(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(REGISTERED TRADEMARK)
MUNICIPAL INCOME FUND
CLASS A, CLASS T, CLASS B
AND CLASS C
SEMIANNUAL REPORT
APRIL 30, 1998
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 19 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 22 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 23 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 34 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 43 NOTES TO THE FINANCIAL STATEMENTS.
PROXY VOTING RESULTS 51
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:
Low interest rates and subdued inflation were two main factors that
bolstered stock and bond markets in the U.S. during the first four
months of 1998. The stock market continued to soar to record heights
as corporate earnings proved to be stronger than expected and
investors shrugged off concerns about the effects of economic
difficulties in Asia. The Federal Reserve Board continued its steady
interest rate policy, which boosted the performance of bonds.
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 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, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL A 3.08% 9.68% 32.42% 132.74%
FIDELITY ADV MUNICIPAL INCOME - CL A -1.81% 4.47% 26.13% 121.68%
(INCL. MAX. 4.75% SALES CHARGE)
LB MUNICIPAL BOND 2.76% 9.30% 37.09% 120.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 2.45% 9.02% 32.67% 114.79%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class A's returns to those of the
Lehman Brothers Municipal Bond Index - a total return performance
benchmark for 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 general 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 246 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL A 9.68% 5.78% 8.81%
FIDELITY ADV MUNICIPAL INCOME - CL A 4.47% 4.75% 8.29%
(INCL. MAX. 4.75% SALES CHARGE)
LB MUNICIPAL BOND 9.30% 6.51% 8.21%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 9.02% 5.81% 7.93%
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' cumulative return
and show you what would have happened if Class A shares had performed
at a constant rate each year.
$10,000 OVER 10 YEARS
FA Municipal Income -CL A LB Municipal Bond
00257 LB015
1988/04/30 9525.00 10000.00
1988/05/31 9572.67 9971.10
1988/06/30 9751.04 10116.98
1988/07/31 9782.09 10182.94
1988/08/31 9815.46 10191.90
1988/09/30 9965.06 10376.37
1988/10/31 10101.21 10559.00
1988/11/30 10112.12 10462.28
1988/12/31 10227.77 10569.31
1989/01/31 10356.57 10787.88
1989/02/28 10366.95 10664.79
1989/03/31 10446.73 10639.30
1989/04/30 10685.46 10891.88
1989/05/31 10860.04 11118.10
1989/06/30 10984.42 11269.09
1989/07/31 11080.78 11422.46
1989/08/31 11166.50 11310.63
1989/09/30 11200.17 11276.93
1989/10/31 11318.42 11414.84
1989/11/30 11457.76 11614.60
1989/12/31 11566.69 11709.61
1990/01/31 11584.94 11654.23
1990/02/28 11667.97 11757.95
1990/03/31 11741.17 11761.48
1990/04/30 11633.78 11676.32
1990/05/31 11872.19 11931.22
1990/06/30 12012.07 12036.09
1990/07/31 12197.34 12213.02
1990/08/31 12115.04 12035.69
1990/09/30 12201.18 12042.55
1990/10/31 12368.70 12261.00
1990/11/30 12675.60 12507.57
1990/12/31 12756.46 12561.98
1991/01/31 12904.92 12730.56
1991/02/28 13004.15 12841.32
1991/03/31 13080.60 12845.94
1991/04/30 13293.59 13016.79
1991/05/31 13457.91 13132.51
1991/06/30 13489.23 13119.51
1991/07/31 13663.65 13279.30
1991/08/31 13787.05 13454.19
1991/09/30 13948.76 13629.37
1991/10/31 14103.33 13752.03
1991/11/30 14156.38 13790.40
1991/12/31 14310.34 14086.34
1992/01/31 14468.97 14118.46
1992/02/29 14547.58 14122.97
1992/03/31 14620.57 14128.20
1992/04/30 14752.52 14253.94
1992/05/31 14884.86 14421.71
1992/06/30 15088.96 14663.71
1992/07/31 15614.37 15103.32
1992/08/31 15493.45 14956.07
1992/09/30 15590.15 15053.88
1992/10/31 15402.00 14905.90
1992/11/30 15710.69 15172.86
1992/12/31 15900.11 15327.78
1993/01/31 16169.05 15506.04
1993/02/28 16739.99 16066.89
1993/03/31 16565.39 15897.07
1993/04/30 16741.06 16057.47
1993/05/31 16879.70 16147.71
1993/06/30 17150.33 16417.22
1993/07/31 17163.06 16438.72
1993/08/31 17605.11 16780.98
1993/09/30 17848.90 16972.11
1993/10/31 17858.47 17004.87
1993/11/30 17683.94 16855.06
1993/12/31 18092.29 17210.87
1994/01/31 18302.97 17407.42
1994/02/28 17819.22 16956.56
1994/03/31 16869.39 16266.09
1994/04/30 16981.33 16404.03
1994/05/31 17081.75 16546.25
1994/06/30 17018.86 16445.15
1994/07/31 17325.86 16746.59
1994/08/31 17353.08 16804.54
1994/09/30 17081.23 16557.85
1994/10/31 16781.80 16263.78
1994/11/30 16242.27 15969.73
1994/12/31 16635.92 16321.22
1995/01/31 17197.93 16787.68
1995/02/28 17661.31 17275.87
1995/03/31 17754.17 17474.37
1995/04/30 17812.52 17494.99
1995/05/31 18382.54 18053.25
1995/06/30 18238.34 17896.19
1995/07/31 18297.76 18065.85
1995/08/31 18482.87 18294.92
1995/09/30 18631.91 18410.73
1995/10/31 18879.94 18678.42
1995/11/30 19236.28 18988.30
1995/12/31 19406.12 19170.77
1996/01/31 19511.97 19315.51
1996/02/29 19481.76 19185.13
1996/03/31 19070.11 18939.95
1996/04/30 18993.93 18886.35
1996/05/31 18971.53 18878.79
1996/06/30 19192.54 19084.38
1996/07/31 19317.98 19258.05
1996/08/31 19360.03 19253.43
1996/09/30 19532.72 19522.98
1996/10/31 19725.51 19743.78
1996/11/30 20070.16 20105.09
1996/12/31 19995.63 20020.65
1997/01/31 20085.97 20058.49
1997/02/28 20265.81 20242.63
1997/03/31 20042.23 19972.79
1997/04/30 20210.99 20139.96
1997/05/31 20452.28 20442.87
1997/06/30 20708.72 20660.59
1997/07/31 21299.97 21232.88
1997/08/31 21105.45 21033.93
1997/09/30 21383.05 21283.61
1997/10/31 21505.34 21420.46
1997/11/30 21644.22 21546.41
1997/12/31 21993.20 21860.77
1998/01/31 22204.88 22086.38
1998/02/28 22212.01 22093.00
1998/03/31 22282.67 22112.44
1998/04/30 22168.03 22012.72
IMATRL PRASUN SHR__CHT 19980430 19980507 150059 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class A on April
30, 1988, and the current 4.75% sales charge was paid. As the chart
shows, by April 30, 1998, the value of the investment would have grown
to $22,168 - a 121.68% 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
$22,013 - a 120.13% 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 YEAR ENDED SEPTEMBER 3, 1996
ENDED OCTOBER 31, (COMMENCEMENT OF
APRIL 30, 1997 SALE OF CLASS A
1998 SHARES) TO
OCTOBER 31, 1996
DIVIDEND RETURN 2.42% 5.51% 0.89%
CAPITAL RETURN 0.66% 3.51% 0.95%
TOTAL RETURN 3.08% 9.02% 1.84%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.65(CENTS) 29.32(CENTS) 58.64(CENTS)
ANNUALIZED DIVIDEND RATE 4.60% 4.81% 4.83%
30-DAY ANNUALIZED YIELD 3.89% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 6.08% - -
</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 $12.30 over the past
one month, $12.30 over the past six months and $12.14 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 A's
current 4.75% sales charge. The tax-equivalent yield shows what you
would have to earn on a taxable investment to equal the class'
tax-free yield, if you're in the 36% federal tax bracket, but does not
reflect payment of the federal alternative minimum tax, if applicable.
FIDELITY ADVISOR MUNICIPAL INCOME FUND - CLASS T
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. If Fidelity had not reimbursed certain
class expenses, the past 10 year total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL T 3.06% 9.75% 32.49% 132.86%
FIDELITY ADV MUNICIPAL INCOME - CL T -0.55% 5.91% 27.85% 124.71%
(INCL. MAX. 3.50% SALES CHARGE)
LB MUNICIPAL BOND 2.76% 9.30% 37.09% 120.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 2.45% 9.02% 32.67% 114.79%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class T's returns to those of the
Lehman Brothers Municipal Bond Index - a total return performance
benchmark for 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 general 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 246 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL T 9.75% 5.79% 8.82%
FIDELITY ADV MUNICIPAL INCOME - CL T 5.91% 5.04% 8.43%
(INCL. MAX. 3.50% SALES CHARGE)
LB MUNICIPAL BOND 9.30% 6.51% 8.21%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 9.02% 5.81% 7.93%
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' cumulative return
and show you what would have happened if Class T shares had performed
at a constant rate each year.
$10,000 OVER 10 YEARS
FA Municipal Income -CL T LB Municipal Bond
00169 LB015
1988/04/30 9650.00 10000.00
1988/05/31 9698.29 9971.10
1988/06/30 9879.00 10116.98
1988/07/31 9910.47 10182.94
1988/08/31 9944.28 10191.90
1988/09/30 10095.83 10376.37
1988/10/31 10233.77 10559.00
1988/11/30 10244.83 10462.28
1988/12/31 10362.00 10569.31
1989/01/31 10492.48 10787.88
1989/02/28 10503.00 10664.79
1989/03/31 10583.82 10639.30
1989/04/30 10825.69 10891.88
1989/05/31 11002.56 11118.10
1989/06/30 11128.58 11269.09
1989/07/31 11226.20 11422.46
1989/08/31 11313.04 11310.63
1989/09/30 11347.16 11276.93
1989/10/31 11466.96 11414.84
1989/11/30 11608.12 11614.60
1989/12/31 11718.48 11709.61
1990/01/31 11736.97 11654.23
1990/02/28 11821.09 11757.95
1990/03/31 11895.25 11761.48
1990/04/30 11786.45 11676.32
1990/05/31 12027.99 11931.22
1990/06/30 12169.71 12036.09
1990/07/31 12357.41 12213.02
1990/08/31 12274.03 12035.69
1990/09/30 12361.30 12042.55
1990/10/31 12531.02 12261.00
1990/11/30 12841.94 12507.57
1990/12/31 12923.87 12561.98
1991/01/31 13074.28 12730.56
1991/02/28 13174.80 12841.32
1991/03/31 13252.26 12845.94
1991/04/30 13468.04 13016.79
1991/05/31 13634.52 13132.51
1991/06/30 13666.26 13119.51
1991/07/31 13842.97 13279.30
1991/08/31 13967.98 13454.19
1991/09/30 14131.82 13629.37
1991/10/31 14288.41 13752.03
1991/11/30 14342.16 13790.40
1991/12/31 14498.14 14086.34
1992/01/31 14658.85 14118.46
1992/02/29 14738.50 14122.97
1992/03/31 14812.44 14128.20
1992/04/30 14946.12 14253.94
1992/05/31 15080.20 14421.71
1992/06/30 15286.98 14663.71
1992/07/31 15819.28 15103.32
1992/08/31 15696.78 14956.07
1992/09/30 15794.74 15053.88
1992/10/31 15604.13 14905.90
1992/11/30 15916.86 15172.86
1992/12/31 16108.77 15327.78
1993/01/31 16381.24 15506.04
1993/02/28 16959.68 16066.89
1993/03/31 16782.79 15897.07
1993/04/30 16960.76 16057.47
1993/05/31 17101.22 16147.71
1993/06/30 17375.40 16417.22
1993/07/31 17388.30 16438.72
1993/08/31 17836.15 16780.98
1993/09/30 18083.14 16972.11
1993/10/31 18092.84 17004.87
1993/11/30 17916.01 16855.06
1993/12/31 18329.72 17210.87
1994/01/31 18543.16 17407.42
1994/02/28 18053.07 16956.56
1994/03/31 17090.78 16266.09
1994/04/30 17204.18 16404.03
1994/05/31 17305.92 16546.25
1994/06/30 17242.21 16445.15
1994/07/31 17553.23 16746.59
1994/08/31 17580.81 16804.54
1994/09/30 17305.40 16557.85
1994/10/31 17002.04 16263.78
1994/11/30 16455.42 15969.73
1994/12/31 16854.24 16321.22
1995/01/31 17423.63 16787.68
1995/02/28 17893.08 17275.87
1995/03/31 17987.16 17474.37
1995/04/30 18046.29 17494.99
1995/05/31 18623.78 18053.25
1995/06/30 18477.69 17896.19
1995/07/31 18537.89 18065.85
1995/08/31 18725.42 18294.92
1995/09/30 18876.43 18410.73
1995/10/31 19127.71 18678.42
1995/11/30 19488.72 18988.30
1995/12/31 19660.80 19170.77
1996/01/31 19768.04 19315.51
1996/02/29 19737.42 19185.13
1996/03/31 19320.38 18939.95
1996/04/30 19243.19 18886.35
1996/05/31 19220.50 18878.79
1996/06/30 19444.41 19084.38
1996/07/31 19571.50 19258.05
1996/08/31 19614.10 19253.43
1996/09/30 19790.11 19522.98
1996/10/31 20022.92 19743.78
1996/11/30 20318.81 20105.09
1996/12/31 20240.69 20020.65
1997/01/31 20331.54 20058.49
1997/02/28 20530.46 20242.63
1997/03/31 20304.40 19972.79
1997/04/30 20474.85 20139.96
1997/05/31 20719.11 20442.87
1997/06/30 20978.48 20660.59
1997/07/31 21576.91 21232.88
1997/08/31 21397.90 21033.93
1997/09/30 21661.32 21283.61
1997/10/31 21803.46 21420.46
1997/11/30 21922.74 21546.41
1997/12/31 22291.82 21860.77
1998/01/31 22506.65 22086.38
1998/02/28 22531.44 22093.00
1998/03/31 22586.04 22112.44
1998/04/30 22470.86 22012.72
IMATRL PRASUN SHR__CHT 19980430 19980507 151106 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class T on April
30, 1988, and the current 3.50% sales charge was paid. As the chart
shows, by April 30, 1998, the value of the investment would have grown
to $22,471 - a 124.71% 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
$22,013 - a 120.13% 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> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31,
ENDED
APRIL 30,
1998 1997 1996 1995 1994 1993
</TABLE>
DIVIDEND RETURN 2.40% 5.47% 5.69% 6.62% 5.27% 6.49%
CAPITAL RETURN 0.66% 3.42% -1.01% 5.88% -11.30% 9.46%
TOTAL RETURN 3.06% 8.89% 4.68% 12.50% -6.03% 15.95%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.70(CENTS) 29.11(CENTS) 58.41(CENTS)
ANNUALIZED DIVIDEND RATE 4.65% 4.77% 4.81%
30-DAY ANNUALIZED YIELD 3.98% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 6.22% - -
</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 $12.31 over the past
one month, $12.31 over the past six months and $12.15 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 3.50% sales charge. The tax-equivalent yield shows what you
would have to earn on a taxable investment to equal the class'
tax-free yield, if you're in the 36% federal tax bracket, but does not
reflect payment of the federal alternative minimum tax, if applicable.
FIDELITY ADVISOR MUNICIPAL INCOME FUND - CLASS B
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class B shares
took place on June 30, 1994. Class B shares bear a 0.90% 12b-1 fee
(1.00% prior to January 1, 1996). Returns prior to June 30, 1994 are
those of Class T, the original class of the fund, and reflect Class
T'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 past 10 years total return figures are 5%, 5%, 2%
and 0%, respectively. If Fidelity had not reimbursed certain class
expenses, the past five year and past 10 year total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL B 2.73% 9.06% 28.59% 126.01%
FIDELITY ADV MUNICIPAL INCOME - CL B -2.27% 4.06% 26.60% 126.01%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB MUNICIPAL BOND 2.76% 9.30% 37.09% 120.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 2.45% 9.02% 32.67% 114.79%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class B's returns to those of the
Lehman Brothers Municipal Bond Index - a total return performance
benchmark for 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 general 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 246 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL B 9.06% 5.16% 8.50%
FIDELITY ADV MUNICIPAL INCOME - CL B 4.06% 4.83% 8.50%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB MUNICIPAL BOND 9.30% 6.51% 8.21%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 9.02% 5.81% 7.93%
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' cumulative return
and show you what would have happened if Class B shares had performed
at a constant rate each year.
