(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
NEW YORK MUNICIPAL INCOME
FUND - CLASS A, CLASS T, AND CLASS B
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 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.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
The longer your investment time frame, the less likely it is that you will
be affected by short-term market volatility. A 10-year investment horizon
appropriate for saving for a college education, for example, enables you to
weather market cycles in a long-term fund, which may have a higher risk
potential, but also has a higher potential rate of return.
An intermediate-length fund could make sense if your investment horizon is
two to four years, while a short-term bond fund could be the right choice
if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund. These funds seek
income and a stable share price by investing in high-quality, short-term
investments. Of course, it's important to remember that there is no
assurance that a money market fund will achieve its goal of maintaining a
stable net asset value of $1.00 per share, and that these types of funds
are neither insured nor guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. The initial
offering of Class A shares took place on September 3, 1996. Class A shares
bear a 0.15% 12b-1 fee. Returns prior to September 3, 1996 are those of
Class T, the original class of the fund, and reflect Class T's 0.25% 12b-1
fee. If Fidelity had not reimbursed certain class expenses, the total
returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor New York Municipal Income - Class 1.54% 6.07% 12.03%
A
Advisor New York Municipal Income - Class A -2.78% 1.56% 7.27%
(incl. max. 4.25% sales charge)
Lehman Brothers New York 4 Plus Year 2.24% 7.36% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 1.69% 6.17% n/a
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, six months, 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 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 99 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - Class A 6.07% 6.93%
Advisor New York Municipal Income - Class A 1.56% 4.23%
(incl. max. 4.25% sales charge)
Lehman Brothers New York 4 Plus Year 7.36% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 6.17% n/a
AVERAGE ANNUAL RETURNS take Class A shares' 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
FA NY Muni Inc -CL A LB Municipal Bond
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
1996/11/30 10487.90 10989.44
1996/12/31 10418.36 10943.28
1997/01/31 10418.14 10963.97
1997/02/28 10513.56 11064.62
1997/03/31 10363.15 10917.12
1997/04/30 10452.41 11008.50
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity 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 April 30, 1997, the
value of the investment would have grown to $10,452 - a 4.52% 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 $11,009 - a 10.09% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIX MONTHS YEAR ENDED AUGUST 21, 1995
ENDED OCTOBER 31, (COMMENCEMENT
APRIL 30, 1997 1996 OF OPERATIONS) TO
OCTOBER 31,
1995
Dividend return 2.21% 4.36% 0.85%
Capital appreciation return -0.67% 0.87% 4.00%
Total return 1.54% 5.23% 4.85%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any, and exclude the effects of sales
charges.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 LIFE OF
MONTH MONTHS CLASS
Dividends per share 3.88(cents) 23.07(cents) 30.28(cents)
Annualized dividend rate 4.59% 4.46% 4.42%
30-day annualized yield 4.47% - -
30-day annualized tax-equivalent yield 7.82% - -
</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 $10.29 over
the past one month, $10.44 over the past six months and $10.43 over the
life of the class, you can compare the class' income over these three
periods. The 30-day annualized YIELD is a standard formula for all funds
based on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds from
different companies on an equal basis. The offering share price used in the
calculation of the yield includes the effect of Class A's current maximum
4.25% 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 42.86% combined effective 1997 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 expenses,
the yield would have been -11.05%.
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. If Fidelity had
not reimbursed certain class expenses, the total returns and dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor New York Municipal Income - Class 1.59% 6.04% 12.00%
T
Advisor New York Municipal Income - Class T -1.97% 2.33% 8.08%
(incl. max. 3.50% sales charge)
Lehman Brothers New York 4 Plus Year 2.24% 7.36% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 1.69% 6.17% n/a
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, six months, 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 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 99 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - Class T 6.04% 6.91%
Advisor New York Municipal Income - Class T 2.33% 4.69%
(incl. max. 3.50% sales charge)
Lehman Brothers New York 4 Plus Year 7.36% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 6.17% n/a
AVERAGE ANNUAL RETURNS take Class T shares' 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
FA NY Muni Inc -CL T LB Municipal Bond
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 10219.79 10557.85
1996/02/29 10129.39 10486.59
1996/03/31 9973.27 10352.57
1996/04/30 9931.22 10323.27
1996/05/31 9929.21 10319.14
1996/06/30 10052.81 10431.52
1996/07/31 10148.51 10526.45
1996/08/31 10107.03 10523.92
1996/09/30 10270.22 10671.25
1996/10/31 10366.77 10791.95
1996/11/30 10571.27 10989.44
1996/12/31 10500.22 10943.28
1997/01/31 10509.13 10963.97
1997/02/28 10604.65 11064.62
1997/03/31 10442.11 10917.12
1997/04/30 10531.18 11008.50
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity 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 April 30, 1997, the
value of the investment would have grown to $10,531 - a 5.31% 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 $11,009 - a 10.09% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIX MONTHS YEAR ENDED AUGUST 21, 1995
ENDED OCTOBER 31, (COMMENCEMENT
APRIL 30, 1997 1996 OF OPERATIONS) TO
OCTOBER 31,
1995
Dividend return 2.17% 4.38% 0.85%
Capital appreciation return -0.58% 0.77% 4.00%
Total return 1.59% 5.15% 4.85%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any, and exclude the effect of sales
charges.
DIVIDENDS AND YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.79(cents) 22.56(cents) 45.06(cents)
Annualized dividend rate 4.48% 4.35% 4.34%
30-day annualized yield 4.41% - -
30-day annualized tax-equivalent yield 7.72% - -
</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 $10.29 over
the past one month, $10.45 over the past six months, and $10.38 over the
past one year, you can compare the class' income over these three periods.
The 30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30 days.
This figure shows you the yield characteristics of the fund's investments
at the end of the period. It also helps you compare funds from different
companies on an equal basis. The offering share price used in the
calculation of the yield includes the effect of Class T's current 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 42.86% combined effective 1997 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 expenses,
the yield and the tax-equivalent yield would have been 3.94% and 6.90%,
respectively.
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. Class B's
contingent deferred sales charges included in the past six months, past one
year and life of fund total return figures are 5%, 5%, and 4%,
respectively. If Fidelity had not reimbursed certain class expenses, the
total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor New York Municipal Income - Class B 1.36% 5.47% 10.81%
Advisor New York Municipal Income - Class B -3.59% 0.47% 6.81%
(incl. contingent deferred sales charge)
Lehman Brothers New York 4 Plus Year 2.24% 7.36% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 1.69% 6.17% n/a
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case, six months, 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 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 99 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - Class B 5.47% 6.24%
Advisor New York Municipal Income - Class B 0.47% 3.96%
(incl. contingent deferred sales charge)
Lehman Brothers New York 4 Plus Year 7.36% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 6.17% n/a
AVERAGE ANNUAL RETURNS take Class B shares' 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
Fidelity Adv NY Muni Inc - CL B Lehman Brothers Muni Bond Index
$11,009
$10,398
$
1996 '97
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor New York Municipal Income Fund - Class B on
August 31, 1995, shortly after the fund started. As the chart shows, by
April 30, 1997, the value of the investment, including the effect of the
applicable contingent deferred sales charge, would have grown to $10,398 -
a 3.98% 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 $11,009 - a 10.09% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIX MONTHS YEAR ENDED AUGUST 21, 1995
ENDED OCTOBER 31, (COMMENCEMENT
APRIL 30, 1997 1996 OF OPERATIONS) TO
OCTOBER 31,
1995
Dividend return 1.84% 3.69% 0.75%
Capital appreciation return -0.48% 0.77% 3.90%
Total return 1.36% 4.46% 4.65%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any, and exclude the effects of sales
charges.
DIVIDENDS AND YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.25(cents) 19.19(cents) 38.33(cents)
Annualized dividend rate 3.84% 3.71% 3.70%
30-day annualized yield 3.93% - -
30-day annualized tax-equivalent yield 6.88% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average share price of $10.29 over
the past one month, $10.44 over the past six months, and $10.37 over the
past one year, you can compare the class' income over these three periods.
The 30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30 days.
This figure shows you the yield characteristics of the fund's investments
at the end of the period. It also helps you compare funds from different
companies on an equal basis. The tax-equivalent yield shows what you would
have to earn on a taxable investment to equal the class' tax-free yield, if
you're in the 42.86% combined effective 1997 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 expenses, the yield and the tax-equivalent yield would have
been 3.19% and 5.58%, 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
An interview with Norm Lind, Portfolio Manager of Fidelity Advisor New York
Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the six-month period ending April 30, 1997, the fund's Class A,
Class T and Class B shares had total returns of 1.54%, 1.59% and 1.36%,
respectively. For the one-year period ended April 30, the fund's Class A,
Class T and Class B shares had total returns of 6.07%, 6.04% and 5.47%,
respectively. To gauge how the fund did relative to its peer group, the New
York municipal debt funds average had a total return of 1.69% for the same
six-month period and 6.17% for the same one-year period, as tracked by
Lipper Analytical Services. The fund's benchmark, the Lehman Brothers New
York 4 Plus Year Municipal Bond Index, had six- and 12-month returns of
2.24% and 7.36%, respectively, as of April 30, 1997.
Q. BONDS ISSUED BY NEW YORK CITY PLAYED AN IMPORTANT ROLE IN THE FUND'S
PERFORMANCE DURING THE PERIOD. CAN YOU TELL US ABOUT THAT?
A. Sure. Uninsured intermediate-maturity bonds - those with maturities
between five and 15 years - issued by New York City were among the best
performers in the municipal market. Their strong performance was triggered,
in part, by the strength of Wall Street and its contribution to New York
City's rising revenues. Tightening credit spreads were another reason for
the strong performance of uninsured New York City bonds. Credit spreads -
which measure the difference in yields between bonds with various credit
ratings - tightened throughout the year, and lower-quality bonds provided a
smaller yield advantage over higher-quality bonds than they had previously.
Q. WHY DID THE FUND LAG THE AVERAGE FUND OF ITS TYPE AND ITS BENCHMARK?
Q. WHY DID THE FUND LAG ITS BENCHMARK?
A. The fund had a much lighter weighting in general obligation bonds issued
by New York City than its benchmark. These bonds comprise roughly
one-quarter of the benchmark, while the fund had about 13% of its
investments in them at the end of the period. New York City has had trouble
maintaining a balanced budget over the past several years. That's one
reason why I kept the fund's stake in New York City bonds low relative to
the benchmark. I held off buying a lot of these bonds early on because I
was worried that the city's budget process might be difficult and because I
thought their prices were relatively high. But in hindsight, I didn't build
up the fund's stake in these bonds fast enough, and that was probably my
biggest disappointment during this period.
Q. WERE THERE OTHER TYPES OF BONDS THAT BENEFITED FROM TIGHTER CREDIT
SPREADS?
A. State-appropriated bonds were another beneficiary. As I've mentioned in
previous reports, the supply of state-appropriated bonds varies a fair
amount during the year, a function of the state's budgetary process. I
bought some state-appropriated bonds in early 1996, correctly anticipating
that supply would dry up if the budget were delayed, thereby constraining
the state's ability to issue new debt. Because of the lack of new issuance
in the spring of 1996, state-appropriated bonds began to look relatively
rich - or expensive compared to their historical value. So I sold some to
take advantage of that strength and their high prices. Late in the year,
supply was more normalized and state-appropriated bonds appeared to be
below what I felt their real value should be. So I bought back some of
these high-yielding bonds at attractive prices. Both the early strong
performance of state-appropriated bonds and their high yields benefited the
fund's performance.
Q. THE FUND HAS A FAIR AMOUNT OF NON-CALLABLE PREMIUM BONDS. WHAT IS THE
UPSIDE AND DOWNSIDE OF THESE BONDS?
A. First, the non-callability feature can provide the potential for price
appreciation when interest rates fall because the bond can't be redeemed by
its issuer before its stated maturity. Second, the premium - or above face
value - price give the bond DE MINIMIS protection. This protects the bond's
gains from unfavorable tax treatment that can occur during particular
market environments. In periods when the market is strong, non-callable
premiums generally do well. In periods when the market is flat, these bonds
are at somewhat of a disadvantage since their yield is not as high as other
types of bonds.
Q. WHICH SECTORS DID YOU FAVOR AND WHICH DID YOU AVOID?
A. General obligation bonds, such as those issued by New York City and the
state, were the fund's largest sector concentration throughout most of the
period. Bonds issued by transportation entities such as the New York State
Thruway Authority and the Metropolitan Transportation Authority were
another large sector concentration. While I've favored many of these bonds
over the years, in part because of their issuers' rising toll collections,
I recently haven't found many in this area that offer attractive yields. I
generally avoided electric utility bonds because of questions surrounding a
potential bailout of Long Island Lighting Company.
Q. WHAT FACTORS DO YOU THINK WILL SHAPE THE NEW YORK MUNICIPAL MARKET IN
THE COMING MONTHS?
A. From a supply and demand standpoint, municipals in general appear to be
in pretty good shape, barring any unforeseen legislation that could
negatively affect them. I don't expect to see a tremendous amount of
supply, and what supply there is should be easily digested if demand
remains firm. As far as munis issued in New York state go, I'll be
monitoring the state budget process, among other things. Last year,
workmen's compensation issues held up the budget. In 1997, the holdup could
come from discussions on welfare reform, rent control and/or the bailout of
Long Island Lighting Company. If that's the case, there may be a short-term
lack of supply, which may favor the overall New York municipal market.
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 April 30, 1997,
more than $7 million
MANAGER: Norm Lind, since
inception; Fidelity Advisor
Short-Intermediate Bond
Fund, since 1995; joined
Fidelity in 1986
(checkmark)
NORM LIND ON MUNICIPAL BOND
INSURANCE AND ITS EFFECT ON
THE NEW YORK MUNI MARKET:
"Roughly one-third of all new
municipal bonds issued in the
state of New York carry
insurance, compared to
roughly 17% at the beginning
of the decade. One
implication of this
development is the increasing
difficulty for this fund in finding
additional yield. Bonds that
might naturally carry an
A-rating, an Aa-rating or
Baa-rating are being insured
and offering lower yields
because they are insured. In
fact, the high incidence of
insurance helps to explain
why the difference in yield
between higher- and
lower-quality bonds has
narrowed over the past year.
Many yield-hungry investors
gravitated toward securities
without insurance - such as
uninsured New York City
bonds - in order to find extra
income. In the process, they
sent some uninsured bond
prices closer to those offered
by insured bonds. Even
though this situation has
posed a significant challenge,
I am optimistic that I'll find
attractively priced
high-yielding opportunities
that might crop up as a
function of a bond's structure,
fluctuating supply and
demand or other factors."
INVESTMENT CHANGES
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligation 49.4 48.2
Water & Sewer 14.3 14.7
Special Tax 10.9 11.1
Transportation 10.1 11.1
Education 5.0 5.4
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1997
6 MONTHS AGO
Years 13.7 13.3
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 APRIL 30, 1997
6 MONTHS AGO
Years 7.6 8.0
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 APRIL 30, 1997 AS OF OCTOBER 31, 1996
Row: 1, Col: 1, Value: 35.1
Row: 1, Col: 2, Value: 32.5
Row: 1, Col: 3, Value: 31.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 1.3
Aaa 40.0%
Aa, A 32.4%
Baa 23.5%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 4.1%
Aaa 35.1%
Aa, A 32.5%
Baa 31.1%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 1.3%
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
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 APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 98.7%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK - 97.5%
Albany County Gen. Oblig.
5.75% 6/1/09 (FGIC Insured) Aaa $ 200,000 $ 204,750
Brookhaven Gen. Oblig.
5.375% 10/1/05 (FGIC Insured) Aaa 205,000 207,819
Broome County Gen. Oblig.
7.40% 4/15/01 (FGIC Insured) Aaa 200,000 218,750
Erie County Gen. Oblig. Series B,
5.60% 6/15/10 (FGIC Insured) Aaa 100,000 101,000
Metropolitan Trans. Auth. Svc. Contract
(Commuter Facs.) Series O, 5.75% 7/1/13 Baa1 400,000 394,000
Monroe County Pub. Impt.:
6.50% 6/1/04 Aa 100,000 108,500
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 230,000 230,863
New York City Gen. Oblig.:
Series A-1, 6.50% 8/1/16 Baa1 200,000 205,000
Series B:
6.20% 8/15/06 Baa1 90,000 93,150
5.875% 8/15/13 Baa1 100,000 96,500
Series C, 6.40% 8/1/03 Baa1 150,000 157,313
Series D, 6% 2/15/16 Baa1 275,000 270,188
Series I, 6.125% 4/15/11 Baa1 150,000 150,188
New York City Muni. Assistance Corp.:
5.50% 7/1/04 Aa2 50,000 51,500
Rfdg. 6% 7/1/05 Aa 300,000 318,375
New York City Muni. Wtr. Fin. Auth. Wtr. &
Swr. Sys. Rev.:
Series A, 6% 6/15/25 A2 275,000 273,625
Series B:
5.875% 6/15/26 A2 200,000 195,500
5.75% 6/15/29, LOC Canadian
Imperial Bank of Commerce A2 50,000 48,000
New York State Dorm. Auth. Lease Rev.:
Rfdg. (State Univ. Dorm. Facs.) Series A:
6% 7/1/03 (AMBAC Insured) Aaa 150,000 158,063
6.50% 5/15/05 Baa1 200,000 214,000
6.50% 5/15/06 Baa1 100,000 106,750
(City Univ. Sys. Consolidated) 2nd Series A,
5.75% 7/1/07 Baa1 450,000 456,750
(FIT Student Hsg. Corp.) 5.75% 7/1/05
(AMBAC Insured) Aaa 125,000 129,840
(Strong Memorial Hospital) 5.10% 7/1/04 A1 100,000 101,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
New York State Energy Research & Dev. Auth.
Facs. Rev. Rfdg. (Consolidated Edison Co.)
Series A, 6.10% 8/15/20 A1 $ 100,000 $ 101,375
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 150,000 151,875
Series D, 6.40% 11/15/06 Aaa 100,000 110,250
New York State Local Gov't. Assistance Corp.:
Series A, 6% 4/1/24 A3 255,000 255,000
Series B, 6% 4/1/18 A3 225,000 226,125
New York State Mtg. Agcy. Rev.
(Homeowner Mtg.):
5.50% 4/1/19 (AMBAC Insured) (c) Aaa 100,000 94,375
Series 49, 5.85% 10/1/17 Aa2 100,000 98,375
Series 60, 6.05% 4/1/26 (c) Aa2 100,000 99,250
New York State Med. Care Facs. Fin. Agcy. Rev.
(North Shore Med. Ctr.) 7.25% 11/1/11
(MBIA Insured) Aaa 100,000 108,875
New York State Pwr. Auth. Rev. Rfdg. & Gen.
Purpose Series CC, 5.125% 1/1/11 Aa 200,000 192,750
New York State Thruway Auth. Hwy. &
Bridge Trust Fund Series B:
6% 4/1/03 (AMBAC Insured) Aaa 210,000 221,813
6% 4/1/04 (MBIA Insured) Aaa 100,000 105,875
New York State Urban Dev. Corp. Rev.:
Rfdg. 5.75% 4/1/11 Baa1 185,000 184,306
(Correctional Cap. Facs.) Series 6,
5.375% 1/1/15 Baa1 100,000 93,250
Shelter Island Unified Free School Dist. #1
6.20% 12/15/08 (AMBAC Insured) Aaa 160,000 170,600
Suffolk County Gen. Oblig. 5% 10/15/03
(AMBAC Insured) Aaa 180,000 182,025
Suffolk County Wtr. Auth. 6% 6/1/17
(MBIA Insured) Aaa 100,000 105,125
Syracuse Gen. Oblig. 7.70% 12/1/99
(MBIA Insured) Aaa 120,000 129,150
Triborough Bridge & Tunnel Auth. Rev. Rfdg.
(Gen. Purpose) Series Y, 6% 1/1/12 Aa 340,000 359,126
7,580,944
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK & NEW JERSEY - 1.2%
New York & New Jersey Port Auth. Consolidated
85th Series, 5.375% 3/1/28 A1 $ 100,000 $ 95,000
TOTAL MUNICIPAL BONDS
(Cost $7,627,967) 7,675,944
MUNICIPAL NOTES - 1.3%
NEW YORK - 1.3%
New York State Energy Research & Dev. Auth.
Poll. Cont. Rev. (Niagara Mohawk Pwr. Proj.)
Series 1987 B, 4.05%, LOC Morgan
Guaranty, VRDN (b)(c) (Cost $100,000) A-1+ 100,000 100,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $7,727,967) $ 7,775,944
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. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
3. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
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 67.6% AAA, AA, A 65.0%
Baa 31.1% BBB 31.1%
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 49.4%
Water & Sewer 14.3
Special Tax 10.9
Transportation 10.1
Education 5.0
Others (individually less than 5%) 10.3
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $7,727,967. Net unrealized appreciation aggregated
$47,977, of which $98,018 related to appreciated investment securities and
$50,041 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $7,727,967) - $ 7,775,944
See accompanying schedule
Interest receivable 119,223
Prepaid expenses 6,707
Receivable from investment adviser for expense 19,749
reductions
TOTAL ASSETS 7,921,623
LIABILITIES
Payable to custodian bank $ 7,610
Payable for investments purchased 48,020
Distributions payable 6,050
Other payables and accrued expenses 21,153
TOTAL LIABILITIES 82,833
NET ASSETS $ 7,838,790
Net Assets consist of:
Paid in capital $ 7,784,043
Accumulated undistributed net realized gain (loss) 6,770
on investments
Net unrealized appreciation (depreciation) on 47,977
investments
NET ASSETS $ 7,838,790
CALCULATION OF MAXIMUM OFFERING PRICE $10.36
CLASS A:
NET ASSET VALUE and redemption price per share
($201,187 (divided by) 19,422 shares)
Maximum offering price per share (100/95.75 of $10.36) $10.82
CLASS T: $10.36
NET ASSET VALUE and redemption price per share
($4,229,055 (divided by) 408,021 shares)
Maximum offering price per share (100/96.50 of $10.36) $10.74
CLASS B: $10.36
NET ASSET VALUE and offering price per share
($2,676,514 (divided by) 258,440 shares) A
INSTITUTIONAL CLASS: $10.37
NET ASSET VALUE, offering price and redemption price per
share ($732,034 (divided by) 70,587 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INTEREST INCOME $ 202,894
EXPENSES
Management fee $ 15,172
Transfer agent fees 7,387
Distribution fees 17,017
Accounting fees and expenses 30,187
Non-interested trustees' compensation 26
Custodian fees and expenses 840
Registration fees 61,809
Audit 15,171
Legal 6,087
Miscellaneous 196
Total expenses before reductions 153,892
Expense reductions (108,239) 45,653
NET INTEREST INCOME 157,241
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 6,923
Futures contracts 6,066 12,989
Change in net unrealized appreciation (depreciation) on:
Investment securities (56,925)
Futures contracts (1,263) (58,188)
NET GAIN (LOSS) (45,199)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 112,042
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 157,241 $ 252,837
Net interest income
Net realized gain (loss) 12,989 39,120
Change in net unrealized appreciation (depreciation) (58,188) 5,377
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 112,042 297,334
FROM OPERATIONS
Distributions to shareholders (157,241) (252,837)
From net interest income
From net realized gain (43,520) -
TOTAL DISTRIBUTIONS (200,761) (252,837)
Share transactions - net increase (decrease) 537,570 3,469,707
TOTAL INCREASE (DECREASE) IN NET ASSETS 448,851 3,514,204
NET ASSETS
Beginning of period 7,389,939 3,875,735
End of period $ 7,838,790 $ 7,389,939
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS SEPTEMBER 3,
ENDED 1996
APRIL 30, 1997 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
(UNAUDITED) 1996
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.490 $ 10.290
Income from Investment Operations
Net interest income .231 .072
Net realized and unrealized gain (loss) (.070) .200
Total from investment operations .161 .272
Less Distributions
From net interest income (.231) (.072)
From net realized gain (.060) -
Total distributions (.291) (.072)
Net asset value, end of period $ 10.360 $ 10.490
TOTAL RETURN B, C 1.54% 2.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 201 $ 102
Ratio of expenses to average net assets .90% A, D .90% A,
D
Ratio of expenses to average net assets after expense .89% A, E .90% A
reductions
Ratio of net interest income to average net assets 4.35% A 4.43% A
Portfolio turnover rate 18% A 17%
</TABLE>
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 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
SIX MONTHS YEAR ENDED AUGUST 21,
ENDED OCTOBER 31, 1995
APRIL 30, 1997 (COMMENCEME
NT
OF OPERATIONS)
TO
OCTOBER 31,
(UNAUDITED) 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.480 $ 10.400 $ 10.000
Income from Investment Operations
Net interest income .226 .444 .084
Net realized and unrealized gain (loss) (.060) .080 .400
Total from investment operations .166 .524 .484
Less Distributions
From net interest income (.226) (.444) (.084)
From net realized gain (.060) - -
Total distributions (.286) (.444) (.084)
Net asset value, end of period $ 10.360 $ 10.480 $ 10.400
TOTAL RETURN B, C 1.59% 5.15% 4.85%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 4,229 $ 4,125 $ 2,033
Ratio of expenses to average net assets 1.00% A, 1.00% D 1.00% A,
D D
Ratio of expenses to average net assets after .99% A, .97% E 1.00% A
expense reductions E
Ratio of net interest income to average net assets 4.29% A 4.30% 4.16% A
Portfolio turnover rate 18% A 17% 0%
</TABLE>
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 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 B
SIX MONTHS YEAR ENDED AUGUST 21, 1995
ENDED OCTOBER 31, (COMMENCEMEN
APRIL 30, 1997 T
OF OPERATIONS)
TO
OCTOBER 31,
(UNAUDITED) 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.470 $ 10.390 $ 10.000
Income from Investment Operations
Net interest income .192 .375 .074
Net realized and unrealized gain (loss) (.050) .080 .390
Total from investment operations .142 .455 .464
Less Distributions
From net interest income (.192) (.375) (.074)
From net realized gain (.060) - -
Total distributions (.252) (.375) (.074)
Net asset value, end of period $ 10.360 $ 10.470 $ 10.390
TOTAL RETURN B, C 1.36% 4.46% 4.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,677 $ 2,445 $ 1,161
Ratio of expenses to average net assets 1.65% A, D 1.66% D 1.75% A
, D
Ratio of expenses to average net assets after 1.64% A, E 1.62% E 1.75% A
expense reductions
Ratio of net interest income to average net assets 3.63% A 3.62% 3.52% A
Portfolio turnover rate 18% A 17% 0%
</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 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
SIX MONTHS YEAR ENDED AUGUST 21, 1995
ENDED OCTOBER 31, (COMMENCEMEN
APRIL 30, 1997 T
OF OPERATIONS)
TO
OCTOBER 31,
(UNAUDITED) 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.470 $ 10.400 $ 10.000
Income from Investment Operations
Net interest income .239 .468 .095
Net realized and unrealized gain (loss) (.040) .070 .400
Total from investment operations .199 .538 .495
Less Distributions
From net interest income (.239) (.468) (.095)
From net realized gain (.060) - -
Total distributions (.299) (.468) (.095)
Net asset value, end of period $ 10.370 $ 10.470 $ 10.400
TOTAL RETURN B, C 1.91% 5.28% 4.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 732 $ 718 $ 683
Ratio of expenses to average net assets .75% A, .75% D .75% A
D , D
Ratio of expenses to average net assets after .74% A, .68% E .75% A
expense reductions E
Ratio of net interest income to average net assets 4.53% A 4.53% 4.75% A
Portfolio turnover rate 18% A 17% 0%
</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 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 April 30, 1997 (Unaudited)
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 T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Interest 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. Securities for which
quotations are not readily available are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are not
readily available are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A 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 and capital
gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for certain
futures and options transactions, and market discount.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital. 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.
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 $1,396,202 and $675,162, respectively.
The market value of futures contracts opened and closed during the period
amounted to $89,358 and $325,911, 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 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
each class of shares (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90% *
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 104 $ 104
CLASS T 5,391 5,391
CLASS B 11,522 3,963
$ 17,017 $ 9,458
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 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 six years of purchase (five years prior to
January 2, 1997). The Class B charge is based on declining rates which
range from 5% to 1%(4% to 1% prior to January 2, 1997) of the lesser of the
cost of shares at the initial date of purchase or the net asset value of
the redeemed shares, excluding any reinvested dividends and capital gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities, dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 1,085 $ 375
CLASS T 27,851 5,380
CLASS B 95 0 *
$ 29,031 $ 5,755
* WHEN CLASS B SHARES ARE INITIALLY 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 T, Class B, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC, an affiliate of FMR, receives account fees and asset-based fees that
vary according to the account size and type of account of the shareholders
of the respective
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
classes of the fund. All fees are paid to FIIOC by UMB, which is reimbursed
by each class for such payments. FIIOC pays for typesetting, printing and
mailing of all shareholder reports. For the period, each class paid the
following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 423 .62
CLASS T UMB 3,952 .18
CLASS B UMB 2,398 .19
INSTITUTIONAL CLASS UMB 614 .17
$ 7,387
UMB also has a sub-contract with Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, under which FSC maintains the fund's accounting records.
The fee is based on the level of average net assets for the month plus
out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above the
following annual rates or range of annual rates of average net assets for
each class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 23,116
CLASS T 1.00% 39,041
CLASS B 1.65% 28,209
INSTITUTIONAL CLASS .75% 17,651
$ 108,017
In addition, the fund has entered into an arrangement with its custodian
whereby credits realized as a result of uninvested cash balances were used
to reduce a portion of expenses. During the period, the fund's custodian
fees were reduced by $222 under the custodian arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 30% of the total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996 A
CLASS A
From net interest income $ 2,978 $ 707
From net realized gain 588 -
Total $ 3,566 $ 707
CLASS T
From net interest income $ 91,783 $ 150,521
From net realized gain 24,294 -
Total $ 116,077 $ 150,521
CLASS B
From net interest income $ 46,135 $ 70,019
From net realized gain 14,507 -
Total $ 60,642 $ 70,019
INSTITUTIONAL CLASS
From net interest income $ 16,345 $ 31,590
From net realized gain 4,131 -
Total $ 20,476 $ 31,590
$ 200,761 $ 252,837
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 A 1997 1996 A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CLASS A 9,337 9,691 $ 98,502 $ 99,722
Shares sold
Reinvestment of distributions 346 67 3,613 699
Shares redeemed (19) - (201) -
Net increase (decrease) 9,664 9,758 $ 101,914 $ 100,421
CLASS T 56,287 226,391 $ 590,277 $ 2,359,874
Shares sold
Reinvestment of distributions 9,279 11,198 97,050 116,533
Shares redeemed (51,049) (39,533) (533,383) (411,400)
Net increase (decrease) 14,517 198,056 $ 153,944 $ 2,065,007
CLASS B 31,136 133,150 $ 324,952 $ 1,388,144
Shares sold
Reinvestment of distributions 3,693 4,418 38,596 45,991
Shares redeemed (9,854) (15,772) (102,589) (161,162)
Net increase (decrease) 24,975 121,796 $ 260,959 $ 1,272,973
INSTITUTIONAL CLASS 409 - $ 4,300 $ -
Shares sold
Reinvestment of distributions 1,981 3,003 20,732 31,306
Shares redeemed (409) - (4,279) -
Net increase (decrease) 1,981 3,003 $ 20,753 $ 31,306
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 21,935
CLASS T 13,443
CLASS B 12,983
INSTITUTIONAL CLASS 13,448
$ 61,809
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
Norman Lind, 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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Intitutional Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
NEW YORK MUNICIPAL INCOME
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 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.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
The longer your investment time frame, the less likely it is that you will
be affected by short-term market volatility. A 10-year investment horizon
appropriate for saving for a college education, for example, enables you to
weather market cycles in a long-term fund, which may have a higher risk
potential, but also has a higher potential rate of return.
An intermediate-length fund could make sense if your investment horizon is
two to four years, while a short-term bond fund could be the right choice
if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund. These funds seek
income and a stable share price by investing in high-quality, short-term
investments. Of course, it's important to remember that there is no
assurance that a money market fund will achieve its goal of maintaining a
stable net asset value of $1.00 per share, and that these types of funds
are neither insured nor guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. If Fidelity had
not reimbursed certain class expenses, the total returns and dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor New York Municipal Income - 1.91% 6.29% 12.61%
Institutional Class
Lehman Brothers New York 4 Plus Year 2.24% 7.36% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 1.69% 6.17% n/a
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, six months, 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 mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
The past six months average represents a peer group of 99 mutual funds.
These benchmarks include reinvested dividends and capital gains, if any,
and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor New York Municipal Income - 6.29% 7.25%
Institutional Class
Lehman Brothers New York 4 Plus Year 7.36% n/a
Municipal Bond Index
New York Municipal Debt Funds Average 6.17% n/a
AVERAGE ANNUAL RETURNS take Institutional Class shares' 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
FA NY Muni Inc -CL I LB Municipal Bond
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 10519.28 10478.74
1996/01/31 10608.72 10557.85
1996/02/29 10517.30 10486.59
1996/03/31 10356.76 10352.57
1996/04/30 10312.58 10323.27
1996/05/31 10301.18 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
1996/11/30 10991.40 10989.44
1996/12/31 10919.96 10943.28
1997/01/31 10921.12 10963.97
1997/02/28 11022.51 11064.62
1997/03/31 10866.37 10917.12
1997/04/30 10961.21 11008.50
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor New York Municipal Income Fund - Institutional
Class on August 31, 1995, shortly after the fund started. As the chart
shows, by April 30, 1997, the value of the investment would have grown to
$10,961 - a 9.61% 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 $11,009 - a 10.09%
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SIX MONTHS YEAR ENDED AUGUST 21, 1995
ENDED OCTOBER 31, (COMMENCEMENT
APRIL 30, 1997 1996 OF OPERATIONS) TO
OCTOBER 31,
1995
Dividend return 2.30% 4.61% 0.96%
Capital appreciation return -0.39% 0.67% 4.00%
Total return 1.91% 5.28% 4.96%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any.
DIVIDENDS AND YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.01(cents) 23.86(cents) 47.53(cents)
Annualized dividend rate 4.74% 4.60% 4.57%
30-day annualized yield 4.82% - -
30-day annualized tax-equivalent yield 8.44% - -
</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 $10.30 over
the past one month, $10.45 over the past six months, and $10.39 over the
past one year, you can compare the class' income over these three periods.
The 30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30 days.
This figure shows you the yield characteristics of the fund's investments
at the end of the period. It also helps you compare funds from different
companies on an equal basis. The tax-equivalent yield shows what you would
have to earn on a taxable investment to equal the class' tax-free yield, if
you're in the 42.86% combined effective 1997 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 expenses, the yield and the tax-equivalent yield would have
been 4.35% and 7.61%, respectively.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Norm Lind, Portfolio Manager of Fidelity Advisor New York
Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. For the six- and 12-month periods ended April 30, 1997, the fund's
Institutional Class shares had total returns of 1.91% and 6.29%,
respectively. To gauge how the fund did relative to its peer group, the New
York municipal debt funds average had a total return of 1.69% for the same
six-month period, and 6.17% for the same one-year period, as tracked by
Lipper Analytical Services. The fund's benchmark, the Lehman Brothers New
York 4 Plus Year Municipal Bond Index, had six- and 12-month returns of
2.24% and 7.36%, respectively, as of April 30, 1997.
Q. BONDS ISSUED BY NEW YORK CITY PLAYED AN IMPORTANT ROLE IN THE FUND'S
PERFORMANCE DURING THE PERIOD. CAN YOU TELL US ABOUT THAT?
A. Sure. Uninsured intermediate-maturity bonds - those with maturities
between five and 15 years - issued by New York City were among the best
performers in the municipal market. Their strong performance was triggered,
in part, by the strength of Wall Street and its contribution to New York
City's rising revenues. Tightening credit spreads were another reason for
the strong performance of uninsured New York City bonds. Credit spreads -
which measure the difference in yields between bonds with various credit
ratings - tightened throughout the year, and lower-quality bonds provided a
smaller yield advantage over higher-quality bonds than they had previously.
Q. WHY DID THE FUND LAG THE AVERAGE FUND OF ITS TYPE AND ITS BENCHMARK?
Q. WHY DID THE FUND LAG ITS BENCHMARK?
A. The fund had a much lighter weighting in general obligation bonds issued
by New York City than its benchmark. These bonds comprise roughly
one-quarter of the benchmark, while the fund had about 13% of its
investments in them at the end of the period. New York City has had trouble
maintaining a balanced budget over the past several years. That's one
reason why I kept the fund's stake in New York City bonds low relative to
the benchmark. I held off buying a lot of these bonds early on because I
was worried that the city's budget process might be difficult and because I
thought their prices were relatively high. But in hindsight, I didn't build
up the fund's stake in these bonds fast enough, and that was probably my
biggest disappointment during this period.
Q. WERE THERE OTHER TYPES OF BONDS THAT BENEFITED FROM TIGHTER CREDIT
SPREADS?
A. State-appropriated bonds were another beneficiary. As I've mentioned in
previous reports, the supply of state-appropriated bonds varies a fair
amount during the year, a function of the state's budgetary process. I
bought some state-appropriated bonds in early 1996, correctly anticipating
that supply would dry up if the budget were delayed, thereby constraining
the state's ability to issue new debt. Because of the lack of new issuance
in the spring of 1996, state-appropriated bonds began to look relatively
rich - or expensive compared to their historical value. So I sold some to
take advantage of that strength and their high prices. Late in the year,
supply was more normalized and state-appropriated bonds appeared to be
below what I felt their real value should be. So I bought back some of
these high-yielding bonds at attractive prices. Both the early strong
performance of state-appropriated bonds and their high yields benefited the
fund's performance.
