-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GWx8q6m8+EvV4CFhaQIg2tWI4aEVqhO+XO5hx2Qjj+uM0xZ96KdJhIqVRKTAsT1/ VutzcfUI70r+TGGgDgzdug== 0000795422-04-000050.txt : 20040629 0000795422-04-000050.hdr.sgml : 20040629 20040629151555 ACCESSION NUMBER: 0000795422-04-000050 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 88 CONFORMED PERIOD OF REPORT: 20040430 FILED AS OF DATE: 20040629 EFFECTIVENESS DATE: 20040629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY ADVISOR SERIES II CENTRAL INDEX KEY: 0000795422 IRS NUMBER: 000000000 FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04707 FILM NUMBER: 04888429 BUSINESS ADDRESS: STREET 1: 82 DEVONSHIRE ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6175707000 MAIL ADDRESS: STREET 1: 82 DEVONSHIRE STREET STREET 2: MAILZONE ZH1 CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY DIVERSIFIED TRUST DATE OF NAME CHANGE: 19930706 FORMER COMPANY: FORMER CONFORMED NAME: PLYMOUTH FUND DATE OF NAME CHANGE: 19920130 FORMER COMPANY: FORMER CONFORMED NAME: PLYMOUTH INVESTMENT SERIES DATE OF NAME CHANGE: 19911204 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:

October 31

Date of reporting period:

April 30, 2004

Item 1. Reports to Stockholders

Fidelity® Advisor

Government Investment

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

Semiannual Report

April 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.

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

Coupon Distribution as of April 30, 2004

% of fund's investments

% of fund's investments
6 months ago

3 - 3.99%

5.0

4.7

4 - 4.99%

4.3

5.6

5 - 5.99%

17.2

10.5

6 - 6.99%

38.1

47.1

7 - 7.99%

12.3

13.0

8 - 8.99%

5.7

5.7

9 - 9.99%

0.2

0.2

10 - 10.99%

1.8

1.9

11 - 11.99%

1.2

1.2

12 - 12.99%

1.8

1.8

13 - 13.99%

6.9

4.0

Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments.

Average Years to Maturity as of April 30, 2004

6 months ago

Years

7.3

8.1

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

4.9

5.3

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Asset Allocation (% of fund's net assets)

As of April 30, 2004

As of October 31, 2003

Mortgage
Securities 11.1%

Mortgage
Securities 9.9%

CMOs and
Other Mortgage
Related Securities 22.3%

CMOs and
Other Mortgage
Related Securities 26.8%

U.S. Treasury
Obligations 27.9%

U.S. Treasury
Obligations 30.8%

U.S. Government
Agency Obligations 36.1%

U.S. Government
Agency Obligations 32.7%

Short-Term Investments and Net Other Assets 2.6%

Short-Term Investments and Net Other AssetsA (0.2)%



A Short-Term Investments and Net Other Assets are not included in the pie chart.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

U.S. Government and Government Agency Obligations - 64.0%

Principal
Amount

Value (Note 1)

U.S. Government Agency Obligations - 36.1%

Fannie Mae:

5.125% 1/2/14

$ 15,000,000

$ 14,756,385

5.5% 3/15/11

1,350,000

1,427,648

6% 5/15/08

6,158,000

6,685,815

6.125% 3/15/12

8,050,000

8,766,321

6.25% 2/1/11

4,660,000

5,052,125

6.625% 9/15/09

1,620,000

1,815,307

6.625% 11/15/30

18,000,000

19,998,180

Farm Credit Systems Financial Assistance Corp. 8.8% 6/10/05

710,000

764,419

Federal Home Loan Bank 5.8% 9/2/08

17,275,000

18,657,967

Freddie Mac:

3.625% 9/15/08

18,076,000

17,952,884

4.5% 1/15/14

9,250,000

8,883,876

5% 1/30/14

25,000,000

24,405,150

5.875% 3/21/11

6,960,000

7,392,877

7% 3/15/10

48,000,000

54,722,209

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

367,818

392,455

Guaranteed Export Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-
Import Bank):

Series 1993-C, 5.2% 10/15/04

21,244

21,502

Series 1993-D, 5.23% 5/15/05

52,126

52,897

Series 1994-A, 7.12% 4/15/06

3,760,768

3,962,834

Series 1994-F, 8.187% 12/15/04

94,936

96,988

Series 1995-A, 6.28% 6/15/04

206,471

207,815

Guaranteed Trade Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-Import Bank):

Series 1994-A, 7.39% 6/26/06

1,875,000

2,002,837

Series 1994-B, 7.5% 1/26/06

65,863

69,508

Overseas Private Investment Corp. U.S. Government guaranteed participation certificates:

Series 1996-A1, 6.726% 9/15/10

1,130,435

1,237,170

Series 2000-016, 6.07% 12/15/14

4,100,000

4,392,125

6.77% 11/15/13

1,275,000

1,381,781

6.99% 5/21/16

4,327,500

4,871,986

Private Export Funding Corp. secured:

5.34% 3/15/06

4,640,000

4,890,425

5.66% 9/15/11 (a)

2,610,000

2,756,210

U.S. Government and Government Agency Obligations - continued

Principal
Amount

Value (Note 1)

U.S. Government Agency Obligations - continued

Private Export Funding Corp. secured: - continued

6.67% 9/15/09

$ 880,000

$ 985,514

Small Business Administration guaranteed development participation certificates Series 2002-20K Class 1, 5.08% 11/1/22

5,695,300

5,715,596

State of Israel (guaranteed by U.S. Government through Agency for International Development):

5.89% 8/15/05

8,560,000

8,906,346

6.6% 2/15/08

13,100,000

14,065,326

6.8% 2/15/12

5,000,000

5,592,610

U.S. Department of Housing and Urban Development Government guaranteed participation certificates Series 1999-A:

5.75% 8/1/06

2,100,000

2,244,299

5.96% 8/1/09

1,800,000

1,896,352

U.S. Trade Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-Import Bank) 8.17% 1/15/07

180,000

193,106

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

257,216,845

U.S. Treasury Obligations - 27.9%

U.S. Treasury Bonds:

6.125% 8/15/29

22,229,000

24,543,950

6.25% 8/15/23

13,500,000

15,000,822

8% 11/15/21

29,994,000

39,512,416

10% 5/15/10

11,170,000

12,099,378

11.25% 2/15/15

5,506,000

8,586,563

12% 8/15/13

10,000,000

13,405,860

13.25% 5/15/14

35,115,000

50,524,445

U.S. Treasury Notes:

3.125% 4/15/09

13,100,000

12,811,905

4.25% 11/15/13

10,090,000

9,898,451

5% 8/15/11

12,000,000

12,616,872

TOTAL U.S. TREASURY OBLIGATIONS

199,000,662

TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS

(Cost $458,014,465)

456,217,507

U.S. Government Agency - Mortgage Securities - 11.1%

Principal
Amount

Value (Note 1)

Fannie Mae - 10.6%

4% 3/1/19 to 4/1/19

$ 6,417,916

$ 6,177,531

4% 5/1/19 (b)

3,488,246

3,353,076

5.5% 5/1/19 (b)

13,000,000

13,341,250

6% 9/1/17

7,278,095

7,595,066

6.5% 2/1/10 to 12/1/33

36,572,759

38,100,079

7% 4/1/26 to 7/1/32

5,941,728

6,286,465

7.5% 3/1/28 to 4/1/29

61,929

66,482

8.5% 9/1/16 to 1/1/17

26,626

29,236

9% 11/1/11 to 5/1/14

504,343

550,292

9.5% 11/1/06 to 5/1/20

333,228

367,989

11.5% 6/15/19

84,447

96,234

12.5% 8/1/15

3,086

3,528

75,967,228

Freddie Mac - 0.3%

7.5% 3/1/15 to 3/1/16

1,282,083

1,368,353

8.5% 8/1/09 to 2/1/10

23,138

25,031

9% 10/1/08 to 10/1/20

115,412

126,136

9.5% 5/1/21 to 7/1/21

104,047

116,112

11% 7/1/13 to 5/1/14

127,266

142,748

12.5% 2/1/10 to 6/1/19

50,571

57,313

1,835,693

Government National Mortgage Association - 0.2%

7.5% 9/15/06 to 8/15/29

293,940

310,857

8% 12/15/23

805,830

886,800

9% 9/15/05 to 12/15/09

3,071

3,091

10.5% 11/15/17 to 1/20/18

107,231

120,927

13.5% 7/15/11

12,265

14,242

1,335,917

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $78,894,370)

79,138,838

Collateralized Mortgage Obligations - 22.3%

U.S. Government Agency - 22.3%

Fannie Mae:

planned amortization class:

Series 1992-168 Class KB, 7% 10/25/22

4,749,994

5,068,717

Series 1993-160 Class PK, 6.5% 11/25/22

2,010,379

2,045,262

Series 1993-187 Class L, 6.5% 7/25/23

1,700,000

1,802,904

Series 1994-27 Class PJ, 6.5% 6/25/23

2,000,000

2,093,069

Collateralized Mortgage Obligations - continued

Principal
Amount

Value (Note 1)

U.S. Government Agency - continued

Fannie Mae: - continued

sequential pay Series 1999-10 Class MZ, 6.5% 9/17/38

$ 1,691,384

$ 1,774,434

Fannie Mae guaranteed REMIC pass thru certificates:

Class 2004-29 Class JZ, 4.5% 5/25/19

1,910,000

1,897,466

planned amortization class:

Series 2001-30 Class PL, 7% 2/25/31

5,750,755

5,961,759

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

138,486

140,135

Series 2001-56 Class KD, 6.5% 7/25/30

5,250,401

5,336,741

Series 2002-55 Class QB, 5.5% 8/25/12

256,260

257,748

Series 2003-73 Class GA, 3.5% 5/25/31

6,181,203

5,949,584

sequential pay Series 2001-46 Class ZG, 6% 9/25/31

7,038,259

6,911,331

Series 2003-122:

Class ZG, 5% 12/25/23

665,801

668,479

Class ZK, 5.5% 12/25/33

206,848

206,757

Series 2003-128 Class NZ, 4% 1/25/19

249,754

249,881

Series 2003-84 Class GZ, 4.5% 9/25/18

211,460

211,324

Series 2004-29:

Class ZE, 4.5% 1/25/32

100,000

98,750

Class ZM, 5.5% 5/25/34

200,000

198,875

Series 2004-38 Class ZC, 6.5% 11/25/33

495,000

495,000

Freddie Mac:

sequential pay:

Series 2343 Class VD, 7% 8/15/16

5,164,000

5,545,975

Series 2355 Class AE, 6% 9/15/31

11,046,290

11,516,257

Series 2361 Class KB, 6.25% 1/15/28

14,238,844

14,762,132

Series 2794 Class ZL, 6% 5/1/34 (b)

250,000

248,594

Freddie Mac Manufactured Housing participation certificates guaranteed planned amortization class Series 1681 Class PJ, 7% 12/15/23

4,000,000

4,297,887

Freddie Mac Multi-class participation certificates guaranteed:

planned amortization class:

Series 1141 Class G, 9% 9/15/21

280,371

280,243

Series 1624 Class KC, 6% 6/15/08

2,288,870

2,296,799

Series 1671 Class G, 6.5% 8/15/23

10,318,746

10,668,336

Series 1727 Class H, 6.5% 8/15/23

2,600,000

2,731,841

Series 2275 Class PM, 6.5% 10/15/29

1,941,783

1,971,479

Series 2322 Class HC, 6.5% 3/15/30

72,369

73,061

Series 2368 Class PQ, 6.5% 8/15/30

1,566,199

1,589,097

Series 2410 Class MK, 6.5% 6/15/29

1,392,109

1,396,256

Collateralized Mortgage Obligations - continued

Principal
Amount

Value (Note 1)

U.S. Government Agency - continued

Freddie Mac Multi-class participation certificates guaranteed: - continued

Series 2435 Class GD, 6.5% 2/15/30

$ 646,716

$ 653,942

Series 2473 Class JB, 5.5% 2/15/29

560,636

565,236

Series 2483 Class DC, 5.5% 7/15/14

2,420,000

2,486,724

sequential pay:

Series 2129 Class VM, 6% 1/15/06

1,723,789

1,740,888

Series 2285 Class VB, 6.5% 10/15/16

4,000,000

4,082,558

Series 2303 Class VT, 6% 2/15/12

387,759

388,676

Series 2448 Class VH, 6.5% 5/15/18

4,835,000

5,089,227

Series 2750 Class ZT, 5% 2/15/34

867,182

711,074

Series 2568 Class SA, 10.56% 9/15/28 (c)

730,756

744,008

Series 2691 Class ZE, 5.5% 5/15/33

96,760

96,688

Series 2707 Class ZA, 4.5% 11/15/18

243,816

242,902

Series 2749 Class MZ, 5% 2/15/24

308,585

307,838

Series 2750 Class CZ, 5% 11/15/32

697,791

698,250

Series 2764:

Class ZA, 5% 10/15/32

123,649

122,992

Class ZB, 5% 3/15/33

208,134

206,899

Class ZC, 4.5% 3/15/19

131,557

130,776

Series 2769 Class ZA, 5% 9/15/32

194,039

193,023

Series 2780:

Class AZ, 5.5% 3/15/33

250,000

248,047

Class KZ, 5% 4/15/32

450,000

448,594

Class ZJ, 4.5% 4/15/19

200,000

199,156

target amortization class Series 2156 Class TC, 6.25% 5/15/29

7,793,412

8,208,356

Ginnie Mae guaranteed REMIC pass thru securities:

planned amortization class:

Series 1998-1 Class PE, 6.35% 1/20/28

5,000,000

5,217,827

Series 2001-53 Class TA, 6% 12/20/30

621,637

633,709

Series 2002-19 Class PE, 6% 10/20/30

25,000,000

25,819,135

sequential pay Series 2000-12 Class B, 7.5% 12/16/28

964,632

973,191

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $160,312,222)

158,955,889

Cash Equivalents - 5.7%

Maturity
Amount

Value (Note 1)

Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.05%, dated 4/30/04 due 5/3/04)
(Cost $41,171,000)

$ 41,174,602

$ 41,171,000

TOTAL INVESTMENT PORTFOLIO - 103.1%

(Cost $738,392,057)

735,483,234

NET OTHER ASSETS - (3.1)%

(22,417,560)

NET ASSETS - 100%

$ 713,065,674

Legend

(a) 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 $2,756,210 or 0.4% of net assets.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

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

Other Information

Purchases and sales of long-term U.S. government and government agency obligations aggregated $396,793,233 and $421,721,211, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including securities loaned of $12,851,100 and repurchase agreements of $41,171,000)(cost $738,392,057) - See accompanying schedule

$ 735,483,234

Cash

546

Receivable for investments sold

2,210

Receivable for fund shares sold

1,122,704

Interest receivable

9,229,344

Prepaid expenses

2,856

Receivable from investment adviser for expense reductions

3,388

Total assets

745,844,282

Liabilities

Payable for investments purchased on a delayed delivery basis

$ 17,086,814

Payable for fund shares redeemed

1,661,380

Distributions payable

245,216

Accrued management fee

254,713

Distribution fees payable

238,716

Other affiliated payables

157,484

Other payables and accrued expenses

26,163

Collateral on securities loaned, at value

13,108,122

Total liabilities

32,778,608

Net Assets

$ 713,065,674

Net Assets consist of:

Paid in capital

$ 716,703,489

Distributions in excess of net investment income

(281,236)

Accumulated undistributed net realized gain (loss) on investments

(447,756)

Net unrealized appreciation (depreciation) on investments

(2,908,823)

Net Assets

$ 713,065,674

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

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($66,173,835 ÷ 6,648,757 shares)

$ 9.95

Maximum offering price per share (100/95.25 of $9.95)

$ 10.45

Class T:
Net Asset Value and redemption price per share ($276,615,759 ÷ 27,809,527 shares)

$ 9.95

Maximum offering price per share (100/96.50 of $9.95)

$ 10.31

Class B:
Net Asset Value and offering price per share ($145,118,727 ÷ 14,604,919 shares) A

$ 9.94

Class C:
Net Asset Value and offering price per share ($71,633,110 ÷ 7,203,482 shares) A

$ 9.94

Institutional Class:
Net Asset Value, offering price and redemption price per share ($153,524,243 ÷ 15,506,884 shares)

$ 9.90

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 15,217,410

Security lending

2,332

Total income

15,219,742

Expenses

Management fee

$ 1,538,760

Transfer agent fees

800,283

Distribution fees

1,524,499

Accounting and security lending fees

135,066

Non-interested trustees' compensation

2,285

Custodian fees and expenses

13,770

Registration fees

61,332

Audit

26,093

Legal

5,679

Miscellaneous

7,841

Total expenses before reductions

4,115,608

Expense reductions

(3,388)

4,112,220

Net investment income (loss)

11,107,522

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

1,339,610

Change in net unrealized appreciation (depreciation) on investment securities

(5,956,245)

Net gain (loss)

(4,616,635)

Net increase (decrease) in net assets resulting from operations

$ 6,490,887

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 11,107,522

$ 25,968,980

Net realized gain (loss)

1,339,610

11,983,727

Change in net unrealized appreciation (depreciation)

(5,956,245)

(23,381,528)

Net increase (decrease) in net assets resulting
from operations

6,490,887

14,571,179

Distributions to shareholders from net investment income

(11,455,701)

(25,752,285)

Distributions to shareholders from net realized gain

(7,095,397)

(5,552,244)

Total distributions

(18,551,098)

(31,304,529)

Share transactions - net increase (decrease)

(2,233,431)

(75,289,044)

Total increase (decrease) in net assets

(14,293,642)

(92,022,394)

Net Assets

Beginning of period

727,359,316

819,381,710

End of period (including distributions in excess of net investment income of $281,236 and undistributed net investment income of $66,943, respectively)

$ 713,065,674

$ 727,359,316

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.12

$ 10.33

$ 10.14

$ 9.42

$ 9.31

$ 10.02

Income from Investment Operations

Net investment
income (loss)E

.169

.360

.410G

.546

.559

.545

Net realized and unrealized gain (loss)

(.065)

(.144)

.205G

.730

.115

(.696)

Total from investment operations

.104

.216

.615

1.276

.674

(.151)

Distributions from net investment income

(.174)

(.356)

(.425)

(.556)

(.564)

(.559)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.274)

(.426)

(.425)

(.556)

(.564)

(.559)

Net asset value, end of period

$ 9.95

$ 10.12

$ 10.33

$ 10.14

$ 9.42

$ 9.31

Total ReturnB,C,D

1.01%

2.11%

6.31%

13.95%

7.53%

(1.53)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.88%A

.83%

.83%

.87%

.85%

.87%

Expenses net of voluntary waivers, if any

.88%A

.83%

.83%

.87%

.85%

.87%

Expenses net of all
reductions

.88%A

.83%

.83%

.86%

.85%

.87%

Net investment
income (loss)

3.36%A

3.50%

4.11%G

5.61%

6.02%

5.73%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 66,174

$ 69,011

$ 68,973

$ 43,205

$ 15,053

$ 15,273

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.11

$ 10.32

$ 10.13

$ 9.41

$ 9.30

$ 10.02

Income from Investment Operations

Net investment
income (loss)E

.165

.350

.398G

.535

.549

.541

Net realized and unrealized gain (loss)

(.056)

(.144)

.206G

.731

.114

(.710)

Total from investment operations

.109

.206

.604

1.266

.663

(.169)

Distributions from net investment income

(.169)

(.346)

(.414)

(.546)

(.553)

(.551)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.269)

(.416)

(.414)

(.546)

(.553)

(.551)

Net asset value, end of period

$ 9.95

$ 10.11

$ 10.32

$ 10.13

$ 9.41

$ 9.30

Total ReturnB,C,D

1.07%

2.01%

6.19%

13.86%

7.41%

(1.71)%

Ratios to Average Net AssetsF

Expenses before expense reductions

.97%A

.93%

.94%

.96%

.95%

.96%

Expenses net of voluntary waivers, if any

.97%A

.93%

.94%

.96%

.95%

.96%

Expenses net of all
reductions

.97%A

.93%

.94%G

.96%

.95%

.95%

Net investment
income (loss)

3.27%A

3.39%

4.00%

5.52%

5.92%

5.65%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 276,616

$ 304,517

$ 366,209

$ 293,105

$ 182,049

$ 215,089

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.10

$ 10.31

$ 10.12

$ 9.41

$ 9.30

$ 10.01

Income from Investment Operations

Net investment
income (loss)E

.131

.282

.335G

.474

.490

.479

Net realized and unrealized gain (loss)

(.056)

(.144)

.205G

.720

.114

(.699)

Total from investment operations

.075

.138

.540

1.194

.604

(.220)

Distributions from net investment income

(.135)

(.278)

(.350)

(.484)

(.494)

(.490)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.235)

(.348)

(.350)

(.484)

(.494)

(.490)

Net asset value, end of period

$ 9.94

$ 10.10

$ 10.31

$ 10.12

$ 9.41

$ 9.30

Total ReturnB,C,D

.73%

1.34%

5.52%

13.03%

6.73%

(2.24)%

Ratios to Average Net AssetsF

Expenses before expense reductions

1.66%A

1.59%

1.58%

1.60%

1.59%

1.59%

Expenses net of voluntary waivers, if any

1.65%A

1.59%

1.58%

1.60%

1.59%

1.59%

Expenses net of all
reductions

1.65%A

1.59%

1.58%

1.60%

1.59%

1.59%

Net investment
income (loss)

2.59%A

2.74%

3.36%G

4.88%

5.28%

5.01%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 145,119

$ 176,855

$ 230,244

$ 158,864

$ 77,424

$ 94,871

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.11

$ 10.32

$ 10.13

$ 9.41

$ 9.30

$ 10.02

Income from Investment Operations

Net investment
income (loss)E

.128

.275

.327G

.468

.482

.468

Net realized and unrealized gain (loss)

(.065)

(.144)

.205G

.729

.115

(.708)

Total from investment operations

.063

.131

.532

1.197

.597

(.240)

Distributions from net investment income

(.133)

(.271)

(.342)

(.477)

(.487)

(.480)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.233)

(.341)

(.342)

(.477)

(.487)

(.480)

Net asset value,
end of period

$ 9.94

$ 10.11

$ 10.32

$ 10.13

$ 9.41

$ 9.30

Total ReturnB,C,D

.60%

1.27%

5.44%

13.05%

6.64%

(2.43)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.70%A

1.66%

1.66%

1.67%

1.67%

1.69%

Expenses net of voluntary waivers, if any

1.70%A

1.66%

1.66%

1.67%

1.67%

1.69%

Expenses net of all
reductions

1.70%A

1.66%

1.66%

1.67%

1.67%

1.69%

Net investment
income (loss)

2.54%A

2.66%

3.29%G

4.81%

5.20%

4.91%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 71,633

$ 80,620

$ 103,002

$ 87,214

$ 30,133

$ 35,652

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.07

$ 10.28

$ 10.09

$ 9.38

$ 9.27

$ 10.00

Income from Investment Operations

Net investment income (loss)D

.176

.370

.422F

.560

.572

.567

Net realized and unrealized gain (loss)

(.063)

(.138)

.207F

.723

.118

(.720)

Total from investment operations

.113

.232

.629

1.283

.690

(.153)

Distributions from net investment income

(.183)

(.372)

(.439)

(.573)

(.580)

(.577)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.283)

(.442)

(.439)

(.573)

(.580)

(.577)

Net asset value, end of period

$ 9.90

$ 10.07

$ 10.28

$ 10.09

$ 9.38

$ 9.27

Total ReturnB,C

1.11%

2.28%

6.49%

14.11%

7.75%

(1.55)%

Ratios to Average Net AssetsE

Expenses before expense reductions

.70%A

.68%

.69%

.69%

.66%

.68%

Expenses net of voluntary waivers, if any

.70%A

.68%

.69%

.69%

.66%

.68%

Expenses net of all
reductions

.70%A

.68%

.69%

.69%

.66%

.68%

Net investment
income (loss)

3.54%A

3.64%

4.26%F

5.79%

6.20%

5.92%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 153,524

$ 96,356

$ 50,953

$ 27,782

$ 22,067

$ 22,636

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Government Investment 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 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. 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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 prior period premium and discount on debt securities, market discount, financing transactions and losses deferred due to wash sales.

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

Unrealized appreciation

$ 5,641,701

Unrealized depreciation

(9,511,879)

Net unrealized appreciation (depreciation)

$ (3,870,178)

Cost for federal income tax purposes

$ 739,353,412

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).

Semiannual Report

2. Operating Policies - continued

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

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.

Financing Transactions. To earn additional income, the fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but will be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the fund's right to repurchase or sell securities may be limited.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

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 .30% 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 .43% of the fund's average net assets.

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%

$ 50,688

$ 245

Class T

0%

.25%

365,319

2,250

Class B

.65%

.25%

725,088

524,835

Class C

.75%

.25%

383,404

50,299

$ 1,524,499

$ 577,629

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.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Sales Load - continued

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

Retained
by FDC

Class A

$ 20,621

Class T

9,943

Class B*

325,575

Class C*

6,124

$ 362,263

* 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 shareholder 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

$ 76,647

.23

Class T

321,468

.22

Class B

202,265

.25

Class C

74,066

.19

Institutional Class

125,837

.20

$ 800,283

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

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 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. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.

7. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class B

1.65%

$ 3,388

Semiannual Report

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,159,195

$ 2,622,269

Class T

4,888,128

11,938,897

Class B

2,155,852

5,949,059

Class C

1,005,579

2,630,246

Institutional Class

2,246,947

2,611,814

Total

$ 11,455,701

$ 25,752,285

From net realized gain

Class A

$ 673,412

$ 465,596

Class T

2,951,583

2,483,022

Class B

1,694,604

1,550,205

Class C

774,841

695,824

Institutional Class

1,000,957

357,597

Total

$ 7,095,397

$ 5,552,244

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

1,023,907

5,954,963

$ 10,389,129

$ 61,424,786

Reinvestment of distributions

159,933

259,349

1,615,772

2,665,148

Shares redeemed

(1,353,937)

(6,073,729)

(13,722,939)

(62,468,909)

Net increase (decrease)

(170,097)

140,583

$ (1,718,038)

$ 1,621,025

Class T

Shares sold

4,456,776

13,752,553

$ 45,201,287

$ 141,665,954

Reinvestment of distributions

733,040

1,299,921

7,400,642

13,348,077

Shares redeemed

(7,485,982)

(20,424,771)

(75,784,043)

(209,811,679)

Net increase (decrease)

(2,296,166)

(5,372,297)

$ (23,182,114)

$ (54,797,648)

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

9. Share Transactions - continued

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended April 30,
2004

Year ended
October 31,
2003

Class B

Shares sold

501,818

5,724,003

$ 5,092,537

$ 59,070,876

Reinvestment of distributions

300,056

562,238

3,025,373

5,768,256

Shares redeemed

(3,699,349)

(11,112,103)

(37,411,242)

(113,895,988)

Net increase (decrease)

(2,897,475)

(4,825,862)

$ (29,293,332)

$ (49,056,856)

Class C

Shares sold

911,163

3,433,368

$ 9,240,157

$ 35,389,290

Reinvestment of distributions

121,868

228,727

1,229,683

2,347,518

Shares redeemed

(1,802,040)

(5,670,985)

(18,252,304)

(58,122,648)

Net increase (decrease)

(769,009)

(2,008,890)

$ (7,782,464)

$ (20,385,840)

Institutional Class

Shares sold

7,622,620

6,469,585

$ 76,691,967

$ 66,283,395

Reinvestment of distributions

281,473

244,539

2,828,928

2,497,316

Shares redeemed

(1,966,763)

(2,100,471)

(19,778,378)

(21,450,436)

Net increase (decrease)

5,937,330

4,613,653

$ 59,742,517

$ 47,330,275

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Investments Money
Management, Inc.

Fidelity International
Investment Advisors

Fidelity International
Investment Advisors (U.K.) Limited

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

AGOV-USAN-0604
1.784882.101

Fidelity® Advisor

Government Investment

Fund - Institutional Class

Semiannual Report

April 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.

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

Coupon Distribution as of April 30, 2004

% of fund's investments

% of fund's investments
6 months ago

3 - 3.99%

5.0

4.7

4 - 4.99%

4.3

5.6

5 - 5.99%

17.2

10.5

6 - 6.99%

38.1

47.1

7 - 7.99%

12.3

13.0

8 - 8.99%

5.7

5.7

9 - 9.99%

0.2

0.2

10 - 10.99%

1.8

1.9

11 - 11.99%

1.2

1.2

12 - 12.99%

1.8

1.8

13 - 13.99%

6.9

4.0

Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments.

Average Years to Maturity as of April 30, 2004

6 months ago

Years

7.3

8.1

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

4.9

5.3

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Asset Allocation (% of fund's net assets)

As of April 30, 2004

As of October 31, 2003

Mortgage
Securities 11.1%

Mortgage
Securities 9.9%

CMOs and
Other Mortgage
Related Securities 22.3%

CMOs and
Other Mortgage
Related Securities 26.8%

U.S. Treasury
Obligations 27.9%

U.S. Treasury
Obligations 30.8%

U.S. Government
Agency Obligations 36.1%

U.S. Government
Agency Obligations 32.7%

Short-Term Investments and Net Other Assets 2.6%

Short-Term Investments and Net Other AssetsA (0.2)%



A Short-Term Investments and Net Other Assets are not included in the pie chart.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

U.S. Government and Government Agency Obligations - 64.0%

Principal
Amount

Value (Note 1)

U.S. Government Agency Obligations - 36.1%

Fannie Mae:

5.125% 1/2/14

$ 15,000,000

$ 14,756,385

5.5% 3/15/11

1,350,000

1,427,648

6% 5/15/08

6,158,000

6,685,815

6.125% 3/15/12

8,050,000

8,766,321

6.25% 2/1/11

4,660,000

5,052,125

6.625% 9/15/09

1,620,000

1,815,307

6.625% 11/15/30

18,000,000

19,998,180

Farm Credit Systems Financial Assistance Corp. 8.8% 6/10/05

710,000

764,419

Federal Home Loan Bank 5.8% 9/2/08

17,275,000

18,657,967

Freddie Mac:

3.625% 9/15/08

18,076,000

17,952,884

4.5% 1/15/14

9,250,000

8,883,876

5% 1/30/14

25,000,000

24,405,150

5.875% 3/21/11

6,960,000

7,392,877

7% 3/15/10

48,000,000

54,722,209

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

367,818

392,455

Guaranteed Export Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-
Import Bank):

Series 1993-C, 5.2% 10/15/04

21,244

21,502

Series 1993-D, 5.23% 5/15/05

52,126

52,897

Series 1994-A, 7.12% 4/15/06

3,760,768

3,962,834

Series 1994-F, 8.187% 12/15/04

94,936

96,988

Series 1995-A, 6.28% 6/15/04

206,471

207,815

Guaranteed Trade Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-Import Bank):

Series 1994-A, 7.39% 6/26/06

1,875,000

2,002,837

Series 1994-B, 7.5% 1/26/06

65,863

69,508

Overseas Private Investment Corp. U.S. Government guaranteed participation certificates:

Series 1996-A1, 6.726% 9/15/10

1,130,435

1,237,170

Series 2000-016, 6.07% 12/15/14

4,100,000

4,392,125

6.77% 11/15/13

1,275,000

1,381,781

6.99% 5/21/16

4,327,500

4,871,986

Private Export Funding Corp. secured:

5.34% 3/15/06

4,640,000

4,890,425

5.66% 9/15/11 (a)

2,610,000

2,756,210

U.S. Government and Government Agency Obligations - continued

Principal
Amount

Value (Note 1)

U.S. Government Agency Obligations - continued

Private Export Funding Corp. secured: - continued

6.67% 9/15/09

$ 880,000

$ 985,514

Small Business Administration guaranteed development participation certificates Series 2002-20K Class 1, 5.08% 11/1/22

5,695,300

5,715,596

State of Israel (guaranteed by U.S. Government through Agency for International Development):

5.89% 8/15/05

8,560,000

8,906,346

6.6% 2/15/08

13,100,000

14,065,326

6.8% 2/15/12

5,000,000

5,592,610

U.S. Department of Housing and Urban Development Government guaranteed participation certificates Series 1999-A:

5.75% 8/1/06

2,100,000

2,244,299

5.96% 8/1/09

1,800,000

1,896,352

U.S. Trade Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-Import Bank) 8.17% 1/15/07

180,000

193,106

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

257,216,845

U.S. Treasury Obligations - 27.9%

U.S. Treasury Bonds:

6.125% 8/15/29

22,229,000

24,543,950

6.25% 8/15/23

13,500,000

15,000,822

8% 11/15/21

29,994,000

39,512,416

10% 5/15/10

11,170,000

12,099,378

11.25% 2/15/15

5,506,000

8,586,563

12% 8/15/13

10,000,000

13,405,860

13.25% 5/15/14

35,115,000

50,524,445

U.S. Treasury Notes:

3.125% 4/15/09

13,100,000

12,811,905

4.25% 11/15/13

10,090,000

9,898,451

5% 8/15/11

12,000,000

12,616,872

TOTAL U.S. TREASURY OBLIGATIONS

199,000,662

TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS

(Cost $458,014,465)

456,217,507

U.S. Government Agency - Mortgage Securities - 11.1%

Principal
Amount

Value (Note 1)

Fannie Mae - 10.6%

4% 3/1/19 to 4/1/19

$ 6,417,916

$ 6,177,531

4% 5/1/19 (b)

3,488,246

3,353,076

5.5% 5/1/19 (b)

13,000,000

13,341,250

6% 9/1/17

7,278,095

7,595,066

6.5% 2/1/10 to 12/1/33

36,572,759

38,100,079

7% 4/1/26 to 7/1/32

5,941,728

6,286,465

7.5% 3/1/28 to 4/1/29

61,929

66,482

8.5% 9/1/16 to 1/1/17

26,626

29,236

9% 11/1/11 to 5/1/14

504,343

550,292

9.5% 11/1/06 to 5/1/20

333,228

367,989

11.5% 6/15/19

84,447

96,234

12.5% 8/1/15

3,086

3,528

75,967,228

Freddie Mac - 0.3%

7.5% 3/1/15 to 3/1/16

1,282,083

1,368,353

8.5% 8/1/09 to 2/1/10

23,138

25,031

9% 10/1/08 to 10/1/20

115,412

126,136

9.5% 5/1/21 to 7/1/21

104,047

116,112

11% 7/1/13 to 5/1/14

127,266

142,748

12.5% 2/1/10 to 6/1/19

50,571

57,313

1,835,693

Government National Mortgage Association - 0.2%

7.5% 9/15/06 to 8/15/29

293,940

310,857

8% 12/15/23

805,830

886,800

9% 9/15/05 to 12/15/09

3,071

3,091

10.5% 11/15/17 to 1/20/18

107,231

120,927

13.5% 7/15/11

12,265

14,242

1,335,917

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $78,894,370)

79,138,838

Collateralized Mortgage Obligations - 22.3%

U.S. Government Agency - 22.3%

Fannie Mae:

planned amortization class:

Series 1992-168 Class KB, 7% 10/25/22

4,749,994

5,068,717

Series 1993-160 Class PK, 6.5% 11/25/22

2,010,379

2,045,262

Series 1993-187 Class L, 6.5% 7/25/23

1,700,000

1,802,904

Series 1994-27 Class PJ, 6.5% 6/25/23

2,000,000

2,093,069

Collateralized Mortgage Obligations - continued

Principal
Amount

Value (Note 1)

U.S. Government Agency - continued

Fannie Mae: - continued

sequential pay Series 1999-10 Class MZ, 6.5% 9/17/38

$ 1,691,384

$ 1,774,434

Fannie Mae guaranteed REMIC pass thru certificates:

Class 2004-29 Class JZ, 4.5% 5/25/19

1,910,000

1,897,466

planned amortization class:

Series 2001-30 Class PL, 7% 2/25/31

5,750,755

5,961,759

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

138,486

140,135

Series 2001-56 Class KD, 6.5% 7/25/30

5,250,401

5,336,741

Series 2002-55 Class QB, 5.5% 8/25/12

256,260

257,748

Series 2003-73 Class GA, 3.5% 5/25/31

6,181,203

5,949,584

sequential pay Series 2001-46 Class ZG, 6% 9/25/31

7,038,259

6,911,331

Series 2003-122:

Class ZG, 5% 12/25/23

665,801

668,479

Class ZK, 5.5% 12/25/33

206,848

206,757

Series 2003-128 Class NZ, 4% 1/25/19

249,754

249,881

Series 2003-84 Class GZ, 4.5% 9/25/18

211,460

211,324

Series 2004-29:

Class ZE, 4.5% 1/25/32

100,000

98,750

Class ZM, 5.5% 5/25/34

200,000

198,875

Series 2004-38 Class ZC, 6.5% 11/25/33

495,000

495,000

Freddie Mac:

sequential pay:

Series 2343 Class VD, 7% 8/15/16

5,164,000

5,545,975

Series 2355 Class AE, 6% 9/15/31

11,046,290

11,516,257

Series 2361 Class KB, 6.25% 1/15/28

14,238,844

14,762,132

Series 2794 Class ZL, 6% 5/1/34 (b)

250,000

248,594

Freddie Mac Manufactured Housing participation certificates guaranteed planned amortization class Series 1681 Class PJ, 7% 12/15/23

4,000,000

4,297,887

Freddie Mac Multi-class participation certificates guaranteed:

planned amortization class:

Series 1141 Class G, 9% 9/15/21

280,371

280,243

Series 1624 Class KC, 6% 6/15/08

2,288,870

2,296,799

Series 1671 Class G, 6.5% 8/15/23

10,318,746

10,668,336

Series 1727 Class H, 6.5% 8/15/23

2,600,000

2,731,841

Series 2275 Class PM, 6.5% 10/15/29

1,941,783

1,971,479

Series 2322 Class HC, 6.5% 3/15/30

72,369

73,061

Series 2368 Class PQ, 6.5% 8/15/30

1,566,199

1,589,097

Series 2410 Class MK, 6.5% 6/15/29

1,392,109

1,396,256

Collateralized Mortgage Obligations - continued

Principal
Amount

Value (Note 1)

U.S. Government Agency - continued

Freddie Mac Multi-class participation certificates guaranteed: - continued

Series 2435 Class GD, 6.5% 2/15/30

$ 646,716

$ 653,942

Series 2473 Class JB, 5.5% 2/15/29

560,636

565,236

Series 2483 Class DC, 5.5% 7/15/14

2,420,000

2,486,724

sequential pay:

Series 2129 Class VM, 6% 1/15/06

1,723,789

1,740,888

Series 2285 Class VB, 6.5% 10/15/16

4,000,000

4,082,558

Series 2303 Class VT, 6% 2/15/12

387,759

388,676

Series 2448 Class VH, 6.5% 5/15/18

4,835,000

5,089,227

Series 2750 Class ZT, 5% 2/15/34

867,182

711,074

Series 2568 Class SA, 10.56% 9/15/28 (c)

730,756

744,008

Series 2691 Class ZE, 5.5% 5/15/33

96,760

96,688

Series 2707 Class ZA, 4.5% 11/15/18

243,816

242,902

Series 2749 Class MZ, 5% 2/15/24

308,585

307,838

Series 2750 Class CZ, 5% 11/15/32

697,791

698,250

Series 2764:

Class ZA, 5% 10/15/32

123,649

122,992

Class ZB, 5% 3/15/33

208,134

206,899

Class ZC, 4.5% 3/15/19

131,557

130,776

Series 2769 Class ZA, 5% 9/15/32

194,039

193,023

Series 2780:

Class AZ, 5.5% 3/15/33

250,000

248,047

Class KZ, 5% 4/15/32

450,000

448,594

Class ZJ, 4.5% 4/15/19

200,000

199,156

target amortization class Series 2156 Class TC, 6.25% 5/15/29

7,793,412

8,208,356

Ginnie Mae guaranteed REMIC pass thru securities:

planned amortization class:

Series 1998-1 Class PE, 6.35% 1/20/28

5,000,000

5,217,827

Series 2001-53 Class TA, 6% 12/20/30

621,637

633,709

Series 2002-19 Class PE, 6% 10/20/30

25,000,000

25,819,135

sequential pay Series 2000-12 Class B, 7.5% 12/16/28

964,632

973,191

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $160,312,222)

158,955,889

Cash Equivalents - 5.7%

Maturity
Amount

Value (Note 1)

Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.05%, dated 4/30/04 due 5/3/04)
(Cost $41,171,000)

$ 41,174,602

$ 41,171,000

TOTAL INVESTMENT PORTFOLIO - 103.1%

(Cost $738,392,057)

735,483,234

NET OTHER ASSETS - (3.1)%

(22,417,560)

NET ASSETS - 100%

$ 713,065,674

Legend

(a) 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 $2,756,210 or 0.4% of net assets.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

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

Other Information

Purchases and sales of long-term U.S. government and government agency obligations aggregated $396,793,233 and $421,721,211, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including securities loaned of $12,851,100 and repurchase agreements of $41,171,000)(cost $738,392,057) - See accompanying schedule

$ 735,483,234

Cash

546

Receivable for investments sold

2,210

Receivable for fund shares sold

1,122,704

Interest receivable

9,229,344

Prepaid expenses

2,856

Receivable from investment adviser for expense reductions

3,388

Total assets

745,844,282

Liabilities

Payable for investments purchased on a delayed delivery basis

$ 17,086,814

Payable for fund shares redeemed

1,661,380

Distributions payable

245,216

Accrued management fee

254,713

Distribution fees payable

238,716

Other affiliated payables

157,484

Other payables and accrued expenses

26,163

Collateral on securities loaned, at value

13,108,122

Total liabilities

32,778,608

Net Assets

$ 713,065,674

Net Assets consist of:

Paid in capital

$ 716,703,489

Distributions in excess of net investment income

(281,236)

Accumulated undistributed net realized gain (loss) on investments

(447,756)

Net unrealized appreciation (depreciation) on investments

(2,908,823)

Net Assets

$ 713,065,674

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($66,173,835 ÷ 6,648,757 shares)

$ 9.95

Maximum offering price per share (100/95.25 of $9.95)

$ 10.45

Class T:
Net Asset Value and redemption price per share ($276,615,759 ÷ 27,809,527 shares)

$ 9.95

Maximum offering price per share (100/96.50 of $9.95)

$ 10.31

Class B:
Net Asset Value and offering price per share ($145,118,727 ÷ 14,604,919 shares) A

$ 9.94

Class C:
Net Asset Value and offering price per share ($71,633,110 ÷ 7,203,482 shares) A

$ 9.94

Institutional Class:
Net Asset Value, offering price and redemption price per share ($153,524,243 ÷ 15,506,884 shares)

$ 9.90

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 15,217,410

Security lending

2,332

Total income

15,219,742

Expenses

Management fee

$ 1,538,760

Transfer agent fees

800,283

Distribution fees

1,524,499

Accounting and security lending fees

135,066

Non-interested trustees' compensation

2,285

Custodian fees and expenses

13,770

Registration fees

61,332

Audit

26,093

Legal

5,679

Miscellaneous

7,841

Total expenses before reductions

4,115,608

Expense reductions

(3,388)

4,112,220

Net investment income (loss)

11,107,522

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

1,339,610

Change in net unrealized appreciation (depreciation) on investment securities

(5,956,245)

Net gain (loss)

(4,616,635)

Net increase (decrease) in net assets resulting from operations

$ 6,490,887

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 11,107,522

$ 25,968,980

Net realized gain (loss)

1,339,610

11,983,727

Change in net unrealized appreciation (depreciation)

(5,956,245)

(23,381,528)

Net increase (decrease) in net assets resulting
from operations

6,490,887

14,571,179

Distributions to shareholders from net investment income

(11,455,701)

(25,752,285)

Distributions to shareholders from net realized gain

(7,095,397)

(5,552,244)

Total distributions

(18,551,098)

(31,304,529)

Share transactions - net increase (decrease)

(2,233,431)

(75,289,044)

Total increase (decrease) in net assets

(14,293,642)

(92,022,394)

Net Assets

Beginning of period

727,359,316

819,381,710

End of period (including distributions in excess of net investment income of $281,236 and undistributed net investment income of $66,943, respectively)

$ 713,065,674

$ 727,359,316

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.12

$ 10.33

$ 10.14

$ 9.42

$ 9.31

$ 10.02

Income from Investment Operations

Net investment
income (loss)E

.169

.360

.410G

.546

.559

.545

Net realized and unrealized gain (loss)

(.065)

(.144)

.205G

.730

.115

(.696)

Total from investment operations

.104

.216

.615

1.276

.674

(.151)

Distributions from net investment income

(.174)

(.356)

(.425)

(.556)

(.564)

(.559)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.274)

(.426)

(.425)

(.556)

(.564)

(.559)

Net asset value, end of period

$ 9.95

$ 10.12

$ 10.33

$ 10.14

$ 9.42

$ 9.31

Total ReturnB,C,D

1.01%

2.11%

6.31%

13.95%

7.53%

(1.53)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.88%A

.83%

.83%

.87%

.85%

.87%

Expenses net of voluntary waivers, if any

.88%A

.83%

.83%

.87%

.85%

.87%

Expenses net of all
reductions

.88%A

.83%

.83%

.86%

.85%

.87%

Net investment
income (loss)

3.36%A

3.50%

4.11%G

5.61%

6.02%

5.73%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 66,174

$ 69,011

$ 68,973

$ 43,205

$ 15,053

$ 15,273

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.11

$ 10.32

$ 10.13

$ 9.41

$ 9.30

$ 10.02

Income from Investment Operations

Net investment
income (loss)E

.165

.350

.398G

.535

.549

.541

Net realized and unrealized gain (loss)

(.056)

(.144)

.206G

.731

.114

(.710)

Total from investment operations

.109

.206

.604

1.266

.663

(.169)

Distributions from net investment income

(.169)

(.346)

(.414)

(.546)

(.553)

(.551)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.269)

(.416)

(.414)

(.546)

(.553)

(.551)

Net asset value, end of period

$ 9.95

$ 10.11

$ 10.32

$ 10.13

$ 9.41

$ 9.30

Total ReturnB,C,D

1.07%

2.01%

6.19%

13.86%

7.41%

(1.71)%

Ratios to Average Net AssetsF

Expenses before expense reductions

.97%A

.93%

.94%

.96%

.95%

.96%

Expenses net of voluntary waivers, if any

.97%A

.93%

.94%

.96%

.95%

.96%

Expenses net of all
reductions

.97%A

.93%

.94%G

.96%

.95%

.95%

Net investment
income (loss)

3.27%A

3.39%

4.00%

5.52%

5.92%

5.65%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 276,616

$ 304,517

$ 366,209

$ 293,105

$ 182,049

$ 215,089

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.10

$ 10.31

$ 10.12

$ 9.41

$ 9.30

$ 10.01

Income from Investment Operations

Net investment
income (loss)E

.131

.282

.335G

.474

.490

.479

Net realized and unrealized gain (loss)

(.056)

(.144)

.205G

.720

.114

(.699)

Total from investment operations

.075

.138

.540

1.194

.604

(.220)

Distributions from net investment income

(.135)

(.278)

(.350)

(.484)

(.494)

(.490)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.235)

(.348)

(.350)

(.484)

(.494)

(.490)

Net asset value, end of period

$ 9.94

$ 10.10

$ 10.31

$ 10.12

$ 9.41

$ 9.30

Total ReturnB,C,D

.73%

1.34%

5.52%

13.03%

6.73%

(2.24)%

Ratios to Average Net AssetsF

Expenses before expense reductions

1.66%A

1.59%

1.58%

1.60%

1.59%

1.59%

Expenses net of voluntary waivers, if any

1.65%A

1.59%

1.58%

1.60%

1.59%

1.59%

Expenses net of all
reductions

1.65%A

1.59%

1.58%

1.60%

1.59%

1.59%

Net investment
income (loss)

2.59%A

2.74%

3.36%G

4.88%

5.28%

5.01%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 145,119

$ 176,855

$ 230,244

$ 158,864

$ 77,424

$ 94,871

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.11

$ 10.32

$ 10.13

$ 9.41

$ 9.30

$ 10.02

Income from Investment Operations

Net investment
income (loss)E

.128

.275

.327G

.468

.482

.468

Net realized and unrealized gain (loss)

(.065)

(.144)

.205G

.729

.115

(.708)

Total from investment operations

.063

.131

.532

1.197

.597

(.240)

Distributions from net investment income

(.133)

(.271)

(.342)

(.477)

(.487)

(.480)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.233)

(.341)

(.342)

(.477)

(.487)

(.480)

Net asset value,
end of period

$ 9.94

$ 10.11

$ 10.32

$ 10.13

$ 9.41

$ 9.30

Total ReturnB,C,D

.60%

1.27%

5.44%

13.05%

6.64%

(2.43)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.70%A

1.66%

1.66%

1.67%

1.67%

1.69%

Expenses net of voluntary waivers, if any

1.70%A

1.66%

1.66%

1.67%

1.67%

1.69%

Expenses net of all
reductions

1.70%A

1.66%

1.66%

1.67%

1.67%

1.69%

Net investment
income (loss)

2.54%A

2.66%

3.29%G

4.81%

5.20%

4.91%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 71,633

$ 80,620

$ 103,002

$ 87,214

$ 30,133

$ 35,652

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 10.07

$ 10.28

$ 10.09

$ 9.38

$ 9.27

$ 10.00

Income from Investment Operations

Net investment income (loss)D

.176

.370

.422F

.560

.572

.567

Net realized and unrealized gain (loss)

(.063)

(.138)

.207F

.723

.118

(.720)

Total from investment operations

.113

.232

.629

1.283

.690

(.153)

Distributions from net investment income

(.183)

(.372)

(.439)

(.573)

(.580)

(.577)

Distributions from net realized gain

(.100)

(.070)

-

-

-

-

Total distributions

(.283)

(.442)

(.439)

(.573)

(.580)

(.577)

Net asset value, end of period

$ 9.90

$ 10.07

$ 10.28

$ 10.09

$ 9.38

$ 9.27

Total ReturnB,C

1.11%

2.28%

6.49%

14.11%

7.75%

(1.55)%

Ratios to Average Net AssetsE

Expenses before expense reductions

.70%A

.68%

.69%

.69%

.66%

.68%

Expenses net of voluntary waivers, if any

.70%A

.68%

.69%

.69%

.66%

.68%

Expenses net of all
reductions

.70%A

.68%

.69%

.69%

.66%

.68%

Net investment
income (loss)

3.54%A

3.64%

4.26%F

5.79%

6.20%

5.92%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 153,524

$ 96,356

$ 50,953

$ 27,782

$ 22,067

$ 22,636

Portfolio turnover rate

114%A

262%

251%

260%

155%

174%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Government Investment 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 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. 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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 prior period premium and discount on debt securities, market discount, financing transactions and losses deferred due to wash sales.

