(2_FIDELITY_LOGOS)(REGISTERED TRADEMARK)
FIDELITY ADVISOR
MUNICIPAL INCOME FUND -
CLASS A, CLASS T, CLASS B
AND CLASS C
ANNUAL REPORT
OCTOBER 31, 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 37 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 46 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 54 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 55
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:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR MUNICIPAL INCOME FUND - CLASS A
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class A shares
took place on September 3, 1996. Class A shares bear a 0.15% 12b-1
fee. Returns prior to September 3, 1996 are those of Class T, the
original class of the fund, and reflect Class T shares' 0.25% 12b-1
fee. If Fidelity had not reimbursed certain class expenses, the total
returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL A 8.07% 30.14% 130.09%
FIDELITY ADV MUNICIPAL INCOME - CL A 2.94% 23.96% 119.16%
(INCL. 4.75% SALES CHARGE)
LB MUNICIPAL BOND 8.02% 36.06% 119.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 30.95% 110.18%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class A's returns to those of the Lehman
Brothers Municipal Bond Index - a 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 one year average
represents a peer group of 239 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL A 8.07% 5.41% 8.69%
FIDELITY ADV MUNICIPAL INCOME - CL A 2.94% 4.39% 8.16%
(INCL. 4.75% SALES CHARGE)
LB MUNICIPAL BOND 8.02% 6.35% 8.16%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 5.53% 7.70%
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
1988/10/31 9525.00 10000.00
1988/11/30 9535.29 9908.40
1988/12/31 9644.35 10009.76
1989/01/31 9765.79 10216.76
1989/02/28 9775.58 10100.19
1989/03/31 9850.81 10076.05
1989/04/30 10075.92 10315.26
1989/05/31 10240.54 10529.51
1989/06/30 10357.83 10672.50
1989/07/31 10448.70 10817.75
1989/08/31 10529.52 10711.84
1989/09/30 10561.27 10679.92
1989/10/31 10672.78 10810.54
1989/11/30 10804.17 10999.72
1989/12/31 10906.88 11089.70
1990/01/31 10924.10 11037.25
1990/02/28 11002.38 11135.48
1990/03/31 11071.41 11138.82
1990/04/30 10970.15 11058.17
1990/05/31 11194.96 11299.57
1990/06/30 11326.86 11398.90
1990/07/31 11501.56 11566.46
1990/08/31 11423.95 11398.51
1990/09/30 11505.19 11405.01
1990/10/31 11663.14 11611.90
1990/11/30 11952.54 11845.41
1990/12/31 12028.79 11896.94
1991/01/31 12168.78 12056.60
1991/02/28 12262.35 12161.49
1991/03/31 12334.44 12165.87
1991/04/30 12535.27 12327.67
1991/05/31 12690.23 12437.27
1991/06/30 12719.76 12424.95
1991/07/31 12884.23 12576.29
1991/08/31 13000.59 12741.92
1991/09/30 13153.08 12907.82
1991/10/31 13298.83 13023.99
1991/11/30 13348.85 13060.33
1991/12/31 13494.03 13340.60
1992/01/31 13643.61 13371.02
1992/02/29 13717.74 13375.30
1992/03/31 13786.56 13380.25
1992/04/30 13910.98 13499.33
1992/05/31 14035.78 13658.22
1992/06/30 14228.23 13887.40
1992/07/31 14723.67 14303.75
1992/08/31 14609.65 14164.29
1992/09/30 14700.83 14256.92
1992/10/31 14523.42 14116.77
1992/11/30 14814.50 14369.61
1992/12/31 14993.11 14516.32
1993/01/31 15246.71 14685.14
1993/02/28 15785.09 15216.31
1993/03/31 15620.45 15055.47
1993/04/30 15786.09 15207.38
1993/05/31 15916.82 15292.84
1993/06/30 16172.01 15548.08
1993/07/31 16184.02 15568.45
1993/08/31 16600.85 15892.59
1993/09/30 16830.74 16073.60
1993/10/31 16839.76 16104.62
1993/11/30 16675.19 15962.74
1993/12/31 17060.25 16299.72
1994/01/31 17258.90 16485.86
1994/02/28 16802.75 16058.87
1994/03/31 15907.11 15404.96
1994/04/30 16012.66 15535.59
1994/05/31 16107.35 15670.28
1994/06/30 16048.05 15574.54
1994/07/31 16337.53 15860.02
1994/08/31 16363.20 15914.90
1994/09/30 16106.86 15681.27
1994/10/31 15824.51 15402.77
1994/11/30 15315.76 15124.28
1994/12/31 15686.95 15457.17
1995/01/31 16216.90 15898.94
1995/02/28 16653.85 16361.28
1995/03/31 16741.41 16549.27
1995/04/30 16796.44 16568.80
1995/05/31 17333.94 17097.51
1995/06/30 17197.96 16948.76
1995/07/31 17254.00 17109.43
1995/08/31 17428.54 17326.38
1995/09/30 17569.09 17436.06
1995/10/31 17802.96 17689.58
1995/11/30 18138.97 17983.05
1995/12/31 18299.13 18155.86
1996/01/31 18398.94 18292.94
1996/02/29 18370.45 18169.46
1996/03/31 17982.29 17937.26
1996/04/30 17910.45 17886.49
1996/05/31 17889.33 17879.34
1996/06/30 18097.73 18074.05
1996/07/31 18216.01 18238.52
1996/08/31 18255.66 18234.14
1996/09/30 18418.51 18489.42
1996/10/31 18600.30 18698.54
1996/11/30 18925.29 19040.72
1996/12/31 18855.01 18960.75
1997/01/31 18940.20 18996.58
1997/02/28 19109.78 19170.97
1997/03/31 18898.96 18915.42
1997/04/30 19058.09 19073.75
1997/05/31 19285.61 19360.61
1997/06/30 19527.42 19566.81
1997/07/31 20084.94 20108.81
1997/08/31 19901.52 19920.39
1997/09/30 20163.28 20156.84
1997/10/31 20278.60 20286.45
1997/11/30 20409.56 20405.73
1997/12/31 20738.64 20703.45
1998/01/31 20938.24 20917.11
1998/02/28 20944.96 20923.39
1998/03/31 21011.59 20941.80
1998/04/30 20903.49 20847.35
1998/05/31 21223.09 21177.37
1998/06/30 21300.64 21260.81
1998/07/31 21346.75 21314.17
1998/08/31 21668.76 21643.47
1998/09/30 21920.45 21913.15
1998/10/30 21915.76 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981207 132546 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class A on
October 31, 1988, and the current 4.75% sales charge was paid. As the
chart shows, by October 31, 1998, the value of the investment would
have grown to $21,916 - a 119.16% increase on the initial investment.
For comparison, look at how the Lehman Brothers Municipal Bond Index -
a total return performance benchmark for investment-grade municipal
bonds with maturities of at least one year - did over the same period.
With dividends reinvested, the same $10,000 would have grown to
$21,913 - a 119.13% 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>
TOTAL RETURN COMPONENTS
YEARS ENDED OCTOBER 31, SEPTEMBER 3, 1996
(COMMENCEMENT OF
SALE OF CLASS A
SHARES) TO
OCTOBER 31,
1998 1997 1996
DIVIDEND RETURNS 4.86% 5.51% 0.89%
CAPITAL RETURNS 3.21% 3.51% 0.95%
TOTAL RETURNS 8.07% 9.02% 1.84%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.73(CENTS) 27.76(CENTS) 57.08(CENTS)
ANNUALIZED DIVIDEND RATE 4.42% 4.43% 4.62%
30-DAY ANNUALIZED YIELD 3.55% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 5.55% - -
</TABLE>
DIVIDENDS per share show the income paid by the class for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average share price of $12.60 over the past one
month, $12.43 over the past six months and $12.36 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 years total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL T 8.15% 30.33% 130.42%
FIDELITY ADV MUNICIPAL INCOME - CL T 4.37% 25.77% 122.36%
(INCL. 3.50% SALES CHARGE)
LB MUNICIPAL BOND 8.02% 36.06% 119.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 30.95% 110.18%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class T's returns to those of the Lehman
Brothers Municipal Bond Index - a 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 one year average
represents a peer group of 239 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL T 8.15% 5.44% 8.71%
FIDELITY ADV MUNICIPAL INCOME - CL T 4.37% 4.69% 8.32%
(INCL. 3.50% SALES CHARGE)
LB MUNICIPAL BOND 8.02% 6.35% 8.16%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 5.53% 7.70%
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
1988/10/31 9650.00 10000.00
1988/11/30 9660.43 9908.40
1988/12/31 9770.91 10009.76
1989/01/31 9893.95 10216.76
1989/02/28 9903.87 10100.19
1989/03/31 9980.09 10076.05
1989/04/30 10208.15 10315.26
1989/05/31 10374.93 10529.51
1989/06/30 10493.76 10672.50
1989/07/31 10585.82 10817.75
1989/08/31 10667.71 10711.84
1989/09/30 10699.87 10679.92
1989/10/31 10812.84 10810.54
1989/11/30 10945.96 10999.72
1989/12/31 11050.02 11089.70
1990/01/31 11067.46 11037.25
1990/02/28 11146.77 11135.48
1990/03/31 11216.70 11138.82
1990/04/30 11114.11 11058.17
1990/05/31 11341.87 11299.57
1990/06/30 11475.50 11398.90
1990/07/31 11652.50 11566.46
1990/08/31 11573.87 11398.51
1990/09/30 11656.17 11405.01
1990/10/31 11816.20 11611.90
1990/11/30 12109.39 11845.41
1990/12/31 12186.64 11896.94
1991/01/31 12328.47 12056.60
1991/02/28 12423.27 12161.49
1991/03/31 12496.30 12165.87
1991/04/30 12699.78 12327.67
1991/05/31 12856.76 12437.27
1991/06/30 12886.69 12424.95
1991/07/31 13053.32 12576.29
1991/08/31 13171.20 12741.92
1991/09/30 13325.69 12907.82
1991/10/31 13473.35 13023.99
1991/11/30 13524.03 13060.33
1991/12/31 13671.12 13340.60
1992/01/31 13822.66 13371.02
1992/02/29 13897.76 13375.30
1992/03/31 13967.48 13380.25
1992/04/30 14093.54 13499.33
1992/05/31 14219.97 13658.22
1992/06/30 14414.95 13887.40
1992/07/31 14916.89 14303.75
1992/08/31 14801.38 14164.29
1992/09/30 14893.75 14256.92
1992/10/31 14714.01 14116.77
1992/11/30 15008.91 14369.61
1992/12/31 15189.87 14516.32
1993/01/31 15446.80 14685.14
1993/02/28 15992.24 15216.31
1993/03/31 15825.44 15055.47
1993/04/30 15993.26 15207.38
1993/05/31 16125.70 15292.84
1993/06/30 16384.24 15548.08
1993/07/31 16396.41 15568.45
1993/08/31 16818.71 15892.59
1993/09/30 17051.61 16073.60
1993/10/31 17060.76 16104.62
1993/11/30 16894.02 15962.74
1993/12/31 17284.13 16299.72
1994/01/31 17485.40 16485.86
1994/02/28 17023.26 16058.87
1994/03/31 16115.86 15404.96
1994/04/30 16222.80 15535.59
1994/05/31 16318.73 15670.28
1994/06/30 16258.65 15574.54
1994/07/31 16551.93 15860.02
1994/08/31 16577.94 15914.90
1994/09/30 16318.24 15681.27
1994/10/31 16032.18 15402.77
1994/11/30 15516.75 15124.28
1994/12/31 15892.82 15457.17
1995/01/31 16429.72 15898.94
1995/02/28 16872.40 16361.28
1995/03/31 16961.11 16549.27
1995/04/30 17016.86 16568.80
1995/05/31 17561.42 17097.51
1995/06/30 17423.66 16948.76
1995/07/31 17480.43 17109.43
1995/08/31 17657.26 17326.38
1995/09/30 17799.65 17436.06
1995/10/31 18036.60 17689.58
1995/11/30 18377.02 17983.05
1995/12/31 18539.28 18155.86
1996/01/31 18640.40 18292.94
1996/02/29 18611.53 18169.46
1996/03/31 18218.28 17937.26
1996/04/30 18145.49 17886.49
1996/05/31 18124.10 17879.34
1996/06/30 18335.23 18074.05
1996/07/31 18455.07 18238.52
1996/08/31 18495.24 18234.14
1996/09/30 18661.21 18489.42
1996/10/31 18880.75 18698.54
1996/11/30 19159.75 19040.72
1996/12/31 19086.09 18960.75
1997/01/31 19171.76 18996.58
1997/02/28 19359.33 19170.97
1997/03/31 19146.17 18915.42
1997/04/30 19306.90 19073.75
1997/05/31 19537.22 19360.61
1997/06/30 19781.79 19566.81
1997/07/31 20346.09 20108.81
1997/08/31 20177.29 19920.39
1997/09/30 20425.68 20156.84
1997/10/31 20559.72 20286.45
1997/11/30 20672.19 20405.73
1997/12/31 21020.22 20703.45
1998/01/31 21222.80 20917.11
1998/02/28 21246.17 20923.39
1998/03/31 21297.65 20941.80
1998/04/30 21189.05 20847.35
1998/05/31 21513.79 21177.37
1998/06/30 21592.83 21260.81
1998/07/31 21640.45 21314.17
1998/08/31 21967.49 21643.47
1998/09/30 22222.91 21913.15
1998/10/30 22235.61 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981110 112406 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class T on
October 31, 1988, and the current 3.50% sales charge was paid. As the
chart shows, by October 31, 1998, the value of the investment would
have grown to $22,236 - a 122.36% increase on the initial investment.
For comparison, look at how the Lehman Brothers Municipal Bond Index -
a total return performance benchmark for investment-grade municipal
bonds with maturities of at least one year - did over the same period.
With dividends reinvested, the same $10,000 would have grown to
$21,913 - a 119.13% 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
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 1994
DIVIDEND RETURNS 4.86% 5.47% 5.69% 6.62% 5.27%
CAPITAL RETURNS 3.29% 3.42% -1.01% 5.88% -11.30%
TOTAL RETURNS 8.15% 8.89% 4.68% 12.50% -6.03%
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 OCTOBER 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.72(CENTS) 27.97(CENTS) 57.08(CENTS)
ANNUALIZED DIVIDEND RATE 4.41% 4.46% 4.61%
30-DAY ANNUALIZED YIELD 3.62% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 5.66% - -
</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 share price of $12.61 over the past one
month, $12.44 over the past six months and $12.37 over the past one
year, you can compare the class' income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on
the yields of the bonds in the fund, averaged over the past 30 days.
This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The offering share price
used in the calculation of the yield includes the effect of Class T's
current 3.50% sales charge. The tax-equivalent yield shows what you
would have to earn on a taxable investment to equal the class'
tax-free yield, if you're in the 36% federal tax bracket, but does not
reflect payment of the federal alternative minimum tax, if applicable.
