contributing to the outperformance
of high-yield municipal bonds is that as municipal yields declined this
year, investors have reached for bonds of lower-credit quality in order to
find additional yield, bidding up the prices of lower-quality,
higher-yielding securities in the process.
Q. WHY DID THE FUND UNDERPERFORM ITS PEERS DURING THE PAST YEAR?
A. There were two reasons. In the first half of the period, the fund's
performance was hurt by its holding in the Ford Heights, Illinois,
incinerator project, which entered bankruptcy this past spring. The fund no
longer holds the bonds. The second reason is its holdings in a resource
recovery project involved in the paper recycling business. Paper prices
have been very depressed this year, and these projects have had difficulty
meeting their original financial and operating forecasts. As a result,
bonds in this sector have lagged the market.
Q. WHAT WERE SOME OF THE FUND'S BEST PERFORMERS?
A. Health care bonds have been very good performers. There has been quite a
bit of consolidation in the hospital sector, which has generated a great
deal of debate in the market about the prospects for individual hospital
bonds. In conjunction with our credit analysts, I have taken advantage of
the market uncertainty to research attractive health care opportunities for
the fund. For example, the fund benefited recently when a hospital whose
bonds it owns announced a merger with a strong hospital system in its
service area. The value of the bonds increased significantly as a result.
Q. APART FROM THE HOSPITAL SECTOR, WHICH OTHER SECTORS PERFORMED WELL?
A. General obligation bonds (GOs) issued by cities and states were some of
the fund's best performers during the past six months. A GO is a municipal
bond backed by the full faith and credit of the issuer which includes the
taxing power of the municipality. Their strong recent performance was a
direct reflection of a healthy economy which resulted in higher tax and
general revenue collections. Additionally, many municipalities have exerted
considerable restraint in managing their expenditure requirements. That has
led to improved cash reserves and general fund balances, and therefore
solid bond performance. For example, GOs issued by the District of Columbia
and New York City have performed well and benefited the fund's performance.
Q. YOU'VE UPGRADED THE CREDIT QUALITY OF THE PORTFOLIO OVER THE PAST YEAR.
WHAT WAS THE RATIONALE FOR THAT MOVE?
A. The rationale for the upgrade was to take advantage of the strong
performance of high-yield municipal bonds. Recently, non-investment-grade
bonds were trading as narrow as 75 basis points - or three-quarters of a
percentage point - over insured bonds. In contrast, BB-rated bonds offered
roughly one percentage point additional yield over insured bonds six months
ago. Because spreads were tight, I was able to buy higher-quality bonds
without sacrificing much yield.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The performance of the municipal market should continue to be favorably
influenced by light supply. That said, it is difficult to see municipals
outperforming Treasuries much more than they already have so far this year.
Although high-yield issuance has been lighter than I would like, I expect
to continue to invest in attractive high-yield opportunities for
shareholders.
FUND FACTS
GOAL: 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
START DATE: September 16,
1987
SIZE: as of October 31, 1996,
more than $520 million
MANAGER: Tanya Roy, since
1995; municipal bond analyst,
1989 to 1995; joined Fidelity in
1989
(checkmark)
TANYA ROY ON AIRLINE
SECTOR BONDS:
"The airline industry's
industrial development bonds
constitute one of the most
interesting sectors in the
municipal market. Airlines issue
tax-exempt bonds to finance
terminal facilities and gates at
airports. The airline industry
has undergone an extensive
turnaround in the last few
years. The recession in the
early '90s caused significant
financial problems for many
airlines. Overcapacity, high
operating costs and price
cutting resulted in significant
losses and several
bankruptcies. Because of
these problems, airline bonds
traded at extremely wide yield
premiums, some 200 to 300
basis points greater than
AAA-rated bond yields.
"The sector as a whole was
cheap, despite the fact that not
all airlines were suffering
equally, presenting
opportunities for the fund.
Since hitting bottom, the
industry has aggressively cut
costs, realigned route
systems and enhanced
revenue generation, all of
which have led to
substantially improved
financial and operating
performance. As a result,
airline bonds have been one of
the top performing sectors in
the muni market in the recent
past. With airline spreads now
as narrow as 60-70 basis
points over AAA bonds, the
fund has reaped the rewards
of having invested in this
sector during the past few
years."
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INVESTMENT CHANGES
TOP FIVE STATES AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
New York 12.3 11.4
California 9.1 7.0
Pennsylvania 6.9 7.8
Ohio 5.7 6.0
Colorado 4.3 3.9
TOP FIVE SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Industrial Development 21.6 20.2
Health Care 21.5 24.9
General Obligation 16.9 16.5
Electric Revenue 15.7 12.6
Transportation 7.7 6.5
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1996
6 MONTHS AGO
Years 16.4 17.2
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF OCTOBER 31, 1996
6 MONTHS AGO
Years 7.1 7.2
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)
AS OF OCTOBER 31, 1996 AS OF APRIL 30, 1996
Aaa 16.9%
Aa, A 14.9%
Baa 28.9%
Ba or B 12.7%
Caa 0.3%
Non-rated 24.9%
Short-term
investments 1.4%
Aaa 14.4%
Aa, A 14.7%
Baa 26.3%
Ba or B 11.8%
Caa 0.9%
Non-rated 28.4%
Short-term
investments 3.5%
Row: 1, Col: 1, Value: 2.4
Row: 1, Col: 2, Value: 23.9
Row: 1, Col: 3, Value: 1.3
Row: 1, Col: 4, Value: 12.7
Row: 1, Col: 5, Value: 27.9
Row: 1, Col: 6, Value: 14.9
Row: 1, Col: 7, Value: 16.9
Row: 1, Col: 1, Value: 3.5
Row: 1, Col: 2, Value: 27.4
Row: 1, Col: 3, Value: 1.9
Row: 1, Col: 4, Value: 11.8
Row: 1, Col: 5, Value: 26.3
Row: 1, Col: 6, Value: 14.7
Row: 1, Col: 7, Value: 14.4
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS. UNRATED DEBT
SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT OCTOBER 31, 1996 AND
APRIL 30, 1996, ACCOUNT FOR 23.1% AND 25.8%, RESPECTIVELY, OF THE FUND'S
INVESTMENTS.
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 98.6%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
ALABAMA - 1.4%
Cullman Med. Park South Med. Clinic Board
Rev. (Cullman Reg'l. Med. Ctr.) Series A,
6.50% 2/15/13 Baa $ 2,700,000 $ 2,700,000
Shelby County Series A, 7.70% 8/1/17 - 4,000,000 4,430,000
7,130,000
ALASKA - 0.9%
Valdez Marine Term. Rev. Rfdg. (BP Pipeline, Inc.
Proj.) Series B, 5.50% 10/1/28 Aa3 5,000,000 4,731,250
ARIZONA - 0.8%
Arizona Trans. Board Excise Tax Rev. Rfdg.
(Maricopa County Reg'l. Area Road Proj.)
Series A, 6% 7/1/03 (AMBAC Insured) Aaa 1,300,000 1,399,125
Navajo County Ind. Dev. Auth. Ind. Dev. Rev.
(Stone Container Corp. Proj.) 7.40% 4/1/26 (e) - 2,500,000 2,571,875
3,971,000
ARKANSAS - 0.3%
Little Rock Arpt. Passenger Facs. Charge Rev.
5.65% 5/1/16 (AMBAC Insured) (e) Aaa 1,500,000 1,567,500
CALIFORNIA - 9.1%
California Dept. Wtr. Resources Ctr. Valley Proj.
Rev. (Wtr. Sys.) Series J-2, 6.125% 12/1/13 Aa 3,000,000 3,120,000
California Gen. Oblig. Unltd. Tax
6.10% 9/1/04 A1 1,415,000 1,533,506
California Hsg. Fin. Agcy. Rev. (Home Mtg.)
Series A, 5.70% 8/1/16 (MBIA Insured) Aaa 1,200,000 1,194,000
California Pub. Wks. Board Lease Rev.:
Rfdg. (Dept. Corrections State Prisons) Series A,
5% 12/1/19 (AMBAC Insured) Aaa 1,750,000 1,616,563
(California State Univ. Proj.) Series A,
5.50% 6/1/14 A1 1,500,000 1,471,875
Central Valley Fing. Auth. Rev. (Cogeneration
Proj.) (Carson Ice Gen. Proj.) 6% 7/1/09 BBB- 4,500,000 4,545,000
Contra Costa Trans. Auth. Sales Tax Rev.
Series A, 6% 3/1/04 (FGIC Insured) Aaa 3,000,000 3,228,750
East Bay Muni. Util. Dist. Wtr. Sys. Rev.
6% 6/1/12 (MBIA Insured) Aaa 2,000,000 2,055,000
Foothill/Eastern Trans. Corridor Agcy. California
Toll Road Rev. (Sr. Lien) (Cap. Appreciation)
Series A, 0% 1/1/14 Baa 2,000,000 672,500
Los Angeles County Ctfs. of Prtn. (Cap.
Appreciation) (Disney Parking Proj.):
0% 3/1/14 Baa1 1,000,000 323,750
0% 9/1/14 Baa1 7,260,000 2,268,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Metropolitan Wtr. Dist. Southern California
Wtrwks. Rev. Rfdg. Series B, 4.75% 7/1/09
(MBIA Insured) Aaa $ 2,480,000 $ 2,346,700
Northern California Pwr. Agcy. Pub. Pwr.
Rev. Rfdg. (Geothermal Proj. #3) Series A,
5.85% 7/1/10 (AMBAC Insured) Aaa 1,500,000 1,580,625
Orange County Dev. Agcy. (Tax Allocation)
(Santa Ana Heights Proj.):
6.20% 9/1/08 Baa 1,650,000 1,633,500
6% 9/1/15 Baa 1,200,000 1,170,000
Riverside County Ctfs. of Prtn. Rfdg. (Air Force
Village West, Inc.) Series A:
8.125% 6/15/12 - 4,790,000 5,059,438
8.125% 6/15/20 - 3,000,000 3,161,250
Sacramento City Fing. Auth. Lease Rev. Rfdg.
Series A, 5.40% 11/1/20 (AMBAC Insured) Aaa 2,000,000 1,950,000
Sacramento City Fing. Auth. Rev. (Tax Allocation)
(Cap. Appreciation) Series B, 0% 11/1/11
(MBIA Insured) Aaa 1,225,000 531,344
Sacramento Cogeneration Auth. Cogeneration
Proj. Rev. (Proctor & Gamble Proj.):
5.40% 7/1/98 BBB- 1,100,000 1,112,375
6.375% 7/1/10 BBB- 1,000,000 1,025,000
6.50% 7/1/14 BBB- 3,800,000 3,933,000
Sequoia Hosp. Dist. Rev. Rfdg. 5.375% 8/15/13
(Escrowed to Maturity) (f) Baa 1,835,000 1,816,650
47,349,576
COLORADO - 4.3%
Colorado Health Facs. Auth. Rev.:
Rfdg. (Rocky Mountain Adventist):
6.625% 2/1/13 Baa 6,900,000 7,046,625
6.625% 2/1/22 Baa 4,000,000 4,060,000
(National Benevolent Assoc. Proj.) Series A,
6.50% 6/1/25 Baa1 1,360,000 1,351,500
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/06 BBB+ 1,405,000 809,631
0% 1/1/08 BBB+ 870,000 435,000
Denver City & County Arpt. Rev. (e):
(Cap. Appreciation):
Series A, 0% 11/15/02 (MBIA Insured) Aaa 2,115,000 1,554,525
Series D, 0% 11/15/04 (MBIA Insured) Aaa 1,700,000 1,115,625
Series A:
6.60% 11/15/97 Baa 1,000,000 1,021,950
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
COLORADO - CONTINUED
Denver City & County Arpt. Rev. (e): - continued
Series A: - continued
6.90% 11/15/98 Baa $ 1,000,000 $ 1,043,750
7.50% 11/15/23 Baa 2,500,000 2,746,875
Mesa County Ind. Dev. Rev. (Joy Technologies,
Inc. Proj.) 8.50% 9/15/06 Ba1 1,250,000 1,357,813
22,543,294
CONNECTICUT - 3.8%
Connecticut Health & Edl. Facs. Auth. Rev.:
(New Britain Mem. Hosp.) Series A:
7.50% 7/1/06 BBB- 2,815,000 3,005,013
7.75% 7/1/22 BBB- 1,500,000 1,610,625
(The Griffin Hosp.) Series A:
6% 7/1/13 Baa1 1,810,000 1,755,700
5.75% 7/1/23 Baa1 3,280,000 3,013,500
Connecticut Spl. Tax Oblig. Rev. (Trans.
Infrastructure) Series B, 5.80% 9/1/04 A1 2,000,000 2,110,000
Eastern Connecticut Resource Recovery Auth.
Solid Waste Rev. (Wheelabrator Lisbon Proj.)
Series A (e):
5.50% 1/1/14 A- 4,750,000 4,459,063
5.50% 1/1/20 A- 4,000,000 3,670,000
19,623,901
DISTRICT OF COLUMBIA - 2.9%
District of Columbia Gen. Oblig.:
Rfdg. Series A:
5.625% 6/1/02 Ba 1,100,000 1,097,250
5.75% 6/1/03 Ba 1,440,000 1,438,200
6% 6/1/07 (MBIA Insured) Aaa 2,000,000 2,080,000
Rfdg. Series A-3:
5.10% 6/1/02 Ba 700,000 680,750
5.60% 6/1/07 Ba 1,700,000 1,627,750
Series A:
6% 6/1/03 Ba 1,100,000 1,101,375
6% 6/1/04 Ba 1,200,000 1,198,500
6% 6/1/05 Ba 1,300,000 1,295,125
6% 6/1/06 Ba 1,000,000 992,500
District of Columbia Hosp. Rev. (Hosp. for Sick
Children) Series A, 8.875% 1/1/21 - 975,000 1,038,375
District of Columbia Redev. Land Agcy. Sports
Arena Spl. Tax Rev.:
5.30% 11/1/99 Baa 1,700,000 1,700,000
5.625% 11/1/10 Baa 750,000 727,500
14,977,325
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
FLORIDA - 0.5%
Florida Mid-Bay Bridge Auth. Rev. Series A,
7.50% 10/1/17 - $ 2,500,000 $ 2,715,625
GEORGIA - 1.3%
Cobb County School Dist. Unltd. Tax
5% 2/1/97 Aa1 3,300,000 3,312,639
Georgia Gen. Oblig. Series B, 7.50% 4/1/97 Aaa 2,350,000 2,389,269
Savannah Econ. Dev. Auth. Ind. Dev. Rev. (Stone
Container Corp. Proj.) 7.40% 4/1/26 (e) - 1,000,000 1,027,500
6,729,408
IDAHO - 0.1%
Boise Urban Renewal Parking Agcy. Rev. (Tax
Increment) Series A, B, C, 8.125% 9/1/15 A 375,000 396,094
ILLINOIS - 4.2%
Chicago O'Hare Int'l. Arpt. Rev.:
Rfdg. (2nd Lien) (Gen. Arpt. Proj.) Series A,
6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,477,000
(2nd Lien) (Gen. Arpt. Proj.) Series A,
6.25% 1/1/09 (AMBAC Insured) (e) Aaa 3,700,000 3,912,750
Chicago O'Hare Int'l. Arpt. Spl. Facs.
Rev. Rfdg. (American Airlines, Inc. Proj.)
8.20% 12/1/24 Baa2 1,000,000 1,171,250
Chicago School Board of Ed. 6.25% 12/1/09
(MBIA Insured) Aaa 3,000,000 3,251,250
Decatur Econ. Dev. Rev. Rfdg. (Kroger Co.)
Series 1992, 7.75% 6/1/07 Ba1 705,000 763,163
Du Page County Commty. High School Dist. #99
(Downers Grove) Series A, 6% 2/1/06,
(AMBAC Insured) Aaa 1,640,000 1,752,750
Illinois Edl. Facs. Auth. Rev. (Lewis Univ.):
5.90% 10/1/14 Baa 1,740,000 1,709,550
6% 10/1/24 Baa 2,575,000 2,504,188
Illinois Health Facs. Auth. Rev.:
(Covenant Retirement Commty.) Series A,
7.60% 12/1/12 BBB+ 750,000 799,688
(Mem. Hosp.):
7.125% 5/1/10 BBB 1,000,000 1,031,250
7.25% 5/1/22 BBB 1,000,000 1,032,500
Round Lake Beach Tax Increment Rev. Rfdg.
7.50% 12/1/13 - 2,500,000 2,575,000
21,980,339
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
INDIANA - 0.2%
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 $ 1,000,000 $ 1,052,500
KANSAS - 0.0%
Kansas City Single Family Mtg. Rev. 9.50%
8/1/06 (AMBAC Insured) Aaa 10,000 10,588
KENTUCKY - 4.2%
Kenton County Arpt. Board Arpt. Rev. (Cincinnati/
Northern Kentucky Int'l.) Series A, 6% 3/1/05,
(MBIA Insured) (e) Aaa 5,570,000 5,834,575
Kenton County Arpt. Board Arpt. Spl. Facs. Rev.
(Delta Airlines, Inc.):
Series A, 7.125% 2/1/21 (e) Baa3 10,840,000 11,436,200
7.80% 12/1/15 Ba2 3,500,000 3,727,500
Murray Ind. Dev. Rev. Rfdg. (Kroger Co.)
7.25% 9/1/12 Ba1 700,000 735,000
21,733,275
LOUISIANA - 1.5%
Calcasieu Parish Inc. Ind. Dev. Board Poll. Cont.
Rev. Rfdg. (Gulf States Utils. Co. Proj.)
6.75% 10/1/12 Ba1 1,000,000 1,020,000
Hodge Util. Rev. (Stone Container Corp.)
9% 3/1/10 (e) - 2,300,000 2,486,875
Louisiana Pub. Facs. Auth. Ind. Dev. Rev. Rfdg.
(Beverly Enterprises, Inc.) 8.25% 9/1/08 - 535,000 571,781
Port New Orleans Ind. Dev. Rev. Rfdg. (Continental
Grain Co. Proj.) 7.50% 7/1/13 BB- 3,000,000 3,187,500
St. Tammany Pub. Trust Fing. Auth. Rev. Rfdg.
(Cap. Appreciation) Series C, 0% 7/20/14 Aaa 2,000,000 695,000
7,961,156
MARYLAND - 2.0%
Baltimore County Poll. Cont. Rev. Rfdg. (Bethlehem
Steel Proj.) Series B, 7.50% 6/1/15 - 3,750,000 3,932,813
Maryland Commty. Dev. Administration Dept.
Hsg. & Commty. Dev. Multi-Family Hsg. Rev.
Series A, 6.50% 5/15/21 (e) Aa 2,150,000 2,201,063
Maryland Energy Fing. Administration Ltd. Oblig.
Solid Waste Disp. Facs. Recycling Rev.
(Hagerstown Fiber Ltd. Partners 94)
9% 10/15/16 - 2,000,000 1,655,000
Maryland Health & Higher Edl. Facs. Auth. Rev.
(Good Samaritan Hosp.) 5.75% 7/1/13 A1 2,680,000 2,730,250
10,519,126
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
MASSACHUSETTS - 2.9%
Brockton Gen. Oblig.:
7.75% 12/15/96 Baa $ 150,000 $ 150,543
7.75% 12/15/98 Ba1 170,000 179,563
Massachusetts Health & Edl. Facs. Auth. Rev.
(1st Mtg.) (Fairview Extended Care) Series A,
10.25% 1/1/21 - 5,000,000 5,656,250
Massachusetts Ind. Fin. Agcy. Rev.:
Rfdg. (Atlanticare Med. Ctr.) Series B,
10.125% 11/1/14 - 700,000 676,375
Rfdg. (Emerson College) 8.90% 1/1/18 - 1,000,000 1,100,000
(1st Mtg.) (Reeds Landing Proj.)
8.625% 10/1/23 - 4,500,000 4,843,125
(Institute Dev. Disabilities) 9.25% 6/1/09 - 85,000 83,300
(Massachusetts Biomedical) (Cap. Appreciation)
Series A-2:
0% 8/1/08 A 800,000 399,000
0% 8/1/10 A 4,500,000 1,946,250
15,034,406
MICHIGAN - 3.6%
Detroit Hosp. Fing. Auth. Facs. Rev. (Michigan
Health Care Corp. Proj.) 10% 12/1/20 (b) Caa 6,685,000 1,303,575
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.):
Rfdg. 9.50% 7/1/06 Baa 1,165,000 1,172,526
7.80% 7/1/14 Baa 700,000 756,000
Highland Park Hosp. Fin. Auth. Hosp. Facs. Rev.
(Lakeside Commty. Hosp. Proj.) 10% 3/1/20 (b) - 150,000 21,750
Michigan Strategic Fund Ltd. Oblig. Rev.:
(Great Lakes Pulp & Fibre Proj.) (e):
10.25% 12/1/16 - 3,000,000 1,920,000
10.25% 12/1/16 - 12,250,000 7,840,000
(Mercy Svcs. for Aging Proj.) 9.40% 5/15/20 - 600,000 675,750
(Michigan Health Care Corp. Proj.)
9.10% 12/1/14 (b) - 2,075,000 404,625
Royal Oak Hosp. Fin. Auth. Rev. Rfdg.
(William Beaumont Hosp.) 6.25% 1/1/09 Aa 2,310,000 2,477,475
Tawas City Hosp. Fin. Auth. Hosp. Rev.
(St. Joseph Hosp. Proj.) Series A,
8.50% 3/15/12 - 1,935,000 1,993,050
18,564,751
MINNESOTA - 1.1%
Minnesota Hsg. Single Family Mtg. Rev.
6.40% 7/1/15 (e) Aa 2,000,000 2,037,500
St. Paul Hsg. & Redev. Auth. Hosp. Rev.
(Healtheast Proj.) Series A, 9.75% 11/1/17 Baa 385,000 411,503
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
MINNESOTA - CONTINUED
Western Minnesota Muni. Pwr. Agcy. Pwr.
Supply Rev. Rfdg. Series A, 6.25% 1/1/06
(AMBAC Insured) Aaa $ 3,000,000 $ 3,258,750
5,707,753
MISSISSIPPI - 0.8%
Claiborne County Poll. Cont. Rev.:
Rfdg. (Sys. Energy Resources, Inc. Proj.)
7.30% 5/1/25 Ba1 2,250,000 2,354,063
(Middle South Energy, Inc. Proj.):
Series A, 9.50% 12/1/13 Ba1 50,000 55,250
Series C, 9.875% 12/1/14 Ba1 1,100,000 1,223,750
Mississippi Home Corp. Single Family Sr. Rev.
Rfdg. Series 1990 A, 9.25% 3/1/12
(FGIC Insured) Aaa 250,000 268,750
3,901,813
MISSOURI - 1.3%
Kansas City Ind. Dev. Auth. (Kingswood United
Methodist Manor Proj.) Series 1993,
9% 1 1/15/13 - 2,000,000 2,167,500
Lake Ozarks Commty. Bridge Corp. Sys. Rev.
6.40% 12/1/25 - 1,750,000 1,708,438
St. Louis Land Clearance Redev. Auth. Hsg.
Dev. Rev. (Westminster Place Apts. Proj.)
11% 12/15/15 - 1,000,000 1,020,360
St. Louis Reg'l. Convention & Sports Complex
Auth. Rev. Series C, 7.90% 8/15/21 - 1,550,000 1,708,875
6,605,173
NEBRASKA - 0.3%
Nebraska Pub. Pwr. Dist. Rev. (Elec. Sys.)
Series A, 6% 1/1/06 A1 1,500,000 1,578,750
NEVADA - 1.9%
Clark County Ind. Dev. Rev. (Southwest Gas
Corp.) Series A, 6.50% 12/1/33 (e) Baa3 7,600,000 7,590,500
Las Vegas Redev. Agcy. Tax Increment Rev.:
(Sub. Lien Fremont Proj.) Series A,
6.10% 6/15/14 BBB+ 1,000,000 981,250
(Sub. Lien Hsg. Proj.) Series B, 6% 6/15/10 BBB+ 1,500,000 1,468,125
10,039,875
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
NEW HAMPSHIRE - 0.6%
New Hampshire Higher Edl. & Health Facs. Auth.
Rev.:
(1st Mtg. River Woods at Exeter):
8% 3/1/01 - $ 750,000 $ 770,798
9% 3/1/23 - 1,830,000 1,985,550
(Littleton Hosp. Assoc., Inc.) Series A,
9.50% 5/1/20 - 495,000 527,794
3,284,142
NEW JERSEY - 3.5%
Camden County Impt. Auth. Lease Rev.:
(Dockside Refrigerated Holt) 8.40% 4/1/24 (e) - 3,000,000 3,048,750
(Holt Hauling & Warehousing):
9.625% 1/1/11 - 3,000,000 3,003,750
9.875% 1/1/21 - 1,300,000 1,301,625
New Jersey Econ. Dev. Auth. Econ. Dev. Rev. Rfdg.:
(Holt Hauling & Warehousing)
8.60% 12/15/17 (e) - 4,500,000 4,635,000
(Stolt Term. Proj.) 10.50% 1/15/18 - 60,000 64,800
New Jersey Trans. Trust Fund Auth.:
6% 12/15/05 (MBIA Insured) Aaa 1,000,000 1,078,750
6% 12/15/06 (MBIA Insured) Aaa 3,000,000 3,228,750
Passaic County Util. Auth. Swr. Dev. Rev. (Cap.
Appreciation) 0% 3/1/02 (MBIA Insured) Aaa 2,500,000 1,946,875
18,308,300
NEW MEXICO - 4.2%
Albuquerque Arpt. Rev. Rfdg. (c)(e):
6.75% 7/1/11 (AMBAC Insured) Aaa 1,805,000 1,935,863
6.70% 7/1/18 (AMBAC Insured) Aaa 3,970,000 4,123,838
Farmington Poll. Cont. Rev.:
Rfdg. (Pub. Svc. Co. of New Mexico San Juan
Proj.) Series X, 5.90% 4/1/07 Ba1 10,550,000 10,352,188
(Pub. Svc. Co. of New Mexico San Juan Proj.):
Series A:
6% 3/1/08 Ba1 700,000 689,500
6.50% 9/1/09 Ba1 1,940,000 1,941,009
6.50% 9/1/04 Ba1 750,000 751,110
New Mexico Edl. Assistance Foundation
Student Loan Rev. 5.25% 4/1/05
(AMBAC Insured) (e) Aaa 2,275,000 2,266,469
22,059,977
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
NEW YORK - 12.3%
New York City Gen. Oblig.:
Rfdg. Series A, 7% 8/1/03 Baa1 $ 2,000,000 $ 2,170,000
Rfdg. Series B, 5.70% 8/15/02 Baa1 1,165,000 1,188,300
Series B, 7.50% 2/1/02 Baa1 2,000,000 2,200,000
Series H, 6.875% 2/1/02 Baa1 1,700,000 1,812,625
5.50% 2/15/04 Baa1 5,000,000 4,950,000
New York City Ind. Dev. Agcy. Ind. Dev. Rev.
(Japan Airlines Co. Ltd. Proj.) 6% 11/1/15
(FSA Insured) (e) Aaa 1,000,000 998,750
New York City Ind. Dev. Agcy. Spl. Facs. Rev.
(Term. One Group Assoc. Proj.)
5.90% 1/1/06 A 8,680,000 8,994,650
New York State Dorm. Auth. Rev.:
Rfdg. (New York State Univ. Edl. Facs.):
Series A, 5.50% 5/15/05 Baa1 2,750,000 2,750,000
Series B, 5.50% 5/15/08 Baa1 12,150,000 11,922,188
(New York City Univ.) 5.70% 7/1/05 Baa1 3,000,000 3,026,250
New York State Energy Research & Dev.
Auth. Elec. Facs. Rev. (Long Island Ltg.)
Series A (e):
7.15% 12/1/20 Ba3 3,000,000 3,052,500
6.90% 8/1/22 Ba3 4,050,000 4,080,375
New York State Local Gov't. Assistance Corp.
Rfdg. Series C, 5.50% 4/1/17 A 7,500,000 7,434,375
New York State Tollway Auth. Gen. Rev.
(Spl. Oblig.) Series A, 0% 1/1/04 BBB 4,000,000 2,680,000
New York State Tollway Auth. Svc. Contract Rev.
(Local Hwy. & Bridges) 5.90% 4/1/07 Baa1 2,000,000 2,045,000
New York State Urban Dev. Corp. Rev. Rfdg.
(Correctional Cap. Facs.) Series A:
6.30% 1/1/03 Baa1 2,000,000 2,105,000
6.40% 1/1/04 Baa1 1,550,000 1,643,000
Suffolk County Wtr. Auth. Wtrwks. Rev.
6% 6/1/17 (MBIA Insured) Aaa 1,000,000 1,067,500
64,120,513
NEW YORK & NEW JERSEY - 0.6%
New York & New Jersey Port Auth. Spl.
Oblig. Rev. (Continental Airlines Corp./
Eastern Airlines, Inc./U.S. Air Laguardia Proj.)
9.125% 12/1/15 (e) B2 3,000,000 3,360,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
NORTH CAROLINA - 2.2%
North Carolina Eastern Muni. Pwr. Agcy. Pwr.
Sys. Rev.:
Rfdg. Series B, 7.25% 1/1/07 Baa1 $ 1,000,000 $ 1,116,250
Rfdg. Series C:
5.125% 1/1/03 Baa1 2,000,000 1,987,500
5.25% 1/1/04 Baa1 1,365,000 1,358,175
Series B, 6.125% 1/1/09 Baa1 3,000,000 3,052,500
North Carolina Muni. Pwr. Agcy. Rev. Rfdg.
(Proj. #1 Catawba Elec.):
5.75% 1/1/02 A 1,750,000 1,804,688
6.25% 1/1/17 (AMBAC Insured) Aaa 1,800,000 1,876,500
11,195,613
NORTH DAKOTA - 0.5%
North Dakota Hsg. Fin. Agcy. Rev. (Hsg. Fin. Proj.)
Series C, 3.85% 4/3/97 (FGIC Insured) (e) Aa 2,700,000 2,701,782
OHIO - 5.7%
Butler County Hosp. Facs. Auth. Rev. Rfdg. &
Impt. (Fort Hamilton Hughe) 7.50% 1/1/10 Baa 3,500,000 3,688,125
Fairfield Econ. Dev. Rev. Rfdg. (Beverly
Enterprises Proj.) 8.50% 1/1/03 - 1,000,000 1,070,000
Gateway Econ. Dev. Corp. (Greater Cleveland
Stadiums) Series 1990, 6.50% 9/15/14 (e) - 3,000,000 2,917,500
Mahoning Valley San. Dist. Wtr. Rev.:
7.75% 5/15/14 - 2,000,000 2,077,500
7.75% 5/15/19 - 2,000,000 2,070,000
Marion County Impt. Rev. 5.60% 5/15/01 BBB+ 1,000,000 1,001,250
Ohio Bldg. Auth. Rfdg. (State Facs.-Vern Riffe Ctr.)
Series A, 5.75% 10/1/04 (AMBAC Insured) Aaa 4,000,000 4,250,000
Ohio Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.50% 9/1/10 Ba1 2,470,000 2,612,025
Ohio Wtr. Dev. Auth. Poll. Cont. Facs. Rev.
(Wtr. Cont. Loan Fund):
State Matching Series, 6.50% 12/1/04
(MBIA Insured) Aaa 1,835,000 2,043,731
Wtr. Quality Series, 5.625% 6/1/06
(MBIA Insured) Aaa 2,000,000 2,097,500
Student Loan Funding Corp. Student Loan Rev.
Sub-Series B, 8.875% 8/1/08 (e) - 3,765,000 3,915,600
Summit County Ind. Dev. Rev. Rfdg. (Surnow
Assoc. Proj.) 7.65% 10/1/06 Ba2 1,730,000 1,857,571
29,600,802
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
OKLAHOMA - 0.8%
Tulsa Muni. Arpt. Trust Rev. (American Airlines
AMR Corp. Proj.) 7.35% 12/1/11 Baa2 $ 4,000,000 $ 4,330,000
PENNSYLVANIA - 6.9%
Allegheny County Hosp. Dev. Auth. Health Facs.
Rev. (Allegheny Valley School):
8% 2/1/02 Ba1 510,000 528,488
8.50% 2/1/15 Ba1 2,930,000 3,080,163
Allegheny County Ind. Dev. Auth. Rev. (YMCA
Pittsburgh Proj.) Series 1990, 8.75% 3/1/10 - 370,000 395,900
Butler County Ind. Dev. Auth. Health Ctr. Rev.
Rfdg. (Sherwood Oaks Proj.) 5.75% 6/1/11 A- 3,000,000 2,850,000
Cumberland County Muni. Auth. Rev.
(Carlisle Hosp.):
6.80% 11/15/14 Baa 3,250,000 3,274,375
6.80% 11/15/23 Baa 1,000,000 1,000,000
Delaware County Auth. Rev.
(1st Mtg. Riddle Village Proj.):
Series 1992, 8.75% 6/1/10 - 2,870,000 3,121,125
7% 6/1/00 - 1,000,000 1,017,500
8.25% 6/1/22 - 2,250,000 2,432,813
9.25% 6/1/22 - 2,905,000 3,217,288
Montgomery County Higher Ed. & Health Auth.
Hosp. Rev. (United Hosp., Inc. Proj.) (f):
(St. Christopher):
8.25% 11/1/03
(Pre-Refunded to 11/1/97 @ 102) Ba1 1,250,000 1,328,188
7% 11/1/06
(Pre-Refunded to 11/1/97 @ 102) Ba1 120,000 123,809
8.50% 11/1/17
(Pre-Refunded to 11/1/97 @ 102) Ba1 525,000 559,104
Series A, 8% 11/1/96
(Escrowed to Maturity) Ba1 65,000 65,000
Series B, 8.10% 11/1/97
(Escrowed to Maturity) Ba1 35,000 36,464
Northampton County Ind. Dev. Auth. Rev. Rfdg.
(Bethlehem Steel Poll. Cont. Proj.) Series 1994,
7.55% 6/1/17 - 1,940,000 2,017,600
Pennsylvania Ind. Dev. Auth. Econ. Dev. Rev.
5.80% 7/1/09 (AMBAC Insured) Aaa 1,345,000 1,403,844
Philadelphia Hosp. & Higher Ed. Facs. Auth.
Hosp. Rev. (Graduate Health Sys. Oblig.
Group) 7.25% 7/1/18 Ba 2,600,000 2,684,500
Philadelphia Ind. Dev. Auth. Rev. (Philadelphia
Arpt.) 7.75% 12/1/17 (e) - 2,000,000 2,117,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Somerset County Hosp. Auth. Rev. (Health
Care 1st Mtg.) 8.50% 6/1/24 - $ 4,500,000 $ 4,798,125
36,051,786
RHODE ISLAND - 1.2%
Rhode Island Clean Wtr. Protection Fin. Agcy. Wtr.
Poll. Cont. Rev. (Revolving Fund Pooled Loan)
Series A, 5.40% 10/1/15 (MBIA Insured) Aaa 1,650,000 1,619,063
Rhode Island Port Auth. & Econ. Dev. Corp. Arpt.
Rev. Series A, 7% 7/1/14 (FSA Insured) (e) Aaa 4,000,000 4,595,000
6,214,063
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Agcy. Elec. Rev. Series A,
6.25% 1/1/05 (FGIC Insured) Aaa 1,715,000 1,858,631
TENNESSEE - 0.6%
Dyer County Ind. Dev. Board. Ind. Dev. Rev. Rfdg.
(Tennessee Assoc. Proj.) 6% 2/01/07 Ba1 1,640,000 1,601,050
Metropolitan Gov't. Nashville & Davidson
County Elec. Rev. Series A, 0% 5/15/06
(MBIA Insured) Aaa 1,000,000 608,750
Rutherford County Ind. Dev. Board Dev. Rev.
Rfdg. (Kroger Co. Proj.) 7.30% 6/1/21 Ba1 1,000,000 1,056,250
3,266,050
TEXAS - 2.6%
Dallas-Fort Worth Int'l. Arpt. Facs. Impt. Corp.
Rev. (AMR Corp.) 7.50% 11/1/25 (e) Baa2 6,000,000 6,405,000
Harris County Cultural & Ed. Facs. Fin. Corp.
Rev. Rfdg. (Space Ctr. Houston Proj.):
Series A, 9.25% 8/15/23 - 1,870,000 1,811,563
Series B, 0% 8/15/23 - 4,730,000 1,259,363
Houston Elderly Hsg. Auth. 1st Lien Rev.
(Low Income Elderly Hsg.) 7.50% 7/1/17 - 450,000 458,438
Houston Hsg. Fin. Corp. Single Family Mtg. Rev.
(Verex Mtg. Assurance, Inc.) Series 1984 A,
10.875% 2/15/16 A 155,000 155,417
Midlothian Independent School Dist. (Cap.
Appreciation) 0% 2/15/04 (PSF Guaranteed) Aaa 1,845,000 1,282,275
San Antonio Health Facs. Dev. Corp. Econ. Dev.
Rev. Rfdg. (Encore Nursing Ctr. Partner)
(Beverly Enterprises, Inc.) 8.25% 12/1/19 - 2,250,000 2,351,250
13,723,306
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
UTAH - 0.7%
Intermountain Pwr. Agcy. Pwr. Supply Rev.
Rfdg. (c):
Series A, 6.50% 7/1/09 (AMBAC Insured) Aaa $ 1,000,000 $ 1,086,250
Series B, 5.75% 7/1/16 (MBIA Insured) Aaa 2,500,000 2,440,625
South Salt Lake City Ind. Rev. (Price Savers
Wholesale Club Proj.) 9% 11/15/13 - 250,000 280,938
3,807,813
VIRGINIA - 2.7%
Hopewell Ind. Dev. Auth. Resource Recovery Rev.
(Stone Container Corp.) 8.25% 6/1/16 - 3,735,000 4,052,475
Loudoun County Ind. Dev. Auth. Residential Care
Facs. Rev. (Falcons Landing Proj.) Series A:
9.25% 11/1/04 - 1,000,000 1,073,750
8.75% 11/1/24 - 8,500,000 8,808,125
13,934,350
WASHINGTON - 2.8%
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #2 Rev. 5.40% 7/1/12 Aa1 14,000,000 13,142,500
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #3 Rev. Rfdg. Series B, 7% 7/1/05
(FGIC Insured) Aaa 1,150,000 1,237,688
14,380,188
WEST VIRGINIA - 0.4%
Ripley Ind. Dev. Rev. Rfdg. (Kroger Co. Proj.)
7.30% 5/1/11 Ba1 2,200,000 2,329,250
WYOMING - 0.5%
Sweetwater County Poll. Cont. Rev. Rfdg.
(Idaho Pwr. Co. Proj.) Series A,
6.05% 7/15/26 A3 2,500,000 2,540,625
TOTAL MUNICIPAL BONDS
(Cost $513,040,825) 513,491,669
MUNICIPAL NOTES (D) - 1.4%
DELAWARE - 0.2%
Delaware Econ. Dev. Auth. Rev. (Delmarva Pwr.
& Lt. Co. Proj.) Series 88, 3.80%, VRDN (e) VMIG 1 1,100,000 1,100,000
LOUISIANA - 0.5%
St. Charles Parish Poll. Cont. Rev. (Shell Oil Co.
Norco Proj.) Series 1991, 3.70%, VRDN (e) VMIG 1 2,500,000 2,500,000
MUNICIPAL NOTES (D) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
TEXAS - 0.4%
Gulf Coast Ind. Dev. Auth. Solid Waste Disp.
Rev. (Citgo Petroleum) 3.75%, LOC Wachovia
Bank, VRDN (e) VMIG 1 $ 1,000,000 $ 1,000,000
Trinity River Auth. Poll. Cont. Rev. Coll. (Texas
Utils. Elec. Co. Proj.) Series 96-A, 3.70%,
(AMBAC Insured) BPA Bank of New York,
VRDN (e) VMIG 1 1,000,000 1,000,000
2,000,000
VIRGINIA - 0.1%
Hopewell Ind. Dev. Auth. Rev. (Hadson Pwr.