$10,000 OVER 10 YEARS
FA Municipal Income -CL B LB Municipal Bond
00669 LB015
1988/04/30 10000.00 10000.00
1988/05/31 10050.04 9971.10
1988/06/30 10237.31 10116.98
1988/07/31 10269.92 10182.94
1988/08/31 10304.95 10191.90
1988/09/30 10462.00 10376.37
1988/10/31 10604.94 10559.00
1988/11/30 10616.40 10462.28
1988/12/31 10737.82 10569.31
1989/01/31 10873.04 10787.88
1989/02/28 10883.94 10664.79
1989/03/31 10967.69 10639.30
1989/04/30 11218.33 10891.88
1989/05/31 11401.61 11118.10
1989/06/30 11532.20 11269.09
1989/07/31 11633.37 11422.46
1989/08/31 11723.36 11310.63
1989/09/30 11758.71 11276.93
1989/10/31 11882.86 11414.84
1989/11/30 12029.14 11614.60
1989/12/31 12143.51 11709.61
1990/01/31 12162.67 11654.23
1990/02/28 12249.83 11757.95
1990/03/31 12326.68 11761.48
1990/04/30 12213.94 11676.32
1990/05/31 12464.24 11931.22
1990/06/30 12611.10 12036.09
1990/07/31 12805.60 12213.02
1990/08/31 12719.20 12035.69
1990/09/30 12809.64 12042.55
1990/10/31 12985.51 12261.00
1990/11/30 13307.71 12507.57
1990/12/31 13392.61 12561.98
1991/01/31 13548.47 12730.56
1991/02/28 13652.65 12841.32
1991/03/31 13732.91 12845.94
1991/04/30 13956.52 13016.79
1991/05/31 14129.04 13132.51
1991/06/30 14161.92 13119.51
1991/07/31 14345.04 13279.30
1991/08/31 14474.59 13454.19
1991/09/30 14644.37 13629.37
1991/10/31 14806.64 13752.03
1991/11/30 14862.34 13790.40
1991/12/31 15023.98 14086.34
1992/01/31 15190.52 14118.46
1992/02/29 15273.05 14122.97
1992/03/31 15349.68 14128.20
1992/04/30 15488.21 14253.94
1992/05/31 15627.15 14421.71
1992/06/30 15841.43 14663.71
1992/07/31 16393.04 15103.32
1992/08/31 16266.09 14956.07
1992/09/30 16367.61 15053.88
1992/10/31 16170.08 14905.90
1992/11/30 16494.16 15172.86
1992/12/31 16693.03 15327.78
1993/01/31 16975.38 15506.04
1993/02/28 17574.80 16066.89
1993/03/31 17391.49 15897.07
1993/04/30 17575.92 16057.47
1993/05/31 17721.47 16147.71
1993/06/30 18005.59 16417.22
1993/07/31 18018.96 16438.72
1993/08/31 18483.05 16780.98
1993/09/30 18739.00 16972.11
1993/10/31 18749.05 17004.87
1993/11/30 18565.82 16855.06
1993/12/31 18994.53 17210.87
1994/01/31 19215.71 17407.42
1994/02/28 18707.84 16956.56
1994/03/31 17710.65 16266.09
1994/04/30 17828.17 16404.03
1994/05/31 17933.60 16546.25
1994/06/30 17867.57 16445.15
1994/07/31 18166.75 16746.59
1994/08/31 18195.69 16804.54
1994/09/30 17893.97 16557.85
1994/10/31 17535.25 16263.78
1994/11/30 16960.02 15969.73
1994/12/31 17376.10 16321.22
1995/01/31 17936.04 16787.68
1995/02/28 18407.91 17275.87
1995/03/31 18492.87 17474.37
1995/04/30 18525.68 17494.99
1995/05/31 19107.47 18053.25
1995/06/30 18945.11 17896.19
1995/07/31 18994.68 18065.85
1995/08/31 19174.95 18294.92
1995/09/30 19318.20 18410.73
1995/10/31 19564.27 18678.42
1995/11/30 19922.57 18988.30
1995/12/31 20086.62 19170.77
1996/01/31 20185.89 19315.51
1996/02/29 20144.08 19185.13
1996/03/31 19706.61 18939.95
1996/04/30 19615.67 18886.35
1996/05/31 19579.69 18878.79
1996/06/30 19796.11 19084.38
1996/07/31 19914.50 19258.05
1996/08/31 19947.37 19253.43
1996/09/30 20115.67 19522.98
1996/10/31 20342.02 19743.78
1996/11/30 20633.80 20105.09
1996/12/31 20544.39 20020.65
1997/01/31 20609.22 20058.49
1997/02/28 20818.26 20242.63
1997/03/31 20578.04 19972.79
1997/04/30 20722.96 20139.96
1997/05/31 20978.07 20442.87
1997/06/30 21212.65 20660.59
1997/07/31 21807.33 21232.88
1997/08/31 21612.93 21033.93
1997/09/30 21868.22 21283.61
1997/10/31 22000.61 21420.46
1997/11/30 22127.91 21546.41
1997/12/31 22470.87 21860.77
1998/01/31 22692.99 22086.38
1998/02/28 22687.46 22093.00
1998/03/31 22730.01 22112.44
1998/04/30 22601.28 22012.72
IMATRL PRASUN SHR__CHT 19980430 19980507 150050 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class B on April
30, 1988. As the chart shows, by April 30, 1998, the value of the
investment would have grown to $22,601 - a 126.01% 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 $22,013 - a 120.13% 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)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS YEARS ENDED OCTOBER 31, JUNE 30, 1994
ENDED (COMMENCEMENT OF
APRIL 30, SALE OF CLASS B
SHARES) TO
OCTOBER 31,
1998 1997 1996 1995 1994
DIVIDEND RETURN 2.07% 4.81% 4.99% 5.77% 1.59%
CAPITAL RETURN 0.66% 3.34% -1.01% 5.80% -3.45%
TOTAL RETURN 2.73% 8.15% 3.98% 11.57% -1.86%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.02(CENTS) 25.06(CENTS) 50.51(CENTS)
ANNUALIZED DIVIDEND RATE 3.98% 4.12% 4.17%
30-DAY ANNUALIZED YIELD 3.45% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 5.39% - -
</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 $12.28 over the past
one month, $12.28 over the past six months, and $12.12 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 36% federal tax bracket, but does not
reflect payment of the federal alternative minimum tax, if applicable.
FIDELITY ADVISOR MUNICIPAL INCOME FUND - CLASS C
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class C shares
took place on November 3, 1997. Class C shares bear a 1.00% 12b-1 fee.
Returns between June 30, 1994 and November 3, 1997 are those of Class
B shares and reflect Class B shares' 0.90% (1.00% prior to January 1,
1996) 12b-1 fee. Returns prior to June 30, 1994 are those of Class T
which bears a 0.25% 12b-1 fee. Had Class C shares' 12b-1 fee been
reflected, returns prior to November 3, 1997 through January 1, 1996
and prior to June 30, 1994 would have been lower. Class C shares'
contingent deferred sales charge included in the past six months, past
one year, past five year and past 10 year total return figures are 1%,
1%, 0%, and 0%, respectively. If Fidelity had not reimbursed certain
class expenses, the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL C 2.60% 8.93% 28.44% 125.72%
FIDELITY ADV MUNICIPAL INCOME - CL C 1.60% 7.93% 28.44% 125.72%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB MUNICIPAL BOND 2.76% 9.30% 37.09% 120.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 2.45% 9.02% 32.67% 114.79%
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class C's returns to those of the
Lehman Brothers Municipal Bond Index - a total return performance
benchmark for investment-grade municipal bonds with maturities of at
least one year. To measure how Class C's performance stacked up
against its peers, you can compare it to the general municipal debt
funds average, which reflects the performance of mutual funds with
similar objectives tracked by Lipper Analytical Services, Inc. The
past six months average represents a peer group of 246 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL C 8.93% 5.13% 8.48%
FIDELITY ADV MUNICIPAL INCOME - CL C 7.93% 5.13% 8.48%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB MUNICIPAL BOND 9.30% 6.51% 8.21%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 9.02% 5.81% 7.93%
AVERAGE ANNUAL TOTAL RETURNS take Class C shares' cumulative return
and show you what would have happened if Class C shares had performed
at a constant rate each year.
$10,000 OVER 10 YEARS
FA Municipal Income -CL C LB Municipal Bond
00490 LB015
1988/04/30 10000.00 10000.00
1988/05/31 10050.04 9971.10
1988/06/30 10237.31 10116.98
1988/07/31 10269.92 10182.94
1988/08/31 10304.94 10191.90
1988/09/30 10462.00 10376.37
1988/10/31 10604.94 10559.00
1988/11/30 10616.40 10462.28
1988/12/31 10737.82 10569.31
1989/01/31 10873.03 10787.88
1989/02/28 10883.93 10664.79
1989/03/31 10967.69 10639.30
1989/04/30 11218.33 10891.88
1989/05/31 11401.62 11118.10
1989/06/30 11532.20 11269.09
1989/07/31 11633.37 11422.46
1989/08/31 11723.35 11310.63
1989/09/30 11758.70 11276.93
1989/10/31 11882.85 11414.84
1989/11/30 12029.14 11614.60
1989/12/31 12143.51 11709.61
1990/01/31 12162.65 11654.23
1990/02/28 12249.83 11757.95
1990/03/31 12326.68 11761.48
1990/04/30 12213.93 11676.32
1990/05/31 12464.23 11931.22
1990/06/30 12611.10 12036.09
1990/07/31 12805.60 12213.02
1990/08/31 12719.20 12035.69
1990/09/30 12809.64 12042.55
1990/10/31 12985.50 12261.00
1990/11/30 13307.71 12507.57
1990/12/31 13392.61 12561.98
1991/01/31 13548.47 12730.56
1991/02/28 13652.64 12841.32
1991/03/31 13732.91 12845.94
1991/04/30 13956.52 13016.79
1991/05/31 14129.03 13132.51
1991/06/30 14161.92 13119.51
1991/07/31 14345.04 13279.30
1991/08/31 14474.58 13454.19
1991/09/30 14644.37 13629.37
1991/10/31 14806.64 13752.03
1991/11/30 14862.34 13790.40
1991/12/31 15023.98 14086.34
1992/01/31 15190.72 14118.46
1992/02/29 15273.59 14122.97
1992/03/31 15350.51 14128.20
1992/04/30 15489.13 14253.94
1992/05/31 15628.47 14421.71
1992/06/30 15843.39 14663.71
1992/07/31 16396.69 15103.32
1992/08/31 16260.97 14956.07
1992/09/30 16362.63 15053.88
1992/10/31 16164.44 14905.90
1992/11/30 16488.94 15172.86
1992/12/31 16688.22 15327.78
1993/01/31 16971.41 15506.04
1993/02/28 17572.11 16066.89
1993/03/31 17388.50 15897.07
1993/04/30 17573.29 16057.47
1993/05/31 17719.18 16147.71
1993/06/30 18004.03 16417.22
1993/07/31 18017.33 16438.72
1993/08/31 18482.36 16780.98
1993/09/30 18738.47 16972.11
1993/10/31 18748.08 17004.87
1993/11/30 18564.96 16855.06
1993/12/31 18994.22 17210.87
1994/01/31 19216.17 17407.42
1994/02/28 18707.23 16956.56
1994/03/31 17707.42 16266.09
1994/04/30 17825.49 16404.03
1994/05/31 17931.69 16546.25
1994/06/30 17864.48 16445.15
1994/07/31 18157.80 16746.59
1994/08/31 18187.12 16804.54
1994/09/30 17885.04 16557.85
1994/10/31 17525.58 16263.78
1994/11/30 16950.83 15969.73
1994/12/31 17367.31 16321.22
1995/01/31 17928.47 16787.68
1995/02/28 18400.88 17275.87
1995/03/31 18485.79 17474.37
1995/04/30 18518.10 17494.99
1995/05/31 19100.76 18053.25
1995/06/30 18937.60 17896.19
1995/07/31 18986.98 18065.85
1995/08/31 19168.29 18294.92
1995/09/30 19311.66 18410.73
1995/10/31 19558.07 18678.42
1995/11/30 19917.07 18988.30
1995/12/31 20081.50 19170.77
1996/01/31 20181.22 19315.51
1996/02/29 20139.07 19185.13
1996/03/31 19701.29 18939.95
1996/04/30 19610.58 18886.35
1996/05/31 19574.38 18878.79
1996/06/30 19791.52 19084.38
1996/07/31 19910.63 19258.05
1996/08/31 19942.90 19253.43
1996/09/30 20111.58 19522.98
1996/10/31 20338.33 19743.78
1996/11/30 20630.75 20105.09
1996/12/31 20541.51 20020.65
1997/01/31 20606.79 20058.49
1997/02/28 20815.88 20242.63
1997/03/31 20575.22 19972.79
1997/04/30 20720.63 20139.96
1997/05/31 20976.21 20442.87
1997/06/30 21210.84 20660.59
1997/07/31 21806.37 21232.88
1997/08/31 21611.96 21033.93
1997/09/30 21867.60 21283.61
1997/10/31 22000.38 21420.46
1997/11/30 22105.90 21546.41
1997/12/31 22459.50 21860.77
1998/01/31 22658.49 22086.38
1998/02/28 22668.62 22093.00
1998/03/31 22704.69 22112.44
1998/04/30 22571.98 22012.72
IMATRL PRASUN SHR__CHT 19980430 19980507 150100 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class C on April
30, 1988. As the chart shows, by April 30, 1998, the value of the
investment would have grown to $22,572 - a 125.72% 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 $22,013 - a 120.13% 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
NOVEMBER 3, 1997
(COMMENCEMENT OF
SALE OF CLASS C
SHARES) TO
APRIL 30, 1998
DIVIDEND RETURN 1.91%
CAPITAL RETURN 0.91%
TOTAL RETURN 2.82%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1998 PAST 1 LIFE OF
MONTH CLASS
DIVIDENDS PER SHARE 3.78(CENTS) 23.14(CENTS)
ANNUALIZED DIVIDEND RATE 3.74% 3.83%
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
and do not reflect any tax reclassifications. If you annualize this
number, based on an average net asset value of $12.31 over the past
one month, and $12.31 over the life of class, you can compare the
class' income over these two periods. The 30-day annualized YIELD is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It
also helps you compare funds from different companies on an equal
basis. Yield information will be reported once Class C has a longer,
more stable operating history.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Investor sentiment, shifting supply
and demand conditions, and
volatility in Asia played key roles in
the municipal bond market during
the six months that ended April
30, 1998. During this period, the
Lehman Brothers Municipal Bond
Index - a measure of the
municipal bond market -
returned 2.76%. To compare, the
Lehman Brothers Aggregate Bond
Index - a measure of the
investment-grade taxable bond
market in the U.S. - returned
3.59%. In late 1997, volatility in
Asia helped prop up the muni
bond market. Investors felt that
currency devaluations in that
region would translate into
cheaper prices for Asian goods
and help control the inflation that
can eat into bonds' fixed
payments. In January and
February 1998, though, muni
bond supply increased as many
issuers took advantage of lower
interest rates to refinance their debt
at lower rates. That, combined
with softening demand, dampened
the performance of muni bonds in
early 1998. On top of that, the
municipal bond market experienced
extremely heavy new issuance in
March and April 1998, as issuers
rushed to the market before the
largest municipal deal in history is
expected to take place. A $3.5
billion issuance by the Long Island
Power Authority is scheduled to be
priced in May. This heavy supply,
coupled with only intermittent
demand, put downward pressure
on municipal bond prices at the
end of the period, causing muni
bonds to lag taxable bonds in
early 1998.
NOTE TO SHAREHOLDERS: Jonathan Short became Portfolio Manager of
Fidelity Advisor Municipal Income Fund on January 31, 1998.
Q. HOW DID THE FUND PERFORM, JON?
A. For the six-month period that ended April 30, 1998, the fund's
Class A, Class T, Class B and Class C shares had total returns of
3.08%, 3.06%, 2.73% and 2.60%, respectively. To get a sense of how the
fund did relative to its competitors, the general municipal debt funds
average returned 2.45% for the same six-month period, according to
Lipper Analytical Services. Additionally, the Lehman Brothers
Municipal Bond Index - a broad measure of the performance of the
municipal bond market - returned 2.76% for the same six-month period.
For the 12-months that ended April 30, 1998, the fund's Class A, Class
T, Class B and Class C shares returned 9.68%, 9.75%, 9.06% and 8.93%,
respectively, while the general municipal debt funds average returned
9.02% and the Lehman Brothers Municipal Bond Index returned 9.30%.
Q. WHAT ROLE DOES THE LEHMAN BROTHERS MUNICIPAL BOND INDEX PLAY IN THE
MANAGEMENT OF THE FUND?
A. The Lehman Brothers Municipal Bond Index plays a very important
role in the management of the fund. It's the fund's benchmark index
and includes most of the universe of investment-grade municipal bonds.
I use the index as a starting point for my investment decisions,
managing the fund to be generally as sensitive to changes in interest
rates as the index. In addition, I refer to the index when deciding
how to allocate assets among different maturities and market sectors
based on my view of the relative value of each maturity or sector.
Q. WHAT HELPED THE FUND'S PERFORMANCE?
A. The fund had a relatively large stake in bonds rated Baa by Moody's
Investors Service, which performed extremely well throughout the
period and helped the fund's performance. Faced with relatively low
interest rates, yield-hungry investors increasingly sought out these
bonds because they offered a yield advantage over higher-quality
bonds. What's more, there was a very small supply of these bonds
during the period. Strong demand pushed up against low supply and
boosted the prices of most Baa-rated bonds.
Q. WHICH SECURITIES DETRACTED FROM THE FUND'S PERFORMANCE?
A. As for detractors, the fund's stake in zero coupon bonds was a drag
on the fund's performance. Zeros pay no periodic interest but trade at
a deep discount to their face value. The buyer of a zero receives the
rate of return by the gradual appreciation of the security, which is
redeemed at face value on a specified maturity date. These securities
tend to be very sensitive to interest-rate movements and when rates
crept up a bit over the past couple of months, zeros lagged the
overall market.
Q. THE ELECTRIC UTILITY INDUSTRY IS TRANSFORMING FROM A MONOPOLY TO A
MORE COMPETITIVE ENVIRONMENT. GIVEN THAT THE INDUSTRY IS UNDER
PRESSURE FROM THE THREAT OF INCREASED COMPETITION, WHAT FACTORS DO YOU
LOOK FOR WHEN SELECTING THESE BONDS?