Q. THE FUND HAS A FAIR AMOUNT OF NON-CALLABLE PREMIUM BONDS. WHAT IS THE
UPSIDE AND DOWNSIDE OF THESE BONDS?
A. First, the non-callability feature can provide the potential for price
appreciation when interest rates fall because the bond can't be redeemed by
its issuer before its stated maturity. Second, the premium - or above face
value - price give the bond DE MINIMIS protection. This protects the bond's
gains from unfavorable tax treatment that can occur during particular
market environments. In periods when the market is strong, non-callable
premiums generally do well. In periods when the market is flat, these bonds
are at somewhat of a disadvantage since their yield is not as high as other
types of bonds.
Q. WHICH SECTORS DID YOU FAVOR AND WHICH DID YOU AVOID?
A. General obligation bonds, such as those issued by New York City and the
state, were the fund's largest sector concentration throughout most of the
period. Bonds issued by transportation entities such as the New York State
Thruway Authority and the Metropolitan Transportation Authority were
another large sector concentration. While I've favored many of these bonds
over the years, in part because of their issuers' rising toll collections,
I recently haven't found many in this area that offer attractive yields. I
generally avoided electric utility bonds because of questions surrounding a
potential bailout of Long Island Lighting Company.
Q. WHAT FACTORS DO YOU THINK WILL SHAPE THE NEW YORK MUNICIPAL MARKET IN
THE COMING MONTHS?
A. From a supply and demand standpoint, municipals in general appear to be
in pretty good shape, barring any unforeseen legislation that could
negatively affect them. I don't expect to see a tremendous amount of
supply, and what supply there is should be easily digested if demand
remains firm. As far as munis issued in New York state go, I'll be
monitoring the state budget process, among other things. Last year,
workmen's compensation issues held up the budget. In 1997, the holdup could
come from discussions on welfare reform, rent control and/or the bailout of
Long Island Lighting Company. If that's the case, there may be a short-term
lack of supply, which may favor the overall New York municipal market.
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 April 30, 1997,
more than $7 million
MANAGER: Norm Lind, since
inception; Fidelity Advisor
Short-Intermediate Bond
Fund, since 1995; joined
Fidelity in 1986
(checkmark)
NORM LIND ON MUNICIPAL BOND
INSURANCE AND ITS EFFECT ON
THE NEW YORK MUNI MARKET:
"Roughly one-third of all new
municipal bonds issued in the
state of New York carry
insurance, compared to
roughly 17% at the beginning
of the decade. One
implication of this
development is the increasing
difficulty for this fund in finding
additional yield. Bonds that
might naturally carry an
A-rating, an Aa-rating or
Baa-rating are being insured
and offering lower yields
because they are insured. In
fact, the high incidence of
insurance helps to explain
why the difference in yield
between higher- and
lower-quality bonds has
narrowed over the past year.
Many yield-hungry investors
gravitated toward securities
without insurance - such as
uninsured New York City
bonds - in order to find extra
income. In the process, they
sent some uninsured bond
prices closer to those offered
by insured bonds. Even
though this situation has
posed a significant challenge,
I am optimistic that I'll find
attractively priced
high-yielding opportunities
that might crop up as a
function of a bond's structure,
fluctuating supply and
demand or other factors."
INVESTMENT CHANGES
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligation 49.4 48.2
Water & Sewer 14.3 14.7
Special Tax 10.9 11.1
Transportation 10.1 11.1
Education 5.0 5.4
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1997
6 MONTHS AGO
Years 13.7 13.3
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 APRIL 30, 1997
6 MONTHS AGO
Years 7.6 8.0
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 APRIL 30, 1997 AS OF OCTOBER 31, 1996
Row: 1, Col: 1, Value: 35.1
Row: 1, Col: 2, Value: 32.5
Row: 1, Col: 3, Value: 31.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 1.3
Aaa 40.0%
Aa, A 32.4%
Baa 23.5%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 4.1%
Aaa 35.1%
Aa, A 32.5%
Baa 31.1%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 1.3%
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
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 APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 98.7%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK - 97.5%
Albany County Gen. Oblig.
5.75% 6/1/09 (FGIC Insured) Aaa $ 200,000 $ 204,750
Brookhaven Gen. Oblig.
5.375% 10/1/05 (FGIC Insured) Aaa 205,000 207,819
Broome County Gen. Oblig.
7.40% 4/15/01 (FGIC Insured) Aaa 200,000 218,750
Erie County Gen. Oblig. Series B,
5.60% 6/15/10 (FGIC Insured) Aaa 100,000 101,000
Metropolitan Trans. Auth. Svc. Contract
(Commuter Facs.) Series O, 5.75% 7/1/13 Baa1 400,000 394,000
Monroe County Pub. Impt.:
6.50% 6/1/04 Aa 100,000 108,500
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 230,000 230,863
New York City Gen. Oblig.:
Series A-1, 6.50% 8/1/16 Baa1 200,000 205,000
Series B:
6.20% 8/15/06 Baa1 90,000 93,150
5.875% 8/15/13 Baa1 100,000 96,500
Series C, 6.40% 8/1/03 Baa1 150,000 157,313
Series D, 6% 2/15/16 Baa1 275,000 270,188
Series I, 6.125% 4/15/11 Baa1 150,000 150,188
New York City Muni. Assistance Corp.:
5.50% 7/1/04 Aa2 50,000 51,500
Rfdg. 6% 7/1/05 Aa 300,000 318,375
New York City Muni. Wtr. Fin. Auth. Wtr. &
Swr. Sys. Rev.:
Series A, 6% 6/15/25 A2 275,000 273,625
Series B:
5.875% 6/15/26 A2 200,000 195,500
5.75% 6/15/29, LOC Canadian
Imperial Bank of Commerce A2 50,000 48,000
New York State Dorm. Auth. Lease Rev.:
Rfdg. (State Univ. Dorm. Facs.) Series A:
6% 7/1/03 (AMBAC Insured) Aaa 150,000 158,063
6.50% 5/15/05 Baa1 200,000 214,000
6.50% 5/15/06 Baa1 100,000 106,750
(City Univ. Sys. Consolidated) 2nd Series A,
5.75% 7/1/07 Baa1 450,000 456,750
(FIT Student Hsg. Corp.) 5.75% 7/1/05
(AMBAC Insured) Aaa 125,000 129,840
(Strong Memorial Hospital) 5.10% 7/1/04 A1 100,000 101,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
New York State Energy Research & Dev. Auth.
Facs. Rev. Rfdg. (Consolidated Edison Co.)
Series A, 6.10% 8/15/20 A1 $ 100,000 $ 101,375
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 150,000 151,875
Series D, 6.40% 11/15/06 Aaa 100,000 110,250
New York State Local Gov't. Assistance Corp.:
Series A, 6% 4/1/24 A3 255,000 255,000
Series B, 6% 4/1/18 A3 225,000 226,125
New York State Mtg. Agcy. Rev.
(Homeowner Mtg.):
5.50% 4/1/19 (AMBAC Insured) (c) Aaa 100,000 94,375
Series 49, 5.85% 10/1/17 Aa2 100,000 98,375
Series 60, 6.05% 4/1/26 (c) Aa2 100,000 99,250
New York State Med. Care Facs. Fin. Agcy. Rev.
(North Shore Med. Ctr.) 7.25% 11/1/11
(MBIA Insured) Aaa 100,000 108,875
New York State Pwr. Auth. Rev. Rfdg. & Gen.
Purpose Series CC, 5.125% 1/1/11 Aa 200,000 192,750
New York State Thruway Auth. Hwy. &
Bridge Trust Fund Series B:
6% 4/1/03 (AMBAC Insured) Aaa 210,000 221,813
6% 4/1/04 (MBIA Insured) Aaa 100,000 105,875
New York State Urban Dev. Corp. Rev.:
Rfdg. 5.75% 4/1/11 Baa1 185,000 184,306
(Correctional Cap. Facs.) Series 6,
5.375% 1/1/15 Baa1 100,000 93,250
Shelter Island Unified Free School Dist. #1
6.20% 12/15/08 (AMBAC Insured) Aaa 160,000 170,600
Suffolk County Gen. Oblig. 5% 10/15/03
(AMBAC Insured) Aaa 180,000 182,025
Suffolk County Wtr. Auth. 6% 6/1/17
(MBIA Insured) Aaa 100,000 105,125
Syracuse Gen. Oblig. 7.70% 12/1/99
(MBIA Insured) Aaa 120,000 129,150
Triborough Bridge & Tunnel Auth. Rev. Rfdg.
(Gen. Purpose) Series Y, 6% 1/1/12 Aa 340,000 359,126
7,580,944
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK & NEW JERSEY - 1.2%
New York & New Jersey Port Auth. Consolidated
85th Series, 5.375% 3/1/28 A1 $ 100,000 $ 95,000
TOTAL MUNICIPAL BONDS
(Cost $7,627,967) 7,675,944
MUNICIPAL NOTES - 1.3%
NEW YORK - 1.3%
New York State Energy Research & Dev. Auth.
Poll. Cont. Rev. (Niagara Mohawk Pwr. Proj.)
Series 1987 B, 4.05%, LOC Morgan
Guaranty, VRDN (b)(c) (Cost $100,000) A-1+ 100,000 100,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $7,727,967) $ 7,775,944
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. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
3. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
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 67.6% AAA, AA, A 65.0%
Baa 31.1% BBB 31.1%
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 49.4%
Water & Sewer 14.3
Special Tax 10.9
Transportation 10.1
Education 5.0
Others (individually less than 5%) 10.3
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $7,727,967. Net unrealized appreciation aggregated
$47,977, of which $98,018 related to appreciated investment securities and
$50,041 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $7,727,967) - $ 7,775,944
See accompanying schedule
Interest receivable 119,223
Prepaid expenses 6,707
Receivable from investment adviser for expense 19,749
reductions
TOTAL ASSETS 7,921,623
LIABILITIES
Payable to custodian bank $ 7,610
Payable for investments purchased 48,020
Distributions payable 6,050
Other payables and accrued expenses 21,153
TOTAL LIABILITIES 82,833
NET ASSETS $ 7,838,790
Net Assets consist of:
Paid in capital $ 7,784,043
Accumulated undistributed net realized gain (loss) 6,770
on investments
Net unrealized appreciation (depreciation) on 47,977
investments
NET ASSETS $ 7,838,790
CALCULATION OF MAXIMUM OFFERING PRICE $10.36
CLASS A:
NET ASSET VALUE and redemption price per share
($201,187 (divided by) 19,422 shares)
Maximum offering price per share (100/95.75 of $10.36) $10.82
CLASS T: $10.36
NET ASSET VALUE and redemption price per share
($4,229,055 (divided by) 408,021 shares)
Maximum offering price per share (100/96.50 of $10.36) $10.74
CLASS B: $10.36
NET ASSET VALUE and offering price per share
($2,676,514 (divided by) 258,440 shares) A
INSTITUTIONAL CLASS: $10.37
NET ASSET VALUE, offering price and redemption price per
share ($732,034 (divided by) 70,587 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INTEREST INCOME $ 202,894
EXPENSES
Management fee $ 15,172
Transfer agent fees 7,387
Distribution fees 17,017
Accounting fees and expenses 30,187
Non-interested trustees' compensation 26
Custodian fees and expenses 840
Registration fees 61,809
Audit 15,171
Legal 6,087
Miscellaneous 196
Total expenses before reductions 153,892
Expense reductions (108,239) 45,653
NET INTEREST INCOME 157,241
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 6,923
Futures contracts 6,066 12,989
Change in net unrealized appreciation (depreciation) on:
Investment securities (56,925)
Futures contracts (1,263) (58,188)
NET GAIN (LOSS) (45,199)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 112,042
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 157,241 $ 252,837
Net interest income
Net realized gain (loss) 12,989 39,120
Change in net unrealized appreciation (depreciation) (58,188) 5,377
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 112,042 297,334
FROM OPERATIONS
Distributions to shareholders (157,241) (252,837)
From net interest income
From net realized gain (43,520) -
TOTAL DISTRIBUTIONS (200,761) (252,837)
Share transactions - net increase (decrease) 537,570 3,469,707
TOTAL INCREASE (DECREASE) IN NET ASSETS 448,851 3,514,204
NET ASSETS
Beginning of period 7,389,939 3,875,735
End of period $ 7,838,790 $ 7,389,939
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS SEPTEMBER 3,
ENDED 1996
APRIL 30, 1997 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
(UNAUDITED) 1996
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.490 $ 10.290
Income from Investment Operations
Net interest income .231 .072
Net realized and unrealized gain (loss) (.070) .200
Total from investment operations .161 .272
Less Distributions
From net interest income (.231) (.072)
From net realized gain (.060) -
Total distributions (.291) (.072)
Net asset value, end of period $ 10.360 $ 10.490
TOTAL RETURN B, C 1.54% 2.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 201 $ 102
Ratio of expenses to average net assets .90% A, D .90% A,
D
Ratio of expenses to average net assets after expense .89% A, E .90% A
reductions
Ratio of net interest income to average net assets 4.35% A 4.43% A
Portfolio turnover rate 18% A 17%
</TABLE>
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 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
SIX MONTHS YEAR ENDED AUGUST 21,
ENDED OCTOBER 31, 1995
APRIL 30, 1997 (COMMENCEME
NT
OF OPERATIONS)
TO
OCTOBER 31,
(UNAUDITED) 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.480 $ 10.400 $ 10.000
Income from Investment Operations
Net interest income .226 .444 .084
Net realized and unrealized gain (loss) (.060) .080 .400
Total from investment operations .166 .524 .484
Less Distributions
From net interest income (.226) (.444) (.084)
From net realized gain (.060) - -
Total distributions (.286) (.444) (.084)
Net asset value, end of period $ 10.360 $ 10.480 $ 10.400
TOTAL RETURN B, C 1.59% 5.15% 4.85%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 4,229 $ 4,125 $ 2,033
Ratio of expenses to average net assets 1.00% A, 1.00% D 1.00% A,
D D
Ratio of expenses to average net assets after .99% A, .97% E 1.00% A
expense reductions E
Ratio of net interest income to average net assets 4.29% A 4.30% 4.16% A
Portfolio turnover rate 18% A 17% 0%
</TABLE>
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 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 B
SIX MONTHS YEAR ENDED AUGUST 21, 1995
ENDED OCTOBER 31, (COMMENCEMEN
APRIL 30, 1997 T
OF OPERATIONS)
TO
OCTOBER 31,
(UNAUDITED) 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.470 $ 10.390 $ 10.000
Income from Investment Operations
Net interest income .192 .375 .074
Net realized and unrealized gain (loss) (.050) .080 .390
Total from investment operations .142 .455 .464
Less Distributions
From net interest income (.192) (.375) (.074)
From net realized gain (.060) - -
Total distributions (.252) (.375) (.074)
Net asset value, end of period $ 10.360 $ 10.470 $ 10.390
TOTAL RETURN B, C 1.36% 4.46% 4.65%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,677 $ 2,445 $ 1,161
Ratio of expenses to average net assets 1.65% A, D 1.66% D 1.75% A
, D
Ratio of expenses to average net assets after 1.64% A, E 1.62% E 1.75% A
expense reductions
Ratio of net interest income to average net assets 3.63% A 3.62% 3.52% A
Portfolio turnover rate 18% A 17% 0%
</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 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
SIX MONTHS YEAR ENDED AUGUST 21, 1995
ENDED OCTOBER 31, (COMMENCEMEN
APRIL 30, 1997 T
OF OPERATIONS)
TO
OCTOBER 31,
(UNAUDITED) 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.470 $ 10.400 $ 10.000
Income from Investment Operations
Net interest income .239 .468 .095
Net realized and unrealized gain (loss) (.040) .070 .400
Total from investment operations .199 .538 .495
Less Distributions
From net interest income (.239) (.468) (.095)
From net realized gain (.060) - -
Total distributions (.299) (.468) (.095)
Net asset value, end of period $ 10.370 $ 10.470 $ 10.400
TOTAL RETURN B, C 1.91% 5.28% 4.96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 732 $ 718 $ 683
Ratio of expenses to average net assets .75% A, .75% D .75% A
D , D
Ratio of expenses to average net assets after .74% A, .68% E .75% A
expense reductions E
Ratio of net interest income to average net assets 4.53% A 4.53% 4.75% A
Portfolio turnover rate 18% A 17% 0%
</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 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 April 30, 1997 (Unaudited)
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 T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Interest 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. Securities for which
quotations are not readily available are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are not
readily available are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A 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 and capital
gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for certain
futures and options transactions, and market discount.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital. 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.
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 $1,396,202 and $675,162, respectively.
The market value of futures contracts opened and closed during the period
amounted to $89,358 and $325,911, 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 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
each class of shares (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90% *
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 104 $ 104
CLASS T 5,391 5,391
CLASS B 11,522 3,963
$ 17,017 $ 9,458
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 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 six years of purchase (five years prior to
January 2, 1997). The Class B charge is based on declining rates which
range from 5% to 1%(4% to 1% prior to January 2, 1997) of the lesser of the
cost of shares at the initial date of purchase or the net asset value of
the redeemed shares, excluding any reinvested dividends and capital gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities, dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 1,085 $ 375
CLASS T 27,851 5,380
CLASS B 95 0 *
$ 29,031 $ 5,755
* WHEN CLASS B SHARES ARE INITIALLY 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 T, Class B, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC, an affiliate of FMR, receives account fees and asset-based fees that
vary according to the account size and type of account of the shareholders
of the respective
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
classes of the fund. All fees are paid to FIIOC by UMB, which is reimbursed
by each class for such payments. FIIOC pays for typesetting, printing and
mailing of all shareholder reports. For the period, each class paid the
following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 423 .62
CLASS T UMB 3,952 .18
CLASS B UMB 2,398 .19
INSTITUTIONAL CLASS UMB 614 .17
$ 7,387
UMB also has a sub-contract with Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, under which FSC maintains the fund's accounting records.
The fee is based on the level of average net assets for the month plus
out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above the
following annual rates or range of annual rates of average net assets for
each class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 23,116
CLASS T 1.00% 39,041
CLASS B 1.65% 28,209
INSTITUTIONAL CLASS .75% 17,651
$ 108,017
In addition, the fund has entered into an arrangement with its custodian
whereby credits realized as a result of uninvested cash balances were used
to reduce a portion of expenses. During the period, the fund's custodian
fees were reduced by $222 under the custodian arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 30% of the total outstanding shares of the fund.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996 A
CLASS A
From net interest income $ 2,978 $ 707
From net realized gain 588 -
Total $ 3,566 $ 707
CLASS T
From net interest income $ 91,783 $ 150,521
From net realized gain 24,294 -
Total $ 116,077 $ 150,521
CLASS B
From net interest income $ 46,135 $ 70,019
From net realized gain 14,507 -
Total $ 60,642 $ 70,019
INSTITUTIONAL CLASS
From net interest income $ 16,345 $ 31,590
From net realized gain 4,131 -
Total $ 20,476 $ 31,590
$ 200,761 $ 252,837
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 A 1997 1996 A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CLASS A 9,337 9,691 $ 98,502 $ 99,722
Shares sold
Reinvestment of distributions 346 67 3,613 699
Shares redeemed (19) - (201) -
Net increase (decrease) 9,664 9,758 $ 101,914 $ 100,421
CLASS T 56,287 226,391 $ 590,277 $ 2,359,874
Shares sold
Reinvestment of distributions 9,279 11,198 97,050 116,533
Shares redeemed (51,049) (39,533) (533,383) (411,400)
Net increase (decrease) 14,517 198,056 $ 153,944 $ 2,065,007
CLASS B 31,136 133,150 $ 324,952 $ 1,388,144
Shares sold
Reinvestment of distributions 3,693 4,418 38,596 45,991
Shares redeemed (9,854) (15,772) (102,589) (161,162)
Net increase (decrease) 24,975 121,796 $ 260,959 $ 1,272,973
INSTITUTIONAL CLASS 409 - $ 4,300 $ -
Shares sold
Reinvestment of distributions 1,981 3,003 20,732 31,306
Shares redeemed (409) - (4,279) -
Net increase (decrease) 1,981 3,003 $ 20,753 $ 31,306
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 21,935
CLASS T 13,443
CLASS B 12,983
INSTITUTIONAL CLASS 13,448
$ 61,809
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
Norman Lind, 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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Intitutional Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
CALIFORNIA MUNICIPAL INCOME
FUND - CLASS A, CLASS T, AND CLASS B
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 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 31 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
The longer your investment time frame, the less likely it is that you will
be affected by short-term market volatility. A 10-year investment horizon
appropriate for saving for a college education, for example, enables you to
weather market cycles in a long-term fund, which may have a higher risk
potential, but also has a higher potential rate of return.
An intermediate-length fund could make sense if your investment horizon is
two to four years, while a short-term bond fund could be the right choice
if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund. These funds seek
income and a stable share price by investing in high-quality, short-term
investments. Of course, it's important to remember that there is no
assurance that a money market fund will achieve its goal of maintaining a
stable net asset value of $1.00 per share, and that these types of funds
are neither insured nor guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. The initial
offering of Class A shares took place on September 3, 1996. Class A shares
bear a 0.15% 12b-1 fee. Returns prior to September 3, 1996 are those of
Class T, the original class of the fund, and reflect Class T's 0.25% 12b-1
fee. If Fidelity had not reimbursed certain class expenses, the total
returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor California Municipal Income - Class 1.41% 6.24% 3.41%
A
Advisor California Municipal Income - Class A -2.90% 1.73% -0.98%
(incl. max 4.25% sales charge)
Lehman Brothers California Municipal Bond Index 1.78% 6.98% n/a
California Municipal Debt Funds Average 1.59% 6.58% n/a
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case six months, one year or 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. 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. To measure how Class A's performance
stacked up against its peers, you can compare it to the California
municipal debt funds average, which reflects the performance of mutual
funds with similar objectives as tracked by Lipper Analytical Services,
Inc. The past six months average represents a peer group of 107 mutual
funds. These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor California Municipal Income - Class A 6.24% 2.85%
Advisor California Municipal Income - Class A 1.73% -0.82%
(incl. max 4.25% sales charge)
Lehman Brothers California Municipal Bond Index 6.98% n/a
California Municipal Debt Funds Average 6.58% n/a
AVERAGE ANNUAL RETURNS take Class A shares' 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
FA CA Muni Inc -CL A LB Municipal Bond
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
1996/11/30 10048.65 10479.52
1996/12/31 9974.77 10435.50
1997/01/31 9980.64 10455.23
1997/02/28 10063.62 10551.20
1997/03/31 9899.29 10410.56
1997/04/30 9975.20 10497.69
$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 April 30, 1997, the
value of the investment would have been $9,975 - a 0.25% 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 $10,498 - a 4.98% 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
SIX FEBRUARY 20, 1996
MONTHS (COMMENCEMENT
ENDED OF OPERATIONS) TO
APRIL 30, OCTOBER 31,
1997 1996
Dividend return 2.11% 2.67%
Capital appreciation return -0.70% -0.70%
Total return 1.41% 1.97%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any, and exclude the effects of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 LIFE OF
MONTH MONTHS CLASS
Dividends per share 3.53% 21.05(cents) 27.67(cents)
Annualized dividend rate 4.38% 4.27% 4.26%
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 share price of $9.80 over
the past one month, $9.95 over the past six months and $9.92 over the life
of the class, 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. Yield information will be reported once Class A has a
longer, more stable, operating history.
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. If Fidelity had
not reimbursed certain class expenses, the total returns and dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor California Municipal Income - Class 1.46% 6.31% 3.48%
T
Advisor California Municipal Income - Class T -2.09% 2.59% -0.14%
(incl. max 3.50% sales charge)
Lehman Brothers California Municipal Bond Index 1.78% 6.98% n/a
California Municipal Debt Funds Average 1.59% 6.58% n/a
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, six months, one year or 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. 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. To measure how Class T's performance
stacked up against its peers, you can compare it to the California
municipal debt funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
The past six months average represents a peer group of 107 mutual funds.
These benchmarks include reinvested dividends and capital gains, if any,
and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor California Municipal Income - Class T 6.31% 2.90%
Advisor California Municipal Income - Class T 2.59% -0.12%
(incl. max 3.50% sales charge)
Lehman Brothers California Municipal Bond Index 6.98% n/a
California Municipal Debt Funds Average 6.58% n/a
AVERAGE ANNUAL RETURNS take Class T shares' 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
FA CA Muni Inc -CL T LB Municipal 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
1996/11/30 10128.07 10479.52
1996/12/31 10062.77 10435.50
1997/01/31 10057.86 10455.23
1997/02/28 10140.75 10551.20
1997/03/31 9974.31 10410.56
1997/04/30 10060.14 10497.69
$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 April 30, 1997, the
value of the investment would have been $10,060 - a 0.60% 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 $10,498 - a 4.98% 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
SIX FEBRUARY 20,
MONTHS 1996
ENDED (COMMENCEMENT
APRIL 30, OF OPERATIONS) TO
OCTOBER 31,
1997 1996
Dividend return 2.06% 2.69%
Capital appreciation return -0.60% -0.70%
Total return 1.46% 1.99%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any, and exclude the effects of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.45(cents) 20.57(cents) 40.29(cents)
Annualized dividend rate 4.28% 4.17% 4.09%
30-day annualized yield 4.27% - -
30-day annualized tax-equivalent 7.36% - -
yield
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average share price of $9.80 over
the past one month, $9.95 over the past six months and $9.85 over the past
one year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The offering share price used in the calculation of the
yield includes the effect of Class T's current 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 41.95%
combined effective 1997 federal and state tax bracket, but does not reflect
payment of the federal alternative minimum tax, if applicable. If Fidelity
had not reimbursed certain class expenses, the yield and tax-equivalent
yield would have been 3.06% and 5.27%, respectively.
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. Class B's
contingent deferred sales charges included in the past six months, past one
year and life of fund total return figures are 5%, 5% and 4%, respectively.
If Fidelity had not reimbursed certain class expenses, the total returns
and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor California Municipal Income - Class 1.14% 5.51% 2.51%
B
Advisor California Municipal Income - Class B -3.83% 0.51% -1.43%
(incl. contingent deferred sales charge)
Lehman Brothers California Municipal Bond Index 1.78% 6.98% n/a
California Municipal Debt Funds Average 1.59% 6.58% n/a
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case six months, one year or 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. 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. To measure how Class B's performance
stacked up against its peers, you can compare it to the California
municipal debt funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Analytical Services, Inc.
The past six months average represents a peer group of 107 mutual funds.
These benchmarks include reinvested dividends and capital gains, if any,
and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor California Municipal Income - Class 5.51% 2.10%
B
Advisor California Municipal Income - Class B 0.51% -1.19%
(incl. contingent deferred sales charge)
Lehman Brothers California Municipal Bond Index 6.98% n/a
California Municipal Debt Funds Average 6.58% n/a
AVERAGE ANNUAL RETURNS take Class B shares' 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
FA CA Muni Inc -CL B LB Municipal Bond
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 10211.87 10291.19
1996/11/30 10437.24 10479.52
1996/12/31 10364.07 10435.50
1997/01/31 10353.26 10455.23
1997/02/28 10433.49 10551.20
1997/03/31 10256.17 10410.56
1997/04/30 9931.87 10497.69
$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. As the chart shows, by
April 30, 1997, the value of the investment, including the effect of the
applicable contingent deferred sales charge, would have been $9,932 - a
0.68% 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 $10,498 - a 4.98% 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
SIX FEBRUARY 20,
MONTHS 1996
ENDED (COMMENCEMENT
APRIL 30, OF OPERATIONS) TO
OCTOBER 31,
1997 1996
Dividend return 1.75% 2.35%
Capital appreciation return -0.61% -1.00%
Total return 1.14% 1.35%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any, and exclude the effects of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 2.92(cents) 17.38(cents) 34.68(cents)
Annualized dividend rate 3.63% 3.53% 3.53%
30-day annualized yield 3.79% - -
30-day annualized tax-equivalent 6.53% - -
yield
DIVIDENDS per share show the income paid by the class for a set period. If
you annualize this number, based on an average share price of $9.78 over
the past one month, $9.93 over the past six months and $9.83 over the past
one year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The offering share price used in the calculation of the
yield excludes the effect of Class B's contingent deferred sales charge.
The tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the class' tax-free yield, if you're in the 41.95%
combined effective 1997 federal and state tax bracket, but does not reflect
payment of the federal alternative minimum tax, if applicable. If Fidelity
had not reimbursed certain class expenses, the yield and tax-equivalent
yield would have been 3.41% and 5.87%, respectively.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jonathan Short, Portfolio Manager of Fidelity Advisor
California Municipal Income Fund
Q. HOW DID THE FUND PERFORM, JON?
A. For the six-month period ending April 30, 1997, the fund's Class A,
Class T and Class B shares had returns of 1.41%, 1.46% and 1.14%,
respectively. For comparison purposes, the California municipal debt funds
average, as tracked by Lipper Analytical Services, returned 1.59% for the
same six-month period and the Lehman Brothers California Municipal Bond
Index returned 1.78%. For the 12-month period ending April 30, 1997, the
fund's Class A, Class T and Class B shares had returns of 6.24%, 6.31% and
5.51%, respectively, while the California municipal debt funds average,
again as tracked by Lipper Analytical Services, returned 6.58% and the
Lehman Brothers California Municipal Bond Index returned 6.98%.
Q. THE FEDERAL RESERVE BOARD RAISED INTEREST RATES IN MARCH OF THIS YEAR.
DID YOU CHANGE YOUR STRATEGY IN RESPONSE?
A. No, I didn't. I kept the fund's duration - or sensitivity to changes in
interest rates - neutral. By that I mean that the fund wasn't structured to
take advantage of rising or falling interest rates. Instead, it was
structured to match the interest rate sensitivity of the market for
California municipal securities. Since it's nearly impossible to
consistently predict the direction of interest rates over a long period of
time, I don't try to "time the market" by structuring the portfolio to
benefit from rising and falling rates. Instead, I focus on individual
security selection, looking for securities that for one reason or another
may be cheap relative to what I believe their value to be.
Q. WHAT TYPES OF BONDS DID WELL?
A. Baa-rated securities were some of the market's - and the fund's - best
performers. The main driver for their strong returns was tightening credit
spreads - meaning the yield differential between lower-quality and
higher-quality bonds narrowed. As a result, the prices of lower-quality
bonds generally performed better than higher-quality securities. Other good
performers were non-callable bonds, which can't be redeemed by their issuer
prior to maturity. When interest rates fall, municipal issuers often call -
or redeem - bonds before their maturity date and issue new bonds as a way
to lower their interest costs. Demand for non-callable bonds was strong
over the past six months and, as a result, non-callable bonds generally
performed better than callable bonds.
Q. WHAT STRATEGIES DID YOU EMPLOY OVER THE PAST SIX MONTHS?
A. I focused on bonds with maturities of between five and 20 years, while
keeping the fund's holdings in shorter- and longer-term bonds light. I
chose to emphasize intermediate bonds because I believed that their
expected total return was greater than that of longer-maturity bonds.
Additionally, I did not believe that many longer-term securities offered
enough additional yield to compensate investors for their added interest
rate sensitivity. All in all, I felt that intermediate maturity bonds were
attractive on a risk/return basis.
Q. OVER THE PAST SEVERAL YEARS, THE HEALTH CARE SECTOR HAS UNDERGONE
DRAMATIC CHANGE, WHICH IS MOST CLEARLY EVIDENCED BY THE WAVE OF MERGERS AND
ACQUISITIONS THAT HAVE TAKEN PLACE. WHAT CHALLENGES HAS THAT CREATED FOR
YOU AS A PORTFOLIO MANAGER?
A. It's true that there have been a wave of consolidations in the health
care sector, with most of the activity centering on non-profit hospitals
being aligned with or bought out by larger, for-profit health
organizations. It's increasingly clear that not all health care
organizations will survive as we head into an even more competitive
environment. I think that the basic challenge presented by this dynamic
situation is the volatility now inherent in the health care sector of the
municipal market. But with the help of Fidelity's research analysts, I try
to identify those
hospitals and other health care organizations that I believe will survive
and emerge as the stronger players.
Q. THE FUND'S STAKE IN GENERAL OBLIGATION BONDS (GOS) ISSUED BY THE STATE
HAS REMAINED THE FUND'S LARGEST SECTOR CONCENTRATION OVER THE PAST SIX
MONTHS. WHY WERE THESE SECURITIES ATTRACTIVE?
A. GOs issued by the state are backed by its full faith and credit and are
repaid by general revenue, in contrast to revenue from a specific facility
or project built with borrowed funds. In my opinion, the state's
creditworthiness has improved as its economy has rebounded. In fact,
revenue collections have improved to the point where estimates call for
California's budget to post $1 billion more in revenues than originally
projected. Also, a recent report by the Legislative Analysts Office, a
bi-partisan group which provides fiscal and policy information and advice
to the State Legislature, stated that the state may have as much as $3.4
billion in added budgetary resources. This is a combination of the increase
in revenues and a large reduction in health care and welfare case loads.
Q. WHAT'S YOUR OUTLOOK?
A. From a supply and demand standpoint, I'm optimistic about municipals. I
don't expect to see a tremendous amount of new bonds issued, and the
increase in supply that we may see will be easily digested if demand
remains firm. How municipals fare over the next year will depend heavily on
the direction of interest rates, but I don't
think anyone can accurately pinpoint where interest rates will be even six
months from now. That said, we may continue to see some volatility in the
bond market as long as there are conflicting signs about the economy and
inflation trends.
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 April 30, 1997,
more than $4 million
MANAGER: Jonathan Short,
since inception; joined
Fidelity in 1990
(checkmark)
JONATHAN SHORT ON CALIFORNIA'S
ECONOMY:
"The strength of California's
economic rebound is an
important component in the
overall performance of
California municipal bonds.
For a number of reasons, I am
optimistic about California's
economy. The first is
employment growth, which
continues to outpace the
nation as a whole. Second,
the state budget is posting
revenues well ahead of
projections, thanks mostly to
rising tax collections. Third,
the rebound has grown to be
more broad-based, with
Southern California finally
showing improvements after
lagging the northern part of
the state. Finally, permits to
build new houses have
increased and sales of
existing homes seem to have
stabilized."
INVESTMENT CHANGES
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligation 20.4 23.8
Water & Sewer 20.1 19.3
Special Tax 10.1 10.8
Electric Revenue 9.8 10.5
Lease Revenue 9.2 9.8
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1997
6 MONTHS AGO
Years 14.4 14.4
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 APRIL 30, 1997
6 MONTHS AGO
Years 7.6 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 THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF APRIL 30, 1997 AS OF OCTOBER 31, 1996
Aaa 46.1%
Aa, A 38.3%
Baa 9.6%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 6.0%
Aaa 47.0%
Aa, A 36.5%
Baa 10.1%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 6.4%
Row: 1, Col: 1, Value: 46.1
Row: 1, Col: 2, Value: 38.3
Row: 1, Col: 3, Value: 9.6
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 6.0
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
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A
PERCENTAGE OF THE FUND'S INVESTMENTS.
FIDELITY ADVISOR CALIFORNIA MUNICIPAL INCOME FUND
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 94.0%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
CALIFORNIA - 94.0%
Cabrillo Unified School Dist. (Cap. Appreciation)
Series A, 0% 8/1/10 (AMBAC Insured) Aaa $ 200,000 $ 94,500
California Dept. Wtr. Resource Rev.
(Central Valley Proj.) 5% 12/1/22 Aa 200,000 177,500
California Edl. Facs. Auth. Rev.:
(Santa Clara Univ.) 5% 9/1/15 (MBIA Insured) Aaa 100,000 92,125
(Univ. of Southern California) Series A,
5.65% 10/1/10 (f) Aa3 100,000 99,500
California Edl. Facs. Auth. Rev. Student Loan
(California Loan Program) Series A, 6%
3/1/16 (MBIA Insured) (c) Aaa 100,000 99,875
California Hsg. Fin. Agcy. Rev. (Home Mtg.) (c):
Series E, 6.375% 8/1/27 Aa2 200,000 202,500
Series L, 5.70% 8/1/25 (MBIA Insured) Aaa 100,000 100,125
Series R, 5.25% 8/1/16 (MBIA Insured) Aaa 100,000 99,250
California Gen. Oblig.:
(Various Purpose) Unltd. Tax Rfdg.
5.60% 9/1/21 A1 100,000 96,375
(Various Purpose) Unltd. Tax 7% 3/1/06 A1 90,000 102,038
6% 10/1/08 A1 100,000 107,000
6.50% 9/1/10 A1 150,000 165,937
5.75% 11/1/12 A1 130,000 133,737
California Poll. Cont. Fing. Auth. Poll. Cont.
Rev. Rfdg. (San Diego Gas & Elec.)
Series A, 5.90% 6/1/14 A2 100,000 101,875
California Pub. Works Board Lease Rev.:
(Various Community College Projs.) Series C,
6% 3/1/05 (AMBAC Insured) Aaa 80,000 84,900
(Various Univ. of California Projs.)
Series B, 5% 6/1/05 A1 230,000 230,287
California Statewide Communities Dev. Auth.
Rev. Ctfs. of Prtn. (Children's Hosp.) 6%
6/1/13 (MBIA Insured) Aaa 100,000 104,250
Central Coast Wtr. Auth. Rev. Rfdg. (State Wtr.