13-Hopewell Proj.) Series 1990 A, 3.65%,
LOC Cr. Suisse Bank, VRDN (e) - 600,000 600,000
WEST VIRGINIA - 0.2%
Grant County Poll. Cont. Rev. (Virginia Elec. &
Pwr. Co. Proj.) Series 1994, 3.80%, tender
3/10/97 VMIG 1 1,000,000 1,000,460
TOTAL MUNICIPAL NOTES
(Cost $7,200,000) 7,200,460
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $520,240,825) $ 520,692,129
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
2. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
3. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
4. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
5. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
6. Security collaleralized 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 investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 29.3% AAA, AA, A 31.2%
Baa 24.0% BBB 21.9%
Ba 11.4% BB 10.0%
B 0.7% B 2.3%
Caa 0.3% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.3%
The percentage not rated by both S&P and Moody's amounted to 24.9%. FMR has
determined that unrated debt securities that are lower quality account for
23.1% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Industrial Development 21.6%
Health Care 21.5
General Obligation 16.9
Electric Revenue 15.7
Transportation 7.7
Others (individually less than 5%) 16.6
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $520,246,765. Net unrealized appre- ciation aggregated
$445,364, of which $16,252,959 related to appreciated invest- ment
securities and $15,807,595 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $16,952,000 of which $3,173,000, $7,511,000 and $6,268,000
will expire on October 31, 2002, 2003 and 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value (cost $520,240,825) - $ 520,692,129
See accompanying schedule
Receivable for investments sold 5,921,199
Interest receivable 10,523,030
Prepaid expenses 16,891
TOTAL ASSETS 537,153,249
LIABILITIES
Payable to custodian bank $ 18,618
Payable for investments purchased 5,113,042
Regular delivery
Delayed delivery 9,291,986
Payable for fund shares redeemed 471,138
Distributions payable 873,655
Accrued management fee 168,831
Other payables and accrued expenses 266,457
TOTAL LIABILITIES 16,203,727
NET ASSETS $ 520,949,522
Net Assets consist of: $ 537,961,032
Paid in capital
Undistributed net investment income 863,965
Accumulated undistributed net realized gain (loss) (18,326,779)
on investments
Net unrealized appreciation (depreciation) on 451,304
investments
NET ASSETS $ 520,949,522
CALCULATION OF MAXIMUM OFFERING PRICE $11.74
CLASS A:
NET ASSET VALUE and redemption price per share
($201,619 (divided by) 17,179 shares)
Maximum offering price per share (100/95.75 of $11.74) $12.26
CLASS B: $11.74
NET ASSET VALUE and offering price per share
($39,388,723 (divided by) 3,356,509 shares) A
CLASS T: $11.76
NET ASSET VALUE and redemption price per share
($480,431,820 (divided by) 40,865,528 shares)
Maximum offering price per share (100/96.50 of $11.76) $12.19
INSTITUTIONAL CLASS: $11.72
NET ASSET VALUE, offering price and redemption price
per share ($927,360 (divided by) 79,150 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INTEREST INCOME $ 37,943,965
EXPENSES
Management fee $ 2,266,568
Transfer agent fees 62
Class A
Class B 60,605
Class T 979,556
Institutional Class 1,577
Distribution fees 35
Class A
Class B 340,118
Class T 1,335,656
Accounting fees and expenses 239,476
Non-interested trustees' compensation 2,192
Custodian fees and expenses 33,910
Registration fees 8,583
Class A
Class B 14,267
Class T 29,650
Institutional Class 29,267
Audit 40,876
Legal 8,037
Miscellaneous 16,260
Total expenses before reductions 5,406,695
Expense reductions (39,464) 5,367,231
NET INTEREST INCOME 32,576,734
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (6,143,265)
Futures contracts 151,645 (5,991,620)
Change in net unrealized appreciation (depreciation) on (1,724,709)
investment securities
NET GAIN (LOSS) (7,716,329)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 24,860,405
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 32,576,734 $ 34,231,751
Net interest income
Net realized gain (loss) (5,991,620) (8,226,585)
Change in net unrealized appreciation (depreciation) (1,724,709) 40,030,641
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 24,860,405 66,035,807
FROM OPERATIONS
Distributions to shareholders (1,272) -
From net interest income
Class A
Class B (1,818,282) (1,127,659)
Class T (29,846,407) (33,101,699)
Institutional Class (46,808) (2,393)
TOTAL DISTRIBUTIONS (31,712,769) (34,231,751)
Share transactions - net increase (decrease) (69,878,601) 11,485,606
TOTAL INCREASE (DECREASE) IN NET ASSETS (76,730,965) 43,289,662
NET ASSETS
Beginning of period 597,680,487 554,390,825
End of period (including undistributed net investment $ 520,949,522 $ 597,680,487
income of $863,965 and $0, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR
ENDED
OCTOBER
31,
1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.630
Income from Investment Operations
Net interest income .105 F, H
Net realized and unrealized gain (loss) .109 G
Total from investment operations .214
Less Distributions
From net interest income (.104)
Net asset value, end of period $ 11.740
TOTAL RETURN B, C 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 202
Ratio of expenses to average net assets .90% A,
D
Ratio of net interest income to average net assets 5.73% A
Portfolio turnover rate 49%
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
F SEE "DISTRIBUTION TO SHAREHOLDERS" SECTION OF NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS.
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
INVESTMENTS OF THE FUND.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 1994 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.860 $ 11.210 $ 11.610
Income from Investment Operations
Net interest income .596 F, .612 .188
G
Net realized and unrealized gain (loss) (.136) .650 (.400)
Total from investment operations .460 1.262 (.212)
Less Distributions
From net interest income (.580) (.612) (.188)
Net asset value, end of period $ 11.740 $ 11.860 $ 11.210
TOTAL RETURN B, C 3.98% 11.57% (1.86)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 39,389 $ 32,395 $ 9,968
Ratio of expenses to average net assets 1.57% 1.86% 2.09% A
D
Ratio of net interest income to average net assets 5.06% 5.18% 4.58% A
Portfolio turnover rate 49% 37% 38%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1994.
F SEE "DISTRIBUTION TO SHAREHOLDERS" SECTION OF NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 1994 C 1993 1992
SELECTED PER-SHARE DATA
Net asset value, $ 11.880 $ 11.220 $ 12.720 $ 11.650 $ 11.410
beginning of period
Income from Investment
Operations
Net interest income .677 E, .700 .689 .710 .774
F
Net realized and unrealized (.136) .660 (1.430) 1.100 .250
gain (loss)
Total from investment .541 1.360 (.741) 1.810 1.024
operations
Less Distributions
From net interest income (.661) (.700) (.689) (.710) (.774)
From net realized gain - - (.060) (.030) (.010)
In excess of net realized gain - - (.010) - -
Total distributions (.661) (.700) (.759) (.740) (.784)
Net asset value, end of period $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650
TOTAL RETURN A, B 4.68% 12.50% (6.03)% 15.95% 9.21%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 480,432 $ 565,131 $ 544,422 $ 497,575 $ 156,659
(000 omitted)
Ratio of expenses to average .89% .91% .89% .92% .90%
net assets D
Ratio of net interest income to 5.74% 6.06% 5.78% 5.59% 6.59%
average net assets
Portfolio turnover rate 49% 37% 38% 27% 13%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
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 SEE "DISTRIBUTION TO SHAREHOLDERS" SECTION OF NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER
31,
1996 1995 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.880 $ 11.700
Income from Investment Operations
Net interest income .707 F, G .232
Net realized and unrealized gain (loss) (.197) .180
Total from investment operations .510 .412
Less Distributions
From net interest income (.670) (.232)
Net asset value, end of period $ 11.720 $ 11.880
TOTAL RETURN B, C 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 927 $ 154
Ratio of expenses to average net assets .75% D .75% A
, D
Ratio of net interest income to average net assets 5.88% 5.89% A
Portfolio turnover rate 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 (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
F SEE "DISTRIBUTION TO SHAREHOLDERS" SECTION OF NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor High Income Municipal Fund (the fund) is a fund of
Fidelity Advisor Series V (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class B, Class T, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
The fund commenced sale of a new Class A shares on September 3, 1996. On
this date, the original Class A was renamed Class T. Investment income,
realized and unrealized capital gains and losses, the common expenses of
the fund, and certain fund-level expense reductions are allocated on a pro
rata basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. 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. 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. 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.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying each class
and shares of each class for distribution
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES - CONTINUED
under federal and state securities law. These expenses are borne by each
class and amortized over one year.
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 are declared
separately for each class, while capital gain distributions are declared at
the fund level and allocated to each class on a pro rata basis based on the
number of shares held by each class on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, market discount, capital loss carryforwards and
losses deferred due to wash sales, futures and options.
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 investment income and realized
and unrealized gain (loss). Accumulated undistributed net realized gain
(loss) on investments may include temporary book and tax basis differences
that will reverse in a subsequent period.
Any taxable income or gain remaining at fiscal year end is distributed in
the following year.
During the period, the fund received payments from the trustees for
Michigan Health Care Corporation, a Detroit hospital system that filed for
bankruptcy in the spring of 1995. These amounts, which were recorded as
income for book purposes, remain undistributed to shareholders as of period
end pending determination as to their classification for income tax
purposes.
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.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The
market value of the securities purchased or sold 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 delayed delivery security. Losses may arise due to changes in
the market value of the underlying securities or if the counterparty does
not perform under the contract.
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, if there is an
illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms. Futures contracts are valued at the
settlement price established each day by the board of trade or exchange on
which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $265,932,863 and $290,096,544, respectively.
The market value of futures contracts opened and closed during the period
amounted to $15,286,969 and $15,173,499, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .25%. For
the period, the management fee was equivalent to an annual rate of .40% of
average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares (Class A Plan), Class B shares (Class B Plan),
Class T shares (Class T Plan), and Institutional Class shares (collectively
referred to as "the Plans"). Under the Class A, Class B, and Class T Plans
the fund pays Fidelity Distributors Corporation (FDC), an affiliate of FMR,
a distribution and service fee. This fee is based on annual rates of .15%,
.90% (of which .65% represents a distribution fee and .25% represents a
shareholder service fee), and .25% of the average net assets of the Class
A, Class B and Class T shares, respectively. Prior to January 1, 1996, the
fee for Class B was based on an annual rate of 1.00% (of which .75%
represented a distribution fee and .25% represented a shareholder service
fee) of the average net assets of the Class B shares. For the period, the
fund paid FDC $35, $340,118, and $1,335,656 under the Class A, Class B and
Class T Plans, of which $35, $92,908, and $1,335,656 were paid to
securities
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
dealers, banks and other financial institutions for the distribution of
Class A, Class B and Class T shares, and providing shareholder support
services.
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
Class T, and Institutional Class shares. The Plans also authorize payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 4.25% and 3.50%
(4.75% prior to January 1, 1996) for selling Class A and Class T shares of
the fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within five years of
purchase. The Class B charge is based on declining rates which range from
4% to 1% of the lesser of the cost of shares at the initial date of
purchase or the net asset value of the redeemed shares, excluding any
reinvested dividends and capital gains.
For the period, FDC received sales charges of $3,984 and $918,111 on sales
of Class A and Class T shares of the fund, of which $3,385 and $763,755
were paid to securities dealers, banks, and other financial institutions.
FDC also received
contingent deferred sales charges of $130,817 on Class B share redemptions
from the fund. When Class B shares are sold, FDC pays commissions from its
own resources to dealers through which the sales are made.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class B, Class T, and Institutional Class shares. UMB has entered into
sub-arrangements with Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, with respect to all classes of the fund to
perform the transfer, dividend disbursing, and shareholder servicing agent
functions. FIIOC receives account fees and asset-based fees that vary
according to the account size and type of account of the shareholders of
the respective classes of the fund. All fees are paid to FIIOC by UMB,
which is reimbursed by the fund for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except proxy
statements.
UMB also has a sub-contract with Fidelity Service Co. (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. For the period, the transfer agent fees were equivalent to annual
rates of .26%, .16%, .18%, and .20% of the average net assets of Class A,
Class B, Class T and Institutional Class, respectively.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above the
following annual rates of average net assets for each class.
(I) CLASS A. For the period, this expense limitation was .90% of average
net assets and the reimbursement reduced expenses by $8,597.
(II) CLASS B. Effective January 1, 1996, the expense limitation changed
from an annual rate of 1.75% to 1.65% of average net assets.
(III) CLASS T. For the period, this expense limitation was 1.00% of average
net assets.
(IIII) INSTITUTIONAL CLASS. For the period, this expense limitation was
.75% of average net assets and the reimbursement reduced expenses by
$28,333.
In addition, the fund has entered into an arrangement with its custodian
whereby interest earned on uninvested cash balances was used to offset a
portion of expenses. During the period, the fund's custodian fees were
reduced by $2,534 under the custodian arrangement.
6. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 A 1995 B 1996 A 1995 B
CLASS A 18,733 - $ 218,730 $ -
Shares sold
Reinvestment of distributions 78 - 910 -
Shares redeemed (1,632) - (19,114) -
Net increase (decrease) 17,179 - $ 200,526 $ -
CLASS B 1,193,226 2,043,527 $ 14,098,773 $ 23,449,301
Shares sold
Reinvestment of distributions 95,237 61,101 1,121,011 707,595
Shares redeemed (664,327) (261,235) (7,798,479) (3,041,172)
Net increase (decrease) 624,136 1,843,393 $ 7,421,305 $ 21,115,724
CLASS T 6,539,718 12,273,037 $ 77,377,354 $ 140,517,484
Shares sold
Reinvestment of distributions 1,597,120 1,809,737 18,850,193 20,850,961
Shares redeemed (14,847,912) (15,035,639) (174,513,587) (171,150,553)
Net increase (decrease) (6,711,074) (952,865) $ (78,286,040) $ (9,782,108)
INSTITUTIONAL CLASS 140,918 12,792 $ 1,653,013 $ 150,012
Shares sold
Reinvestment of distributions 3,139 168 36,744 1,978
Shares redeemed (77,867) - (904,149) -
Net increase (decrease) 66,190 12,960 $ 785,608 $ 151,990
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
B SHARE TRANSACTIONS FOR INSTITUTIONAL CLASS ARE FOR THE PERIOD JULY 3,
1995 (COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1995.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series V and the Shareholders of
Fidelity Advisor High Income Municipal Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series V: Fidelity Advisor High Income Municipal Fund,
including the schedule of portfolio investments, as of October 31, 1996,
and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period
then ended and the financial highlights of Class A, Class B, Class T and
Institutional Class for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series V: Fidelity Advisor High Income Municipal Fund
as of October 31, 1996, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights of Class A, Class B, Class
T and Institutional Class for each of the periods indicated therein, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 13, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor High Income Municipal 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 12/9/96 12/6/96 $- $.002
Class B 12/9/96 12/6/96 $- $.002
Class T 12/9/96 12/6/96 $- $.002
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
During fiscal year ended 1996, 100% of the fund's income dividends was free
from federal income tax, and 26.36% of the fund's income dividends was
subject to the federal alternative minimum tax.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
HIGH INCOME MUNICIPAL
FUND - INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 1996
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 26 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 33 Notes to the financial statements.
REPORT OF INDEPENDENT 39 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 40
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:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and 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, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR HIGH INCOME MUNICIPAL 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at income to
measure performance. The initial offering of Institutional Class shares
took place on July 3, 1995. Institutional Class shares are sold to eligible
investors without a sales load or 12b-1 fee. Returns prior to July 3, 1995
are those of Class T, the original class of the fund, and reflect Class T's
0.25% 12b-1 fee. If Fidelity had not reimbursed certain class expenses
during the periods shown, the total returns and dividends would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - 4.41% 39.86% 121.73%
Institutional Class
Lehman Brothers 70% Municipal/30% 5.55% n/a n/a
Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 5.74% 40.72% n/a
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five years, or
since the fund started on September 16, 1987. 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 70% Municipal/30%
Non-Investment Grade Composite Index. With a Municipal Bond Index weight of
70% and a Non-Investment Grade Bond Index weight of 30%, this index is a
total return performance benchmark for both investment-grade and
non-investment-grade municipal bonds. To measure how Institutional Class'
performance stacked up against its peers, you can compare it to the
high-yield municipal debt funds average, which reflects the performance of
43 mutual funds with similar objectives tracked by Lipper Analytical
Services, Inc. over the past 12 months. These benchmarks include reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - 4.41% 6.94% 9.11%
Institutional Class
Lehman Brothers 70% Municipal/30% 5.55% n/a n/a
Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 5.74% 7.06% n/a
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' actual (or
cumulative) return and show you what would have happened if Institutional
Class shares had performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA High Inc Class I LB Lehman Brothers Muni Bond
00679 LB015
1987/09/30 10000.00 10000.00
1987/10/31 10032.38 10035.40
1987/11/30 10202.58 10297.42
1987/12/31 10377.36 10446.84
1988/01/31 10759.02 10818.96
1988/02/29 10878.35 10933.31
1988/03/31 10752.21 10806.49
1988/04/30 10804.96 10888.62
1988/05/31 10859.03 10857.15
1988/06/30 11061.37 11015.99
1988/07/31 11096.60 11087.81
1988/08/31 11134.46 11097.57
1988/09/30 11304.15 11298.44
1988/10/31 11458.60 11497.29
1988/11/30 11470.98 11391.97
1988/12/31 11602.17 11508.51
1989/01/31 11748.27 11746.51
1989/02/28 11760.05 11612.48
1989/03/31 11850.55 11584.73
1989/04/30 12121.36 11859.75
1989/05/31 12319.40 12106.08
1989/06/30 12460.50 12270.48
1989/07/31 12569.81 12437.48
1989/08/31 12667.04 12315.71
1989/09/30 12705.24 12279.01
1989/10/31 12839.38 12429.19
1989/11/30 12997.44 12646.70
1989/12/31 13121.01 12750.15
1990/01/31 13141.72 12689.84
1990/02/28 13235.90 12802.78
1990/03/31 13318.94 12806.62
1990/04/30 13197.12 12713.90
1990/05/31 13467.56 12991.44
1990/06/30 13626.24 13105.64
1990/07/31 13836.41 13298.29
1990/08/31 13743.04 13105.20
1990/09/30 13840.77 13112.67
1990/10/31 14030.79 13350.53
1990/11/30 14378.93 13619.01
1990/12/31 14470.66 13678.26
1991/01/31 14639.07 13861.82
1991/02/28 14751.63 13982.42
1991/03/31 14838.36 13987.45
1991/04/30 15079.97 14173.48
1991/05/31 15266.37 14299.48
1991/06/30 15301.90 14285.33
1991/07/31 15499.76 14459.32
1991/08/31 15639.74 14649.75
1991/09/30 15823.19 14840.49
1991/10/31 15998.52 14974.06
1991/11/30 16058.70 15015.83
1991/12/31 16233.36 15338.07
1992/01/31 16413.30 15373.04
1992/02/29 16502.47 15377.96
1992/03/31 16585.27 15383.65
1992/04/30 16734.95 15520.57
1992/05/31 16885.07 15703.25
1992/06/30 17116.60 15966.75
1992/07/31 17712.61 16445.43
1992/08/31 17575.45 16285.09
1992/09/30 17685.14 16391.59
1992/10/31 17471.71 16230.46
1992/11/30 17821.88 16521.15
1992/12/31 18036.75 16689.83
1993/01/31 18341.83 16883.93
1993/02/28 18989.50 17494.62
1993/03/31 18791.44 17309.71
1993/04/30 18990.71 17484.36
1993/05/31 19147.98 17582.62
1993/06/30 19454.97 17876.08
1993/07/31 19469.42 17899.49
1993/08/31 19970.87 18272.16
1993/09/30 20247.42 18480.28
1993/10/31 20258.28 18515.95
1993/11/30 20060.30 18352.82
1993/12/31 20523.52 18740.25
1994/01/31 20762.50 18954.27
1994/02/28 20213.75 18463.35
1994/03/31 19136.29 17711.52
1994/04/30 19263.27 17861.72
1994/05/31 19377.19 18016.58
1994/06/30 19305.84 17906.50
1994/07/31 19654.09 18234.72
1994/08/31 19684.97 18297.81
1994/09/30 19376.60 18029.20
1994/10/31 19036.93 17709.00
1994/11/30 18424.89 17388.82
1994/12/31 18871.45 17771.55
1995/01/31 19508.98 18279.46
1995/02/28 20034.62 18811.03
1995/03/31 20139.96 19027.17
1995/04/30 20206.16 19049.62
1995/05/31 20852.77 19657.49
1995/06/30 20689.20 19486.47
1995/07/31 20757.08 19671.21
1995/08/31 20971.45 19920.64
1995/09/30 21180.60 20046.73
1995/10/31 21430.48 20338.21
1995/11/30 21855.44 20675.63
1995/12/31 22049.38 20874.32
1996/01/31 22171.17 21031.92
1996/02/29 22121.25 20889.95
1996/03/31 21672.67 20622.98
1996/04/30 21585.00 20564.62
1996/05/31 21506.43 20556.39
1996/06/30 21759.46 20780.25
1996/07/31 21903.89 20969.35
1996/08/31 21953.82 20964.32
1996/09/30 22152.49 21257.82
1996/10/31 22375.26 21498.24
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor High Income Municipal Fund - Institutional
Class on September 30, 1987, shortly after the fund started. As the chart
shows, by October 31, 1996, the value of the investment would have grown to
$22,375 - a 123.75% increase on the initial investment. For comparison,
look at how the Lehman Brothers Municipal Bond Index, a total return
performance benchmark for investment-grade municipal bonds with maturities
of at least one year, did over the same period. With dividends reinvested,
the same $10,000 would have grown to $21,498 - a 114.98% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31,
1996 1995 1994 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Dividend return 5.76% 6.71% 5.27% 6.49% 7.01%
Capital appreciation return -1.35% 5.88% -11.30% 9.46% 2.20%
Total return 4.41% 12.59% -6.03% 15.95% 9.21%
</TABLE>
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.73(cents) 33.93(cents) 66.99(cents)
Annualized dividend rate 5.77% 5.79% 5.69%
30-day annualized yield 5.68% - -
30-day annualized tax-equivalent yield 8.88% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average net asset value of $11.70
over the past month, $11.63 over the past six months, and $11.78 over the
past year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. If Fidelity had not reimbursed certain class expenses
during the periods shown, the yield would have been 4.87%. 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
Municipal bonds benefited from
steady demand and relatively low
supply during much of the year
that ended October 31, 1996.
For the past 12 months, the
Lehman Brothers Municipal Bond
Index - a broad measure of the
municipal bond market - had a
total return of 5.70%. In
comparison, the Lehman
Brothers Aggregate Bond Index
- - a proxy for investment-grade
taxable bonds - had a total
return of 5.85%. Munis
outperformed their
counterparts in the taxable bond
market for the first 10 months
of the period. Factors that helped
munis included a lack of supply of
new issues, strong demand for
municipal bonds from both
insurance companies and
individual investors, and the
diminishing likelihood of
significant tax reform in the near
future. Like most domestic bonds,
munis were hurt by
stronger-than-expected signs of
strength in the economy earlier in
1996. Nevertheless, the market
conditions that supported the
muni market prevailed to the
point that munis entered the last
two months of the period trading
at expensive levels relative to
their taxable counterparts. At that
point and through the end of the
period, the performance of the
municipal market stalled
somewhat, as investor demand
declined and institutional
investors sold off some of their
municipal bond holdings to take
profits.
An interview with Tanya Roy, Portfolio Manager of Fidelity Advisor High
Income Municipal Fund
Q. HOW DID THE FUND PERFORM, TANYA?
A. As of October 31, 1996, the fund's Institutional Class had a total
return of 4.41% for the 12-month period. For the same period, the
high-yield municipal debt funds average had a total return of 5.74%,
according to Lipper Analytical Services. Additionally, the Lehman Brothers
70% Municipal/30% Non-Investment Grade Composite Index returned 5.55% for
the year.
Q. MORE SPECIFICALLY, HOW DID HIGH-YIELD MUNICIPALS - WHICH THE FUND
EMPHASIZES - PERFORM, COMPARED TO INVESTMENT-GRADE MUNICIPALS?
A. Quite well. Fundamental credit quality has improved among many
high-yield issuers due to a healthy economy and improved operating
efficiencies. Also, the rate of growth in municipal issuance this year has
been very manageable, including issuance in the high-yield municipal
sector. Several industries that had been active in the municipal market in
the last few years have reduced their appetite for borrowing because they
have entered a period of consolidation and cost retrenchment. These
industries include investor-owned and municipal utilities, as well as
hospitals and airlines. Another factor contributing to the outperformance
of high-yield municipal bonds is that as municipal yields declined this
year, investors have reached for bonds of lower-credit quality in order to
find additional yield, bidding up the prices of lower-quality,
higher-yielding securities in the process.
Q. WHY DID THE FUND UNDERPERFORM ITS PEERS DURING THE PAST YEAR?
A. There were two reasons. In the first half of the period, the fund's
performance was hurt by its holding in the Ford Heights, Illinois,
incinerator project, which entered bankruptcy this past spring. The fund no
longer holds the bonds. The second reason is its holdings in a resource
recovery project involved in the paper recycling business. Paper prices
have been very depressed this year, and these projects have had difficulty
meeting their original financial and operating forecasts. As a result,
bonds in this sector have lagged the market.
Q. WHAT WERE SOME OF THE FUND'S BEST PERFORMERS?
A. Health care bonds have been very good performers. There has been quite a
bit of consolidation in the hospital sector, which has generated a great
deal of debate in the market about the prospects for individual hospital
bonds. In conjunction with our credit analysts, I have taken advantage of
the market uncertainty to research attractive health care opportunities for
the fund. For example, the fund benefited recently when a hospital whose
bonds it owns announced a merger with a strong hospital system in its
service area. The value of the bonds increased significantly as a result.
Q. APART FROM THE HOSPITAL SECTOR, WHICH OTHER SECTORS PERFORMED WELL?
A. General obligation bonds (GOs) issued by cities and states were some of
the fund's best performers during the past six months. A GO is a municipal
bond backed by the full faith and credit of the issuer which includes the
taxing power of the municipality. Their strong recent performance was a
direct reflection of a healthy economy which resulted in higher tax and
general revenue collections. Additionally, many municipalities have exerted
considerable restraint in managing their expenditure requirements. That has
led to improved cash reserves and general fund balances, and therefore
solid bond performance. For example, GOs issued by the District of Columbia
and New York City have performed well and benefited the fund's performance.
Q. YOU'VE UPGRADED THE CREDIT QUALITY OF THE PORTFOLIO OVER THE PAST YEAR.
WHAT WAS THE RATIONALE FOR THAT MOVE?
A. The rationale for the upgrade was to take advantage of the strong
performance of high-yield municipal bonds. Recently, non-investment-grade
bonds were trading as narrow as 75 basis points - or three-quarters of a
percentage point - over insured bonds. In contrast, BB-rated bonds offered
roughly one percentage point additional yield over insured bonds six months
ago. Because spreads were tight, I was able to buy higher-quality bonds
without sacrificing much yield.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The performance of the municipal market should continue to be favorably
influenced by light supply. That said, it is difficult to see municipals
outperforming Treasuries much more than they already have so far this year.
Although high-yield issuance has been lighter than I would like, I expect
to continue to invest in attractive high-yield opportunities for
shareholders.
FUND FACTS
GOAL: 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
START DATE: September 16,
1987
SIZE: as of October 31, 1996,
more than $520 million
MANAGER: Tanya Roy, since
1995; municipal bond analyst,
1989 to 1995; joined Fidelity in
1989
(checkmark)
TANYA ROY ON AIRLINE
SECTOR BONDS:
"The airline industry's
industrial development bonds
constitute one of the most
interesting sectors in the
municipal market. Airlines issue
tax-exempt bonds to finance
terminal facilities and gates at
airports. The airline industry
has undergone an extensive
turnaround in the last few
years. The recession in the
early '90s caused significant
financial problems for many
airlines. Overcapacity, high
operating costs and price
cutting resulted in significant
losses and several
bankruptcies. Because of
these problems, airline bonds
traded at extremely wide yield
premiums, some 200 to 300
basis points greater than
AAA-rated bond yields.
"The sector as a whole was
cheap, despite the fact that not
all airlines were suffering
equally, presenting
opportunities for the fund.
Since hitting bottom, the
industry has aggressively cut
costs, realigned route
systems and enhanced
revenue generation, all of
which have led to
substantially improved
financial and operating
performance. As a result,
airline bonds have been one of
the top performing sectors in
the muni market in the recent
past. With airline spreads now
as narrow as 60-70 basis
points over AAA bonds, the
fund has reaped the rewards
of having invested in this
sector during the past few
years."
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INVESTMENT CHANGES
TOP FIVE STATES AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
New York 12.3 11.4
California 9.1 7.0
Pennsylvania 6.9 7.8
Ohio 5.7 6.0
Colorado 4.3 3.9
TOP FIVE SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Industrial Development 21.6 20.2
Health Care 21.5 24.9
General Obligation 16.9 16.5
Electric Revenue 15.7 12.6
Transportation 7.7 6.5
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1996
6 MONTHS AGO
Years 16.4 17.2
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF OCTOBER 31, 1996
6 MONTHS AGO
Years 7.1 7.2
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)
AS OF OCTOBER 31, 1996 AS OF APRIL 30, 1996
Aaa 16.9%
Aa, A 14.9%
Baa 28.9%
Ba or B 12.7%
Caa 0.3%
Non-rated 24.9%
Short-term
investments 1.4%
Aaa 14.4%
Aa, A 14.7%
Baa 26.3%
Ba or B 11.8%
Caa 0.9%
Non-rated 28.4%
Short-term
investments 3.5%
Row: 1, Col: 1, Value: 2.4
Row: 1, Col: 2, Value: 23.9
Row: 1, Col: 3, Value: 1.3
Row: 1, Col: 4, Value: 12.7
Row: 1, Col: 5, Value: 27.9
Row: 1, Col: 6, Value: 14.9
Row: 1, Col: 7, Value: 16.9
Row: 1, Col: 1, Value: 3.5
Row: 1, Col: 2, Value: 27.4
Row: 1, Col: 3, Value: 1.9
Row: 1, Col: 4, Value: 11.8
Row: 1, Col: 5, Value: 26.3
Row: 1, Col: 6, Value: 14.7
Row: 1, Col: 7, Value: 14.4
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS. UNRATED DEBT
SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT OCTOBER 31, 1996 AND
APRIL 30, 1996, ACCOUNT FOR 23.1% AND 25.8%, RESPECTIVELY, OF THE FUND'S
INVESTMENTS.
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 98.6%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
ALABAMA - 1.4%
Cullman Med. Park South Med. Clinic Board
Rev. (Cullman Reg'l. Med. Ctr.) Series A,
6.50% 2/15/13 Baa $ 2,700,000 $ 2,700,000
Shelby County Series A, 7.70% 8/1/17 - 4,000,000 4,430,000
7,130,000
ALASKA - 0.9%
Valdez Marine Term. Rev. Rfdg. (BP Pipeline, Inc.
Proj.) Series B, 5.50% 10/1/28 Aa3 5,000,000 4,731,250
ARIZONA - 0.8%
Arizona Trans. Board Excise Tax Rev. Rfdg.
(Maricopa County Reg'l. Area Road Proj.)
Series A, 6% 7/1/03 (AMBAC Insured) Aaa 1,300,000 1,399,125
Navajo County Ind. Dev. Auth. Ind. Dev. Rev.
(Stone Container Corp. Proj.) 7.40% 4/1/26 (e) - 2,500,000 2,571,875
3,971,000
ARKANSAS - 0.3%
Little Rock Arpt. Passenger Facs. Charge Rev.
5.65% 5/1/16 (AMBAC Insured) (e) Aaa 1,500,000 1,567,500
CALIFORNIA - 9.1%
California Dept. Wtr. Resources Ctr. Valley Proj.
Rev. (Wtr. Sys.) Series J-2, 6.125% 12/1/13 Aa 3,000,000 3,120,000
California Gen. Oblig. Unltd. Tax
6.10% 9/1/04 A1 1,415,000 1,533,506
California Hsg. Fin. Agcy. Rev. (Home Mtg.)
Series A, 5.70% 8/1/16 (MBIA Insured) Aaa 1,200,000 1,194,000
California Pub. Wks. Board Lease Rev.:
Rfdg. (Dept. Corrections State Prisons) Series A,
5% 12/1/19 (AMBAC Insured) Aaa 1,750,000 1,616,563
(California State Univ. Proj.) Series A,
5.50% 6/1/14 A1 1,500,000 1,471,875
Central Valley Fing. Auth. Rev. (Cogeneration
Proj.) (Carson Ice Gen. Proj.) 6% 7/1/09 BBB- 4,500,000 4,545,000
Contra Costa Trans. Auth. Sales Tax Rev.
Series A, 6% 3/1/04 (FGIC Insured) Aaa 3,000,000 3,228,750
East Bay Muni. Util. Dist. Wtr. Sys. Rev.
6% 6/1/12 (MBIA Insured) Aaa 2,000,000 2,055,000
Foothill/Eastern Trans. Corridor Agcy. California
Toll Road Rev. (Sr. Lien) (Cap. Appreciation)
Series A, 0% 1/1/14 Baa 2,000,000 672,500
Los Angeles County Ctfs. of Prtn. (Cap.
Appreciation) (Disney Parking Proj.):
0% 3/1/14 Baa1 1,000,000 323,750
0% 9/1/14 Baa1 7,260,000 2,268,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Metropolitan Wtr. Dist. Southern California
Wtrwks. Rev. Rfdg. Series B, 4.75% 7/1/09
(MBIA Insured) Aaa $ 2,480,000 $ 2,346,700
Northern California Pwr. Agcy. Pub. Pwr.
Rev. Rfdg. (Geothermal Proj. #3) Series A,
5.85% 7/1/10 (AMBAC Insured) Aaa 1,500,000 1,580,625
Orange County Dev. Agcy. (Tax Allocation)
(Santa Ana Heights Proj.):
6.20% 9/1/08 Baa 1,650,000 1,633,500
6% 9/1/15 Baa 1,200,000 1,170,000
Riverside County Ctfs. of Prtn. Rfdg. (Air Force
Village West, Inc.) Series A:
8.125% 6/15/12 - 4,790,000 5,059,438
8.125% 6/15/20 - 3,000,000 3,161,250
Sacramento City Fing. Auth. Lease Rev. Rfdg.
Series A, 5.40% 11/1/20 (AMBAC Insured) Aaa 2,000,000 1,950,000
Sacramento City Fing. Auth. Rev. (Tax Allocation)
(Cap. Appreciation) Series B, 0% 11/1/11
(MBIA Insured) Aaa 1,225,000 531,344
Sacramento Cogeneration Auth. Cogeneration
Proj. Rev. (Proctor & Gamble Proj.):
5.40% 7/1/98 BBB- 1,100,000 1,112,375
6.375% 7/1/10 BBB- 1,000,000 1,025,000
6.50% 7/1/14 BBB- 3,800,000 3,933,000
Sequoia Hosp. Dist. Rev. Rfdg. 5.375% 8/15/13
(Escrowed to Maturity) (f) Baa 1,835,000 1,816,650
47,349,576
COLORADO - 4.3%
Colorado Health Facs. Auth. Rev.:
Rfdg. (Rocky Mountain Adventist):
6.625% 2/1/13 Baa 6,900,000 7,046,625
6.625% 2/1/22 Baa 4,000,000 4,060,000
(National Benevolent Assoc. Proj.) Series A,
6.50% 6/1/25 Baa1 1,360,000 1,351,500
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/06 BBB+ 1,405,000 809,631
0% 1/1/08 BBB+ 870,000 435,000
Denver City & County Arpt. Rev. (e):
(Cap. Appreciation):
Series A, 0% 11/15/02 (MBIA Insured) Aaa 2,115,000 1,554,525
Series D, 0% 11/15/04 (MBIA Insured) Aaa 1,700,000 1,115,625
Series A:
6.60% 11/15/97 Baa 1,000,000 1,021,950
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
COLORADO - CONTINUED
Denver City & County Arpt. Rev. (e): - continued
Series A: - continued
6.90% 11/15/98 Baa $ 1,000,000 $ 1,043,750
7.50% 11/15/23 Baa 2,500,000 2,746,875
Mesa County Ind. Dev. Rev. (Joy Technologies,
Inc. Proj.) 8.50% 9/15/06 Ba1 1,250,000 1,357,813
22,543,294
CONNECTICUT - 3.8%
Connecticut Health & Edl. Facs. Auth. Rev.:
(New Britain Mem. Hosp.) Series A:
7.50% 7/1/06 BBB- 2,815,000 3,005,013
7.75% 7/1/22 BBB- 1,500,000 1,610,625
(The Griffin Hosp.) Series A:
6% 7/1/13 Baa1 1,810,000 1,755,700
5.75% 7/1/23 Baa1 3,280,000 3,013,500
Connecticut Spl. Tax Oblig. Rev. (Trans.
Infrastructure) Series B, 5.80% 9/1/04 A1 2,000,000 2,110,000
Eastern Connecticut Resource Recovery Auth.
Solid Waste Rev. (Wheelabrator Lisbon Proj.)
Series A (e):
5.50% 1/1/14 A- 4,750,000 4,459,063
5.50% 1/1/20 A- 4,000,000 3,670,000
19,623,901
DISTRICT OF COLUMBIA - 2.9%
District of Columbia Gen. Oblig.:
Rfdg. Series A:
5.625% 6/1/02 Ba 1,100,000 1,097,250
5.75% 6/1/03 Ba 1,440,000 1,438,200
6% 6/1/07 (MBIA Insured) Aaa 2,000,000 2,080,000
Rfdg. Series A-3:
5.10% 6/1/02 Ba 700,000 680,750
5.60% 6/1/07 Ba 1,700,000 1,627,750
Series A:
6% 6/1/03 Ba 1,100,000 1,101,375
6% 6/1/04 Ba 1,200,000 1,198,500
6% 6/1/05 Ba 1,300,000 1,295,125
6% 6/1/06 Ba 1,000,000 992,500
District of Columbia Hosp. Rev. (Hosp. for Sick
Children) Series A, 8.875% 1/1/21 - 975,000 1,038,375
District of Columbia Redev. Land Agcy. Sports
Arena Spl. Tax Rev.:
5.30% 11/1/99 Baa 1,700,000 1,700,000
5.625% 11/1/10 Baa 750,000 727,500
14,977,325
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
FLORIDA - 0.5%
Florida Mid-Bay Bridge Auth. Rev. Series A,
7.50% 10/1/17 - $ 2,500,000 $ 2,715,625
GEORGIA - 1.3%
Cobb County School Dist. Unltd. Tax
5% 2/1/97 Aa1 3,300,000 3,312,639
Georgia Gen. Oblig. Series B, 7.50% 4/1/97 Aaa 2,350,000 2,389,269
Savannah Econ. Dev. Auth. Ind. Dev. Rev. (Stone
Container Corp. Proj.) 7.40% 4/1/26 (e) - 1,000,000 1,027,500
6,729,408
IDAHO - 0.1%
Boise Urban Renewal Parking Agcy. Rev. (Tax
Increment) Series A, B, C, 8.125% 9/1/15 A 375,000 396,094
ILLINOIS - 4.2%
Chicago O'Hare Int'l. Arpt. Rev.:
Rfdg. (2nd Lien) (Gen. Arpt. Proj.) Series A,
6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,477,000
(2nd Lien) (Gen. Arpt. Proj.) Series A,
6.25% 1/1/09 (AMBAC Insured) (e) Aaa 3,700,000 3,912,750
Chicago O'Hare Int'l. Arpt. Spl. Facs.
Rev. Rfdg. (American Airlines, Inc. Proj.)
8.20% 12/1/24 Baa2 1,000,000 1,171,250
Chicago School Board of Ed. 6.25% 12/1/09
(MBIA Insured) Aaa 3,000,000 3,251,250
Decatur Econ. Dev. Rev. Rfdg. (Kroger Co.)
Series 1992, 7.75% 6/1/07 Ba1 705,000 763,163
Du Page County Commty. High School Dist. #99
(Downers Grove) Series A, 6% 2/1/06,
(AMBAC Insured) Aaa 1,640,000 1,752,750
Illinois Edl. Facs. Auth. Rev. (Lewis Univ.):
5.90% 10/1/14 Baa 1,740,000 1,709,550
6% 10/1/24 Baa 2,575,000 2,504,188
Illinois Health Facs. Auth. Rev.:
(Covenant Retirement Commty.) Series A,
7.60% 12/1/12 BBB+ 750,000 799,688
(Mem. Hosp.):
7.125% 5/1/10 BBB 1,000,000 1,031,250
7.25% 5/1/22 BBB 1,000,000 1,032,500
Round Lake Beach Tax Increment Rev. Rfdg.
7.50% 12/1/13 - 2,500,000 2,575,000
21,980,339
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
INDIANA - 0.2%
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 $ 1,000,000 $ 1,052,500
KANSAS - 0.0%
Kansas City Single Family Mtg. Rev. 9.50%
8/1/06 (AMBAC Insured) Aaa 10,000 10,588
KENTUCKY - 4.2%
Kenton County Arpt. Board Arpt. Rev. (Cincinnati/
Northern Kentucky Int'l.) Series A, 6% 3/1/05,
(MBIA Insured) (e) Aaa 5,570,000 5,834,575
Kenton County Arpt. Board Arpt. Spl. Facs. Rev.
(Delta Airlines, Inc.):
Series A, 7.125% 2/1/21 (e) Baa3 10,840,000 11,436,200
7.80% 12/1/15 Ba2 3,500,000 3,727,500
Murray Ind. Dev. Rev. Rfdg. (Kroger Co.)
7.25% 9/1/12 Ba1 700,000 735,000
21,733,275
LOUISIANA - 1.5%
Calcasieu Parish Inc. Ind. Dev. Board Poll. Cont.
Rev. Rfdg. (Gulf States Utils. Co. Proj.)
6.75% 10/1/12 Ba1 1,000,000 1,020,000
Hodge Util. Rev. (Stone Container Corp.)
9% 3/1/10 (e) - 2,300,000 2,486,875
Louisiana Pub. Facs. Auth. Ind. Dev. Rev. Rfdg.
(Beverly Enterprises, Inc.) 8.25% 9/1/08 - 535,000 571,781
Port New Orleans Ind. Dev. Rev. Rfdg. (Continental
Grain Co. Proj.) 7.50% 7/1/13 BB- 3,000,000 3,187,500
St. Tammany Pub. Trust Fing. Auth. Rev. Rfdg.
(Cap. Appreciation) Series C, 0% 7/20/14 Aaa 2,000,000 695,000
7,961,156
MARYLAND - 2.0%
Baltimore County Poll. Cont. Rev. Rfdg. (Bethlehem
Steel Proj.) Series B, 7.50% 6/1/15 - 3,750,000 3,932,813
Maryland Commty. Dev. Administration Dept.
Hsg. & Commty. Dev. Multi-Family Hsg. Rev.
Series A, 6.50% 5/15/21 (e) Aa 2,150,000 2,201,063
Maryland Energy Fing. Administration Ltd. Oblig.
Solid Waste Disp. Facs. Recycling Rev.
(Hagerstown Fiber Ltd. Partners 94)
9% 10/15/16 - 2,000,000 1,655,000
Maryland Health & Higher Edl. Facs. Auth. Rev.
(Good Samaritan Hosp.) 5.75% 7/1/13 A1 2,680,000 2,730,250
10,519,126
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
MASSACHUSETTS - 2.9%
Brockton Gen. Oblig.:
7.75% 12/15/96 Baa $ 150,000 $ 150,543
7.75% 12/15/98 Ba1 170,000 179,563
Massachusetts Health & Edl. Facs. Auth. Rev.
(1st Mtg.) (Fairview Extended Care) Series A,
10.25% 1/1/21 - 5,000,000 5,656,250
Massachusetts Ind. Fin. Agcy. Rev.:
Rfdg. (Atlanticare Med. Ctr.) Series B,
10.125% 11/1/14 - 700,000 676,375
Rfdg. (Emerson College) 8.90% 1/1/18 - 1,000,000 1,100,000
(1st Mtg.) (Reeds Landing Proj.)