A. I have focused on two types of electric utilities. First, I
emphasized those that are well-prepared to deal with increased
competition. Second, I tended to focus on those that I believed could
meet competitive challenges down the road, but have been severely and
unduly penalized by the market today because of uncertainty
surrounding future deregulation. Recently, I've added some electric
utilities of both types, bringing the fund's stake in the sector up to
16.5% at the end of the period.
Q. WHAT'S YOUR OUTLOOK?
A. Municipals lagged taxable bonds throughout much of the past six
months, and as a result, currently are priced inexpensively compared
to U.S. Treasury securities. In my view, municipals may now be poised
to play catch up with Treasuries and could be in for a period of
relatively good performance. Municipals became cheap relative to their
Treasury counterparts because of a supply and demand imbalance. In the
first four months of 1998, the supply of municipals was actually quite
large compared to previous years. Cities, states, counties and other
issuers sought to take advantage of relatively low interest rates to
refinance their older, more expensive debt. As more and more of these
refinancings occurred, the supply of municipal bonds grew. On the
other side of the equation, demand - while remaining firm - didn't
keep pace with the additional supply. For the remainder of the year, I
expect that municipal refinancing activity will taper off, which would
likely be a positive for municipal bonds as long as demand remains
firm or increases.
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.
JONATHAN SHORT ON THE
IMPROVED CREDITWORTHINESS OF
MUNICIPAL BONDS:
"THE STRENGTH OF THE U.S. ECONOMY
OVER THE PAST SEVERAL YEARS HAS LED TO
A GENERAL IMPROVEMENT IN THE OVERALL
CREDITWORTHINESS OF MUNICIPAL BOND
ISSUERS. BY THAT I MEAN THAT CITIES,
STATES AND OTHER MUNICIPAL ISSUERS
ACROSS THE NATION HAVE ENJOYED BETTER
FINANCIAL AND FISCAL HEALTH THANKS IN
LARGE PART TO RISING TAX COLLECTIONS
AND BUDGET CUTTING.
"ECONOMIC STRENGTH HELPS TO EXPLAIN
WHY GENERAL OBLIGATION BONDS (GOS)
WERE THE FUND'S LARGEST SECTOR
CONCENTRATION AT THE END OF THE
PERIOD. A GO IS BACKED BY THE FULL
FAITH AND CREDIT - WHICH INCLUDES
THE TAXING POWER - OF A CITY, COUNTY,
STATE OR OTHER ISSUER, AND IS REPAID
WITH GENERAL REVENUE, INCLUDING
TAXES. AS LONG AS I FEEL THAT THE
ECONOMY IS IN RELATIVELY GOOD SHAPE,
I'LL MOST LIKELY CONTINUE TO
EMPHASIZE GOS. HOWEVER, IF I FEEL
THAT THE ECONOMY IS WEAKENING TO THE
POINT OF COMPROMISING THE FISCAL AND
FINANCIAL HEALTH OF GO ISSUERS, I'D
MOST LIKELY SWITCH MY FOCUS TOWARD
REVENUE BONDS, WHICH ARE ISSUED BY
ENTITIES SUCH AS WATER AND ELECTRIC
UTILITIES. BECAUSE REVENUE BOND
ISSUERS PROVIDE ESSENTIAL SERVICES
THAT ARE SOMEWHAT IMMUNE TO THE
UPS AND DOWNS OF THE ECONOMIC
CYCLE, THEY TEND TO PERFORM BETTER
THAN GOS IN SLOWER ECONOMIES."
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, 1998,
MORE THAN $436 MILLION
MANAGER: JONATHAN SHORT,
SINCE JANUARY 31, 1998;
JOINED FIDELITY IN 1990
(CHECKMARK)
INVESTMENT CHANGES
TOP FIVE STATES AS OF APRIL 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STATES
6 MONTHS AGO
NEW YORK 21.4 17.9
CALIFORNIA 7.6 9.5
COLORADO 6.1 5.7
PENNSYLVANIA 5.6 5.6
ILLINOIS 5.5 4.4
TOP FIVE SECTORS AS OF APRIL 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE SECTORS
6 MONTHS AGO
GENERAL OBLIGATION 26.6 27.1
ELECTRIC REVENUE 16.5 15.9
HEALTH CARE 12.5 15.8
TRANSPORTATION 9.0 10.5
ESCROWED/PRE-REFUNDED 8.9 6.0
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1998
6 MONTHS AGO
YEARS 12.9 13.2
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF APRIL 30, 1998
6 MONTHS AGO
YEARS 6.8 6.9
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF APRIL 30, 1998 AS OF OCTOBER 31, 1997
AAA 34.2%
AA, A 30.2%
BAA 26.5%
BA, B 0%
CAA, C 0%
NON-RATED 6.9%
SHORT-TERM
INVESTMENTS 2.2%
AAA 34.6%
AA, A 25.2%
BAA 26.8%
BA, B 1.3%
CAA, C 0.3%
NON-RATED 10.2%
SHORT-TERM
INVESTMENTS 1.6%
ROW: 1, COL: 1, VALUE: 34.1
ROW: 1, COL: 2, VALUE: 30.2
ROW: 1, COL: 3, VALUE: 26.5
ROW: 1, COL: 4, VALUE: 0.0
ROW: 1, COL: 5, VALUE: 7.0
ROW: 1, COL: 6, VALUE: 2.2
ROW: 1, COL: 7, VALUE: 0.0
ROW: 1, COL: 1, VALUE: 33.6
ROW: 1, COL: 2, VALUE: 24.2
ROW: 1, COL: 3, VALUE: 25.8
ROW: 1, COL: 4, VALUE: 2.3
ROW: 1, COL: 5, VALUE: 1.3
ROW: 1, COL: 6, VALUE: 10.2
ROW: 1, COL: 7, VALUE: 2.6
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, 1998,
AND OCTOBER 31, 1997 ACCOUNT FOR 0.4% AND 4.3% RESPECTIVELY, OF THE
FUND'S INVESTMENTS.
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
MUNICIPAL BONDS - 97.8%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
ALABAMA - 1.0%
Shelby County Gen. Oblig. Series A,
7.70% 8/1/17 - $ 4,000,000 $ 4,433,080
ARIZONA - 0.3%
Arizona Trans. Board Excise Tax Rev. Rfdg.
(Maricopa County Reg'l. Area) Series A,
6% 7/1/03 (AMBAC Insured) Aaa 1,300,000 1,394,536
ARKANSAS - 0.3%
Little Rock Arpt. Passenger Facs. Charge Rev.
5.65% 5/1/16 (AMBAC Insured) (d) Aaa 1,315,000 1,402,658
CALIFORNIA - 7.6%
California Dept. Wtr. Resources Rev. (Central
Valley Proj.) Series J-2, 6.125% 12/1/13 Aa2 2,190,000 2,299,938
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Rfdg. Series A, 5.70% 8/1/16 (MBIA Insured) Aaa 795,000 812,760
Series B, 5.20% 8/1/26 (MBIA Insured) (d) Aaa 1,020,000 1,038,748
Series R, 6.15% 8/1/27 (MBIA Insured) (d) Aaa 1,500,000 1,582,170
California Pub. Wks. Board Lease Rev. Rfdg.:
(California Univ. Proj.) Series A,
5.50% 10/1/13 A 2,000,000 2,053,220
(Dept. of Corrections State Prisons) Series A,
5% 12/1/19 (AMBAC Insured) Aaa 1,750,000 1,698,253
(Various California Univ. Projs.)
Series A, 5.50% 6/1/14 Aa3 1,500,000 1,563,330
California State Gen. Oblig. 6% 10/1/09 A1 2,500,000 2,783,500
Central Valley Fing. Auth. Cogeneration Proj.
Rev. (Carson Ice Gen. Proj.) 6% 7/1/09 BBB- 4,500,000 4,709,565
Foothill/Eastern Trans. Corridor Agcy. California
Toll Road Rev. (Sr. Lien) (Cap. Appreciation)
Series A, 0% 1/1/14 Baa 2,000,000 846,320
Los Angeles County Ctfs. of Prtn. (Cap.
Appreciation) (Disney Parking Proj.):
0% 3/1/14 Baa1 1,000,000 422,550
0% 9/1/14 Baa1 7,260,000 2,985,385
Northern California Pwr. Agcy. Pub. Pwr. Rev.
Rfdg. (Geothermal Proj. #3)
Series A, 5.85% 7/1/10 (AMBAC Insured) Aaa 1,500,000 1,650,510
Sacramento Fing. Auth. Lease Rev. Rfdg.
Series A, 5.40% 11/1/20 (AMBAC Insured) Aaa 2,000,000 2,044,800
Sacramento Fing. Auth. Rev.
(Cap. Appreciation) (Combined Proj.)
Series B, 0% 11/1/11 (MBIA Insured) Aaa 1,225,000 621,957
Sacramento Cogeneration Auth. Cogeneration Proj.
Rev. (Proctor & Gamble Proj.):
5.40% 7/1/98 BBB- 1,100,000 1,102,178
6.375% 7/1/10 BBB- 1,000,000 1,083,850
6.50% 7/1/14 BBB- 3,800,000 4,125,280
33,424,314
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
COLORADO - 6.1%
Arapahoe County Cap. Impt. Tr.ust Federal Hwy.
Rev. (Cap. Appreciation) Series E, 0% 8/31/26
(Pre-Refunded to 8/31/05 @ 20.8626) (e) Aaa $ 7,800,000 $ 1,153,932
Colorado Health Facs. Auth. Rev.:
(Nat'l. Benevolent Assoc. Proj.)
Series A, 6.50% 6/1/25 Baa1 1,360,000 1,473,070
(Nat'l. Jewish Medical & Research Ctr.)
5.375% 1/1/28 BBB 3,000,000 2,898,510
Rfdg. (Rocky Mountain Adventist):
6.625% 2/1/13 Baa2 6,900,000 7,443,927
6.625% 2/1/22 Baa2 4,000,000 4,315,320
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/06 (MBIA Insured) Aaa 1,405,000 984,961
0% 1/1/08 (MBIA Insured) Aaa 870,000 550,788
Denver City & County Arpt. Rev.:
(Cap. Appreciation):
Series A, 0% 11/15/02
(MBIA Insured) (d) Aaa 2,115,000 1,717,211
Series D, 0% 11/15/04 (MBIA Insured) (d) Aaa 1,700,000 1,251,557
Rfdg. Series D, 5% 11/15/98 (d) Baa1 1,200,000 1,205,556
Series A:
6.90% 11/15/98 (d) Baa1 1,000,000 1,014,190
7.50% 11/15/23
(Pre-Refunded to 11/15/04 @ 102) (e) Aaa 430,000 506,011
7.50% 11/15/23 (d) Baa1 2,070,000 2,361,373
26,876,406
CONNECTICUT - 3.3%
Connecticut Health & Edl. Facs. Auth. Rev.:
(New Britain Mem. Hosp.) Series A:
7.50% 7/1/06
(Pre-Refunded to 7/1/02 @ 102) (e) - 2,615,000 2,868,995
7.75% 7/1/22
(Pre-Refunded to 7/1/02 @ 102) (e) Aaa 1,500,000 1,716,930
(The Griffin Hosp.) Series A:
6% 7/1/13 Baa2 1,810,000 1,862,671
5.75% 7/1/23 Baa2 3,280,000 3,284,297
Connecticut Spl. Tax Oblig. Rev. Trans. Infrastructure
Series A, 5.50% 11/1/06 (FSA Insured) Aaa 1,500,000 1,599,705
Eastern Connecticut Resource Recovery Auth.
Solid Waste Rev. (Wheelabrator Lisbon Proj.)
Series A, 5.50% 1/1/20 (d) BBB 3,350,000 3,254,659
14,587,257
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
DISTRICT OF COLUMBIA - 2.7%
District of Columbia Gen. Oblig. Rfdg.:
Series A, 6% 6/1/07 (MBIA Insured) Aaa $ 2,000,000 $ 2,166,120
Series B, 5% 6/1/05 (MBIA Insured) Aaa 4,135,000 4,193,634
District of Columbia Hosp. Rev. (Hosp. for Sick
Children) Series A, 8.875% 1/1/21 - 955,000 1,040,377
District of Columbia Redev. Land Agcy.
Sport Arena Spl. Tax Rev.:
5.30% 11/1/99 Baa 1,700,000 1,722,525
5.625% 11/1/10 Baa 705,000 715,180
District of Columbia Rev. Rfdg. (Georgetown Univ.)
Series A, 5.95% 4/1/14 (MBIA Insured) Aaa 2,000,000 2,140,300
11,978,136
FLORIDA - 0.8%
Broward County Resource Recovery Rev. (SES
Broward Co. LP South Proj.) 7.95% 12/1/08 A3 575,000 620,379
Florida Mid-Bay Bridge Auth. Rev.
Series A, 7.50% 10/1/17 - 2,500,000 2,753,375
3,373,754
GEORGIA - 0.9%
Georgia Gen. Oblig. Series C, 6.25% 8/1/09 Aaa 3,500,000 3,977,890
HAWAII - 1.1%
Hawaii Gen. Oblig. Series C, 6.25% 3/1/03
(FGIC Insured) Aaa 4,515,000 4,858,230
IDAHO - 0.1%
Boise Urban Renewal Agcy. Parking Rev. (Tax
Increment) Series A, B, C, 8.125% 9/1/15 BBB+ 375,000 382,564
ILLINOIS - 5.5%
Chicago Board of Ed. (Chicago School Reform):
6.25% 12/1/09 (MBIA Insured) Aaa 3,000,000 3,404,640
5.75% 12/1/27 (AMBAC Insured) Aaa 5,000,000 5,173,150
Chicago O'Hare Int'l. Arpt. Rev.:
(Passenger Facs. Charge) Series A,
5.60% 1/1/10 (AMBAC Insured) Aaa 2,500,000 2,614,350
Rfdg. (Gen. Arpt. Proj.) (2nd Lien) Series A:
6.25% 1/1/09 (AMBAC Insured) (d) Aaa 3,700,000 4,056,828
6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,526,966
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg.
(American Airlines, Inc. Proj.) 8.20% 12/1/24 Baa2 1,000,000
1,196,760
Du Page County Commty. High School Dist. #99
(Downers Grove) Series A, 6% 2/1/06
(AMBAC Insured) Aaa 1,640,000 1,779,220
Illinois Ed. Facs. Auth. Rev. Rfdg. (DePaul Univ.)
6% 10/1/05 (AMBAC Insured) Aaa 1,200,000 1,300,512
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
ILLINOIS - CONTINUED
Illinois Health Facs. Auth. Rev.:
(Covenant Retirement Commty.)
Series A, 7.60% 12/1/12 A- $ 750,000 $ 840,795
(Mem. Hosp.):
7.125% 5/1/10
(Pre-Refunded to 5/1/02 @ 102) (e) BBB 1,000,000 1,113,550
7.25% 5/1/22
(Pre-Refunded to 5/1/02 @ 102) (e) BBB 1,000,000 1,118,080
24,124,851
INDIANA - 0.3%
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 1,000,000 1,113,630
KANSAS - 0.7%
Kansas Dev. Fin. Auth. Rev.
(Sisters of Charity Leavenworth):
5% 12/1/13 (MBIA Insured) Aaa 2,390,000 2,361,440
5% 12/1/14 (MBIA Insured) Aaa 500,000 490,515
2,851,955
KENTUCKY - 1.9%
Kenton County Arpt. Board Arpt. Rev.:
(Cincinnati/Northern Kentucky Int'l.)
Series A, 6% 3/1/05 (MBIA Insured) (d) Aaa 5,570,000 5,970,984
(Spl. Facs. Delta Airlines, Inc. Proj.)
Series A, 7.50% 2/1/20 (d) Baa3 2,000,000 2,203,060
8,174,044
MARYLAND - 1.2%
Maryland Health & Higher Edl. Facs. Auth. Rev.:
(Good Samaritan Hosp.):
5.75% 7/1/13 (AMBAC Insured)
(Escrowed to Maturity) (e) A1 1,665,000 1,786,295
5.75% 7/1/13 (AMBAC Insured) Aaa 1,015,000 1,104,046
Rfdg. (Johns Hopkins Univ.) 6% 7/1/10 Aa2 2,000,000 2,214,480
5,104,821
MASSACHUSETTS - 4.4%
Massachusetts Bay Trans. Auth.
(Mass. General Trans. Sys.)
Series A, 5.625% 3/1/26
(Pre-Refunded to 3/1/06 @ 102) (e) A1 5,875,000 6,307,576
Massachusetts Health & Edl. Facs. Auth. Rev.:
(1st. Mtg.) (Fairview Extended Care)
Series A, 10.25% 1/1/21
(Pre-Refunded to 1/1/01 @ 103) (e) - 5,000,000 5,865,550
(Hebrew Rehabilitation Ctr. for Aged)
Series C, 5.25% 7/1/17 A 2,000,000 1,961,800
(New England Med. Ctr. Hosp.)
Series G, 5.375% 7/1/24 (MBIA Insured) Aaa 500,000 497,595
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Rev.:
(Atlanticare Med. Ctr.)
Series B, 10.125% 11/1/14 - $ 700,000 $ 766,514
(Cap. Appreciation) (Massachusetts Biomedical
Research) Series A-2:
0% 8/1/08 - 800,000 481,968
0% 8/1/10 - 4,500,000 2,389,410
Rfdg. (Emerson College)
Series A, 8.90% 1/1/18 - 1,000,000 1,099,090
19,369,503
MICHIGAN - 0.6%
Royal Oak Hosp. Fin. Auth. Rev. Rfdg.