Proj. Regional Facs.) Series A,
5% 10/1/16 (AMBAC Insured) Aaa 100,000 91,375
Central Valley Fing. Auth. Cogeneration Proj.
Rev. (Carson Ice Gen. Proj.) 5.70% 7/1/03 BBB 100,000 102,000
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 400,000 112,000
Duarte Ctfs. of Prtn. (City of Hope Nat'l.
Med. Ctr.) 6.25% 4/1/23 Baa1 100,000 100,000
East Bay Muni. Util. Dist. Wtr. Sys. Rev.:
6% 6/1/01 (FGIC Insured) Aaa 75,000 78,938
6% 6/1/06 (FGIC Insured) Aaa 100,000 107,625
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
East Bay Muni. Util. Dist. Wastewtr. Treatment
Sys. Rev. 6.50% 6/1/24 (AMBAC Insured)
(Pre-Refunded to 6/1/04 @ 102) (d) Aaa $ 75,000 $ 83,156
Foothill/Eastern Trans. Corridor Agcy. Toll Rd. Rev.
(Sr. Lien) Series A, 6% 1/1/34 Baa 100,000 96,625
Fresno Swr. Rev. Series A-1, 5% 9/1/08
(AMBAC Insured) Aaa 100,000 97,875
Los Angeles County Convention & Exhibition Ctr.
Auth. Rev. Rfdg. (Lease Rev.) Series A,
6% 8/15/10 (MBIA Insured) Aaa 100,000 106,125
Los Angeles County Ctfs. of Prtn. (Cap. Appreciation)
(Disney Parking Proj.) 0% 9/1/16 Baa1 100,000 28,875
Los Angeles County Trans. Commission Sales
Tax Rev. Rfdg. Series B, 6.50% 7/1/10 (e) A1 150,000 165,750
Los Angeles Hbr. Dept. Rev.:
Series B, 5.25% 11/1/05 (c) Aa 100,000 101,000
7.60% 10/1/18 (Escrowed to Maturity) (d) Aa 100,000 121,625
Metropolitan Wtr. Dist. Southern California
Wtrwks. Rev. Rfdg. Series B:
4.75% 7/1/09 (MBIA Insured) Aaa 100,000 94,500
4.75% 7/1/21 (MBIA Insured) Aaa 100,000 85,375
Northern California Pwr. Agcy. Pub. Pwr. Rev. Rfdg.
(Geothermal Proj.) Series A, 5.85% 7/1/10
(AMBAC Insured) Aaa 100,000 104,250
Sacramento Fing. Auth. Lease Rev. Rfdg. Series A,
5.40% 11/1/20 (AMBAC Insured) Aaa 75,000 71,438
San Bernadino County Ctfs. of Prtn. Rfdg.
(Med. Ctr. Fing. Proj.) 5.25% 8/1/04 Baa1 150,000 149,250
San Diego County Reg'l. Trans. Commission
Sales Tax Rev. Second Series A, 5.25% 4/1/02
(AMBAC Insured) Aaa 150,000 153,188
San Francisco Bay Area Rapid Transit Dist. Sales
Tax Rev. 5.50% 7/1/20 (FGIC Insured) Aaa 100,000 96,375
San Francisco City & County Swr. Rev. Rfdg.
5.50% 10/1/01 (AMBAC Insured) Aaa 75,000 77,625
San Joaquin County Ctfs. of Prtn.
(General Hosp. Proj.) 5.80% 9/1/02 A 100,000 102,250
San Jose Redev. Agcy. Tax Allocation (Merged Area
Redev. Proj.) 5% 8/1/20 (MBIA Insured) Aaa 100,000 89,375
Santa Rosa Wastewtr. Rev. Rfdg. & Sub Reg'l.
Wastewtr. Proj. Series A, 4.75% 9/1/16
(FGIC Insured) Aaa 100,000 87,500
Turlock Irrigation Dist. Rev. Rfdg. Series A,
6% 1/1/07 (MBIA Insured) Aaa 75,000 79,781
TOTAL MUNICIPAL BONDS
(Cost $4,667,510) $ 4,675,650
MUNICIPAL NOTES (B) - 6.0%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
CALIFORNIA - 6.0%
California Poll. Cont. Fing. Auth. Poll. Cont.
Rev. Rfdg. (Pacific Gas & Elec.)
Series 1996 G, 4%, VRDN (c) VMIG 1 $ 100,000 $ 100,000
California Poll. Cont. Fing. Auth. Resources Recovery
Rev. (Ultra Pwr. Rocklin Proj.) Series 1988 A, 4%,
LOC Bank of America, VRDN (c) P-1 100,000 100,000
Orange County Wtr. Dist. Ctfs. of Prtn. Rev.
Series 1990 B, 3.70%,
LOC Nat'l. Westminster Bank, VRDN VMIG 1 100,000 100,000
TOTAL MUNICIPAL NOTES
(Cost $300,000) 300,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,967,510) $ 4,975,650
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
1 Municipal Bond Index Contract June 1997 $ 114,375 $ (1,634)
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.3%
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. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
3. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
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 $55,250.
6. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 84.4% AAA, AA, A 87.4%
Baa 7.5% BBB 4.6%
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 20.4%
Water & Sewer 20.1
Special Tax 10.1
Electric Revenue 9.8
Lease Revenue 9.2
Housing 8.1
Escrowed/Prerefunded 6.4
Education 5.9
Others (individually less than 5%) 10.0
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $4,967,510. Net unrealized appreciation aggregated $8,140,
of which $45,476 related to appreciated investment securities and $37,336
related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $4,000 which will expire on October 31, 2004.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $4,967,510) - $ 4,975,650
See accompanying schedule
Cash 61,121
Interest receivable 66,055
Prepaid expenses 6,708
Receivable from investment adviser for expense 8,093
reductions
TOTAL ASSETS 5,117,627
LIABILITIES
Payable for investments purchased delayed delivery $ 99,915
Payable for fund shares redeemed 970
Distributions payable 3,831
Payable for daily variation on futures contracts 438
Other payables and accrued expenses 31,124
TOTAL LIABILITIES 136,278
NET ASSETS $ 4,981,349
Net Assets consist of:
Paid in capital $ 4,981,423
Accumulated undistributed net realized gain (loss) (6,580)
on investments
Net unrealized appreciation (depreciation) on 6,506
investments
NET ASSETS $ 4,981,349
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1997 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $9.86
CLASS A:
NET ASSET VALUE and redemption price per share
($137,118 (divided by) 13,902 shares)
Maximum offering price per share (100/95.75 of $9.86) $10.30
CLASS T: $9.87
NET ASSET VALUE and redemption price per share
($2,278,655 (divided by) 230,937 shares)
Maximum offering price per share (100/96.50 of $9.87) $10.23
CLASS B: $9.84
NET ASSET VALUE and offering price per share
($676,175 (divided by) 68,704 shares) A
INSTITUTIONAL CLASS: $9.81
NET ASSET VALUE, offering price and redemption price
per share ($1,889,401 (divided by) 192,593 shares)
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>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INTEREST INCOME $ 125,315
EXPENSES
Management fee $ 9,498
Transfer agent fees 4,564
Distribution fees 5,858
Accounting fees and expenses 30,642
Non-interested trustees' compensation 9
Custodian fees and expenses 828
Registration fees 54,879
Audit 14,934
Legal 43
Miscellaneous 62
Total expenses before reductions 121,317
Expense reductions (97,740) 23,577
NET INTEREST INCOME 101,738
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (2,768)
Futures contracts (2,872) (5,640)
Change in net unrealized appreciation (depreciation) on:
Investment securities (30,434)
Futures contracts 1,781 (28,653)
NET GAIN (LOSS) (34,293)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 67,445
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS FEBRUARY 20,
ENDED APRIL 30, 1996
1997 (COMMENCEMENT
(UNAUDITED) OF OPERATIONS) TO
OCTOBER 31,
1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 101,738 $ 98,467
Net interest income
Net realized gain (loss) (5,640) (856)
Change in net unrealized appreciation (depreciation) (28,653) 35,159
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 67,445 132,770
FROM OPERATIONS
Distributions to shareholders from net interest income (101,738) (98,467)
Share transactions - net increase (decrease) 182,663 4,798,676
TOTAL INCREASE (DECREASE) IN NET ASSETS 148,370 4,832,979
NET ASSETS
Beginning of period 4,832,979 -
End of period $ 4,981,349 $ 4,832,979
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997
(UNAUDITED) 1996 F
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.930 $ 9.750
Income from Investment Operations
Net interest income .211 .066
Net realized and unrealized gain (loss) (.070) .180
Total from investment operations .141 .246
Less Distributions
From net interest income (.211) (.066)
Net asset value, end of period $ 9.860 $ 9.930
TOTAL RETURN B, C 1.41% 2.53%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 137 $ 102
Ratio of expenses to average net assets .90% A, D .90% A,
D
Ratio of expenses to average net assets after expense .89% A, E .90% A
reductions
Ratio of net interest income to average net assets 4.27% A 3.98% A
Portfolio turnover rate 13% A 21% A
</TABLE>
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 FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS FEBRUARY 20,
ENDED APRIL 30, 1996
1997 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
(UNAUDITED) 1996
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.920 $ 10.000
Income from Investment Operations
Net interest income .206 .261
Net realized and unrealized gain (loss) (.050) (.080) D
Total from investment operations .156 .181
Less Distributions
From net interest income (.206) (.261)
Net asset value, end of period $ 9.870 $ 9.920
TOTAL RETURN B, C 1.46% 1.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,279 $ 2,244
Ratio of expenses to average net assets 1.00% A, E 1.00% A,
E
Ratio of expenses to average net assets after expense .99% A, F .87% A,
reductions F
Ratio of net interest income to average net assets 4.21% A 3.92% A
Portfolio turnover rate 13% A 21% A
</TABLE>
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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN 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.
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).
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS FEBRUARY 20, 1996
ENDED APRIL 30, (COMMENCEMENT
1997 OF OPERATIONS) TO
OCTOBER 31,
(UNAUDITED) 1996
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.900 $ 10.000
Income from Investment Operations
Net interest income .174 .229
Net realized and unrealized gain (loss) (.060) (.100) D
Total from investment operations .114 .129
Less Distributions
From net interest income (.174) (.229)
Net asset value, end of period $ 9.840 $ 9.900
TOTAL RETURN B, C 1.14% 1.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 676 $ 646
Ratio of expenses to average net assets 1.65% A, E 1.65% A,
E
Ratio of expenses to average net assets after expense 1.64% A, F 1.62% A,
reductions F
Ratio of net interest income to average net assets 3.64% A 3.38% A
Portfolio turnover rate 13% A 21% A
</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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN 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.
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).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS FEBRUARY 20,
ENDED APRIL 30, 1996,
1997 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
(UNAUDITED) 1996
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.910 $ 10.000
Income from Investment Operations
Net interest income .217 .307
Net realized and unrealized gain (loss) (.100) (.090) D
Total from investment operations .117 .217
Less Distributions
From net interest income (.217) (.307)
Net asset value, end of period $ 9.810 $ 9.910
TOTAL RETURN B, C 1.18% 2.27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,889 $ 1,841
Ratio of expenses to average net assets .75% A, E .75% A,
E
Ratio of expenses to average net assets after expense .74% A, F .72% A,
reductions F
Ratio of net interest income to average net assets 4.48% A 4.51% A
Portfolio turnover rate 13% A 21% A
</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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN 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.
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).
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997 (Unaudited)
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 T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Interest 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. Securities for which
quotations are not readily available are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are not
readily available are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A 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 and capital
gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, market discount and capital loss carryforwards.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net interest income and realized
and unrealized gain (loss). Accumulated undistributed net realized gain
(loss) on investments may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
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.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. The fund
2. OPERATING POLICIES - CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
may receive compensation for interest forgone in the purchase of a
when-issued security. With respect to purchase commitments, the fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the commitment. The payables and
receivables associated with the purchases and sales of when-issued
securities having the same settlement date and broker are offset.
When-issued securities that have been purchased from and sold to different
brokers are reflected as both payables and receivables in the statement of
assets and liabilities under the caption "Delayed delivery." Losses may
arise due to changes in the market value of the underlying securities, if
the counterparty does not perform under the contract, or if the issuer does
not issue the securities due to political, economic, or other factors.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $594,877 and $297,793, respectively.
The market value of futures contracts opened and closed during the period
amounted to $574,298 and $576,889, 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 annualized 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
each class of shares (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90% *
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 92 $ 92
CLASS T 2,737 2,737
CLASS B 3,029 838
$ 5,858 $ 3,667
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 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 six years of purchase (five years prior to
January 2, 1997). The Class B charge is based on declining rates which
range from 5% to 1% (4% to 1% prior to January 2, 1997) of the lesser of
the cost of shares at the initial date of purchase or the net asset value
of the redeemed shares, excluding any reinvested dividends and capital
gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 4,215 $ 0
CLASS T 27,189 1,072
CLASS B 0 0 *
$ 31,404 $ 1,072
* WHEN CLASS B SHARES ARE INITIALLY 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 T, Class B, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC, an affiliate of FMR, receives account fees and asset-based fees that
vary according to the account size and type of account of the shareholders
of the respective
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
classes of the fund. All fees are paid to FIIOC by UMB, which is reimbursed
by each class for such payments. FIIOC pays for typesetting, printing and
mailing of all shareholder reports. For the period, each class paid the
following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 402 .66
CLASS T UMB 2,060 .19
CLASS B UMB 743 .22
INSTITUTIONAL CLASS UMB 1,359 .15
$ 4,564
UMB also has a sub-contract with Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, under which FSC maintains the fund's accounting records.
The fee is based on the level of average net assets for the month plus
out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above the
following annual rates or range of annual rates of average net assets for
each class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 15,608
CLASS T 1.00% 33,476
CLASS B 1.65% 18,872
INSTITUTIONAL CLASS .75% 29,560
$ 97,516
In addition, the fund has entered into an arrangement with its custodian
whereby credits realized as a result of uninvested cash balances were used
to reduce a portion of expenses. During the period, the fund's custodian
fees were reduced by $224 under the custodian arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996 A, B
CLASS A
From net interest income $ 2,606 $ 635
CLASS T
From net interest income 45,806 32,566
CLASS B
From net interest income 12,098 9,737
INSTITUTIONAL CLASS
From net interest income 41,228 55,529
$ 101,738 $ 98,467
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
B DISTRIBUTIONS FOR CLASS B, CLASS T AND INSTITUTIONAL CLASS ARE FOR THE
PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996.
7. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 43.4% of
the total outstanding shares of the fund. In addition, one unaffiliated
shareholder was record owner of more than 10% of the total outstanding
shares of the fund, totaling 10.05%.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 A, B 1997 1996 A, B
CLASS A 3,369 10,225 $ 33,518 $ 99,695
Shares sold
Reinvestment of distributions 260 68 2,585 677
from net interest income
Shares redeemed (20) - (200) -
Net increase (decrease) 3,609 10,293 $ 35,903 $ 100,372
CLASS T 36,651 248,275 $ 362,431 $ 2,423,465
Shares sold
Reinvestment of distributions 2,354 2,001 23,458 19,573
from net interest income
Shares redeemed (34,235) (24,109) (340,970) (235,454)
Net increase (decrease) 4,770 226,167 $ 44,919 $ 2,207,584
CLASS B 3,840 64,662 $ 38,126 $ 629,107
Shares sold
Reinvestment of distributions 692 573 6,878 5,592
from net interest income
Shares redeemed (1,063) - (10,424) -
Net increase (decrease) 3,469 65,235 $ 34,580 $ 634,699
INSTITUTIONAL CLASS 2,717 180,001 $ 26,500 $ 1,800,010
Shares sold
Reinvestment of distributions 4,115 5,760 40,761 56,011
from net interest income
Shares redeemed - - - -
Net increase (decrease) 6,832 185,761 $ 67,261 $ 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 OPERATIONS) TO
OCTOBER 31, 1996.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 14,286
CLASS T 14,186
CLASS B 12,688
INSTITUTIONAL CLASS 13,719
$ 54,879
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 *
Edward C. Johnson 3d
Robert M. Gates *
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
CALIFORNIA MUNICIPAL INCOME
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 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 23 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
The longer your investment time frame, the less likely it is that you will
be affected by short-term market volatility. A 10-year investment horizon
appropriate for saving for a college education, for example, enables you to
weather market cycles in a long-term fund, which may have a higher risk
potential, but also has a higher potential rate of return.
An intermediate-length fund could make sense if your investment horizon is
two to four years, while a short-term bond fund could be the right choice
if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund. These funds seek
income and a stable share price by investing in high-quality, short-term
investments. Of course, it's important to remember that there is no
assurance that a money market fund will achieve its goal of maintaining a
stable net asset value of $1.00 per share, and that these types of funds
are neither insured nor guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. If Fidelity had
not reimbursed certain class expenses, the total returns and dividends
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor California Municipal Income - 1.18% 6.50% 3.48%
Institutional Class
Lehman Brothers California Municipal Bond Index 1.78% 6.98% n/a
California Municipal Debt Funds Average 1.59% 6.58% n/a
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case six months, one year or
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. You can compare the 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. To
measure how Institutional Class' performance stacked up against its peers,
you can compare it to the California municipal debt funds average, which
reflects the performance of mutual funds with similar objectives as tracked
by Lipper Analytical Services, Inc. The past six months average represents
a peer group of 107 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effects of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 LIFE OF
YEAR FUND
Advisor California Municipal Income - 6.50% 2.91%
Institutional Class
Lehman Brothers California Municipal Bond Index 6.98% n/a
California Municipal Debt Funds Average 6.58% n/a
AVERAGE ANNUAL RETURNS take Institutional Class shares' 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
FA CA Muni Inc -CL 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
1996/11/30 10495.36 10479.52
1996/12/31 10419.06 10435.50
1997/01/31 10416.07 10455.23
1997/02/28 10514.85 10551.20
1997/03/31 10333.01 10410.56
1997/04/30 10424.52 10497.69
$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 April 30, 1997, the value of the investment would
have been $10,425 - a 4.25% 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 $10,498 - a 4.98% 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
SIX FEBRUARY 20,
MONTHS 1996
ENDED (COMMENCEMENT
APRIL 30, OF OPERATIONS) TO
OCTOBER 31,
1997 1996
Dividend return 2.19% 3.17%
Capital appreciation return -1.01% -0.90%
Total return 1.18% 2.27%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any.
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.64% 21.75(cents) 43.74(cents)
Annualized dividend rate 4.54% 4.43% 4.46%
30-day annualized yield 4.70% - -
30-day annualized tax-equivalent yield 8.10% - -
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 $9.75 over
the past one month, $9.90 over the past six months and $9.80 over the past
one year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the class' tax-free yield, if you're
in the 41.95% combined effective 1997 federal and state tax bracket, but
does not reflect payment of the federal alternative minimum tax, if
applicable. If Fidelity had not reimbursed certain class expenses, the
yield and tax-equivalent yield would have been 3.41% and 5.87%,
respectively.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jonathan Short, Portfolio Manager of Fidelity Advisor
California Municipal Income Fund
Q. HOW DID THE FUND PERFORM, JON?
A. For the six-month and 12-month periods ending April 30, 1997, the fund's
Institutional Class shares had returns of 1.18% and 6.50%, respectively.
For comparison, the California municipal debt funds average, as tracked by
Lipper Analytical Services, returned 1.59% and 6.58% for the same periods.
The Lehman Brothers California Municipal Bond Index returned 1.78% for the
same six-month period and 6.98% for the same 12-month period.
Q. THE FEDERAL RESERVE BOARD RAISED INTEREST RATES IN MARCH OF THIS YEAR.
DID YOU CHANGE YOUR STRATEGY IN RESPONSE?
A. No, I didn't. I kept the fund's duration - or sensitivity to changes in
interest rates - neutral. By that I mean that the fund wasn't structured to
take advantage of rising or falling interest rates. Instead, it was
structured to match the interest rate sensitivity of the market for
California municipal securities. Since it's nearly impossible to
consistently predict the direction of interest rates over a long period of
time, I don't try to "time the market" by structuring the portfolio to
benefit from rising and falling rates. Instead, I focus on individual
security selection, looking for securities that for one reason or another
may be cheap relative to what I believe their value to be.
Q. WHAT TYPES OF BONDS DID WELL?
A. Baa-rated securities were some of the market's - and the fund's - best
performers. The main driver for their strong returns was tightening credit
spreads - meaning the yield differential between lower-quality and
higher-quality bonds narrowed. As a result, the prices of lower-quality
bonds generally performed better than higher-quality securities. Other good
performers were non-callable bonds, which can't be redeemed by their issuer
prior to maturity. When interest rates fall, municipal issuers often call -
or redeem - bonds before their maturity date and issue new bonds as a way
to lower their interest costs. Demand for non-callable bonds was strong
over the past six months and, as a result, non-callable bonds generally
performed better than callable bonds.
Q. WHAT STRATEGIES DID YOU EMPLOY OVER THE PAST SIX MONTHS?
A. I focused on bonds with maturities of between five and 20 years, while
keeping the fund's holdings in shorter- and longer-term bonds light. I
chose to emphasize intermediate bonds because I believed that their
expected total return was greater than that of longer-maturity bonds.
Additionally, I did not believe that many longer-term securities offered
enough additional yield to compensate investors for their added interest
rate sensitivity. All in all, I felt that intermediate maturity bonds were
attractive on a risk/return basis.
Q. OVER THE PAST SEVERAL YEARS, THE HEALTH CARE SECTOR HAS UNDERGONE
DRAMATIC CHANGE, WHICH IS MOST CLEARLY EVIDENCED BY THE WAVE OF MERGERS AND
ACQUISITIONS THAT HAVE TAKEN PLACE. WHAT CHALLENGES HAS THAT CREATED FOR
YOU AS A PORTFOLIO MANAGER?
A. It's true that there have been a wave of consolidations in the health
care sector, with most of the activity centering on non-profit hospitals
being aligned with or bought out by larger, for-profit health
organizations. It's increasingly clear that not all health care
organizations will survive as we head into an even more competitive
environment. I think that the basic challenge presented by this dynamic
situation is the volatility now inherent in the health care sector of the
municipal market. But with the help of Fidelity's research analysts, I try
to identify those
hospitals and other health care organizations that I believe will survive
and emerge as the stronger players.
Q. THE FUND'S STAKE IN GENERAL OBLIGATION BONDS (GOS) ISSUED BY THE STATE
HAS REMAINED THE FUND'S LARGEST SECTOR CONCENTRATION OVER THE PAST SIX
MONTHS. WHY WERE THESE SECURITIES ATTRACTIVE?
A. GOs issued by the state are backed by its full faith and credit and are
repaid by general revenue, in contrast to revenue from a specific facility
or project built with borrowed funds. In my opinion, the state's
creditworthiness has improved as its economy has rebounded. In fact,
revenue collections have improved to the point where estimates call for
California's budget to post $1 billion more in revenues than originally
projected. Also, a recent report by the Legislative Analysts Office, a
bi-partisan group which provides fiscal and policy information and advice
to the State Legislature, stated that the state may have as much as $3.4
billion in added budgetary resources. This is a combination of the increase
in revenues and a large reduction in health care and welfare case loads.
Q. WHAT'S YOUR OUTLOOK?
A. From a supply and demand standpoint, I'm optimistic about municipals. I
don't expect to see a tremendous amount of new bonds issued, and the
increase in supply that we may see will be easily digested if demand
remains firm. How municipals fare over the next year will depend heavily on
the direction of interest rates, but I don't
think anyone can accurately pinpoint where interest rates will be even six
months from now. That said, we may continue to see some volatility in the
bond market as long as there are conflicting signs about the economy and
inflation trends.
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 April 30, 1997,
more than $4 million
MANAGER: Jonathan Short,
since inception; joined
Fidelity in 1990
(checkmark)
JONATHAN SHORT ON CALIFORNIA'S
ECONOMY:
"The strength of California's
economic rebound is an
important component in the
overall performance of
California municipal bonds.
For a number of reasons, I am
optimistic about California's
economy. The first is
employment growth, which
continues to outpace the
nation as a whole. Second,
the state budget is posting
revenues well ahead of
projections, thanks mostly to
rising tax collections. Third,
the rebound has grown to be
more broad-based, with
Southern California finally
showing improvements after
lagging the northern part of
the state. Finally, permits to
build new houses have
increased and sales of
existing homes seem to have
stabilized."
INVESTMENT CHANGES
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligation 20.4 23.8
Water & Sewer 20.1 19.3
Special Tax 10.1 10.8
Electric Revenue 9.8 10.5
Lease Revenue 9.2 9.8
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1997
6 MONTHS AGO
Years 14.4 14.4
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 APRIL 30, 1997
6 MONTHS AGO
Years 7.6 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 THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF APRIL 30, 1997 AS OF OCTOBER 31, 1996
Aaa 46.1%
Aa, A 38.3%
Baa 9.6%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 6.0%
Aaa 47.0%
Aa, A 36.5%
Baa 10.1%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 6.4%
Row: 1, Col: 1, Value: 46.1
Row: 1, Col: 2, Value: 38.3
Row: 1, Col: 3, Value: 9.6
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 6.0
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
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. AMOUNTS
SHOWN ARE AS A
PERCENTAGE OF THE FUND'S INVESTMENTS.
FIDELITY ADVISOR CALIFORNIA MUNICIPAL INCOME FUND
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 94.0%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
CALIFORNIA - 94.0%
Cabrillo Unified School Dist. (Cap. Appreciation)
Series A, 0% 8/1/10 (AMBAC Insured) Aaa $ 200,000 $ 94,500
California Dept. Wtr. Resource Rev.
(Central Valley Proj.) 5% 12/1/22 Aa 200,000 177,500
California Edl. Facs. Auth. Rev.:
(Santa Clara Univ.) 5% 9/1/15 (MBIA Insured) Aaa 100,000 92,125
(Univ. of Southern California) Series A,
5.65% 10/1/10 (f) Aa3 100,000 99,500
California Edl. Facs. Auth. Rev. Student Loan
(California Loan Program) Series A, 6%
3/1/16 (MBIA Insured) (c) Aaa 100,000 99,875
California Hsg. Fin. Agcy. Rev. (Home Mtg.) (c):
Series E, 6.375% 8/1/27 Aa2 200,000 202,500
Series L, 5.70% 8/1/25 (MBIA Insured) Aaa 100,000 100,125
Series R, 5.25% 8/1/16 (MBIA Insured) Aaa 100,000 99,250
California Gen. Oblig.:
(Various Purpose) Unltd. Tax Rfdg.
5.60% 9/1/21 A1 100,000 96,375
(Various Purpose) Unltd. Tax 7% 3/1/06 A1 90,000 102,038
6% 10/1/08 A1 100,000 107,000
6.50% 9/1/10 A1 150,000 165,937
5.75% 11/1/12 A1 130,000 133,737
California Poll. Cont. Fing. Auth. Poll. Cont.
Rev. Rfdg. (San Diego Gas & Elec.)
Series A, 5.90% 6/1/14 A2 100,000 101,875
California Pub. Works Board Lease Rev.:
(Various Community College Projs.) Series C,
6% 3/1/05 (AMBAC Insured) Aaa 80,000 84,900
(Various Univ. of California Projs.)
Series B, 5% 6/1/05 A1 230,000 230,287
California Statewide Communities Dev. Auth.
Rev. Ctfs. of Prtn. (Children's Hosp.) 6%
6/1/13 (MBIA Insured) Aaa 100,000 104,250
Central Coast Wtr. Auth. Rev. Rfdg. (State Wtr.
Proj. Regional Facs.) Series A,
5% 10/1/16 (AMBAC Insured) Aaa 100,000 91,375
Central Valley Fing. Auth. Cogeneration Proj.
Rev. (Carson Ice Gen. Proj.) 5.70% 7/1/03 BBB 100,000 102,000
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 400,000 112,000
Duarte Ctfs. of Prtn. (City of Hope Nat'l.
Med. Ctr.) 6.25% 4/1/23 Baa1 100,000 100,000
East Bay Muni. Util. Dist. Wtr. Sys. Rev.:
6% 6/1/01 (FGIC Insured) Aaa 75,000 78,938
6% 6/1/06 (FGIC Insured) Aaa 100,000 107,625
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
East Bay Muni. Util. Dist. Wastewtr. Treatment
Sys. Rev. 6.50% 6/1/24 (AMBAC Insured)
(Pre-Refunded to 6/1/04 @ 102) (d) Aaa $ 75,000 $ 83,156
Foothill/Eastern Trans. Corridor Agcy. Toll Rd. Rev.
(Sr. Lien) Series A, 6% 1/1/34 Baa 100,000 96,625
Fresno Swr. Rev. Series A-1, 5% 9/1/08
(AMBAC Insured) Aaa 100,000 97,875
Los Angeles County Convention & Exhibition Ctr.
Auth. Rev. Rfdg. (Lease Rev.) Series A,
6% 8/15/10 (MBIA Insured) Aaa 100,000 106,125
Los Angeles County Ctfs. of Prtn. (Cap. Appreciation)
(Disney Parking Proj.) 0% 9/1/16 Baa1 100,000 28,875
Los Angeles County Trans. Commission Sales
Tax Rev. Rfdg. Series B, 6.50% 7/1/10 (e) A1 150,000 165,750
Los Angeles Hbr. Dept. Rev.:
Series B, 5.25% 11/1/05 (c) Aa 100,000 101,000
7.60% 10/1/18 (Escrowed to Maturity) (d) Aa 100,000 121,625
Metropolitan Wtr. Dist. Southern California
Wtrwks. Rev. Rfdg. Series B:
4.75% 7/1/09 (MBIA Insured) Aaa 100,000 94,500
4.75% 7/1/21 (MBIA Insured) Aaa 100,000 85,375
Northern California Pwr. Agcy. Pub. Pwr. Rev. Rfdg.
(Geothermal Proj.) Series A, 5.85% 7/1/10
(AMBAC Insured) Aaa 100,000 104,250
Sacramento Fing. Auth. Lease Rev. Rfdg. Series A,
5.40% 11/1/20 (AMBAC Insured) Aaa 75,000 71,438
San Bernadino County Ctfs. of Prtn. Rfdg.
(Med. Ctr. Fing. Proj.) 5.25% 8/1/04 Baa1 150,000 149,250
San Diego County Reg'l. Trans. Commission
Sales Tax Rev. Second Series A, 5.25% 4/1/02
(AMBAC Insured) Aaa 150,000 153,188
San Francisco Bay Area Rapid Transit Dist. Sales
Tax Rev. 5.50% 7/1/20 (FGIC Insured) Aaa 100,000 96,375
San Francisco City & County Swr. Rev. Rfdg.
5.50% 10/1/01 (AMBAC Insured) Aaa 75,000 77,625
San Joaquin County Ctfs. of Prtn.
(General Hosp. Proj.) 5.80% 9/1/02 A 100,000 102,250
San Jose Redev. Agcy. Tax Allocation (Merged Area
Redev. Proj.) 5% 8/1/20 (MBIA Insured) Aaa 100,000 89,375
Santa Rosa Wastewtr. Rev. Rfdg. & Sub Reg'l.
Wastewtr. Proj. Series A, 4.75% 9/1/16
(FGIC Insured) Aaa 100,000 87,500
Turlock Irrigation Dist. Rev. Rfdg. Series A,
6% 1/1/07 (MBIA Insured) Aaa 75,000 79,781
TOTAL MUNICIPAL BONDS
(Cost $4,667,510) $ 4,675,650
MUNICIPAL NOTES (B) - 6.0%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
CALIFORNIA - 6.0%
California Poll. Cont. Fing. Auth. Poll. Cont.
Rev. Rfdg. (Pacific Gas & Elec.)
Series 1996 G, 4%, VRDN (c) VMIG 1 $ 100,000 $ 100,000
California Poll. Cont. Fing. Auth. Resources Recovery
Rev. (Ultra Pwr. Rocklin Proj.) Series 1988 A, 4%,
LOC Bank of America, VRDN (c) P-1 100,000 100,000
Orange County Wtr. Dist. Ctfs. of Prtn. Rev.
Series 1990 B, 3.70%,
LOC Nat'l. Westminster Bank, VRDN VMIG 1 100,000 100,000
TOTAL MUNICIPAL NOTES
(Cost $300,000) 300,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,967,510) $ 4,975,650
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
1 Municipal Bond Index Contract June 1997 $ 114,375 $ (1,634)
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.3%
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. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
3. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
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 $55,250.
6. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 84.4% AAA, AA, A 87.4%
Baa 7.5% BBB 4.6%
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 20.4%
Water & Sewer 20.1
Special Tax 10.1
Electric Revenue 9.8
Lease Revenue 9.2
Housing 8.1
Escrowed/Prerefunded 6.4
Education 5.9
Others (individually less than 5%) 10.0
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $4,967,510. Net unrealized appreciation aggregated $8,140,
of which $45,476 related to appreciated investment securities and $37,336
related to depreciated investment securities.
At October 31, 1996, the fund had a capital loss carryforward of
approximately $4,000 which will expire on October 31, 2004.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $4,967,510) - $ 4,975,650
See accompanying schedule
Cash 61,121
Interest receivable 66,055
Prepaid expenses 6,708
Receivable from investment adviser for expense 8,093
reductions
TOTAL ASSETS 5,117,627
LIABILITIES
Payable for investments purchased delayed delivery $ 99,915
Payable for fund shares redeemed 970
Distributions payable 3,831
Payable for daily variation on futures contracts 438
Other payables and accrued expenses 31,124
TOTAL LIABILITIES 136,278
NET ASSETS $ 4,981,349
Net Assets consist of:
Paid in capital $ 4,981,423
Accumulated undistributed net realized gain (loss) (6,580)
on investments
Net unrealized appreciation (depreciation) on 6,506
investments
NET ASSETS $ 4,981,349
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1997 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $9.86
CLASS A:
NET ASSET VALUE and redemption price per share
($137,118 (divided by) 13,902 shares)
Maximum offering price per share (100/95.75 of $9.86) $10.30
CLASS T: $9.87
NET ASSET VALUE and redemption price per share
($2,278,655 (divided by) 230,937 shares)
Maximum offering price per share (100/96.50 of $9.87) $10.23
CLASS B: $9.84
NET ASSET VALUE and offering price per share
($676,175 (divided by) 68,704 shares) A
INSTITUTIONAL CLASS: $9.81
NET ASSET VALUE, offering price and redemption price
per share ($1,889,401 (divided by) 192,593 shares)
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>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INTEREST INCOME $ 125,315
EXPENSES
Management fee $ 9,498
Transfer agent fees 4,564
Distribution fees 5,858
Accounting fees and expenses 30,642
Non-interested trustees' compensation 9
Custodian fees and expenses 828
Registration fees 54,879
Audit 14,934
Legal 43
Miscellaneous 62
Total expenses before reductions 121,317
Expense reductions (97,740) 23,577
NET INTEREST INCOME 101,738
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (2,768)
Futures contracts (2,872) (5,640)
Change in net unrealized appreciation (depreciation) on:
Investment securities (30,434)
Futures contracts 1,781 (28,653)
NET GAIN (LOSS) (34,293)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 67,445
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS FEBRUARY 20,
ENDED APRIL 30, 1996
1997 (COMMENCEMENT
(UNAUDITED) OF OPERATIONS) TO
OCTOBER 31,
1996
INCREASE (DECREASE) IN NET ASSETS
Operations $ 101,738 $ 98,467
Net interest income
Net realized gain (loss) (5,640) (856)
Change in net unrealized appreciation (depreciation) (28,653) 35,159
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 67,445 132,770
FROM OPERATIONS
Distributions to shareholders from net interest income (101,738) (98,467)
Share transactions - net increase (decrease) 182,663 4,798,676
TOTAL INCREASE (DECREASE) IN NET ASSETS 148,370 4,832,979
NET ASSETS
Beginning of period 4,832,979 -
End of period $ 4,981,349 $ 4,832,979
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997
(UNAUDITED) 1996 F
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.930 $ 9.750
Income from Investment Operations
Net interest income .211 .066
Net realized and unrealized gain (loss) (.070) .180
Total from investment operations .141 .246
Less Distributions
From net interest income (.211) (.066)
Net asset value, end of period $ 9.860 $ 9.930
TOTAL RETURN B, C 1.41% 2.53%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 137 $ 102
Ratio of expenses to average net assets .90% A, D .90% A,
D
Ratio of expenses to average net assets after expense .89% A, E .90% A
reductions
Ratio of net interest income to average net assets 4.27% A 3.98% A
Portfolio turnover rate 13% A 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.
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 FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS FEBRUARY 20,
ENDED APRIL 30, 1996
1997 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
(UNAUDITED) 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.920 $ 10.000
Income from Investment Operations
Net interest income .206 .261
Net realized and unrealized gain (loss) (.050) (.080) D
Total from investment operations .156 .181
Less Distributions
From net interest income (.206) (.261)
Net asset value, end of period $ 9.870 $ 9.920
TOTAL RETURN B, C 1.46% 1.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,279 $ 2,244
Ratio of expenses to average net assets 1.00% A, E 1.00% A,
E
Ratio of expenses to average net assets after expense .99% A, F .87% A,
reductions F
Ratio of net interest income to average net assets 4.21% A 3.92% A
Portfolio turnover rate 13% A 21% A
</TABLE>
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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN 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.
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).