8.625% 10/1/23 - 4,500,000 4,843,125
(Institute Dev. Disabilities) 9.25% 6/1/09 - 85,000 83,300
(Massachusetts Biomedical) (Cap. Appreciation)
Series A-2:
0% 8/1/08 A 800,000 399,000
0% 8/1/10 A 4,500,000 1,946,250
15,034,406
MICHIGAN - 3.6%
Detroit Hosp. Fing. Auth. Facs. Rev. (Michigan
Health Care Corp. Proj.) 10% 12/1/20 (b) Caa 6,685,000 1,303,575
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.):
Rfdg. 9.50% 7/1/06 Baa 1,165,000 1,172,526
7.80% 7/1/14 Baa 700,000 756,000
Highland Park Hosp. Fin. Auth. Hosp. Facs. Rev.
(Lakeside Commty. Hosp. Proj.) 10% 3/1/20 (b) - 150,000 21,750
Michigan Strategic Fund Ltd. Oblig. Rev.:
(Great Lakes Pulp & Fibre Proj.) (e):
10.25% 12/1/16 - 3,000,000 1,920,000
10.25% 12/1/16 - 12,250,000 7,840,000
(Mercy Svcs. for Aging Proj.) 9.40% 5/15/20 - 600,000 675,750
(Michigan Health Care Corp. Proj.)
9.10% 12/1/14 (b) - 2,075,000 404,625
Royal Oak Hosp. Fin. Auth. Rev. Rfdg.
(William Beaumont Hosp.) 6.25% 1/1/09 Aa 2,310,000 2,477,475
Tawas City Hosp. Fin. Auth. Hosp. Rev.
(St. Joseph Hosp. Proj.) Series A,
8.50% 3/15/12 - 1,935,000 1,993,050
18,564,751
MINNESOTA - 1.1%
Minnesota Hsg. Single Family Mtg. Rev.
6.40% 7/1/15 (e) Aa 2,000,000 2,037,500
St. Paul Hsg. & Redev. Auth. Hosp. Rev.
(Healtheast Proj.) Series A, 9.75% 11/1/17 Baa 385,000 411,503
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
MINNESOTA - CONTINUED
Western Minnesota Muni. Pwr. Agcy. Pwr.
Supply Rev. Rfdg. Series A, 6.25% 1/1/06
(AMBAC Insured) Aaa $ 3,000,000 $ 3,258,750
5,707,753
MISSISSIPPI - 0.8%
Claiborne County Poll. Cont. Rev.:
Rfdg. (Sys. Energy Resources, Inc. Proj.)
7.30% 5/1/25 Ba1 2,250,000 2,354,063
(Middle South Energy, Inc. Proj.):
Series A, 9.50% 12/1/13 Ba1 50,000 55,250
Series C, 9.875% 12/1/14 Ba1 1,100,000 1,223,750
Mississippi Home Corp. Single Family Sr. Rev.
Rfdg. Series 1990 A, 9.25% 3/1/12
(FGIC Insured) Aaa 250,000 268,750
3,901,813
MISSOURI - 1.3%
Kansas City Ind. Dev. Auth. (Kingswood United
Methodist Manor Proj.) Series 1993,
9% 1 1/15/13 - 2,000,000 2,167,500
Lake Ozarks Commty. Bridge Corp. Sys. Rev.
6.40% 12/1/25 - 1,750,000 1,708,438
St. Louis Land Clearance Redev. Auth. Hsg.
Dev. Rev. (Westminster Place Apts. Proj.)
11% 12/15/15 - 1,000,000 1,020,360
St. Louis Reg'l. Convention & Sports Complex
Auth. Rev. Series C, 7.90% 8/15/21 - 1,550,000 1,708,875
6,605,173
NEBRASKA - 0.3%
Nebraska Pub. Pwr. Dist. Rev. (Elec. Sys.)
Series A, 6% 1/1/06 A1 1,500,000 1,578,750
NEVADA - 1.9%
Clark County Ind. Dev. Rev. (Southwest Gas
Corp.) Series A, 6.50% 12/1/33 (e) Baa3 7,600,000 7,590,500
Las Vegas Redev. Agcy. Tax Increment Rev.:
(Sub. Lien Fremont Proj.) Series A,
6.10% 6/15/14 BBB+ 1,000,000 981,250
(Sub. Lien Hsg. Proj.) Series B, 6% 6/15/10 BBB+ 1,500,000 1,468,125
10,039,875
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
NEW HAMPSHIRE - 0.6%
New Hampshire Higher Edl. & Health Facs. Auth.
Rev.:
(1st Mtg. River Woods at Exeter):
8% 3/1/01 - $ 750,000 $ 770,798
9% 3/1/23 - 1,830,000 1,985,550
(Littleton Hosp. Assoc., Inc.) Series A,
9.50% 5/1/20 - 495,000 527,794
3,284,142
NEW JERSEY - 3.5%
Camden County Impt. Auth. Lease Rev.:
(Dockside Refrigerated Holt) 8.40% 4/1/24 (e) - 3,000,000 3,048,750
(Holt Hauling & Warehousing):
9.625% 1/1/11 - 3,000,000 3,003,750
9.875% 1/1/21 - 1,300,000 1,301,625
New Jersey Econ. Dev. Auth. Econ. Dev. Rev. Rfdg.:
(Holt Hauling & Warehousing)
8.60% 12/15/17 (e) - 4,500,000 4,635,000
(Stolt Term. Proj.) 10.50% 1/15/18 - 60,000 64,800
New Jersey Trans. Trust Fund Auth.:
6% 12/15/05 (MBIA Insured) Aaa 1,000,000 1,078,750
6% 12/15/06 (MBIA Insured) Aaa 3,000,000 3,228,750
Passaic County Util. Auth. Swr. Dev. Rev. (Cap.
Appreciation) 0% 3/1/02 (MBIA Insured) Aaa 2,500,000 1,946,875
18,308,300
NEW MEXICO - 4.2%
Albuquerque Arpt. Rev. Rfdg. (c)(e):
6.75% 7/1/11 (AMBAC Insured) Aaa 1,805,000 1,935,863
6.70% 7/1/18 (AMBAC Insured) Aaa 3,970,000 4,123,838
Farmington Poll. Cont. Rev.:
Rfdg. (Pub. Svc. Co. of New Mexico San Juan
Proj.) Series X, 5.90% 4/1/07 Ba1 10,550,000 10,352,188
(Pub. Svc. Co. of New Mexico San Juan Proj.):
Series A:
6% 3/1/08 Ba1 700,000 689,500
6.50% 9/1/09 Ba1 1,940,000 1,941,009
6.50% 9/1/04 Ba1 750,000 751,110
New Mexico Edl. Assistance Foundation
Student Loan Rev. 5.25% 4/1/05
(AMBAC Insured) (e) Aaa 2,275,000 2,266,469
22,059,977
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
NEW YORK - 12.3%
New York City Gen. Oblig.:
Rfdg. Series A, 7% 8/1/03 Baa1 $ 2,000,000 $ 2,170,000
Rfdg. Series B, 5.70% 8/15/02 Baa1 1,165,000 1,188,300
Series B, 7.50% 2/1/02 Baa1 2,000,000 2,200,000
Series H, 6.875% 2/1/02 Baa1 1,700,000 1,812,625
5.50% 2/15/04 Baa1 5,000,000 4,950,000
New York City Ind. Dev. Agcy. Ind. Dev. Rev.
(Japan Airlines Co. Ltd. Proj.) 6% 11/1/15
(FSA Insured) (e) Aaa 1,000,000 998,750
New York City Ind. Dev. Agcy. Spl. Facs. Rev.
(Term. One Group Assoc. Proj.)
5.90% 1/1/06 A 8,680,000 8,994,650
New York State Dorm. Auth. Rev.:
Rfdg. (New York State Univ. Edl. Facs.):
Series A, 5.50% 5/15/05 Baa1 2,750,000 2,750,000
Series B, 5.50% 5/15/08 Baa1 12,150,000 11,922,188
(New York City Univ.) 5.70% 7/1/05 Baa1 3,000,000 3,026,250
New York State Energy Research & Dev.
Auth. Elec. Facs. Rev. (Long Island Ltg.)
Series A (e):
7.15% 12/1/20 Ba3 3,000,000 3,052,500
6.90% 8/1/22 Ba3 4,050,000 4,080,375
New York State Local Gov't. Assistance Corp.
Rfdg. Series C, 5.50% 4/1/17 A 7,500,000 7,434,375
New York State Tollway Auth. Gen. Rev.
(Spl. Oblig.) Series A, 0% 1/1/04 BBB 4,000,000 2,680,000
New York State Tollway Auth. Svc. Contract Rev.
(Local Hwy. & Bridges) 5.90% 4/1/07 Baa1 2,000,000 2,045,000
New York State Urban Dev. Corp. Rev. Rfdg.
(Correctional Cap. Facs.) Series A:
6.30% 1/1/03 Baa1 2,000,000 2,105,000
6.40% 1/1/04 Baa1 1,550,000 1,643,000
Suffolk County Wtr. Auth. Wtrwks. Rev.
6% 6/1/17 (MBIA Insured) Aaa 1,000,000 1,067,500
64,120,513
NEW YORK & NEW JERSEY - 0.6%
New York & New Jersey Port Auth. Spl.
Oblig. Rev. (Continental Airlines Corp./
Eastern Airlines, Inc./U.S. Air Laguardia Proj.)
9.125% 12/1/15 (e) B2 3,000,000 3,360,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
NORTH CAROLINA - 2.2%
North Carolina Eastern Muni. Pwr. Agcy. Pwr.
Sys. Rev.:
Rfdg. Series B, 7.25% 1/1/07 Baa1 $ 1,000,000 $ 1,116,250
Rfdg. Series C:
5.125% 1/1/03 Baa1 2,000,000 1,987,500
5.25% 1/1/04 Baa1 1,365,000 1,358,175
Series B, 6.125% 1/1/09 Baa1 3,000,000 3,052,500
North Carolina Muni. Pwr. Agcy. Rev. Rfdg.
(Proj. #1 Catawba Elec.):
5.75% 1/1/02 A 1,750,000 1,804,688
6.25% 1/1/17 (AMBAC Insured) Aaa 1,800,000 1,876,500
11,195,613
NORTH DAKOTA - 0.5%
North Dakota Hsg. Fin. Agcy. Rev. (Hsg. Fin. Proj.)
Series C, 3.85% 4/3/97 (FGIC Insured) (e) Aa 2,700,000 2,701,782
OHIO - 5.7%
Butler County Hosp. Facs. Auth. Rev. Rfdg. &
Impt. (Fort Hamilton Hughe) 7.50% 1/1/10 Baa 3,500,000 3,688,125
Fairfield Econ. Dev. Rev. Rfdg. (Beverly
Enterprises Proj.) 8.50% 1/1/03 - 1,000,000 1,070,000
Gateway Econ. Dev. Corp. (Greater Cleveland
Stadiums) Series 1990, 6.50% 9/15/14 (e) - 3,000,000 2,917,500
Mahoning Valley San. Dist. Wtr. Rev.:
7.75% 5/15/14 - 2,000,000 2,077,500
7.75% 5/15/19 - 2,000,000 2,070,000
Marion County Impt. Rev. 5.60% 5/15/01 BBB+ 1,000,000 1,001,250
Ohio Bldg. Auth. Rfdg. (State Facs.-Vern Riffe Ctr.)
Series A, 5.75% 10/1/04 (AMBAC Insured) Aaa 4,000,000 4,250,000
Ohio Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.50% 9/1/10 Ba1 2,470,000 2,612,025
Ohio Wtr. Dev. Auth. Poll. Cont. Facs. Rev.
(Wtr. Cont. Loan Fund):
State Matching Series, 6.50% 12/1/04
(MBIA Insured) Aaa 1,835,000 2,043,731
Wtr. Quality Series, 5.625% 6/1/06
(MBIA Insured) Aaa 2,000,000 2,097,500
Student Loan Funding Corp. Student Loan Rev.
Sub-Series B, 8.875% 8/1/08 (e) - 3,765,000 3,915,600
Summit County Ind. Dev. Rev. Rfdg. (Surnow
Assoc. Proj.) 7.65% 10/1/06 Ba2 1,730,000 1,857,571
29,600,802
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
OKLAHOMA - 0.8%
Tulsa Muni. Arpt. Trust Rev. (American Airlines
AMR Corp. Proj.) 7.35% 12/1/11 Baa2 $ 4,000,000 $ 4,330,000
PENNSYLVANIA - 6.9%
Allegheny County Hosp. Dev. Auth. Health Facs.
Rev. (Allegheny Valley School):
8% 2/1/02 Ba1 510,000 528,488
8.50% 2/1/15 Ba1 2,930,000 3,080,163
Allegheny County Ind. Dev. Auth. Rev. (YMCA
Pittsburgh Proj.) Series 1990, 8.75% 3/1/10 - 370,000 395,900
Butler County Ind. Dev. Auth. Health Ctr. Rev.
Rfdg. (Sherwood Oaks Proj.) 5.75% 6/1/11 A- 3,000,000 2,850,000
Cumberland County Muni. Auth. Rev.
(Carlisle Hosp.):
6.80% 11/15/14 Baa 3,250,000 3,274,375
6.80% 11/15/23 Baa 1,000,000 1,000,000
Delaware County Auth. Rev.
(1st Mtg. Riddle Village Proj.):
Series 1992, 8.75% 6/1/10 - 2,870,000 3,121,125
7% 6/1/00 - 1,000,000 1,017,500
8.25% 6/1/22 - 2,250,000 2,432,813
9.25% 6/1/22 - 2,905,000 3,217,288
Montgomery County Higher Ed. & Health Auth.
Hosp. Rev. (United Hosp., Inc. Proj.) (f):
(St. Christopher):
8.25% 11/1/03
(Pre-Refunded to 11/1/97 @ 102) Ba1 1,250,000 1,328,188
7% 11/1/06
(Pre-Refunded to 11/1/97 @ 102) Ba1 120,000 123,809
8.50% 11/1/17
(Pre-Refunded to 11/1/97 @ 102) Ba1 525,000 559,104
Series A, 8% 11/1/96
(Escrowed to Maturity) Ba1 65,000 65,000
Series B, 8.10% 11/1/97
(Escrowed to Maturity) Ba1 35,000 36,464
Northampton County Ind. Dev. Auth. Rev. Rfdg.
(Bethlehem Steel Poll. Cont. Proj.) Series 1994,
7.55% 6/1/17 - 1,940,000 2,017,600
Pennsylvania Ind. Dev. Auth. Econ. Dev. Rev.
5.80% 7/1/09 (AMBAC Insured) Aaa 1,345,000 1,403,844
Philadelphia Hosp. & Higher Ed. Facs. Auth.
Hosp. Rev. (Graduate Health Sys. Oblig.
Group) 7.25% 7/1/18 Ba 2,600,000 2,684,500
Philadelphia Ind. Dev. Auth. Rev. (Philadelphia
Arpt.) 7.75% 12/1/17 (e) - 2,000,000 2,117,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Somerset County Hosp. Auth. Rev. (Health
Care 1st Mtg.) 8.50% 6/1/24 - $ 4,500,000 $ 4,798,125
36,051,786
RHODE ISLAND - 1.2%
Rhode Island Clean Wtr. Protection Fin. Agcy. Wtr.
Poll. Cont. Rev. (Revolving Fund Pooled Loan)
Series A, 5.40% 10/1/15 (MBIA Insured) Aaa 1,650,000 1,619,063
Rhode Island Port Auth. & Econ. Dev. Corp. Arpt.
Rev. Series A, 7% 7/1/14 (FSA Insured) (e) Aaa 4,000,000 4,595,000
6,214,063
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Agcy. Elec. Rev. Series A,
6.25% 1/1/05 (FGIC Insured) Aaa 1,715,000 1,858,631
TENNESSEE - 0.6%
Dyer County Ind. Dev. Board. Ind. Dev. Rev. Rfdg.
(Tennessee Assoc. Proj.) 6% 2/01/07 Ba1 1,640,000 1,601,050
Metropolitan Gov't. Nashville & Davidson
County Elec. Rev. Series A, 0% 5/15/06
(MBIA Insured) Aaa 1,000,000 608,750
Rutherford County Ind. Dev. Board Dev. Rev.
Rfdg. (Kroger Co. Proj.) 7.30% 6/1/21 Ba1 1,000,000 1,056,250
3,266,050
TEXAS - 2.6%
Dallas-Fort Worth Int'l. Arpt. Facs. Impt. Corp.
Rev. (AMR Corp.) 7.50% 11/1/25 (e) Baa2 6,000,000 6,405,000
Harris County Cultural & Ed. Facs. Fin. Corp.
Rev. Rfdg. (Space Ctr. Houston Proj.):
Series A, 9.25% 8/15/23 - 1,870,000 1,811,563
Series B, 0% 8/15/23 - 4,730,000 1,259,363
Houston Elderly Hsg. Auth. 1st Lien Rev.
(Low Income Elderly Hsg.) 7.50% 7/1/17 - 450,000 458,438
Houston Hsg. Fin. Corp. Single Family Mtg. Rev.
(Verex Mtg. Assurance, Inc.) Series 1984 A,
10.875% 2/15/16 A 155,000 155,417
Midlothian Independent School Dist. (Cap.
Appreciation) 0% 2/15/04 (PSF Guaranteed) Aaa 1,845,000 1,282,275
San Antonio Health Facs. Dev. Corp. Econ. Dev.
Rev. Rfdg. (Encore Nursing Ctr. Partner)
(Beverly Enterprises, Inc.) 8.25% 12/1/19 - 2,250,000 2,351,250
13,723,306
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
UTAH - 0.7%
Intermountain Pwr. Agcy. Pwr. Supply Rev.
Rfdg. (c):
Series A, 6.50% 7/1/09 (AMBAC Insured) Aaa $ 1,000,000 $ 1,086,250
Series B, 5.75% 7/1/16 (MBIA Insured) Aaa 2,500,000 2,440,625
South Salt Lake City Ind. Rev. (Price Savers
Wholesale Club Proj.) 9% 11/15/13 - 250,000 280,938
3,807,813
VIRGINIA - 2.7%
Hopewell Ind. Dev. Auth. Resource Recovery Rev.
(Stone Container Corp.) 8.25% 6/1/16 - 3,735,000 4,052,475
Loudoun County Ind. Dev. Auth. Residential Care
Facs. Rev. (Falcons Landing Proj.) Series A:
9.25% 11/1/04 - 1,000,000 1,073,750
8.75% 11/1/24 - 8,500,000 8,808,125
13,934,350
WASHINGTON - 2.8%
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #2 Rev. 5.40% 7/1/12 Aa1 14,000,000 13,142,500
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #3 Rev. Rfdg. Series B, 7% 7/1/05
(FGIC Insured) Aaa 1,150,000 1,237,688
14,380,188
WEST VIRGINIA - 0.4%
Ripley Ind. Dev. Rev. Rfdg. (Kroger Co. Proj.)
7.30% 5/1/11 Ba1 2,200,000 2,329,250
WYOMING - 0.5%
Sweetwater County Poll. Cont. Rev. Rfdg.
(Idaho Pwr. Co. Proj.) Series A,
6.05% 7/15/26 A3 2,500,000 2,540,625
TOTAL MUNICIPAL BONDS
(Cost $513,040,825) 513,491,669
MUNICIPAL NOTES (D) - 1.4%
DELAWARE - 0.2%
Delaware Econ. Dev. Auth. Rev. (Delmarva Pwr.
& Lt. Co. Proj.) Series 88, 3.80%, VRDN (e) VMIG 1 1,100,000 1,100,000
LOUISIANA - 0.5%
St. Charles Parish Poll. Cont. Rev. (Shell Oil Co.
Norco Proj.) Series 1991, 3.70%, VRDN (e) VMIG 1 2,500,000 2,500,000
MUNICIPAL NOTES (D) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (A) AMOUNT (NOTE 1)
TEXAS - 0.4%
Gulf Coast Ind. Dev. Auth. Solid Waste Disp.
Rev. (Citgo Petroleum) 3.75%, LOC Wachovia
Bank, VRDN (e) VMIG 1 $ 1,000,000 $ 1,000,000
Trinity River Auth. Poll. Cont. Rev. Coll. (Texas
Utils. Elec. Co. Proj.) Series 96-A, 3.70%,
(AMBAC Insured) BPA Bank of New York,
VRDN (e) VMIG 1 1,000,000 1,000,000
2,000,000
VIRGINIA - 0.1%
Hopewell Ind. Dev. Auth. Rev. (Hadson Pwr.
13-Hopewell Proj.) Series 1990 A, 3.65%,
LOC Cr. Suisse Bank, VRDN (e) - 600,000 600,000
WEST VIRGINIA - 0.2%
Grant County Poll. Cont. Rev. (Virginia Elec. &
Pwr. Co. Proj.) Series 1994, 3.80%, tender
3/10/97 VMIG 1 1,000,000 1,000,460
TOTAL MUNICIPAL NOTES
(Cost $7,200,000) 7,200,460
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $520,240,825) $ 520,692,129
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
2. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
3. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
4. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
5. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
6. Security collaleralized 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 investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 29.3% AAA, AA, A 31.2%
Baa 24.0% BBB 21.9%
Ba 11.4% BB 10.0%
B 0.7% B 2.3%
Caa 0.3% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.3%
The percentage not rated by both S&P and Moody's amounted to 24.9%. FMR has
determined that unrated debt securities that are lower quality account for
23.1% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Industrial Development 21.6%
Health Care 21.5
General Obligation 16.9
Electric Revenue 15.7
Transportation 7.7
Others (individually less than 5%) 16.6
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $520,246,765. Net unrealized appre- ciation aggregated
$445,364, of which $16,252,959 related to appreciated invest- ment
securities and $15,807,595 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $16,952,000 of which $3,173,000, $7,511,000 and $6,268,000
will expire on October 31, 2002, 2003 and 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value (cost $520,240,825) - $ 520,692,129
See accompanying schedule
Receivable for investments sold 5,921,199
Interest receivable 10,523,030
Prepaid expenses 16,891
TOTAL ASSETS 537,153,249
LIABILITIES
Payable to custodian bank $ 18,618
Payable for investments purchased 5,113,042
Regular delivery
Delayed delivery 9,291,986
Payable for fund shares redeemed 471,138
Distributions payable 873,655
Accrued management fee 168,831
Other payables and accrued expenses 266,457
TOTAL LIABILITIES 16,203,727
NET ASSETS $ 520,949,522
Net Assets consist of: $ 537,961,032
Paid in capital
Undistributed net investment income 863,965
Accumulated undistributed net realized gain (loss) (18,326,779)
on investments
Net unrealized appreciation (depreciation) on 451,304
investments
NET ASSETS $ 520,949,522
CALCULATION OF MAXIMUM OFFERING PRICE $11.74
CLASS A:
NET ASSET VALUE and redemption price per share
($201,619 (divided by) 17,179 shares)
Maximum offering price per share (100/95.75 of $11.74) $12.26
CLASS B: $11.74
NET ASSET VALUE and offering price per share
($39,388,723 (divided by) 3,356,509 shares) A
CLASS T: $11.76
NET ASSET VALUE and redemption price per share
($480,431,820 (divided by) 40,865,528 shares)
Maximum offering price per share (100/96.50 of $11.76) $12.19
INSTITUTIONAL CLASS: $11.72
NET ASSET VALUE, offering price and redemption price
per share ($927,360 (divided by) 79,150 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INTEREST INCOME $ 37,943,965
EXPENSES
Management fee $ 2,266,568
Transfer agent fees 62
Class A
Class B 60,605
Class T 979,556
Institutional Class 1,577
Distribution fees 35
Class A
Class B 340,118
Class T 1,335,656
Accounting fees and expenses 239,476
Non-interested trustees' compensation 2,192
Custodian fees and expenses 33,910
Registration fees 8,583
Class A
Class B 14,267
Class T 29,650
Institutional Class 29,267
Audit 40,876
Legal 8,037
Miscellaneous 16,260
Total expenses before reductions 5,406,695
Expense reductions (39,464) 5,367,231
NET INTEREST INCOME 32,576,734
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (6,143,265)
Futures contracts 151,645 (5,991,620)
Change in net unrealized appreciation (depreciation) on (1,724,709)
investment securities
NET GAIN (LOSS) (7,716,329)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 24,860,405
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 32,576,734 $ 34,231,751
Net interest income
Net realized gain (loss) (5,991,620) (8,226,585)
Change in net unrealized appreciation (depreciation) (1,724,709) 40,030,641
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 24,860,405 66,035,807
FROM OPERATIONS
Distributions to shareholders (1,272) -
From net interest income
Class A
Class B (1,818,282) (1,127,659)
Class T (29,846,407) (33,101,699)
Institutional Class (46,808) (2,393)
TOTAL DISTRIBUTIONS (31,712,769) (34,231,751)
Share transactions - net increase (decrease) (69,878,601) 11,485,606
TOTAL INCREASE (DECREASE) IN NET ASSETS (76,730,965) 43,289,662
NET ASSETS
Beginning of period 597,680,487 554,390,825
End of period (including undistributed net investment $ 520,949,522 $ 597,680,487
income of $863,965 and $0, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR
ENDED
OCTOBER
31,
1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.630
Income from Investment Operations
Net interest income .105 F, H
Net realized and unrealized gain (loss) .109 G
Total from investment operations .214
Less Distributions
From net interest income (.104)
Net asset value, end of period $ 11.740
TOTAL RETURN B, C 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 202
Ratio of expenses to average net assets .90% A,
D
Ratio of net interest income to average net assets 5.73% A
Portfolio turnover rate 49%
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
F SEE "DISTRIBUTION TO SHAREHOLDERS" SECTION OF NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS.
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
INVESTMENTS OF THE FUND.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 1994 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.860 $ 11.210 $ 11.610
Income from Investment Operations
Net interest income .596 F, .612 .188
G
Net realized and unrealized gain (loss) (.136) .650 (.400)
Total from investment operations .460 1.262 (.212)
Less Distributions
From net interest income (.580) (.612) (.188)
Net asset value, end of period $ 11.740 $ 11.860 $ 11.210
TOTAL RETURN B, C 3.98% 11.57% (1.86)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 39,389 $ 32,395 $ 9,968
Ratio of expenses to average net assets 1.57% 1.86% 2.09% A
D
Ratio of net interest income to average net assets 5.06% 5.18% 4.58% A
Portfolio turnover rate 49% 37% 38%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1994.
F SEE "DISTRIBUTION TO SHAREHOLDERS" SECTION OF NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 1994 C 1993 1992
SELECTED PER-SHARE DATA
Net asset value, $ 11.880 $ 11.220 $ 12.720 $ 11.650 $ 11.410
beginning of period
Income from Investment
Operations
Net interest income .677 E, .700 .689 .710 .774
F
Net realized and unrealized (.136) .660 (1.430) 1.100 .250
gain (loss)
Total from investment .541 1.360 (.741) 1.810 1.024
operations
Less Distributions
From net interest income (.661) (.700) (.689) (.710) (.774)
From net realized gain - - (.060) (.030) (.010)
In excess of net realized gain - - (.010) - -
Total distributions (.661) (.700) (.759) (.740) (.784)
Net asset value, end of period $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650
TOTAL RETURN A, B 4.68% 12.50% (6.03)% 15.95% 9.21%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 480,432 $ 565,131 $ 544,422 $ 497,575 $ 156,659
(000 omitted)
Ratio of expenses to average .89% .91% .89% .92% .90%
net assets D
Ratio of net interest income to 5.74% 6.06% 5.78% 5.59% 6.59%
average net assets
Portfolio turnover rate 49% 37% 38% 27% 13%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
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 SEE "DISTRIBUTION TO SHAREHOLDERS" SECTION OF NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER
31,
1996 1995 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.880 $ 11.700
Income from Investment Operations
Net interest income .707 F, G .232
Net realized and unrealized gain (loss) (.197) .180
Total from investment operations .510 .412
Less Distributions
From net interest income (.670) (.232)
Net asset value, end of period $ 11.720 $ 11.880
TOTAL RETURN B, C 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 927 $ 154
Ratio of expenses to average net assets .75% D .75% A
, D
Ratio of net interest income to average net assets 5.88% 5.89% A
Portfolio turnover rate 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 (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
F SEE "DISTRIBUTION TO SHAREHOLDERS" SECTION OF NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor High Income Municipal Fund (the fund) is a fund of
Fidelity Advisor Series V (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class B, Class T, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
The fund commenced sale of a new Class A shares on September 3, 1996. On
this date, the original Class A was renamed Class T. Investment income,
realized and unrealized capital gains and losses, the common expenses of
the fund, and certain fund-level expense reductions are allocated on a pro
rata basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. 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. 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. 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.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying each class
and shares of each class for distribution
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES - CONTINUED
under federal and state securities law. These expenses are borne by each
class and amortized over one year.
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 are declared
separately for each class, while capital gain distributions are declared at
the fund level and allocated to each class on a pro rata basis based on the
number of shares held by each class on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, market discount, capital loss carryforwards and
losses deferred due to wash sales, futures and options.
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 investment income and realized
and unrealized gain (loss). Accumulated undistributed net realized gain
(loss) on investments may include temporary book and tax basis differences
that will reverse in a subsequent period.
Any taxable income or gain remaining at fiscal year end is distributed in
the following year.
During the period, the fund received payments from the trustees for
Michigan Health Care Corporation, a Detroit hospital system that filed for
bankruptcy in the spring of 1995. These amounts, which were recorded as
income for book purposes, remain undistributed to shareholders as of period
end pending determination as to their classification for income tax
purposes.
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.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The
market value of the securities purchased or sold 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 delayed delivery security. Losses may arise due to changes in
the market value of the underlying securities or if the counterparty does
not perform under the contract.
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, if there is an
illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms. Futures contracts are valued at the
settlement price established each day by the board of trade or exchange on
which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $265,932,863 and $290,096,544, respectively.
The market value of futures contracts opened and closed during the period
amounted to $15,286,969 and $15,173,499, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .25%. For
the period, the management fee was equivalent to an annual rate of .40% of
average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares (Class A Plan), Class B shares (Class B Plan),
Class T shares (Class T Plan), and Institutional Class shares (collectively
referred to as "the Plans"). Under the Class A, Class B, and Class T Plans
the fund pays Fidelity Distributors Corporation (FDC), an affiliate of FMR,
a distribution and service fee. This fee is based on annual rates of .15%,
.90% (of which .65% represents a distribution fee and .25% represents a
shareholder service fee), and .25% of the average net assets of the Class
A, Class B and Class T shares, respectively. Prior to January 1, 1996, the
fee for Class B was based on an annual rate of 1.00% (of which .75%
represented a distribution fee and .25% represented a shareholder service
fee) of the average net assets of the Class B shares. For the period, the
fund paid FDC $35, $340,118, and $1,335,656 under the Class A, Class B and
Class T Plans, of which $35, $92,908, and $1,335,656 were paid to
securities
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
dealers, banks and other financial institutions for the distribution of
Class A, Class B and Class T shares, and providing shareholder support
services.
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
Class T, and Institutional Class shares. The Plans also authorize payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 4.25% and 3.50%
(4.75% prior to January 1, 1996) for selling Class A and Class T shares of
the fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within five years of
purchase. The Class B charge is based on declining rates which range from
4% to 1% of the lesser of the cost of shares at the initial date of
purchase or the net asset value of the redeemed shares, excluding any
reinvested dividends and capital gains.
For the period, FDC received sales charges of $3,984 and $918,111 on sales
of Class A and Class T shares of the fund, of which $3,385 and $763,755
were paid to securities dealers, banks, and other financial institutions.
FDC also received
contingent deferred sales charges of $130,817 on Class B share redemptions
from the fund. When Class B shares are sold, FDC pays commissions from its
own resources to dealers through which the sales are made.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class B, Class T, and Institutional Class shares. UMB has entered into
sub-arrangements with Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, with respect to all classes of the fund to
perform the transfer, dividend disbursing, and shareholder servicing agent
functions. FIIOC receives account fees and asset-based fees that vary
according to the account size and type of account of the shareholders of
the respective classes of the fund. All fees are paid to FIIOC by UMB,
which is reimbursed by the fund for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except proxy
statements.
UMB also has a sub-contract with Fidelity Service Co. (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. For the period, the transfer agent fees were equivalent to annual
rates of .26%, .16%, .18%, and .20% of the average net assets of Class A,
Class B, Class T and Institutional Class, respectively.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above the
following annual rates of average net assets for each class.
(I) CLASS A. For the period, this expense limitation was .90% of average
net assets and the reimbursement reduced expenses by $8,597.
(II) CLASS B. Effective January 1, 1996, the expense limitation changed
from an annual rate of 1.75% to 1.65% of average net assets.
(III) CLASS T. For the period, this expense limitation was 1.00% of average
net assets.
(IIII) INSTITUTIONAL CLASS. For the period, this expense limitation was
.75% of average net assets and the reimbursement reduced expenses by
$28,333.
In addition, the fund has entered into an arrangement with its custodian
whereby interest earned on uninvested cash balances was used to offset a
portion of expenses. During the period, the fund's custodian fees were
reduced by $2,534 under the custodian arrangement.
6. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 A 1995 B 1996 A 1995 B
CLASS A 18,733 - $ 218,730 $ -
Shares sold
Reinvestment of distributions 78 - 910 -
Shares redeemed (1,632) - (19,114) -
Net increase (decrease) 17,179 - $ 200,526 $ -
CLASS B 1,193,226 2,043,527 $ 14,098,773 $ 23,449,301
Shares sold
Reinvestment of distributions 95,237 61,101 1,121,011 707,595
Shares redeemed (664,327) (261,235) (7,798,479) (3,041,172)
Net increase (decrease) 624,136 1,843,393 $ 7,421,305 $ 21,115,724
CLASS T 6,539,718 12,273,037 $ 77,377,354 $ 140,517,484
Shares sold
Reinvestment of distributions 1,597,120 1,809,737 18,850,193 20,850,961
Shares redeemed (14,847,912) (15,035,639) (174,513,587) (171,150,553)
Net increase (decrease) (6,711,074) (952,865) $ (78,286,040) $ (9,782,108)
INSTITUTIONAL CLASS 140,918 12,792 $ 1,653,013 $ 150,012
Shares sold
Reinvestment of distributions 3,139 168 36,744 1,978
Shares redeemed (77,867) - (904,149) -
Net increase (decrease) 66,190 12,960 $ 785,608 $ 151,990
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
B SHARE TRANSACTIONS FOR INSTITUTIONAL CLASS ARE FOR THE PERIOD JULY 3,
1995 (COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1995.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series V and the Shareholders of
Fidelity Advisor High Income Municipal Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series V: Fidelity Advisor High Income Municipal Fund,
including the schedule of portfolio investments, as of October 31, 1996,
and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period
then ended and the financial highlights of Class A, Class B, Class T and
Institutional Class for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series V: Fidelity Advisor High Income Municipal Fund
as of October 31, 1996, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights of Class A, Class B, Class
T and Institutional Class for each of the periods indicated therein, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 13, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor High Income Municipal 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 12/9/96 12/6/96 $- $.002
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
During fiscal year ended 1996, 100% of the fund's income dividends was free
from federal income tax, and 26.36% of the fund's income dividends was
subject to the federal alternative minimum tax.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
CALIFORNIA MUNICIPAL INCOME
FUND - CLASS A, CLASS T
(FORMERLY CLASS A), AND CLASS B
ANNUAL REPORT
OCTOBER 31, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 15 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 18 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 19 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 23 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 30 Notes to the financial statements.
REPORT OF INDEPENDENT 35 The auditors' opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and 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, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR CALIFORNIA 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at the class'
income 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's 0.25% 12b-1 fee. If Fidelity had not
reimbursed certain Class A expenses during the period shown, the total
return and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED OCTOBER 31, 1996 LIFE OF
FUND
Advisor California Municipal Income - Class 1.97%
A
Advisor California Municipal Income - Class A -2.36%
(incl. max. 4.25% sales charge)
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, since the fund started on February 20,
1996. 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.
Once the fund is a year old, you can compare Class A's returns to the
performance of the Lehman Brothers California Municipal Bond Index, a total
return performance benchmark for California investment-grade municipal
bonds with maturities of at least one year. You may also want to look at
the performance of the California municipal debt funds average as tracked
by Lipper Analytical Services, Inc. Both benchmarks include reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class A shares' actual (or cumulative) return
and show you what would have happened if Class A had performed at a
constant rate each year. Since the class is less than a year old, we will
report these numbers in the next report.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA CA Muni CL A LB Municipal Bond Index
00254 LB015
1996/02/29 9575.00 10000.00
1996/03/31 9422.06 9872.20
1996/04/30 9389.07 9844.26
1996/05/31 9371.81 9840.32
1996/06/30 9480.01 9947.49
1996/07/31 9571.96 10038.01
1996/08/31 9593.68 10035.60
1996/09/30 9721.97 10176.10
1996/10/31 9836.26 10291.19
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor California Municipal Income Fund - Class A on
February 29, 1996, shortly after the fund started, and the current maximum
4.25% sales charge was paid. As the chart shows, by October 31, 1996, the
value of the investment would have been $9,836 - a 1.64% decrease on the
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index, a total return performance benchmark for
investment-grade bonds with maturities of at least one year, did over the
same period. With dividends reinvested, the same $10,000 would have grown
to $10,291 - a 2.91% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
PERIOD ENDED OCTOBER 31, 1996
LIFE OF
FUND
Dividend return 2.67%
Capital appreciation return -0.70%
Total return 1.97%
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any, and exclude the effects of sales charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1996 PAST LIFE OF
MONTH CLASS
Dividends per share 3.58(cents) 6.62(cents)
Annualized dividend rate 4.26% 4.23%
DIVIDENDS per share show the income paid by the class for a set period. The
annualized dividend rate is based on an average net asset value of $9.89
over the past month and $9.85 over the life of the class. The 30-day
annualized YIELD is a standard formula for all funds based on the yields of
the bonds in the fund, averaged over the past 30 days. This figure shows
you the yield characteristics of the fund's investments at the end of the
period. It also helps you compare funds from different companies on an
equal basis. Yield information will be reported once Class A has a longer,
more stable, operating history.
ADVISOR CALIFORNIA 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at the class'
income to measure performance. If Fidelity had not reimbursed certain Class
T expenses during the period shown, the total return and dividends would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED OCTOBER 31, 1996 LIFE OF
FUND
Advisor California Municipal Income - Class T 1.99%
Advisor California Municipal Income - Class T -1.58%
(incl. max. 3.50% sales charge)
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, since the fund started on February 20,
1996. 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.
Once the fund is a year old, you can compare Class T's returns to the
performance of the Lehman Brothers California Municipal Bond Index, a total
return performance benchmark for California investment-grade municipal
bonds with maturities of at least one year. You may also want to look at
the performance of the California municipal debt funds average as tracked
by Lipper Analytical Services, Inc. Both benchmarks include reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class T shares' actual (or cumulative) return
and show you what would have happened if Class T had performed at a
constant rate each year. Since the class is less than a year old, we will
report these numbers in the next report.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA Cal Muni Class T LB Lehman Brothers Muni Bond
00609 LB015
1996/02/29 9650.00 10000.00
1996/03/31 9495.86 9872.20
1996/04/30 9462.61 9844.26
1996/05/31 9445.22 9840.32
1996/06/30 9554.27 9947.49
1996/07/31 9646.93 10038.01
1996/08/31 9668.82 10035.60
1996/09/30 9790.58 10176.10
1996/10/31 9914.90 10291.19
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor California Municipal Income Fund - Class T on
February 29, 1996, shortly after the fund started, and the current maximum
3.50% sales charge was paid. As the chart shows, by October 31, 1996, the
value of the investment would have been $9,915 - a 0.85% decrease on the
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index, a total return performance benchmark for
investment-grade bonds with maturities of at least one year, did over the
same period. With dividends reinvested, the same $10,000 would have grown
to $10,291 - a 2.91% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
PERIOD ENDED OCTOBER 31, 1996
LIFE OF
FUND
Dividend return 2.69%
Capital appreciation return -0.70%
Total return 1.99%
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any, and exclude the effects of sales charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 LIFE OF
MONTH MONTHS CLASS
Dividends per share 3.50(cents) 19.72(cents) 26.09(cents)
Annualized dividend rate 4.17% 4.02% 3.85%
DIVIDENDS per share show the income paid by the class for a set period. The
annualized dividend rate is based on an average net asset value of $ $9.89
over the past month, $9.74 over the past six months and $9.74 over the life
of the class. The 30-day annualized YIELD is a standard formula for all
funds based on the yields of the bonds in the fund, averaged over the past
30 days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds from
different companies on an equal basis. Yield information will be reported
once Class T has a longer, more stable, operating history.
ADVISOR CALIFORNIA 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at the class'
income to measure performance. If Fidelity had not reimbursed certain Class
B expenses during the period shown, the total return and dividends would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED OCTOBER 31, 1996 LIFE OF
FUND
Advisor California Municipal Income - Class B 1.35%
Advisor California Municipal Income - Class B -2.61%
(incl. 4.00% contingent deferred sales
charge)
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case, since the fund began on February 20,
1996. 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.
Once the fund is a year old, you can compare Class B's returns to the
performance of the Lehman Brothers California Municipal Bond Index, a total
return performance benchmark for California investment-grade municipal
bonds with maturities of at least one year. You may also want to look at
the performance of the California municipal debt funds average as tracked
by Lipper Analytical Services, Inc. Both benchmarks include reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Class B shares' actual (or cumulative) return
and show you what would have happened if Class B had performed at a
constant rate each year. Since the class is less than a year old, we will
report these numbers in the next report.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA CA Muni Class B LB Municipal Bond Index
00610 LB015
1996/02/29 10000.00 10000.00
1996/03/31 9828.97 9872.20
1996/04/30 9789.24 9844.26
1996/05/31 9770.87 9840.32
1996/06/30 9878.27 9947.49
1996/07/31 9969.43 10038.01
1996/08/31 9978.51 10035.60
1996/09/30 10099.31 10176.10
1996/10/31 9811.87 10291.19
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor California Municipal Income Fund - Class B on
February 29, 1996, shortly after the fund started and paid the applicable
4% contingent deferred sales charge. As the chart shows, by October 31,
1996, the value of the investment would have been $9,812 - a 1.88% decrease
on the initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index, a total return performance benchmark for
investment-grade bonds with maturities of at least one year, did over the
same period. With dividends reinvested, the same $10,000 would have grown
to $10,291 - a 2.91% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
PERIOD ENDED OCTOBER 31, 1996
LIFE OF
FUND
Dividend return 2.35%
Capital appreciation return -1.00%
Total return 1.35%
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any, and exclude the effects of sales charges.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 LIFE OF
MONTH MONTHS CLASS
Dividends per share 2.94(cents) 17.30(cents) 22.88(cents)
Annualized dividend rate 3.51% 3.53% 3.38%
DIVIDENDS per share show the income paid by the class for a set period. The
annualized dividend rate is based on an average net asset value of $9.87
over the past month, $9.73 over the past six months and $9.73 over the life
of the class. The 30-day annualized YIELD is a standard formula for all
funds based on the yields of the bonds in the fund, averaged over the past
30 days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds from
different companies on an equal basis. Yield information will be reported
once Class B has a longer, more stable, operating history.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Municipal bonds benefited from
steady demand and relatively low
supply during much of the year
that ended October 31, 1996.