FIDELITY ADVISOR MUNICIPAL INCOME FUND - CLASS B
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Class B shares
took place on June 30, 1994. Class B shares bear a 0.90% 12b-1 fee
(1.00% prior to January 1, 1996). Returns prior to June 30, 1994 are
those of Class T, the original class of the fund, and reflect Class T
shares' 0.25% 12b-1 fee. Had Class B shares' 12b-1 fee been reflected,
returns prior to June 30, 1994 would have been lower. Class B shares'
contingent deferred sales charges included in the past one year, past
five years and past 10 years total return figures are 5%, 2% and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the past five years and past 10 years total returns would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL B 7.47% 26.11% 122.96%
FIDELITY ADV MUNICIPAL INCOME - CL B 2.47% 24.14% 122.96%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB MUNICIPAL BOND 8.02% 36.06% 119.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 30.95% 110.18%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class B's returns to those of the Lehman
Brothers Municipal Bond Index - a 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 one year average
represents a peer group of 239 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL B 7.47% 4.75% 8.35%
FIDELITY ADV MUNICIPAL INCOME - CL B 2.47% 4.42% 8.35%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB MUNICIPAL BOND 8.02% 6.35% 8.16%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 5.53% 7.70%
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
1988/10/31 10000.00 10000.00
1988/11/30 10010.81 9908.40
1988/12/31 10125.30 10009.76
1989/01/31 10252.80 10216.76
1989/02/28 10263.08 10100.19
1989/03/31 10342.06 10076.05
1989/04/30 10578.40 10315.26
1989/05/31 10751.23 10529.51
1989/06/30 10874.37 10672.50
1989/07/31 10969.76 10817.75
1989/08/31 11054.62 10711.84
1989/09/30 11087.95 10679.92
1989/10/31 11205.02 10810.54
1989/11/30 11342.96 10999.72
1989/12/31 11450.80 11089.70
1990/01/31 11468.87 11037.25
1990/02/28 11551.06 11135.48
1990/03/31 11623.53 11138.82
1990/04/30 11517.21 11058.17
1990/05/31 11753.24 11299.57
1990/06/30 11891.71 11398.90
1990/07/31 12075.13 11566.46
1990/08/31 11993.65 11398.51
1990/09/30 12078.93 11405.01
1990/10/31 12244.77 11611.90
1990/11/30 12548.59 11845.41
1990/12/31 12628.65 11896.94
1991/01/31 12775.62 12056.60
1991/02/28 12873.85 12161.49
1991/03/31 12949.54 12165.87
1991/04/30 13160.39 12327.67
1991/05/31 13323.07 12437.27
1991/06/30 13354.08 12424.95
1991/07/31 13526.75 12576.29
1991/08/31 13648.91 12741.92
1991/09/30 13809.00 12907.82
1991/10/31 13962.02 13023.99
1991/11/30 14014.54 13060.33
1991/12/31 14166.96 13340.60
1992/01/31 14324.00 13371.02
1992/02/29 14401.82 13375.30
1992/03/31 14474.08 13380.25
1992/04/30 14604.71 13499.33
1992/05/31 14735.72 13658.22
1992/06/30 14937.78 13887.40
1992/07/31 15457.92 14303.75
1992/08/31 15338.22 14164.29
1992/09/30 15433.94 14256.92
1992/10/31 15247.68 14116.77
1992/11/30 15553.28 14369.61
1992/12/31 15740.80 14516.32
1993/01/31 16007.05 14685.14
1993/02/28 16572.27 15216.31
1993/03/31 16399.42 15055.47
1993/04/30 16573.33 15207.38
1993/05/31 16710.57 15292.84
1993/06/30 16978.49 15548.08
1993/07/31 16991.10 15568.45
1993/08/31 17428.72 15892.59
1993/09/30 17670.07 16073.60
1993/10/31 17679.54 16104.62
1993/11/30 17506.76 15962.74
1993/12/31 17911.02 16299.72
1994/01/31 18119.58 16485.86
1994/02/28 17640.68 16058.87
1994/03/31 16700.37 15404.96
1994/04/30 16811.19 15535.59
1994/05/31 16910.60 15670.28
1994/06/30 16848.34 15574.54
1994/07/31 17130.46 15860.02
1994/08/31 17157.74 15914.90
1994/09/30 16873.23 15681.27
1994/10/31 16534.98 15402.77
1994/11/30 15992.56 15124.28
1994/12/31 16384.91 15457.17
1995/01/31 16912.91 15898.94
1995/02/28 17357.86 16361.28
1995/03/31 17437.97 16549.27
1995/04/30 17468.91 16568.80
1995/05/31 18017.51 17097.51
1995/06/30 17864.41 16948.76
1995/07/31 17911.16 17109.43
1995/08/31 18081.14 17326.38
1995/09/30 18216.23 17436.06
1995/10/31 18448.26 17689.58
1995/11/30 18786.11 17983.05
1995/12/31 18940.81 18155.86
1996/01/31 19034.42 18292.94
1996/02/29 18994.99 18169.46
1996/03/31 18582.48 17937.26
1996/04/30 18496.73 17886.49
1996/05/31 18462.80 17879.34
1996/06/30 18666.87 18074.05
1996/07/31 18778.51 18238.52
1996/08/31 18809.50 18234.14
1996/09/30 18968.20 18489.42
1996/10/31 19181.64 18698.54
1996/11/30 19456.78 19040.72
1996/12/31 19372.46 18960.75
1997/01/31 19433.60 18996.58
1997/02/28 19630.72 19170.97
1997/03/31 19404.20 18915.42
1997/04/30 19540.85 19073.75
1997/05/31 19781.41 19360.61
1997/06/30 20002.61 19566.81
1997/07/31 20563.37 20108.81
1997/08/31 20380.06 19920.39
1997/09/30 20620.78 20156.84
1997/10/31 20745.62 20286.45
1997/11/30 20865.65 20405.73
1997/12/31 21189.05 20703.45
1998/01/31 21398.50 20917.11
1998/02/28 21393.29 20923.39
1998/03/31 21433.42 20941.80
1998/04/30 21312.03 20847.35
1998/05/31 21628.07 21177.37
1998/06/30 21696.13 21260.81
1998/07/31 21732.48 21314.17
1998/08/31 22050.08 21643.47
1998/09/30 22295.34 21913.15
1998/10/30 22296.30 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981110 112837 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class B on
October 31, 1988. As the chart shows, by October 31, 1998, the value
of the investment would have grown to $22,296 - a 122.96% increase on
the initial investment. For comparison, look at how the Lehman
Brothers Municipal Bond Index - a total return performance benchmark
for investment-grade municipal bonds with maturities of at least one
year - did over the same period. With dividends reinvested, the same
$10,000 would have grown to $21,913 - a 119.13% 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
YEARS ENDED OCTOBER 31, JUNE 30, 1994
(COMMENCEMENT OF
SALE OF CLASS B
SHARES) TO
OCTOBER 31,
1998 1997 1996 1995 1994
DIVIDEND RETURNS 4.17% 4.81% 4.99% 5.77% 1.59%
CAPITAL RETURNS 3.30% 3.34% -1.01% 5.80% -3.45%
TOTAL RETURNS 7.47% 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 OCTOBER 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.05(CENTS) 24.00(CENTS) 49.06(CENTS)
ANNUALIZED DIVIDEND RATE 3.79% 3.84% 3.97%
30-DAY ANNUALIZED YIELD 3.09% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 4.83% - -
</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 share price of $12.58 over the past one
month, $12.41 over the past six months, and $12.35 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 between January 1, 1996 and November 3, 1997 and
prior to June 30, 1994 would have been lower. Class C shares'
contingent deferred sales charge included in the past one year, past
five year and past 10 year total return figures are 1%, 0%, and 0%,
respectively. If Fidelity had not reimbursed certain class expenses,
the total returns and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL C 7.18% 25.77% 122.36%
FIDELITY ADV MUNICIPAL INCOME - CL C 6.18% 25.77% 122.36%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB MUNICIPAL BOND 8.02% 36.06% 119.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 30.95% 110.18%
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, one year, five years or 10
years. For example, if you had invested $1,000 in a fund that had a 5%
return over the past year, the value of your investment would be
$1,050. You can compare Class C's returns to those of the Lehman
Brothers Municipal Bond Index - a 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 one year average
represents a peer group of 239 mutual funds. These benchmarks include
reinvested dividends and capital gains, if any, and exclude the effect
of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - CL C 7.18% 4.69% 8.32%
FIDELITY ADV MUNICIPAL INCOME - CL C 6.18% 4.69% 8.32%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
LB MUNICIPAL BOND 8.02% 6.35% 8.16%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 5.53% 7.70%
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
1988/10/31 10000.00 10000.00
1988/11/30 10010.81 9908.40
1988/12/31 10125.30 10009.76
1989/01/31 10252.80 10216.76
1989/02/28 10263.08 10100.19
1989/03/31 10342.06 10076.05
1989/04/30 10578.40 10315.26
1989/05/31 10751.23 10529.51
1989/06/30 10874.37 10672.50
1989/07/31 10969.76 10817.75
1989/08/31 11054.62 10711.84
1989/09/30 11087.95 10679.92
1989/10/31 11205.02 10810.54
1989/11/30 11342.96 10999.72
1989/12/31 11450.80 11089.70
1990/01/31 11468.87 11037.25
1990/02/28 11551.06 11135.48
1990/03/31 11623.53 11138.82
1990/04/30 11517.21 11058.17
1990/05/31 11753.24 11299.57
1990/06/30 11891.71 11398.90
1990/07/31 12075.13 11566.46
1990/08/31 11993.65 11398.51
1990/09/30 12078.93 11405.01
1990/10/31 12244.77 11611.90
1990/11/30 12548.59 11845.41
1990/12/31 12628.65 11896.94
1991/01/31 12775.62 12056.60
1991/02/28 12873.85 12161.49
1991/03/31 12949.54 12165.87
1991/04/30 13160.39 12327.67
1991/05/31 13323.07 12437.27
1991/06/30 13354.08 12424.95
1991/07/31 13526.75 12576.29
1991/08/31 13648.91 12741.92
1991/09/30 13809.00 12907.82
1991/10/31 13962.02 13023.99
1991/11/30 14014.54 13060.33
1991/12/31 14166.96 13340.60
1992/01/31 14324.00 13371.02
1992/02/29 14401.82 13375.30
1992/03/31 14474.08 13380.25
1992/04/30 14604.71 13499.33
1992/05/31 14735.72 13658.22
1992/06/30 14937.78 13887.40
1992/07/31 15457.92 14303.75
1992/08/31 15338.22 14164.29
1992/09/30 15433.94 14256.92
1992/10/31 15247.68 14116.77
1992/11/30 15553.28 14369.61
1992/12/31 15740.80 14516.32
1993/01/31 16007.05 14685.14
1993/02/28 16572.27 15216.31
1993/03/31 16399.42 15055.47
1993/04/30 16573.33 15207.38
1993/05/31 16710.57 15292.84
1993/06/30 16978.49 15548.08
1993/07/31 16991.10 15568.45
1993/08/31 17428.72 15892.59
1993/09/30 17670.07 16073.60
1993/10/31 17679.54 16104.62
1993/11/30 17506.76 15962.74
1993/12/31 17911.02 16299.72
1994/01/31 18119.58 16485.86
1994/02/28 17640.68 16058.87
1994/03/31 16700.37 15404.96
1994/04/30 16811.19 15535.59
1994/05/31 16910.60 15670.28
1994/06/30 16848.34 15574.54
1994/07/31 17130.46 15860.02
1994/08/31 17157.74 15914.90
1994/09/30 16873.23 15681.27
1994/10/31 16534.98 15402.77
1994/11/30 15992.56 15124.28
1994/12/31 16384.91 15457.17
1995/01/31 16912.91 15898.94
1995/02/28 17357.86 16361.28
1995/03/31 17437.97 16549.27
1995/04/30 17468.91 16568.80
1995/05/31 18017.51 17097.51
1995/06/30 17864.41 16948.76
1995/07/31 17911.16 17109.43
1995/08/31 18081.14 17326.38
1995/09/30 18216.23 17436.06
1995/10/31 18448.26 17689.58
1995/11/30 18786.11 17983.05
1995/12/31 18940.81 18155.86
1996/01/31 19034.42 18292.94
1996/02/29 18994.99 18169.46
1996/03/31 18582.48 17937.26
1996/04/30 18496.73 17886.49
1996/05/31 18462.80 17879.34
1996/06/30 18666.87 18074.05
1996/07/31 18778.51 18238.52
1996/08/31 18809.50 18234.14
1996/09/30 18968.20 18489.42
1996/10/31 19181.64 18698.54
1996/11/30 19456.78 19040.72
1996/12/31 19372.46 18960.75
1997/01/31 19433.60 18996.58
1997/02/28 19630.72 19170.97
1997/03/31 19404.20 18915.42
1997/04/30 19540.85 19073.75
1997/05/31 19781.41 19360.61
1997/06/30 20002.61 19566.81
1997/07/31 20563.37 20108.81
1997/08/31 20380.06 19920.39
1997/09/30 20620.78 20156.84
1997/10/31 20745.62 20286.45
1997/11/30 20845.06 20405.73
1997/12/31 21178.50 20703.45
1998/01/31 21366.13 20917.11
1998/02/28 21375.68 20923.39
1998/03/31 21409.69 20941.80
1998/04/30 21284.56 20847.35
1998/05/31 21594.19 21177.37
1998/06/30 21657.57 21260.81
1998/07/31 21688.79 21314.17
1998/08/31 22000.17 21643.47
1998/09/30 22257.77 21913.15
1998/10/30 22235.74 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981110 112720 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class C on
October 31, 1988. As the chart shows, by October 31, 1998, the value
of the investment would have grown to $22,236 - a 122.36% increase on
the initial investment. For comparison, look at how the Lehman
Brothers Municipal Bond Index - a total return performance benchmark
for investment-grade municipal bonds with maturities of at least one
year - did over the same period. With dividends reinvested, the same
$10,000 would have grown to $21,913 - a 119.13% 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
OCTOBER 31, 1998
DIVIDEND RETURNS 3.87%
CAPITAL RETURNS 3.54%
TOTAL RETURNS 7.41%
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested and exclude the effect of sales
charges.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 6 LIFE OF
MONTH MONTHS CLASS
DIVIDENDS PER SHARE 3.75(CENTS) 22.36(CENTS) 45.50(CENTS)
ANNUALIZED DIVIDEND RATE 3.50% 3.57% 3.71%
30-DAY ANNUALIZED YIELD N/A - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD N/A - -
</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 share price of $12.61 over the past one
month, $12.44 over the past six months, and $12.37 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
Despite heavy new supply and slack
demand for municipal bonds, and
an extreme flight to Treasuries by
investors, the municipal bond
market turned in a solid
performance for the 12 months
ended October 31, 1998. While
the glut of new issues hurt the price
of munis, their yields - which move
in the opposite direction of prices -
became attractive relative to taxable
bonds. Two interest-rate cuts by the
Federal Reserve Board and low
inflation provided additional
support. During this period, the
Lehman Brothers Municipal Bond
Index - a popular measure of the
municipal bond market - returned
8.02%. By comparison, the Lehman
Brothers Aggregate Bond Index -
a widely followed measure of taxable
bond performance - returned 9.34%
during the period. Throughout most
of the period, low interest rates and
a stable economy resulted in a flood
of municipalities rushing to sell
bonds this year. In fact, 1998 is on
track to top the record $293 billion
muni-bond issuance during 1993.
While waves of new issues kept total
return in check, volatility in the
equity markets, concerns about the
impact of overseas markets on the
U.S. economy and the attractive
level of muni-bond yields provided
support through the end of
September. Late in the period,
however, as equity markets rallied,
demand for the safety of municipal
bonds weakened, putting further
pressure on prices.
NOTE TO SHAREHOLDERS: Christine Thompson became Portfolio Manager of
Fidelity Advisor Municipal Income Fund on July 13, 1998.
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. For the 12-month period that ended October 31, 1998, the fund's
Class A, Class T, Class B and Class C shares had total returns of
8.07%, 8.15%, 7.47% and 7.18%, respectively. To get a sense of how the
fund did relative to its competitors during the same one-year period,
the general municipal debt funds average returned 7.12%, according to
Lipper Analytical Services. Additionally, the Lehman Brothers
Municipal Bond Index - a broad measure of the performance of the
municipal bond market - returned 8.02% for the same 12-month period.
Q. WHICH OF THE FUND'S HOLDINGS PERFORMED WELL OVER THE PAST 12
MONTHS?
A. Lower-quality investment-grade bonds - such as those rated Baa by
Moody's Investors Service - were very strong performers during that
time period. In their search for higher yields amid declining interest
rates, investors increasingly gravitated toward these bonds because
they offered an attractive combination of more yield than their
higher-rated counterparts, plus investment-grade credit quality. In
addition to a growing demand for Baa-rated bonds, there was a limited
supply of them, which, taken together, helped them outpace
higher-rated bonds during much of the period.
Q. GIVEN THEIR STRONG PERFORMANCE, WHY THEN DID YOU CUT BACK THE
FUND'S STAKE IN BAA-RATED BONDS?
A. The spreads on the Baa-rated bonds - or the amount of yield
investors demanded over that of higher-quality municipals - diminished
because of limited supply and firm demand. That smaller - or tighter -
yield spread signified that investors weren't demanding a lot of
additional yield from Baa-rated securities to compensate for the
bonds' lower credit quality. In light of the heightened possibility
that global economic turmoil could translate into slower U.S. economic
growth, and the potential for Baa-rated securities to lag
higher-quality bonds as a result, I reduced the fund's investments in
the Baa-rated sector. Among the fund's remaining Baa-rated holdings, I
made some shifts. I sold some bonds whose issuers I felt had little
room for further credit-quality improvement, and replaced them with
more defensively oriented bonds, including those with short durations
- - or less interest-rate sensitivity. In the event that investors push
Baa-rated bond yields higher and their prices lower - perhaps because
they're worried that these somewhat riskier bonds will have trouble
during an economic slowdown - shorter-duration securities would fare
better than those with longer durations. In addition, I continued to
hold onto Baa-rated securities backed by issuers that I felt could
perform relatively well in any economic environment.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Some of the fund's industrial development bonds were
disappointments because they lagged the overall municipal market
during the past several months. Industrial development bonds are
issued through a municipality for a corporation to finance a fixed
asset - such as an airline terminal or a road to a new industrial
plant - for a purpose that is deemed in the public interest. Because
an industrial development bond ultimately depends on the ability of a
corporation to pay back both interest and principal, its fortunes are
tied to the health of that business. As investors became more
concerned about corporate profitability in the wake of a potentially
slowing economy, industrial development bonds - particularly airline
bonds - languished.
Q. DID YOU CHANGE THE WAY IN WHICH THE FUND'S INVESTMENTS WERE
ALLOCATED ACROSS DIFFERENT STATES SINCE TAKING OVER THE FUND IN JULY?
A. I reduced the fund's stake in bonds issued in California, primarily
because I felt their prospects for further appreciation were limited
given their previous strong performance. I also cut the fund's
holdings in Baa-rated New York state appropriated bonds, which was
connected with the sale of Baa-rated bonds I mentioned earlier. I
re-deployed the proceeds from those sales into bonds from a variety of
other states I felt offered more attractive prices.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. From historical measures, municipals were priced quite attractively
compared to their U.S. Treasury counterparts at the end of the period.
One indication of munis' cheap prices is that their yields are roughly
90% of Treasury yields; historically, municipals yield between 65% and
80% of Treasuries. If municipal bond yields - which move in the
opposite direction of their prices - move back to their historical
relationship with Treasuries because of more favorable supply and
demand conditions, they are likely to perform relatively well.
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.
CHRISTINE THOMPSON ON THE
ROLE OF THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX IN THE
MANAGEMENT OF THE FUND:
"THE LEHMAN BROTHERS MUNICIPAL
BOND INDEX IS A REPRESENTATION OF
THE OVERALL MARKET IN WHICH THE
FUND INVESTS, AND INCLUDES MOST
OF THE UNIVERSE OF MUNICIPAL BONDS.
