N-CSRS 1 main.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811- 4707

Fidelity Advisor Series II
 (Exact name of registrant as specified in charter)

82 Devonshire St., Boston, Massachusetts 02109
 (Address of principal executive offices) (Zip code)

Eric D. Roiter, Secretary

82 Devonshire St.

Boston, Massachusetts 02109
(Name and address of agent for service)

Registrant's telephone number, including area code: 617-563-7000

Date of fiscal year end:

December 31

Date of reporting period:

June 30, 2004

Item 1. Reports to Stockholders

(Fidelity Investment logo)(registered trademark)

Fidelity® Advisor

Strategic Income
Fund - Class A, Class T, Class B
and Class C

Semiannual Report

June 30, 2004

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

Ned Johnson's message to shareholders.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets,
as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

For a free copy of the fund's proxy voting guidelines call 1-877-208-0098 or visit the Securities and Exchange Commission (SEC)'s web site at www.sec.gov.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.

(Recycle graphic)   This report is printed on recycled paper using soy-based inks.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.

Neither the fund nor Fidelity Distributors Corporation is a bank.

For more information on any Fidelity Advisor fund, including charges and expenses, contact your investment professional for a free prospectus. Read it carefully before you invest or send money.

Semiannual Report

Chairman's Message

(photo_of_Edward_C_Johnson_3d)

Dear Shareholder:

Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.

With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:

First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.

Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.

Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.

For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.

Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.

Best regards,

/s/Edward C. Johnson 3d

Edward C. Johnson 3d

Semiannual Report

Investment Changes

Top Five Holdings as of June 30, 2004

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

U.S. Treasury Obligations

12.4

9.5

Fannie Mae

3.3

4.5

German Federal Republic

2.9

4.1

Brazilian Federative Republic

2.4

2.6

Freddie Mac

2.0

1.8

23.0

Top Five Market Sectors as of June 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Consumer Discretionary

10.4

11.9

Financials

9.4

8.4

Telecommunication Services

8.3

6.4

Energy

5.2

3.8

Materials

5.1

4.8

Quality Diversification (% of fund's net assets)

As of June 30, 2004

As of December 31, 2003

U.S.Government and U.S.Government
Agency
Obligations 19.2%

U.S.Government and U.S.Government
Agency
Obligations 17.8%

AAA,AA,A 10.7%

AAA,AA,A 13.5%

BBB 4.6%

BBB 4.3%

BB 11.3%

BB 11.5%

B 30.2%

B 27.4%

CCC,CC,C 10.2%

CCC,CC,C 10.6%

D 0.2%

D 0.2%

Not Rated 1.6%

Not Rated 1.7%

Equities 1.0%

Equities 1.4%

Short-Term
Investments and
Net Other Assets 11.0%

Short-Term
Investments and
Net Other Assets 11.6%



We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings.

Asset Allocation (% of fund's net assets)

As of June 30, 2004 *

As of December 31, 2003 **

Corporate Bonds 47.5%

Corporate Bonds 46.3%

U.S. Government and U.S. Government Agency Obligations 19.2%

U.S. Government and U.S. Government Agency Obligations 17.8%

Foreign Government & Government Agency Obligations 20.1%

Foreign Government & Government Agency Obligations 21.6%

Stocks 1.0%

Stocks 1.4%

Other Investments 1.2%

Other Investments 1.3%

Short-Term
Investments and
Net Other Assets 11.0%

Short-Term
Investments and
Net Other Assets 11.6%



* Foreign investments

31.7%

** Foreign investments

32.9%

* Swaps

0.0%

** Swaps

0.9%

Semiannual Report

Investments June 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Corporate Bonds - 47.5%

Principal Amount (000s) (j)

Value (Note 1) (000s)

Convertible Bonds - 0.1%

INFORMATION TECHNOLOGY - 0.1%

Semiconductors & Semiconductor Equipment - 0.1%

Atmel Corp. 0% 5/23/21

$ 4,190

$ 1,849

Nonconvertible Bonds - 47.4%

CONSUMER DISCRETIONARY - 9.6%

Auto Components - 0.5%

Dana Corp.:

9% 8/15/11

4,190

4,902

10.125% 3/15/10

1,855

2,101

EaglePicher, Inc. 9.75% 9/1/13

1,470

1,580

Stoneridge, Inc. 11.5% 5/1/12

35

41

Tenneco Automotive, Inc. 11.625% 10/15/09

265

285

United Components, Inc. 9.375% 6/15/13

360

366

9,275

Automobiles - 0.1%

Renault SA 0.3255% 4/23/07 (g)

JPY

200,000

1,838

Hotels, Restaurants & Leisure - 2.3%

Domino's, Inc. 8.25% 7/1/11

670

710

Florida Panthers Holdings, Inc. 9.875% 4/15/09

2,205

2,315

Gaylord Entertainment Co. 8% 11/15/13

920

934

Hilton Hotels Corp.:

7.625% 12/1/12

2,610

2,819

8.25% 2/15/11

1,315

1,466

ITT Corp. 7.375% 11/15/15

2,560

2,566

Mandalay Resort Group:

6.375% 12/15/11

1,220

1,238

6.5% 7/31/09

1,995

2,035

MGM MIRAGE 8.5% 9/15/10

435

470

Morton's Restaurant Group, Inc. 7.5% 7/1/10

1,215

1,130

Penn National Gaming, Inc. 8.875% 3/15/10

1,505

1,633

Royal Caribbean Cruises Ltd. 6.875% 12/1/13

2,060

2,034

Speedway Motorsports, Inc.:

6.75% 6/1/13

700

707

6.75% 6/1/13 (f)

1,940

1,959

Starwood Hotels & Resorts Worldwide, Inc.:

7.375% 5/1/07

1,480

1,554

7.875% 5/1/12

985

1,054

Station Casinos, Inc.:

6% 4/1/12

1,790

1,727

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

CONSUMER DISCRETIONARY - continued

Hotels, Restaurants & Leisure - continued

Station Casinos, Inc.: - continued

6.5% 2/1/14

$ 1,670

$ 1,599

Sun International Hotels Ltd./Sun International North America, Inc. 8.875% 8/15/11

3,735

3,987

Town Sports International Holdings, Inc. 0% 2/1/14 (d)(f)

5,260

2,367

Vail Resorts, Inc. 6.75% 2/15/14

2,080

1,963

Venetian Casino Resort LLC/Las Vegas Sands, Inc. 11% 6/15/10

295

341

VICORP Restaurants, Inc. 10.5% 4/15/11 (f)

1,630

1,654

Waterford Gaming LLC/Waterford Gaming Finance Corp. 8.625% 9/15/12 (f)

573

607

Wheeling Island Gaming, Inc. 10.125% 12/15/09

735

779

Wynn Las Vegas LLC/ Wynn Las Vegas Capital Corp. 12% 11/1/10

1,754

2,105

41,753

Household Durables - 0.5%

Beazer Homes USA, Inc. 8.625% 5/15/11

1,085

1,150

D.R. Horton, Inc.:

7.875% 8/15/11

1,000

1,093

8% 2/1/09

1,300

1,425

K. Hovnanian Enterprises, Inc. 7.75% 5/15/13

1,750

1,741

KB Home 8.625% 12/15/08

1,350

1,445

Standard Pacific Corp.:

7.75% 3/15/13

750

756

9.25% 4/15/12

315

342

Tempur-Pedic, Inc./Tempur Production USA, Inc. 10.25% 8/15/10

1,015

1,147

9,099

Internet & Catalog Retail - 0.1%

J. Crew Operating Corp. 10.375% 10/15/07

1,240

1,265

Leisure Equipment & Products - 0.1%

The Hockey Co. 11.25% 4/15/09

1,380

1,615

Media - 5.6%

AMC Entertainment, Inc.:

8% 3/1/14 (f)

1,930

1,834

9.5% 2/1/11

39

40

9.875% 2/1/12

1,740

1,827

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

CONSUMER DISCRETIONARY - continued

Media - continued

Cablevision Systems Corp. 8% 4/15/12 (f)

$ 14,265

$ 14,087

Charter Communications Operating LLC/Charter Communications Operating Capital Corp. 8% 4/30/12 (f)

2,110

2,036

Cinemark USA, Inc. 9% 2/1/13

500

546

Cinemark, Inc. 0% 3/15/14 (d)(f)

4,695

3,063

Corus Entertainment, Inc. 8.75% 3/1/12

1,970

2,105

CSC Holdings, Inc.:

6.75% 4/15/12 (f)

3,730

3,571

7.625% 4/1/11

2,580

2,619

7.625% 7/15/18

3,460

3,235

7.875% 2/15/18

710

675

Dex Media, Inc.:

0% 11/15/13 (d)(f)

720

461

0% 11/15/13 (d)(f)

30

19

8% 11/15/13 (f)

5,755

5,453

EchoStar DBS Corp.:

6.375% 10/1/11

3,705

3,640

9.125% 1/15/09

42

46

10.375% 10/1/07

25

27

Entravision Communications Corp. 8.125% 3/15/09

1,930

1,988

Granite Broadcasting Corp. 9.75% 12/1/10 (f)

1,695

1,568

Haights Cross Communications, Inc. 0% 8/15/11 (d)

1,550

853

Haights Cross Operating Co. 11.75% 8/15/11

1,790

1,933

Houghton Mifflin Co.:

0% 10/15/13 (d)

10,520

5,470

8.25% 2/1/11

1,905

1,915

9.875% 2/1/13

4,265

4,276

IMAX Corp. 9.625% 12/1/10 (f)

1,970

1,847

Innova S. de R.L. 9.375% 9/19/13

7,120

7,476

Lamar Media Corp. 7.25% 1/1/13

370

381

LBI Media, Inc. 10.125% 7/15/12

835

931

Livent, Inc. yankee 9.375% 10/15/04 (c)

300

51

PanAmSat Corp.:

6.375% 1/15/08

490

495

8.5% 2/1/12

2,130

2,407

PEI Holdings, Inc. 11% 3/15/10

1,551

1,799

Radio One, Inc. 8.875% 7/1/11

4,015

4,376

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

CONSUMER DISCRETIONARY - continued

Media - continued

Rogers Cable, Inc.:

6.25% 6/15/13

$ 1,160

$ 1,077

7.875% 5/1/12

1,710

1,768

Sun Media Corp. Canada 7.625% 2/15/13

635

649

Susquehanna Media Co. 7.375% 4/15/13

770

785

Telewest PLC:

11% 10/1/07 (c)

9,795

5,828

yankee 9.625% 10/1/06 (c)

1,720

980

The Reader's Digest Association, Inc. 6.5% 3/1/11

3,670

3,606

The Walt Disney Co. 0.7171% 10/19/04 (g)

JPY

100,000

919

TV Azteca SA de CV:

euro 10.5% 2/15/07 (Reg. S)

2,920

2,978

yankee 10.5% 2/15/07

255

260

Videotron LTEE 6.875% 1/15/14

550

528

Von Hoffman Holdings, Inc. 13.5% 5/15/09

160

142

102,570

Multiline Retail - 0.1%

Barneys, Inc. 9% 4/1/08

1,160

1,206

Specialty Retail - 0.3%

AutoNation, Inc. 9% 8/1/08

1,850

2,086

CSK Automotive, Inc. 7% 1/15/14

410

392

Hollywood Entertainment Corp. 9.625% 3/15/11

1,760

2,024

J. Crew Intermediate LLC 0% 5/15/08 (d)

1,375

1,183

5,685

TOTAL CONSUMER DISCRETIONARY

174,306

CONSUMER STAPLES - 1.0%

Food Products - 0.3%

Central Garden & Pet Co. 9.125% 2/1/13

260

282

Dean Foods Co.:

6.625% 5/15/09

90

92

6.9% 10/15/17

979

940

Doane Pet Care Co.:

9.75% 5/15/07

1,275

1,192

10.75% 3/1/10

800

852

Hines Nurseries, Inc. 10.25% 10/1/11

370

400

Michael Foods, Inc. 8% 11/15/13

420

434

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

CONSUMER STAPLES - continued

Food Products - continued

Philipp Brothers Chemicals, Inc. 9.875% 6/1/08

$ 890

$ 810

Pierre Foods, Inc. 9.875% 7/15/12 (f)

780

791

5,793

Household Products - 0.2%

JohnsonDiversey Holdings, Inc. 0% 5/15/13 (d)

4,800

3,696

Personal Products - 0.5%

Elizabeth Arden, Inc. 7.75% 1/15/14

470

475

Revlon Consumer Products Corp. 12% 12/1/05

7,620

8,496

8,971

TOTAL CONSUMER STAPLES

18,460

ENERGY - 5.2%

Energy Equipment & Services - 0.7%

CHC Helicopter Corp. 7.375% 5/1/14 (f)

1,900

1,853

Grant Prideco, Inc.:

9% 12/15/09

170

185

9.625% 12/1/07

460

506

Hanover Compressor Co.:

8.625% 12/15/10

490

508

9% 6/1/14

1,260

1,307

Petroliam Nasional BHD (Petronas) 7.625% 10/15/26 (Reg. S)

3,435

3,648

Seabulk International, Inc. 9.5% 8/15/13

3,290

3,372

SESI LLC 8.875% 5/15/11

60

65

11,444

Oil & Gas - 4.5%

Chesapeake Energy Corp.:

6.875% 1/15/16

2,879

2,793

7.75% 1/15/15

615

640

El Paso Corp.:

7% 5/15/11

3,360

2,940

7.875% 6/15/12

1,985

1,784

El Paso Energy Corp.:

6.95% 12/15/07

710

683

7.375% 12/15/12

2,990

2,598

7.75% 1/15/32

520

417

7.8% 8/1/31

1,630

1,308

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

ENERGY - continued

Oil & Gas - continued

El Paso Energy Corp.: - continued

8.05% 10/15/30

$ 165

$ 135

Encore Acquisition Co. 8.375% 6/15/12

755

800

Energy Partners Ltd. 8.75% 8/1/10

1,830

1,912

EXCO Resources, Inc. 7.25% 1/15/11

570

577

Forest Oil Corp. 8% 12/15/11

480

511

General Maritime Corp. 10% 3/15/13

2,945

3,262

GulfTerra Energy Partners LP/GulfTerra Energy Finance Corp.:

6.25% 6/1/10

1,480

1,480

10.625% 12/1/12

823

955

Houston Exploration Co. 7% 6/15/13

410

411

InterNorth, Inc. 9.625% 3/15/06 (c)

935

244

OAO Gazprom 9.625% 3/1/13

5,490

5,641

Pecom Energia SA:

8.125% 7/15/10 (Reg. S)

3,060

2,861

9% 1/30/07 (f)

330

337

9% 5/1/09 (Reg. S)

2,085

2,043

Petroleos Mexicanos 9.25% 3/30/18

4,595

5,158

Plains Exploration & Production Co. 7.125% 6/15/14 (f)

1,010

1,028

Plains Exploration & Production Co. LP Series B, 8.75% 7/1/12

1,825

1,962

Range Resources Corp. 7.375% 7/15/13

2,190

2,179

Teekay Shipping Corp. 8.875% 7/15/11

5,635

6,199

The Coastal Corp.:

6.375% 2/1/09

440

387

6.5% 5/15/06

175

172

6.5% 6/1/08

1,210

1,089

7.5% 8/15/06

2,895

2,866

7.75% 6/15/10

4,460

4,025

7.75% 10/15/35

235

184

Vintage Petroleum, Inc. 8.25% 5/1/12

1,000

1,094

Williams Companies, Inc.:

7.125% 9/1/11

2,300

2,335

7.625% 7/15/19

7,267

6,976

7.75% 6/15/31

1,625

1,487

7.875% 9/1/21

3,705

3,594

8.125% 3/15/12

1,025

1,092

8.625% 6/1/10

1,430

1,568

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

ENERGY - continued

Oil & Gas - continued

Williams Companies, Inc.: - continued

8.75% 3/15/32

$ 3,360

$ 3,360

YPF SA yankee 9.125% 2/24/09

1,075

1,166

82,253

TOTAL ENERGY

93,697

FINANCIALS - 9.0%

Capital Markets - 0.8%

Banco BPI SA 0.0975% 2/12/07 (g)

JPY

100,000

918

BCP Caylux Holdings Luxembourg SCA 9.625% 6/15/14 (f)

8,890

9,223

Lehman Brothers Treasury BV 0.3963% 10/22/04 (g)

JPY

200,000

1,839

Merrill Lynch & Co., Inc. 0.3675% 5/28/08 (g)

JPY

200,000

1,840

13,820

Commercial Banks - 0.5%

ASB Bank Ltd. 0.0463% 7/27/05 (g)

JPY

200,000

1,836

Banco Santander Central Hispano SA 0% 2/23/06 (g)

EUR

500

609

Banque Federative du Credit Mutuel (BFCM) 2.159% 7/24/06 (g)

EUR

1,500

1,827

Japan Development Bank 1.7% 9/20/22

JPY

170,000

1,396

NIB Capital Bank NV 0.0975% 2/17/09 (g)

JPY

250,000

2,294

Westpac Banking Corp. 2.1857% 1/27/06 (g)

CAD

1,500

1,125

9,087

Consumer Finance - 0.2%

Ford Credit Australia Ltd. 0% 1/5/07 (g)

EUR

500

618

General Motors Acceptance Corp. 0% 7/5/05 (g)

EUR

1,500

1,853

Metris Companies, Inc. 10.125% 7/15/06

330

325

SLM Corp. 1.01% 6/15/09

JPY

100,000

909

3,705

Diversified Financial Services - 6.8%

Ahold Finance USA, Inc.:

6.25% 5/1/09

1,350

1,320

8.25% 7/15/10

5,430

5,702

American Airlines, Inc. pass thru trust certificates:

7.377% 5/23/19

4,790

3,353

7.379% 5/23/16

980

686

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

FINANCIALS - continued

Diversified Financial Services - continued

American Airlines, Inc. pass thru trust certificates: - continued

7.8% 4/1/08

$ 810

$ 737

Arch Western Finance LLC 6.75% 7/1/13 (f)

2,580

2,580

BAT International Finance PLC 0% 4/3/06 (g)

EUR

1,500

1,844

Caixa Finance BV 2.141% 11/21/06 (g)

EUR

1,000

1,218

Canada Housing Trust No. 1 4.65% 9/15/09

CAD

2,000

1,507

CCO Holdings LLC/CCO Holdings Capital Corp. 8.75% 11/15/13 (f)

4,085

3,901

Charter Communications Holding II LLC/Charter Communications Holdings II Capital Corp. 10.25% 9/15/10 (f)

9,283

9,376

Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp.:

0% 1/15/10 (d)

995

798

0% 5/15/11 (d)

2,510

1,606

9.92% 4/1/11

1,780

1,406

10% 4/1/09

535

444

10.75% 10/1/09

1,670

1,407

Chukchansi Economic Development Authority 14.5% 6/15/09 (f)

490

608

Continental Airlines, Inc. pass thru trust certificates:

6.541% 9/15/09

113

93

6.748% 9/15/18

97

77

6.795% 2/2/20

350

280

6.8% 7/2/07

60

50

6.9% 7/2/18

764

596

8.312% 10/2/12

657

487

8.321% 11/1/06

425

383

8.388% 5/1/22

929

706

Delta Air Lines, Inc. pass thru trust certificates:

7.299% 9/18/06

130

79

7.57% 11/18/10

1,280

1,188

7.711% 9/18/11

675

425

7.779% 11/18/05

715

443

7.92% 5/18/12

3,890

2,547

10.06% 1/2/16

170

85

Deutsche Telekom International Finance BV 6.25% 12/9/10

GBP

250

458

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

FINANCIALS - continued

Diversified Financial Services - continued

El Paso Energy Partners LP/El Paso Energy Partners Finance Corp. 8.5% 6/1/11

$ 725

$ 779

Entercom Radio LLC/Entercom Capital, Inc. 7.625% 3/1/14

1,505

1,554

FIMEP SA 10.5% 2/15/13

2,885

3,285

Fresenius Medical Care Capital Trust IV 7.875% 6/15/11

1,000

1,055

Gerdau AmeriSteel Corp./GUSAP Partners 10.375% 7/15/11

1,335

1,479

Global Cash Access LLC/Global Cash Access Finance Corp. 8.75% 3/15/12 (f)

540

562

Huntsman Advanced Materials LLC:

10% 7/15/08 (f)(g)

940

975

11% 7/15/10 (f)

750

833

Hurricane Finance BV:

9.625% 2/12/10 (f)

1,325

1,381

9.625% 2/12/10 (Reg. S)

175

182

IOS Capital LLC 7.25% 6/30/08

58

60

Ispat Inland ULC 9.75% 4/1/14 (f)

1,415

1,457

Japan Finance Corp. for Municipal Enterprises 1.35% 11/26/13

JPY

125,000

1,107

Jostens Holding Corp. 0% 12/1/13 (d)

2,060

1,401

Kraton Polymers LLC/Kraton Polymers Capital Corp. 8.125% 1/15/14 (f)

310

313

Level 3 Financing, Inc. 10.75% 10/15/11 (f)

7,485

6,587

MEI Euro Finance Ltd. 8.75% 5/22/10 (f)

745

667

Mobile Telesystems Finance SA:

9.75% 1/30/08 (f)

4,855

5,025

9.75% 1/30/08 (Reg. S)

250

259

MSW Energy Holdings II LLC/MSW Finance Co. II, Inc. 7.375% 9/1/10 (f)

1,170

1,170

National Beef Packing Co. LLC/National Beef Finance Corp. 10.5% 8/1/11

3,430

3,584

Northwest Airlines, Inc. pass thru trust certificates:

6.81% 2/1/20

214

186

7.248% 7/2/14

314

223

7.575% 3/1/19

156

154

7.691% 4/1/17

36

27

7.95% 9/1/16

45

35

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

FINANCIALS - continued

Diversified Financial Services - continued

Northwest Airlines, Inc. pass thru trust certificates: - continued

8.07% 1/2/15

$ 1,384

$ 899

8.304% 9/1/10

248

194

PDVSA Finance Ltd. 9.75% 2/15/10

4,082

4,480

Pemex Project Funding Master Trust:

2.82% 6/15/10 (f)(g)

2,940

2,953

2.94% 10/15/09 (f)(g)

2,530

2,627

6.625% 4/4/10

EUR

500

641

Permanent Financing No. 1 PLC 5.1% 6/10/09 (g)

EUR

400

512

Petronas Capital Ltd. 7.875% 5/22/22 (Reg. S)

3,490

3,852

Punch Taverns Finance PLC 5.52% 10/15/26 (g)

GBP

150

275

R.H. Donnelley Finance Corp. I:

8.875% 12/15/10 (f)

350

385

10.875% 12/15/12 (f)

550

639

Sealed Air Finance euro 5.625% 7/19/06

EUR

250

315

Ship Finance International Ltd. 8.5% 12/15/13 (f)

5,015

4,839

TRW Automotive Acquisition Corp.:

9.375% 2/15/13

1,318

1,486

11% 2/15/13

2,593

3,053

Tyumen Oil Co. 11% 11/6/07

1,765

1,942

Universal City Development Partners Ltd./UCDP Finance, Inc. 11.75% 4/1/10

5,760

6,667

Volkswagen International Finance NV 0.1475% 2/9/06 (g)

JPY

200,000

1,835

WH Holdings Ltd./WH Capital Corp. 9.5% 4/1/11 (f)

540

562

Williams Companies, Inc. Credit Linked Certificate Trust 6.75% 4/15/09 (f)

2,425

2,401

Xerox Capital Trust I 8% 2/1/27

1,500

1,373

122,660

Real Estate - 0.7%

American Real Estate Partners/American Real Estate Finance Corp. 8.125% 6/1/12 (f)

2,450

2,499

BF Saul REIT 7.5% 3/1/14

3,400

3,332

Crescent Real Estate Equities LP/Crescent Finance Co. 9.25% 4/15/09

1,725

1,794

La Quinta Properties, Inc. 8.875% 3/15/11

1,860

2,000

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

FINANCIALS - continued

Real Estate - continued

Senior Housing Properties Trust:

7.875% 4/15/15

$ 1,540

$ 1,575

8.625% 1/15/12

1,510

1,638

12,838

Thrifts & Mortgage Finance - 0.0%

Granite Mortgages PLC 2.423% 1/20/43 (g)

EUR

400

489

TOTAL FINANCIALS

162,599

HEALTH CARE - 1.5%

Biotechnology - 0.1%

Polypore, Inc. 8.75% 5/15/12 (f)

1,300

1,355

Health Care Equipment & Supplies - 0.2%

Apogent Technologies, Inc. 6.5% 5/15/13

620

631

Bio-Rad Laboratories, Inc. 7.5% 8/15/13

1,770

1,859

Fisher Scientific International, Inc. 8.125% 5/1/12

845

902

3,392

Health Care Providers & Services - 1.1%

AmeriPath, Inc. 10.5% 4/1/13

2,805

2,840

AmerisourceBergen Corp.:

7.25% 11/15/12

515

525

8.125% 9/1/08

310

333

Beverly Enterprises, Inc. 7.875% 6/15/14 (f)

1,030

1,017

Concentra Operating Corp. 9.125% 6/1/12 (f)

390

408

Fountain View, Inc. 9.25% 8/19/08 (e)

718

718

Genesis HealthCare Corp. 8% 10/15/13 (f)

350

360

HCA, Inc. 6.75% 7/15/13

3,715

3,770

Mariner Health Care, Inc. 8.25% 12/15/13 (f)

870

879

National Nephrology Associates, Inc. 9% 11/1/11 (f)

490

561

PacifiCare Health Systems, Inc. 10.75% 6/1/09

908

1,035

Psychiatric Solutions, Inc. 10.625% 6/15/13

320

365

Service Corp. International (SCI) 6.75% 4/1/16 (f)

2,800

2,590

Tenet Healthcare Corp. 9.875% 7/1/14 (f)

3,740

3,721

Triad Hospitals, Inc. 7% 11/15/13

2,020

1,934

21,056

Pharmaceuticals - 0.1%

Leiner Health Products, Inc. 11% 6/1/12 (f)

570

587

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

HEALTH CARE - continued

Pharmaceuticals - continued

VWR International, Inc.:

6.875% 4/15/12 (f)

$ 630

$ 630

8% 4/15/14 (f)

630

647

1,864

TOTAL HEALTH CARE

27,667

INDUSTRIALS - 2.6%

Aerospace & Defense - 0.4%

Alliant Techsystems, Inc. 8.5% 5/15/11

2,020

2,172

BE Aerospace, Inc.:

8.5% 10/1/10

200

211

8.875% 5/1/11

2,415

2,252

Transdigm, Inc. 8.375% 7/15/11

560

574

Vought Aircraft Industries, Inc. 8% 7/15/11 (f)

1,035

983

6,192

Airlines - 0.3%

AMR Corp. 9% 8/1/12

620

487

Continental Airlines, Inc. 8% 12/15/05

2,690

2,394

Delta Air Lines, Inc.:

7.9% 12/15/09

170

85

8.3% 12/15/29

2,100

861

Northwest Airlines Corp. 10% 2/1/09

1,270

953

Northwest Airlines, Inc.:

7.875% 3/15/08

295

207

9.875% 3/15/07

125

98

10.5% 4/1/09

289

217

NWA Trust 10.23% 6/21/14

276

243

5,545

Building Products - 0.2%

Erico International Corp. 8.875% 3/1/12 (f)

240

241

Jacuzzi Brands, Inc. 9.625% 7/1/10

2,435

2,605

2,846

Commercial Services & Supplies - 0.6%

Allied Waste North America, Inc.:

6.375% 4/15/11 (f)

1,080

1,058

6.5% 11/15/10 (f)

1,830

1,807

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

INDUSTRIALS - continued

Commercial Services & Supplies - continued

Allied Waste North America, Inc.: - continued

9.25% 9/1/12

$ 540

$ 605

Browning-Ferris Industries, Inc.:

7.4% 9/15/35

1,640

1,402

9.25% 5/1/21

680

738

JohnsonDiversey, Inc. 9.625% 5/15/12

435

474

Mail-Well I Corp. 7.875% 12/1/13 (f)

230

208

Worldspan LP 9.625% 6/15/11

4,680

4,820

11,112

Construction & Engineering - 0.0%

Great Lakes Dredge & Dock Corp. 7.75% 12/15/13

540

462

Machinery - 0.2%

Cummins, Inc.:

7.125% 3/1/28

2,250

2,138

9.5% 12/1/10 (g)

320

363

Dunlop Standard Aerospace Holdings PLC yankee 11.875% 5/15/09

145

154

Navistar International Corp. 7.5% 6/15/11

650

666

3,321

Marine - 0.2%

Horizon Lines LLC 9% 11/1/12 (f)

770

784

OMI Corp. 7.625% 12/1/13

2,265

2,220

Transport Maritima Mexicana SA de CV yankee:

9.5% 8/15/04 (c)

360

364

10.25% 11/15/06 (c)

995

1,005

4,373

Road & Rail - 0.7%

Kansas City Southern Railway Co.:

7.5% 6/15/09

2,185

2,185

9.5% 10/1/08

95

102

TFM SA de CV yankee:

10.25% 6/15/07

865

865

11.75% 6/15/09

10,159

9,956

13,108

TOTAL INDUSTRIALS

46,959

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

INFORMATION TECHNOLOGY - 2.1%

Communications Equipment - 0.4%

Lucent Technologies, Inc.:

6.45% 3/15/29

$ 8,730

$ 6,678

6.5% 1/15/28

190

146

6,824

Electronic Equipment & Instruments - 0.3%

Celestica, Inc. 7.875% 7/1/11

5,130

5,207

IT Services - 0.2%

Iron Mountain, Inc.:

6.625% 1/1/16

3,120

2,824

8.25% 7/1/11

535

552

8.625% 4/1/13

45

48

3,424

Office Electronics - 0.7%

Xerox Corp.:

7.125% 6/15/10

3,720

3,813

7.625% 6/15/13

8,870

9,092

12,905

Semiconductors & Semiconductor Equipment - 0.5%

AMI Semiconductor, Inc. 10.75% 2/1/13

688

800

Amkor Technology, Inc.:

7.125% 3/15/11 (f)

2,240

2,089

7.75% 5/15/13

2,115

1,993

ON Semiconductor Corp./Semiconductor Components Industries LLC 12% 3/15/10

510

597

Semiconductor Note Partners Trust 0% 8/4/11 (f)

500

715

Viasystems, Inc. 10.5% 1/15/11 (f)

2,935

3,096

9,290

TOTAL INFORMATION TECHNOLOGY

37,650

MATERIALS - 5.1%

Chemicals - 1.9%

America Rock Salt Co. LLC 9.5% 3/15/14 (f)

2,955

3,029

Compass Minerals Group, Inc. 10% 8/15/11

1,120

1,243

Equistar Chemicals LP/Equistar Funding Corp. 10.625% 5/1/11

910

1,010

Georgia Gulf Corp. 7.125% 12/15/13 (f)

630

649

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

MATERIALS - continued

Chemicals - continued

Huntsman ICI Chemicals LLC 10.125% 7/1/09

$ 2,965

$ 3,009

Huntsman ICI Holdings LLC 0% 12/31/09

10,120

4,908

Huntsman International LLC 9.875% 3/1/09

480

514

Huntsman LLC:

8.8% 7/15/11 (f)(g)

630

636

11.5% 7/15/12 (f)

1,260

1,273

11.625% 10/15/10

2,495

2,751

Lyondell Chemical Co.:

9.5% 12/15/08

1,365

1,423

9.625% 5/1/07

265

276

9.875% 5/1/07

245

256

11.125% 7/15/12

1,950

2,140

Millennium America, Inc.:

9.25% 6/15/08

1,590

1,685

9.25% 6/15/08 (f)

925

981

Phibro Animal Health Corp. 13% 12/1/07 unit (f)

1,295

1,412

Pliant Corp. 0% 6/15/09 (d)

1,700

1,428

Resolution Performance Products LLC/RPP Capital Corp. 9.5% 4/15/10

2,470

2,544

Solutia, Inc.:

6.72% 10/15/37 (c)

170

97

7.375% 10/15/27 (c)

5,120

2,918

34,182

Containers & Packaging - 1.0%

BWAY Corp. 10% 10/15/10

1,175

1,246

Crown Cork & Seal, Inc.:

7.375% 12/15/26

1,800

1,494

8% 4/15/23

2,215

1,938

Crown European Holdings SA:

9.5% 3/1/11

2,330

2,546

10.875% 3/1/13

760

870

Jefferson Smurfit Corp. U.S. 8.25% 10/1/12

2,140

2,226

Owens-Brockway Glass Container, Inc.:

7.75% 5/15/11

620

642

8.25% 5/15/13

1,070

1,102

8.75% 11/15/12

4,155

4,487

8.875% 2/15/09

2,240

2,408

18,959

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

MATERIALS - continued

Metals & Mining - 1.6%

Compass Minerals International, Inc.:

0% 12/15/12 (d)

$ 1,330

$ 1,051

0% 6/1/13 (d)

2,260

1,740

CSN Islands VIII Corp. 9.75% 12/16/13 (f)

8,250

7,425

Freeport-McMoRan Copper & Gold, Inc. 10.125% 2/1/10

3,590

3,985

International Steel Group, Inc. 6.5% 4/15/14 (f)

4,720

4,413

Luscar Coal Ltd. 9.75% 10/15/11

1,350

1,505

Massey Energy Co. 6.625% 11/15/10

2,850

2,836

Oregon Steel Mills, Inc. 10% 7/15/09

1,345

1,419

Peabody Energy Corp. 6.875% 3/15/13

1,340

1,357

Steel Dynamics, Inc.:

9.5% 3/15/09

65

72

9.5% 3/15/09

2,090

2,309

28,112

Paper & Forest Products - 0.6%

Georgia-Pacific Corp.:

7.375% 12/1/25

1,000

934

8% 1/15/24 (f)

3,120

3,128

9.375% 2/1/13

2,540

2,902

Millar Western Forest Products Ltd. 7.75% 11/15/13

390

392

Norske Skog Canada Ltd. 8.625% 6/15/11

1,280

1,357

Solo Cup Co. 8.5% 2/15/14 (f)

770

716

Stone Container Corp.:

8.375% 7/1/12

540

564

9.75% 2/1/11

1,290

1,419

11,412

TOTAL MATERIALS

92,665

TELECOMMUNICATION SERVICES - 8.1%

Diversified Telecommunication Services - 5.0%

Alestra SA de RL de CV 8% 6/30/10

805

640

Empresa Brasil de Telecomm SA 11% 12/15/08 (f)

4,743

5,122

Eschelon Operating Co. 8.375% 3/15/10

1,330

1,091

MCI, Inc.:

6.688% 5/1/09

102

95

7.735% 5/1/14

1,140

1,022

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

TELECOMMUNICATION SERVICES - continued

Diversified Telecommunication Services - continued

Mobifon Holdings BV 12.5% 7/31/10

$ 7,225

$ 8,237

NTL Cable PLC 8.75% 4/15/14 (f)

8,640

8,878

Primus Telecommunications Group, Inc. 8% 1/15/14

3,145

2,705

Qwest Communications International, Inc.:

7.25% 2/15/11 (f)

4,210

3,915

7.5% 2/15/14 (f)

9,100

8,281

Qwest Corp. 9.125% 3/15/12 (f)

10,765

11,626

Qwest Services Corp. 14% 12/15/14 (f)

5,595

6,686

Telecom Italia Spa 0% 10/29/07 (g)

EUR

1,500

1,828

Telefonica de Argentina SA 9.125% 11/7/10

2,042

1,960

Telenet Group Holding NV 0% 6/15/14 (d)(f)

9,375

5,953

Telewest Communications PLC yankee:

0% 2/1/10 (c)(d)

1,690

727

9.25% 4/15/09 (c)

2,620

1,205

9.875% 2/1/10 (c)

575

322

11.25% 11/1/08 (c)

935

549

Triton PCS, Inc.:

8.75% 11/15/11

7,060

5,825

9.375% 2/1/11

1,035

885

U.S. West Communications:

6.875% 9/15/33

7,968

6,693

7.125% 11/15/43

220

184

7.2% 11/10/26

2,450

2,107

7.25% 9/15/25

1,115

959

7.25% 10/15/35

1,300

1,092

7.5% 6/15/23

1,880

1,654

8.875% 6/1/31

340

332

90,573

Wireless Telecommunication Services - 3.1%

American Cellular Corp. 10% 8/1/11

190

165

Centennial Cellular Operating Co./Centennial Communications Corp. 10.125% 6/15/13

3,650

3,760

Centennial Communications Corp./Centennial Cellular Operating Co. LLC/Centennial Puerto Rico Operations Corp. 8.125% 2/1/14 (f)

2,460

2,282

Crown Castle International Corp.:

Series B, 7.5% 12/1/13

1,670

1,653

7.5% 12/1/13

1,540

1,525

9.375% 8/1/11

3,800

4,180

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

TELECOMMUNICATION SERVICES - continued

Wireless Telecommunication Services - continued

Crown Castle International Corp.: - continued

10.75% 8/1/11

$ 2,255

$ 2,520

DirecTV Holdings LLC/DirecTV Financing, Inc. 8.375% 3/15/13

2,320

2,569

Globe Telecom, Inc. 9.75% 4/15/12

1,510

1,653

Millicom International Cellular SA 10% 12/1/13 (f)

3,765

3,803

Nextel Communications, Inc.:

5.95% 3/15/14

1,150

1,058

6.875% 10/31/13

790

778

7.375% 8/1/15

17,510

17,598

Rogers Wireless, Inc.:

6.375% 3/1/14

2,380

2,184

9.625% 5/1/11

1,940

2,163

Rural Cellular Corp.:

8.25% 3/15/12 (f)

1,360

1,394

9.75% 1/15/10

725

658

9.875% 2/1/10

215

214

Telemig Cellular SA/Amazonia Cellular SA 8.75% 1/20/09 (f)

2,080

1,914

Western Wireless Corp. 9.25% 7/15/13

5,230

5,361

57,432

TOTAL TELECOMMUNICATION SERVICES

148,005

UTILITIES - 3.2%

Electric Utilities - 0.4%

CMS Energy Corp.:

7.5% 1/15/09

760

759

8.5% 4/15/11

1,320

1,353

8.9% 7/15/08

1,130

1,188

Illinois Power Co.:

7.5% 6/15/09

60

66

11.5% 12/15/10

2,175

2,572

Nevada Power Co. 10.875% 10/15/09

80

91

Sierra Pacific Power Co.:

6.25% 4/15/12 (f)

640

600

8% 6/1/08

870

918

7,547

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

UTILITIES - continued

Gas Utilities - 1.8%

ANR Pipeline, Inc.:

7.375% 2/15/24

$ 1,980

$ 1,846

8.875% 3/15/10

430

468

9.625% 11/1/21

5,555

6,194

El Paso Energy Corp. 6.75% 5/15/09

1,945

1,768

Northwest Pipeline Corp.:

6.625% 12/1/07

285

295

8.125% 3/1/10

400

434

Sonat, Inc.:

6.75% 10/1/07

250

237

7.625% 7/15/11

1,910

1,695

Southern Natural Gas Co.:

7.35% 2/15/31

7,350

6,514

8% 3/1/32

4,170

3,894

8.875% 3/15/10

510

555

Tennessee Gas Pipeline Co.:

7% 10/15/28

550

479

7.5% 4/1/17

3,715

3,576

7.625% 4/1/37

1,035

937

8.375% 6/15/32

1,155

1,126

Transcontinental Gas Pipe Line Corp.:

6.125% 1/15/05

420

422

6.25% 1/15/08

1,115

1,132

7% 8/15/11

330

341

8.875% 7/15/12

1,455

1,657

33,570

Multi-Utilities & Unregulated Power - 1.0%

AES Corp.:

7.75% 3/1/14

1,780

1,709

8.75% 5/15/13 (f)

1,460

1,562

8.875% 2/15/11

1,139

1,183

9% 5/15/15 (f)

1,340

1,434

Calpine Corp. 8.75% 7/15/13 (f)

8,590

7,087

Enron Corp.:

6.4% 7/15/06 (c)

545

142

6.625% 11/15/05 (c)

2,200

575

6.725% 11/17/08 (c)

684

174

6.75% 8/1/09 (c)

550

144

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

UTILITIES - continued

Multi-Utilities & Unregulated Power - continued

Enron Corp.: - continued

6.875% 10/15/07 (c)

$ 1,330

$ 348

6.95% 7/15/28 (c)

1,204

307

7.125% 5/15/07 (c)

235

61

7.375% 5/15/19 (c)

1,400

361

7.875% 6/15/49 (c)

235

61

8.375% 5/23/05 (c)

2,500

644

9.125% 4/1/49 (c)

50

13

9.875% 6/15/49 (c)

220

57

Sierra Pacific Resources 8.625% 3/15/14 (f)

2,000

1,945

17,807

TOTAL UTILITIES

58,924

TOTAL NONCONVERTIBLE BONDS

860,932

TOTAL CORPORATE BONDS

(Cost $849,126)

862,781

U.S. Government and Government Agency Obligations - 18.9%

U.S. Government Agency Obligations - 5.5%

Fannie Mae:

3.25% 1/15/08

6,150

6,044

3.25% 2/15/09

12,890

12,419

5.125% 1/2/14

8,000

7,785

6% 5/15/11

9,675

10,388

6.125% 3/15/12

900

970

6.25% 2/1/11

380

408

Federal Home Loan Bank:

2.25% 5/15/06

16,150

15,968

5.8% 9/2/08

2,920

3,119

Freddie Mac:

2.875% 12/15/06

5,525

5,471

3.625% 9/15/08

22,050

21,737

4.375% 2/4/10

3,440

3,400

4.5% 1/15/14

5,480

5,208

U.S. Government and Government Agency Obligations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

U.S. Government Agency Obligations - continued

Government Loan Trusts (assets of Trust guaranteed by U.S. Government through Agency for International Development) Series 1-B, 8.5% 4/1/06

$ 69

$ 73

Small Business Administration guaranteed development participation certificates Series 2003 P10B, 5.136% 8/10/13

1,969

1,959

State of Israel (guaranteed by U.S. Government through Agency for International Development) 5.5% 9/18/23

4,750

4,670

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

99,619

U.S. Treasury Inflation Protected Obligations - 4.9%

U.S. Treasury Inflation-Indexed Bonds 3.625% 4/15/28

17,410

21,241

U.S. Treasury Inflation-Indexed Notes:

1.875% 7/15/13

64,266

63,462

2% 1/15/14

5,087

5,057

TOTAL U.S. TREASURY INFLATION PROTECTED OBLIGATIONS

89,760

U.S. Treasury Obligations - 8.5%

U.S. Treasury Bills, yield at date of purchase 1.03% to 1.24% 8/26/04 to 9/23/04

19,000

18,962

U.S. Treasury Bonds:

6.125% 8/15/29

6,500

7,150

8% 11/15/21

8,000

10,486

9% 11/15/18

2,000

2,792

11.25% 2/15/15

2,900

4,474

U.S. Treasury Notes:

1.625% 2/28/06

35,100

34,586

2.5% 5/31/06

11,000

10,963

3.25% 1/15/09

31,600

30,993

4.25% 8/15/13

4,000

3,905

4.25% 11/15/13

17,000

16,546

4.75% 5/15/14

3,800

3,840

5.75% 8/15/10

8,500

9,268

TOTAL U.S. TREASURY OBLIGATIONS

153,965

TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS

(Cost $348,990)

343,344

U.S. Government Agency - Mortgage Securities - 1.2%

Principal Amount (000s) (j)

Value (Note 1) (000s)

Fannie Mae - 1.2%

4.5% 12/1/18

$ 9,393

$ 9,203

5% 3/1/18 to 7/1/18

5,521

5,540

5.5% 5/1/11 to 3/1/18

4,832

4,957

6% 8/1/13 to 1/1/26

202

211

6.5% 4/1/09 to 9/1/32

1,190

1,242

7% 9/1/25

19

20

7.5% 1/1/28 to 5/1/28

129

138

TOTAL FANNIE MAE

21,311

Freddie Mac - 0.0%

8.5% 3/1/20

36

40

Government National Mortgage Association - 0.0%

6% 1/15/09 to 5/15/09

177

186

6.5% 4/15/26 to 5/15/26

156

164

7% 9/15/25 to 5/15/32

381

405

7.5% 2/15/22 to 8/15/28

361

391

8% 9/15/26 to 12/15/26

62

68

TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION

1,214

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $22,796)

22,565

Collateralized Mortgage Obligations - 0.1%

Private Sponsor - 0.0%

Holmes Financing PLC floater Series 8 Class 3C, 2.804% 7/15/40 (g)

EUR

500

610

U.S. Government Agency - 0.1%

Fannie Mae guaranteed REMIC pass thru certificates:

planned amortization class Series 2001-53 Class OH, 6.5% 6/25/30

992

999

Series 2003-122 Class ZG, 5% 12/25/23

38

38

Freddie Mac planned amortization class Series 2351 Class PX, 6.5% 7/15/30

561

569

TOTAL U.S. GOVERNMENT AGENCY

1,606

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $2,277)

2,216

Foreign Government and Government Agency Obligations - 20.1%

Principal Amount (000s) (j)

Value (Note 1) (000s)

Argentine Republic:

Brady par L-GP 6% 3/31/23 (c)

$ 2,310

$ 1,172

1.2138% 8/3/12 (c)(g)

1,900

1,267

Banco Central del Uruguay:

Brady:

par A 6.75% 2/19/21

1,000

825

par B 6.75% 3/21/21

100

83

value recovery A rights 1/2/21 (h)

1,000,000

0

value recovery B rights 1/2/21 (h)

750,000

0

Bogota Distrito Capital:

9.5% 12/12/06 (f)

540

583

9.5% 12/12/06 (Reg. S)

2,778

3,000

Brazilian Federative Republic:

Brady:

capitalization bond 8% 4/15/14

28,287

26,042

new money bond L 7.6875% 4/15/09 (Reg.) (g)

318

287

new money bond L, 2.11% 4/15/09 (Bearer) (g)

953

860

par Z-L 6% 4/15/24

1,760

1,373

11% 8/17/40

6,185

5,829

11.25% 7/26/07

1,855

1,999

11.5% 3/12/08

1,895

2,025

12% 4/15/10

825

877

12.25% 3/6/30

2,435

2,532

12.75% 1/15/20

1,820

1,947

Bulgarian Republic Brady discount A 1.9825% 7/28/24 (g)

1,785

1,785

Canadian Government:

3% 6/1/06

CAD

22,250

16,600

5.25% 6/1/12

CAD

8,100

6,255

5.5% 6/1/09

CAD

2,000

1,578

5.75% 6/1/29

CAD

11,000

8,692

Central Bank of Nigeria:

Brady 6.25% 11/15/20

1,500

1,275

promissory note 5.092% 1/5/10

1,723

1,573

warrants 11/15/20 (a)(h)

3,250

1

City of Kiev 8.75% 8/8/08

3,240

3,337

Colombian Republic:

9.75% 4/23/09

1,020

1,091

10.75% 1/15/13

2,750

2,939

11.75% 2/25/20

2,310

2,527

Dominican Republic:

Brady 2% 8/30/09 (g)

3,937

2,618

2.4381% 8/30/24 (g)

680

490

Foreign Government and Government Agency Obligations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Dominican Republic: - continued

9.5% 9/27/06 (Reg. S)

$ 440

$ 308

Ecuador Republic:

12% 11/15/12 (Reg. S)

5,971

5,269

euro par 4.75% 2/28/25 (e)

425

242

French Government 3.75% 1/12/07

EUR

1,600

1,989

German Federal Republic:

3.75% 7/4/13

EUR

250

294

4.25% 1/4/14

EUR

17,000

20,682

5% 1/4/12

EUR

11,600

14,992

5% 7/4/12

EUR

560

723

5.25% 1/4/11

EUR

13,250

17,393

Greek Government 3.5% 4/20/09

EUR

18,000

21,764

Italian Republic:

3.75% 6/8/05

JPY

200,000

1,900

5.25% 11/1/29

EUR

2,000

2,506

5.75% 2/1/33

EUR

8,150

10,947

Ivory Coast Brady FLIRB A 2% 3/29/18 (c)(e)

FRF

10,395

285

Japan Government:

0.8% 3/20/13

JPY

150,000

1,284

1.5% 3/20/14

JPY

1,450,000

13,014

Lebanese Republic 10.125% 8/6/08

1,220

1,345

Panamanian Republic:

9.625% 2/8/11

605

669

10.75% 5/15/20

1,475

1,659

Peruvian Republic:

3% 3/7/27 (e)

900

495

9.125% 2/21/12

3,030

3,106

Philippine Republic:

Brady principal collateralized interest reduction bond 6.5% 12/1/17

3,170

3,043

8.375% 2/15/11

4,385

4,347

9.875% 1/15/19

3,205

3,189

Russian Federation:

5% 3/31/30 (e)(f)

3,900

3,564

5% 3/31/30 (Reg. S) (e)

23,725

21,679

8.25% 3/31/10 (Reg. S)

3,220

3,462

South African Republic:

8.5% 6/23/17

1,360

1,557

9.125% 5/19/09

1,700

1,974

Foreign Government and Government Agency Obligations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Turkish Republic:

0% 8/24/05

TRL

4,221,290,000

$ 2,130

10.5% 1/13/08

$ 3,000

3,233

11% 1/14/13

1,740

1,905

11.75% 6/15/10

4,330

4,860

12.375% 6/15/09

1,435

1,639

25% 11/16/05

TRL

3,040,209,000

1,964

Ukraine Cabinet of Ministers 7.65% 6/11/13 (f)

1,410

1,343

Ukraine Government:

6.875% 3/4/11 (f)

275

260

7.65% 6/11/13 (Reg. S)

395

376

11% 3/15/07 (Reg. S)

767

831

United Kingdom, Great Britain & Northern Ireland:

4.5% 3/7/07

GBP

5,000

8,986

4.75% 9/7/15

GBP

800

1,413

6% 12/7/28

GBP

2,950

6,220

6.25% 11/25/10

GBP

5,970

11,549

8% 6/7/21

GBP

900

2,190

8.75% 8/25/17

GBP

1,500

3,683

United Mexican States:

7.5% 4/8/33

7,675

7,464

8.125% 12/30/19

6,075

6,525

8.375% 1/14/11

1,725

1,953

11.5% 5/15/26

5,760

8,084

Uruguay Republic:

7.25% 2/15/11

2,645

2,176

10.5% 10/20/06

UYU

58,000

2,140

Venezuelan Republic:

Discount A, 2.1325% 3/31/20 (g)

1,250

1,044

oil recovery rights 4/15/20 (h)

3,260

0

9.25% 9/15/27

1,355

1,145

10.75% 9/19/13

6,215

6,168

11% 3/5/08

EUR

1,095

1,406

13.625% 8/15/18

895

989

euro Brady:

par W-A 6.75% 3/31/20

4,250

3,783

par W-B 6.75% 3/31/20

3,970

3,533

Foreign Government and Government Agency Obligations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Vietnamese Socialist Republic Brady par 3.75% 3/12/28 (e)

$ 2,580

$ 1,671

TOTAL FOREIGN GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS

(Cost $355,377)

365,806

Supranational Obligations - 0.1%

European Investment Bank euro 0.875% 11/8/04
(Cost $2,121)

JPY

250,000

2,304

Common Stocks - 0.8%

Shares

CONSUMER DISCRETIONARY - 0.6%

Hotels, Restaurants & Leisure - 0.1%

Volume Services America Holdings, Inc. Income Deposit Security

165,925

2,245

Media - 0.5%

NTL, Inc. (a)

140,401

8,090

NTL, Inc. warrants 1/13/11 (a)

6

0

8,090

Multiline Retail - 0.0%

Barneys, Inc. warrants 4/1/08 (a)

1,160

41

TOTAL CONSUMER DISCRETIONARY

10,376

CONSUMER STAPLES - 0.2%

Personal Products - 0.2%

Revlon, Inc. Class A (a)

1,502,200

4,431

HEALTH CARE - 0.0%

Health Care Providers & Services - 0.0%

Fountain View, Inc. (i)

98

2

Common Stocks - continued

Shares

Value (Note 1) (000s)

TELECOMMUNICATION SERVICES - 0.0%

Wireless Telecommunication Services - 0.0%

DigitalGlobe, Inc. (a)(f)

895

$ 1

TOTAL COMMON STOCKS

(Cost $14,693)

14,810

Nonconvertible Preferred Stocks - 0.2%

CONSUMER DISCRETIONARY - 0.1%

Media - 0.1%

Spanish Broadcasting System, Inc. Class B, 10.75%

1,480

1,510

Specialty Retail - 0.0%

General Nutrition Centers Holding Co. 12.00% (f)

1,170

1,264

TOTAL CONSUMER DISCRETIONARY

2,774

FINANCIALS - 0.1%

Diversified Financial Services - 0.1%

Fresenius Medical Care Capital Trust II 7.875%

1,260

1,351

Insurance - 0.0%

American Annuity Group Capital Trust II 8.875%

240

240

TOTAL FINANCIALS

1,591

TELECOMMUNICATION SERVICES - 0.0%

Diversified Telecommunication Services - 0.0%

PTV, Inc. Series A, 10.00%

123

1

TOTAL NONCONVERTIBLE PREFERRED STOCKS

(Cost $4,182)

4,366

Floating Rate Loans - 0.8%

Principal Amount (000s) (j)

CONSUMER DISCRETIONARY - 0.1%

Hotels, Restaurants & Leisure - 0.1%

Hilton Head Communications LP Tranche B term loan 5.5% 3/31/08 (g)

$ 1,800

1,724

Floating Rate Loans - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

CONSUMER DISCRETIONARY - continued

Textiles Apparel & Luxury Goods - 0.0%

Levi Strauss & Co. Tranche B term loan 10% 9/29/09

$ 995

$ 1,052

TOTAL CONSUMER DISCRETIONARY

2,776

FINANCIALS - 0.3%

Consumer Finance - 0.2%

Metris Companies, Inc. term loan 10.61% 5/6/07 (g)

2,800

2,835

Diversified Financial Services - 0.1%

Olympus Cable Holdings LLC Tranche B term loan 6.25% 9/30/10 (g)

2,720

2,625

TOTAL FINANCIALS

5,460

TELECOMMUNICATION SERVICES - 0.2%

Diversified Telecommunication Services - 0.2%

Qwest Corp. Tranche A term loan 6.5% 6/30/07 (g)

2,700

2,808

UTILITIES - 0.2%

Electric Utilities - 0.2%

Astoria Energy LLC term loan:

6.8518% 4/15/12 (g)

1,820

1,838

10.3363% 4/15/12 (g)

1,560

1,603

3,441

TOTAL FLOATING RATE LOANS

(Cost $13,676)

14,485

Sovereign Loan Participations - 0.3%

Indonesian Republic loan participation:

- Barclays Bank 2.0625% 3/28/13 (g)

219

183

- Credit Suisse First Boston:

1.8125% 1/25/06 (g)

275

254

2.0625% 3/28/13 (g)

1,969

1,644

- Deutsche Bank:

0.965% 3/28/13 (g)

JPY

94,640

687

2.0625% 3/21/05 (g)

455

439

Sovereign Loan Participations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Indonesian Republic loan participation: - continued

2.0625% 3/28/13 (g)

$ 987

$ 824

- Salomon Brothers 2.0625% 3/21/05 (g)

450

434

TOTAL SOVEREIGN LOAN PARTICIPATIONS

(Cost $4,493)

4,465

Money Market Funds - 9.7%

Shares

Fidelity Cash Central Fund, 1.16% (b)
(Cost $176,848)

176,847,544

176,848

Cash Equivalents - 0.4%

Maturity Amount (000s)

Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 1.3%, dated 6/30/04 due 7/1/04)
(Cost $7,034)

$ 7,034

7,034

TOTAL INVESTMENT PORTFOLIO - 100.1%

(Cost $1,801,613)

1,821,024

NET OTHER ASSETS - (0.1)%

(2,639)

NET ASSETS - 100%

$ 1,818,385

Security Type Abbreviations

FLIRB

-

Front Loaded Interest Reduction Bonds

Currency Abbreviations

CAD

-

Canadian dollar

EUR

-

European Monetary Unit

FRF

-

French franc

GBP

-

British pound

JPY

-

Japanese yen

TRL

-

Turkish lira

UYU

-

Uraguay peso

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(c) Non-income producing - issuer filed for bankruptcy or is in default of interest payments.

(d) Debt obligation initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end.

(e) Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end.

(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $232,993,000 or 12.8% of net assets.

(g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end.

(h) Quantity represents share amount.

(i) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,000 or 0.0% of net assets.

Additional information on each holding is as follows:

Security

Acquisition
Date

Acquisition
Cost (000s)

Fountain View, Inc.

8/19/03 - 1/22/04

$ 0

(j) Principal amount is stated in United States dollars unless otherwise noted.

Other Information

Distribution of investments by country of issue, as a percentage of total net assets, is as follows:

United States of America

68.3%

Canada

3.3%

Germany

3.0%

United Kingdom

2.9%

Mexico

2.9%

Brazil

2.8%

Russia

2.3%

Greece

1.2%

Venezuela

1.1%

Netherlands

1.0%

Japan

1.0%

Others (individually less than 1%)

10.2%

100.0%

The fund invested in loans and loan participations, trade claims or other receivables. At period end the value of these investments amounted to $18,950,000 or 1.1% of net assets.