(William Beaumont Hosp.) 6.25% 1/1/09 Aa3 2,310,000 2,555,299
MINNESOTA - 1.7%
Minneapolis & St. Paul Hsg. & Redev. Auth.
Health Care Sys. Rev. Rfdg.
(Healthspan Health Sys. Corp.)
Series A, 4.75% 11/15/18 (AMBAC Insured) Aaa 2,300,000 2,123,705
Minnesota Hsg. Fin. Agcy. Rev. (Single
Family Mtg.) Series D, 6.40% 7/1/15 (d) Aa2 2,000,000 2,121,700
Western Minnesota Muni. Pwr. Agcy. Pwr. Supply
Rev. Rfdg. Series A, 6.25% 1/1/06
(AMBAC Insured) Aaa 3,000,000 3,326,700
7,572,105
MISSISSIPPI - 0.1%
Mississippi Home Corp. Single Family Rev. Rfdg.
Series 1990-A, 9.25% 3/1/12 (FGIC Insured) Aaa 220,000 235,290
NEBRASKA - 1.4%
Nebraska Pub. Pwr. Dist. Rev. Rfdg.:
(Elec. Sys.) Series A, 6% 1/1/06 A1 1,500,000 1,602,030
(Pwr. Supply Sys.) Series C, 5% 1/1/17 A1 4,590,000 4,401,030
6,003,060
NEVADA - 0.6%
Las Vegas Downtown Redev. Agcy. Tax Increment
Rev. (Fremont Str. Proj.) Series A:
6% 6/15/10 BBB+ 1,500,000 1,530,810
6.10% 6/15/14 BBB+ 1,000,000 1,039,280
2,570,090
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW HAMPSHIRE - 0.6%
New Hampshire Higher Edl. & Health Facs.
Auth. Rev.:
(1st. Mtg.) (Riverwoods at Exeter) 9% 3/1/23
(Pre-Refunded to 3/1/03 @ 103) (e) Aaa $ 1,830,000 $ 2,227,513
(Littleton Hosp. Assoc., Inc.)
Series A, 9.50% 5/1/20 - 490,000 522,046
2,749,559
NEW JERSEY - 1.4%
New Jersey Trans. Trust Fund Auth. Rfdg.
(Trans. Sys.) Series A, 5.50% 6/15/11
(MBIA Insured) Aaa 4,000,000 4,175,400
Passaic County Util. Auth. Solid Waste Disp.
Rev. Rfdg. (Cap. Appreciation)
0% 3/1/02 (MBIA Insured) Aaa 2,500,000 2,116,850
6,292,250
NEW MEXICO - 1.9%
Albuquerque Arpt. Rev. Rfdg.:
6.75% 7/1/11 (AMBAC Insured) (d) Aaa 1,805,000 2,094,919
6.70% 7/1/18 (AMBAC Insured) (d) Aaa 3,970,000 4,437,547
New Mexico Edl. Assistance Foundation
Student Loan Rev. Series B,
5.25% 4/1/05 (AMBAC Insured) (d) Aaa 1,585,000 1,615,178
8,147,644
NEW YORK - 21.4%
New York City Gen. Oblig.:
Rfdg.:
Series A, 7% 8/1/03 A3 2,000,000 2,212,620
Series B:
5.70% 8/15/02 A3 1,165,000 1,214,536
6.75% 8/15/03 A3 2,000,000 2,190,900
Series E, 6.50% 2/15/04 (FGIC Insured) Aaa 1,500,000 1,639,560
Series B, 7.50% 2/1/02 A3 3,525,000 3,870,838
Series D, 5.50% 2/15/04 A3 5,000,000 5,183,450
Series H, 6.875% 2/1/02 A3 240,000 258,451
New York City Ind. Dev. Agcy. Spl. Facs. Rev.
(Terminal One Group Assoc. Proj.)
5.90% 1/1/06 (d) A 8,680,000 9,194,290
New York City Ind. Dev. Agcy. Ind. Dev. Rev.
(Japan Airlines Co. Ltd. Proj.)
Series 91, 6% 11/1/15 (FSA Insured)
LOC Morgan Guaranty Trust Co. (d) Aaa 1,000,000 1,068,090
New York City Muni. Assistance Corp. Rfdg.
Series H, 6% 7/1/05 Aa2 5,000,000 5,409,750
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
New York City Muni. Wtr. Fin. Auth. Rev.
(Wtr. & Swr. Sys.) Series B:
5.75% 6/15/26 A2 $ 5,000,000 $ 5,207,550
5.50% 6/15/27 (MBIA Insured) Aaa 3,000,000 3,054,300
5.75% 6/15/29 A2 4,000,000 4,159,640
New York Metropolitan Trans. Auth. Svc. Contract
Rfdg. Series 7, 5.625% 7/1/16 Baa1 6,445,000 6,548,313
New York Metropolitan Trans. Commuter Facs.
Rev. Rfdg. Series R:
5% 7/1/02 Baa1 2,370,000 2,408,655
5% 7/1/03 Baa1 2,490,000 2,528,545
5.50% 7/1/07 Baa1 2,645,000 2,751,514
New York State Dorm. Auth. Rev.:
(City Univ. Sys. Consolidated)
Series A, 5.70% 7/1/05 Baa1 3,000,000 3,152,340
(New York Univ.)
Series A, 5.75% 7/1/14 (MBIA Insured) Aaa 1,000,000 1,073,060
Rfdg. (Jamaica Hosp. Med. Ctr.)
Series F, 5.20% 2/15/14 Baa1 6,150,000 6,037,886
Rfdg. (State Univ. Edl. Facs.)
Series B, 5.50% 5/15/08 A3 10,000,000 10,490,500
New York State Local Gov't. Assistance Corp.
Rfdg. Series C, 5.50% 4/1/17 A3 7,500,000 7,689,600
New York State Tollway Auth. Gen. Rev.
(Spl. Oblig.) (Cap. Appreciation) Series A,
0% 1/1/04 BBB 4,000,000 2,980,440
New York State Tollway Auth. Svc. Contract Rev.
(Local Hwy. & Bridges) 5.90% 4/1/07 Baa1 2,000,000 2,113,700
Suffolk County Wtr. Auth. Wtrwks. Rev. Rfdg.
(Sub-Lien) 6% 6/1/17 (MBIA Insured) Aaa 1,000,000 1,105,040
93,543,568
NORTH CAROLINA - 4.3%
North Carolina Eastern Muni. Pwr. Agcy. Pwr.
Sys. Rev. Rfdg.:
Series A, 5.50% 1/1/05 (MBIA Insured) Aaa 4,000,000 4,180,440
Series B:
6% 1/1/06 Baa1 3,955,000 4,214,290
7.25% 1/1/07 Baa1 1,000,000 1,155,940
Series C:
5.125% 1/1/03 Baa1 2,000,000 2,029,200
5.25% 1/1/04 Baa1 1,365,000 1,393,979
5.50% 1/1/07 (MBIA Insured) Aaa 2,000,000 2,098,460
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NORTH CAROLINA - CONTINUED
North Carolina Muni. Pwr. Agcy. #1 Catawba
Elec. Rev. Rfdg.:
5.75% 1/1/02 A3 $ 1,750,000 $ 1,820,455
6.25% 1/1/17 (AMBAC Insured) Aaa 1,800,000 1,939,698
18,832,462
OHIO - 2.6%
Gateway Econ. Dev. Corp. Greater Cleveland
Stadium Rev. (Cuyahoga County Annual
Guaranty) 6.50% 9/15/14 (d) - 3,000,000 3,149,580
Marion County Hosp. Impt. Rev. Rfdg.
(Commty. Hosp. Proj.) 5.60% 5/15/01 BBB+ 1,000,000 1,025,670
Ohio Wtr. Dev. Auth. Poll. Cont. Facs. Rev.
(Wtr. Control Loan Fund) State Matching Series:
6.50% 12/1/04 (MBIA Insured) Aaa 1,835,000 2,041,639
5.625% 6/1/06 (MBIA Insured) Aaa 2,000,000 2,130,180
Student Loan Funding Corp.
Cincinnati Student Loan Rev.
Series B, 8.875% 8/1/08 (d) - 2,910,000 3,074,590
11,421,659
OKLAHOMA - 1.0%
Tulsa Muni. Arpt. Trust Rev. (American Airlines
Corp. Proj.) 7.35% 12/1/11 Baa2 4,000,000 4,449,000
PENNSYLVANIA - 5.6%
Allegheny County Ind. Dev. Auth. Rev.
(1st Mtg.) (YMCA Proj.) Series 1990,
8.75% 3/1/10 - 340,000 372,157
Butler County Ind. Dev. Auth. Health
Ctr. Rev. (Sherwood Oaks Proj.)
5.75% 6/1/11 A 3,000,000 3,067,770
Cumberland County Muni. Auth. Rev. Rfdg.
(1st Mtg.) (Carlisle Hosp. & Health):
6.80% 11/15/14 Baa2 3,250,000 3,573,018
6.80% 11/15/23 Baa2 1,000,000 1,099,390
Delaware County Auth. Rev.
(1st. Mtg.) (Riddle Village Proj.):
8.25% 6/1/22 (Escrowed to Maturity) (e) Aaa 2,250,000 2,743,898
9.25% 6/1/22
(Pre-Refunded to 6/1/02 @ 102) (e) Aaa 2,905,000 3,467,524
Series 1992, 8.75% 6/1/10
(Pre-Refunded to 6/1/02 @ 102) (e) Aaa 2,870,000 3,378,736
Delaware County Ind. Dev. Auth. Rev. Rfdg.
(Resource Recovery Fac.) Series A,
6.10% 7/1/13 Baa1 1,900,000 2,033,494
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Gen. Oblig. Second Series,
5.80% 7/1/04 Aa3 $ 3,000,000 $ 3,212,010
Pennsylvania Ind. Dev. Auth. Rev. Econ. Dev.
5.80% 7/1/09 (AMBAC Insured) Aaa 1,345,000 1,465,633
24,413,630
RHODE ISLAND - 1.1%
Rhode Island Port Auth. & Econ. Dev. Corp. Arpt.
Rev. Series A, 7% 7/1/14 (FSA Insured) (d) Aaa 4,000,000 4,829,200
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Elec. Agcy. Rev. Rfdg.
Series A, 6.25% 1/1/05 (FGIC Insured) Aaa 1,715,000 1,875,438
TENNESSEE - 0.5%
Chattanooga Gen. Oblig. Rfdg. & Impt.
5.25% 9/1/14 Aa3 1,580,000 1,609,214
Metropolitan Gov't. Nashville & Davidson
County Elec. Rev. (Cap. Appreciation)
Series A, 0% 5/15/06 (MBIA Insured) Aaa 1,000,000 689,070
2,298,284
TEXAS - 4.4%
Brazos River Auth. Poll. Cont. Rev. (Texas Utils.
Elec. Co.) Series A, 9.25% 3/1/18
(Pre-Refunded to 5/1/98 @ 102) (d)(e) Baa1 1,300,000 1,326,000
Conroe Independent School Dist. Rfdg.
(Cap. Appreciation) 0% 2/15/09
(PSF Guaranteed) Aaa 750,000 445,110
Dallas-Fort Worth Int'l. Arpt. Facs. Impt. Corp.
Rev. (American Airlines, Inc.)
7.50% 11/1/25 (d) Baa2 6,000,000 6,467,640
Midlothian Independent School Dist. Rfdg.
(Cap. Appreciation) 0% 2/15/04
(PSF Guaranteed) Aaa 1,845,000 1,417,145
Plano Independent School Dist. 6% 2/15/03
(PSF Guaranteed) Aaa 4,510,000 4,817,898
Texas Pub. Fin. Auth. Series A, 5% 10/1/14 Aa2 5,000,000 4,943,850
19,417,643
U.S. VIRGIN ISLANDS - 0.5%
Virgin Islands Pub. Fin. Auth. 5.50% 10/1/05 BBB- 2,000,000
2,048,560
UTAH - 2.9%
Intermountain Pwr. Agcy. Pwr. Supply Rev. Rfdg.:
Series A, 6.50% 7/1/09 (AMBAC Insured) Aaa 1,000,000 1,149,800
Series B, 5.75% 7/1/16 (MBIA Insured) Aaa 2,500,000 2,631,450
Series D, 5% 7/1/21 (MBIA Insured) Aaa 1,200,000 1,152,264
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
UTAH - CONTINUED
Intermountain Pwr. Agcy. Pwr. Supply Sys. Rev.
Spl. Oblig. Sixth
Series B, 6% 7/1/16 (MBIA Insured) Aaa $ 7,000,000 $ 7,508,200
South Salt Lake City Ind. Rev. (Price Savers
Wholesale Club Proj.) 9% 11/15/13 - 250,000 278,938
12,720,652
VIRGINIA - 2.1%
Loudoun County Ind. Dev. Auth. Residential Care
Facs. Rev. (Falcons Landing Proj.) Series A,
9.25% 11/1/04 (Escrowed to Maturity) (e) - 1,000,000 1,185,480
Virginia Pub. Bldg. Auth. Pub. Facs. Rev. Rfdg.
Series A, 5% 8/1/12 Aa2 4,860,000 4,862,331
Virginia Pub. School Auth. Series B, 6.50%
8/1/15 (Pre-Refunded to 8/1/04 @ 102) (e) Aa2 3,000,000 3,368,400
9,416,211
WASHINGTON - 4.5%
King County Gen. Oblig. Series D,
5.75% 12/1/11 Aa1 3,990,000 4,263,475
Washington Pub. Pwr. Supply Sys. Rev.
(Nuclear Proj. #2):
Rfdg. Series A, 5.90% 7/1/04 Aa1 1,000,000 1,065,470
5.40% 7/1/12 Aa1 14,000,000 14,227,920
19,556,865
TOTAL MUNICIPAL BONDS
(Cost $407,097,276 ) 428,376,098
CASH EQUIVALENTS - 2.2%
SHARES
Municipal Central Cash Fund (b)(c)
(Cost $9,603,798) 9,603,798 9,603,798
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $416,701,074) $ 437,979,896
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) 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.
(c) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 5.51%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) Security collateralized by an amount sufficient to pay interest
and principal.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 62.3% AAA, AA, A 58.1%
Baa 20.6% BBB 27.2%
Ba 0.0% BB 0.6%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 6.9%. FMR has
determined that unrated debt securities that are lower quality account
for 0.4% of the total value of investment.
The distribution of municipal securities by revenue source, as a
percentage of total value of investment in securities, is as follows:
General Obligation 26.6%
Electric Revenue 16.5
Health Care 12.5
Transportation 9.0
Escrowed/Pre-Refunded 8.9
Industrial Development 6.9
Special Tax 5.0
Others (individually less than 5%) 14.6
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $416,701,074. Net unrealized appreciation
aggregated $21,278,822, of which $21,734,055 related to appreciated
investment securities and $455,233 related to depreciated investment
securities.