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS FEBRUARY 20, 1996
ENDED APRIL 30, (COMMENCEMENT
1997 OF OPERATIONS) TO
OCTOBER 31,
(UNAUDITED) 1996
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.900 $ 10.000
Income from Investment Operations
Net interest income .174 .229
Net realized and unrealized gain (loss) (.060) (.100) D
Total from investment operations .114 .129
Less Distributions
From net interest income (.174) (.229)
Net asset value, end of period $ 9.840 $ 9.900
TOTAL RETURN B, C 1.14% 1.35%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 676 $ 646
Ratio of expenses to average net assets 1.65% A, E 1.65% A,
E
Ratio of expenses to average net assets after expense 1.64% A, F 1.62% A,
reductions F
Ratio of net interest income to average net assets 3.64% A 3.38% A
Portfolio turnover rate 13% A 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.
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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN 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.
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).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS FEBRUARY 20,
ENDED APRIL 30, 1996,
1997 (COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
(UNAUDITED) 1996
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.910 $ 10.000
Income from Investment Operations
Net interest income .217 .307
Net realized and unrealized gain (loss) (.100) (.090) D
Total from investment operations .117 .217
Less Distributions
From net interest income (.217) (.307)
Net asset value, end of period $ 9.810 $ 9.910
TOTAL RETURN B, C 1.18% 2.27%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,889 $ 1,841
Ratio of expenses to average net assets .75% A, E .75% A,
E
Ratio of expenses to average net assets after expense .74% A, F .72% A,
reductions F
Ratio of net interest income to average net assets 4.48% A 4.51% A
Portfolio turnover rate 13% A 21% A
</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 THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN 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.
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).
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997 (Unaudited)
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 T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Interest 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. Securities for which
quotations are not readily available are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are not
readily available are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A 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 and capital
gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, market discount and capital loss carryforwards.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net interest income and realized
and unrealized gain (loss). Accumulated undistributed net realized gain
(loss) on investments may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
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.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. The fund
2. OPERATING POLICIES - CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
may receive compensation for interest forgone in the purchase of a
when-issued security. With respect to purchase commitments, the fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the commitment. The payables and
receivables associated with the purchases and sales of when-issued
securities having the same settlement date and broker are offset.
When-issued securities that have been purchased from and sold to different
brokers are reflected as both payables and receivables in the statement of
assets and liabilities under the caption "Delayed delivery." Losses may
arise due to changes in the market value of the underlying securities, if
the counterparty does not perform under the contract, or if the issuer does
not issue the securities due to political, economic, or other factors.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $594,877 and $297,793, respectively.
The market value of futures contracts opened and closed during the period
amounted to $574,298 and $576,889, 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 annualized 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
each class of shares (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90% *
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 92 $ 92
CLASS T 2,737 2,737
CLASS B 3,029 838
$ 5,858 $ 3,667
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 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 six years of purchase (five years prior to
January 2, 1997). The Class B charge is based on declining rates which
range from 5% to 1% (4% to 1% prior to January 2, 1997) of the lesser of
the cost of shares at the initial date of purchase or the net asset value
of the redeemed shares, excluding any reinvested dividends and capital
gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 4,215 $ 0
CLASS T 27,189 1,072
CLASS B 0 0 *
$ 31,404 $ 1,072
* WHEN CLASS B SHARES ARE INITIALLY 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 T, Class B, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC, an affiliate of FMR, receives account fees and asset-based fees that
vary according to the account size and type of account of the shareholders
of the respective
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
classes of the fund. All fees are paid to FIIOC by UMB, which is reimbursed
by each class for such payments. FIIOC pays for typesetting, printing and
mailing of all shareholder reports. For the period, each class paid the
following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 402 .66
CLASS T UMB 2,060 .19
CLASS B UMB 743 .22
INSTITUTIONAL CLASS UMB 1,359 .15
$ 4,564
UMB also has a sub-contract with Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, under which FSC maintains the fund's accounting records.
The fee is based on the level of average net assets for the month plus
out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above the
following annual rates or range of annual rates of average net assets for
each class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 15,608
CLASS T 1.00% 33,476
CLASS B 1.65% 18,872
INSTITUTIONAL CLASS .75% 29,560
$ 97,516
In addition, the fund has entered into an arrangement with its custodian
whereby credits realized as a result of uninvested cash balances were used
to reduce a portion of expenses. During the period, the fund's custodian
fees were reduced by $224 under the custodian arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996 A, B
CLASS A
From net interest income $ 2,606 $ 635
CLASS T
From net interest income 45,806 32,566
CLASS B
From net interest income 12,098 9,737
INSTITUTIONAL CLASS
From net interest income 41,228 55,529
$ 101,738 $ 98,467
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
B DISTRIBUTIONS FOR CLASS B, CLASS T AND INSTITUTIONAL CLASS ARE FOR THE
PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996.
7. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 43.4% of
the total outstanding shares of the fund. In addition, one unaffiliated
shareholder was record owner of more than 10% of the total outstanding
shares of the fund, totaling 10.05%.
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 A, B 1997 1996 A, B
CLASS A 3,369 10,225 $ 33,518 $ 99,695
Shares sold
Reinvestment of distributions 260 68 2,585 677
from net interest income
Shares redeemed (20) - (200) -
Net increase (decrease) 3,609 10,293 $ 35,903 $ 100,372
CLASS T 36,651 248,275 $ 362,431 $ 2,423,465
Shares sold
Reinvestment of distributions 2,354 2,001 23,458 19,573
from net interest income
Shares redeemed (34,235) (24,109) (340,970) (235,454)
Net increase (decrease) 4,770 226,167 $ 44,919 $ 2,207,584
CLASS B 3,840 64,662 $ 38,126 $ 629,107
Shares sold
Reinvestment of distributions 692 573 6,878 5,592
from net interest income
Shares redeemed (1,063) - (10,424) -
Net increase (decrease) 3,469 65,235 $ 34,580 $ 634,699
INSTITUTIONAL CLASS 2,717 180,001 $ 26,500 $ 1,800,010
Shares sold
Reinvestment of distributions 4,115 5,760 40,761 56,011
from net interest income
Shares redeemed - - - -
Net increase (decrease) 6,832 185,761 $ 67,261 $ 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 OPERATIONS) TO
OCTOBER 31, 1996.
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 14,286
CLASS T 14,186
CLASS B 12,688
INSTITUTIONAL CLASS 13,719
$ 54,879
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 *
Edward C. Johnson 3d
Robert M. Gates *
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
HIGH INCOME MUNICIPAL
FUND - CLASS A, CLASS T
AND CLASS B
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 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 32 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 39 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
The longer your investment time frame, the less likely it is that you will
be affected by short-term market volatility. A 10-year investment horizon
appropriate for saving for a college education, for example, enables you to
weather market cycles in a long-term fund, which may have a higher risk
potential, but also has a higher potential rate of return.
An intermediate-length fund could make sense if your investment horizon is
two to four years, while a short-term bond fund could be the right choice
if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund. These funds seek
income and a stable share price by investing in high-quality, short-term
investments. Of course, it's important to remember that there is no
assurance that a money market fund will achieve its goal of maintaining a
stable net asset value of $1.00 per share, and that these types of funds
are neither insured nor guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. The initial
offering of Class A shares took place on September 3, 1996. Class A shares
bear a 0.15% 12b-1 fee. Returns prior to September 3, 1996 are those of
Class T, the original class of the fund, and reflect Class T's 0.25% 12b-1
fee. If Fidelity had not reimbursed certain class expenses, the total
returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Advisor High Income Municipal - Class A 2.46% 6.36% 36.94% 127.09%
Advisor High Income Municipal - Class A -1.89% 1.84% 31.12% 117.44%
(incl. max. 4.25% sales charge)
Lehman Brothers 70% Municipal/ 2.30% 7.01% n/a n/a
30% Non-Investment Grade Composite
Index
High-Yield Municipal Debt Funds Average 2.50% 7.26% 39.02% n/a
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, six months, one year, five years or 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 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 49 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - Class A 6.36% 6.49% 8.89%
Advisor High Income Municipal - Class A 1.84% 5.57% 8.40%
(incl. max. 4.25% sales charge)
Lehman Brothers 70% Municipal/ 7.01% n/a n/a
30% Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 7.26% 6.80% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' cumulative return and
show you what would have happened if Class A shares had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
FA High Inc Muni -CL A LB Municipal Bond
00257 LB015
1987/09/30 9575.00 10000.00
1987/10/31 9606.00 10035.40
1987/11/30 9768.97 10297.42
1987/12/31 9936.32 10446.84
1988/01/31 10301.76 10818.96
1988/02/29 10416.02 10933.31
1988/03/31 10295.24 10806.49
1988/04/30 10345.75 10888.62
1988/05/31 10397.52 10857.15
1988/06/30 10591.27 11015.99
1988/07/31 10625.00 11087.81
1988/08/31 10661.24 11097.57
1988/09/30 10823.73 11298.44
1988/10/31 10971.61 11497.29
1988/11/30 10983.46 11391.97
1988/12/31 11109.08 11508.51
1989/01/31 11248.97 11746.51
1989/02/28 11260.25 11612.48
1989/03/31 11346.90 11584.73
1989/04/30 11606.20 11859.75
1989/05/31 11795.82 12106.08
1989/06/30 11930.93 12270.48
1989/07/31 12035.59 12437.48
1989/08/31 12128.70 12315.71
1989/09/30 12165.27 12279.01
1989/10/31 12293.71 12429.19
1989/11/30 12445.05 12646.70
1989/12/31 12563.37 12750.15
1990/01/31 12583.19 12689.84
1990/02/28 12673.37 12802.78
1990/03/31 12752.88 12806.62
1990/04/30 12636.24 12713.90
1990/05/31 12895.19 12991.44
1990/06/30 13047.12 13105.64
1990/07/31 13248.36 13298.29
1990/08/31 13158.96 13105.20
1990/09/30 13252.54 13112.67
1990/10/31 13434.48 13350.53
1990/11/30 13767.83 13619.01
1990/12/31 13855.66 13678.26
1991/01/31 14016.91 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
1996/11/30 21789.62 21891.66
1996/12/31 21708.71 21799.72
1997/01/31 21806.78 21840.92
1997/02/28 22002.03 22041.42
1997/03/31 21759.30 21747.61
1997/04/30 21942.51 21929.63
$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 April 30, 1997, the
value of the investment would have grown to $21,943 - a 119.43% 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 $21,930 - a 119.30% 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
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30,
1997 1996 1995 1994 1993 1992
Dividend return 2.78% 5.61% 6.62% 5.27% 6.49% 7.01%
Capital appreciation -0.32% -1.18% 5.88% -11.30% 9.46% 2.20%
return
Total return 2.46% 4.43% 12.50% -6.03% 15.95% 9.21%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 LIFE OF
MONTH MONTHS CLASS
Dividends per share 4.81(cents) 32.51(cents) 42.88(cents)
Annualized dividend rate 5.03% 5.57% 5.55%
30-day annualized yield 4.68% - -
30-day annualized tax-equivalent yield 7.31% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period and
do not reflect any tax reclassifications. If you annualize this number,
based on an average net asset value of $11.64 over the past one month,
$11.76 over the past six months and $11.74 over the life of the class, you
can compare the class' income over these three periods. The 30-day
annualized YIELD is a standard formula for all funds based on the yields of
the bonds in the fund, averaged over the past 30 days. This figure shows
you the yield characteristics of the fund's investments at the end of the
period. It also helps you compare funds from different companies on an
equal basis. The offering share price used in the calculation of the yield
includes the effect of Class A's current maximum 4.25% sales charge. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the class' tax-free yield, if you're in the 36% federal
tax bracket, but does not reflect payment of the federal alternative
minimum tax, if applicable. If Fidelity had not reimbursed certain class
expenses, the yield would have been -1.04%.
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. If Fidelity had
not reimbursed certain class expenses, the past five year and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Advisor High Income Municipal - Class T 2.26% 6.40% 36.99% 127.18%
Advisor High Income Municipal - Class T -1.32% 2.68% 32.20% 119.23%
(incl. max. 3.50% sales charge)
Lehman Brothers 70% Municipal/ 2.30% 7.01% n/a n/a
30% Non-Investment Grade Composite
Index
High-Yield Municipal Debt Funds Average 2.50% 7.26% 39.02% n/a
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, six months, one year, five years or 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 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 49 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - Class T 6.40% 6.50% 8.89%
Advisor High Income Municipal - Class T 2.68% 5.74% 8.49%
(incl. max. 3.50% sales charge)
Lehman Brothers 70% Municipal/ 7.01% n/a n/a
30% Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 7.26% 6.80% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' cumulative return and
show you what would have happened if Class T shares had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
FA High Inc Muni -CL T LB Municipal Bond
00169 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
1996/11/30 21954.39 21891.66
1996/12/31 21869.99 21799.72
1997/01/31 21968.16 21840.92
1997/02/28 22183.08 22041.42
1997/03/31 21938.83 21747.61
1997/04/30 22123.00 21929.63
$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 April 30, 1997, the
value of the investment would have grown to $22,123 - a 121.23% 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 $21,930 - a 119.30% 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
SIX YEARS ENDED OCTOBER 31,
MONTHS
ENDED
APRIL 30,
1997 1996 1995 1994 1993 1992
Dividend return 2.75% 5.69% 6.62% 5.27% 6.49% 7.01%
Capital appreciation -0.49% -1.01% 5.88% -11.30% 9.46% 2.20%
return
Total return 2.26% 4.68% 12.50% -6.03% 15.95% 9.21%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.78(cents) 32.15(cents) 65.57(cents)
Annualized dividend rate 5.00% 5.52% 5.60%
30-day annualized yield 4.66% - -
30-day annualized tax-equivalent yield 7.28% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period and
do not reflect any tax reclassifications. If you annualize this number,
based on an average net asset value of $11.64 over the past one month,
$11.75 over the past six months and $11.70 over the past one year, you can
compare the class' income over these three periods. The 30-day annualized
YIELD is a standard formula for all funds based on the yields of the bonds
in the fund, averaged over the past 30 days. This figure shows you the
yield characteristics of the fund's investments at the end of the period.
It also helps you compare funds from different companies on an equal basis.
The offering share price used in the calculation of the yield includes the
effect of Class T's current 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.
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. The initial
offering of Class B shares took place on June 30, 1994. Class B shares bear
a 0.90% 12b-1/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 six months, past
one year, past five years and life of fund total return figures are 5%, 5%,
2% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Advisor High Income Municipal - Class B 1.87% 5.64% 33.78% 121.85%
Advisor High Income Municipal - Class B -3.10% 0.64% 31.78% 121.85%
(incl. contingent deferred sales charge)
Lehman Brothers 70% Municipal/ 2.30% 7.01% n/a n/a
30% Non-Investment Grade Composite
Index
High-Yield Municipal Debt Funds Average 2.50% 7.26% 39.02% n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case, six months, one year, five years or 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 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 49 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - Class 5.64% 5.99% 8.63%
B
Advisor High Income Municipal - Class B 0.64% 5.67% 8.63%
(incl. contingent deferred sales charge)
Lehman Brothers 70% Municipal/ 7.01% n/a n/a
30% Non-Investment Grade Composite
Index
High-Yield Municipal Debt Funds 7.26% 6.80% n/a
Average
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' cumulative return and
show you what would have happened if Class B shares had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
FA High Inc Muni -CL B LB Municipal 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
1996/11/30 22291.08 21891.66
1996/12/31 22194.48 21799.72
1997/01/31 22264.52 21840.92
1997/02/28 22490.35 22041.42
1997/03/31 22230.84 21747.61
1997/04/30 22387.40 21929.63
$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
April 30, 1997, the value of the investment would have grown to $22,387 - a
123.87% 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 $21,930 - a 119.30% 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
SIX YEARS ENDED OCTOBER 31,
MONTHS
ENDED
APRIL 30,
1997 1996 1995 1994 1993 1992
Dividend return 2.45% 4.99% 5.77% 4.90% 6.49% 7.01%
Capital appreciation -0.58% -1.01% 5.80% -11.37% 9.46% 2.20%
return
Total return 1.87% 3.98% 11.57% -6.47% 15.95% 9.21%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 PAST 1
MONTHS MONTHS YEAR
Dividends per share 4.19(cents) 28.66(cents) 58.08(cents)
Annualized dividend rate 4.39% 4.93% 4.98%
30-day annualized yield 4.13% - -
30-day annualized tax-equivalent yield 6.45% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period and
do not reflect any tax reclassifications. The annualized dividend rate is
based on an average net asset value of $11.61 over the past one month,
$11.73 over the past six months, and $11.67 over the past one 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 MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: George Fischer (right) became Portfolio Manager of
Fidelity Advisor High Income Municipal Fund on April 15, 1997. The
following is an interview with Tanya Roy (left) who managed the fund during
most of the period covered in this report, and George Fischer, who
discusses his outlook and investment philosophy.
Q. HOW HAS THE FUND PERFORMED, TANYA?
T.R. For the six-month period ending April 30, 1997, the fund's Class A,
Class T and Class B shares had total returns of 2.46%, 2.26% and 1.87%,
respectively. By comparison, the high-yield municipal debt funds average
returned 2.50%, according to Lipper Analytical Services, and the Lehman
Brothers 70% Municipal/ 30% Non-Investment Grade Composite Index returned
2.30% for the same six-month period. For the year ending April 30, 1997,
the fund's Class A, Class T and Class B shares returned 6.36%, 6.40% and
5.64%, respectively, the high-yield municipal debt funds average returned
7.26% and the index returned 7.01%.
Q. HIGH-YIELD MUNICIPAL BONDS PERFORMED WELL RELATIVE TO INVESTMENT-GRADE
MUNICIPALS. WHAT WERE THE REASONS FOR THEIR STRONG PERFORMANCE?
T.R. Fundamental credit quality has improved among many high-yield issuers
due to a healthy economy and improved operating efficiencies. Also,
municipal high-yield issuance was very light. Issuers in a number of
different industries, including utilities, hospitals and airlines, have
reduced their appetite for borrowing because they have entered a period of
consolidation and cost retrenchment. A lack of supply, coupled with firm
demand for high-yielding munis, resulted in their strong performance
relative to higher-quality munis.
Q. WHICH SECTORS PERFORMED WELL?
T.R. Bonds issued by the District of Columbia and New York City performed
well and benefited the fund's performance. In fact, many general obligation
bonds (GOs) issued by cities and states were some of the fund's best
performers. A GO is a municipal bond backed by the full faith and credit of
the issuer, including 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
expenditures. That has led to improved cash reserves and general fund
balances and, consequently, solid bond performance.
Q. WHICH OTHER SECTORS PERFORMED WELL?
T.R. Some of the fund's health care holdings were among its strongest
performers. There has been quite a bit of consolidation in the hospital
sector, which has benefited the bonds issued by many smaller, independent
hospitals. Retirement centers and nursing home bonds also have been strong
performers due to favorable occupancy trends and improving debt service
coverage.
Q. YOU UPGRADED THE CREDIT QUALITY OF THE PORTFOLIO OVER SIX MONTHS. WHAT
WAS THE RATIONALE FOR THAT MOVE?
T.R. 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 65 basis points - roughly two-thirds of a
percentage point - over insured municipal bonds. A year ago,
non-investment-grade bonds offered roughly one percentage point in
additional yield over insured bonds. Because spreads were tight, I was able
to sell some high-yielding bonds at attractive prices and buy
higher-quality bonds without sacrificing much yield.
Q. IS THIS CREDIT UPGRADE RELATED TO A CHANGE IN THE FUND'S POLICIES?
T.R. No, it's simply been a matter of where I see relative value in the
market. However, recognizing that issuance of lower-quality municipal debt
has been in decline for several years, thus reducing liquidity in the
sector, the fund's Board of Trustees recently approved a change under which
the fund must limit its holdings of below-investment-grade securities to
less than 35%. Previously, the fund could invest in any combination of
investment-grade and below-investment-grade securities. This change
reflects the realities of the marketplace, while still permitting the fund
to invest in lower-quality debt if bonds are issued that have the
appropriate risk/return characteristics.
Q. TURNING TO YOU GEORGE, WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
G.F. The past year has been a relatively good one for municipal bonds.
Going forward, I don't see a huge amount of price appreciation for the
municipal bond market overall from here without significant declines in
short-term interest rates. As a result, income should be a more important
part of a bond's total return. Still, there are always opportunities to
make money. So I'll concentrate on doing careful research - with the help
of Fidelity's credit and quantitative research group - to uncover those
opportunities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
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 April 30, 1997,
more than $455 million
MANAGER: George Fischer,
since April, 1997; joined
Fidelity in 1989
(checkmark)
GEORGE FISCHER ON HIS
INVESTMENT PHILOSOPHY:
"Of the total amount of new
municipal bonds issued in
1996, roughly half was
insured, which was rather a
large amount compared to
previous years. While this
situation may not last forever,
the high level of insured
bonds issued as a portion of
the total municipal market has
made it increasingly more
difficult to find relatively
higher-yielding opportunities.
Because the opportunities to
pick up yield have been
somewhat curtailed, I focus
on exploiting opportunities in
structural and quantitative
ways. For example, I'll analyze
a bond's call feature, which
determines whether a bond can
be redeemed by its issuer
before maturity. Depending
on their price and their
potential for appreciation, I may
overweight non-callable bonds
- - which can't be redeemed
by their issuers before
maturity - when I think the
market will reward me for
doing so. I also look for
opportunities that may arise
when bonds are selling at
prices cheaper than I believe
to be their fair value based on
their coupon, maturity or other
factors."
INVESTMENT CHANGES
TOP FIVE STATES AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
New York 14.8 12.3
California 11.1 9.1
Pennsylvania 5.8 6.9
Colorado 5.0 4.3
Illinois 4.9 4.2
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligations 20.2 16.9
Health Care 17.6 21.5
Electric Revenue 16.1 15.7
Industrial Development 12.2 21.6
Transportation 9.4 7.7
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1997
6 MONTHS AGO
Years 14.4 16.4
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 APRIL 30, 1997
6 MONTHS AGO
Years 6.9 7.1
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 APRIL 30, 1997 AS OF OCTOBER 31, 1996
Aaa 26.4%
Aa, A 20.8%
Baa 29.2%
Ba, B 4.2%
Caa, C 0.3%
Non-rated 15.3%
Short-term
investments 3.8%
Aaa 16.9%
Aa, A 14.9%
Baa 28.9%
Ba, B 12.7%
Caa 0.3%
Non-rated 24.9%
Short-term
investments 1.4%
Row: 1, Col: 1, Value: 26.0
Row: 1, Col: 2, Value: 20.0
Row: 1, Col: 3, Value: 29.2
Row: 1, Col: 4, Value: 4.2
Row: 1, Col: 5, Value: 1.5
Row: 1, Col: 6, Value: 15.3
Row: 1, Col: 7, Value: 3.8
Row: 1, Col: 1, Value: 16.9
Row: 1, Col: 2, Value: 14.9
Row: 1, Col: 3, Value: 27.2
Row: 1, Col: 4, Value: 12.7
Row: 1, Col: 5, Value: 1.5
Row: 1, Col: 6, Value: 24.4
Row: 1, Col: 7, Value: 2.4
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 APRIL 30, 1997 AND
OCTOBER 31, 1996 ACCOUNT FOR 11.5% AND 23.1%, RESPECTIVELY, OF THE FUND'S
INVESTMENTS.
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 96.2%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
ALABAMA - 1.6%
Cullman Med. Park South Med. Clinic Board
Rev. (Cullman Reg. Med. Ctr.) Series A,
6.50% 2/15/13 Baa3 $ 2,700,000 $ 2,716,875
Shelby County Series A, 7.70% 8/1/17 - 4,000,000 4,380,000
7,096,875
ARIZONA - 1.3%
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 1,378,000
Cochise County Ind. Dev. Auth. Hosp. Rev. Rfdg.
(Sierra Vista Commty. Hosp. Proj.)
Series A, 6.75% 12/1/26 - 1,705,000 1,692,213
Navajo County Ind. Dev. Auth. Ind. Dev. Rev.
(Stone Container Corp. Proj.)
7.40% 4/1/26 (e) - 2,500,000 2,528,125
5,598,338
ARKANSAS - 0.3%
Little Rock Arpt. Passenger Facs. Charge Rev.
5.65% 5/1/16 (AMBAC Insured) (e) Aaa 1,500,000 1,545,000
CALIFORNIA - 11.1%
California Dept. Wtr. Resources Ctr. Valley Proj. Rev.
(Wtr. Sys.) Series J-2, 6.125% 12/1/13 Aa 2,190,000 2,228,325
California Gen. Oblig. Unltd. Tax:
Rfdg. 5.625% 9/1/24 A1 5,000,000 4,793,750
6.10% 9/1/04 A1 1,415,000 1,517,588
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Rfdg. Series A, 5.70% 8/1/16 (MBIA Insured) Aaa 970,000 968,788
Series B, 5.20% 8/1/26 (MBIA Insured) (e) Aaa 1,025,000 1,023,719
Series R, 6.15% 8/1/27 (MBIA Insured) (e) Aaa 1,500,000 1,500,000
California Pub. Wks. Board Lease Rev. Rfdg.:
(California Univ. Proj.) Series A:
5.50% 10/1/13 A 2,000,000 1,950,000
5.50% 6/1/14 A1 1,500,000 1,466,250
(Dept. Corrections State Prisons):
Series A, 5% 12/1/19 (AMBAC Insured) Aaa 1,750,000 1,596,875
Series D, 5.75% 9/1/06 (MBIA Insured) Aaa 5,000,000 5,237,500
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 3,187,500
East Bay Muni. Util. Dist. Wtr. Sys. Rev. Series A,
6% 6/1/12 (MBIA Insured) Aaa 2,000,000 2,040,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Foothill/Eastern Trans. Corridor Agcy. California
Toll Road Rev. (Sr. Lien) (Cap Appreciation)
Series A, 0% 1/1/14 Baa $ 2,000,000 $ 692,500
Los Angeles County Ctfs. of Prtn. (Cap. Appreciation)
(Disney Parking Proj.):
0% 3/1/14 Baa1 1,000,000 345,000
0% 9/1/14 Baa1 7,260,000 2,423,025
Los Angeles Waste Wtr. Sys. Rev. Rfdg. Series D,
4.70% 11/1/19 (FGIC Insured) Aaa 1,200,000 1,009,500
Northern California Pwr. Agcy. Pub. Pwr. Rev.
Rfdg. (Geothermal Proj. #3) Series A,
5.85% 7/1/10 (AMBAC Insured) Aaa 1,500,000 1,563,750
Orange County Dev. Agcy. (Tax Allocation)
(Santa Ana Heights Proj.) 6.20% 9/1/08 Baa 1,650,000 1,656,188
Sacramento City Fing. Auth. Lease Rev. Rfdg.
Series A, 5.40% 11/1/20 (AMBAC Insured) Aaa 2,000,000 1,905,000
Sacramento City Fing. Auth. (Tax Allocation)
(Cap. Appreciation) Series B, 0% 11/1/11
(MBIA Insured) Aaa 1,225,000 542,063
Sacramento Cogeneration Auth. Cogeneration
Proj. Rev. (Proctor & Gamble Proj.):
5.40% 7/1/98 BBB- 1,100,000 1,108,250
6.375% 7/1/10 BBB- 1,000,000 1,031,250
6.50% 7/1/14 BBB- 3,800,000 3,923,500
Sequoia Hosp. Dist. Rev. Rfdg. 5.375% 8/15/13
(Escrowed to Maturity) (d) Baa 1,465,000 1,428,375
49,683,696
COLORADO - 5.0%
Colorado Health Facs. Auth. Rev.:
Rfdg. (Rocky Mountain Adventist):
6.625% 2/1/13 Baa 6,900,000 7,063,875
6.625% 2/1/22 Baa 4,000,000 4,070,000
(National Benevolent Assoc. Proj.)
Series A, 6.50% 6/1/25 Baa1 1,360,000 1,361,700
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/06 (MBIA Insured) Aaa 1,405,000 893,931
0% 1/1/08 (MBIA Insured) Aaa 870,000 490,463
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
COLORADO - CONTINUED
Denver City & County Arpt. Rev. (e):
(Cap. Appreciation):
Series A, 0% 11/15/02 (MBIA Insured) Aaa $ 2,115,000 $ 1,580,963
Series D, 0% 11/15/04 (MBIA Insured) Aaa 1,700,000 1,132,625
Series A:
6.60% 11/15/97 Baa 1,000,000 1,012,010
6.90% 11/15/98 Baa 1,000,000 1,036,250
8% 11/15/17 Baa 1,000,000 1,036,550
7.50% 11/15/23 Baa 2,500,000 2,743,750
22,422,117
CONNECTICUT - 4.3%
Connecticut Health & Edl. Facs. Auth. Rev.:
(New Britain Mem. Hosp.) Series A:
7.50% 7/1/06 BBB- 2,815,000 2,990,938
7.75% 7/1/22 BBB- 1,500,000 1,601,250
(The Griffin Hosp.) Series A:
6% 7/1/13 Baa2 1,810,000 1,751,175
5.75% 7/1/23 Baa2 3,280,000 3,001,200
Connecticut Spl. Tax Oblig. Rev. (Trans. Infrastructure)
Series B, 5.80% 9/1/04 A1 2,000,000 2,095,000
Eastern Connecticut Resource Recovery Auth.
Solid Waste Rev. (Wheelabrator Lisbon Proj.)
Series A (e):
5.50% 1/1/14 A- 4,750,000 4,441,250
5.50% 1/1/20 A- 4,000,000 3,600,000
19,480,813
DISTRICT OF COLUMBIA - 3.0%
District of Columbia Gen. Oblig.:
Rfdg. Series A:
5.625% 6/1/02 Ba 1,100,000 1,098,625
5.75% 6/1/03 Ba 1,440,000 1,440,000
6% 6/1/07 (MBIA Insured) Aaa 2,000,000 2,077,500
Series A:
6% 6/1/03 Ba 1,100,000 1,115,125
6% 6/1/04 Ba 1,200,000 1,212,000
6% 6/1/05 Ba 1,300,000 1,304,875
District of Columbia Hosp. Rev. (Hosp. for
Sick Children) Series A, 8.875% 1/1/21 - 965,000 1,024,106
District of Columbia Redev. Land Agcy. Sport Arena
Spl. Tax Rev.:
5.30% 11/1/99 Baa 1,700,000 1,691,500
5.625% 11/1/10 Baa 750,000 720,938
District of Columbia Rev. Rfdg. (Georgetown Univ.)
Series A, 5.95% 4/1/14 (MBIA Insured) (f) Aaa 2,000,000 1,997,500
13,682,169
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
FLORIDA - 1.9%
Broward County Resource Recovery Rev. (SES
Broward Co. LP South Proj.) 7.95% 12/1/08 A $ 600,000 $ 651,750
Florida Mid-Bay Bridge Auth. Rev. Series A,
7.50% 10/1/17 - 2,500,000 2,721,875
Jacksonville Elec. Auth. Rev. Rfdg. (St. Johns
River Pwr. Park Sys.) 5.375% 10/1/16 Aa1 5,500,000 5,273,125
8,646,750
GEORGIA - 0.2%
Savannah Economic Dev. Auth. Ind. Dev. Rev. (Stone
Container Corp. Proj.) 7.40% 4/1/26 (e) - 1,000,000 1,028,750
IDAHO - 0.1%
Boise Urban Renewal Parking Agcy. Rev. (Tax
Increment) Series A, B, C, 8.125% 9/1/15 A 375,000 390,938
ILLINOIS - 4.9%
Chicago O'Hare Int'l. Arpt. Rev.:
(Passenger Facs. Charge) Series A,
5.60% 1/1/10 (AMBAC Insured) Aaa 2,500,000 2,518,750
Rfdg. (2nd Lien) (Gen Arpt. Proj.):
Series A, 6.25% 1/1/09
(AMBAC Insured) (e) Aaa 3,700,000 3,917,375
Series A, 6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,473,500
Series C-1, 5% 1/1/10 (MBIA Insured) Aaa 3,000,000 2,820,000
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg.
(American Airlines, Inc. Proj.)
8.20% 12/1/24 Baa2 1,000,000 1,161,250
Chicago School Board of Ed. 6.25% 12/1/09
(MBIA Insured) Aaa 3,000,000 3,221,250
Decatur Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.75% 6/1/07 Ba1 705,000 787,838
Du Page County Commty. High School Dist. #99
(Downers Grove) Series A, 6% 2/1/06
(AMBAC Insured) Aaa 1,640,000 1,734,300
Illinois Edl. Facs. Auth. Rev. (Depaul Univ.)
6% 10/1/05 (AMBAC Insured) Aaa 1,200,000 1,267,500
Illinois Health Facs. Auth. Rev.:
(Covenant Retirement Commty.) Series A,
7.60% 12/1/12 BBB+ 750,000 802,500
(Mem. Hosp.):
7.125% 5/1/10 BBB 1,000,000 1,050,000
7.25% 5/1/22 BBB 1,000,000 1,051,250
21,805,513
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
INDIANA - 0.5%
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 $ 1,000,000 $ 1,058,750
Indiana Health Facs. Fing. Auth. Hosp. Rev. Rfdg.
(Clarian Health Partners Inc.)
Series 5.50% 2/15/16 Aa3 1,000,000 947,500
2,006,250
KENTUCKY - 2.8%
Kenton County Arpt. Board Arpt. Rev.:
(Cincinnati/Northern Kentucky Int'l.)
6% 3/1/05 (MBIA Insured) (e) Aaa 5,570,000 5,799,763
(Spl. Facs. Delta Airlines, Inc.)
7.80% 12/1/15 Ba2 3,500,000 3,745,000
Series A, 7.50% 2/1/20 (e) Baa3 2,000,000 2,140,000
Murray Ind. Dev. Rev. Rfdg. (Kroger Co. Proj.)
7.25% 9/1/12 Baa3 700,000 761,250
12,446,013
LOUISIANA - 0.6%
Hodge Util. Rev. 9% 3/1/10
(Stone Container Corp.) 9% 3/1/10 (e) - 1,265,000 1,345,644
Louisiana Pub. Facs. Auth. Ind. Dev. Rev. Rfdg.
(Beverly Enterprises, Inc.) 8.25% 9/1/08 - 535,000 573,788
St. Tammany Pub. Trust Fing. Auth. Rev. Rfdg.
(Cap. Appreciation) Series C, 0% 7/20/14 Aaa 2,000,000 722,500
2,641,932
MARYLAND - 0.6%
Maryland Health & Higher Edl. Facs. Auth. Rev.
(Good Samaritan Hosp.) 5.75% 7/1/13 A1 2,680,000 2,690,050
MASSACHUSETTS - 2.3%
Massachusetts Health & Edl. Facs. Auth. Rev.:
(1st Mtg.) (Fairview Extended Care) Series A,
10.25% 1/1/21 - 5,000,000 5,675,000
(New England Med. Ctr.) Series G,
5.375% 7/1/24 (MBIA Insured) Aaa 500,000 468,125
Massachusetts Ind. Fin. Agcy. Rev. Rfdg.:
(Atlanticare Med. Ctr.) Series A,
10.125% 11/1/14 - 700,000 699,125
(Emerson College) 8.90% 1/1/18 - 1,000,000 1,093,750
(Institute Dev. Disabilities) 9.25% 6/1/09 - 85,000 83,300
(Massachusetts Biomedical) (Cap. Appreciation)
Series A-2:
0% 8/1/08 A 800,000 420,000
0% 8/1/10 A 4,500,000 2,053,125
10,492,425
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
MICHIGAN - 3.3%
Detroit Hosp. Fing. Auth. Facs. Rev. (Michigan
Health Care Corp. Proj.) 10% 12/1/20 (b) C $ 6,685,000 $ 1,203,300
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.)
7.80% 7/1/14 Baa1 700,000 749,875
Highland Park Hosp. Fin. Auth. Hosp. Facs. Rev.
(Lakeside Commty. Hosp. Proj.) 10% 3/1/20 (b) - 150,000 375
Michigan Strategic Fund Ltd. Oblig. Rev.:
(Great Lakes Pulp & Fibre Proj.)
10.25% 12/1/16 (b)(e) - 15,250,000 7,320,000
(Mercy Svcs. for Aging Proj.) 9.40% 5/15/20
(Pre-Refunded to 5/15/00 @ 102) (d) - 600,000 678,750
(Michigan Health Care Corp. Proj.)
9.10% 12/1/14 (b) - 2,075,000 373,500
Royal Oak Hosp. Fin. Auth. Rev. Rfdg.
(William Beaumont Hosp.) 6.25% 1/1/09 Aa3 2,310,000 2,477,475
Tawas City Hosp. Fin. Auth. Hosp. Rev. (St. Joseph
Hosp. Proj.) Series A, 8.50% 3/15/12 - 1,875,000 1,933,594
14,736,869
MINNESOTA - 1.7%
Minneapolis & St. Paul Hsg. & Redev. Auth.
Healthcare Sys. Rev. Rfdg. (Healthspan
Health Sys. Corp.) Series A, 4.75% 11/15/18
(AMBAC Insured) Aaa 2,500,000 2,128,125
Minnesota Hsg. Single Family Mtg. Rev.
6.40% 7/1/15 (e) Aa2 2,000,000 2,037,500
St. Paul Hsg. & Redev. Auth. Hosp. Rev.
(Healtheast Proj.) Series A, 9.75% 11/1/17 Baa 380,000 396,876
Western Minnesota Muni. Pwr. Supply Agcy.
Rev. Rfdg. Series A, 6.25% 1/1/06
(AMBAC Insured) Aaa 3,000,000 3,236,250
7,798,751
MISSISSIPPI - 0.1%
Mississippi Home Corp. Single Family Sr.