I MANAGE THE FUND TO HAVE SIMILAR
OVERALL INTEREST-RATE RISK TO ITS
BENCHMARK INDEX BUT, BEYOND THAT,
THE FUND CAN VARY SIGNIFICANTLY FROM
THE INDEX. WITH RESPECT TO SECTOR,
ISSUER AND STRUCTURAL COMPOSITION,
THE FUND'S HOLDINGS REFLECT MY
RESEARCH CONCLUSIONS ON THE
RELATIVE VALUE OF BONDS."
(SOLID BULLET) GENERAL OBLIGATION BONDS (GOS)
MADE UP THE FUND'S LARGEST SECTOR
CONCENTRATION AT 20.5% OF
INVESTMENTS 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.
FUND FACTS
GOAL: SEEKS TO PROVIDE A HIGH
CURRENT YIELD EXEMPT FROM
FEDERAL INCOME TAX BY INVESTING
NORMALLY IN INVESTMENT-GRADE
MUNICIPAL DEBT SECURITIES
START DATE: SEPTEMBER 16, 1987
SIZE: AS OF OCTOBER 31, 1998,
MORE THAN $452 MILLION
MANAGER: CHRISTINE THOMPSON,
SINCE JULY 1998; JOINED
FIDELITY IN 1985
(CHECKMARK)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS IN
INVESTMENTS THESE HOLDINGS 6 MONTHS AGO
NEW YORK 20.6 21.4
CALIFORNIA 6.6 7.6
MASSACHUSETTS 6.0 4.4
COLORADO 5.8 6.1
MICHIGAN 5.7 0.6
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS IN THE
INVESTMENTS THESE SECTORS 6 MONTHS AGO
GENERAL OBLIGATIONS 20.5 26.6
ELECTRIC UTILITIES 19.1 16.5
HEALTH CARE 13.4 12.5
TRANSPORTATION 12.0 9.0
ESCROWED/PRE-REFUNDED 11.3 8.9
</TABLE>
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1998
6 MONTHS AGO
YEARS 13.3 12.9
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF OCTOBER 31, 1998
6 MONTHS AGO
YEARS 6.7 6.8
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF OCTOBER 31, 1998 AS OF APRIL 30, 1998
AAA 43.0%
AA, A 27.3%
BAA 23.0%
NOT RATED 5.6%
SHORT-TERM
INVESTMENTS 1.1%
AAA 34.2%
AA, A 30.2%
BAA 26.5%
NOT RATED 6.9%
SHORT-TERM
INVESTMENTS 2.2%
ROW: 1, COL: 1, VALUE: 43.0
ROW: 1, COL: 2, VALUE: 27.3
ROW: 1, COL: 3, VALUE: 23.0
ROW: 1, COL: 4, VALUE: 5.6
ROW: 1, COL: 5, VALUE: 1.1
ROW: 1, COL: 1, VALUE: 34.2
ROW: 1, COL: 2, VALUE: 30.2
ROW: 1, COL: 3, VALUE: 26.5
ROW: 1, COL: 4, VALUE: 6.9
ROW: 1, COL: 5, VALUE: 2.2
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS. UNRATED
DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT OCTOBER 31,
1998 AND APRIL 30, 1998 ACCOUNT FOR 5.4% AND 0.4% RESPECTIVELY, OF THE
FUND'S INVESTMENTS.
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.9%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
ALABAMA - 1.0%
Shelby County Gen. Oblig. Series A, - $ 4,000,000 $ 4,450,920
7.7% 8/1/17
ALASKA - 0.4%
Alaska Student Ln. Corp. Student Ln. Rev. Series A, Aaa 1,500,000 1,586,790
5.25% 7/1/07 (AMBAC Insured) (f)
ARKANSAS - 0.3%
Little Rock Arpt. Passenger Facilities Charge Rev. Aaa 1,180,000 1,305,222
5.65% 5/1/16 (AMBAC Insured) (f)
CALIFORNIA - 6.6%
California Dept. of Wtr. Resources Central Valley Aa2 2,190,000 2,350,790
Proj. Rev. (Wtr. Sys.) Series J 2, 6.125%
12/1/13
California Gen. Oblig. 6% 10/1/09 Aa3 2,500,000 2,887,325
California Hsg. Fin. Agcy. Rev.:
(Home Mtg.):
Series B, 5.2% 8/1/26 (MBIA Insured) (f) Aaa 990,000 1,013,552
Series R, 6.15% 8/1/27 (MBIA Insured) (f) Aaa 1,500,000 1,588,140
Rfdg. (Home Mtg.) Series A, 5.7% 8/1/16 Aaa 495,000 508,251
(MBIA Insured)
California Pub. Wks. Board Lease Rev. Rfdg.:
(California Univ. Proj.) Series A, A1 2,000,000 2,154,220
5.5% 10/1/13
(Dept. of Corrections State Prisons) Series A, Aaa 1,750,000 1,782,148
5% 12/1/19 (AMBAC Insured)
(Various California State Univ. Projs.) Series A, Aa3 1,500,000 1,650,540
5.5% 6/1/14
Central Valley Fin. Auth. Cogeneration Proj. Rev. BBB- 4,500,000 4,838,175
(Carson Ice Gen. Proj.) 6% 7/1/09
Foothill/Eastern Trans. Corridor Agcy. Toll Road. Baa3 2,000,000 921,440
Rev. (Cap. Appreciation) Series A, 0% 1/1/14
Northern California Pwr. Agcy. Pub. Pwr. Rev. Aaa 1,500,000 1,716,870
Rfdg. (Geothermal Proj. #3) Series A, 5.85%
7/1/10 (AMBAC Insured)
Sacramento City Fing. Auth. Lease Rev. Rfdg. Aaa 2,000,000 2,145,240
Series A, 5.4% 11/1/20 (AMBAC Insured)
Sacramento City Fing. Auth. Rev. (Cap. Aaa 1,225,000 682,999
Appreciation) Series B, 0% 11/1/11
(MBIA Insured)
Sacramento Cogeneration Auth. Cogeneration
Proj. Rev. (Procter & Gamble Proj.):
6.375% 7/1/10 BBB- 500,000 558,970
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
CALIFORNIA - CONTINUED
Sacramento Cogeneration Auth. Cogeneration
Proj. Rev. (Procter & Gamble Proj.): - continued
6.375% 7/1/10 (Pre-Refunded to BBB- $ 500,000 $ 578,055
7/1/05 @ 102) (g)
6.5% 7/1/14 (Pre-Refunded to BBB- 3,800,000 4,433,004
7/1/05 @ 102) (g)
29,809,719
COLORADO - 5.8%
Arapaho County Cap. Impt. Trust Fund Hwy. Rev. Aaa 7,800,000 1,233,570
(Cap. Appreciation) Series C, 0% 8/31/26
(Pre-Refunded to 8/31/05 @ 20.862) (g)
Colorado Health Facilities Auth. Rev.:
(Nat'l. Benevolent Assoc. Proj.) Series A, 6.5% Baa1 1,360,000 1,487,799
6/1/25
Rfdg. (Rocky Mountain Adventist):
6.625% 2/1/13 Baa2 6,900,000 7,371,201
6.625% 2/1/22 Baa2 4,000,000 4,273,160
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/06 (MBIA Insured) Aaa 1,405,000 1,054,916
0% 1/1/08 (MBIA Insured) Aaa 870,000 590,286
Denver City & County Arpt. Rev.:
(Cap. Appreciation):
Series A, 0% 11/15/02 (MBIA Insured) (f) Aaa 2,115,000 1,812,470
Series D, 0% 11/15/04 (MBIA Insured) (f) Aaa 1,700,000 1,335,112
Rfdg. Series D, 5% 11/15/98 (f) Baa1 1,200,000 1,200,468
Series A:
6.9% 11/15/98 (f) Baa1 1,000,000 1,000,940
7.5% 11/15/23 (f) Baa1 2,070,000 2,369,343
7.5% 11/15/23 (Pre-Refunded to Aaa 430,000 515,420
11/15/04 @ 102) (f)(g)
8.5% 11/15/23 (f) Baa1 1,000,000 1,094,430
Series C, 6.55% 11/15/02 (f) Baa1 1,000,000 1,080,420
26,419,535
CONNECTICUT - 2.1%
Connecticut Spl. Tax Oblig. Rev. (Trans. Aaa 1,500,000 1,653,975
Infrastructure) Series A, 5.5% 11/1/06 (FSA
Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
CONNECTICUT - CONTINUED
Connecticut Health & Edl. Facilities Auth. Rev.
(New Britain Memorial Hosp.) Series A:
7.5% 7/1/06 (Pre-Refunded to 7/1/02 @ - $ 2,400,000 $ 2,679,576
102) (g)
7.75% 7/1/22 (Pre-Refunded to 7/1/02 @ AAA 1,500,000 1,732,200
102) (g)
Eastern Resources Recovery Auth. Solid Waste BBB+ 3,350,000 3,355,930
Rev. (Wheelabrator Lisbon Proj.) Series A,
5.5% 1/1/20 (f)
9,421,681
DISTRICT OF COLUMBIA - 2.7%
District of Columbia Gen. Oblig. Rfdg.:
Series A:
6% 6/1/07 (MBIA Insured) Aaa 1,850,000 2,066,968
6% 6/1/07 (MBIA Insured) (Escrowed to Aaa 150,000 169,269
Maturity) (g)
Series B, 5% 6/1/05 (MBIA Insured) Aaa 4,135,000 4,310,779
District of Columbia Hosp. Rev. (Hosp. for Sick - 955,000 1,033,568
Children) Series A, 8.875% 1/1/21
District of Columbia Redev. Land Agcy.
Washington D.C. Sports Arena Spl. Tax Rev.:
5.3% 11/1/99 Baa 1,700,000 1,723,256
5.625% 11/1/10 Baa 615,000 635,664
District of Columbia Rev. Rfdg. (Georgetown Aaa 2,000,000 2,232,700
Univ.) Series A, 5.95% 4/1/14 (MBIA Insured)
12,172,204
FLORIDA - 2.4%
Broward County Resource Recovery Rev. A3 575,000 612,950
(SES Broward Co. LP South Proj.)
7.95% 12/1/08
Dade County Aviation Rev. Rfdg. Series D, Aaa 5,000,000 5,472,200
5.75% 10/1/09 (AMBAC Insured) (f)
Florida Division Board Fin. Dept. Gen. Svcs. Rev. Aaa 2,000,000 2,128,200
Rfdg. (Dept. Envir. Proj.) Series A, 5% 7/1/06
(FSA Insured)
Florida Mid-Bay Bridge Auth. Rev. Series A, - 2,500,000 2,784,125
7.5% 10/1/17
10,997,475
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
HAWAII - 1.1%
Hawaii Gen. Oblig. Series C N, 6.25% 3/1/03 Aaa $ 4,515,000 $ 4,935,121
(FGIC Insured)
IDAHO - 0.0%
Boise Urban Renewal Agcy. Parking Rev. BBB+ 180,000 182,952
Series A B C, 8.125% 9/1/15
ILLINOIS - 4.9%
Chicago Board of Ed. (Chicago School Reform) Aaa 5,000,000 5,375,650
5.75% 12/1/27 (AMBAC Insured)
Chicago Midway Arpt. Rev. Series A, 5.5% Aaa 1,500,000 1,569,090
1/1/29 (MBIA Insured)
Chicago O'Hare Int'l. Arpt. Rev.:
(Passenger Facility Charge) Series A, 5.6% Aaa 2,500,000 2,698,175
1/1/10 (AMBAC Insured)
Rfdg. (Gen. Arpt. Proj.) Series A:
6.25% 1/1/09 (AMBAC Insured) (f) Aaa 3,700,000 4,168,346
6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,565,690
Chicago O'Hare Int'l. Arpt. Spl. Facilities Rev. Baa2 1,000,000 1,200,420
Rfdg. (American Airlines, Inc. Proj.) 8.2%
12/1/24
Du Page County Cmnty. High School #99 Aaa 1,640,000 1,828,092
(Downers Grove) Series A, 6% 2/1/06
(AMBAC Insured)
Illinois Edl. Facilities Auth. Rev. Rfdg. (DePaul Aaa 1,200,000 1,345,920
Univ.) 6% 10/1/05 (AMBAC Insured)
Illinois Health Facilities Auth. Rev. (Memorial
Hosp.):
7.125% 5/1/10 (Pre-Refunded to 5/1/02 @ - 1,000,000 1,127,060
102) (g)
7.25% 5/1/22 (Pre-Refunded to 5/1/02 @ - 1,000,000 1,131,110
102) (g)
22,009,553
INDIANA - 0.2%
Indianapolis Ind. Econ. Dev. Rev. Rfdg. (Nat'l. Baa1 1,000,000 1,112,730
Benevolent Assoc.) 7.625% 10/1/22
KANSAS - 0.7%
Kansas Dev. Fin. Auth. Rev. (Sisters of Charity
Leavenworth):
5% 12/1/13 (MBIA Insured) Aaa 2,390,000 2,440,142
5% 12/1/14 (MBIA Insured) Aaa 500,000 505,915
2,946,057
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
KENTUCKY - 1.8%
Kenton County Arpt. Board Arpt. Rev.:
(Spl. Facilities Delta Airlines, Inc. Proj.) Baa3 $ 2,000,000 $ 2,185,560
Series A, 7.5% 2/1/20 (f)
(Cincinnati/Northern Kentucky Int'l.) Series A, Aaa 5,570,000 6,183,090
6% 3/1/05 (MBIA Insured) (f)
8,368,650
MARYLAND - 1.2%
Maryland Health & Higher Edl. Facilities
Auth. Rev.:
(Good Samaritian Hosp.):
5.75% 7/1/13 (AMBAC Insured) Aaa 1,015,000 1,155,811
5.75% 7/1/13 (Escrowed to Maturity) (g) A1 1,665,000 1,836,428
Rfdg. (John Hopkins Univ.) 6% 7/1/10 Aa2 2,000,000 2,308,540
5,300,779
MASSACHUSETTS - 6.0%
Martha's Vineyard Land Bank Rev. Series A, AAA 1,000,000 1,011,320
5.125% 5/1/18 (FSA Insured)
Massachusetts Bay Trans. Auth. (Massachusetts Aa3 5,875,000 6,499,865
Gen. Trans. Sys.) Series A, 5.625% 3/1/26
(Pre-Refunded to 3/1/06 @ 101) (g)
Massachusetts Health & Edl. Facilities Auth. Rev.:
(Bentley College) Series J, 5% 7/1/17 (MBIA Aaa 1,265,000 1,263,330
Insured)
(Fairview Extended Care) Series A, 10.25% Aaa 5,000,000 5,822,950
1/1/21 (Pre-Refunded to 1/1/01 @
103) (g)
(Hebrew Rehab. Ctr. for Aged) Series C, A 2,000,000 2,014,720
5.25% 7/1/17
(New England Med. Ctr. Hosp.) Series G, Aaa 500,000 507,965
5.375% 7/1/24 (MBIA Insured)
Massachusetts Ind. Fin. Agcy. Resource Recovery BBB 1,000,000 1,000,820
Rev. Rfdg. Series A, 4.7% 12/1/03
Massachusetts Ind. Fin. Agcy. Rev.:
(Atlanticare Med. Ctr.) Series B, 10.125% - 700,000 749,882
11/1/14
(Cap. Appreciation) (Massachusetts
Biomedical) Series A 2:
0% 8/1/08 - 800,000 505,864
0% 8/1/10 - 4,500,000 2,525,850
Rfdg. (Emerson College) Issue A, 8.9% 1/1/18 - 1,000,000 1,086,610
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
MASSACHUSETTS - CONTINUED
Massachusetts Muni. Wholesale Elec. Co. Pwr. Baa2 $ 1,000,000 $ 1,095,790
Supply Sys. Rev. Rfdg. Series C, 6.5% 7/1/03
New England Ed. Ln. Marketing Corp. Aaa 3,000,000 3,158,730
Massachusetts Student Ln. Rev. Issue A, 5.8%
3/1/02
27,243,696
MICHIGAN - 5.0%
Detroit Gen. Oblig. Rfdg. Series B, 6% 4/1/00 Baa1 1,710,000 1,760,325
Michigan Bldg. Auth. Rev. (Facilities Prog.) Aaa 3,000,000 3,372,510
Series 1, 6% 10/1/05 (AMBAC Insured)
Michigan Hosp. Fin. Auth. Rev.:
(Detroit Med. Ctr.) Series A, 5.25% 8/15/28 A3 2,500,000 2,448,675
Rfdg.:
(Genesys Reg'l. Hosp.) Series A:
5.5% 10/1/18 Baa2 4,250,000 4,285,063
5.5% 10/1/27 Baa2 3,000,000 3,011,490
(Pontiac Osteopathic Hosp.) Series A, 6% Baa1 2,000,000 2,083,040
2/1/24
Michigan Strategic Fund Ltd. Oblg. Rev. Rfdg. Aaa 3,000,000 3,048,390
(Detroit Edison Co.) Series A, 5.55% 9/1/29
(MBIA Insured) (b)(f)
Royal Oak Hosp. Fin. Auth. Rev. Rfdg. (William Aa3 2,310,000 2,637,697
Beaumont Hosp.) 6.25% 1/1/09
22,647,190
MINNESOTA - 2.2%
Minneapolis & Saint Paul Hsg. & Redev. Auth. Aaa 2,300,000 2,270,721
Health Care Sys. Rev. Rfdg. (Healthspan Health
Sys. Corp.) Series A, 4.75% 11/15/18
(AMBAC Insured)
Minnesota Hsg. Fin. Agcy. (Single Family Mtg.) Aa2 2,000,000 2,124,040
Series D, 6.4% 7/1/15 (f)
Rochester Health Care Facilities Rev. (Mayo AA+ 2,000,000 2,102,140
Foundation) Series A, 5.5% 11/15/27
Western Minnesota Muni. Pwr. Agcy. Pwr. Supply Aaa 3,000,000 3,408,630
Rev. Rfdg. Series A, 6.25% 1/1/06 (AMBAC
Insured)
9,905,531
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
MISSISSIPPI - 0.6%
Mississippi Gen. Oblig. 6.2% 2/1/08 (Escrowed Aaa $ 2,250,000 $ 2,564,685
to Maturity) (g)
Mississippi Home Corp. Single Family Rev. Rfdg. Aaa 205,000 217,909
Series A, 9.25% 3/1/12 (FGIC Insured)
2,782,594
NEBRASKA - 1.4%
Nebraska Pub. Pwr. Dist. Rev.:
(Elec. Sys.) Series A, 6% 1/1/06 A1 1,500,000 1,626,240
(Pre-Refunded to 1/1/02 @ 102) (g)
Rfdg. (Pwr. Supply Sys.) Series C, 5% 1/1/17 A1 4,590,000 4,856,817
(Pre-Refunded to 7/1/04 @ 101) (g)
6,483,057
NEVADA - 0.6%
Las Vegas Downtown Redev. Agcy. Tax Increment
Rev. (Fremont Street Proj.) Series A:
6% 6/15/10 BBB+ 1,500,000 1,558,875
6.1% 6/15/14 BBB+ 1,000,000 1,053,010
2,611,885
NEW HAMPSHIRE - 0.1%
New Hampshire Higher Edl. & Health Facilities - 485,000 518,329
Auth. Rev. (Littleton Hosp. Assoc., Inc.) Series
A, 9.5% 5/1/20 (Pre-Refunded to 5/1/00 @
102) (g)
NEW JERSEY - 2.0%
New Jersey Edl. Facilities Auth. Rev. Rfdg. (Seton
Hall Univ.) Series P J:
5% 7/1/18 (AMBAC Insured) (b) Aaa 1,000,000 983,920
5.25% 7/1/07 (AMBAC Insured) (b) Aaa 1,610,000 1,709,112
New Jersey Trans. Trust Fund Auth. Rfdg. (Trans. Aaa 4,000,000 4,316,920
Sys.) Series A, 5.5% 6/15/11 (MBIA Insured)
Passaic County Util. Auth. Solid Waste Disp. Rev. Aaa 2,500,000 2,210,925
Rfdg. (Cap. Appreciation) 0% 3/1/02 (MBIA
Insured)
9,220,877
NEW MEXICO - 1.8%
Albuquerque Arpt. Rev. Rfdg.:
6.7% 7/1/18 (AMBAC Insured) (f) Aaa 3,970,000 4,580,348
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
NEW MEXICO - CONTINUED
Albuquerque Arpt. Rev. Rfdg.: - continued
6.75% 7/1/11 (AMBAC Insured) (f) Aaa $ 1,805,000 $ 2,185,422
New Mexico Edl. Assistance Foundation Student Aaa 1,585,000 1,617,302
Ln. Rev. Series B, 5.25% 4/1/05 (AMBAC
Insured) (f)
8,383,072
NEW YORK - 20.6%
Long Island Pwr. Auth. Elec. Sys. Rev.:
4% 4/1/00 Baa1 2,250,000 2,261,880
Series A:
5.125% 12/1/22 (FSA Insured) Aaa 9,390,000 9,447,279
5.25% 12/1/26 Baa1 3,500,000 3,522,680
5.5% 12/1/29 Baa1 2,400,000 2,474,520
Metropolitan Trans. Auth. Commuter Facilities
Rev. Rfdg. (Svc. Contract) Series R:
5% 7/1/02 Baa1 2,370,000 2,456,315
5% 7/1/03 Baa1 2,490,000 2,594,854
Muni. Assistance Corp. for New York City Rfdg. Aa2 5,000,000 5,588,400
Series H, 6% 7/1/05
New York City Gen. Oblig.:
Rfdg.:
Series A, 7% 8/1/03 A3 2,000,000 2,248,640
Series B:
5.7% 8/15/02 A3 1,130,000 1,200,376
5.7% 8/15/02 (Escrowed to Maturity) (g) A3 35,000 37,383
6.75% 8/15/03 A3 2,000,000 2,233,580
Series E, 6.5% 2/15/04 (FGIC Insured) Aaa 1,500,000 1,674,930
Series B, 7.5% 2/1/02 A3 3,525,000 3,900,836
Series D, 5.5% 2/15/04 A3 5,000,000 5,320,300
Series H, 6.875% 2/1/02 A3 240,000 261,449
New York City Ind. Dev. Agcy. Spl. Fac. Rev. A3 8,680,000 9,393,930
(Term. One Group Assoc. Proj.) 5.9%
1/1/06 (f)
New York City Ind. Dev. Agcy. Ind. Dev. Rev. Aaa 1,000,000 1,097,070
(Japan Airlines Co. Ltd. Proj.) Series 1991, 6%
11/1/15 (FSA Insured) (f)
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr.