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

Unrealized appreciation

$ 5,641,701

Unrealized depreciation

(9,511,879)

Net unrealized appreciation (depreciation)

$ (3,870,178)

Cost for federal income tax purposes

$ 739,353,412

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).

Semiannual Report

2. Operating Policies - continued

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

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.

Financing Transactions. To earn additional income, the fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but will be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the fund's right to repurchase or sell securities may be limited.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

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 .30% 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 .43% of the fund's average net assets.

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%

$ 50,688

$ 245

Class T

0%

.25%

365,319

2,250

Class B

.65%

.25%

725,088

524,835

Class C

.75%

.25%

383,404

50,299

$ 1,524,499

$ 577,629

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.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Sales Load - continued

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

Retained
by FDC

Class A

$ 20,621

Class T

9,943

Class B*

325,575

Class C*

6,124

$ 362,263

* 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 shareholder 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

$ 76,647

.23

Class T

321,468

.22

Class B

202,265

.25

Class C

74,066

.19

Institutional Class

125,837

.20

$ 800,283

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

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 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. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.

7. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class B

1.65%

$ 3,388

Semiannual Report

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,159,195

$ 2,622,269

Class T

4,888,128

11,938,897

Class B

2,155,852

5,949,059

Class C

1,005,579

2,630,246

Institutional Class

2,246,947

2,611,814

Total

$ 11,455,701

$ 25,752,285

From net realized gain

Class A

$ 673,412

$ 465,596

Class T

2,951,583

2,483,022

Class B

1,694,604

1,550,205

Class C

774,841

695,824

Institutional Class

1,000,957

357,597

Total

$ 7,095,397

$ 5,552,244

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

1,023,907

5,954,963

$ 10,389,129

$ 61,424,786

Reinvestment of distributions

159,933

259,349

1,615,772

2,665,148

Shares redeemed

(1,353,937)

(6,073,729)

(13,722,939)

(62,468,909)

Net increase (decrease)

(170,097)

140,583

$ (1,718,038)

$ 1,621,025

Class T

Shares sold

4,456,776

13,752,553

$ 45,201,287

$ 141,665,954

Reinvestment of distributions

733,040

1,299,921

7,400,642

13,348,077

Shares redeemed

(7,485,982)

(20,424,771)

(75,784,043)

(209,811,679)

Net increase (decrease)

(2,296,166)

(5,372,297)

$ (23,182,114)

$ (54,797,648)

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

9. Share Transactions - continued

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended April 30,
2004

Year ended
October 31,
2003

Class B

Shares sold

501,818

5,724,003

$ 5,092,537

$ 59,070,876

Reinvestment of distributions

300,056

562,238

3,025,373

5,768,256

Shares redeemed

(3,699,349)

(11,112,103)

(37,411,242)

(113,895,988)

Net increase (decrease)

(2,897,475)

(4,825,862)

$ (29,293,332)

$ (49,056,856)

Class C

Shares sold

911,163

3,433,368

$ 9,240,157

$ 35,389,290

Reinvestment of distributions

121,868

228,727

1,229,683

2,347,518

Shares redeemed

(1,802,040)

(5,670,985)

(18,252,304)

(58,122,648)

Net increase (decrease)

(769,009)

(2,008,890)

$ (7,782,464)

$ (20,385,840)

Institutional Class

Shares sold

7,622,620

6,469,585

$ 76,691,967

$ 66,283,395

Reinvestment of distributions

281,473

244,539

2,828,928

2,497,316

Shares redeemed

(1,966,763)

(2,100,471)

(19,778,378)

(21,450,436)

Net increase (decrease)

5,937,330

4,613,653

$ 59,742,517

$ 47,330,275

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Investments Money
Management, Inc.

Fidelity International
Investment Advisors

Fidelity International
Investment Advisors (U.K.) Limited

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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

AGOVI-USAN-0604
1.784883.101

Fidelity® Advisor

Value

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

Semiannual Report

April 30, 2004

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

Ned Johnson's message to shareholders.

Investment Summary

<Click Here>

A summary of the fund's investments.

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.

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 Summary

Top Ten Stocks as of April 30, 2004

% of fund's
net assets

Fluor Corp.

1.3

Flextronics International Ltd.

1.2

Ceridian Corp.

1.2

Baxter International, Inc.

1.2

Celestica, Inc. (sub. vtg.)

1.0

St. Paul Companies, Inc.

1.0

Alcan, Inc.

1.0

Precision Castparts Corp.

1.0

Kennametal, Inc.

1.0

Cooper Cameron Corp.

0.9

10.8

Top Five Market Sectors as of April 30, 2004

% of fund's
net assets

Information Technology

15.1

Consumer Discretionary

13.6

Industrials

13.4

Financials

12.9

Energy

11.1

Asset Allocation (% of fund's net assets)

As of April 30, 2004*

Stocks 91.9%

Bonds 1.0%

Convertible
Securities 1.1%

Short-Term Investments
and Net Other Assets 6.0%

* Foreign investments

9.1%



Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 91.9%

Shares

Value (Note 1)

CONSUMER DISCRETIONARY - 13.6%

Auto Components - 0.1%

TRW Automotive Holdings Corp.

180

$ 3,776

Automobiles - 0.3%

Monaco Coach Corp.

550

14,339

Hotels, Restaurants & Leisure - 2.8%

Brinker International, Inc. (a)

160

6,154

Caesars Entertainment, Inc. (a)

480

6,360

Carnival Corp. unit

120

5,120

Harrah's Entertainment, Inc.

250

13,295

Hilton Hotels Corp.

880

15,391

Mandalay Resort Group

380

21,831

Outback Steakhouse, Inc.

480

21,086

Royal Caribbean Cruises Ltd.

490

19,860

Starwood Hotels & Resorts Worldwide, Inc. unit

110

4,377

Wendy's International, Inc.

120

4,680

Yum! Brands, Inc. (a)

530

20,559

138,713

Household Durables - 1.9%

American Greetings Corp. Class A (a)

380

7,790

Furniture Brands International, Inc.

690

19,417

Jarden Corp. (a)

250

9,300

Leggett & Platt, Inc.

760

17,176

Newell Rubbermaid, Inc.

1,100

26,004

Whirlpool Corp.

250

16,378

96,065

Leisure Equipment & Products - 0.7%

Brunswick Corp.

780

32,066

K2, Inc. (a)

230

3,372

RC2 Corp. (a)

50

1,356

36,794

Media - 2.4%

Catalina Marketing Corp. (a)

340

5,637

Clear Channel Communications, Inc.

470

19,500

Cumulus Media, Inc. Class A (a)

420

8,828

E.W. Scripps Co. Class A

100

10,555

Emmis Communications Corp. Class A (a)

810

18,954

NTL, Inc. (a)

40

2,271

Reader's Digest Association, Inc. (non-vtg.)

1,290

18,486

Common Stocks - continued

Shares

Value (Note 1)

CONSUMER DISCRETIONARY - continued

Media - continued

Time Warner, Inc. (a)

1,250

$ 21,025

Viacom, Inc. Class B (non-vtg.)

360

13,914

119,170

Multiline Retail - 1.2%

Big Lots, Inc. (a)

2,040

28,886

Nordstrom, Inc.

860

30,642

59,528

Specialty Retail - 2.9%

American Eagle Outfitters, Inc. (a)

750

19,268

AutoNation, Inc. (a)

690

11,744

Circuit City Stores, Inc.

300

3,504

Foot Locker, Inc.

260

6,240

Limited Brands, Inc.

1,040

21,466

Office Depot, Inc. (a)

560

9,806

Pier 1 Imports, Inc.

470

9,710

Select Comfort Corp. (a)

80

1,939

Sherwin-Williams Co.

410

15,601

Stage Stores, Inc. (a)

260

10,208

Toys 'R' Us, Inc. (a)

2,310

35,690

145,176

Textiles Apparel & Luxury Goods - 1.3%

Liz Claiborne, Inc.

1,040

36,504

Polo Ralph Lauren Corp. Class A

410

14,186

Timberland Co. Class A (a)

170

10,662

Warnaco Group, Inc. (a)

240

4,591

65,943

TOTAL CONSUMER DISCRETIONARY

679,504

CONSUMER STAPLES - 1.3%

Food & Staples Retailing - 0.5%

Safeway, Inc. (a)

1,020

23,409

Food Products - 0.5%

Dean Foods Co. (a)

240

8,059

Hormel Foods Corp.

540

16,465

Interstate Bakeries Corp.

150

1,695

26,219

Common Stocks - continued

Shares

Value (Note 1)

CONSUMER STAPLES - continued

Household Products - 0.3%

Kimberly-Clark Corp.

220

$ 14,399

TOTAL CONSUMER STAPLES

64,027

ENERGY - 11.1%

Energy Equipment & Services - 8.3%

Baker Hughes, Inc.

1,250

45,850

BJ Services Co. (a)

970

43,165

Cooper Cameron Corp. (a)

980

47,383

ENSCO International, Inc.

330

9,032

FMC Technologies, Inc. (a)

460

12,535

GlobalSantaFe Corp.

200

5,274

Grant Prideco, Inc. (a)

1,020

15,555

Helmerich & Payne, Inc.

920

24,831

Maverick Tube Corp. (a)

270

6,110

Nabors Industries Ltd. (a)

490

21,736

National-Oilwell, Inc. (a)

1,150

32,108

Noble Corp. (a)

840

31,214

Pride International, Inc. (a)

500

8,435

Smith International, Inc. (a)

800

43,800

Transocean, Inc. (a)

650

18,051

Varco International, Inc. (a)

1,050

21,725

Weatherford International Ltd. (a)

660

28,697

415,501

Oil & Gas - 2.8%

Apache Corp.

490

20,516

Burlington Resources, Inc.

340

22,872

Cimarex Energy Co. (a)

30

828

ConocoPhillips

300

21,390

EnCana Corp.

520

20,397

Occidental Petroleum Corp.

470

22,184

Premcor, Inc. (a)

510

17,559

Valero Energy Corp.

240

15,302

141,048

TOTAL ENERGY

556,549

FINANCIALS - 12.9%

Capital Markets - 0.7%

Bank of New York Co., Inc.

60

1,748

Common Stocks - continued

Shares

Value (Note 1)

FINANCIALS - continued

Capital Markets - continued

Charles Schwab Corp.

810

$ 8,335

Janus Capital Group, Inc.

650

9,880

Lehman Brothers Holdings, Inc.

200

14,680

34,643

Commercial Banks - 2.4%

Bank of America Corp.

244

19,640

Bank One Corp.

390

19,254

Banknorth Group, Inc.

530

16,234

City National Corp.

60

3,699

Hibernia Corp. Class A

220

4,794

North Fork Bancorp, Inc., New York

100

3,712

UnionBanCal Corp.

310

16,563

Wachovia Corp.

660

30,195

Zions Bancorp

100

5,652

119,743

Consumer Finance - 0.1%

Rewards Network, Inc. (a)

380

3,728

Diversified Financial Services - 0.2%

Citigroup, Inc.

200

9,618

Insurance - 5.6%

ACE Ltd.

570

24,989

AFLAC, Inc.

400

16,892

Allstate Corp.

390

17,901

AMBAC Financial Group, Inc.

310

21,390

Conseco, Inc. (a)

290

5,742

Everest Re Group Ltd.

290

24,702

Marsh & McLennan Companies, Inc.

480

21,648

MBIA, Inc.

360

21,200

MetLife, Inc.

650

22,425

PartnerRe Ltd.

250

14,325

Reinsurance Group of America, Inc.

370

14,363

Scottish Re Group Ltd.

170

3,720

St. Paul Companies, Inc.

1,230

50,024

The Chubb Corp.

300

20,700

280,021

Real Estate - 2.7%

Alexandria Real Estate Equities, Inc.

270

15,341

Apartment Investment & Management Co. Class A

350

9,860

Boston Properties, Inc.

250

11,750

Common Stocks - continued

Shares

Value (Note 1)

FINANCIALS - continued

Real Estate - continued

CenterPoint Properties Trust (SBI)

210

$ 15,141

Duke Realty Corp.

640

18,662

Pan Pacific Retail Properties, Inc.

100

4,393

Public Storage, Inc.

290

12,119

Reckson Associates Realty Corp.

630

14,975

Simon Property Group, Inc.

320

15,427

Vornado Realty Trust

380

19,171

136,839

Thrifts & Mortgage Finance - 1.2%

Countrywide Financial Corp.

570

33,801

Fannie Mae

220

15,118

Freddie Mac

170

9,928

Sovereign Bancorp, Inc.

90

1,798

60,645

TOTAL FINANCIALS

645,237

HEALTH CARE - 8.3%

Biotechnology - 0.3%

CSL Ltd.

517

8,240

Millennium Pharmaceuticals, Inc. (a)

490

7,345

15,585

Health Care Equipment & Supplies - 3.2%

Apogent Technologies, Inc. (a)

240

7,781

Bausch & Lomb, Inc.

180

11,309

Baxter International, Inc.

1,830

57,920

Becton, Dickinson & Co.

430

21,737

Dade Behring Holdings, Inc. (a)

730

33,580

Fisher Scientific International, Inc. (a)

470

27,519

159,846

Health Care Providers & Services - 3.9%

AmerisourceBergen Corp.

40

2,316

Covance, Inc. (a)

370

12,484

HCA, Inc.

950

38,599

Inveresk Research Group, Inc. (a)

290

8,219

Laboratory Corp. of America Holdings (a)

390

15,499

PacifiCare Health Systems, Inc. (a)

170

6,079

Pediatrix Medical Group, Inc. (a)

290

20,735

Quest Diagnostics, Inc.

240

20,244

Common Stocks - continued

Shares

Value (Note 1)

HEALTH CARE - continued

Health Care Providers & Services - continued

Triad Hospitals, Inc. (a)

730

$ 24,827

Universal Health Services, Inc. Class B

810

35,559

WebMD Corp. (a)

1,400

12,306

196,867

Pharmaceuticals - 0.9%

Forest Laboratories, Inc. (a)

240

15,475

Schering-Plough Corp.

1,670

27,939

Wyeth

80

3,046

46,460

TOTAL HEALTH CARE

418,758

INDUSTRIALS - 13.4%

Aerospace & Defense - 2.8%

EADS NV

880

22,246

GenCorp, Inc.

850

9,019

Goodrich Corp.

680

19,577

Honeywell International, Inc.

580

20,056

Lockheed Martin Corp.

230

10,971

Precision Castparts Corp.

1,070

48,161

United Defense Industries, Inc. (a)

300

10,395

140,425

Air Freight & Logistics - 0.4%

CNF, Inc.

590

21,570

Airlines - 0.2%

Ryanair Holdings PLC sponsored ADR (a)

210

6,997

Building Products - 0.7%

Masco Corp.

1,320

36,973

Commercial Services & Supplies - 1.1%

Central Parking Corp.

60

1,145

CoStar Group, Inc. (a)

60

2,366

Herman Miller, Inc.

140

3,679

IKON Office Solutions, Inc.

480

5,342

John H. Harland Co.

120

3,697

Manpower, Inc.

420

19,698

Steelcase, Inc. Class A

1,060

13,027

Tetra Tech, Inc. (a)

70

1,163

Waste Connections, Inc. (a)

60

2,416

52,533

Common Stocks - continued

Shares

Value (Note 1)

INDUSTRIALS - continued

Construction & Engineering - 1.7%

Dycom Industries, Inc. (a)

550

$ 12,969

Fluor Corp.

1,730

66,008

Granite Construction, Inc.

230

4,566

83,543

Electrical Equipment - 0.1%

A.O. Smith Corp.

50

1,495

AMETEK, Inc.

80

2,120

3,615

Industrial Conglomerates - 1.1%

Carlisle Companies, Inc.

140

8,295

Textron, Inc.

480

26,486

Tyco International Ltd.

740

20,313

55,094

Machinery - 4.3%

AGCO Corp. (a)

580

11,165

Albany International Corp. Class A

1,010

30,805

Crane Co.

410

12,632

Eaton Corp.

220

13,064

Harsco Corp.

590

25,683

ITT Industries, Inc.

130

10,308

Kennametal, Inc.

1,110

47,908

SPX Corp.

520

23,062

Terex Corp. (a)

490

16,097

Wabash National Corp. (a)

620

15,754

Watts Water Technologies, Inc. Class A

430

10,531

217,009

Road & Rail - 0.8%

Canadian National Railway Co.

455

17,151

CSX Corp.

640

19,686

Dollar Thrifty Automotive Group, Inc. (a)

160

4,216

41,053

Trading Companies & Distributors - 0.2%

W.W. Grainger, Inc.

220

11,528

TOTAL INDUSTRIALS

670,340

INFORMATION TECHNOLOGY - 15.1%

Communications Equipment - 1.3%

Alcatel SA sponsored ADR (a)

1,360

19,938

Common Stocks - continued

Shares

Value (Note 1)

INFORMATION TECHNOLOGY - continued

Communications Equipment - continued

Andrew Corp. (a)

530

$ 8,984

Motorola, Inc.

2,000

36,500

65,422

Computers & Peripherals - 3.7%

Dell, Inc. (a)

50

1,736

Intergraph Corp. (a)

140

3,529

Komag, Inc. (a)

110

1,398

Maxtor Corp. (a)

5,120

33,331

NCR Corp. (a)

1,030

46,031

Seagate Technology

1,910

23,894

Storage Technology Corp. (a)

1,120

29,422

UNOVA, Inc. (a)

630

11,025

Western Digital Corp. (a)

4,420

35,714

186,080

Electronic Equipment & Instruments - 5.6%

Arrow Electronics, Inc. (a)

1,300

32,864

Avnet, Inc. (a)

1,800

38,952

Celestica, Inc. (sub. vtg.) (a)

2,940

51,810

Flextronics International Ltd. (a)

3,890

62,629

Ingram Micro, Inc. Class A (a)

700

8,365

Merix Corp. (a)

620

9,641

Mettler-Toledo International, Inc. (a)

620

27,788

Solectron Corp. (a)

1,180

5,782

Symbol Technologies, Inc.

1,870

22,440

Thermo Electron Corp. (a)

740

21,608

281,879

Internet Software & Services - 0.0%

iPass, Inc.

200

2,120

IT Services - 2.3%

Affiliated Computer Services, Inc. Class A (a)

80

3,880

BearingPoint, Inc. (a)

1,060

10,621

Ceridian Corp. (a)

2,880

61,574

Computer Sciences Corp. (a)

230

9,409

DST Systems, Inc. (a)

470

20,751

ManTech International Corp. Class A (a)

241

6,049

112,284

Office Electronics - 0.9%

Xerox Corp. (a)

3,360

45,125

Common Stocks - continued

Shares

Value (Note 1)

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - 0.4%

Agere Systems, Inc.:

Class A (a)

1,710

$ 3,865

Class B (a)

1,900

4,123

AMIS Holdings, Inc.

120

1,731

Fairchild Semiconductor International, Inc. (a)

590

11,487

21,206

Software - 0.9%

Cadence Design Systems, Inc. (a)

910

11,666

Network Associates, Inc. (a)

1,520

23,834

Synopsys, Inc. (a)

250

6,683

42,183

TOTAL INFORMATION TECHNOLOGY

756,299

MATERIALS - 9.2%

Chemicals - 2.7%

Albemarle Corp.

300

8,775

BOC Group PLC

130

2,095

Crompton Corp.

680

4,230

Dow Chemical Co.

280

11,113

Ferro Corp.

800

20,712

Georgia Gulf Corp.

250

7,965

Great Lakes Chemical Corp.

510

12,811

Lyondell Chemical Co.

1,200

19,620

NOVA Chemicals Corp.

460

11,739

Olin Corp.

290

5,008

OMNOVA Solutions, Inc. (a)

1,440

6,840

PolyOne Corp. (a)

2,230

15,253

Sensient Technologies Corp.

490

10,025

W.R. Grace & Co. (a)

390

1,115

137,301

Construction Materials - 0.2%

Martin Marietta Materials, Inc.

240

10,380

Containers & Packaging - 1.2%

Anchor Glass Container Corp.

210

3,320

Aptargroup, Inc.

200

7,860

Owens-Illinois, Inc. (a)

2,320

32,387

Common Stocks - continued

Shares

Value (Note 1)

MATERIALS - continued

Containers & Packaging - continued

Packaging Corp. of America

440

$ 9,671

Smurfit-Stone Container Corp. (a)

270

4,641

57,879

Metals & Mining - 4.2%

Agnico-Eagle Mines Ltd.

910

11,054

Alcan, Inc.

1,210

48,628

Alcoa, Inc.

1,450

44,588

Arch Coal, Inc.

640

19,590

IPSCO, Inc.

480

8,714

Newmont Mining Corp.

450

16,830

Nucor Corp.

540

32,076

Phelps Dodge Corp. (a)

260

17,116

Steel Dynamics, Inc. (a)

450

10,832

209,428

Paper & Forest Products - 0.9%

Aracruz Celulose SA sponsored ADR

200

6,228

Bowater, Inc.

250

10,488

International Paper Co.

300

12,096

MeadWestvaco Corp.

590

15,429

44,241

TOTAL MATERIALS

459,229

TELECOMMUNICATION SERVICES - 3.0%

Diversified Telecommunication Services - 2.2%

BellSouth Corp.

760

19,616

CenturyTel, Inc.

400

11,552

Citizens Communications Co. (a)

2,000

26,080

SBC Communications, Inc.

780

19,422

TELUS Corp. (non-vtg.)

430

6,772

Verizon Communications, Inc.

680

25,663

109,105

Wireless Telecommunication Services - 0.8%

American Tower Corp. Class A (a)

1,740

21,663

SpectraSite, Inc. (a)

520

19,432

41,095

TOTAL TELECOMMUNICATION SERVICES

150,200

Common Stocks - continued

Shares

Value (Note 1)

UTILITIES - 4.0%

Electric Utilities - 3.2%

Edison International

1,370

$ 32,058

Entergy Corp.

500

27,300

PG&E Corp. (a)

1,060

29,171

PPL Corp.

670

28,710

TXU Corp.

1,230

41,992

159,231

Multi-Utilities & Unregulated Power - 0.8%

AES Corp. (a)

1,540

13,352

Public Service Enterprise Group, Inc.

160

6,864

SCANA Corp.

350

12,040

Sierra Pacific Resources (a)

1,120

7,930

40,186

TOTAL UTILITIES

199,417

TOTAL COMMON STOCKS

(Cost $4,550,986)

4,599,560

Convertible Preferred Stocks - 1.1%

CONSUMER DISCRETIONARY - 0.0%

Hotels, Restaurants & Leisure - 0.0%

Six Flags, Inc. 7.25% PIERS

100

2,290

FINANCIALS - 0.0%

Insurance - 0.0%

Hartford Financial Services Group, Inc. 6.00%

40

2,365

HEALTH CARE - 0.3%

Health Care Equipment & Supplies - 0.3%

Baxter International, Inc. 7.00%

260

13,991

MATERIALS - 0.3%

Containers & Packaging - 0.3%

Owens-Illinois, Inc. 4.75%

390

13,319

UTILITIES - 0.5%

Electric Utilities - 0.3%

Dominion Resources, Inc. 8.75%

270

14,975

Convertible Preferred Stocks - continued

Shares

Value (Note 1)

UTILITIES - continued

Gas Utilities - 0.2%

KeySpan Corp. 8.75% MEDS

200

$ 10,344

TOTAL UTILITIES

25,319

TOTAL CONVERTIBLE PREFERRED STOCKS

(Cost $56,964)

57,284

Nonconvertible Bonds - 1.0%

Principal
Amount

HEALTH CARE - 1.0%

Health Care Providers & Services - 1.0%

Tenet Healthcare Corp.:

5.375% 11/15/06

$ 25,000

23,500

6.375% 12/1/11

30,000

25,950

49,450

TOTAL NONCONVERTIBLE BONDS

(Cost $49,809)

49,450

Money Market Funds - 4.0%

Shares

Fidelity Cash Central Fund, 1.06% (b)
(Cost $201,568)

201,568

201,568

TOTAL INVESTMENT PORTFOLIO - 98.0%

(Cost $4,859,327)

4,907,862

NET OTHER ASSETS - 2.0%

98,725

NET ASSETS - 100%

$ 5,006,587

Security Type Abbreviations

MEDS

-

Mandatorily Exchangeable Debt Securities

PIERS

-

Preferred Income Equity Redeemable Securities

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.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $5,071,740 and $428,614, respectively.

The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $53 for the period.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (cost $4,859,327) - See accompanying schedule

$ 4,907,862

Cash

15,793

Foreign currency held at value (cost $18)

18

Receivable for investments sold

9,817

Receivable for fund shares sold

137,848

Dividends receivable

3,076

Interest receivable

1,628

Prepaid expenses

48,553

Receivable from investment adviser for expense reductions

19,976

Other receivables

335

Total assets

5,144,906

Liabilities

Payable for investments purchased

$ 29,398

Payable for fund shares redeemed

7,570

Accrued management fee

2,260

Distribution fees payable

2,340

Other affiliated payables

3,588

Other payables and accrued expenses

93,163

Total liabilities

138,319

Net Assets

$ 5,006,587

Net Assets consist of:

Paid in capital

$ 4,951,055

Accumulated net investment loss

(8,479)

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

15,474

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

48,537

Net Assets

$ 5,006,587

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($924,679 ÷ 89,612 shares)

$ 10.32

Maximum offering price per share (100/94.25 of $10.32)

$ 10.95

Class T:
Net Asset Value and redemption price per share ($1,226,078 ÷ 118,905 shares)

$ 10.31

Maximum offering price per share (100/96.50 of $10.31)

$ 10.68

Class B:
Net Asset Value and offering price per share ($1,186,267 ÷ 115,246 shares) A

$ 10.29

Class C:
Net Asset Value and offering price per share ($948,875 ÷ 92,201 shares) A

$ 10.29

Institutional Class:
Net Asset Value, offering price and redemption price per share ($720,688 ÷ 69,774 shares)

$ 10.33

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

December 23, 2003 (commencement of operations) to April 30, 2004 (Unaudited)

Investment Income

Dividends

$ 14,435

Interest

1,872

Total income

16,307

Expenses

Management fee

$ 7,857

Transfer agent fees

3,387

Distribution fees

7,889

Accounting fees and expenses

12,364

Non-interested trustees' compensation

5

Custodian fees and expenses

11,314

Registration fees

33,673

Audit

14,584

Miscellaneous

15

Total expenses before reductions

91,088

Expense reductions

(66,302)

24,786

Net investment income (loss)

(8,479)

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities

15,550

Foreign currency transactions

(76)

Total net realized gain (loss)

15,474

Change in net unrealized appreciation (depreciation) on:

Investment securities

48,535

Assets and liabilities in foreign currencies

2

Total change in net unrealized appreciation (depreciation)

48,537

Net gain (loss)

64,011

Net increase (decrease) in net assets resulting from operations

$ 55,532

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

Semiannual Report

Statement of Changes in Net Assets

December 23, 2003
(commencement
of operations) to
April 30, 2004
(Unaudited)

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ (8,479)

Net realized gain (loss)

15,474

Change in net unrealized appreciation (depreciation)

48,537

Net increase (decrease) in net assets resulting from operations

55,532

Share transactions - net increase (decrease)

4,951,055

Total increase (decrease) in net assets

5,006,587

Net Assets

Beginning of period

-

End of period (including accumulated net investment loss of $8,479)

$ 5,006,587

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

Semiannual Report

Financial Highlights - Class A

April 30, 2004 F

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) E

(.01)

Net realized and unrealized gain (loss)

.33

Total from investment operations

.32

Net asset value, end of period

$ 10.32

Total Return B, C, D

3.20%

Ratios to Average Net Assets G

Expenses before expense reductions

6.27% A

Expenses net of voluntary waivers, if any

1.50% A

Expenses net of all reductions

1.47% A

Net investment income (loss)

(.29)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 925

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class T

April 30, 2004 F

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) E

(.02)

Net realized and unrealized gain (loss)

.33

Total from investment operations

.31

Net asset value, end of period

$ 10.31

Total Return B, C, D

3.10%

Ratios to Average Net Assets G

Expenses before expense reductions

6.52% A

Expenses net of voluntary waivers, if any

1.75% A

Expenses net of all reductions

1.72% A

Net investment income (loss)

(.53)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 1,226

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class B

April 30, 2004 F

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) E

(.04)

Net realized and unrealized gain (loss)

.33

Total from investment operations

.29

Net asset value, end of period

$ 10.29

Total Return B, C, D

2.90%

Ratios to Average Net Assets G

Expenses before expense reductions

7.03% A

Expenses net of voluntary waivers, if any

2.25% A

Expenses net of all reductions

2.22% A

Net investment income (loss)

(1.03)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 1,186

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class C

April 30, 2004 F

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) E

(.04)

Net realized and unrealized gain (loss)

.33

Total from investment operations

.29

Net asset value, end of period

$ 10.29

Total Return B, C, D

2.90%

Ratios to Average Net Assets G

Expenses before expense reductions

7.01% A

Expenses net of voluntary waivers, if any

2.25% A

Expenses net of all reductions

2.22% A

Net investment income (loss)

(1.03)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 949

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Institutional Class

April 30, 2004 E

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) D

-G

Net realized and unrealized gain (loss) D

.33

Total from investment operations

.33

Net asset value, end of period

$ 10.33

Total Return B, C

3.30%

Ratios to Average Net Assets F

Expenses before expense reductions

5.98% A

Expenses net of voluntary waivers, if any

1.25% A

Expenses net of all reductions

1.22% A

Net investment income (loss)

(.04)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 721

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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 Amount represents less than $.01 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Value 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. Equity 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. Debt 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. 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

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. The fund estimates the components of distributions received from Real Estate Investment Trusts (REITs). Distributions received in excess of income are recorded as a reduction of cost of investments and/or as a realized gain. 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.

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. Income dividends and capital gain distributions are declared separately for each class. Distributions are recorded on the ex-dividend date.

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

Semiannual Report

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

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

Unrealized appreciation

$ 229,104

Unrealized depreciation

(180,922)

Net unrealized appreciation (depreciation)

$ 48,182

Cost for federal income tax purposes

$ 4,859,680

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).

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 .30% of the fund's average net assets and a group fee rate that averaged .28% 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

Notes to Financial Statements (Unaudited) - continued

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, except for the Institutional Class. 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%

.25%

$ 641

$ 558

Class T

.25%

.25%

1,540

1,116

Class B

.75%

.25%

3,118

2,896

Class C

.75%

.25%

2,590

2,484

$ 7,889

$ 7,054

Sales Load. FDC receives a front-end sales charge of up to 5.75% 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

$ 1,790

Class T

802

Class B*

-

Class C*

-

$ 2,592

* 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 shareholder reports, except proxy statements.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

For the period the total transfer agent fees paid by each class to FIIOC, were as follows:

Amount

% of
Average
Net Assets*

Class A

$ 647

.25

Class T

778

.25

Class B

848

.27

Class C

637

.25

Institutional Class

477

.21

$ 3,387

* 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 $915 for the period.

Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.

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 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.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

6. Expense Reductions - continued

interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class A

1.50%

$ 12,397

Class T

1.75%

14,915

Class B

2.25%

15,143

Class C

2.25%

12,483

Institutional Class

1.25%

10,964

$ 65,902

Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $400 for the period.

7. Other Information.

At the end of the period, FMR or its affiliates were the owners of record of 62% of the total outstanding shares of the fund

8. Share Transactions.

Transactions for each class of shares were as follows:

December 23, 2003
(commencement of operations)
to April 30, 2004

Shares

Dollars

Class A

Shares sold

89,619

$ 913,408

Shares redeemed

(7)

(70)

Net increase (decrease)

89,612

$ 913,338

Class T

Shares sold

121,681

$ 1,246,526

Shares redeemed

(2,776)

(28,816)

Net increase (decrease)

118,905

$ 1,217,710

Class B

Shares sold

120,426

$ 1,234,546

Shares redeemed

(5,180)

(54,698)

Net increase (decrease)

115,246

$ 1,179,848

Class C

Shares sold

92,201

$ 938,934

Net increase (decrease)

92,201

$ 938,934

Institutional Class

Shares sold

69,774

$ 701,225

Net increase (decrease)

69,774

$ 701,225

Semiannual Report

Semiannual Report

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

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

Fidelity Investments Institutional Operations Company, Inc.

Boston, MA

Custodian

Mellon Bank, N.A.

Pittsburgh, PA

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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

FAV-USAN-0604
1.800649.100

Fidelity® Advisor

Value

Fund - Institutional Class

Semiannual Report

April 30, 2004

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

Ned Johnson's message to shareholders.

Investment Summary

<Click Here>

A summary of the fund's investments.

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.

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 Summary

Top Ten Stocks as of April 30, 2004

% of fund's
net assets

Fluor Corp.

1.3

Flextronics International Ltd.

1.2

Ceridian Corp.

1.2

Baxter International, Inc.

1.2

Celestica, Inc. (sub. vtg.)

1.0

St. Paul Companies, Inc.

1.0

Alcan, Inc.

1.0

Precision Castparts Corp.

1.0

Kennametal, Inc.

1.0

Cooper Cameron Corp.

0.9

10.8

Top Five Market Sectors as of April 30, 2004

% of fund's
net assets

Information Technology

15.1

Consumer Discretionary

13.6

Industrials

13.4

Financials

12.9

Energy

11.1

Asset Allocation (% of fund's net assets)

As of April 30, 2004*

Stocks 91.9%

Bonds 1.0%

Convertible
Securities 1.1%

Short-Term Investments
and Net Other Assets 6.0%

* Foreign investments

9.1%



Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 91.9%

Shares

Value (Note 1)

CONSUMER DISCRETIONARY - 13.6%

Auto Components - 0.1%

TRW Automotive Holdings Corp.

180

$ 3,776

Automobiles - 0.3%

Monaco Coach Corp.

550

14,339

Hotels, Restaurants & Leisure - 2.8%

Brinker International, Inc. (a)

160

6,154

Caesars Entertainment, Inc. (a)

480

6,360

Carnival Corp. unit

120

5,120

Harrah's Entertainment, Inc.

250

13,295

Hilton Hotels Corp.

880

15,391

Mandalay Resort Group

380

21,831

Outback Steakhouse, Inc.

480

21,086

Royal Caribbean Cruises Ltd.

490

19,860

Starwood Hotels & Resorts Worldwide, Inc. unit

110

4,377

Wendy's International, Inc.

120

4,680

Yum! Brands, Inc. (a)

530

20,559

138,713

Household Durables - 1.9%

American Greetings Corp. Class A (a)

380

7,790

Furniture Brands International, Inc.

690

19,417

Jarden Corp. (a)

250

9,300

Leggett & Platt, Inc.

760

17,176

Newell Rubbermaid, Inc.

1,100

26,004

Whirlpool Corp.

250

16,378

96,065

Leisure Equipment & Products - 0.7%

Brunswick Corp.

780

32,066

K2, Inc. (a)

230

3,372

RC2 Corp. (a)

50

1,356

36,794

Media - 2.4%

Catalina Marketing Corp. (a)

340

5,637

Clear Channel Communications, Inc.

470

19,500

Cumulus Media, Inc. Class A (a)

420

8,828

E.W. Scripps Co. Class A

100

10,555

Emmis Communications Corp. Class A (a)

810

18,954

NTL, Inc. (a)

40

2,271

Reader's Digest Association, Inc. (non-vtg.)

1,290

18,486

Common Stocks - continued

Shares

Value (Note 1)

CONSUMER DISCRETIONARY - continued

Media - continued

Time Warner, Inc. (a)

1,250

$ 21,025

Viacom, Inc. Class B (non-vtg.)

360

13,914

119,170

Multiline Retail - 1.2%

Big Lots, Inc. (a)

2,040

28,886

Nordstrom, Inc.

860

30,642

59,528

Specialty Retail - 2.9%

American Eagle Outfitters, Inc. (a)

750

19,268

AutoNation, Inc. (a)

690

11,744

Circuit City Stores, Inc.

300

3,504

Foot Locker, Inc.

260

6,240

Limited Brands, Inc.

1,040

21,466

Office Depot, Inc. (a)

560

9,806

Pier 1 Imports, Inc.

470

9,710

Select Comfort Corp. (a)

80

1,939

Sherwin-Williams Co.

410

15,601

Stage Stores, Inc. (a)

260

10,208

Toys 'R' Us, Inc. (a)

2,310

35,690

145,176

Textiles Apparel & Luxury Goods - 1.3%

Liz Claiborne, Inc.

1,040

36,504

Polo Ralph Lauren Corp. Class A

410

14,186

Timberland Co. Class A (a)

170

10,662

Warnaco Group, Inc. (a)

240

4,591

65,943

TOTAL CONSUMER DISCRETIONARY

679,504

CONSUMER STAPLES - 1.3%

Food & Staples Retailing - 0.5%

Safeway, Inc. (a)

1,020

23,409

Food Products - 0.5%

Dean Foods Co. (a)

240

8,059

Hormel Foods Corp.

540

16,465

Interstate Bakeries Corp.

150

1,695

26,219

Common Stocks - continued

Shares

Value (Note 1)

CONSUMER STAPLES - continued

Household Products - 0.3%

Kimberly-Clark Corp.

220

$ 14,399

TOTAL CONSUMER STAPLES

64,027

ENERGY - 11.1%

Energy Equipment & Services - 8.3%

Baker Hughes, Inc.

1,250

45,850

BJ Services Co. (a)

970

43,165

Cooper Cameron Corp. (a)

980

47,383

ENSCO International, Inc.

330

9,032

FMC Technologies, Inc. (a)

460

12,535

GlobalSantaFe Corp.

200

5,274

Grant Prideco, Inc. (a)

1,020

15,555

Helmerich & Payne, Inc.

920

24,831

Maverick Tube Corp. (a)

270

6,110

Nabors Industries Ltd. (a)

490

21,736

National-Oilwell, Inc. (a)

1,150

32,108

Noble Corp. (a)

840

31,214

Pride International, Inc. (a)

500

8,435

Smith International, Inc. (a)

800

43,800

Transocean, Inc. (a)

650

18,051

Varco International, Inc. (a)

1,050

21,725

Weatherford International Ltd. (a)

660

28,697

415,501

Oil & Gas - 2.8%

Apache Corp.