Rev. Rfdg. Series 1990 A, 9.25% 3/1/12
(FGIC Insured) Aaa 240,000 256,500
MISSOURI - 0.4%
St. Louis Reg'l Convention & Sports Complex
Auth. Series C:
7.90% 8/15/21 (Pre-Refunded to
8/15/03 @ 100) (d) Aaa 1,485,000 1,728,169
7.90% 8/15/21 - 65,000 71,013
1,799,182
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEBRASKA - 1.3%
Nebraska Pub. Pwr. Dist. Rev.:
Rfdg. (Pwr. Supply Sys.) Series C, 5% 1/1/17 A1 $ 4,590,000 $ 4,119,525
(Elec. Sys.) Series A, 6% 1/1/06 A1 1,500,000 1,565,625
5,685,150
NEVADA - 1.1%
Clark County Gen. Oblig. Series A,
4.75% 6/1/10 (MBIA Insured) Aaa 2,730,000 2,501,363
Las Vegas Redev. Agcy. Tax Increment Rev.:
(Sub. Lien Fremont Proj.) Series A,
6.10% 6/15/14 BBB+ 1,000,000 967,500
(Sub. Lien Hsg. Proj.) Series B, 6% 6/15/10 BBB+ 1,500,000 1,464,375
4,933,238
NEW HAMPSHIRE - 0.7%
New Hampshire Higher Edl. & Health Facs.
Auth. Rev.:
(1st Mtg. River Woods at Exeter):
8% 3/1/01 - 750,000 767,483
9% 3/1/23 - 1,830,000 1,990,125
(Littleton Hosp. Assoc., Inc.) Series A,
9.50% 5/1/20 - 495,000 525,319
3,282,927
NEW JERSEY - 1.3%
New Jersey Econ. Dev. Auth. Econ. Dev. Rev.
Rfdg. (Stolt Term. Proj.) 10.50% 1/15/18 - 60,000 63,697
New Jersey Trans. Trust Fund Auth.
5.50% 6/15/11 (MBIA Insured) Aaa 4,000,000 3,985,000
Passaic County Util. Auth. Swr. Dev. Rev. (Cap.
Appreciation) 0% 3/1/02 (MBIA Insured) Aaa 2,500,000 1,975,000
6,023,697
NEW MEXICO - 1.8%
Albuquerque Arpt. Rev. Rfdg.
(AMBAC Insured) (e):
6.75% 7/1/11 Aaa 1,805,000 1,987,756
6.70% 7/1/18 Aaa 3,970,000 4,257,825
New Mexico Edl. Assistance Foundation
Student Loan Rev. 5.25% 4/1/05
(AMBAC Insured) (e) Aaa 1,935,000 1,918,069
8,163,650
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK - 14.8%
New York City Gen. Oblig.:
Rfdg. Series A, 7% 8/1/03 Baa1 $ 2,000,000 $ 2,167,500
Rfdg. Series B, 6.75% 8/15/03 Baa1 2,000,000 2,142,500
Rfdg. Unltd. Tax Series E, 6.50% 2/15/04
(FGIC Insured) Aaa 1,500,000 1,631,250
Series B:
7.50% 2/1/02 Baa1 2,000,000 2,195,000
5.70% 8/15/02 Baa1 1,165,000 1,194,125
Series D, 5.50% 2/15/04 Baa1 5,000,000 4,987,500
Series H, 6.875% 2/1/02 Baa1 1,700,000 1,821,125
New York City Ind. Dev. Agcy. Ind. Dev. Rev. (e):
(Japan Airlines Co. Ltd. Proj.)
Series 91, 6% 11/1/15 (FSA Insured)
LOC Morgan Guaranty Trust Co. Aaa 1,000,000 1,030,000
(Term. One Group Assoc. Proj.)
5.90% 1/1/06 A 8,680,000 8,940,400
New York City Muni. Assistance Corp. (Spl. Tax)
6% 7/1/05 Aa2 6,500,000 6,857,500
New York State Dorm. Auth. Rev.:
Rfdg. (New York State Univ. Edl. Facs.):
Series A, 5.50% 5/15/05 Baa1 2,750,000 2,763,750
Series B, 5.50% 5/15/08 Baa1 12,150,000 12,058,875
(New York City Univ.) 5.70% 7/1/05 Baa1 3,000,000 3,048,750
New York State Local Gov't. Assistance Corp. Rfdg.
Series C, 5.50% 4/1/17 A3 7,500,000 7,303,125
New York State Tollway Auth. Gen. Rev.
(Spl. Oblig.) (Cap. Appreciation)
Series A, 0% 1/1/04 BBB 4,000,000 2,740,000
New York State Tollway Auth. Svc. Contract Rev.
(Local Hwy. & Bridges):
5.90% 4/1/07 Baa1 2,000,000 2,025,000
6% 1/1/11 Baa1 2,445,000 2,441,931
Suffolk County Wtr. Auth. 6% 6/1/17
(MBIA Insured) Aaa 1,000,000 1,051,250
66,399,581
NORTH CAROLINA - 3.4%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys.
Rev. Rfdg.:
Series A, 5.50% 1/1/05 (MBIA Insured) Aaa 4,000,000 4,080,000
Series B:
7.25% 1/1/07 Baa1 1,000,000 1,110,000
6.125% 1/1/09 Aaa 3,000,000 3,056,250
Series C:
5.125% 1/1/03 Baa1 2,000,000 1,972,500
5.25% 1/1/04 Baa1 1,365,000 1,344,525
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NORTH CAROLINA - CONTINUED
North Carolina Muni. Pwr. Agcy. Rev. Rfdg.
(Proj. #1 Catawba Elec.):
5.75% 1/1/02 A3 $ 1,750,000 $ 1,789,375
6.25% 1/1/17 (AMBAC Insured) Aaa 1,800,000 1,856,250
15,208,900
OHIO - 4.5%
Gateway Econ. Dev. Corp. (Greater Cleveland
Stadiums) Series 1990, 6.50% 9/15/14 (e) - 3,000,000 3,045,000
Mahoning Valley San. Dist. Wtr. Rev.:
7.75% 5/15/14 - 2,000,000 2,082,500
7.75% 5/15/19 - 2,000,000 2,077,500
Marion County Hosp. Impt. Rev. Rfdg. (Commty.
Hosp. Impt. Proj.) 5.60% 5/15/01 BBB+ 1,000,000 1,011,250
Ohio Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.50% 9/1/10 Baa3 2,470,000 2,741,700
Ohio Wtr. Dev. Auth. Pollution Cont. Facs. Rev.
(Wtr. Cont. Loan Fund):
State Matching Series 6.50% 1/1/04
(MBIA Insured) Aaa 1,835,000 2,004,738
Wtr. Quality Series, 5.625% 6/1/06
(MBIA Insured) Aaa 2,000,000 2,072,500
Student Loan Fund Corp. Student Loan Rev.
Sub-Series B, 8.875% 8/1/08 (e) - 3,230,000 3,339,013
Summit County Ind. Dev. Rev. Rfdg.
(Surnow Assoc. Proj.) 7.65% 10/1/06 Ba2 1,730,000 1,924,625
20,298,826
OKLAHOMA - 1.0%
Tulsa Muni. Arpt. Trust Rev. (American Airlines
Corp. Proj.) 7.35% 12/1/11 Baa2 4,000,000 4,315,000
PENNSYLVANIA - 5.8%
Allegheny County Ind. Dev. Auth. Rev. (YMCA
Pittsburgh Proj.) Series 1990, 8.75% 3/1/10 - 355,000 378,519
Butler County Ind. Dev. Auth. Health Ctr. Rev.
Rfdg. (Sherwood Oaks Proj.) 5.75% 6/1/11 A- 3,000,000 2,876,250
Cumberland County Muni. Auth. Rev.
(Carlisle Hosp.):
6.80% 11/15/14 Baa 3,250,000 3,355,625
6.80% 11/15/23 Baa 1,000,000 1,026,250
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Delaware County Auth. Rev. (1st Mtg. Riddle
Village Proj.) (d):
Series 1992, 8.75% 6/1/10
(Pre-Refunded to 6/1/02 @ 102) - $ 2,870,000 $ 3,383,013
7% 6/1/00 (Escrowed to Maturity) - 1,000,000 1,022,010
8.25% 6/1/22 (Escrowed to Maturity) - 2,250,000 2,702,813
9.25% 6/1/22 (Pre-Refunded to
6/1/02 @ 102) - 2,905,000 3,489,631
Delaware County Ind. Dev. Auth. Rev. Rfdg.
(Resource Recovery Facs.) Series A,
6.10% 7/1/13 Baa1 1,900,000 1,900,000
Montgomery County Higher Ed. & Health Auth.
Hosp. Rev. (United Hosp., Inc. Proj.) (d):
(St. Christopher):
8.25% 11/1/03
(Pre-Refunded to 11/1/97 @102) Ba1 1,250,000 1,300,588
7% 11/1/06
(Pre-Refunded to 11/1/97 @ 102) Ba1 120,000 121,841
8.50% 11/1/17
(Pre-Refunded to 11/1/97 @ 102) Ba1 525,000 547,008
Series B, 8.10% 11/1/97
(Escrowed to Maturity) Ba1 35,000 35,713
Pennsylvania Ind. Dev. Auth. Rev. Econ. Dev.
5.80% 7/1/09 (AMBAC Insured) Aaa 1,345,000 1,397,119
Philadelphia Hosp. & Higher Ed. Facs. Auth.
Hosp. Rev. (Graduate Health Sys. Oblig.
Group) 7.25% 7/1/18 Ba 2,600,000 2,713,750
26,250,130
RHODE ISLAND - 1.0%
Rhode Island Port Auth. & Econ. Dev. Corp. Arpt.
Rev. Series A, 7% 7/1/14 (FSA Insured) (e) Aaa 4,000,000 4,545,000
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Elec. Agcy. Rev. Series A,
6.25% 1/1/05 (FGIC Insured) Aaa 1,715,000 1,835,050
TENNESSEE - 0.7%
Dyer County Ind. Dev. Board. Ind. Dev. Rev.
Rfdg. (Tennessee Assoc. Proj.) 6% 2/1/07 Ba1 1,555,000 1,562,775
Metropolitan Gov't Nashville & Davidson County
Elec. Rev. (Cap. Appreciation) Series A,
0% 5/15/06 (MBIA Insured) Aaa 1,000,000 623,750
Rutherford County Ind. Dev. Board Dev. Rev. Rfdg.
(Kroger Co. Proj.) 7.30% 6/1/21 Baa3 1,000,000 1,092,500
3,279,025
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
TEXAS - 3.3%
Brazos River Auth. Poll. Cont. Rev. Coll.
(Texas Util. Elec. Co.) 9.25% 3/1/18 (e) Baa1 $ 1,300,000 $ 1,371,266
Conroe Independent School Dist.
(Capital Appreciation) Rfdg. 0% 2/15/09
(PSF Guaranteed) Aaa 750,000 392,813
Dallas-Fort Worth Int'l. Arpt. Facs. Impt. Corp.
Rev. (AMR Corp.) 7.50% 11/1/25 (e) Baa2 6,000,000 6,397,500
Houston Elderly Hsg. Auth. 1st Lien Rev.
(Low Income Elderly Hsg.) 7.50% 7/1/17 - 450,000 457,875
Midlothian Independent School Dist. (Cap.
Appreciation) 0% 2/15/04 (PSF Guaranteed) Aaa 1,845,000 1,305,338
Texas Pub. Fin. Auth. Series A, 5% 10/1/14 Aa 5,000,000 4,656,250
14,581,042
UTAH - 2.4%
Intermountain Pwr. Agcy. Pwr. Supply Sys.
Rev. Rfdg.:
Series A, 6.50% 7/1/09 (AMBAC Insured) Aaa 1,000,000 1,105,000
Series B (MBIA Insured):
5.75% 7/1/16 Aaa 2,500,000 2,487,500
6% 7/1/16 Aaa 6,000,000 6,097,500
5.75% 7/1/19 Aaa 1,000,000 988,750
South Salt Lake City Ind. Rev. (Price Savers
Wholesale Club Proj.) 9% 11/15/13 - 250,000 278,125
10,956,875
VIRGINIA - 3.0%
Loudoun County Ind. Dev. Auth. Residential Care
Facs. Rev. (Falcons Landing Proj.) Series A:
9.25% 11/1/04 - 1,000,000 1,086,250
8.75% 11/1/24 - 8,500,000 8,967,500
Virginia Pub. School Auth. Series B,
6.50% 8/1/15 Aa 3,000,000 3,228,750
13,282,500
WASHINGTON - 3.2%
Washington Pub. Pwr. Supply Sys.:
Nuclear Proj. #2 Rev. 5.40% 7/1/12 Aa1 14,000,000 13,107,500
Nuclear Proj. #3 Rev. Rfdg. Series B,
7% 7/1/05 (FGIC Insured) (g) Aaa 1,150,000 1,226,188
14,333,688
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
WEST VIRGINIA - 0.5%
Ripley Ind. Dev. Rev. Rfdg. (Kroger Co. Proj.)
7.30% 5/1/11 Baa3 $ 2,200,000 $ 2,392,500
TOTAL MUNICIPAL BONDS
(Cost $438,269,482) 432,015,710
CASH EQUIVALENTS - 3.8%
SHARES
Municipal Central Cash Fund (c)(h)
(Cost $17,179,297) 17,179,297 17,179,297
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $455,448,779) $ 449,195,007
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
73 U.S. Treasury Bond Futures June 1997 $ 7,977,471 $ 144,463
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.8%
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. At the period end, the seven-day yield of the Municipal Central Cash
Fund was 4.30%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
4. Security collateralized by an amount sufficient to pay interest and
principal.
5. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
6. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
7. 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 $533,125.
8. Information in this report regarding holdings by state and security
types do not reflect the holdings of the Municipal Central Cash Fund. A
listing of the Municipal Central Cash Fund's holdings as of its most recent
fiscal period end is available upon request.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 44.2% AAA, AA, A 47.3%
Baa 23.8% BBB 21.9%
Ba 4.2% BB 4.0%
B 0.0% B 1.9%
Caa 0.0% CCC 0.0%
Ca, C 0.3% CC, C 0.0%
D 0.3%
The percentage not rated by both S&P and Moody's amounted to 15.3%. FMR has
determined that unrated debt securities that are lower quality account for
11.5% 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:
General Obligation 20.2%
Health Care 17.6
Electric Revenue 16.1
Industrial Development 12.2
Transportation 9.4
Special Tax 5.8
Others (individually less than 5%) 18.7
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $455,448,779. Net unrealized depreciation aggregated
$6,253,772, of which $12,745,011 related to appreciated investment
securities and $18,998,783 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>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $455,448,779) - $ 449,195,007
See accompanying schedule
Receivable for investments sold 1,806,252
Interest receivable 7,944,975
Receivable for daily variation on futures contracts 25,094
Prepaid expenses 6,534
TOTAL ASSETS 458,977,862
LIABILITIES
Payable for investments purchased $ 2,000,000
Delayed delivery
Payable for fund shares redeemed 868,219
Distributions payable 736,598
Accrued management fee 145,300
Other payables and accrued expenses 221,452
TOTAL LIABILITIES 3,971,569
NET ASSETS $ 455,006,293
Net Assets consist of:
Paid in capital $ 474,353,002
Accumulated undistributed net realized gain (loss) (13,237,400)
on investments
Net unrealized appreciation (depreciation) on (6,109,309)
investments
NET ASSETS $ 455,006,293
</TABLE>
CALCULATION OF MAXIMUM OFFERING PRICE $11.70
CLASS A:
NET ASSET VALUE and redemption price per share
($1,610,533 (divided by) 137,671 shares)
Maximum offering price per share (100/95.75 of $11.70) $12.22
CLASS T: $11.70
NET ASSET VALUE and redemption price per share
($413,225,053 (divided by) 35,326,581 shares)
Maximum offering price per share (100/96.50 of $11.70) $12.12
CLASS B: $11.67
NET ASSET VALUE and offering price per share
($39,396,258 (divided by) 3,374,886 shares) A
INSTITUTIONAL CLASS: $11.68
NET ASSET VALUE, offering price and redemption price
per share ($774,449 (divided by) 66,288 shares)
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>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INTEREST INCOME $ 14,744,505
EXPENSES
Management fee $ 954,644
Transfer agent fees 436,782
Distribution fees 735,123
Accounting fees and expenses 95,411
Non-interested trustees' compensation 2,590
Custodian fees and expenses 17,499
Registration fees 37,288
Audit 20,566
Legal 4,784
Miscellaneous 8,889
Total expenses before reductions 2,313,576
Expense reductions (21,860) 2,291,716
NET INTEREST INCOME 12,452,789
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 5,292,398
Futures contracts (116,375) 5,176,023
Change in net unrealized appreciation (depreciation) on:
Investment securities (6,705,076)
Futures contracts 144,463 (6,560,613)
NET GAIN (LOSS) (1,384,590)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 11,068,199
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 12,452,789 $ 32,576,734
Net interest income
Net realized gain (loss) 5,176,023 (5,991,620)
Change in net unrealized appreciation (depreciation) (6,560,613) (1,724,709)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 11,068,199 24,860,405
FROM OPERATIONS
Distributions to shareholders (13,316,754) (31,712,769)
From net interest income
In excess of net interest income (86,644) -
TOTAL DISTRIBUTIONS (13,403,398) (31,712,769)
Share transactions - net increase (decrease) (63,608,030) (69,878,601)
TOTAL INCREASE (DECREASE) IN NET ASSETS (65,943,229) (76,730,965)
NET ASSETS
Beginning of period 520,949,522 597,680,487
End of period (including undistributed net interest $ 455,006,293 $ 520,949,522
income of $0 and $863,965, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996 H
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.740 $ 11.630
Income from Investment Operations
Net interest income .298 F .105 F, G
Net realized and unrealized gain (loss) (.011) .109 E
Total from investment operations .287 .214
Less Distributions
From net interest income (.325) G (.104)
In excess of net interest income (.002) I -
Total distributions (.327) (.104)
Net asset value, end of period $ 11.700 $ 11.740
TOTAL RETURN B, C 2.46% 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,611 $ 202
Ratio of expenses to average net assets .90% A, D .90% A,
D
Ratio of net interest income to average net assets 5.21% A 5.73% A
Portfolio turnover rate 44% A 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 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.
F NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
I THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS YEARS ENDED OCTOBER 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 1994 D 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650 $ 11.410
beginning of period
Income from
Investment
Operations
Net interest income .304 F .677 F, .700 .689 .710 .774
G
Net realized and (.041) (.136) .660 (1.430) 1.100 .250
unrealized gain
(loss)
Total from investment .263 .541 1.360 (.741) 1.810 1.024
operations
Less Distributions (.321) G (.661) (.700) (.689) (.710) (.774)
From net interest
income
From net realized gain - - - (.060) (.030) (.010)
In excess of net (.002) H - - - - -
interest income
In excess of net - - - (.010) - -
realized gain
Total distributions (.323) (.661) (.700) (.759) (.740) (.784)
Net asset value, $ 11.700 $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650
end of period
TOTAL RETURN B, C 2.26% 4.68% 12.50% (6.03) 15.95% 9.21%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 413,225 $ 480,432 $ 565,131 $ 544,422 $ 497,575 $ 156,659
period (000 omitted)
Ratio of expenses to .89% .89% .91% .89% .92% .90%
average net assets A E
Ratio of net interest 5.21% 5.74% 6.06% 5.78% 5.59% 6.59%
income to average A
net assets
Portfolio turnover rate 44% 49% 37% 38% 27% 13%
A
</TABLE>
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.
D EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
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 NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 1994 G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.740 $ 11.860 $ 11.210 $ 11.610
Income from Investment Operations
Net interest income .263 E .596 E, F .612 .188
Net realized and unrealized (.044) (.136) .650 (.400)
gain (loss)
Total from investment operations .219 .460 1.262 (.212)
Less Distributions
From net interest income (.287) F (.580) (.612) (.188)
In excess of net interest income (.002) H - - -
Total distributions (.289) (.580) (.612) (.188)
Net asset value, end of period $ 11.670 $ 11.740 $ 11.860 $ 11.210
TOTAL RETURN B, C 1.87% 3.98% 11.57% (1.86)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 39,396 $ 39,389 $ 32,395 $ 9,968
(000 omitted)
Ratio of expenses to average 1.58% A 1.57% 1.86% D 2.09% A
net assets
Ratio of net interest income to 4.53% A 5.06% 5.18% 4.58% A
average net assets
Portfolio turnover rate 44% A 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.
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 NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
F NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
G FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1994.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 H
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.720 $ 11.880 $ 11.700
Income from Investment Operations
Net interest income .313 E .707 E, G .232
Net realized and unrealized gain (loss) .002 F (.197) .180
Total from investment operations .315 .510 .412
Less Distributions
From net interest income (.353) G (.670) (.232)
In excess of net interest income (.002) I - -
Total distributions (.355) (.670) (.232)
Net asset value, end of period $ 11.680 $ 11.720 $ 11.880
TOTAL RETURN B, C 2.70% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 774 $ 927 $ 154
Ratio of expenses to average net assets .75% A, D .75% D .75% A,
D
Ratio of net interest income to average net assets 5.36% A 5.88% 5.89% A
Portfolio turnover rate 44% A 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 NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
F 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.
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
I THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997 (Unaudited)
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 T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Interest 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. Securities for which
quotations are not readily available are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are not
readily available are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest income. Distributions from realized gains, if
any, are recorded on the ex-dividend date. Income dividends and capital
gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
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.
Accumulated undistributed net realized gain (loss) on investments may
include temporary book to 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.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund may invest in the Municipal
Central Cash Fund (the Cash Fund) managed by FMR Texas, an affiliate of
FMR. The Cash Fund is an open-end money market fund available only to
investment companies and other accounts managed by FMR and its affiliates.
The Cash Fund seeks preservation of capital, liquidity, and current income
by investing in high-quality, short-term municipal securities of various
states and municipalities. Dividends from the Cash Fund are declared daily
and paid monthly from net interest income. Income distributions received by
the fund are recorded as interest income in the accompanying financial
statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. The fund may
receive compensation for interest forgone in the purchase of a when-issued
security. With respect to purchase commitments, the fund identifies
securities as segregated in its custodial records with a value at least
equal to the amount of the commitment. The payables and receivables
associated with the purchases and sales of when-issued securities having
the same settlement date and broker are offset. When-issued securities that
have been purchased from and sold to different brokers are reflected as
both payables and receivables in the statement of assets and liabilities
under the caption "Delayed delivery." Losses may arise due to changes in
the market value of the underlying securities, if the counterparty does not
perform under the contract, or if the issuer does not issue the securities
due to political, economic, or other factors.
2. OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period end
is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, 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 $103,496,881 and $183,810,335, respectively.
The market value of futures contracts opened and closed during the period
amounted to $37,677,430 and $29,728,047, 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 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
each class of shares (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 702 $ 702
CLASS T 557,165 557,165
CLASS B 177,256 49,238
$ 735,123 $ 607,105
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 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 six years of purchase (five years prior to
January 2, 1997). The Class B charge is based on declining rates which
range from 5% to 1%(4% to 1% prior to January 2, 1997) of the lesser of the
cost of shares at the initial date of purchase or the net asset value of
the redeemed shares, excluding any reinvested dividends and capital gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 22,226 $ 16,093
CLASS T 97,829 70,755
CLASS B 77,606 0 *
$ 197,661 $ 86,848
* WHEN CLASS B SHARES ARE INITIALLY 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 T, Class B, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC, an affiliate of FMR, receives account fees and asset-based fees that
vary according to the account size and type of account of the shareholders
of
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
the respective classes of the fund. All fees are paid to FIIOC by UMB,
which is reimbursed by each class for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports. For the
period, each class paid the following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 1,053 .23
CLASS T UMB 399,735 .18
CLASS B UMB 34,820 .18
INSTITUTIONAL CLASS UMB 1,174 .27
$ 436,782
UMB also has a sub-contract with Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, under which FSC maintains the fund's accounting records.
The fee is based on the level of average net assets for the month plus
out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above the
following annual rates or range of annual rates of average net assets for
each class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 13,721
INSTITUTIONAL CLASS .75% 6,648
$ 20,369
In addition, the fund has entered into arrangements with its custodian and
each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses. During
the period, the fund's custodian fees were reduced by $192 under the
custodian arrangement, and each applicable class' expenses were reduced as
follows under the transfer agent arrangements:
TRANSFER
AGENT
INTEREST
CREDITS
CLASS T $ 1,299
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996 A
CLASS A
From net interest income $ 24,908 $ 1,272
In excess of net interest income 40 -
Total $ 24,948 $ 1,272
CLASS T
From net interest income $ 12,294,544 $ 29,846,407
In excess of net interest income 79,597 -
Total $ 12,374,141 $ 29,846,407
CLASS B
From net interest income $ 970,856 $ 1,818,282
In excess of net interest income 6,838 -
Total $ 977,694 $ 1,818,282
INSTITUTIONAL CLASS
From net interest income $ 26,446 $ 46,808
In excess of net interest income 169 -
Total $ 26,615 $ 46,808
$ 13,403,398 $ 31,712,769
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 A 1997 1996 A
CLASS A 125,129 18,733 $ 1,471,806 $ 218,730
Shares sold
Reinvestment of distributions 926 78 10,857 910
Shares redeemed (5,563) (1,632) (65,409) (19,114)
Net increase (decrease) 120,492 17,179 $ 1,417,254 $ 200,526
CLASS T 1,304,002 6,539,718 $ 15,296,238 $ 77,377,354
Shares sold
Reinvestment of distributions 643,930 1,597,120 7,576,575 18,850,193
Shares redeemed (7,486,879) (14,847,912) (87,957,097) (174,513,587)
Net increase (decrease) (5,538,947) (6,711,074) $ (65,084,284) $ (78,286,040)
CLASS B 353,186 1,193,226 $ 4,139,591 $ 14,098,773
Shares sold
Reinvestment of distributions 49,002 95,237 575,380 1,121,011
Shares redeemed (383,811) (664,327) (4,505,190) (7,798,479)
Net increase (decrease) 18,377 624,136 $ 209,781 $ 7,421,305
INSTITUTIONAL CLASS 23,272 140,918 $ 273,956 $ 1,653,013
Shares sold
Reinvestment of distributions 1,644 3,139 19,334 36,744
Shares redeemed (37,778) (77,867) (444,071) (904,149)
Net increase (decrease) (12,862) 66,190 $ (150,781) $ 785,608
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 13,963
CLASS T 10,258
CLASS B 6,324
INSTITUTIONAL CLASS 6,743
$ 37,288
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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
HIGH INCOME MUNICIPAL
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 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 24 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 31 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
The longer your investment time frame, the less likely it is that you will
be affected by short-term market volatility. A 10-year investment horizon
appropriate for saving for a college education, for example, enables you to
weather market cycles in a long-term fund, which may have a higher risk
potential, but also has a higher potential rate of return.
An intermediate-length fund could make sense if your investment horizon is
two to four years, while a short-term bond fund could be the right choice
if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund. These funds seek
income and a stable share price by investing in high-quality, short-term
investments. Of course, it's important to remember that there is no
assurance that a money market fund will achieve its goal of maintaining a
stable net asset value of $1.00 per share, and that these types of funds
are neither insured nor guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). You can also look at the class'
income, as reflected in its yield, to measure performance. The initial
offering of Institutional Class shares took place on July 3, 1995.
Institutional Class shares are sold to eligible investors without a sales
load or 12b-1 fee. Returns prior to July 3, 1995 are those of Class T, the
original class of the fund, and reflect Class T's 0.25% 12b-1 fee. If
Fidelity had not reimbursed certain class expenses, the total returns and
dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Advisor High Income Municipal - 2.70% 6.46% 37.32% 127.72%
Institutional Class
Lehman Brothers 70% Municipal/30% 2.30% 7.01% n/a n/a
Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 2.50% 7.26% 39.02% n/a
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, six months, 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
mutual funds with similar objectives tracked by Lipper Analytical Services,
Inc. The past six months average represents a peer group of 49 mutual
funds. These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor High Income Municipal - 6.46% 6.55% 8.92%
Institutional Class
Lehman Brothers 70% Municipal/30% 7.01% n/a n/a
Non-Investment Grade Composite Index
High-Yield Municipal Debt Funds Average 7.26% 6.80% n/a
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' shares cumulative
return and show you what would have happened if Institutional Class shares
had performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
FA High Inc Muni -CL I LB Municipal 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
1996/11/30 22809.71 21891.66
1996/12/31 22731.47 21799.72
1997/01/31 22804.77 21840.92
1997/02/28 23039.08 22041.42
1997/03/31 22796.65 21747.61
1997/04/30 22980.16 21929.63
$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 April 30, 1997, the value of the investment would have grown to
$22,980 - a 129.80% 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 $21,930 - a 119.30% 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
SIX YEARS ENDED OCTOBER 31,
MONTHS
ENDED
APRIL 30,
1997 1996 1995 1994 1993 1992
Dividend return 3.02% 5.76% 6.71% 5.27% 6.49% 7.01%
Capital appreciation -0.32% -1.35% 5.88% -11.30% 9.46% 2.20%
return
Total return 2.70% 4.41% 12.59% -6.03% 15.95% 9.21%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains
paid by the class are reinvested, if any.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.37(cents) 35.28(cents) 69.22(cents)
Annualized dividend rate 5.62% 6.05% 5.93%
30-day annualized yield 5.47% - -
30-day annualized tax-equivalent yield 8.55% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period and
do not reflect any tax reclassifications. If you annualize this number,
based on an average net asset value of $11.63 over the past one month,
$11.75 over the past six months, and $11.68 over the past one year, you can
compare the class' income over these three periods. The 30-day annualized
YIELD is a standard formula for all funds based on the yields of the bonds
in the fund, averaged over the past 30 days. This figure shows you the
yield characteristics of the fund's investments at the end of the period.
It also helps you compare funds from different companies on an equal basis.
The tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the class' tax-free yield, if you're in the 36% federal
tax bracket, but does not reflect payment of the federal alternative
minimum tax, if applicable.
FUND TALK: THE MANAGERS' OVERVIEW
NOTE TO SHAREHOLDERS: George Fischer (right) became Portfolio Manager of
Fidelity Advisor High Income Municipal Fund on April 15, 1997. The
following is an interview with Tanya Roy (left) who managed the fund during
most of the period covered in this report, and George Fischer, who
discusses his outlook and investment philosophy.
Q. HOW HAS THE FUND PERFORMED, TANYA?
T.R. For the six- and 12-month periods ending April 30, 1997, the fund's
Institutional Class shares had total returns of 2.70% and 6.46%,
respectively. By comparison, the high-yield municipal debt funds average
returned 2.50% and 7.26%, respectively, for the same time periods. In
addition, the Lehman Brothers 70% Municipal/30% Non-Investment Grade
Composite Index returned 2.30% for the same six-month period and 7.01% for
the 12-month period.
Q. HIGH-YIELD MUNICIPAL BONDS PERFORMED WELL RELATIVE TO INVESTMENT-GRADE
MUNICIPALS. WHAT WERE THE REASONS FOR THEIR STRONG PERFORMANCE?
T.R. Fundamental credit quality has improved among many high-yield issuers
due to a healthy economy and improved operating efficiencies. Also,
municipal high-yield issuance was very light. Issuers in a number of
different industries, including utilities, hospitals and airlines, have
reduced their appetite for borrowing because they have entered a period of
consolidation and cost retrenchment. A lack of supply, coupled with firm
demand for high-yielding munis, resulted in their strong performance
relative to higher-quality munis.
Q. WHICH SECTORS PERFORMED WELL?
T.R. Bonds issued by the District of Columbia and New York City performed
well and benefited the fund's performance. In fact, many general obligation
bonds (GOs) issued by cities and states were some of the fund's best
performers. A GO is a municipal bond backed by the full faith and credit of
the issuer, including 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
expenditures. That has led to improved cash reserves and general fund
balances and, consequently, solid bond performance.
Q. WHICH OTHER SECTORS PERFORMED WELL?
T.R. Some of the fund's health care holdings were among its strongest
performers. There has been quite a bit of consolidation in the hospital
sector, which has benefited the bonds issued by many smaller, independent
hospitals. Retirement centers and nursing home bonds also have been strong
performers due to favorable occupancy trends and improving debt service
coverage.
Q. YOU UPGRADED THE CREDIT QUALITY OF THE PORTFOLIO OVER SIX MONTHS. WHAT
WAS THE RATIONALE FOR THAT MOVE?
T.R. 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 65 basis points - roughly two-thirds of a
percentage point - over insured municipal bonds. A year ago,
non-investment-grade bonds offered roughly one percentage point in
additional yield over insured bonds. Because spreads were tight, I was able
to sell some high-yielding bonds at attractive prices and buy
higher-quality bonds without sacrificing much yield.
Q. IS THIS CREDIT UPGRADE RELATED TO A CHANGE IN THE FUND'S POLICIES?
T.R. No, it's simply been a matter of where I see relative value in the
market. However, recognizing that issuance of lower-quality municipal debt
has been in decline for several years, thus reducing liquidity in the
sector, the fund's Board of Trustees recently approved a change under which
the fund must limit its holdings of below-investment-grade securities to
less than 35%. Previously, the fund could invest in any combination of
investment-grade and below-investment-grade securities. This change
reflects the realities of the marketplace, while still permitting the fund
to invest in lower-quality debt if bonds are issued that have the
appropriate risk/return characteristics.
Q. TURNING TO YOU GEORGE, WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
G.F. The past year has been a relatively good one for municipal bonds.
Going forward, I don't see a huge amount of price appreciation for the
municipal bond market overall from here without significant declines in
short-term interest rates. As a result, income should be a more important
part of a bond's total return. Still, there are always opportunities to
make money. So I'll concentrate on doing careful research - with the help
of Fidelity's credit and quantitative research group - to uncover those
opportunities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
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 April 30, 1997,
more than $455 million
MANAGER: George Fischer,
since April, 1997; joined
Fidelity in 1989
(checkmark)
GEORGE FISCHER ON HIS
INVESTMENT PHILOSOPHY:
"Of the total amount of new
municipal bonds issued in
1996, roughly half was
insured, which was rather a
large amount compared to
previous years. While this
situation may not last forever,
the high level of insured
bonds issued as a portion of
the total municipal market has
made it increasingly more
difficult to find relatively
higher-yielding opportunities.
Because the opportunities to
pick up yield have been
somewhat curtailed, I focus
on exploiting opportunities in
structural and quantitative
ways. For example, I'll analyze
a bond's call feature, which
determines whether a bond can
be redeemed by its issuer
before maturity. Depending
on their price and their
potential for appreciation, I may
overweight non-callable bonds
- - which can't be redeemed
by their issuers before
maturity - when I think the
market will reward me for
doing so. I also look for
opportunities that may arise
when bonds are selling at
prices cheaper than I believe
to be their fair value based on
their coupon, maturity or other
factors."
INVESTMENT CHANGES
TOP FIVE STATES AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
New York 14.8 12.3
California 11.1 9.1
Pennsylvania 5.8 6.9
Colorado 5.0 4.3
Illinois 4.9 4.2
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
General Obligations 20.2 16.9
Health Care 17.6 21.5
Electric Revenue 16.1 15.7
Industrial Development 12.2 21.6
Transportation 9.4 7.7
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1997
6 MONTHS AGO
Years 14.4 16.4
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 APRIL 30, 1997
6 MONTHS AGO
Years 6.9 7.1
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 APRIL 30, 1997 AS OF OCTOBER 31, 1996
Aaa 26.4%
Aa, A 20.8%
Baa 29.2%
Ba, B 4.2%
Caa, C 0.3%
Non-rated 15.3%
Short-term
investments 3.8%
Aaa 16.9%
Aa, A 14.9%
Baa 28.9%
Ba, B 12.7%
Caa 0.3%
Non-rated 24.9%
Short-term
investments 1.4%
Row: 1, Col: 1, Value: 26.0
Row: 1, Col: 2, Value: 20.0
Row: 1, Col: 3, Value: 29.2
Row: 1, Col: 4, Value: 4.2
Row: 1, Col: 5, Value: 1.5
Row: 1, Col: 6, Value: 15.3
Row: 1, Col: 7, Value: 3.8
Row: 1, Col: 1, Value: 16.9
Row: 1, Col: 2, Value: 14.9
Row: 1, Col: 3, Value: 27.2
Row: 1, Col: 4, Value: 12.7
Row: 1, Col: 5, Value: 1.5
Row: 1, Col: 6, Value: 24.4
Row: 1, Col: 7, Value: 2.4
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 APRIL 30, 1997 AND
OCTOBER 31, 1996 ACCOUNT FOR 11.5% AND 23.1%, RESPECTIVELY, OF THE FUND'S
INVESTMENTS.
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 96.2%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
ALABAMA - 1.6%
Cullman Med. Park South Med. Clinic Board
Rev. (Cullman Reg. Med. Ctr.) Series A,
6.50% 2/15/13 Baa3 $ 2,700,000 $ 2,716,875
Shelby County Series A, 7.70% 8/1/17 - 4,000,000 4,380,000
7,096,875
ARIZONA - 1.3%
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 1,378,000
Cochise County Ind. Dev. Auth. Hosp. Rev. Rfdg.
(Sierra Vista Commty. Hosp. Proj.)
Series A, 6.75% 12/1/26 - 1,705,000 1,692,213
Navajo County Ind. Dev. Auth. Ind. Dev. Rev.
(Stone Container Corp. Proj.)
7.40% 4/1/26 (e) - 2,500,000 2,528,125
5,598,338
ARKANSAS - 0.3%
Little Rock Arpt. Passenger Facs. Charge Rev.