Purchases and sales of securities, other than short-term securities, aggregated $1,031,512,000 and $730,985,000, respectively, of which long-term U.S. government and government agency obligations aggregated $294,305,000 and $216,204,000, respectively.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $2,454,000 all of which will expire on December 31, 2010.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

Amounts in thousands (except per-share amounts)

June 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $7,034) (cost $1,801,613) - See accompanying schedule

$ 1,821,024

Cash

318

Receivable for investments sold

9,754

Receivable for fund shares sold

4,580

Dividends receivable

10

Interest receivable

27,070

Prepaid expenses

3

Total assets

1,862,759

Liabilities

Payable for investments purchased

$ 36,862

Payable for fund shares redeemed

4,384

Distributions payable

1,213

Accrued management fee

853

Distribution fees payable

645

Other affiliated payables

334

Other payables and accrued expenses

83

Total liabilities

44,374

Net Assets

$ 1,818,385

Net Assets consist of:

Paid in capital

$ 1,769,001

Undistributed net investment income

7,932

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

22,140

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

19,312

Net Assets

$ 1,818,385

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

Amounts in thousands (except per-share amounts)

June 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($260,062 ÷ 23,072 shares)

$ 11.27

Maximum offering price per share (100/95.25 of $11.27)

$ 11.83

Class T:
Net Asset Value and redemption price per share ($592,538 ÷ 52,582 shares)

$ 11.27

Maximum offering price per share (100/96.50 of $11.27)

$ 11.68

Class B:
Net Asset Value and offering price per share ($291,129 ÷ 25,779 shares) A

$ 11.29

Class C:
Net Asset Value and offering price per share ($329,361 ÷ 29,254 shares) A

$ 11.26

Institutional Class:
Net Asset Value, offering price and redemption price per share ($345,295 ÷ 30,417 shares)

$ 11.35

A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

Amounts in thousands

Six months ended June 30, 2004 (Unaudited)

Investment Income

Dividends

$ 449

Interest

52,655

Total income

53,104

Expenses

Management fee

$ 4,944

Transfer agent fees

1,630

Distribution fees

3,809

Accounting fees and expenses

329

Non-interested trustees' compensation

4

Custodian fees and expenses

78

Registration fees

216

Audit

27

Legal

2

Miscellaneous

8

Total expenses before reductions

11,047

Expense reductions

(4)

11,043

Net investment income (loss)

42,061

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities

25,489

Foreign currency transactions

325

Swap agreements

144

Total net realized gain (loss)

25,958

Change in net unrealized appreciation (depreciation) on:

Investment securities

(86,012)

Assets and liabilities in foreign currencies

(498)

Swap agreements

(33)

Total change in net unrealized appreciation (depreciation)

(86,543)

Net gain (loss)

(60,585)

Net increase (decrease) in net assets resulting from operations

$ (18,524)

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

Amounts in thousands

Six months ended
June 30, 2004
(Unaudited)

Year ended
December 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 42,061

$ 56,583

Net realized gain (loss)

25,958

37,411

Change in net unrealized appreciation (depreciation)

(86,543)

86,288

Net increase (decrease) in net assets resulting from operations

(18,524)

180,282

Distributions to shareholders from net investment income

(38,440)

(61,174)

Share transactions - net increase (decrease)

317,068

768,440

Total increase (decrease) in net assets

260,104

887,548

Net Assets

Beginning of period

1,558,281

670,733

End of period (including undistributed net investment income of $7,932 and undistributed net investment income of $4,311, respectively)

$ 1,818,385

$ 1,558,281

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class A

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.63

$ 10.34

$ 10.11

$ 10.12

$ 10.47

$ 10.56

Income from Investment Operations

Net investment income (loss) E

.296

.617

.668

.730 G

.793

.775

Net realized and unrealized gain (loss)

(.382)

1.321

.214

(.081) G

(.434)

(.152)

Total from investment operations

(.086)

1.938

.882

.649

.359

.623

Distributions from net investment income

(.274)

(.648)

(.652)

(.659)

(.709)

(.713)

Net asset value, end of period

$ 11.27

$ 11.63

$ 10.34

$ 10.11

$ 10.12

$ 10.47

Total Return B, C, D

(.76)%

19.20%

9.09%

6.53%

3.58%

6.12%

Ratios to Average Net Assets F

Expenses before expense reductions

1.01% A

1.01%

1.04%

1.07%

1.08%

1.08%

Expenses net of voluntary waivers, if any

1.01% A

1.01%

1.04%

1.07%

1.08%

1.08%

Expenses net of all reductions

1.01% A

1.00%

1.04%

1.07%

1.08%

1.07%

Net investment income (loss)

5.21% A

5.58%

6.65%

7.18% G

7.76%

7.44%

Supplemental Data

Net assets, end of period (in millions)

$ 260

$ 187

$ 57

$ 33

$ 18

$ 13

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class T

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.62

$ 10.33

$ 10.11

$ 10.11

$ 10.47

$ 10.55

Income from Investment Operations

Net investment income (loss) E

.292

.604

.660

.725 G

.788

.772

Net realized and unrealized gain (loss)

(.372)

1.322

.203

(.074) G

(.445)

(.147)

Total from investment operations

(.080)

1.926

.863

.651

.343

.625

Distributions from net investment income

(.270)

(.636)

(.643)

(.651)

(.703)

(.705)

Net asset value, end of period

$ 11.27

$ 11.62

$ 10.33

$ 10.11

$ 10.11

$ 10.47

Total Return B, C, D

(.71)%

19.09%

8.89%

6.55%

3.42%

6.15%

Ratios to Average Net Assets F

Expenses before expense reductions

1.09% A

1.11%

1.13%

1.15%

1.14%

1.13%

Expenses net of voluntary waivers, if any

1.09% A

1.11%

1.13%

1.15%

1.14%

1.13%

Expenses net of all reductions

1.09% A

1.11%

1.13%

1.15%

1.14%

1.13%

Net investment income (loss)

5.13% A

5.47%

6.57%

7.10% G

7.70%

7.38%

Supplemental Data

Net assets, end of period (in millions)

$ 593

$ 515

$ 279

$ 238

$ 207

$ 190

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class B

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.65

$ 10.35

$ 10.12

$ 10.13

$ 10.49

$ 10.57

Income from Investment Operations

Net investment income (loss) E

.254

.533

.595

.658 G

.722

.703

Net realized and unrealized gain (loss)

(.384)

1.330

.212

(.085) G

(.447)

(.146)

Total from investment operations

(.130)

1.863

.807

.573

.275

.557

Distributions from net investment income

(.230)

(.563)

(.577)

(.583)

(.635)

(.637)

Net asset value, end of period

$ 11.29

$ 11.65

$ 10.35

$ 10.12

$ 10.13

$ 10.49

Total Return B, C, D

(1.14)%

18.38%

8.28%

5.74%

2.73%

5.45%

Ratios to Average Net Assets F

Expenses before expense reductions

1.79% A

1.77%

1.78%

1.81%

1.80%

1.78%

Expenses net of voluntary waivers, if any

1.79% A

1.77%

1.78%

1.81%

1.80%

1.78%

Expenses net of all reductions

1.79% A

1.77%

1.78%

1.81%

1.80%

1.78%

Net investment income (loss)

4.43% A

4.81%

5.91%

6.44% G

7.04%

6.73%

Supplemental Data

Net assets, end of period (in millions)

$ 291

$ 287

$ 147

$ 116

$ 88

$ 86

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class C

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.61

$ 10.32

$ 10.10

$ 10.11

$ 10.46

$ 10.55

Income from Investment Operations

Net investment income (loss) E

.249

.525

.585

.647 G

.707

.687

Net realized and unrealized gain (loss)

(.372)

1.320

.204

(.082) G

(.432)

(.151)

Total from investment operations

(.123)

1.845

.789

.565

.275

.536

Distributions from net investment income

(.227)

(.555)

(.569)

(.575)

(.625)

(.626)

Net asset value, end of period

$ 11.26

$ 11.61

$ 10.32

$ 10.10

$ 10.11

$ 10.46

Total Return B, C, D

(1.08)%

18.24%

8.10%

5.67%

2.74%

5.25%

Ratios to Average Net Assets F

Expenses before expense reductions

1.84% A

1.84%

1.87%

1.89%

1.91%

1.91%

Expenses net of voluntary waivers, if any

1.84% A

1.84%

1.87%

1.89%

1.91%

1.91%

Expenses net of all reductions

1.84% A

1.84%

1.87%

1.89%

1.90%

1.90%

Net investment income (loss)

4.38% A

4.74%

5.83%

6.35% G

6.94%

6.61%

Supplemental Data

Net assets, end of period (in millions)

$ 329

$ 277

$ 68

$ 40

$ 26

$ 17

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Institutional Class

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.71

$ 10.40

$ 10.17

$ 10.18

$ 10.53

$ 10.61

Income from Investment Operations

Net investment income (loss) D

.309

.635

.685

.725 F

.816

.799

Net realized and unrealized gain (loss)

(.384)

1.338

.210

(.059) F

(.437)

(.150)

Total from investment operations

(.075)

1.973

.895

.666

.379

.649

Distributions from net investment income

(.285)

(.663)

(.665)

(.676)

(.729)

(.729)

Net asset value, end of period

$ 11.35

$ 11.71

$ 10.40

$ 10.17

$ 10.18

$ 10.53

Total Return B, C

(.66)%

19.44%

9.17%

6.67%

3.76%

6.35%

Ratios to Average Net Assets E

Expenses before expense reductions

.83% A

.87%

.92%

.94%

.90%

.93%

Expenses net of voluntary waivers, if any

.83% A

.87%

.92%

.94%

.90%

.93%

Expenses net of all reductions

.83% A

.87%

.92%

.94%

.90%

.93%

Net investment income (loss)

5.39% A

5.71%

6.78%

7.31% F

7.95%

7.58%

Supplemental Data

Net assets, end of period (in millions)

$ 345

$ 291

$ 120

$ 42

$ 4

$ 4

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2004 (Unaudited)

(Amounts in thousands except ratios)

1. Significant Accounting Policies.

Fidelity Advisor Strategic Income Fund (the fund) is a fund of Fidelity Advisor Series II (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.

The fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment 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 differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, 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. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Debt securities, including restricted securities, for which quotations are readily available are valued at their most recent bid prices (sales prices if the principal market is an exchange) in the principal market in which such securities are normally traded, as determined by recognized dealers in such securities, or securities are valued on the basis of information provided by a pricing service. Pricing services use valuation matrices that incorporate both dealer-supplied valuations and valuation models. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

1. Significant Accounting Policies - continued

Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured.

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.

Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Dividends are declared daily and paid monthly from net investment income. Distributions from realized gains, if any, are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital

Semiannual Report

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to foreign currency transactions, prior period premium and discount on debt securities, market discount, non-taxable dividends, capital loss carryforwards and losses deferred due to wash sales.

The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:

Unrealized appreciation

$ 62,981

Unrealized depreciation

(40,840)

Net unrealized appreciation (depreciation)

$ 22,141

Cost for federal income tax purposes

$ 1,798,883

2. Operating Policies.

Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).

Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the fund's Schedule of Investments.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

2. Operating Policies - continued

Loans and Other Direct Debt Instruments. The fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments that obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. Information regarding loans and other direct debt instruments is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

Swap Agreements. The fund may invest in swaps for the purpose of managing its exposure to interest rate, credit or market risk.

Interest rate swaps are agreements to exchange cash flows periodically based on a notional principal amount, for example, the exchange of fixed rate interest payments for floating rate interest payments. Periodic payments received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. The primary risk associated with interest rate swaps is that unfavorable changes in the fluctuation of interest rates could adversely impact the fund.

Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Gains or losses are realized upon early termination of the swap agreement. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with the fund's custodian in compliance with swap contracts.

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the fund's average net assets and a group fee rate that averaged .13% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .58% of the fund's average net assets.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:

Distribution
Fee

Service
Fee

Paid to
FDC

Retained
by FDC

Class A

0%

.15%

$ 171

$ 1

Class T

0%

.25%

700

68

Class B

.65%

.25%

1,343

972

Class C

.75%

.25%

1,595

972

$ 3,809

$ 2,013

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, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.

For the period, sales charge amounts retained by FDC were as follows:

Retained
by FDC

Class A

$ 268

Class T

90

Class B*

355

Class C*

79

$ 792

* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of share

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

holder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:

Amount

% of
Average
Net Assets

Class A

$ 232

.20*

Class T

506

.18*

Class B

340

.23*

Class C

280

.18*

Institutional Class

272

.18*

$ 1,630

* Annualized

Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The fee is based on the level of average net assets for the month.

Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $816 for the period.

5. Committed Line of Credit.

The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.

6. Expense Reductions.

Through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $4.

Semiannual Report

7. Credit Risk.

The fund's relatively large investment in countries with limited or developing capital markets may involve greater risks than investments in more developed markets and the prices of such investments may be volatile. The yields of emerging market debt obligations reflect, among other things, perceived credit risk. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of the fund's investments and the income they generate, as well as the fund's ability to repatriate such amounts.

8. Other Information.

At the end of the period, one otherwise unaffiliated shareholder was the owner of record of 19% of the total outstanding shares of the fund.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2004

Year ended
December 31,
2003

From net investment income

Class A

$ 5,426

$ 6,752

Class T

13,151

22,425

Class B

5,940

11,149

Class C

6,277

8,621

Institutional Class

7,646

12,227

Total

$ 38,440

$ 61,174

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

10. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
June 30,
2004

Year ended
December 31,
2003

Six months ended
June 30,
2004

Year ended
December 31,
2003

Class A

Shares sold

11,093

13,642

$ 127,946

$ 152,125

Reinvestment of distributions

373

467

4,265

5,244

Shares redeemed

(4,490)

(3,482)

(51,357)

(38,441)

Net increase (decrease)

6,976

10,627

$ 80,854

$ 118,928

Class T

Shares sold

20,029

30,354

$ 231,332

$ 337,303

Reinvestment of distributions

1,020

1,732

11,689

19,345

Shares redeemed

(12,761)

(14,809)

(147,004)

(164,042)

Net increase (decrease)

8,288

17,277

$ 96,017

$ 192,606

Class B

Shares sold

4,413

14,093

$ 51,227

$ 156,171

Reinvestment of distributions

359

681

4,139

7,636

Shares redeemed

(3,665)

(4,277)

(41,935)

(47,163)

Net increase (decrease)

1,107

10,497

$ 13,431

$ 116,644

Class C

Shares sold

9,197

20,173

$ 106,482

$ 224,162

Reinvestment of distributions

368

515

4,222

5,797

Shares redeemed

(4,194)

(3,387)

(47,725)

(37,640)

Net increase (decrease)

5,371

17,301

$ 62,979

$ 192,319

Institutional Class

Shares sold

8,585

18,048

$ 99,219

$ 201,125

Reinvestment of distributions

572

983

6,626

11,080

Shares redeemed

(3,629)

(5,722)

(42,058)

(64,262)

Net increase (decrease)

5,528

13,309

$ 63,787

$ 147,943

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research
(U.K.) Inc.

Fidelity Management & Research
(Far East) Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

Fidelity Investments Money Management, Inc.

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agent

Fidelity Investments Institutional Operations Company, Inc.

Boston, MA

Custodian

The Bank of New York

New York, NY

Semiannual Report

Fidelity Advisor Aggressive Growth Fund

Fidelity Advisor Asset Allocation Fund

Fidelity Advisor Balanced Fund

Fidelity Advisor Biotechnology Fund

Fidelity Advisor California Municipal Income Fund

Fidelity Advisor Consumer Industries Fund

Fidelity Advisor Cyclical Industries Fund

Fidelity Advisor Developing Communications Fund

Fidelity Advisor Diversified International Fund

Fidelity Advisor Dividend Growth Fund

Fidelity Advisor Dynamic Capital
Appreciation Fund

Fidelity Advisor Electronics Fund

Fidelity Advisor Emerging Asia Fund

Fidelity Advisor Emerging Markets Fund

Fidelity Advisor Emerging Markets Income Fund

Fidelity Advisor Equity Growth Fund

Fidelity Advisor Equity Income Fund

Fidelity Advisor Equity Value Fund

Fidelity Advisor Europe Capital
Appreciation Fund

Fidelity Advisor Fifty Fund

Fidelity Advisor Financial Services Fund

Fidelity Advisor Floating Rate High Income Fund

Fidelity Advisor Freedom Income, 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040 FundsSM

Fidelity Advisor Global Equity Fund

Fidelity Advisor Government Investment Fund

Fidelity Advisor Growth & Income Fund

Fidelity Advisor Growth Opportunities Fund

Fidelity Advisor Health Care Fund

Fidelity Advisor High Income Advantage Fund

Fidelity Advisor High Income Fund

Fidelity Advisor Inflation-Protected Bond Fund

Fidelity Advisor Intermediate Bond Fund

Fidelity Advisor International Capital Appreciation Fund

Fidelity Advisor International
Small Cap Fund

Fidelity Advisor Investment Grade Bond Fund

Fidelity Advisor Japan Fund

Fidelity Advisor Korea Fund

Fidelity Advisor Large Cap Fund

Fidelity Advisor Latin America Fund

Fidelity Advisor Leveraged Company Stock Fund

Fidelity Advisor Mid Cap Fund

Fidelity Advisor Mortgage Securities Fund

Fidelity Advisor Municipal Income Fund

Fidelity Advisor Natural Resources Fund

Fidelity Advisor New Insights Fund

Fidelity Advisor New York Municipal
Income Fund

Fidelity Advisor Overseas Fund

Fidelity Advisor Real Estate Fund

Fidelity Advisor Short Fixed-Income Fund

Fidelity Advisor Short Intermediate Municipal Income Fund

Fidelity Advisor Small Cap Fund

Fidelity Advisor Strategic Dividend &
Income Fund

Fidelity Advisor Strategic Growth Fund

Fidelity Advisor Strategic Income Fund

Fidelity Advisor Tax Managed Stock Fund

Fidelity Advisor Technology Fund

Fidelity Advisor Telecommunications &
Utilities Growth Fund

Fidelity Advisor Total Bond Fund

Fidelity Advisor Ultra-Short Bond Fund

Fidelity Advisor Value Fund

Fidelity Advisor Value Leaders Fund

Fidelity Advisor Value Strategies Fund

Prime Fund

Tax-Exempt Fund

Treasury Fund

SI-USAN-0804
1.787775.101

(Fidelity Investment logo)(registered trademark)

(Fidelity Investment logo)(registered trademark)

Fidelity ® Advisor

Strategic Income
Fund - Institutional Class

Semiannual Report

June 30, 2004

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

Ned Johnson's message to shareholders.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets,
as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

For a free copy of the fund's proxy voting guidelines call 1-877-208-0098 or visit the Securities and Exchange Commission (SEC)'s web site at www.sec.gov.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.

(Recycle graphic)   This report is printed on recycled paper using soy-based inks.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.

Neither the fund nor Fidelity Distributors Corporation is a bank.