Sys. Rev. Series B:
5.5% 6/15/27 (MBIA Insured) Aaa 3,500,000 3,660,370
5.75% 6/15/26 A2 5,000,000 5,363,800
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
NEW YORK - CONTINUED
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr.
Sys. Rev. Series B: - continued
5.75% 6/15/29 A2 $ 4,000,000 $ 4,287,840
New York State Dorm. Auth. Rev.:
(City Univ. Sys. Consolidated) Series A, 5.7% Baa1 3,000,000 3,269,640
7/1/05
(New York Univ.) Series A, 5.75% 7/1/14 Aaa 1,000,000 1,115,330
(MBIA Insured)
Rfdg. (Jamaica Hosp.) Series F, 5.2% 2/15/14 Aaa 6,150,000 6,316,419
(MBIA Insured)
New York State Local Gov't. Assistance Corp. A3 7,500,000 8,098,500
Rfdg. Series C, 5.5% 4/1/17
New York State Pwr. Auth. Rev. Series Z, 6.5% AAA 2,010,000 2,211,985
1/1/19 (Pre-Refunded to 1/1/02 @ 102) (g)
New York State Thruway Auth. Svc. Contract Rev. Baa1 2,000,000 2,187,740
(Local Hwy. & Bridges) 5.9% 4/1/07
Suffolk County Wtr. Auth. Wtrwks. Rev. Rfdg. 6% Aaa 1,000,000 1,142,450
6/1/17 (MBIA Insured)
93,368,496
NORTH CAROLINA - 4.4%
North Carolina Eastern Muni. Pwr. Agcy. Pwr.
Sys. Rev. Rfdg.:
Series A, 5.5% 1/1/05 (MBIA Insured) Aaa 4,000,000 4,305,840
Series B:
6% 1/1/06 Baa1 4,175,000 4,567,826
7.25% 1/1/07 Baa1 1,000,000 1,186,220
Series C:
5.125% 1/1/03 Baa1 2,600,000 2,689,492
5.25% 1/1/04 Baa1 1,365,000 1,427,135
5.5% 1/1/07 (MBIA Insured) Aaa 2,000,000 2,173,960
North Carolina Muni. Pwr. Agcy. #1 Catawba
Elec. Rev.:
Rfdg. 5.75% 1/1/02 A3 1,750,000 1,837,798
6.25% 1/1/17 (AMBAC Insured) Aaa 1,150,000 1,256,467
6.25% 1/1/17 (AMBAC Insured) Aaa 650,000 721,799
(Pre-Refunded to 1/1/03 @ 102) (g)
20,166,537
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
OHIO - 3.5%
Cincinnati Student Ln. Fdg. Corp. Student Ln. - $ 2,025,000 $ 2,127,627
Rev. Series B, 8.875% 8/1/08 (f)
Gateway Economic Dev. Corp. Greater - 3,000,000 3,153,090
Cleveland Stadium Rev. 6.5% 9/15/14 (f)
Marion County Hosp. Impt. Rev. Rfdg. (Commty. BBB+ 1,000,000 1,032,050
Hosp. Proj.) 5.6% 5/15/01
Ohio Tpk. Commission Tpk. Rev. Rfdg. Series A, Aaa 5,000,000 5,456,200
5.5% 2/15/24 (FGIC Insured)
Ohio Wtr. Dev. Auth. Poll. Cont. Facilities Rev.
(Wtr. Cont. Ln. Fund):
State Match Series, 6.5% 12/1/04 (MBIA Aaa 1,835,000 2,086,358
Insured)
5.625% 6/1/06 (MBIA Insured) Aaa 2,000,000 2,189,400
16,044,725
OKLAHOMA - 1.0%
Tulsa Muni. Arpt. Trust Rev. (American Airlines Baa2 4,000,000 4,454,680
Corp. Proj.) 7.35% 12/1/11
PENNSYLVANIA - 5.4%
Allegheny County Ind. Dev. Auth. Rev. - 340,000 368,516
(YMCA Pittsburgh Proj.) Series A, 8.75%
3/1/10
Butler County Ind. Dev. Auth. Health Ctr. Rev. A 3,000,000 3,120,870
Rfdg. (Sherwood Oaks Proj.) 5.75% 6/1/11
Cumberland County Muni. Auth. Rev. Rfdg.
(Carlisle Hosp. & Health):
6.8% 11/15/14 Baa2 3,250,000 3,571,718
6.8% 11/15/23 Baa2 1,000,000 1,098,990
Delaware County Auth. Rev. (1st. Mtg. Riddle
Village Proj.):
8.25% 6/1/22 (Escrowed to Maturity) (g) Aaa 2,250,000 2,770,988
8.75% 6/1/10 (Pre-Refunded to 6/1/02 @ Aaa 2,870,000 3,401,381
102) (g)
9.25% 6/1/22 (Pre-Refunded to 6/1/02 @ Aaa 2,905,000 3,485,651
102) (c)(g)
Delaware County Ind. Dev. Auth. Rev. Rfdg. Baa1 1,900,000 2,072,254
(Resource Recovery Facility) Series A, 6.1%
7/1/13
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
PENNSYLVANIA - CONTINUED
Pennsylvania Gen. Oblig. Second Series, 5.8% Aa3 $ 3,000,000 $ 3,281,400
7/1/04
Pennsylvania Ind. Dev. Auth. Rev. (Econ. Dev.) Aaa 1,345,000 1,517,967
5.8% 7/1/09 (AMBAC Insured)
24,689,735
RHODE ISLAND - 1.1%
Rhode Island Port Auth. & Economic Dev. Corp. Aaa 4,000,000 4,970,800
Arpt. Rev. Series A, 7% 7/1/14 (FSA
Insured) (f)
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Agcy. Elec. Rev. Rfdg. Aaa 1,715,000 1,920,543
Series A, 6.25% 1/1/05 (FGIC Insured)
TENNESSEE - 0.2%
Metro Govt. Nashville & Davidson County Elec. Aaa 1,000,000 739,770
Rev. (Cap. Appreciation) Series A, 0%
5/15/06 (MBIA Insured)
TEXAS - 3.3%
Conroe Independent School Dist. Rfdg. (Cap. Aaa 750,000 478,508
Appreciation) Series B, 0% 2/15/09
Dallas-Fort Worth Int'l. Arpt. Facility Impt. Corp. Baa1 6,000,000 6,425,220
Rev. (American Airlines, Inc.) 7.5%
11/1/25 (f)
Midlothian Independent School Dist. Rfdg. (Cap. Aaa 1,845,000 1,497,623
Appreciation) 0% 2/15/04
San Antonio Elec. & Gas Rev. Rfdg. 5.5% Aa1 1,500,000 1,566,420
2/1/20
Texas Pub. Fin. Auth. Series A, 5% 10/1/14 Aa2 5,000,000 5,039,350
15,007,121
UTAH - 2.9%
Intermountain Pwr. Agcy. Rev. Rfdg.:
Series A, 6.5% 7/1/09 (AMBAC Insured) Aaa 1,000,000 1,189,920
Series B, 5.75% 7/1/16 (MBIA Insured) Aaa 2,500,000 2,745,175
Series D, 5% 7/1/21 (MBIA Insured) Aaa 1,200,000 1,180,824
Spl. Oblig. 6th Series B, 6% 7/1/16 Aaa 7,000,000 7,769,020
(MBIA Insured)
South Salt Lake City Ind. Rev. (Price Savers - 250,000 276,270
Wholesale Club Proj.) 9% 11/15/13
13,161,209
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
VIRGINIA - 0.3%
Loudoun County Ind. Dev. Auth. Residential Care Aaa $ 1,000,000 $ 1,189,660
Facilities Rev. (Falcons Landing Proj.) Series A,
9.25% 11/1/04 (Escrowed to Maturity) (g)
WASHINGTON - 4.9%
King County Gen. Oblig. Series D, 5.75% Aa1 3,990,000 4,447,613
12/1/11
Washington Pub. Pwr. Supply Sys. Nuclear Proj.
#2 Rev.:
Rfdg. Series A:
5.9% 7/1/04 Aa1 1,000,000 1,095,110
4.8% 7/1/04 Aa1 2,000,000 2,079,760
5.4% 7/1/12 Aa1 14,000,000 14,783,994
22,406,477
TOTAL MUNICIPAL BONDS 448,935,372
(Cost $420,348,475)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL NOTES - 0.7%
MICHIGAN - 0.7%
Michigan Muni. Bond Auth. Rev. RAN Series D 1, 4.25% 8/27/99 3,000,000 3,031,140
(Cost $3,019,038)
</TABLE>
CASH EQUIVALENTS - 0.4%
SHARES
Municipal Central Cash Fund (d)(e) 1,853,056 1,853,056
(Cost $1,853,056)
TOTAL INVESTMENT IN SECURITIES - 100% $ 453,819,568
(Cost $425,220,569)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION UNDERLYING UNREALIZED
DATE FACE AMOUNT GAIN/(LOSS)
SOLD
55 Bond Buyer Municipal Bond Index Contracts Dec. 1998 $ 6,900,781 $ 83,889
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 1.5%.
</TABLE>
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
(c) Security or a portion of the security was pledged to cover margin
requirements for futures contracts. At the period end, the value of
securities pledged amounted to $323,968.
(d) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(e) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 3.35%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
(f) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(g) Security collateralized by an amount sufficient to pay interest
and principal.
SECURITY TYPE ABBREVIATION
RAN - Revenue Anticipation Note
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 67.5% AAA, AA, A 67.5%
Baa 19.0% BBB 20.3%
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 5.4%.
OTHER INFORMATION
The distribution of municipal securities by revenue source, as a
percentage of total value of investments in securities, is as follows:
General Obligations 20.5%
Electric Utilities 19.1
Health Care 13.4
Transportation 12.0
Escrowed/Pre-Refunded 11.3
Industrial Development 6.8
Others (individually less than 5%) 16.9
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost
of investment securities for income tax purposes was $425,220,569. Net
unrealized appreciation aggregated $28,598,999, of which $28,734,615
related to appreciated investment securities and $135,616 related to
depreciated investment securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $15,845,000 of which $2,066,000, $7,511,000 and
$6,268,000 will expire
on October 31, 2002, 2003 and 2004, respectively.