5.65% 5/1/16 (AMBAC Insured) (e) Aaa 1,500,000 1,545,000
CALIFORNIA - 11.1%
California Dept. Wtr. Resources Ctr. Valley Proj. Rev.
(Wtr. Sys.) Series J-2, 6.125% 12/1/13 Aa 2,190,000 2,228,325
California Gen. Oblig. Unltd. Tax:
Rfdg. 5.625% 9/1/24 A1 5,000,000 4,793,750
6.10% 9/1/04 A1 1,415,000 1,517,588
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Rfdg. Series A, 5.70% 8/1/16 (MBIA Insured) Aaa 970,000 968,788
Series B, 5.20% 8/1/26 (MBIA Insured) (e) Aaa 1,025,000 1,023,719
Series R, 6.15% 8/1/27 (MBIA Insured) (e) Aaa 1,500,000 1,500,000
California Pub. Wks. Board Lease Rev. Rfdg.:
(California Univ. Proj.) Series A:
5.50% 10/1/13 A 2,000,000 1,950,000
5.50% 6/1/14 A1 1,500,000 1,466,250
(Dept. Corrections State Prisons):
Series A, 5% 12/1/19 (AMBAC Insured) Aaa 1,750,000 1,596,875
Series D, 5.75% 9/1/06 (MBIA Insured) Aaa 5,000,000 5,237,500
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 3,187,500
East Bay Muni. Util. Dist. Wtr. Sys. Rev. Series A,
6% 6/1/12 (MBIA Insured) Aaa 2,000,000 2,040,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Foothill/Eastern Trans. Corridor Agcy. California
Toll Road Rev. (Sr. Lien) (Cap Appreciation)
Series A, 0% 1/1/14 Baa $ 2,000,000 $ 692,500
Los Angeles County Ctfs. of Prtn. (Cap. Appreciation)
(Disney Parking Proj.):
0% 3/1/14 Baa1 1,000,000 345,000
0% 9/1/14 Baa1 7,260,000 2,423,025
Los Angeles Waste Wtr. Sys. Rev. Rfdg. Series D,
4.70% 11/1/19 (FGIC Insured) Aaa 1,200,000 1,009,500
Northern California Pwr. Agcy. Pub. Pwr. Rev.
Rfdg. (Geothermal Proj. #3) Series A,
5.85% 7/1/10 (AMBAC Insured) Aaa 1,500,000 1,563,750
Orange County Dev. Agcy. (Tax Allocation)
(Santa Ana Heights Proj.) 6.20% 9/1/08 Baa 1,650,000 1,656,188
Sacramento City Fing. Auth. Lease Rev. Rfdg.
Series A, 5.40% 11/1/20 (AMBAC Insured) Aaa 2,000,000 1,905,000
Sacramento City Fing. Auth. (Tax Allocation)
(Cap. Appreciation) Series B, 0% 11/1/11
(MBIA Insured) Aaa 1,225,000 542,063
Sacramento Cogeneration Auth. Cogeneration
Proj. Rev. (Proctor & Gamble Proj.):
5.40% 7/1/98 BBB- 1,100,000 1,108,250
6.375% 7/1/10 BBB- 1,000,000 1,031,250
6.50% 7/1/14 BBB- 3,800,000 3,923,500
Sequoia Hosp. Dist. Rev. Rfdg. 5.375% 8/15/13
(Escrowed to Maturity) (d) Baa 1,465,000 1,428,375
49,683,696
COLORADO - 5.0%
Colorado Health Facs. Auth. Rev.:
Rfdg. (Rocky Mountain Adventist):
6.625% 2/1/13 Baa 6,900,000 7,063,875
6.625% 2/1/22 Baa 4,000,000 4,070,000
(National Benevolent Assoc. Proj.)
Series A, 6.50% 6/1/25 Baa1 1,360,000 1,361,700
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/06 (MBIA Insured) Aaa 1,405,000 893,931
0% 1/1/08 (MBIA Insured) Aaa 870,000 490,463
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
COLORADO - CONTINUED
Denver City & County Arpt. Rev. (e):
(Cap. Appreciation):
Series A, 0% 11/15/02 (MBIA Insured) Aaa $ 2,115,000 $ 1,580,963
Series D, 0% 11/15/04 (MBIA Insured) Aaa 1,700,000 1,132,625
Series A:
6.60% 11/15/97 Baa 1,000,000 1,012,010
6.90% 11/15/98 Baa 1,000,000 1,036,250
8% 11/15/17 Baa 1,000,000 1,036,550
7.50% 11/15/23 Baa 2,500,000 2,743,750
22,422,117
CONNECTICUT - 4.3%
Connecticut Health & Edl. Facs. Auth. Rev.:
(New Britain Mem. Hosp.) Series A:
7.50% 7/1/06 BBB- 2,815,000 2,990,938
7.75% 7/1/22 BBB- 1,500,000 1,601,250
(The Griffin Hosp.) Series A:
6% 7/1/13 Baa2 1,810,000 1,751,175
5.75% 7/1/23 Baa2 3,280,000 3,001,200
Connecticut Spl. Tax Oblig. Rev. (Trans. Infrastructure)
Series B, 5.80% 9/1/04 A1 2,000,000 2,095,000
Eastern Connecticut Resource Recovery Auth.
Solid Waste Rev. (Wheelabrator Lisbon Proj.)
Series A (e):
5.50% 1/1/14 A- 4,750,000 4,441,250
5.50% 1/1/20 A- 4,000,000 3,600,000
19,480,813
DISTRICT OF COLUMBIA - 3.0%
District of Columbia Gen. Oblig.:
Rfdg. Series A:
5.625% 6/1/02 Ba 1,100,000 1,098,625
5.75% 6/1/03 Ba 1,440,000 1,440,000
6% 6/1/07 (MBIA Insured) Aaa 2,000,000 2,077,500
Series A:
6% 6/1/03 Ba 1,100,000 1,115,125
6% 6/1/04 Ba 1,200,000 1,212,000
6% 6/1/05 Ba 1,300,000 1,304,875
District of Columbia Hosp. Rev. (Hosp. for
Sick Children) Series A, 8.875% 1/1/21 - 965,000 1,024,106
District of Columbia Redev. Land Agcy. Sport Arena
Spl. Tax Rev.:
5.30% 11/1/99 Baa 1,700,000 1,691,500
5.625% 11/1/10 Baa 750,000 720,938
District of Columbia Rev. Rfdg. (Georgetown Univ.)
Series A, 5.95% 4/1/14 (MBIA Insured) (f) Aaa 2,000,000 1,997,500
13,682,169
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
FLORIDA - 1.9%
Broward County Resource Recovery Rev. (SES
Broward Co. LP South Proj.) 7.95% 12/1/08 A $ 600,000 $ 651,750
Florida Mid-Bay Bridge Auth. Rev. Series A,
7.50% 10/1/17 - 2,500,000 2,721,875
Jacksonville Elec. Auth. Rev. Rfdg. (St. Johns
River Pwr. Park Sys.) 5.375% 10/1/16 Aa1 5,500,000 5,273,125
8,646,750
GEORGIA - 0.2%
Savannah Economic Dev. Auth. Ind. Dev. Rev. (Stone
Container Corp. Proj.) 7.40% 4/1/26 (e) - 1,000,000 1,028,750
IDAHO - 0.1%
Boise Urban Renewal Parking Agcy. Rev. (Tax
Increment) Series A, B, C, 8.125% 9/1/15 A 375,000 390,938
ILLINOIS - 4.9%
Chicago O'Hare Int'l. Arpt. Rev.:
(Passenger Facs. Charge) Series A,
5.60% 1/1/10 (AMBAC Insured) Aaa 2,500,000 2,518,750
Rfdg. (2nd Lien) (Gen Arpt. Proj.):
Series A, 6.25% 1/1/09
(AMBAC Insured) (e) Aaa 3,700,000 3,917,375
Series A, 6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,473,500
Series C-1, 5% 1/1/10 (MBIA Insured) Aaa 3,000,000 2,820,000
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg.
(American Airlines, Inc. Proj.)
8.20% 12/1/24 Baa2 1,000,000 1,161,250
Chicago School Board of Ed. 6.25% 12/1/09
(MBIA Insured) Aaa 3,000,000 3,221,250
Decatur Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.75% 6/1/07 Ba1 705,000 787,838
Du Page County Commty. High School Dist. #99
(Downers Grove) Series A, 6% 2/1/06
(AMBAC Insured) Aaa 1,640,000 1,734,300
Illinois Edl. Facs. Auth. Rev. (Depaul Univ.)
6% 10/1/05 (AMBAC Insured) Aaa 1,200,000 1,267,500
Illinois Health Facs. Auth. Rev.:
(Covenant Retirement Commty.) Series A,
7.60% 12/1/12 BBB+ 750,000 802,500
(Mem. Hosp.):
7.125% 5/1/10 BBB 1,000,000 1,050,000
7.25% 5/1/22 BBB 1,000,000 1,051,250
21,805,513
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
INDIANA - 0.5%
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 $ 1,000,000 $ 1,058,750
Indiana Health Facs. Fing. Auth. Hosp. Rev. Rfdg.
(Clarian Health Partners Inc.)
Series 5.50% 2/15/16 Aa3 1,000,000 947,500
2,006,250
KENTUCKY - 2.8%
Kenton County Arpt. Board Arpt. Rev.:
(Cincinnati/Northern Kentucky Int'l.)
6% 3/1/05 (MBIA Insured) (e) Aaa 5,570,000 5,799,763
(Spl. Facs. Delta Airlines, Inc.)
7.80% 12/1/15 Ba2 3,500,000 3,745,000
Series A, 7.50% 2/1/20 (e) Baa3 2,000,000 2,140,000
Murray Ind. Dev. Rev. Rfdg. (Kroger Co. Proj.)
7.25% 9/1/12 Baa3 700,000 761,250
12,446,013
LOUISIANA - 0.6%
Hodge Util. Rev. 9% 3/1/10
(Stone Container Corp.) 9% 3/1/10 (e) - 1,265,000 1,345,644
Louisiana Pub. Facs. Auth. Ind. Dev. Rev. Rfdg.
(Beverly Enterprises, Inc.) 8.25% 9/1/08 - 535,000 573,788
St. Tammany Pub. Trust Fing. Auth. Rev. Rfdg.
(Cap. Appreciation) Series C, 0% 7/20/14 Aaa 2,000,000 722,500
2,641,932
MARYLAND - 0.6%
Maryland Health & Higher Edl. Facs. Auth. Rev.
(Good Samaritan Hosp.) 5.75% 7/1/13 A1 2,680,000 2,690,050
MASSACHUSETTS - 2.3%
Massachusetts Health & Edl. Facs. Auth. Rev.:
(1st Mtg.) (Fairview Extended Care) Series A,
10.25% 1/1/21 - 5,000,000 5,675,000
(New England Med. Ctr.) Series G,
5.375% 7/1/24 (MBIA Insured) Aaa 500,000 468,125
Massachusetts Ind. Fin. Agcy. Rev. Rfdg.:
(Atlanticare Med. Ctr.) Series A,
10.125% 11/1/14 - 700,000 699,125
(Emerson College) 8.90% 1/1/18 - 1,000,000 1,093,750
(Institute Dev. Disabilities) 9.25% 6/1/09 - 85,000 83,300
(Massachusetts Biomedical) (Cap. Appreciation)
Series A-2:
0% 8/1/08 A 800,000 420,000
0% 8/1/10 A 4,500,000 2,053,125
10,492,425
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
MICHIGAN - 3.3%
Detroit Hosp. Fing. Auth. Facs. Rev. (Michigan
Health Care Corp. Proj.) 10% 12/1/20 (b) C $ 6,685,000 $ 1,203,300
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.)
7.80% 7/1/14 Baa1 700,000 749,875
Highland Park Hosp. Fin. Auth. Hosp. Facs. Rev.
(Lakeside Commty. Hosp. Proj.) 10% 3/1/20 (b) - 150,000 375
Michigan Strategic Fund Ltd. Oblig. Rev.:
(Great Lakes Pulp & Fibre Proj.)
10.25% 12/1/16 (b)(e) - 15,250,000 7,320,000
(Mercy Svcs. for Aging Proj.) 9.40% 5/15/20
(Pre-Refunded to 5/15/00 @ 102) (d) - 600,000 678,750
(Michigan Health Care Corp. Proj.)
9.10% 12/1/14 (b) - 2,075,000 373,500
Royal Oak Hosp. Fin. Auth. Rev. Rfdg.
(William Beaumont Hosp.) 6.25% 1/1/09 Aa3 2,310,000 2,477,475
Tawas City Hosp. Fin. Auth. Hosp. Rev. (St. Joseph
Hosp. Proj.) Series A, 8.50% 3/15/12 - 1,875,000 1,933,594
14,736,869
MINNESOTA - 1.7%
Minneapolis & St. Paul Hsg. & Redev. Auth.
Healthcare Sys. Rev. Rfdg. (Healthspan
Health Sys. Corp.) Series A, 4.75% 11/15/18
(AMBAC Insured) Aaa 2,500,000 2,128,125
Minnesota Hsg. Single Family Mtg. Rev.
6.40% 7/1/15 (e) Aa2 2,000,000 2,037,500
St. Paul Hsg. & Redev. Auth. Hosp. Rev.
(Healtheast Proj.) Series A, 9.75% 11/1/17 Baa 380,000 396,876
Western Minnesota Muni. Pwr. Supply Agcy.
Rev. Rfdg. Series A, 6.25% 1/1/06
(AMBAC Insured) Aaa 3,000,000 3,236,250
7,798,751
MISSISSIPPI - 0.1%
Mississippi Home Corp. Single Family Sr.
Rev. Rfdg. Series 1990 A, 9.25% 3/1/12
(FGIC Insured) Aaa 240,000 256,500
MISSOURI - 0.4%
St. Louis Reg'l Convention & Sports Complex
Auth. Series C:
7.90% 8/15/21 (Pre-Refunded to
8/15/03 @ 100) (d) Aaa 1,485,000 1,728,169
7.90% 8/15/21 - 65,000 71,013
1,799,182
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEBRASKA - 1.3%
Nebraska Pub. Pwr. Dist. Rev.:
Rfdg. (Pwr. Supply Sys.) Series C, 5% 1/1/17 A1 $ 4,590,000 $ 4,119,525
(Elec. Sys.) Series A, 6% 1/1/06 A1 1,500,000 1,565,625
5,685,150
NEVADA - 1.1%
Clark County Gen. Oblig. Series A,
4.75% 6/1/10 (MBIA Insured) Aaa 2,730,000 2,501,363
Las Vegas Redev. Agcy. Tax Increment Rev.:
(Sub. Lien Fremont Proj.) Series A,
6.10% 6/15/14 BBB+ 1,000,000 967,500
(Sub. Lien Hsg. Proj.) Series B, 6% 6/15/10 BBB+ 1,500,000 1,464,375
4,933,238
NEW HAMPSHIRE - 0.7%
New Hampshire Higher Edl. & Health Facs.
Auth. Rev.:
(1st Mtg. River Woods at Exeter):
8% 3/1/01 - 750,000 767,483
9% 3/1/23 - 1,830,000 1,990,125
(Littleton Hosp. Assoc., Inc.) Series A,
9.50% 5/1/20 - 495,000 525,319
3,282,927
NEW JERSEY - 1.3%
New Jersey Econ. Dev. Auth. Econ. Dev. Rev.
Rfdg. (Stolt Term. Proj.) 10.50% 1/15/18 - 60,000 63,697
New Jersey Trans. Trust Fund Auth.
5.50% 6/15/11 (MBIA Insured) Aaa 4,000,000 3,985,000
Passaic County Util. Auth. Swr. Dev. Rev. (Cap.
Appreciation) 0% 3/1/02 (MBIA Insured) Aaa 2,500,000 1,975,000
6,023,697
NEW MEXICO - 1.8%
Albuquerque Arpt. Rev. Rfdg.
(AMBAC Insured) (e):
6.75% 7/1/11 Aaa 1,805,000 1,987,756
6.70% 7/1/18 Aaa 3,970,000 4,257,825
New Mexico Edl. Assistance Foundation
Student Loan Rev. 5.25% 4/1/05
(AMBAC Insured) (e) Aaa 1,935,000 1,918,069
8,163,650
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK - 14.8%
New York City Gen. Oblig.:
Rfdg. Series A, 7% 8/1/03 Baa1 $ 2,000,000 $ 2,167,500
Rfdg. Series B, 6.75% 8/15/03 Baa1 2,000,000 2,142,500
Rfdg. Unltd. Tax Series E, 6.50% 2/15/04
(FGIC Insured) Aaa 1,500,000 1,631,250
Series B:
7.50% 2/1/02 Baa1 2,000,000 2,195,000
5.70% 8/15/02 Baa1 1,165,000 1,194,125
Series D, 5.50% 2/15/04 Baa1 5,000,000 4,987,500
Series H, 6.875% 2/1/02 Baa1 1,700,000 1,821,125
New York City Ind. Dev. Agcy. Ind. Dev. Rev. (e):
(Japan Airlines Co. Ltd. Proj.)
Series 91, 6% 11/1/15 (FSA Insured)
LOC Morgan Guaranty Trust Co. Aaa 1,000,000 1,030,000
(Term. One Group Assoc. Proj.)
5.90% 1/1/06 A 8,680,000 8,940,400
New York City Muni. Assistance Corp. (Spl. Tax)
6% 7/1/05 Aa2 6,500,000 6,857,500
New York State Dorm. Auth. Rev.:
Rfdg. (New York State Univ. Edl. Facs.):
Series A, 5.50% 5/15/05 Baa1 2,750,000 2,763,750
Series B, 5.50% 5/15/08 Baa1 12,150,000 12,058,875
(New York City Univ.) 5.70% 7/1/05 Baa1 3,000,000 3,048,750
New York State Local Gov't. Assistance Corp. Rfdg.
Series C, 5.50% 4/1/17 A3 7,500,000 7,303,125
New York State Tollway Auth. Gen. Rev.
(Spl. Oblig.) (Cap. Appreciation)
Series A, 0% 1/1/04 BBB 4,000,000 2,740,000
New York State Tollway Auth. Svc. Contract Rev.
(Local Hwy. & Bridges):
5.90% 4/1/07 Baa1 2,000,000 2,025,000
6% 1/1/11 Baa1 2,445,000 2,441,931
Suffolk County Wtr. Auth. 6% 6/1/17
(MBIA Insured) Aaa 1,000,000 1,051,250
66,399,581
NORTH CAROLINA - 3.4%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys.
Rev. Rfdg.:
Series A, 5.50% 1/1/05 (MBIA Insured) Aaa 4,000,000 4,080,000
Series B:
7.25% 1/1/07 Baa1 1,000,000 1,110,000
6.125% 1/1/09 Aaa 3,000,000 3,056,250
Series C:
5.125% 1/1/03 Baa1 2,000,000 1,972,500
5.25% 1/1/04 Baa1 1,365,000 1,344,525
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NORTH CAROLINA - CONTINUED
North Carolina Muni. Pwr. Agcy. Rev. Rfdg.
(Proj. #1 Catawba Elec.):
5.75% 1/1/02 A3 $ 1,750,000 $ 1,789,375
6.25% 1/1/17 (AMBAC Insured) Aaa 1,800,000 1,856,250
15,208,900
OHIO - 4.5%
Gateway Econ. Dev. Corp. (Greater Cleveland
Stadiums) Series 1990, 6.50% 9/15/14 (e) - 3,000,000 3,045,000
Mahoning Valley San. Dist. Wtr. Rev.:
7.75% 5/15/14 - 2,000,000 2,082,500
7.75% 5/15/19 - 2,000,000 2,077,500
Marion County Hosp. Impt. Rev. Rfdg. (Commty.
Hosp. Impt. Proj.) 5.60% 5/15/01 BBB+ 1,000,000 1,011,250
Ohio Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.50% 9/1/10 Baa3 2,470,000 2,741,700
Ohio Wtr. Dev. Auth. Pollution Cont. Facs. Rev.
(Wtr. Cont. Loan Fund):
State Matching Series 6.50% 1/1/04
(MBIA Insured) Aaa 1,835,000 2,004,738
Wtr. Quality Series, 5.625% 6/1/06
(MBIA Insured) Aaa 2,000,000 2,072,500
Student Loan Fund Corp. Student Loan Rev.
Sub-Series B, 8.875% 8/1/08 (e) - 3,230,000 3,339,013
Summit County Ind. Dev. Rev. Rfdg.
(Surnow Assoc. Proj.) 7.65% 10/1/06 Ba2 1,730,000 1,924,625
20,298,826
OKLAHOMA - 1.0%
Tulsa Muni. Arpt. Trust Rev. (American Airlines
Corp. Proj.) 7.35% 12/1/11 Baa2 4,000,000 4,315,000
PENNSYLVANIA - 5.8%
Allegheny County Ind. Dev. Auth. Rev. (YMCA
Pittsburgh Proj.) Series 1990, 8.75% 3/1/10 - 355,000 378,519
Butler County Ind. Dev. Auth. Health Ctr. Rev.
Rfdg. (Sherwood Oaks Proj.) 5.75% 6/1/11 A- 3,000,000 2,876,250
Cumberland County Muni. Auth. Rev.
(Carlisle Hosp.):
6.80% 11/15/14 Baa 3,250,000 3,355,625
6.80% 11/15/23 Baa 1,000,000 1,026,250
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Delaware County Auth. Rev. (1st Mtg. Riddle
Village Proj.) (d):
Series 1992, 8.75% 6/1/10
(Pre-Refunded to 6/1/02 @ 102) - $ 2,870,000 $ 3,383,013
7% 6/1/00 (Escrowed to Maturity) - 1,000,000 1,022,010
8.25% 6/1/22 (Escrowed to Maturity) - 2,250,000 2,702,813
9.25% 6/1/22 (Pre-Refunded to
6/1/02 @ 102) - 2,905,000 3,489,631
Delaware County Ind. Dev. Auth. Rev. Rfdg.
(Resource Recovery Facs.) Series A,
6.10% 7/1/13 Baa1 1,900,000 1,900,000
Montgomery County Higher Ed. & Health Auth.
Hosp. Rev. (United Hosp., Inc. Proj.) (d):
(St. Christopher):
8.25% 11/1/03
(Pre-Refunded to 11/1/97 @102) Ba1 1,250,000 1,300,588
7% 11/1/06
(Pre-Refunded to 11/1/97 @ 102) Ba1 120,000 121,841
8.50% 11/1/17
(Pre-Refunded to 11/1/97 @ 102) Ba1 525,000 547,008
Series B, 8.10% 11/1/97
(Escrowed to Maturity) Ba1 35,000 35,713
Pennsylvania Ind. Dev. Auth. Rev. Econ. Dev.
5.80% 7/1/09 (AMBAC Insured) Aaa 1,345,000 1,397,119
Philadelphia Hosp. & Higher Ed. Facs. Auth.
Hosp. Rev. (Graduate Health Sys. Oblig.
Group) 7.25% 7/1/18 Ba 2,600,000 2,713,750
26,250,130
RHODE ISLAND - 1.0%
Rhode Island Port Auth. & Econ. Dev. Corp. Arpt.
Rev. Series A, 7% 7/1/14 (FSA Insured) (e) Aaa 4,000,000 4,545,000
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Elec. Agcy. Rev. Series A,
6.25% 1/1/05 (FGIC Insured) Aaa 1,715,000 1,835,050
TENNESSEE - 0.7%
Dyer County Ind. Dev. Board. Ind. Dev. Rev.
Rfdg. (Tennessee Assoc. Proj.) 6% 2/1/07 Ba1 1,555,000 1,562,775
Metropolitan Gov't Nashville & Davidson County
Elec. Rev. (Cap. Appreciation) Series A,
0% 5/15/06 (MBIA Insured) Aaa 1,000,000 623,750
Rutherford County Ind. Dev. Board Dev. Rev. Rfdg.
(Kroger Co. Proj.) 7.30% 6/1/21 Baa3 1,000,000 1,092,500
3,279,025
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
TEXAS - 3.3%
Brazos River Auth. Poll. Cont. Rev. Coll.
(Texas Util. Elec. Co.) 9.25% 3/1/18 (e) Baa1 $ 1,300,000 $ 1,371,266
Conroe Independent School Dist.
(Capital Appreciation) Rfdg. 0% 2/15/09
(PSF Guaranteed) Aaa 750,000 392,813
Dallas-Fort Worth Int'l. Arpt. Facs. Impt. Corp.
Rev. (AMR Corp.) 7.50% 11/1/25 (e) Baa2 6,000,000 6,397,500
Houston Elderly Hsg. Auth. 1st Lien Rev.
(Low Income Elderly Hsg.) 7.50% 7/1/17 - 450,000 457,875
Midlothian Independent School Dist. (Cap.
Appreciation) 0% 2/15/04 (PSF Guaranteed) Aaa 1,845,000 1,305,338
Texas Pub. Fin. Auth. Series A, 5% 10/1/14 Aa 5,000,000 4,656,250
14,581,042
UTAH - 2.4%
Intermountain Pwr. Agcy. Pwr. Supply Sys.
Rev. Rfdg.:
Series A, 6.50% 7/1/09 (AMBAC Insured) Aaa 1,000,000 1,105,000
Series B (MBIA Insured):
5.75% 7/1/16 Aaa 2,500,000 2,487,500
6% 7/1/16 Aaa 6,000,000 6,097,500
5.75% 7/1/19 Aaa 1,000,000 988,750
South Salt Lake City Ind. Rev. (Price Savers
Wholesale Club Proj.) 9% 11/15/13 - 250,000 278,125
10,956,875
VIRGINIA - 3.0%
Loudoun County Ind. Dev. Auth. Residential Care
Facs. Rev. (Falcons Landing Proj.) Series A:
9.25% 11/1/04 - 1,000,000 1,086,250
8.75% 11/1/24 - 8,500,000 8,967,500
Virginia Pub. School Auth. Series B,
6.50% 8/1/15 Aa 3,000,000 3,228,750
13,282,500
WASHINGTON - 3.2%
Washington Pub. Pwr. Supply Sys.:
Nuclear Proj. #2 Rev. 5.40% 7/1/12 Aa1 14,000,000 13,107,500
Nuclear Proj. #3 Rev. Rfdg. Series B,
7% 7/1/05 (FGIC Insured) (g) Aaa 1,150,000 1,226,188
14,333,688
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
WEST VIRGINIA - 0.5%
Ripley Ind. Dev. Rev. Rfdg. (Kroger Co. Proj.)
7.30% 5/1/11 Baa3 $ 2,200,000 $ 2,392,500
TOTAL MUNICIPAL BONDS
(Cost $438,269,482) 432,015,710
CASH EQUIVALENTS - 3.8%
SHARES
Municipal Central Cash Fund (c)(h)
(Cost $17,179,297) 17,179,297 17,179,297
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $455,448,779) $ 449,195,007
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
73 U.S. Treasury Bond Futures June 1997 $ 7,977,471 $ 144,463
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.8%
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. At the period end, the seven-day yield of the Municipal Central Cash
Fund was 4.30%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
4. Security collateralized by an amount sufficient to pay interest and
principal.
5. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
6. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
7. 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 $533,125.
8. Information in this report regarding holdings by state and security
types do not reflect the holdings of the Municipal Central Cash Fund. A
listing of the Municipal Central Cash Fund's holdings as of its most recent
fiscal period end is available upon request.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 44.2% AAA, AA, A 47.3%
Baa 23.8% BBB 21.9%
Ba 4.2% BB 4.0%
B 0.0% B 1.9%
Caa 0.0% CCC 0.0%
Ca, C 0.3% CC, C 0.0%
D 0.3%
The percentage not rated by both S&P and Moody's amounted to 15.3%. FMR has
determined that unrated debt securities that are lower quality account for
11.5% 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:
General Obligation 20.2%
Health Care 17.6
Electric Revenue 16.1
Industrial Development 12.2
Transportation 9.4
Special Tax 5.8
Others (individually less than 5%) 18.7
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $455,448,779. Net unrealized depreciation aggregated
$6,253,772, of which $12,745,011 related to appreciated investment
securities and $18,998,783 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>
APRIL 30, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $455,448,779) - $ 449,195,007
See accompanying schedule
Receivable for investments sold 1,806,252
Interest receivable 7,944,975
Receivable for daily variation on futures contracts 25,094
Prepaid expenses 6,534
TOTAL ASSETS 458,977,862
LIABILITIES
Payable for investments purchased $ 2,000,000
Delayed delivery
Payable for fund shares redeemed 868,219
Distributions payable 736,598
Accrued management fee 145,300
Other payables and accrued expenses 221,452
TOTAL LIABILITIES 3,971,569
NET ASSETS $ 455,006,293
Net Assets consist of:
Paid in capital $ 474,353,002
Accumulated undistributed net realized gain (loss) (13,237,400)
on investments
Net unrealized appreciation (depreciation) on (6,109,309)
investments
NET ASSETS $ 455,006,293
</TABLE>
CALCULATION OF MAXIMUM OFFERING PRICE $11.70
CLASS A:
NET ASSET VALUE and redemption price per share
($1,610,533 (divided by) 137,671 shares)
Maximum offering price per share (100/95.75 of $11.70) $12.22
CLASS T: $11.70
NET ASSET VALUE and redemption price per share
($413,225,053 (divided by) 35,326,581 shares)
Maximum offering price per share (100/96.50 of $11.70) $12.12
CLASS B: $11.67
NET ASSET VALUE and offering price per share
($39,396,258 (divided by) 3,374,886 shares) A
INSTITUTIONAL CLASS: $11.68
NET ASSET VALUE, offering price and redemption price
per share ($774,449 (divided by) 66,288 shares)
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>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INTEREST INCOME $ 14,744,505
EXPENSES
Management fee $ 954,644
Transfer agent fees 436,782
Distribution fees 735,123
Accounting fees and expenses 95,411
Non-interested trustees' compensation 2,590
Custodian fees and expenses 17,499
Registration fees 37,288
Audit 20,566
Legal 4,784
Miscellaneous 8,889
Total expenses before reductions 2,313,576
Expense reductions (21,860) 2,291,716
NET INTEREST INCOME 12,452,789
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 5,292,398
Futures contracts (116,375) 5,176,023
Change in net unrealized appreciation (depreciation) on:
Investment securities (6,705,076)
Futures contracts 144,463 (6,560,613)
NET GAIN (LOSS) (1,384,590)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 11,068,199
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED OCTOBER 31,
APRIL 30, 1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 12,452,789 $ 32,576,734
Net interest income
Net realized gain (loss) 5,176,023 (5,991,620)
Change in net unrealized appreciation (depreciation) (6,560,613) (1,724,709)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 11,068,199 24,860,405
FROM OPERATIONS
Distributions to shareholders (13,316,754) (31,712,769)
From net interest income
In excess of net interest income (86,644) -
TOTAL DISTRIBUTIONS (13,403,398) (31,712,769)
Share transactions - net increase (decrease) (63,608,030) (69,878,601)
TOTAL INCREASE (DECREASE) IN NET ASSETS (65,943,229) (76,730,965)
NET ASSETS
Beginning of period 520,949,522 597,680,487
End of period (including undistributed net interest $ 455,006,293 $ 520,949,522
income of $0 and $863,965, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996 H
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.740 $ 11.630
Income from Investment Operations
Net interest income .298 F .105 F, G
Net realized and unrealized gain (loss) (.011) .109 E
Total from investment operations .287 .214
Less Distributions
From net interest income (.325) G (.104)
In excess of net interest income (.002) I -
Total distributions (.327) (.104)
Net asset value, end of period $ 11.700 $ 11.740
TOTAL RETURN B, C 2.46% 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,611 $ 202
Ratio of expenses to average net assets .90% A, D .90% A,
D
Ratio of net interest income to average net assets 5.21% A 5.73% A
Portfolio turnover rate 44% A 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 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.
F NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
I THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 1994 D 1993 1992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650 $ 11.410
beginning of period
Income from
Investment
Operations
Net interest income .304 F .677 F, .700 .689 .710 .774
G
Net realized and (.041) (.136) .660 (1.430) 1.100 .250
unrealized gain
(loss)
Total from investment .263 .541 1.360 (.741) 1.810 1.024
operations
Less Distributions (.321) G (.661) (.700) (.689) (.710) (.774)
From net interest
income
From net realized gain - - - (.060) (.030) (.010)
In excess of net (.002) H - - - - -
interest income
In excess of net - - - (.010) - -
realized gain
Total distributions (.323) (.661) (.700) (.759) (.740) (.784)
Net asset value, $ 11.700 $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650
end of period
TOTAL RETURN B, C 2.26% 4.68% 12.50% (6.03) 15.95% 9.21%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 413,225 $ 480,432 $ 565,131 $ 544,422 $ 497,575 $ 156,659
period (000 omitted)
Ratio of expenses to .89% .89% .91% .89% .92% .90%
average net assets A E
Ratio of net interest 5.21% 5.74% 6.06% 5.78% 5.59% 6.59%
income to average A
net assets
Portfolio turnover rate 44% 49% 37% 38% 27% 13%
A
</TABLE>
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.
D EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
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 NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 1994 G
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.740 $ 11.860 $ 11.210 $ 11.610
Income from Investment Operations
Net interest income .263 E .596 E, F .612 .188
Net realized and unrealized (.044) (.136) .650 (.400)
gain (loss)
Total from investment operations .219 .460 1.262 (.212)
Less Distributions
From net interest income (.287) F (.580) (.612) (.188)
In excess of net interest income (.002) H - - -
Total distributions (.289) (.580) (.612) (.188)
Net asset value, end of period $ 11.670 $ 11.740 $ 11.860 $ 11.210
TOTAL RETURN B, C 1.87% 3.98% 11.57% (1.86)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 39,396 $ 39,389 $ 32,395 $ 9,968
(000 omitted)
Ratio of expenses to average 1.58% A 1.57% 1.86% D 2.09% A
net assets
Ratio of net interest income to 4.53% A 5.06% 5.18% 4.58% A
average net assets
Portfolio turnover rate 44% A 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.
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 NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
F NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
G FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1994.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 H
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 11.720 $ 11.880 $ 11.700
Income from Investment Operations
Net interest income .313 E .707 E, G .232
Net realized and unrealized gain (loss) .002 F (.197) .180
Total from investment operations .315 .510 .412
Less Distributions
From net interest income (.353) G (.670) (.232)
In excess of net interest income (.002) I - -
Total distributions (.355) (.670) (.232)
Net asset value, end of period $ 11.680 $ 11.720 $ 11.880
TOTAL RETURN B, C 2.70% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 774 $ 927 $ 154
Ratio of expenses to average net assets .75% A, D .75% D .75% A,
D
Ratio of net interest income to average net assets 5.36% A 5.88% 5.89% A
Portfolio turnover rate 44% A 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 NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
F 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.
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
I THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997 (Unaudited)
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 T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Interest 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. Securities for which
quotations are not readily available are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are not
readily available are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest income. Distributions from realized gains, if
any, are recorded on the ex-dividend date. Income dividends and capital
gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
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.
Accumulated undistributed net realized gain (loss) on investments may
include temporary book to 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.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund may invest in the Municipal
Central Cash Fund (the Cash Fund) managed by FMR Texas, an affiliate of
FMR. The Cash Fund is an open-end money market fund available only to
investment companies and other accounts managed by FMR and its affiliates.
The Cash Fund seeks preservation of capital, liquidity, and current income
by investing in high-quality, short-term municipal securities of various
states and municipalities. Dividends from the Cash Fund are declared daily
and paid monthly from net interest income. Income distributions received by
the fund are recorded as interest income in the accompanying financial
statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying securities
is fixed at the time the transaction is negotiated. The market values of
the securities purchased on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. The fund may
receive compensation for interest forgone in the purchase of a when-issued
security. With respect to purchase commitments, the fund identifies
securities as segregated in its custodial records with a value at least
equal to the amount of the commitment. The payables and receivables
associated with the purchases and sales of when-issued securities having
the same settlement date and broker are offset. When-issued securities that
have been purchased from and sold to different brokers are reflected as
both payables and receivables in the statement of assets and liabilities
under the caption "Delayed delivery." Losses may arise due to changes in
the market value of the underlying securities, if the counterparty does not
perform under the contract, or if the issuer does not issue the securities
due to political, economic, or other factors.
2. OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period end
is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, 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 $103,496,881 and $183,810,335, respectively.
The market value of futures contracts opened and closed during the period
amounted to $37,677,430 and $29,728,047, 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 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
each class of shares (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 702 $ 702
CLASS T 557,165 557,165
CLASS B 177,256 49,238
$ 735,123 $ 607,105
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 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 six years of purchase (five years prior to
January 2, 1997). The Class B charge is based on declining rates which
range from 5% to 1%(4% to 1% prior to January 2, 1997) of the lesser of the
cost of shares at the initial date of purchase or the net asset value of
the redeemed shares, excluding any reinvested dividends and capital gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 22,226 $ 16,093
CLASS T 97,829 70,755
CLASS B 77,606 0 *
$ 197,661 $ 86,848
* WHEN CLASS B SHARES ARE INITIALLY 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 T, Class B, and Institutional Class shares. UMB has entered into a
sub-arrangement with Fidelity Investments Institutional Operations Company,
Inc. (FIIOC) with respect to all classes of the fund to perform the
transfer, dividend disbursing, and shareholder servicing agent functions.