490

20,516

Burlington Resources, Inc.

340

22,872

Cimarex Energy Co. (a)

30

828

ConocoPhillips

300

21,390

EnCana Corp.

520

20,397

Occidental Petroleum Corp.

470

22,184

Premcor, Inc. (a)

510

17,559

Valero Energy Corp.

240

15,302

141,048

TOTAL ENERGY

556,549

FINANCIALS - 12.9%

Capital Markets - 0.7%

Bank of New York Co., Inc.

60

1,748

Common Stocks - continued

Shares

Value (Note 1)

FINANCIALS - continued

Capital Markets - continued

Charles Schwab Corp.

810

$ 8,335

Janus Capital Group, Inc.

650

9,880

Lehman Brothers Holdings, Inc.

200

14,680

34,643

Commercial Banks - 2.4%

Bank of America Corp.

244

19,640

Bank One Corp.

390

19,254

Banknorth Group, Inc.

530

16,234

City National Corp.

60

3,699

Hibernia Corp. Class A

220

4,794

North Fork Bancorp, Inc., New York

100

3,712

UnionBanCal Corp.

310

16,563

Wachovia Corp.

660

30,195

Zions Bancorp

100

5,652

119,743

Consumer Finance - 0.1%

Rewards Network, Inc. (a)

380

3,728

Diversified Financial Services - 0.2%

Citigroup, Inc.

200

9,618

Insurance - 5.6%

ACE Ltd.

570

24,989

AFLAC, Inc.

400

16,892

Allstate Corp.

390

17,901

AMBAC Financial Group, Inc.

310

21,390

Conseco, Inc. (a)

290

5,742

Everest Re Group Ltd.

290

24,702

Marsh & McLennan Companies, Inc.

480

21,648

MBIA, Inc.

360

21,200

MetLife, Inc.

650

22,425

PartnerRe Ltd.

250

14,325

Reinsurance Group of America, Inc.

370

14,363

Scottish Re Group Ltd.

170

3,720

St. Paul Companies, Inc.

1,230

50,024

The Chubb Corp.

300

20,700

280,021

Real Estate - 2.7%

Alexandria Real Estate Equities, Inc.

270

15,341

Apartment Investment & Management Co. Class A

350

9,860

Boston Properties, Inc.

250

11,750

Common Stocks - continued

Shares

Value (Note 1)

FINANCIALS - continued

Real Estate - continued

CenterPoint Properties Trust (SBI)

210

$ 15,141

Duke Realty Corp.

640

18,662

Pan Pacific Retail Properties, Inc.

100

4,393

Public Storage, Inc.

290

12,119

Reckson Associates Realty Corp.

630

14,975

Simon Property Group, Inc.

320

15,427

Vornado Realty Trust

380

19,171

136,839

Thrifts & Mortgage Finance - 1.2%

Countrywide Financial Corp.

570

33,801

Fannie Mae

220

15,118

Freddie Mac

170

9,928

Sovereign Bancorp, Inc.

90

1,798

60,645

TOTAL FINANCIALS

645,237

HEALTH CARE - 8.3%

Biotechnology - 0.3%

CSL Ltd.

517

8,240

Millennium Pharmaceuticals, Inc. (a)

490

7,345

15,585

Health Care Equipment & Supplies - 3.2%

Apogent Technologies, Inc. (a)

240

7,781

Bausch & Lomb, Inc.

180

11,309

Baxter International, Inc.

1,830

57,920

Becton, Dickinson & Co.

430

21,737

Dade Behring Holdings, Inc. (a)

730

33,580

Fisher Scientific International, Inc. (a)

470

27,519

159,846

Health Care Providers & Services - 3.9%

AmerisourceBergen Corp.

40

2,316

Covance, Inc. (a)

370

12,484

HCA, Inc.

950

38,599

Inveresk Research Group, Inc. (a)

290

8,219

Laboratory Corp. of America Holdings (a)

390

15,499

PacifiCare Health Systems, Inc. (a)

170

6,079

Pediatrix Medical Group, Inc. (a)

290

20,735

Quest Diagnostics, Inc.

240

20,244

Common Stocks - continued

Shares

Value (Note 1)

HEALTH CARE - continued

Health Care Providers & Services - continued

Triad Hospitals, Inc. (a)

730

$ 24,827

Universal Health Services, Inc. Class B

810

35,559

WebMD Corp. (a)

1,400

12,306

196,867

Pharmaceuticals - 0.9%

Forest Laboratories, Inc. (a)

240

15,475

Schering-Plough Corp.

1,670

27,939

Wyeth

80

3,046

46,460

TOTAL HEALTH CARE

418,758

INDUSTRIALS - 13.4%

Aerospace & Defense - 2.8%

EADS NV

880

22,246

GenCorp, Inc.

850

9,019

Goodrich Corp.

680

19,577

Honeywell International, Inc.

580

20,056

Lockheed Martin Corp.

230

10,971

Precision Castparts Corp.

1,070

48,161

United Defense Industries, Inc. (a)

300

10,395

140,425

Air Freight & Logistics - 0.4%

CNF, Inc.

590

21,570

Airlines - 0.2%

Ryanair Holdings PLC sponsored ADR (a)

210

6,997

Building Products - 0.7%

Masco Corp.

1,320

36,973

Commercial Services & Supplies - 1.1%

Central Parking Corp.

60

1,145

CoStar Group, Inc. (a)

60

2,366

Herman Miller, Inc.

140

3,679

IKON Office Solutions, Inc.

480

5,342

John H. Harland Co.

120

3,697

Manpower, Inc.

420

19,698

Steelcase, Inc. Class A

1,060

13,027

Tetra Tech, Inc. (a)

70

1,163

Waste Connections, Inc. (a)

60

2,416

52,533

Common Stocks - continued

Shares

Value (Note 1)

INDUSTRIALS - continued

Construction & Engineering - 1.7%

Dycom Industries, Inc. (a)

550

$ 12,969

Fluor Corp.

1,730

66,008

Granite Construction, Inc.

230

4,566

83,543

Electrical Equipment - 0.1%

A.O. Smith Corp.

50

1,495

AMETEK, Inc.

80

2,120

3,615

Industrial Conglomerates - 1.1%

Carlisle Companies, Inc.

140

8,295

Textron, Inc.

480

26,486

Tyco International Ltd.

740

20,313

55,094

Machinery - 4.3%

AGCO Corp. (a)

580

11,165

Albany International Corp. Class A

1,010

30,805

Crane Co.

410

12,632

Eaton Corp.

220

13,064

Harsco Corp.

590

25,683

ITT Industries, Inc.

130

10,308

Kennametal, Inc.

1,110

47,908

SPX Corp.

520

23,062

Terex Corp. (a)

490

16,097

Wabash National Corp. (a)

620

15,754

Watts Water Technologies, Inc. Class A

430

10,531

217,009

Road & Rail - 0.8%

Canadian National Railway Co.

455

17,151

CSX Corp.

640

19,686

Dollar Thrifty Automotive Group, Inc. (a)

160

4,216

41,053

Trading Companies & Distributors - 0.2%

W.W. Grainger, Inc.

220

11,528

TOTAL INDUSTRIALS

670,340

INFORMATION TECHNOLOGY - 15.1%

Communications Equipment - 1.3%

Alcatel SA sponsored ADR (a)

1,360

19,938

Common Stocks - continued

Shares

Value (Note 1)

INFORMATION TECHNOLOGY - continued

Communications Equipment - continued

Andrew Corp. (a)

530

$ 8,984

Motorola, Inc.

2,000

36,500

65,422

Computers & Peripherals - 3.7%

Dell, Inc. (a)

50

1,736

Intergraph Corp. (a)

140

3,529

Komag, Inc. (a)

110

1,398

Maxtor Corp. (a)

5,120

33,331

NCR Corp. (a)

1,030

46,031

Seagate Technology

1,910

23,894

Storage Technology Corp. (a)

1,120

29,422

UNOVA, Inc. (a)

630

11,025

Western Digital Corp. (a)

4,420

35,714

186,080

Electronic Equipment & Instruments - 5.6%

Arrow Electronics, Inc. (a)

1,300

32,864

Avnet, Inc. (a)

1,800

38,952

Celestica, Inc. (sub. vtg.) (a)

2,940

51,810

Flextronics International Ltd. (a)

3,890

62,629

Ingram Micro, Inc. Class A (a)

700

8,365

Merix Corp. (a)

620

9,641

Mettler-Toledo International, Inc. (a)

620

27,788

Solectron Corp. (a)

1,180

5,782

Symbol Technologies, Inc.

1,870

22,440

Thermo Electron Corp. (a)

740

21,608

281,879

Internet Software & Services - 0.0%

iPass, Inc.

200

2,120

IT Services - 2.3%

Affiliated Computer Services, Inc. Class A (a)

80

3,880

BearingPoint, Inc. (a)

1,060

10,621

Ceridian Corp. (a)

2,880

61,574

Computer Sciences Corp. (a)

230

9,409

DST Systems, Inc. (a)

470

20,751

ManTech International Corp. Class A (a)

241

6,049

112,284

Office Electronics - 0.9%

Xerox Corp. (a)

3,360

45,125

Common Stocks - continued

Shares

Value (Note 1)

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - 0.4%

Agere Systems, Inc.:

Class A (a)

1,710

$ 3,865

Class B (a)

1,900

4,123

AMIS Holdings, Inc.

120

1,731

Fairchild Semiconductor International, Inc. (a)

590

11,487

21,206

Software - 0.9%

Cadence Design Systems, Inc. (a)

910

11,666

Network Associates, Inc. (a)

1,520

23,834

Synopsys, Inc. (a)

250

6,683

42,183

TOTAL INFORMATION TECHNOLOGY

756,299

MATERIALS - 9.2%

Chemicals - 2.7%

Albemarle Corp.

300

8,775

BOC Group PLC

130

2,095

Crompton Corp.

680

4,230

Dow Chemical Co.

280

11,113

Ferro Corp.

800

20,712

Georgia Gulf Corp.

250

7,965

Great Lakes Chemical Corp.

510

12,811

Lyondell Chemical Co.

1,200

19,620

NOVA Chemicals Corp.

460

11,739

Olin Corp.

290

5,008

OMNOVA Solutions, Inc. (a)

1,440

6,840

PolyOne Corp. (a)

2,230

15,253

Sensient Technologies Corp.

490

10,025

W.R. Grace & Co. (a)

390

1,115

137,301

Construction Materials - 0.2%

Martin Marietta Materials, Inc.

240

10,380

Containers & Packaging - 1.2%

Anchor Glass Container Corp.

210

3,320

Aptargroup, Inc.

200

7,860

Owens-Illinois, Inc. (a)

2,320

32,387

Common Stocks - continued

Shares

Value (Note 1)

MATERIALS - continued

Containers & Packaging - continued

Packaging Corp. of America

440

$ 9,671

Smurfit-Stone Container Corp. (a)

270

4,641

57,879

Metals & Mining - 4.2%

Agnico-Eagle Mines Ltd.

910

11,054

Alcan, Inc.

1,210

48,628

Alcoa, Inc.

1,450

44,588

Arch Coal, Inc.

640

19,590

IPSCO, Inc.

480

8,714

Newmont Mining Corp.

450

16,830

Nucor Corp.

540

32,076

Phelps Dodge Corp. (a)

260

17,116

Steel Dynamics, Inc. (a)

450

10,832

209,428

Paper & Forest Products - 0.9%

Aracruz Celulose SA sponsored ADR

200

6,228

Bowater, Inc.

250

10,488

International Paper Co.

300

12,096

MeadWestvaco Corp.

590

15,429

44,241

TOTAL MATERIALS

459,229

TELECOMMUNICATION SERVICES - 3.0%

Diversified Telecommunication Services - 2.2%

BellSouth Corp.

760

19,616

CenturyTel, Inc.

400

11,552

Citizens Communications Co. (a)

2,000

26,080

SBC Communications, Inc.

780

19,422

TELUS Corp. (non-vtg.)

430

6,772

Verizon Communications, Inc.

680

25,663

109,105

Wireless Telecommunication Services - 0.8%

American Tower Corp. Class A (a)

1,740

21,663

SpectraSite, Inc. (a)

520

19,432

41,095

TOTAL TELECOMMUNICATION SERVICES

150,200

Common Stocks - continued

Shares

Value (Note 1)

UTILITIES - 4.0%

Electric Utilities - 3.2%

Edison International

1,370

$ 32,058

Entergy Corp.

500

27,300

PG&E Corp. (a)

1,060

29,171

PPL Corp.

670

28,710

TXU Corp.

1,230

41,992

159,231

Multi-Utilities & Unregulated Power - 0.8%

AES Corp. (a)

1,540

13,352

Public Service Enterprise Group, Inc.

160

6,864

SCANA Corp.

350

12,040

Sierra Pacific Resources (a)

1,120

7,930

40,186

TOTAL UTILITIES

199,417

TOTAL COMMON STOCKS

(Cost $4,550,986)

4,599,560

Convertible Preferred Stocks - 1.1%

CONSUMER DISCRETIONARY - 0.0%

Hotels, Restaurants & Leisure - 0.0%

Six Flags, Inc. 7.25% PIERS

100

2,290

FINANCIALS - 0.0%

Insurance - 0.0%

Hartford Financial Services Group, Inc. 6.00%

40

2,365

HEALTH CARE - 0.3%

Health Care Equipment & Supplies - 0.3%

Baxter International, Inc. 7.00%

260

13,991

MATERIALS - 0.3%

Containers & Packaging - 0.3%

Owens-Illinois, Inc. 4.75%

390

13,319

UTILITIES - 0.5%

Electric Utilities - 0.3%

Dominion Resources, Inc. 8.75%

270

14,975

Convertible Preferred Stocks - continued

Shares

Value (Note 1)

UTILITIES - continued

Gas Utilities - 0.2%

KeySpan Corp. 8.75% MEDS

200

$ 10,344

TOTAL UTILITIES

25,319

TOTAL CONVERTIBLE PREFERRED STOCKS

(Cost $56,964)

57,284

Nonconvertible Bonds - 1.0%

Principal
Amount

HEALTH CARE - 1.0%

Health Care Providers & Services - 1.0%

Tenet Healthcare Corp.:

5.375% 11/15/06

$ 25,000

23,500

6.375% 12/1/11

30,000

25,950

49,450

TOTAL NONCONVERTIBLE BONDS

(Cost $49,809)

49,450

Money Market Funds - 4.0%

Shares

Fidelity Cash Central Fund, 1.06% (b)
(Cost $201,568)

201,568

201,568

TOTAL INVESTMENT PORTFOLIO - 98.0%

(Cost $4,859,327)

4,907,862

NET OTHER ASSETS - 2.0%

98,725

NET ASSETS - 100%

$ 5,006,587

Security Type Abbreviations

MEDS

-

Mandatorily Exchangeable Debt Securities

PIERS

-

Preferred Income Equity Redeemable Securities

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.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $5,071,740 and $428,614, respectively.

The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $53 for the period.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (cost $4,859,327) - See accompanying schedule

$ 4,907,862

Cash

15,793

Foreign currency held at value (cost $18)

18

Receivable for investments sold

9,817

Receivable for fund shares sold

137,848

Dividends receivable

3,076

Interest receivable

1,628

Prepaid expenses

48,553

Receivable from investment adviser for expense reductions

19,976

Other receivables

335

Total assets

5,144,906

Liabilities

Payable for investments purchased

$ 29,398

Payable for fund shares redeemed

7,570

Accrued management fee

2,260

Distribution fees payable

2,340

Other affiliated payables

3,588

Other payables and accrued expenses

93,163

Total liabilities

138,319

Net Assets

$ 5,006,587

Net Assets consist of:

Paid in capital

$ 4,951,055

Accumulated net investment loss

(8,479)

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

15,474

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

48,537

Net Assets

$ 5,006,587

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($924,679 ÷ 89,612 shares)

$ 10.32

Maximum offering price per share (100/94.25 of $10.32)

$ 10.95

Class T:
Net Asset Value and redemption price per share ($1,226,078 ÷ 118,905 shares)

$ 10.31

Maximum offering price per share (100/96.50 of $10.31)

$ 10.68

Class B:
Net Asset Value and offering price per share ($1,186,267 ÷ 115,246 shares) A

$ 10.29

Class C:
Net Asset Value and offering price per share ($948,875 ÷ 92,201 shares) A

$ 10.29

Institutional Class:
Net Asset Value, offering price and redemption price per share ($720,688 ÷ 69,774 shares)

$ 10.33

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

December 23, 2003 (commencement of operations) to April 30, 2004 (Unaudited)

Investment Income

Dividends

$ 14,435

Interest

1,872

Total income

16,307

Expenses

Management fee

$ 7,857

Transfer agent fees

3,387

Distribution fees

7,889

Accounting fees and expenses

12,364

Non-interested trustees' compensation

5

Custodian fees and expenses

11,314

Registration fees

33,673

Audit

14,584

Miscellaneous

15

Total expenses before reductions

91,088

Expense reductions

(66,302)

24,786

Net investment income (loss)

(8,479)

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities

15,550

Foreign currency transactions

(76)

Total net realized gain (loss)

15,474

Change in net unrealized appreciation (depreciation) on:

Investment securities

48,535

Assets and liabilities in foreign currencies

2

Total change in net unrealized appreciation (depreciation)

48,537

Net gain (loss)

64,011

Net increase (decrease) in net assets resulting from operations

$ 55,532

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

Semiannual Report

Statement of Changes in Net Assets

December 23, 2003
(commencement
of operations) to
April 30, 2004
(Unaudited)

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ (8,479)

Net realized gain (loss)

15,474

Change in net unrealized appreciation (depreciation)

48,537

Net increase (decrease) in net assets resulting from operations

55,532

Share transactions - net increase (decrease)

4,951,055

Total increase (decrease) in net assets

5,006,587

Net Assets

Beginning of period

-

End of period (including accumulated net investment loss of $8,479)

$ 5,006,587

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

Semiannual Report

Financial Highlights - Class A

April 30, 2004 F

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) E

(.01)

Net realized and unrealized gain (loss)

.33

Total from investment operations

.32

Net asset value, end of period

$ 10.32

Total Return B, C, D

3.20%

Ratios to Average Net Assets G

Expenses before expense reductions

6.27% A

Expenses net of voluntary waivers, if any

1.50% A

Expenses net of all reductions

1.47% A

Net investment income (loss)

(.29)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 925

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class T

April 30, 2004 F

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) E

(.02)

Net realized and unrealized gain (loss)

.33

Total from investment operations

.31

Net asset value, end of period

$ 10.31

Total Return B, C, D

3.10%

Ratios to Average Net Assets G

Expenses before expense reductions

6.52% A

Expenses net of voluntary waivers, if any

1.75% A

Expenses net of all reductions

1.72% A

Net investment income (loss)

(.53)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 1,226

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class B

April 30, 2004 F

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) E

(.04)

Net realized and unrealized gain (loss)

.33

Total from investment operations

.29

Net asset value, end of period

$ 10.29

Total Return B, C, D

2.90%

Ratios to Average Net Assets G

Expenses before expense reductions

7.03% A

Expenses net of voluntary waivers, if any

2.25% A

Expenses net of all reductions

2.22% A

Net investment income (loss)

(1.03)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 1,186

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class C

April 30, 2004 F

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) E

(.04)

Net realized and unrealized gain (loss)

.33

Total from investment operations

.29

Net asset value, end of period

$ 10.29

Total Return B, C, D

2.90%

Ratios to Average Net Assets G

Expenses before expense reductions

7.01% A

Expenses net of voluntary waivers, if any

2.25% A

Expenses net of all reductions

2.22% A

Net investment income (loss)

(1.03)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 949

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Institutional Class

April 30, 2004 E

(Unaudited)

Selected Per-Share Data

Net asset value, beginning of period

$ 10.00

Income from Investment Operations

Net investment income (loss) D

-G

Net realized and unrealized gain (loss) D

.33

Total from investment operations

.33

Net asset value, end of period

$ 10.33

Total Return B, C

3.30%

Ratios to Average Net Assets F

Expenses before expense reductions

5.98% A

Expenses net of voluntary waivers, if any

1.25% A

Expenses net of all reductions

1.22% A

Net investment income (loss)

(.04)% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 721

Portfolio turnover rate

33% A

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 For the period December 23, 2003 (commencement of operations) to April 30, 2004.

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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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 Amount represents less than $.01 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Value 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. Equity 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. Debt 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. 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

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. The fund estimates the components of distributions received from Real Estate Investment Trusts (REITs). Distributions received in excess of income are recorded as a reduction of cost of investments and/or as a realized gain. 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.

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. Income dividends and capital gain distributions are declared separately for each class. Distributions are recorded on the ex-dividend date.

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

Semiannual Report

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

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

Unrealized appreciation

$ 229,104

Unrealized depreciation

(180,922)

Net unrealized appreciation (depreciation)

$ 48,182

Cost for federal income tax purposes

$ 4,859,680

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).

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 .30% of the fund's average net assets and a group fee rate that averaged .28% 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

Notes to Financial Statements (Unaudited) - continued

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, except for the Institutional Class. 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%

.25%

$ 641

$ 558

Class T

.25%

.25%

1,540

1,116

Class B

.75%

.25%

3,118

2,896

Class C

.75%

.25%

2,590

2,484

$ 7,889

$ 7,054

Sales Load. FDC receives a front-end sales charge of up to 5.75% 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

$ 1,790

Class T

802

Class B*

-

Class C*

-

$ 2,592

* 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 shareholder reports, except proxy statements.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

For the period the total transfer agent fees paid by each class to FIIOC, were as follows:

Amount

% of
Average
Net Assets*

Class A

$ 647

.25

Class T

778

.25

Class B

848

.27

Class C

637

.25

Institutional Class

477

.21

$ 3,387

* 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 $915 for the period.

Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.

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 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.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

6. Expense Reductions - continued

interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class A

1.50%

$ 12,397

Class T

1.75%

14,915

Class B

2.25%

15,143

Class C

2.25%

12,483

Institutional Class

1.25%

10,964

$ 65,902

Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $400 for the period.

7. Other Information.

At the end of the period, FMR or its affiliates were the owners of record of 62% of the total outstanding shares of the fund

8. Share Transactions.

Transactions for each class of shares were as follows:

December 23, 2003
(commencement of operations)
to April 30, 2004

Shares

Dollars

Class A

Shares sold

89,619

$ 913,408

Shares redeemed

(7)

(70)

Net increase (decrease)

89,612

$ 913,338

Class T

Shares sold

121,681

$ 1,246,526

Shares redeemed

(2,776)

(28,816)

Net increase (decrease)

118,905

$ 1,217,710

Class B

Shares sold

120,426

$ 1,234,546

Shares redeemed

(5,180)

(54,698)

Net increase (decrease)

115,246

$ 1,179,848

Class C

Shares sold

92,201

$ 938,934

Net increase (decrease)

92,201

$ 938,934

Institutional Class

Shares sold

69,774

$ 701,225

Net increase (decrease)

69,774

$ 701,225

Semiannual Report

Semiannual Report

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

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

Fidelity Investments Institutional Operations Company, Inc.

Boston, MA

Custodian

Mellon Bank, N.A.

Pittsburgh, PA

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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

FAVI-USAN-0604
1.800652.100

Fidelity® Advisor

Short Fixed-Income

Fund - Institutional Class

Semiannual Report

April 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.

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

Quality Diversification (% of fund's net assets)

As of April 30, 2004*

As of October 31, 2003**

U.S. Government and
U.S. Government
Agency Obligations 26.3%

U.S. Government and
U.S. Government
Agency Obligations 28.4%

AAA 24.3%

AAA 21.3%

AA 5.5%

AA 3.8%

A 15.6%

A 15.7%

BBB 15.8%

BBB 14.3%

BB and Below 1.2%

BB and Below 2.1%

Not Rated 1.1%

Not Rated 4.4%

Short-Term
Investments and
Net Other Assets 10.2%

Short-Term
Investments and
Net Other Assets 10.0%



We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. Securities rated BB or below were rated investment grade at the time of acquisition.

Average Years to Maturity as of April 30, 2004

6 months ago

Years

2.5

2.4

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

1.9

1.8

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Asset Allocation (% of fund's net assets)

As of April 30, 2004 *

As of October 31, 2003**

Corporate Bonds 22.0%

Corporate Bonds 23.8%

U.S. Government and
U.S. Government
Agency Obligations 26.3%

U.S. Government and
U.S. Government
Agency Obligations 28.4%

Asset-Backed
Securities 26.2%

Asset-Backed
Securities 25.9%

CMOs and Other Mortgage Related Securities 15.0%

CMOs and Other Mortgage Related Securities 11.5%

Other Investments 0.3%

Other Investments 0.4%

Short-Term
Investments and
Net Other Assets 10.2%

Short-Term
Investments and
Net Other Assets 10.0%

* Foreign investments

4.7%

** Foreign investments

4.0%

* Futures and Swaps

19.4%

** Futures and Swaps

12.8%



The information in the above tables is based on the combined investments of the fund and its pro-rata share of the investments of Fidelity's fixed-income central fund.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Nonconvertible Bonds - 21.3%

Principal
Amount

Value
(Note 1)

CONSUMER DISCRETIONARY - 3.6%

Auto Components - 0.5%

DaimlerChrysler NA Holding Corp.:

4.05% 6/4/08

$ 650,000

$ 638,474

4.75% 1/15/08

2,250,000

2,282,567

6.9% 9/1/04

1,500,000

1,523,289

7.4% 1/20/05

400,000

415,254

7.75% 6/15/05

1,100,000

1,166,954

6,026,538

Media - 3.0%

AOL Time Warner, Inc.:

5.625% 5/1/05

1,150,000

1,191,732

6.15% 5/1/07

1,825,000

1,952,491

British Sky Broadcasting Group PLC (BSkyB) yankee 7.3% 10/15/06

2,350,000

2,575,917

Continental Cablevision, Inc.:

8.3% 5/15/06

3,200,000

3,525,882

9% 9/1/08

1,400,000

1,648,779

Cox Communications, Inc.:

6.875% 6/15/05

2,025,000

2,125,705

7.5% 8/15/04

1,450,000

1,473,258

7.75% 8/15/06

600,000

662,174

Cox Enterprises, Inc. 4.375% 5/1/08 (a)

1,370,000

1,376,716

Liberty Media Corp. 2.61% 9/17/06 (e)

4,000,000

4,069,936

News America, Inc. 6.625% 1/9/08

3,000,000

3,273,951

TCI Communications, Inc. 8% 8/1/05

3,610,000

3,853,924

Time Warner, Inc. 7.75% 6/15/05

5,050,000

5,331,093

Univision Communications, Inc.:

3.5% 10/15/07

535,000

529,178

3.875% 10/15/08

585,000

574,795

34,165,531

Specialty Retail - 0.0%

Boise Cascade Corp. 7.5% 2/1/08

525,000

564,424

Textiles Apparel & Luxury Goods - 0.1%

Jones Apparel Group, Inc. 7.5% 6/15/04

800,000

805,042

TOTAL CONSUMER DISCRETIONARY

41,561,535

CONSUMER STAPLES - 0.9%

Food & Staples Retailing - 0.2%

Fred Meyer, Inc. 7.375% 3/1/05

2,510,000

2,620,395

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

CONSUMER STAPLES - continued

Food Products - 0.3%

Kraft Foods, Inc. 5.25% 6/1/07

$ 3,265,000

$ 3,430,842

Tobacco - 0.4%

Altria Group, Inc. 5.625% 11/4/08

2,000,000

2,053,036

Philip Morris Companies, Inc. 6.375% 2/1/06

2,000,000

2,097,400

4,150,436

TOTAL CONSUMER STAPLES

10,201,673

ENERGY - 0.5%

Energy Equipment & Services - 0.2%

Cooper Cameron Corp. 2.65% 4/15/07

1,335,000

1,304,182

Petroliam Nasional BHD (Petronas) yankee 8.875% 8/1/04 (a)

1,135,000

1,153,093

2,457,275

Oil & Gas - 0.3%

Duke Energy Field Services LLC 5.75% 11/15/06

695,000

733,819

Kerr-McGee Corp. 5.375% 4/15/05

1,375,000

1,411,715

Pemex Project Funding Master Trust 2.64% 1/7/05 (a)(e)

1,700,000

1,715,300

3,860,834

TOTAL ENERGY

6,318,109

FINANCIALS - 10.3%

Capital Markets - 1.5%

ABN-AMRO Bank NV, Chicago 7.25% 5/31/05

610,000

643,427

Bank of New York Co., Inc.:

3.4% 3/15/13 (e)

2,750,000

2,664,230

4.25% 9/4/12 (e)

1,285,000

1,291,518

Goldman Sachs Group LP 7.2% 11/1/06 (a)

500,000

550,291

Goldman Sachs Group, Inc. 4.125% 1/15/08

2,995,000

3,035,666

J.P. Morgan Chase & Co. 3.5% 3/15/09

2,620,000

2,534,268

Lehman Brothers Holdings, Inc.:

4% 1/22/08

300,000

302,837

6.25% 5/15/06

2,795,000

2,987,852

6.625% 2/5/06

120,000

128,186

Merrill Lynch & Co., Inc. 3.7% 4/21/08

1,400,000

1,389,758

Morgan Stanley 6.1% 4/15/06

1,800,000

1,918,336

17,446,369

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Commercial Banks - 0.9%

Australia & New Zealand Banking Group Ltd. yankee 7.55% 9/15/06

$ 405,000

$ 445,152

Bank of America Corp.:

3.875% 1/15/08

275,000

277,160

7.125% 9/15/06

1,750,000

1,916,163

Corporacion Andina de Fomento yankee 7.25% 3/1/07

965,000

1,051,851

First National Boston Corp. 7.375% 9/15/06

1,145,000

1,266,972

Korea Development Bank:

3.875% 3/2/09

2,700,000

2,625,923

7.375% 9/17/04

810,000

820,290

Mellon Bank NA, Pittsburgh 6.5% 8/1/05

2,000,000

2,103,574

10,507,085

Consumer Finance - 2.3%

American General Finance Corp. 4.5% 11/15/07

1,115,000

1,148,427

Ford Motor Credit Co.:

6.5% 1/25/07

4,215,000

4,469,776

6.875% 2/1/06

5,800,000

6,139,161

General Motors Acceptance Corp.:

6.125% 2/1/07

400,000

422,238

6.125% 8/28/07

1,900,000

2,007,745

6.75% 1/15/06

5,907,000

6,254,952

Household Finance Corp.:

4.125% 12/15/08

705,000

704,698

4.625% 1/15/08

818,000

841,242

5.75% 1/30/07

745,000

793,412

Household International, Inc. 8.875% 2/15/08

2,025,000

2,234,970

John Deere Capital Corp. 1.71% 9/17/04 (e)

1,300,000

1,302,373

26,318,994

Diversified Financial Services - 3.0%

Citigroup, Inc. 6.75% 12/1/05

4,100,000

4,383,359

Delta Air Lines, Inc. pass thru trust certificates 7.379% 5/18/10

848,394

828,475

Deutsche Telekom International Finance BV:

3.875% 7/22/08

2,425,000

2,411,937

8.25% 6/15/05

4,190,000

4,460,108

NiSource Finance Corp. 3.2% 11/1/06

1,085,000

1,085,173

Pemex Project Funding Master Trust 6.125% 8/15/08

2,535,000

2,636,400

Powergen US Funding LLC 4.5% 10/15/04

4,240,000

4,284,592

Prime Property Funding II 6.25% 5/15/07

1,000,000

1,082,666

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Diversified Financial Services - continued

Sprint Capital Corp.:

6% 1/15/07

$ 2,240,000

$ 2,381,064

7.125% 1/30/06

1,925,000

2,065,011

Telecom Italia Capital 4% 11/15/08 (a)

3,100,000

3,072,878

Verizon Global Funding Corp.:

4% 1/15/08

1,250,000

1,263,043

6.125% 6/15/07

4,840,000

5,221,445

35,176,151

Insurance - 0.3%

Allstate Corp. 7.875% 5/1/05

535,000

565,622

MetLife, Inc. 3.911% 5/15/05

2,750,000

2,798,158

Travelers Property Casualty Corp. 3.75% 3/15/08

530,000

528,871

3,892,651

Real Estate - 1.7%

AMB Property LP 7.2% 12/15/05

1,000,000

1,077,220

Arden Realty LP 8.875% 3/1/05

2,045,000

2,152,870

AvalonBay Communities, Inc. 5% 8/1/07

915,000

956,990

BRE Properties, Inc. 5.95% 3/15/07

575,000

612,776

Camden Property Trust 5.875% 6/1/07

580,000

618,370

CarrAmerica Realty Corp. 5.25% 11/30/07

1,745,000

1,831,798

CenterPoint Properties Trust 6.75% 4/1/05

470,000

486,489

Duke Realty LP 6.875% 3/15/05

1,200,000

1,249,411

EOP Operating LP:

6.625% 2/15/05

500,000

517,636

6.763% 6/15/07

1,625,000

1,775,470

7.75% 11/15/07

650,000

735,775

8.375% 3/15/06

1,500,000

1,647,417

ERP Operating LP 7.1% 6/23/04

1,700,000

1,712,600

Gables Realty LP:

5.75% 7/15/07

1,220,000

1,290,431

7.25% 2/15/06

2,200,000

2,355,368

Merry Land & Investment Co., Inc. 7.25% 6/15/05

600,000

631,798

19,652,419

Thrifts & Mortgage Finance - 0.6%

Abbey National PLC 6.69% 10/17/05

200,000

212,663

Countrywide Home Loans, Inc.:

1.6% 6/2/06 (e)

1,250,000

1,258,635

5.5% 8/1/06

1,290,000

1,357,486

5.625% 5/15/07

745,000

790,295

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Thrifts & Mortgage Finance - continued

Washington Mutual, Inc.:

4.375% 1/15/08

$ 700,000

$ 711,362

5.625% 1/15/07

2,000,000

2,118,476

6,448,917

TOTAL FINANCIALS

119,442,586

INDUSTRIALS - 1.2%

Aerospace & Defense - 0.5%

Bombardier Capital, Inc. 6.125% 6/29/06 (a)

4,050,000

4,255,452

Raytheon Co. 6.75% 8/15/07

900,000

986,278

5,241,730

Air Freight & Logistics - 0.1%

Federal Express Corp. pass thru trust certificates 7.53% 9/23/06

659,683

690,616

Commercial Services & Supplies - 0.1%

Boise Cascade Office Products Corp. 7.05% 5/15/05

1,100,000

1,135,827

Industrial Conglomerates - 0.5%

Tyco International Group SA yankee 6.375% 6/15/05

6,100,000

6,345,415

TOTAL INDUSTRIALS

13,413,588

INFORMATION TECHNOLOGY - 0.5%

Communications Equipment - 0.5%

Motorola, Inc. 6.75% 2/1/06

4,950,000

5,257,583

MATERIALS - 0.6%

Containers & Packaging - 0.1%

Sealed Air Corp. 6.95% 5/15/09 (a)

855,000

941,184

Paper & Forest Products - 0.5%

Boise Cascade Corp.:

7.43% 10/10/05

1,540,000

1,598,597

8% 2/24/06

745,000

784,456

International Paper Co. 4.25% 1/15/09

435,000

431,677

Weyerhaeuser Co. 5.95% 11/1/08

3,245,000

3,464,833

6,279,563

TOTAL MATERIALS

7,220,747

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

TELECOMMUNICATION SERVICES - 1.5%

Diversified Telecommunication Services - 0.9%

British Telecommunications PLC 7.875% 12/15/05

$ 2,200,000

$ 2,381,126

France Telecom SA 8.2% 3/1/06

4,750,000

5,166,314

Telecomunicaciones de Puerto Rico, Inc. 6.65% 5/15/06

2,220,000

2,365,137

Telefonica Europe BV 7.35% 9/15/05

180,000

191,804

10,104,381

Wireless Telecommunication Services - 0.6%

America Movil SA de CV 4.125% 3/1/09 (a)

2,825,000

2,708,328

AT&T Wireless Services, Inc.:

7.35% 3/1/06

1,000,000

1,082,068

7.5% 5/1/07

1,590,000

1,765,608

Vodafone Group PLC 7.625% 2/15/05

1,800,000

1,880,071

7,436,075

TOTAL TELECOMMUNICATION SERVICES

17,540,456

UTILITIES - 2.2%

Electric Utilities - 1.9%

Cleveland Electric Illuminating Co./Toledo Edison Co. 7.67% 7/1/04

5,035,000

5,081,382

DTE Energy Co. 6.45% 6/1/06

1,510,000

1,604,158

Duke Capital Corp.:

4.37% 3/1/09

2,045,000

2,004,806

6.25% 7/15/05

1,493,000

1,556,567

FirstEnergy Corp. 5.5% 11/15/06

4,095,000

4,272,879

FPL Group Capital, Inc. 3.25% 4/11/06

705,000

712,646

MidAmerican Energy Holdings, Inc. 4.625% 10/1/07

705,000

720,588

Monongahela Power Co. 5% 10/1/06

2,015,000

2,042,706

Pacific Gas & Electric Co.:

1.81% 4/3/06 (e)

1,550,000

1,550,598

3.6% 3/1/09

340,000

329,805

Progress Energy, Inc. 6.75% 3/1/06

1,500,000

1,602,530

Southwestern Public Service Co. 5.125% 11/1/06

650,000

680,123

22,158,788

Gas Utilities - 0.3%

Consolidated Natural Gas Co. 7.375% 4/1/05

1,100,000

1,151,614

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

UTILITIES - continued

Gas Utilities - continued

Kinder Morgan Energy Partners LP 5.35% 8/15/07

$ 1,400,000

$ 1,475,491

Williams Holdings of Delaware, Inc. 6.25% 2/1/06

530,000

549,875

3,176,980

TOTAL UTILITIES

25,335,768

TOTAL NONCONVERTIBLE BONDS

(Cost $241,801,402)

246,292,045

U.S. Government and Government Agency Obligations - 14.8%

U.S. Government Agency Obligations - 6.8%

Fannie Mae:

0% 5/19/04 (c)

1,580,000

1,579,325

6% 5/15/08

28,824,000

31,294,556

Freddie Mac:

2.7% 3/16/07

18,000,000

17,840,214

2.875% 9/15/05

22,907,000

23,175,814

2.875% 12/15/06

4,300,000

4,300,925

Guaranteed Export Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-Import Bank) Series 1995-A, 6.28% 6/15/04

176,471

177,619

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

78,368,453

U.S. Treasury Obligations - 8.0%

U.S. Treasury Bonds:

10% 5/15/10

5,021,000

5,438,762

11.75% 2/15/10

1,625,000

1,752,080

12% 8/15/13

17,526,000

23,495,110

U.S. Treasury Notes:

1.875% 1/31/06 (d)

22,779,000

22,661,551

2.625% 11/15/06

16,200,000

16,188,611

3.5% 11/15/06

185,000

188,874

4.375% 5/15/07

21,470,000

22,388,336

TOTAL U.S. TREASURY OBLIGATIONS

92,113,324

TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS

(Cost $172,428,736)

170,481,777

U.S. Government Agency - Mortgage Securities - 4.7%

Principal
Amount

Value
(Note 1)

Fannie Mae - 4.4%

5.5% 8/1/14 to 3/1/18

$ 13,758,466

$ 14,147,059

5.5% 5/1/19 (b)

9,200,000

9,441,500

6.5% 2/1/08 to 1/1/33

21,798,897

23,041,909

7% 1/1/11 to 6/1/32

3,164,922

3,367,674

7% 5/1/19 (b)

766,744

817,541

7.5% 5/1/12 to 10/1/14

277,777

297,714

11.5% 11/1/15

125,965

144,413

TOTAL FANNIE MAE

51,257,810

Freddie Mac - 0.0%

8.5% 5/1/26 to 7/1/28

457,817

499,870

12% 11/1/19

23,735

26,939

TOTAL FREDDIE MAC

526,809

Government National Mortgage Association - 0.3%

7% 1/15/25 to 6/15/32

2,707,516

2,880,538

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $54,402,492)

54,665,157

Asset-Backed Securities - 20.6%

Accredited Mortgage Loan Trust:

Series 2003-2 Class A1, 4.23% 10/25/33

2,118,057

2,124,681

Series 2003-3 Class A1, 4.46% 1/25/34

2,000,754

1,966,487

ACE Securities Corp.:

Series 2002-HE1, Class A, 1.44% 6/25/32 (e)

613,337

614,665

Series 2002-HE2 Class A2A, 1.53% 8/25/32 (e)

615,605

617,149

Series 2003-HE1:

Class A2, 1.51% 11/25/33 (e)

2,742,006

2,752,433

Class M1 1.75% 11/25/33 (e)

430,000

432,669

Class M2, 2.8% 11/25/33 (e)

270,000

274,454

Series 2003-NC1 Class A2A, 1.52% 7/25/33 (e)

3,497,783

3,514,841

Series 2004-HE1 Class A2B, 1.55% 2/25/34 (e)

1,420,000

1,418,438

American Express Credit Account Master Trust
Series 2000-1 Class A, 7.2% 9/17/07

1,600,000

1,670,103

AmeriCredit Automobile Receivables Trust:

Series 2001-B Class A4, 5.37% 6/12/08

2,233,325

2,292,534

Series 2001-C Class A4, 5.01% 7/14/08

2,500,000

2,581,600

Series 2001-D Class A4 4.41% 11/12/08

2,350,000

2,404,974

Series 2002-A Class A4, 4.61% 1/12/09

3,675,000

3,782,370

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

AmeriCredit Automobile Receivables Trust: - continued

Series 2002-B:

Class A3, 3.78% 2/12/07

$ 2,680,308

$ 2,704,347

Class A4, 4.46% 4/12/09

980,000

1,010,016

Series 2003-AM Class A4A, 3.1% 11/6/09

875,000

880,349

Series 2003-BX:

Class A3, 2.11% 8/6/07

740,000

741,360

Class A4A, 2.72% 1/6/10

1,105,000

1,101,021

Series 2003-CF Class A4, 3.48% 5/6/10

1,810,000

1,826,634

Series 2003-DM Class A4, 2.84% 8/6/10

1,580,000

1,562,394

Ameriquest Mortgage Securities, Inc.:

Series 2002-4 Class A2, 1.54% 2/25/33 (e)

390,309

392,069

Series 2002-AR1 Class M1, 1.81% 9/25/32 (e)

1,100,000

1,107,055

Series 2003-3 Class S, 5% 9/25/05 (g)

3,564,894

146,495

Series 2003-7 Class M1, 1.95% 8/25/33 (e)

625,000

634,445

Amortizing Residential Collateral Trust:

Series 2002-BC3 Class A, 1.43% 6/25/32 (e)

838,151

840,099

Series 2002-BC3N Class B2, 7% 6/25/32 (a)

16,834

16,758

Series 2002-BC6 Class AIO, 6% 8/25/04 (g)

7,392,727

135,760

Series 2002-BC7:

Class AIO, 6% 9/25/04 (g)

5,000,000

116,460

Class M1, 1.9% 10/25/32 (e)

1,100,000

1,108,250

Series 2002-BC9 Class A2, 1.58% 12/25/32 (e)

643,294

647,096

AQ Finance NIMS Trust Series 2003-N1 Class NOTE, 9.37% 3/25/33 (a)

164,257

164,253

Argent Securities, Inc.:

Series 2003-W3:

Class AV1B, 1.55% 9/25/33 (e)

328,712

330,332

Class AV2, 1.5% 9/25/33 (e)

358,807

360,168

Class M2, 2.9% 9/25/33 (e)

3,100,000

3,186,055

Series 2003-W6 Class AV2, 1.47% 1/25/34 (e)

3,474,488

3,486,601

Series 2003-W7:

Class A2, 1.49% 3/1/34 (e)

2,718,269

2,728,814

Class M1, 1.79% 3/1/34 (e)

2,500,000

2,519,663

Series 2003-W9 Class M1, 1.79% 3/25/34 (e)

1,800,000

1,814,642

Series 2004-W5 Class M1, 1.69% 4/25/34 (e)

830,000

828,444

Asset Backed Securities Corp. Home Equity Loan Trust:

Series 2001-HE3 Class A1, 1.37% 11/15/31 (e)

351,424

351,785

Series 2002-HE3 Class 2A, 1.5% 10/15/32 (e)

308,301

309,263

Series 2003-HE2 Class A2, 1.48% 4/15/33 (e)