At October 31, 1998 the fund was required to defer approximately
$755,840 of losses on futures contracts.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $425,220,569) - $ 453,819,568
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR FUND SHARES SOLD 762,152
INTEREST RECEIVABLE 7,516,160
RECEIVABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 41,250
OTHER RECEIVABLES 22,338
TOTAL ASSETS 462,161,468
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 2,265,750
REGULAR DELIVERY
DELAYED DELIVERY 5,621,843
PAYABLE FOR FUND SHARES REDEEMED 379,702
DISTRIBUTIONS PAYABLE 664,346
ACCRUED MANAGEMENT FEE 147,576
DISTRIBUTION FEES PAYABLE 126,461
OTHER PAYABLES AND ACCRUED EXPENSES 106,753
TOTAL LIABILITIES 9,312,431
NET ASSETS $ 452,849,037
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 440,825,900
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (16,659,751)
INVESTMENTS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 28,682,888
NET ASSETS $ 452,849,037
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE $12.54
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($6,721,100 (DIVIDED BY) 535,829 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/95.25 OF $12.54) $13.17
CLASS T: $12.56
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($380,324,545 (DIVIDED BY) 30,291,618 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.50 OF $12.56) $13.02
CLASS B: $12.53
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($55,031,711 (DIVIDED BY) 4,393,495 SHARES) A
CLASS C: $12.56
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($7,030,566 (DIVIDED BY) 559,837 SHARES) A
INSTITUTIONAL CLASS: $12.51
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($3,741,115 (DIVIDED BY) 299,162 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
YEAR ENDED OCTOBER 31, 1998
INTEREST INCOME $ 24,223,962
EXPENSES
MANAGEMENT FEE $ 1,699,469
TRANSFER AGENT FEES 691,776
DISTRIBUTION FEES 1,419,553
ACCOUNTING FEES AND EXPENSES 184,252
NON-INTERESTED TRUSTEES' COMPENSATION 1,388
CUSTODIAN FEES AND EXPENSES 21,309
REGISTRATION FEES 77,268
AUDIT 42,525
LEGAL 8,340
REPORTS TO SHAREHOLDERS 39,993
MISCELLANEOUS 1,231
TOTAL EXPENSES BEFORE REDUCTIONS 4,187,104
EXPENSE REDUCTIONS (18,038) 4,169,066
NET INTEREST INCOME 20,054,896
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 797,794
FUTURES CONTRACTS 44,323 842,117
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 13,311,152
FUTURES CONTRACTS 51,051 13,362,203
NET GAIN (LOSS) 14,204,320
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 34,259,216
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 20,054,896 $ 23,276,174
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 842,117 982,319
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 13,362,203 14,869,381
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 34,259,216 39,127,874
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (20,054,896) (24,140,139)
FROM NET INTEREST INCOME
IN EXCESS OF NET INTEREST INCOME - (86,644)
TOTAL DISTRIBUTIONS (20,054,896) (24,226,783)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 279,500 (97,485,396)
TOTAL INCREASE (DECREASE) IN NET ASSETS 14,483,820 (82,584,305)
NET ASSETS
BEGINNING OF PERIOD 438,365,217 520,949,522
END OF PERIOD $ 452,849,037 $ 438,365,217
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31,
1998 1997 1996 F
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.150 $ 11.740 $ 11.630
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .571 .583 D .105 D, E
NET REALIZED AND UNREALIZED GAIN (LOSS) .390 .445 .109
TOTAL FROM INVESTMENT OPERATIONS .961 1.028 .214
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.571) (.616) E (.104)
IN EXCESS OF NET INTEREST INCOME - (.002) H -
TOTAL DISTRIBUTIONS (.571) (.618) (.104)
NET ASSET VALUE, END OF PERIOD $ 12.540 $ 12.150 $ 11.740
TOTAL RETURN B, C 8.07% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,721 $ 3,755 $ 202
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% G .90% G .90% A, G
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.57% 4.87% 5.73% A
PORTFOLIO TURNOVER RATE 36% 36% 49%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 12.150 $ 11.760 $ 11.880 $ 11.220 $ 12.720
BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .571 .597 C .677 C, D .700 .689
NET REALIZED AND UNREALIZED .410 .407 (.136) .660 (1.430)
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS .981 1.004 .541 1.360 (.741)
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.571) (.612) D (.661) (.700) (.689)
IN EXCESS OF NET INTEREST INCOME - (.002) B - - -
FROM NET REALIZED GAIN - - - - (.060)
IN EXCESS OF NET REALIZED GAIN - - - - (.010)
TOTAL DISTRIBUTIONS (.571) (.614) (.661) (.700) (.759)
NET ASSET VALUE, END OF PERIOD $ 12.560 $ 12.150 $ 11.760 $ 11.880 $ 11.220
TOTAL RETURN A 8.15% 8.89% 4.68% 12.50% (6.03)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 380,325 $ 392,075 $ 480,432 $ 565,131 $ 544,422
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .87% .89% .89% .91% .89%
NET ASSETS
RATIO OF NET INTEREST INCOME TO 4.62% 5.04% 5.74% 6.06% 5.78%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 36% 36% 49% 37% 38%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
C NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 1994 F
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 .491 .515 E .596 E, G .612 .188
NET REALIZED AND UNREALIZED .400 .416 (.136) .650 (.400)
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS .891 .931 .460 1.262 (.212)
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.491) (.539) G (.580) (.612) (.188)
IN EXCESS OF NET INTEREST INCOME - (.002) H - - -
TOTAL DISTRIBUTIONS (.491) (.541) (.580) (.612) (.188)
NET ASSET VALUE, END OF PERIOD $ 12.530 $ 12.130 $ 11.740 $ 11.860 $ 11.210
TOTAL RETURN B, C 7.47% 8.15% 3.98% 11.57% (1.86)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 55,032 $ 41,024 $ 39,389 $ 32,395 $ 9,968
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 1.53% 1.56% 1.57% 1.86% D 2.09% A
NET ASSETS
RATIO OF NET INTEREST INCOME TO 3.96% 4.35% 5.06% 5.18% 4.58% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 36% 36% 49% 37% 38%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D 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 FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO OCTOBER 31, 1994.
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
OCTOBER 31,
1998 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.130
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .455
NET REALIZED AND UNREALIZED GAIN (LOSS) .430
TOTAL FROM INVESTMENT OPERATIONS .885
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.455)
NET ASSET VALUE, END OF PERIOD $ 12.560
TOTAL RETURN B, C 7.41%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,031
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, E
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.60% A
PORTFOLIO TURNOVER RATE 36%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 E
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 .592 .609 D .707 D, G .232
NET REALIZED AND UNREALIZED GAIN (LOSS) .390 .464 (.197) .180
TOTAL FROM INVESTMENT OPERATIONS .982 1.073 .510 .412
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.592) (.671) G (.670) (.232)
IN EXCESS OF NET INTEREST INCOME - (.002) H - -
TOTAL DISTRIBUTION (.592) (.673) (.670) (.232)
NET ASSET VALUE, END OF PERIOD $ 12.510 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C 8.28% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,741 $ 1,511 $ 927 $ 154
RATIO OF EXPENSES TO AVERAGE NET ASSETS .75% F .75% F .75% F .75% A, F
RATIO OF NET INTEREST INCOME TO AVERAGE NET 4.75% 5.11% 5.88% 5.89% A
ASSETS
PORTFOLIO TURNOVER RATE 36% 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5OF NOTES TO FINANCIAL STATEMENTS).
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998
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
matters that affect that class. 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, 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 market quotations are not readily available are
valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date. Income dividends
and capital gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for future transactions, market discount, capital loss
carryforwards, and losses deferred due to 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 income or gain remaining at fiscal year end is distributed in
the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc., an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a delayed delivery basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of
the underlying securities and the date when the securities will be
delivered and paid for are fixed at the time the transaction is
negotiated. The market values of the securities purchased or sold on a
delayed delivery basis are identified as such in the fund's schedule
of investments. The fund may receive compensation for interest forgone
in the purchase of a delayed delivery security. With respect to
purchase
2. OPERATING POLICIES - CONTINUED
DELAYED DELIVERY TRANSACTIONS - CONTINUED
commitments, the fund identifies securities as segregated in its
records with a value at least equal to the amount of the commitment.
Losses may arise due to changes in the market value of the underlying
securities 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.
Futures contracts involve, to varying degrees, risk of loss in excess
of the futures variation margin reflected in the Statement of Assets
and Liabilities. The underlying face amount at value of any open
futures contracts at period end is shown in the schedule of
investments under the caption "Futures Contracts." This amount
reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the
underlying instruments 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 $166,603,774 and $155,415,463, respectively.
The market value of futures contracts opened and closed during the
period amounted to $43,912,925 and $48,390,926, 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 annual rate of .39% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was based on the following annual rates of
the average net assets of each applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 7,582 $ 126
CLASS T 958,589 10,809
CLASS B 423,933 306,178
CLASS C 29,449 29,368
$ 1,419,553 $ 346,481
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 $ 747
CLASS T 43,765
CLASS B 11,053
CLASS C 2,835
INSTITUTIONAL CLASS 495
$ 58,895
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
1% for Class C, of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. In addition,
purchases of Class A and Class T shares that were subject to a
finder's fee bear a contingent deferred sales charge on assets that do
not remain in the fund for at least one year. The Class A and Class T
contingent deferred sales charge is based on 0.25% of the lesser of
the cost of shares at the initial date of purchase or the net asset
value of the redeemed shares, excluding any reinvested dividends and
capital gains. A portion of the sales charges paid to FDC are paid to
securities dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 38,091 $ 15,167
CLASS T 179,663 60,942
CLASS B 112,936 112,936*
CLASS C 6,848 6,848*
$ 337,538 $ 195,893
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT AND ACCOUNTING FEES. 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 $ 8,537 .17
CLASS T 599,276 .16
CLASS B 73,627 .16
CLASS C 4,797 .16*
INSTITUTIONAL CLASS 5,539 .20
$ 691,776
* ANNUALIZED
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
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% $ 106
CLASS C 1.75% 9,313
INSTITUTIONAL CLASS .75% 6,230
$ 15,649
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 $2,389 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEARS ENDED OCTOBER 31,
1998 A 1997
FROM NET INTEREST INCOME
CLASS A $ 231,309 $ 94,032
CLASS T 17,722,552 22,160,320
CLASS B 1,865,869 1,825,294
CLASS C 106,528 -
INSTITUTIONAL CLASS 128,638 60,493
TOTAL $ 20,054,896 $ 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
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 A 1997 1998 A 1997
CLASS A 362,699 307,664 $ 4,479,496 $ 3,663,457
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 11,508 3,770 142,669 45,120
SHARES REDEEMED (147,406) (19,585) (1,811,982) (234,062)
NET INCREASE (DECREASE) 226,801 291,849 $ 2,810,183 $ 3,474,515
CLASS T 4,799,958 2,221,421 $ 59,544,980 $ 26,303,589
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 873,770 1,143,394 10,820,895 13,582,690
SHARES REDEEMED (7,639,811) (11,972,642) (94,496,816) (141,705,601)
NET INCREASE (DECREASE) (1,966,083) (8,607,827) $ (24,130,941) $ (101,819,322)
CLASS B 1,497,112 713,815 $ 18,512,808 $ 8,459,000
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 86,162 90,487 1,065,255 1,073,258
SHARES REDEEMED (572,594) (777,996) (7,073,528) (9,216,485)
NET INCREASE (DECREASE) 1,010,680 26,306 $ 12,504,535 $ 315,773
CLASS C 650,179 - $ 8,065,902 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,455 - 55,539 -
SHARES REDEEMED (94,797) - (1,177,225) -
NET INCREASE (DECREASE) 559,837 - $ 6,944,216 $ -
INSTITUTIONAL CLASS 238,568 107,503 $ 2,943,409 $ 1,278,313
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 6,313 3,746 77,958 44,614
SHARES REDEEMED (70,388) (65,730) (869,860) (779,289)
NET INCREASE (DECREASE) 174,493 45,519 $ 2,151,507 $ 543,638
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 6,683
CLASS T 36,678
CLASS B 11,483
CLASS C 13,760
INSTITUTIONAL CLASS 8,664
$ 77,268
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series V and the Shareholders of
Fidelity Advisor Municipal Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Municipal Income Fund (a fund of Fidelity Advisor
Series V) at October 31, 1998, the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Advisor Municipal Income Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 14, 1998
DISTRIBUTIONS
During fiscal year ended 1998, 100% of the fund's income dividends was
free from federal income tax, and 17.42% of the fund's income
dividends was subject to the federal alternative minimum tax.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Christine J. Thompson, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
* INDEPENDENT TRUSTEES
ADVISORY BOARD
J. Gary Burkhead
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 TechnoQuantSM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
HIM-ANN-1298 67163
1.538412.101
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
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
(2_FIDELITY_LOGOS)(REGISTERED TRADEMARK)
FIDELITY ADVISOR
MUNICIPAL INCOME FUND -
INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 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 25 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 34 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 42 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 43
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:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR MUNICIPAL INCOME FUND - INSTITUTIONAL CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can
look at the total percentage change in value, the average annual
percentage change or the growth of a hypothetical $10,000 investment.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Institutional
Class shares took place on July 3, 1995. Institutional Class shares
are sold to eligible investors without a sales load or 12b-1 fee.
Returns prior to July 3, 1995 are those of Class T, the original class
of the fund, and reflect Class T shares' 0.25% 12b-1 fee. If Fidelity
had not reimbursed certain class expenses, the total returns and
dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - INST CL 8.28% 30.92% 131.45%
LB MUNICIPAL BOND 8.02% 36.06% 119.13%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 30.95% 110.18%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Institutional Class' returns to those
of the Lehman Brothers Municipal Bond Index - a 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
general municipal debt funds average, which reflects the performance
of mutual funds with similar objectives tracked by Lipper Analytical
Services, Inc. The past one year average represents a peer group of
239 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY ADV MUNICIPAL INCOME - INST CL 8.28% 5.54% 8.75%
LB MUNICIPAL BOND 8.02% 6.35% 8.16%
GENERAL MUNICIPAL DEBT FUNDS AVERAGE 7.12% 5.53% 7.70%
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
1988/10/31 10000.00 10000.00
1988/11/30 10010.81 9908.40
1988/12/31 10125.30 10009.76
1989/01/31 10252.80 10216.76
1989/02/28 10263.08 10100.19
1989/03/31 10342.06 10076.05
1989/04/30 10578.40 10315.26
1989/05/31 10751.23 10529.51
1989/06/30 10874.37 10672.50
1989/07/31 10969.76 10817.75
1989/08/31 11054.62 10711.84
1989/09/30 11087.95 10679.92
1989/10/31 11205.02 10810.54
1989/11/30 11342.96 10999.72
1989/12/31 11450.80 11089.70
1990/01/31 11468.87 11037.25
1990/02/28 11551.06 11135.48
1990/03/31 11623.53 11138.82
1990/04/30 11517.21 11058.17
1990/05/31 11753.24 11299.57
1990/06/30 11891.71 11398.90
1990/07/31 12075.13 11566.46
1990/08/31 11993.65 11398.51
1990/09/30 12078.93 11405.01
1990/10/31 12244.77 11611.90
1990/11/30 12548.59 11845.41
1990/12/31 12628.65 11896.94
1991/01/31 12775.62 12056.60
1991/02/28 12873.85 12161.49
1991/03/31 12949.54 12165.87
1991/04/30 13160.39 12327.67
1991/05/31 13323.07 12437.27
1991/06/30 13354.08 12424.95
1991/07/31 13526.75 12576.29
1991/08/31 13648.91 12741.92
1991/09/30 13809.00 12907.82
1991/10/31 13962.02 13023.99
1991/11/30 14014.54 13060.33
1991/12/31 14166.96 13340.60
1992/01/31 14324.00 13371.02
1992/02/29 14401.82 13375.30
1992/03/31 14474.08 13380.25
1992/04/30 14604.71 13499.33
1992/05/31 14735.72 13658.22
1992/06/30 14937.78 13887.40
1992/07/31 15457.92 14303.75
1992/08/31 15338.22 14164.29
1992/09/30 15433.94 14256.92
1992/10/31 15247.68 14116.77
1992/11/30 15553.28 14369.61
1992/12/31 15740.80 14516.32
1993/01/31 16007.05 14685.14
1993/02/28 16572.27 15216.31
1993/03/31 16399.42 15055.47
1993/04/30 16573.33 15207.38
1993/05/31 16710.57 15292.84
1993/06/30 16978.49 15548.08
1993/07/31 16991.10 15568.45
1993/08/31 17428.72 15892.59
1993/09/30 17670.07 16073.60
1993/10/31 17679.54 16104.62
1993/11/30 17506.76 15962.74
1993/12/31 17911.02 16299.72
1994/01/31 18119.58 16485.86
1994/02/28 17640.68 16058.87
1994/03/31 16700.37 15404.96
1994/04/30 16811.19 15535.59
1994/05/31 16910.60 15670.28
1994/06/30 16848.34 15574.54
1994/07/31 17152.26 15860.02
1994/08/31 17179.21 15914.90
1994/09/30 16910.09 15681.27
1994/10/31 16613.66 15402.77
1994/11/30 16079.53 15124.28
1994/12/31 16469.24 15457.17
1995/01/31 17025.62 15898.94
1995/02/28 17484.35 16361.28
1995/03/31 17576.28 16549.27
1995/04/30 17634.05 16568.80
1995/05/31 18198.36 17097.51
1995/06/30 18055.61 16948.76
1995/07/31 18117.71 17109.43
1995/08/31 18304.83 17326.38
1995/09/30 18487.38 17436.06
1995/10/31 18705.49 17689.58
1995/11/30 19076.41 17983.05
1995/12/31 19245.69 18155.86
1996/01/31 19352.00 18292.94
1996/02/29 19308.42 18169.46
1996/03/31 18916.88 17937.26
1996/04/30 18840.36 17886.49
1996/05/31 18771.77 17879.34
1996/06/30 18992.64 18074.05
1996/07/31 19118.70 18238.52
1996/08/31 19162.28 18234.14
1996/09/30 19335.69 18489.42
1996/10/31 19530.13 18698.54
1996/11/30 19909.34 19040.72
1996/12/31 19841.05 18960.75
1997/01/31 19905.03 18996.58
1997/02/28 20109.54 19170.97
1997/03/31 19897.93 18915.42
1997/04/30 20058.12 19073.75
1997/05/31 20307.60 19360.61
1997/06/30 20571.63 19566.81
1997/07/31 21166.98 20108.81
1997/08/31 20980.36 19920.39
1997/09/30 21245.94 20156.84
1997/10/31 21374.64 20286.45
1997/11/30 21516.92 20405.73
1997/12/31 21869.71 20703.45
1998/01/31 22085.93 20917.11
1998/02/28 22113.63 20923.39
1998/03/31 22151.22 20941.80
1998/04/30 22039.80 20847.35
1998/05/31 22380.77 21177.37
1998/06/30 22465.59 21260.81
1998/07/31 22517.31 21314.17
1998/08/31 22860.98 21643.47
1998/09/30 23148.60 21913.15
1998/10/30 23145.27 21912.71
IMATRL PRASUN SHR__CHT 19981031 19981110 112544 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Institutional
Class on October 31, 1988. As the chart shows, by October 31, 1998,
the value of the investment would have grown to $23,145 - a 131.45%
increase on the initial investment. For comparison, look at how the
Lehman Brothers Municipal Bond Index - a total return performance
benchmark for investment-grade municipal bonds with maturities of at
least one year - did over the same period. With dividends reinvested,
the same $10,000 would have grown to $21,913 - a 119.13% 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>
YEARS ENDED OCTOBER 31, JULY 3, 1995
(COMMENCEMENT OF
SALE OF INSTITUTIONAL
CLASS SHARES) TO
OCTOBER 31,
1998 1997 1996 1995
DIVIDEND RETURNS 5.06% 6.01% 5.76% 2.01%
CAPITAL RETURNS 3.22% 3.43% -1.35% 1.54%
TOTAL RETURNS 8.28% 9.44% 4.41% 3.55%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DIVIDENDS AND YIELD
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
DIVIDENDS PER SHARE 4.82(CENTS) 28.64(CENTS) 59.24(CENTS)
ANNUALIZED DIVIDEND RATE 4.52% 4.59% 4.80%
30-DAY ANNUALIZED YIELD 3.83% - -
30-DAY ANNUALIZED TAX-EQUIVALENT YIELD 5.98% - -
</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 $12.56 over the past
one month, $12.39 over the past six months, and $12.33 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
Despite heavy new supply and slack
demand for municipal bonds, and
an extreme flight to Treasuries by
investors, the municipal bond
market turned in a solid
performance for the 12 months
ended October 31, 1998. While
the glut of new issues hurt the price
of munis, their yields - which move
in the opposite direction of prices -
became attractive relative to taxable
bonds. Two interest-rate cuts by the
Federal Reserve Board and low
inflation provided additional
support. During this period, the
Lehman Brothers Municipal Bond
Index - a popular measure of the
municipal bond market - returned
8.02%. By comparison, the Lehman
Brothers Aggregate Bond Index -
a widely followed measure of taxable
bond performance - returned 9.34%
during the period. Throughout most
of the period, low interest rates and
a stable economy resulted in a flood
of municipalities rushing to sell
bonds this year. In fact, 1998 is on
track to top the record $293 billion
muni-bond issuance during 1993.