At October 31, 1997, the fund had a capital loss carryforward of
approximately $16,425,000 of which $2,646,000, $7,511,000 and
$6,268,000 will expire on October 31, 2002, 2003 and 2004,
respectively.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $416,701,074) - $ 437,979,896
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR FUND SHARES SOLD 506,029
INTEREST RECEIVABLE 7,109,834
OTHER RECEIVABLES 22,338
PREPAID EXPENSES 7,018
TOTAL ASSETS 445,625,115
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 6,939,670
PAYABLE FOR FUND SHARES REDEEMED 1,203,086
DISTRIBUTIONS PAYABLE 608,348
ACCRUED MANAGEMENT FEE 135,460
DISTRIBUTION FEES PAYABLE 117,823
OTHER PAYABLES AND ACCRUED EXPENSES 101,159
TOTAL LIABILITIES 9,105,546
NET ASSETS $ 436,519,569
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 435,774,884
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) (20,534,137)
ON INVESTMENTS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 21,278,822
NET ASSETS $ 436,519,569
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1998 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $12.23
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($4,791,044 (DIVIDED BY) 391,720 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/95.25 OF $12.23) $12.84
CLASS T: $12.24
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($378,512,125 (DIVIDED BY) 30,927,954 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.50 OF $12.24) $12.68
CLASS B: $12.21
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($47,301,034 (DIVIDED BY) 3,873,953 SHARES) A
CLASS C: $12.24
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($2,516,910 (DIVIDED BY) 205,630 SHARES) A
INSTITUTIONAL CLASS: $12.19
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($3,398,456 (DIVIDED BY) 278,768 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INTEREST INCOME $ 12,264,715
EXPENSES
MANAGEMENT FEE $ 847,369
TRANSFER AGENT FEES 366,615
DISTRIBUTION FEES 691,300
ACCOUNTING FEES AND EXPENSES 93,549
NON-INTERESTED TRUSTEES' COMPENSATION 812
CUSTODIAN FEES AND EXPENSES 11,711
REGISTRATION FEES 48,204
AUDIT 21,263
LEGAL 3,219
REPORTS TO SHAREHOLDERS 21,696
MISCELLANEOUS 473
TOTAL EXPENSES BEFORE REDUCTIONS 2,106,211
EXPENSE REDUCTIONS (28,002) 2,078,209
NET INTEREST INCOME 10,186,506
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (3,252,074)
FUTURES CONTRACTS 219,805 (3,032,269)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 5,990,975
FUTURES CONTRACTS (32,838) 5,958,137
NET GAIN (LOSS) 2,925,868
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 13,112,374
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 10,186,506 $ 23,276,174
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) (3,032,269) 982,319
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 5,958,137 14,869,381
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 13,112,374 39,127,874
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (10,186,506) (24,140,139)
FROM NET INTEREST INCOME
IN EXCESS OF NET INTEREST INCOME - (86,644)
TOTAL DISTRIBUTIONS (10,186,506) (24,226,783)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) (4,771,516) (97,485,396)
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,845,648) (82,584,305)
NET ASSETS
BEGINNING OF PERIOD 438,365,217 520,949,522
END OF PERIOD $ 436,519,569 $ 438,365,217
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 G
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.150 $ 11.740 $ 11.630
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .293 .583 E .105 E, F
NET REALIZED AND UNREALIZED GAIN (LOSS) .080 .445 .109
TOTAL FROM INVESTMENT OPERATIONS .373 1.028 .214
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.293) (.616) F (.104)
IN EXCESS OF NET INTEREST INCOME - (.002) H -
TOTAL DISTRIBUTIONS (.293) (.618) (.104)
NET ASSET VALUE, END OF PERIOD $ 12.230 $ 12.150 $ 11.740
TOTAL RETURN B, C 3.08% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,791 $ 3,755 $ 202
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A, D .90% D .90% A, D
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.73% A 4.87% 5.73% A
PORTFOLIO TURNOVER RATE 34% A 36% 49%
</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 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 SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 F 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE,
BEGINNING OF PERIOD $ 12.150 $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .291 .597 C .677 C, E .700 .689 .710
NET REALIZED AND .090 .407 (.136) .660 (1.430) 1.100
UNREALIZED
GAIN (LOSS)
TOTAL FROM INVESTMENT .381 1.004 .541 1.360 (.741) 1.810
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST (.291) (.612) E (.661) (.700) (.689) (.710)
INCOME
IN EXCESS OF NET - (.002) D - - - -
INTEREST INCOME
FROM NET REALIZED - - - - (.060) (.030)
GAIN
IN EXCESS OF NET - - - - (.010) -
REALIZED GAIN
TOTAL DISTRIBUTIONS (.291) (.614) (.661) (.700) (.759) (.740)
NET ASSET VALUE, $ 12.240 $ 12.150 $ 11.760 $ 11.880 $ 11.220 $ 12.720
END OF PERIOD
TOTAL RETURN B 3.06% 8.89% 4.68% 12.50% (6.03)% 15.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF $ 378,512 $ 392,075 $ 480,432 $ 565,131 $ 544,422 $ 497,575
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO .88% A .89% .89% .91% .89% .92%
AVERAGE NET ASSETS
RATIO OF NET INTEREST 4.75% A 5.04% 5.74% 6.06% 5.78% 5.59%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 34% A 36% 49% 37% 38% 27%
</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 NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 G
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 12.130 $ 11.740 $ 11.860 $ 11.210 $ 11.610
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .251 .515 E .596 E, F .612 .188
NET REALIZED AND UNREALIZED .080 .416 (.136) .650 (.400)
GAIN (LOSS)
TOTAL FROM INVESTMENT .331 .931 .460 1.262 (.212)
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.251) (.539) F (.580) (.612) (.188)
IN EXCESS OF NET INTEREST - (.002) H - - -
INCOME
TOTAL DISTRIBUTIONS (.251) (.541) (.580) (.612) (.188)
NET ASSET VALUE, END OF PERIOD $ 12.210 $ 12.130 $ 11.740 $ 11.860 $ 11.210
TOTAL RETURN B, C 2.73% 8.15% 3.98% 11.57% (1.86)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 47,301 $ 41,024 $ 39,389 $ 32,395 $ 9,968
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 1.57% A 1.56% 1.57% 1.86% D 2.09% A
NET ASSETS
RATIO OF NET INTEREST INCOME TO 4.08% A 4.35% 5.06% 5.18% 4.58% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 34% A 36% 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.
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED
APRIL 30, 1998 E
(UNAUDITED)
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.130
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .231
NET REALIZED AND UNREALIZED GAIN (LOSS) .110
TOTAL FROM INVESTMENT OPERATIONS .341
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.231)
NET ASSET VALUE, END OF PERIOD $ 12.240
TOTAL RETURN B, C 2.82%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,517
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, D
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.67% A
PORTFOLIO TURNOVER RATE 34% 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 FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO APRIL 30, 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 G
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.120 $ 11.720 $ 11.880 $ 11.700
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .306 .609 E .707 E, F .232
NET REALIZED AND UNREALIZED GAIN (LOSS) .070 .464 (.197) .180
TOTAL FROM INVESTMENT OPERATIONS .376 1.073 .510 .412
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.306) (.671) F (.670) (.232)
IN EXCESS OF NET INTEREST INCOME - (.002) H - -
TOTAL DISTRIBUTIONS (.306) (.673) (.670) (.232)
NET ASSET VALUE, END OF PERIOD $ 12.190 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C 3.11% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,398 $ 1,511 $ 927 $ 154
RATIO OF EXPENSES TO AVERAGE NET ASSETS .75% A, D .75% D .75% D .75% A, D
RATIO OF NET INTEREST INCOME TO AVERAGE 4.99% A 5.11% 5.88% 5.89% A
NET ASSETS
PORTFOLIO TURNOVER RATE 34% A 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (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 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 JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor 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. At a special meeting of the shareholders of the fund
on April 15, 1998, shareholders approved an Agreement and Plan
Reorganization, providing for the reorganization of the fund into
Fidelity Advisor Series II, on or about February 26, 1999.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to its
distribution plan. The fund commenced sale of Class C shares on
November 3, 1997. Interest income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, 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 require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are borne by Class C 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 transactions, market discount and losses
deferred due to wash sales and futures. The fund also utilized
earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax
purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc., (formerly FMR Texas, Inc.) 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. Income
distributions from the Cash Fund are declared daily and paid monthly
from net interest income. Income distributions earned by the fund are
recorded as interest income in the accompanying financial statements.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a delayed delivery basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of
the underlying securities and the date when the securities will be
delivered and paid for are fixed at the time the transaction is
negotiated. With respect to
2. OPERATING POLICIES - CONTINUED
DELAYED DELIVERY TRANSACTIONS - CONTINUED
purchase commitments, the fund identifies securities as segregated in
its custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under
the contract.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $74,370,018 and $72,273,292, respectively.
The market value of futures contracts opened and closed during the
period amounted to $26,267,621 and $37,554,990, 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. The annual individual fund fee rate is .25%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Fidelity Distributors Corporation (FDC), an affiliate of FMR, a
distribution and service fee. For the period, this fee was based on
the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO PAID TO RETAINED BY
FDC INVESTMENT FDC
PROFESSIONALS
CLASS A $ 3,021 $ 3,021 $ -
CLASS T 485,085 476,168 8,917
CLASS B 197,946 54,985 142,961
CLASS C 5,248 - 5,248
$ 691,300 $ 534,174 $ 157,126
Under the Plans, FMR may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The
Plans also authorize payments to third parties that assist in the sale
of each class' shares or render shareholder support services. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 537
CLASS T 34,626
CLASS B 7,743
CLASS C 1,935
$ 44,841
SALES LOAD. FDC receives a front-end sales charge of up to 4.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
one year. The Class A and Class T contingent deferred sales charge is
based on 0.25% of the lesser of the cost of shares at the initial date
of purchase or the net asset value of the redeemed shares, excluding
any reinvested dividends and capital gains.
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 PAID TO
FDC INVESTMENT
PROFESSIONALS
CLASS A $ 20,995 $ 12,146
CLASS T 88,690 54,855
CLASS B 53,624 -*
CLASS C 2,888 -*
$ 166,197 $ 67,001
* WHEN CLASS B AND CLASS C 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, Class C, 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 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,
except proxy statements. For the period, each class paid the following
transfer agent fees:
AMOUNT % OF
AVERAGE
NET ASSETS*
CLASS A $ 3,475 .17
CLASS T 324,954 .17
CLASS B 35,076 .16
CLASS C 1,058 .20
INSTITUTIONAL CLASS 2,052 .22
$ 366,615
* ANNUALIZED
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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A .90% $ 4,644
CLASS C 1.75% 13,659
INSTITUTIONAL CLASS .75% 9,128
$ 27,431
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 $571 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1998 A 1997
FROM NET INTEREST INCOME
CLASS A $ 94,406 $ 94,032
CLASS T 9,135,232 22,160,320
CLASS B 890,310 1,825,294
CLASS C 19,098 -
INSTITUTIONAL CLASS 47,460 60,493
TOTAL $ 10,186,506 $ 24,140,139
IN EXCESS OF NET INTEREST INCOME
CLASS A $ - $ 40
CLASS T - 79,597
CLASS B - 6,838
CLASS C - -
INSTITUTIONAL CLASS - 169
TOTAL $ - $ 86,644
TOTAL $ 10,186,506 $ 24,226,783
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO APRIL 30, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1998 A 1997 1998 A 1997
CLASS A 181,306 307,664 $ 2,231,475 $ 3,663,457
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,748 3,770 58,432 45,120
SHARES REDEEMED (103,362) (19,585) (1,262,429) (234,062)
NET INCREASE (DECREASE) 82,692 291,849 $ 1,027,478 $ 3,474,515
CLASS T 2,122,390 2,221,421 $ 26,183,166 $ 26,303,589
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 451,827 1,143,394 5,562,644 13,582,690
SHARES REDEEMED (3,903,964) (11,972,642) (48,013,706) (141,705,601)
NET INCREASE (DECREASE) (1,329,747) (8,607,827) $ (16,267,896) $ (101,819,322)
CLASS B 725,700 713,815 $ 8,926,602 $ 8,459,000
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 41,612 90,487 511,215 1,073,258
SHARES REDEEMED (276,174) (777,996) (3,398,037) (9,216,485)
NET INCREASE (DECREASE) 491,138 26,306 $ 6,039,780 $ 315,773
CLASS C 234,829 - $ 2,893,894 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 609 - 7,497 -
SHARES REDEEMED (29,808) - (368,757) -
NET INCREASE (DECREASE) 205,630 - $ 2,532,634 $ -
INSTITUTIONAL CLASS 178,100 107,503 $ 2,191,539 $ 1,278,313
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 2,612 3,746 32,027 44,614
SHARES REDEEMED (26,613) (65,730) (327,078) (779,289)
NET INCREASE (DECREASE) 154,099 45,519 $ 1,896,488 $ 543,638
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO APRIL 30, 1998.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 6,755
CLASS T 9,410
CLASS B 8,619
CLASS C 13,810
INSTITUTIONAL CLASS 9,610
$ 48,204
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on April 15,
1998. The results of votes taken among shareholders on proposals
before them are listed below.
PROPOSAL 1
To approve an amended management contract for the fund.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 25,817,524.338 92.116
AGAINST 469,603.522 1.675
ABSTAIN 1,740,144.132 6.209
TOTAL 28,027,271.992 100.000
PROPOSAL 2
To amend the fundamental investment policy on diversification for the
fund to exclude investments in other investment companies from the
limitation.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 18,288,422.825 87.741
AGAINST 662,051.546 3.176
ABSTAIN 1,893,272.621 9.083
TOTAL 20,843,746.992 100.000
BROKER 7,183,525.000
NON-VOTES
PROPOSAL 3
To approve an agreement and plan providing for the reorganization of
the fund.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 18,490,167.503 88.708
AGAINST 436,395.990 2.094
ABSTAIN 1,917,183.499 9.198
TOTAL 20,843,746.992 100.000
BROKER 7,183,525.000
NON-VOTES
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Jonathan D. Short, Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Erid D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
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 International Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant
Growth Fund
SM
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 Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(REGISTERED TRADEMARK)
MUNICIPAL INCOME FUND -
INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1998
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 22 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 31 NOTES TO THE FINANCIAL STATEMENTS.
PROXY VOTING RESULTS 39
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:
Low interest rates and subdued inflation were two main factors that
bolstered stock and bond markets in the U.S. during the first four
months of 1998. The stock market continued to soar to record heights
as corporate earnings proved to be stronger than expected and
investors shrugged off concerns about the effects of economic
difficulties in Asia. The Federal Reserve Board continued its steady
interest rate policy, which boosted the performance of bonds.
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 MUNICIPAL INCOME FUND - INSTITUTIONAL CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Institutional
Class shares took place on July 3, 1995. Institutional Class shares
are sold to eligible investors without a sales load or 12b-1 fee.
Returns prior to July 3, 1995 are those of Class T, the original class
of the fund, and reflect Class T'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, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - INST CL 3.11% 9.88% 32.98% 133.73%
LB MUNICIPAL BOND 2.76% 9.30% 37.09% 120.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 2.45% 9.02% 32.67% 114.79%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, six months, one
year, five years or 10 years. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare Institutional Class'
returns to those of the Lehman Brothers Municipal Bond Index - a total
return performance benchmark for 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
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 246 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - INST CL 9.88% 5.87% 8.86%
LB MUNICIPAL BOND 9.30% 6.51% 8.21%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 9.02% 5.81% 7.93%
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class shares'
cumulative return and show you what would have happened if
Institutional Class shares had performed at a constant rate each year.
$10,000 OVER 10 YEARS
FA Municipal Income -CL I LB Municipal Bond
00679 LB015
1988/04/30 10000.00 10000.00
1988/05/31 10050.04 9971.10
1988/06/30 10237.31 10116.98
1988/07/31 10269.92 10182.94
1988/08/31 10304.95 10191.90
1988/09/30 10462.00 10376.37
1988/10/31 10604.94 10559.00
1988/11/30 10616.40 10462.28
1988/12/31 10737.82 10569.31
1989/01/31 10873.04 10787.88
1989/02/28 10883.94 10664.79
1989/03/31 10967.69 10639.30
1989/04/30 11218.33 10891.88
1989/05/31 11401.61 11118.10
1989/06/30 11532.20 11269.09
1989/07/31 11633.37 11422.46
1989/08/31 11723.36 11310.63
1989/09/30 11758.71 11276.93
1989/10/31 11882.86 11414.84
1989/11/30 12029.14 11614.60
1989/12/31 12143.51 11709.61
1990/01/31 12162.67 11654.23
1990/02/28 12249.83 11757.95
1990/03/31 12326.68 11761.48
1990/04/30 12213.94 11676.32
1990/05/31 12464.24 11931.22
1990/06/30 12611.10 12036.09
1990/07/31 12805.60 12213.02
1990/08/31 12719.20 12035.69
1990/09/30 12809.64 12042.55
1990/10/31 12985.51 12261.00
1990/11/30 13307.71 12507.57
1990/12/31 13392.61 12561.98
1991/01/31 13548.47 12730.56
1991/02/28 13652.65 12841.32
1991/03/31 13732.91 12845.94
1991/04/30 13956.52 13016.79
1991/05/31 14129.04 13132.51
1991/06/30 14161.92 13119.51
1991/07/31 14345.04 13279.30
1991/08/31 14474.59 13454.19
1991/09/30 14644.37 13629.37
1991/10/31 14806.64 13752.03
1991/11/30 14862.34 13790.40
1991/12/31 15023.98 14086.34
1992/01/31 15190.52 14118.46
1992/02/29 15273.05 14122.97
1992/03/31 15349.68 14128.20
1992/04/30 15488.21 14253.94
1992/05/31 15627.15 14421.71
1992/06/30 15841.43 14663.71
1992/07/31 16393.04 15103.32
1992/08/31 16266.09 14956.07
1992/09/30 16367.61 15053.88
1992/10/31 16170.08 14905.90
1992/11/30 16494.16 15172.86
1992/12/31 16693.03 15327.78
1993/01/31 16975.38 15506.04
1993/02/28 17574.80 16066.89
1993/03/31 17391.49 15897.07
1993/04/30 17575.92 16057.47
1993/05/31 17721.47 16147.71
1993/06/30 18005.59 16417.22
1993/07/31 18018.96 16438.72
1993/08/31 18483.05 16780.98
1993/09/30 18739.00 16972.11
1993/10/31 18749.05 17004.87
1993/11/30 18565.82 16855.06
1993/12/31 18994.53 17210.87
1994/01/31 19215.71 17407.42
1994/02/28 18707.84 16956.56
1994/03/31 17710.65 16266.09
1994/04/30 17828.17 16404.03
1994/05/31 17933.60 16546.25
1994/06/30 17867.57 16445.15
1994/07/31 18189.88 16746.59
1994/08/31 18218.45 16804.54
1994/09/30 17933.05 16557.85
1994/10/31 17618.69 16263.78
1994/11/30 17052.25 15969.73
1994/12/31 17465.54 16321.22
1995/01/31 18055.57 16787.68
1995/02/28 18542.05 17275.87
1995/03/31 18639.55 17474.37
1995/04/30 18700.81 17494.99
1995/05/31 19299.26 18053.25
1995/06/30 19147.87 17896.19
1995/07/31 19213.73 18065.85
1995/08/31 19412.16 18294.92
1995/09/30 19605.76 18410.73
1995/10/31 19837.06 18678.42
1995/11/30 20230.42 18988.30
1995/12/31 20409.95 19170.77
1996/01/31 20522.68 19315.51
1996/02/29 20476.47 19185.13
1996/03/31 20061.24 18939.95
1996/04/30 19980.09 18886.35
1996/05/31 19907.36 18878.79
1996/06/30 20141.58 19084.38
1996/07/31 20275.27 19258.05
1996/08/31 20321.48 19253.43
1996/09/30 20505.39 19522.98
1996/10/31 20711.59 19743.78
1996/11/30 21113.74 20105.09
1996/12/31 21041.32 20020.65
1997/01/31 21109.17 20058.49
1997/02/28 21326.06 20242.63
1997/03/31 21101.65 19972.79
1997/04/30 21271.52 20139.96
1997/05/31 21536.09 20442.87
1997/06/30 21816.09 20660.59
1997/07/31 22447.46 21232.88
1997/08/31 22249.56 21033.93
1997/09/30 22531.20 21283.61
1997/10/31 22667.68 21420.46
1997/11/30 22818.57 21546.41
1997/12/31 23192.71 21860.77
1998/01/31 23422.00 22086.38
1998/02/28 23451.38 22093.00
1998/03/31 23491.24 22112.44
1998/04/30 23373.08 22012.72
IMATRL PRASUN SHR__CHT 19980430 19980507 150102 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Institutional
Class on April 30, 1988. As the chart shows, by April 30, 1998, the
value of the investment would have grown to $23,373 - a 133.73%
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 $22,013 - a 120.13% 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> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, JULY 3, 1995
ENDED (COMMENCEMENT OF
APRIL 30, SALE OF INSTITUTIONAL
CLASS SHARES) TO
OCTOBER 31,
1998 1997 1996 1995
DIVIDEND RETURN 2.53% 6.01% 5.76% 2.01%
CAPITAL RETURN 0.58% 3.43% -1.35% 1.54%
TOTAL RETURN 3.11% 9.44% 4.41% 3.55%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED APRIL 30, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.81(CENTS) 30.60(CENTS) 62.58(CENTS)
ANNUALIZED DIVIDEND RATE 4.77% 5.03% 5.16%
30-DAY ANNUALIZED YIELD 4.26% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 6.66% - -
</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 $12.26 over the past
one month, $12.27 over the past six months, and $12.12 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 MANAGER'S OVERVIEW
MARKET RECAP
Investor sentiment, shifting supply
and demand conditions, and
volatility in Asia played key roles in
the municipal bond market during
the six months that ended April
30, 1998. During this period, the
Lehman Brothers Municipal Bond
Index - a measure of the
municipal bond market -
returned 2.76%. To compare, the
Lehman Brothers Aggregate Bond
Index - a measure of the
investment-grade taxable bond
market in the U.S. - returned
3.59%. In late 1997, volatility in
Asia helped prop up the muni
bond market. Investors felt that
currency devaluations in that
region would translate into
cheaper prices for Asian goods
and help control the inflation that
can eat into bonds' fixed
payments. In January and
February 1998, though, muni
bond supply increased as many
issuers took advantage of lower
interest rates to refinance their debt
at lower rates. That, combined
with softening demand, dampened
the performance of muni bonds in
early 1998. On top of that, the
municipal bond market experienced
extremely heavy new issuance in
March and April 1998, as issuers
rushed to the market before the
largest municipal deal in history is
expected to take place. A $3.5
billion issuance by the Long Island
Power Authority is scheduled to be
priced in May. This heavy supply,
coupled with only intermittent
demand, put downward pressure
on municipal bond prices at the
end of the period, causing muni
bonds to lag taxable bonds in
early 1998.