1,580,163

1,585,557

Series 2003-HE3 Class A2, 1.45% 6/15/33 (e)

308,820

309,654

Series 2003-HE4 Class A3, 1.32% 8/15/33 (e)

857,966

857,717

Series 2003-HE5 Class A2B, 4% 8/15/33

746,478

746,068

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Asset Backed Securities Corp. Home Equity Loan Trust: - continued

Series 2003-HE7 Class A3, 1.46% 12/15/33 (e)

$ 2,474,741

$ 2,482,463

Series 2004-HE3 Class M2, 0% 5/26/34 (h)

700,000

699,066

Associates Automobile Receivables Trust Series 2000-1 Class B, 7.83% 8/15/07

1,754,790

1,790,747

Bank One Issuance Trust:

Series 2002-B2 Class B2, 1.44% 5/15/08 (e)

1,100,000

1,103,503

Series 2002-C2 Class C2, 2.09% 5/15/08 (e)

3,590,000

3,618,270

Bayview Commercial Asset Trust Series 2003-2 Class A, 1.68% 12/25/33 (a)(e)

3,974,083

3,984,018

Bayview Financial Asset Trust Series 2000-F Class A, 1.6% 9/28/43 (e)

2,970,817

2,983,699

Bayview Financial Mortgage Loan Trust Series 2004-A Class A, 1.55% 2/28/44 (e)

2,089,691

2,094,670

BMW Vehicle Owner Trust Series 2002-A Class A3, 3.8% 5/25/06

555,170

558,872

Capital Auto Receivables Asset Trust:

Series 2002-4, Class CTFS, 2.62% 3/17/08

1,488,472

1,497,869

Series 2002-5 Class B, 2.8% 4/15/08

1,310,185

1,320,239

Capital One Auto Finance Trust Series 2002-A Class A4, 4.79% 1/15/09

1,900,000

1,959,305

Capital One Master Trust:

Series 1999-3 Class B, 1.58% 9/15/09 (e)

1,000,000

1,001,102

Series 2001-1 Class B, 1.61% 12/15/10 (e)

1,700,000

1,714,011

Series 2001-8A Class A, 4.6% 8/17/09

1,390,000

1,445,333

Series 2002-3A Class B, 4.55% 2/15/08

2,250,000

2,290,156

Capital One Multi-Asset Execution Trust:

Series 2002-B1 Class B1, 1.78% 7/15/08 (e)

2,250,000

2,263,383

Series 2003-B1 Class B1, 2.27% 2/17/09 (e)

5,715,000

5,817,128

CDC Mortgage Capital Trust:

Series 2001-HE1 Class A, 1.44% 1/25/32 (e)

687,560

687,813

Series 2002-HE2:

Class A, 1.39% 1/25/33 (e)

343,455

343,891

Class M1, 1.8% 1/25/33 (e)

899,998

906,391

Series 2003-HE4 Class A2, 1.33% 3/25/34 (e)

4,370,549

4,372,759

Chase Credit Card Master Trust Series 2003-6 Class B, 1.45% 2/15/11 (e)

2,150,000

2,166,375

Chase Credit Card Owner Trust Series 2004-1 Class B, 1.3% 5/15/09 (e)

875,000

875,000

Chase Manhattan Auto Owner Trust:

Series 2000-A Class CTFS, 6.48% 6/15/07

265,145

267,490

Series 2001-A Class CTFS, 5.06% 2/15/08

100,327

102,159

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Citibank Credit Card Issuance Trust:

Series 2000-C2 Class C2, 1.79% 10/15/07 (e)

$ 3,000,000

$ 3,009,807

Series 2002-B1 Class B1, 1.44% 6/25/09 (e)

1,885,000

1,892,372

Series 2002-C1 Class C1, 2.12% 2/9/09 (e)

3,000,000

3,048,482

Series 2003-C1 Class C1, 2.24% 4/7/10 (e)

2,600,000

2,665,917

Citigroup Mortgage Loan Trust Series 2003-HE4 Class A, 1.51% 12/25/33 (e)

2,598,704

2,603,577

Countrywide Home Loans, Inc.:

Series 2004-2:

Class 3A4, 1.35% 7/25/34 (e)

1,715,000

1,714,464

Class M1, 1.6% 5/25/34 (e)

1,075,000

1,073,992

Series 2004-3 Class 3A4, 1.35% 8/25/34 (e)

2,590,000

2,569,910

Series 2004-4:

Class A, 1.47% 8/25/34 (e)

1,095,319

1,093,265

Class M1, 1.58% 7/25/34 (e)

775,000

774,516

Class M2, 1.63% 6/25/34 (e)

920,000

919,138

Discover Card Master Trust I:

Series 1999-6 Class A, 6.85% 7/17/07

1,400,000

1,451,088

Series 2001-5 Class B, 5.65% 11/15/06

700,000

703,778

Series 2003-4 Class B1, 1.43% 5/16/11 (e)

1,775,000

1,783,072

First USA Secured Note Trust Series 2001-3 Class C, 2.15% 11/19/08 (a)(e)

2,645,000

2,677,133

Ford Credit Auto Owner Trust Series 2001-B Class B, 5.71% 9/15/05

290,000

292,580

Fremont Home Loan Trust:

Series 2004-1:

Class M1, 1.55% 2/25/34 (e)

150,000

149,883

Class M2, 1.6% 2/25/34 (e)

150,000

149,883

Series 2004-A Class M2, 2.25% 1/25/34 (e)

1,100,000

1,097,714

GS Mortgage Securities Corp. Series 2003-HE2 Class M1, 1.75% 8/25/33 (e)

650,000

653,929

GSAMP NIMS Trust Series 2002-HE2N Class NOTE, 8.25% 10/20/32 (a)

6,518

6,522

GSAMP Trust Series 2002-NC1 Class A2, 1.42% 7/25/32 (e)

549,970

551,897

Home Equity Asset Trust:

Series 2002-2 Class A4, 1.45% 6/25/32 (e)

920,810

922,136

Series 2002-4 Class M2, 3.15% 3/25/33 (e)

400,000

406,684

Series 2002-5 Class A3, 1.62% 5/25/33 (e)

1,833,299

1,846,247

Series 2003-3 Class A4, 1.56% 2/25/33 (e)

1,736,631

1,746,191

Series 2003-5 Class A2, 1.45% 12/25/33 (e)

3,008,906

3,017,458

Series 2003-5N Class A, 7.5% 1/27/34 (a)

150,071

150,822

Series 2003-7 Class A2, 1.48% 3/25/34 (e)

3,038,638

3,049,890

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Home Equity Asset Trust: - continued

Series 2003-8 Class M1, 1.82% 4/25/34 (e)

$ 845,000

$ 850,663

Series 2004-1 Class M2, 2.3% 6/25/34 (e)

655,000

653,630

Series 2004-2 Class A2, 1.39% 7/25/34 (e)

1,741,628

1,741,628

Series 2004-3:

Class M1, 1.66% 8/25/34 (b)(e)

425,000

425,000

Class M2, 2.29% 8/25/34 (b)(e)

465,000

465,000

Class M3, 2.54% 8/25/34 (b)(e)

200,000

200,000

Home Equity Asset Trust NIMS Trust:

Series 2002-4N Class A, 8% 5/27/33 (a)

225,931

225,931

Series 2003-2N Class A, 8% 9/27/33 (a)

415,563

417,640

Series 2003-3N Class A, 8% 9/27/33 (a)

725,712

729,341

Household Automotive Trust:

Series 2001-1 Class A4, 5.57% 11/19/07

1,265,783

1,296,735

Series 2001-2 Class A4, 5.39% 8/17/08

1,000,000

1,033,443

Series 2002-2 Class A3, 2.85% 3/19/07

2,462,492

2,479,100

Household Home Equity Loan Trust:

Series 2002-1 Class A, 1.47% 12/22/31 (e)

438,570

439,584

Series 2002-3 Class A, 1.55% 7/20/32 (e)

787,947

789,833

Series 2003-1 Class A, 1.45% 10/20/32 (e)

1,859,488

1,863,909

Series 2003-2 Class M, 1.68% 9/20/33 (e)

782,091

784,901

Household Mortgage Loan Trust Series 2003-HC2:

Class A2, 1.43% 6/20/33 (e)

1,735,782

1,740,107

Class M, 1.7% 6/20/33 (e)

1,446,763

1,451,869

Household Private Label Credit Card Master Note Trust I:

Series 2001-2 Class A, 4.95% 6/16/08

1,600,000

1,616,059

Series 2002-2 Class B, 1.65% 1/18/11 (e)

1,000,000

1,008,280

Series 2002-3 Class B, 2.35% 9/15/09 (e)

975,000

987,976

Long Beach Asset Holdings Corp. NIMS Trust Series 2002-3 Class NOTE, 1.65% 8/25/09 (a)(e)

228,108

228,108

MBNA Credit Card Master Note Trust:

Series 2001-B1 Class B1, 1.475% 10/15/08 (e)

1,350,000

1,353,717

Series 2001-B2 Class B2, 1.46% 1/15/09 (e)

4,750,000

4,770,663

Series 2002-B1 Class B1, 5.15% 7/15/09

1,025,000

1,071,688

Series 2002-B2 Class B2, 1.48% 10/15/09 (e)

3,600,000

3,619,572

Series 2002-B3 Class B3, 1.5% 1/15/08 (e)

1,100,000

1,103,860

MBNA Master Credit Card Trust II:

Series 1998-E Class B, 1.47% 9/15/10 (e)

1,500,000

1,509,169

Series 1998-G Class B, 1.5% 2/17/09 (e)

1,550,000

1,554,776

Series 1999-G Class A, 6.35% 12/15/06

1,000,000

1,010,643

Series 2000-L Class B, 1.6% 4/15/10 (e)

650,000

655,469

Meritage Mortgage Loan Trust Series 2004-1 Class M1, 1.6% 7/25/34 (e)

425,000

424,004

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Merrill Lynch Mortgage Investors, Inc.:

Series 2003-HE1 Class A1, 1.55% 7/25/34 (e)

$ 3,564,466

$ 3,569,701

Series 2003-OPT1 Class M1, 1.75% 7/25/34 (e)

1,145,000

1,151,955

Morgan Stanley ABS Capital I, Inc.:

Series 2002-NC6N Class NOTE, 9.5% 9/25/32 (a)

8,770

8,825

Series 2003-HE1 Class M2, 3% 5/25/33 (e)

325,000

329,924

Series 2003-NC5 Class M2, 3.1% 4/25/33 (e)

575,000

588,319

Morgan Stanley Dean Witter Capital I Trust:

Series 2002-AM3 Class A3, 1.59% 2/25/33 (e)

780,493

783,440

Series 2002-HE2 Class M1, 1.8% 8/25/32 (e)

1,150,000

1,157,426

Series 2002-NC1 Class M1, 1.9% 2/25/32 (a)(e)

755,000

763,295

Series 2002-NC5N Class NOTE, 9.5% 9/25/32 (a)

102,056

102,279

Series 2003-NC1 Class M1, 2.15% 11/25/32 (e)

535,000

542,225

Series 2003-NC2 Class M2, 3.1% 2/25/33 (e)

615,000

631,584

Morgan Stanley Dean Witter Capital I, Inc.:

Series 2003-NC1N Class NOTE, 9.5% 11/25/32 (a)

616,897

619,017

Series 2003-NC2N Class NOTE, 9.5% 12/25/32 (a)

573,116

575,624

Mortgage Asset Backed Securities Trust Series 2002-NC1 Class M1, 1.95% 10/25/32 (e)

1,600,000

1,618,921

Navistar Financial Corp. Owner Trust Series 2001-B Class B, 4.83% 11/17/08

1,693,409

1,722,140

New Century Home Equity Loan Trust Series 2003-2 Class AIO, 4.5% 3/25/05 (e)(g)

25,823,160

854,747

Onyx Acceptance Owner Trust:

Series 2000-D Class A4, 6.85% 8/15/07

936,367

942,507

Series 2001-D Class A3, 3.63% 12/15/05

25,344

25,370

Series 2002-A Class A3, 3.75% 4/15/06

188,560

189,473

Series 2002-C:

Class A3, 3.29% 9/15/06

647,714

652,260

Class A4, 4.07% 4/15/09

970,000

993,190

Series 2003-D Class A3, 2.4% 12/15/07

1,685,000

1,688,224

PP&L Transition Bonds LLC Series 1999-1 Class A5, 6.83% 3/25/07

1,117,131

1,144,812

Providian Gateway Master Trust Series 2002-B Class A, 1.8% 6/15/09 (a)(e)

1,400,000

1,404,099

Residential Asset Mortgage Products, Inc. Series 2003-RZ2 Class A1, 3.6% 4/25/33

1,584,624

1,547,298

Salomon Brothers Mortgage Securities VII, Inc. Series 2003-UP1 Class A, 3.45% 4/25/32 (a)

1,290,977

1,274,749

Sears Credit Account Master Trust II:

Series 1996-3 Class A, 7% 7/15/08

81,250

81,822

Series 2001-2 Class B, 1.39% 6/16/08 (e)

1,200,000

1,200,177

Series 2002-4 Class B, 1.525% 8/18/09 (e)

1,100,000

1,103,359

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Sears Credit Account Master Trust II: - continued

Series 2002-5 Class B, 2.35% 11/17/09 (e)

$ 2,200,000

$ 2,206,770

Securitized Asset Back Receivables LLC Trust Series 2004-NC1:

Class A2, 1.35% 2/25/34 (e)

2,585,000

2,583,384

Class M1, 1.62% 2/25/34 (e)

610,000

610,000

SLM Private Credit Student Loan Trust Series 2004-A:

Class B, 1.7% 6/15/33 (e)

400,000

400,906

Class C, 2.07% 6/15/33 (e)

1,020,000

1,021,952

Superior Wholesale Inventory Financing Trust VII Series 2003-A8 Class CTFS, 1.55% 3/15/11 (a)(e)

2,520,000

2,523,938

Terwin Mortgage Trust:

Series 2003 8HE, Class A, 1.57% 12/25/34 (e)

1,440,654

1,441,577

Series 2003-4HE Class A1, 1.53% 9/25/34 (e)

3,655,447

3,674,076

Series 2003-6HE Class A1, 1.57% 11/25/33 (e)

1,132,049

1,132,049

Series 2004-1HE Class A1, 1.61% 2/25/35 (a)(e)

1,373,790

1,373,790

Triad Auto Receivables Owner Trust Series 2002-A:

Class A3, 2.62% 2/12/07

2,600,000

2,616,070

Class A4, 3.24% 8/12/09

1,505,000

1,523,034

TOTAL ASSET-BACKED SECURITIES

(Cost $237,276,452)

238,241,687

Collateralized Mortgage Obligations - 7.7%

Private Sponsor - 3.4%

Countrywide Home Loans, Inc. sequential pay:

Series 2002-25 Class 2A1, 5.5% 11/27/17

1,159,066

1,176,824

Series 2002-32 Class 2A3, 5% 1/25/18

478,498

487,692

CS First Boston Mortgage Securities Corp. floater Series 2004-AR4 Class 5A2, 1.47% 5/25/34 (e)

980,000

980,000

Granite Mortgages 2004-1 PLC floater Series 2004-1 Class 1C, 2.01% 3/20/44 (e)

875,000

877,756

Holmes Financing PLC floater Series 8:

Class 1B, 1.2444% 7/15/40 (e)

430,000

430,000

Class 2B, 1.2844% 7/15/40 (e)

565,000

565,000

Class 2C, 1.8344% 7/15/40 (e)

1,295,000

1,295,000

Master Alternative Loan Trust Series 2004-3 Class 3A1, 6% 4/25/34

421,436

437,371

Merrill Lynch Mortgage Investors, Inc.:

floater:

Series 2003-A Class 2A1, 1.49% 3/25/28 (e)

3,207,854

3,218,136

Series 2003-F Class A2, 1.665% 10/25/28 (e)

4,180,832

4,203,206

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

Private Sponsor - continued

Merrill Lynch Mortgage Investors, Inc.: - continued

Series 2003-E Class XA1, 1% 10/25/28 (e)(g)

$ 17,052,557

$ 267,273

Series 2003-G Class XA1, 1% 1/25/29 (g)

14,910,507

251,615

Series 2003-H Class XA1, 1% 1/25/29 (a)(g)

13,015,593

221,672

Permanent Financing PLC floater:

Series 3 Class 2C, 2.16% 6/10/42 (e)

605,000

605,000

Series 4:

Class 1B, 1.2488% 6/10/42 (e)

415,000

415,000

Class 1M, 1.3388% 6/10/42 (e)

330,000

330,000

Class 2C, 1.8288% 6/10/42 (e)

690,000

690,216

Class 2M, 1.4388% 6/10/42 (e)

345,000

345,108

Residential Asset Mortgage Products, Inc. sequential pay Series 2003-SL1 Class A31, 7.125% 4/25/31

2,420,560

2,523,433

Sequoia Mortgage Funding Trust Series 2003-A
Class AX1, 0.8% 10/21/08 (a)(g)

59,991,889

667,878

Sequoia Mortgage Trust:

floater:

Series 2003-5 Class A2, 1.53% 9/20/33 (e)

1,372,607

1,371,797

Series 2003-6 Class A2, 1.61% 11/20/33 (e)

3,164,747

3,169,692

Series 2003-7 Class A2, 1.5738% 1/20/34 (e)

3,839,287

3,845,886

Series 2004-2 Class A, 1.55% 3/20/34 (e)

1,471,704

1,468,254

Series 2004-3 Class A, 1.53% 5/20/34 (e)

3,565,463

3,559,335

Series 2004-4 Class A, 1.585% 5/20/34 (e)

3,000,000

3,000,000

Series 2003-7 Class X1, 0.8% 1/20/34 (e)(g)

143,462,399

1,665,168

Series 2003-8 Class X1, 0.8% 1/20/34 (e)(g)

77,749,155

834,388

Series 2004-1 Class X1, 0.8% 2/20/34 (g)

18,261,721

231,126

Washington Mutual Mortgage Securities Corp. sequential pay Series 2003-MS9 Class 2A1, 7.5% 12/25/33

521,360

544,003

TOTAL PRIVATE SPONSOR

39,677,829

U.S. Government Agency - 4.3%

Fannie Mae planned amortization class:

Series 1993-183 Class J, 6.5% 11/25/22

2,373,621

2,399,108

Series 1993-187 Class L, 6.5% 7/25/23

2,265,000

2,402,104

Series 1993-206 Class KA, 6.5% 12/25/22

315,806

319,494

Series 1993-78 Class G, 6.5% 11/25/07

41,972

42,020

Series 1994-51 Class PH, 6.5% 1/25/23

136,152

136,974

Series 1994-63 Class PH, 7% 6/25/23

538,819

546,381

Fannie Mae guaranteed REMIC pass thru certificates:

Class 2004-29 Class JZ, 4.5% 5/25/19

3,105,000

3,084,623

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Fannie Mae guaranteed REMIC pass thru certificates: - continued

planned amortization class:

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

$ 345,516

$ 349,631

Series 2001-71 Class QD, 6% 4/25/15

2,600,000

2,653,788

Series 2001-80 Class PH, 6% 12/25/27

304,032

304,878

Series 2002-55 Class PA, 5.5% 3/25/18

266,928

267,429

Series 2003-16 Class PA, 4.5% 11/25/09

455,112

463,567

Series 2003-19 Class MJ, 4.25% 5/25/30

2,993,064

3,007,224

sequential pay:

Series 2001-9 Class PB, 6.5% 5/25/27

276,599

277,347

Series 2002-28 Class VB, 6.5% 3/25/20

154,892

154,751

Series 2004-28 Class ZK, 5.5% 5/25/34

1,000,000

995,313

Series 2004-29:

Class ZE, 4.5% 1/25/32

200,000

197,500

Class ZM, 5.5% 5/25/34

400,000

397,750

Series 2004-38 Class ZC, 6.5% 11/25/33

805,000

805,000

Freddie Mac:

planned amortization class Series 2355 Class CD, 6.5% 6/15/30

198,319

200,788

Series 2794 Class ZL, 6% 5/1/34 (b)

400,000

397,750

Freddie Mac Multi-class participation certificates guaranteed:

planned amortization class:

Series 1714 Class H, 6.75% 5/15/23

504,614

511,115

Series 2322 Class HC, 6.5% 3/15/30

93,477

94,371

Series 2376 Class JC, 5.5% 2/15/14

1,689,948

1,704,610

Series 2420 Class BE, 6.5% 12/15/30

3,623,132

3,746,332

Series 2443 Class TD, 6.5% 10/15/30

3,253,931

3,368,783

Series 2489 Class PD, 6% 2/15/31

2,525,000

2,642,904

Series 2496 Class OC, 5.5% 9/15/14

10,260,000

10,581,815

sequential pay:

Series 2458 Class VK, 6.5% 3/15/13

2,222,292

2,288,484

Series 2489 Class MA, 5% 12/15/12

83,752

83,751

Series 1803 Class A, 6% 12/15/08

500,114

519,503

Series 2764:

Class DZ, 5% 2/15/33

1,114,069

1,108,499

Class ZA, 5% 10/15/32

197,839

196,788

Class ZB, 5% 3/15/33

337,640

335,635

Class ZC, 4.5% 3/15/19

213,780

212,510

Series 2769 Class ZA, 5% 9/15/32

310,463

308,837

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Freddie Mac Multi-class participation certificates guaranteed: - continued

Series 2780:

Class KZ, 5% 4/15/32

$ 730,000

$ 727,719

Class ZJ, 4.5% 4/15/19

300,000

298,734

Ginnie Mae guaranteed REMIC pass thru securities planned amortization class Series 2001-53 Class TA, 6% 12/20/30

783,907

799,131

TOTAL U.S. GOVERNMENT AGENCY

48,932,941

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $89,026,974)

88,610,770

Commercial Mortgage Securities - 9.6%

280 Park Avenue Trust floater Series 2001-280 Class X1, 1.0193% 2/3/11 (a)(e)(g)

15,579,789

787,239

Asset Securitization Corp.:

sequential pay Series 1995-MD4 Class A1, 7.1% 8/13/29

501,109

530,612

Series 1995-MD4 Class ACS2, 1.9777% 8/13/29 (e)(g)

19,731,081

1,616,270

Series 1997-D5 Class PS1, 1.3146% 2/14/43 (e)(g)

11,019,745

681,406

Banc of America Commercial Mortgage, Inc.:

Series 2002-2 Class XP, 2.0359% 7/11/43 (a)(e)(g)

8,205,000

635,883

Series 2003-1 Class XP1, 1.6731% 9/11/36 (a)(e)(g)

52,955,000

1,468,675

Series 2003-2 Class XP, 0.5864% 3/11/41 (a)(e)(g)

33,365,000

525,239

Series 2004-2 Class XP, 1.161% 11/10/38 (e)(g)

9,040,000

473,894

Banc of America Large Loan, Inc. floater:

Series 2002-FL2A Class A2, 1.42% 9/8/14 (a)(e)

2,100,000

2,100,164

Series 2003-BBA2:

Class A3, 1.42% 11/15/15 (a)(e)

1,145,000

1,145,805

Class C, 1.57% 11/15/15 (a)(e)

235,000

235,799

Class D, 1.65% 11/15/15 (a)(e)

365,000

366,383

Class F, 2% 11/15/15 (a)(e)

260,000

263,118

Class H, 2.5% 11/15/15 (a)(e)

235,000

237,938

Class J, 3.05% 11/15/15 (a)(e)

245,000

248,886

Class K, 3.7% 11/15/15 (a)(e)

220,000

221,160

Bayview Commercial Asset Trust:

floater Series 2004-1:

Class A, 1.46% 4/25/34 (a)(e)

1,591,855

1,591,855

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Bayview Commercial Asset Trust: - continued

Class B, 3% 4/25/34 (a)(e)

$ 198,982

$ 198,982

Class M1, 1.66% 4/25/34 (a)(e)

99,491

99,491

Class M2, 2.3% 4/25/34 (a)(e)

99,491

99,491

Series 2004-1 Class IO, 1.25% 4/25/34 (a)(g)

16,852,205

1,129,625

Bear Stearns Commercial Mortgage Securities, Inc.:

floater Series 2004-HS2A:

Class E, 2% 1/14/16 (a)(e)

350,000

350,000

Class F, 2.15% 1/14/16 (a)(e)

225,000

225,000

Series 2002-TOP8 Class X2, 2.1272% 8/15/38 (a)(e)(g)

9,053,000

869,757

Series 2003-PWR2 Class X2, 0.8582% 5/11/39 (a)(e)(g)

23,310,000

692,274

Series 2003-T12 Class X2, 0.9247% 8/13/39 (a)(e)(g)

15,835,000

514,071

Chase Commercial Mortgage Securities Corp.:

floater Series 2000-FL1A Class B, 1.55% 12/12/13 (a)(e)

425,828

424,645

sequential pay:

Series 1999-2 Class A1, 7.032% 1/15/32

630,402

684,581

Series 2000-3 Class A1, 7.093% 10/15/32

1,208,658

1,310,391

COMM:

floater:

Series 2000-FL3A Class C, 1.86% 11/15/12 (a)(e)

1,974,039

1,966,357

Series 2001-FL5A:

Class A2, 1.65% 11/15/13 (a)(e)

593,744

593,762

Class D, 2.35% 11/15/13 (a)(e)

1,350,000

1,350,644

Series 2002-FL6 Class G, 3% 6/14/14 (a)(e)

800,000

792,487

Series 2002-FL7:

Class D, 1.67% 11/15/14 (a)(e)

520,000

519,569

Class H, 3.35% 11/15/14 (a)(e)

1,232,000

1,220,433

Class MPP, 3.5% 11/15/14 (a)(e)

850,000

850,000

Series 2003-FL9 Class B, 1.6% 11/15/15 (a)(e)

3,930,000

3,942,281

Series 2004-LBN2 Class X2, 1.2765% 3/10/39 (a)(e)(g)

3,535,000

173,579

Commercial Resecuritization Trust sequential pay Series 1999-ABC1 Class A, 6.74% 1/27/09 (a)

786,242

822,482

CS First Boston Mortgage Securities Corp.:

floater:

Series 2001-TFLA Class H230, 3.05% 9/15/11 (a)(e)

700,000

696,516

Series 2003-TF2A:

Class A2, 1.42% 11/15/14 (a)(e)

1,200,000

1,199,410

Class C, 1.65% 11/15/14 (a)(e)

240,000

239,886

Class E, 2.05% 11/15/14 (a)(e)

190,000

190,891

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

CS First Boston Mortgage Securities Corp.: - continued

Series 2003-TF2A:

Class H, 3% 11/15/14 (a)(e)

$ 235,000

$ 234,999

Class K, 4.2% 11/15/14 (a)(e)

350,000

349,999

sequential pay:

Series 1997-C2 Class A2, 6.52% 1/17/35

762,276

791,624

Series 2000-C1 Class A1, 7.325% 4/15/62

911,669

986,478

Series 2001-CK3 Class A2, 6.04% 6/15/34

1,050,000

1,108,560

Series 2001-CK6 Class AX, 0.645% 9/15/18 (g)

20,132,762

784,111

Series 2003-C3 Class ASP, 1.9634% 5/15/38 (a)(e)(g)

26,520,000

2,039,351

Series 2003-C4 Class ASP, 0.6008% 8/15/36 (a)(e)(g)

19,040,000

422,870

Series 2003-C5 Class ASP, 0.8427% 12/15/36 (a)(e)(g)

20,215,000

737,766

Series 2004-C1 Class ASP, 1.2154% 1/15/37 (a)(e)(g)

17,340,000

800,811

Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class D, 7.231% 6/15/31

485,000

502,138

DLJ Commercial Mortgage Corp. sequential pay Series 2000-CF1 Class A1A, 7.45% 6/10/33

857,921

909,717

EQI Financing Partnership I LP Series 1997-1 Class B, 7.37% 12/20/15 (a)

329,374

351,943

Equitable Life Assurance Society of the United States sequential pay Series 174 Class A1, 7.24% 5/15/06 (a)

1,000,000

1,079,816

First Union-Lehman Brothers Commercial Mortgage Trust sequential pay:

Series 1997-C1 Class A2, 7.3% 4/18/29

8,371

8,364

Series 1997-C2 Class A3, 6.65% 11/18/29

2,780,000

3,011,232

FMAC Loan Receivables Trust sequential pay Series 1998-CA Class A1, 5.99% 11/15/04 (a)

41,478

37,123

Franchise Loan Trust sequential pay Series 1998-I Class A1, 6.24% 7/15/04 (a)

121,871

113,340

GE Capital Commercial Mortgage Corp. Series 2001-1 Class X1, 0.5342% 5/15/33 (a)(e)(g)

11,880,586

492,507

GE Commercial Mortgage Corp. Series 2004-C1 Class X2, 1.1954% 11/10/38 (e)(g)

13,460,000

724,160

GGP Mall Properties Trust floater Series 2001-C1A:

Class A1, 1.7% 11/15/11 (a)(e)

41,160

41,390

Class A3 1.8% 2/15/14 (a)(e)

944,974

950,171

GMAC Commercial Mortgage Securities, Inc.:

Series 2003-C2 Class X2, 0.3887% 5/10/40 (g)

56,940,000

637,694

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

GMAC Commercial Mortgage Securities, Inc.: - continued

Series 2003-C3 Class X2, 0.985% 12/10/38 (e)(g)

$ 21,235,000

$ 765,069

Greenwich Capital Commercial Funding Corp.:

Series 2002-C1 Class SWDB 5.857% 11/11/19 (a)

1,150,000

1,153,774

Series 2003-C1 Class XP, 2.2433% 7/5/35 (a)(e)(g)

13,440,000

1,190,213

Series 2003-C2 Class XP, 1.1451% 1/5/36 (a)(e)(g)

24,935,000

1,231,737

GS Mortgage Securities Corp. floater Series 2003-HE1 Class M2, 3% 6/20/33 (e)

1,810,000

1,852,357

GS Mortgage Securities Corp. II:

sequential pay:

Series 2003-C1 Class A2A, 3.59% 1/10/40

1,705,000

1,690,660

Series 2004-C1 Class A1, 3.659% 10/10/28

5,000,000

4,917,559

Series 2004-C1 Class X2, 1.0222% 10/10/28 (a)(e)(g)

13,585,000

558,259

GS Mortgage Trust II floater Series 2001-FL4A Class D, 2.01% 12/15/10 (a)(e)

51,024

50,969

Hilton Hotel Pool Trust sequential pay Series 2000-HLTA Class A1, 7.055% 10/3/15 (a)

752,348

813,562

Host Marriot Pool Trust sequential pay Series 1999-HMTA Class A, 6.98% 8/3/15 (a)

624,199

674,570

J.P. Morgan Chase Commercial Mortgage Securities Corp.:

Series 2002-C3 Class X2, 1.327% 7/12/35 (a)(e)(g)

7,000,723

352,543

Series 2003-CB7 Class X2, 0.8684% 1/12/38 (a)(e)(g)

20,635,000

792,458

Series 2003-LN1 Class X2, 0.737% 10/15/37 (a)(e)(g)

29,610,000

968,665

Series 2004-C1 Class X2, 1.2011% 1/15/38 (e)(g)

4,490,000

229,968

Series 2004-CB8 Class X2, 1.3856% 1/12/39 (a)(e)(g)

5,480,000

312,141

J.P. Morgan Commercial Mortgage Finance Corp. sequential pay Series 1997-C5 Class A2, 7.069% 9/15/29

379,755

391,450

LB-UBS Commercial Mortgage Trust:

sequential pay:

Series 2003-C3 Class A2, 3.086% 5/15/27

1,465,000

1,419,864

Series 2003-C5 Class A2, 3.478% 7/15/27

4,605,000

4,511,264

Series 2002-C4 Class XCP, 1.476% 10/15/35 (a)(e)(g)

13,355,000

849,546

Series 2002-C7 Class XCP, 1.1897% 1/15/36 (a)(g)

14,590,000

619,226

Series 2003-C1 Class XCP, 1.4818% 12/15/36 (a)(e)(g)

7,565,000

435,059

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

LB-UBS Commercial Mortgage Trust: - continued

Series 2004-C1 Class XCP, 1.0545% 1/15/36 (a)(e)(g)

$ 13,850,000

$ 691,877

Series 2004-C2 Class XCP, 1.4108% 3/1/36 (a)(g)

11,720,000

665,766

Lehman Brothers Floating Rate Commercial Mortgage Trust floater:

Series 2001-LLFA Class A, 1.34% 8/16/13 (a)(e)

659,165

659,140

Series 2002-LLFA Class A, 1.39% 6/14/17 (a)(e)

334,087

334,084

Merrill Lynch Mortgage Trust:

sequential pay Series 2004-MKB1 Class A2, 4.353% 2/12/42 (b)

3,500,000

3,501,914

Series 2002-MW1 Class XP, 1.616% 7/12/34 (a)(e)(g)

6,130,159

385,151

Morgan Stanley Capital I, Inc.:

sequential pay:

Series 1999-CAM1 Class A2, 6.76% 3/15/32

152,262

163,614

Series 1999-LIFE Class A1, 6.97% 4/15/33

684,567

742,093

Series 1997-RR:

Class B, 7.31% 4/30/39 (a)(e)

711,607

733,584

Class C, 7.44% 4/30/39 (a)(e)

1,275,066

1,325,143

Series 1999-1NYP Class F, 7.4888% 5/3/30 (a)(e)

1,690,000

1,776,019

Series 2003-IQ5 Class X2, 1.1298% 4/15/38 (a)(e)(g)

10,090,000

496,330

Series 2003-IQ6 Class X2, 0.6313% 12/15/41 (a)(e)(g)

16,995,000

587,267

Series 2004-TOP13, Class X2, 1.2196% 9/13/45 (a)(e)(g)

9,350,000

483,108

Morgan Stanley Dean Witter Capital I Trust:

floater Series 2002-XLF:

Class D, 2% 8/5/14 (a)(e)

1,591,511

1,599,589

Class F, 3.25% 8/5/14 (a)(e)

2,296,879

2,345,897

Series 2003-HQ2 Class X2, 1.5793% 3/12/35 (a)(e)(g)

13,498,875

951,665

Series 2003-TOP9 Class X2, 1.6792% 11/13/36 (a)(e)(g)

9,055,000

635,772

Mortgage Capital Funding, Inc. sequential pay Series 1996-MC1 Class A2B, 7.9% 2/15/06

729,515

785,483

Nationslink Funding Corp. sequential pay Series 1999-2 Class A1C, 7.03% 6/20/31

681,014

730,356

Salomon Brothers Mortgage Securities VII, Inc. floater Series 2001-CDCA Class C, 1.9% 2/15/13 (a)(e)

1,364,000

1,363,659

STRIPs III Ltd./STRIPs III Corp. floater Series 2004-1A Class A, 1.58% 3/24/18 (a)(e)

1,978,746

1,978,746

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Thirteen Affiliates of General Growth Properties, Inc. sequential pay Series 1 Class A1, 6.537% 11/15/04 (a)

$ 4,780,000

$ 4,887,391

Trizechahn Office Properties Trust Series 2001-TZHA Class E3, 7.253% 3/15/13 (a)

1,555,000

1,655,228

Wachovia Bank Commercial Mortgage Trust:

floater Series 2004-WHL3:

Class A2, 1.28% 3/15/14 (a)(e)

735,000

735,000

Class E, 1.6% 3/15/14 (a)(e)

460,000

460,000

Class F, 1.65% 3/15/14 (a)(e)

365,000

365,000

Class G, 1.88% 3/15/14 (a)(e)

185,000

185,000

Series 2003-C8 Class XP, 0.7463% 11/15/35 (a)(e)(g)

13,550,000

374,454

Series 2003-C9 Class XP, 0.7143% 12/15/35 (a)(e)(g)

9,055,000

268,933

Series 2004-C10 Class XP, 1.025% 2/15/41 (a)(e)(g)

6,460,000

315,786

Series 2004-WHL3X Class 1A, 1.0319% 3/15/14 (a)(e)(g)

82,175,000

1,118,073

TOTAL COMMERCIAL MORTGAGE SECURITIES

(Cost $110,269,551)

110,485,130

Foreign Government and Government Agency Obligations - 0.3%

Chilean Republic 5.625% 7/23/07

740,000

782,088

United Mexican States 4.625% 10/8/08

3,190,000

3,174,050

TOTAL FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS

(Cost $3,904,708)

3,956,138

Fixed-Income Funds - 14.8%

Shares

Fidelity Ultra-Short Central Fund (f)
(Cost $171,100,053)

1,721,452

171,542,692

Cash Equivalents - 7.5%

Maturity
Amount

Value
(Note 1)

Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.05%, dated 4/30/04 due 5/3/04)
(Cost $86,280,000)

$ 86,287,550

$ 86,280,000

TOTAL INVESTMENT PORTFOLIO - 101.3%

(Cost $1,166,490,368)

1,170,555,396

NET OTHER ASSETS - (1.3)%

(14,542,962)

NET ASSETS - 100%

$ 1,156,012,434

Futures Contracts

Expiration
Date

Underlying
Face Amount
at Value

Unrealized
Appreciation/
(Depreciation)

Purchased

Eurodollar Contracts

117 Eurodollar 90 Day Index Contracts

June 2004

$ 116,610,975

$ 71,007

117 Eurodollar 90 Day Index Contracts

Sept. 2004

116,492,513

57,845

117 Eurodollar 90 Day Index Contracts

Dec. 2004

116,356,500

44,982

117 Eurodollar 90 Day Index Contracts

March 2005

116,217,563

23,470

138 Eurodollar 90 Day Index Contracts

June 2005

136,920,150

69,874

138 Eurodollar 90 Day Index Contracts

Sept. 2005

136,787,325

26,324

138 Eurodollar 90 Day Index Contracts

Dec. 2005

136,673,475

(5,914)

138 Eurodollar 90 Day Index Contracts

March 2006

136,582,050

(28,939)

138 Eurodollar 90 Day Index Contracts

June 2006

136,500,975

(54,402)

138 Eurodollar 90 Day Index Contracts

Sept. 2006

136,428,525

(139,239)

138 Eurodollar 90 Day Index Contracts

Dec. 2006

136,359,525

(150,814)

138 Eurodollar 90 Day Index Contracts

March 2007

136,302,600

(18,060)

138 Eurodollar 90 Day Index Contracts

June 2007

136,249,125

(355,902)

$ (459,768)

Swap Agreements

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Credit Default Swap

Receive quarterly notional amount multiplied by .35% and pay Goldman Sachs upon default event of Devon Energy Corp., par value of the notional amount of Devon Energy Corp. 7.95% 4/15/32

June 2006

$ 800,000

$ 553

Receive quarterly notional amount multiplied by .38% and pay Merrill Lynch, Inc. upon default event of EnCana Corp., par value of the notional amount of EnCana Corp. 4.75% 10/15/13

March 2009

1,300,000

(5,025)

Receive quarterly notional amount multiplied by .38% and pay Merrill Lynch, Inc. upon default event of EnCana Corp., par value of the notional amount of EnCana Corp. 4.75% 10/15/13

March 2009

500,000

(1,937)

Receive quarterly notional amount multiplied by .41% and pay Merrill Lynch, Inc. upon default event of Talisman Energy, Inc., par value of the notional amount of Talisman Energy, Inc. 7.25% 10/15/27

March 2009

1,000,000

(316)

Receive quarterly notional amount multiplied by .5% and pay Merrill Lynch, Inc. upon default event of EnCana Corp., par value of the notional amount of EnCana Corp. 4.75% 10/15/13

June 2009

1,500,000

1,689

Receive quarterly notional amount multiplied by .53% and pay Deutsche Bank upon default event of SBC Communications, Inc., par value of the notional amount of SBC Communications, Inc. 6.25% 3/15/11

March 2009

1,200,000

6,138

Receive quarterly notional amount multiplied by .53% and pay Lehman Brothers, Inc., upon default event of SBC Communications, Inc., par value of the notional amount of SBC Communications, Inc. 6.25% 3/15/11

March 2009

900,000

2,531

Receive quarterly notional amount multiplied by .565% and pay Morgan Stanley, Inc. upon default event of Walt Disney Co., par value of the notional amount of Walt Disney Co. 6.375% 3/1/12

March 2009

2,600,000

23,004

Swap Agreements - continued

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Credit Default Swap - continued

Receive quarterly notional amount multiplied by .59% and pay Merrill Lynch, Inc. upon default event of Raytheon Co., par value of the notional amount of Raytheon Co. 6.55% 3/15/10

March 2009

$ 1,600,000

$ 2,045

Receive quarterly notional amount multiplied by .62% and pay Goldman Sachs upon default of SLM Corp., par value of the notional amount of SLM Corp. 1.12% 7/25/35

August 2007

400,000

5,244

TOTAL CREDIT DEFAULT SWAP

11,800,000

33,926

Interest Rate Swap

Receive quarterly a fixed rate equal to 2.385% and pay quarterly a floating rate based on 3-month LIBOR with Bank of America

April 2006

22,000,000

(82,565)

Receive quarterly a fixed rate equal to 2.849% and pay quarterly a floating rate based on 3-month LIBOR with Lehman Brothers, Inc.

August 2007

6,000,000

(86,502)

Receive quarterly a fixed rate equal to 3.098% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.

April 2007

21,470,000

(58,997)

Receive quarterly a fixed rate equal to 3.1422% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.

April 2007

8,280,000

(24,305)

TOTAL INTEREST RATE SWAP

57,750,000

(252,369)

Total Return Swap

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

August 2004

5,300,000

(173,972)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

Sept. 2004

4,045,000

(123,988)

Swap Agreements - continued

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Total Return Swap - continued

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

Sept. 2004

$ 2,600,000

$ (85,344)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 55 basis points with Deutsche Bank

Dec. 2004

6,000,000

(25,916)

TOTAL TOTAL RETURN SWAP

17,945,000

(409,220)

$ 87,495,000

$ (627,663)

Legend

(a) 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 $107,931,181 or 9.3% of net assets.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(c) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $1,579,325.

(d) Security or a portion of the security has been segregated as collateral for open swap agreements. At the period end, the value of securities pledged amounted to $422,809.

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

(f) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(g) Security represents right to receive monthly interest payments on an underlying pool of mortgages. Principal shown is the par amount of the mortgage pool.

(h) Security or a portion of the security purchased on a delayed delivery or when-issued basis. Interest rate to be determined at settlement date.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $411,982,598 and $428,013,448, respectively, of which long-term U.S. government and government agency obligations aggregated $241,931,550 and $277,900,091, respectively.