While waves of new issues kept total
return in check, volatility in the
equity markets, concerns about the
impact of overseas markets on the
U.S. economy and the attractive
level of muni-bond yields provided
support through the end of
September. Late in the period,
however, as equity markets rallied,
demand for the safety of municipal
bonds weakened, putting further
pressure on prices.
NOTE TO SHAREHOLDERS: Christine Thompson became Portfolio Manager of
Fidelity Advisor Municipal Income Fund on July 13, 1998.
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. For the 12-month period that ended October 31, 1998, the fund's
Institutional Class shares had a total return of 8.28%. To get a sense
of how the fund did relative to its competitors during the same
one-year period, the general municipal debt funds average returned
7.12%, according to Lipper Analytical Services. Additionally, the
Lehman Brothers Municipal Bond Index - a broad measure of the
performance of the municipal bond market - returned 8.02% for the same
12-month period.
Q. WHICH OF THE FUND'S HOLDINGS PERFORMED WELL OVER THE PAST 12
MONTHS?
A. Lower-quality investment-grade bonds - such as those rated Baa by
Moody's Investors Service - were very strong performers during that
time period. In their search for higher yields amid declining interest
rates, investors increasingly gravitated toward these bonds because
they offered an attractive combination of more yield than their
higher-rated counterparts, plus investment-grade credit quality. In
addition to a growing demand for Baa-rated bonds, there was a limited
supply of them, which, taken together, helped them outpace
higher-rated bonds during much of the period.
Q. GIVEN THEIR STRONG PERFORMANCE, WHY THEN DID YOU CUT BACK THE
FUND'S STAKE IN BAA-RATED BONDS?
A. The spreads on the Baa-rated bonds - or the amount of yield
investors demanded over that of higher-quality municipals - diminished
because of limited supply and firm demand. That smaller - or tighter -
yield spread signified that investors weren't demanding a lot of
additional yield from Baa-rated securities to compensate for the
bonds' lower credit quality. In light of the heightened possibility
that global economic turmoil could translate into slower U.S. economic
growth, and the potential for Baa-rated securities to lag
higher-quality bonds as a result, I reduced the fund's investments in
the Baa-rated sector. Among the fund's remaining Baa-rated holdings, I
made some shifts. I sold some bonds whose issuers I felt had little
room for further credit-quality improvement, and replaced them with
more defensively oriented bonds, including those with short durations
- - or less interest-rate sensitivity. In the event that investors push
Baa-rated bond yields higher and their prices lower - perhaps because
they're worried that these somewhat riskier bonds will have trouble
during an economic slowdown - shorter-duration securities would fare
better than those with longer durations. In addition, I continued to
hold onto Baa-rated securities backed by issuers that I felt could
perform relatively well in any economic environment.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Some of the fund's industrial development bonds were
disappointments because they lagged the overall municipal market
during the past several months. Industrial development bonds are
issued through a municipality for a corporation to finance a fixed
asset - such as an airline terminal or a road to a new industrial
plant - for a purpose that is deemed in the public interest. Because
an industrial development bond ultimately depends on the ability of a
corporation to pay back both interest and principal, its fortunes are
tied to the health of that business. As investors became more
concerned about corporate profitability in the wake of a potentially
slowing economy, industrial development bonds - particularly airline
bonds - languished.
Q. DID YOU CHANGE THE WAY IN WHICH THE FUND'S INVESTMENTS WERE
ALLOCATED ACROSS DIFFERENT STATES SINCE TAKING OVER THE FUND IN JULY?
A. I reduced the fund's stake in bonds issued in California, primarily
because I felt their prospects for further appreciation were limited
given their previous strong performance. I also cut the fund's
holdings in Baa-rated New York state appropriated bonds, which was
connected with the sale of Baa-rated bonds I mentioned earlier. I
re-deployed the proceeds from those sales into bonds from a variety of
other states I felt offered more attractive prices.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. From historical measures, municipals were priced quite attractively
compared to their U.S. Treasury counterparts at the end of the period.
One indication of munis' cheap prices is that their yields are roughly
90% of Treasury yields; historically, municipals yield between 65% and
80% of Treasuries. If municipal bond yields - which move in the
opposite direction of their prices - move back to their historical
relationship with Treasuries because of more favorable supply and
demand conditions, they are likely to perform relatively well.
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.
CHRISTINE THOMPSON ON THE
ROLE OF THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX IN THE
MANAGEMENT OF THE FUND:
"THE LEHMAN BROTHERS MUNICIPAL
BOND INDEX IS A REPRESENTATION OF
THE OVERALL MARKET IN WHICH THE
FUND INVESTS, AND INCLUDES MOST
OF THE UNIVERSE OF MUNICIPAL BONDS.
I MANAGE THE FUND TO HAVE SIMILAR
OVERALL INTEREST-RATE RISK TO ITS
BENCHMARK INDEX BUT, BEYOND THAT,
THE FUND CAN VARY SIGNIFICANTLY FROM
THE INDEX. WITH RESPECT TO SECTOR,
ISSUER AND STRUCTURAL COMPOSITION,
THE FUND'S HOLDINGS REFLECT MY
RESEARCH CONCLUSIONS ON THE
RELATIVE VALUE OF BONDS."
(SOLID BULLET) GENERAL OBLIGATION BONDS (GOS)
MADE UP THE FUND'S LARGEST SECTOR
CONCENTRATION AT 20.5% OF
INVESTMENTS 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.
FUND FACTS
GOAL: SEEKS TO PROVIDE A HIGH
CURRENT YIELD EXEMPT FROM
FEDERAL INCOME TAX BY INVESTING
NORMALLY IN INVESTMENT-GRADE
MUNICIPAL DEBT SECURITIES
START DATE: SEPTEMBER 16, 1987
SIZE: AS OF OCTOBER 31, 1998,
MORE THAN $452 MILLION
MANAGER: CHRISTINE THOMPSON,
SINCE JULY 1998; JOINED
FIDELITY IN 1985
(CHECKMARK)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS IN
INVESTMENTS THESE HOLDINGS 6 MONTHS AGO
NEW YORK 20.6 21.4
CALIFORNIA 6.6 7.6
MASSACHUSETTS 6.0 4.4
COLORADO 5.8 6.1
MICHIGAN 5.7 0.6
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS IN THE
INVESTMENTS THESE SECTORS 6 MONTHS AGO
GENERAL OBLIGATIONS 20.5 26.6
ELECTRIC UTILITIES 19.1 16.5
HEALTH CARE 13.4 12.5
TRANSPORTATION 12.0 9.0
ESCROWED/PRE-REFUNDED 11.3 8.9
</TABLE>
AVERAGE YEARS TO MATURITY AS OF OCTOBER 31, 1998
6 MONTHS AGO
YEARS 13.3 12.9
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF OCTOBER 31, 1998
6 MONTHS AGO
YEARS 6.7 6.8
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF OCTOBER 31, 1998 AS OF APRIL 30, 1998
AAA 43.0%
AA, A 27.3%
BAA 23.0%
NOT RATED 5.6%
SHORT-TERM
INVESTMENTS 1.1%
AAA 34.2%
AA, A 30.2%
BAA 26.5%
NOT RATED 6.9%
SHORT-TERM
INVESTMENTS 2.2%
ROW: 1, COL: 1, VALUE: 43.0
ROW: 1, COL: 2, VALUE: 27.3
ROW: 1, COL: 3, VALUE: 23.0
ROW: 1, COL: 4, VALUE: 5.6
ROW: 1, COL: 5, VALUE: 1.1
ROW: 1, COL: 1, VALUE: 34.2
ROW: 1, COL: 2, VALUE: 30.2
ROW: 1, COL: 3, VALUE: 26.5
ROW: 1, COL: 4, VALUE: 6.9
ROW: 1, COL: 5, VALUE: 2.2
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS. UNRATED
DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT OCTOBER 31,
1998 AND APRIL 30, 1998 ACCOUNT FOR 5.4% AND 0.4% RESPECTIVELY, OF THE
FUND'S INVESTMENTS.
INVESTMENTS OCTOBER 31, 1998
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.9%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
ALABAMA - 1.0%
Shelby County Gen. Oblig. Series A, - $ 4,000,000 $ 4,450,920
7.7% 8/1/17
ALASKA - 0.4%
Alaska Student Ln. Corp. Student Ln. Rev. Series A, Aaa 1,500,000 1,586,790
5.25% 7/1/07 (AMBAC Insured) (f)
ARKANSAS - 0.3%
Little Rock Arpt. Passenger Facilities Charge Rev. Aaa 1,180,000 1,305,222
5.65% 5/1/16 (AMBAC Insured) (f)
CALIFORNIA - 6.6%
California Dept. of Wtr. Resources Central Valley Aa2 2,190,000 2,350,790
Proj. Rev. (Wtr. Sys.) Series J 2, 6.125%
12/1/13
California Gen. Oblig. 6% 10/1/09 Aa3 2,500,000 2,887,325
California Hsg. Fin. Agcy. Rev.:
(Home Mtg.):
Series B, 5.2% 8/1/26 (MBIA Insured) (f) Aaa 990,000 1,013,552
Series R, 6.15% 8/1/27 (MBIA Insured) (f) Aaa 1,500,000 1,588,140
Rfdg. (Home Mtg.) Series A, 5.7% 8/1/16 Aaa 495,000 508,251
(MBIA Insured)
California Pub. Wks. Board Lease Rev. Rfdg.:
(California Univ. Proj.) Series A, A1 2,000,000 2,154,220
5.5% 10/1/13
(Dept. of Corrections State Prisons) Series A, Aaa 1,750,000 1,782,148
5% 12/1/19 (AMBAC Insured)
(Various California State Univ. Projs.) Series A, Aa3 1,500,000 1,650,540
5.5% 6/1/14
Central Valley Fin. Auth. Cogeneration Proj. Rev. BBB- 4,500,000 4,838,175
(Carson Ice Gen. Proj.) 6% 7/1/09
Foothill/Eastern Trans. Corridor Agcy. Toll Road. Baa3 2,000,000 921,440
Rev. (Cap. Appreciation) Series A, 0% 1/1/14
Northern California Pwr. Agcy. Pub. Pwr. Rev. Aaa 1,500,000 1,716,870
Rfdg. (Geothermal Proj. #3) Series A, 5.85%
7/1/10 (AMBAC Insured)
Sacramento City Fing. Auth. Lease Rev. Rfdg. Aaa 2,000,000 2,145,240
Series A, 5.4% 11/1/20 (AMBAC Insured)
Sacramento City Fing. Auth. Rev. (Cap. Aaa 1,225,000 682,999
Appreciation) Series B, 0% 11/1/11
(MBIA Insured)
Sacramento Cogeneration Auth. Cogeneration
Proj. Rev. (Procter & Gamble Proj.):
6.375% 7/1/10 BBB- 500,000 558,970
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
CALIFORNIA - CONTINUED
Sacramento Cogeneration Auth. Cogeneration
Proj. Rev. (Procter & Gamble Proj.): - continued
6.375% 7/1/10 (Pre-Refunded to BBB- $ 500,000 $ 578,055
7/1/05 @ 102) (g)
6.5% 7/1/14 (Pre-Refunded to BBB- 3,800,000 4,433,004
7/1/05 @ 102) (g)
29,809,719
COLORADO - 5.8%
Arapaho County Cap. Impt. Trust Fund Hwy. Rev. Aaa 7,800,000 1,233,570
(Cap. Appreciation) Series C, 0% 8/31/26
(Pre-Refunded to 8/31/05 @ 20.862) (g)
Colorado Health Facilities Auth. Rev.:
(Nat'l. Benevolent Assoc. Proj.) Series A, 6.5% Baa1 1,360,000 1,487,799
6/1/25
Rfdg. (Rocky Mountain Adventist):
6.625% 2/1/13 Baa2 6,900,000 7,371,201
6.625% 2/1/22 Baa2 4,000,000 4,273,160
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/06 (MBIA Insured) Aaa 1,405,000 1,054,916
0% 1/1/08 (MBIA Insured) Aaa 870,000 590,286
Denver City & County Arpt. Rev.:
(Cap. Appreciation):
Series A, 0% 11/15/02 (MBIA Insured) (f) Aaa 2,115,000 1,812,470
Series D, 0% 11/15/04 (MBIA Insured) (f) Aaa 1,700,000 1,335,112
Rfdg. Series D, 5% 11/15/98 (f) Baa1 1,200,000 1,200,468
Series A:
6.9% 11/15/98 (f) Baa1 1,000,000 1,000,940
7.5% 11/15/23 (f) Baa1 2,070,000 2,369,343
7.5% 11/15/23 (Pre-Refunded to Aaa 430,000 515,420
11/15/04 @ 102) (f)(g)
8.5% 11/15/23 (f) Baa1 1,000,000 1,094,430
Series C, 6.55% 11/15/02 (f) Baa1 1,000,000 1,080,420
26,419,535
CONNECTICUT - 2.1%
Connecticut Spl. Tax Oblig. Rev. (Trans. Aaa 1,500,000 1,653,975
Infrastructure) Series A, 5.5% 11/1/06 (FSA
Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
CONNECTICUT - CONTINUED
Connecticut Health & Edl. Facilities Auth. Rev.
(New Britain Memorial Hosp.) Series A:
7.5% 7/1/06 (Pre-Refunded to 7/1/02 @ - $ 2,400,000 $ 2,679,576
102) (g)
7.75% 7/1/22 (Pre-Refunded to 7/1/02 @ AAA 1,500,000 1,732,200
102) (g)
Eastern Resources Recovery Auth. Solid Waste BBB+ 3,350,000 3,355,930
Rev. (Wheelabrator Lisbon Proj.) Series A,
5.5% 1/1/20 (f)
9,421,681
DISTRICT OF COLUMBIA - 2.7%
District of Columbia Gen. Oblig. Rfdg.:
Series A:
6% 6/1/07 (MBIA Insured) Aaa 1,850,000 2,066,968
6% 6/1/07 (MBIA Insured) (Escrowed to Aaa 150,000 169,269
Maturity) (g)
Series B, 5% 6/1/05 (MBIA Insured) Aaa 4,135,000 4,310,779
District of Columbia Hosp. Rev. (Hosp. for Sick - 955,000 1,033,568
Children) Series A, 8.875% 1/1/21
District of Columbia Redev. Land Agcy.
Washington D.C. Sports Arena Spl. Tax Rev.:
5.3% 11/1/99 Baa 1,700,000 1,723,256
5.625% 11/1/10 Baa 615,000 635,664
District of Columbia Rev. Rfdg. (Georgetown Aaa 2,000,000 2,232,700
Univ.) Series A, 5.95% 4/1/14 (MBIA Insured)
12,172,204
FLORIDA - 2.4%
Broward County Resource Recovery Rev. A3 575,000 612,950
(SES Broward Co. LP South Proj.)