FIIOC, an affiliate of FMR, receives account fees and asset-based fees that
vary according to the account size and type of account of the shareholders
of
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
the respective classes of the fund. All fees are paid to FIIOC by UMB,
which is reimbursed by each class for such payments. FIIOC pays for
typesetting, printing and mailing of all shareholder reports. For the
period, each class paid the following transfer agent fees:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A UMB $ 1,053 .23
CLASS T UMB 399,735 .18
CLASS B UMB 34,820 .18
INSTITUTIONAL CLASS UMB 1,174 .27
$ 436,782
UMB also has a sub-contract with Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, under which FSC maintains the fund's accounting records.
The fee is based on the level of average net assets for the month plus
out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) above the
following annual rates or range of annual rates of average net assets for
each class:
FMR REIMBURSEME
EXPENSE NT
LIMITATIONS
CLASS A .90% $ 13,721
INSTITUTIONAL CLASS .75% 6,648
$ 20,369
In addition, the fund has entered into arrangements with its custodian and
each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses. During
the period, the fund's custodian fees were reduced by $192 under the
custodian arrangement, and each applicable class' expenses were reduced as
follows under the transfer agent arrangements:
TRANSFER
AGENT
INTEREST
CREDITS
CLASS T $ 1,299
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996 A
CLASS A
From net interest income $ 24,908 $ 1,272
In excess of net interest income 40 -
Total $ 24,948 $ 1,272
CLASS T
From net interest income $ 12,294,544 $ 29,846,407
In excess of net interest income 79,597 -
Total $ 12,374,141 $ 29,846,407
CLASS B
From net interest income $ 970,856 $ 1,818,282
In excess of net interest income 6,838 -
Total $ 977,694 $ 1,818,282
INSTITUTIONAL CLASS
From net interest income $ 26,446 $ 46,808
In excess of net interest income 169 -
Total $ 26,615 $ 46,808
$ 13,403,398 $ 31,712,769
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 A 1997 1996 A
CLASS A 125,129 18,733 $ 1,471,806 $ 218,730
Shares sold
Reinvestment of distributions 926 78 10,857 910
Shares redeemed (5,563) (1,632) (65,409) (19,114)
Net increase (decrease) 120,492 17,179 $ 1,417,254 $ 200,526
CLASS T 1,304,002 6,539,718 $ 15,296,238 $ 77,377,354
Shares sold
Reinvestment of distributions 643,930 1,597,120 7,576,575 18,850,193
Shares redeemed (7,486,879) (14,847,912) (87,957,097) (174,513,587)
Net increase (decrease) (5,538,947) (6,711,074) $ (65,084,284) $ (78,286,040)
CLASS B 353,186 1,193,226 $ 4,139,591 $ 14,098,773
Shares sold
Reinvestment of distributions 49,002 95,237 575,380 1,121,011
Shares redeemed (383,811) (664,327) (4,505,190) (7,798,479)
Net increase (decrease) 18,377 624,136 $ 209,781 $ 7,421,305
INSTITUTIONAL CLASS 23,272 140,918 $ 273,956 $ 1,653,013
Shares sold
Reinvestment of distributions 1,644 3,139 19,334 36,744
Shares redeemed (37,778) (77,867) (444,071) (904,149)
Net increase (decrease) (12,862) 66,190 $ (150,781) $ 785,608
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 13,963
CLASS T 10,258
CLASS B 6,324
INSTITUTIONAL CLASS 6,743
$ 37,288
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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
NATURAL RESOURCES
FUND - CLASS A, CLASS T AND CLASS B
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 10 The 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.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories as bonds. If you have a short investment time
horizon, you might want to consider moving some of your investment into a
money market fund, which seeks income and a stable share price by investing
in high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). The initial offering of Class A
shares took place on September 3, 1996. Class A shares bear a 0.25% 12b-1
fee. Returns prior to September 3, 1996 are those of Class T, the original
class of the fund, and reflect Class T's 0.50% 12b-1 fee (0.65% prior to
January 1, 1996). If Fidelity had not reimbursed certain class expenses,
the past six months, past one year, past five years and life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Advisor Natural Resources - Class -3.25% 3.38% 114.70% 294.27%
A
Advisor Natural Resources - Class A -8.33% -2.04% 103.43% 273.57%
(incl. max. 5.25% sales charge)
S&P 500(registered trademark) 14.72% 25.13% 120.23% 331.74%
Natural Resources Funds Average -1.27% 6.35% 86.56% n/a
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, six months, one year, five years or 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 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 43 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - Class A 3.38% 16.51% 15.81%
Advisor Natural Resources - Class A -2.04% 15.26% 15.15%
(incl. max. 5.25% sales charge)
S&P 500 25.13% 17.10% 16.94%
Natural Resources Funds Average 6.35% 12.96% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' cumulative return and
show you what would have happened if Class A shares had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
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
1996/11/30 40547.87 40479.97
1996/12/31 40614.39 39678.06
1997/01/31 41272.38 42157.15
1997/02/28 38541.72 42487.66
1997/03/31 37538.29 40741.84
1997/04/30 37373.79 43174.13
$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 the current maximum 5.25% sales charge
was paid. As the chart shows, by April 30, 1997, the value of the
investment would have grown to $37,357 - a 273.57% 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 $43,174 - a 331.74% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. The stock market, for
example, has a history of
long-term growth and short-term
volatility. 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)
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). 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 APRIL 30, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Advisor Natural Resources - Class -3.08% 3.60% 115.15% 295.10%
T
Advisor Natural Resources - Class T -6.47% -0.03% 107.62% 281.27%
(incl. max. 3.50% sales charge)
S&P 500(registered trademark) 14.72% 25.13% 120.23% 331.74%
Natural Resources Funds Average -1.27% 6.35% 86.56% n/a
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage terms
over a set period - in this case, six months, one year, five years or 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 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 43 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - Class T 3.60% 16.56% 15.84%
Advisor Natural Resources - Class T -0.03% 15.73% 15.40%
(incl. max. 3.50% sales charge)
S&P 500 25.13% 17.10% 16.94%
Natural Resources Funds Average 6.35% 12.96% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' cumulative return and
show you what would have happened if Class T shares had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
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
1996/11/30 41328.09 40479.97
1996/12/31 41410.95 39678.06
1997/01/31 42077.79 42157.15
1997/02/28 39310.39 42487.66
1997/03/31 38276.79 40741.84
1997/04/30 38126.75 43174.13
$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 the current maximum 3.50% sales charge
was paid. As the chart shows, by April 30, 1997, the value of the
investment would have grown to $38,127 - a 281.27% 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 $43,174 - a 331.74% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. The stock market, for
example, has a history of
long-term growth and
short-term volatility. 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)
FIDELITY 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). The initial offering of Class B
shares took place on 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 six months, past one year, past five years and life of
fund total return figures are 5%, 5%, 2% 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 APRIL 30, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Advisor Natural Resources - Class -3.36% 2.93% 112.50% 290.23%
B
Advisor Natural Resources - Class B -7.90% -1.91% 110.50% 290.23%
(incl. contingent deferred sales
charge)
S&P 500(registered trademark) 14.72% 25.13% 120.23% 331.74%
Natural Resources Funds Average -1.27% 6.35% 86.56% n/a
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case, six months, one year, five years or 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 mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 43 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - Class B 2.93% 16.27% 15.68%
Advisor Natural Resources - Class B -1.91% 16.05% 15.68%
(incl. contingent deferred sales charge)
S&P 500 25.13% 17.10% 16.94%
Natural Resources Funds Average 6.35% 12.96% n/a
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' cumulative return and
show you what would have happened if Class B shares had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
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
1996/11/30 42407.95 40479.97
1996/12/31 42477.53 39678.06
1997/01/31 43133.96 42157.15
1997/02/28 40283.70 42487.66
1997/03/31 39212.69 40741.84
1997/04/30 39022.67 43174.13
$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 April 30, 1997, the
value of the investment would have been $39,023 - a 290.23% 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 $43,174 - a 331.74% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. The stock market, for
example, has a history of
long-term growth and short-term
volatility. 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
NOTE TO SHAREHOLDERS: Larry Rakers became Portfolio Manager of Fidelity
Advisor Natural Resources Fund on January 7, 1997.
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the six months that ended April 30, 1997, the fund's Class A shares
had a total return of -3.25%, while Class T shares returned -3.08% and
Class B shares returned -3.36%. During the same period, the natural
resources funds average tracked by Lipper Analytical Services returned
- -1.27%. For the 12 months that ended April 30, 1997, Class A, Class T and
Class B shares had total returns of 3.38%, 3.60% and 2.93%, respectively,
compared to 6.35% for the natural resources funds average. The Standard &
Poor's 500 Index returned 14.72% for the six-month period and 25.13% for
the 12-month period.
Q. WHAT WERE THE FACTORS BEHIND THE FUND'S PERFORMANCE?
A. In January, oil peaked at approximately $26 a barrel and natural gas at
about $4 per thousand cubic feet. Both have come down significantly from
those levels. The fund had been overweighted in the kinds of stocks most
sensitive to energy prices. When those prices weakened, our performance
suffered.
Q. YOU TOOK OVER THE FUND IN JANUARY. CAN YOU DISCUSS SOME OF THE CHANGES
YOU'VE MADE?
A. There have been many changes as a result of the decline I mentioned in
oil and gas prices. While we still have significant oil and gas holdings,
I've tried to replace the most price-sensitive stocks with others that hold
up better in an environment of stable to lower oil and gas prices.
Q. SPECIFICALLY, WHAT CATEGORIES HAVE YOU BEEN ACQUIRING?
A. If you were to rank energy companies according to their sensitivity to
oil and gas prices, the most sensitive would be the energy service and
drilling companies, followed by the pure exploration and production (E&P)
companies, followed by the integrated energy companies and refiners. So for
the most part I have bought the refiners and integrated companies and sold
stocks in the other categories. In the case of deep water energy service
and drilling companies, where I believe the supply/demand considerations
are still favorable, I have made some exceptions to that rule.
Q. WHAT MADE THE DEEP WATER ENERGY SERVICE AND DRILLING COMPANIES
ATTRACTIVE?
A. Generally, the lowest cost oil is now available from deep water sites.
That's because virtually all the low-cost sites on land and in shallow
water have already been exhausted. Technology has only recently made it
possible to exploit the deep water sites in a cost-effective way. If oil is
around $20 a barrel, and the economics of a particular site make it
profitable to drill for oil down to a price of $12 or $13 a barrel, that
should increase the demand for deep water drill rigs, and result in some
flexibility in how much exploration companies are willing to pay to use
those rigs. Based on this scenario, we reasoned that deep water energy
service and drilling companies would benefit from strong demand even if oil
went considerably lower than the $20 a barrel area.
Q. ARE THERE ANY OTHER CHANGES YOU'D LIKE TO MENTION?
A. I've increased the fund's position in the paper and forest products area
because I believe the supply/demand considerations bottomed out recently,
and the area now offers some compelling values.
Q. WHAT STOCKS DID WELL DURING THE PERIOD?
A. Tosco Corp. is an oil and gas refiner that has successfully implemented
cost-cutting measures, and it has also been acquiring the assets of other
companies. Schlumberger and Halliburton are both energy service companies
that have benefited from an environment of strong exploration activities.
They've enjoyed the twin advantages of higher pricing and increased volume.
Total SA is a French integrated oil company whose stock rose in response to
cost-cutting measures and production growth.
Q. HOW ABOUT STOCKS THAT DIDN'T PERFORM WELL?
A. Although we had already reduced our position in the stock because we
thought it was getting overvalued, we were still hurt by the news of
potential problems with the huge gold deposit that had been reported by
Bre-X Minerals Ltd. United Meridian is an E&P stock that was weak in
response to both declines in oil and gas prices and some disappointing
exploration results. The precious metals sector of the fund, which
comprised roughly 15% of our holdings at the end of the period,
underperformed due to continued weakness in gold and silver prices, which I
believe will remain a factor until the dollar weakens or we see more signs
of renewed inflation.
Q. WHAT'S YOUR OUTLOOK, LARRY?
A. Any outlook for natural resources investments must always be dependent
on the supply/demand fundamentals for the underlying commodities. Over the
very short term, I think oil prices should be steady to slightly lower, and
I'm neutral on the prospects for gas. In the late fall to early winter, gas
prices often benefit from favorable seasonal trends, as demand strengthens
due to the winter heating season. However, I expect a number of large
companies engaged in oil and gas exploration to increase their production
volume beginning in the third quarter of 1997. While this is good for those
companies on a short-term basis, for the industry as a whole, increased
production ultimately means greater supply and therefore weaker prices. So
on the one hand, I am currently emphasizing stocks that are less sensitive
to energy prices. However, the fund is also positioned to take advantage of
those projected production increases. The other part of my strategy for the
energy sector is to own the deep water drilling and service companies
because of the strong fundamentals I mentioned earlier. On other fronts,
the fundamentals for paper are steadily improving. I'm neutral on precious
metals - while I don't see significant upside potential near-term, I
believe the downside risk is minimal at these levels. And I like selected
base metals such as zinc.
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: long-term capital
growth and protection of the
purchasing power of
shareholders' capital by
investing primarily 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
START DATE: December 29,
1987
SIZE: as of April 30, 1997,
more than $669 million
MANAGER: Lawrence Rakers,
since January 1997; joined
Fidelity in 1993
(checkmark)
LARRY RAKERS ON INVESTING IN
NATURAL RESOURCES STOCKS:
"I first try to isolate sectors
where supply/demand
fundamentals are likely to
improve over current Wall
Street expectations. Within
those sectors, I look for stocks
with better valuations,
fundamentals or management
than is currently recognized.
With any type of resource
operation, whether it be oil,
gas, metals or minerals, you
look for companies that are
growing their production and
reserves faster than other
companies in the same
sector. If they are low-cost
producers, so much the
better. In addition to doing our
homework on the numbers, we
consider personal contact with
management a key factor in
our decision-making
process. Smart, experienced
management is especially
important when you're dealing
with natural resources stocks.
It's not a field for amateurs."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Total SA sponsored ADR 2.7 1.7
Tosco Corp. 2.0 0.6
Transocean Offshore, Inc. 2.0 1.4
Energy Ventures, Inc. 1.9 1.3
Boise Cascade Corp. 1.9 1.0
Schlumberger Ltd. 1.9 1.5
Euro-Nevada Mining Ltd. 1.9 1.3
Getchell Gold Corp. 1.8 1.2
Halliburton Co. 1.7 1.4
Unocal Corp. 1.7 0.0
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Energy 53.4 46.5
Basic Industries 21.0 24.9
Precious Metals 14.8 12.0
Transportation 2.3 2.6
Durables 1.0 0.9
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997 * AS OF OCTOBER 31, 1996 **
Row: 1, Col: 1, Value: 6.0
Row: 1, Col: 2, Value: 44.0
Row: 1, Col: 3, Value: 50.0
Stocks 95.7%
Short-term
investments 4.3%
FOREIGN
INVESTMENTS 20.1%
Stocks 94.7%
Short-term
investments 5.3%
FOREIGN
INVESTMENTS 28.4%
Row: 1, Col: 1, Value: 5.0
Row: 1, Col: 2, Value: 45.0
Row: 1, Col: 3, Value: 50.0
*
**
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.4%
Boeing Co. 25,000 $ 2,465,625
BASIC INDUSTRIES - 21.0%
CHEMICALS & PLASTICS - 3.0%
Agrium, Inc. 210,000 2,697,413
du Pont (E.I.) de Nemours & Co. 76,000 8,065,500
IMC Global, Inc. 67,000 2,470,625
Monsanto Co. 155,000 6,626,250
19,859,788
IRON & STEEL - 0.3%
Nucor Corp. 47,000 2,338,250
METALS & MINING - 7.2%
Alcan Aluminium Ltd. 155,000 5,257,433
Alumax, Inc. (a) 258,000 9,417,000
Aluminum Co. of America 83,900 5,862,513
Arizona Star Resource Corp. (a) 135,000 966,045
Asturiana del Zinc SA (a) 346,000 5,333,105
Asturiana del Zinc SA (a)(c) 45,000 693,612
Comalco Ltd. 193,900 984,396
Cominco Ltd. (a) 191,000 4,920,391
Elkem ASA 60,000 1,150,055
Helix Resources NL (a) 650,500 751,948
IMCO Recycling, Inc. 40,900 613,500
Inco Ltd. 150,000 4,803,392
JCI Ltd. 200,000 1,933,453
Minefinders (special warrants) (a)(c) 200,000 500,283
Metaleurop SA (a) 56,000 671,894
Metaleurop SA (warrants) (a) 16,000 26,053
Pasminco Ltd. 267,100 509,029
Pechiney SA Class A 96,000 3,587,093
47,981,195
PAPER & FOREST PRODUCTS - 10.5%
Alliance Forest Products, Inc. (a) 128,500 2,942,502
Alliance Forest Products (a)(c) 200,000 4,579,770
Boise Cascade Corp. 390,000 12,967,500
Bowater, Inc. 50,000 2,162,500
Buckeye Cellulose Corp. (a) 100,000 3,012,500
Champion International Corp. 50,000 2,325,000
Chesapeake Corp. 168,200 5,739,825
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Consolidated Papers, Inc. 25,000 $ 1,343,750
Domtar, Inc. 100,000 851,551
Fibermark Inc. 25,000 590,625
Fort Howard Corp. (a) 186,900 6,436,369
Georgia-Pacific Corp. 45,000 3,510,000
Harmac Pacific, Inc. 50,000 497,334
International Paper Co. 15,000 633,750
Jefferson Smurfit Corp. (a) 226,300 2,941,900
Mail-Well, Inc. 101,100 2,767,613
Mercer International, Inc. SBI 313,100 2,583,075
Stone Container Corp. 135,000 1,366,875
Union Camp Corp. 25,000 1,215,625
Weyerhaeuser Co. 60,000 2,745,000
Willamette Industries, Inc. 146,700 9,352,125
70,565,189
TOTAL BASIC INDUSTRIES 140,744,422
CONSTRUCTION & REAL ESTATE - 0.6%
CONSTRUCTION - 0.3%
McDermott (J. Ray) SA 100,000 1,712,500
ENGINEERING - 0.3%
EG & G, Inc. 123,800 2,336,725
TOTAL CONSTRUCTION & REAL ESTATE 4,049,225
DURABLES - 1.0%
AUTOS, TIRES, & ACCESSORIES - 1.0%
Eaton Corp. 90,000 6,738,750
ENERGY - 53.4%
ENERGY SERVICES - 15.7%
Atwood Oceanics, Inc. (a) 50,000 3,062,500
BJ Services Co. (a) 52,500 2,474,063
Baker Hughes, Inc. 130,000 4,485,000
Diamond Offshore Drilling, Inc. (a) 167,600 10,789,250
Energy Ventures, Inc. (a) 195,000 13,040,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Falcon Drilling, Inc. (a) 139,800 $ 5,347,350
Global Industries Ltd. (a) 351,600 7,383,600
Halliburton Co. 163,970 11,580,381
Nabors Industries, Inc. (a) 152,700 2,863,125
Noble Drilling Corp. (a) 265,000 4,604,375
Pool Energy Services Co. (a) 90,000 1,170,000
Schlumberger Ltd. 115,000 12,736,250
Transocean Offshore, Inc. 221,805 13,446,928
Varco International, Inc. (a) 50,000 1,150,000
Weatherford Enterra, Inc. (a) 185,000 5,873,750
Western Atlas, Inc. 90,000 5,580,000
105,587,197
OIL & GAS - 37.7%
Abacan Resource Corp. (a) 715,000 4,602,813
Amerada Hess Corp. 96,000 4,668,000
American Exploration Co. (a) 100,000 1,125,000
Anadarko Petroleum Corp. 88,000 4,829,000
Beau Canada Exploration Ltd. (a) 1,000,000 2,218,326
Belden & Blake Corp. (a) 165,000 4,248,750
British Petroleum PLC ADR 71,128 9,788,991
Burlington Resources, Inc. 120,200 5,093,475
Canadian Natural Resources Ltd. (a) 200,000 4,765,823
Chesapeake Energy Corp. (a) 298,500 4,514,813
Coastal Corp. (The) 185,000 8,787,500
Comstock Resources, Inc. (a) 300,000 2,550,000
Cooper Cameron Corp. (a) 88,300 6,291,375
Elf Aquitaine SA sponsored ADR 62,500 3,039,063
Eni Spa 1,000,000 5,093,944
Enron Oil & Gas Co. 231,900 4,319,138
Exxon Corp. 117,000 6,625,125
Flores & Rucks, Inc. (a) 173,000 7,547,125
Forcenergy Gas Exploration, Inc. (a) 286,500 8,881,500
KCS Group, Inc. 79,700 2,590,250
Kerr-McGee Corp. 85,000 5,131,875
Louisiana Land & Exploration Co. 68,400 3,420,000
Murphy Oil Corp. 139,500 6,068,250
Newfield Exploration Co. (a) 121,400 2,321,775
Noble Affiliates, Inc. 60,000 2,145,000
Occidental Petroleum Corp. 251,400 5,562,225
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Oryx Energy Co. (a) 160,000 $ 3,200,000
Penn West Petroleum Ltd. (a) 100,000 1,127,053
Pennzoil Co. 120,000 5,910,000
Petsec Energy Ltd. sponsored ADR 49,700 1,068,550
Pogo Producing Co. 69,000 2,527,125
Renaissance Energy Ltd. (a) 200,000 5,538,660
Rio Alto Exploration Ltd. (a) 250,000 1,744,248
Royal Dutch Petroleum Co. ADR 60,000 10,815,000
Santa Fe Energy Resources, Inc. (a) 320,000 4,520,000
Stone Energy Corp. (a) 115,900 3,100,325
Swift Energy Co. (a) 35,000 739,375
Texaco, Inc. 103,000 10,866,500
Tosco Corp. 456,100 13,511,963
Total Petroleum (North America) Ltd. 132,200 1,296,032
Total SA sponsored ADR 437,000 18,190,125
Ultramar Diamond Shamrock Corp. 40,000 1,285,000
Union Pacific Resources Group, Inc. 263,520 7,147,980
Unit Corp. (a) 140,000 1,190,000
United Meridian Corp. (a) 250,200 7,099,425
Unocal Corp. 291,445 11,111,341
Valero Energy Corp. 142,700 5,012,338
Vastar Resources, Inc. 101,200 3,162,500
Vintage Petroleum, Inc. 186,000 5,254,500
Woodside Petroleum Ltd. 130,200 1,037,266
252,684,442
TOTAL ENERGY 358,271,639
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
ELECTRICAL EQUIPMENT - 0.8%
Anixter International, Inc. 358,000 5,101,500
NONDURABLES - 0.2%
TOBACCO - 0.2%
Schweitzer-Mauduit International, Inc. 50,000 1,631,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - 14.8%
Agnico Eagle Mines Ltd. 125,000 $ 1,252,281
Bakyrchik Gold PLC (a) 169,000 397,839
Barrick Gold Corp. 485,000 10,776,235
Bema Gold Corp. (a) 177,100 1,210,279
Buffelsfontein Gold Mines Ltd. (a) 380,000 1,495,054
Compania de Minas Buenaventura SA
Class B sponsored ADR 182,400 3,967,200
Emperor Mines Ltd. (a) 319,000 473,394
Euro-Nevada Mining Ltd. 435,400 12,493,857
Evander Gold Mines Ltd. 141,400 715,265
First Dynasty Mines Ltd. (a) 566,600 1,135,268
Franco-Nevada Mining Corp. 100,000 4,651,329
Francisco Gold Corp. (a) 51,000 799,241
Francisco Gold (special warrants) (a)(c) 62,500 902,944
Getchell Gold Corp. (a) 322,000 12,356,750
Greenstone Resources Ltd. (a) 812,700 7,676,582
Greenstone Resources Ltd. (warrants) (a) 50,700 181,402
Indochina Goldfields Ltd. (a) 188,300 1,731,479
Indochina Goldfields Ltd. (special warrants) (a) 170,000 1,508,492
Industrias Penoles SA 600,000 2,807,547
Kalahari Goldridge Mng. Co. Ltd. 1,200,000 863,309
Kinross Gold Corp. (a) 329,100 1,789,803
Mentor Exploration & Development Co. Ltd. (a) 160,000 1,442,628
Meridian Gold, Inc. Installment Receipt (d) 1,190,000 3,448,782
Newmont Mining Corp. 297,900 10,314,788
Pan American Silver Corp. (a) 135,000 840,459
Queenston Mining, Inc. (a) 385,400 410,924
Randgold & Exploration Co. Ltd. (a) 930,900 5,859,982
Samax Gold Inc. (a) 29,000 115,174
Santa Fe Pacific Gold Corp. 100,000 1,475,000
Stillwater Mining Co. (a) 120,000 2,415,000
Sudbury Contact Mines Ltd. (a) 140,000 891,624
TVI Pacific, Inc. (a) 459,200 269,451
TVX Gold, Inc. (a) 100,000 558,160
West Rand Consolidated Mines Ltd. (Reg.) (a) 250,000 640,737
Western Areas Gold Mining Ltd. Ord. (a) 125,936 1,132,518
99,000,777
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.1%
LEASING & RENTAL - 0.1%
Mitcham Industries, Inc. (a) 148,900 $ 986,463
TECHNOLOGY - 0.1%
ELECTRONICS - 0.1%
Tower Semiconductor Ltd. (a) 48,700 608,750
TRANSPORTATION - 2.3%
RAILROADS - 2.3%
Burlington Northern Santa Fe Corp. 110,000 8,662,500
CSX Corp. 61,500 2,867,436
Illinois Central Corp., Series A 70,000 2,327,500
Wisconsin Central Transportation Corp. (a) 50,000 1,637,500
15,494,936
TOTAL COMMON STOCKS
(Cost $614,634,254) 635,093,337
CASH EQUIVALENTS - 5.3%
SHARES
Taxable Central Cash Fund
(Cost 35,706,420) (b) 35,706,420 35,706,420
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $650,340,674) $ 670,799,757
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
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $6,676,609 or 1.0% of net
assets.
4. Purchased on an installment basis. Market value reflects only those
payments made through April 30, 1997. The remaining installments
aggregating CAD 2,975,000 are 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 71.6%
Canada 15.8
France 3.8
South Africa 1.9
Netherlands 1.6
United Kingdom 1.5
Others (individually less than 1%) 3.8
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $650,340,674. Net unrealized appreciation aggregated
$20,459,083, of which $68,046,184 related to appreciated investment
securities and $47,587,101 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS APRIL 30, 1997 (UNAUDITED)
Investment in securities, at value (cost $650,340,674) - $ 670,799,757
See accompanying schedule
Receivable for investments sold 6,458,505
Receivable for fund shares sold 1,880,532
Dividends receivable 266,877
Interest receivable 194,779
Redemption fees receivable 481
Other receivables 48,019
Prepaid expenses 6,707
TOTAL ASSETS 679,655,657
LIABILITIES
Payable to custodian bank $ 790,656
Payable for investments purchased 5,275,675
Payable for fund shares redeemed 2,955,399
Accrued management fee 333,237
Distribution fees payable 293,563
Other payables and accrued expenses 242,723
TOTAL LIABILITIES 9,891,253
NET ASSETS $ 669,764,404
Net Assets consist of:
Paid in capital $ 603,833,584
Distributions in excess of net investment income (1,907,156)
Accumulated undistributed net realized gain (loss) on 47,378,973
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 20,459,003
investments and assets and liabilities in foreign
currencies
NET ASSETS $ 669,764,404
</TABLE>
CALCULATION OF MAXIMUM OFFERING PRICE $22.71
CLASS A:
NET ASSET VALUE and redemption price per share
($5,370,328 (divided by) 236,484 shares)
Maximum offering price per share (100/94.75 of $22.71) $23.97
CLASS T: $22.87
NET ASSET VALUE and redemption price per share
($604,935,669 (divided by) 26,455,821 shares)
Maximum offering price per share (100/96.50 of $22.87) $23.70
CLASS B: $22.59
NET ASSET VALUE and offering price per share
($49,951,681 (divided by) 2,211,266 shares) A
INSTITUTIONAL CLASS: $22.92
NET ASSET VALUE, offering price and redemption price
per share ($9,506,726 (divided by) 414,854 shares)
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>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 2,592,828
Dividends
Interest 819,410
TOTAL INCOME 3,412,238
EXPENSES
Management fee $ 2,100,446
Transfer agent fees 790,701
Distribution fees 1,828,891
Accounting fees and expenses 231,903
Non-interested trustees' compensation 1,230
Custodian fees and expenses 33,410
Registration fees 162,252
Audit 21,399
Legal 7,011
Miscellaneous 26,112
Total expenses before reductions 5,203,564
Expense reductions (95,355) 5,108,000
NET INVESTMENT INCOME (LOSS) (1,695,762)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 47,395,460
Foreign currency transactions (4,418) 47,391,042
Change in net unrealized appreciation (depreciation) on:
Investment securities (71,365,353)
Assets and liabilities in foreign currencies (177) (71,365,530)
NET GAIN (LOSS) (23,974,488)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (25,670,250)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ (1,695,762) $ (90,614)
Net investment income (loss)
Net realized gain (loss) 47,391,042 49,754,317
Change in net unrealized appreciation (depreciation) (71,365,530) 74,826,728
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (25,670,250) 124,490,431
FROM OPERATIONS
Distributions to shareholders (321,641) -
From net investment income
In excess of net investment income (211,394) -
From net realized gain (41,626,013) (10,221,079)
TOTAL DISTRIBUTIONS (42,159,048) (10,221,079)
Share transactions - net increase (decrease) 87,102,464 260,016,652
TOTAL INCREASE (DECREASE) IN NET ASSETS 19,273,166 374,286,004
NET ASSETS
Beginning of period 650,491,238 276,205,234
End of period (including under (over) distribution of net $ 669,764,404 $ 650,491,238
investment income of $(1,907,156) and $376,703,
respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997
(UNAUDITED) 1996 E
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 25.11 $ 23.65
Income from Investment Operations
Net investment income (loss) (.09) .00
Net realized and unrealized gain (loss) (.60) 1.46
Total from investment operations (.69) 1.46
Less Distributions
From net investment income (.08) -
In excess of net investment income (.06) -
From net realized gain (1.57) -
Total distributions (1.71) -
Net asset value, end of period $ 22.71 $ 25.11
TOTAL RETURN B, C (3.25)% 6.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 5,370 $ 1,609
Ratio of expenses to average net assets 1.72% A, F 1.66% A,
F
Ratio of expenses to average net assets after expense reductions 1.69% A, G 1.58% A,
G
Ratio of net investment income (loss) to average net assets (.73)% A (.01)%
A
Portfolio turnover 108% A 137%
Average commission rate H $ .0294 $ .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 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 FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
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 - CLASS T
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 1994 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88 $ 14.11
beginning of period
Income from Investment
Operations
Net investment (.06) E .00 E (.05) E (.11) E .22 (.10)
income (loss)
Net realized and (.60) 6.56 2.00 .76 4.91 .79
unrealized gain
(loss)
Total from investment (.66) 6.56 1.95 .65 5.13 .69
operations
Less Distributions (.01) - - - - -
From net investment
income
In excess of net (.01) - - - - -
investment income
From net realized gain (1.57) (.69) (.26) (.68) (1.42) (.92)
Total distributions (1.59) (.69) (.26) (.68) (1.42) (.92)
Net asset value, $ 22.87 $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88
end of period
TOTAL RETURN B, C (3.08)% 35.01% 11.40% 3.97% 41.05% 5.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 604,936 $ 602,915 $ 272,979 $ 199,361 $ 40,309 $ 7,087
(000 omitted)
Ratio of expenses to 1.48% A 1.59% 1.86% 2.10% 2.63% 3.27%
average net assets G D
Ratio of expenses to 1.46% A, 1.56% 1.84% 2.07% 2.62% 3.27%
average net assets H H H H H
after expense
reductions
Ratio of net investment (.46)% .00% (.30)% (.67)% (1.18)% (1.22)
income (loss) to A %
average net assets
Portfolio turnover 108% A 137% 161% 125% 208% 248%
Average commission $ .0294 $ .0337
rate F
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D LIMITED IN ACCORDANCE WITH A STATE
EXPENSE LIMITATION. E NET INVESTMENT INCOME (LOSS) PER SHARE
HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. F FOR FISCAL YEARS BEGINNING ON
OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING
ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER. G FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER. H 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).
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 E
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 24.88 $ 19.23 $ 18.87
Income from Investment Operations
Net investment income (loss) (.12) (.15) (.03)
Net realized and unrealized gain (loss) (.60) 6.49 .39
Total from investment operations (.72) 6.34 .36
Less Distributions
From net realized gain (1.57) (.69) -
Net asset value, end of period $ 22.59 $ 24.88 $ 19.23
TOTAL RETURN B, C (3.36)% 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 49,952 $ 36,106 $ 2,508
Ratio of expenses to average net assets 2.07% A 2.28% 2.23% A,
F
Ratio of expenses to average net assets after 2.04% A, 2.24% G 2.21% A,
expense reductions G G
Ratio of net investment income (loss) to average (1.06)% (.68)% (.67)%
net assets A A
Portfolio turnover 108% A 137% 161%
Average commission rate H $ .0294 $ .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 FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 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
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30, 1997
(UNAUDITED) 1996 1995 E
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 25.17 $ 19.27 $ 18.87
Income from Investment Operations
Net investment income (loss) .00 .04 (.01)
Net realized and unrealized gain (loss) (.61) 6.55 .41
Total from investment operations (.61) 6.59 .40
Less Distributions
From net investment income (.04) - -
In excess of net investment income (.03) - -
From net realized gain (1.57) (.69) -
Total distributions (1.64) (.69) -
Net asset value, end of period $ 22.92 $ 25.17 $ 19.27
TOTAL RETURN B, C (2.88)% 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 9,507 $ 9,860 $ 718
Ratio of expenses to average net assets 1.06% A 1.44% 1.68% A,
F
Ratio of expenses to average net assets after 1.03% A, 1.39% G 1.66% A,
expense reductions G G
Ratio of net investment income (loss) to average (.02)% .17% (.13)% A
net assets A
Portfolio turnover 108% A 137% 161%
Average commission rate H $ .0294 $ .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 FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Natural Resources (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 T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Investment income, realized and unrealized capital gains and losses, the
common expenses of the fund, redemption fees, 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 (including restricted securities) for which
exchange 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 in foreign currency
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
exchange rates on investments in securities are included with the net
realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income is accrued as earned. Investment income is recorded net of foreign
taxes withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for 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.
Distributions in excess of 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES. Shares purchased on or after March 1, 1997 and held in the
fund less than 60 days are subject to a redemption fee equal to 1.00% of
the proceeds of the redeemed shares. The fee, which is retained by the
fund, is accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
Losses may arise from changes in the value of the foreign currency or if
the counterparties do not perform under the contracts' terms. The U.S.
dollar value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of FMR, may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities. Dividends from
the Cash Fund are declared daily and paid monthly from net interest income.
Income distributions received by the fund are recorded as interest income
in the accompanying financial statements.
2. OPERATING POLICIES - CONTINUED
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, the
fund had no investments in restricted securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $383,995,460 and $350,806,348, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2500% to .5200% for the period. The annual individual
fund fee rate is .30%. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
For the period, the management fee was equivalent to an annualized rate of
.60% of average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
each class of shares, (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 4,642 $ 4,642
CLASS T 1,592,733 1,592,733
CLASS B 231,516 57,878
$ 1,828,891 $ 1,655,253
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the fund,
respectively, and the proceeds of a contingent deferred sales charge levied
on Class B share redemptions occurring within six years of purchase (five
years prior to January 2, 1997). The Class B charge is based on declining
rates which range from 5% to 1%(4% to 1% prior to January 2, 1997) of the
lesser of the cost of shares at the initial date of purchase or the net
asset value of the redeemed shares, excluding any reinvested dividends and
capital gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities, dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 119,158 $ 96,467
CLASS T 784,871 576,763
CLASS B 58,571 0 *
$ 962,600 $ 673,230
* WHEN CLASS B SHARES ARE INITIALLY 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. Each class of the fund has entered into a separate
transfer, dividend disbursing, and shareholder servicing agent
(collectively referred to as the Transfer Agents) contract with respect to
its shares. The Transfer Agents receive account fees and asset-based fees
that vary according to the account size and type of account of the
shareholders of the respective classes of the fund. For the period, the
following amounts were paid to each transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC * $ 5,719 .31
CLASS T** FIIOC * 714,555 .23
CLASS B FIIOC * 60,954 .27
INSTITUTIONAL CLASS FIIOC * 9,682 .17
$ 790,910
* FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC. (FIIOC) AN
AFFILIATE OF FMR.
** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS THE
TRANSFER AGENT FOR THE FUND'S CLASS T SHARES.. STATE STREET, HOWEVER, HAD
DELEGATED CERTAIN
TRANSFER, DIVIDEND DISBURSING, AND SHAREHOLDER SERVICES TO FIIOC FOR WHICH
FIIOC RECEIVED ITS ALLOCABLE SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., 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 $104,469 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 $8,094.
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 $548.
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses were
reduced by $81,369 under this arrangement.