For the past 12 months, the
Lehman Brothers Municipal Bond
Index - a broad measure of the
municipal bond market - had a
total return of 5.70%. In
comparison, the Lehman Brothers
Aggregate Bond Index - a proxy
for investment-grade taxable
bonds - had a total return of
5.85%. Munis outperformed their
counterparts in the taxable
bond market for the first 10
months of the period. Factors
that helped munis included a lack
of supply of new issues, strong
demand for municipal bonds from
both insurance companies and
individual investors, and the
diminishing likelihood of
significant tax reform in the near
future. Like most domestic bonds,
munis were hurt by
stronger-than-expected signs of
strength in the economy earlier in
1996. Nevertheless, the market
conditions that supported the
muni market prevailed to the point
that munis entered the last two
months of the period trading at
expensive levels relative to their
taxable counterparts. At that point
and through the end of the period,
the performance of the municipal
market stalled somewhat, as
investor demand declined and
institutional investors sold off
some of their municipal bond
holdings to take profits.
An interview with Jonathan Short, Portfolio Manager of Fidelity Advisor
California Municipal Income Fund
Q. HOW DID THE FUND PERFORM, JON?
A. The fund was unveiled on February 20, 1996. Fidelity generally looks at
performance over six- and 12-month intervals. For purposes of this report,
we'll look at the fund's performance since inception, and its benchmark and
competitive group will reflect performance from February 29, 1996 through
October 31, 1996. For the period ending October 31, 1996, the fund's Class
A, Class T and Class B shares had returns of 1.97%, 1.99% and 1.35%,
respectively. For comparison, the Lehman Brothers California Municipal Bond
Index had a return of 2.91%, while the California municipal debt funds
average, as tracked by Lipper Analytical Services, had a return of 2.63%.
Q. WHAT SPECIFIC FACTORS INFLUENCED THE FUND'S PERFORMANCE DURING THE
PERIOD?
A. On a positive note, the fund's weighting in California state general
obligation issues helped as the credit quality of these securities improved
during the period and the state's credit rating was upgraded. That's one
area that worked well. Another strategy that helped was being
underweighted, relative to the index, in electric utility bonds. During the
period, several California utility bonds were downgraded. I had avoided
purchasing many of these issues based on our credit research, so this move
proved beneficial. In terms of disappointments, there were some investments
I could have made that might have boosted the fund's return. In a market
environment like we've seen - where bond prices slid and yields rose -
housing bonds tended to perform very well. While the portfolio did have
positions in some housing bonds, a higher weighting would most likely have
been beneficial. Performance also suffered a bit due to the flattening of
the yield curve during the period. I was underweighted in longer-term
bonds, which tended to outperform shorter-term securities on a
risk-adjustable basis.
Q. HOW WOULD YOU CHARACTERIZE THE INVESTMENT CLIMATE IN WHICH YOU WERE
OPERATING?
A. Right after the fund commenced in late February, a series of employment
reports was released that led investors to believe that the national
economy was stronger than many had thought. This news ignited fears of
inflation and, as result, the bond market tailed off. The yield ratios
between municipal bonds and Treasuries - which are a standard gauge of the
attractiveness of the municipal market - vacillated quite a bit during the
period, and municipals fell in and out of favor with investors. We also saw
yield spreads tighten between higher-rated bonds and lower-quality issues.
The market improved toward the end of the period, but not back to its
original level. As far as California goes, the state's economy continued to
shine as it grew at a rate faster than that of the nation.
Q. WHAT WAS YOUR STRATEGY WITH RESPECT TO QUALITY SPREADS?
A. During the period, a lack of lower-quality issuance helped BBB-rated, or
lower-quality securities, perform well. The lower-quality issues I had
purchased at the beginning of the period contributed positively to the
fund's performance.
Q. BOND INSURANCE HAS BECOME QUITE POPULAR AMONG ISSUERS. HOW DOES THIS
PLAY INTO YOUR DECISION MAKING?
A. It definitely poses a challenge. If an issuer does not have an AAA
rating, it can come to market with that rating simply by purchasing
insurance. There has been an increase in the number of securities coming to
market with insurance, and this has limited the supply of uninsured
obligations. This trend has affected credit spreads as the lower supply of
uninsured issues has made them harder to find and has increased their value
relative to insured paper. I'd like to see fewer bonds carry insurance
because this would allow our municipal research team to uncover
opportunities.
Q. WHAT'S IN STORE FOR THE NEXT SIX MONTHS?
A. I'm optimistic about California's economy and think it will continue to
outpace that of the nation. Since I don't make moves based on short-term
market swings, I'll look to boost performance by looking at other areas,
particularly quality selection and security structure, while analyzing each
security's risk/reward profile. As to the direction of interest rates and
the overall economy, it's anyone's guess.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: a high level of current
income free from federal
income tax and California
state personal income tax by
investing primarily in municipal
securities
START DATE: February 20, 1996
SIZE: as of October 31, 1996,
more than $4 million
MANAGER: Jonathan Short,
since February 1996; manager,
Fidelity California Municipal
Income Fund, Fidelity California
Insured Municipal Income
Fund, Fidelity Minnesota
Municipal Income Fund, Spartan
California Municipal Income
Fund, and Spartan California
Intermediate Municipal
Income Fund, since 1995;
joined Fidelity in 1990
(checkmark)
JON SHORT ON CALIFORNIA'S
ECONOMIC REVIVAL:
"The state has continued to
bounce back from its
well-documented economic
woes. Revenues have come in
ahead of budget projections,
Standard & Poor's has
upgraded the state's credit
quality from A to A+ and
we've seen gains in the trade,
entertainment and high
technology industries. Job
growth initially looked to be
splintered across pockets of
the state, but it has become
more widespread. One
sector that hasn't rebounded
well is housing, as housing
starts and existing home
sales have not shown much
improvement. That's really
the last piece of the puzzle.
Another positive for the state
came in June, when Orange
County emerged from
bankruptcy by issuing a
substantial amount of
insured bonds and came out
with a substantial issuance of
new bonds. The county paid a
premium for bond insurance,
but the bond offering was
mostly successful."
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMETS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
General Obligation 23.8 21.1
Water And Sewer 19.3 17.4
Special Tax 10.8 13.6
Electric Revenue 10.5 24.9
Lease Revenue 9.8 1.0
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1996
6 MONTHS AGO
Years 14.4 12.6
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF OCTOBER 31, 1996
6 MONTHS AGO
Years 7.8 7.9
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THE ABOVE EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF OCTOBER 31, 1996 AS OF APRIL 30, 1996
Aaa 47.0%
Aa, A 36.5%
Baa 10.1.%
Ba, B 0.0%
Non-rated 0.0%
Short-term investments 6.4%
Aaa 43.4%
Aa, A 32.7%
Baa 12.1%
Ba, B 0.0%
Non-rated 0.0%
Short-term investments 11.8%
Row: 1, Col: 1, Value: 47.0
Row: 1, Col: 2, Value: 36.5
Row: 1, Col: 3, Value: 10.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 6.4
Row: 1, Col: 1, Value: 43.4
Row: 1, Col: 2, Value: 32.7
Row: 1, Col: 3, Value: 12.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 11.8
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS.
FIDELITY ADVISOR CALIFORNIA MUNICIPAL INCOME FUND
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 93.6%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - 93.6%
Cabrillo Unified School Dist. (Cap. Appreciation)
Series A, 0% 8/1/10 (AMBAC Insured) Aaa $ 200,000 $ 92,500
California Dept. Wtr. Res. Central Valley Proj.
Rev. 5% 12/1/22 Aa 200,000 180,250
California Edl. Facs. Auth. Rev. (Santa Clara Univ.)
5% 9/1/15 (MBIA Insured) Aaa 100,000 92,523
California Gen. Oblig.:
Rfdg. 5.60% 9/1/21 A1 100,000 98,875
7% 3/1/06 A1 90,000 103,275
6% 10/1/08 A1 100,000 108,000
6.50% 9/1/10 A1 150,000 168,375
5.75% 11/1/12 A1 130,000 134,875
California Hsg. Fin. Agcy. Rev. (Home Mtg.)
Series E, 6.375% 8/1/27 (b) Aa 200,000 202,750
California Poll. Cont. Fing. Auth. Poll. Cont.
Rev. Rfdg. (San Diego Gas & Elec.) Series A,
5.90% 6/1/14 (b) A2 100,000 104,000
California Pub. Works Board Lease Rev.:
(Var. Cmnty. College Projs.) Series C,
6% 3/1/05 (AMBAC Insured) Aaa 80,000 85,700
(Var. Univ. of California Projs.)
Series B, 5% 6/1/05 A1 230,000 230,000
California Statewide Commtys. Dev. Auth. Rev.
Ctfs. of Prtn. (Children's Hosp.) 6% 6/1/13
(MBIA Insured) Aaa 100,000 104,875
Central Valley Fing. Auth. Cogeneration Proj. Rev.
(Carson Ice Gen. Proj.) 5.70% 7/1/03 BBB- 100,000 102,375
Contra Costa Schools Fing. Auth. Rev. Vista
Unified School Dist. School Sites Series A,
0% 9/1/17 (AMBAC Insured)
(Pre-Refunded to 9/1/02 - 36.34) (d) Aaa 400,000 111,000
Duarte Ctfs. of Prtn. (City of Hope Nat'l.
Medical Ctr.) 6.25% 4/1/23 Baa1 100,000 99,875
East Bay Muni. Util. Dist. Wastewater Treatment
Sys. Rev.:
6% 6/1/01 (FGIC Insured) Aaa 75,000 79,688
6% 6/1/06 (FGIC Insured) Aaa 100,000 108,000
6.50% 6/1/24 (AMBAC Insured)
(Pre-Refunded to 6/1/04 @ 102) (d) Aaa 75,000 84,844
Foothill/Eastern Trans. Corridor Agcy. Toll Rd. Rev.
(Sr. Lien) Series A, 6% 1/1/34 Baa 100,000 97,750
Fresno Swr. Rev. Series A-1, 5% 9/1/08
(AMBAC Insured) Aaa 100,000 97,875
Los Angeles County Ctfs. of Prtn. (Cap. Appreciation)
(Disney Parking Proj.) 0% 9/1/16 Baa1 100,000 27,250
Los Angeles County Convention & Exhibition Ctr.
Auth. Rev. Rfdg. (Lease Rev.) Series A,
6% 8/15/10 (MBIA Insured) Aaa 100,000 106,875
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles County Trans. Commission Sales
Tax Rev. Rfdg. Series B, 6.50% 7/1/10 (e) A1 $ 150,000 $ 166,875
Los Angeles Hbr. Dept. Rev. 7.60% 10/1/18 Aa 100,000 121,000
Los Angeles Wastewater Sys. Rev. Rfdg. Series A,
5% 2/1/11 (FGIC Insured) Aaa 100,000 95,125
Metropolitan Wtr. Dist. Southern California
Wtrwks. Rev.: Rfdg. Series B,
4.75% 7/1/09 (MBIA Insured) Aaa 100,000 94,625
4.75% 7/1/21 (MBIA Insured) Aaa 100,000 87,000
Northern California Pwr. Agcy. Pub. Pwr. Rev.
Rfdg. (Geothermal Proj.) Series A,
5.85% 7/1/10 (AMBAC Insured) Aaa 100,000 105,375
Redding Joint Pwrs. Fing. Auth. Elec. Sys. Rev.
Series A, 5.50% 6/1/05 (MBIA Insured) Aaa 100,000 104,125
Sacramento Fing. Auth. Lease Rev. Rfdg. Series A,
5.40% 11/1/20 (AMBAC Insured) Aaa 75,000 73,125
San Bernadino County Ctfs. of Prtn.
(Med. Ctr. Fing. Proj.): Rfdg. 5.25% 8/1/04 Baa1 150,000 149,438
Series A, 5.50% 8/1/15 (MBIA Insured) Aaa 100,000 97,750
San Diego County Reg'l. Trans. Commission
Sales Tax Rev. Second Series A,
5.25% 4/1/02 (AMBAC Insured) Aaa 150,000 154,500
San Francisco Bay Area Rapid Transit Dist. Sales
Tax Rev. 5.50% 7/1/20 (FGIC Insured) Aaa 100,000 98,125
San Francisco City & County Swr. Rev. Rfdg.
5.50% 10/1/01 (AMBAC Insured) Aaa 75,000 78,094
San Joaquin County Ctfs. of Prtn.
(General Hosp. Proj.) 5.80% 9/1/02 A 100,000 102,625
San Jose Redev. Agcy. Tax Alloc. Merged Area
Redev. Proj., 5% 8/1/20 (MBIA Insured) Aaa 100,000 91,000
Santa Rosa Waste Wtr. Rev. Rfdg. & Sub Reg'l
Waste Wtr. Proj. Series A, 4.75% 9/1/16
(FGIC Insured) Aaa 100,000 89,375
Turlock Irrigation Dist. Rev. Rfdg. Series A,
6% 1/1/07 (MBIA Insured) Aaa 75,000 80,342
TOTAL MUNICIPAL BONDS
(Cost $4,371,455) 4,410,029
MUNICIPAL NOTES (A) - 6.4.%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - 6.4%
California Poll. Cont. Fing. Auth. Resources Recovery
Rev. (Malaga Proj.) VRDN (b):
Series A, 3.65%, LOC Bank
of America Nat'l. Trust & Savings, P-1 $ 100,000 $ 100,000
Series B, 3.65%, LOC Bank America Nat'l.
Trust & Savings Association P-1 100,000 100,000
California Poll. Cont. Fing. Auth. Resources
Recovery Rev. (Ultra Pwr. Rocklin Proj.)
Series 1988 A, 3.65%, LOC Security Pacific
Nat'l. Bank, VRDN (b) P-1 100,000 100,000
TOTAL MUNICIPAL NOTES
(Cost $300,000) 300,000
TOTAL INVESTMENTS - 100%
(Cost $4,671,455) $ 4,710,029
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
1 Municipal Bond Contract December 1996 $ 115,875 $ (3,415)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.5%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
4. Security collateralized by an amount sufficient to pay interest and
principal.
5. A portion of the Security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $55,625.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 83.5% AAA, AA, A 84.5%
Baa 8.0% BBB 4.8%
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 both S&P and Moody's amounted to 0.0%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 23.8%
Water and Sewer 19.3
Special Tax 10.8
Electric Revenue 10.5
Lease Revenue 9.8
Others (individually less than 5%) 25.8
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $4,671,455. Net unrealized appreciation (depreciation)
aggregated $38,574, of which $65,471 related to appreciated investment
securities and $26,897 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $4,356 which will expire on October 31, 2004.
During fiscal year ended 1996, 100% of the fund's income dividends was free
from federal income tax, and 5.5% of the fund's income dividends was
subject to the federal alternative minimum tax.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS OCTOBER 31, 1996
Investment in securities, at value (cost $4,671,455) - $ 4,710,029
See accompanying schedule
Cash 32,803
Receivable for investments sold 105,133
Receivable for fund shares sold 6,824
Interest receivable 62,565
Prepaid expenses 26,070
Receivable from investment adviser for expense 22,691
reductions
TOTAL ASSETS 4,966,115
LIABILITIES
Payable for investments purchased $ 92,704
Distributions payable 2,538
Accrued management fee 1,551
Payable for daily variation on futures contracts 625
Other payables and accrued expenses 35,718
TOTAL LIABILITIES 133,136
NET ASSETS $ 4,832,979
Net Assets consist of:
Paid in capital $ 4,798,760
Accumulated undistributed net realized gain (loss) (940)
on investments
Net unrealized appreciation (depreciation) on 35,159
investments
NET ASSETS $ 4,832,979
CALCULATION OF MAXIMUM OFFERING PRICE $9.93
CLASS A:
NET ASSET VALUE, offering price and redemption price
per share ($102,248 (divided by) 10,293 shares)
Maximum offering price per share (100/95.75 of $9.93) $10.37
CLASS B: $9.90
NET ASSET VALUE offering price and redemption price
per share ($645,873 (divided by) 65,235 shares) A
CLASS T: $9.92
NET ASSET VALUE, offering price and redemption price
per share ($2,244,013 (divided by) 226,167 shares)
Maximum offering price per share (100/96.50 of $9.92) $10.28
INSTITUTIONAL CLASS: $9.91
NET ASSET VALUE, offering price and redemption price
per share ($1,840,845 (divided by) 185,761 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996
INTEREST INCOME $ 119,434
EXPENSES
Management fee $ 9,314
Transfer agent fees 92
Class A
Class B 703
Class T 1,844
Institutional Class 1,598
Distribution fees 24
Class A
Class B 2,581
Class T 2,066
Accounting fees and expenses 42,183
Non-interested trustees' compensation 2
Custodian fees and expenses 870
Registration fees 8,151
Class A
Class B 14,341
Class T 15,523
Institutional Class 15,529
Audit 27,464
Legal 7
Miscellaneous 140
Total expenses before reductions 142,432
Expense reductions (121,465) 20,967
NET INTEREST INCOME 98,467
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 4,357
Futures contracts (5,213) (856)
Change in net unrealized appreciation (depreciation) on:
Investment securities 38,574
Futures contracts (3,415) 35,159
NET GAIN (LOSS) 34,303
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 132,770
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
FEBRUARY 20,
1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 98,467
Net interest income
Net realized gain (loss) (856)
Change in net unrealized appreciation (depreciation) 35,159
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 132,770
Distributions to shareholders (635)
From net interest income
Class A
Class B (9,737)
Class T (32,566)
Institutional Class (55,529)
TOTAL DISTRIBUTIONS (98,467)
Share transactions - net increase (decrease) 4,798,676
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,832,979
NET ASSETS
Beginning of period -
End of period $ 4,832,979
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SEPTEMBER 3,
1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.75
Income from Investment Operations
Net interest income .066
Net realized and unrealized gain (loss) .180
Total from investment operations .246
Less Distributions
From net interest income (.066)
Net asset value, end of period $ 9.93
TOTAL RETURN B 2.53%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 102
Ratio of expenses to average net assets .90% 1.
, C
Ratio of net interest income to average net assets 3.98% 1.
Portfolio turnover rate 21% 1.
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURN WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS B
FEBRUARY 20, 1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations
Net interest income .229
Net realized and unrealized gain (loss) (.100) E
Total from investment operations .129
Less Distributions
From net interest income (.229)
Net asset value, end of period $ 9.900
TOTAL RETURN B 1.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 646
Ratio of expenses to average net assets 1.65% A,
D
Ratio of expenses to average net assets after expense reductions 1.62% A,
C
Ratio of net interest income to average net assets 3.38% A
Portfolio turnover rate 21% A
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURN
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIOD SHOWN.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
FINANCIAL HIGHLIGHTS - CLASS T
FEBRUARY 20, 1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations
Net interest income .261
Net realized and unrealized gain (loss) (.080) E
Total from investment operations .181
Less Distributions
From net interest income (.261)
Net asset value, end of period $ 9.920
TOTAL RETURN B 1.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,244
Ratio of expenses to average net assets 1.00% A,
D
Ratio of expenses to average net assets after expense reductions .87% A,
C
Ratio of net interest income to average net assets 3.92% A
Portfolio turnover rate 21% A
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURN WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
FEBRUARY 20, 1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations
Net interest income .307
Net realized and unrealized gain (loss) (.090) E
Total from investment operations .217
Less Distributions
From net interest income (.307)
Net asset value, end of period $ 9.910
TOTAL RETURN B 2.27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,841
Ratio of expenses to average net assets .75% A,
D
Ratio of expenses to average net assets after expense reductions .72% A,
C
Ratio of net interest income to average net assets 4.51% A
Portfolio turnover rate 21% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.THE
TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIOD SHOWN.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor California Municipal Income Fund (the fund) is a fund of
Fidelity Advisor Series V (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class B, Class T, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
The fund commenced sale of a new Class A of shares on September 3, 1996. On
this date, the original Class A was renamed Class T. Investment income,
realized and unrealized capital gains and losses, the common expenses of
the fund, and certain fund-level expense reductions are allocated on a pro
rata basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. 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. 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. 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.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying each class
and shares of each class for distribution
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES - CONTINUED
under federal and state securities law. These expenses are borne by each
class and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date. Income dividends are declared
separately for each class, while capital gain distributions are declared at
the fund level and allocated to each class on a pro rata basis based on the
number of shares held by each class on the ex-dividend date.
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
gains/losses on certain securities, futures and options transactions and
market discount.
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.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period
end, is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $4,821,852 and $452,400, respectively.
The market value of futures contracts opened and closed during the period
amounted to $1,232,938 and $1,118,490, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
fund fee rate applied to the average net assets of the fund. The group fee
rate is the weighted average of a series of rates and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .25%. For
the period, the management fee was equivalent to an annualized rate of .39%
of average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares (Class A Plan), Class B shares (Class B Plan),
Class T shares (Class T Plan), and Institutional Class shares (collectively
referred to as "the Plans"). Under the Class A, Class B, and Class T Plans,
the fund pays Fidelity Distributors Corporation (FDC), an affiliate of FMR,
a distribution and service fee. This fee is based on annual rates of .15%,
.90% (of which .65% represents a distribution fee and .25% represents a
shareholder service fee), and .25% of the average net assets of the Class
A, Class B and Class T shares, respectively. For the
period, the fund paid FDC $24, $2,581, and $2,066 under the Class A, Class
B and Class T Plans, of which $24 , $717, and $2,066 were paid to
securities dealers, banks and other financial institutions for the
distribution of Class A, Class B and Class T shares, and providing
shareholder support services.
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
Class T, and Institutional Class shares. The Plans also authorize payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 4.25% and 3.50%
for selling Class A and Class T shares of the fund, respectively, and the
proceeds of a contingent deferred sales charge levied on Class B share
redemptions occurring within five years of purchase. The Class B charge is
based on declining rates which range from 4% to 1% of the lesser of the
cost of shares at the initial date of purchase or the net asset value of
the redeemed shares, excluding any reinvested dividends and capital gains.
For the period, FDC received sales charges of $27 and $31,149 on sales of
Class A and Class T shares of the fund, of which $23 and $30,614 were paid
to securities dealers, banks, and other financial institutions. When Class
B shares are sold, FDC pays commissions from its own resources to dealers
through which the sales are made.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class B, Class T, and Institutional Class shares. UMB has entered into
sub-arrangements with Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, with respect to all classes of the fund to
perform the transfer, dividend disbursing, and shareholder servicing agent
functions. FIIOC receives account fees and asset-based fees that vary
according to the account size and type of account of the shareholders of
the respective classes of the fund. All fees are paid to FIIOC by UMB,
which is reimbursed by the fund for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except proxy
statements.
UMB also has a sub-contract with Fidelity Service Co. (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.
For the period, the transfer agent fees were equivalent to annualized rates
of .58%, .24%, .22%, and .13% of the average net assets of Class A, Class
B, Class T and Institutional Class, respectively.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above annual rates
of .90%, 1.65%, 1.00% and .75% of average net assets for Class A, Class B,
Class T, and Institutional Class, respectively. For the period, the
reimbursement reduced expenses by $8,446, $22,335, $36,466 and $52,765 for
Class A, Class B, Class T, and Institutional Class, respectively.
In addition, the fund has entered into an arrangement with its custodian
whereby interest earned on uninvested cash balances was used to offset a
portion of expenses. During the period, the fund's custodian fees were
reduced by $1,453 under the custodian arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 42.3% of
the total outstanding shares. In addition, one unaffiliated shareholder was
record owner of more than 10% of the total outstanding shares of the fund,
totaling 12.9%.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1996 1996
CLASS A A 10,225 $ 99,695
Shares sold
Reinvestment of distributions from net interest income 68 677
Shares redeemed - -
Net increase (decrease) 10,293 $ 100,372
CLASS B B 64,662 $ 629,107
Shares sold
Reinvestment of distributions from net interest income 573 5,592
Shares redeemed - -
Net increase (decrease) 65,235 $ 634,699
CLASS T B 248,275 $ 2,423,465
Shares sold
Reinvestment of distributions from net interest income 2,001 19,573
Shares redeemed (24,109) (235,454)
Net increase (decrease) 226,167 $ 2,207,584
INSTITUTIONAL CLASS B 180,001 $ 1,800,010
Shares sold
Reinvestment of distributions from net interest income 5,760 56,011
Shares redeemed - -
Net increase (decrease) 185,761 $ 1,856,021
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
B SHARE TRANSACTIONS FOR CLASS B, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1996.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Advisor Series V and the Shareholders of Advisor
California Municipal Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series V: Fidelity Advisor California Municipal Income
Fund, including the schedule of portfolio investments, as of October 31,
1996, and the related statements of operations and changes in net assets
for the period February 20, 1996 (commencement of operations) to October
31, 1996 and the financial highlights of Class A, Class B, Class T and
Institutional Class for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series V: Fidelity Advisor California Municipal Income
Fund as of October 31, 1996, the results of its operations, and the changes
in its net assets for the period February 20, 1996 (commencement of
operations) to October 31, 1996 and the financial highlights of Class A,
Class B, Class T and Institutional Class for each of the periods indicated
therein, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 9, 1996
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
CALIFORNIA MUNICIPAL INCOME
FUND - INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 1996
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 last six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 15 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 22 Notes to the financial statements.
REPORT OF INDEPENDENT 27 The auditors' opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and 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, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR CALIFORNIA 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at income to
measure performance. If Fidelity had not reimbursed certain Institutional
Class expenses during the period shown, the total return and dividends
would have been lower.
<TABLE>
<CAPTION>
<S> <C>
CUMULATIVE TOTAL RETURNS
PERIOD ENDED OCTOBER 31, 1996 LIFE OF
FUND
Advisor California Municipal Income - Institutional Class 2.27%
</TABLE>
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund started
on February 20, 1996. 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. Once the fund is a year old, you can compare Institutional
Class' returns to the performance of the Lehman Brothers California
Municipal Bond Index, a total return performance benchmark for California
investment-grade municipal bonds with maturities of at least one year. You
may also want to look at the performance of the California municipal debt
funds average as tracked by Lipper Analytical Services, Inc. Both
benchmarks include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL RETURNS take Institutional Class shares' actual (or
cumulative) return and show you what would have happened if Institutional
Class had performed at a constant rate each year. Since the class is less
than a year old, we will report these numbers in the next report.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA Cal Muni Class I LB Municipal Bond
00649 LB015
1996/02/29 10000.00 10000.00
1996/03/31 9837.64 9872.20
1996/04/30 9788.27 9844.26
1996/05/31 9788.23 9840.32
1996/06/30 9915.06 9947.49
1996/07/31 10003.95 10038.01
1996/08/31 10021.32 10035.60
1996/09/30 10160.66 10176.10
1996/10/31 10302.56 10291.19
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor California Municipal Income Fund -
Institutional Class on February 29, 1996, shortly after the fund started.
As the chart shows, by October 31, 1996, the value of the investment would
have grown to $10,303 - a 3.03% increase on the initial investment. For
comparison, look at how the Lehman Brothers Municipal Bond Index, a total
return performance benchmark for investment-grade bonds with maturities of
at least one year, did over the same period. With dividends reinvested, the
same $10,000 would have grown to $10,291 - a 2.91% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
PERIOD ENDED OCTOBER 31, 1996
LIFE OF
FUND
Dividend return 3.17%
Capital appreciation return -0.90%
Total return 2.27%
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any.
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 LIFE OF
MONTH MONTHS CLASS
Dividends per share 3.70(cents) 21.99(cents) 30.68(cents)
Annualized dividend rate 4.43% 4.49% 4.54%
DIVIDENDS per share show the income paid by the class for a set period. The
annualized dividend rate is based on an average net asset value of $9.85
over the past month, $9.72 over the past six months and $9.72 over the life
of the class. The 30-day annualized YIELD is a standard formula for all
funds based on the yields of the bonds in the fund, averaged over the past
30 days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds from
different companies on an equal basis. Yield information will be reported
once Institutional Class has a longer, more stable, operating history.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Municipal bonds benefited from
steady demand and relatively low
supply during much of the year
that ended October 31, 1996.
For the past 12 months, the
Lehman Brothers Municipal Bond
Index - a broad measure of the
municipal bond market - had a
total return of 5.70%. In
comparison, the Lehman Brothers
Aggregate Bond Index - a proxy
for investment-grade taxable
bonds - had a total return of
5.85%. Munis outperformed their
counterparts in the taxable
bond market for the first 10
months of the period. Factors
that helped munis included a lack
of supply of new issues, strong
demand for municipal bonds from
both insurance companies and
individual investors, and the
diminishing likelihood of
significant tax reform in the near
future. Like most domestic bonds,
munis were hurt by
stronger-than-expected signs of
strength in the economy earlier in
1996. Nevertheless, the market
conditions that supported the
muni market prevailed to the point
that munis entered the last two
months of the period trading at
expensive levels relative to their
taxable counterparts. At that point
and through the end of the period,
the performance of the municipal
market stalled somewhat, as
investor demand declined and
institutional investors sold off
some of their municipal bond
holdings to take profits.
An interview with Jonathan Short, Portfolio Manager of Fidelity Advisor
California Municipal Income Fund
Q. HOW DID THE FUND PERFORM, JON?
A. The fund commenced on February 20, 1996. Fidelity generally looks at
performance over six- and 12-month increments. For purposes of this report,
we'll look at the fund's performance since inception, and its benchmark and
competitive group will reflect performance from February 29, 1996 through
October 31, 1996. For the period that ended October 31, 1996, the fund's
Institutional Class shares had a return of 2.27%. This compares to the
2.91% return of the Lehman Brothers California Municipal Bond Index and the
2.63% return of the California municipal debt funds average, as tracked by
Lipper Analytical Services.
Q. WHAT SPECIFIC FACTORS INFLUENCED THE FUND'S PERFORMANCE DURING THE
PERIOD?
A. On a positive note, the fund's weighting in California state general
obligation issues helped as the credit quality of these securities improved
during the period and the state's credit rating was upgraded. That's one
area that worked well. Another strategy that helped was being
underweighted, relative to the index, in electric utility bonds. During the
period, several California utility bonds were downgraded. I had avoided
purchasing many of these issues based on our credit research, so this move
proved beneficial. In terms of disappointments, there were some investments
I could have made that might have boosted the fund's return. In a market
environment like we've seen - where bond prices slid and yields rose -
housing bonds tended to perform very well. While the portfolio did have
positions in some housing bonds, a higher weighting would most likely have
been beneficial. Performance also suffered a bit due to the flattening of
the yield curve during the period. I was underweighted in longer-term
bonds, which tended to outperform shorter-term securities on a
risk-adjustable basis.
Q. HOW WOULD YOU CHARACTERIZE THE INVESTMENT CLIMATE IN WHICH YOU WERE
OPERATING?
A. Right after the fund commenced in late February, a series of employment
reports was released that led investors to believe that the national
economy was stronger than many had thought. This news ignited fears of
inflation and, as result, the bond market tailed off. The yield ratios
between municipal bonds and Treasuries - which are a standard gauge of the
attractiveness of the municipal market - vacillated quite a bit during the
period, and municipals fell in and out of favor with investors. We also saw
yield spreads tighten between higher-rated bonds and lower-quality issues.
The market improved toward the end of the period, but not back to its
original level. As far as California goes, the state's economy continued to
shine as it grew at a rate faster than that of the nation.
Q. WHAT WAS YOUR STRATEGY WITH RESPECT TO QUALITY SPREADS?
A. During the period, a lack of lower-quality issuance helped BBB-rated, or
lower-quality securities, perform well. The lower-quality issues I had
purchased at the beginning of the period contributed positively to the
fund's performance.
Q. BOND INSURANCE HAS BECOME QUITE POPULAR AMONG ISSUERS. HOW DOES THIS
PLAY INTO YOUR DECISION MAKING?
A. It definitely poses a challenge. If an issuer does not have an AAA
rating, it can come to market with that rating simply by purchasing
insurance. There has been an increase in the number of securities coming to
market with insurance, and this has limited the supply of uninsured
obligations. This trend has affected credit spreads as the lower supply of
uninsured issues has made them harder to find and has increased their value
relative to insured paper. I'd like to see fewer bonds carry insurance
because this would allow our municipal research team to uncover
opportunities.
Q. WHAT'S IN STORE FOR THE NEXT SIX MONTHS?
A. I'm optimistic about California's economy and think it will continue to
outpace that of the nation. Since I don't make moves based on short-term
market swings, I'll look to boost performance by looking at other areas,
particularly quality selection and security structure, while analyzing each
security's risk/reward profile. As to the direction of interest rates and
the overall economy, it's anyone's guess.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: a high level of current
income free from federal
income tax and California
state personal income tax by
investing primarily in municipal
securities
START DATE: February 20, 1996
SIZE: as of October 31, 1996,
more than $4 million
MANAGER: Jonathan Short,
since February 1996; manager,
Fidelity California Municipal
Income Fund, Fidelity California
Insured Municipal Income
Fund, Fidelity Minnesota
Municipal Income Fund, Spartan
California Municipal Income
Fund, and Spartan California
Intermediate Municipal
Income Fund, since 1995;
joined Fidelity in 1990
(checkmark)
JON SHORT ON CALIFORNIA'S
ECONOMIC REVIVAL:
"The state has continued to
bounce back from its
well-documented economic
woes. Revenues have come in
ahead of budget projections,
Standard & Poor's has
upgraded the state's credit
quality from A to A+ and
we've seen gains in the trade,
entertainment and high
technology industries. Job
growth initially looked to be
splintered across pockets of
the state, but it has become
more widespread. One
sector that hasn't rebounded
well is housing, as housing
starts and existing home
sales have not shown much
improvement. That's really
the last piece of the puzzle.
Another positive for the state
came in June, when Orange
County emerged from
bankruptcy by issuing a
substantial amount of
insured bonds and came out
with a substantial issuance of
new bonds. The county paid a
premium for bond insurance,
but the bond offering was
mostly successful."
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMETS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
General Obligation 23.8 21.1
Water And Sewer 19.3 17.4
Special Tax 10.8 13.6
Electric Revenue 10.5 24.9
Lease Revenue 9.8 1.0
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1996
6 MONTHS AGO
Years 14.4 12.6
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF OCTOBER 31, 1996
6 MONTHS AGO
Years 7.8 7.9
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THE ABOVE EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF OCTOBER 31, 1996 AS OF APRIL 30, 1996
Aaa 47.0%
Aa, A 36.5%
Baa 10.1.%
Ba, B 0.0%
Non-rated 0.0%
Short-term investments 6.4%
Aaa 43.4%
Aa, A 32.7%
Baa 12.1%
Ba, B 0.0%
Non-rated 0.0%
Short-term investments 11.8%
Row: 1, Col: 1, Value: 47.0
Row: 1, Col: 2, Value: 36.5
Row: 1, Col: 3, Value: 10.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 6.4
Row: 1, Col: 1, Value: 43.4
Row: 1, Col: 2, Value: 32.7
Row: 1, Col: 3, Value: 12.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 11.8
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS.
FIDELITY ADVISOR CALIFORNIA MUNICIPAL INCOME FUND
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 93.6%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - 93.6%
Cabrillo Unified School Dist. (Cap. Appreciation)
Series A, 0% 8/1/10 (AMBAC Insured) Aaa $ 200,000 $ 92,500
California Dept. Wtr. Res. Central Valley Proj.
Rev. 5% 12/1/22 Aa 200,000 180,250
California Edl. Facs. Auth. Rev. (Santa Clara Univ.)
5% 9/1/15 (MBIA Insured) Aaa 100,000 92,523
California Gen. Oblig.:
Rfdg. 5.60% 9/1/21 A1 100,000 98,875
7% 3/1/06 A1 90,000 103,275
6% 10/1/08 A1 100,000 108,000
6.50% 9/1/10 A1 150,000 168,375
5.75% 11/1/12 A1 130,000 134,875
California Hsg. Fin. Agcy. Rev. (Home Mtg.)
Series E, 6.375% 8/1/27 (b) Aa 200,000 202,750
California Poll. Cont. Fing. Auth. Poll. Cont.
Rev. Rfdg. (San Diego Gas & Elec.) Series A,
5.90% 6/1/14 (b) A2 100,000 104,000
California Pub. Works Board Lease Rev.:
(Var. Cmnty. College Projs.) Series C,
6% 3/1/05 (AMBAC Insured) Aaa 80,000 85,700
(Var. Univ. of California Projs.)
Series B, 5% 6/1/05 A1 230,000 230,000
California Statewide Commtys. Dev. Auth. Rev.
Ctfs. of Prtn. (Children's Hosp.) 6% 6/1/13
(MBIA Insured) Aaa 100,000 104,875
Central Valley Fing. Auth. Cogeneration Proj. Rev.
(Carson Ice Gen. Proj.) 5.70% 7/1/03 BBB- 100,000 102,375
Contra Costa Schools Fing. Auth. Rev. Vista
Unified School Dist. School Sites Series A,
0% 9/1/17 (AMBAC Insured)
(Pre-Refunded to 9/1/02 - 36.34) (d) Aaa 400,000 111,000
Duarte Ctfs. of Prtn. (City of Hope Nat'l.
Medical Ctr.) 6.25% 4/1/23 Baa1 100,000 99,875
East Bay Muni. Util. Dist. Wastewater Treatment
Sys. Rev.:
6% 6/1/01 (FGIC Insured) Aaa 75,000 79,688
6% 6/1/06 (FGIC Insured) Aaa 100,000 108,000
6.50% 6/1/24 (AMBAC Insured)
(Pre-Refunded to 6/1/04 @ 102) (d) Aaa 75,000 84,844
Foothill/Eastern Trans. Corridor Agcy. Toll Rd. Rev.
(Sr. Lien) Series A, 6% 1/1/34 Baa 100,000 97,750
Fresno Swr. Rev. Series A-1, 5% 9/1/08
(AMBAC Insured) Aaa 100,000 97,875
Los Angeles County Ctfs. of Prtn. (Cap. Appreciation)
(Disney Parking Proj.) 0% 9/1/16 Baa1 100,000 27,250
Los Angeles County Convention & Exhibition Ctr.
Auth. Rev. Rfdg. (Lease Rev.) Series A,
6% 8/15/10 (MBIA Insured) Aaa 100,000 106,875
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles County Trans. Commission Sales
Tax Rev. Rfdg. Series B, 6.50% 7/1/10 (e) A1 $ 150,000 $ 166,875
Los Angeles Hbr. Dept. Rev. 7.60% 10/1/18 Aa 100,000 121,000
Los Angeles Wastewater Sys. Rev. Rfdg. Series A,
5% 2/1/11 (FGIC Insured) Aaa 100,000 95,125
Metropolitan Wtr. Dist. Southern California
Wtrwks. Rev.: Rfdg. Series B,
4.75% 7/1/09 (MBIA Insured) Aaa 100,000 94,625
4.75% 7/1/21 (MBIA Insured) Aaa 100,000 87,000
Northern California Pwr. Agcy. Pub. Pwr. Rev.
Rfdg. (Geothermal Proj.) Series A,
5.85% 7/1/10 (AMBAC Insured) Aaa 100,000 105,375
Redding Joint Pwrs. Fing. Auth. Elec. Sys. Rev.
Series A, 5.50% 6/1/05 (MBIA Insured) Aaa 100,000 104,125
Sacramento Fing. Auth. Lease Rev. Rfdg. Series A,
5.40% 11/1/20 (AMBAC Insured) Aaa 75,000 73,125
San Bernadino County Ctfs. of Prtn.
(Med. Ctr. Fing. Proj.): Rfdg. 5.25% 8/1/04 Baa1 150,000 149,438
Series A, 5.50% 8/1/15 (MBIA Insured) Aaa 100,000 97,750
San Diego County Reg'l. Trans. Commission
Sales Tax Rev. Second Series A,
5.25% 4/1/02 (AMBAC Insured) Aaa 150,000 154,500
San Francisco Bay Area Rapid Transit Dist. Sales
Tax Rev. 5.50% 7/1/20 (FGIC Insured) Aaa 100,000 98,125
San Francisco City & County Swr. Rev. Rfdg.
5.50% 10/1/01 (AMBAC Insured) Aaa 75,000 78,094
San Joaquin County Ctfs. of Prtn.
(General Hosp. Proj.) 5.80% 9/1/02 A 100,000 102,625
San Jose Redev. Agcy. Tax Alloc. Merged Area
Redev. Proj., 5% 8/1/20 (MBIA Insured) Aaa 100,000 91,000
Santa Rosa Waste Wtr. Rev. Rfdg. & Sub Reg'l
Waste Wtr. Proj. Series A, 4.75% 9/1/16
(FGIC Insured) Aaa 100,000 89,375
Turlock Irrigation Dist. Rev. Rfdg. Series A,
6% 1/1/07 (MBIA Insured) Aaa 75,000 80,342
TOTAL MUNICIPAL BONDS
(Cost $4,371,455) 4,410,029
MUNICIPAL NOTES (A) - 6.4.%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - 6.4%
California Poll. Cont. Fing. Auth. Resources Recovery
Rev. (Malaga Proj.) VRDN (b):
Series A, 3.65%, LOC Bank
of America Nat'l. Trust & Savings, P-1 $ 100,000 $ 100,000
Series B, 3.65%, LOC Bank America Nat'l.
Trust & Savings Association P-1 100,000 100,000
California Poll. Cont. Fing. Auth. Resources
Recovery Rev. (Ultra Pwr. Rocklin Proj.)