Income Tax Information

At October 31, 2003, the fund had a capital loss carryforward of approximately $11,617,000 of which $2,265,000, $3,149,000, $2,459,000 and $3,744,000 will expire on October 31, 2004, 2005, 2007 and 2008, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $86,280,000) (cost $1,166,490,368) - See accompanying schedule

$ 1,170,555,396

Cash

161,806

Receivable for investments sold

167,477

Receivable for swap agreements

28,142

Receivable for fund shares sold

5,614,480

Interest receivable

8,635,279

Receivable for daily variation on futures contracts

194,439

Prepaid expenses

4,118

Total assets

1,185,361,137

Liabilities

Payable for investments purchased
Regular delivery

$ 2,305,565

Delayed delivery

16,052,206

Payable for fund shares redeemed

8,959,436

Distributions payable

353,886

Unrealized loss on swap agreements

627,663

Accrued management fee

413,523

Distribution fees payable

393,221

Other affiliated payables

211,237

Other payables and accrued expenses

31,966

Total liabilities

29,348,703

Net Assets

$ 1,156,012,434

Net Assets consist of:

Paid in capital

$ 1,165,882,978

Undistributed net investment income

2,929,375

Accumulated undistributed net realized gain (loss) on investments

(15,777,516)

Net unrealized appreciation (depreciation) on investments

2,977,597

Net Assets

$ 1,156,012,434

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($211,091,162 ÷ 22,128,146 shares)

$ 9.54

Maximum offering price per share (100/98.50 of $9.54)

$ 9.69

Class T:
Net Asset Value and redemption price per share ($488,223,598 ÷ 51,139,925 shares)

$ 9.55

Maximum offering price per share (100/98.50 of $9.55)

$ 9.70

Class B:
Net Asset Value and offering price per share ($50,720,154 ÷ 5,307,856 shares) A

$ 9.56

Class C:
Net Asset Value and offering price per share ($316,785,005 ÷ 33,174,926 shares) A

$ 9.55

Institutional Class:
Net Asset Value, offering price and redemption price
per share ($89,192,515 ÷ 9,343,737 shares)

$ 9.55

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 17,468,254

Security lending

13,562

Total income

17,481,816

Expenses

Management fee

$ 2,459,917

Transfer agent fees

1,104,623

Distribution fees

2,413,815

Accounting and security lending fees

128,947

Non-interested trustees' compensation

3,643

Custodian fees and expenses

24,490

Registration fees

94,110

Audit

26,705

Legal

3,589

Miscellaneous

9,630

Total expenses before reductions

6,269,469

Expense reductions

(2,292)

6,267,177

Net investment income (loss)

11,214,639

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities

3,384,036

Futures contracts

52,507

Swap agreements

475,645

Total net realized gain (loss)

3,912,188

Change in net unrealized appreciation (depreciation) on: Investment securities

(4,583,176)

Futures contracts

(552,438)

Swap agreements

(739,038)

Total change in net unrealized appreciation (depreciation)

(5,874,652)

Net gain (loss)

(1,962,464)

Net increase (decrease) in net assets resulting from operations

$ 9,252,175

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 11,214,639

$ 26,028,484

Net realized gain (loss)

3,912,188

12,524,137

Change in net unrealized appreciation (depreciation)

(5,874,652)

(2,717,720)

Net increase (decrease) in net assets resulting
from operations

9,252,175

35,834,901

Distributions to shareholders from net investment income

(10,186,200)

(27,246,649)

Share transactions - net increase (decrease)

1,455,316

300,204,128

Total increase (decrease) in net assets

521,291

308,792,380

Net Assets

Beginning of period

1,155,491,143

846,698,763

End of period (including undistributed net investment income of $2,929,375 and undistributed net investment income of $1,900,936, respectively)

$ 1,156,012,434

$ 1,155,491,143

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.55

$ 9.44

$ 9.49

$ 9.12

$ 9.15

$ 9.38

Income from Investment Operations

Net investment income (loss) E

.105

.261

.381 G

.523

.551

.518

Net realized and unrealized gain (loss)

(.018)

.128

(.034) G

.386

(.028)

(.233)

Total from investment operations

.087

.389

.347

.909

.523

.285

Distributions from net investment income

(.097)

(.279)

(.397)

(.539)

(.553)

(.515)

Net asset value,
end of period

$ 9.54

$ 9.55

$ 9.44

$ 9.49

$ 9.12

$ 9.15

Total Return B, C, D

.91%

4.16%

3.78%

10.22%

5.91%

3.12%

Ratios to Average Net Assets F

Expenses before expense reductions

.83% A

.81%

.80%

.85%

.83%

.82%

Expenses net of voluntary waivers, if any

.83% A

.81%

.80%

.85%

.83%

.82%

Expenses net of all reductions

.83% A

.81%

.80%

.84%

.83%

.80%

Net investment income (loss)

2.21% A

2.74%

4.09% G

5.63%

6.05%

5.68%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 211,091

$ 186,290

$ 106,018

$ 38,240

$ 16,698

$ 17,835

Portfolio turnover rate

77% A

102%

111%

145%

115%

139%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.15

$ 9.38

Income from Investment Operations

Net investment income (loss) E

.106

.261

.381 G

.525

.550

.523

Net realized and unrealized gain (loss)

(.009)

.118

(.036) G

.383

(.019)

(.238)

Total from investment operations

.097

.379

.345

.908

.531

.285

Distributions from net investment income

(.097)

(.279)

(.395)

(.538)

(.551)

(.515)

Net asset value,
end of period

$ 9.55

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.15

Total Return B, C, D

1.02%

4.04%

3.75%

10.21%

6.00%

3.12%

Ratios to Average Net Assets F

Expenses before expense reductions

.83% A

.82%

.82%

.85%

.84%

.84%

Expenses net of voluntary waivers, if any

.83% A

.82%

.82%

.85%

.84%

.84%

Expenses net of all reductions

.83% A

.82%

.82%

.85%

.83%

.83%

Net investment income (loss)

2.21% A

2.73%

4.07% G

5.62%

6.05%

5.64%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 488,224

$ 468,931

$ 388,495

$ 309,958

$ 279,306

$ 309,670

Portfolio turnover rate

77% A

102%

111%

145%

115%

139%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.56

$ 9.46

$ 9.43

Income from Investment Operations

Net investment income (loss) E

.067

.183

.281 H

Net realized and unrealized gain (loss)

(.008)

.120

(.234) H

Total from investment operations

.059

.303

.047

Distributions from net investment income

(.059)

(.203)

(.017)

Net asset value, end of period

$ 9.56

$ 9.56

$ 9.46

Total Return B, C, D

.61%

3.23%

.50%

Ratios to Average Net Assets G

Expenses before expense reductions

1.63% A

1.61%

1.86% A

Expenses net of voluntary waivers, if any

1.63% A

1.61%

1.65% A

Expenses net of all reductions

1.63% A

1.61%

1.65% A

Net investment income (loss)

1.41% A

1.94%

3.59% A, H

Supplemental Data

Net assets, end of period (000 omitted)

$ 50,720

$ 49,353

$ 3,811

Portfolio turnover rate

77% A

102%

111%

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 For the period October 9, 2002 (commencement of sale of shares) to October 31, 2002.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

H Effective November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.16

$ 9.38

Income from Investment Operations

Net investment income (loss) E

.067

.182

.304 G

.448

.467

.434

Net realized and unrealized gain (loss)

(.009)

.118

(.037) G

.383

(.021)

(.222)

Total from investment operations

.058

.300

.267

.831

.446

.212

Distributions from net investment income

(.058)

(.200)

(.317)

(.461)

(.476)

(.432)

Net asset value,
end of period

$ 9.55

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.16

Total Return B, C, D

.61%

3.19%

2.90%

9.30%

5.01%

2.31%

Ratios to Average Net Assets F

Expenses before expense reductions

1.66% A

1.64%

1.64%

1.68%

1.68%

1.73%

Expenses net of voluntary waivers, if any

1.66% A

1.64%

1.64%

1.68%

1.68%

1.73%

Expenses net of all reductions

1.65% A

1.64%

1.63%

1.68%

1.67%

1.72%

Net investment income (loss)

1.39% A

1.91%

3.25% G

4.80%

5.21%

4.75%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 316,785

$ 359,779

$ 283,046

$ 99,486

$ 50,824

$ 30,428

Portfolio turnover rate

77% A

102%

111%

145%

115%

139%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.15

$ 9.38

Income from Investment Operations

Net investment income (loss) D

.115

.278

.397 F

.540

.564

.534

Net realized and unrealized gain (loss)

(.009)

.119

(.034) F

.387

(.015)

(.236)

Total from investment operations

.106

.397

.363

.927

.549

.298

Distributions from net investment income

(.106)

(.297)

(.413)

(.557)

(.569)

(.528)

Net asset value, end of period

$ 9.55

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.15

Total Return B, C

1.11%

4.24%

3.95%

10.43%

6.21%

3.27%

Ratios to Average Net Assets E

Expenses before expense reductions

.64% A

.63%

.64%

.66%

.67%

.71%

Expenses net of voluntary waivers, if any

.64% A

.63%

.64%

.66%

.67%

.71%

Expenses net of all reductions

.64% A

.63%

.63%

.66%

.67%

.70%

Net investment income (loss)

2.40% A

2.92%

4.25% F

5.81%

6.21%

5.77%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 89,193

$ 91,138

$ 65,330

$ 23,301

$ 7,655

$ 6,805

Portfolio turnover rate

77% A

102%

111%

145%

115%

139%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Short Fixed-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 four 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 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. 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

1. Significant Accounting Policies - continued

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 futures transactions, prior period premium and discount on debt securities, market discount, financing transactions, capital loss carryforwards, expiring capital loss carryforwards and losses deferred due to wash sales.

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

Unrealized appreciation

$ 10,433,462

Unrealized depreciation

(5,153,127)

Net unrealized appreciation (depreciation)

$ 5,280,335

Cost for federal income tax purposes

$ 1,165,275,061

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

Semiannual Report

2. Operating Policies - continued

Repurchase Agreements - continued

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).

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

Futures Contracts. The fund may use futures contracts to manage its exposure to the bond market and to fluctuations in interest rates. Buying futures tends to increase the fund's exposure to the underlying instrument, while selling futures tends to decrease the fund's exposure to the underlying instrument or hedge other fund investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counter-parties do not perform under the contracts' terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.

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

2. Operating Policies - continued

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.

Total return swaps are agreements to exchange the return generated by one instrument for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the index exceeds the offsetting interest obligation, the fund will receive a payment from the counterparty. To the extent it is less, the fund will make a payment to the counterparty. Periodic payments received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a "guarantor" receiving a periodic payment that is a fixed percentage applied to a notional principal amount. In return the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the swap. The fund may enter into credit default swaps in which the fund or its counterparty act as guarantors. By acting as the guarantor of a swap, the fund assumes the market and credit risk of the underlying instrument including liquidity and loss of value. Premiums received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

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. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. These risks include changes in the returns of the underlying instruments, failure of the counterparties to perform under the contracts' terms and the possible lack of liquidity with respect to the swap agreements. Details of swap agreements open at period end are included in the fund's Schedule of Investments under the caption "Swap Agreements."

Semiannual Report

2. Operating Policies - continued

Financing Transactions. To earn additional income, the fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but will be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the fund's right to repurchase or sell securities may be limited.

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 .30% 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 .43% of the fund's average net assets.

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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan - continued

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%

$ 148,084

$ 917

Class T

0%

.15%

359,462

21,526

Class B

.65%

.25%

223,258

161,516

Class C

.75%

.25%

1,683,011

584,866

$ 2,413,815

$ 768,825

Sales Load. FDC receives a front-end sales charge of up to 1.50% for selling Class A and Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of a 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 3% 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

$ 69,550

Class T

42,206

Class B*

59,918

Class C*

107,739

$ 279,413

* 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

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

shareholder 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

$ 201,052

.20

Class T

482,078

.20

Class B

61,665

.25

Class C

286,297

.17

Institutional Class

73,531

.16

$ 1,104,623

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

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 $1,404,533 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 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. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

6. Security Lending - continued

market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. At period end there were no security loans outstanding.

7. 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 $2,292.

8. Other Information.

At the end of the period, one unaffiliated shareholder was the owner of record of 10% of the total outstanding shares of the fund.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,992,815

$ 4,157,590

Class T

4,853,024

13,023,102

Class B

303,269

541,261

Class C

2,026,874

7,051,516

Institutional Class

1,010,218

2,473,180

Total

$ 10,186,200

$ 27,246,649

Semiannual Report

10. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

8,249,676

20,802,909

$ 79,249,730

$ 198,897,539

Reinvestment of distributions

168,253

344,259

1,614,804

3,291,947

Shares redeemed

(5,806,810)

(12,855,965)

(55,741,515)

(122,878,485)

Net increase (decrease)

2,611,119

8,291,203

$ 25,123,019

$ 79,311,001

Class T

Shares sold

16,719,872

37,820,298

$ 160,750,066

$ 361,699,855

Reinvestment of distributions

436,796

1,149,084

4,196,438

10,991,925

Shares redeemed

(15,107,885)

(30,982,503)

(145,112,130)

(296,311,977)

Net increase (decrease)

2,048,783

7,986,879

$ 19,834,374

$ 76,379,803

Class B

Shares sold

1,429,785

6,189,378

$ 13,754,905

$ 59,258,449

Reinvestment of distributions

25,739

45,938

247,520

440,440

Shares redeemed

(1,309,866)

(1,475,998)

(12,589,613)

(14,147,798)

Net increase (decrease)

145,658

4,759,318

$ 1,412,812

$ 45,551,091

Class C

Shares sold

4,848,313

23,921,233

$ 46,609,530

$ 228,874,396

Reinvestment of distributions

132,548

469,309

1,273,568

4,490,147

Shares redeemed

(9,464,307)

(16,674,118)

(90,908,585)

(159,470,102)

Net increase (decrease)

(4,483,446)

7,716,424

$ (43,025,487)

$ 73,894,441

Institutional Class

Shares sold

3,356,653

8,171,676

$ 32,242,244

$ 78,200,044

Reinvestment of distributions

60,465

141,892

580,816

1,357,285

Shares redeemed

(3,615,186)

(5,685,068)

(34,712,462)

(54,489,537)

Net increase (decrease)

(198,068)

2,628,500

$ (1,889,402)

$ 25,067,792

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

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

Fidelity Management &
Research (Far East) Inc.

Fidelity Investments Japan Limited

Fidelity Investments Money
Management, Inc.

Fidelity International Investment Advisors

Fidelity International Investment Advisors
(U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

SFII-USAN-0604
1.784906.101

Fidelity® Advisor

Short Fixed-Income

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

Semiannual Report

April 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.

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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.

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

Quality Diversification (% of fund's net assets)

As of April 30, 2004*

As of October 31, 2003**

U.S. Government and
U.S. Government
Agency Obligations 26.3%

U.S. Government and
U.S. Government
Agency Obligations 28.4%

AAA 24.3%

AAA 21.3%

AA 5.5%

AA 3.8%

A 15.6%

A 15.7%

BBB 15.8%

BBB 14.3%

BB and Below 1.2%

BB and Below 2.1%

Not Rated 1.1%

Not Rated 4.4%

Short-Term
Investments and
Net Other Assets 10.2%

Short-Term
Investments and
Net Other Assets 10.0%



We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. Securities rated BB or below were rated investment grade at the time of acquisition.

Average Years to Maturity as of April 30, 2004

6 months ago

Years

2.5

2.4

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

1.9

1.8

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Asset Allocation (% of fund's net assets)

As of April 30, 2004 *

As of October 31, 2003**

Corporate Bonds 22.0%

Corporate Bonds 23.8%

U.S. Government and
U.S. Government
Agency Obligations 26.3%

U.S. Government and
U.S. Government
Agency Obligations 28.4%

Asset-Backed
Securities 26.2%

Asset-Backed
Securities 25.9%

CMOs and Other Mortgage Related Securities 15.0%

CMOs and Other Mortgage Related Securities 11.5%

Other Investments 0.3%

Other Investments 0.4%

Short-Term
Investments and
Net Other Assets 10.2%

Short-Term
Investments and
Net Other Assets 10.0%

* Foreign investments

4.7%

** Foreign investments

4.0%

* Futures and Swaps

19.4%

** Futures and Swaps

12.8%



The information in the above tables is based on the combined investments of the fund and its pro-rata share of the investments of Fidelity's fixed-income central fund.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Nonconvertible Bonds - 21.3%

Principal
Amount

Value
(Note 1)

CONSUMER DISCRETIONARY - 3.6%

Auto Components - 0.5%

DaimlerChrysler NA Holding Corp.:

4.05% 6/4/08

$ 650,000

$ 638,474

4.75% 1/15/08

2,250,000

2,282,567

6.9% 9/1/04

1,500,000

1,523,289

7.4% 1/20/05

400,000

415,254

7.75% 6/15/05

1,100,000

1,166,954

6,026,538

Media - 3.0%

AOL Time Warner, Inc.:

5.625% 5/1/05

1,150,000

1,191,732

6.15% 5/1/07

1,825,000

1,952,491

British Sky Broadcasting Group PLC (BSkyB) yankee 7.3% 10/15/06

2,350,000

2,575,917

Continental Cablevision, Inc.:

8.3% 5/15/06

3,200,000

3,525,882

9% 9/1/08

1,400,000

1,648,779

Cox Communications, Inc.:

6.875% 6/15/05

2,025,000

2,125,705

7.5% 8/15/04

1,450,000

1,473,258

7.75% 8/15/06

600,000

662,174

Cox Enterprises, Inc. 4.375% 5/1/08 (a)

1,370,000

1,376,716

Liberty Media Corp. 2.61% 9/17/06 (e)

4,000,000

4,069,936

News America, Inc. 6.625% 1/9/08

3,000,000

3,273,951

TCI Communications, Inc. 8% 8/1/05

3,610,000

3,853,924

Time Warner, Inc. 7.75% 6/15/05

5,050,000

5,331,093

Univision Communications, Inc.:

3.5% 10/15/07

535,000

529,178

3.875% 10/15/08

585,000

574,795

34,165,531

Specialty Retail - 0.0%

Boise Cascade Corp. 7.5% 2/1/08

525,000

564,424

Textiles Apparel & Luxury Goods - 0.1%

Jones Apparel Group, Inc. 7.5% 6/15/04

800,000

805,042

TOTAL CONSUMER DISCRETIONARY

41,561,535

CONSUMER STAPLES - 0.9%

Food & Staples Retailing - 0.2%

Fred Meyer, Inc. 7.375% 3/1/05

2,510,000

2,620,395

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

CONSUMER STAPLES - continued

Food Products - 0.3%

Kraft Foods, Inc. 5.25% 6/1/07

$ 3,265,000

$ 3,430,842

Tobacco - 0.4%

Altria Group, Inc. 5.625% 11/4/08

2,000,000

2,053,036

Philip Morris Companies, Inc. 6.375% 2/1/06

2,000,000

2,097,400

4,150,436

TOTAL CONSUMER STAPLES

10,201,673

ENERGY - 0.5%

Energy Equipment & Services - 0.2%

Cooper Cameron Corp. 2.65% 4/15/07

1,335,000

1,304,182

Petroliam Nasional BHD (Petronas) yankee 8.875% 8/1/04 (a)

1,135,000

1,153,093

2,457,275

Oil & Gas - 0.3%

Duke Energy Field Services LLC 5.75% 11/15/06

695,000

733,819

Kerr-McGee Corp. 5.375% 4/15/05

1,375,000

1,411,715

Pemex Project Funding Master Trust 2.64% 1/7/05 (a)(e)

1,700,000

1,715,300

3,860,834

TOTAL ENERGY

6,318,109

FINANCIALS - 10.3%

Capital Markets - 1.5%

ABN-AMRO Bank NV, Chicago 7.25% 5/31/05

610,000

643,427

Bank of New York Co., Inc.:

3.4% 3/15/13 (e)

2,750,000

2,664,230

4.25% 9/4/12 (e)

1,285,000

1,291,518

Goldman Sachs Group LP 7.2% 11/1/06 (a)

500,000

550,291

Goldman Sachs Group, Inc. 4.125% 1/15/08

2,995,000

3,035,666

J.P. Morgan Chase & Co. 3.5% 3/15/09

2,620,000

2,534,268

Lehman Brothers Holdings, Inc.:

4% 1/22/08

300,000

302,837

6.25% 5/15/06

2,795,000

2,987,852

6.625% 2/5/06

120,000

128,186

Merrill Lynch & Co., Inc. 3.7% 4/21/08

1,400,000

1,389,758

Morgan Stanley 6.1% 4/15/06

1,800,000

1,918,336

17,446,369

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Commercial Banks - 0.9%

Australia & New Zealand Banking Group Ltd. yankee 7.55% 9/15/06

$ 405,000

$ 445,152

Bank of America Corp.:

3.875% 1/15/08

275,000

277,160

7.125% 9/15/06

1,750,000

1,916,163

Corporacion Andina de Fomento yankee 7.25% 3/1/07

965,000

1,051,851

First National Boston Corp. 7.375% 9/15/06

1,145,000

1,266,972

Korea Development Bank:

3.875% 3/2/09

2,700,000

2,625,923

7.375% 9/17/04

810,000

820,290

Mellon Bank NA, Pittsburgh 6.5% 8/1/05

2,000,000

2,103,574

10,507,085

Consumer Finance - 2.3%

American General Finance Corp. 4.5% 11/15/07

1,115,000

1,148,427

Ford Motor Credit Co.:

6.5% 1/25/07

4,215,000

4,469,776

6.875% 2/1/06

5,800,000

6,139,161

General Motors Acceptance Corp.:

6.125% 2/1/07

400,000

422,238

6.125% 8/28/07

1,900,000

2,007,745

6.75% 1/15/06

5,907,000

6,254,952

Household Finance Corp.:

4.125% 12/15/08

705,000

704,698

4.625% 1/15/08

818,000

841,242

5.75% 1/30/07

745,000

793,412

Household International, Inc. 8.875% 2/15/08

2,025,000

2,234,970

John Deere Capital Corp. 1.71% 9/17/04 (e)

1,300,000

1,302,373

26,318,994

Diversified Financial Services - 3.0%

Citigroup, Inc. 6.75% 12/1/05

4,100,000

4,383,359

Delta Air Lines, Inc. pass thru trust certificates 7.379% 5/18/10

848,394

828,475

Deutsche Telekom International Finance BV:

3.875% 7/22/08

2,425,000

2,411,937

8.25% 6/15/05

4,190,000

4,460,108

NiSource Finance Corp. 3.2% 11/1/06

1,085,000

1,085,173

Pemex Project Funding Master Trust 6.125% 8/15/08

2,535,000

2,636,400

Powergen US Funding LLC 4.5% 10/15/04

4,240,000

4,284,592

Prime Property Funding II 6.25% 5/15/07

1,000,000

1,082,666

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Diversified Financial Services - continued

Sprint Capital Corp.:

6% 1/15/07

$ 2,240,000

$ 2,381,064

7.125% 1/30/06

1,925,000

2,065,011

Telecom Italia Capital 4% 11/15/08 (a)

3,100,000

3,072,878

Verizon Global Funding Corp.:

4% 1/15/08

1,250,000

1,263,043

6.125% 6/15/07

4,840,000

5,221,445

35,176,151

Insurance - 0.3%

Allstate Corp. 7.875% 5/1/05

535,000

565,622

MetLife, Inc. 3.911% 5/15/05

2,750,000

2,798,158

Travelers Property Casualty Corp. 3.75% 3/15/08

530,000

528,871

3,892,651

Real Estate - 1.7%

AMB Property LP 7.2% 12/15/05

1,000,000

1,077,220

Arden Realty LP 8.875% 3/1/05

2,045,000

2,152,870

AvalonBay Communities, Inc. 5% 8/1/07

915,000

956,990

BRE Properties, Inc. 5.95% 3/15/07

575,000

612,776

Camden Property Trust 5.875% 6/1/07

580,000

618,370

CarrAmerica Realty Corp. 5.25% 11/30/07

1,745,000

1,831,798

CenterPoint Properties Trust 6.75% 4/1/05

470,000

486,489

Duke Realty LP 6.875% 3/15/05

1,200,000

1,249,411

EOP Operating LP:

6.625% 2/15/05

500,000

517,636

6.763% 6/15/07

1,625,000

1,775,470

7.75% 11/15/07

650,000

735,775

8.375% 3/15/06

1,500,000

1,647,417

ERP Operating LP 7.1% 6/23/04

1,700,000

1,712,600

Gables Realty LP:

5.75% 7/15/07

1,220,000

1,290,431

7.25% 2/15/06

2,200,000

2,355,368

Merry Land & Investment Co., Inc. 7.25% 6/15/05

600,000

631,798

19,652,419

Thrifts & Mortgage Finance - 0.6%

Abbey National PLC 6.69% 10/17/05

200,000

212,663

Countrywide Home Loans, Inc.:

1.6% 6/2/06 (e)

1,250,000

1,258,635

5.5% 8/1/06

1,290,000

1,357,486

5.625% 5/15/07

745,000

790,295

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Thrifts & Mortgage Finance - continued

Washington Mutual, Inc.:

4.375% 1/15/08

$ 700,000

$ 711,362

5.625% 1/15/07

2,000,000

2,118,476

6,448,917

TOTAL FINANCIALS

119,442,586

INDUSTRIALS - 1.2%

Aerospace & Defense - 0.5%

Bombardier Capital, Inc. 6.125% 6/29/06 (a)

4,050,000

4,255,452

Raytheon Co. 6.75% 8/15/07

900,000

986,278

5,241,730

Air Freight & Logistics - 0.1%

Federal Express Corp. pass thru trust certificates 7.53% 9/23/06

659,683

690,616

Commercial Services & Supplies - 0.1%

Boise Cascade Office Products Corp. 7.05% 5/15/05

1,100,000

1,135,827

Industrial Conglomerates - 0.5%

Tyco International Group SA yankee 6.375% 6/15/05

6,100,000

6,345,415

TOTAL INDUSTRIALS

13,413,588

INFORMATION TECHNOLOGY - 0.5%

Communications Equipment - 0.5%

Motorola, Inc. 6.75% 2/1/06

4,950,000

5,257,583

MATERIALS - 0.6%

Containers & Packaging - 0.1%

Sealed Air Corp. 6.95% 5/15/09 (a)

855,000

941,184

Paper & Forest Products - 0.5%

Boise Cascade Corp.:

7.43% 10/10/05

1,540,000

1,598,597

8% 2/24/06

745,000

784,456

International Paper Co. 4.25% 1/15/09

435,000

431,677

Weyerhaeuser Co. 5.95% 11/1/08

3,245,000

3,464,833

6,279,563

TOTAL MATERIALS

7,220,747

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

TELECOMMUNICATION SERVICES - 1.5%

Diversified Telecommunication Services - 0.9%

British Telecommunications PLC 7.875% 12/15/05

$ 2,200,000

$ 2,381,126

France Telecom SA 8.2% 3/1/06

4,750,000

5,166,314

Telecomunicaciones de Puerto Rico, Inc. 6.65% 5/15/06

2,220,000

2,365,137

Telefonica Europe BV 7.35% 9/15/05

180,000

191,804

10,104,381

Wireless Telecommunication Services - 0.6%

America Movil SA de CV 4.125% 3/1/09 (a)

2,825,000

2,708,328

AT&T Wireless Services, Inc.:

7.35% 3/1/06

1,000,000

1,082,068

7.5% 5/1/07

1,590,000

1,765,608

Vodafone Group PLC 7.625% 2/15/05

1,800,000

1,880,071

7,436,075

TOTAL TELECOMMUNICATION SERVICES

17,540,456

UTILITIES - 2.2%

Electric Utilities - 1.9%

Cleveland Electric Illuminating Co./Toledo Edison Co. 7.67% 7/1/04

5,035,000

5,081,382

DTE Energy Co. 6.45% 6/1/06

1,510,000

1,604,158

Duke Capital Corp.:

4.37% 3/1/09

2,045,000

2,004,806

6.25% 7/15/05

1,493,000

1,556,567

FirstEnergy Corp. 5.5% 11/15/06

4,095,000

4,272,879

FPL Group Capital, Inc. 3.25% 4/11/06

705,000

712,646

MidAmerican Energy Holdings, Inc. 4.625% 10/1/07

705,000

720,588

Monongahela Power Co. 5% 10/1/06

2,015,000

2,042,706

Pacific Gas & Electric Co.:

1.81% 4/3/06 (e)

1,550,000

1,550,598

3.6% 3/1/09

340,000

329,805

Progress Energy, Inc. 6.75% 3/1/06

1,500,000

1,602,530

Southwestern Public Service Co. 5.125% 11/1/06

650,000

680,123

22,158,788

Gas Utilities - 0.3%

Consolidated Natural Gas Co. 7.375% 4/1/05

1,100,000

1,151,614

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

UTILITIES - continued

Gas Utilities - continued

Kinder Morgan Energy Partners LP 5.35% 8/15/07

$ 1,400,000

$ 1,475,491

Williams Holdings of Delaware, Inc. 6.25% 2/1/06

530,000

549,875

3,176,980

TOTAL UTILITIES

25,335,768

TOTAL NONCONVERTIBLE BONDS

(Cost $241,801,402)

246,292,045

U.S. Government and Government Agency Obligations - 14.8%

U.S. Government Agency Obligations - 6.8%

Fannie Mae:

0% 5/19/04 (c)

1,580,000

1,579,325

6% 5/15/08

28,824,000

31,294,556

Freddie Mac:

2.7% 3/16/07

18,000,000

17,840,214

2.875% 9/15/05

22,907,000

23,175,814

2.875% 12/15/06

4,300,000

4,300,925

Guaranteed Export Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-Import Bank) Series 1995-A, 6.28% 6/15/04

176,471

177,619

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

78,368,453

U.S. Treasury Obligations - 8.0%

U.S. Treasury Bonds:

10% 5/15/10

5,021,000

5,438,762

11.75% 2/15/10

1,625,000

1,752,080

12% 8/15/13

17,526,000

23,495,110

U.S. Treasury Notes:

1.875% 1/31/06 (d)

22,779,000

22,661,551

2.625% 11/15/06

16,200,000

16,188,611

3.5% 11/15/06

185,000

188,874

4.375% 5/15/07

21,470,000

22,388,336

TOTAL U.S. TREASURY OBLIGATIONS

92,113,324

TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS

(Cost $172,428,736)

170,481,777

U.S. Government Agency - Mortgage Securities - 4.7%

Principal
Amount

Value
(Note 1)

Fannie Mae - 4.4%

5.5% 8/1/14 to 3/1/18

$ 13,758,466

$ 14,147,059

5.5% 5/1/19 (b)

9,200,000

9,441,500

6.5% 2/1/08 to 1/1/33

21,798,897

23,041,909

7% 1/1/11 to 6/1/32

3,164,922

3,367,674

7% 5/1/19 (b)

766,744

817,541

7.5% 5/1/12 to 10/1/14

277,777

297,714

11.5% 11/1/15

125,965

144,413

TOTAL FANNIE MAE

51,257,810

Freddie Mac - 0.0%

8.5% 5/1/26 to 7/1/28

457,817

499,870

12% 11/1/19

23,735

26,939

TOTAL FREDDIE MAC

526,809

Government National Mortgage Association - 0.3%

7% 1/15/25 to 6/15/32

2,707,516

2,880,538

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $54,402,492)

54,665,157

Asset-Backed Securities - 20.6%

Accredited Mortgage Loan Trust:

Series 2003-2 Class A1, 4.23% 10/25/33

2,118,057

2,124,681

Series 2003-3 Class A1, 4.46% 1/25/34

2,000,754

1,966,487

ACE Securities Corp.:

Series 2002-HE1, Class A, 1.44% 6/25/32 (e)

613,337

614,665

Series 2002-HE2 Class A2A, 1.53% 8/25/32 (e)

615,605

617,149

Series 2003-HE1:

Class A2, 1.51% 11/25/33 (e)

2,742,006

2,752,433

Class M1 1.75% 11/25/33 (e)

430,000

432,669

Class M2, 2.8% 11/25/33 (e)

270,000

274,454

Series 2003-NC1 Class A2A, 1.52% 7/25/33 (e)

3,497,783

3,514,841

Series 2004-HE1 Class A2B, 1.55% 2/25/34 (e)

1,420,000

1,418,438

American Express Credit Account Master Trust
Series 2000-1 Class A, 7.2% 9/17/07

1,600,000

1,670,103

AmeriCredit Automobile Receivables Trust:

Series 2001-B Class A4, 5.37% 6/12/08

2,233,325

2,292,534

Series 2001-C Class A4, 5.01% 7/14/08

2,500,000

2,581,600

Series 2001-D Class A4 4.41% 11/12/08

2,350,000

2,404,974

Series 2002-A Class A4, 4.61% 1/12/09

3,675,000

3,782,370

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

AmeriCredit Automobile Receivables Trust: - continued

Series 2002-B:

Class A3, 3.78% 2/12/07

$ 2,680,308

$ 2,704,347

Class A4, 4.46% 4/12/09

980,000

1,010,016

Series 2003-AM Class A4A, 3.1% 11/6/09

875,000

880,349

Series 2003-BX:

Class A3, 2.11% 8/6/07

740,000

741,360

Class A4A, 2.72% 1/6/10

1,105,000

1,101,021

Series 2003-CF Class A4, 3.48% 5/6/10

1,810,000

1,826,634

Series 2003-DM Class A4, 2.84% 8/6/10

1,580,000

1,562,394

Ameriquest Mortgage Securities, Inc.:

Series 2002-4 Class A2, 1.54% 2/25/33 (e)

390,309

392,069

Series 2002-AR1 Class M1, 1.81% 9/25/32 (e)

1,100,000

1,107,055

Series 2003-3 Class S, 5% 9/25/05 (g)

3,564,894

146,495

Series 2003-7 Class M1, 1.95% 8/25/33 (e)

625,000

634,445

Amortizing Residential Collateral Trust:

Series 2002-BC3 Class A, 1.43% 6/25/32 (e)

838,151

840,099

Series 2002-BC3N Class B2, 7% 6/25/32 (a)

16,834

16,758

Series 2002-BC6 Class AIO, 6% 8/25/04 (g)

7,392,727

135,760

Series 2002-BC7:

Class AIO, 6% 9/25/04 (g)

5,000,000

116,460

Class M1, 1.9% 10/25/32 (e)

1,100,000

1,108,250

Series 2002-BC9 Class A2, 1.58% 12/25/32 (e)

643,294

647,096

AQ Finance NIMS Trust Series 2003-N1 Class NOTE, 9.37% 3/25/33 (a)

164,257

164,253

Argent Securities, Inc.:

Series 2003-W3:

Class AV1B, 1.55% 9/25/33 (e)

328,712

330,332

Class AV2, 1.5% 9/25/33 (e)

358,807

360,168

Class M2, 2.9% 9/25/33 (e)

3,100,000

3,186,055

Series 2003-W6 Class AV2, 1.47% 1/25/34 (e)

3,474,488

3,486,601

Series 2003-W7:

Class A2, 1.49% 3/1/34 (e)

2,718,269

2,728,814

Class M1, 1.79% 3/1/34 (e)

2,500,000

2,519,663

Series 2003-W9 Class M1, 1.79% 3/25/34 (e)

1,800,000

1,814,642

Series 2004-W5 Class M1, 1.69% 4/25/34 (e)

830,000

828,444

Asset Backed Securities Corp. Home Equity Loan Trust:

Series 2001-HE3 Class A1, 1.37% 11/15/31 (e)

351,424

351,785

Series 2002-HE3 Class 2A, 1.5% 10/15/32 (e)

308,301

309,263

Series 2003-HE2 Class A2, 1.48% 4/15/33 (e)

1,580,163

1,585,557

Series 2003-HE3 Class A2, 1.45% 6/15/33 (e)

308,820

309,654

Series 2003-HE4 Class A3, 1.32% 8/15/33 (e)

857,966

857,717

Series 2003-HE5 Class A2B, 4% 8/15/33

746,478

746,068

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Asset Backed Securities Corp. Home Equity Loan Trust: - continued

Series 2003-HE7 Class A3, 1.46% 12/15/33 (e)

$ 2,474,741

$ 2,482,463

Series 2004-HE3 Class M2, 0% 5/26/34 (h)

700,000

699,066

Associates Automobile Receivables Trust Series 2000-1 Class B, 7.83% 8/15/07

1,754,790

1,790,747

Bank One Issuance Trust:

Series 2002-B2 Class B2, 1.44% 5/15/08 (e)

1,100,000

1,103,503

Series 2002-C2 Class C2, 2.09% 5/15/08 (e)

3,590,000

3,618,270

Bayview Commercial Asset Trust Series 2003-2 Class A, 1.68% 12/25/33 (a)(e)

3,974,083

3,984,018

Bayview Financial Asset Trust Series 2000-F Class A, 1.6% 9/28/43 (e)

2,970,817

2,983,699

Bayview Financial Mortgage Loan Trust Series 2004-A Class A, 1.55% 2/28/44 (e)

2,089,691

2,094,670

BMW Vehicle Owner Trust Series 2002-A Class A3, 3.8% 5/25/06

555,170

558,872

Capital Auto Receivables Asset Trust:

Series 2002-4, Class CTFS, 2.62% 3/17/08

1,488,472

1,497,869

Series 2002-5 Class B, 2.8% 4/15/08

1,310,185

1,320,239

Capital One Auto Finance Trust Series 2002-A Class A4, 4.79% 1/15/09

1,900,000

1,959,305

Capital One Master Trust:

Series 1999-3 Class B, 1.58% 9/15/09 (e)

1,000,000

1,001,102

Series 2001-1 Class B, 1.61% 12/15/10 (e)

1,700,000

1,714,011

Series 2001-8A Class A, 4.6% 8/17/09

1,390,000

1,445,333

Series 2002-3A Class B, 4.55% 2/15/08

2,250,000

2,290,156

Capital One Multi-Asset Execution Trust:

Series 2002-B1 Class B1, 1.78% 7/15/08 (e)

2,250,000

2,263,383

Series 2003-B1 Class B1, 2.27% 2/17/09 (e)

5,715,000

5,817,128

CDC Mortgage Capital Trust:

Series 2001-HE1 Class A, 1.44% 1/25/32 (e)

687,560

687,813

Series 2002-HE2:

Class A, 1.39% 1/25/33 (e)

343,455

343,891

Class M1, 1.8% 1/25/33 (e)

899,998

906,391

Series 2003-HE4 Class A2, 1.33% 3/25/34 (e)

4,370,549

4,372,759

Chase Credit Card Master Trust Series 2003-6 Class B, 1.45% 2/15/11 (e)

2,150,000

2,166,375

Chase Credit Card Owner Trust Series 2004-1 Class B, 1.3% 5/15/09 (e)

875,000

875,000

Chase Manhattan Auto Owner Trust:

Series 2000-A Class CTFS, 6.48% 6/15/07

265,145

267,490

Series 2001-A Class CTFS, 5.06% 2/15/08

100,327

102,159

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Citibank Credit Card Issuance Trust:

Series 2000-C2 Class C2, 1.79% 10/15/07 (e)

$ 3,000,000

$ 3,009,807

Series 2002-B1 Class B1, 1.44% 6/25/09 (e)

1,885,000

1,892,372

Series 2002-C1 Class C1, 2.12% 2/9/09 (e)

3,000,000

3,048,482

Series 2003-C1 Class C1, 2.24% 4/7/10 (e)

2,600,000

2,665,917

Citigroup Mortgage Loan Trust Series 2003-HE4 Class A, 1.51% 12/25/33 (e)

2,598,704

2,603,577

Countrywide Home Loans, Inc.:

Series 2004-2:

Class 3A4, 1.35% 7/25/34 (e)

1,715,000

1,714,464

Class M1, 1.6% 5/25/34 (e)

1,075,000

1,073,992

Series 2004-3 Class 3A4, 1.35% 8/25/34 (e)

2,590,000

2,569,910

Series 2004-4:

Class A, 1.47% 8/25/34 (e)

1,095,319

1,093,265

Class M1, 1.58% 7/25/34 (e)

775,000

774,516

Class M2, 1.63% 6/25/34 (e)

920,000

919,138

Discover Card Master Trust I:

Series 1999-6 Class A, 6.85% 7/17/07

1,400,000

1,451,088

Series 2001-5 Class B, 5.65% 11/15/06

700,000

703,778

Series 2003-4 Class B1, 1.43% 5/16/11 (e)

1,775,000

1,783,072

First USA Secured Note Trust Series 2001-3 Class C, 2.15% 11/19/08 (a)(e)

2,645,000

2,677,133

Ford Credit Auto Owner Trust Series 2001-B Class B, 5.71% 9/15/05

290,000

292,580

Fremont Home Loan Trust:

Series 2004-1:

Class M1, 1.55% 2/25/34 (e)

150,000

149,883

Class M2, 1.6% 2/25/34 (e)

150,000

149,883

Series 2004-A Class M2, 2.25% 1/25/34 (e)

1,100,000

1,097,714

GS Mortgage Securities Corp. Series 2003-HE2 Class M1, 1.75% 8/25/33 (e)

650,000

653,929

GSAMP NIMS Trust Series 2002-HE2N Class NOTE, 8.25% 10/20/32 (a)

6,518

6,522

GSAMP Trust Series 2002-NC1 Class A2, 1.42% 7/25/32 (e)

549,970

551,897

Home Equity Asset Trust:

Series 2002-2 Class A4, 1.45% 6/25/32 (e)

920,810

922,136

Series 2002-4 Class M2, 3.15% 3/25/33 (e)

400,000

406,684

Series 2002-5 Class A3, 1.62% 5/25/33 (e)

1,833,299

1,846,247

Series 2003-3 Class A4, 1.56% 2/25/33 (e)

1,736,631

1,746,191

Series 2003-5 Class A2, 1.45% 12/25/33 (e)

3,008,906

3,017,458

Series 2003-5N Class A, 7.5% 1/27/34 (a)

150,071

150,822

Series 2003-7 Class A2, 1.48% 3/25/34 (e)

3,038,638

3,049,890

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Home Equity Asset Trust: - continued

Series 2003-8 Class M1, 1.82% 4/25/34 (e)

$ 845,000

$ 850,663

Series 2004-1 Class M2, 2.3% 6/25/34 (e)

655,000

653,630

Series 2004-2 Class A2, 1.39% 7/25/34 (e)

1,741,628

1,741,628

Series 2004-3:

Class M1, 1.66% 8/25/34 (b)(e)

425,000

425,000

Class M2, 2.29% 8/25/34 (b)(e)

465,000

465,000

Class M3, 2.54% 8/25/34 (b)(e)

200,000

200,000

Home Equity Asset Trust NIMS Trust:

Series 2002-4N Class A, 8% 5/27/33 (a)

225,931

225,931

Series 2003-2N Class A, 8% 9/27/33 (a)

415,563

417,640

Series 2003-3N Class A, 8% 9/27/33 (a)

725,712

729,341

Household Automotive Trust:

Series 2001-1 Class A4, 5.57% 11/19/07

1,265,783

1,296,735

Series 2001-2 Class A4, 5.39% 8/17/08

1,000,000

1,033,443

Series 2002-2 Class A3, 2.85% 3/19/07

2,462,492

2,479,100

Household Home Equity Loan Trust:

Series 2002-1 Class A, 1.47% 12/22/31 (e)

438,570

439,584

Series 2002-3 Class A, 1.55% 7/20/32 (e)

787,947

789,833

Series 2003-1 Class A, 1.45% 10/20/32 (e)

1,859,488

1,863,909

Series 2003-2 Class M, 1.68% 9/20/33 (e)

782,091

784,901

Household Mortgage Loan Trust Series 2003-HC2:

Class A2, 1.43% 6/20/33 (e)

1,735,782

1,740,107

Class M, 1.7% 6/20/33 (e)

1,446,763

1,451,869

Household Private Label Credit Card Master Note Trust I:

Series 2001-2 Class A, 4.95% 6/16/08

1,600,000

1,616,059

Series 2002-2 Class B, 1.65% 1/18/11 (e)

1,000,000

1,008,280

Series 2002-3 Class B, 2.35% 9/15/09 (e)

975,000

987,976

Long Beach Asset Holdings Corp. NIMS Trust Series 2002-3 Class NOTE, 1.65% 8/25/09 (a)(e)

228,108

228,108

MBNA Credit Card Master Note Trust:

Series 2001-B1 Class B1, 1.475% 10/15/08 (e)

1,350,000

1,353,717

Series 2001-B2 Class B2, 1.46% 1/15/09 (e)

4,750,000

4,770,663

Series 2002-B1 Class B1, 5.15% 7/15/09

1,025,000

1,071,688

Series 2002-B2 Class B2, 1.48% 10/15/09 (e)

3,600,000

3,619,572

Series 2002-B3 Class B3, 1.5% 1/15/08 (e)

1,100,000

1,103,860

MBNA Master Credit Card Trust II:

Series 1998-E Class B, 1.47% 9/15/10 (e)

1,500,000

1,509,169

Series 1998-G Class B, 1.5% 2/17/09 (e)

1,550,000

1,554,776

Series 1999-G Class A, 6.35% 12/15/06

1,000,000

1,010,643

Series 2000-L Class B, 1.6% 4/15/10 (e)

650,000

655,469

Meritage Mortgage Loan Trust Series 2004-1 Class M1, 1.6% 7/25/34 (e)

425,000

424,004

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Merrill Lynch Mortgage Investors, Inc.:

Series 2003-HE1 Class A1, 1.55% 7/25/34 (e)

$ 3,564,466

$ 3,569,701

Series 2003-OPT1 Class M1, 1.75% 7/25/34 (e)

1,145,000

1,151,955

Morgan Stanley ABS Capital I, Inc.:

Series 2002-NC6N Class NOTE, 9.5% 9/25/32 (a)

8,770

8,825

Series 2003-HE1 Class M2, 3% 5/25/33 (e)

325,000

329,924

Series 2003-NC5 Class M2, 3.1% 4/25/33 (e)

575,000

588,319

Morgan Stanley Dean Witter Capital I Trust:

Series 2002-AM3 Class A3, 1.59% 2/25/33 (e)

780,493

783,440

Series 2002-HE2 Class M1, 1.8% 8/25/32 (e)

1,150,000

1,157,426

Series 2002-NC1 Class M1, 1.9% 2/25/32 (a)(e)