For more information on any Fidelity Advisor fund, including charges and expenses, contact your investment professional for a free prospectus. Read it carefully before you invest or send money.

Annual Report

Chairman's Message

(photo_of_Edward_C_Johnson_3d)

Dear Shareholder:

Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.

With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:

First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.

Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.

Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.

For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.

Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.

Best regards,

/s/Edward C. Johnson 3d

Edward C. Johnson 3d

Semiannual Report

Investment Changes

Top Five Holdings as of June 30, 2004

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

U.S. Treasury Obligations

12.4

9.5

Fannie Mae

3.3

4.5

German Federal Republic

2.9

4.1

Brazilian Federative Republic

2.4

2.6

Freddie Mac

2.0

1.8

23.0

Top Five Market Sectors as of June 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Consumer Discretionary

10.4

11.9

Financials

9.4

8.4

Telecommunication Services

8.3

6.4

Energy

5.2

3.8

Materials

5.1

4.8

Quality Diversification (% of fund's net assets)

As of June 30, 2004

As of December 31, 2003

U.S.Government and U.S.Government
Agency
Obligations 19.2%

U.S.Government and U.S.Government
Agency
Obligations 17.8%

AAA,AA,A 10.7%

AAA,AA,A 13.5%

BBB 4.6%

BBB 4.3%

BB 11.3%

BB 11.5%

B 30.2%

B 27.4%

CCC,CC,C 10.2%

CCC,CC,C 10.6%

D 0.2%

D 0.2%

Not Rated 1.6%

Not Rated 1.7%

Equities 1.0%

Equities 1.4%

Short-Term
Investments and
Net Other Assets 11.0%

Short-Term
Investments and
Net Other Assets 11.6%



We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings.

Asset Allocation (% of fund's net assets)

As of June 30, 2004 *

As of December 31, 2003 **

Corporate Bonds 47.5%

Corporate Bonds 46.3%

U.S. Government and U.S. Government Agency Obligations 19.2%

U.S. Government and U.S. Government Agency Obligations 17.8%

Foreign Government & Government Agency Obligations 20.1%

Foreign Government & Government Agency Obligations 21.6%

Stocks 1.0%

Stocks 1.4%

Other Investments 1.2%

Other Investments 1.3%

Short-Term
Investments and
Net Other Assets 11.0%

Short-Term
Investments and
Net Other Assets 11.6%



* Foreign investments

31.7%

** Foreign investments

32.9%

* Swaps

0.0%

** Swaps

0.9%

Semiannual Report

Investments June 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Corporate Bonds - 47.5%

Principal Amount (000s) (j)

Value (Note 1) (000s)

Convertible Bonds - 0.1%

INFORMATION TECHNOLOGY - 0.1%

Semiconductors & Semiconductor Equipment - 0.1%

Atmel Corp. 0% 5/23/21

$ 4,190

$ 1,849

Nonconvertible Bonds - 47.4%

CONSUMER DISCRETIONARY - 9.6%

Auto Components - 0.5%

Dana Corp.:

9% 8/15/11

4,190

4,902

10.125% 3/15/10

1,855

2,101

EaglePicher, Inc. 9.75% 9/1/13

1,470

1,580

Stoneridge, Inc. 11.5% 5/1/12

35

41

Tenneco Automotive, Inc. 11.625% 10/15/09

265

285

United Components, Inc. 9.375% 6/15/13

360

366

9,275

Automobiles - 0.1%

Renault SA 0.3255% 4/23/07 (g)

JPY

200,000

1,838

Hotels, Restaurants & Leisure - 2.3%

Domino's, Inc. 8.25% 7/1/11

670

710

Florida Panthers Holdings, Inc. 9.875% 4/15/09

2,205

2,315

Gaylord Entertainment Co. 8% 11/15/13

920

934

Hilton Hotels Corp.:

7.625% 12/1/12

2,610

2,819

8.25% 2/15/11

1,315

1,466

ITT Corp. 7.375% 11/15/15

2,560

2,566

Mandalay Resort Group:

6.375% 12/15/11

1,220

1,238

6.5% 7/31/09

1,995

2,035

MGM MIRAGE 8.5% 9/15/10

435

470

Morton's Restaurant Group, Inc. 7.5% 7/1/10

1,215

1,130

Penn National Gaming, Inc. 8.875% 3/15/10

1,505

1,633

Royal Caribbean Cruises Ltd. 6.875% 12/1/13

2,060

2,034

Speedway Motorsports, Inc.:

6.75% 6/1/13

700

707

6.75% 6/1/13 (f)

1,940

1,959

Starwood Hotels & Resorts Worldwide, Inc.:

7.375% 5/1/07

1,480

1,554

7.875% 5/1/12

985

1,054

Station Casinos, Inc.:

6% 4/1/12

1,790

1,727

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

CONSUMER DISCRETIONARY - continued

Hotels, Restaurants & Leisure - continued

Station Casinos, Inc.: - continued

6.5% 2/1/14

$ 1,670

$ 1,599

Sun International Hotels Ltd./Sun International North America, Inc. 8.875% 8/15/11

3,735

3,987

Town Sports International Holdings, Inc. 0% 2/1/14 (d)(f)

5,260

2,367

Vail Resorts, Inc. 6.75% 2/15/14

2,080

1,963

Venetian Casino Resort LLC/Las Vegas Sands, Inc. 11% 6/15/10

295

341

VICORP Restaurants, Inc. 10.5% 4/15/11 (f)

1,630

1,654

Waterford Gaming LLC/Waterford Gaming Finance Corp. 8.625% 9/15/12 (f)

573

607

Wheeling Island Gaming, Inc. 10.125% 12/15/09

735

779

Wynn Las Vegas LLC/ Wynn Las Vegas Capital Corp. 12% 11/1/10

1,754

2,105

41,753

Household Durables - 0.5%

Beazer Homes USA, Inc. 8.625% 5/15/11

1,085

1,150

D.R. Horton, Inc.:

7.875% 8/15/11

1,000

1,093

8% 2/1/09

1,300

1,425

K. Hovnanian Enterprises, Inc. 7.75% 5/15/13

1,750

1,741

KB Home 8.625% 12/15/08

1,350

1,445

Standard Pacific Corp.:

7.75% 3/15/13

750

756

9.25% 4/15/12

315

342

Tempur-Pedic, Inc./Tempur Production USA, Inc. 10.25% 8/15/10

1,015

1,147

9,099

Internet & Catalog Retail - 0.1%

J. Crew Operating Corp. 10.375% 10/15/07

1,240

1,265

Leisure Equipment & Products - 0.1%

The Hockey Co. 11.25% 4/15/09

1,380

1,615

Media - 5.6%

AMC Entertainment, Inc.:

8% 3/1/14 (f)

1,930

1,834

9.5% 2/1/11

39

40

9.875% 2/1/12

1,740

1,827

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

CONSUMER DISCRETIONARY - continued

Media - continued

Cablevision Systems Corp. 8% 4/15/12 (f)

$ 14,265

$ 14,087

Charter Communications Operating LLC/Charter Communications Operating Capital Corp. 8% 4/30/12 (f)

2,110

2,036

Cinemark USA, Inc. 9% 2/1/13

500

546

Cinemark, Inc. 0% 3/15/14 (d)(f)

4,695

3,063

Corus Entertainment, Inc. 8.75% 3/1/12

1,970

2,105

CSC Holdings, Inc.:

6.75% 4/15/12 (f)

3,730

3,571

7.625% 4/1/11

2,580

2,619

7.625% 7/15/18

3,460

3,235

7.875% 2/15/18

710

675

Dex Media, Inc.:

0% 11/15/13 (d)(f)

720

461

0% 11/15/13 (d)(f)

30

19

8% 11/15/13 (f)

5,755

5,453

EchoStar DBS Corp.:

6.375% 10/1/11

3,705

3,640

9.125% 1/15/09

42

46

10.375% 10/1/07

25

27

Entravision Communications Corp. 8.125% 3/15/09

1,930

1,988

Granite Broadcasting Corp. 9.75% 12/1/10 (f)

1,695

1,568

Haights Cross Communications, Inc. 0% 8/15/11 (d)

1,550

853

Haights Cross Operating Co. 11.75% 8/15/11

1,790

1,933

Houghton Mifflin Co.:

0% 10/15/13 (d)

10,520

5,470

8.25% 2/1/11

1,905

1,915

9.875% 2/1/13

4,265

4,276

IMAX Corp. 9.625% 12/1/10 (f)

1,970

1,847

Innova S. de R.L. 9.375% 9/19/13

7,120

7,476

Lamar Media Corp. 7.25% 1/1/13

370

381

LBI Media, Inc. 10.125% 7/15/12

835

931

Livent, Inc. yankee 9.375% 10/15/04 (c)

300

51

PanAmSat Corp.:

6.375% 1/15/08

490

495

8.5% 2/1/12

2,130

2,407

PEI Holdings, Inc. 11% 3/15/10

1,551

1,799

Radio One, Inc. 8.875% 7/1/11

4,015

4,376

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

CONSUMER DISCRETIONARY - continued

Media - continued

Rogers Cable, Inc.:

6.25% 6/15/13

$ 1,160

$ 1,077

7.875% 5/1/12

1,710

1,768

Sun Media Corp. Canada 7.625% 2/15/13

635

649

Susquehanna Media Co. 7.375% 4/15/13

770

785

Telewest PLC:

11% 10/1/07 (c)

9,795

5,828

yankee 9.625% 10/1/06 (c)

1,720

980

The Reader's Digest Association, Inc. 6.5% 3/1/11

3,670

3,606

The Walt Disney Co. 0.7171% 10/19/04 (g)

JPY

100,000

919

TV Azteca SA de CV:

euro 10.5% 2/15/07 (Reg. S)

2,920

2,978

yankee 10.5% 2/15/07

255

260

Videotron LTEE 6.875% 1/15/14

550

528

Von Hoffman Holdings, Inc. 13.5% 5/15/09

160

142

102,570

Multiline Retail - 0.1%

Barneys, Inc. 9% 4/1/08

1,160

1,206

Specialty Retail - 0.3%

AutoNation, Inc. 9% 8/1/08

1,850

2,086

CSK Automotive, Inc. 7% 1/15/14

410

392

Hollywood Entertainment Corp. 9.625% 3/15/11

1,760

2,024

J. Crew Intermediate LLC 0% 5/15/08 (d)

1,375

1,183

5,685

TOTAL CONSUMER DISCRETIONARY

174,306

CONSUMER STAPLES - 1.0%

Food Products - 0.3%

Central Garden & Pet Co. 9.125% 2/1/13

260

282

Dean Foods Co.:

6.625% 5/15/09

90

92

6.9% 10/15/17

979

940

Doane Pet Care Co.:

9.75% 5/15/07

1,275

1,192

10.75% 3/1/10

800

852

Hines Nurseries, Inc. 10.25% 10/1/11

370

400

Michael Foods, Inc. 8% 11/15/13

420

434

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

CONSUMER STAPLES - continued

Food Products - continued

Philipp Brothers Chemicals, Inc. 9.875% 6/1/08

$ 890

$ 810

Pierre Foods, Inc. 9.875% 7/15/12 (f)

780

791

5,793

Household Products - 0.2%

JohnsonDiversey Holdings, Inc. 0% 5/15/13 (d)

4,800

3,696

Personal Products - 0.5%

Elizabeth Arden, Inc. 7.75% 1/15/14

470

475

Revlon Consumer Products Corp. 12% 12/1/05

7,620

8,496

8,971

TOTAL CONSUMER STAPLES

18,460

ENERGY - 5.2%

Energy Equipment & Services - 0.7%

CHC Helicopter Corp. 7.375% 5/1/14 (f)

1,900

1,853

Grant Prideco, Inc.:

9% 12/15/09

170

185

9.625% 12/1/07

460

506

Hanover Compressor Co.:

8.625% 12/15/10

490

508

9% 6/1/14

1,260

1,307

Petroliam Nasional BHD (Petronas) 7.625% 10/15/26 (Reg. S)

3,435

3,648

Seabulk International, Inc. 9.5% 8/15/13

3,290

3,372

SESI LLC 8.875% 5/15/11

60

65

11,444

Oil & Gas - 4.5%

Chesapeake Energy Corp.:

6.875% 1/15/16

2,879

2,793

7.75% 1/15/15

615

640

El Paso Corp.:

7% 5/15/11

3,360

2,940

7.875% 6/15/12

1,985

1,784

El Paso Energy Corp.:

6.95% 12/15/07

710

683

7.375% 12/15/12

2,990

2,598

7.75% 1/15/32

520

417

7.8% 8/1/31

1,630

1,308

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

ENERGY - continued

Oil & Gas - continued

El Paso Energy Corp.: - continued

8.05% 10/15/30

$ 165

$ 135

Encore Acquisition Co. 8.375% 6/15/12

755

800

Energy Partners Ltd. 8.75% 8/1/10

1,830

1,912

EXCO Resources, Inc. 7.25% 1/15/11

570

577

Forest Oil Corp. 8% 12/15/11

480

511

General Maritime Corp. 10% 3/15/13

2,945

3,262

GulfTerra Energy Partners LP/GulfTerra Energy Finance Corp.:

6.25% 6/1/10

1,480

1,480

10.625% 12/1/12

823

955

Houston Exploration Co. 7% 6/15/13

410

411

InterNorth, Inc. 9.625% 3/15/06 (c)

935

244

OAO Gazprom 9.625% 3/1/13

5,490

5,641

Pecom Energia SA:

8.125% 7/15/10 (Reg. S)

3,060

2,861

9% 1/30/07 (f)

330

337

9% 5/1/09 (Reg. S)

2,085

2,043

Petroleos Mexicanos 9.25% 3/30/18

4,595

5,158

Plains Exploration & Production Co. 7.125% 6/15/14 (f)

1,010

1,028

Plains Exploration & Production Co. LP Series B, 8.75% 7/1/12

1,825

1,962

Range Resources Corp. 7.375% 7/15/13

2,190

2,179

Teekay Shipping Corp. 8.875% 7/15/11

5,635

6,199

The Coastal Corp.:

6.375% 2/1/09

440

387

6.5% 5/15/06

175

172

6.5% 6/1/08

1,210

1,089

7.5% 8/15/06

2,895

2,866

7.75% 6/15/10

4,460

4,025

7.75% 10/15/35

235

184

Vintage Petroleum, Inc. 8.25% 5/1/12

1,000

1,094

Williams Companies, Inc.:

7.125% 9/1/11

2,300

2,335

7.625% 7/15/19

7,267

6,976

7.75% 6/15/31

1,625

1,487

7.875% 9/1/21

3,705

3,594

8.125% 3/15/12

1,025

1,092

8.625% 6/1/10

1,430

1,568

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

ENERGY - continued

Oil & Gas - continued

Williams Companies, Inc.: - continued

8.75% 3/15/32

$ 3,360

$ 3,360

YPF SA yankee 9.125% 2/24/09

1,075

1,166

82,253

TOTAL ENERGY

93,697

FINANCIALS - 9.0%

Capital Markets - 0.8%

Banco BPI SA 0.0975% 2/12/07 (g)

JPY

100,000

918

BCP Caylux Holdings Luxembourg SCA 9.625% 6/15/14 (f)

8,890

9,223

Lehman Brothers Treasury BV 0.3963% 10/22/04 (g)

JPY

200,000

1,839

Merrill Lynch & Co., Inc. 0.3675% 5/28/08 (g)

JPY

200,000

1,840

13,820

Commercial Banks - 0.5%

ASB Bank Ltd. 0.0463% 7/27/05 (g)

JPY

200,000

1,836

Banco Santander Central Hispano SA 0% 2/23/06 (g)

EUR

500

609

Banque Federative du Credit Mutuel (BFCM) 2.159% 7/24/06 (g)

EUR

1,500

1,827

Japan Development Bank 1.7% 9/20/22

JPY

170,000

1,396

NIB Capital Bank NV 0.0975% 2/17/09 (g)

JPY

250,000

2,294

Westpac Banking Corp. 2.1857% 1/27/06 (g)

CAD

1,500

1,125

9,087

Consumer Finance - 0.2%

Ford Credit Australia Ltd. 0% 1/5/07 (g)

EUR

500

618

General Motors Acceptance Corp. 0% 7/5/05 (g)

EUR

1,500

1,853

Metris Companies, Inc. 10.125% 7/15/06

330

325

SLM Corp. 1.01% 6/15/09

JPY

100,000

909

3,705

Diversified Financial Services - 6.8%

Ahold Finance USA, Inc.:

6.25% 5/1/09

1,350

1,320

8.25% 7/15/10

5,430

5,702

American Airlines, Inc. pass thru trust certificates:

7.377% 5/23/19

4,790

3,353

7.379% 5/23/16

980

686

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

FINANCIALS - continued

Diversified Financial Services - continued

American Airlines, Inc. pass thru trust certificates: - continued

7.8% 4/1/08

$ 810

$ 737

Arch Western Finance LLC 6.75% 7/1/13 (f)

2,580

2,580

BAT International Finance PLC 0% 4/3/06 (g)

EUR

1,500

1,844

Caixa Finance BV 2.141% 11/21/06 (g)

EUR

1,000

1,218

Canada Housing Trust No. 1 4.65% 9/15/09

CAD

2,000

1,507

CCO Holdings LLC/CCO Holdings Capital Corp. 8.75% 11/15/13 (f)

4,085

3,901

Charter Communications Holding II LLC/Charter Communications Holdings II Capital Corp. 10.25% 9/15/10 (f)

9,283

9,376

Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp.:

0% 1/15/10 (d)

995

798

0% 5/15/11 (d)

2,510

1,606

9.92% 4/1/11

1,780

1,406

10% 4/1/09

535

444

10.75% 10/1/09

1,670

1,407

Chukchansi Economic Development Authority 14.5% 6/15/09 (f)

490

608

Continental Airlines, Inc. pass thru trust certificates:

6.541% 9/15/09

113

93

6.748% 9/15/18

97

77

6.795% 2/2/20

350

280

6.8% 7/2/07

60

50

6.9% 7/2/18

764

596

8.312% 10/2/12

657

487

8.321% 11/1/06

425

383

8.388% 5/1/22

929

706

Delta Air Lines, Inc. pass thru trust certificates:

7.299% 9/18/06

130

79

7.57% 11/18/10

1,280

1,188

7.711% 9/18/11

675

425

7.779% 11/18/05

715

443

7.92% 5/18/12

3,890

2,547

10.06% 1/2/16

170

85

Deutsche Telekom International Finance BV 6.25% 12/9/10

GBP

250

458

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

FINANCIALS - continued

Diversified Financial Services - continued

El Paso Energy Partners LP/El Paso Energy Partners Finance Corp. 8.5% 6/1/11

$ 725

$ 779

Entercom Radio LLC/Entercom Capital, Inc. 7.625% 3/1/14

1,505

1,554

FIMEP SA 10.5% 2/15/13

2,885

3,285

Fresenius Medical Care Capital Trust IV 7.875% 6/15/11

1,000

1,055

Gerdau AmeriSteel Corp./GUSAP Partners 10.375% 7/15/11

1,335

1,479

Global Cash Access LLC/Global Cash Access Finance Corp. 8.75% 3/15/12 (f)