Series 1988 A, 3.65%, LOC Security Pacific
Nat'l. Bank, VRDN (b) P-1 100,000 100,000
TOTAL MUNICIPAL NOTES
(Cost $300,000) 300,000
TOTAL INVESTMENTS - 100%
(Cost $4,671,455) $ 4,710,029
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
1 Municipal Bond Contract December 1996 $ 115,875 $ (3,415)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.5%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
4. Security collateralized by an amount sufficient to pay interest and
principal.
5. A portion of the Security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $55,625.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 83.5% AAA, AA, A 84.5%
Baa 8.0% BBB 4.8%
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 both S&P and Moody's amounted to 0.0%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 23.8%
Water and Sewer 19.3
Special Tax 10.8
Electric Revenue 10.5
Lease Revenue 9.8
Others (individually less than 5%) 25.8
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $4,671,455. Net unrealized appreciation (depreciation)
aggregated $38,574, of which $65,471 related to appreciated investment
securities and $26,897 related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $4,356 which will expire on October 31, 2004.
During fiscal year ended 1996, 100% of the fund's income dividends was free
from federal income tax, and 5.5% of the fund's income dividends was
subject to the federal alternative minimum tax.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS OCTOBER 31, 1996
Investment in securities, at value (cost $4,671,455) - $ 4,710,029
See accompanying schedule
Cash 32,803
Receivable for investments sold 105,133
Receivable for fund shares sold 6,824
Interest receivable 62,565
Prepaid expenses 26,070
Receivable from investment adviser for expense 22,691
reductions
TOTAL ASSETS 4,966,115
LIABILITIES
Payable for investments purchased $ 92,704
Distributions payable 2,538
Accrued management fee 1,551
Payable for daily variation on futures contracts 625
Other payables and accrued expenses 35,718
TOTAL LIABILITIES 133,136
NET ASSETS $ 4,832,979
Net Assets consist of:
Paid in capital $ 4,798,760
Accumulated undistributed net realized gain (loss) (940)
on investments
Net unrealized appreciation (depreciation) on 35,159
investments
NET ASSETS $ 4,832,979
CALCULATION OF MAXIMUM OFFERING PRICE $9.93
CLASS A:
NET ASSET VALUE, offering price and redemption price
per share ($102,248 (divided by) 10,293 shares)
Maximum offering price per share (100/95.75 of $9.93) $10.37
CLASS B: $9.90
NET ASSET VALUE offering price and redemption price
per share ($645,873 (divided by) 65,235 shares) A
CLASS T: $9.92
NET ASSET VALUE, offering price and redemption price
per share ($2,244,013 (divided by) 226,167 shares)
Maximum offering price per share (100/96.50 of $9.92) $10.28
INSTITUTIONAL CLASS: $9.91
NET ASSET VALUE, offering price and redemption price
per share ($1,840,845 (divided by) 185,761 shares)
</TABLE>
B REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996
INTEREST INCOME $ 119,434
EXPENSES
Management fee $ 9,314
Transfer agent fees 92
Class A
Class B 703
Class T 1,844
Institutional Class 1,598
Distribution fees 24
Class A
Class B 2,581
Class T 2,066
Accounting fees and expenses 42,183
Non-interested trustees' compensation 2
Custodian fees and expenses 870
Registration fees 8,151
Class A
Class B 14,341
Class T 15,523
Institutional Class 15,529
Audit 27,464
Legal 7
Miscellaneous 140
Total expenses before reductions 142,432
Expense reductions (121,465) 20,967
NET INTEREST INCOME 98,467
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 4,357
Futures contracts (5,213) (856)
Change in net unrealized appreciation (depreciation) on:
Investment securities 38,574
Futures contracts (3,415) 35,159
NET GAIN (LOSS) 34,303
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 132,770
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
FEBRUARY 20,
1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 98,467
Net interest income
Net realized gain (loss) (856)
Change in net unrealized appreciation (depreciation) 35,159
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 132,770
Distributions to shareholders (635)
From net interest income
Class A
Class B (9,737)
Class T (32,566)
Institutional Class (55,529)
TOTAL DISTRIBUTIONS (98,467)
Share transactions - net increase (decrease) 4,798,676
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,832,979
NET ASSETS
Beginning of period -
End of period $ 4,832,979
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SEPTEMBER 3,
1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.75
Income from Investment Operations
Net interest income .066
Net realized and unrealized gain (loss) .180
Total from investment operations .246
Less Distributions
From net interest income (.066)
Net asset value, end of period $ 9.93
TOTAL RETURN B 2.53%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 102
Ratio of expenses to average net assets .90% 1.
, C
Ratio of net interest income to average net assets 3.98% 1.
Portfolio turnover rate 21% 1.
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURN WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS B
FEBRUARY 20, 1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations
Net interest income .229
Net realized and unrealized gain (loss) (.100) E
Total from investment operations .129
Less Distributions
From net interest income (.229)
Net asset value, end of period $ 9.900
TOTAL RETURN B 1.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 646
Ratio of expenses to average net assets 1.65% A,
D
Ratio of expenses to average net assets after expense reductions 1.62% A,
C
Ratio of net interest income to average net assets 3.38% A
Portfolio turnover rate 21% A
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURN
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIOD SHOWN.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
FINANCIAL HIGHLIGHTS - CLASS T
FEBRUARY 20, 1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations
Net interest income .261
Net realized and unrealized gain (loss) (.080) E
Total from investment operations .181
Less Distributions
From net interest income (.261)
Net asset value, end of period $ 9.920
TOTAL RETURN B 1.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,244
Ratio of expenses to average net assets 1.00% A,
D
Ratio of expenses to average net assets after expense reductions .87% A,
C
Ratio of net interest income to average net assets 3.92% A
Portfolio turnover rate 21% A
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURN WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
FEBRUARY 20, 1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations
Net interest income .307
Net realized and unrealized gain (loss) (.090) E
Total from investment operations .217
Less Distributions
From net interest income (.307)
Net asset value, end of period $ 9.910
TOTAL RETURN B 2.27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,841
Ratio of expenses to average net assets .75% A,
D
Ratio of expenses to average net assets after expense reductions .72% A,
C
Ratio of net interest income to average net assets 4.51% A
Portfolio turnover rate 21% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.THE
TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIOD SHOWN.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor California Municipal Income Fund (the fund) is a fund of
Fidelity Advisor Series V (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class B, Class T, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
The fund commenced sale of a new Class A of shares on September 3, 1996. On
this date, the original Class A was renamed Class T. Investment income,
realized and unrealized capital gains and losses, the common expenses of
the fund, and certain fund-level expense reductions are allocated on a pro
rata basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. 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. 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. 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.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying each class
and shares of each class for distribution
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES - CONTINUED
under federal and state securities law. These expenses are borne by each
class and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net investment income. Distributions from realized gains, if
any, are recorded on the ex-dividend date. Income dividends are declared
separately for each class, while capital gain distributions are declared at
the fund level and allocated to each class on a pro rata basis based on the
number of shares held by each class on the ex-dividend date.
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
gains/losses on certain securities, futures and options transactions and
market discount.
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.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period
end, is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $4,821,852 and $452,400, respectively.
The market value of futures contracts opened and closed during the period
amounted to $1,232,938 and $1,118,490, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
fund fee rate applied to the average net assets of the fund. The group fee
rate is the weighted average of a series of rates and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .25%. For
the period, the management fee was equivalent to an annualized rate of .39%
of average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares (Class A Plan), Class B shares (Class B Plan),
Class T shares (Class T Plan), and Institutional Class shares (collectively
referred to as "the Plans"). Under the Class A, Class B, and Class T Plans,
the fund pays Fidelity Distributors Corporation (FDC), an affiliate of FMR,
a distribution and service fee. This fee is based on annual rates of .15%,
.90% (of which .65% represents a distribution fee and .25% represents a
shareholder service fee), and .25% of the average net assets of the Class
A, Class B and Class T shares, respectively. For the
period, the fund paid FDC $24, $2,581, and $2,066 under the Class A, Class
B and Class T Plans, of which $24 , $717, and $2,066 were paid to
securities dealers, banks and other financial institutions for the
distribution of Class A, Class B and Class T shares, and providing
shareholder support services.
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
Class T, and Institutional Class shares. The Plans also authorize payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 4.25% and 3.50%
for selling Class A and Class T shares of the fund, respectively, and the
proceeds of a contingent deferred sales charge levied on Class B share
redemptions occurring within five years of purchase. The Class B charge is
based on declining rates which range from 4% to 1% of the lesser of the
cost of shares at the initial date of purchase or the net asset value of
the redeemed shares, excluding any reinvested dividends and capital gains.
For the period, FDC received sales charges of $27 and $31,149 on sales of
Class A and Class T shares of the fund, of which $23 and $30,614 were paid
to securities dealers, banks, and other financial institutions. When Class
B shares are sold, FDC pays commissions from its own resources to dealers
through which the sales are made.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class B, Class T, and Institutional Class shares. UMB has entered into
sub-arrangements with Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, with respect to all classes of the fund to
perform the transfer, dividend disbursing, and shareholder servicing agent
functions. FIIOC receives account fees and asset-based fees that vary
according to the account size and type of account of the shareholders of
the respective classes of the fund. All fees are paid to FIIOC by UMB,
which is reimbursed by the fund for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except proxy
statements.
UMB also has a sub-contract with Fidelity Service Co. (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.
For the period, the transfer agent fees were equivalent to annualized rates
of .58%, .24%, .22%, and .13% of the average net assets of Class A, Class
B, Class T and Institutional Class, respectively.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above annual rates
of .90%, 1.65%, 1.00% and .75% of average net assets for Class A, Class B,
Class T, and Institutional Class, respectively. For the period, the
reimbursement reduced expenses by $8,446, $22,335, $36,466 and $52,765 for
Class A, Class B, Class T, and Institutional Class, respectively.
In addition, the fund has entered into an arrangement with its custodian
whereby interest earned on uninvested cash balances was used to offset a
portion of expenses. During the period, the fund's custodian fees were
reduced by $1,453 under the custodian arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 42.3% of
the total outstanding shares. In addition, one unaffiliated shareholder was
record owner of more than 10% of the total outstanding shares of the fund,
totaling 12.9%.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1996 1996
CLASS A A 10,225 $ 99,695
Shares sold
Reinvestment of distributions from net interest income 68 677
Shares redeemed - -
Net increase (decrease) 10,293 $ 100,372
CLASS B B 64,662 $ 629,107
Shares sold
Reinvestment of distributions from net interest income 573 5,592
Shares redeemed - -
Net increase (decrease) 65,235 $ 634,699
CLASS T B 248,275 $ 2,423,465
Shares sold
Reinvestment of distributions from net interest income 2,001 19,573
Shares redeemed (24,109) (235,454)
Net increase (decrease) 226,167 $ 2,207,584
INSTITUTIONAL CLASS B 180,001 $ 1,800,010
Shares sold
Reinvestment of distributions from net interest income 5,760 56,011
Shares redeemed - -
Net increase (decrease) 185,761 $ 1,856,021
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
B SHARE TRANSACTIONS FOR CLASS B, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1996.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Advisor Series V and the Shareholders of Advisor
California Municipal Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series V: Fidelity Advisor California Municipal Income
Fund, including the schedule of portfolio investments, as of October 31,
1996, and the related statements of operations and changes in net assets
for the period February 20, 1996 (commencement of operations) to October
31, 1996 and the financial highlights of Class A, Class B, Class T and
Institutional Class for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series V: Fidelity Advisor California Municipal Income
Fund as of October 31, 1996, the results of its operations, and the changes
in its net assets for the period February 20, 1996 (commencement of
operations) to October 31, 1996 and the financial highlights of Class A,
Class B, Class T and Institutional Class for each of the periods indicated
therein, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 9, 1996
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
NEW YORK MUNICIPAL INCOME
FUND - INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 15 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 22 Notes to the financial statements.
REPORT OF INDEPENDENT 27 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 28
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:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and 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, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR NEW YORK 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at income to
measure performance. If Fidelity had not reimbursed certain Institutional
Class expenses during the periods shown, the total returns and dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - 5.28% 10.51%
Institutional Class
Lehman Brothers New York 4 Plus Year 6.02% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 4.89% n/a
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, or since the
fund started on August 21, 1995. For example, if you had invested $1,000 in
a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare Institutional Class' returns to
the Lehman Brothers New York 4 Plus Year Municipal Bond Index - a total
return performance benchmark for New York investment-grade municipal bonds
with maturities of at least four years. To measure how Institutional Class'
performance stacked up against its peers, you can compare it to the New
York municipal debt funds average, which reflects the performance of 99
mutual funds with similar objectives tracked by Lipper Analytical Services,
Inc. over the past 12 months. Both benchmarks include reinvested dividends
and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - 5.28% 8.68%
Institutional Class
Lehman Brothers New York 4 Plus Year 6.02% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 4.89% n/a
AVERAGE ANNUAL RETURNS take Institutional Class shares' actual (or
cumulative) return and show you what would have happened if Institutional
Class had performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA NY Muni CL I LB Municipal Bond Index
00661 LB015
1995/08/31 10000.00 10000.00
1995/09/30 10039.75 10063.30
1995/10/31 10216.57 10209.62
1995/11/30 10410.16 10379.00
1995/12/31 10519.29 10478.74
1996/01/31 10608.73 10557.85
1996/02/29 10517.31 10486.59
1996/03/31 10356.76 10352.57
1996/04/30 10312.58 10323.27
1996/05/31 10301.19 10319.14
1996/06/30 10431.54 10431.52
1996/07/31 10523.15 10526.45
1996/08/31 10492.40 10523.92
1996/09/30 10653.75 10671.25
1996/10/31 10756.24 10791.95
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Advisor New York Municipal Income Fund - Institutional Class on
August 31, 1995, shortly after the fund started. As the chart shows, by
October 31, 1996, the value of the investment would have grown to $10,756 -
a 7.56% increase on the initial investment. For comparison, look at how the
Lehman Brothers Municipal Bond Index, a total return performance benchmark
for investment-grade municipal bonds with maturities of at least one year,
did over the same period. With dividends reinvested, the same $10,000
investment would have grown to $10,792 - a 7.92% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMENT
1996 OF OPERATIONS) TO
OCTOBER 31,
1995
Dividend return 4.61% 0.96%
Capital appreciation return 0.67% 4.00%
Total return 5.28% 4.96%
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested.
DIVIDENDS AND YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.01(cents) 23.66(cents) 46.75(cents)
Annualized dividend rate 4.52% 4.55% 4.49%
30-day annualized yield 4.63% - -
30-day annualized tax-equivalent yield 8.18% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average share price of $10.44 over
the past month, $10.32 over the past six months, and $10.41 over the past
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 43.41% combined effective 1996 federal, state and New York City tax
bracket but does not reflect the payment of the federal alternative minimum
tax, if applicable. If Fidelity had not reimbursed certain Institutional
Class expenses during the period shown, the yield and the tax-equivalent
yield would have been 1.38% and 2.44%, respectively.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Municipal bonds benefited from
steady demand and relatively low
supply during much of the year
that ended October 31, 1996.
For the past 12 months, the
Lehman Brothers Municipal Bond
Index - a broad measure of the
municipal bond market - had a
total return of 5.70%. In
comparison, the Lehman Brothers
Aggregate Bond Index - a proxy
for investment-grade taxable
bonds - had a total return of
5.85%. Munis outperformed their
counterparts in the taxable
bond market for the first 10
months of the period. Factors
that helped munis included a lack
of supply of new issues, strong
demand for municipal bonds from
both insurance companies and
individual investors, and the
diminishing likelihood of
significant tax reform in the near
future. Like most domestic bonds,
munis were hurt by
stronger-than-expected signs of
strength in the economy earlier in
1996. Nevertheless, the market
conditions that supported the
muni market prevailed to the point
that munis entered the last two
months of the period trading at
expensive levels relative to their
taxable counterparts. At that point
and through the end of the period,
the performance of the municipal
market stalled somewhat, as
investor demand declined and
institutional investors sold off
some of their municipal bond
holdings to take profits.
An interview with Norman Lind, Portfolio Manager of Fidelity Advisor New
York Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the 12 months ending October 31, 1996, the fund's Institutional
Class shares provided a return of 5.28%. To measure how the fund stacked up
against its competition, the New York municipal debt funds average, as
monitored by Lipper Analytical Services, had a return of 4.89% over the
same period. The Lehman Brothers New York 4 Plus Year Municipal Bond Index
- - the fund's benchmark - had a return of 6.02% for the 12 months that ended
October 31.
Q. CAN YOU DESCRIBE HOW THE BOND MARKET'S BEHAVIOR OVER THE PAST YEAR
AFFECTED THE FUND'S PERFORMANCE?
A. The bond market had a somewhat schizophrenic nature during the period.
At the end of 1995, municipals were inexpensive relative to Treasuries,
influenced heavily by the whole tax reform movement and, specifically, by
the potential for a flat tax to become reality. There were a couple of
proposals being floated that would have affected the tax-exempt status of
municipals, and this raised caution flags among investors. As a result, the
municipal market lost some of its luster. Things continued to look bleak in
early 1996 as yields rose and employment reports indicated a very robust
economy.
Q. WHEN DID THE SITUATION START TO IMPROVE?
A. Municipals staged a mini-rally in the late spring/early summer of 1996.
This turnaround was attributed to a number of factors, including diminished
tax reform discussion, a favorable political scenario and some positive
government reports, most notably the Kemp Commission findings that
contained no direct recommendations on the municipal market. These
developments allowed the municipal market to breathe a sigh of relief. As
the period came to a close, Treasuries were outperforming municipals, but I
think this was a natural correction. Yield spreads had been looking a bit
rich, and I believe this swing helped even them out some.
Q. HOW ABOUT NEW YORK? DID THE UNCERTAINTY OF THE OVERALL MUNICIPAL MARKET
SPREAD TO THE STATE AS WELL?
A. Most of the uncertainty within the state surrounded the legislature's
continued inability to display a sense of urgency in adopting a budget. New
York is perennially late with its budget, but it set new records for
tardiness in the first half of the period. Governor Pataki's proposals -
specifically those concerning Medicaid and welfare reform - were contingent
upon the approval of the federal budget, which was also delayed. We
witnessed the same types of problems within New York City, where a good
amount of budget wrangling occurred. Budget difficulties, however, can
sometimes help bond performance because they restrict new bond issuance.
So, despite these fiscal obstacles, both state and New York City
obligations performed quite well.
Q. IN TERMS OF PORTFOLIO STRUCTURE, WHICH STRATEGIES WORKED OUT WELL? WHICH
PROVED DISAPPOINTING?
A. In the early part of the period, I built up the fund's exposure to
state-appropriated bonds. My thinking there was that the budget would
inevitably be pushed back, and we'd see less supply due to a lack of new
issuance. This move turned out to be beneficial to the fund's performance.
On the other hand, I kept the fund's exposure to New York City bonds at a
minimum due to concerns I had over the city's financial condition. As the
market improved in the summertime and yields dropped, New York City issues
performed quite well. Due to my low exposure, however, I wasn't able to
capitalize on that situation.
Q. WHAT'S IN STORE FOR THE STATE AND THE MUNICIPAL MARKET OVER THE COMING
MONTHS?
A. I think the muni market's in pretty good shape. Municipals should remain
stable and stay in line more or less with the general bond market. In New
York, it's quite possible that we'll see an instant replay of what we've
just seen. A wide range of issues needs to be worked out before I decide
which types of bonds I'd like to add to the portfolio. We could be in for
some interesting plot twists within the state.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: a high level of current
income free from federal
income tax and New York state
and city personal income tax
by investing primarily in
municipal securities
START DATE: August 21, 1995
SIZE: as of October 31, 1996,
more than $7 million
MANAGER: Norman Lind,
since 1995; manager, Fidelity
New York Municipal Income
Fund and Spartan New York
Municipal Income Fund, since
1993; Fidelity New York
Insured Municipal Income
Fund, since 1994; Spartan
Short-Intermediate Municipal
Income Fund, Spartan New
York Intermediate Municipal
Income Fund, Spartan
Intermediate Municipal Income
Fund and Fidelity Advisor
Short-Intermediate Municipal
Income Fund, since 1995;
joined Fidelity in 1986
(checkmark)
NORM LIND ON SOME
WELCOME CHANGES IN NEW
YORK:
"New York is both an
interesting and challenging
state in which to invest.
Historically, the state has
been regarded as being very
generous in terms of welfare
and public care funding. This
past year, however, saw
diminished financial
assistance in those areas.
Expenses were lower and, for
the second year in a row,
budget costs were down,
which is quite astounding. I
think lawmakers are finally
realizing that maybe
government can't do
everything, so they're cutting
back on certain programs. As
a manager, that's a trend that
I'd like to see continue. New
York City has done a
wonderful job of publicizing
itself as a kinder, gentler place
to visit and conduct business.
We've seen signs that the
economy is improving -
most notably growth in the
advertising, high tech and
movie industries. Tourism is
also booming - whenever I
want to go to New York to talk
to issuers, I need to book a
hotel room weeks in advance.
A huge part of this renewed
attractiveness is the fact
that the crime rate has
declined. New York City can
still be somewhat intimidating,
but it is perceived as being
safer than it was five years
ago. The city's efforts in trying
to improve the climate have
not gone unnoticed."
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
General Obligation 48.2 44.7
Water & Sewer 14.7 14.6
Transportation 11.1 9.0
Special Tax 11.1 12.1
Electric Revenue 5.4 12.2
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1996
Years 13.3 13.4
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF OCTOBER 31, 1996
Years 8.0 7.8
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 THE ABOVE EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF OCTOBER 31, 1996 AS OF APRIL 30, 1996
Aaa 40.0%
Aa, A 32.4%
Baa 23.5%
Ba, B 0.0%
Non-rated 0.0%
Short-term investments 4.1%
Aaa 42.4%
Aa, A 29.4%
Baa 19.1%
Ba, B 0.0%
Non-rated 0.0%
Short-term investments 9.1%
Row: 1, Col: 1, Value: 40.0
Row: 1, Col: 2, Value: 32.4
Row: 1, Col: 3, Value: 23.5
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 4.1
Row: 1, Col: 1, Value: 42.4
Row: 1, Col: 2, Value: 29.4
Row: 1, Col: 3, Value: 19.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 9.1
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 95.9%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
NEW YORK - 94.6%
Albany County Gen. Oblig.
5.75% 6/1/09 (FGIC Insured) (c) Aaa $ 200,000 $ 205,000
Brookhaven Gen. Oblig.
5.375% 10/1/05 (FGIC Insured) Aaa 205,000 209,612
Broome County Gen. Oblig.
7.40% 4/15/01 (FGIC Insured) Aaa 200,000 221,500
Erie County Gen. Oblig. Series B,
5.60% 6/15/10 (FGIC Insured) Aaa 100,000 101,125
Metropolitan Trans. Auth. Svc. Contract
(Commuter Facs.) Series O, 5.75% 7/1/13 Baa1 400,000 397,000
Monroe County Gen. Oblig. 6.50% 6/1/04 Aa 100,000 110,375
Monroe County Pub. Impt.
5.25% 6/1/08 (FGIC Insured) Aaa 100,000 100,000
Nassau County Combined Swr. Dist. Rfdg.
Series F, 5.10% 7/1/05 (MBIA Insured) Aaa 230,000 231,725
New York City Muni. Assistance Corp.
6% 7/1/05 Aa 300,000 324,750
New York City Muni. Wtr. Fin. Auth. Wtr. &
Swr. Sys. Rev Series A:
5.50% 6/15/20 A 200,000 191,500
6% 6/15/25 A 275,000 278,438
New York Gen. Oblig.:
Series A-1, 6.50% 8/1/16 Baa1 200,000 203,750
Series B, 6.20% 8/15/06 Baa1 90,000 91,685
Series C, 6.40% 8/1/03 Baa1 150,000 157,687
Series D, 6% 2/15/16 Baa1 275,000 267,438
New York State Dorm. Auth. Lease Rev.
(State Univ.) 6% 7/1/03 (AMBAC Insured) Aaa 150,000 161,250
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.) Series A:
6.50% 5/15/05 Baa1 200,000 213,750
6.50% 5/15/06 Baa1 100,000 106,750
(City Univ. Sys. Consolidated) Series C,
6% 7/1/03 (AMBAC Insured) Aaa 200,000 215,500
(FIT Student Hsg. Corp.) 5.75% 7/1/05
(AMBAC Insured) Aaa 125,000 131,406
(Strong Memorial Hospital) 5.10% 7/1/04 A1 100,000 101,250
New York State Energy Research & Dev. Auth.
Facs. Rev. Rfdg. (Consolidated Edison Co.)
Series A, 6.10% 8/15/20 A1 100,000 101,750
New York State Envir. Facs. Corp. Poll. Cont. Rev.:
(New York State Wtr. Revolving Fund/Pooled
Loan) Series B, 5.90% 11/15/14 Aaa 150,000 153,750
6.40% 11/15/06 Aaa 100,000 111,250
New York State Local Gov't. Assistance Corp.:
Series A, 6% 4/1/24 A 255,000 257,231
Series B, 6% 4/1/18 A 225,000 227,250
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
New York State Mtg. Agcy. Rev. (Homeowner Mtg.)
Series 49, 5.85% 10/1/17 Aa $ 100,000 $ 100,000
New York State Pwr. Auth. Rev. Rfdg. & Gen.
Purpose Series CC, 5.125% 1/1/11 Aa 200,000 194,250
New York State Tollway Auth. Hwy. &
Bridge Trust Fund:
6% 4/1/03 (AMBAC Insured) Aaa 210,000 224,963
6% 4/1/04 (MBIA Insured) Aaa 100,000 107,500
New York State Urban Dev. Corp. Rev.:
Rfdg. 5.75% 4/1/11 Baa1 185,000 185,231
(Correctional Cap. Facs.) Series 6,
5.375% 1/1/15 Baa1 100,000 92,625
Series A, 6.25% 4/1/05 (MBIA Insured) Aaa 150,000 164,250
Shelter Island Unified Free School Dist. #1
6.20% 12/15/08 (AMBAC Insured) Aaa 160,000 171,000
Suffolk County Gen. Oblig. 5% 10/15/03
(AMBAC Insured) Aaa 180,000 183,150
Suffolk County Wtr. Auth. 6% 6/1/17
(MBIA Insured) Aaa 100,000 106,750
Syracuse Gen. Oblig. 7.70% 12/1/99
(MBIA Insured) Aaa 120,000 130,650
Triborough Bridge & Tunnel Auth. Rev. Rfdg.
(Gen. Purpose) Series Y, 6% 1/1/12 Aa 365,000 386,900
6,919,991
NEW YORK& NEW JERSEY - 1.3%
New York & New Jersey Port Auth.
Consolidated 85th Series, 5.375% 3/1/28 A1 100,000 96,750
TOTAL MUNICIPAL BONDS
(Cost $6,911,839) 7,016,741
MUNICIPAL NOTES (A) - 4.1%
NEW YORK - 4.1%
New York City Hsg. Dev. Corp. Residential Rev.
(East 17th Street Properties)
Series 93-A, 3.60%, LOC Chase Manhattan
Bank, VRDN A-1 100,000 100,000
New York State Energy Research & Dev.
Auth. Poll. Cont. Rev. (Niagara Mohawk
Pwr. Corp.) VRDN:
Series 1985 B, 3.60%
LOC Toronto Dominion Bank, Canada P-1 100,000 100,000
MUNICIPAL NOTES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
New York State Energy Research & Dev.
Auth. Poll. Cont. Rev. (Niagara Mohawk
Pwr. Corp.) VRDN: - continued
Series 1985 C, 3.60%, LOC Canadian
Imperial Bank of Commerce P-1 $ 100,000 $ 100,000
TOTAL MUNICIPAL NOTES
(Cost $300,000) 300,000
TOTAL INVESTMENTS - 100%
(Cost $7,211,839) $ 7,316,741
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
2 Municipal Bond Contracts Dec. 1996 $ 231,750 $ 1,263
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 3.2%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
3. A portion of the Security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $51,250.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $7,211,839. Net unrealized appreciation aggregated
$104,902, of which $132,883 related to appreciated investment securities
and $27,981 related to depreciated investment securities.
During fiscal year ended October 31,1996, 100% of the fund's income
dividends was free from federal income tax, and 0.09% of the fund's income
dividends was subject to the federal alternative minimum tax.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 72.4% AAA, AA, A 71.1%
Baa 23.5% BBB 23.5%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 48.2%
Water & Sewer 14.7
Transportation 11.1
Special Tax 11.1
Electric Revenue 5.4
Education 5.4
Others (individually less than 5%) 4.1
TOTAL 100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value (cost $7,211,839) - $ 7,316,741
See accompanying schedule
Cash 29,073
Receivable for fund shares sold 14,476
Interest receivable 110,376
Receivable for daily variation on futures contracts 1,250
Prepaid expenses 33,390
Receivable from investment adviser for expense 25,680
reductions
TOTAL ASSETS 7,530,986
LIABILITIES
Payable for investments purchased $ 92,925
Distributions payable 7,262
Accrued management fee 2,381
Other payables and accrued expenses 38,479
TOTAL LIABILITIES 141,047
NET ASSETS $ 7,389,939
Net Assets consist of:
Paid in capital $ 7,246,473
Accumulated undistributed net realized gain (loss) 37,301
on investments
Net unrealized appreciation (depreciation) on 106,165
investments
NET ASSETS $ 7,389,939
CLASS A: $10.49
NET ASSET VALUE, offering price and redemption price per
share ($102,348 (divided by) 9,758 shares)
Maximum offering price per share (100/95.75 of $10.49) $10.96
CLASS B: $10.47
NET ASSET VALUE and offering price per share
($2,444,721 (divided by) 233,465 shares) A
CLASS T: $10.48
NET ASSET VALUE and redemption price per share
($4,124,565 (divided by) 393,504 shares)
Maximum offering price per share (100/96.50 of $10.48) $10.86
INSTITUTIONAL CLASS: $10.47
NET ASSET VALUE, offering price and redemption price per
share ($718,305 (divided by) 68,606 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INTEREST INCOME $ 322,982
EXPENSES
Management fee $ 24,300
Transfer agent fees 56
Class A
Class B 3,198
Class T 4,809
Institutional Class 1,045
Distribution fees 24
Class A
Class B 17,620
Class T 8,737
Accounting fees and expenses 58,926
Non-interested trustees' compensation 24
Custodian fees and expenses 635
Registration fees 8,221
Class A
Class B 16,719
Class T 16,104
Institutional Class 13,028
Audit 25,183
Legal 41
Miscellaneous 105
Total expenses before reductions 198,775
Expense reductions (128,630) 70,145
NET INTEREST INCOME 252,837
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 41,674
Futures contracts (2,554) 39,120
Change in net unrealized appreciation (depreciation) on:
Investment securities 4,114
Futures contracts 1,263 5,377
NET GAIN (LOSS) 44,497
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 297,334
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMENT
1996 OF OPERATIONS) TO
OCTOBER 31,
1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 252,837 $ 22,944
Net interest income
Net realized gain (loss) 39,120 -
Change in net unrealized appreciation (depreciation) 5,377 100,788
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 297,334 123,732
FROM OPERATIONS
Distributions to shareholders (707) -
From net interest income
Class A
Class B (70,019) (6,231)
Class T (150,521) (10,525)
Institutional Class (31,590) (6,188)
TOTAL DISTRIBUTIONS (252,837) (22,944)
Share transactions - net increase (decrease) 3,469,707 3,774,947
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,514,204 3,875,735
NET ASSETS
Beginning of period 3,875,735 -
End of period $ 7,389,939 $ 3,875,735
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.29
Income from Investment Operations
Net Interest income .072
Net realized and unrealized gain (loss) .200
Total from investment operations .272
Less Distributions
From net interest income (.072)
Net asset value, end of period $ 10.49
TOTAL RETURN B 2.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 102
Ratio of expenses to average net assets .90% A,
C
Ratio of net interest income to average net assets 4.43% A
Portfolio turnover rate 17% A
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMEN
T OF OPERATIONS)
TO OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.390 $ 10.000
Income from Investment Operations
Net interest income .375 .074
Net realized and unrealized gain (loss) .080 .390
Total from investment operations .455 .464
Less Distributions
From net interest income (.375) (.074)
Net asset value, end of period $ 10.470 $ 10.390
TOTAL RETURN B 4.46% 4.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,445 $ 1,161
Ratio of expenses to average net assets 1.66% C 1.75% A,
C
Ratio of expenses to average net assets after expense 1.62% D 1.75% A
reductions
Ratio of net interest income to average net assets 3.62% 3.52% A
Portfolio turnover rate 17% 0%
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMEN
T OF OPERATIONS)
TO
OCTOBER 31,
1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.400 $ 10.000
Income from Investment Operations
Net interest income .444 .084
Net realized and unrealized gain (loss) .080 .400
Total from investment operations .524 .484
Less Distributions
From net interest income (.444) (.084)
Net asset value, end of period $ 10.480 $ 10.400
TOTAL RETURN B 5.15% 4.85%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 4,125 $ 2,033
Ratio of expenses to average net assets 1.00% C 1.00% A,
C
Ratio of expenses to average net assets after expense .97% D 1.00% A
reductions
Ratio of net interest income to average net assets 4.30% 4.16% A
Portfolio turnover rate 17% 0%
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMEN
T OF OPERATIONS)
TO
OCTOBER 31,
1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.400 $ 10.000
Income from Investment Operations
Net interest income .468 .095
Net realized and unrealized gain (loss) .070 .400
Total from investment operations .538 .495
Less Distributions
From net interest income (.468) (.095)
Net asset value, end of period $ 10.470 $ 10.400
TOTAL RETURN B 5.28% 4.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 718 $ 683
Ratio of expenses to average net assets .75% C .75% A,
C
Ratio of expenses to average net assets after expense .68% D .75% A
reductions
Ratio of net interest income to average net assets 4.53% 4.75% A
Portfolio turnover rate 17% 0%
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
</TABLE>
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor New York Municipal Income Fund (the fund) is a fund of
Fidelity Advisor Series V (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class B, Class T, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
The fund commenced sale of a new Class A of shares on September 3, 1996. On
this date, the original Class A was renamed Class T. Investment income,
realized and unrealized capital gains and losses, the common expenses of
the fund, and certain fund-level expense reductions are allocated on a pro
rata basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. 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. 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. 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.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying each class
and shares of each class for distribution
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
PREPAID EXPENSES - CONTINUED
under federal and state securities law. These expenses are borne by each
class and amortized over one year.
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 are declared
separately for each class, while capital gain distributions are declared at
the fund level and allocated to each class on a pro rata basis based on the
number of shares held by each class on the ex-dividend date.
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 certain
futures and options transactions, market discount and excise tax
regulations.
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 investment income and realized
and unrealized gain (loss). 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.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period
end, is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $4,749,734 and $958,028, respectively.
3. PURCHASES AND SALES OF INVESTMENTS - CONTINUED
The market value of futures contracts opened and closed during the period
amounted to $566,889 and $333,848, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .25%. For
the period, the management fee was equivalent to an annual rate of .40% of
average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares (Class A Plan), Class B shares (Class B Plan),
Class T shares (Class T Plan), and Institutional Class shares (collectively
referred to as "the Plans"). Under the Class A, Class B, and Class T Plans,
the fund pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution and
service fee. This fee is based on annual rates of .15%, .90% (of which .65%
represents a distribution fee and .25% represents a shareholder service
fee), and .25% of the average net assets of the Class A, Class B and Class
T shares, respectively. For the period, the fund paid FDC $24, $17,620, and
$8,737 under the Class A, Class B and Class T Plans, of which $24, $4,825,
and $8,737 were paid to securities dealers, banks and other financial
institutions for the distribution of Class A, Class B and Class T shares,
and providing shareholder support services.
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
Class T, and Institutional Class shares. The Plans also authorize payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 4.25% and 3.50%
(4.75% prior to January 1, 1996) for selling Class A and Class T shares of
the fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within five years of
purchase. The Class B charge is based on declining rates which range from
4% to 1% of the lesser of the cost of shares at the initial date of
purchase or the net asset value of the redeemed shares, excluding any
reinvested dividends and capital gains.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received sales charges of $27 and $94,802 on sales of
Class A and Class T shares of the fund, of which $23 and $90,622 were paid
to securities dealers, banks, and other financial institutions. FDC also
received contingent deferred sales charges of $4,097 on Class B share
redemptions from the fund. When Class B shares are sold, FDC pays
commissions from its own resources to dealers through which the sales are
made.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class B, Class T, and Institutional Class shares. UMB has entered into
sub-arrangements with Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, with respect to all classes of the fund to
perform the transfer, dividend disbursing, and shareholder servicing agent
functions. FIIOC receives account fees and asset-based fees that vary
according to the account size and type of account of the shareholders of
the respective classes of the fund. All fees are paid to FIIOC by UMB,
which is reimbursed by the fund for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except proxy
statements.
UMB also has a sub-contract with Fidelity Service Co. (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.
For the period, the transfer agent fees were equivalent to annual rates of
.35%, .17%, .14%, and .15% of the average net assets of Class A, Class B,
Class T and Institutional Class, respectively.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above annual rates
of .90%, 1.65%, 1.00% and .75% of average net assets for Class A, Class B,
Class T, and Institutional Class, respectively. For the period, the
reimbursement reduced expenses by $8,408, $39,715, $56,858, and $21,447 for
Class A, Class B, Class T, and Institutional Class, respectively.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of expenses. During the period, the fund's custodian
fees were reduced by $1,371 under the custodian arrangement and Class B,
Class T and Institutional Class expenses were reduced by $290, $223 and
$318, respectively, under the transfer agent arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 42% of the total outstanding shares.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 B 1996 1995 B
CLASS A A 9,691 - $ 99,722 $ -
Shares sold
Reinvestment of distributions 67 - 699 -
Shares redeemed - - - -
Net increase (decrease) 9,758 - $ 100,421 $ -
CLASS B 133,150 111,132 $ 1,388,144 $ 1,123,890
Shares sold
Reinvestment of distributions 4,418 537 45,991 5,564
Shares redeemed (15,772) - (161,162) -
Net increase (decrease) 121,796 111,669 $ 1,272,973 $ 1,129,454
CLASS T 226,391 194,544 $ 2,359,874 $ 1,979,912
Shares sold
Reinvestment of distributions 11,198 904 116,533 9,361
Shares redeemed (39,533) - (411,400) -
Net increase (decrease) 198,056 195,448 $ 2,065,007 $ 1,989,273
INSTITUTIONAL CLASS - 65,001 $ - $ 650,032
Shares sold
Reinvestment of distributions 3,003 602 31,306 6,188
Shares redeemed - - - -
Net increase (decrease) 3,003 65,603 $ 31,306 $ 656,220
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
B SHARE TRANSACTIONS FOR CLASS B, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD AUGUST 21, 1995 (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1995.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Advisor Series V and the Shareholders of Advisor New
York Municipal Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series V: Fidelity Advisor New York Municipal Income Fund,
including the schedule of portfolio investments, as of October 31, 1996,
and the related statement of operations for the year then ended, the
statement of changes in net assets for the year ended October 31, 1996 and
for the period August 21, 1995 (commencement of operations) to October 31,
1995 and the financial highlights of Class A, Class B, Class T and
Institutional Class for the periods indicated therein. These financial
statements and financial highlights are the responsibility of the fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series V: Fidelity Advisor New York Municipal Income
Fund as of October 31, 1996, the results of its operations for the year
then ended, the changes in its net assets for the year ended October 31,
1996 and for the period August 21, 1995 (commencement of operations) to
October 31, 1995 and the financial highlights of Class A, Class B, Class T
and Institutional Class for the periods indicated therein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 9, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor New York 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:
PAY DATE RECORD DATE CAPITAL GAINS
Class A 12/9/96 12/6/96 $.06
Class B 12/9/96 12/6/96 $.06
Class T 12/9/96 12/6/96 $.06
Institutional Class 12/9/96 12/6/96 $.06
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Intitutional Operations Company
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
NEW YORK MUNICIPAL INCOME
FUND - CLASS A, CLASS T (FORMERLY CLASS A), AND CLASS B
ANNUAL REPORT
OCTOBER 31, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 15 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 18 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 19 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 23 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 30 Notes to the financial statements.
REPORT OF INDEPENDENT 35 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 36
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:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and 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, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR NEW YORK 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at the class'
income 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's 0.25% 12b-1 fee. If Fidelity had not reimbursed
certain Class A expenses during the periods shown, the total returns and
dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - Class A 5.23% 10.33%
Advisor New York Municipal Income - Class A 0.76% 5.65%
(incl. max. 4.25% sales charge)
Lehman Brothers New York 4 Plus Year 6.02% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 4.89% n/a
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
August 21,1995. For example, if you had invested $1,000 in a fund that had
a 5% return over the past year, the value of your investment would be
$1,050. You can compare Class A's returns to the Lehman Brothers New York 4
Plus Year Municipal Bond Index - a total return performance benchmark for
New York investment-grade municipal bonds with maturities of at least four
years. To measure how Class A's performance stacked up against its peers,
you can compare it to the New York municipal debt funds average, which
reflects the performance of 99 mutual funds with similar objectives tracked
by Lipper Analytical Services, Inc. over the past 12 months. Both
benchmarks include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - Class A 5.23% 8.54%
Advisor New York Municipal Income - Class A 0.76% 4.68%
(incl. max. 4.25% sales charge)
Lehman Brothers New York 4 Plus Year 6.02% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 4.89% n/a
AVERAGE ANNUAL RETURNS take Class A shares' actual (or cumulative) return
and show you what would have happened if Class A had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA NY Muni CL A LB Municipal Bond Index
00259 LB015
1995/08/31 9575.00 10000.00
1995/09/30 9608.44 10063.30
1995/10/31 9782.33 10209.62
1995/11/30 9955.05 10379.00
1995/12/31 10066.46 10478.74
1996/01/31 10140.36 10557.85
1996/02/29 10050.67 10486.59
1996/03/31 9895.76 10352.57
1996/04/30 9854.03 10323.27
1996/05/31 9852.04 10319.14
1996/06/30 9974.68 10431.52
1996/07/31 10069.64 10526.45
1996/08/31 10028.47 10523.92
1996/09/30 10177.83 10671.25
1996/10/31 10293.98 10791.95
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Advisor New York Municipal Income Fund - Class A on August 31,
1995, shortly after the fund started, and the current maximum 4.25% sales
charge was paid. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $10,294 - a 2.94% increase on the initial
investment. For comparison, look at how the Lehman Brothers Municipal Bond
Index, a total return performance benchmark for investment-grade municipal
bonds with maturities of at least one year, did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$10,792- a 7.92% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMENT
1996 OF OPERATIONS) TO
OCTOBER 31,
1995
Dividend return 4.36% 0.85%
Capital appreciation return 0.87% 4.00%
Total return 5.23% 4.85%
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any, and exclude the effects of sales charges.