755,000

763,295

Series 2002-NC5N Class NOTE, 9.5% 9/25/32 (a)

102,056

102,279

Series 2003-NC1 Class M1, 2.15% 11/25/32 (e)

535,000

542,225

Series 2003-NC2 Class M2, 3.1% 2/25/33 (e)

615,000

631,584

Morgan Stanley Dean Witter Capital I, Inc.:

Series 2003-NC1N Class NOTE, 9.5% 11/25/32 (a)

616,897

619,017

Series 2003-NC2N Class NOTE, 9.5% 12/25/32 (a)

573,116

575,624

Mortgage Asset Backed Securities Trust Series 2002-NC1 Class M1, 1.95% 10/25/32 (e)

1,600,000

1,618,921

Navistar Financial Corp. Owner Trust Series 2001-B Class B, 4.83% 11/17/08

1,693,409

1,722,140

New Century Home Equity Loan Trust Series 2003-2 Class AIO, 4.5% 3/25/05 (e)(g)

25,823,160

854,747

Onyx Acceptance Owner Trust:

Series 2000-D Class A4, 6.85% 8/15/07

936,367

942,507

Series 2001-D Class A3, 3.63% 12/15/05

25,344

25,370

Series 2002-A Class A3, 3.75% 4/15/06

188,560

189,473

Series 2002-C:

Class A3, 3.29% 9/15/06

647,714

652,260

Class A4, 4.07% 4/15/09

970,000

993,190

Series 2003-D Class A3, 2.4% 12/15/07

1,685,000

1,688,224

PP&L Transition Bonds LLC Series 1999-1 Class A5, 6.83% 3/25/07

1,117,131

1,144,812

Providian Gateway Master Trust Series 2002-B Class A, 1.8% 6/15/09 (a)(e)

1,400,000

1,404,099

Residential Asset Mortgage Products, Inc. Series 2003-RZ2 Class A1, 3.6% 4/25/33

1,584,624

1,547,298

Salomon Brothers Mortgage Securities VII, Inc. Series 2003-UP1 Class A, 3.45% 4/25/32 (a)

1,290,977

1,274,749

Sears Credit Account Master Trust II:

Series 1996-3 Class A, 7% 7/15/08

81,250

81,822

Series 2001-2 Class B, 1.39% 6/16/08 (e)

1,200,000

1,200,177

Series 2002-4 Class B, 1.525% 8/18/09 (e)

1,100,000

1,103,359

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Sears Credit Account Master Trust II: - continued

Series 2002-5 Class B, 2.35% 11/17/09 (e)

$ 2,200,000

$ 2,206,770

Securitized Asset Back Receivables LLC Trust Series 2004-NC1:

Class A2, 1.35% 2/25/34 (e)

2,585,000

2,583,384

Class M1, 1.62% 2/25/34 (e)

610,000

610,000

SLM Private Credit Student Loan Trust Series 2004-A:

Class B, 1.7% 6/15/33 (e)

400,000

400,906

Class C, 2.07% 6/15/33 (e)

1,020,000

1,021,952

Superior Wholesale Inventory Financing Trust VII Series 2003-A8 Class CTFS, 1.55% 3/15/11 (a)(e)

2,520,000

2,523,938

Terwin Mortgage Trust:

Series 2003 8HE, Class A, 1.57% 12/25/34 (e)

1,440,654

1,441,577

Series 2003-4HE Class A1, 1.53% 9/25/34 (e)

3,655,447

3,674,076

Series 2003-6HE Class A1, 1.57% 11/25/33 (e)

1,132,049

1,132,049

Series 2004-1HE Class A1, 1.61% 2/25/35 (a)(e)

1,373,790

1,373,790

Triad Auto Receivables Owner Trust Series 2002-A:

Class A3, 2.62% 2/12/07

2,600,000

2,616,070

Class A4, 3.24% 8/12/09

1,505,000

1,523,034

TOTAL ASSET-BACKED SECURITIES

(Cost $237,276,452)

238,241,687

Collateralized Mortgage Obligations - 7.7%

Private Sponsor - 3.4%

Countrywide Home Loans, Inc. sequential pay:

Series 2002-25 Class 2A1, 5.5% 11/27/17

1,159,066

1,176,824

Series 2002-32 Class 2A3, 5% 1/25/18

478,498

487,692

CS First Boston Mortgage Securities Corp. floater Series 2004-AR4 Class 5A2, 1.47% 5/25/34 (e)

980,000

980,000

Granite Mortgages 2004-1 PLC floater Series 2004-1 Class 1C, 2.01% 3/20/44 (e)

875,000

877,756

Holmes Financing PLC floater Series 8:

Class 1B, 1.2444% 7/15/40 (e)

430,000

430,000

Class 2B, 1.2844% 7/15/40 (e)

565,000

565,000

Class 2C, 1.8344% 7/15/40 (e)

1,295,000

1,295,000

Master Alternative Loan Trust Series 2004-3 Class 3A1, 6% 4/25/34

421,436

437,371

Merrill Lynch Mortgage Investors, Inc.:

floater:

Series 2003-A Class 2A1, 1.49% 3/25/28 (e)

3,207,854

3,218,136

Series 2003-F Class A2, 1.665% 10/25/28 (e)

4,180,832

4,203,206

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

Private Sponsor - continued

Merrill Lynch Mortgage Investors, Inc.: - continued

Series 2003-E Class XA1, 1% 10/25/28 (e)(g)

$ 17,052,557

$ 267,273

Series 2003-G Class XA1, 1% 1/25/29 (g)

14,910,507

251,615

Series 2003-H Class XA1, 1% 1/25/29 (a)(g)

13,015,593

221,672

Permanent Financing PLC floater:

Series 3 Class 2C, 2.16% 6/10/42 (e)

605,000

605,000

Series 4:

Class 1B, 1.2488% 6/10/42 (e)

415,000

415,000

Class 1M, 1.3388% 6/10/42 (e)

330,000

330,000

Class 2C, 1.8288% 6/10/42 (e)

690,000

690,216

Class 2M, 1.4388% 6/10/42 (e)

345,000

345,108

Residential Asset Mortgage Products, Inc. sequential pay Series 2003-SL1 Class A31, 7.125% 4/25/31

2,420,560

2,523,433

Sequoia Mortgage Funding Trust Series 2003-A
Class AX1, 0.8% 10/21/08 (a)(g)

59,991,889

667,878

Sequoia Mortgage Trust:

floater:

Series 2003-5 Class A2, 1.53% 9/20/33 (e)

1,372,607

1,371,797

Series 2003-6 Class A2, 1.61% 11/20/33 (e)

3,164,747

3,169,692

Series 2003-7 Class A2, 1.5738% 1/20/34 (e)

3,839,287

3,845,886

Series 2004-2 Class A, 1.55% 3/20/34 (e)

1,471,704

1,468,254

Series 2004-3 Class A, 1.53% 5/20/34 (e)

3,565,463

3,559,335

Series 2004-4 Class A, 1.585% 5/20/34 (e)

3,000,000

3,000,000

Series 2003-7 Class X1, 0.8% 1/20/34 (e)(g)

143,462,399

1,665,168

Series 2003-8 Class X1, 0.8% 1/20/34 (e)(g)

77,749,155

834,388

Series 2004-1 Class X1, 0.8% 2/20/34 (g)

18,261,721

231,126

Washington Mutual Mortgage Securities Corp. sequential pay Series 2003-MS9 Class 2A1, 7.5% 12/25/33

521,360

544,003

TOTAL PRIVATE SPONSOR

39,677,829

U.S. Government Agency - 4.3%

Fannie Mae planned amortization class:

Series 1993-183 Class J, 6.5% 11/25/22

2,373,621

2,399,108

Series 1993-187 Class L, 6.5% 7/25/23

2,265,000

2,402,104

Series 1993-206 Class KA, 6.5% 12/25/22

315,806

319,494

Series 1993-78 Class G, 6.5% 11/25/07

41,972

42,020

Series 1994-51 Class PH, 6.5% 1/25/23

136,152

136,974

Series 1994-63 Class PH, 7% 6/25/23

538,819

546,381

Fannie Mae guaranteed REMIC pass thru certificates:

Class 2004-29 Class JZ, 4.5% 5/25/19

3,105,000

3,084,623

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Fannie Mae guaranteed REMIC pass thru certificates: - continued

planned amortization class:

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

$ 345,516

$ 349,631

Series 2001-71 Class QD, 6% 4/25/15

2,600,000

2,653,788

Series 2001-80 Class PH, 6% 12/25/27

304,032

304,878

Series 2002-55 Class PA, 5.5% 3/25/18

266,928

267,429

Series 2003-16 Class PA, 4.5% 11/25/09

455,112

463,567

Series 2003-19 Class MJ, 4.25% 5/25/30

2,993,064

3,007,224

sequential pay:

Series 2001-9 Class PB, 6.5% 5/25/27

276,599

277,347

Series 2002-28 Class VB, 6.5% 3/25/20

154,892

154,751

Series 2004-28 Class ZK, 5.5% 5/25/34

1,000,000

995,313

Series 2004-29:

Class ZE, 4.5% 1/25/32

200,000

197,500

Class ZM, 5.5% 5/25/34

400,000

397,750

Series 2004-38 Class ZC, 6.5% 11/25/33

805,000

805,000

Freddie Mac:

planned amortization class Series 2355 Class CD, 6.5% 6/15/30

198,319

200,788

Series 2794 Class ZL, 6% 5/1/34 (b)

400,000

397,750

Freddie Mac Multi-class participation certificates guaranteed:

planned amortization class:

Series 1714 Class H, 6.75% 5/15/23

504,614

511,115

Series 2322 Class HC, 6.5% 3/15/30

93,477

94,371

Series 2376 Class JC, 5.5% 2/15/14

1,689,948

1,704,610

Series 2420 Class BE, 6.5% 12/15/30

3,623,132

3,746,332

Series 2443 Class TD, 6.5% 10/15/30

3,253,931

3,368,783

Series 2489 Class PD, 6% 2/15/31

2,525,000

2,642,904

Series 2496 Class OC, 5.5% 9/15/14

10,260,000

10,581,815

sequential pay:

Series 2458 Class VK, 6.5% 3/15/13

2,222,292

2,288,484

Series 2489 Class MA, 5% 12/15/12

83,752

83,751

Series 1803 Class A, 6% 12/15/08

500,114

519,503

Series 2764:

Class DZ, 5% 2/15/33

1,114,069

1,108,499

Class ZA, 5% 10/15/32

197,839

196,788

Class ZB, 5% 3/15/33

337,640

335,635

Class ZC, 4.5% 3/15/19

213,780

212,510

Series 2769 Class ZA, 5% 9/15/32

310,463

308,837

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Freddie Mac Multi-class participation certificates guaranteed: - continued

Series 2780:

Class KZ, 5% 4/15/32

$ 730,000

$ 727,719

Class ZJ, 4.5% 4/15/19

300,000

298,734

Ginnie Mae guaranteed REMIC pass thru securities planned amortization class Series 2001-53 Class TA, 6% 12/20/30

783,907

799,131

TOTAL U.S. GOVERNMENT AGENCY

48,932,941

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $89,026,974)

88,610,770

Commercial Mortgage Securities - 9.6%

280 Park Avenue Trust floater Series 2001-280 Class X1, 1.0193% 2/3/11 (a)(e)(g)

15,579,789

787,239

Asset Securitization Corp.:

sequential pay Series 1995-MD4 Class A1, 7.1% 8/13/29

501,109

530,612

Series 1995-MD4 Class ACS2, 1.9777% 8/13/29 (e)(g)

19,731,081

1,616,270

Series 1997-D5 Class PS1, 1.3146% 2/14/43 (e)(g)

11,019,745

681,406

Banc of America Commercial Mortgage, Inc.:

Series 2002-2 Class XP, 2.0359% 7/11/43 (a)(e)(g)

8,205,000

635,883

Series 2003-1 Class XP1, 1.6731% 9/11/36 (a)(e)(g)

52,955,000

1,468,675

Series 2003-2 Class XP, 0.5864% 3/11/41 (a)(e)(g)

33,365,000

525,239

Series 2004-2 Class XP, 1.161% 11/10/38 (e)(g)

9,040,000

473,894

Banc of America Large Loan, Inc. floater:

Series 2002-FL2A Class A2, 1.42% 9/8/14 (a)(e)

2,100,000

2,100,164

Series 2003-BBA2:

Class A3, 1.42% 11/15/15 (a)(e)

1,145,000

1,145,805

Class C, 1.57% 11/15/15 (a)(e)

235,000

235,799

Class D, 1.65% 11/15/15 (a)(e)

365,000

366,383

Class F, 2% 11/15/15 (a)(e)

260,000

263,118

Class H, 2.5% 11/15/15 (a)(e)

235,000

237,938

Class J, 3.05% 11/15/15 (a)(e)

245,000

248,886

Class K, 3.7% 11/15/15 (a)(e)

220,000

221,160

Bayview Commercial Asset Trust:

floater Series 2004-1:

Class A, 1.46% 4/25/34 (a)(e)

1,591,855

1,591,855

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Bayview Commercial Asset Trust: - continued

Class B, 3% 4/25/34 (a)(e)

$ 198,982

$ 198,982

Class M1, 1.66% 4/25/34 (a)(e)

99,491

99,491

Class M2, 2.3% 4/25/34 (a)(e)

99,491

99,491

Series 2004-1 Class IO, 1.25% 4/25/34 (a)(g)

16,852,205

1,129,625

Bear Stearns Commercial Mortgage Securities, Inc.:

floater Series 2004-HS2A:

Class E, 2% 1/14/16 (a)(e)

350,000

350,000

Class F, 2.15% 1/14/16 (a)(e)

225,000

225,000

Series 2002-TOP8 Class X2, 2.1272% 8/15/38 (a)(e)(g)

9,053,000

869,757

Series 2003-PWR2 Class X2, 0.8582% 5/11/39 (a)(e)(g)

23,310,000

692,274

Series 2003-T12 Class X2, 0.9247% 8/13/39 (a)(e)(g)

15,835,000

514,071

Chase Commercial Mortgage Securities Corp.:

floater Series 2000-FL1A Class B, 1.55% 12/12/13 (a)(e)

425,828

424,645

sequential pay:

Series 1999-2 Class A1, 7.032% 1/15/32

630,402

684,581

Series 2000-3 Class A1, 7.093% 10/15/32

1,208,658

1,310,391

COMM:

floater:

Series 2000-FL3A Class C, 1.86% 11/15/12 (a)(e)

1,974,039

1,966,357

Series 2001-FL5A:

Class A2, 1.65% 11/15/13 (a)(e)

593,744

593,762

Class D, 2.35% 11/15/13 (a)(e)

1,350,000

1,350,644

Series 2002-FL6 Class G, 3% 6/14/14 (a)(e)

800,000

792,487

Series 2002-FL7:

Class D, 1.67% 11/15/14 (a)(e)

520,000

519,569

Class H, 3.35% 11/15/14 (a)(e)

1,232,000

1,220,433

Class MPP, 3.5% 11/15/14 (a)(e)

850,000

850,000

Series 2003-FL9 Class B, 1.6% 11/15/15 (a)(e)

3,930,000

3,942,281

Series 2004-LBN2 Class X2, 1.2765% 3/10/39 (a)(e)(g)

3,535,000

173,579

Commercial Resecuritization Trust sequential pay Series 1999-ABC1 Class A, 6.74% 1/27/09 (a)

786,242

822,482

CS First Boston Mortgage Securities Corp.:

floater:

Series 2001-TFLA Class H230, 3.05% 9/15/11 (a)(e)

700,000

696,516

Series 2003-TF2A:

Class A2, 1.42% 11/15/14 (a)(e)

1,200,000

1,199,410

Class C, 1.65% 11/15/14 (a)(e)

240,000

239,886

Class E, 2.05% 11/15/14 (a)(e)

190,000

190,891

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

CS First Boston Mortgage Securities Corp.: - continued

Series 2003-TF2A:

Class H, 3% 11/15/14 (a)(e)

$ 235,000

$ 234,999

Class K, 4.2% 11/15/14 (a)(e)

350,000

349,999

sequential pay:

Series 1997-C2 Class A2, 6.52% 1/17/35

762,276

791,624

Series 2000-C1 Class A1, 7.325% 4/15/62

911,669

986,478

Series 2001-CK3 Class A2, 6.04% 6/15/34

1,050,000

1,108,560

Series 2001-CK6 Class AX, 0.645% 9/15/18 (g)

20,132,762

784,111

Series 2003-C3 Class ASP, 1.9634% 5/15/38 (a)(e)(g)

26,520,000

2,039,351

Series 2003-C4 Class ASP, 0.6008% 8/15/36 (a)(e)(g)

19,040,000

422,870

Series 2003-C5 Class ASP, 0.8427% 12/15/36 (a)(e)(g)

20,215,000

737,766

Series 2004-C1 Class ASP, 1.2154% 1/15/37 (a)(e)(g)

17,340,000

800,811

Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class D, 7.231% 6/15/31

485,000

502,138

DLJ Commercial Mortgage Corp. sequential pay Series 2000-CF1 Class A1A, 7.45% 6/10/33

857,921

909,717

EQI Financing Partnership I LP Series 1997-1 Class B, 7.37% 12/20/15 (a)

329,374

351,943

Equitable Life Assurance Society of the United States sequential pay Series 174 Class A1, 7.24% 5/15/06 (a)

1,000,000

1,079,816

First Union-Lehman Brothers Commercial Mortgage Trust sequential pay:

Series 1997-C1 Class A2, 7.3% 4/18/29

8,371

8,364

Series 1997-C2 Class A3, 6.65% 11/18/29

2,780,000

3,011,232

FMAC Loan Receivables Trust sequential pay Series 1998-CA Class A1, 5.99% 11/15/04 (a)

41,478

37,123

Franchise Loan Trust sequential pay Series 1998-I Class A1, 6.24% 7/15/04 (a)

121,871

113,340

GE Capital Commercial Mortgage Corp. Series 2001-1 Class X1, 0.5342% 5/15/33 (a)(e)(g)

11,880,586

492,507

GE Commercial Mortgage Corp. Series 2004-C1 Class X2, 1.1954% 11/10/38 (e)(g)

13,460,000

724,160

GGP Mall Properties Trust floater Series 2001-C1A:

Class A1, 1.7% 11/15/11 (a)(e)

41,160

41,390

Class A3 1.8% 2/15/14 (a)(e)

944,974

950,171

GMAC Commercial Mortgage Securities, Inc.:

Series 2003-C2 Class X2, 0.3887% 5/10/40 (g)

56,940,000

637,694

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

GMAC Commercial Mortgage Securities, Inc.: - continued

Series 2003-C3 Class X2, 0.985% 12/10/38 (e)(g)

$ 21,235,000

$ 765,069

Greenwich Capital Commercial Funding Corp.:

Series 2002-C1 Class SWDB 5.857% 11/11/19 (a)

1,150,000

1,153,774

Series 2003-C1 Class XP, 2.2433% 7/5/35 (a)(e)(g)

13,440,000

1,190,213

Series 2003-C2 Class XP, 1.1451% 1/5/36 (a)(e)(g)

24,935,000

1,231,737

GS Mortgage Securities Corp. floater Series 2003-HE1 Class M2, 3% 6/20/33 (e)

1,810,000

1,852,357

GS Mortgage Securities Corp. II:

sequential pay:

Series 2003-C1 Class A2A, 3.59% 1/10/40

1,705,000

1,690,660

Series 2004-C1 Class A1, 3.659% 10/10/28

5,000,000

4,917,559

Series 2004-C1 Class X2, 1.0222% 10/10/28 (a)(e)(g)

13,585,000

558,259

GS Mortgage Trust II floater Series 2001-FL4A Class D, 2.01% 12/15/10 (a)(e)

51,024

50,969

Hilton Hotel Pool Trust sequential pay Series 2000-HLTA Class A1, 7.055% 10/3/15 (a)

752,348

813,562

Host Marriot Pool Trust sequential pay Series 1999-HMTA Class A, 6.98% 8/3/15 (a)

624,199

674,570

J.P. Morgan Chase Commercial Mortgage Securities Corp.:

Series 2002-C3 Class X2, 1.327% 7/12/35 (a)(e)(g)

7,000,723

352,543

Series 2003-CB7 Class X2, 0.8684% 1/12/38 (a)(e)(g)

20,635,000

792,458

Series 2003-LN1 Class X2, 0.737% 10/15/37 (a)(e)(g)

29,610,000

968,665

Series 2004-C1 Class X2, 1.2011% 1/15/38 (e)(g)

4,490,000

229,968

Series 2004-CB8 Class X2, 1.3856% 1/12/39 (a)(e)(g)

5,480,000

312,141

J.P. Morgan Commercial Mortgage Finance Corp. sequential pay Series 1997-C5 Class A2, 7.069% 9/15/29

379,755

391,450

LB-UBS Commercial Mortgage Trust:

sequential pay:

Series 2003-C3 Class A2, 3.086% 5/15/27

1,465,000

1,419,864

Series 2003-C5 Class A2, 3.478% 7/15/27

4,605,000

4,511,264

Series 2002-C4 Class XCP, 1.476% 10/15/35 (a)(e)(g)

13,355,000

849,546

Series 2002-C7 Class XCP, 1.1897% 1/15/36 (a)(g)

14,590,000

619,226

Series 2003-C1 Class XCP, 1.4818% 12/15/36 (a)(e)(g)

7,565,000

435,059

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

LB-UBS Commercial Mortgage Trust: - continued

Series 2004-C1 Class XCP, 1.0545% 1/15/36 (a)(e)(g)

$ 13,850,000

$ 691,877

Series 2004-C2 Class XCP, 1.4108% 3/1/36 (a)(g)

11,720,000

665,766

Lehman Brothers Floating Rate Commercial Mortgage Trust floater:

Series 2001-LLFA Class A, 1.34% 8/16/13 (a)(e)

659,165

659,140

Series 2002-LLFA Class A, 1.39% 6/14/17 (a)(e)

334,087

334,084

Merrill Lynch Mortgage Trust:

sequential pay Series 2004-MKB1 Class A2, 4.353% 2/12/42 (b)

3,500,000

3,501,914

Series 2002-MW1 Class XP, 1.616% 7/12/34 (a)(e)(g)

6,130,159

385,151

Morgan Stanley Capital I, Inc.:

sequential pay:

Series 1999-CAM1 Class A2, 6.76% 3/15/32

152,262

163,614

Series 1999-LIFE Class A1, 6.97% 4/15/33

684,567

742,093

Series 1997-RR:

Class B, 7.31% 4/30/39 (a)(e)

711,607

733,584

Class C, 7.44% 4/30/39 (a)(e)

1,275,066

1,325,143

Series 1999-1NYP Class F, 7.4888% 5/3/30 (a)(e)

1,690,000

1,776,019

Series 2003-IQ5 Class X2, 1.1298% 4/15/38 (a)(e)(g)

10,090,000

496,330

Series 2003-IQ6 Class X2, 0.6313% 12/15/41 (a)(e)(g)

16,995,000

587,267

Series 2004-TOP13, Class X2, 1.2196% 9/13/45 (a)(e)(g)

9,350,000

483,108

Morgan Stanley Dean Witter Capital I Trust:

floater Series 2002-XLF:

Class D, 2% 8/5/14 (a)(e)

1,591,511

1,599,589

Class F, 3.25% 8/5/14 (a)(e)

2,296,879

2,345,897

Series 2003-HQ2 Class X2, 1.5793% 3/12/35 (a)(e)(g)

13,498,875

951,665

Series 2003-TOP9 Class X2, 1.6792% 11/13/36 (a)(e)(g)

9,055,000

635,772

Mortgage Capital Funding, Inc. sequential pay Series 1996-MC1 Class A2B, 7.9% 2/15/06

729,515

785,483

Nationslink Funding Corp. sequential pay Series 1999-2 Class A1C, 7.03% 6/20/31

681,014

730,356

Salomon Brothers Mortgage Securities VII, Inc. floater Series 2001-CDCA Class C, 1.9% 2/15/13 (a)(e)

1,364,000

1,363,659

STRIPs III Ltd./STRIPs III Corp. floater Series 2004-1A Class A, 1.58% 3/24/18 (a)(e)

1,978,746

1,978,746

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Thirteen Affiliates of General Growth Properties, Inc. sequential pay Series 1 Class A1, 6.537% 11/15/04 (a)

$ 4,780,000

$ 4,887,391

Trizechahn Office Properties Trust Series 2001-TZHA Class E3, 7.253% 3/15/13 (a)

1,555,000

1,655,228

Wachovia Bank Commercial Mortgage Trust:

floater Series 2004-WHL3:

Class A2, 1.28% 3/15/14 (a)(e)

735,000

735,000

Class E, 1.6% 3/15/14 (a)(e)

460,000

460,000

Class F, 1.65% 3/15/14 (a)(e)

365,000

365,000

Class G, 1.88% 3/15/14 (a)(e)

185,000

185,000

Series 2003-C8 Class XP, 0.7463% 11/15/35 (a)(e)(g)

13,550,000

374,454

Series 2003-C9 Class XP, 0.7143% 12/15/35 (a)(e)(g)

9,055,000

268,933

Series 2004-C10 Class XP, 1.025% 2/15/41 (a)(e)(g)

6,460,000

315,786

Series 2004-WHL3X Class 1A, 1.0319% 3/15/14 (a)(e)(g)

82,175,000

1,118,073

TOTAL COMMERCIAL MORTGAGE SECURITIES

(Cost $110,269,551)

110,485,130

Foreign Government and Government Agency Obligations - 0.3%

Chilean Republic 5.625% 7/23/07

740,000

782,088

United Mexican States 4.625% 10/8/08

3,190,000

3,174,050

TOTAL FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS

(Cost $3,904,708)

3,956,138

Fixed-Income Funds - 14.8%

Shares

Fidelity Ultra-Short Central Fund (f)
(Cost $171,100,053)

1,721,452

171,542,692

Cash Equivalents - 7.5%

Maturity
Amount

Value
(Note 1)

Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.05%, dated 4/30/04 due 5/3/04)
(Cost $86,280,000)

$ 86,287,550

$ 86,280,000

TOTAL INVESTMENT PORTFOLIO - 101.3%

(Cost $1,166,490,368)

1,170,555,396

NET OTHER ASSETS - (1.3)%

(14,542,962)

NET ASSETS - 100%

$ 1,156,012,434

Futures Contracts

Expiration
Date

Underlying
Face Amount
at Value

Unrealized
Appreciation/
(Depreciation)

Purchased

Eurodollar Contracts

117 Eurodollar 90 Day Index Contracts

June 2004

$ 116,610,975

$ 71,007

117 Eurodollar 90 Day Index Contracts

Sept. 2004

116,492,513

57,845

117 Eurodollar 90 Day Index Contracts

Dec. 2004

116,356,500

44,982

117 Eurodollar 90 Day Index Contracts

March 2005

116,217,563

23,470

138 Eurodollar 90 Day Index Contracts

June 2005

136,920,150

69,874

138 Eurodollar 90 Day Index Contracts

Sept. 2005

136,787,325

26,324

138 Eurodollar 90 Day Index Contracts

Dec. 2005

136,673,475

(5,914)

138 Eurodollar 90 Day Index Contracts

March 2006

136,582,050

(28,939)

138 Eurodollar 90 Day Index Contracts

June 2006

136,500,975

(54,402)

138 Eurodollar 90 Day Index Contracts

Sept. 2006

136,428,525

(139,239)

138 Eurodollar 90 Day Index Contracts

Dec. 2006

136,359,525

(150,814)

138 Eurodollar 90 Day Index Contracts

March 2007

136,302,600

(18,060)

138 Eurodollar 90 Day Index Contracts

June 2007

136,249,125

(355,902)

$ (459,768)

Swap Agreements

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Credit Default Swap

Receive quarterly notional amount multiplied by .35% and pay Goldman Sachs upon default event of Devon Energy Corp., par value of the notional amount of Devon Energy Corp. 7.95% 4/15/32

June 2006

$ 800,000

$ 553

Receive quarterly notional amount multiplied by .38% and pay Merrill Lynch, Inc. upon default event of EnCana Corp., par value of the notional amount of EnCana Corp. 4.75% 10/15/13

March 2009

1,300,000

(5,025)

Receive quarterly notional amount multiplied by .38% and pay Merrill Lynch, Inc. upon default event of EnCana Corp., par value of the notional amount of EnCana Corp. 4.75% 10/15/13

March 2009

500,000

(1,937)

Receive quarterly notional amount multiplied by .41% and pay Merrill Lynch, Inc. upon default event of Talisman Energy, Inc., par value of the notional amount of Talisman Energy, Inc. 7.25% 10/15/27

March 2009

1,000,000

(316)

Receive quarterly notional amount multiplied by .5% and pay Merrill Lynch, Inc. upon default event of EnCana Corp., par value of the notional amount of EnCana Corp. 4.75% 10/15/13

June 2009

1,500,000

1,689

Receive quarterly notional amount multiplied by .53% and pay Deutsche Bank upon default event of SBC Communications, Inc., par value of the notional amount of SBC Communications, Inc. 6.25% 3/15/11

March 2009

1,200,000

6,138

Receive quarterly notional amount multiplied by .53% and pay Lehman Brothers, Inc., upon default event of SBC Communications, Inc., par value of the notional amount of SBC Communications, Inc. 6.25% 3/15/11

March 2009

900,000

2,531

Receive quarterly notional amount multiplied by .565% and pay Morgan Stanley, Inc. upon default event of Walt Disney Co., par value of the notional amount of Walt Disney Co. 6.375% 3/1/12

March 2009

2,600,000

23,004

Swap Agreements - continued

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Credit Default Swap - continued

Receive quarterly notional amount multiplied by .59% and pay Merrill Lynch, Inc. upon default event of Raytheon Co., par value of the notional amount of Raytheon Co. 6.55% 3/15/10

March 2009

$ 1,600,000

$ 2,045

Receive quarterly notional amount multiplied by .62% and pay Goldman Sachs upon default of SLM Corp., par value of the notional amount of SLM Corp. 1.12% 7/25/35

August 2007

400,000

5,244

TOTAL CREDIT DEFAULT SWAP

11,800,000

33,926

Interest Rate Swap

Receive quarterly a fixed rate equal to 2.385% and pay quarterly a floating rate based on 3-month LIBOR with Bank of America

April 2006

22,000,000

(82,565)

Receive quarterly a fixed rate equal to 2.849% and pay quarterly a floating rate based on 3-month LIBOR with Lehman Brothers, Inc.

August 2007

6,000,000

(86,502)

Receive quarterly a fixed rate equal to 3.098% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.

April 2007

21,470,000

(58,997)

Receive quarterly a fixed rate equal to 3.1422% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.

April 2007

8,280,000

(24,305)

TOTAL INTEREST RATE SWAP

57,750,000

(252,369)

Total Return Swap

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

August 2004

5,300,000

(173,972)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

Sept. 2004

4,045,000

(123,988)

Swap Agreements - continued

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Total Return Swap - continued

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

Sept. 2004

$ 2,600,000

$ (85,344)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 55 basis points with Deutsche Bank

Dec. 2004

6,000,000

(25,916)

TOTAL TOTAL RETURN SWAP

17,945,000

(409,220)

$ 87,495,000

$ (627,663)

Legend

(a) 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 $107,931,181 or 9.3% of net assets.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(c) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $1,579,325.

(d) Security or a portion of the security has been segregated as collateral for open swap agreements. At the period end, the value of securities pledged amounted to $422,809.

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

(f) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(g) Security represents right to receive monthly interest payments on an underlying pool of mortgages. Principal shown is the par amount of the mortgage pool.

(h) Security or a portion of the security purchased on a delayed delivery or when-issued basis. Interest rate to be determined at settlement date.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $411,982,598 and $428,013,448, respectively, of which long-term U.S. government and government agency obligations aggregated $241,931,550 and $277,900,091, respectively.

Income Tax Information

At October 31, 2003, the fund had a capital loss carryforward of approximately $11,617,000 of which $2,265,000, $3,149,000, $2,459,000 and $3,744,000 will expire on October 31, 2004, 2005, 2007 and 2008, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $86,280,000) (cost $1,166,490,368) - See accompanying schedule

$ 1,170,555,396

Cash

161,806

Receivable for investments sold

167,477

Receivable for swap agreements

28,142

Receivable for fund shares sold

5,614,480

Interest receivable

8,635,279

Receivable for daily variation on futures contracts

194,439

Prepaid expenses

4,118

Total assets

1,185,361,137

Liabilities

Payable for investments purchased
Regular delivery

$ 2,305,565

Delayed delivery

16,052,206

Payable for fund shares redeemed

8,959,436

Distributions payable

353,886

Unrealized loss on swap agreements

627,663

Accrued management fee

413,523

Distribution fees payable

393,221

Other affiliated payables

211,237

Other payables and accrued expenses

31,966

Total liabilities

29,348,703

Net Assets

$ 1,156,012,434

Net Assets consist of:

Paid in capital

$ 1,165,882,978

Undistributed net investment income

2,929,375

Accumulated undistributed net realized gain (loss) on investments

(15,777,516)

Net unrealized appreciation (depreciation) on investments

2,977,597

Net Assets

$ 1,156,012,434

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($211,091,162 ÷ 22,128,146 shares)

$ 9.54

Maximum offering price per share (100/98.50 of $9.54)

$ 9.69

Class T:
Net Asset Value and redemption price per share ($488,223,598 ÷ 51,139,925 shares)

$ 9.55

Maximum offering price per share (100/98.50 of $9.55)

$ 9.70

Class B:
Net Asset Value and offering price per share ($50,720,154 ÷ 5,307,856 shares) A

$ 9.56

Class C:
Net Asset Value and offering price per share ($316,785,005 ÷ 33,174,926 shares) A

$ 9.55

Institutional Class:
Net Asset Value, offering price and redemption price
per share ($89,192,515 ÷ 9,343,737 shares)

$ 9.55

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 17,468,254

Security lending

13,562

Total income

17,481,816

Expenses

Management fee

$ 2,459,917

Transfer agent fees

1,104,623

Distribution fees

2,413,815

Accounting and security lending fees

128,947

Non-interested trustees' compensation

3,643

Custodian fees and expenses

24,490

Registration fees

94,110

Audit

26,705

Legal

3,589

Miscellaneous

9,630

Total expenses before reductions

6,269,469

Expense reductions

(2,292)

6,267,177

Net investment income (loss)

11,214,639

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities

3,384,036

Futures contracts

52,507

Swap agreements

475,645

Total net realized gain (loss)

3,912,188

Change in net unrealized appreciation (depreciation) on: Investment securities

(4,583,176)

Futures contracts

(552,438)

Swap agreements

(739,038)

Total change in net unrealized appreciation (depreciation)

(5,874,652)

Net gain (loss)

(1,962,464)

Net increase (decrease) in net assets resulting from operations

$ 9,252,175

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 11,214,639

$ 26,028,484

Net realized gain (loss)

3,912,188

12,524,137

Change in net unrealized appreciation (depreciation)

(5,874,652)

(2,717,720)

Net increase (decrease) in net assets resulting
from operations

9,252,175

35,834,901

Distributions to shareholders from net investment income

(10,186,200)

(27,246,649)

Share transactions - net increase (decrease)

1,455,316

300,204,128

Total increase (decrease) in net assets

521,291

308,792,380

Net Assets

Beginning of period

1,155,491,143

846,698,763

End of period (including undistributed net investment income of $2,929,375 and undistributed net investment income of $1,900,936, respectively)

$ 1,156,012,434

$ 1,155,491,143

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.55

$ 9.44

$ 9.49

$ 9.12

$ 9.15

$ 9.38

Income from Investment Operations

Net investment income (loss) E

.105

.261

.381 G

.523

.551

.518

Net realized and unrealized gain (loss)

(.018)

.128

(.034) G

.386

(.028)

(.233)

Total from investment operations

.087

.389

.347

.909

.523

.285

Distributions from net investment income

(.097)

(.279)

(.397)

(.539)

(.553)

(.515)

Net asset value,
end of period

$ 9.54

$ 9.55

$ 9.44

$ 9.49

$ 9.12

$ 9.15

Total Return B, C, D

.91%

4.16%

3.78%

10.22%

5.91%

3.12%

Ratios to Average Net Assets F

Expenses before expense reductions

.83% A

.81%

.80%

.85%

.83%

.82%

Expenses net of voluntary waivers, if any

.83% A

.81%

.80%

.85%

.83%

.82%

Expenses net of all reductions

.83% A

.81%

.80%

.84%

.83%

.80%

Net investment income (loss)

2.21% A

2.74%

4.09% G

5.63%

6.05%

5.68%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 211,091

$ 186,290

$ 106,018

$ 38,240

$ 16,698

$ 17,835

Portfolio turnover rate

77% A

102%

111%

145%

115%

139%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.15

$ 9.38

Income from Investment Operations

Net investment income (loss) E

.106

.261

.381 G

.525

.550

.523

Net realized and unrealized gain (loss)

(.009)

.118

(.036) G

.383

(.019)

(.238)

Total from investment operations

.097

.379

.345

.908

.531

.285

Distributions from net investment income

(.097)

(.279)

(.395)

(.538)

(.551)

(.515)

Net asset value,
end of period

$ 9.55

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.15

Total Return B, C, D

1.02%

4.04%

3.75%

10.21%

6.00%

3.12%

Ratios to Average Net Assets F

Expenses before expense reductions

.83% A

.82%

.82%

.85%

.84%

.84%

Expenses net of voluntary waivers, if any

.83% A

.82%

.82%

.85%

.84%

.84%

Expenses net of all reductions

.83% A

.82%

.82%

.85%

.83%

.83%

Net investment income (loss)

2.21% A

2.73%

4.07% G

5.62%

6.05%

5.64%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 488,224

$ 468,931

$ 388,495

$ 309,958

$ 279,306

$ 309,670

Portfolio turnover rate

77% A

102%

111%

145%

115%

139%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.56

$ 9.46

$ 9.43

Income from Investment Operations

Net investment income (loss) E

.067

.183

.281 H

Net realized and unrealized gain (loss)

(.008)

.120

(.234) H

Total from investment operations

.059

.303

.047

Distributions from net investment income

(.059)

(.203)

(.017)

Net asset value, end of period

$ 9.56

$ 9.56

$ 9.46

Total Return B, C, D

.61%

3.23%

.50%

Ratios to Average Net Assets G

Expenses before expense reductions

1.63% A

1.61%

1.86% A

Expenses net of voluntary waivers, if any

1.63% A

1.61%

1.65% A

Expenses net of all reductions

1.63% A

1.61%

1.65% A

Net investment income (loss)

1.41% A

1.94%

3.59% A, H

Supplemental Data

Net assets, end of period (000 omitted)

$ 50,720

$ 49,353

$ 3,811

Portfolio turnover rate

77% A

102%

111%

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 For the period October 9, 2002 (commencement of sale of shares) to October 31, 2002.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

H Effective November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.16

$ 9.38

Income from Investment Operations

Net investment income (loss) E

.067

.182

.304 G

.448

.467

.434

Net realized and unrealized gain (loss)

(.009)

.118

(.037) G

.383

(.021)

(.222)

Total from investment operations

.058

.300

.267

.831

.446

.212

Distributions from net investment income

(.058)

(.200)

(.317)

(.461)

(.476)

(.432)

Net asset value,
end of period

$ 9.55

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.16

Total Return B, C, D

.61%

3.19%

2.90%

9.30%

5.01%

2.31%

Ratios to Average Net Assets F

Expenses before expense reductions

1.66% A

1.64%

1.64%

1.68%

1.68%

1.73%

Expenses net of voluntary waivers, if any

1.66% A

1.64%

1.64%

1.68%

1.68%

1.73%

Expenses net of all reductions

1.65% A

1.64%

1.63%

1.68%

1.67%

1.72%

Net investment income (loss)

1.39% A

1.91%

3.25% G

4.80%

5.21%

4.75%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 316,785

$ 359,779

$ 283,046

$ 99,486

$ 50,824

$ 30,428

Portfolio turnover rate

77% A

102%

111%

145%

115%

139%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.15

$ 9.38

Income from Investment Operations

Net investment income (loss) D

.115

.278

.397 F

.540

.564

.534

Net realized and unrealized gain (loss)

(.009)

.119

(.034) F

.387

(.015)

(.236)

Total from investment operations

.106

.397

.363

.927

.549

.298

Distributions from net investment income

(.106)

(.297)

(.413)

(.557)

(.569)

(.528)

Net asset value, end of period

$ 9.55

$ 9.55

$ 9.45

$ 9.50

$ 9.13

$ 9.15

Total Return B, C

1.11%

4.24%

3.95%

10.43%

6.21%

3.27%

Ratios to Average Net Assets E

Expenses before expense reductions

.64% A

.63%

.64%

.66%

.67%

.71%

Expenses net of voluntary waivers, if any

.64% A

.63%

.64%

.66%

.67%

.71%

Expenses net of all reductions

.64% A

.63%

.63%

.66%

.67%

.70%

Net investment income (loss)

2.40% A

2.92%

4.25% F

5.81%

6.21%

5.77%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 89,193

$ 91,138

$ 65,330

$ 23,301

$ 7,655

$ 6,805

Portfolio turnover rate

77% A

102%

111%

145%

115%

139%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Short Fixed-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 four 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 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. 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

1. Significant Accounting Policies - continued

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 futures transactions, prior period premium and discount on debt securities, market discount, financing transactions, capital loss carryforwards, expiring capital loss carryforwards and losses deferred due to wash sales.

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

Unrealized appreciation

$ 10,433,462

Unrealized depreciation

(5,153,127)

Net unrealized appreciation (depreciation)

$ 5,280,335

Cost for federal income tax purposes

$ 1,165,275,061

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

Semiannual Report

2. Operating Policies - continued

Repurchase Agreements - continued

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).

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

Futures Contracts. The fund may use futures contracts to manage its exposure to the bond market and to fluctuations in interest rates. Buying futures tends to increase the fund's exposure to the underlying instrument, while selling futures tends to decrease the fund's exposure to the underlying instrument or hedge other fund investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counter-parties do not perform under the contracts' terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.

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

2. Operating Policies - continued

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.

Total return swaps are agreements to exchange the return generated by one instrument for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the index exceeds the offsetting interest obligation, the fund will receive a payment from the counterparty. To the extent it is less, the fund will make a payment to the counterparty. Periodic payments received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a "guarantor" receiving a periodic payment that is a fixed percentage applied to a notional principal amount. In return the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the swap. The fund may enter into credit default swaps in which the fund or its counterparty act as guarantors. By acting as the guarantor of a swap, the fund assumes the market and credit risk of the underlying instrument including liquidity and loss of value. Premiums received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

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. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. These risks include changes in the returns of the underlying instruments, failure of the counterparties to perform under the contracts' terms and the possible lack of liquidity with respect to the swap agreements. Details of swap agreements open at period end are included in the fund's Schedule of Investments under the caption "Swap Agreements."

Semiannual Report

2. Operating Policies - continued

Financing Transactions. To earn additional income, the fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but will be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the fund's right to repurchase or sell securities may be limited.

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 .30% 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 .43% of the fund's average net assets.

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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan - continued

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%

$ 148,084

$ 917

Class T

0%

.15%

359,462

21,526

Class B

.65%

.25%

223,258

161,516

Class C

.75%

.25%

1,683,011

584,866

$ 2,413,815

$ 768,825

Sales Load. FDC receives a front-end sales charge of up to 1.50% for selling Class A and Class T shares, some of which is paid to financial intermediaries for selling shares of the fund. FDC receives the proceeds of a 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 3% 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

$ 69,550

Class T

42,206

Class B*

59,918

Class C*

107,739

$ 279,413

* 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

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

shareholder 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

$ 201,052

.20

Class T

482,078

.20

Class B

61,665

.25

Class C

286,297

.17

Institutional Class

73,531

.16

$ 1,104,623

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

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 $1,404,533 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 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. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

6. Security Lending - continued

market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. At period end there were no security loans outstanding.

7. 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 $2,292.