540

562

Huntsman Advanced Materials LLC:

10% 7/15/08 (f)(g)

940

975

11% 7/15/10 (f)

750

833

Hurricane Finance BV:

9.625% 2/12/10 (f)

1,325

1,381

9.625% 2/12/10 (Reg. S)

175

182

IOS Capital LLC 7.25% 6/30/08

58

60

Ispat Inland ULC 9.75% 4/1/14 (f)

1,415

1,457

Japan Finance Corp. for Municipal Enterprises 1.35% 11/26/13

JPY

125,000

1,107

Jostens Holding Corp. 0% 12/1/13 (d)

2,060

1,401

Kraton Polymers LLC/Kraton Polymers Capital Corp. 8.125% 1/15/14 (f)

310

313

Level 3 Financing, Inc. 10.75% 10/15/11 (f)

7,485

6,587

MEI Euro Finance Ltd. 8.75% 5/22/10 (f)

745

667

Mobile Telesystems Finance SA:

9.75% 1/30/08 (f)

4,855

5,025

9.75% 1/30/08 (Reg. S)

250

259

MSW Energy Holdings II LLC/MSW Finance Co. II, Inc. 7.375% 9/1/10 (f)

1,170

1,170

National Beef Packing Co. LLC/National Beef Finance Corp. 10.5% 8/1/11

3,430

3,584

Northwest Airlines, Inc. pass thru trust certificates:

6.81% 2/1/20

214

186

7.248% 7/2/14

314

223

7.575% 3/1/19

156

154

7.691% 4/1/17

36

27

7.95% 9/1/16

45

35

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

FINANCIALS - continued

Diversified Financial Services - continued

Northwest Airlines, Inc. pass thru trust certificates: - continued

8.07% 1/2/15

$ 1,384

$ 899

8.304% 9/1/10

248

194

PDVSA Finance Ltd. 9.75% 2/15/10

4,082

4,480

Pemex Project Funding Master Trust:

2.82% 6/15/10 (f)(g)

2,940

2,953

2.94% 10/15/09 (f)(g)

2,530

2,627

6.625% 4/4/10

EUR

500

641

Permanent Financing No. 1 PLC 5.1% 6/10/09 (g)

EUR

400

512

Petronas Capital Ltd. 7.875% 5/22/22 (Reg. S)

3,490

3,852

Punch Taverns Finance PLC 5.52% 10/15/26 (g)

GBP

150

275

R.H. Donnelley Finance Corp. I:

8.875% 12/15/10 (f)

350

385

10.875% 12/15/12 (f)

550

639

Sealed Air Finance euro 5.625% 7/19/06

EUR

250

315

Ship Finance International Ltd. 8.5% 12/15/13 (f)

5,015

4,839

TRW Automotive Acquisition Corp.:

9.375% 2/15/13

1,318

1,486

11% 2/15/13

2,593

3,053

Tyumen Oil Co. 11% 11/6/07

1,765

1,942

Universal City Development Partners Ltd./UCDP Finance, Inc. 11.75% 4/1/10

5,760

6,667

Volkswagen International Finance NV 0.1475% 2/9/06 (g)

JPY

200,000

1,835

WH Holdings Ltd./WH Capital Corp. 9.5% 4/1/11 (f)

540

562

Williams Companies, Inc. Credit Linked Certificate Trust 6.75% 4/15/09 (f)

2,425

2,401

Xerox Capital Trust I 8% 2/1/27

1,500

1,373

122,660

Real Estate - 0.7%

American Real Estate Partners/American Real Estate Finance Corp. 8.125% 6/1/12 (f)

2,450

2,499

BF Saul REIT 7.5% 3/1/14

3,400

3,332

Crescent Real Estate Equities LP/Crescent Finance Co. 9.25% 4/15/09

1,725

1,794

La Quinta Properties, Inc. 8.875% 3/15/11

1,860

2,000

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

FINANCIALS - continued

Real Estate - continued

Senior Housing Properties Trust:

7.875% 4/15/15

$ 1,540

$ 1,575

8.625% 1/15/12

1,510

1,638

12,838

Thrifts & Mortgage Finance - 0.0%

Granite Mortgages PLC 2.423% 1/20/43 (g)

EUR

400

489

TOTAL FINANCIALS

162,599

HEALTH CARE - 1.5%

Biotechnology - 0.1%

Polypore, Inc. 8.75% 5/15/12 (f)

1,300

1,355

Health Care Equipment & Supplies - 0.2%

Apogent Technologies, Inc. 6.5% 5/15/13

620

631

Bio-Rad Laboratories, Inc. 7.5% 8/15/13

1,770

1,859

Fisher Scientific International, Inc. 8.125% 5/1/12

845

902

3,392

Health Care Providers & Services - 1.1%

AmeriPath, Inc. 10.5% 4/1/13

2,805

2,840

AmerisourceBergen Corp.:

7.25% 11/15/12

515

525

8.125% 9/1/08

310

333

Beverly Enterprises, Inc. 7.875% 6/15/14 (f)

1,030

1,017

Concentra Operating Corp. 9.125% 6/1/12 (f)

390

408

Fountain View, Inc. 9.25% 8/19/08 (e)

718

718

Genesis HealthCare Corp. 8% 10/15/13 (f)

350

360

HCA, Inc. 6.75% 7/15/13

3,715

3,770

Mariner Health Care, Inc. 8.25% 12/15/13 (f)

870

879

National Nephrology Associates, Inc. 9% 11/1/11 (f)

490

561

PacifiCare Health Systems, Inc. 10.75% 6/1/09

908

1,035

Psychiatric Solutions, Inc. 10.625% 6/15/13

320

365

Service Corp. International (SCI) 6.75% 4/1/16 (f)

2,800

2,590

Tenet Healthcare Corp. 9.875% 7/1/14 (f)

3,740

3,721

Triad Hospitals, Inc. 7% 11/15/13

2,020

1,934

21,056

Pharmaceuticals - 0.1%

Leiner Health Products, Inc. 11% 6/1/12 (f)

570

587

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

HEALTH CARE - continued

Pharmaceuticals - continued

VWR International, Inc.:

6.875% 4/15/12 (f)

$ 630

$ 630

8% 4/15/14 (f)

630

647

1,864

TOTAL HEALTH CARE

27,667

INDUSTRIALS - 2.6%

Aerospace & Defense - 0.4%

Alliant Techsystems, Inc. 8.5% 5/15/11

2,020

2,172

BE Aerospace, Inc.:

8.5% 10/1/10

200

211

8.875% 5/1/11

2,415

2,252

Transdigm, Inc. 8.375% 7/15/11

560

574

Vought Aircraft Industries, Inc. 8% 7/15/11 (f)

1,035

983

6,192

Airlines - 0.3%

AMR Corp. 9% 8/1/12

620

487

Continental Airlines, Inc. 8% 12/15/05

2,690

2,394

Delta Air Lines, Inc.:

7.9% 12/15/09

170

85

8.3% 12/15/29

2,100

861

Northwest Airlines Corp. 10% 2/1/09

1,270

953

Northwest Airlines, Inc.:

7.875% 3/15/08

295

207

9.875% 3/15/07

125

98

10.5% 4/1/09

289

217

NWA Trust 10.23% 6/21/14

276

243

5,545

Building Products - 0.2%

Erico International Corp. 8.875% 3/1/12 (f)

240

241

Jacuzzi Brands, Inc. 9.625% 7/1/10

2,435

2,605

2,846

Commercial Services & Supplies - 0.6%

Allied Waste North America, Inc.:

6.375% 4/15/11 (f)

1,080

1,058

6.5% 11/15/10 (f)

1,830

1,807

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

INDUSTRIALS - continued

Commercial Services & Supplies - continued

Allied Waste North America, Inc.: - continued

9.25% 9/1/12

$ 540

$ 605

Browning-Ferris Industries, Inc.:

7.4% 9/15/35

1,640

1,402

9.25% 5/1/21

680

738

JohnsonDiversey, Inc. 9.625% 5/15/12

435

474

Mail-Well I Corp. 7.875% 12/1/13 (f)

230

208

Worldspan LP 9.625% 6/15/11

4,680

4,820

11,112

Construction & Engineering - 0.0%

Great Lakes Dredge & Dock Corp. 7.75% 12/15/13

540

462

Machinery - 0.2%

Cummins, Inc.:

7.125% 3/1/28

2,250

2,138

9.5% 12/1/10 (g)

320

363

Dunlop Standard Aerospace Holdings PLC yankee 11.875% 5/15/09

145

154

Navistar International Corp. 7.5% 6/15/11

650

666

3,321

Marine - 0.2%

Horizon Lines LLC 9% 11/1/12 (f)

770

784

OMI Corp. 7.625% 12/1/13

2,265

2,220

Transport Maritima Mexicana SA de CV yankee:

9.5% 8/15/04 (c)

360

364

10.25% 11/15/06 (c)

995

1,005

4,373

Road & Rail - 0.7%

Kansas City Southern Railway Co.:

7.5% 6/15/09

2,185

2,185

9.5% 10/1/08

95

102

TFM SA de CV yankee:

10.25% 6/15/07

865

865

11.75% 6/15/09

10,159

9,956

13,108

TOTAL INDUSTRIALS

46,959

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

INFORMATION TECHNOLOGY - 2.1%

Communications Equipment - 0.4%

Lucent Technologies, Inc.:

6.45% 3/15/29

$ 8,730

$ 6,678

6.5% 1/15/28

190

146

6,824

Electronic Equipment & Instruments - 0.3%

Celestica, Inc. 7.875% 7/1/11

5,130

5,207

IT Services - 0.2%

Iron Mountain, Inc.:

6.625% 1/1/16

3,120

2,824

8.25% 7/1/11

535

552

8.625% 4/1/13

45

48

3,424

Office Electronics - 0.7%

Xerox Corp.:

7.125% 6/15/10

3,720

3,813

7.625% 6/15/13

8,870

9,092

12,905

Semiconductors & Semiconductor Equipment - 0.5%

AMI Semiconductor, Inc. 10.75% 2/1/13

688

800

Amkor Technology, Inc.:

7.125% 3/15/11 (f)

2,240

2,089

7.75% 5/15/13

2,115

1,993

ON Semiconductor Corp./Semiconductor Components Industries LLC 12% 3/15/10

510

597

Semiconductor Note Partners Trust 0% 8/4/11 (f)

500

715

Viasystems, Inc. 10.5% 1/15/11 (f)

2,935

3,096

9,290

TOTAL INFORMATION TECHNOLOGY

37,650

MATERIALS - 5.1%

Chemicals - 1.9%

America Rock Salt Co. LLC 9.5% 3/15/14 (f)

2,955

3,029

Compass Minerals Group, Inc. 10% 8/15/11

1,120

1,243

Equistar Chemicals LP/Equistar Funding Corp. 10.625% 5/1/11

910

1,010

Georgia Gulf Corp. 7.125% 12/15/13 (f)

630

649

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

MATERIALS - continued

Chemicals - continued

Huntsman ICI Chemicals LLC 10.125% 7/1/09

$ 2,965

$ 3,009

Huntsman ICI Holdings LLC 0% 12/31/09

10,120

4,908

Huntsman International LLC 9.875% 3/1/09

480

514

Huntsman LLC:

8.8% 7/15/11 (f)(g)

630

636

11.5% 7/15/12 (f)

1,260

1,273

11.625% 10/15/10

2,495

2,751

Lyondell Chemical Co.:

9.5% 12/15/08

1,365

1,423

9.625% 5/1/07

265

276

9.875% 5/1/07

245

256

11.125% 7/15/12

1,950

2,140

Millennium America, Inc.:

9.25% 6/15/08

1,590

1,685

9.25% 6/15/08 (f)

925

981

Phibro Animal Health Corp. 13% 12/1/07 unit (f)

1,295

1,412

Pliant Corp. 0% 6/15/09 (d)

1,700

1,428

Resolution Performance Products LLC/RPP Capital Corp. 9.5% 4/15/10

2,470

2,544

Solutia, Inc.:

6.72% 10/15/37 (c)

170

97

7.375% 10/15/27 (c)

5,120

2,918

34,182

Containers & Packaging - 1.0%

BWAY Corp. 10% 10/15/10

1,175

1,246

Crown Cork & Seal, Inc.:

7.375% 12/15/26

1,800

1,494

8% 4/15/23

2,215

1,938

Crown European Holdings SA:

9.5% 3/1/11

2,330

2,546

10.875% 3/1/13

760

870

Jefferson Smurfit Corp. U.S. 8.25% 10/1/12

2,140

2,226

Owens-Brockway Glass Container, Inc.:

7.75% 5/15/11

620

642

8.25% 5/15/13

1,070

1,102

8.75% 11/15/12

4,155

4,487

8.875% 2/15/09

2,240

2,408

18,959

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

MATERIALS - continued

Metals & Mining - 1.6%

Compass Minerals International, Inc.:

0% 12/15/12 (d)

$ 1,330

$ 1,051

0% 6/1/13 (d)

2,260

1,740

CSN Islands VIII Corp. 9.75% 12/16/13 (f)

8,250

7,425

Freeport-McMoRan Copper & Gold, Inc. 10.125% 2/1/10

3,590

3,985

International Steel Group, Inc. 6.5% 4/15/14 (f)

4,720

4,413

Luscar Coal Ltd. 9.75% 10/15/11

1,350

1,505

Massey Energy Co. 6.625% 11/15/10

2,850

2,836

Oregon Steel Mills, Inc. 10% 7/15/09

1,345

1,419

Peabody Energy Corp. 6.875% 3/15/13

1,340

1,357

Steel Dynamics, Inc.:

9.5% 3/15/09

65

72

9.5% 3/15/09

2,090

2,309

28,112

Paper & Forest Products - 0.6%

Georgia-Pacific Corp.:

7.375% 12/1/25

1,000

934

8% 1/15/24 (f)

3,120

3,128

9.375% 2/1/13

2,540

2,902

Millar Western Forest Products Ltd. 7.75% 11/15/13

390

392

Norske Skog Canada Ltd. 8.625% 6/15/11

1,280

1,357

Solo Cup Co. 8.5% 2/15/14 (f)

770

716

Stone Container Corp.:

8.375% 7/1/12

540

564

9.75% 2/1/11

1,290

1,419

11,412

TOTAL MATERIALS

92,665

TELECOMMUNICATION SERVICES - 8.1%

Diversified Telecommunication Services - 5.0%

Alestra SA de RL de CV 8% 6/30/10

805

640

Empresa Brasil de Telecomm SA 11% 12/15/08 (f)

4,743

5,122

Eschelon Operating Co. 8.375% 3/15/10

1,330

1,091

MCI, Inc.:

6.688% 5/1/09

102

95

7.735% 5/1/14

1,140

1,022

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

TELECOMMUNICATION SERVICES - continued

Diversified Telecommunication Services - continued

Mobifon Holdings BV 12.5% 7/31/10

$ 7,225

$ 8,237

NTL Cable PLC 8.75% 4/15/14 (f)

8,640

8,878

Primus Telecommunications Group, Inc. 8% 1/15/14

3,145

2,705

Qwest Communications International, Inc.:

7.25% 2/15/11 (f)

4,210

3,915

7.5% 2/15/14 (f)

9,100

8,281

Qwest Corp. 9.125% 3/15/12 (f)

10,765

11,626

Qwest Services Corp. 14% 12/15/14 (f)

5,595

6,686

Telecom Italia Spa 0% 10/29/07 (g)

EUR

1,500

1,828

Telefonica de Argentina SA 9.125% 11/7/10

2,042

1,960

Telenet Group Holding NV 0% 6/15/14 (d)(f)

9,375

5,953

Telewest Communications PLC yankee:

0% 2/1/10 (c)(d)

1,690

727

9.25% 4/15/09 (c)

2,620

1,205

9.875% 2/1/10 (c)

575

322

11.25% 11/1/08 (c)

935

549

Triton PCS, Inc.:

8.75% 11/15/11

7,060

5,825

9.375% 2/1/11

1,035

885

U.S. West Communications:

6.875% 9/15/33

7,968

6,693

7.125% 11/15/43

220

184

7.2% 11/10/26

2,450

2,107

7.25% 9/15/25

1,115

959

7.25% 10/15/35

1,300

1,092

7.5% 6/15/23

1,880

1,654

8.875% 6/1/31

340

332

90,573

Wireless Telecommunication Services - 3.1%

American Cellular Corp. 10% 8/1/11

190

165

Centennial Cellular Operating Co./Centennial Communications Corp. 10.125% 6/15/13

3,650

3,760

Centennial Communications Corp./Centennial Cellular Operating Co. LLC/Centennial Puerto Rico Operations Corp. 8.125% 2/1/14 (f)

2,460

2,282

Crown Castle International Corp.:

Series B, 7.5% 12/1/13

1,670

1,653

7.5% 12/1/13

1,540

1,525

9.375% 8/1/11

3,800

4,180

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

TELECOMMUNICATION SERVICES - continued

Wireless Telecommunication Services - continued

Crown Castle International Corp.: - continued

10.75% 8/1/11

$ 2,255

$ 2,520

DirecTV Holdings LLC/DirecTV Financing, Inc. 8.375% 3/15/13

2,320

2,569

Globe Telecom, Inc. 9.75% 4/15/12

1,510

1,653

Millicom International Cellular SA 10% 12/1/13 (f)

3,765

3,803

Nextel Communications, Inc.:

5.95% 3/15/14

1,150

1,058

6.875% 10/31/13

790

778

7.375% 8/1/15

17,510

17,598

Rogers Wireless, Inc.:

6.375% 3/1/14

2,380

2,184

9.625% 5/1/11

1,940

2,163

Rural Cellular Corp.:

8.25% 3/15/12 (f)

1,360

1,394

9.75% 1/15/10

725

658

9.875% 2/1/10

215

214

Telemig Cellular SA/Amazonia Cellular SA 8.75% 1/20/09 (f)

2,080

1,914

Western Wireless Corp. 9.25% 7/15/13

5,230

5,361

57,432

TOTAL TELECOMMUNICATION SERVICES

148,005

UTILITIES - 3.2%

Electric Utilities - 0.4%

CMS Energy Corp.:

7.5% 1/15/09

760

759

8.5% 4/15/11

1,320

1,353

8.9% 7/15/08

1,130

1,188

Illinois Power Co.:

7.5% 6/15/09

60

66

11.5% 12/15/10

2,175

2,572

Nevada Power Co. 10.875% 10/15/09

80

91

Sierra Pacific Power Co.:

6.25% 4/15/12 (f)

640

600

8% 6/1/08

870

918

7,547

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

UTILITIES - continued

Gas Utilities - 1.8%

ANR Pipeline, Inc.:

7.375% 2/15/24

$ 1,980

$ 1,846

8.875% 3/15/10

430

468

9.625% 11/1/21

5,555

6,194

El Paso Energy Corp. 6.75% 5/15/09

1,945

1,768

Northwest Pipeline Corp.:

6.625% 12/1/07

285

295

8.125% 3/1/10

400

434

Sonat, Inc.:

6.75% 10/1/07

250

237

7.625% 7/15/11

1,910

1,695

Southern Natural Gas Co.:

7.35% 2/15/31

7,350

6,514

8% 3/1/32

4,170

3,894

8.875% 3/15/10

510

555

Tennessee Gas Pipeline Co.:

7% 10/15/28

550

479

7.5% 4/1/17

3,715

3,576

7.625% 4/1/37

1,035

937

8.375% 6/15/32

1,155

1,126

Transcontinental Gas Pipe Line Corp.:

6.125% 1/15/05

420

422

6.25% 1/15/08

1,115

1,132

7% 8/15/11

330

341

8.875% 7/15/12

1,455

1,657

33,570

Multi-Utilities & Unregulated Power - 1.0%

AES Corp.:

7.75% 3/1/14

1,780

1,709

8.75% 5/15/13 (f)

1,460

1,562

8.875% 2/15/11

1,139

1,183

9% 5/15/15 (f)

1,340

1,434

Calpine Corp. 8.75% 7/15/13 (f)

8,590

7,087

Enron Corp.:

6.4% 7/15/06 (c)

545

142

6.625% 11/15/05 (c)

2,200

575

6.725% 11/17/08 (c)

684

174

6.75% 8/1/09 (c)

550

144

Corporate Bonds - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

UTILITIES - continued

Multi-Utilities & Unregulated Power - continued

Enron Corp.: - continued

6.875% 10/15/07 (c)

$ 1,330

$ 348

6.95% 7/15/28 (c)

1,204

307

7.125% 5/15/07 (c)

235

61

7.375% 5/15/19 (c)

1,400

361

7.875% 6/15/49 (c)

235

61

8.375% 5/23/05 (c)

2,500

644

9.125% 4/1/49 (c)

50

13

9.875% 6/15/49 (c)

220

57

Sierra Pacific Resources 8.625% 3/15/14 (f)

2,000

1,945

17,807

TOTAL UTILITIES

58,924

TOTAL NONCONVERTIBLE BONDS

860,932

TOTAL CORPORATE BONDS

(Cost $849,126)

862,781

U.S. Government and Government Agency Obligations - 18.9%

U.S. Government Agency Obligations - 5.5%

Fannie Mae:

3.25% 1/15/08

6,150

6,044

3.25% 2/15/09

12,890

12,419

5.125% 1/2/14

8,000

7,785

6% 5/15/11

9,675

10,388

6.125% 3/15/12

900

970

6.25% 2/1/11

380

408

Federal Home Loan Bank:

2.25% 5/15/06

16,150

15,968

5.8% 9/2/08

2,920

3,119

Freddie Mac:

2.875% 12/15/06

5,525

5,471

3.625% 9/15/08

22,050

21,737

4.375% 2/4/10

3,440

3,400

4.5% 1/15/14

5,480

5,208

U.S. Government and Government Agency Obligations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

U.S. Government Agency Obligations - continued

Government Loan Trusts (assets of Trust guaranteed by U.S. Government through Agency for International Development) Series 1-B, 8.5% 4/1/06

$ 69

$ 73

Small Business Administration guaranteed development participation certificates Series 2003 P10B, 5.136% 8/10/13

1,969

1,959

State of Israel (guaranteed by U.S. Government through Agency for International Development) 5.5% 9/18/23

4,750

4,670

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

99,619

U.S. Treasury Inflation Protected Obligations - 4.9%

U.S. Treasury Inflation-Indexed Bonds 3.625% 4/15/28

17,410

21,241

U.S. Treasury Inflation-Indexed Notes:

1.875% 7/15/13

64,266

63,462

2% 1/15/14

5,087

5,057

TOTAL U.S. TREASURY INFLATION PROTECTED OBLIGATIONS

89,760

U.S. Treasury Obligations - 8.5%

U.S. Treasury Bills, yield at date of purchase 1.03% to 1.24% 8/26/04 to 9/23/04

19,000

18,962

U.S. Treasury Bonds:

6.125% 8/15/29

6,500

7,150

8% 11/15/21

8,000

10,486

9% 11/15/18

2,000

2,792

11.25% 2/15/15

2,900

4,474

U.S. Treasury Notes:

1.625% 2/28/06

35,100

34,586

2.5% 5/31/06

11,000

10,963

3.25% 1/15/09

31,600

30,993

4.25% 8/15/13

4,000

3,905

4.25% 11/15/13

17,000

16,546

4.75% 5/15/14

3,800

3,840

5.75% 8/15/10

8,500

9,268

TOTAL U.S. TREASURY OBLIGATIONS

153,965

TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS

(Cost $348,990)

343,344

U.S. Government Agency - Mortgage Securities - 1.2%

Principal Amount (000s) (j)

Value (Note 1) (000s)

Fannie Mae - 1.2%

4.5% 12/1/18

$ 9,393

$ 9,203

5% 3/1/18 to 7/1/18

5,521

5,540

5.5% 5/1/11 to 3/1/18

4,832

4,957

6% 8/1/13 to 1/1/26

202

211

6.5% 4/1/09 to 9/1/32

1,190

1,242

7% 9/1/25

19

20

7.5% 1/1/28 to 5/1/28

129

138

TOTAL FANNIE MAE

21,311

Freddie Mac - 0.0%

8.5% 3/1/20

36

40

Government National Mortgage Association - 0.0%

6% 1/15/09 to 5/15/09

177

186

6.5% 4/15/26 to 5/15/26

156

164

7% 9/15/25 to 5/15/32

381

405

7.5% 2/15/22 to 8/15/28

361

391

8% 9/15/26 to 12/15/26

62

68

TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION

1,214

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $22,796)

22,565

Collateralized Mortgage Obligations - 0.1%

Private Sponsor - 0.0%

Holmes Financing PLC floater Series 8 Class 3C, 2.804% 7/15/40 (g)

EUR

500

610

U.S. Government Agency - 0.1%

Fannie Mae guaranteed REMIC pass thru certificates:

planned amortization class Series 2001-53 Class OH, 6.5% 6/25/30

992

999

Series 2003-122 Class ZG, 5% 12/25/23

38

38

Freddie Mac planned amortization class Series 2351 Class PX, 6.5% 7/15/30

561

569

TOTAL U.S. GOVERNMENT AGENCY

1,606

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $2,277)

2,216

Foreign Government and Government Agency Obligations - 20.1%

Principal Amount (000s) (j)

Value (Note 1) (000s)

Argentine Republic:

Brady par L-GP 6% 3/31/23 (c)

$ 2,310

$ 1,172

1.2138% 8/3/12 (c)(g)

1,900

1,267

Banco Central del Uruguay:

Brady:

par A 6.75% 2/19/21

1,000

825

par B 6.75% 3/21/21

100

83

value recovery A rights 1/2/21 (h)

1,000,000

0

value recovery B rights 1/2/21 (h)

750,000

0

Bogota Distrito Capital:

9.5% 12/12/06 (f)

540

583

9.5% 12/12/06 (Reg. S)

2,778

3,000

Brazilian Federative Republic:

Brady:

capitalization bond 8% 4/15/14

28,287

26,042

new money bond L 7.6875% 4/15/09 (Reg.) (g)

318

287

new money bond L, 2.11% 4/15/09 (Bearer) (g)

953

860

par Z-L 6% 4/15/24

1,760

1,373

11% 8/17/40

6,185

5,829

11.25% 7/26/07

1,855

1,999

11.5% 3/12/08

1,895

2,025

12% 4/15/10

825

877

12.25% 3/6/30

2,435

2,532

12.75% 1/15/20

1,820

1,947

Bulgarian Republic Brady discount A 1.9825% 7/28/24 (g)

1,785

1,785

Canadian Government:

3% 6/1/06

CAD

22,250

16,600

5.25% 6/1/12

CAD

8,100

6,255

5.5% 6/1/09

CAD

2,000

1,578

5.75% 6/1/29

CAD

11,000

8,692

Central Bank of Nigeria:

Brady 6.25% 11/15/20

1,500

1,275

promissory note 5.092% 1/5/10

1,723

1,573

warrants 11/15/20 (a)(h)

3,250

1

City of Kiev 8.75% 8/8/08

3,240

3,337

Colombian Republic:

9.75% 4/23/09

1,020

1,091

10.75% 1/15/13

2,750

2,939

11.75% 2/25/20

2,310

2,527

Dominican Republic:

Brady 2% 8/30/09 (g)

3,937

2,618

2.4381% 8/30/24 (g)

680

490

Foreign Government and Government Agency Obligations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Dominican Republic: - continued

9.5% 9/27/06 (Reg. S)

$ 440

$ 308

Ecuador Republic:

12% 11/15/12 (Reg. S)

5,971

5,269

euro par 4.75% 2/28/25 (e)

425

242

French Government 3.75% 1/12/07

EUR

1,600

1,989

German Federal Republic:

3.75% 7/4/13

EUR

250

294

4.25% 1/4/14

EUR

17,000

20,682

5% 1/4/12

EUR

11,600

14,992

5% 7/4/12

EUR

560

723

5.25% 1/4/11

EUR

13,250

17,393

Greek Government 3.5% 4/20/09

EUR

18,000

21,764

Italian Republic:

3.75% 6/8/05

JPY

200,000

1,900

5.25% 11/1/29

EUR

2,000

2,506

5.75% 2/1/33

EUR

8,150

10,947

Ivory Coast Brady FLIRB A 2% 3/29/18 (c)(e)

FRF

10,395

285

Japan Government:

0.8% 3/20/13

JPY

150,000

1,284

1.5% 3/20/14

JPY

1,450,000

13,014

Lebanese Republic 10.125% 8/6/08

1,220

1,345

Panamanian Republic:

9.625% 2/8/11

605

669

10.75% 5/15/20

1,475

1,659

Peruvian Republic:

3% 3/7/27 (e)

900

495

9.125% 2/21/12

3,030

3,106

Philippine Republic:

Brady principal collateralized interest reduction bond 6.5% 12/1/17

3,170

3,043

8.375% 2/15/11

4,385

4,347

9.875% 1/15/19

3,205

3,189

Russian Federation:

5% 3/31/30 (e)(f)

3,900

3,564

5% 3/31/30 (Reg. S) (e)

23,725

21,679

8.25% 3/31/10 (Reg. S)

3,220

3,462

South African Republic:

8.5% 6/23/17

1,360

1,557

9.125% 5/19/09

1,700

1,974

Foreign Government and Government Agency Obligations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Turkish Republic:

0% 8/24/05

TRL

4,221,290,000

$ 2,130

10.5% 1/13/08

$ 3,000

3,233

11% 1/14/13

1,740

1,905

11.75% 6/15/10

4,330

4,860

12.375% 6/15/09

1,435

1,639

25% 11/16/05

TRL

3,040,209,000

1,964

Ukraine Cabinet of Ministers 7.65% 6/11/13 (f)

1,410

1,343

Ukraine Government:

6.875% 3/4/11 (f)

275

260

7.65% 6/11/13 (Reg. S)

395

376

11% 3/15/07 (Reg. S)

767

831

United Kingdom, Great Britain & Northern Ireland:

4.5% 3/7/07

GBP

5,000

8,986

4.75% 9/7/15

GBP

800

1,413

6% 12/7/28

GBP

2,950

6,220

6.25% 11/25/10

GBP

5,970

11,549

8% 6/7/21

GBP

900

2,190

8.75% 8/25/17

GBP

1,500

3,683

United Mexican States:

7.5% 4/8/33

7,675

7,464

8.125% 12/30/19

6,075

6,525

8.375% 1/14/11

1,725

1,953

11.5% 5/15/26

5,760

8,084

Uruguay Republic:

7.25% 2/15/11

2,645

2,176

10.5% 10/20/06

UYU

58,000

2,140

Venezuelan Republic:

Discount A, 2.1325% 3/31/20 (g)

1,250

1,044

oil recovery rights 4/15/20 (h)

3,260

0

9.25% 9/15/27

1,355

1,145

10.75% 9/19/13

6,215

6,168

11% 3/5/08

EUR

1,095

1,406

13.625% 8/15/18

895

989

euro Brady:

par W-A 6.75% 3/31/20

4,250

3,783

par W-B 6.75% 3/31/20

3,970

3,533

Foreign Government and Government Agency Obligations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Vietnamese Socialist Republic Brady par 3.75% 3/12/28 (e)

$ 2,580

$ 1,671

TOTAL FOREIGN GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS

(Cost $355,377)

365,806

Supranational Obligations - 0.1%

European Investment Bank euro 0.875% 11/8/04
(Cost $2,121)

JPY

250,000

2,304

Common Stocks - 0.8%

Shares

CONSUMER DISCRETIONARY - 0.6%

Hotels, Restaurants & Leisure - 0.1%

Volume Services America Holdings, Inc. Income Deposit Security

165,925

2,245

Media - 0.5%

NTL, Inc. (a)

140,401

8,090

NTL, Inc. warrants 1/13/11 (a)

6

0

8,090

Multiline Retail - 0.0%

Barneys, Inc. warrants 4/1/08 (a)

1,160

41

TOTAL CONSUMER DISCRETIONARY

10,376

CONSUMER STAPLES - 0.2%

Personal Products - 0.2%

Revlon, Inc. Class A (a)

1,502,200

4,431

HEALTH CARE - 0.0%

Health Care Providers & Services - 0.0%

Fountain View, Inc. (i)

98

2

Common Stocks - continued

Shares

Value (Note 1) (000s)

TELECOMMUNICATION SERVICES - 0.0%

Wireless Telecommunication Services - 0.0%

DigitalGlobe, Inc. (a)(f)

895

$ 1

TOTAL COMMON STOCKS

(Cost $14,693)

14,810

Nonconvertible Preferred Stocks - 0.2%

CONSUMER DISCRETIONARY - 0.1%

Media - 0.1%

Spanish Broadcasting System, Inc. Class B, 10.75%

1,480

1,510

Specialty Retail - 0.0%

General Nutrition Centers Holding Co. 12.00% (f)

1,170

1,264

TOTAL CONSUMER DISCRETIONARY

2,774

FINANCIALS - 0.1%

Diversified Financial Services - 0.1%

Fresenius Medical Care Capital Trust II 7.875%

1,260

1,351

Insurance - 0.0%

American Annuity Group Capital Trust II 8.875%

240

240

TOTAL FINANCIALS

1,591

TELECOMMUNICATION SERVICES - 0.0%

Diversified Telecommunication Services - 0.0%

PTV, Inc. Series A, 10.00%

123

1

TOTAL NONCONVERTIBLE PREFERRED STOCKS

(Cost $4,182)

4,366

Floating Rate Loans - 0.8%

Principal Amount (000s) (j)

CONSUMER DISCRETIONARY - 0.1%

Hotels, Restaurants & Leisure - 0.1%

Hilton Head Communications LP Tranche B term loan 5.5% 3/31/08 (g)

$ 1,800

1,724

Floating Rate Loans - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

CONSUMER DISCRETIONARY - continued

Textiles Apparel & Luxury Goods - 0.0%

Levi Strauss & Co. Tranche B term loan 10% 9/29/09

$ 995

$ 1,052

TOTAL CONSUMER DISCRETIONARY

2,776

FINANCIALS - 0.3%

Consumer Finance - 0.2%

Metris Companies, Inc. term loan 10.61% 5/6/07 (g)

2,800

2,835

Diversified Financial Services - 0.1%

Olympus Cable Holdings LLC Tranche B term loan 6.25% 9/30/10 (g)

2,720

2,625

TOTAL FINANCIALS

5,460

TELECOMMUNICATION SERVICES - 0.2%

Diversified Telecommunication Services - 0.2%

Qwest Corp. Tranche A term loan 6.5% 6/30/07 (g)

2,700

2,808

UTILITIES - 0.2%

Electric Utilities - 0.2%

Astoria Energy LLC term loan:

6.8518% 4/15/12 (g)

1,820

1,838

10.3363% 4/15/12 (g)

1,560

1,603

3,441

TOTAL FLOATING RATE LOANS

(Cost $13,676)

14,485

Sovereign Loan Participations - 0.3%

Indonesian Republic loan participation:

- Barclays Bank 2.0625% 3/28/13 (g)

219

183

- Credit Suisse First Boston:

1.8125% 1/25/06 (g)

275

254

2.0625% 3/28/13 (g)

1,969

1,644

- Deutsche Bank:

0.965% 3/28/13 (g)

JPY

94,640

687

2.0625% 3/21/05 (g)

455

439

Sovereign Loan Participations - continued

Principal Amount (000s) (j)

Value (Note 1) (000s)

Indonesian Republic loan participation: - continued

2.0625% 3/28/13 (g)

$ 987

$ 824

- Salomon Brothers 2.0625% 3/21/05 (g)

450

434

TOTAL SOVEREIGN LOAN PARTICIPATIONS

(Cost $4,493)

4,465

Money Market Funds - 9.7%

Shares

Fidelity Cash Central Fund, 1.16% (b)
(Cost $176,848)

176,847,544

176,848

Cash Equivalents - 0.4%

Maturity Amount (000s)

Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 1.3%, dated 6/30/04 due 7/1/04)
(Cost $7,034)

$ 7,034

7,034

TOTAL INVESTMENT PORTFOLIO - 100.1%

(Cost $1,801,613)

1,821,024

NET OTHER ASSETS - (0.1)%

(2,639)

NET ASSETS - 100%

$ 1,818,385

Security Type Abbreviations

FLIRB

-

Front Loaded Interest Reduction Bonds

Currency Abbreviations

CAD

-

Canadian dollar

EUR

-

European Monetary Unit

FRF

-

French franc

GBP

-

British pound

JPY

-

Japanese yen

TRL

-

Turkish lira

UYU

-

Uraguay peso

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(c) Non-income producing - issuer filed for bankruptcy or is in default of interest payments.

(d) Debt obligation initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end.

(e) Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end.

(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $232,993,000 or 12.8% of net assets.

(g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end.

(h) Quantity represents share amount.

(i) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,000 or 0.0% of net assets.

Additional information on each holding is as follows:

Security

Acquisition
Date

Acquisition
Cost (000s)

Fountain View, Inc.

8/19/03 - 1/22/04

$ 0

(j) Principal amount is stated in United States dollars unless otherwise noted.

Other Information

Distribution of investments by country of issue, as a percentage of total net assets, is as follows:

United States of America

68.3%

Canada

3.3%

Germany

3.0%

United Kingdom

2.9%

Mexico

2.9%

Brazil

2.8%

Russia

2.3%

Greece

1.2%

Venezuela

1.1%

Netherlands

1.0%

Japan

1.0%

Others (individually less than 1%)

10.2%

100.0%

The fund invested in loans and loan participations, trade claims or other receivables. At period end the value of these investments amounted to $18,950,000 or 1.1% of net assets.