DIVIDENDS AND YIELD
PERIOD ENDED OCTOBER 31, 1996 PAST LIFE OF
MONTH CLASS
Dividends per share 3.88(cents) 7.20(cents)
Annualized dividend rate 4.38% 4.36%
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 $10.44 over
the past month, and $10.39 over the life of the class, you can compare the
class' income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. Yield
information will be reported once Class A has a longer, more stable,
operating history.
ADVISOR NEW YORK 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at the class'
income to measure performance. If Fidelity had not reimbursed certain Class
T expenses during the periods shown, the total returns and dividends would
have been lower. Effective January 1, 1996, the maximum 4.75% sales charge
on Class T shares was reduced to 3.50%.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - Class 5.15% 10.25%
T
Advisor New York Municipal Income - Class T 1.47% 6.39%
(incl. max. 3.50% sales charge)
Lehman Brothers New York 4 Plus Year 6.02% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 4.89% n/a
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
August 21, 1995. For example, if you had invested $1,000 in a fund that had
a 5% return over the past year, the value of your investment would be
$1,050. You can compare Class T's returns to the Lehman Brothers New York 4
Plus Year Municipal Bond Index - a total return performance benchmark for
New York investment-grade municipal bonds with maturities of at least four
years. To measure how Class T's performance stacked up against its peers,
you can compare it to the New York municipal debt funds average, which
reflects the performance of 99 mutual funds with similar objectives tracked
by Lipper Analytical Services, Inc. over the past 12 months. Both
benchmarks include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - Class T 5.15% 8.47%
Advisor New York Municipal Income - Class T 1.47% 5.30%
(incl. max. 3.50% sales charge)
Lehman Brothers New York 4 Plus Year 6.02% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 4.89% n/a
AVERAGE ANNUAL RETURNS take Class T shares' actual (or cumulative) return
and show you what would have happened if Class T had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA NY Muni CL T LB Municipal Bond Index
00611 LB015
1995/08/31 9650.00 10000.00
1995/09/30 9683.70 10063.30
1995/10/31 9858.95 10209.62
1995/11/30 10033.03 10379.00
1995/12/31 10145.31 10478.74
1996/01/31 10219.78 10557.85
1996/02/29 10129.39 10486.59
1996/03/31 9973.27 10352.57
1996/04/30 9931.21 10323.27
1996/05/31 9929.20 10319.14
1996/06/30 10052.81 10431.52
1996/07/31 10148.51 10526.45
1996/08/31 10107.02 10523.92
1996/09/30 10270.22 10671.25
1996/10/31 10366.76 10791.95
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Advisor New York Municipal Income Fund - Class T on August 31,
1995, shortly after the fund started, and the current maximum 3.50% sales
charge was paid. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $10,367 - a 3.67% increase on the initial
investment. For comparison, look at how the Lehman Brothers Municipal Bond
Index, a total return performance benchmark for investment-grade municipal
bonds with maturities of at least one year, did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$10,792 - a 7.92% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMENT
1996 OF OPERATIONS) TO
OCTOBER 31,
1995
Dividend return 4.38% 0.85%
Capital appreciation return 0.77% 4.00%
Total return 5.15% 4.85%
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any, and exclude the effects of sales charges.
DIVIDENDS AND YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.80(cents) 22.50(cents) 44.43(cents)
Annualized dividend rate 4.29% 4.32% 4.27%
30-day annualized yield 4.22% - -
30-day annualized tax-equivalent yield 7.46% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average share price of $10.44 over
the past month, $10.32 over the past six months, and $10.40 over the past
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 maximum 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 43.41%
combined effective 1996 federal, state and New York City tax bracket but
does not reflect the payment of the federal alternative minimum tax, if
applicable. If Fidelity had not reimbursed certain Class T expenses during
the period shown, the yield and the tax-equivalent yield would have been
3.23% and 5.71%, respectively.
ADVISOR NEW YORK 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). You can also look at the class'
income to measure performance. Class B's contingent deferred sales charges
included in the past one year and life of fund total return figures are 4%
and 3%, respectively. If Fidelity had not reimbursed certain Class B
expenses during the periods shown, the total returns and dividends would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - Class B 4.46% 9.32%
Advisor New York Municipal Income - Class B 0.46% 6.32%
(incl. contingent deferred sales charge)
Lehman Brothers New York 4 Plus Year 6.02% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 4.89% n/a
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
August 21, 1995. For example, if you had invested $1,000 in a fund that had
a 5% return over the past year, the value of your investment would be
$1,050. You can compare Class B's returns to the Lehman Brothers New York 4
Plus Year Municipal Bond Index - a total return performance benchmark for
New York investment-grade municipal bonds with maturities of at least four
years. To measure how Class B's performance stacked up against its peers,
you can compare it to the New York municipal debt funds average, which
reflects the performance of 99 mutual funds with similar objectives tracked
by Lipper Analytical Services, Inc. over the past 12 months. Both
benchmarks include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - Class B 4.46% 7.71%
Advisor New York Municipal Income - Class B 0.46% 5.24%
(incl. contingent deferred sales charge)
Lehman Brothers New York 4 Plus Year 6.02% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 4.89% n/a
AVERAGE ANNUAL RETURNS take Class B shares' actual (or cumulative) return
and show you what would have happened if Class B had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
FA NY Muni CL B LB Municipal Bond Index
00612 LB015
1995/08/31 10000.00 10000.00
1995/09/30 10031.16 10063.30
1995/10/31 10198.61 10209.62
1995/11/30 10382.57 10379.00
1995/12/31 10481.89 10478.74
1996/01/31 10553.22 10557.85
1996/02/29 10464.34 10486.59
1996/03/31 10297.37 10352.57
1996/04/30 10238.77 10323.27
1996/05/31 10231.09 10319.14
1996/06/30 10353.23 10431.52
1996/07/31 10446.48 10526.45
1996/08/31 10397.80 10523.92
1996/09/30 10560.15 10671.25
1996/10/31 10253.60 10791.95
IMATRL PRASUN SHR__CHT 19960930 19961009 151629 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Advisor New York Municipal Income Fund - Class B on August 31,
1995, shortly after the fund started and the applicable contingent deferred
sales charge was paid. As the chart shows, by October 31, 1996, the value
of the investment would have grown to $10,254 - a 2.54% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index, a total return performance benchmark for
investment-grade municipal bonds with maturities of at least one year, did
over the same period. With dividends reinvested, the same $10,000
investment would have grown to $10,792 - a 7.92% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMENT
1996 OF OPERATIONS) TO
OCTOBER 31,
1995
Dividend return 3.69% 0.75%
Capital appreciation return 0.77% 3.90%
Total return 4.46% 4.65%
DIVIDEND returns and capital appreciation returns are both part of a class'
total return. A dividend return reflects the actual dividends paid by the
class. A capital appreciation return reflects both the amount paid by the
class to shareholders as capital gain distributions and changes in the
class' share price. Both returns assume the dividends or gains are
reinvested, if any, and exclude the effects of sales charges.
DIVIDENDS AND YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.21(cents) 19.13(cents) 37.51(cents)
Annualized dividend rate 3.62% 3.68% 3.61%
30-day annualized yield 3.73% - -
30-day annualized tax-equivalent yield 6.59% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average share price of $10.43 over
the past month, $10.31 over the past six months, and $10.40 over the past
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 43.41% combined effective 1996 federal, state and New York City tax
bracket but does not reflect the payment of the federal alternative minimum
tax, if applicable. If Fidelity had not reimbursed certain Class B expenses
during the period shown, the yield and the tax-equivalent yield would have
been 2.21% and 3.91%, respectively. The offering share price used in the
calculation of the yield excludes the effect of Class B's contingent
deferred sales charge.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Municipal bonds benefited from
steady demand and relatively low
supply during much of the year
that ended October 31, 1996.
For the past 12 months, the
Lehman Brothers Municipal Bond
Index - a broad measure of the
municipal bond market - had a
total return of 5.70%. In
comparison, the Lehman Brothers
Aggregate Bond Index - a proxy
for investment-grade taxable
bonds - had a total return of
5.85%. Munis outperformed their
counterparts in the taxable
bond market for the first 10
months of the period. Factors
that helped munis included a lack
of supply of new issues, strong
demand for municipal bonds from
both insurance companies and
individual investors, and the
diminishing likelihood of
significant tax reform in the near
future. Like most domestic bonds,
munis were hurt by
stronger-than-expected signs of
strength in the economy earlier in
1996. Nevertheless, the market
conditions that supported the
muni market prevailed to the point
that munis entered the last two
months of the period trading at
expensive levels relative to their
taxable counterparts. At that point
and through the end of the period,
the performance of the municipal
market stalled somewhat, as
investor demand declined and
institutional investors sold off
some of their municipal bond
holdings to take profits.
An interview with Norman Lind, Portfolio Manager of Fidelity Advisor New
York Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the 12 months ending October 31, 1996, the fund's Class A, Class T
and Class B shares generated returns of 5.23%, 5.15%, and 4.46%,
respectively. To gauge how the fund did relative to its peer group, the New
York municipal debt funds average had a return of 4.89% over the same time,
as tracked by Lipper Analytical Services. The fund's benchmark, the Lehman
Brothers New York 4 Plus Year Municipal Bond Index, had a 12-month return
of 6.02% as of October 31.
Q. CAN YOU DESCRIBE HOW THE BOND MARKET'S BEHAVIOR OVER THE PAST YEAR
AFFECTED THE FUND'S PERFORMANCE?
A. The bond market had a somewhat schizophrenic nature during the period.
At the end of 1995, municipals were inexpensive relative to Treasuries,
influenced heavily by the whole tax reform movement and, specifically, by
the potential for a flat tax to become reality. There were a couple of
proposals being floated that would have affected the tax-exempt status of
municipals, and this raised caution flags among investors. As a result, the
municipal market lost some of its luster. Things continued to look bleak in
early 1996 as yields rose and employment reports indicated a very robust
economy.
Q. WHEN DID THE SITUATION START TO IMPROVE?
A. Municipals staged a mini-rally in the late spring/early summer of 1996.
This turnaround was attributed to a number of factors, including diminished
tax reform discussion, a favorable political scenario and some positive
government reports, most notably the Kemp Commission findings that
contained no direct recommendations on the municipal market. These
developments allowed the municipal market to breathe a sigh of relief. As
the period came to a close, Treasuries were outperforming municipals, but I
think this was a natural correction. Yield spreads had been looking a bit
rich, and I believe this swing helped even them out some.
Q. HOW ABOUT NEW YORK? DID THE UNCERTAINTY OF THE OVERALL MUNICIPAL MARKET
SPREAD TO THE STATE AS WELL?
A. Most of the uncertainty within the state surrounded the legislature's
continued inability to display a sense of urgency in adopting a budget. New
York is perennially late with its budget, but it set new records for
tardiness in the first half of the period. Governor Pataki's proposals -
specifically those concerning Medicaid and welfare reform - were contingent
upon the approval of the federal budget, which was also delayed. We
witnessed the same types of problems within New York City, where a good
amount of budget wrangling occurred. Budget difficulties, however, can
sometimes help bond performance because they restrict new bond issuance.
So, despite these fiscal obstacles, both state and New York City
obligations performed quite well.
Q. IN TERMS OF PORTFOLIO STRUCTURE, WHICH STRATEGIES WORKED OUT WELL? WHICH
PROVED DISAPPOINTING?
A. In the early part of the period, I built up the fund's exposure to
state-appropriated bonds. My thinking there was that the budget would
inevitably be pushed back, and we'd see less supply due to a lack of new
issuance. This move turned out to be beneficial to the fund's performance.
On the other hand, I kept the fund's exposure to New York City bonds at a
minimum due to concerns I had over the city's financial condition. As the
market improved in the summertime and yields dropped, New York City issues
performed quite well. Due to my low exposure, however, I wasn't able to
capitalize on that situation.
Q. WHAT'S IN STORE FOR THE STATE AND THE MUNICIPAL MARKET OVER THE COMING
MONTHS?
A. I think the muni market's in pretty good shape. Municipals should remain
stable and stay in line more or less with the general bond market. In New
York, it's quite possible that we'll see an instant replay of what we've
just seen. A wide range of issues needs to be worked out before I decide
which types of bonds I'd like to add to the portfolio. We could be in for
some interesting plot twists within the state.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: a high level of current
income free from federal
income tax and New York state
and city personal income tax
by investing primarily in
municipal securities
START DATE: August 21, 1995
SIZE: as of October 31, 1996,
more than $7 million
MANAGER: Norman Lind,
since 1995; manager, Fidelity
New York Municipal Income
Fund and Spartan New York
Municipal Income Fund, since
1993; Fidelity New York
Insured Municipal Income
Fund, since 1994; Spartan
Short-Intermediate Municipal
Income Fund, Spartan New
York Intermediate Municipal
Income Fund, Spartan
Intermediate Municipal Income
Fund and Fidelity Advisor
Short-Intermediate Municipal
Income Fund, since 1995;
joined Fidelity in 1986
(checkmark)
NORM LIND ON SOME
WELCOME CHANGES IN NEW
YORK:
"New York is both an
interesting and challenging
state in which to invest.
Historically, the state has
been regarded as being very
generous in terms of welfare
and public care funding. This
past year, however, saw
diminished financial
assistance in those areas.
Expenses were lower and, for
the second year in a row,
budget costs were down,
which is quite astounding. I
think lawmakers are finally
realizing that maybe
government can't do
everything, so they're cutting
back on certain programs. As
a manager, that's a trend that
I'd like to see continue. New
York City has done a
wonderful job of publicizing
itself as a kinder, gentler place
to visit and conduct business.
We've seen signs that the
economy is improving -
most notably growth in the
advertising, high tech and
movie industries. Tourism is
also booming - whenever I
want to go to New York to talk
to issuers, I need to book a
hotel room weeks in advance.
A huge part of this renewed
attractiveness is the fact
that the crime rate has
declined. New York City can
still be somewhat intimidating,
but it is perceived as being
safer than it was five years
ago. The city's efforts in trying
to improve the climate have
not gone unnoticed."
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
General Obligation 48.2 44.7
Water & Sewer 14.7 14.6
Transportation 11.1 9.0
Special Tax 11.1 12.1
Electric Revenue 5.4 12.2
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1996
Years 13.3 13.4
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF OCTOBER 31, 1996
Years 8.0 7.8
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 THE ABOVE EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF OCTOBER 31, 1996 AS OF APRIL 30, 1996
Aaa 40.0%
Aa, A 32.4%
Baa 23.5%
Ba, B 0.0%
Non-rated 0.0%
Short-term investments 4.1%
Aaa 42.4%
Aa, A 29.4%
Baa 19.1%
Ba, B 0.0%
Non-rated 0.0%
Short-term investments 9.1%
Row: 1, Col: 1, Value: 40.0
Row: 1, Col: 2, Value: 32.4
Row: 1, Col: 3, Value: 23.5
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 4.1
Row: 1, Col: 1, Value: 42.4
Row: 1, Col: 2, Value: 29.4
Row: 1, Col: 3, Value: 19.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 9.1
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 95.9%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
NEW YORK - 94.6%
Albany County Gen. Oblig.
5.75% 6/1/09 (FGIC Insured) (c) Aaa $ 200,000 $ 205,000
Brookhaven Gen. Oblig.
5.375% 10/1/05 (FGIC Insured) Aaa 205,000 209,612
Broome County Gen. Oblig.
7.40% 4/15/01 (FGIC Insured) Aaa 200,000 221,500
Erie County Gen. Oblig. Series B,
5.60% 6/15/10 (FGIC Insured) Aaa 100,000 101,125
Metropolitan Trans. Auth. Svc. Contract
(Commuter Facs.) Series O, 5.75% 7/1/13 Baa1 400,000 397,000
Monroe County Gen. Oblig. 6.50% 6/1/04 Aa 100,000 110,375
Monroe County Pub. Impt.
5.25% 6/1/08 (FGIC Insured) Aaa 100,000 100,000
Nassau County Combined Swr. Dist. Rfdg.
Series F, 5.10% 7/1/05 (MBIA Insured) Aaa 230,000 231,725
New York City Muni. Assistance Corp.
6% 7/1/05 Aa 300,000 324,750
New York City Muni. Wtr. Fin. Auth. Wtr. &
Swr. Sys. Rev Series A:
5.50% 6/15/20 A 200,000 191,500
6% 6/15/25 A 275,000 278,438
New York Gen. Oblig.:
Series A-1, 6.50% 8/1/16 Baa1 200,000 203,750
Series B, 6.20% 8/15/06 Baa1 90,000 91,685
Series C, 6.40% 8/1/03 Baa1 150,000 157,687
Series D, 6% 2/15/16 Baa1 275,000 267,438
New York State Dorm. Auth. Lease Rev.
(State Univ.) 6% 7/1/03 (AMBAC Insured) Aaa 150,000 161,250
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.) Series A:
6.50% 5/15/05 Baa1 200,000 213,750
6.50% 5/15/06 Baa1 100,000 106,750
(City Univ. Sys. Consolidated) Series C,
6% 7/1/03 (AMBAC Insured) Aaa 200,000 215,500
(FIT Student Hsg. Corp.) 5.75% 7/1/05
(AMBAC Insured) Aaa 125,000 131,406
(Strong Memorial Hospital) 5.10% 7/1/04 A1 100,000 101,250
New York State Energy Research & Dev. Auth.
Facs. Rev. Rfdg. (Consolidated Edison Co.)
Series A, 6.10% 8/15/20 A1 100,000 101,750
New York State Envir. Facs. Corp. Poll. Cont. Rev.:
(New York State Wtr. Revolving Fund/Pooled
Loan) Series B, 5.90% 11/15/14 Aaa 150,000 153,750
6.40% 11/15/06 Aaa 100,000 111,250
New York State Local Gov't. Assistance Corp.:
Series A, 6% 4/1/24 A 255,000 257,231
Series B, 6% 4/1/18 A 225,000 227,250
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
New York State Mtg. Agcy. Rev. (Homeowner Mtg.)
Series 49, 5.85% 10/1/17 Aa $ 100,000 $ 100,000
New York State Pwr. Auth. Rev. Rfdg. & Gen.
Purpose Series CC, 5.125% 1/1/11 Aa 200,000 194,250
New York State Tollway Auth. Hwy. &
Bridge Trust Fund:
6% 4/1/03 (AMBAC Insured) Aaa 210,000 224,963
6% 4/1/04 (MBIA Insured) Aaa 100,000 107,500
New York State Urban Dev. Corp. Rev.:
Rfdg. 5.75% 4/1/11 Baa1 185,000 185,231
(Correctional Cap. Facs.) Series 6,
5.375% 1/1/15 Baa1 100,000 92,625
Series A, 6.25% 4/1/05 (MBIA Insured) Aaa 150,000 164,250
Shelter Island Unified Free School Dist. #1
6.20% 12/15/08 (AMBAC Insured) Aaa 160,000 171,000
Suffolk County Gen. Oblig. 5% 10/15/03
(AMBAC Insured) Aaa 180,000 183,150
Suffolk County Wtr. Auth. 6% 6/1/17
(MBIA Insured) Aaa 100,000 106,750
Syracuse Gen. Oblig. 7.70% 12/1/99
(MBIA Insured) Aaa 120,000 130,650
Triborough Bridge & Tunnel Auth. Rev. Rfdg.
(Gen. Purpose) Series Y, 6% 1/1/12 Aa 365,000 386,900
6,919,991
NEW YORK& NEW JERSEY - 1.3%
New York & New Jersey Port Auth.
Consolidated 85th Series, 5.375% 3/1/28 A1 100,000 96,750
TOTAL MUNICIPAL BONDS
(Cost $6,911,839) 7,016,741
MUNICIPAL NOTES (A) - 4.1%
NEW YORK - 4.1%
New York City Hsg. Dev. Corp. Residential Rev.
(East 17th Street Properties)
Series 93-A, 3.60%, LOC Chase Manhattan
Bank, VRDN A-1 100,000 100,000
New York State Energy Research & Dev.
Auth. Poll. Cont. Rev. (Niagara Mohawk
Pwr. Corp.) VRDN:
Series 1985 B, 3.60%
LOC Toronto Dominion Bank, Canada P-1 100,000 100,000
MUNICIPAL NOTES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
New York State Energy Research & Dev.
Auth. Poll. Cont. Rev. (Niagara Mohawk
Pwr. Corp.) VRDN: - continued
Series 1985 C, 3.60%, LOC Canadian
Imperial Bank of Commerce P-1 $ 100,000 $ 100,000
TOTAL MUNICIPAL NOTES
(Cost $300,000) 300,000
TOTAL INVESTMENTS - 100%
(Cost $7,211,839) $ 7,316,741
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
2 Municipal Bond Contracts Dec. 1996 $ 231,750 $ 1,263
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 3.2%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
3. A portion of the Security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $51,250.
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $7,211,839. Net unrealized appreciation aggregated
$104,902, of which $132,883 related to appreciated investment securities
and $27,981 related to depreciated investment securities.
During fiscal year ended October 31,1996, 100% of the fund's income
dividends was free from federal income tax, and 0.09% of the fund's income
dividends was subject to the federal alternative minimum tax.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 72.4% AAA, AA, A 71.1%
Baa 23.5% BBB 23.5%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 48.2%
Water & Sewer 14.7
Transportation 11.1
Special Tax 11.1
Electric Revenue 5.4
Education 5.4
Others (individually less than 5%) 4.1
TOTAL 100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1996
ASSETS
Investment in securities, at value (cost $7,211,839) - $ 7,316,741
See accompanying schedule
Cash 29,073
Receivable for fund shares sold 14,476
Interest receivable 110,376
Receivable for daily variation on futures contracts 1,250
Prepaid expenses 33,390
Receivable from investment adviser for expense 25,680
reductions
TOTAL ASSETS 7,530,986
LIABILITIES
Payable for investments purchased $ 92,925
Distributions payable 7,262
Accrued management fee 2,381
Other payables and accrued expenses 38,479
TOTAL LIABILITIES 141,047
NET ASSETS $ 7,389,939
Net Assets consist of:
Paid in capital $ 7,246,473
Accumulated undistributed net realized gain (loss) 37,301
on investments
Net unrealized appreciation (depreciation) on 106,165
investments
NET ASSETS $ 7,389,939
CLASS A: $10.49
NET ASSET VALUE, offering price and redemption price per
share ($102,348 (divided by) 9,758 shares)
Maximum offering price per share (100/95.75 of $10.49) $10.96
CLASS B: $10.47
NET ASSET VALUE and offering price per share
($2,444,721 (divided by) 233,465 shares) A
CLASS T: $10.48
NET ASSET VALUE and redemption price per share
($4,124,565 (divided by) 393,504 shares)
Maximum offering price per share (100/96.50 of $10.48) $10.86
INSTITUTIONAL CLASS: $10.47
NET ASSET VALUE, offering price and redemption price per
share ($718,305 (divided by) 68,606 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1996
INTEREST INCOME $ 322,982
EXPENSES
Management fee $ 24,300
Transfer agent fees 56
Class A
Class B 3,198
Class T 4,809
Institutional Class 1,045
Distribution fees 24
Class A
Class B 17,620
Class T 8,737
Accounting fees and expenses 58,926
Non-interested trustees' compensation 24
Custodian fees and expenses 635
Registration fees 8,221
Class A
Class B 16,719
Class T 16,104
Institutional Class 13,028
Audit 25,183
Legal 41
Miscellaneous 105
Total expenses before reductions 198,775
Expense reductions (128,630) 70,145
NET INTEREST INCOME 252,837
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 41,674
Futures contracts (2,554) 39,120
Change in net unrealized appreciation (depreciation) on:
Investment securities 4,114
Futures contracts 1,263 5,377
NET GAIN (LOSS) 44,497
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 297,334
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMENT
1996 OF OPERATIONS) TO
OCTOBER 31,
1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 252,837 $ 22,944
Net interest income
Net realized gain (loss) 39,120 -
Change in net unrealized appreciation (depreciation) 5,377 100,788
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 297,334 123,732
FROM OPERATIONS
Distributions to shareholders (707) -
From net interest income
Class A
Class B (70,019) (6,231)
Class T (150,521) (10,525)
Institutional Class (31,590) (6,188)
TOTAL DISTRIBUTIONS (252,837) (22,944)
Share transactions - net increase (decrease) 3,469,707 3,774,947
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,514,204 3,875,735
NET ASSETS
Beginning of period 3,875,735 -
End of period $ 7,389,939 $ 3,875,735
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SEPTEMBER 3, 1996
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.29
Income from Investment Operations
Net Interest income .072
Net realized and unrealized gain (loss) .200
Total from investment operations .272
Less Distributions
From net interest income (.072)
Net asset value, end of period $ 10.49
TOTAL RETURN B 2.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 102
Ratio of expenses to average net assets .90% A,
C
Ratio of net interest income to average net assets 4.43% A
Portfolio turnover rate 17% A
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURN WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS B
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMEN
T OF OPERATIONS)
TO OCTOBER 31,
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.390 $ 10.000
Income from Investment Operations
Net interest income .375 .074
Net realized and unrealized gain (loss) .080 .390
Total from investment operations .455 .464
Less Distributions
From net interest income (.375) (.074)
Net asset value, end of period $ 10.470 $ 10.390
TOTAL RETURN B 4.46% 4.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,445 $ 1,161
Ratio of expenses to average net assets 1.66% C 1.75% A,
C
Ratio of expenses to average net assets after expense 1.62% D 1.75% A
reductions
Ratio of net interest income to average net assets 3.62% 3.52% A
Portfolio turnover rate 17% 0%
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS T
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMEN
T OF OPERATIONS)
TO
OCTOBER 31,
1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.400 $ 10.000
Income from Investment Operations
Net interest income .444 .084
Net realized and unrealized gain (loss) .080 .400
Total from investment operations .524 .484
Less Distributions
From net interest income (.444) (.084)
Net asset value, end of period $ 10.480 $ 10.400
TOTAL RETURN B 5.15% 4.85%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 4,125 $ 2,033
Ratio of expenses to average net assets 1.00% C 1.00% A,
C
Ratio of expenses to average net assets after expense .97% D 1.00% A
reductions
Ratio of net interest income to average net assets 4.30% 4.16% A
Portfolio turnover rate 17% 0%
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEAR ENDED AUGUST 21, 1995
OCTOBER 31, (COMMENCEMEN
T OF OPERATIONS)
TO
OCTOBER 31,
1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.400 $ 10.000
Income from Investment Operations
Net interest income .468 .095
Net realized and unrealized gain (loss) .070 .400
Total from investment operations .538 .495
Less Distributions
From net interest income (.468) (.095)
Net asset value, end of period $ 10.470 $ 10.400
TOTAL RETURN B 5.28% 4.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 718 $ 683
Ratio of expenses to average net assets .75% C .75% A,
C
Ratio of expenses to average net assets after expense .68% D .75% A
reductions
Ratio of net interest income to average net assets 4.53% 4.75% A
Portfolio turnover rate 17% 0%
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
</TABLE>
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor New York Municipal Income Fund (the fund) is a fund of
Fidelity Advisor Series V (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund offers Class A, Class B, Class T, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
The fund commenced sale of a new Class A of shares on September 3, 1996. On
this date, the original Class A was renamed Class T. Investment income,
realized and unrealized capital gains and losses, the common expenses of
the fund, and certain fund-level expense reductions are allocated on a pro
rata basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. 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. 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. 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.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying each class
and shares of each class for distribution
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
PREPAID EXPENSES - CONTINUED
under federal and state securities law. These expenses are borne by each
class and amortized over one year.
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 are declared
separately for each class, while capital gain distributions are declared at
the fund level and allocated to each class on a pro rata basis based on the
number of shares held by each class on the ex-dividend date.
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 certain
futures and options transactions, market discount and excise tax
regulations.
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 investment income and realized
and unrealized gain (loss). 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.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period
end, is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms. Futures contracts are valued at the settlement price established
each day by the board of trade or exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $4,749,734 and $958,028, respectively.
3. PURCHASES AND SALES OF INVESTMENTS - CONTINUED
The market value of futures contracts opened and closed during the period
amounted to $566,889 and $333,848, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1100% to .3700% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .25%. For
the period, the management fee was equivalent to an annual rate of .40% of
average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares (Class A Plan), Class B shares (Class B Plan),
Class T shares (Class T Plan), and Institutional Class shares (collectively
referred to as "the Plans"). Under the Class A, Class B, and Class T Plans,
the fund pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution and
service fee. This fee is based on annual rates of .15%, .90% (of which .65%
represents a distribution fee and .25% represents a shareholder service
fee), and .25% of the average net assets of the Class A, Class B and Class
T shares, respectively. For the period, the fund paid FDC $24, $17,620, and
$8,737 under the Class A, Class B and Class T Plans, of which $24, $4,825,
and $8,737 were paid to securities dealers, banks and other financial
institutions for the distribution of Class A, Class B and Class T shares,
and providing shareholder support services.
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
Class T, and Institutional Class shares. The Plans also authorize payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 4.25% and 3.50%
(4.75% prior to January 1, 1996) for selling Class A and Class T shares of
the fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within five years of
purchase. The Class B charge is based on declining rates which range from
4% to 1% of the lesser of the cost of shares at the initial date of
purchase or the net asset value of the redeemed shares, excluding any
reinvested dividends and capital gains.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
SALES LOAD - CONTINUED
For the period, FDC received sales charges of $27 and $94,802 on sales of
Class A and Class T shares of the fund, of which $23 and $90,622 were paid
to securities dealers, banks, and other financial institutions. FDC also
received contingent deferred sales charges of $4,097 on Class B share
redemptions from the fund. When Class B shares are sold, FDC pays
commissions from its own resources to dealers through which the sales are
made.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian,
transfer agent, and shareholder servicing agent for the fund's Class A,
Class B, Class T, and Institutional Class shares. UMB has entered into
sub-arrangements with Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, with respect to all classes of the fund to
perform the transfer, dividend disbursing, and shareholder servicing agent
functions. FIIOC receives account fees and asset-based fees that vary
according to the account size and type of account of the shareholders of
the respective classes of the fund. All fees are paid to FIIOC by UMB,
which is reimbursed by the fund for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports, except proxy
statements.
UMB also has a sub-contract with Fidelity Service Co. (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.
For the period, the transfer agent fees were equivalent to annual rates of
.35%, .17%, .14%, and .15% of the average net assets of Class A, Class B,
Class T and Institutional Class, respectively.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above annual rates
of .90%, 1.65%, 1.00% and .75% of average net assets for Class A, Class B,
Class T, and Institutional Class, respectively. For the period, the
reimbursement reduced expenses by $8,408, $39,715, $56,858, and $21,447 for
Class A, Class B, Class T, and Institutional Class, respectively.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of expenses. During the period, the fund's custodian
fees were reduced by $1,371 under the custodian arrangement and Class B,
Class T and Institutional Class expenses were reduced by $290, $223 and
$318, respectively, under the transfer agent arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 42% of the total outstanding shares.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 B 1996 1995 B
CLASS A A 9,691 - $ 99,722 $ -
Shares sold
Reinvestment of distributions 67 - 699 -
Shares redeemed - - - -
Net increase (decrease) 9,758 - $ 100,421 $ -
CLASS B 133,150 111,132 $ 1,388,144 $ 1,123,890
Shares sold
Reinvestment of distributions 4,418 537 45,991 5,564
Shares redeemed (15,772) - (161,162) -
Net increase (decrease) 121,796 111,669 $ 1,272,973 $ 1,129,454
CLASS T 226,391 194,544 $ 2,359,874 $ 1,979,912
Shares sold
Reinvestment of distributions 11,198 904 116,533 9,361
Shares redeemed (39,533) - (411,400) -
Net increase (decrease) 198,056 195,448 $ 2,065,007 $ 1,989,273
INSTITUTIONAL CLASS - 65,001 $ - $ 650,032
Shares sold
Reinvestment of distributions 3,003 602 31,306 6,188
Shares redeemed - - - -
Net increase (decrease) 3,003 65,603 $ 31,306 $ 656,220
</TABLE>
C SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
D SHARE TRANSACTIONS FOR CLASS B, CLASS T AND INSTITUTIONAL CLASS ARE FOR
THE PERIOD AUGUST 21, 1995 (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1995.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Advisor Series V and the Shareholders of Advisor New
York Municipal Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series V: Fidelity Advisor New York Municipal Income Fund,
including the schedule of portfolio investments, as of October 31, 1996,
and the related statement of operations for the year then ended, the
statement of changes in net assets for the year ended October 31, 1996 and
for the period August 21, 1995 (commencement of operations) to October 31,
1995 and the financial highlights of Class A, Class B, Class T and
Institutional Class for the periods indicated therein. These financial
statements and financial highlights are the responsibility of the fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series V: Fidelity Advisor New York Municipal Income
Fund as of October 31, 1996, the results of its operations for the year
then ended, the changes in its net assets for the year ended October 31,
1996 and for the period August 21, 1995 (commencement of operations) to
October 31, 1995 and the financial highlights of Class A, Class B, Class T
and Institutional Class for the periods indicated therein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 9, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor New York 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:
PAY DATE RECORD DATE CAPITAL GAINS
Class A 12/9/96 12/6/96 $.06
Class B 12/9/96 12/6/96 $.06
Class T 12/9/96 12/6/96 $.06
Institutional Class 12/9/96 12/6/96 $.06
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Intitutional Operations Company
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
NATURAL RESOURCES
FUND (FORMERLY FIDELITY
ADVISOR GLOBAL RESOURCES FUND) - INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 17 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 24 Notes to the financial statements.
REPORT OF INDEPENDENT 30 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 31
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:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR NATURAL RESOURCES 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The initial offering of Institutional
Class shares took place on July 3, 1995. Institutional Class shares are
sold to eligible investors without a sales load or 12b-1 fee. Returns prior
to July 3, 1995 are those of Class T, the original class of the fund, and
reflect Class T's prior 0.65% 12b-1 fee. If Fidelity had not reimbursed
certain class expenses, the past five years and life of fund total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - 35.13% 134.17% 308.45%
Institutional Class
S&P 500(registered trademark) 24.10% 106.02% 276.35%
Natural Resources Funds 39.65% 76.85% n/a
Average
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five years, or
since the fund started on December 29, 1987. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare Institutional Class' returns to
the performance of the Standard & Poor's 500 Index - a widely recognized,
unmanaged index of common stocks. To measure how Institutional Class'
performance stacked up against its peers, you can compare it to the natural
resources funds average, which reflects the performance of 38 mutual funds
with similar objectives tracked by Lipper Analytical Services, Inc. over
the past 12 months. Both benchmarks include reinvested dividends and
capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - 35.13% 18.55% 17.24%
Institutional Class
S&P 500 24.10% 15.55% 16.16%
Natural Resources Funds Average 39.65% 11.79% n/a
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' actual (or
cumulative) return and show you what would have happened if Institutional
Class shares had performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19961031 19961115 145337 S00000000000001
FA Natural Resource -CL I SP Standard & Poor 500
00686 SP001
1987/12/29 10000.00 10000.00
1987/12/31 9980.00 10064.43
1988/01/31 9880.00 10488.14
1988/02/29 10630.00 10976.89
1988/03/31 10920.00 10637.70
1988/04/30 11100.00 10755.78
1988/05/31 10920.00 10849.36
1988/06/30 11640.00 11347.34
1988/07/31 11590.00 11304.22
1988/08/31 11280.00 10919.88
1988/09/30 11230.00 11385.07
1988/10/31 11470.00 11701.57
1988/11/30 11210.00 11534.24
1988/12/31 11586.91 11736.09
1989/01/31 12523.44 12595.17
1989/02/28 12338.32 12281.55
1989/03/31 12577.89 12567.71
1989/04/30 12969.93 13219.97
1989/05/31 13274.85 13755.38
1989/06/30 13231.29 13676.98
1989/07/31 14189.61 14912.01
1989/08/31 14614.32 15204.28
1989/09/30 14222.28 15141.94
1989/10/31 13721.34 14790.65
1989/11/30 14331.18 15092.38
1989/12/31 15426.57 15454.60
1990/01/31 14453.51 14417.59
1990/02/28 15129.90 14603.58
1990/03/31 15414.70 14990.58
1990/04/30 14607.77 14615.81
1990/05/31 16091.10 16040.85
1990/06/30 15889.36 15931.78
1990/07/31 16672.56 15880.79
1990/08/31 16233.50 14445.17
1990/09/30 15723.23 13741.69
1990/10/31 14595.91 13682.60
1990/11/30 14833.24 14566.50
1990/12/31 14611.74 14972.90
1991/01/31 15093.85 15625.72
1991/02/28 17269.54 16742.96
1991/03/31 16861.60 17148.14
1991/04/30 16948.13 17189.30
1991/05/31 17764.01 17931.87
1991/06/30 16737.98 17110.59
1991/07/31 17294.26 17907.95
1991/08/31 17739.29 18332.37
1991/09/30 17047.02 18026.21
1991/10/31 17442.60 18267.77
1991/11/30 16033.35 17531.58
1991/12/31 16725.88 19537.19
1992/01/31 17764.58 19173.80
1992/02/29 18164.09 19423.06
1992/03/31 17711.32 19044.31
1992/04/30 18363.84 19604.21
1992/05/31 18856.56 19700.27
1992/06/30 18243.99 19406.73
1992/07/31 18976.41 20200.47
1992/08/31 18696.76 19786.36
1992/09/30 18883.19 20019.84
1992/10/31 18483.69 20089.91
1992/11/30 18723.39 20774.97
1992/12/31 18956.24 21030.51
1993/01/31 19563.91 21207.16
1993/02/28 20112.29 21495.58
1993/03/31 21446.19 21949.14
1993/04/30 22602.24 21417.97
1993/05/31 23713.83 21991.97
1993/06/30 24039.89 22055.75
1993/07/31 23713.83 21967.52
1993/08/31 25077.37 22800.09
1993/09/30 24943.98 22624.53
1993/10/31 26070.39 23092.86
1993/11/30 25092.19 22873.48
1993/12/31 26148.04 23150.25
1994/01/31 27737.91 23937.36
1994/02/28 26873.51 23288.65
1994/03/31 25221.90 22273.27
1994/04/30 25638.66 22558.37
1994/05/31 25978.24 22928.32
1994/06/30 25515.17 22366.58
1994/07/31 26379.57 23100.20
1994/08/31 27660.73 24047.31
1994/09/30 27521.81 23458.15
1994/10/31 27105.05 23985.96
1994/11/30 25329.95 23112.39
1994/12/31 25552.05 23455.15
1995/01/31 25050.10 24063.34
1995/02/28 25787.33 25001.09
1995/03/31 27230.42 25738.87
1995/04/30 28344.11 26496.88
1995/05/31 28736.25 27555.96
1995/06/30 29551.91 28196.09
1995/07/31 30806.76 29131.07
1995/08/31 31293.02 29204.19
1995/09/30 31528.31 30436.60
1995/10/31 30226.39 30327.94
1995/11/30 31763.59 31659.34
1995/12/31 32925.99 32269.10
1996/01/31 34175.53 33367.54
1996/02/29 35019.37 33676.86
1996/03/31 36090.39 34001.17
1996/04/30 38200.00 34502.34
1996/05/31 38897.79 35392.16
1996/06/30 38654.37 35527.00
1996/07/31 36544.77 33957.42
1996/08/31 38200.00 34673.58
1996/09/30 39855.22 36625.01
1996/10/31 40845.11 37635.13
IMATRL PRASUN SHR__CHT 19961031 19961115 145339 R00000000000110
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources Fund - Institutional Class
on December 29, 1987, when the fund started. As the chart shows, by October
31, 1996, the value of the investment would have grown to $40,845 - a
308.45% increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends reinvested, the same
$10,000 investment would have grown to $37,635 - a 276.35% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. The stock market, for
example, has a history of
growth in the long run and
volatility in the short run. Foreign
stocks involve greater risks, due
to political and economic
uncertainties. In turn, the share
price and return of a fund that
invests in stocks will vary. That
means if you sell your shares
during a market downturn, you
might lose money. But if you
can ride out the market's ups
and downs, you may have a
gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Paced by the robust performance
of blue chip stocks, the U.S. stock
market posted strong gains for the
year that ended October 31, 1996.
The Standard & Poor's 500 Index
returned 24.10% during the period
- - well above its long-term
average of about 12%. The stock
market spent much of the past
year breaking price and trading
volume records. Solid corporate
earnings reports, large cash
inflows into mutual funds,
widespread optimism and a
generally favorable interest rate
environment propelled share prices
higher. Large capitalization stocks
thrived as investors sought their
lower volatility and higher degree of
liquidity over smaller cap stocks in
an environment where it was
sometimes difficult to discern the
health of the economy. The Dow
Jones Industrial Average closed
above 6000 for the first time in
October. While short-term
confusion over the direction of
interest rates created a volatile
backdrop in the summer months,
stocks rallied again when the
Federal Reserve Board left
short-term interest rates unchanged
and it appeared inflation would not
be an issue for the remainder of
1996. Smaller-company stocks
posted strong gains at the
beginning of 1996, but trended
downward in the spring and summer
because their earnings tend to be
more affected by the higher
borrowing costs brought on by
higher rates. When interest rate
fears subsided, these stocks
rebounded, only to fade toward the
end of the period due to earnings
concerns and a general flight to
quality.
NOTE TO SHAREHOLDERS: Steve Dufour became Portfolio Manager of Fidelity
Advisor Natural Resources Fund on August 30, 1996.
Q. STEVE, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended October 31, 1996, the fund's Institutional Class
shares had a total return of 35.13%. During the same 12-month period, the
natural resources funds average tracked by Lipper Analytical Services
returned 39.65%. The Standard & Poor's 500 Index returned 24.10% for the
same period.