NOTE TO SHAREHOLDERS: Jonathan Short became Portfolio Manager of
Fidelity Advisor Municipal Income Fund on January 31, 1998.
Q. HOW DID THE FUND PERFORM, JON?
A. For the six-month period that ended April 30, 1998, the fund's
Institutional Class shares had a total return of 3.11%. To get a sense
of how the fund did relative to its competitors, the general municipal
debt funds average returned 2.45% for the same six-month period,
according to Lipper Analytical Services. Additionally, the Lehman
Brothers Municipal Bond Index - a broad measure of the performance of
the municipal bond market - returned 2.76% for the same six-month
period. For the 12-month period that ended April 30, 1998, the fund's
Institutional Class shares had a total return of 9.88%, while the
general municipal debt funds average and the Lehman Brothers Municipal
Bond Index returned 9.02% and 9.30%, respectively.
Q. WHAT ROLE DOES THE LEHMAN BROTHERS MUNICIPAL BOND INDEX PLAY IN THE
MANAGEMENT OF THE FUND?
A. The Lehman Brothers Municipal Bond Index plays a very important
role in the management of the fund. It's the fund's benchmark index
and includes most of the universe of investment-grade municipal bonds.
I use the index as a starting point for my investment decisions,
managing the fund to be generally as sensitive to changes in interest
rates as the index. In addition, I refer to the index when deciding
how to allocate assets among different maturities and market sectors
based on my view of the relative value of each maturity or sector.
Q. WHAT HELPED THE FUND'S PERFORMANCE?
A. The fund had a relatively large stake in bonds rated Baa by Moody's
Investors Service, which performed extremely well throughout the
period and helped the fund's performance. Faced with relatively low
interest rates, yield-hungry investors increasingly sought out these
bonds because they offered a yield advantage over higher-quality
bonds. What's more, there was a very small supply of these bonds
during the period. Strong demand pushed up against low supply and
boosted the prices of most Baa-rated bonds.
Q. WHICH SECURITIES DETRACTED FROM THE FUND'S PERFORMANCE?
A. As for detractors, the fund's stake in zero coupon bonds was a drag
on the fund's performance. Zeros pay no periodic interest but trade at
a deep discount to their face value. The buyer of a zero receives the
rate of return by the gradual appreciation of the security, which is
redeemed at face value on a specified maturity date. These securities
tend to be very sensitive to interest-rate movements and when rates
crept up a bit over the past couple of months, zeros lagged the
overall market.
Q. THE ELECTRIC UTILITY INDUSTRY IS TRANSFORMING FROM A MONOPOLY TO A
MORE COMPETITIVE ENVIRONMENT. GIVEN THAT THE INDUSTRY IS UNDER
PRESSURE FROM THE THREAT OF INCREASED COMPETITION, WHAT FACTORS DO YOU
LOOK FOR WHEN SELECTING THESE BONDS?
A. I have focused on two types of electric utilities. First, I
emphasized those that are well-prepared to deal with increased
competition. Second, I tended to focus on those that I believed could
meet competitive challenges down the road, but have been severely and
unduly penalized by the market today because of uncertainty
surrounding future deregulation. Recently, I've added some electric
utilities of both types, bringing the fund's stake in the sector up to
16.5% at the end of the period.
Q. WHAT'S YOUR OUTLOOK?
A. Municipals lagged taxable bonds throughout much of the past six
months, and as a result, currently are priced inexpensively compared
to U.S. Treasury securities. In my view, municipals may now be poised
to play catch up with Treasuries and could be in for a period of
relatively good performance. Municipals became cheap relative to their
Treasury counterparts because of a supply and demand imbalance. In the
first four months of 1998, the supply of municipals was actually quite
large compared to previous years. Cities, states, counties and other
issuers sought to take advantage of relatively low interest rates to
refinance their older, more expensive debt. As more and more of these
refinancings occurred, the supply of municipal bonds grew. On the
other side of the equation, demand - while remaining firm - didn't
keep pace with the additional supply. For the remainder of the year, I
expect that municipal refinancing activity will taper off, which would
likely be a positive for municipal bonds as long as demand remains
firm or increases.
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.
JONATHAN SHORT ON THE
IMPROVED CREDITWORTHINESS OF
MUNICIPAL BONDS:
"THE STRENGTH OF THE U.S. ECONOMY
OVER THE PAST SEVERAL YEARS HAS LED TO
A GENERAL IMPROVEMENT IN THE OVERALL
CREDITWORTHINESS OF MUNICIPAL BOND
ISSUERS. BY THAT I MEAN THAT CITIES,
STATES AND OTHER MUNICIPAL ISSUERS
ACROSS THE NATION HAVE ENJOYED BETTER
FINANCIAL AND FISCAL HEALTH THANKS IN
LARGE PART TO RISING TAX COLLECTIONS
AND BUDGET CUTTING.
"ECONOMIC STRENGTH HELPS TO EXPLAIN
WHY GENERAL OBLIGATION BONDS (GOS)
WERE THE FUND'S LARGEST SECTOR
CONCENTRATION AT THE END OF THE
PERIOD. A GO IS BACKED BY THE FULL
FAITH AND CREDIT - WHICH INCLUDES
THE TAXING POWER - OF A CITY, COUNTY,
STATE OR OTHER ISSUER, AND IS REPAID
WITH GENERAL REVENUE, INCLUDING
TAXES. AS LONG AS I FEEL THAT THE
ECONOMY IS IN RELATIVELY GOOD SHAPE,
I'LL MOST LIKELY CONTINUE TO
EMPHASIZE GOS. HOWEVER, IF I FEEL
THAT THE ECONOMY IS WEAKENING TO THE
POINT OF COMPROMISING THE FISCAL AND
FINANCIAL HEALTH OF GO ISSUERS, I'D
MOST LIKELY SWITCH MY FOCUS TOWARD
REVENUE BONDS, WHICH ARE ISSUED BY
ENTITIES SUCH AS WATER AND ELECTRIC
UTILITIES. BECAUSE REVENUE BOND
ISSUERS PROVIDE ESSENTIAL SERVICES
THAT ARE SOMEWHAT IMMUNE TO THE
UPS AND DOWNS OF THE ECONOMIC
CYCLE, THEY TEND TO PERFORM BETTER
THAN GOS IN SLOWER ECONOMIES."
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, 1998,
MORE THAN $436 MILLION
MANAGER: JONATHAN SHORT,
SINCE JANUARY 31, 1998;
JOINED FIDELITY IN 1990
(CHECKMARK)
INVESTMENT CHANGES
TOP FIVE STATES AS OF APRIL 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STATES
6 MONTHS AGO
NEW YORK 21.4 17.9
CALIFORNIA 7.6 9.5
COLORADO 6.1 5.7
PENNSYLVANIA 5.6 5.6
ILLINOIS 5.5 4.4
TOP FIVE SECTORS AS OF APRIL 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE SECTORS
6 MONTHS AGO
GENERAL OBLIGATION 26.6 27.1
ELECTRIC REVENUE 16.5 15.9
HEALTH CARE 12.5 15.8
TRANSPORTATION 9.0 10.5
ESCROWED/PRE-REFUNDED 8.9 6.0
AVERAGE YEARS TO MATURITY AS OF APRIL 30, 1998
6 MONTHS AGO
YEARS 12.9 13.2
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF APRIL 30, 1998
6 MONTHS AGO
YEARS 6.8 6.9
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF APRIL 30, 1998 AS OF OCTOBER 31, 1997
AAA 34.2%
AA, A 30.2%
BAA 26.5%
BA, B 0%
CAA, C 0%
NON-RATED 6.9%
SHORT-TERM
INVESTMENTS 2.2%
AAA 34.6%
AA, A 25.2%
BAA 26.8%
BA, B 1.3%
CAA, C 0.3%
NON-RATED 10.2%
SHORT-TERM
INVESTMENTS 1.6%
ROW: 1, COL: 1, VALUE: 34.1
ROW: 1, COL: 2, VALUE: 30.2
ROW: 1, COL: 3, VALUE: 26.5
ROW: 1, COL: 4, VALUE: 0.0
ROW: 1, COL: 5, VALUE: 7.0
ROW: 1, COL: 6, VALUE: 2.2
ROW: 1, COL: 7, VALUE: 0.0
ROW: 1, COL: 1, VALUE: 33.6
ROW: 1, COL: 2, VALUE: 24.2
ROW: 1, COL: 3, VALUE: 25.8
ROW: 1, COL: 4, VALUE: 2.3
ROW: 1, COL: 5, VALUE: 1.3
ROW: 1, COL: 6, VALUE: 10.2
ROW: 1, COL: 7, VALUE: 2.6
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, 1998,
AND OCTOBER 31, 1997 ACCOUNT FOR 0.4% AND 4.3% RESPECTIVELY, OF THE
FUND'S INVESTMENTS.
INVESTMENTS APRIL 30, 1998 (UNAUDITED)
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
MUNICIPAL BONDS - 97.8%
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
ALABAMA - 1.0%
Shelby County Gen. Oblig. Series A,
7.70% 8/1/17 - $ 4,000,000 $ 4,433,080
ARIZONA - 0.3%
Arizona Trans. Board Excise Tax Rev. Rfdg.
(Maricopa County Reg'l. Area) Series A,
6% 7/1/03 (AMBAC Insured) Aaa 1,300,000 1,394,536
ARKANSAS - 0.3%
Little Rock Arpt. Passenger Facs. Charge Rev.
5.65% 5/1/16 (AMBAC Insured) (d) Aaa 1,315,000 1,402,658
CALIFORNIA - 7.6%
California Dept. Wtr. Resources Rev. (Central
Valley Proj.) Series J-2, 6.125% 12/1/13 Aa2 2,190,000 2,299,938
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Rfdg. Series A, 5.70% 8/1/16 (MBIA Insured) Aaa 795,000 812,760
Series B, 5.20% 8/1/26 (MBIA Insured) (d) Aaa 1,020,000 1,038,748
Series R, 6.15% 8/1/27 (MBIA Insured) (d) Aaa 1,500,000 1,582,170
California Pub. Wks. Board Lease Rev. Rfdg.:
(California Univ. Proj.) Series A,
5.50% 10/1/13 A 2,000,000 2,053,220
(Dept. of Corrections State Prisons) Series A,
5% 12/1/19 (AMBAC Insured) Aaa 1,750,000 1,698,253
(Various California Univ. Projs.)
Series A, 5.50% 6/1/14 Aa3 1,500,000 1,563,330
California State Gen. Oblig. 6% 10/1/09 A1 2,500,000 2,783,500
Central Valley Fing. Auth. Cogeneration Proj.
Rev. (Carson Ice Gen. Proj.) 6% 7/1/09 BBB- 4,500,000 4,709,565
Foothill/Eastern Trans. Corridor Agcy. California
Toll Road Rev. (Sr. Lien) (Cap. Appreciation)
Series A, 0% 1/1/14 Baa 2,000,000 846,320
Los Angeles County Ctfs. of Prtn. (Cap.
Appreciation) (Disney Parking Proj.):
0% 3/1/14 Baa1 1,000,000 422,550
0% 9/1/14 Baa1 7,260,000 2,985,385
Northern California Pwr. Agcy. Pub. Pwr. Rev.
Rfdg. (Geothermal Proj. #3)
Series A, 5.85% 7/1/10 (AMBAC Insured) Aaa 1,500,000 1,650,510
Sacramento Fing. Auth. Lease Rev. Rfdg.
Series A, 5.40% 11/1/20 (AMBAC Insured) Aaa 2,000,000 2,044,800
Sacramento Fing. Auth. Rev.
(Cap. Appreciation) (Combined Proj.)
Series B, 0% 11/1/11 (MBIA Insured) Aaa 1,225,000 621,957
Sacramento Cogeneration Auth. Cogeneration Proj.
Rev. (Proctor & Gamble Proj.):
5.40% 7/1/98 BBB- 1,100,000 1,102,178
6.375% 7/1/10 BBB- 1,000,000 1,083,850
6.50% 7/1/14 BBB- 3,800,000 4,125,280
33,424,314
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
COLORADO - 6.1%
Arapahoe County Cap. Impt. Tr.ust Federal Hwy.
Rev. (Cap. Appreciation) Series E, 0% 8/31/26
(Pre-Refunded to 8/31/05 @ 20.8626) (e) Aaa $ 7,800,000 $ 1,153,932
Colorado Health Facs. Auth. Rev.:
(Nat'l. Benevolent Assoc. Proj.)
Series A, 6.50% 6/1/25 Baa1 1,360,000 1,473,070
(Nat'l. Jewish Medical & Research Ctr.)
5.375% 1/1/28 BBB 3,000,000 2,898,510
Rfdg. (Rocky Mountain Adventist):
6.625% 2/1/13 Baa2 6,900,000 7,443,927
6.625% 2/1/22 Baa2 4,000,000 4,315,320
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/06 (MBIA Insured) Aaa 1,405,000 984,961
0% 1/1/08 (MBIA Insured) Aaa 870,000 550,788
Denver City & County Arpt. Rev.:
(Cap. Appreciation):
Series A, 0% 11/15/02
(MBIA Insured) (d) Aaa 2,115,000 1,717,211
Series D, 0% 11/15/04 (MBIA Insured) (d) Aaa 1,700,000 1,251,557
Rfdg. Series D, 5% 11/15/98 (d) Baa1 1,200,000 1,205,556
Series A:
6.90% 11/15/98 (d) Baa1 1,000,000 1,014,190
7.50% 11/15/23
(Pre-Refunded to 11/15/04 @ 102) (e) Aaa 430,000 506,011
7.50% 11/15/23 (d) Baa1 2,070,000 2,361,373
26,876,406
CONNECTICUT - 3.3%
Connecticut Health & Edl. Facs. Auth. Rev.:
(New Britain Mem. Hosp.) Series A:
7.50% 7/1/06
(Pre-Refunded to 7/1/02 @ 102) (e) - 2,615,000 2,868,995
7.75% 7/1/22
(Pre-Refunded to 7/1/02 @ 102) (e) Aaa 1,500,000 1,716,930
(The Griffin Hosp.) Series A:
6% 7/1/13 Baa2 1,810,000 1,862,671
5.75% 7/1/23 Baa2 3,280,000 3,284,297
Connecticut Spl. Tax Oblig. Rev. Trans. Infrastructure
Series A, 5.50% 11/1/06 (FSA Insured) Aaa 1,500,000 1,599,705
Eastern Connecticut Resource Recovery Auth.
Solid Waste Rev. (Wheelabrator Lisbon Proj.)
Series A, 5.50% 1/1/20 (d) BBB 3,350,000 3,254,659
14,587,257
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
DISTRICT OF COLUMBIA - 2.7%
District of Columbia Gen. Oblig. Rfdg.:
Series A, 6% 6/1/07 (MBIA Insured) Aaa $ 2,000,000 $ 2,166,120
Series B, 5% 6/1/05 (MBIA Insured) Aaa 4,135,000 4,193,634
District of Columbia Hosp. Rev. (Hosp. for Sick
Children) Series A, 8.875% 1/1/21 - 955,000 1,040,377
District of Columbia Redev. Land Agcy.