Purchases and sales of securities, other than short-term securities, aggregated $1,031,512,000 and $730,985,000, respectively, of which long-term U.S. government and government agency obligations aggregated $294,305,000 and $216,204,000, respectively.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $2,454,000 all of which will expire on December 31, 2010.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

Amounts in thousands (except per-share amounts)

June 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $7,034) (cost $1,801,613) - See accompanying schedule

$ 1,821,024

Cash

318

Receivable for investments sold

9,754

Receivable for fund shares sold

4,580

Dividends receivable

10

Interest receivable

27,070

Prepaid expenses

3

Total assets

1,862,759

Liabilities

Payable for investments purchased

$ 36,862

Payable for fund shares redeemed

4,384

Distributions payable

1,213

Accrued management fee

853

Distribution fees payable

645

Other affiliated payables

334

Other payables and accrued expenses

83

Total liabilities

44,374

Net Assets

$ 1,818,385

Net Assets consist of:

Paid in capital

$ 1,769,001

Undistributed net investment income

7,932

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

22,140

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

19,312

Net Assets

$ 1,818,385

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

Amounts in thousands (except per-share amounts)

June 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($260,062 ÷ 23,072 shares)

$ 11.27

Maximum offering price per share (100/95.25 of $11.27)

$ 11.83

Class T:
Net Asset Value and redemption price per share ($592,538 ÷ 52,582 shares)

$ 11.27

Maximum offering price per share (100/96.50 of $11.27)

$ 11.68

Class B:
Net Asset Value and offering price per share ($291,129 ÷ 25,779 shares) A

$ 11.29

Class C:
Net Asset Value and offering price per share ($329,361 ÷ 29,254 shares) A

$ 11.26

Institutional Class:
Net Asset Value, offering price and redemption price per share ($345,295 ÷ 30,417 shares)

$ 11.35

A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

Amounts in thousands

Six months ended June 30, 2004 (Unaudited)

Investment Income

Dividends

$ 449

Interest

52,655

Total income

53,104

Expenses

Management fee

$ 4,944

Transfer agent fees

1,630

Distribution fees

3,809

Accounting fees and expenses

329

Non-interested trustees' compensation

4

Custodian fees and expenses

78

Registration fees

216

Audit

27

Legal

2

Miscellaneous

8

Total expenses before reductions

11,047

Expense reductions

(4)

11,043

Net investment income (loss)

42,061

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities

25,489

Foreign currency transactions

325

Swap agreements

144

Total net realized gain (loss)

25,958

Change in net unrealized appreciation (depreciation) on:

Investment securities

(86,012)

Assets and liabilities in foreign currencies

(498)

Swap agreements

(33)

Total change in net unrealized appreciation (depreciation)

(86,543)

Net gain (loss)

(60,585)

Net increase (decrease) in net assets resulting from operations

$ (18,524)

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

Amounts in thousands

Six months ended
June 30, 2004
(Unaudited)

Year ended
December 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 42,061

$ 56,583

Net realized gain (loss)

25,958

37,411

Change in net unrealized appreciation (depreciation)

(86,543)

86,288

Net increase (decrease) in net assets resulting from operations

(18,524)

180,282

Distributions to shareholders from net investment income

(38,440)

(61,174)

Share transactions - net increase (decrease)

317,068

768,440

Total increase (decrease) in net assets

260,104

887,548

Net Assets

Beginning of period

1,558,281

670,733

End of period (including undistributed net investment income of $7,932 and undistributed net investment income of $4,311, respectively)

$ 1,818,385

$ 1,558,281

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class A

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.63

$ 10.34

$ 10.11

$ 10.12

$ 10.47

$ 10.56

Income from Investment Operations

Net investment income (loss) E

.296

.617

.668

.730 G

.793

.775

Net realized and unrealized gain (loss)

(.382)

1.321

.214

(.081) G

(.434)

(.152)

Total from investment operations

(.086)

1.938

.882

.649

.359

.623

Distributions from net investment income

(.274)

(.648)

(.652)

(.659)

(.709)

(.713)

Net asset value, end of period

$ 11.27

$ 11.63

$ 10.34

$ 10.11

$ 10.12

$ 10.47

Total Return B, C, D

(.76)%

19.20%

9.09%

6.53%

3.58%

6.12%

Ratios to Average Net Assets F

Expenses before expense reductions

1.01% A

1.01%

1.04%

1.07%

1.08%

1.08%

Expenses net of voluntary waivers, if any

1.01% A

1.01%

1.04%

1.07%

1.08%

1.08%

Expenses net of all reductions

1.01% A

1.00%

1.04%

1.07%

1.08%

1.07%

Net investment income (loss)

5.21% A

5.58%

6.65%

7.18% G

7.76%

7.44%

Supplemental Data

Net assets, end of period (in millions)

$ 260

$ 187

$ 57

$ 33

$ 18

$ 13

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class T

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.62

$ 10.33

$ 10.11

$ 10.11

$ 10.47

$ 10.55

Income from Investment Operations

Net investment income (loss) E

.292

.604

.660

.725 G

.788

.772

Net realized and unrealized gain (loss)

(.372)

1.322

.203

(.074) G

(.445)

(.147)

Total from investment operations

(.080)

1.926

.863

.651

.343

.625

Distributions from net investment income

(.270)

(.636)

(.643)

(.651)

(.703)

(.705)

Net asset value, end of period

$ 11.27

$ 11.62

$ 10.33

$ 10.11

$ 10.11

$ 10.47

Total Return B, C, D

(.71)%

19.09%

8.89%

6.55%

3.42%

6.15%

Ratios to Average Net Assets F

Expenses before expense reductions

1.09% A

1.11%

1.13%

1.15%

1.14%

1.13%

Expenses net of voluntary waivers, if any

1.09% A

1.11%

1.13%

1.15%

1.14%

1.13%

Expenses net of all reductions

1.09% A

1.11%

1.13%

1.15%

1.14%

1.13%

Net investment income (loss)

5.13% A

5.47%

6.57%

7.10% G

7.70%

7.38%

Supplemental Data

Net assets, end of period (in millions)

$ 593

$ 515

$ 279

$ 238

$ 207

$ 190

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the sales charges. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class B

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.65

$ 10.35

$ 10.12

$ 10.13

$ 10.49

$ 10.57

Income from Investment Operations

Net investment income (loss) E

.254

.533

.595

.658 G

.722

.703

Net realized and unrealized gain (loss)

(.384)

1.330

.212

(.085) G

(.447)

(.146)

Total from investment operations

(.130)

1.863

.807

.573

.275

.557

Distributions from net investment income

(.230)

(.563)

(.577)

(.583)

(.635)

(.637)

Net asset value, end of period

$ 11.29

$ 11.65

$ 10.35

$ 10.12

$ 10.13

$ 10.49

Total Return B, C, D

(1.14)%

18.38%

8.28%

5.74%

2.73%

5.45%

Ratios to Average Net Assets F

Expenses before expense reductions

1.79% A

1.77%

1.78%

1.81%

1.80%

1.78%

Expenses net of voluntary waivers, if any

1.79% A

1.77%

1.78%

1.81%

1.80%

1.78%

Expenses net of all reductions

1.79% A

1.77%

1.78%

1.81%

1.80%

1.78%

Net investment income (loss)

4.43% A

4.81%

5.91%

6.44% G

7.04%

6.73%

Supplemental Data

Net assets, end of period (in millions)

$ 291

$ 287

$ 147

$ 116

$ 88

$ 86

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class C

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.61

$ 10.32

$ 10.10

$ 10.11

$ 10.46

$ 10.55

Income from Investment Operations

Net investment income (loss) E

.249

.525

.585

.647 G

.707

.687

Net realized and unrealized gain (loss)

(.372)

1.320

.204

(.082) G

(.432)

(.151)

Total from investment operations

(.123)

1.845

.789

.565

.275

.536

Distributions from net investment income

(.227)

(.555)

(.569)

(.575)

(.625)

(.626)

Net asset value, end of period

$ 11.26

$ 11.61

$ 10.32

$ 10.10

$ 10.11

$ 10.46

Total Return B, C, D

(1.08)%

18.24%

8.10%

5.67%

2.74%

5.25%

Ratios to Average Net Assets F

Expenses before expense reductions

1.84% A

1.84%

1.87%

1.89%

1.91%

1.91%

Expenses net of voluntary waivers, if any

1.84% A

1.84%

1.87%

1.89%

1.91%

1.91%

Expenses net of all reductions

1.84% A

1.84%

1.87%

1.89%

1.90%

1.90%

Net investment income (loss)

4.38% A

4.74%

5.83%

6.35% G

6.94%

6.61%

Supplemental Data

Net assets, end of period (in millions)

$ 329

$ 277

$ 68

$ 40

$ 26

$ 17

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Total returns do not include the effect of the contingent deferred sales charge. E Calculated based on average shares outstanding during the period. F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. G Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Institutional Class

Six months ended
June 30, 2004

Years ended December 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.71

$ 10.40

$ 10.17

$ 10.18

$ 10.53

$ 10.61

Income from Investment Operations

Net investment income (loss) D

.309

.635

.685

.725 F

.816

.799

Net realized and unrealized gain (loss)

(.384)

1.338

.210

(.059) F

(.437)

(.150)

Total from investment operations

(.075)

1.973

.895

.666

.379

.649

Distributions from net investment income

(.285)

(.663)

(.665)

(.676)

(.729)

(.729)

Net asset value, end of period

$ 11.35

$ 11.71

$ 10.40

$ 10.17

$ 10.18

$ 10.53

Total Return B, C

(.66)%

19.44%

9.17%

6.67%

3.76%

6.35%

Ratios to Average Net Assets E

Expenses before expense reductions

.83% A

.87%

.92%

.94%

.90%

.93%

Expenses net of voluntary waivers, if any

.83% A

.87%

.92%

.94%

.90%

.93%

Expenses net of all reductions

.83% A

.87%

.92%

.94%

.90%

.93%

Net investment income (loss)

5.39% A

5.71%

6.78%

7.31% F

7.95%

7.58%

Supplemental Data

Net assets, end of period (in millions)

$ 345

$ 291

$ 120

$ 42

$ 4

$ 4

Portfolio turnover rate

96% A

153%

111%

120%

99%

146%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. F Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2004 (Unaudited)

(Amounts in thousands except ratios)

1. Significant Accounting Policies.

Fidelity Advisor Strategic Income Fund (the fund) is a fund of Fidelity Advisor Series II (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.

The fund offers Class A, Class T, Class B, Class C, and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment 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 differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, 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. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Debt securities, including restricted securities, for which quotations are readily available are valued at their most recent bid prices (sales prices if the principal market is an exchange) in the principal market in which such securities are normally traded, as determined by recognized dealers in such securities, or securities are valued on the basis of information provided by a pricing service. Pricing services use valuation matrices that incorporate both dealer-supplied valuations and valuation models. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

1. Significant Accounting Policies - continued

Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured.

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.

Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Dividends are declared daily and paid monthly from net investment income. Distributions from realized gains, if any, are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital

Semiannual Report

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to foreign currency transactions, prior period premium and discount on debt securities, market discount, non-taxable dividends, capital loss carryforwards and losses deferred due to wash sales.

The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:

Unrealized appreciation

$ 62,981

Unrealized depreciation

(40,840)

Net unrealized appreciation (depreciation)

$ 22,141

Cost for federal income tax purposes

$ 1,798,883

2. Operating Policies.

Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).

Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the fund's Schedule of Investments.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

2. Operating Policies - continued

Loans and Other Direct Debt Instruments. The fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments that obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. Information regarding loans and other direct debt instruments is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

Swap Agreements. The fund may invest in swaps for the purpose of managing its exposure to interest rate, credit or market risk.

Interest rate swaps are agreements to exchange cash flows periodically based on a notional principal amount, for example, the exchange of fixed rate interest payments for floating rate interest payments. Periodic payments received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. The primary risk associated with interest rate swaps is that unfavorable changes in the fluctuation of interest rates could adversely impact the fund.

Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Gains or losses are realized upon early termination of the swap agreement. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with the fund's custodian in compliance with swap contracts.

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the fund's average net assets and a group fee rate that averaged .13% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .58% of the fund's average net assets.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:

Distribution
Fee

Service
Fee

Paid to
FDC

Retained
by FDC

Class A

0%

.15%

$ 171

$ 1

Class T

0%

.25%

700

68

Class B

.65%

.25%

1,343

972

Class C

.75%

.25%

1,595

972

$ 3,809

$ 2,013

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, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, and .25% for certain purchases of Class A and Class T shares.

For the period, sales charge amounts retained by FDC were as follows:

Retained
by FDC

Class A

$ 268

Class T

90

Class B*

355

Class C*

79

$ 792

* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC pays for typesetting, printing and mailing of share

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

holder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC, were as follows:

Amount

% of
Average
Net Assets

Class A

$ 232

.20*

Class T

506

.18*

Class B

340

.23*

Class C

280

.18*

Institutional Class

272

.18*

$ 1,630

* Annualized

Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The fee is based on the level of average net assets for the month.

Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $816 for the period.

5. Committed Line of Credit.

The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.

6. Expense Reductions.

Through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $4.

Semiannual Report

7. Credit Risk.

The fund's relatively large investment in countries with limited or developing capital markets may involve greater risks than investments in more developed markets and the prices of such investments may be volatile. The yields of emerging market debt obligations reflect, among other things, perceived credit risk. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of the fund's investments and the income they generate, as well as the fund's ability to repatriate such amounts.

8. Other Information.

At the end of the period, one otherwise unaffiliated shareholder was the owner of record of 19% of the total outstanding shares of the fund.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2004

Year ended
December 31,
2003

From net investment income

Class A

$ 5,426

$ 6,752

Class T

13,151

22,425

Class B

5,940

11,149

Class C

6,277

8,621

Institutional Class

7,646

12,227

Total

$ 38,440

$ 61,174

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

10. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
June 30,
2004

Year ended
December 31,
2003

Six months ended
June 30,
2004

Year ended
December 31,
2003

Class A

Shares sold

11,093

13,642

$ 127,946

$ 152,125

Reinvestment of distributions

373

467

4,265

5,244

Shares redeemed

(4,490)

(3,482)

(51,357)

(38,441)

Net increase (decrease)

6,976

10,627

$ 80,854

$ 118,928

Class T

Shares sold

20,029

30,354

$ 231,332

$ 337,303

Reinvestment of distributions

1,020

1,732

11,689

19,345

Shares redeemed

(12,761)

(14,809)

(147,004)

(164,042)

Net increase (decrease)

8,288

17,277

$ 96,017

$ 192,606

Class B

Shares sold

4,413

14,093

$ 51,227

$ 156,171

Reinvestment of distributions

359

681

4,139

7,636

Shares redeemed

(3,665)

(4,277)

(41,935)

(47,163)

Net increase (decrease)

1,107

10,497

$ 13,431

$ 116,644

Class C

Shares sold

9,197

20,173

$ 106,482

$ 224,162

Reinvestment of distributions

368

515

4,222

5,797

Shares redeemed

(4,194)

(3,387)

(47,725)

(37,640)

Net increase (decrease)

5,371

17,301

$ 62,979

$ 192,319

Institutional Class

Shares sold

8,585

18,048

$ 99,219

$ 201,125

Reinvestment of distributions

572

983

6,626

11,080

Shares redeemed

(3,629)

(5,722)

(42,058)

(64,262)

Net increase (decrease)

5,528

13,309

$ 63,787

$ 147,943

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research
(U.K.) Inc.

Fidelity Management & Research
(Far East) Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

Fidelity Investments Money Management, Inc.

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agent

Fidelity Investments Institutional Operations Company, Inc.

Boston, MA

Custodian

The Bank of New York

New York, NY

Semiannual Report

Fidelity Advisor Aggressive Growth Fund

Fidelity Advisor Asset Allocation Fund

Fidelity Advisor Balanced Fund

Fidelity Advisor Biotechnology Fund

Fidelity Advisor California Municipal Income Fund

Fidelity Advisor Consumer Industries Fund

Fidelity Advisor Cyclical Industries Fund

Fidelity Advisor Developing Communications Fund

Fidelity Advisor Diversified International Fund

Fidelity Advisor Dividend Growth Fund

Fidelity Advisor Dynamic Capital
Appreciation Fund

Fidelity Advisor Electronics Fund

Fidelity Advisor Emerging Asia Fund

Fidelity Advisor Emerging Markets Fund

Fidelity Advisor Emerging Markets Income Fund

Fidelity Advisor Equity Growth Fund

Fidelity Advisor Equity Income Fund

Fidelity Advisor Equity Value Fund

Fidelity Advisor Europe Capital
Appreciation Fund

Fidelity Advisor Fifty Fund

Fidelity Advisor Financial Services Fund

Fidelity Advisor Floating Rate High Income Fund

Fidelity Advisor Freedom Income, 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040 FundsSM

Fidelity Advisor Global Equity Fund

Fidelity Advisor Government Investment Fund

Fidelity Advisor Growth & Income Fund

Fidelity Advisor Growth Opportunities Fund

Fidelity Advisor Health Care Fund

Fidelity Advisor High Income Advantage Fund

Fidelity Advisor High Income Fund

Fidelity Advisor Inflation-Protected Bond Fund

Fidelity Advisor Intermediate Bond Fund

Fidelity Advisor International Capital Appreciation Fund

Fidelity Advisor International
Small Cap Fund

Fidelity Advisor Investment Grade Bond Fund

Fidelity Advisor Japan Fund

Fidelity Advisor Korea Fund

Fidelity Advisor Large Cap Fund

Fidelity Advisor Latin America Fund

Fidelity Advisor Leveraged Company Stock Fund

Fidelity Advisor Mid Cap Fund

Fidelity Advisor Mortgage Securities Fund

Fidelity Advisor Municipal Income Fund

Fidelity Advisor Natural Resources Fund

Fidelity Advisor New Insights Fund

Fidelity Advisor New York Municipal
Income Fund

Fidelity Advisor Overseas Fund

Fidelity Advisor Real Estate Fund

Fidelity Advisor Short Fixed-Income Fund

Fidelity Advisor Short Intermediate Municipal Income Fund

Fidelity Advisor Small Cap Fund

Fidelity Advisor Strategic Dividend &
Income Fund

Fidelity Advisor Strategic Growth Fund

Fidelity Advisor Strategic Income Fund

Fidelity Advisor Tax Managed Stock Fund

Fidelity Advisor Technology Fund

Fidelity Advisor Telecommunications &
Utilities Growth Fund

Fidelity Advisor Total Bond Fund

Fidelity Advisor Ultra-Short Bond Fund

Fidelity Advisor Value Fund

Fidelity Advisor Value Leaders Fund

Fidelity Advisor Value Strategies Fund

Prime Fund

Tax-Exempt Fund

Treasury Fund

SII-USAN-0804
1.787776.101

(Fidelity Investment logo)(registered trademark)

Item 2. Code of Ethics

Not applicable.

Item 3. Audit Committee Financial Expert

Not applicable.

Item 4. Principal Accountant Fees and Services

Not applicable.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Schedule of Investments

Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable.

Item 8. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable.

Item 9. Submission of Matters to a Vote of Security Holders

There were no material changes to the procedures by which shareholders may recommend nominees to the Fidelity Advisor Series II's Board of Trustees.

Item 10. Controls and Procedures

(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Fidelity Advisor Series II's (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.

(a)(ii) There was no change in the Trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the Trust's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.

Item 11. Exhibits

(a)

(1)

Not applicable.

(a)

(2)

Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

(a)

(3)

Not applicable.

(b)

Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Fidelity Advisor Series II

By:

/s/Christine Reynolds

Christine Reynolds

President and Treasurer

Date:

August 17, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:

/s/Christine Reynolds

Christine Reynolds

President and Treasurer

Date:

August 17, 2004

By:

/s/Timothy F. Hayes

Timothy F. Hayes

Chief Financial Officer

Date:

August 17, 2004