Q. WHAT CHANGES HAVE YOU MADE SINCE YOU BEGAN MANAGING THE FUND IN AUGUST?
A. I significantly added to the fund's holdings in the energy sector. By
the end of the period, the fund's stake in energy companies had grown to
nearly half of its investments, compared to six months ago, when energy
stocks represented just over a quarter of the fund's holdings. During the
first half of 1996, investors were worried that Iraq - which so far has
been banned from doing so - would be allowed to sell its oil in the world
market. In anticipation that the supply of oil would rise significantly
because of Iraq's potential re-entry, oil prices remained low. When it
became clear that the ban against Iraq wasn't going to be lifted over the
near-term, energy prices began to rise. Meanwhile, stronger-than-expected
global economic growth translated into higher-than-anticipated demand for
oil.
Q. WHICH TYPES OF COMPANIES WITHIN THE ENERGY SECTOR DID YOU ADD?
A. I emphasized exploration and production (E&P) companies and energy
services companies because I believed these companies had the most to gain
from the rising price of oil. In the E&P sector, I added to the fund's
holdings in United Meridian, a medium-sized company with very attractive
acreage in Equatorial Guinea, and Union Pacific Resources, which was
recently spun out from its parent. Both stocks have performed quite well
over the past six months. Chesapeake Energy, one of the strongest
contributors to the fund's performance over the past year, has had a lot of
exploration success this year. In the energy services area, I added to
holdings in Schlumberger and Halliburton. As the price of oil rose, there
was more interest in drilling new wells and extracting more oil from
existing wells. Generally speaking, energy services companies continued to
see strong current results as the capital expenditures of E&P companies
rose.
Q. WHAT OTHER CHANGES HAVE YOU MADE?
A. Since taking over the fund, I added to the fund's holdings in gold
stocks, such as Newmont Mining and Barrick Gold. I bought them at a time
when they were cheap, meaning that I believed their business prospects were
much better than their stock prices reflected. The price of gold has
languished for much of the year. But if history is any indication, demand
resulting from higher jewelry sales during the holidays could help the
price of gold over the next several months.
Q. STEVE, WE UNDERSTAND THAT THERE ARE SOME UPCOMING CHANGES TO THE FUND'S
INVESTMENT POLICIES.
A. Yes, effective January 2, 1997, the fund's ability to invest in below
investment-grade quality bonds will be limited to 5% of its total assets,
down from 35%. Further, there will be a change in the amount the fund is
required to invest in natural resource stocks. The fund normally invests at
least 80%, up from 65%, of its assets in securities of foreign and domestic
companies that own or develop natural resources, or supply goods and
services to such companies, or in physical commodities. These changes do
not impact the way in which I am currently managing the fund.
Q. WHAT'S YOUR OUTLOOK?
A. In my view, the current outlook for energy and energy services stocks is
favorable. But there are a lot of variables that could change my outlook,
including the
re-entry of Iraq into the world marketplace, slower-than-expected economic
growth or some event we can't even anticipate right now. If I believe the
outlook for energy has deteriorated, I'll move into industries that I think
offer a better value.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: a high level of current
income free from federal
income tax and New York state
and city personal income tax
by investing primarily in
municipal securities
START DATE: August 21, 1995
SIZE: as of October 31, 1996,
more than $7 million
MANAGER: Norman Lind,
since 1995; manager, Fidelity
New York Municipal Income
Fund and Spartan New York
Municipal Income Fund, since
1993; Fidelity New York
Insured Municipal Income
Fund, since 1994; Spartan
Short-Intermediate Municipal
Income Fund, Spartan New
York Intermediate Municipal
Income Fund, Spartan
Intermediate Municipal Income
Fund and Fidelity Advisor
Short-Intermediate Municipal
Income Fund, since 1995;
joined Fidelity in 1986
(checkmark)
NORM LIND ON SOME
WELCOME CHANGES IN NEW
YORK:
"New York is both an
interesting and challenging
state in which to invest.
Historically, the state has
been regarded as being very
generous in terms of welfare
and public care funding. This
past year, however, saw
diminished financial
assistance in those areas.
Expenses were lower and, for
the second year in a row,
budget costs were down,
which is quite astounding. I
think lawmakers are finally
realizing that maybe
government can't do
everything, so they're cutting
back on certain programs. As
a manager, that's a trend that
I'd like to see continue. New
York City has done a
wonderful job of publicizing
itself as a kinder, gentler place
to visit and conduct business.
We've seen signs that the
economy is improving -
most notably growth in the
advertising, high tech and
movie industries. Tourism is
also booming - whenever I
want to go to New York to talk
to issuers, I need to book a
hotel room weeks in advance.
A huge part of this renewed
attractiveness is the fact
that the crime rate has
declined. New York City can
still be somewhat intimidating,
but it is perceived as being
safer than it was five years
ago. The city's efforts in trying
to improve the climate have
not gone unnoticed."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Bre-X Minerals Ltd. 2.6 2.6
United Meridian Corp. 2.1 0.6
CSX Corp. 1.9 0.1
Total SA sponsored ADR 1.7 0.0
Aluminum Co. of America 1.6 0.7
Schlumberger Ltd. 1.5 0.7
Diamond Offshore Drilling, Inc. 1.5 1.1
Transocean Offshore, Inc. 1.4 0.9
Halliburton Co. 1.4 0.0
Occidental Petroleum Corp. 1.4 1.0
TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO
Energy 46.5 26.2
Basic Industries 24.9 23.3
Precious Metals 12.0 8.2
Transportation 2.6 1.0
Technology 2.5 6.4
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996 * AS OF APRIL 30, 1996 **
Row: 1, Col: 1, Value: 4.3
Row: 1, Col: 2, Value: 95.7
Row: 1, Col: 1, Value: 7.9
Row: 1, Col: 2, Value: 92.09999999999999
Stocks 95.7%
Short-term
investments 4.3%
FOREIGN
INVESTMENTS 20.1%
Stocks 92.1%
Short-term
investments 7.9%
FOREIGN
INVESTMENTS 19.8%
*
**
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.3%
Rockwell International Corp. 40,000 $ 2,200,000
BASIC INDUSTRIES - 24.9%
CHEMICALS & PLASTICS - 12.7%
Agrium, Inc. 210,000 2,816,317
Air Products & Chemicals, Inc. 55,000 3,300,000
Cambrex Corp. 100,000 3,125,000
Crompton & Knowles Corp. 216,041 3,888,738
Cytec Industries, Inc. (a) 135,000 4,826,250
DSM NV 30,000 2,866,214
du Pont (E.I.) de Nemours & Co. 60,000 5,565,000
FMC Corp. (a) 50,000 3,681,250
Ferro Corp. 120,000 3,240,000
Fuller (H.B.) Co. 81,472 3,401,456
Furon Co. 85,000 1,785,000
Hanna (M.A.) Co. 141,250 3,001,563
Hercules, Inc. 60,000 2,857,500
IMC Fertilizer Group, Inc. 92,000 3,450,000
Intertape Polymer Group, Inc. 59,300 1,369,024
Monsanto Co. 155,000 6,141,875
Nalco Chemical Co. 125,000 4,546,875
Potash Corp. of Saskatchewan 35,000 2,481,602
Praxair, Inc. 102,000 4,513,500
Schulman (A.), Inc. 150,000 3,168,750
Scotts Co. Class A (a) 140,000 2,607,500
Union Carbide Corp. 80,000 3,410,000
Wellman, Inc. 50,000 887,500
Witco Corp. 200,000 6,200,000
83,130,914
IRON & STEEL - 0.4%
Nucor Corp. 47,000 2,226,625
METALS & MINING - 6.6%
Alcan Aluminium Ltd. 170,000 5,588,554
Alumax, Inc. (a) 160,000 5,140,000
Aluminum Co. of America 177,000 10,376,625
IMCO Recycling, Inc. 133,500 2,136,000
Inco Ltd. 150,000 4,746,162
JCI Ltd. (a) 100,000 1,033,014
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
Kaiser Aluminum Corp. (a) 385,500 $ 4,288,688
Pechiney SA Class A 109,683 4,698,559
Reynolds Metals Co. 92,000 5,175,000
43,182,602
PAPER & FOREST PRODUCTS - 5.2%
Boise Cascade Corp. 205,000 6,355,000
Buckeye Cellulose Corp. 100,000 2,612,500
Champion International Corp. 60,000 2,610,000
Chesapeake Corp. 150,000 4,237,500
Consolidated Papers, Inc. 55,000 2,756,875
Fort Howard Corp. (a) 200,000 5,125,000
International Paper Co. 51,000 2,180,250
Mercer International, Inc. SBI 100,000 1,250,000
Stone Container Corp. 180,000 2,745,000
Temple-Inland, Inc. 80,000 4,100,000
33,972,125
TOTAL BASIC INDUSTRIES 162,512,266
CONGLOMERATES - 0.8%
Tyco International Ltd. 103,700 5,146,113
CONSTRUCTION & REAL ESTATE - 0.7%
BUILDING MATERIALS - 0.3%
Lilly Industrial Coatings, Inc. Class A 115,000 2,070,000
CONSTRUCTION - 0.4%
McDermott (J. Ray) SA 100,000 2,712,500
TOTAL CONSTRUCTION & REAL ESTATE 4,782,500
DURABLES - 0.9%
AUTOS, TIRES, & ACCESSORIES - 0.9%
Eaton Corp. 100,000 5,975,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - 46.5%
ENERGY SERVICES - 18.2%
BJ Services Co. (a) 110,000 $ 4,936,250
Baker Hughes, Inc. 50,000 1,781,250
Carbo Ceramics, Inc. 52,000 1,027,000
Cliffs Drilling Co. (a) 138,100 5,921,038
Diamond Offshore Drilling, Inc. (a) 160,000 9,740,000
ENSCO International, Inc. (a) 100,000 4,325,000
Energy Ventures, Inc. (a) 200,000 8,800,000
Eni Spa 1,000,000 4,777,503
Falcon Drilling, Inc. (a) 190,000 6,721,250
Global Industries Ltd. (a) 331,600 5,968,800
Halliburton Co. 158,970 9,001,676
Marine Drilling Companies, Inc. (a) 370,000 5,133,750
Nabors Industries, Inc. (a) 230,000 3,823,750
Noble Drilling Corp. 250,000 4,656,250
Numar Corp. (a) 200,000 3,200,000
Pool Energy Services Co. (a) 120,000 1,770,000
Schlumberger Ltd. 101,000 10,011,625
Serv-Tech, Inc. (a) 31,800 99,375
Tidewater, Inc. 124,900 5,464,375
Transocean Offshore, Inc. 148,905 9,418,241
Weatherford Enterra, Inc. (a) 200,000 5,800,000
Western Atlas, Inc. (a) 100,000 6,937,500
119,314,633
OIL & GAS - 28.3%
Amerada Hess Corp. 116,000 6,423,500
Amoco Corp. 50,000 3,787,500
Anadarko Petroleum Corp. 83,000 5,280,875
Barrett Resources Corp. (a) 162,000 6,216,750
Beau Canada Exploration Ltd. (a) 1,400,000 2,562,666
Belco Oil & Gas Corp. (a) 120,000 2,985,000
Belden & Blake Corp. (a) 165,000 4,372,500
British Petroleum PLC ADR 43,399 5,582,196
Burlington Resources, Inc. 100,200 5,047,575
Canadian Natural Resources Ltd. (a) 100,000 2,487,952
Chesapeake Energy Corp. (a) 115,000 6,698,750
Chieftain International, Inc. (a) 250,000 5,864,993
Coastal Corp. (The) 30,000 1,290,000
Comstock Resources, Inc. (a) 100,000 1,287,500
Devon Energy Corp. 100,000 3,487,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Enron Oil & Gas Co. 135,000 $ 3,476,250
Flores & Rucks, Inc. (a) 160,000 7,560,000
Forcenergy Gas Exploration, Inc. (a) 240,800 6,591,900
KCS Group, Inc. 73,000 3,148,125
Kerr-McGee Corp. 85,000 5,333,750
Louisiana Land & Exploration Co. 113,400 6,449,625
Markwest Hydrocarbon, Inc. (a) 88,000 913,000
Mobil Corp. 20,000 2,335,000
National-Oilwell, Inc. 1,000 23,250
Newfield Exploration Co. (a) 60,700 2,868,075
Newport Petroleum Corp. (a) 50,000 263,364
Noble Affiliates, Inc. 60,000 2,610,000
Occidental Petroleum Corp. 366,400 8,976,800
Oryx Energy Co. (a) 100,000 1,925,000
Penn West Petroleum Ltd. (a) 100,000 915,238
Pogo Producing Co. 85,300 3,785,188
Renaissance Energy Ltd. (a) 210,000 6,668,161
Santa Fe Energy Resources, Inc. (a) 385,000 5,486,250
Stone Energy Corp. (a) 102,500 2,152,500
Texaco, Inc. 20,000 2,032,500
Tosco Corp. 71,400 4,007,325
Total SA sponsored ADR 282,000 10,998,000
Union Pacific Resources Group, Inc. 213,520 5,871,800
Unit Corp. (a) 250,000 2,000,000
United Meridian Corp. (a) 286,400 13,496,600
Vastar Resources, Inc. 102,000 3,786,750
Vintage Petroleum, Inc. 151,000 4,454,500
YPF Sociedad Anonima sponsored ADR representing
Class D shares 150,000 3,412,500
184,916,708
TOTAL ENERGY 304,231,341
FINANCE - 0.9%
FEDERAL SPONSORED CREDIT - 0.9%
Federal National Mortgage Association 145,000 5,673,125
HOLDING COMPANIES - 0.7%
Norfolk Southern Corp. 50,000 4,456,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 2.3%
ELECTRICAL EQUIPMENT - 0.7%
Advanced Lighting Technologies, Inc. (a) 42,000 $ 787,500
Anixter International, Inc. (a) 238,000 3,540,250
4,327,750
POLLUTION CONTROL - 1.6%
USA Waste Services, Inc. (a) 114,000 3,648,000
WMX Technologies, Inc. 100,000 3,437,500
Zurn Industries, Inc. 135,000 3,391,875
10,477,375
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 14,805,125
NONDURABLES - 0.6%
AGRICULTURE - 0.6%
Pioneer Hi-Bred International, Inc. 60,000 4,027,500
TOBACCO - 0.0%
Schweitzer-Mauduit International, Inc. 2,600 79,950
TOTAL NONDURABLES 4,107,450
PRECIOUS METALS - 12.0%
Agnico Eagle Mines Ltd. 125,000 1,751,090
Barrick Gold Corp. 325,000 8,522,918
Bre-X Minerals Ltd. (a) 1,000,000 16,735,777
Bro-X Minerals Ltd. 100,000 291,382
Compania de Minas Buenaventura SA Class B
sponsored ADR (a) 156,400 2,619,700
De Beers Consolidated Mines Ltd. ADR 135,000 3,982,500
Driefontein Consolidated Ltd. ADR 100,000 1,318,750
Euro-Nevada Mining Corp. Ltd. 295,400 8,739,841
Franco Nevada Mining Corp. 50,000 2,148,007
Getchell Gold Corp. (a) 175,000 7,787,500
Greenstone Resources Ltd. (a) 350,000 4,445,441
Mentor Exploration & Development Co. Ltd. (a) 160,000 1,637,715
Meridian Gold, Inc. Installment Receipt (c) 1,000,000 2,502,895
Newmont Mining Corp. 190,000 8,787,500
Randgold & Exploration Co. Ltd. 130,900 1,003,706
Santa Fe Pacific Gold Corp. 100,000 1,187,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - CONTINUED
Stillwater Mining Co. (a) 120,000 $ 2,070,000
Sudbury Contact Mines Ltd. (a) 140,000 1,098,285
Western Areas Gold Mining Ltd. Ord. (a) 97,300 1,502,503
78,133,010
TECHNOLOGY - 2.5%
COMPUTERS & OFFICE EQUIPMENT - 1.0%
Ingram Micro, Inc. Class A 2,000 36,000
Hewlett-Packard Co. 145,000 6,398,125
6,434,125
ELECTRONIC INSTRUMENTS - 1.5%
KLA Instruments Corp. (a) 175,000 4,243,750
Teradyne, Inc. (a) 375,000 5,953,125
10,196,875
TOTAL TECHNOLOGY 16,631,000
TRANSPORTATION - 2.6%
RAILROADS - 2.6%
Burlington Northern Santa Fe Corp. 25,000 2,059,375
CSX Corp. 286,500 12,355,313
Union Pacific Corp. 50,000 2,806,250
17,220,938
TOTAL COMMON STOCKS
(Cost $534,049,682) 625,874,118
CASH EQUIVALENTS - 4.3%
SHARES
Taxable Central Cash Fund (b) 27,981,495 27,981,495
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $562,031,177) $ 653,855,613
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.33%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Purchased on an installment basis. Market value reflects only those
payments made through October 31, 1996. The remaining installment
aggregating CAD 2,500,000 is due July 31, 1997.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 79.9%
Canada 13.0
France 2.4
South Africa 1.4
Others (individually less than 1%) 3.3
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $562,052,367. Net unrealized appreciation aggregated
$91,803,246, of which $103,164,764 related to appreciated investment
securities and $11,361,518 related to depreciated investment securities.
The fund hereby designates approximately $7,167,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS OCTOBER 31, 1996
Investment in securities, at value (cost $562,031,177) - $ 653,855,613
See accompanying schedule
Receivable for investments sold 6,742,290
Receivable for fund shares sold 2,158,369
Dividends receivable 508,358
Other receivables 9,284
Prepaid expenses 16,768
TOTAL ASSETS 663,290,682
LIABILITIES
Payable for investments purchased $ 10,889,336
Payable for fund shares redeemed 1,083,019
Accrued management fee 304,684
Distribution fees payable 273,570
Other payables and accrued expenses 248,835
TOTAL LIABILITIES 12,799,444
NET ASSETS $ 650,491,238
Net Assets consist of:
Paid in capital $ 509,564,904
Undistributed net investment income 376,703
Accumulated undistributed net realized gain (loss) on 48,725,098
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 91,824,533
investments and assets and liabilities in foreign
currencies
NET ASSETS $ 650,491,238
CALCULATION OF MAXIMUM OFFERING PRICE $25.11
CLASS A:
NET ASSET VALUE and redemption price per share
($1,609,170 (divided by) 64,082 shares)
Maximum offering price per share (100/94.75 of $25.11) $26.50
CLASS B: $24.88
NET ASSET VALUE and offering price per share
($36,106,231 (divided by) 1,451,038 shares) A
CLASS T: $25.12
NET ASSET VALUE and redemption price per share
($602,915,345 (divided by) 23,997,736 shares)
Maximum offering price per share (100/96.50 of $25.12) $26.03
INSTITUTIONAL CLASS: $25.17
NET ASSET VALUE, offering price and redemption price
per share ($9,860,492 (divided by) 391,772 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME YEAR ENDED OCTOBER 31, 1996
Dividends $ 5,636,422
Interest 1,624,764
TOTAL INCOME 7,261,186
EXPENSES
Management fee $ 3,344,653
Transfer agent fees 320
Class A
Class B 47,470
Class T 1,065,112
Institutional Class 10,859
Distribution fees 344
Class A
Class B 164,177
Class T 2,272,463
Accounting fees and expenses 323,423
Non-interested trustees' compensation 1,646
Custodian fees and expenses 75,676
Registration fees 9,352
Class A
Class B 31,266
Class T 74,812
Institutional Class 28,751
Audit 35,509
Legal 8,368
Miscellaneous 19,011
Total expenses before reductions 7,513,212
Expense reductions (161,412) 7,351,800
NET INVESTMENT INCOME (LOSS) (90,614)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 49,757,639
Foreign currency transactions (3,322) 49,754,317
Change in net unrealized appreciation (depreciation) on:
Investment securities 74,826,891
Assets and liabilities in foreign currencies (163) 74,826,728
NET GAIN (LOSS) 124,581,045
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 124,490,431
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ (90,614) $ (685,143)
Net investment income (loss)
Net realized gain (loss) 49,754,317 11,238,410
Change in net unrealized appreciation (depreciation) 74,826,728 12,904,308
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 124,490,431 23,457,575
FROM OPERATIONS
Distributions to shareholders
From net realized gain
Class B (127,176) -
Class T (10,063,536) (3,086,044)
Institutional Class (30,367) -
TOTAL DISTRIBUTIONS (10,221,079) (3,086,044)
Share transactions - net increase (decrease) 260,016,652 56,472,708
TOTAL INCREASE (DECREASE) IN NET ASSETS 374,286,004 76,844,239
NET ASSETS
Beginning of period 276,205,234 199,360,995
End of period (including undistributed net investment $ 650,491,238 $ 276,205,234
income (loss) of $376,703 and $(408), respectively)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
OCTOBER 31,
1996 G
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 23.65
Income from Investment Operations
Net investment income (loss) .00
Net realized and unrealized gain (loss) 1.46
Total from investment operations 1.46
Net asset value, end of period $ 25.11
TOTAL RETURN B, C 6.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,609
Ratio of expenses to average net assets 1.66% A,
E
Ratio of expenses to average net assets after expense reductions 1.58% A,
F
Ratio of net investment income (loss) to average net assets (.01)%
A
Portfolio turnover 137%
Average commission rate H $ .0337
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - CLASS B
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 G
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 19.23 $ 18.87
Income from Investment Operations
Net investment income (loss) (.15) (.03)
Net realized and unrealized gain (loss) 6.49 .39
Total from investment operations 6.34 .36
Less Distributions
From net realized gain (.69) -
Net asset value, end of period $ 24.88 $ 19.23
TOTAL RETURN B, C 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 36,106 $ 2,508
Ratio of expenses to average net assets 2.28% 2.23% A,
E
Ratio of expenses to average net assets after expense reductions 2.24% F 2.21% A,
F
Ratio of net investment income (loss) to average net assets (.68)% (.67)%
A
Portfolio turnover 137% 161%
Average commission rate H $ .0337
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1995.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 1994 E 1993 1992
SELECTED PER-SHARE DATA
Net asset value, beginning $ 19.25 $ 17.56 $ 17.59 $ 13.88 $ 14.11
of period
Income from Investment
Operations
Net investment income (loss) .00 D (.05) D (.11) D .22 (.10)
Net realized and unrealized 6.56 2.00 .76 4.91 .79
gain (loss)
Total from investment 6.56 1.95 .65 5.13 .69
operations
Less Distributions
From net realized gain (.69) (.26) (.68) (1.42) (.92)
Net asset value, end of period $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88
TOTAL RETURN A, B 35.01% 11.40% 3.97% 41.05% 5.97%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 602,915 $ 272,979 $ 199,361 $ 40,309 $ 7,087
(000 omitted)
Ratio of expenses to average 1.59% 1.86% 2.10% 2.63% 3.27%
net assets F C
Ratio of expenses to average 1.56% 1.84% 2.07% 2.62% 3.27%
net assets after expense G G G G
reductions
Ratio of net investment income .00% (.30)% (.67)% (1.18)% (1.22)%
(loss) to average net assets
Portfolio turnover 137% 161% 125% 208% 248%
Average commission rate H $ .0337
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 G
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 19.27 $ 18.87
Income from Investment Operations
Net investment income (loss) .04 (.01)
Net realized and unrealized gain (loss) 6.55 .41
Total from investment operations 6.59 .40
Less Distributions
From net realized gain (.69) -
Net asset value, end of period $ 25.17 $ 19.27
TOTAL RETURN B, C 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 9,860 $ 718
Ratio of expenses to average net assets 1.44% 1.68% A,
E
Ratio of expenses to average net assets after expense reductions 1.39% F 1.66% A,
F
Ratio of net investment income (loss) to average net assets .17% (.13)%
A
Portfolio turnover 137% 161%
Average commission rate H $ .0337
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Natural Resources Fund (the fund) (formerly Fidelity
Advisor Global Resources Fund) is a fund of Fidelity Advisor Series V (the
trust) and is authorized to issue an unlimited number of shares. The trust
is registered under the Investment Company Act of 1940, as amended (the
1940 Act), as an open-end management investment company organized as a
Massachusetts business trust.
The fund offers Class A, Class B, Class T, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
The fund commenced sale of a new Class A of shares on September 3, 1996. On
this date, the original Class A was renamed Class T. Investment income,
realized and unrealized capital gains and losses, the common expenses of
the fund, and certain fund-level expense reductions are allocated on a pro
rata basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which quotations are not readily
available (and in certain cases debt securities which trade on an exchange)
are valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
in foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on investment
securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. FMR bears all organizational expenses except for
registering and qualifying each class and shares of each class for
distribution under federal and state securities law. These expenses are
borne by each class and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends are declared separately for each class,
while capital gain distributions are declared at the fund level and
allocated to each class on a pro rata basis based on the number of shares
held by each class on the ex-dividend date.
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 foreign
currency transactions, passive foreign investment companies (PFIC), net
operating losses and losses deferred due to wash sales. The fund also
utilized earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences that will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign securities. Losses may
arise from changes in the value of the foreign currency or if the
counterparties do not perform under the contracts' terms. The U.S. dollar
value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an exemptive order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR. 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 U.S. Treasury securities and repurchase
agreements for these securities, and may be utilized by the fund as an
additional cash management option. Dividends from the Cash Fund are
declared daily and paid monthly from net interest income. Income
distributions received by the fund are recorded as interest income.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $844,334,385 and $596,480,708, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2500% to
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
.5200% for the period. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
The annual individual fund fee rate is .30%. For the period, the management
fee was equivalent to an annual rate of .72% of average net assets.
Effective September 1, 1996, FMR voluntarily agreed to reduce the
individual fund fee rate from .45% to .30%.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares (Class A Plan), Class B shares (Class B Plan),
Class T shares (Class T Plan), and Institutional Class shares (collectively
referred to as "the Plans"). Under the Class A, Class B, and Class T Plans,
the fund pays Fidelity Distributors Corporation (FDC), an affiliate of FMR,
a distribution and service fee. This fee is based on annual rates of .25%,
1.00% (of which .75% represents a distribution fee and .25% represents a
shareholder service fee), and .50% (.65% prior to January 1, 1996) of the
average net assets of the Class A, Class B, and Class T shares,
respectively. For the period, the fund paid FDC $344, $164,177, and
$2,272,463 under the Class A, Class B, and Class T Plans, of which $344,
$41,044, and $2,199,691 were paid to securities
dealers, banks and other financial institutions for the distribution of
Class A, Class B, and Class T shares, and providing shareholder support
services.
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
Class T, and Institutional Class shares. The Plans also authorize payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% and 3.50%
(4.75% prior to January 1, 1996) for selling Class A and Class T shares of
the fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within five years of
purchase. The Class B charge is based on declining rates which range from
4% to 1% of the lesser of the cost of shares at the initial date of
purchase or the net asset value of the redeemed shares, excluding any
reinvested dividends and capital gains.
For the period, FDC received sales charges of $61,535 and $3,256,662 on
sales of Class A and Class T shares of the fund, of which $55,384 and
$2,725,846 were paid to securities dealers, banks, and other financial
institutions. FDC also received contingent deferred sales charges of
$21,872 on Class B share redemptions from the fund. When Class B shares are
sold, FDC pays commissions from its own resources to dealers through which
the sales are made.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, is the transfer, dividend disbursing, and
shareholder servicing agent for the fund's Class A , Class B, and
Institutional Class Shares, while State Street Bank and Trust Company
(State Street) (collectively, with FIIOC, referred to as the Transfer
Agents) acts in that capacity for the fund's Class T shares. The Transfer
Agents receive account fees and asset-based fees that vary according to
account size and type of account of the shareholders of the respective
classes of the fund. With respect to the Class T shares, State Street has
delegated certain transfer, dividend disbursing, and shareholder services
to FIIOC for which FIIOC receives its allocable share of all such fees.
FIIOC pays for typesetting, printing and mailing of all shareholder
reports, except proxy statements. For the period, the transfer agent fees
were equivalent to annual rates of .22%, .29%, .24%, and .17% of the
average net assets of Class A, Class B, Class T, and Institutional Class,
respectively.
ACCOUNTING FEES. Fidelity Service Co. (FSC), an affiliate of FMR, maintains
the fund's accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $299,285 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above an annual
rate of 1.75% of the average net assets for Class A. For the period, the
reimbursement reduced expenses by $8,444.
In addition, FMR voluntarily agreed to reimburse certain transfer agent,
distribution and registration expenses for Class A. For the period, the
reimbursement reduced these expenses by $134.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$145,793 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of expenses. During the period, the fund's custodian
fees were reduced by $3,215 under the custodian arrangement, and Class T
and Institutional Class expenses were reduced by $3,021 and $805,
respectively, under the transfer agent arrangement.
6. SHARE TRANSACTIONS.
Share transactions for each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEARS ENDED YEARS ENDED
OCTOBER 31, OCTOBER 31,
1996 A 1995 B 1996 A 1995 B
CLASS A 68,176 - $ 1,669,719 $ -
Shares sold
Shares redeemed (4,094) - (102,601) -
Net increase (decrease) 64,082 - $ 1,567,118 $ -
CLASS B 1,475,147 131,062 $ 33,567,815 $ 2,593,820
Shares sold
Reinvestment of distributions 5,653 - 112,491 -
Shares redeemed (160,185) (639) (3,677,194) (12,702)
Net increase (decrease) 1,320,615 130,423 $ 30,003,112 $ 2,581,118
CLASS T 16,012,851 7,829,216 $ 364,247,050 $ 140,936,888
Shares sold
Reinvestment of distributions 462,106 172,755 9,214,395 2,772,967
Shares redeemed (6,657,398) (5,174,557) (152,716,059) (90,539,239)
Net increase (decrease) 9,817,559 2,827,414 $ 220,745,386 $ 53,170,616
INSTITUTIONAL CLASS 759,537 38,128 $ 17,292,506 $ 737,951
Shares sold
Reinvestment of distributions 1,464 - 29,239 -
Shares redeemed (406,499) (858) (9,620,709) (16,977)
Net increase (decrease) 354,502 37,270 $ 7,701,036 $ 720,974
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
B SHARE TRANSACTIONS FOR CLASS B AND INSTITUTIONAL CLASS ARE FOR THE PERIOD
JULY 3, 1995 (COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1995.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series V and the Shareholders of
Fidelity Advisor Natural Resources Fund (formerly Fidelity Advisor Global
Resources Fund):
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series V: Fidelity Advisor Natural Resources Fund
(formerly Fidelity Advisor Global Resources Fund), including the schedule
of portfolio investments, as of October 31, 1996, and the related statement
of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights of Class A, Class B, Class T and Institutional Class for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series V: Fidelity Advisor Natural Resources Fund as of
October 31, 1996, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights of Class A, Class B, Class T and
Institutional Class for each of the periods indicated therein, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 13, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Natural Resources voted to pay on
December 9, 1996, to shareholders of record at the opening of business on
December 6, 1996, a distribution of $1.57 per share derived from capital
gains realized from sales of portfolio securities and a dividend of $.07
per share from net investment income.
A total of 22% of the dividends distributed during the fiscal year
qualifies for the dividends received deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
NATURAL RESOURCES
FUND (FORMERLY FIDELITY ADVISOR GLOBAL RESOURCES FUND) - CLASS A, CLASS T
(FORMERLY CLASS A), AND CLASS B
ANNUAL REPORT
OCTOBER 31, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 10 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 13 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 14 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 21 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 34 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 35
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:
Although stocks have managed to post solid returns through the first 10
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR NATURAL RESOURCES 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The initial offering of Class A
shares took place on September 3, 1996. Class A shares bear a 0.25% 12b-1
fee. Returns prior to September 3, 1996 are those of Class T, the original
class of the fund, and reflect Class T's 0.50% 12b-1 fee (0.65% prior to
January 1, 1996). If Fidelity had not reimbursed certain class expenses,
the past one year, past five years and life of fund total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - Class 34.96% 133.62% 307.50%
A
Advisor Natural Resources - Class A 27.87% 121.36% 286.10%
(incl. max. 5.25% sales charge)
S&P 500(registered trademark) 24.10% 106.02% 276.35%
Natural Resources Funds Average 39.65% 76.85% n/a
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 29, 1987. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare Class A's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. To measure how Class A's performance stacked up against its
peers, you can compare it to the natural resources funds average, which
reflects the performance of 38 mutual funds with similar objectives tracked
by Lipper Analytical Services, Inc. over the past 12 months. Both
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - Class A 34.96% 18.50% 17.21%
Advisor Natural Resources - Class A 27.87% 17.22% 16.49%
(incl. max. 5.25% sales charge)
S&P 500 24.10% 15.55% 16.16%
Natural Resources Funds Average 39.65% 11.79% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' actual (or cumulative)
return and show you what would have happened if Class A shares had
performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19961031 19961111 131334 S00000000000001
FA Natural Resource -CL A SP Standard & Poor 500
00247 SP001
1987/12/29 9475.00 10000.00
1987/12/31 9456.05 10064.43
1988/01/31 9361.30 10488.14
1988/02/29 10071.93 10976.89
1988/03/31 10346.70 10637.70
1988/04/30 10517.25 10755.78
1988/05/31 10346.70 10849.36
1988/06/30 11028.90 11347.34
1988/07/31 10981.53 11304.22
1988/08/31 10687.80 10919.88
1988/09/30 10640.43 11385.07
1988/10/31 10867.83 11701.57
1988/11/30 10621.48 11534.24
1988/12/31 10978.60 11736.09
1989/01/31 11865.96 12595.17
1989/02/28 11690.55 12281.55
1989/03/31 11917.56 12567.71
1989/04/30 12289.01 13219.97
1989/05/31 12577.92 13755.38
1989/06/30 12536.65 13676.98
1989/07/31 13444.65 14912.01
1989/08/31 13847.06 15204.28
1989/09/30 13475.61 15141.94
1989/10/31 13000.97 14790.65
1989/11/30 13578.79 15092.38
1989/12/31 14616.67 15454.60
1990/01/31 13694.70 14417.59
1990/02/28 14335.58 14603.58
1990/03/31 14605.43 14990.58
1990/04/30 13840.87 14615.81
1990/05/31 15246.31 16040.85
1990/06/30 15055.17 15931.78
1990/07/31 15797.25 15880.79
1990/08/31 15381.24 14445.17
1990/09/30 14897.76 13741.69
1990/10/31 13829.62 13682.60
1990/11/30 14054.49 14566.50
1990/12/31 13844.62 14972.90
1991/01/31 14301.42 15625.72
1991/02/28 16362.89 16742.96
1991/03/31 15976.36 17148.14
1991/04/30 16058.35 17189.30
1991/05/31 16831.40 17931.87
1991/06/30 15859.23 17110.59
1991/07/31 16386.31 17907.95
1991/08/31 16807.98 18332.37
1991/09/30 16152.06 18026.21
1991/10/31 16526.87 18267.77
1991/11/30 15191.60 17531.58
1991/12/31 15847.77 19537.19
1992/01/31 16831.94 19173.80
1992/02/29 17210.47 19423.06
1992/03/31 16781.47 19044.31
1992/04/30 17399.74 19604.21
1992/05/31 17866.59 19700.27
1992/06/30 17286.18 19406.73
1992/07/31 17980.15 20200.47
1992/08/31 17715.18 19786.36
1992/09/30 17891.83 20019.84
1992/10/31 17513.30 20089.91
1992/11/30 17740.41 20774.97
1992/12/31 17961.04 21030.51
1993/01/31 18536.80 21207.16
1993/02/28 19056.39 21495.58
1993/03/31 20320.27 21949.14
1993/04/30 21415.62 21417.97
1993/05/31 22468.85 21991.97
1993/06/30 22777.80 22055.75
1993/07/31 22468.85 21967.52
1993/08/31 23760.81 22800.09
1993/09/30 23634.42 22624.53
1993/10/31 24701.69 23092.86
1993/11/30 23774.85 22873.48
1993/12/31 24775.26 23150.25
1994/01/31 26281.67 23937.36
1994/02/28 25462.65 23288.65
1994/03/31 23897.75 22273.27
1994/04/30 24292.63 22558.37
1994/05/31 24614.39 22928.32
1994/06/30 24175.63 22366.58
1994/07/31 24994.64 23100.20
1994/08/31 26208.54 24047.31
1994/09/30 26076.92 23458.15
1994/10/31 25682.03 23985.96
1994/11/30 24000.12 23112.39
1994/12/31 24210.56 23455.15
1995/01/31 23734.97 24063.34
1995/02/28 24433.50 25001.09
1995/03/31 25800.82 25738.87
1995/04/30 26856.04 26496.88
1995/05/31 27227.60 27555.96
1995/06/30 28000.43 28196.09
1995/07/31 29174.55 29131.07
1995/08/31 29620.41 29204.19
1995/09/30 29873.07 30436.60
1995/10/31 28609.78 30327.94
1995/11/30 30066.28 31659.34
1995/12/31 31152.82 32269.10
1996/01/31 32336.81 33367.54
1996/02/29 33136.39 33676.86
1996/03/31 34151.24 34001.17
1996/04/30 36134.81 34502.34
1996/05/31 36811.37 35392.16
1996/06/30 36580.73 35527.00
1996/07/31 34597.16 33957.42
1996/08/31 36150.18 34673.58
1996/09/30 37687.84 36625.01
1996/10/31 38610.43 37635.13
IMATRL PRASUN SHR__CHT 19961031 19961111 131336 R00000000000110
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources Fund - Class A on December
29, 1987, when the fund started, and paid the current maximum 5.25% sales
charge. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $38,610 - a 286.10% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends reinvested, the same $10,000 investment would have
grown to $37,635 - a 276.35% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. The stock market, for
example, has a history of
growth in the long run and
volatility in the short run. Foreign
stocks involve greater risks, due
to political and economic
uncertainties. In turn, the share
price and return of a fund that
invests in stocks will vary. That
means if you sell your shares
during a market downturn, you
might lose money. But if you
can ride out the market's ups
and downs, you may have a
gain.
(checkmark)
ADVISOR NATURAL RESOURCES 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). If Fidelity had not reimbursed
certain class expenses, the past five years and life of fund total returns
would have been lower. Effective January 1, 1996, the maximum 4.75% sales
charge on Class T shares was reduced to 3.50%.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - Class 35.01% 133.72% 307.66%
T
Advisor Natural Resources - Class T 30.28% 125.54% 293.39%
(incl. max. 3.50% sales charge)
S&P 500(registered trademark) 24.10% 106.02% 276.35%
Natural Resources Funds Average 39.65% 76.85% n/a
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 29, 1987. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare Class T's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. To measure how Class T's performance stacked up against its
peers, you can compare it to the natural resources funds average, which
reflects the performance of 38 mutual funds with similar objectives tracked
by Lipper Analytical Services, Inc. over the past 12 months. Both
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - Class T 35.01% 18.51% 17.21%
Advisor Natural Resources - Class T 30.28% 17.66% 16.74%
(incl. max. 3.50% sales charge)
S&P 500 24.10% 15.55% 16.16%
Natural Resources Funds Average 39.65% 11.79% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' actual (or cumulative)
return and show you what would have happened if Class T shares had
performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19961031 19961111 131732 S00000000000001
FA Natural Resource -CL T SP Standard & Poor 500
00166 SP001
1987/12/29 9650.00 10000.00
1987/12/31 9630.70 10064.43
1988/01/31 9534.20 10488.14
1988/02/29 10257.95 10976.89
1988/03/31 10537.80 10637.70
1988/04/30 10711.50 10755.78
1988/05/31 10537.80 10849.36
1988/06/30 11232.60 11347.34
1988/07/31 11184.35 11304.22
1988/08/31 10885.20 10919.88
1988/09/30 10836.95 11385.07
1988/10/31 11068.55 11701.57
1988/11/30 10817.65 11534.24
1988/12/31 11181.37 11736.09
1989/01/31 12085.12 12595.17
1989/02/28 11906.47 12281.55
1989/03/31 12137.67 12567.71
1989/04/30 12515.99 13219.97
1989/05/31 12810.23 13755.38
1989/06/30 12768.20 13676.98
1989/07/31 13692.97 14912.01
1989/08/31 14102.81 15204.28
1989/09/30 13724.50 15141.94
1989/10/31 13241.09 14790.65
1989/11/30 13829.59 15092.38
1989/12/31 14886.64 15454.60
1990/01/31 13947.63 14417.59
1990/02/28 14600.36 14603.58
1990/03/31 14875.19 14990.58
1990/04/30 14096.50 14615.81
1990/05/31 15527.91 16040.85
1990/06/30 15333.24 15931.78
1990/07/31 16089.02 15880.79
1990/08/31 15665.32 14445.17
1990/09/30 15172.92 13741.69
1990/10/31 14085.05 13682.60
1990/11/30 14314.08 14566.50
1990/12/31 14100.32 14972.90
1991/01/31 14565.56 15625.72
1991/02/28 16665.10 16742.96
1991/03/31 16271.44 17148.14
1991/04/30 16354.95 17189.30
1991/05/31 17142.27 17931.87
1991/06/30 16152.15 17110.59
1991/07/31 16688.96 17907.95
1991/08/31 17118.41 18332.37
1991/09/30 16450.38 18026.21
1991/10/31 16832.11 18267.77
1991/11/30 15472.18 17531.58
1991/12/31 16140.47 19537.19
1992/01/31 17142.82 19173.80
1992/02/29 17528.34 19423.06
1992/03/31 17091.42 19044.31
1992/04/30 17721.10 19604.21
1992/05/31 18196.58 19700.27
1992/06/30 17605.45 19406.73
1992/07/31 18312.24 20200.47
1992/08/31 18042.37 19786.36
1992/09/30 18222.28 20019.84
1992/10/31 17836.76 20089.91
1992/11/30 18068.07 20774.97
1992/12/31 18292.77 21030.51
1993/01/31 18879.17 21207.16
1993/02/28 19408.36 21495.58
1993/03/31 20695.58 21949.14
1993/04/30 21811.16 21417.97
1993/05/31 22883.84 21991.97
1993/06/30 23198.50 22055.75
1993/07/31 22883.84 21967.52
1993/08/31 24199.66 22800.09
1993/09/30 24070.94 22624.53
1993/10/31 25157.92 23092.86
1993/11/30 24213.97 22873.48
1993/12/31 25232.86 23150.25
1994/01/31 26767.08 23937.36
1994/02/28 25932.94 23288.65
1994/03/31 24339.13 22273.27
1994/04/30 24741.31 22558.37
1994/05/31 25069.01 22928.32
1994/06/30 24622.14 22366.58
1994/07/31 25456.29 23100.20
1994/08/31 26692.61 24047.31
1994/09/30 26558.55 23458.15
1994/10/31 26156.37 23985.96
1994/11/30 24443.40 23112.39
1994/12/31 24657.72 23455.15
1995/01/31 24173.35 24063.34
1995/02/28 24884.78 25001.09
1995/03/31 26277.35 25738.87
1995/04/30 27352.06 26496.88
1995/05/31 27730.48 27555.96
1995/06/30 28517.59 28196.09
1995/07/31 29713.39 29131.07
1995/08/31 30167.49 29204.19
1995/09/30 30424.82 30436.60
1995/10/31 29138.19 30327.94
1995/11/30 30621.59 31659.34
1995/12/31 31728.20 32269.10
1996/01/31 32934.06 33367.54
1996/02/29 33748.41 33676.86
1996/03/31 34782.00 34001.17
1996/04/30 36802.21 34502.34
1996/05/31 37491.27 35392.16
1996/06/30 37256.36 35527.00
1996/07/31 35236.15 33957.42
1996/08/31 36817.87 34673.58
1996/09/30 38399.58 36625.01
1996/10/31 39339.21 37635.13
IMATRL PRASUN SHR__CHT 19961031 19961111 131735 R00000000000110
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources Fund - Class T on December
29, 1987, when the fund started, and paid the current maximum 3.50% sales
charge. As the chart shows, by October 31, 1996, the value of the
investment would have grown to $39,339 - a 293.39% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends reinvested, the same $10,000 investment would have
grown to $37,635 - a 276.35% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. The stock market, for
example, has a history of
growth in the long run and
volatility in the short run. Foreign
stocks involve greater risks, due
to political and economic
uncertainties. In turn, the share
price and return of a fund that
invests in stocks will vary. That
means if you sell your shares
during a market downturn, you
might lose money. But if you
can ride out the market's ups
and downs, you may have a
gain.