Sport Arena Spl. Tax Rev.:
5.30% 11/1/99 Baa 1,700,000 1,722,525
5.625% 11/1/10 Baa 705,000 715,180
District of Columbia Rev. Rfdg. (Georgetown Univ.)
Series A, 5.95% 4/1/14 (MBIA Insured) Aaa 2,000,000 2,140,300
11,978,136
FLORIDA - 0.8%
Broward County Resource Recovery Rev. (SES
Broward Co. LP South Proj.) 7.95% 12/1/08 A3 575,000 620,379
Florida Mid-Bay Bridge Auth. Rev.
Series A, 7.50% 10/1/17 - 2,500,000 2,753,375
3,373,754
GEORGIA - 0.9%
Georgia Gen. Oblig. Series C, 6.25% 8/1/09 Aaa 3,500,000 3,977,890
HAWAII - 1.1%
Hawaii Gen. Oblig. Series C, 6.25% 3/1/03
(FGIC Insured) Aaa 4,515,000 4,858,230
IDAHO - 0.1%
Boise Urban Renewal Agcy. Parking Rev. (Tax
Increment) Series A, B, C, 8.125% 9/1/15 BBB+ 375,000 382,564
ILLINOIS - 5.5%
Chicago Board of Ed. (Chicago School Reform):
6.25% 12/1/09 (MBIA Insured) Aaa 3,000,000 3,404,640
5.75% 12/1/27 (AMBAC Insured) Aaa 5,000,000 5,173,150
Chicago O'Hare Int'l. Arpt. Rev.:
(Passenger Facs. Charge) Series A,
5.60% 1/1/10 (AMBAC Insured) Aaa 2,500,000 2,614,350
Rfdg. (Gen. Arpt. Proj.) (2nd Lien) Series A:
6.25% 1/1/09 (AMBAC Insured) (d) Aaa 3,700,000 4,056,828
6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,526,966
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg.
(American Airlines, Inc. Proj.) 8.20% 12/1/24 Baa2 1,000,000
1,196,760
Du Page County Commty. High School Dist. #99
(Downers Grove) Series A, 6% 2/1/06
(AMBAC Insured) Aaa 1,640,000 1,779,220
Illinois Ed. Facs. Auth. Rev. Rfdg. (DePaul Univ.)
6% 10/1/05 (AMBAC Insured) Aaa 1,200,000 1,300,512
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
ILLINOIS - CONTINUED
Illinois Health Facs. Auth. Rev.:
(Covenant Retirement Commty.)
Series A, 7.60% 12/1/12 A- $ 750,000 $ 840,795
(Mem. Hosp.):
7.125% 5/1/10
(Pre-Refunded to 5/1/02 @ 102) (e) BBB 1,000,000 1,113,550
7.25% 5/1/22
(Pre-Refunded to 5/1/02 @ 102) (e) BBB 1,000,000 1,118,080
24,124,851
INDIANA - 0.3%
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 1,000,000 1,113,630
KANSAS - 0.7%
Kansas Dev. Fin. Auth. Rev.
(Sisters of Charity Leavenworth):
5% 12/1/13 (MBIA Insured) Aaa 2,390,000 2,361,440
5% 12/1/14 (MBIA Insured) Aaa 500,000 490,515
2,851,955
KENTUCKY - 1.9%
Kenton County Arpt. Board Arpt. Rev.:
(Cincinnati/Northern Kentucky Int'l.)
Series A, 6% 3/1/05 (MBIA Insured) (d) Aaa 5,570,000 5,970,984
(Spl. Facs. Delta Airlines, Inc. Proj.)
Series A, 7.50% 2/1/20 (d) Baa3 2,000,000 2,203,060
8,174,044
MARYLAND - 1.2%
Maryland Health & Higher Edl. Facs. Auth. Rev.:
(Good Samaritan Hosp.):
5.75% 7/1/13 (AMBAC Insured)
(Escrowed to Maturity) (e) A1 1,665,000 1,786,295
5.75% 7/1/13 (AMBAC Insured) Aaa 1,015,000 1,104,046
Rfdg. (Johns Hopkins Univ.) 6% 7/1/10 Aa2 2,000,000 2,214,480
5,104,821
MASSACHUSETTS - 4.4%
Massachusetts Bay Trans. Auth.
(Mass. General Trans. Sys.)
Series A, 5.625% 3/1/26
(Pre-Refunded to 3/1/06 @ 102) (e) A1 5,875,000 6,307,576
Massachusetts Health & Edl. Facs. Auth. Rev.:
(1st. Mtg.) (Fairview Extended Care)
Series A, 10.25% 1/1/21
(Pre-Refunded to 1/1/01 @ 103) (e) - 5,000,000 5,865,550
(Hebrew Rehabilitation Ctr. for Aged)
Series C, 5.25% 7/1/17 A 2,000,000 1,961,800
(New England Med. Ctr. Hosp.)
Series G, 5.375% 7/1/24 (MBIA Insured) Aaa 500,000 497,595
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Rev.:
(Atlanticare Med. Ctr.)
Series B, 10.125% 11/1/14 - $ 700,000 $ 766,514
(Cap. Appreciation) (Massachusetts Biomedical
Research) Series A-2:
0% 8/1/08 - 800,000 481,968
0% 8/1/10 - 4,500,000 2,389,410
Rfdg. (Emerson College)
Series A, 8.90% 1/1/18 - 1,000,000 1,099,090
19,369,503
MICHIGAN - 0.6%
Royal Oak Hosp. Fin. Auth. Rev. Rfdg.
(William Beaumont Hosp.) 6.25% 1/1/09 Aa3 2,310,000 2,555,299
MINNESOTA - 1.7%
Minneapolis & St. Paul Hsg. & Redev. Auth.
Health Care Sys. Rev. Rfdg.
(Healthspan Health Sys. Corp.)
Series A, 4.75% 11/15/18 (AMBAC Insured) Aaa 2,300,000 2,123,705
Minnesota Hsg. Fin. Agcy. Rev. (Single
Family Mtg.) Series D, 6.40% 7/1/15 (d) Aa2 2,000,000 2,121,700
Western Minnesota Muni. Pwr. Agcy. Pwr. Supply
Rev. Rfdg. Series A, 6.25% 1/1/06
(AMBAC Insured) Aaa 3,000,000 3,326,700
7,572,105
MISSISSIPPI - 0.1%
Mississippi Home Corp. Single Family Rev. Rfdg.
Series 1990-A, 9.25% 3/1/12 (FGIC Insured) Aaa 220,000 235,290
NEBRASKA - 1.4%
Nebraska Pub. Pwr. Dist. Rev. Rfdg.:
(Elec. Sys.) Series A, 6% 1/1/06 A1 1,500,000 1,602,030
(Pwr. Supply Sys.) Series C, 5% 1/1/17 A1 4,590,000 4,401,030
6,003,060
NEVADA - 0.6%
Las Vegas Downtown Redev. Agcy. Tax Increment
Rev. (Fremont Str. Proj.) Series A:
6% 6/15/10 BBB+ 1,500,000 1,530,810
6.10% 6/15/14 BBB+ 1,000,000 1,039,280
2,570,090
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW HAMPSHIRE - 0.6%
New Hampshire Higher Edl. & Health Facs.
Auth. Rev.:
(1st. Mtg.) (Riverwoods at Exeter) 9% 3/1/23
(Pre-Refunded to 3/1/03 @ 103) (e) Aaa $ 1,830,000 $ 2,227,513
(Littleton Hosp. Assoc., Inc.)
Series A, 9.50% 5/1/20 - 490,000 522,046
2,749,559
NEW JERSEY - 1.4%
New Jersey Trans. Trust Fund Auth. Rfdg.
(Trans. Sys.) Series A, 5.50% 6/15/11
(MBIA Insured) Aaa 4,000,000 4,175,400
Passaic County Util. Auth. Solid Waste Disp.
Rev. Rfdg. (Cap. Appreciation)
0% 3/1/02 (MBIA Insured) Aaa 2,500,000 2,116,850
6,292,250
NEW MEXICO - 1.9%
Albuquerque Arpt. Rev. Rfdg.:
6.75% 7/1/11 (AMBAC Insured) (d) Aaa 1,805,000 2,094,919
6.70% 7/1/18 (AMBAC Insured) (d) Aaa 3,970,000 4,437,547
New Mexico Edl. Assistance Foundation
Student Loan Rev. Series B,
5.25% 4/1/05 (AMBAC Insured) (d) Aaa 1,585,000 1,615,178
8,147,644
NEW YORK - 21.4%
New York City Gen. Oblig.:
Rfdg.:
Series A, 7% 8/1/03 A3 2,000,000 2,212,620
Series B:
5.70% 8/15/02 A3 1,165,000 1,214,536
6.75% 8/15/03 A3 2,000,000 2,190,900
Series E, 6.50% 2/15/04 (FGIC Insured) Aaa 1,500,000 1,639,560
Series B, 7.50% 2/1/02 A3 3,525,000 3,870,838
Series D, 5.50% 2/15/04 A3 5,000,000 5,183,450
Series H, 6.875% 2/1/02 A3 240,000 258,451
New York City Ind. Dev. Agcy. Spl. Facs. Rev.
(Terminal One Group Assoc. Proj.)
5.90% 1/1/06 (d) A 8,680,000 9,194,290
New York City Ind. Dev. Agcy. Ind. Dev. Rev.
(Japan Airlines Co. Ltd. Proj.)
Series 91, 6% 11/1/15 (FSA Insured)
LOC Morgan Guaranty Trust Co. (d) Aaa 1,000,000 1,068,090
New York City Muni. Assistance Corp. Rfdg.
Series H, 6% 7/1/05 Aa2 5,000,000 5,409,750
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
New York City Muni. Wtr. Fin. Auth. Rev.
(Wtr. & Swr. Sys.) Series B:
5.75% 6/15/26 A2 $ 5,000,000 $ 5,207,550
5.50% 6/15/27 (MBIA Insured) Aaa 3,000,000 3,054,300
5.75% 6/15/29 A2 4,000,000 4,159,640
New York Metropolitan Trans. Auth. Svc. Contract
Rfdg. Series 7, 5.625% 7/1/16 Baa1 6,445,000 6,548,313
New York Metropolitan Trans. Commuter Facs.
Rev. Rfdg. Series R:
5% 7/1/02 Baa1 2,370,000 2,408,655
5% 7/1/03 Baa1 2,490,000 2,528,545
5.50% 7/1/07 Baa1 2,645,000 2,751,514
New York State Dorm. Auth. Rev.:
(City Univ. Sys. Consolidated)
Series A, 5.70% 7/1/05 Baa1 3,000,000 3,152,340
(New York Univ.)
Series A, 5.75% 7/1/14 (MBIA Insured) Aaa 1,000,000 1,073,060
Rfdg. (Jamaica Hosp. Med. Ctr.)
Series F, 5.20% 2/15/14 Baa1 6,150,000 6,037,886
Rfdg. (State Univ. Edl. Facs.)
Series B, 5.50% 5/15/08 A3 10,000,000 10,490,500
New York State Local Gov't. Assistance Corp.
Rfdg. Series C, 5.50% 4/1/17 A3 7,500,000 7,689,600
New York State Tollway Auth. Gen. Rev.
(Spl. Oblig.) (Cap. Appreciation) Series A,
0% 1/1/04 BBB 4,000,000 2,980,440
New York State Tollway Auth. Svc. Contract Rev.
(Local Hwy. & Bridges) 5.90% 4/1/07 Baa1 2,000,000 2,113,700
Suffolk County Wtr. Auth. Wtrwks. Rev. Rfdg.
(Sub-Lien) 6% 6/1/17 (MBIA Insured) Aaa 1,000,000 1,105,040
93,543,568
NORTH CAROLINA - 4.3%
North Carolina Eastern Muni. Pwr. Agcy. Pwr.
Sys. Rev. Rfdg.:
Series A, 5.50% 1/1/05 (MBIA Insured) Aaa 4,000,000 4,180,440
Series B:
6% 1/1/06 Baa1 3,955,000 4,214,290
7.25% 1/1/07 Baa1 1,000,000 1,155,940
Series C:
5.125% 1/1/03 Baa1 2,000,000 2,029,200
5.25% 1/1/04 Baa1 1,365,000 1,393,979
5.50% 1/1/07 (MBIA Insured) Aaa 2,000,000 2,098,460
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
NORTH CAROLINA - CONTINUED
North Carolina Muni. Pwr. Agcy. #1 Catawba
Elec. Rev. Rfdg.:
5.75% 1/1/02 A3 $ 1,750,000 $ 1,820,455
6.25% 1/1/17 (AMBAC Insured) Aaa 1,800,000 1,939,698
18,832,462
OHIO - 2.6%
Gateway Econ. Dev. Corp. Greater Cleveland
Stadium Rev. (Cuyahoga County Annual
Guaranty) 6.50% 9/15/14 (d) - 3,000,000 3,149,580
Marion County Hosp. Impt. Rev. Rfdg.
(Commty. Hosp. Proj.) 5.60% 5/15/01 BBB+ 1,000,000 1,025,670
Ohio Wtr. Dev. Auth. Poll. Cont. Facs. Rev.
(Wtr. Control Loan Fund) State Matching Series:
6.50% 12/1/04 (MBIA Insured) Aaa 1,835,000 2,041,639
5.625% 6/1/06 (MBIA Insured) Aaa 2,000,000 2,130,180
Student Loan Funding Corp.
Cincinnati Student Loan Rev.
Series B, 8.875% 8/1/08 (d) - 2,910,000 3,074,590
11,421,659
OKLAHOMA - 1.0%
Tulsa Muni. Arpt. Trust Rev. (American Airlines
Corp. Proj.) 7.35% 12/1/11 Baa2 4,000,000 4,449,000
PENNSYLVANIA - 5.6%
Allegheny County Ind. Dev. Auth. Rev.
(1st Mtg.) (YMCA Proj.) Series 1990,
8.75% 3/1/10 - 340,000 372,157
Butler County Ind. Dev. Auth. Health
Ctr. Rev. (Sherwood Oaks Proj.)
5.75% 6/1/11 A 3,000,000 3,067,770
Cumberland County Muni. Auth. Rev. Rfdg.
(1st Mtg.) (Carlisle Hosp. & Health):
6.80% 11/15/14 Baa2 3,250,000 3,573,018
6.80% 11/15/23 Baa2 1,000,000 1,099,390
Delaware County Auth. Rev.
(1st. Mtg.) (Riddle Village Proj.):
8.25% 6/1/22 (Escrowed to Maturity) (e) Aaa 2,250,000 2,743,898
9.25% 6/1/22
(Pre-Refunded to 6/1/02 @ 102) (e) Aaa 2,905,000 3,467,524
Series 1992, 8.75% 6/1/10
(Pre-Refunded to 6/1/02 @ 102) (e) Aaa 2,870,000 3,378,736
Delaware County Ind. Dev. Auth. Rev. Rfdg.
(Resource Recovery Fac.) Series A,
6.10% 7/1/13 Baa1 1,900,000 2,033,494
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Gen. Oblig. Second Series,
5.80% 7/1/04 Aa3 $ 3,000,000 $ 3,212,010
Pennsylvania Ind. Dev. Auth. Rev. Econ. Dev.
5.80% 7/1/09 (AMBAC Insured) Aaa 1,345,000 1,465,633
24,413,630
RHODE ISLAND - 1.1%
Rhode Island Port Auth. & Econ. Dev. Corp. Arpt.
Rev. Series A, 7% 7/1/14 (FSA Insured) (d) Aaa 4,000,000 4,829,200
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Elec. Agcy. Rev. Rfdg.
Series A, 6.25% 1/1/05 (FGIC Insured) Aaa 1,715,000 1,875,438
TENNESSEE - 0.5%
Chattanooga Gen. Oblig. Rfdg. & Impt.
5.25% 9/1/14 Aa3 1,580,000 1,609,214
Metropolitan Gov't. Nashville & Davidson
County Elec. Rev. (Cap. Appreciation)
Series A, 0% 5/15/06 (MBIA Insured) Aaa 1,000,000 689,070
2,298,284
TEXAS - 4.4%
Brazos River Auth. Poll. Cont. Rev. (Texas Utils.
Elec. Co.) Series A, 9.25% 3/1/18
(Pre-Refunded to 5/1/98 @ 102) (d)(e) Baa1 1,300,000 1,326,000
Conroe Independent School Dist. Rfdg.
(Cap. Appreciation) 0% 2/15/09
(PSF Guaranteed) Aaa 750,000 445,110
Dallas-Fort Worth Int'l. Arpt. Facs. Impt. Corp.
Rev. (American Airlines, Inc.)
7.50% 11/1/25 (d) Baa2 6,000,000 6,467,640
Midlothian Independent School Dist. Rfdg.
(Cap. Appreciation) 0% 2/15/04
(PSF Guaranteed) Aaa 1,845,000 1,417,145
Plano Independent School Dist. 6% 2/15/03
(PSF Guaranteed) Aaa 4,510,000 4,817,898
Texas Pub. Fin. Auth. Series A, 5% 10/1/14 Aa2 5,000,000 4,943,850
19,417,643
U.S. VIRGIN ISLANDS - 0.5%
Virgin Islands Pub. Fin. Auth. 5.50% 10/1/05 BBB- 2,000,000
2,048,560
UTAH - 2.9%
Intermountain Pwr. Agcy. Pwr. Supply Rev. Rfdg.:
Series A, 6.50% 7/1/09 (AMBAC Insured) Aaa 1,000,000 1,149,800
Series B, 5.75% 7/1/16 (MBIA Insured) Aaa 2,500,000 2,631,450
Series D, 5% 7/1/21 (MBIA Insured) Aaa 1,200,000 1,152,264
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (A) AMOUNT (NOTE 1)
UTAH - CONTINUED
Intermountain Pwr. Agcy. Pwr. Supply Sys. Rev.