8. Other Information.

At the end of the period, one unaffiliated shareholder was the owner of record of 10% of the total outstanding shares of the fund.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,992,815

$ 4,157,590

Class T

4,853,024

13,023,102

Class B

303,269

541,261

Class C

2,026,874

7,051,516

Institutional Class

1,010,218

2,473,180

Total

$ 10,186,200

$ 27,246,649

Semiannual Report

10. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

8,249,676

20,802,909

$ 79,249,730

$ 198,897,539

Reinvestment of distributions

168,253

344,259

1,614,804

3,291,947

Shares redeemed

(5,806,810)

(12,855,965)

(55,741,515)

(122,878,485)

Net increase (decrease)

2,611,119

8,291,203

$ 25,123,019

$ 79,311,001

Class T

Shares sold

16,719,872

37,820,298

$ 160,750,066

$ 361,699,855

Reinvestment of distributions

436,796

1,149,084

4,196,438

10,991,925

Shares redeemed

(15,107,885)

(30,982,503)

(145,112,130)

(296,311,977)

Net increase (decrease)

2,048,783

7,986,879

$ 19,834,374

$ 76,379,803

Class B

Shares sold

1,429,785

6,189,378

$ 13,754,905

$ 59,258,449

Reinvestment of distributions

25,739

45,938

247,520

440,440

Shares redeemed

(1,309,866)

(1,475,998)

(12,589,613)

(14,147,798)

Net increase (decrease)

145,658

4,759,318

$ 1,412,812

$ 45,551,091

Class C

Shares sold

4,848,313

23,921,233

$ 46,609,530

$ 228,874,396

Reinvestment of distributions

132,548

469,309

1,273,568

4,490,147

Shares redeemed

(9,464,307)

(16,674,118)

(90,908,585)

(159,470,102)

Net increase (decrease)

(4,483,446)

7,716,424

$ (43,025,487)

$ 73,894,441

Institutional Class

Shares sold

3,356,653

8,171,676

$ 32,242,244

$ 78,200,044

Reinvestment of distributions

60,465

141,892

580,816

1,357,285

Shares redeemed

(3,615,186)

(5,685,068)

(34,712,462)

(54,489,537)

Net increase (decrease)

(198,068)

2,628,500

$ (1,889,402)

$ 25,067,792

Semiannual Report

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

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

Fidelity Management &
Research (Far East) Inc.

Fidelity Investments Japan Limited

Fidelity Investments Money
Management, Inc.

Fidelity International
Investment Advisors

Fidelity International
Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

SFI-USAN-0604
1.784905.101

Fidelity® Advisor

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

Semiannual Report

April 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.

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 States as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Texas

15.2

15.0

Illinois

14.5

13.1

New York

9.5

9.9

Washington

9.1

7.9

California

7.9

6.8

Top Five Sectors as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

General Obligations

35.0

31.9

Electric Utilities

12.8

13.2

Transportation

11.2

11.2

Health Care

11.2

11.7

Water & Sewer

10.8

10.2

Average Years to Maturity as of April 30, 2004

6 months ago

Years

15.4

15.0

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

7.7

7.5

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Quality Diversification (% of fund's net assets)

As of April 30, 2004

As of October 31, 2003

AAA 69.0%

AAA 63.1%

AA,A 20.0%

AA,A 27.4%

BBB 9.6%

BBB 7.8%

BB and Below 0.0%

BB and Below 0.1%

Not Rated 1.5%

Not Rated 2.0%

Short-Term
Investments and
Net Other Assets(dagger) (0.1)%

Short-Term
Investments and
Net Other Assets(dagger) (0.4)%



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

(dagger) Short-Term Investments and Net Other Assets are not included in the pie chart.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Municipal Bonds - 100.1%

Principal
Amount

Value (Note 1)

Alabama - 0.2%

Oxford Gen. Oblig. 5.75% 5/1/25 (AMBAC Insured)

$ 1,000,000

$ 1,072,390

Alaska - 1.1%

Alaska Hsg. Fin. Corp. Series A, 5.4% 12/1/13

5,490,000

5,614,788

Alaska Student Ln. Corp. Student Ln. Rev. Series A, 5.45% 7/1/09 (AMBAC Insured) (e)

1,500,000

1,593,510

7,208,298

Arizona - 0.6%

Arizona Student Ln. Acquisition Auth. Student Ln. Rev. Series A1, 5.875% 5/1/18 (e)

1,300,000

1,364,584

Phoenix Indl. Dev. Auth. Single Family Mtg. Rev. 0% 12/1/14 (Escrowed to Maturity) (f)

3,750,000

2,345,063

3,709,647

Arkansas - 0.2%

Little Rock School District Series 2001 C, 5.25% 2/1/33 (FSA Insured)

1,000,000

1,020,280

California - 7.9%

California Dept. of Wtr. Resources Pwr. Supply Rev.:

Series 2002 A, 5.75% 5/1/17

800,000

867,720

Series A:

5.25% 5/1/09 (MBIA Insured)

3,600,000

3,959,460

5.5% 5/1/15 (AMBAC Insured)

1,000,000

1,089,110

5.875% 5/1/16

2,100,000

2,307,018

California Gen. Oblig.:

4.5% 2/1/09

1,000,000

1,046,030

5.25% 2/1/11

2,300,000

2,472,385

5.25% 2/1/14

2,400,000

2,533,536

5.25% 2/1/15

1,200,000

1,261,200

5.25% 2/1/16

1,000,000

1,044,850

5.25% 2/1/20

1,300,000

1,330,784

5.25% 2/1/22

2,300,000

2,318,722

5.5% 3/1/11

3,500,000

3,817,065

5.5% 4/1/30

500,000

508,520

5.5% 11/1/33

1,100,000

1,117,314

California Hsg. Fin. Agcy. Home Mtg. Rev.:

Series B, 5.2% 8/1/26 (MBIA Insured) (e)

105,000

105,187

Series R, 5.35% 8/1/07 (MBIA Insured) (e)

1,000,000

1,061,800

California Poll. Cont. Fing. Auth. Solid Waste Disp. Rev. (Waste Mgmt., Inc. Proj.) Series A, 5%, tender 5/1/13 (b)(e)

2,000,000

2,000,000

California State Univ. Rev. & Colleges Series 1999 AY, 5.875% 11/1/30 (FGIC Insured)

1,000,000

1,093,200

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

California - continued

Central Valley Fing. Auth. Cogeneration Proj. Rev. (Carson Ice Gen. Proj.) 6% 7/1/09

$ 2,460,000

$ 2,500,270

Foothill/Eastern Trans. Corridor Agcy. Toll Road Rev.:

Series A, 5% 1/1/35 (MBIA Insured)

700,000

690,424

5% 1/15/16 (MBIA Insured)

400,000

418,692

5.75% 1/15/40

600,000

609,258

Golden State Tobacco Securitization Corp.:

Series 2003 A1, 6.75% 6/1/39

1,200,000

1,128,240

Series 2003 B, 5.75% 6/1/23

1,800,000

1,844,190

Los Angeles Dept. of Wtr. & Pwr. Wtrwks. Rev. Series 2001 A, 5.125% 7/1/41

4,000,000

3,926,200

Los Angeles Unified School District Series A:

5.375% 7/1/17 (MBIA Insured)

1,800,000

1,945,656

5.375% 7/1/18 (MBIA Insured)

1,000,000

1,075,420

Sacramento Cogeneration Auth. Cogeneration Proj. Rev. (Procter & Gamble Proj.) 6.375% 7/1/10

500,000

529,195

Sacramento Pwr. Auth. Cogeneration Proj. Rev. 6.5% 7/1/08

300,000

327,438

San Joaquin Hills Trans. Corridor Agcy. Toll Road Rev. Series A, 0% 1/15/12 (MBIA Insured)

1,300,000

932,152

Univ. of California Revs. (UCLA Med. Ctr. Proj.) Series A:

5.5% 5/15/18 (AMBAC Insured) (a)

1,755,000

1,900,367

5.5% 5/15/20 (AMBAC Insured) (a)

2,000,000

2,150,580

49,911,983

Colorado - 2.2%

Arapahoe County Cherry Creek School District #5 6% 12/15/15

1,250,000

1,413,813

Colorado Springs Arpt. Rev. Series C, 0% 1/1/08 (MBIA Insured)

870,000

774,396

Colorado Wtr. Resources Pwr. Dev. Auth. Clean Wtr. Rev. Series 2001 A:

5.625% 9/1/13

1,610,000

1,800,721

5.625% 9/1/14

1,745,000

1,948,153

Douglas County School District #RE1, Douglas & Elbert Counties Series 2002 B, 5.75% 12/15/16 (FSA Insured)

2,775,000

3,105,059

E-470 Pub. Hwy. Auth. Rev. Series 2000 A, 5.75% 9/1/29 (MBIA Insured)

1,200,000

1,292,748

Larimer County School District #R1, Poudre:

5.5% 12/15/23 (MBIA Insured)

500,000

536,805

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Colorado - continued

Larimer County School District #R1, Poudre: - continued

6% 12/15/17 (FGIC Insured)

$ 1,325,000

$ 1,513,084

Mesa County Residual Rev. 0% 12/1/11 (Escrowed to Maturity) (f)

2,275,000

1,684,274

14,069,053

Connecticut - 0.8%

Connecticut Gen. Oblig.:

Series 2002 B, 5.5% 6/15/18

600,000

655,392

Series D, 5.375% 11/15/18

1,000,000

1,076,280

Eastern Connecticut Resources Recovery Auth. Solid Waste Rev. (Wheelabrator Lisbon Proj.) Series A, 5.5% 1/1/20 (e)

3,350,000

3,245,581

4,977,253

District Of Columbia - 2.0%

District of Columbia Gen. Oblig.:

Series A, 6% 6/1/07 (Escrowed to Maturity) (f)

150,000

162,905

Series B, 5.25% 6/1/26 (FSA Insured)

6,000,000

6,165,660

District of Columbia Rev.:

(George Washington Univ. Proj.) Series A, 5.75% 9/15/20 (MBIA Insured)

1,490,000

1,649,907

(Georgetown Univ. Proj.) Series A, 5.95% 4/1/14 (MBIA Insured)

2,000,000

2,237,260

(Nat'l. Academy of Sciences Proj.) Series A, 5% 1/1/19 (AMBAC Insured)

2,500,000

2,560,700

12,776,432

Florida - 1.3%

Dade County Aviation Rev. Series D, 5.75% 10/1/09 (AMBAC Insured) (e)

5,000,000

5,348,450

Florida Board of Ed. Lottery Rev. Series B, 6% 7/1/15 (FGIC Insured)

500,000

571,175

Highlands County Health Facilities Auth. Rev. (Adventist Health Sys./Sunbelt Proj.) 3.35%, tender 9/1/05 (b)

2,200,000

2,238,808

8,158,433

Georgia - 0.4%

College Park Bus. & Indl. Dev. Auth. Civic Ctr. Proj. Rev. Series 2000, 5.75% 9/1/20 (AMBAC Insured)

1,100,000

1,224,905

Columbus Wtr. & Swr. Rev. 5.25% 5/1/11 (FSA Insured)

1,085,000

1,195,507

2,420,412

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Hawaii - 0.3%

Hawaii Arpts. Sys. Rev. Series 2000 B, 8% 7/1/11 (FGIC Insured) (e)

$ 1,300,000

$ 1,608,113

Illinois - 14.5%

Chicago Board of Ed.:

Series A:

0% 12/1/14 (FGIC Insured)

1,000,000

611,940

0% 12/1/16 (FGIC Insured)

4,000,000

2,171,400

5.75% 12/1/27 (AMBAC Insured)

14,065,000

15,916,517

Chicago Gen. Oblig.:

(City Colleges Proj.):

0% 1/1/16 (FGIC Insured)

2,520,000

1,430,201

0% 1/1/24 (FGIC Insured)

6,110,000

2,087,542

0% 1/1/28 (FGIC Insured)

5,000,000

1,341,350

(Neighborhoods Alive 21 Prog.):

Series 2000 A, 6% 1/1/28 (FGIC Insured)

1,400,000

1,547,658

5.5% 1/1/17 (FGIC Insured)

2,265,000

2,449,212

Series A:

5% 1/1/41 (MBIA Insured)

1,000,000

974,070

5% 1/1/42 (AMBAC Insured)

1,700,000

1,655,545

5.5% 1/1/38 (MBIA Insured)

1,000,000

1,025,680

Chicago Midway Arpt. Rev.:

Series A, 5.5% 1/1/29 (MBIA Insured)

1,500,000

1,551,525

Series B, 6% 1/1/09 (MBIA Insured) (e)

300,000

324,285

Chicago O'Hare Int'l. Arpt. Rev.:

Series A:

5.5% 1/1/16 (AMBAC Insured) (e)

1,000,000

1,049,680

6.25% 1/1/09 (AMBAC Insured) (e)

3,700,000

4,061,934

6.375% 1/1/15 (MBIA Insured)

1,400,000

1,470,336

5.5% 1/1/09 (AMBAC Insured) (e)

1,250,000

1,354,925

Chicago Transit Auth. Cap. Grant Receipts Rev. (Douglas Branch Proj.) Series 2003 B, 4.25% 6/1/08 (AMBAC Insured)

1,400,000

1,428,280

Coles & Cumberland Counties Cmnty. Unit School District #2 5.8% 2/1/17 (FGIC Insured)

1,000,000

1,107,200

DuPage County Cmnty. High School District #108, Lake Park 5.6% 1/1/17 (FSA Insured)

3,190,000

3,521,728

Evanston Gen. Oblig. Series C, 5.25% 1/1/20

1,500,000

1,585,140

Illinois Edl. Facilities Auth. Revs. (DePaul Univ. Proj.):

5.5% 10/1/18 (Pre-Refunded to 10/1/10 @ 101) (f)

2,195,000

2,497,669

5.5% 10/1/19 (Pre-Refunded to 10/1/10 @ 101) (f)

1,000,000

1,137,890

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Illinois - continued

Illinois Gen. Oblig.:

First Series:

5.5% 8/1/19 (MBIA Insured)

$ 2,500,000

$ 2,712,000

5.75% 12/1/18 (MBIA Insured)

1,000,000

1,108,730

5.5% 4/1/17 (MBIA Insured)

1,000,000

1,081,290

5.6% 4/1/21 (MBIA Insured)

1,000,000

1,073,420

Illinois Health Facilities Auth. Rev.:

(Condell Med. Ctr. Proj.) 6.5% 5/15/30

3,000,000

3,131,580

(Dectaur Memorial Hosp. Proj.) Series 2001, 5.75% 10/1/24

2,100,000

2,124,927

(Lake Forest Hosp. Proj.) 6% 7/1/33

1,000,000

1,023,600

(Riverside Health Sys. Proj.) 6.8% 11/15/20

1,500,000

1,602,270

Illinois Sales Tax Rev.:

First Series 2001, 5.5% 6/15/13

3,250,000

3,563,918

6% 6/15/20

600,000

673,386

Kane & DuPage Counties Cmnty. Unit School District #303, Saint Charles Series A, 5.5% 1/1/17 (FSA Insured)

2,000,000

2,174,280

Kane County School District #129, Aurora West Side Series A:

5.75% 2/1/16 (FGIC Insured)

1,000,000

1,100,190

5.75% 2/1/18 (FGIC Insured)

2,000,000

2,194,820

Kane, McHenry, Cook & DeKalb Counties Cmnty. Unit School District #300, Carpentersville 5.5% 12/1/16 (MBIA Insured)

1,000,000

1,089,740

Lake County Cmnty. Consolidated School District #50, Woodland Series 2000 A, 6% 12/1/20 (FGIC Insured)

1,075,000

1,200,711

Lake County Warren Township High School District #121, Gurnee Series C, 5.5% 3/1/23 (AMBAC Insured) (a)

1,795,000

1,919,645

McHenry County Conservation District Series A, 5.625% 2/1/21 (FGIC Insured)

1,000,000

1,063,450

Metropolitan Pier & Exposition Auth. Dedicated State Tax Rev.:

(McCormick Place Expansion Proj.):

Series 2002 A:

0% 12/15/32 (MBIA Insured)

2,000,000

402,540

5.75% 6/15/41 (MBIA Insured)

1,200,000

1,272,672

Series A:

0% 6/15/16 (FGIC Insured)

2,370,000

1,315,682

0% 12/15/24 (MBIA Insured)

3,000,000

972,840

0% 6/15/31 (MBIA Insured)

1,800,000

395,172

0% 6/15/40 (MBIA Insured)

7,400,000

952,898

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Illinois - continued

Metropolitan Pier & Exposition Auth. Dedicated State Tax Rev.: - continued

Series 2002 A:

0% 6/15/09 (Escrowed to Maturity) (f)

$ 975,000

$ 823,563

0% 6/15/09 (FGIC Insured)

25,000

20,791

Series A, 0% 6/15/09 (Escrowed to Maturity) (f)

65,000

54,904

Ogle Lee & DeKalb Counties Township High School District #212 6% 12/1/16 (MBIA Insured)

1,000,000

1,146,560

Univ. of Illinois Auxiliary Facilities Sys. Rev. 0% 4/1/15 (MBIA Insured)

3,700,000

2,201,093

Will County Forest Preservation District Series B, 0% 12/1/14 (FGIC Insured)

1,000,000

608,780

91,307,159

Indiana - 0.9%

Indiana Bond Bank Rev. Series B, 5% 2/1/10 (MBIA Insured)

1,000,000

1,085,280

Indiana Health Facility Fing. Auth. Rev. (Sisters of Saint Francis Health Svc. Proj.) 5.5% 11/1/31

1,500,000

1,515,510

New Albany Floyd County Independent School Bldg. Corp. 5.75% 7/15/17 (FGIC Insured)

1,000,000

1,108,130

Petersburg Poll. Cont. Rev. 5.95% 12/1/29 (e)

2,000,000

2,044,220

5,753,140

Iowa - 0.8%

Iowa Fin. Auth. Hosp. Facilities Rev. 5.875% 2/15/30 (AMBAC Insured)

1,870,000

2,005,594

Tobacco Settlement Auth. Tobacco Settlement Rev. 5.3% 6/1/25

4,000,000

3,289,320

5,294,914

Kansas - 1.7%

Burlington Envir. Impt. Rev. (Kansas City Pwr. & Lt. Co. Proj.) Series A, 4.75%, tender 10/1/07 (b)

1,000,000

1,058,220

Kansas Dev. Fin. Auth. Health Facilities Rev. (Sisters of Charity of Leavenworth Health Services Corp. Proj.) Series J, 6.25% 12/1/28

1,500,000

1,634,895

Kansas Dev. Fin. Auth. Pub. Wtr. Supply Revolving Ln. Fund Rev.:

(Sisters of Charity Leavenworth Health Svc. Co. Proj.):

5% 12/1/13 (MBIA Insured)

2,390,000

2,519,347

5% 12/1/14 (MBIA Insured)

500,000

528,030

5.25% 12/1/09 (MBIA Insured)

1,420,000

1,542,688

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Kansas - continued

Kansas Dev. Fin. Auth. Pub. Wtr. Supply Revolving Ln. Fund Rev.: - continued

(Sisters of Charity Leavenworth Health Svc. Co. Proj.):

5.25% 12/1/11 (MBIA Insured)

$ 1,750,000

$ 1,887,253

Series 2000 2, 5.75% 4/1/16 (AMBAC Insured)

1,550,000

1,737,132

10,907,565

Kentucky - 1.2%

Louisville & Jefferson County Metro. Swr. District Swr. & Drain Sys. Rev. Series A:

5.25% 5/15/37 (FGIC Insured)

1,300,000

1,339,338

5.75% 5/15/33 (FGIC Insured)

6,050,000

6,477,614

7,816,952

Maine - 1.4%

Maine Tpk. Auth. Tpk. Rev. Series 2000, 5.75% 7/1/28 (FGIC Insured)

8,100,000

8,644,968

Maryland - 0.5%

Maryland Health & Higher Edl. Facilities Auth. Rev. (Good Samaritan Hosp. Proj.) 5.75% 7/1/13 (Escrowed to Maturity) (f)

2,680,000

3,017,760

Massachusetts - 3.0%

Massachusetts Bay Trans. Auth.:

Series 1997 D, 5% 3/1/27

2,000,000

2,000,760

Series A:

5.375% 3/1/19

1,000,000

1,063,750

5.75% 3/1/26

2,000,000

2,145,060

Massachusetts Gen. Oblig. Series D, 5.25% 10/1/22 (Pre-Refunded to 10/1/13 @ 100) (f)

1,200,000

1,308,708

Massachusetts Health & Edl. Facilities Auth. Rev. (New England Med. Ctr. Hosp. Proj.) Series G, 5.375% 7/1/24 (MBIA Insured)

500,000

511,590

Massachusetts Indl. Fin. Agcy. Rev. (Massachusetts Biomedical Research Corp. Proj.) Series A2:

0% 8/1/08

800,000

697,984

0% 8/1/10

4,500,000

3,507,030

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Massachusetts - continued

Massachusetts Wtr. Poll. Abatement Trust Wtr. Poll. Abatement Rev. (MWRA Ln. Prog.) Series A, 5.25% 8/1/13

$ 10,000

$ 10,716

Massachusetts Wtr. Resources Auth. Series A, 5.75% 8/1/39 (FGIC Insured)

7,000,000

7,495,390

18,740,988

Michigan - 1.9%

Detroit Gen. Oblig. Series A, 5% 4/1/08 (FSA Insured) (a)

3,400,000

3,584,552

Detroit Wtr. Supply Sys. Rev. Series 2001 A, 5.25% 7/1/33 (FGIC Insured)

1,065,000

1,082,008

Ecorse Pub. School District 5.5% 5/1/27 (FGIC Insured)

1,000,000

1,049,370

Michigan Hosp. Fin. Auth. Hosp. Rev.:

(Ascension Health Cr. Group Proj.) Series A, 6.125% 11/15/26 (Pre-Refunded to 11/15/09 @ 101) (f)

300,000

348,636

(McLaren Health Care Corp. Proj.) Series A, 5% 6/1/19

2,000,000

1,997,000

Royal Oak Hosp. Fin. Auth. Hosp. Rev. (William Beaumont Hosp. Proj.) 6.25% 1/1/09

2,310,000

2,583,250

Zeeland Pub. Schools 5.375% 5/1/25 (FGIC Insured)

1,500,000

1,546,710

12,191,526

Minnesota - 1.3%

Minneapolis & Saint Paul Hsg. & Redev. Auth. Health Care Sys. Rev. (Healthspan Corp. Proj.) Series A, 4.75% 11/15/18 (AMBAC Insured)

1,800,000

1,817,136

Minneapolis Health Care Sys. Rev. (Allina Health Sys. Proj.) Series 2002 A, 6% 11/15/23

1,000,000

1,049,910

Minnesota Hsg. Fin. Agcy. (Single Family Mtg. Prog.) Series D, 6.4% 7/1/15 (e)

665,000

682,357

Rochester Health Care Facilities Rev. (Mayo Foundation Proj.) Series A, 5.5% 11/15/27

640,000

660,384

Saint Cloud Health Care Rev. (Saint Cloud Hosp. Group Oblig. Proj.) Series A, 5.875% 5/1/30 (FSA Insured)

2,000,000

2,162,340

Saint Paul Port Auth. Lease Rev. Series 2003 11, 5.25% 12/1/18

1,000,000

1,074,250

Waconia Independent School District #110 Series A, 5% 2/1/12 (FSA Insured)

500,000

537,185

7,983,562

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Missouri - 0.4%

Missouri Envir. Impt. & Energy Resources Auth. Wtr. Poll. Cont. & Drinking Wtr. Rev. (State Revolving Fund Prog.) Series 2003 A, 5.125% 1/1/21

$ 1,010,000

$ 1,055,733

Saint Louis Muni. Fin. Corp. Leasehold Rev. (Civil Courts Bldg. Proj.) Series A, 5% 8/1/08 (FSA Insured)

1,130,000

1,224,434

2,280,167

Montana - 0.2%

Forsyth Poll. Cont. Rev. (Portland Gen. Elec. Co. Projs.) Series A, 5.2%, tender 5/1/09 (b)

1,100,000

1,151,359

Nevada - 0.8%

Clark County Arpt. Rev. Series C, 5.375% 7/1/22 (AMBAC Insured) (e)

1,000,000

1,024,480

Clark County Gen. Oblig.:

(Park & Reg'l. Justice Ctr. Proj.) 5.75% 11/1/24
(FGIC Insured)

1,000,000

1,073,010

Series 2000, 5.5% 7/1/30 (MBIA Insured)

500,000

517,805

Las Vegas Valley Wtr. District Series B:

5.25% 6/1/16 (MBIA Insured)

1,000,000

1,075,140

5.25% 6/1/17 (MBIA Insured)

1,000,000

1,067,710

4,758,145

New Jersey - 1.0%

New Jersey Tpk. Auth. Tpk. Rev. Series A, 5.625% 1/1/15 (MBIA Insured)

185,000

200,423

New Jersey Trans. Trust Fund Auth. Series C, 5.5% 6/15/19

700,000

761,313

North Hudson Swr. Auth. Swr. Rev. Series A, 5.25% 8/1/17 (FGIC Insured)

2,000,000

2,142,340

Tobacco Settlement Fing. Corp.:

4.375% 6/1/19

600,000

587,778

6.125% 6/1/24

1,100,000

1,047,937

6.125% 6/1/42

1,600,000

1,375,168

6,114,959

New Mexico - 1.3%

Albuquerque Arpt. Rev.:

6.7% 7/1/18 (AMBAC Insured) (e)

3,970,000

4,458,072

6.75% 7/1/09 (AMBAC Insured) (e)

450,000

518,999

6.75% 7/1/11 (AMBAC Insured) (e)

1,805,000

2,105,190

New Mexico Edl. Assistance Foundation Student Ln. Rev. Series IV A2, 6.65% 3/1/07

1,000,000

1,047,620

8,129,881

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

New York - 9.5%

Erie County Indl. Dev. Agcy. School Facility Rev. (Buffalo City School District Proj.):

5.75% 5/1/16 (FSA Insured)

$ 1,500,000

$ 1,662,405

5.75% 5/1/21 (FSA Insured)

1,200,000

1,308,312

Metro. Trans. Auth. Transit Facilities Rev.:

Series B2, 5% 7/1/17 (Escrowed to Maturity) (f)

500,000

528,845

Series C, 4.75% 7/1/16 (Pre-Refunded to 1/1/12 @ 100) (f)

150,000

161,135

Metropolitan Trans. Auth. Rev. Series 2002 A, 5.75% 11/15/32

4,300,000

4,565,310

Metropolitan Trans. Auth. Svc. Contract Rev.:

Series 7, 5.625% 7/1/16 (Escrowed to Maturity) (f)

1,000,000

1,015,240

Series O, 5.75% 7/1/13 (Escrowed to Maturity) (f)

700,000

792,141

Nassau County Gen. Oblig. Series Z:

5% 9/1/11 (FGIC Insured)

300,000

324,066

5% 9/1/13 (FGIC Insured)

850,000

906,457

New York City Gen. Oblig.:

Series A, 5.25% 11/1/14 (MBIA Insured)

600,000

650,208

Series C, 5.75% 3/15/27 (FSA Insured)

500,000

532,500

Series E, 6% 8/1/11

500,000

543,910

New York City Indl. Dev. Agcy. Indl. Dev. Rev. (Japan Airlines Co. Ltd. Proj.) Series 1991, 6% 11/1/15
(FSA Insured) (e)

800,000

829,728

New York City Indl. Dev. Agcy. Spl. Facilities Rev. (Term. One Group Assoc. Proj.) 5.9% 1/1/06 (e)

8,680,000

8,836,240

New York City Muni. Wtr. Fin. Auth. Wtr. & Swr. Sys. Rev.:

Series A:

5.125% 6/15/34 (MBIA Insured)

2,000,000

2,020,540

6% 6/15/28

1,500,000

1,641,000

Series B:

5.75% 6/15/26

5,000,000

5,353,700

5.75% 6/15/29

5,000,000

5,349,100

5.75% 6/15/29 (MBIA Insured)

1,500,000

1,605,645

New York City Trust Cultural Resources Rev. (Museum of Modern Art Proj.) Series 2001 D, 5.125% 7/1/31 (AMBAC Insured)

1,000,000

1,014,330

New York State Dorm. Auth. Revs.:

(City Univ. Sys. Consolidation Proj.) Series C, 7.5% 7/1/10

500,000

578,320

(The Jamaica Hosp. Proj.) Series F, 5.2% 2/15/14 (MBIA Insured)

6,150,000

6,572,690

Series 2002 A, 5.75% 10/1/17 (MBIA Insured)

1,000,000

1,112,020

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

New York - continued

New York State Envir. Facilities Corp. Clean Wtr. & Drinking Wtr. Rev. Series F:

4.875% 6/15/18

$ 870,000

$ 895,508

4.875% 6/15/20

795,000

812,299

5% 6/15/15

305,000

322,702

New York State Thruway Auth. State Personal Income Tax Rev. Series A, 5.5% 3/15/17

500,000

543,530

New York State Thruway Auth. Svc. Contract Rev.:

5.5% 4/1/16

305,000

336,632

5.5% 4/1/16 (Pre-Refunded to 4/1/12 @ 100) (f)

695,000

778,525

New York State Urban Dev. Corp. Rev. Series C1, 5.5% 3/15/18 (FGIC Insured)

1,000,000

1,087,880

New York Transitional Fin. Auth. Rev. Series A, 5.75% 2/15/16

400,000

445,016

Tobacco Settlement Fing. Corp. Series A1:

5.25% 6/1/21 (AMBAC Insured)

1,000,000

1,042,710

5.25% 6/1/22 (AMBAC Insured)

950,000

984,172

5.5% 6/1/16

4,700,000

4,984,820

60,137,636

New York & New Jersey - 0.1%

Port Auth. of New York & New Jersey 124th Series, 5% 8/1/13 (FGIC Insured) (e)

500,000

521,495

North Carolina - 3.5%

North Carolina Cap. Facilities Fin. Agcy. Rev. (Duke Univ. Proj.) Series A:

5.125% 10/1/41

1,050,000

1,052,804

5.125% 7/1/42

3,420,000

3,430,636

North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev.:

Series A, 5.5% 1/1/11

1,500,000

1,607,535

Series B:

5.875% 1/1/21 (MBIA Insured)

3,050,000

3,356,556

6% 1/1/06

5,820,000

6,141,322

7.25% 1/1/07

1,000,000

1,105,490

Series C:

5.5% 1/1/07

700,000

743,764

5.5% 1/1/07 (MBIA Insured)

2,000,000

2,166,040

Series D, 6.7% 1/1/19

1,115,000

1,222,397

North Carolina Infrastructure Fin. Corp. Ctfs. of Prtn. (North Carolina Correctional Facilities Proj.) Series A, 5% 2/1/18

1,000,000

1,042,570

21,869,114

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

North Dakota - 0.2%

North Dakota Bldg. Auth. Lease Rev. Series A, 5.25% 6/1/09 (FGIC Insured)

$ 1,400,000

$ 1,538,488

Ohio - 1.5%

Cincinnati Student Ln. Fdg. Corp. Student Ln. Rev. Series B, 8.875% 8/1/08 (e)

1,005,000

1,010,126

Delaware County Gen. Oblig. 6% 12/1/25

1,000,000

1,122,860

Fairborn City School District (School Impt. Proj.) 5.75% 12/1/26 (FSA Insured)

1,000,000

1,073,070

Franklin County Hosp. Rev. 5.5% 5/1/21 (AMBAC Insured)

1,455,000

1,552,922

Gateway Econ. Dev. Corp. Greater Cleveland Stadium Rev. Series 1990, 6.5% 9/15/14 (e)

3,000,000

3,071,880

Ohio Wtr. Dev. Auth. Rev. (Fresh Wtr. Impt. Proj.) 5.375% 12/1/17

1,000,000

1,089,180

Plain Local School District 6% 12/1/25 (FGIC Insured)

410,000

453,960

9,373,998

Oklahoma - 1.3%

Oklahoma Industries Auth. Rev.:

(Health Sys. Oblig. Group Proj.) Series A, 5.75% 8/15/29 (MBIA Insured)

1,500,000

1,584,765

6% 8/15/19 (MBIA Insured)

3,000,000

3,329,010

Tulsa Indl. Auth. Rev. (Univ. of Tulsa Proj.) Series 2000 A, 5.75% 10/1/25 (MBIA Insured)

3,000,000

3,213,150

8,126,925

Oregon - 0.6%

Portland Swr. Sys. Rev. Series 2000 A, 5.75% 8/1/18 (FGIC Insured)

500,000

557,750

Tri-County Metro. Trans. District Rev. Series A:

5.75% 8/1/18

1,000,000

1,115,500

5.75% 8/1/19

2,080,000

2,306,762

3,980,012

Pennsylvania - 3.8%

Allegheny County Arpt. Rev. (Pittsburgh Int'l. Arpt. Proj.) Series A1, 5.75% 1/1/07 (MBIA Insured) (e)

1,000,000

1,073,620

Canon McMillan School District:

Series 2001 B, 5.75% 12/1/33 (FGIC Insured)

1,000,000

1,075,630

Series 2002 B, 5.75% 12/1/35 (FGIC Insured)

1,595,000

1,713,493

Delaware County Auth. College Rev. (Haverford College Proj.) 5.75% 11/15/29

3,500,000

3,742,235

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Pennsylvania - continued

Delaware County Auth. Rev. (First Mtg. Riddle Village Proj.) 8.25% 6/1/22 (Escrowed to Maturity) (f)

$ 2,120,000

$ 2,193,076

Montgomery County Higher Ed. & Health Auth. Hosp. Rev. (Abington Memorial Hosp. Proj.) Series A, 6% 6/1/16 (AMBAC Insured)

1,860,000

2,128,379

Pennsylvania Econ. Dev. Fing. Auth. Exempt Facilities Rev. (Amtrak Proj.) Series 2001 A, 6.25% 11/1/31 (e)

2,000,000

2,041,620

Pennsylvania Gen. Oblig. Second Series, 5.5% 5/1/17 (FSA Insured)

600,000

659,412

Pennsylvania Higher Edl. Facilities Auth. Rev. (Lafayette College Proj.) 6% 5/1/30

3,065,000

3,381,308

Philadelphia School District Series 2002 A, 5.5% 2/1/31 (FSA Insured)

1,300,000

1,360,801

Tredyffrin-Easttown School District 5.5% 2/15/15

2,010,000

2,198,960

Westmoreland County Muni. Auth. Muni. Svc. Rev. Series A, 0% 8/15/21 (FGIC Insured)

5,000,000

2,077,700

23,646,234

Puerto Rico - 0.2%

Puerto Rico Commonwealth Infrastructure Fing. Auth. Series 2000 A, 5.5% 10/1/32 (Escrowed to Maturity) (f)

1,000,000

1,069,870

Rhode Island - 1.1%

North Kingstown Gen. Oblig. 5.8% 10/1/21
(FGIC Insured)

1,320,000

1,463,128

Providence Redev. Agcy. Rev. Series A, 5.75% 4/1/29 (AMBAC Insured)

800,000

857,760

Rhode Island Port Auth. & Econ. Dev. Corp. Arpt. Rev. Series A, 7% 7/1/14 (FSA Insured) (e)

4,000,000

4,772,760

7,093,648

South Carolina - 0.4%

South Carolina Ed. Assistance Auth. Rev. (Guaranteed Student Ln. Prog.) Series B, 5.7% 9/1/05 (e)

1,000,000

1,039,460

South Carolina Jobs Econ. Dev. Auth. Hosp. Facilities Rev. (Palmetto Health Alliance Proj.) Series A, 7.375% 12/15/21 (Pre-Refunded to 12/15/10 @ 102) (f)

1,000,000

1,233,410

Tobacco Settlement Rev. Mgmt. Auth. Series 2001 B, 6.375% 5/15/28

545,000

496,152

2,769,022

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Tennessee - 0.7%

Metro. Govt. Nashville & Davidson County Health & Edl. Facilities Board Rev. (Ascension Health Cr. Group Proj.) Series A:

5.875% 11/15/28 (Pre-Refunded to 11/15/09 @ 101) (f)

$ 400,000

$ 462,008

6% 11/15/30 (Pre-Refunded to 11/15/09 @ 101) (f)

600,000

696,810

Shelby County Health Edl. & Hsg. Facility Board Hosp. Rev. (Methodist Health Care Proj.) 6.5% 9/1/26

3,000,000

3,231,960

4,390,778

Texas - 15.2%

Aldine Independent School District 5.5% 2/15/13

3,150,000

3,441,533

Alvin Independent School District 5.75% 8/15/21

1,000,000

1,103,160

Austin Util. Sys. Rev. Series A, 0% 11/15/10 (MBIA Insured)

1,100,000

850,201

Canyon Independent School District Series A, 5.5% 2/15/18

1,575,000

1,713,506

Comal Independent School District 5.75% 8/1/28

2,000,000

2,141,780

Conroe Independent School District Lot B, 0% 2/15/09

750,000

633,893

Corpus Christi Util. Sys. Rev. 5.25% 7/15/18 (FSA Insured)

1,500,000

1,583,895

Cypress-Fairbanks Independent School District:

Series A:

0% 2/15/14

3,200,000

2,023,904

0% 2/15/16

1,400,000

792,596

5.75% 2/15/21

1,000,000

1,088,840

Denton County Lewisville Independent School District Series 2004, 5% 8/15/20

1,000,000

1,031,300

El Paso Gen. Oblig. 5.75% 8/15/25 (FSA Insured)

4,500,000

4,785,885

El Paso Wtr. & Swr. Rev. 5% 3/1/10 (AMBAC Insured)

1,205,000

1,307,148

Garland Independent School District 5.5% 2/15/19

2,500,000

2,676,475

Grapevine Gen. Oblig. 5.75% 8/15/18 (FGIC Insured)

1,250,000

1,387,788

Guadalupe-Blanco River Auth. Contract Rev. (Western Canyon Reg'l. Wtr. Supply Proj.) 5.25% 4/15/20 (MBIA Insured)

1,000,000

1,048,190

Harris County Gen. Oblig. 0% 10/1/17 (MBIA Insured)

2,500,000

1,294,825

Harris County Health Facilities Dev. Corp. Rev. (Saint Luke's Episcopal Hosp. Proj.):

Series 2001 A, 5.5% 2/15/12

1,000,000

1,090,020

5.75% 2/15/21

1,310,000

1,376,181

Houston Arpt. Sys. Rev.:

Series A, 5.625% 7/1/19 (FSA Insured) (e)

1,000,000

1,057,280

Series B, 5.5% 7/1/30 (FSA Insured)

1,400,000

1,456,658

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Texas - continued

Houston Independent School District 0% 8/15/13

$ 1,300,000

$ 856,310

Hurst Euless Bedford Independent School District 0% 8/15/11

1,000,000

739,830

Lewisville Independent School District 0% 8/15/19

2,340,000

1,084,403

Los Fresnos Independent School District:

5.75% 8/15/13

1,040,000

1,171,997

5.75% 8/15/14

1,100,000

1,235,652

Lower Colorado River Auth. Transmission Contract Rev. (LCRA Transmission Services Corp. Proj.) Series C, 5.25% 5/15/19 (AMBAC Insured)

1,000,000

1,050,090

Mansfield Independent School District 5.5% 2/15/17

2,000,000

2,175,280

Montgomery County Muni. Util. District #46 5% 3/1/21 (FSA Insured)

1,040,000

1,062,755

Mount Pleasant Independent School District 5.5% 2/15/22

2,590,000

2,744,157

Northside Independent School District 5.5% 2/15/15

2,000,000

2,173,940

Northwest Texas Independent School District 5.5% 8/15/21

3,185,000

3,397,726

Pearland Independent School District 5.875% 2/15/17

1,205,000

1,343,961

Sabine River Auth. Poll. Cont. Rev. (Texas Utils. Elec. Co. Proj.) Series B, 5.75%, tender 11/1/11 (b)(e)

4,000,000

4,289,120

San Antonio Elec. & Gas Systems Rev. 5.5% 2/1/20 (Pre-Refunded to 2/1/07 @ 101) (f)

75,000

82,226

San Benito Consolidated Independent School District 6% 2/15/25

900,000

990,162

Southwest Higher Ed. Auth. Rev. (Southern Methodist Univ. Proj.) 5.5% 10/1/14 (AMBAC Insured)

2,245,000

2,483,868

Spring Branch Independent School District 5.375% 2/1/18

1,000,000

1,077,980

Tarrant County Health Facilities Dev. Corp. Hosp. Rev. 5.375% 11/15/20

1,000,000

994,770

Texas Muni. Pwr. Agcy. Rev.:

0% 9/1/11 (AMBAC Insured)

4,705,000

3,474,501

0% 9/1/11 (Escrowed to Maturity) (f)

330,000

249,424

0% 9/1/15 (MBIA Insured)

1,000,000

581,290

Texas Pub. Fin. Auth. Bldg. Rev. (Texas Technical College Proj.) 6.25% 8/1/09 (MBIA Insured)

1,000,000

1,108,110

Texas Tpk. Auth. Central Tpk. Sys. Rev.:

Series A:

0% 8/15/25 (AMBAC Insured)

2,910,000

893,021

0% 8/15/29 (AMBAC Insured)

8,000,000

1,931,920

5.5% 8/15/39 (AMBAC Insured)

4,050,000

4,197,177

5.75% 8/15/38 (AMBAC Insured)

3,775,000

4,015,241

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Texas - continued

Texas Tpk. Auth. Dallas North Tollway Rev. 5.25% 1/1/23 (FGIC Insured)

$ 2,600,000

$ 2,703,532

Texas Wtr. Dev. Board Rev. Series A, 5.5% 7/15/21

1,000,000

1,055,920

Travis County Health Facilities Dev. Corp. Rev. (Ascension Health Cr. Prog.) Series A, 6.25% 11/15/19 (Pre-Refunded to 11/15/09 @ 101) (f)

4,000,000

4,696,000

Trinity River Auth. Reg'l. Wastewtr. Sys. Rev. 5.25% 8/1/11 (MBIA Insured)

2,000,000

2,202,020

Tyler Health Facilities Dev. Corp. Hosp. Rev. (Mother Frances Hosp. Reg'l. Health Care Ctr. Proj.) 6% 7/1/27

1,000,000

1,014,810

Williamson County Gen. Oblig. 6% 8/15/19 (FGIC Insured)

1,000,000

1,158,670

Yselta Independent School District 0% 8/15/09

4,065,000

3,367,446

95,488,367

Utah - 2.2%

Intermountain Pwr. Agcy. Pwr. Supply Rev.:

Series A:

6.5% 7/1/09 (AMBAC Insured)

365,000

421,352

6.5% 7/1/09 (Escrowed to Maturity) (f)

635,000

742,715

Series B:

5.75% 7/1/16 (MBIA Insured)

2,500,000

2,767,725

6% 7/1/16 (MBIA Insured)

7,000,000

7,680,890

Salt Lake County Hosp. Rev. (IHC Health Svcs., Inc. Proj.) 5.5% 5/15/10 (AMBAC Insured)

2,000,000

2,217,740

13,830,422

Vermont - 0.2%

Vermont Edl. & Health Bldgs. Fing. Agcy. Rev. (Fletcher Allen Health Care, Inc. Proj.):

Series 2000 A, 6.125% 12/1/27 (AMBAC Insured)

1,000,000

1,115,270

Series A, 5.75% 12/1/18 (AMBAC Insured)

400,000

445,376

1,560,646

Virginia - 0.9%

Loudoun County Indl. Dev. Auth. Residential Care Facilities Rev. (Falcons Landing Proj.) Series A, 9.25% 11/1/04 (Escrowed to Maturity) (f)

265,000

275,568

Virginia Commonwealth Trans. Board Trans. Rev.
(U.S. Route 58 Corridor Dev. Prog.) Series B, 5.75% 5/15/21

1,965,000

2,169,753

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Virginia - continued

Virginia Resources Auth. Clean Wtr. State Revolving Fund Rev.:

5.625% 10/1/22

$ 1,250,000

$ 1,355,550

5.75% 10/1/19

1,750,000

1,950,673

5,751,544

Washington - 9.1%

Chelan County Pub. Util. District #1 Rev. Series B, 4.5% 7/1/08 (FGIC Insured) (a)

1,040,000

1,064,482

Clark County School District #114, Evergreen 5.375% 12/1/14 (FSA Insured)

3,040,000

3,328,648

Clark County School District #37, Vancouver Series C, 0% 12/1/19 (FGIC Insured)

2,000,000

906,300

Energy Northwest Elec. Rev. (#1 Proj.) Series B, 6% 7/1/17 (MBIA Insured)

4,000,000

4,508,200

Grant County Pub. Util. District #2 (Priest Rapids Hydro-Elec. Proj.) Second Series B, 5.375% 1/1/16 (MBIA Insured) (e)

1,715,000

1,815,259

King County Swr. Rev. Series B:

5.125% 1/1/33 (FSA Insured)

2,800,000

2,807,728

5.5% 1/1/21 (FSA Insured)

1,615,000

1,712,191

Port of Seattle Passenger Facilities Charge Rev. Series B, 5.25% 12/1/14 (AMBAC Insured) (e)

3,000,000

3,152,040

Port of Seattle Rev. Series A, 5% 4/1/31 (FGIC Insured)

1,000,000

985,590

Seattle Wtr. Sys. Rev. Series B, 5.75% 7/1/23 (FGIC Insured)

1,000,000

1,090,090

Snohomish County Pub. Hosp. District #2 (Stevens Health Care Proj.) 4.5% 12/1/10 (FGIC Insured)

1,000,000

1,053,380

Spokane County School District #81 5.25% 12/1/18 (FSA Insured)

1,000,000

1,060,970

Spokane Pub. Facilities District Hotel & Motel Tax & Sales Use Tax Rev. 5.75% 12/1/24 (MBIA Insured)

1,000,000

1,082,110

Tacoma Elec. Sys. Rev. Series A, 5.625% 1/1/21
(FSA Insured)

1,300,000

1,408,446

Tumwater School District #33, Thurston County Series 1996 B, 0% 12/1/10 (FGIC Insured)

4,000,000

3,084,280

Univ. of Washington Univ. Revs. (Student Facilities Fee Prog.) 5.8% 6/1/30 (FSA Insured)

3,000,000

3,224,250

Washington Gen. Oblig.:

Series 2000 A, 5.625% 7/1/24

2,000,000

2,118,740

Series 2001 C, 5.25% 1/1/16

1,000,000

1,075,340

Series R 97A, 0% 7/1/19 (MBIA Insured)

1,200,000

559,536

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Washington - continued

Washington Health Care Facilities Auth. Rev. (Providence Health Systems Proj.) Series 2001 A, 5.5% 10/1/13 (MBIA Insured)

$ 3,000,000

$ 3,260,040

Washington Pub. Pwr. Supply Sys. Nuclear Proj. #2 Rev. 5.4% 7/1/12

16,000,000

17,494,064

Washington Pub. Pwr. Supply Sys. Nuclear Proj. #3 Rev. Series C, 5.1% 7/1/07

500,000

538,880

57,330,564

Wisconsin - 1.7%

Badger Tobacco Asset Securitization Corp. 6.125% 6/1/27

1,000,000

927,210

Douglas County Gen. Oblig. 5.5% 2/1/18
(FGIC Insured)

1,000,000

1,079,700

Fond Du Lac School District 5.75% 4/1/13
(Pre-Refunded to 4/1/10 @ 100) (f)

1,300,000

1,477,801

Milwaukee County Gen. Oblig. Series A:

0% 12/1/10 (Escrowed to Maturity) (f)

130,000

102,561

0% 12/1/10 (FGIC Insured)

3,370,000

2,620,411

Wisconsin Health & Edl. Facilities Auth. Rev.:

(Marshfield Clinic Proj.) Series B, 6% 2/15/25

1,500,000

1,524,045

(Wheaton Franciscan Svcs., Inc. Proj.):

Series A, 5.5% 8/15/16

1,000,000

1,046,280

5.75% 8/15/30

1,500,000

1,544,070

6.25% 8/15/22

600,000

642,744

10,964,822

TOTAL MUNICIPAL BONDS

(Cost $605,560,772)

630,468,924

Money Market Funds - 0.7%

Shares

Fidelity Municipal Cash Central Fund, 1.11% (c)(d)
(Cost $4,238,600)

4,238,600

4,238,600

TOTAL INVESTMENT PORTFOLIO - 100.8%

(Cost $609,799,372)

634,707,524

NET OTHER ASSETS - (0.8)%

(4,852,598)

NET ASSETS - 100%

$ 629,854,926

Legend

(a) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

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

(c) Information in this report regarding holdings by state and security types does not reflect the holdings of the Fidelity Municipal Cash Central Fund.