(checkmark)
ADVISOR NATURAL RESOURCES 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. A class' total return
includes changes in share price, plus reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value). The initial offering of Class B
shares took place on July 3, 1995. Class B shares bear a 1.00%
12b-1/shareholder service fee. Returns prior to July 3, 1995 are those of
Class T, the original class of the fund, and reflect Class T's prior 0.65%
12b-1 fee. Had Class B's 12b-1 fee been reflected, returns prior to July 3,
1995 would have been lower. Class B's contingent deferred sales charges
included in the past one year, past five years and life of fund total
return figures are 4%, 1% and 0%, respectively. If Fidelity had not
reimbursed certain class expenses, the past five years and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - Class 33.87% 131.50% 303.79%
B
Advisor Natural Resources - Class B 29.87% 130.50% 303.79%
(incl. contingent deferred sales
charge)
S&P 500(registered trademark) 24.10% 106.02% 276.35%
Natural Resources Funds Average 39.65% 76.85% n/a
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 29, 1987. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. You can compare Class B's returns to the performance of the
Standard & Poor's 500 Index - a widely recognized, unmanaged index of
common stocks. To measure how Class B's performance stacked up against its
peers, you can compare it to the natural resources funds average, which
reflects the performance of 38 mutual funds with similar objectives tracked
by Lipper Analytical Services, Inc. over the past 12 months. Both
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - Class B 33.87% 18.28% 17.08%
Advisor Natural Resources - Class B 29.87% 18.18% 17.08%
(incl. contingent deferred sales charge)
S&P 500 24.10% 15.55% 16.16%
Natural Resources Funds Average 39.65% 11.79% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' actual (or cumulative)
return and show you what would have happened if Class B shares had
performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19961031 19961111 131452 S00000000000001
FA Natural Resource -CL B SP Standard & Poor 500
00656 SP001
1987/12/29 10000.00 10000.00
1987/12/31 9980.00 10064.43
1988/01/31 9880.00 10488.14
1988/02/29 10630.00 10976.89
1988/03/31 10920.00 10637.70
1988/04/30 11100.00 10755.78
1988/05/31 10920.00 10849.36
1988/06/30 11640.00 11347.34
1988/07/31 11590.00 11304.22
1988/08/31 11280.00 10919.88
1988/09/30 11230.00 11385.07
1988/10/31 11470.00 11701.57
1988/11/30 11210.00 11534.24
1988/12/31 11586.91 11736.09
1989/01/31 12523.44 12595.17
1989/02/28 12338.32 12281.55
1989/03/31 12577.89 12567.71
1989/04/30 12969.93 13219.97
1989/05/31 13274.85 13755.38
1989/06/30 13231.29 13676.98
1989/07/31 14189.61 14912.01
1989/08/31 14614.32 15204.28
1989/09/30 14222.28 15141.94
1989/10/31 13721.34 14790.65
1989/11/30 14331.18 15092.38
1989/12/31 15426.57 15454.60
1990/01/31 14453.51 14417.59
1990/02/28 15129.90 14603.58
1990/03/31 15414.70 14990.58
1990/04/30 14607.77 14615.81
1990/05/31 16091.10 16040.85
1990/06/30 15889.36 15931.78
1990/07/31 16672.56 15880.79
1990/08/31 16233.50 14445.17
1990/09/30 15723.23 13741.69
1990/10/31 14595.91 13682.60
1990/11/30 14833.24 14566.50
1990/12/31 14611.74 14972.90
1991/01/31 15093.85 15625.72
1991/02/28 17269.54 16742.96
1991/03/31 16861.60 17148.14
1991/04/30 16948.13 17189.30
1991/05/31 17764.01 17931.87
1991/06/30 16737.98 17110.59
1991/07/31 17294.26 17907.95
1991/08/31 17739.29 18332.37
1991/09/30 17047.02 18026.21
1991/10/31 17442.60 18267.77
1991/11/30 16033.35 17531.58
1991/12/31 16725.88 19537.19
1992/01/31 17764.58 19173.80
1992/02/29 18164.09 19423.06
1992/03/31 17711.32 19044.31
1992/04/30 18363.84 19604.21
1992/05/31 18856.56 19700.27
1992/06/30 18243.99 19406.73
1992/07/31 18976.41 20200.47
1992/08/31 18696.76 19786.36
1992/09/30 18883.19 20019.84
1992/10/31 18483.69 20089.91
1992/11/30 18723.39 20774.97
1992/12/31 18956.24 21030.51
1993/01/31 19563.91 21207.16
1993/02/28 20112.29 21495.58
1993/03/31 21446.19 21949.14
1993/04/30 22602.24 21417.97
1993/05/31 23713.83 21991.97
1993/06/30 24039.89 22055.75
1993/07/31 23713.83 21967.52
1993/08/31 25077.37 22800.09
1993/09/30 24943.98 22624.53
1993/10/31 26070.39 23092.86
1993/11/30 25092.19 22873.48
1993/12/31 26148.04 23150.25
1994/01/31 27737.91 23937.36
1994/02/28 26873.51 23288.65
1994/03/31 25221.90 22273.27
1994/04/30 25638.66 22558.37
1994/05/31 25978.24 22928.32
1994/06/30 25515.17 22366.58
1994/07/31 26379.57 23100.20
1994/08/31 27660.73 24047.31
1994/09/30 27521.81 23458.15
1994/10/31 27105.05 23985.96
1994/11/30 25329.95 23112.39
1994/12/31 25552.05 23455.15
1995/01/31 25050.10 24063.34
1995/02/28 25787.33 25001.09
1995/03/31 27230.42 25738.87
1995/04/30 28344.11 26496.88
1995/05/31 28736.25 27555.96
1995/06/30 29551.91 28196.09
1995/07/31 30775.39 29131.07
1995/08/31 31245.96 29204.19
1995/09/30 31481.25 30436.60
1995/10/31 30163.65 30327.94
1995/11/30 31669.48 31659.34
1995/12/31 32767.57 32269.10
1996/01/31 34017.25 33367.54
1996/02/29 34828.73 33676.86
1996/03/31 35867.42 34001.17
1996/04/30 37912.35 34502.34
1996/05/31 38593.99 35392.16
1996/06/30 38318.09 35527.00
1996/07/31 36224.47 33957.42
1996/08/31 37814.97 34673.58
1996/09/30 39421.70 36625.01
1996/10/31 40379.25 37635.13
IMATRL PRASUN SHR__CHT 19961031 19961111 131454 R00000000000110
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Natural Resources Fund - Class B on December
29, 1987, when the fund started. As the chart shows, by October 31, 1996,
the value of the investment would have grown to $40,379 - a 303.79%
increase on the initial investment. For comparison, look at how the S&P 500
did over the same period. With dividends reinvested, the same $10,000
investment would have grown to $37,635 - a 276.35% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. The stock market, for
example, has a history of
growth in the long run and
volatility in the short run. Foreign
stocks involve greater risks, due
to political and economic
uncertainties. In turn, the share
price and return of a fund that
invests in stocks will vary. That
means if you sell your shares
during a market downturn, you
might lose money. But if you
can ride out the market's ups
and downs, you may have a
gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Paced by the robust performance
of blue chip stocks, the U.S. stock
market posted strong gains for the
year that ended October 31, 1996.
The Standard & Poor's 500 Index
returned 24.10% during the period
- - well above its long-term
average of about 12%. The stock
market spent much of the past
year breaking price and trading
volume records. Solid corporate
earnings reports, large cash
inflows into mutual funds,
widespread optimism and a
generally favorable interest rate
environment propelled share prices
higher. Large capitalization stocks
thrived as investors sought their
lower volatility and higher degree of
liquidity over smaller cap stocks in
an environment where it was
sometimes difficult to discern the
health of the economy. The Dow
Jones Industrial Average closed
above 6000 for the first time in
October. While short-term
confusion over the direction of
interest rates created a volatile
backdrop in the summer months,
stocks rallied again when the
Federal Reserve Board left
short-term interest rates unchanged
and it appeared inflation would not
be an issue for the remainder of
1996. Smaller-company stocks
posted strong gains at the
beginning of 1996, but trended
downward in the spring and summer
because their earnings tend to be
more affected by the higher
borrowing costs brought on by
higher rates. When interest rate
fears subsided, these stocks
rebounded, only to fade toward the
end of the period due to earnings
concerns and a general flight to
quality.
NOTE TO SHAREHOLDERS: Steve Dufour became Portfolio Manager of Fidelity
Advisor Natural Resources Fund on August 30, 1996.
Q. STEVE, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended October 31, 1996, the fund's Class A, Class T
and Class B shares had total returns of 34.96%, 35.01% and 33.87%,
respectively. During the same 12-month period, the natural resources funds
average tracked by Lipper Analytical Services returned 39.65%. The Standard
& Poor's 500 Index returned 24.10% for the same period.
Q. WHAT CHANGES HAVE YOU MADE SINCE YOU BEGAN MANAGING THE FUND IN AUGUST?
A. I significantly added to the fund's holdings in the energy sector. By
the end of the period, the fund's stake in energy companies had grown to
nearly half of its investments, compared to six months ago, when energy
stocks represented just over a quarter of the fund's holdings. During the
first half of 1996, investors were worried that Iraq - which so far has
been banned from doing so - would be allowed to sell its oil in the world
market. In anticipation that the supply of oil would rise significantly
because of Iraq's potential re-entry, oil prices remained low. When it
became clear that the ban against Iraq wasn't going to be lifted over the
near-term, energy prices began to rise. Meanwhile, stronger-than-expected
global economic growth translated into higher-than-anticipated demand for
oil.
Q. WHICH TYPES OF COMPANIES WITHIN THE ENERGY SECTOR DID YOU ADD?
A. I emphasized exploration and production (E&P) companies and energy
services companies because I believed these companies had the most to gain
from the rising price of oil. In the E&P sector, I added to the fund's
holdings in United Meridian, a medium-sized company with very attractive
acreage in Equatorial Guinea, and Union Pacific Resources, which was
recently spun out from its parent. Both stocks have performed quite well
over the past six months. Chesapeake Energy, one of the strongest
contributors to the fund's performance over the past year, has had a lot of
exploration success this year. In the energy services area, I added to
holdings in Schlumberger and Halliburton. As the price of oil rose, there
was more interest in drilling new wells and extracting more oil from
existing wells. Generally speaking, energy services companies continued to
see strong current results as the capital expenditures of E&P companies
rose.
Q. WHAT OTHER CHANGES HAVE YOU MADE?
A. Since taking over the fund, I added to the fund's holdings in gold
stocks, such as Newmont Mining and Barrick Gold. I bought them at a time
when they were cheap, meaning that I believed their business prospects were
much better than their stock prices reflected. The price of gold has
languished for much of the year. But if history is any indication, demand
resulting from higher jewelry sales during the holidays could help the
price of gold over the next several months.
Q. STEVE, WE UNDERSTAND THAT THERE ARE SOME UPCOMING CHANGES TO THE FUND'S
INVESTMENT POLICIES.
A. Yes, effective January 2, 1997, the fund's ability to invest in below
investment-grade quality bonds will be limited to 5% of its total assets,
down from 35%. Further, there will be a change in the amount the fund is
required to invest in natural resource stocks. The fund normally invests at
least 80%, up from 65%, of its assets in securities of foreign and domestic
companies that own or develop natural resources, or supply goods and
services to such companies, or in physical commodities. These changes do
not impact the way in which I am currently managing the fund.
Q. WHAT'S YOUR OUTLOOK?
A. In my view, the current outlook for energy and energy services stocks is
favorable. But there are a lot of variables that could change my outlook,
including the
re-entry of Iraq into the world marketplace, slower-than-expected economic
growth or some event we can't even anticipate right now. If I believe the
outlook for energy has deteriorated, I'll move into industries that I think
offer a better value.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: a high level of current
income free from federal
income tax and New York state
and city personal income tax
by investing primarily in
municipal securities
START DATE: August 21, 1995
SIZE: as of October 31, 1996,
more than $7 million
MANAGER: Norman Lind,
since 1995; manager, Fidelity
New York Municipal Income
Fund and Spartan New York
Municipal Income Fund, since
1993; Fidelity New York
Insured Municipal Income
Fund, since 1994; Spartan
Short-Intermediate Municipal
Income Fund, Spartan New
York Intermediate Municipal
Income Fund, Spartan
Intermediate Municipal Income
Fund and Fidelity Advisor
Short-Intermediate Municipal
Income Fund, since 1995;
joined Fidelity in 1986
(checkmark)
NORM LIND ON SOME
WELCOME CHANGES IN NEW
YORK:
"New York is both an
interesting and challenging
state in which to invest.
Historically, the state has
been regarded as being very
generous in terms of welfare
and public care funding. This
past year, however, saw
diminished financial
assistance in those areas.
Expenses were lower and, for
the second year in a row,
budget costs were down,
which is quite astounding. I
think lawmakers are finally
realizing that maybe
government can't do
everything, so they're cutting
back on certain programs. As
a manager, that's a trend that
I'd like to see continue. New
York City has done a
wonderful job of publicizing
itself as a kinder, gentler place
to visit and conduct business.
We've seen signs that the
economy is improving -
most notably growth in the
advertising, high tech and
movie industries. Tourism is
also booming - whenever I
want to go to New York to talk
to issuers, I need to book a
hotel room weeks in advance.
A huge part of this renewed
attractiveness is the fact
that the crime rate has
declined. New York City can
still be somewhat intimidating,
but it is perceived as being
safer than it was five years
ago. The city's efforts in trying
to improve the climate have
not gone unnoticed."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Bre-X Minerals Ltd. 2.6 2.6
United Meridian Corp. 2.1 0.6
CSX Corp. 1.9 0.1
Total SA sponsored ADR 1.7 0.0
Aluminum Co. of America 1.6 0.7
Schlumberger Ltd. 1.5 0.7
Diamond Offshore Drilling, Inc. 1.5 1.1
Transocean Offshore, Inc. 1.4 0.9
Halliburton Co. 1.4 0.0
Occidental Petroleum Corp. 1.4 1.0
TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO
Energy 46.5 26.2
Basic Industries 24.9 23.3
Precious Metals 12.0 8.2
Transportation 2.6 1.0
Technology 2.5 6.4
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1996 * AS OF APRIL 30, 1996 **
Row: 1, Col: 1, Value: 4.3
Row: 1, Col: 2, Value: 95.7
Row: 1, Col: 1, Value: 7.9
Row: 1, Col: 2, Value: 92.09999999999999
Stocks 95.7%
Short-term
investments 4.3%
FOREIGN
INVESTMENTS 20.1%
Stocks 92.1%
Short-term
investments 7.9%
FOREIGN
INVESTMENTS 19.8%
*
**
INVESTMENTS OCTOBER 31, 1996
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.3%
Rockwell International Corp. 40,000 $ 2,200,000
BASIC INDUSTRIES - 24.9%
CHEMICALS & PLASTICS - 12.7%
Agrium, Inc. 210,000 2,816,317
Air Products & Chemicals, Inc. 55,000 3,300,000
Cambrex Corp. 100,000 3,125,000
Crompton & Knowles Corp. 216,041 3,888,738
Cytec Industries, Inc. (a) 135,000 4,826,250
DSM NV 30,000 2,866,214
du Pont (E.I.) de Nemours & Co. 60,000 5,565,000
FMC Corp. (a) 50,000 3,681,250
Ferro Corp. 120,000 3,240,000
Fuller (H.B.) Co. 81,472 3,401,456
Furon Co. 85,000 1,785,000
Hanna (M.A.) Co. 141,250 3,001,563
Hercules, Inc. 60,000 2,857,500
IMC Fertilizer Group, Inc. 92,000 3,450,000
Intertape Polymer Group, Inc. 59,300 1,369,024
Monsanto Co. 155,000 6,141,875
Nalco Chemical Co. 125,000 4,546,875
Potash Corp. of Saskatchewan 35,000 2,481,602
Praxair, Inc. 102,000 4,513,500
Schulman (A.), Inc. 150,000 3,168,750
Scotts Co. Class A (a) 140,000 2,607,500
Union Carbide Corp. 80,000 3,410,000
Wellman, Inc. 50,000 887,500
Witco Corp. 200,000 6,200,000
83,130,914
IRON & STEEL - 0.4%
Nucor Corp. 47,000 2,226,625
METALS & MINING - 6.6%
Alcan Aluminium Ltd. 170,000 5,588,554
Alumax, Inc. (a) 160,000 5,140,000
Aluminum Co. of America 177,000 10,376,625
IMCO Recycling, Inc. 133,500 2,136,000
Inco Ltd. 150,000 4,746,162
JCI Ltd. (a) 100,000 1,033,014
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
Kaiser Aluminum Corp. (a) 385,500 $ 4,288,688
Pechiney SA Class A 109,683 4,698,559
Reynolds Metals Co. 92,000 5,175,000
43,182,602
PAPER & FOREST PRODUCTS - 5.2%
Boise Cascade Corp. 205,000 6,355,000
Buckeye Cellulose Corp. 100,000 2,612,500
Champion International Corp. 60,000 2,610,000
Chesapeake Corp. 150,000 4,237,500
Consolidated Papers, Inc. 55,000 2,756,875
Fort Howard Corp. (a) 200,000 5,125,000
International Paper Co. 51,000 2,180,250
Mercer International, Inc. SBI 100,000 1,250,000
Stone Container Corp. 180,000 2,745,000
Temple-Inland, Inc. 80,000 4,100,000
33,972,125
TOTAL BASIC INDUSTRIES 162,512,266
CONGLOMERATES - 0.8%
Tyco International Ltd. 103,700 5,146,113
CONSTRUCTION & REAL ESTATE - 0.7%
BUILDING MATERIALS - 0.3%
Lilly Industrial Coatings, Inc. Class A 115,000 2,070,000
CONSTRUCTION - 0.4%
McDermott (J. Ray) SA 100,000 2,712,500
TOTAL CONSTRUCTION & REAL ESTATE 4,782,500
DURABLES - 0.9%
AUTOS, TIRES, & ACCESSORIES - 0.9%
Eaton Corp. 100,000 5,975,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - 46.5%
ENERGY SERVICES - 18.2%
BJ Services Co. (a) 110,000 $ 4,936,250
Baker Hughes, Inc. 50,000 1,781,250
Carbo Ceramics, Inc. 52,000 1,027,000
Cliffs Drilling Co. (a) 138,100 5,921,038
Diamond Offshore Drilling, Inc. (a) 160,000 9,740,000
ENSCO International, Inc. (a) 100,000 4,325,000
Energy Ventures, Inc. (a) 200,000 8,800,000
Eni Spa 1,000,000 4,777,503
Falcon Drilling, Inc. (a) 190,000 6,721,250
Global Industries Ltd. (a) 331,600 5,968,800
Halliburton Co. 158,970 9,001,676
Marine Drilling Companies, Inc. (a) 370,000 5,133,750
Nabors Industries, Inc. (a) 230,000 3,823,750
Noble Drilling Corp. 250,000 4,656,250
Numar Corp. (a) 200,000 3,200,000
Pool Energy Services Co. (a) 120,000 1,770,000
Schlumberger Ltd. 101,000 10,011,625
Serv-Tech, Inc. (a) 31,800 99,375
Tidewater, Inc. 124,900 5,464,375
Transocean Offshore, Inc. 148,905 9,418,241
Weatherford Enterra, Inc. (a) 200,000 5,800,000
Western Atlas, Inc. (a) 100,000 6,937,500
119,314,633
OIL & GAS - 28.3%
Amerada Hess Corp. 116,000 6,423,500
Amoco Corp. 50,000 3,787,500
Anadarko Petroleum Corp. 83,000 5,280,875
Barrett Resources Corp. (a) 162,000 6,216,750
Beau Canada Exploration Ltd. (a) 1,400,000 2,562,666
Belco Oil & Gas Corp. (a) 120,000 2,985,000
Belden & Blake Corp. (a) 165,000 4,372,500
British Petroleum PLC ADR 43,399 5,582,196
Burlington Resources, Inc. 100,200 5,047,575
Canadian Natural Resources Ltd. (a) 100,000 2,487,952
Chesapeake Energy Corp. (a) 115,000 6,698,750
Chieftain International, Inc. (a) 250,000 5,864,993
Coastal Corp. (The) 30,000 1,290,000
Comstock Resources, Inc. (a) 100,000 1,287,500
Devon Energy Corp. 100,000 3,487,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Enron Oil & Gas Co. 135,000 $ 3,476,250
Flores & Rucks, Inc. (a) 160,000 7,560,000
Forcenergy Gas Exploration, Inc. (a) 240,800 6,591,900
KCS Group, Inc. 73,000 3,148,125
Kerr-McGee Corp. 85,000 5,333,750
Louisiana Land & Exploration Co. 113,400 6,449,625
Markwest Hydrocarbon, Inc. (a) 88,000 913,000
Mobil Corp. 20,000 2,335,000
National-Oilwell, Inc. 1,000 23,250
Newfield Exploration Co. (a) 60,700 2,868,075
Newport Petroleum Corp. (a) 50,000 263,364
Noble Affiliates, Inc. 60,000 2,610,000
Occidental Petroleum Corp. 366,400 8,976,800
Oryx Energy Co. (a) 100,000 1,925,000
Penn West Petroleum Ltd. (a) 100,000 915,238
Pogo Producing Co. 85,300 3,785,188
Renaissance Energy Ltd. (a) 210,000 6,668,161
Santa Fe Energy Resources, Inc. (a) 385,000 5,486,250
Stone Energy Corp. (a) 102,500 2,152,500
Texaco, Inc. 20,000 2,032,500
Tosco Corp. 71,400 4,007,325
Total SA sponsored ADR 282,000 10,998,000
Union Pacific Resources Group, Inc. 213,520 5,871,800
Unit Corp. (a) 250,000 2,000,000
United Meridian Corp. (a) 286,400 13,496,600
Vastar Resources, Inc. 102,000 3,786,750
Vintage Petroleum, Inc. 151,000 4,454,500
YPF Sociedad Anonima sponsored ADR representing
Class D shares 150,000 3,412,500
184,916,708
TOTAL ENERGY 304,231,341
FINANCE - 0.9%
FEDERAL SPONSORED CREDIT - 0.9%
Federal National Mortgage Association 145,000 5,673,125
HOLDING COMPANIES - 0.7%
Norfolk Southern Corp. 50,000 4,456,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 2.3%
ELECTRICAL EQUIPMENT - 0.7%
Advanced Lighting Technologies, Inc. (a) 42,000 $ 787,500
Anixter International, Inc. (a) 238,000 3,540,250
4,327,750
POLLUTION CONTROL - 1.6%
USA Waste Services, Inc. (a) 114,000 3,648,000
WMX Technologies, Inc. 100,000 3,437,500
Zurn Industries, Inc. 135,000 3,391,875
10,477,375
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 14,805,125
NONDURABLES - 0.6%
AGRICULTURE - 0.6%
Pioneer Hi-Bred International, Inc. 60,000 4,027,500
TOBACCO - 0.0%
Schweitzer-Mauduit International, Inc. 2,600 79,950
TOTAL NONDURABLES 4,107,450
PRECIOUS METALS - 12.0%
Agnico Eagle Mines Ltd. 125,000 1,751,090
Barrick Gold Corp. 325,000 8,522,918
Bre-X Minerals Ltd. (a) 1,000,000 16,735,777
Bro-X Minerals Ltd. 100,000 291,382
Compania de Minas Buenaventura SA Class B
sponsored ADR (a) 156,400 2,619,700
De Beers Consolidated Mines Ltd. ADR 135,000 3,982,500
Driefontein Consolidated Ltd. ADR 100,000 1,318,750
Euro-Nevada Mining Corp. Ltd. 295,400 8,739,841
Franco Nevada Mining Corp. 50,000 2,148,007
Getchell Gold Corp. (a) 175,000 7,787,500
Greenstone Resources Ltd. (a) 350,000 4,445,441
Mentor Exploration & Development Co. Ltd. (a) 160,000 1,637,715
Meridian Gold, Inc. Installment Receipt (c) 1,000,000 2,502,895
Newmont Mining Corp. 190,000 8,787,500
Randgold & Exploration Co. Ltd. 130,900 1,003,706
Santa Fe Pacific Gold Corp. 100,000 1,187,500
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - CONTINUED
Stillwater Mining Co. (a) 120,000 $ 2,070,000
Sudbury Contact Mines Ltd. (a) 140,000 1,098,285
Western Areas Gold Mining Ltd. Ord. (a) 97,300 1,502,503
78,133,010
TECHNOLOGY - 2.5%
COMPUTERS & OFFICE EQUIPMENT - 1.0%
Ingram Micro, Inc. Class A 2,000 36,000
Hewlett-Packard Co. 145,000 6,398,125
6,434,125
ELECTRONIC INSTRUMENTS - 1.5%
KLA Instruments Corp. (a) 175,000 4,243,750
Teradyne, Inc. (a) 375,000 5,953,125
10,196,875
TOTAL TECHNOLOGY 16,631,000
TRANSPORTATION - 2.6%
RAILROADS - 2.6%
Burlington Northern Santa Fe Corp. 25,000 2,059,375
CSX Corp. 286,500 12,355,313
Union Pacific Corp. 50,000 2,806,250
17,220,938
TOTAL COMMON STOCKS
(Cost $534,049,682) 625,874,118
CASH EQUIVALENTS - 4.3%
SHARES
Taxable Central Cash Fund (b) 27,981,495 27,981,495
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $562,031,177) $ 653,855,613
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.33%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Purchased on an installment basis. Market value reflects only those
payments made through October 31, 1996. The remaining installment
aggregating CAD 2,500,000 is due July 31, 1997.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 79.9%
Canada 13.0
France 2.4
South Africa 1.4
Others (individually less than 1%) 3.3
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1996, the aggregate cost of investment securities for income
tax purposes was $562,052,367. Net unrealized appreciation aggregated
$91,803,246, of which $103,164,764 related to appreciated investment
securities and $11,361,518 related to depreciated investment securities.
The fund hereby designates approximately $7,167,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS OCTOBER 31, 1996
Investment in securities, at value (cost $562,031,177) - $ 653,855,613
See accompanying schedule
Receivable for investments sold 6,742,290
Receivable for fund shares sold 2,158,369
Dividends receivable 508,358
Other receivables 9,284
Prepaid expenses 16,768
TOTAL ASSETS 663,290,682
LIABILITIES
Payable for investments purchased $ 10,889,336
Payable for fund shares redeemed 1,083,019
Accrued management fee 304,684
Distribution fees payable 273,570
Other payables and accrued expenses 248,835
TOTAL LIABILITIES 12,799,444
NET ASSETS $ 650,491,238
Net Assets consist of:
Paid in capital $ 509,564,904
Undistributed net investment income 376,703
Accumulated undistributed net realized gain (loss) on 48,725,098
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 91,824,533
investments and assets and liabilities in foreign
currencies
NET ASSETS $ 650,491,238
CALCULATION OF MAXIMUM OFFERING PRICE $25.11
CLASS A:
NET ASSET VALUE and redemption price per share
($1,609,170 (divided by) 64,082 shares)
Maximum offering price per share (100/94.75 of $25.11) $26.50
CLASS B: $24.88
NET ASSET VALUE and offering price per share
($36,106,231 (divided by) 1,451,038 shares) A
CLASS T: $25.12
NET ASSET VALUE and redemption price per share
($602,915,345 (divided by) 23,997,736 shares)
Maximum offering price per share (100/96.50 of $25.12) $26.03
INSTITUTIONAL CLASS: $25.17
NET ASSET VALUE, offering price and redemption price
per share ($9,860,492 (divided by) 391,772 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME YEAR ENDED OCTOBER 31, 1996
Dividends $ 5,636,422
Interest 1,624,764
TOTAL INCOME 7,261,186
EXPENSES
Management fee $ 3,344,653
Transfer agent fees 320
Class A
Class B 47,470
Class T 1,065,112
Institutional Class 10,859
Distribution fees 344
Class A
Class B 164,177
Class T 2,272,463
Accounting fees and expenses 323,423
Non-interested trustees' compensation 1,646
Custodian fees and expenses 75,676
Registration fees 9,352
Class A
Class B 31,266
Class T 74,812
Institutional Class 28,751
Audit 35,509
Legal 8,368
Miscellaneous 19,011
Total expenses before reductions 7,513,212
Expense reductions (161,412) 7,351,800
NET INVESTMENT INCOME (LOSS) (90,614)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 49,757,639
Foreign currency transactions (3,322) 49,754,317
Change in net unrealized appreciation (depreciation) on:
Investment securities 74,826,891
Assets and liabilities in foreign currencies (163) 74,826,728
NET GAIN (LOSS) 124,581,045
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 124,490,431
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ (90,614) $ (685,143)
Net investment income (loss)
Net realized gain (loss) 49,754,317 11,238,410
Change in net unrealized appreciation (depreciation) 74,826,728 12,904,308
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 124,490,431 23,457,575
FROM OPERATIONS
Distributions to shareholders
From net realized gain
Class B (127,176) -
Class T (10,063,536) (3,086,044)
Institutional Class (30,367) -
TOTAL DISTRIBUTIONS (10,221,079) (3,086,044)
Share transactions - net increase (decrease) 260,016,652 56,472,708
TOTAL INCREASE (DECREASE) IN NET ASSETS 374,286,004 76,844,239
NET ASSETS
Beginning of period 276,205,234 199,360,995
End of period (including undistributed net investment $ 650,491,238 $ 276,205,234
income (loss) of $376,703 and $(408), respectively)
</TABLE>
<TABLE>
<CAPTION>
<C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEAR ENDED
OCTOBER 31,
1996 G
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 23.65
Income from Investment Operations
Net investment income (loss) .00
Net realized and unrealized gain (loss) 1.46
Total from investment operations 1.46
Net asset value, end of period $ 25.11
TOTAL RETURN B, C 6.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,609
Ratio of expenses to average net assets 1.66% A,
E
Ratio of expenses to average net assets after expense reductions 1.58% A,
F
Ratio of net investment income (loss) to average net assets (.01)%
A
Portfolio turnover 137%
Average commission rate H $ .0337
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - CLASS B
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 G
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 19.23 $ 18.87
Income from Investment Operations
Net investment income (loss) (.15) (.03)
Net realized and unrealized gain (loss) 6.49 .39
Total from investment operations 6.34 .36
Less Distributions
From net realized gain (.69) -
Net asset value, end of period $ 24.88 $ 19.23
TOTAL RETURN B, C 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 36,106 $ 2,508
Ratio of expenses to average net assets 2.28% 2.23% A,
E
Ratio of expenses to average net assets after expense reductions 2.24% F 2.21% A,
F
Ratio of net investment income (loss) to average net assets (.68)% (.67)%
A
Portfolio turnover 137% 161%
Average commission rate H $ .0337
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1995.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 1994 E 1993 1992
SELECTED PER-SHARE DATA
Net asset value, beginning $ 19.25 $ 17.56 $ 17.59 $ 13.88 $ 14.11
of period
Income from Investment
Operations
Net investment income (loss) .00 D (.05) D (.11) D .22 (.10)
Net realized and unrealized 6.56 2.00 .76 4.91 .79
gain (loss)
Total from investment 6.56 1.95 .65 5.13 .69
operations
Less Distributions
From net realized gain (.69) (.26) (.68) (1.42) (.92)
Net asset value, end of period $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88
TOTAL RETURN A, B 35.01% 11.40% 3.97% 41.05% 5.97%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 602,915 $ 272,979 $ 199,361 $ 40,309 $ 7,087
(000 omitted)
Ratio of expenses to average 1.59% 1.86% 2.10% 2.63% 3.27%
net assets F C
Ratio of expenses to average 1.56% 1.84% 2.07% 2.62% 3.27%
net assets after expense G G G G
reductions
Ratio of net investment income .00% (.30)% (.67)% (1.18)% (1.22)%
(loss) to average net assets
Portfolio turnover 137% 161% 125% 208% 248%
Average commission rate H $ .0337
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER 31,
1996 1995 G
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 19.27 $ 18.87
Income from Investment Operations
Net investment income (loss) .04 (.01)
Net realized and unrealized gain (loss) 6.55 .41
Total from investment operations 6.59 .40
Less Distributions
From net realized gain (.69) -
Net asset value, end of period $ 25.17 $ 19.27
TOTAL RETURN B, C 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 9,860 $ 718
Ratio of expenses to average net assets 1.44% 1.68% A,
E
Ratio of expenses to average net assets after expense reductions 1.39% F 1.66% A,
F
Ratio of net investment income (loss) to average net assets .17% (.13)%
A
Portfolio turnover 137% 161%
Average commission rate H $ .0337
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Natural Resources Fund (the fund) (formerly Fidelity
Advisor Global Resources Fund) is a fund of Fidelity Advisor Series V (the
trust) and is authorized to issue an unlimited number of shares. The trust
is registered under the Investment Company Act of 1940, as amended (the
1940 Act), as an open-end management investment company organized as a
Massachusetts business trust.
The fund offers Class A, Class B, Class T, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
The fund commenced sale of a new Class A of shares on September 3, 1996. On
this date, the original Class A was renamed Class T. Investment income,
realized and unrealized capital gains and losses, the common expenses of
the fund, and certain fund-level expense reductions are allocated on a pro
rata basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, registration, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which quotations are not readily
available (and in certain cases debt securities which trade on an exchange)
are valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. The effects of changes
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
in foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on investment
securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. FMR bears all organizational expenses except for
registering and qualifying each class and shares of each class for
distribution under federal and state securities law. These expenses are
borne by each class and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends are declared separately for each class,
while capital gain distributions are declared at the fund level and
allocated to each class on a pro rata basis based on the number of shares
held by each class on the ex-dividend date.
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 foreign
currency transactions, passive foreign investment companies (PFIC), net
operating losses and losses deferred due to wash sales. The fund also
utilized earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions may
include temporary book and tax basis differences that will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign securities. Losses may
arise from changes in the value of the foreign currency or if the
counterparties do not perform under the contracts' terms. The U.S. dollar
value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an exemptive order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR. 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 U.S. Treasury securities and repurchase
agreements for these securities, and may be utilized by the fund as an
additional cash management option. Dividends from the Cash Fund are
declared daily and paid monthly from net interest income. Income
distributions received by the fund are recorded as interest income.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $844,334,385 and $596,480,708, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2500% to
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
.5200% for the period. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
The annual individual fund fee rate is .30%. For the period, the management
fee was equivalent to an annual rate of .72% of average net assets.
Effective September 1, 1996, FMR voluntarily agreed to reduce the
individual fund fee rate from .45% to .30%.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares (Class A Plan), Class B shares (Class B Plan),
Class T shares (Class T Plan), and Institutional Class shares (collectively
referred to as "the Plans"). Under the Class A, Class B, and Class T Plans,
the fund pays Fidelity Distributors Corporation (FDC), an affiliate of FMR,
a distribution and service fee. This fee is based on annual rates of .25%,
1.00% (of which .75% represents a distribution fee and .25% represents a
shareholder service fee), and .50% (.65% prior to January 1, 1996) of the
average net assets of the Class A, Class B, and Class T shares,
respectively. For the period, the fund paid FDC $344, $164,177, and
$2,272,463 under the Class A, Class B, and Class T Plans, of which $344,
$41,044, and $2,199,691 were paid to securities
dealers, banks and other financial institutions for the distribution of
Class A, Class B, and Class T shares, and providing shareholder support
services.
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
Class T, and Institutional Class shares. The Plans also authorize payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% and 3.50%
(4.75% prior to January 1, 1996) for selling Class A and Class T shares of
the fund, respectively, and the proceeds of a contingent deferred sales
charge levied on Class B share redemptions occurring within five years of
purchase. The Class B charge is based on declining rates which range from
4% to 1% of the lesser of the cost of shares at the initial date of
purchase or the net asset value of the redeemed shares, excluding any
reinvested dividends and capital gains.
For the period, FDC received sales charges of $61,535 and $3,256,662 on
sales of Class A and Class T shares of the fund, of which $55,384 and
$2,725,846 were paid to securities dealers, banks, and other financial
institutions. FDC also received contingent deferred sales charges of
$21,872 on Class B share redemptions from the fund. When Class B shares are
sold, FDC pays commissions from its own resources to dealers through which
the sales are made.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, is the transfer, dividend disbursing, and
shareholder servicing agent for the fund's Class A , Class B, and
Institutional Class Shares, while State Street Bank and Trust Company
(State Street) (collectively, with FIIOC, referred to as the Transfer
Agents) acts in that capacity for the fund's Class T shares. The Transfer
Agents receive account fees and asset-based fees that vary according to
account size and type of account of the shareholders of the respective
classes of the fund. With respect to the Class T shares, State Street has
delegated certain transfer, dividend disbursing, and shareholder services
to FIIOC for which FIIOC receives its allocable share of all such fees.
FIIOC pays for typesetting, printing and mailing of all shareholder
reports, except proxy statements. For the period, the transfer agent fees
were equivalent to annual rates of .22%, .29%, .24%, and .17% of the
average net assets of Class A, Class B, Class T, and Institutional Class,
respectively.
ACCOUNTING FEES. Fidelity Service Co. (FSC), an affiliate of FMR, maintains
the fund's accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $299,285 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above an annual
rate of 1.75% of the average net assets for Class A. For the period, the
reimbursement reduced expenses by $8,444.
In addition, FMR voluntarily agreed to reimburse certain transfer agent,
distribution and registration expenses for Class A. For the period, the
reimbursement reduced these expenses by $134.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$145,793 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby interest earned on uninvested cash balances was used
to offset a portion of expenses. During the period, the fund's custodian
fees were reduced by $3,215 under the custodian arrangement, and Class T
and Institutional Class expenses were reduced by $3,021 and $805,
respectively, under the transfer agent arrangement.
6. SHARE TRANSACTIONS.
Share transactions for each class were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEARS ENDED YEARS ENDED
OCTOBER 31, OCTOBER 31,
1996 A 1995 B 1996 A 1995 B
CLASS A 68,176 - $ 1,669,719 $ -
Shares sold
Shares redeemed (4,094) - (102,601) -
Net increase (decrease) 64,082 - $ 1,567,118 $ -
CLASS B 1,475,147 131,062 $ 33,567,815 $ 2,593,820
Shares sold
Reinvestment of distributions 5,653 - 112,491 -
Shares redeemed (160,185) (639) (3,677,194) (12,702)
Net increase (decrease) 1,320,615 130,423 $ 30,003,112 $ 2,581,118
CLASS T 16,012,851 7,829,216 $ 364,247,050 $ 140,936,888
Shares sold
Reinvestment of distributions 462,106 172,755 9,214,395 2,772,967
Shares redeemed (6,657,398) (5,174,557) (152,716,059) (90,539,239)
Net increase (decrease) 9,817,559 2,827,414 $ 220,745,386 $ 53,170,616
INSTITUTIONAL CLASS 759,537 38,128 $ 17,292,506 $ 737,951
Shares sold
Reinvestment of distributions 1,464 - 29,239 -
Shares redeemed (406,499) (858) (9,620,709) (16,977)
Net increase (decrease) 354,502 37,270 $ 7,701,036 $ 720,974
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
B SHARE TRANSACTIONS FOR CLASS B AND INSTITUTIONAL CLASS ARE FOR THE PERIOD
JULY 3, 1995 (COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1995.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series V and the Shareholders of
Fidelity Advisor Natural Resources Fund (formerly Fidelity Advisor Global
Resources Fund):
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series V: Fidelity Advisor Natural Resources Fund
(formerly Fidelity Advisor Global Resources Fund), including the schedule
of portfolio investments, as of October 31, 1996, and the related statement
of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights of Class A, Class B, Class T and Institutional Class for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series V: Fidelity Advisor Natural Resources Fund as of
October 31, 1996, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights of Class A, Class B, Class T and
Institutional Class for each of the periods indicated therein, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 13, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Natural Resources 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 12/09/96 12/06/96 $.14 $1.57
Class B 12/09/96 12/06/96 - $1.57
Class T 12/09/96 12/06/96 $.02 $1.57
A total of 22% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate shareholders.
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
State Street Bank and Trust Company
Boston, MA - Class T
Fidelity Investments Institutional Operations Company
Boston, MA - Class A & Class B
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)