5. EXPENSE REDUCTIONS - CONTINUED
In addition, the fund has entered into arrangement with its custodian and
each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses. During
the period, the fund's custodian fees were reduced by $4,909 under the
custodian arrangement, and Class T expenses were reduced by $435 under the
transfer agent arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER
1997 31,1996 A
CLASS A
From net investment income $ 8,075 $ -
In excess of net investment income 5,307 -
From net realized gain 150,076 -
Total $ 163,458 $
CLASS T
From net investment income $ 294,534 $ -
In excess of net investment income 193,579 -
From net realized gain 38,299,867 10,063,536
Total $ 38,787,980 $ 10,063,536
CLASS B
From net realized gain 2,464,971 127,176
INSTITUTIONAL CLASS
From net investment income $ 19,032 $ -
In excess of net investment income 12,508 -
From net realized gain 711,099 30,367
Total $ 742,639 $ 30,367
$ 42,159,048 $ 10,221,079
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 A 1997 1996 A
CLASS A 182,759 68,176 $ 4,479,365 $ 1,669,719
Shares sold
Reinvestment of distributions 6,590 - 161,464 -
Shares redeemed (16,947) (4,094) (406,295) (102,601)
Redemption fees - - 139 -
Net increase (decrease) 172,402 64,082 $ 4,234,673 $ 1,567,118
CLASS T 6,468,027 16,012,851 $ 158,874,718 $ 364,247,050
Shares sold
Reinvestment of distributions 1,447,419 462,106 35,664,385 9,214,395
Shares redeemed (5,457,361) (6,657,398) (131,189,069) (152,716,059)
Redemption fees - - 17,311 -
Net increase (decrease) 2,458,085 9,817,559 $ 63,367,345 $ 220,745,386
CLASS B 950,701 1,475,147 $ 23,175,397 $ 33,567,815
Shares sold
Reinvestment of distributions 96,174 5,653 2,345,681 112,491
Shares redeemed (286,647) (160,185) (6,694,447) (3,677,194)
Redemption fees - - 1,573 -
Net increase (decrease) 760,228 1,320,615 $ 18,828,204 $ 30,003,112
INSTITUTIONAL CLASS 269,162 759,537 $ 6,698,555 $ 17,292,506
Shares sold
Reinvestment of distributions 29,515 1,464 727,819 29,239
Shares redeemed (275,595) (406,499) (6,754,401) (9,620,709)
Redemption fees - - 269 -
Net increase (decrease) 23,082 354,502 $ 672,242 $ 7,701,036
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 16,803
CLASS T 118,712
CLASS B 16,884
INSTITUTIONAL CLASS 9,853
$ 162,252
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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Fidelity Investments Institutional Operations Company, Inc.
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 TechnoQuant(trademark)
Growth Fund
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(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
NATURAL RESOURCES
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 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.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Through the first four months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories as bonds. If you have a short investment time
horizon, you might want to consider moving some of your investment into a
money market fund, which seeks income and a stable share price by investing
in high-quality, short-term investments. Of course, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR 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. Total return reflects
the change in the value of an investment, assuming reinvestment of the
class' dividend income and capital gains (the profits earned upon the sale
of securities that have grown in value). The initial offering of
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 APRIL 30, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Advisor Natural Resources - -2.88% 3.84% 116.01% 296.67%
Institutional Class
S&P 500(registered trademark) 14.72% 25.13% 120.23% 331.74%
Natural Resources Funds -1.27% 6.35% 86.56% n/a
Average
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, six months, 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 mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 43 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Advisor Natural Resources - 3.84% 16.65% 15.89%
Institutional Class
S&P 500 25.13% 17.10% 16.94%
Natural Resources Funds Average 6.35% 12.96% n/a
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' 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
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
1996/11/30 42938.48 40479.97
1996/12/31 43042.28 39678.06
1997/01/31 43734.56 42157.15
1997/02/28 40878.92 42487.66
1997/03/31 39823.20 40741.84
1997/04/30 39650.13 43174.13
$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 April
30, 1997, the value of the investment would have grown to $39,667 - a
296.67% 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 $43,174 - a 331.74% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. The stock market, for
example, has a history of
long-term growth and short-term
volatility. 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
NOTE TO SHAREHOLDERS: Larry Rakers became Portfolio Manager of Fidelity
Advisor Natural Resources Fund on January 7, 1997.
Q. HOW DID THE FUND PERFORM, LARRY?
A. For the six months that ended April 30, 1997, the fund's Institutional
Class shares had a total return of -2.88%. During the same period, the
natural resources funds average tracked by Lipper Analytical Services
returned -1.27%. For the 12 months that ended April 30, 1997, Institutional
Class shares had a total return of 3.84%, compared to 6.35% for the natural
resources funds average. The Standard & Poor's 500 Index returned 14.72%
for the six-month period and 25.13% for the 12-month period.
Q. WHAT WERE THE FACTORS BEHIND THE FUND'S PERFORMANCE?
A. In January, oil peaked at approximately $26 a barrel and natural gas at
about $4 per thousand cubic feet. Both have come down significantly from
those levels. The fund had been overweighted in the kinds of stocks most
sensitive to energy prices. When those prices weakened, our performance
suffered.
Q. YOU TOOK OVER THE FUND IN JANUARY. CAN YOU DISCUSS SOME OF THE CHANGES
YOU'VE MADE?
A. There have been many changes as a result of the decline I mentioned in
oil and gas prices. While we still have significant oil and gas holdings,
I've tried to replace the most price-sensitive stocks with others that hold
up better in an environment of stable to lower oil and gas prices.
Q. SPECIFICALLY, WHAT CATEGORIES HAVE YOU BEEN ACQUIRING?
A. If you were to rank energy companies according to their sensitivity to
oil and gas prices, the most sensitive would be the energy service and
drilling companies, followed by the pure exploration and production (E&P)
companies, followed by the integrated energy companies and refiners. So for
the most part I have bought the refiners and integrated companies and sold
stocks in the other categories. In the case of deep water energy service
and drilling companies, where I believe the supply/demand considerations
are still favorable, I have made some exceptions to that rule.
Q. WHAT MADE THE DEEP WATER ENERGY SERVICE AND DRILLING COMPANIES
ATTRACTIVE?
A. Generally, the lowest cost oil is now available from deep water sites.
That's because virtually all the low-cost sites on land and in shallow
water have already been exhausted. Technology has only recently made it
possible to exploit the deep water sites in a cost-effective way. If oil is
around $20 a barrel, and the economics of a particular site make it
profitable to drill for oil down to a price of $12 or $13 a barrel, that
should increase the demand for deep water drill rigs, and result in some
flexibility in how much exploration companies are willing to pay to use
those rigs. Based on this scenario, we reasoned that deep water energy
service and drilling companies would benefit from strong demand even if oil
went considerably lower than the $20 a barrel area.
Q. ARE THERE ANY OTHER CHANGES YOU'D LIKE TO MENTION?
A. I've increased the fund's position in the paper and forest products area
because I believe the supply/demand considerations bottomed out recently,
and the area now offers some compelling values.
Q. WHAT STOCKS DID WELL DURING THE PERIOD?
A. Tosco Corp. is an oil and gas refiner that has successfully implemented
cost-cutting measures, and it has also been acquiring the assets of other
companies. Schlumberger and Halliburton are both energy service companies
that have benefited from an environment of strong exploration activities.
They've enjoyed the twin advantages of higher pricing and increased volume.
Total SA is a French integrated oil company whose stock rose in response to
cost-cutting measures and production growth.
Q. HOW ABOUT STOCKS THAT DIDN'T PERFORM WELL?
A. Although we had already reduced our position in the stock because we
thought it was getting overvalued, we were still hurt by the news of
potential problems with the huge gold deposit that had been reported by
Bre-X Minerals Ltd. United Meridian is an E&P stock that was weak in
response to both declines in oil and gas prices and some disappointing
exploration results. The precious metals sector of the fund, which
comprised roughly 15% of our holdings at the end of the period,
underperformed due to continued weakness in gold and silver prices, which I
believe will remain a factor until the dollar weakens or we see more signs
of renewed inflation.
Q. WHAT'S YOUR OUTLOOK, LARRY?
A. Any outlook for natural resources investments must always be dependent
on the supply/demand fundamentals for the underlying commodities. Over the
very short term, I think oil prices should be steady to slightly lower, and
I'm neutral on the prospects for gas. In the late fall to early winter, gas
prices often benefit from favorable seasonal trends, as demand strengthens
due to the winter heating season. However, I expect a number of large
companies engaged in oil and gas exploration to increase their production
volume beginning in the third quarter of 1997. While this is good for those
companies on a short-term basis, for the industry as a whole, increased
production ultimately means greater supply and therefore weaker prices. So
on the one hand, I am currently emphasizing stocks that are less sensitive
to energy prices. However, the fund is also positioned to take advantage of
those projected production increases. The other part of my strategy for the
energy sector is to own the deep water drilling and service companies
because of the strong fundamentals I mentioned earlier. On other fronts,
the fundamentals for paper are steadily improving. I'm neutral on precious
metals - while I don't see significant upside potential near-term, I
believe the downside risk is minimal at these levels. And I like selected
base metals such as zinc.
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: long-term capital
growth and protection of the
purchasing power of
shareholders' capital by
investing primarily 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
START DATE: December 29,
1987
SIZE: as of April 30, 1997,
more than $669 million
MANAGER: Lawrence Rakers,
since January 1997; joined
Fidelity in 1993
(checkmark)
LARRY RAKERS ON INVESTING IN
NATURAL RESOURCES STOCKS:
"I first try to isolate sectors
where supply/demand
fundamentals are likely to
improve over current Wall
Street expectations. Within
those sectors, I look for stocks
with better valuations,
fundamentals or management
than is currently recognized.
With any type of resource
operation, whether it be oil,
gas, metals or minerals, you
look for companies that are
growing their production and
reserves faster than other
companies in the same
sector. If they are low-cost
producers, so much the
better. In addition to doing our
homework on the numbers, we
consider personal contact with
management a key factor in
our decision-making
process. Smart, experienced
management is especially
important when you're dealing
with natural resources stocks.
It's not a field for amateurs."
INVESTMENT CHANGES
TOP TEN STOCKS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Total SA sponsored ADR 2.7 1.7
Tosco Corp. 2.0 0.6
Transocean Offshore, Inc. 2.0 1.4
Energy Ventures, Inc. 1.9 1.3
Boise Cascade Corp. 1.9 1.0
Schlumberger Ltd. 1.9 1.5
Euro-Nevada Mining Ltd. 1.9 1.3
Getchell Gold Corp. 1.8 1.2
Halliburton Co. 1.7 1.4
Unocal Corp. 1.7 0.0
TOP FIVE MARKET SECTORS AS OF APRIL 30, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Energy 53.4 46.5
Basic Industries 21.0 24.9
Precious Metals 14.8 12.0
Transportation 2.3 2.6
Durables 1.0 0.9
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1997 * AS OF OCTOBER 31, 1996 **
Row: 1, Col: 1, Value: 6.0
Row: 1, Col: 2, Value: 44.0
Row: 1, Col: 3, Value: 50.0
Stocks 95.7%
Short-term
investments 4.3%
FOREIGN
INVESTMENTS 20.1%
Stocks 94.7%
Short-term
investments 5.3%
FOREIGN
INVESTMENTS 28.4%
Row: 1, Col: 1, Value: 5.0
Row: 1, Col: 2, Value: 45.0
Row: 1, Col: 3, Value: 50.0
*
**
INVESTMENTS APRIL 30, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.4%
Boeing Co. 25,000 $ 2,465,625
BASIC INDUSTRIES - 21.0%
CHEMICALS & PLASTICS - 3.0%
Agrium, Inc. 210,000 2,697,413
du Pont (E.I.) de Nemours & Co. 76,000 8,065,500
IMC Global, Inc. 67,000 2,470,625
Monsanto Co. 155,000 6,626,250
19,859,788
IRON & STEEL - 0.3%
Nucor Corp. 47,000 2,338,250
METALS & MINING - 7.2%
Alcan Aluminium Ltd. 155,000 5,257,433
Alumax, Inc. (a) 258,000 9,417,000
Aluminum Co. of America 83,900 5,862,513
Arizona Star Resource Corp. (a) 135,000 966,045
Asturiana del Zinc SA (a) 346,000 5,333,105
Asturiana del Zinc SA (a)(c) 45,000 693,612
Comalco Ltd. 193,900 984,396
Cominco Ltd. (a) 191,000 4,920,391
Elkem ASA 60,000 1,150,055
Helix Resources NL (a) 650,500 751,948
IMCO Recycling, Inc. 40,900 613,500
Inco Ltd. 150,000 4,803,392
JCI Ltd. 200,000 1,933,453
Minefinders (special warrants) (a)(c) 200,000 500,283
Metaleurop SA (a) 56,000 671,894
Metaleurop SA (warrants) (a) 16,000 26,053
Pasminco Ltd. 267,100 509,029
Pechiney SA Class A 96,000 3,587,093
47,981,195
PAPER & FOREST PRODUCTS - 10.5%
Alliance Forest Products, Inc. (a) 128,500 2,942,502
Alliance Forest Products (a)(c) 200,000 4,579,770
Boise Cascade Corp. 390,000 12,967,500
Bowater, Inc. 50,000 2,162,500
Buckeye Cellulose Corp. (a) 100,000 3,012,500
Champion International Corp. 50,000 2,325,000
Chesapeake Corp. 168,200 5,739,825
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
Consolidated Papers, Inc. 25,000 $ 1,343,750
Domtar, Inc. 100,000 851,551
Fibermark Inc. 25,000 590,625
Fort Howard Corp. (a) 186,900 6,436,369
Georgia-Pacific Corp. 45,000 3,510,000
Harmac Pacific, Inc. 50,000 497,334
International Paper Co. 15,000 633,750
Jefferson Smurfit Corp. (a) 226,300 2,941,900
Mail-Well, Inc. 101,100 2,767,613
Mercer International, Inc. SBI 313,100 2,583,075
Stone Container Corp. 135,000 1,366,875
Union Camp Corp. 25,000 1,215,625
Weyerhaeuser Co. 60,000 2,745,000
Willamette Industries, Inc. 146,700 9,352,125
70,565,189
TOTAL BASIC INDUSTRIES 140,744,422
CONSTRUCTION & REAL ESTATE - 0.6%
CONSTRUCTION - 0.3%
McDermott (J. Ray) SA 100,000 1,712,500
ENGINEERING - 0.3%
EG & G, Inc. 123,800 2,336,725
TOTAL CONSTRUCTION & REAL ESTATE 4,049,225
DURABLES - 1.0%
AUTOS, TIRES, & ACCESSORIES - 1.0%
Eaton Corp. 90,000 6,738,750
ENERGY - 53.4%
ENERGY SERVICES - 15.7%
Atwood Oceanics, Inc. (a) 50,000 3,062,500
BJ Services Co. (a) 52,500 2,474,063
Baker Hughes, Inc. 130,000 4,485,000
Diamond Offshore Drilling, Inc. (a) 167,600 10,789,250
Energy Ventures, Inc. (a) 195,000 13,040,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Falcon Drilling, Inc. (a) 139,800 $ 5,347,350
Global Industries Ltd. (a) 351,600 7,383,600
Halliburton Co. 163,970 11,580,381
Nabors Industries, Inc. (a) 152,700 2,863,125
Noble Drilling Corp. (a) 265,000 4,604,375
Pool Energy Services Co. (a) 90,000 1,170,000
Schlumberger Ltd. 115,000 12,736,250
Transocean Offshore, Inc. 221,805 13,446,928
Varco International, Inc. (a) 50,000 1,150,000
Weatherford Enterra, Inc. (a) 185,000 5,873,750
Western Atlas, Inc. 90,000 5,580,000
105,587,197
OIL & GAS - 37.7%
Abacan Resource Corp. (a) 715,000 4,602,813
Amerada Hess Corp. 96,000 4,668,000
American Exploration Co. (a) 100,000 1,125,000
Anadarko Petroleum Corp. 88,000 4,829,000
Beau Canada Exploration Ltd. (a) 1,000,000 2,218,326
Belden & Blake Corp. (a) 165,000 4,248,750
British Petroleum PLC ADR 71,128 9,788,991
Burlington Resources, Inc. 120,200 5,093,475
Canadian Natural Resources Ltd. (a) 200,000 4,765,823
Chesapeake Energy Corp. (a) 298,500 4,514,813
Coastal Corp. (The) 185,000 8,787,500
Comstock Resources, Inc. (a) 300,000 2,550,000
Cooper Cameron Corp. (a) 88,300 6,291,375
Elf Aquitaine SA sponsored ADR 62,500 3,039,063
Eni Spa 1,000,000 5,093,944
Enron Oil & Gas Co. 231,900 4,319,138
Exxon Corp. 117,000 6,625,125
Flores & Rucks, Inc. (a) 173,000 7,547,125
Forcenergy Gas Exploration, Inc. (a) 286,500 8,881,500
KCS Group, Inc. 79,700 2,590,250
Kerr-McGee Corp. 85,000 5,131,875
Louisiana Land & Exploration Co. 68,400 3,420,000
Murphy Oil Corp. 139,500 6,068,250
Newfield Exploration Co. (a) 121,400 2,321,775
Noble Affiliates, Inc. 60,000 2,145,000
Occidental Petroleum Corp. 251,400 5,562,225
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Oryx Energy Co. (a) 160,000 $ 3,200,000
Penn West Petroleum Ltd. (a) 100,000 1,127,053
Pennzoil Co. 120,000 5,910,000
Petsec Energy Ltd. sponsored ADR 49,700 1,068,550
Pogo Producing Co. 69,000 2,527,125
Renaissance Energy Ltd. (a) 200,000 5,538,660
Rio Alto Exploration Ltd. (a) 250,000 1,744,248
Royal Dutch Petroleum Co. ADR 60,000 10,815,000
Santa Fe Energy Resources, Inc. (a) 320,000 4,520,000
Stone Energy Corp. (a) 115,900 3,100,325
Swift Energy Co. (a) 35,000 739,375
Texaco, Inc. 103,000 10,866,500
Tosco Corp. 456,100 13,511,963
Total Petroleum (North America) Ltd. 132,200 1,296,032
Total SA sponsored ADR 437,000 18,190,125
Ultramar Diamond Shamrock Corp. 40,000 1,285,000
Union Pacific Resources Group, Inc. 263,520 7,147,980
Unit Corp. (a) 140,000 1,190,000
United Meridian Corp. (a) 250,200 7,099,425
Unocal Corp. 291,445 11,111,341
Valero Energy Corp. 142,700 5,012,338
Vastar Resources, Inc. 101,200 3,162,500
Vintage Petroleum, Inc. 186,000 5,254,500
Woodside Petroleum Ltd. 130,200 1,037,266
252,684,442
TOTAL ENERGY 358,271,639
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
ELECTRICAL EQUIPMENT - 0.8%
Anixter International, Inc. 358,000 5,101,500
NONDURABLES - 0.2%
TOBACCO - 0.2%
Schweitzer-Mauduit International, Inc. 50,000 1,631,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - 14.8%
Agnico Eagle Mines Ltd. 125,000 $ 1,252,281
Bakyrchik Gold PLC (a) 169,000 397,839
Barrick Gold Corp. 485,000 10,776,235
Bema Gold Corp. (a) 177,100 1,210,279
Buffelsfontein Gold Mines Ltd. (a) 380,000 1,495,054
Compania de Minas Buenaventura SA
Class B sponsored ADR 182,400 3,967,200
Emperor Mines Ltd. (a) 319,000 473,394
Euro-Nevada Mining Ltd. 435,400 12,493,857
Evander Gold Mines Ltd. 141,400 715,265
First Dynasty Mines Ltd. (a) 566,600 1,135,268
Franco-Nevada Mining Corp. 100,000 4,651,329
Francisco Gold Corp. (a) 51,000 799,241
Francisco Gold (special warrants) (a)(c) 62,500 902,944
Getchell Gold Corp. (a) 322,000 12,356,750
Greenstone Resources Ltd. (a) 812,700 7,676,582
Greenstone Resources Ltd. (warrants) (a) 50,700 181,402
Indochina Goldfields Ltd. (a) 188,300 1,731,479
Indochina Goldfields Ltd. (special warrants) (a) 170,000 1,508,492
Industrias Penoles SA 600,000 2,807,547
Kalahari Goldridge Mng. Co. Ltd. 1,200,000 863,309
Kinross Gold Corp. (a) 329,100 1,789,803
Mentor Exploration & Development Co. Ltd. (a) 160,000 1,442,628
Meridian Gold, Inc. Installment Receipt (d) 1,190,000 3,448,782
Newmont Mining Corp. 297,900 10,314,788
Pan American Silver Corp. (a) 135,000 840,459
Queenston Mining, Inc. (a) 385,400 410,924
Randgold & Exploration Co. Ltd. (a) 930,900 5,859,982
Samax Gold Inc. (a) 29,000 115,174
Santa Fe Pacific Gold Corp. 100,000 1,475,000
Stillwater Mining Co. (a) 120,000 2,415,000
Sudbury Contact Mines Ltd. (a) 140,000 891,624
TVI Pacific, Inc. (a) 459,200 269,451
TVX Gold, Inc. (a) 100,000 558,160
West Rand Consolidated Mines Ltd. (Reg.) (a) 250,000 640,737
Western Areas Gold Mining Ltd. Ord. (a) 125,936 1,132,518
99,000,777
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - 0.1%
LEASING & RENTAL - 0.1%
Mitcham Industries, Inc. (a) 148,900 $ 986,463
TECHNOLOGY - 0.1%
ELECTRONICS - 0.1%
Tower Semiconductor Ltd. (a) 48,700 608,750
TRANSPORTATION - 2.3%
RAILROADS - 2.3%
Burlington Northern Santa Fe Corp. 110,000 8,662,500
CSX Corp. 61,500 2,867,436
Illinois Central Corp., Series A 70,000 2,327,500
Wisconsin Central Transportation Corp. (a) 50,000 1,637,500
15,494,936
TOTAL COMMON STOCKS
(Cost $614,634,254) 635,093,337
CASH EQUIVALENTS - 5.3%
SHARES
Taxable Central Cash Fund
(Cost 35,706,420) (b) 35,706,420 35,706,420
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $650,340,674) $ 670,799,757
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
5.45%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $6,676,609 or 1.0% of net
assets.
4. Purchased on an installment basis. Market value reflects only those
payments made through April 30, 1997. The remaining installments
aggregating CAD 2,975,000 are 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 71.6%
Canada 15.8
France 3.8
South Africa 1.9
Netherlands 1.6
United Kingdom 1.5
Others (individually less than 1%) 3.8
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1997, the aggregate cost of investment securities for income
tax purposes was $650,340,674. Net unrealized appreciation aggregated
$20,459,083, of which $68,046,184 related to appreciated investment
securities and $47,587,101 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS APRIL 30, 1997 (UNAUDITED)
Investment in securities, at value (cost $650,340,674) - $ 670,799,757
See accompanying schedule
Receivable for investments sold 6,458,505
Receivable for fund shares sold 1,880,532
Dividends receivable 266,877
Interest receivable 194,779
Redemption fees receivable 481
Other receivables 48,019
Prepaid expenses 6,707
TOTAL ASSETS 679,655,657
LIABILITIES
Payable to custodian bank $ 790,656
Payable for investments purchased 5,275,675
Payable for fund shares redeemed 2,955,399
Accrued management fee 333,237
Distribution fees payable 293,563
Other payables and accrued expenses 242,723
TOTAL LIABILITIES 9,891,253
NET ASSETS $ 669,764,404
Net Assets consist of:
Paid in capital $ 603,833,584
Distributions in excess of net investment income (1,907,156)
Accumulated undistributed net realized gain (loss) on 47,378,973
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 20,459,003
investments and assets and liabilities in foreign
currencies
NET ASSETS $ 669,764,404
</TABLE>
CALCULATION OF MAXIMUM OFFERING PRICE $22.71
CLASS A:
NET ASSET VALUE and redemption price per share
($5,370,328 (divided by) 236,484 shares)
Maximum offering price per share (100/94.75 of $22.71) $23.97
CLASS T: $22.87
NET ASSET VALUE and redemption price per share
($604,935,669 (divided by) 26,455,821 shares)
Maximum offering price per share (100/96.50 of $22.87) $23.70
CLASS B: $22.59
NET ASSET VALUE and offering price per share
($49,951,681 (divided by) 2,211,266 shares) A
INSTITUTIONAL CLASS: $22.92
NET ASSET VALUE, offering price and redemption price
per share ($9,506,726 (divided by) 414,854 shares)
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>
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INVESTMENT INCOME $ 2,592,828
Dividends
Interest 819,410
TOTAL INCOME 3,412,238
EXPENSES
Management fee $ 2,100,446
Transfer agent fees 790,701
Distribution fees 1,828,891
Accounting fees and expenses 231,903
Non-interested trustees' compensation 1,230
Custodian fees and expenses 33,410
Registration fees 162,252
Audit 21,399
Legal 7,011
Miscellaneous 26,112
Total expenses before reductions 5,203,564
Expense reductions (95,355) 5,108,000
NET INVESTMENT INCOME (LOSS) (1,695,762)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 47,395,460
Foreign currency transactions (4,418) 47,391,042
Change in net unrealized appreciation (depreciation) on:
Investment securities (71,365,353)
Assets and liabilities in foreign currencies (177) (71,365,530)
NET GAIN (LOSS) (23,974,488)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (25,670,250)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ (1,695,762) $ (90,614)
Net investment income (loss)
Net realized gain (loss) 47,391,042 49,754,317
Change in net unrealized appreciation (depreciation) (71,365,530) 74,826,728
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (25,670,250) 124,490,431
FROM OPERATIONS
Distributions to shareholders (321,641) -
From net investment income
In excess of net investment income (211,394) -
From net realized gain (41,626,013) (10,221,079)
TOTAL DISTRIBUTIONS (42,159,048) (10,221,079)
Share transactions - net increase (decrease) 87,102,464 260,016,652
TOTAL INCREASE (DECREASE) IN NET ASSETS 19,273,166 374,286,004
NET ASSETS
Beginning of period 650,491,238 276,205,234
End of period (including under (over) distribution of net $ 669,764,404 $ 650,491,238
investment income of $(1,907,156) and $376,703,
respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1997
(UNAUDITED) 1996 E
<TABLE>
<CAPTION>
<S> <C> <C>
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 25.11 $ 23.65
Income from Investment Operations
Net investment income (loss) (.09) .00
Net realized and unrealized gain (loss) (.60) 1.46
Total from investment operations (.69) 1.46
Less Distributions
From net investment income (.08) -
In excess of net investment income (.06) -
From net realized gain (1.57) -
Total distributions (1.71) -
Net asset value, end of period $ 22.71 $ 25.11
TOTAL RETURN B, C (3.25)% 6.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 5,370 $ 1,609
Ratio of expenses to average net assets 1.72% A, F 1.66% A,
F
Ratio of expenses to average net assets after expense reductions 1.69% A, G 1.58% A,
G
Ratio of net investment income (loss) to average net assets (.73)% A (.01)%
A
Portfolio turnover 108% A 137%
Average commission rate H $ .0294 $ .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 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 FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES)
TO OCTOBER 31, 1996.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
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 - CLASS T
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 1994 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88 $ 14.11
beginning of period
Income from Investment
Operations
Net investment (.06) E .00 E (.05) E (.11) E .22 (.10)
income (loss)
Net realized and (.60) 6.56 2.00 .76 4.91 .79
unrealized gain
(loss)
Total from investment (.66) 6.56 1.95 .65 5.13 .69
operations
Less Distributions (.01) - - - - -
From net investment
income
In excess of net (.01) - - - - -
investment income
From net realized gain (1.57) (.69) (.26) (.68) (1.42) (.92)
Total distributions (1.59) (.69) (.26) (.68) (1.42) (.92)
Net asset value, $ 22.87 $ 25.12 $ 19.25 $ 17.56 $ 17.59 $ 13.88
end of period
TOTAL RETURN B, C (3.08)% 35.01% 11.40% 3.97% 41.05% 5.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 604,936 $ 602,915 $ 272,979 $ 199,361 $ 40,309 $ 7,087
(000 omitted)
Ratio of expenses to 1.48% A 1.59% 1.86% 2.10% 2.63% 3.27%
average net assets G D
Ratio of expenses to 1.46% A, 1.56% 1.84% 2.07% 2.62% 3.27%
average net assets H H H H H
after expense
reductions
Ratio of net investment (.46)% .00% (.30)% (.67)% (1.18)% (1.22)
income (loss) to A %
average net assets
Portfolio turnover 108% A 137% 161% 125% 208% 248%
Average commission $ .0294 $ .0337
rate F
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). C
TOTAL RETURNS DO NOT INCLUDE THE ONE TIME
SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED. D LIMITED IN ACCORDANCE WITH A STATE
EXPENSE LIMITATION. E NET INVESTMENT INCOME (LOSS) PER SHARE HAS
BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. F FOR FISCAL YEARS BEGINNING ON OR
AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING
ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER. G FMR AGREED TO REIMBURSE A
PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER. H 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).
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED APRIL 30,
1997
(UNAUDITED) 1996 1995 E
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 24.88 $ 19.23 $ 18.87
Income from Investment Operations
Net investment income (loss) (.12) (.15) (.03)
Net realized and unrealized gain (loss) (.60) 6.49 .39
Total from investment operations (.72) 6.34 .36
Less Distributions
From net realized gain (1.57) (.69) -
Net asset value, end of period $ 22.59 $ 24.88 $ 19.23
TOTAL RETURN B, C (3.36)% 33.87% 1.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 49,952 $ 36,106 $ 2,508
Ratio of expenses to average net assets 2.07% A 2.28% 2.23% A,
F
Ratio of expenses to average net assets after 2.04% A, 2.24% G 2.21% A,
expense reductions G G
Ratio of net investment income (loss) to average (1.06)% (.68)% (.67)%
net assets A A
Portfolio turnover 108% A 137% 161%
Average commission rate H $ .0294 $ .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 FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 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
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30, 1997
(UNAUDITED) 1996 1995 E
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA D
Net asset value, beginning of period $ 25.17 $ 19.27 $ 18.87
Income from Investment Operations
Net investment income (loss) .00 .04 (.01)
Net realized and unrealized gain (loss) (.61) 6.55 .41
Total from investment operations (.61) 6.59 .40
Less Distributions
From net investment income (.04) - -
In excess of net investment income (.03) - -
From net realized gain (1.57) (.69) -
Total distributions (1.64) (.69) -
Net asset value, end of period $ 22.92 $ 25.17 $ 19.27
TOTAL RETURN B, C (2.88)% 35.13% 2.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 9,507 $ 9,860 $ 718
Ratio of expenses to average net assets 1.06% A 1.44% 1.68% A,
F
Ratio of expenses to average net assets after 1.03% A, 1.39% G 1.66% A,
expense reductions G G
Ratio of net investment income (loss) to average (.02)% .17% (.13)% A
net assets A
Portfolio turnover 108% A 137% 161%
Average commission rate H $ .0294 $ .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 FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES (SEE NOTE 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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Natural Resources (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 T, Class B, and Institutional Class shares,
each of which has equal rights as to assets and voting privileges. Each
class has exclusive voting rights with respect to its distribution plan.
Investment income, realized and unrealized capital gains and losses, the
common expenses of the fund, redemption fees, 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 (including restricted securities) for which
exchange 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 in foreign currency
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
exchange rates on investments in securities are included with the net
realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income is accrued as earned. Investment income is recorded net of foreign
taxes withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears all
organizational expenses except for registering and qualifying Class A and
shares of Class A for distribution under federal and state securities law.
These expenses are borne by Class A and amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for 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.
Distributions in excess of 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES. Shares purchased on or after March 1, 1997 and held in the
fund less than 60 days are subject to a redemption fee equal to 1.00% of
the proceeds of the redeemed shares. The fee, which is retained by the
fund, is accounted for as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
Losses may arise from changes in the value of the foreign currency or if
the counterparties do not perform under the contracts' terms. The U.S.
dollar value of foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of FMR, may transfer uninvested cash balances into one
or more joint trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities. Dividends from
the Cash Fund are declared daily and paid monthly from net interest income.
Income distributions received by the fund are recorded as interest income
in the accompanying financial statements.
2. OPERATING POLICIES - CONTINUED
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period, the
fund had no investments in restricted securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $383,995,460 and $350,806,348, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2500% to .5200% for the period. The annual individual
fund fee rate is .30%. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
For the period, the management fee was equivalent to an annualized rate of
.60% of average net assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
each class of shares, (collectively referred to as "the Plans"). Under
certain of the Plans, the class pays Fidelity Distributors Corporation
(FDC), an affiliate of FMR, a distribution and service fee. This fee is
based on the following annual rates of the average net assets of each
applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
For the period, each class paid FDC the following amounts, a portion of
which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares, and
providing shareholder support services:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 4,642 $ 4,642
CLASS T 1,592,733 1,592,733
CLASS B 231,516 57,878
$ 1,828,891 $ 1,655,253
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The Plans
also authorize payments to third parties that assist in the sale of each
class' shares or render shareholder support services.
SALES LOAD. FDC receives a front-end sales charge of up to 5.25% for
selling Class A shares and 3.50% for selling Class T shares of the fund,
respectively, and the proceeds of a contingent deferred sales charge levied
on Class B share redemptions occurring within six years of purchase (five
years prior to January 2, 1997). The Class B charge is based on declining
rates which range from 5% to 1%(4% to 1% prior to January 2, 1997) of the
lesser of the cost of shares at the initial date of purchase or the net
asset value of the redeemed shares, excluding any reinvested dividends and
capital gains.
For the period, FDC received the following sales charge amounts related to
each class, a portion of which is paid to securities, dealers, banks, and
other financial institutions:
PAID TO DEALERS'
FDC PORTION
CLASS A $ 119,158 $ 96,467
CLASS T 784,871 576,763
CLASS B 58,571 0 *
$ 962,600 $ 673,230
* WHEN CLASS B SHARES ARE INITIALLY 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. Each class of the fund has entered into a separate
transfer, dividend disbursing, and shareholder servicing agent
(collectively referred to as the Transfer Agents) contract with respect to
its shares. The Transfer Agents receive account fees and asset-based fees
that vary according to the account size and type of account of the
shareholders of the respective classes of the fund. For the period, the
following amounts were paid to each transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
CLASS A FIIOC * $ 5,719 .31
CLASS T** FIIOC * 714,555 .23
CLASS B FIIOC * 60,954 .27
INSTITUTIONAL CLASS FIIOC * 9,682 .17
$ 790,910
* FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, INC. (FIIOC) AN
AFFILIATE OF FMR.
** PRIOR TO JANUARY 1, 1997 STATE STREET BANK AND TRUST COMPANY WAS THE
TRANSFER AGENT FOR THE FUND'S CLASS T SHARES.. STATE STREET, HOWEVER, HAD
DELEGATED CERTAIN
TRANSFER, DIVIDEND DISBURSING, AND SHAREHOLDER SERVICES TO FIIOC FOR WHICH
FIIOC RECEIVED ITS ALLOCABLE SHARE OF ALL SUCH FEES.
ACCOUNTING FEES. Fidelity Service Company, Inc., 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 $104,469 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 $8,094.
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 $548.
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses were
reduced by $81,369 under this arrangement.
5. EXPENSE REDUCTIONS - CONTINUED
In addition, the fund has entered into arrangement with its custodian and
each class' transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of expenses. During
the period, the fund's custodian fees were reduced by $4,909 under the
custodian arrangement, and Class T expenses were reduced by $435 under the
transfer agent arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER
1997 31,1996 A
CLASS A
From net investment income $ 8,075 $ -
In excess of net investment income 5,307 -
From net realized gain 150,076 -
Total $ 163,458 $
CLASS T
From net investment income $ 294,534 $ -
In excess of net investment income 193,579 -
From net realized gain 38,299,867 10,063,536
Total $ 38,787,980 $ 10,063,536
CLASS B
From net realized gain 2,464,971 127,176
INSTITUTIONAL CLASS
From net investment income $ 19,032 $ -
In excess of net investment income 12,508 -
From net realized gain 711,099 30,367
Total $ 742,639 $ 30,367
$ 42,159,048 $ 10,221,079
A DISTRIBUTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 A 1997 1996 A
CLASS A 182,759 68,176 $ 4,479,365 $ 1,669,719
Shares sold
Reinvestment of distributions 6,590 - 161,464 -
Shares redeemed (16,947) (4,094) (406,295) (102,601)
Redemption fees - - 139 -
Net increase (decrease) 172,402 64,082 $ 4,234,673 $ 1,567,118
CLASS T 6,468,027 16,012,851 $ 158,874,718 $ 364,247,050
Shares sold
Reinvestment of distributions 1,447,419 462,106 35,664,385 9,214,395
Shares redeemed (5,457,361) (6,657,398) (131,189,069) (152,716,059)
Redemption fees - - 17,311 -
Net increase (decrease) 2,458,085 9,817,559 $ 63,367,345 $ 220,745,386
CLASS B 950,701 1,475,147 $ 23,175,397 $ 33,567,815
Shares sold
Reinvestment of distributions 96,174 5,653 2,345,681 112,491
Shares redeemed (286,647) (160,185) (6,694,447) (3,677,194)
Redemption fees - - 1,573 -
Net increase (decrease) 760,228 1,320,615 $ 18,828,204 $ 30,003,112
INSTITUTIONAL CLASS 269,162 759,537 $ 6,698,555 $ 17,292,506
Shares sold
Reinvestment of distributions 29,515 1,464 727,819 29,239
Shares redeemed (275,595) (406,499) (6,754,401) (9,620,709)
Redemption fees - - 269 -
Net increase (decrease) 23,082 354,502 $ 672,242 $ 7,701,036
</TABLE>
A SHARE TRANSACTIONS FOR CLASS A ARE FOR THE PERIOD SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1996.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 16,803
CLASS T 118,712
CLASS B 16,884
INSTITUTIONAL CLASS 9,853
$ 162,252
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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
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 TechnoQuant(trademark)
Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