Spl. Oblig. Sixth
Series B, 6% 7/1/16 (MBIA Insured) Aaa $ 7,000,000 $ 7,508,200
South Salt Lake City Ind. Rev. (Price Savers
Wholesale Club Proj.) 9% 11/15/13 - 250,000 278,938
12,720,652
VIRGINIA - 2.1%
Loudoun County Ind. Dev. Auth. Residential Care
Facs. Rev. (Falcons Landing Proj.) Series A,
9.25% 11/1/04 (Escrowed to Maturity) (e) - 1,000,000 1,185,480
Virginia Pub. Bldg. Auth. Pub. Facs. Rev. Rfdg.
Series A, 5% 8/1/12 Aa2 4,860,000 4,862,331
Virginia Pub. School Auth. Series B, 6.50%
8/1/15 (Pre-Refunded to 8/1/04 @ 102) (e) Aa2 3,000,000 3,368,400
9,416,211
WASHINGTON - 4.5%
King County Gen. Oblig. Series D,
5.75% 12/1/11 Aa1 3,990,000 4,263,475
Washington Pub. Pwr. Supply Sys. Rev.
(Nuclear Proj. #2):
Rfdg. Series A, 5.90% 7/1/04 Aa1 1,000,000 1,065,470
5.40% 7/1/12 Aa1 14,000,000 14,227,920
19,556,865
TOTAL MUNICIPAL BONDS
(Cost $407,097,276 ) 428,376,098
CASH EQUIVALENTS - 2.2%
SHARES
Municipal Central Cash Fund (b)(c)
(Cost $9,603,798) 9,603,798 9,603,798
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $416,701,074) $ 437,979,896
LEGEND
(f) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(g) 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.
(h) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 5.51%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
(i) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(j) Security collateralized by an amount sufficient to pay interest
and principal.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 62.3% AAA, AA, A 58.1%
Baa 20.6% BBB 27.2%
Ba 0.0% BB 0.6%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 6.9%. FMR has
determined that unrated debt securities that are lower quality account
for 0.4% of the total value of investment.
The distribution of municipal securities by revenue source, as a
percentage of total value of investment in securities, is as follows:
General Obligation 26.6%
Electric Revenue 16.5
Health Care 12.5
Transportation 9.0
Escrowed/Pre-Refunded 8.9
Industrial Development 6.9
Special Tax 5.0
Others (individually less than 5%) 14.6
TOTAL 100.0%
INCOME TAX INFORMATION
At April 30, 1998, the aggregate cost of investment securities for
income tax purposes was $416,701,074. Net unrealized appreciation
aggregated $21,278,822, of which $21,734,055 related to appreciated
investment securities and $455,233 related to depreciated investment
securities.
At October 31, 1997, the fund had a capital loss carryforward of
approximately $16,425,000 of which $2,646,000, $7,511,000 and
$6,268,000 will expire on October 31, 2002, 2003 and 2004,
respectively.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $416,701,074) - $ 437,979,896
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR FUND SHARES SOLD 506,029
INTEREST RECEIVABLE 7,109,834
OTHER RECEIVABLES 22,338
PREPAID EXPENSES 7,018
TOTAL ASSETS 445,625,115
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 6,939,670
PAYABLE FOR FUND SHARES REDEEMED 1,203,086
DISTRIBUTIONS PAYABLE 608,348
ACCRUED MANAGEMENT FEE 135,460
DISTRIBUTION FEES PAYABLE 117,823
OTHER PAYABLES AND ACCRUED EXPENSES 101,159
TOTAL LIABILITIES 9,105,546
NET ASSETS $ 436,519,569
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 435,774,884
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) (20,534,137)
ON INVESTMENTS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 21,278,822
NET ASSETS $ 436,519,569
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1998 (UNAUDITED)
CALCULATION OF MAXIMUM OFFERING PRICE $12.23
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($4,791,044 (DIVIDED BY) 391,720 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/95.25 OF $12.23) $12.84
CLASS T: $12.24
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($378,512,125 (DIVIDED BY) 30,927,954 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.50 OF $12.24) $12.68
CLASS B: $12.21
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($47,301,034 (DIVIDED BY) 3,873,953 SHARES) A
CLASS C: $12.24
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($2,516,910 (DIVIDED BY) 205,630 SHARES) A
INSTITUTIONAL CLASS: $12.19
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($3,398,456 (DIVIDED BY) 278,768 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
INTEREST INCOME $ 12,264,715
EXPENSES
MANAGEMENT FEE $ 847,369
TRANSFER AGENT FEES 366,615
DISTRIBUTION FEES 691,300
ACCOUNTING FEES AND EXPENSES 93,549
NON-INTERESTED TRUSTEES' COMPENSATION 812
CUSTODIAN FEES AND EXPENSES 11,711
REGISTRATION FEES 48,204
AUDIT 21,263
LEGAL 3,219
REPORTS TO SHAREHOLDERS 21,696
MISCELLANEOUS 473
TOTAL EXPENSES BEFORE REDUCTIONS 2,106,211
EXPENSE REDUCTIONS (28,002) 2,078,209
NET INTEREST INCOME 10,186,506
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (3,252,074)
FUTURES CONTRACTS 219,805 (3,032,269)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 5,990,975
FUTURES CONTRACTS (32,838) 5,958,137
NET GAIN (LOSS) 2,925,868
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 13,112,374
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 10,186,506 $ 23,276,174
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) (3,032,269) 982,319
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 5,958,137 14,869,381
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 13,112,374 39,127,874
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (10,186,506) (24,140,139)
FROM NET INTEREST INCOME
IN EXCESS OF NET INTEREST INCOME - (86,644)
TOTAL DISTRIBUTIONS (10,186,506) (24,226,783)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) (4,771,516) (97,485,396)
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,845,648) (82,584,305)
NET ASSETS
BEGINNING OF PERIOD 438,365,217 520,949,522
END OF PERIOD $ 436,519,569 $ 438,365,217
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 G
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.150 $ 11.740 $ 11.630
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .293 .583 E .105 E, F
NET REALIZED AND UNREALIZED GAIN (LOSS) .080 .445 .109
TOTAL FROM INVESTMENT OPERATIONS .373 1.028 .214
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.293) (.616) F (.104)
IN EXCESS OF NET INTEREST INCOME - (.002) H -
TOTAL DISTRIBUTIONS (.293) (.618) (.104)
NET ASSET VALUE, END OF PERIOD $ 12.230 $ 12.150 $ 11.740
TOTAL RETURN B, C 3.08% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,791 $ 3,755 $ 202
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A, D .90% D .90% A, D
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.73% A 4.87% 5.73% A
PORTFOLIO TURNOVER RATE 34% A 36% 49%
</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 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 SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 F 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE,
BEGINNING OF PERIOD $ 12.150 $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .291 .597 C .677 C, E .700 .689 .710
NET REALIZED AND .090 .407 (.136) .660 (1.430) 1.100
UNREALIZED
GAIN (LOSS)
TOTAL FROM INVESTMENT .381 1.004 .541 1.360 (.741) 1.810
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST (.291) (.612) E (.661) (.700) (.689) (.710)
INCOME
IN EXCESS OF NET - (.002) D - - - -
INTEREST INCOME
FROM NET REALIZED - - - - (.060) (.030)
GAIN
IN EXCESS OF NET - - - - (.010) -
REALIZED GAIN
TOTAL DISTRIBUTIONS (.291) (.614) (.661) (.700) (.759) (.740)
NET ASSET VALUE, $ 12.240 $ 12.150 $ 11.760 $ 11.880 $ 11.220 $ 12.720
END OF PERIOD
TOTAL RETURN B 3.06% 8.89% 4.68% 12.50% (6.03)% 15.95%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF $ 378,512 $ 392,075 $ 480,432 $ 565,131 $ 544,422 $ 497,575
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO .88% A .89% .89% .91% .89% .92%
AVERAGE NET ASSETS
RATIO OF NET INTEREST 4.75% A 5.04% 5.74% 6.06% 5.78% 5.59%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 34% A 36% 49% 37% 38% 27%
</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 NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 G
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 12.130 $ 11.740 $ 11.860 $ 11.210 $ 11.610
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .251 .515 E .596 E, F .612 .188
NET REALIZED AND UNREALIZED .080 .416 (.136) .650 (.400)
GAIN (LOSS)
TOTAL FROM INVESTMENT .331 .931 .460 1.262 (.212)
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.251) (.539) F (.580) (.612) (.188)
IN EXCESS OF NET INTEREST - (.002) H - - -
INCOME
TOTAL DISTRIBUTIONS (.251) (.541) (.580) (.612) (.188)
NET ASSET VALUE, END OF PERIOD $ 12.210 $ 12.130 $ 11.740 $ 11.860 $ 11.210
TOTAL RETURN B, C 2.73% 8.15% 3.98% 11.57% (1.86)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 47,301 $ 41,024 $ 39,389 $ 32,395 $ 9,968
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 1.57% A 1.56% 1.57% 1.86% D 2.09% A
NET ASSETS
RATIO OF NET INTEREST INCOME TO 4.08% A 4.35% 5.06% 5.18% 4.58% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 34% A 36% 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.
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED
APRIL 30, 1998 E
(UNAUDITED)
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.130
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .231
NET REALIZED AND UNREALIZED GAIN (LOSS) .110
TOTAL FROM INVESTMENT OPERATIONS .341
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.231)
NET ASSET VALUE, END OF PERIOD $ 12.240
TOTAL RETURN B, C 2.82%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,517
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, D
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.67% A
PORTFOLIO TURNOVER RATE 34% 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 FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO APRIL 30, 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 G
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.120 $ 11.720 $ 11.880 $ 11.700
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .306 .609 E .707 E, F .232
NET REALIZED AND UNREALIZED GAIN (LOSS) .070 .464 (.197) .180
TOTAL FROM INVESTMENT OPERATIONS .376 1.073 .510 .412
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.306) (.671) F (.670) (.232)
IN EXCESS OF NET INTEREST INCOME - (.002) H - -
TOTAL DISTRIBUTIONS (.306) (.673) (.670) (.232)
NET ASSET VALUE, END OF PERIOD $ 12.190 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C 3.11% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,398 $ 1,511 $ 927 $ 154
RATIO OF EXPENSES TO AVERAGE NET ASSETS .75% A, D .75% D .75% D .75% A, D
RATIO OF NET INTEREST INCOME TO AVERAGE 4.99% A 5.11% 5.88% 5.89% A
NET ASSETS
PORTFOLIO TURNOVER RATE 34% A 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (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 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 JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor 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. At a special meeting of the shareholders of the fund
on April 15, 1998, shareholders approved an Agreement and Plan
Reorganization, providing for the reorganization of the fund into
Fidelity Advisor Series II, on or about February 26, 1999.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to its
distribution plan. The fund commenced sale of Class C shares on
November 3, 1997. Interest income, realized and unrealized capital
gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, 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 require management to
make certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses except for registering and qualifying
Class C and shares of Class C for distribution under federal and state
securities law. These expenses are borne by Class C 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 transactions, market discount and losses
deferred due to wash sales and futures. The fund also utilized
earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax
purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc., (formerly FMR Texas, Inc.) 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. Income
distributions from the Cash Fund are declared daily and paid monthly
from net interest income. Income distributions earned by the fund are
recorded as interest income in the accompanying financial statements.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a delayed delivery basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of
the underlying securities and the date when the securities will be
delivered and paid for are fixed at the time the transaction is
negotiated. With respect to
2. OPERATING POLICIES - CONTINUED
DELAYED DELIVERY TRANSACTIONS - CONTINUED
purchase commitments, the fund identifies securities as segregated in
its custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under
the contract.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $74,370,018 and $72,273,292, respectively.
The market value of futures contracts opened and closed during the
period amounted to $26,267,621 and $37,554,990, 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. The annual individual fund fee rate is .25%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Fidelity Distributors Corporation (FDC), an affiliate of FMR, a
distribution and service fee. For the period, this fee was based on
the following annual rates of the average net assets of each
applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was paid to securities dealers, banks and other financial
institutions for the distribution of each class' applicable shares,
and providing shareholder support services:
PAID TO PAID TO RETAINED BY
FDC INVESTMENT FDC
PROFESSIONALS
CLASS A $ 3,021 $ 3,021 $ -
CLASS T 485,085 476,168 8,917
CLASS B 197,946 54,985 142,961
CLASS C 5,248 - 5,248
$ 691,300 $ 534,174 $ 157,126
Under the Plans, FMR may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The
Plans also authorize payments to third parties that assist in the sale
of each class' shares or render shareholder support services. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 537
CLASS T 34,626
CLASS B 7,743
CLASS C 1,935
$ 44,841
SALES LOAD. FDC receives a front-end sales charge of up to 4.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
one year. The Class A and Class T contingent deferred sales charge is
based on 0.25% of the lesser of the cost of shares at the initial date
of purchase or the net asset value of the redeemed shares, excluding
any reinvested dividends and capital gains.
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 PAID TO
FDC INVESTMENT
PROFESSIONALS
CLASS A $ 20,995 $ 12,146
CLASS T 88,690 54,855
CLASS B 53,624 -*
CLASS C 2,888 -*
$ 166,197 $ 67,001
* WHEN CLASS B AND CLASS C 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, Class C, 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 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,
except proxy statements. For the period, each class paid the following
transfer agent fees:
AMOUNT % OF
AVERAGE
NET ASSETS*
CLASS A $ 3,475 .17
CLASS T 324,954 .17
CLASS B 35,076 .16
CLASS C 1,058 .20
INSTITUTIONAL CLASS 2,052 .22
$ 366,615
* ANNUALIZED
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 of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A .90% $ 4,644
CLASS C 1.75% 13,659
INSTITUTIONAL CLASS .75% 9,128
$ 27,431
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 $571 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1998 A 1997
FROM NET INTEREST INCOME
CLASS A $ 94,406 $ 94,032
CLASS T 9,135,232 22,160,320
CLASS B 890,310 1,825,294
CLASS C 19,098 -
INSTITUTIONAL CLASS 47,460 60,493
TOTAL $ 10,186,506 $ 24,140,139
IN EXCESS OF NET INTEREST INCOME
CLASS A $ - $ 40
CLASS T - 79,597
CLASS B - 6,838
CLASS C - -
INSTITUTIONAL CLASS - 169
TOTAL $ - $ 86,644
TOTAL $ 10,186,506 $ 24,226,783
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO APRIL 30, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1998 A 1997 1998 A 1997
CLASS A 181,306 307,664 $ 2,231,475 $ 3,663,457
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,748 3,770 58,432 45,120
SHARES REDEEMED (103,362) (19,585) (1,262,429) (234,062)
NET INCREASE (DECREASE) 82,692 291,849 $ 1,027,478 $ 3,474,515
CLASS T 2,122,390 2,221,421 $ 26,183,166 $ 26,303,589
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 451,827 1,143,394 5,562,644 13,582,690
SHARES REDEEMED (3,903,964) (11,972,642) (48,013,706) (141,705,601)
NET INCREASE (DECREASE) (1,329,747) (8,607,827) $ (16,267,896) $ (101,819,322)
CLASS B 725,700 713,815 $ 8,926,602 $ 8,459,000
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 41,612 90,487 511,215 1,073,258
SHARES REDEEMED (276,174) (777,996) (3,398,037) (9,216,485)
NET INCREASE (DECREASE) 491,138 26,306 $ 6,039,780 $ 315,773
CLASS C 234,829 - $ 2,893,894 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 609 - 7,497 -
SHARES REDEEMED (29,808) - (368,757) -
NET INCREASE (DECREASE) 205,630 - $ 2,532,634 $ -
INSTITUTIONAL CLASS 178,100 107,503 $ 2,191,539 $ 1,278,313
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 2,612 3,746 32,027 44,614
SHARES REDEEMED (26,613) (65,730) (327,078) (779,289)
NET INCREASE (DECREASE) 154,099 45,519 $ 1,896,488 $ 543,638
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO APRIL 30, 1998.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 6,755
CLASS T 9,410
CLASS B 8,619
CLASS C 13,810
INSTITUTIONAL CLASS 9,610
$ 48,204
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on April 15,
1998. The results of votes taken among shareholders on proposals
before them are listed below.
PROPOSAL 1
To approve an amended management contract for the fund.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 25,817,524.338 92.116
AGAINST 469,603.522 1.675
ABSTAIN 1,740,144.132 6.209
TOTAL 28,027,271.992 100.000
PROPOSAL 2
To amend the fundamental investment policy on diversification for the
fund to exclude investments in other investment companies from the
limitation.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 18,288,422.825 87.741
AGAINST 662,051.546 3.176
ABSTAIN 1,893,272.621 9.083
TOTAL 20,843,746.992 100.000
BROKER 7,183,525.000
NON-VOTES
PROPOSAL 3
To approve an agreement and plan providing for the reorganization of
the fund.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 18,490,167.503 88.708
AGAINST 436,395.990 2.094
ABSTAIN 1,917,183.499 9.198
TOTAL 20,843,746.992 100.000
BROKER 7,183,525.000
NON-VOTES
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Jonathan D. Short, Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
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 International Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuant
Growth Fund
SM
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 Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(REGISTERED TRADEMARK)