7.95% 12/1/08
Dade County Aviation Rev. Rfdg. Series D, Aaa 5,000,000 5,472,200
5.75% 10/1/09 (AMBAC Insured) (f)
Florida Division Board Fin. Dept. Gen. Svcs. Rev. Aaa 2,000,000 2,128,200
Rfdg. (Dept. Envir. Proj.) Series A, 5% 7/1/06
(FSA Insured)
Florida Mid-Bay Bridge Auth. Rev. Series A, - 2,500,000 2,784,125
7.5% 10/1/17
10,997,475
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
HAWAII - 1.1%
Hawaii Gen. Oblig. Series C N, 6.25% 3/1/03 Aaa $ 4,515,000 $ 4,935,121
(FGIC Insured)
IDAHO - 0.0%
Boise Urban Renewal Agcy. Parking Rev. BBB+ 180,000 182,952
Series A B C, 8.125% 9/1/15
ILLINOIS - 4.9%
Chicago Board of Ed. (Chicago School Reform) Aaa 5,000,000 5,375,650
5.75% 12/1/27 (AMBAC Insured)
Chicago Midway Arpt. Rev. Series A, 5.5% Aaa 1,500,000 1,569,090
1/1/29 (MBIA Insured)
Chicago O'Hare Int'l. Arpt. Rev.:
(Passenger Facility Charge) Series A, 5.6% Aaa 2,500,000 2,698,175
1/1/10 (AMBAC Insured)
Rfdg. (Gen. Arpt. Proj.) Series A:
6.25% 1/1/09 (AMBAC Insured) (f) Aaa 3,700,000 4,168,346
6.375% 1/1/15 (MBIA Insured) Aaa 1,400,000 1,565,690
Chicago O'Hare Int'l. Arpt. Spl. Facilities Rev. Baa2 1,000,000 1,200,420
Rfdg. (American Airlines, Inc. Proj.) 8.2%
12/1/24
Du Page County Cmnty. High School #99 Aaa 1,640,000 1,828,092
(Downers Grove) Series A, 6% 2/1/06
(AMBAC Insured)
Illinois Edl. Facilities Auth. Rev. Rfdg. (DePaul Aaa 1,200,000 1,345,920
Univ.) 6% 10/1/05 (AMBAC Insured)
Illinois Health Facilities Auth. Rev. (Memorial
Hosp.):
7.125% 5/1/10 (Pre-Refunded to 5/1/02 @ - 1,000,000 1,127,060
102) (g)
7.25% 5/1/22 (Pre-Refunded to 5/1/02 @ - 1,000,000 1,131,110
102) (g)
22,009,553
INDIANA - 0.2%
Indianapolis Ind. Econ. Dev. Rev. Rfdg. (Nat'l. Baa1 1,000,000 1,112,730
Benevolent Assoc.) 7.625% 10/1/22
KANSAS - 0.7%
Kansas Dev. Fin. Auth. Rev. (Sisters of Charity
Leavenworth):
5% 12/1/13 (MBIA Insured) Aaa 2,390,000 2,440,142
5% 12/1/14 (MBIA Insured) Aaa 500,000 505,915
2,946,057
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
KENTUCKY - 1.8%
Kenton County Arpt. Board Arpt. Rev.:
(Spl. Facilities Delta Airlines, Inc. Proj.) Baa3 $ 2,000,000 $ 2,185,560
Series A, 7.5% 2/1/20 (f)
(Cincinnati/Northern Kentucky Int'l.) Series A, Aaa 5,570,000 6,183,090
6% 3/1/05 (MBIA Insured) (f)
8,368,650
MARYLAND - 1.2%
Maryland Health & Higher Edl. Facilities
Auth. Rev.:
(Good Samaritian Hosp.):
5.75% 7/1/13 (AMBAC Insured) Aaa 1,015,000 1,155,811
5.75% 7/1/13 (Escrowed to Maturity) (g) A1 1,665,000 1,836,428
Rfdg. (John Hopkins Univ.) 6% 7/1/10 Aa2 2,000,000 2,308,540
5,300,779
MASSACHUSETTS - 6.0%
Martha's Vineyard Land Bank Rev. Series A, AAA 1,000,000 1,011,320
5.125% 5/1/18 (FSA Insured)
Massachusetts Bay Trans. Auth. (Massachusetts Aa3 5,875,000 6,499,865
Gen. Trans. Sys.) Series A, 5.625% 3/1/26
(Pre-Refunded to 3/1/06 @ 101) (g)
Massachusetts Health & Edl. Facilities Auth. Rev.:
(Bentley College) Series J, 5% 7/1/17 (MBIA Aaa 1,265,000 1,263,330
Insured)
(Fairview Extended Care) Series A, 10.25% Aaa 5,000,000 5,822,950
1/1/21 (Pre-Refunded to 1/1/01 @
103) (g)
(Hebrew Rehab. Ctr. for Aged) Series C, A 2,000,000 2,014,720
5.25% 7/1/17
(New England Med. Ctr. Hosp.) Series G, Aaa 500,000 507,965
5.375% 7/1/24 (MBIA Insured)
Massachusetts Ind. Fin. Agcy. Resource Recovery BBB 1,000,000 1,000,820
Rev. Rfdg. Series A, 4.7% 12/1/03
Massachusetts Ind. Fin. Agcy. Rev.:
(Atlanticare Med. Ctr.) Series B, 10.125% - 700,000 749,882
11/1/14
(Cap. Appreciation) (Massachusetts
Biomedical) Series A 2:
0% 8/1/08 - 800,000 505,864
0% 8/1/10 - 4,500,000 2,525,850
Rfdg. (Emerson College) Issue A, 8.9% 1/1/18 - 1,000,000 1,086,610
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
MASSACHUSETTS - CONTINUED
Massachusetts Muni. Wholesale Elec. Co. Pwr. Baa2 $ 1,000,000 $ 1,095,790
Supply Sys. Rev. Rfdg. Series C, 6.5% 7/1/03
New England Ed. Ln. Marketing Corp. Aaa 3,000,000 3,158,730
Massachusetts Student Ln. Rev. Issue A, 5.8%
3/1/02
27,243,696
MICHIGAN - 5.0%
Detroit Gen. Oblig. Rfdg. Series B, 6% 4/1/00 Baa1 1,710,000 1,760,325
Michigan Bldg. Auth. Rev. (Facilities Prog.) Aaa 3,000,000 3,372,510
Series 1, 6% 10/1/05 (AMBAC Insured)
Michigan Hosp. Fin. Auth. Rev.:
(Detroit Med. Ctr.) Series A, 5.25% 8/15/28 A3 2,500,000 2,448,675
Rfdg.:
(Genesys Reg'l. Hosp.) Series A:
5.5% 10/1/18 Baa2 4,250,000 4,285,063
5.5% 10/1/27 Baa2 3,000,000 3,011,490
(Pontiac Osteopathic Hosp.) Series A, 6% Baa1 2,000,000 2,083,040
2/1/24
Michigan Strategic Fund Ltd. Oblg. Rev. Rfdg. Aaa 3,000,000 3,048,390
(Detroit Edison Co.) Series A, 5.55% 9/1/29
(MBIA Insured) (b)(f)
Royal Oak Hosp. Fin. Auth. Rev. Rfdg. (William Aa3 2,310,000 2,637,697
Beaumont Hosp.) 6.25% 1/1/09
22,647,190
MINNESOTA - 2.2%
Minneapolis & Saint Paul Hsg. & Redev. Auth. Aaa 2,300,000 2,270,721
Health Care Sys. Rev. Rfdg. (Healthspan Health
Sys. Corp.) Series A, 4.75% 11/15/18
(AMBAC Insured)
Minnesota Hsg. Fin. Agcy. (Single Family Mtg.) Aa2 2,000,000 2,124,040
Series D, 6.4% 7/1/15 (f)
Rochester Health Care Facilities Rev. (Mayo AA+ 2,000,000 2,102,140
Foundation) Series A, 5.5% 11/15/27
Western Minnesota Muni. Pwr. Agcy. Pwr. Supply Aaa 3,000,000 3,408,630
Rev. Rfdg. Series A, 6.25% 1/1/06 (AMBAC
Insured)
9,905,531
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
MISSISSIPPI - 0.6%
Mississippi Gen. Oblig. 6.2% 2/1/08 (Escrowed Aaa $ 2,250,000 $ 2,564,685
to Maturity) (g)
Mississippi Home Corp. Single Family Rev. Rfdg. Aaa 205,000 217,909
Series A, 9.25% 3/1/12 (FGIC Insured)
2,782,594
NEBRASKA - 1.4%
Nebraska Pub. Pwr. Dist. Rev.:
(Elec. Sys.) Series A, 6% 1/1/06 A1 1,500,000 1,626,240
(Pre-Refunded to 1/1/02 @ 102) (g)
Rfdg. (Pwr. Supply Sys.) Series C, 5% 1/1/17 A1 4,590,000 4,856,817
(Pre-Refunded to 7/1/04 @ 101) (g)
6,483,057
NEVADA - 0.6%
Las Vegas Downtown Redev. Agcy. Tax Increment
Rev. (Fremont Street Proj.) Series A:
6% 6/15/10 BBB+ 1,500,000 1,558,875
6.1% 6/15/14 BBB+ 1,000,000 1,053,010
2,611,885
NEW HAMPSHIRE - 0.1%
New Hampshire Higher Edl. & Health Facilities - 485,000 518,329
Auth. Rev. (Littleton Hosp. Assoc., Inc.) Series
A, 9.5% 5/1/20 (Pre-Refunded to 5/1/00 @
102) (g)
NEW JERSEY - 2.0%
New Jersey Edl. Facilities Auth. Rev. Rfdg. (Seton
Hall Univ.) Series P J:
5% 7/1/18 (AMBAC Insured) (b) Aaa 1,000,000 983,920
5.25% 7/1/07 (AMBAC Insured) (b) Aaa 1,610,000 1,709,112
New Jersey Trans. Trust Fund Auth. Rfdg. (Trans. Aaa 4,000,000 4,316,920
Sys.) Series A, 5.5% 6/15/11 (MBIA Insured)
Passaic County Util. Auth. Solid Waste Disp. Rev. Aaa 2,500,000 2,210,925
Rfdg. (Cap. Appreciation) 0% 3/1/02 (MBIA
Insured)
9,220,877
NEW MEXICO - 1.8%
Albuquerque Arpt. Rev. Rfdg.:
6.7% 7/1/18 (AMBAC Insured) (f) Aaa 3,970,000 4,580,348
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
NEW MEXICO - CONTINUED
Albuquerque Arpt. Rev. Rfdg.: - continued
6.75% 7/1/11 (AMBAC Insured) (f) Aaa $ 1,805,000 $ 2,185,422
New Mexico Edl. Assistance Foundation Student Aaa 1,585,000 1,617,302
Ln. Rev. Series B, 5.25% 4/1/05 (AMBAC
Insured) (f)
8,383,072
NEW YORK - 20.6%
Long Island Pwr. Auth. Elec. Sys. Rev.:
4% 4/1/00 Baa1 2,250,000 2,261,880
Series A:
5.125% 12/1/22 (FSA Insured) Aaa 9,390,000 9,447,279
5.25% 12/1/26 Baa1 3,500,000 3,522,680
5.5% 12/1/29 Baa1 2,400,000 2,474,520
Metropolitan Trans. Auth. Commuter Facilities
Rev. Rfdg. (Svc. Contract) Series R:
5% 7/1/02 Baa1 2,370,000 2,456,315
5% 7/1/03 Baa1 2,490,000 2,594,854
Muni. Assistance Corp. for New York City Rfdg. Aa2 5,000,000 5,588,400
Series H, 6% 7/1/05
New York City Gen. Oblig.:
Rfdg.:
Series A, 7% 8/1/03 A3 2,000,000 2,248,640
Series B:
5.7% 8/15/02 A3 1,130,000 1,200,376
5.7% 8/15/02 (Escrowed to Maturity) (g) A3 35,000 37,383
6.75% 8/15/03 A3 2,000,000 2,233,580
Series E, 6.5% 2/15/04 (FGIC Insured) Aaa 1,500,000 1,674,930
Series B, 7.5% 2/1/02 A3 3,525,000 3,900,836
Series D, 5.5% 2/15/04 A3 5,000,000 5,320,300
Series H, 6.875% 2/1/02 A3 240,000 261,449
New York City Ind. Dev. Agcy. Spl. Fac. Rev. A3 8,680,000 9,393,930
(Term. One Group Assoc. Proj.) 5.9%
1/1/06 (f)
New York City Ind. Dev. Agcy. Ind. Dev. Rev. Aaa 1,000,000 1,097,070
(Japan Airlines Co. Ltd. Proj.) Series 1991, 6%
11/1/15 (FSA Insured) (f)
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr.
Sys. Rev. Series B:
5.5% 6/15/27 (MBIA Insured) Aaa 3,500,000 3,660,370
5.75% 6/15/26 A2 5,000,000 5,363,800
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
NEW YORK - CONTINUED
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr.
Sys. Rev. Series B: - continued
5.75% 6/15/29 A2 $ 4,000,000 $ 4,287,840
New York State Dorm. Auth. Rev.:
(City Univ. Sys. Consolidated) Series A, 5.7% Baa1 3,000,000 3,269,640
7/1/05
(New York Univ.) Series A, 5.75% 7/1/14 Aaa 1,000,000 1,115,330
(MBIA Insured)
Rfdg. (Jamaica Hosp.) Series F, 5.2% 2/15/14 Aaa 6,150,000 6,316,419
(MBIA Insured)
New York State Local Gov't. Assistance Corp. A3 7,500,000 8,098,500
Rfdg. Series C, 5.5% 4/1/17
New York State Pwr. Auth. Rev. Series Z, 6.5% AAA 2,010,000 2,211,985
1/1/19 (Pre-Refunded to 1/1/02 @ 102) (g)
New York State Thruway Auth. Svc. Contract Rev. Baa1 2,000,000 2,187,740
(Local Hwy. & Bridges) 5.9% 4/1/07
Suffolk County Wtr. Auth. Wtrwks. Rev. Rfdg. 6% Aaa 1,000,000 1,142,450
6/1/17 (MBIA Insured)
93,368,496
NORTH CAROLINA - 4.4%
North Carolina Eastern Muni. Pwr. Agcy. Pwr.
Sys. Rev. Rfdg.:
Series A, 5.5% 1/1/05 (MBIA Insured) Aaa 4,000,000 4,305,840
Series B:
6% 1/1/06 Baa1 4,175,000 4,567,826
7.25% 1/1/07 Baa1 1,000,000 1,186,220
Series C:
5.125% 1/1/03 Baa1 2,600,000 2,689,492
5.25% 1/1/04 Baa1 1,365,000 1,427,135
5.5% 1/1/07 (MBIA Insured) Aaa 2,000,000 2,173,960
North Carolina Muni. Pwr. Agcy. #1 Catawba
Elec. Rev.:
Rfdg. 5.75% 1/1/02 A3 1,750,000 1,837,798
6.25% 1/1/17 (AMBAC Insured) Aaa 1,150,000 1,256,467
6.25% 1/1/17 (AMBAC Insured) Aaa 650,000 721,799
(Pre-Refunded to 1/1/03 @ 102) (g)
20,166,537
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
OHIO - 3.5%
Cincinnati Student Ln. Fdg. Corp. Student Ln. - $ 2,025,000 $ 2,127,627
Rev. Series B, 8.875% 8/1/08 (f)
Gateway Economic Dev. Corp. Greater - 3,000,000 3,153,090
Cleveland Stadium Rev. 6.5% 9/15/14 (f)
Marion County Hosp. Impt. Rev. Rfdg. (Commty. BBB+ 1,000,000 1,032,050
Hosp. Proj.) 5.6% 5/15/01
Ohio Tpk. Commission Tpk. Rev. Rfdg. Series A, Aaa 5,000,000 5,456,200
5.5% 2/15/24 (FGIC Insured)
Ohio Wtr. Dev. Auth. Poll. Cont. Facilities Rev.
(Wtr. Cont. Ln. Fund):
State Match Series, 6.5% 12/1/04 (MBIA Aaa 1,835,000 2,086,358
Insured)
5.625% 6/1/06 (MBIA Insured) Aaa 2,000,000 2,189,400
16,044,725
OKLAHOMA - 1.0%
Tulsa Muni. Arpt. Trust Rev. (American Airlines Baa2 4,000,000 4,454,680
Corp. Proj.) 7.35% 12/1/11
PENNSYLVANIA - 5.4%
Allegheny County Ind. Dev. Auth. Rev. - 340,000 368,516
(YMCA Pittsburgh Proj.) Series A, 8.75%
3/1/10
Butler County Ind. Dev. Auth. Health Ctr. Rev. A 3,000,000 3,120,870
Rfdg. (Sherwood Oaks Proj.) 5.75% 6/1/11
Cumberland County Muni. Auth. Rev. Rfdg.
(Carlisle Hosp. & Health):
6.8% 11/15/14 Baa2 3,250,000 3,571,718
6.8% 11/15/23 Baa2 1,000,000 1,098,990
Delaware County Auth. Rev. (1st. Mtg. Riddle
Village Proj.):
8.25% 6/1/22 (Escrowed to Maturity) (g) Aaa 2,250,000 2,770,988
8.75% 6/1/10 (Pre-Refunded to 6/1/02 @ Aaa 2,870,000 3,401,381
102) (g)
9.25% 6/1/22 (Pre-Refunded to 6/1/02 @ Aaa 2,905,000 3,485,651
102) (c)(g)
Delaware County Ind. Dev. Auth. Rev. Rfdg. Baa1 1,900,000 2,072,254
(Resource Recovery Facility) Series A, 6.1%
7/1/13
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
PENNSYLVANIA - CONTINUED
Pennsylvania Gen. Oblig. Second Series, 5.8% Aa3 $ 3,000,000 $ 3,281,400
7/1/04
Pennsylvania Ind. Dev. Auth. Rev. (Econ. Dev.) Aaa 1,345,000 1,517,967
5.8% 7/1/09 (AMBAC Insured)
24,689,735
RHODE ISLAND - 1.1%
Rhode Island Port Auth. & Economic Dev. Corp. Aaa 4,000,000 4,970,800
Arpt. Rev. Series A, 7% 7/1/14 (FSA
Insured) (f)
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Agcy. Elec. Rev. Rfdg. Aaa 1,715,000 1,920,543
Series A, 6.25% 1/1/05 (FGIC Insured)
TENNESSEE - 0.2%
Metro Govt. Nashville & Davidson County Elec. Aaa 1,000,000 739,770
Rev. (Cap. Appreciation) Series A, 0%
5/15/06 (MBIA Insured)
TEXAS - 3.3%
Conroe Independent School Dist. Rfdg. (Cap. Aaa 750,000 478,508
Appreciation) Series B, 0% 2/15/09
Dallas-Fort Worth Int'l. Arpt. Facility Impt. Corp. Baa1 6,000,000 6,425,220
Rev. (American Airlines, Inc.) 7.5%
11/1/25 (f)
Midlothian Independent School Dist. Rfdg. (Cap. Aaa 1,845,000 1,497,623
Appreciation) 0% 2/15/04
San Antonio Elec. & Gas Rev. Rfdg. 5.5% Aa1 1,500,000 1,566,420
2/1/20
Texas Pub. Fin. Auth. Series A, 5% 10/1/14 Aa2 5,000,000 5,039,350
15,007,121
UTAH - 2.9%
Intermountain Pwr. Agcy. Rev. Rfdg.:
Series A, 6.5% 7/1/09 (AMBAC Insured) Aaa 1,000,000 1,189,920
Series B, 5.75% 7/1/16 (MBIA Insured) Aaa 2,500,000 2,745,175
Series D, 5% 7/1/21 (MBIA Insured) Aaa 1,200,000 1,180,824
Spl. Oblig. 6th Series B, 6% 7/1/16 Aaa 7,000,000 7,769,020
(MBIA Insured)
South Salt Lake City Ind. Rev. (Price Savers - 250,000 276,270
Wholesale Club Proj.) 9% 11/15/13
13,161,209
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (A) AMOUNT
VIRGINIA - 0.3%
Loudoun County Ind. Dev. Auth. Residential Care Aaa $ 1,000,000 $ 1,189,660
Facilities Rev. (Falcons Landing Proj.) Series A,
9.25% 11/1/04 (Escrowed to Maturity) (g)
WASHINGTON - 4.9%
King County Gen. Oblig. Series D, 5.75% Aa1 3,990,000 4,447,613
12/1/11
Washington Pub. Pwr. Supply Sys. Nuclear Proj.
#2 Rev.:
Rfdg. Series A:
5.9% 7/1/04 Aa1 1,000,000 1,095,110
4.8% 7/1/04 Aa1 2,000,000 2,079,760
5.4% 7/1/12 Aa1 14,000,000 14,783,994
22,406,477
TOTAL MUNICIPAL BONDS 448,935,372
(Cost $420,348,475)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL NOTES - 0.7%
MICHIGAN - 0.7%
Michigan Muni. Bond Auth. Rev. RAN Series D 1, 4.25% 8/27/99 3,000,000 3,031,140
(Cost $3,019,038)
</TABLE>
CASH EQUIVALENTS - 0.4%
SHARES
Municipal Central Cash Fund (d)(e) 1,853,056 1,853,056
(Cost $1,853,056)
TOTAL INVESTMENT IN SECURITIES - 100% $ 453,819,568
(Cost $425,220,569)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION UNDERLYING UNREALIZED
DATE FACE AMOUNT GAIN/(LOSS)
SOLD
55 Bond Buyer Municipal Bond Index Contracts Dec. 1998 $ 6,900,781 $ 83,889
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 1.5%.
</TABLE>
LEGEND
(a) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(b) Security purchased on a delayed delivery or when-issued basis (see
Note 2 of Notes to Financial Statements).
(c) Security or a portion of the security was pledged to cover margin
requirements for futures contracts. At the period end, the value of
securities pledged amounted to $323,968.
(d) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(e) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 3.35%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
(f) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(g) Security collateralized by an amount sufficient to pay interest
and principal.
SECURITY TYPE ABBREVIATION
RAN - Revenue Anticipation Note
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 67.5% AAA, AA, A 67.5%
Baa 19.0% BBB 20.3%
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 5.4%.
OTHER INFORMATION
The distribution of municipal securities by revenue source, as a
percentage of total value of investments in securities, is as follows:
General Obligations 20.5%
Electric Utilities 19.1
Health Care 13.4
Transportation 12.0
Escrowed/Pre-Refunded 11.3
Industrial Development 6.8
Others (individually less than 5%) 16.9
TOTAL 100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost
of investment securities for income tax purposes was $425,220,569. Net
unrealized appreciation aggregated $28,598,999, of which $28,734,615
related to appreciated investment securities and $135,616 related to
depreciated investment securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $15,845,000 of which $2,066,000, $7,511,000 and
$6,268,000 will expire
on October 31, 2002, 2003 and 2004, respectively.
At October 31, 1998 the fund was required to defer approximately
$755,840 of losses on futures contracts.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $425,220,569) - $ 453,819,568
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR FUND SHARES SOLD 762,152
INTEREST RECEIVABLE 7,516,160
RECEIVABLE FOR DAILY VARIATION ON FUTURES CONTRACTS 41,250
OTHER RECEIVABLES 22,338
TOTAL ASSETS 462,161,468
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 2,265,750
REGULAR DELIVERY
DELAYED DELIVERY 5,621,843
PAYABLE FOR FUND SHARES REDEEMED 379,702
DISTRIBUTIONS PAYABLE 664,346
ACCRUED MANAGEMENT FEE 147,576
DISTRIBUTION FEES PAYABLE 126,461
OTHER PAYABLES AND ACCRUED EXPENSES 106,753
TOTAL LIABILITIES 9,312,431
NET ASSETS $ 452,849,037
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 440,825,900
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (16,659,751)
INVESTMENTS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 28,682,888
NET ASSETS $ 452,849,037
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE $12.54
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($6,721,100 (DIVIDED BY) 535,829 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/95.25 OF $12.54) $13.17
CLASS T: $12.56
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($380,324,545 (DIVIDED BY) 30,291,618 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.50 OF $12.56) $13.02
CLASS B: $12.53
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($55,031,711 (DIVIDED BY) 4,393,495 SHARES) A
CLASS C: $12.56
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($7,030,566 (DIVIDED BY) 559,837 SHARES) A
INSTITUTIONAL CLASS: $12.51
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($3,741,115 (DIVIDED BY) 299,162 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
YEAR ENDED OCTOBER 31, 1998
INTEREST INCOME $ 24,223,962
EXPENSES
MANAGEMENT FEE $ 1,699,469
TRANSFER AGENT FEES 691,776
DISTRIBUTION FEES 1,419,553
ACCOUNTING FEES AND EXPENSES 184,252
NON-INTERESTED TRUSTEES' COMPENSATION 1,388
CUSTODIAN FEES AND EXPENSES 21,309
REGISTRATION FEES 77,268
AUDIT 42,525
LEGAL 8,340
REPORTS TO SHAREHOLDERS 39,993
MISCELLANEOUS 1,231
TOTAL EXPENSES BEFORE REDUCTIONS 4,187,104
EXPENSE REDUCTIONS (18,038) 4,169,066
NET INTEREST INCOME 20,054,896
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 797,794
FUTURES CONTRACTS 44,323 842,117
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 13,311,152
FUTURES CONTRACTS 51,051 13,362,203
NET GAIN (LOSS) 14,204,320
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 34,259,216
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 20,054,896 $ 23,276,174
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 842,117 982,319
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 13,362,203 14,869,381
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 34,259,216 39,127,874
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (20,054,896) (24,140,139)
FROM NET INTEREST INCOME
IN EXCESS OF NET INTEREST INCOME - (86,644)
TOTAL DISTRIBUTIONS (20,054,896) (24,226,783)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 279,500 (97,485,396)
TOTAL INCREASE (DECREASE) IN NET ASSETS 14,483,820 (82,584,305)
NET ASSETS
BEGINNING OF PERIOD 438,365,217 520,949,522
END OF PERIOD $ 452,849,037 $ 438,365,217
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31,
1998 1997 1996 F
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.150 $ 11.740 $ 11.630
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .571 .583 D .105 D, E
NET REALIZED AND UNREALIZED GAIN (LOSS) .390 .445 .109
TOTAL FROM INVESTMENT OPERATIONS .961 1.028 .214
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.571) (.616) E (.104)
IN EXCESS OF NET INTEREST INCOME - (.002) H -
TOTAL DISTRIBUTIONS (.571) (.618) (.104)
NET ASSET VALUE, END OF PERIOD $ 12.540 $ 12.150 $ 11.740
TOTAL RETURN B, C 8.07% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,721 $ 3,755 $ 202
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% G .90% G .90% A, G
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.57% 4.87% 5.73% A
PORTFOLIO TURNOVER RATE 36% 36% 49%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 12.150 $ 11.760 $ 11.880 $ 11.220 $ 12.720
BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .571 .597 C .677 C, D .700 .689
NET REALIZED AND UNREALIZED .410 .407 (.136) .660 (1.430)
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS .981 1.004 .541 1.360 (.741)
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.571) (.612) D (.661) (.700) (.689)
IN EXCESS OF NET INTEREST INCOME - (.002) B - - -
FROM NET REALIZED GAIN - - - - (.060)
IN EXCESS OF NET REALIZED GAIN - - - - (.010)
TOTAL DISTRIBUTIONS (.571) (.614) (.661) (.700) (.759)
NET ASSET VALUE, END OF PERIOD $ 12.560 $ 12.150 $ 11.760 $ 11.880 $ 11.220
TOTAL RETURN A 8.15% 8.89% 4.68% 12.50% (6.03)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 380,325 $ 392,075 $ 480,432 $ 565,131 $ 544,422
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .87% .89% .89% .91% .89%
NET ASSETS
RATIO OF NET INTEREST INCOME TO 4.62% 5.04% 5.74% 6.06% 5.78%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 36% 36% 49% 37% 38%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
C NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 1994 F
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 .491 .515 E .596 E, G .612 .188
NET REALIZED AND UNREALIZED .400 .416 (.136) .650 (.400)
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS .891 .931 .460 1.262 (.212)
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.491) (.539) G (.580) (.612) (.188)
IN EXCESS OF NET INTEREST INCOME - (.002) H - - -
TOTAL DISTRIBUTIONS (.491) (.541) (.580) (.612) (.188)
NET ASSET VALUE, END OF PERIOD $ 12.530 $ 12.130 $ 11.740 $ 11.860 $ 11.210
TOTAL RETURN B, C 7.47% 8.15% 3.98% 11.57% (1.86)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 55,032 $ 41,024 $ 39,389 $ 32,395 $ 9,968
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 1.53% 1.56% 1.57% 1.86% D 2.09% A
NET ASSETS
RATIO OF NET INTEREST INCOME TO 3.96% 4.35% 5.06% 5.18% 4.58% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 36% 36% 49% 37% 38%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D 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 FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO OCTOBER 31, 1994.
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
OCTOBER 31,
1998 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.130
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .455
NET REALIZED AND UNREALIZED GAIN (LOSS) .430
TOTAL FROM INVESTMENT OPERATIONS .885
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.455)
NET ASSET VALUE, END OF PERIOD $ 12.560
TOTAL RETURN B, C 7.41%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,031
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% A, E
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.60% A
PORTFOLIO TURNOVER RATE 36%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 E
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 .592 .609 D .707 D, G .232
NET REALIZED AND UNREALIZED GAIN (LOSS) .390 .464 (.197) .180
TOTAL FROM INVESTMENT OPERATIONS .982 1.073 .510 .412
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.592) (.671) G (.670) (.232)
IN EXCESS OF NET INTEREST INCOME - (.002) H - -
TOTAL DISTRIBUTION (.592) (.673) (.670) (.232)
NET ASSET VALUE, END OF PERIOD $ 12.510 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C 8.28% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,741 $ 1,511 $ 927 $ 154
RATIO OF EXPENSES TO AVERAGE NET ASSETS .75% F .75% F .75% F .75% A, F
RATIO OF NET INTEREST INCOME TO AVERAGE NET 4.75% 5.11% 5.88% 5.89% A
ASSETS
PORTFOLIO TURNOVER RATE 36% 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5OF NOTES TO FINANCIAL STATEMENTS).
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998
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
matters that affect that class. 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, 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 market quotations are not readily available are
valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date. Income dividends
and capital gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for future transactions, market discount, capital loss
carryforwards, and losses deferred due to 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 income or gain remaining at fiscal year end is distributed in
the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc., an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the fund are recorded as interest income in the accompanying
financial statements.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a delayed delivery basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of
the underlying securities and the date when the securities will be
delivered and paid for are fixed at the time the transaction is
negotiated. The market values of the securities purchased or sold on a
delayed delivery basis are identified as such in the fund's schedule
of investments. The fund may receive compensation for interest forgone
in the purchase of a delayed delivery security. With respect to
purchase
2. OPERATING POLICIES - CONTINUED
DELAYED DELIVERY TRANSACTIONS - CONTINUED
commitments, the fund identifies securities as segregated in its
records with a value at least equal to the amount of the commitment.
Losses may arise due to changes in the market value of the underlying
securities 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.
Futures contracts involve, to varying degrees, risk of loss in excess
of the futures variation margin reflected in the Statement of Assets
and Liabilities. The underlying face amount at value of any open
futures contracts at period end is shown in the schedule of
investments under the caption "Futures Contracts." This amount
reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the
underlying instruments 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 $166,603,774 and $155,415,463, respectively.
The market value of futures contracts opened and closed during the
period amounted to $43,912,925 and $48,390,926, 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 annual rate of .39% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was based on the following annual rates of
the average net assets of each applicable class:
CLASS A .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A
SHAREHOLDER SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 7,582 $ 126
CLASS T 958,589 10,809
CLASS B 423,933 306,178
CLASS C 29,449 29,368
$ 1,419,553 $ 346,481
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 $ 747
CLASS T 43,765
CLASS B 11,053
CLASS C 2,835
INSTITUTIONAL CLASS 495
$ 58,895
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
1% for Class C, of the lesser of the cost of shares at the initial
date of purchase or the net asset value of the redeemed shares,
excluding any reinvested dividends and capital gains. In addition,
purchases of Class A and Class T shares that were subject to a
finder's fee bear a contingent deferred sales charge on assets that do
not remain in the fund for at least one year. The Class A and Class T
contingent deferred sales charge is based on 0.25% of the lesser of
the cost of shares at the initial date of purchase or the net asset
value of the redeemed shares, excluding any reinvested dividends and
capital gains. A portion of the sales charges paid to FDC are paid to
securities dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 38,091 $ 15,167
CLASS T 179,663 60,942
CLASS B 112,936 112,936*
CLASS C 6,848 6,848*
$ 337,538 $ 195,893
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT AND ACCOUNTING FEES. 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 $ 8,537 .17
CLASS T 599,276 .16
CLASS B 73,627 .16
CLASS C 4,797 .16*
INSTITUTIONAL CLASS 5,539 .20
$ 691,776
* ANNUALIZED
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
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% $ 106
CLASS C 1.75% 9,313
INSTITUTIONAL CLASS .75% 6,230
$ 15,649
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 $2,389 under the custodian
arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
YEARS ENDED OCTOBER 31,
1998 A 1997
FROM NET INTEREST INCOME
CLASS A $ 231,309 $ 94,032
CLASS T 17,722,552 22,160,320
CLASS B 1,865,869 1,825,294
CLASS C 106,528 -
INSTITUTIONAL CLASS 128,638 60,493
TOTAL $ 20,054,896 $ 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
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 A 1997 1998 A 1997
CLASS A 362,699 307,664 $ 4,479,496 $ 3,663,457
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 11,508 3,770 142,669 45,120
SHARES REDEEMED (147,406) (19,585) (1,811,982) (234,062)
NET INCREASE (DECREASE) 226,801 291,849 $ 2,810,183 $ 3,474,515
CLASS T 4,799,958 2,221,421 $ 59,544,980 $ 26,303,589
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 873,770 1,143,394 10,820,895 13,582,690
SHARES REDEEMED (7,639,811) (11,972,642) (94,496,816) (141,705,601)
NET INCREASE (DECREASE) (1,966,083) (8,607,827) $ (24,130,941) $ (101,819,322)
CLASS B 1,497,112 713,815 $ 18,512,808 $ 8,459,000
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 86,162 90,487 1,065,255 1,073,258
SHARES REDEEMED (572,594) (777,996) (7,073,528) (9,216,485)
NET INCREASE (DECREASE) 1,010,680 26,306 $ 12,504,535 $ 315,773
CLASS C 650,179 - $ 8,065,902 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,455 - 55,539 -
SHARES REDEEMED (94,797) - (1,177,225) -
NET INCREASE (DECREASE) 559,837 - $ 6,944,216 $ -
INSTITUTIONAL CLASS 238,568 107,503 $ 2,943,409 $ 1,278,313
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 6,313 3,746 77,958 44,614
SHARES REDEEMED (70,388) (65,730) (869,860) (779,289)
NET INCREASE (DECREASE) 174,493 45,519 $ 2,151,507 $ 543,638
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 6,683
CLASS T 36,678
CLASS B 11,483
CLASS C 13,760
INSTITUTIONAL CLASS 8,664
$ 77,268
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series V and the Shareholders of
Fidelity Advisor Municipal Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Municipal Income Fund (a fund of Fidelity Advisor
Series V) at October 31, 1998, the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Advisor Municipal Income Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 14, 1998
DISTRIBUTIONS
During fiscal year ended 1998, 100% of the fund's income dividends was
free from federal income tax, and 17.42% of the fund's income
dividends was subject to the federal alternative minimum tax.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Christine J. Thompson, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
* INDEPENDENT TRUSTEES
ADVISORY BOARD
J. Gary Burkhead
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 TechnoQuantSM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