(d) 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.

(e) Private activity obligations whose interest is subject to the federal alternative minimum tax for individuals.

(f) Security collateralized by an amount sufficient to pay interest and principal.

Other Information

The distribution of municipal securities by revenue source, as a percentage of total net assets, is as follows:

General Obligations

35.0%

Electric Utilities

12.8%

Transportation

11.2%

Health Care

11.2%

Water & Sewer

10.8%

Education

6.1%

Others* (individually less than 5%)

12.9%

100.0%

*Includes cash equivalents and net other assets

Purchases and sales of securities, other than short-term securities, aggregated $52,667,660 and $63,964,685, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (cost $609,799,372) - See accompanying schedule

$ 634,707,524

Cash

62,871

Receivable for fund shares sold

1,102,075

Interest receivable

9,618,691

Prepaid expenses

2,372

Other receivables

171

Total assets

645,493,704

Liabilities

Payable for investments purchased
Regular delivery

$ 2,111,140

Delayed delivery

10,633,476

Payable for fund shares redeemed

1,647,885

Distributions payable

734,649

Accrued management fee

200,560

Distribution fees payable

213,630

Other affiliated payables

76,366

Other payables and accrued expenses

21,072

Total liabilities

15,638,778

Net Assets

$ 629,854,926

Net Assets consist of:

Paid in capital

$ 602,669,726

Undistributed net investment income

27,011

Accumulated undistributed net realized gain (loss) on investments

2,250,037

Net unrealized appreciation (depreciation) on investments

24,908,152

Net Assets

$ 629,854,926

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($95,813,463 ÷ 7,429,675 shares)

$ 12.90

Maximum offering price per share (100/95.25 of $12.90)

$ 13.54

Class T:
Net Asset Value and redemption price per share ($326,389,266 ÷ 25,260,955 shares)

$ 12.92

Maximum offering price per share (100/96.50 of $12.92)

$ 13.39

Class B:
Net Asset Value and offering price per share ($104,853,522 ÷ 8,147,486 shares) A

$ 12.87

Class C:
Net Asset Value and offering price per share ($61,172,582 ÷ 4,736,521 shares) A

$ 12.92

Institutional Class:
Net Asset Value, offering price and redemption price per share ($41,626,093 ÷ 3,238,268 shares)

$ 12.85

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 15,277,729

Expenses

Management fee

$ 1,224,025

Transfer agent fees

350,419

Distribution fees

1,310,032

Accounting fees and expenses

90,477

Non-interested trustees' compensation

2,112

Custodian fees and expenses

6,690

Registration fees

48,352

Audit

24,192

Legal

7,343

Miscellaneous

7,331

Total expenses before reductions

3,070,973

Expense reductions

(1,087)

3,069,886

Net investment income (loss)

12,207,843

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

2,629,933

Change in net unrealized appreciation (depreciation) on investment securities

(6,647,846)

Net gain (loss)

(4,017,913)

Net increase (decrease) in net assets resulting from operations

$ 8,189,930

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 12,207,843

$ 25,195,637

Net realized gain (loss)

2,629,933

9,116,247

Change in net unrealized appreciation (depreciation)

(6,647,846)

(3,367,057)

Net increase (decrease) in net assets resulting
from operations

8,189,930

30,944,827

Distributions to shareholders from net investment income

(12,183,194)

(25,330,647)

Distributions to shareholders from net realized gain

(1,087,798)

(96,841)

Total distributions

(13,270,992)

(25,427,488)

Share transactions - net increase (decrease)

(8,247,914)

22,471,782

Total increase (decrease) in net assets

(13,328,976)

27,989,121

Net Assets

Beginning of period

643,183,902

615,194,781

End of period (including undistributed net investment income of $27,011 and undistributed net investment income of $63,585, respectively)

$ 629,854,926

$ 643,183,902

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 13.00

$ 12.87

$ 12.70

$ 12.02

$ 11.69

$ 12.54

Income from Investment Operations

Net investment
income (loss)

.264E

.539E

.557E,G

.584E

.591E

.567

Net realized and unrealized gain (loss)

(.078)

.137

.168G

.679

.337

(.850)

Total from investment operations

.186

.676

.725

1.263

.928

(.283)

Distributions from net investment income

(.264)

(.544)

(.555)

(.583)

(.598)

(.567)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.286)

(.546)

(.555)

(.583)

(.598)

(.567)

Net asset value,
end of period

$ 12.90

$ 13.00

$ 12.87

$ 12.70

$ 12.02

$ 11.69

Total ReturnB,C,D

1.41%

5.33%

5.88%

10.72%

8.17%

(2.36)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.70%A

.68%

.69%

.69%

.72%

.72%

Expenses net of voluntary waivers, if any

.70%A

.68%

.69%

.69%

.72%

.72%

Expenses net of all
reductions

.70%A

.68%

.67%

.62%

.72%

.72%

Net investment income (loss)

4.02%A

4.15%

4.41%G

4.70%

5.02%

4.62%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 95,813

$ 87,406

$ 67,457

$ 46,796

$ 22,780

$ 10,722

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 13.03

$ 12.89

$ 12.72

$ 12.04

$ 11.70

$ 12.56

Income from Investment Operations

Net investment
income (loss)

.259E

.529E

.546E,G

.572E

.583E

.555

Net realized and unrealized gain (loss)

(.089)

.144

.166G

.679

.343

(.860)

Total from investment operations

.170

.673

.712

1.251

.926

(.305)

Distributions from net investment income

(.258)

(.531)

(.542)

(.571)

(.586)

(.555)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.280)

(.533)

(.542)

(.571)

(.586)

(.555)

Net asset value, end of period

$ 12.92

$ 13.03

$ 12.89

$ 12.72

$ 12.04

$ 11.70

Total ReturnB,C,D

1.28%

5.30%

5.76%

10.59%

8.14%

(2.53)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.79%A

.78%

.79%

.79%

.81%

.81%

Expenses net of voluntary waivers, if any

.79%A

.78%

.79%

.79%

.81%

.81%

Expenses net of all
reductions

.79%A

.77%

.77%

.72%

.81%

.81%

Net investment
income (loss)

3.93%A

4.06%

4.31%G

4.60%

4.93%

4.51%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 326,389

$ 340,542

$ 354,030

$ 369,295

$ 340,959

$ 329,926

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 12.98

$ 12.85

$ 12.67

$ 12.00

$ 11.67

$ 12.53

Income from Investment Operations

Net investment income (loss)

.215E

.443E

.462E,G

.489E

.504E

.476

Net realized and unrealized gain (loss)

(.088)

.136

.178G

.671

.336

(.860)

Total from investment operations

.127

.579

.640

1.160

.840

(.384)

Distributions from net investment income

(.215)

(.447)

(.460)

(.490)

(.510)

(.476)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.237)

(.449)

(.460)

(.490)

(.510)

(.476)

Net asset value,
end of period

$ 12.87

$ 12.98

$ 12.85

$ 12.67

$ 12.00

$ 11.67

Total ReturnB,C,D

.95%

4.56%

5.19%

9.83%

7.38%

(3.16)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.45%A

1.43%

1.44%

1.43%

1.46%

1.46%

Expenses net of voluntary waivers, if any

1.45%A

1.43%

1.44%

1.43%

1.46%

1.46%

Expenses net of all
reductions

1.45%A

1.42%

1.41%

1.37%

1.46%

1.46%

Net investment
income (loss)

3.27%A

3.41%

3.66%G

3.95%

4.28%

3.88%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 104,854

$ 110,853

$ 109,986

$ 91,687

$ 68,571

$ 63,464

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 13.02

$ 12.89

$ 12.71

$ 12.04

$ 11.70

$ 12.56

Income from Investment Operations

Net investment income (loss)

.209E

.430E

.451E,G

.478E

.493E

.465

Net realized and unrealized gain (loss)

(.079)

.135

.176G

.669

.345

(.860)

Total from investment operations

.130

.565

.627

1.147

.838

(.395)

Distributions from net investment income

(.208)

(.433)

(.447)

(.477)

(.498)

(.465)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.230)

(.435)

(.447)

(.477)

(.498)

(.465)

Net asset value,
end of period

$ 12.92

$ 13.02

$ 12.89

$ 12.71

$ 12.04

$ 11.70

Total ReturnB,C,D

.97%

4.44%

5.06%

9.69%

7.34%

(3.24)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.55%A

1.53%

1.53%

1.53%

1.56%

1.56%

Expenses net of voluntary waivers, if any

1.55%A

1.53%

1.53%

1.53%

1.56%

1.56%

Expenses net of all
reductions

1.55%A

1.52%

1.51%

1.47%

1.56%

1.56%

Net investment
income (loss)

3.17%A

3.31%

3.57%G

3.85%

4.18%

3.79%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 61,173

$ 59,423

$ 52,019

$ 37,324

$ 17,120

$ 13,071

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 12.96

$ 12.83

$ 12.66

$ 11.98

$ 11.65

$ 12.51

Income from Investment Operations

Net investment income (loss)

.274D

.556D

.573D,F

.598D

.604D

.584

Net realized and unrealized gain (loss)

(.088)

.139

.170F

.682

.339

(.860)

Total from investment operations

.186

.695

.743

1.280

.943

(.276)

Distributions from net investment income

(.274)

(.563)

(.573)

(.600)

(.613)

(.584)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.296)

(.565)

(.573)

(.600)

(.613)

(.584)

Net asset value, end of period

$ 12.85

$ 12.96

$ 12.83

$ 12.66

$ 11.98

$ 11.65

Total ReturnB,C

1.41%

5.50%

6.05%

10.91%

8.34%

(2.31)%

Ratios to Average Net AssetsE

Expenses before
expense reductions

.55%A

.54%

.55%

.54%

.61%

.60%

Expenses net of voluntary waivers, if any

.55%A

.54%

.55%

.54%

.61%

.60%

Expenses net of all
reductions

.55%A

.53%

.52%

.48%

.61%

.60%

Net investment
income (loss)

4.17%A

4.30%

4.55%F

4.84%

5.13%

4.75%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 41,626

$ 44,960

$ 31,703

$ 21,842

$ 8,324

$ 3,431

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Municipal 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 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. 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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 market discount and losses deferred due to futures transactions.

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

Unrealized appreciation

$ 29,503,120

Unrealized depreciation

(4,277,005)

Net unrealized appreciation (depreciation)

$ 25,226,115

Cost for federal income tax purposes

$ 609,481,409

2. Operating Policies.

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

Semiannual Report

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. Fidelity Management & Research Company (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 .25% 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 .38% of the fund's average net assets.

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%

$ 69,688

$ 652

Class T

0%

.25%

426,394

21,583

Class B

.65%

.25%

500,149

362,613

Class C

.75%

.25%

313,801

108,436

$ 1,310,032

$ 493,284

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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

Sales Load - continued

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

Retained
by FDC

Class A

$ 49,607

Class T

14,686

Class B*

110,773

Class C*

8,291

$ 183,357

* 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 and Accounting Fees. Citibank, N.A. (Citibank) is the custodian, transfer agent, and shareholder servicing agent for the fund's Class A, Class T, Class B, Class C, and Institutional Class shares. Citibank has entered into a sub-arrangement with Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, with respect to all classes of the fund to perform the transfer, dividend disbursing, and shareholder servicing agent functions. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. All fees are paid to FIIOC by Citibank, which is reimbursed by each class for such payments. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, each class paid the following transfer agent fees:

Amount

% of
Average
Net Assets

Class A

$ 50,631

.11*

Class T

180,620

.11*

Class B

61,163

.11*

Class C

33,831

.11*

Institutional Class

24,174

.11*

$ 350,419

* Annualized

Citibank also has a sub-arrangement with Fidelity Service Company, Inc. (FSC), an affiliate of FMR, under which FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month.

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

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Central Funds - continued

earned by the fund are recorded as income in the accompanying financial statements and totaled $15,387 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 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 $1,087.

7. Other Information.

At the end of the period, one unaffiliated shareholder was the owner of record of 11% of the total outstanding shares of the fund.

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,855,299

$ 3,352,432

Class T

6,643,669

14,468,124

Class B

1,809,584

3,967,761

Class C

987,057

1,950,363

Institutional Class

887,585

1,591,967

Total

$ 12,183,194

$ 25,330,647

From net realized gain

Class A

$ 149,850

$ 10,945

Class T

570,715

55,415

Class B

187,961

17,248

Class C

103,235

8,364

Institutional Class

76,037

4,869

Total

$ 1,087,798

$ 96,841

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

1,515,620

3,901,567

$ 20,066,606

$ 50,803,639

Reinvestment of distributions

96,469

162,162

1,271,182

2,110,532

Shares redeemed

(905,501)

(2,581,581)

(11,955,657)

(33,549,091)

Net increase (decrease)

706,588

1,482,148

$ 9,382,131

$ 19,365,080

Class T

Shares sold

1,509,731

5,300,881

$ 20,024,558

$ 69,054,270

Reinvestment of distributions

388,060

757,344

5,123,728

9,873,817

Shares redeemed

(2,780,452)

(7,372,291)

(36,792,934)

(95,857,703)

Net increase (decrease)

(882,661)

(1,314,066)

$ (11,644,648)

$ (16,929,616)

Class B

Shares sold

393,645

2,246,062

$ 5,194,764

$ 29,269,745

Reinvestment of distributions

87,516

172,328

1,150,820

2,238,503

Shares redeemed

(876,939)

(2,436,595)

(11,572,467)

(31,456,462)

Net increase (decrease)

(395,778)

(18,205)

$ (5,226,883)

$ 51,786

Class C

Shares sold

788,784

1,928,795

$ 10,429,904

$ 25,207,188

Reinvestment of distributions

52,856

97,383

697,543

1,268,933

Shares redeemed

(669,144)

(1,498,069)

(8,867,288)

(19,484,342)

Net increase (decrease)

172,496

528,109

$ 2,260,159

$ 6,991,779

Institutional Class

Shares sold

991,418

3,276,194

$ 13,079,792

$ 42,752,774

Reinvestment of distributions

15,702

31,935

206,116

414,731

Shares redeemed

(1,237,906)

(2,309,742)

(16,304,581)

(30,174,752)

Net increase (decrease)

(230,786)

998,387

$ (3,018,673)

$ 12,992,753

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Investments Money
Management, Inc.

Fidelity International Investment Advisors

Fidelity International Investment Advisors
(U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

Citibank, N.A.
New York, NY

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA

Custodian

Citibank, N.A.
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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

HIM-USAN-0604
1.784901.101

Fidelity® Advisor

Municipal Income Fund -

Institutional Class

Semiannual Report

April 30, 2004

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.

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 States as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Texas

15.2

15.0

Illinois

14.5

13.1

New York

9.5

9.9

Washington

9.1

7.9

California

7.9

6.8

Top Five Sectors as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

General Obligations

35.0

31.9

Electric Utilities

12.8

13.2

Transportation

11.2

11.2

Health Care

11.2

11.7

Water & Sewer

10.8

10.2

Average Years to Maturity as of April 30, 2004

6 months ago

Years

15.4

15.0

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

7.7

7.5

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Quality Diversification (% of fund's net assets)

As of April 30, 2004

As of October 31, 2003

AAA 69.0%

AAA 63.1%

AA,A 20.0%

AA,A 27.4%

BBB 9.6%

BBB 7.8%

BB and Below 0.0%

BB and Below 0.1%

Not Rated 1.5%

Not Rated 2.0%

Short-Term
Investments and
Net Other Assets(dagger) (0.1)%

Short-Term
Investments and
Net Other Assets(dagger) (0.4)%



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

(dagger) Short-Term Investments and Net Other Assets are not included in the pie chart.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Municipal Bonds - 100.1%

Principal
Amount

Value (Note 1)

Alabama - 0.2%

Oxford Gen. Oblig. 5.75% 5/1/25 (AMBAC Insured)

$ 1,000,000

$ 1,072,390

Alaska - 1.1%

Alaska Hsg. Fin. Corp. Series A, 5.4% 12/1/13

5,490,000

5,614,788

Alaska Student Ln. Corp. Student Ln. Rev. Series A, 5.45% 7/1/09 (AMBAC Insured) (e)

1,500,000

1,593,510

7,208,298

Arizona - 0.6%

Arizona Student Ln. Acquisition Auth. Student Ln. Rev. Series A1, 5.875% 5/1/18 (e)

1,300,000

1,364,584

Phoenix Indl. Dev. Auth. Single Family Mtg. Rev. 0% 12/1/14 (Escrowed to Maturity) (f)

3,750,000

2,345,063

3,709,647

Arkansas - 0.2%

Little Rock School District Series 2001 C, 5.25% 2/1/33 (FSA Insured)

1,000,000

1,020,280

California - 7.9%

California Dept. of Wtr. Resources Pwr. Supply Rev.:

Series 2002 A, 5.75% 5/1/17

800,000

867,720

Series A:

5.25% 5/1/09 (MBIA Insured)

3,600,000

3,959,460

5.5% 5/1/15 (AMBAC Insured)

1,000,000

1,089,110

5.875% 5/1/16

2,100,000

2,307,018

California Gen. Oblig.:

4.5% 2/1/09

1,000,000

1,046,030

5.25% 2/1/11

2,300,000

2,472,385

5.25% 2/1/14

2,400,000

2,533,536

5.25% 2/1/15

1,200,000

1,261,200

5.25% 2/1/16

1,000,000

1,044,850

5.25% 2/1/20

1,300,000

1,330,784

5.25% 2/1/22

2,300,000

2,318,722

5.5% 3/1/11

3,500,000

3,817,065

5.5% 4/1/30

500,000

508,520

5.5% 11/1/33

1,100,000

1,117,314

California Hsg. Fin. Agcy. Home Mtg. Rev.:

Series B, 5.2% 8/1/26 (MBIA Insured) (e)

105,000

105,187

Series R, 5.35% 8/1/07 (MBIA Insured) (e)

1,000,000

1,061,800

California Poll. Cont. Fing. Auth. Solid Waste Disp. Rev. (Waste Mgmt., Inc. Proj.) Series A, 5%, tender 5/1/13 (b)(e)

2,000,000

2,000,000

California State Univ. Rev. & Colleges Series 1999 AY, 5.875% 11/1/30 (FGIC Insured)

1,000,000

1,093,200

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

California - continued

Central Valley Fing. Auth. Cogeneration Proj. Rev. (Carson Ice Gen. Proj.) 6% 7/1/09

$ 2,460,000

$ 2,500,270

Foothill/Eastern Trans. Corridor Agcy. Toll Road Rev.:

Series A, 5% 1/1/35 (MBIA Insured)

700,000

690,424

5% 1/15/16 (MBIA Insured)

400,000

418,692

5.75% 1/15/40

600,000

609,258

Golden State Tobacco Securitization Corp.:

Series 2003 A1, 6.75% 6/1/39

1,200,000

1,128,240

Series 2003 B, 5.75% 6/1/23

1,800,000

1,844,190

Los Angeles Dept. of Wtr. & Pwr. Wtrwks. Rev. Series 2001 A, 5.125% 7/1/41

4,000,000

3,926,200

Los Angeles Unified School District Series A:

5.375% 7/1/17 (MBIA Insured)

1,800,000

1,945,656

5.375% 7/1/18 (MBIA Insured)

1,000,000

1,075,420

Sacramento Cogeneration Auth. Cogeneration Proj. Rev. (Procter & Gamble Proj.) 6.375% 7/1/10

500,000

529,195

Sacramento Pwr. Auth. Cogeneration Proj. Rev. 6.5% 7/1/08

300,000

327,438

San Joaquin Hills Trans. Corridor Agcy. Toll Road Rev. Series A, 0% 1/15/12 (MBIA Insured)

1,300,000

932,152

Univ. of California Revs. (UCLA Med. Ctr. Proj.) Series A:

5.5% 5/15/18 (AMBAC Insured) (a)

1,755,000

1,900,367

5.5% 5/15/20 (AMBAC Insured) (a)

2,000,000

2,150,580

49,911,983

Colorado - 2.2%

Arapahoe County Cherry Creek School District #5 6% 12/15/15

1,250,000

1,413,813

Colorado Springs Arpt. Rev. Series C, 0% 1/1/08 (MBIA Insured)

870,000

774,396

Colorado Wtr. Resources Pwr. Dev. Auth. Clean Wtr. Rev. Series 2001 A:

5.625% 9/1/13

1,610,000

1,800,721

5.625% 9/1/14

1,745,000

1,948,153

Douglas County School District #RE1, Douglas & Elbert Counties Series 2002 B, 5.75% 12/15/16 (FSA Insured)

2,775,000

3,105,059

E-470 Pub. Hwy. Auth. Rev. Series 2000 A, 5.75% 9/1/29 (MBIA Insured)

1,200,000

1,292,748

Larimer County School District #R1, Poudre:

5.5% 12/15/23 (MBIA Insured)

500,000

536,805

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Colorado - continued

Larimer County School District #R1, Poudre: - continued

6% 12/15/17 (FGIC Insured)

$ 1,325,000

$ 1,513,084

Mesa County Residual Rev. 0% 12/1/11 (Escrowed to Maturity) (f)

2,275,000

1,684,274

14,069,053

Connecticut - 0.8%

Connecticut Gen. Oblig.:

Series 2002 B, 5.5% 6/15/18

600,000

655,392

Series D, 5.375% 11/15/18

1,000,000

1,076,280

Eastern Connecticut Resources Recovery Auth. Solid Waste Rev. (Wheelabrator Lisbon Proj.) Series A, 5.5% 1/1/20 (e)

3,350,000

3,245,581

4,977,253

District Of Columbia - 2.0%

District of Columbia Gen. Oblig.:

Series A, 6% 6/1/07 (Escrowed to Maturity) (f)

150,000

162,905

Series B, 5.25% 6/1/26 (FSA Insured)

6,000,000

6,165,660

District of Columbia Rev.:

(George Washington Univ. Proj.) Series A, 5.75% 9/15/20 (MBIA Insured)

1,490,000

1,649,907

(Georgetown Univ. Proj.) Series A, 5.95% 4/1/14 (MBIA Insured)

2,000,000

2,237,260

(Nat'l. Academy of Sciences Proj.) Series A, 5% 1/1/19 (AMBAC Insured)

2,500,000

2,560,700

12,776,432

Florida - 1.3%

Dade County Aviation Rev. Series D, 5.75% 10/1/09 (AMBAC Insured) (e)

5,000,000

5,348,450

Florida Board of Ed. Lottery Rev. Series B, 6% 7/1/15 (FGIC Insured)

500,000

571,175

Highlands County Health Facilities Auth. Rev. (Adventist Health Sys./Sunbelt Proj.) 3.35%, tender 9/1/05 (b)

2,200,000

2,238,808

8,158,433

Georgia - 0.4%

College Park Bus. & Indl. Dev. Auth. Civic Ctr. Proj. Rev. Series 2000, 5.75% 9/1/20 (AMBAC Insured)

1,100,000

1,224,905

Columbus Wtr. & Swr. Rev. 5.25% 5/1/11 (FSA Insured)

1,085,000

1,195,507

2,420,412

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Hawaii - 0.3%

Hawaii Arpts. Sys. Rev. Series 2000 B, 8% 7/1/11 (FGIC Insured) (e)

$ 1,300,000

$ 1,608,113

Illinois - 14.5%

Chicago Board of Ed.:

Series A:

0% 12/1/14 (FGIC Insured)

1,000,000

611,940

0% 12/1/16 (FGIC Insured)

4,000,000

2,171,400

5.75% 12/1/27 (AMBAC Insured)

14,065,000

15,916,517

Chicago Gen. Oblig.:

(City Colleges Proj.):

0% 1/1/16 (FGIC Insured)

2,520,000

1,430,201

0% 1/1/24 (FGIC Insured)

6,110,000

2,087,542

0% 1/1/28 (FGIC Insured)

5,000,000

1,341,350

(Neighborhoods Alive 21 Prog.):

Series 2000 A, 6% 1/1/28 (FGIC Insured)

1,400,000

1,547,658

5.5% 1/1/17 (FGIC Insured)

2,265,000

2,449,212

Series A:

5% 1/1/41 (MBIA Insured)

1,000,000

974,070

5% 1/1/42 (AMBAC Insured)

1,700,000

1,655,545

5.5% 1/1/38 (MBIA Insured)

1,000,000

1,025,680

Chicago Midway Arpt. Rev.:

Series A, 5.5% 1/1/29 (MBIA Insured)

1,500,000

1,551,525

Series B, 6% 1/1/09 (MBIA Insured) (e)

300,000

324,285

Chicago O'Hare Int'l. Arpt. Rev.:

Series A:

5.5% 1/1/16 (AMBAC Insured) (e)

1,000,000

1,049,680

6.25% 1/1/09 (AMBAC Insured) (e)

3,700,000

4,061,934

6.375% 1/1/15 (MBIA Insured)

1,400,000

1,470,336

5.5% 1/1/09 (AMBAC Insured) (e)

1,250,000

1,354,925

Chicago Transit Auth. Cap. Grant Receipts Rev. (Douglas Branch Proj.) Series 2003 B, 4.25% 6/1/08 (AMBAC Insured)

1,400,000

1,428,280

Coles & Cumberland Counties Cmnty. Unit School District #2 5.8% 2/1/17 (FGIC Insured)

1,000,000

1,107,200

DuPage County Cmnty. High School District #108, Lake Park 5.6% 1/1/17 (FSA Insured)

3,190,000

3,521,728

Evanston Gen. Oblig. Series C, 5.25% 1/1/20

1,500,000

1,585,140

Illinois Edl. Facilities Auth. Revs. (DePaul Univ. Proj.):

5.5% 10/1/18 (Pre-Refunded to 10/1/10 @ 101) (f)

2,195,000

2,497,669

5.5% 10/1/19 (Pre-Refunded to 10/1/10 @ 101) (f)

1,000,000

1,137,890

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Illinois - continued

Illinois Gen. Oblig.:

First Series:

5.5% 8/1/19 (MBIA Insured)

$ 2,500,000

$ 2,712,000

5.75% 12/1/18 (MBIA Insured)

1,000,000

1,108,730

5.5% 4/1/17 (MBIA Insured)

1,000,000

1,081,290

5.6% 4/1/21 (MBIA Insured)

1,000,000

1,073,420

Illinois Health Facilities Auth. Rev.:

(Condell Med. Ctr. Proj.) 6.5% 5/15/30

3,000,000

3,131,580

(Dectaur Memorial Hosp. Proj.) Series 2001, 5.75% 10/1/24

2,100,000

2,124,927

(Lake Forest Hosp. Proj.) 6% 7/1/33

1,000,000

1,023,600

(Riverside Health Sys. Proj.) 6.8% 11/15/20

1,500,000

1,602,270

Illinois Sales Tax Rev.:

First Series 2001, 5.5% 6/15/13

3,250,000

3,563,918

6% 6/15/20

600,000

673,386

Kane & DuPage Counties Cmnty. Unit School District #303, Saint Charles Series A, 5.5% 1/1/17 (FSA Insured)

2,000,000

2,174,280

Kane County School District #129, Aurora West Side Series A:

5.75% 2/1/16 (FGIC Insured)

1,000,000

1,100,190

5.75% 2/1/18 (FGIC Insured)

2,000,000

2,194,820

Kane, McHenry, Cook & DeKalb Counties Cmnty. Unit School District #300, Carpentersville 5.5% 12/1/16 (MBIA Insured)

1,000,000

1,089,740

Lake County Cmnty. Consolidated School District #50, Woodland Series 2000 A, 6% 12/1/20 (FGIC Insured)

1,075,000

1,200,711

Lake County Warren Township High School District #121, Gurnee Series C, 5.5% 3/1/23 (AMBAC Insured) (a)

1,795,000

1,919,645

McHenry County Conservation District Series A, 5.625% 2/1/21 (FGIC Insured)

1,000,000

1,063,450

Metropolitan Pier & Exposition Auth. Dedicated State Tax Rev.:

(McCormick Place Expansion Proj.):

Series 2002 A:

0% 12/15/32 (MBIA Insured)

2,000,000

402,540

5.75% 6/15/41 (MBIA Insured)

1,200,000

1,272,672

Series A:

0% 6/15/16 (FGIC Insured)

2,370,000

1,315,682

0% 12/15/24 (MBIA Insured)

3,000,000

972,840

0% 6/15/31 (MBIA Insured)

1,800,000

395,172

0% 6/15/40 (MBIA Insured)

7,400,000

952,898

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Illinois - continued

Metropolitan Pier & Exposition Auth. Dedicated State Tax Rev.: - continued

Series 2002 A:

0% 6/15/09 (Escrowed to Maturity) (f)

$ 975,000

$ 823,563

0% 6/15/09 (FGIC Insured)

25,000

20,791

Series A, 0% 6/15/09 (Escrowed to Maturity) (f)

65,000

54,904

Ogle Lee & DeKalb Counties Township High School District #212 6% 12/1/16 (MBIA Insured)

1,000,000

1,146,560

Univ. of Illinois Auxiliary Facilities Sys. Rev. 0% 4/1/15 (MBIA Insured)

3,700,000

2,201,093

Will County Forest Preservation District Series B, 0% 12/1/14 (FGIC Insured)

1,000,000

608,780

91,307,159

Indiana - 0.9%

Indiana Bond Bank Rev. Series B, 5% 2/1/10 (MBIA Insured)

1,000,000

1,085,280

Indiana Health Facility Fing. Auth. Rev. (Sisters of Saint Francis Health Svc. Proj.) 5.5% 11/1/31

1,500,000

1,515,510

New Albany Floyd County Independent School Bldg. Corp. 5.75% 7/15/17 (FGIC Insured)

1,000,000

1,108,130

Petersburg Poll. Cont. Rev. 5.95% 12/1/29 (e)

2,000,000

2,044,220

5,753,140

Iowa - 0.8%

Iowa Fin. Auth. Hosp. Facilities Rev. 5.875% 2/15/30 (AMBAC Insured)

1,870,000

2,005,594

Tobacco Settlement Auth. Tobacco Settlement Rev. 5.3% 6/1/25

4,000,000

3,289,320

5,294,914

Kansas - 1.7%

Burlington Envir. Impt. Rev. (Kansas City Pwr. & Lt. Co. Proj.) Series A, 4.75%, tender 10/1/07 (b)

1,000,000

1,058,220

Kansas Dev. Fin. Auth. Health Facilities Rev. (Sisters of Charity of Leavenworth Health Services Corp. Proj.) Series J, 6.25% 12/1/28

1,500,000

1,634,895

Kansas Dev. Fin. Auth. Pub. Wtr. Supply Revolving Ln. Fund Rev.:

(Sisters of Charity Leavenworth Health Svc. Co. Proj.):

5% 12/1/13 (MBIA Insured)

2,390,000

2,519,347

5% 12/1/14 (MBIA Insured)

500,000

528,030

5.25% 12/1/09 (MBIA Insured)

1,420,000

1,542,688

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Kansas - continued

Kansas Dev. Fin. Auth. Pub. Wtr. Supply Revolving Ln. Fund Rev.: - continued

(Sisters of Charity Leavenworth Health Svc. Co. Proj.):

5.25% 12/1/11 (MBIA Insured)

$ 1,750,000

$ 1,887,253

Series 2000 2, 5.75% 4/1/16 (AMBAC Insured)

1,550,000

1,737,132

10,907,565

Kentucky - 1.2%

Louisville & Jefferson County Metro. Swr. District Swr. & Drain Sys. Rev. Series A:

5.25% 5/15/37 (FGIC Insured)

1,300,000

1,339,338

5.75% 5/15/33 (FGIC Insured)

6,050,000

6,477,614

7,816,952

Maine - 1.4%

Maine Tpk. Auth. Tpk. Rev. Series 2000, 5.75% 7/1/28 (FGIC Insured)

8,100,000

8,644,968

Maryland - 0.5%

Maryland Health & Higher Edl. Facilities Auth. Rev. (Good Samaritan Hosp. Proj.) 5.75% 7/1/13 (Escrowed to Maturity) (f)

2,680,000

3,017,760

Massachusetts - 3.0%

Massachusetts Bay Trans. Auth.:

Series 1997 D, 5% 3/1/27

2,000,000

2,000,760

Series A:

5.375% 3/1/19

1,000,000

1,063,750

5.75% 3/1/26

2,000,000

2,145,060

Massachusetts Gen. Oblig. Series D, 5.25% 10/1/22 (Pre-Refunded to 10/1/13 @ 100) (f)

1,200,000

1,308,708

Massachusetts Health & Edl. Facilities Auth. Rev. (New England Med. Ctr. Hosp. Proj.) Series G, 5.375% 7/1/24 (MBIA Insured)

500,000

511,590

Massachusetts Indl. Fin. Agcy. Rev. (Massachusetts Biomedical Research Corp. Proj.) Series A2:

0% 8/1/08

800,000

697,984

0% 8/1/10

4,500,000

3,507,030

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Massachusetts - continued

Massachusetts Wtr. Poll. Abatement Trust Wtr. Poll. Abatement Rev. (MWRA Ln. Prog.) Series A, 5.25% 8/1/13

$ 10,000

$ 10,716

Massachusetts Wtr. Resources Auth. Series A, 5.75% 8/1/39 (FGIC Insured)

7,000,000

7,495,390

18,740,988

Michigan - 1.9%

Detroit Gen. Oblig. Series A, 5% 4/1/08 (FSA Insured) (a)

3,400,000

3,584,552

Detroit Wtr. Supply Sys. Rev. Series 2001 A, 5.25% 7/1/33 (FGIC Insured)

1,065,000

1,082,008

Ecorse Pub. School District 5.5% 5/1/27 (FGIC Insured)

1,000,000

1,049,370

Michigan Hosp. Fin. Auth. Hosp. Rev.:

(Ascension Health Cr. Group Proj.) Series A, 6.125% 11/15/26 (Pre-Refunded to 11/15/09 @ 101) (f)

300,000

348,636

(McLaren Health Care Corp. Proj.) Series A, 5% 6/1/19

2,000,000

1,997,000

Royal Oak Hosp. Fin. Auth. Hosp. Rev. (William Beaumont Hosp. Proj.) 6.25% 1/1/09

2,310,000

2,583,250

Zeeland Pub. Schools 5.375% 5/1/25 (FGIC Insured)

1,500,000

1,546,710

12,191,526

Minnesota - 1.3%

Minneapolis & Saint Paul Hsg. & Redev. Auth. Health Care Sys. Rev. (Healthspan Corp. Proj.) Series A, 4.75% 11/15/18 (AMBAC Insured)

1,800,000

1,817,136

Minneapolis Health Care Sys. Rev. (Allina Health Sys. Proj.) Series 2002 A, 6% 11/15/23

1,000,000

1,049,910

Minnesota Hsg. Fin. Agcy. (Single Family Mtg. Prog.) Series D, 6.4% 7/1/15 (e)

665,000

682,357

Rochester Health Care Facilities Rev. (Mayo Foundation Proj.) Series A, 5.5% 11/15/27

640,000

660,384

Saint Cloud Health Care Rev. (Saint Cloud Hosp. Group Oblig. Proj.) Series A, 5.875% 5/1/30 (FSA Insured)

2,000,000

2,162,340

Saint Paul Port Auth. Lease Rev. Series 2003 11, 5.25% 12/1/18

1,000,000

1,074,250

Waconia Independent School District #110 Series A, 5% 2/1/12 (FSA Insured)

500,000

537,185

7,983,562

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Missouri - 0.4%

Missouri Envir. Impt. & Energy Resources Auth. Wtr. Poll. Cont. & Drinking Wtr. Rev. (State Revolving Fund Prog.) Series 2003 A, 5.125% 1/1/21

$ 1,010,000

$ 1,055,733

Saint Louis Muni. Fin. Corp. Leasehold Rev. (Civil Courts Bldg. Proj.) Series A, 5% 8/1/08 (FSA Insured)

1,130,000

1,224,434

2,280,167

Montana - 0.2%

Forsyth Poll. Cont. Rev. (Portland Gen. Elec. Co. Projs.) Series A, 5.2%, tender 5/1/09 (b)

1,100,000

1,151,359

Nevada - 0.8%

Clark County Arpt. Rev. Series C, 5.375% 7/1/22 (AMBAC Insured) (e)

1,000,000

1,024,480

Clark County Gen. Oblig.:

(Park & Reg'l. Justice Ctr. Proj.) 5.75% 11/1/24
(FGIC Insured)

1,000,000

1,073,010

Series 2000, 5.5% 7/1/30 (MBIA Insured)

500,000

517,805

Las Vegas Valley Wtr. District Series B:

5.25% 6/1/16 (MBIA Insured)

1,000,000

1,075,140

5.25% 6/1/17 (MBIA Insured)

1,000,000

1,067,710

4,758,145

New Jersey - 1.0%

New Jersey Tpk. Auth. Tpk. Rev. Series A, 5.625% 1/1/15 (MBIA Insured)

185,000

200,423

New Jersey Trans. Trust Fund Auth. Series C, 5.5% 6/15/19

700,000

761,313

North Hudson Swr. Auth. Swr. Rev. Series A, 5.25% 8/1/17 (FGIC Insured)

2,000,000

2,142,340

Tobacco Settlement Fing. Corp.:

4.375% 6/1/19

600,000

587,778

6.125% 6/1/24

1,100,000

1,047,937

6.125% 6/1/42

1,600,000

1,375,168

6,114,959

New Mexico - 1.3%

Albuquerque Arpt. Rev.:

6.7% 7/1/18 (AMBAC Insured) (e)

3,970,000

4,458,072

6.75% 7/1/09 (AMBAC Insured) (e)

450,000

518,999

6.75% 7/1/11 (AMBAC Insured) (e)

1,805,000

2,105,190

New Mexico Edl. Assistance Foundation Student Ln. Rev. Series IV A2, 6.65% 3/1/07

1,000,000

1,047,620

8,129,881

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

New York - 9.5%

Erie County Indl. Dev. Agcy. School Facility Rev. (Buffalo City School District Proj.):

5.75% 5/1/16 (FSA Insured)

$ 1,500,000

$ 1,662,405

5.75% 5/1/21 (FSA Insured)

1,200,000

1,308,312

Metro. Trans. Auth. Transit Facilities Rev.:

Series B2, 5% 7/1/17 (Escrowed to Maturity) (f)

500,000

528,845

Series C, 4.75% 7/1/16 (Pre-Refunded to 1/1/12 @ 100) (f)

150,000

161,135

Metropolitan Trans. Auth. Rev. Series 2002 A, 5.75% 11/15/32

4,300,000

4,565,310

Metropolitan Trans. Auth. Svc. Contract Rev.:

Series 7, 5.625% 7/1/16 (Escrowed to Maturity) (f)

1,000,000

1,015,240

Series O, 5.75% 7/1/13 (Escrowed to Maturity) (f)

700,000

792,141

Nassau County Gen. Oblig. Series Z:

5% 9/1/11 (FGIC Insured)

300,000

324,066

5% 9/1/13 (FGIC Insured)

850,000

906,457

New York City Gen. Oblig.:

Series A, 5.25% 11/1/14 (MBIA Insured)

600,000

650,208

Series C, 5.75% 3/15/27 (FSA Insured)

500,000

532,500

Series E, 6% 8/1/11

500,000

543,910

New York City Indl. Dev. Agcy. Indl. Dev. Rev. (Japan Airlines Co. Ltd. Proj.) Series 1991, 6% 11/1/15
(FSA Insured) (e)

800,000

829,728

New York City Indl. Dev. Agcy. Spl. Facilities Rev. (Term. One Group Assoc. Proj.) 5.9% 1/1/06 (e)

8,680,000

8,836,240

New York City Muni. Wtr. Fin. Auth. Wtr. & Swr. Sys. Rev.:

Series A:

5.125% 6/15/34 (MBIA Insured)

2,000,000

2,020,540

6% 6/15/28

1,500,000

1,641,000

Series B:

5.75% 6/15/26

5,000,000

5,353,700

5.75% 6/15/29

5,000,000

5,349,100

5.75% 6/15/29 (MBIA Insured)

1,500,000

1,605,645

New York City Trust Cultural Resources Rev. (Museum of Modern Art Proj.) Series 2001 D, 5.125% 7/1/31 (AMBAC Insured)

1,000,000

1,014,330

New York State Dorm. Auth. Revs.:

(City Univ. Sys. Consolidation Proj.) Series C, 7.5% 7/1/10

500,000

578,320

(The Jamaica Hosp. Proj.) Series F, 5.2% 2/15/14 (MBIA Insured)

6,150,000

6,572,690

Series 2002 A, 5.75% 10/1/17 (MBIA Insured)

1,000,000

1,112,020

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

New York - continued

New York State Envir. Facilities Corp. Clean Wtr. & Drinking Wtr. Rev. Series F:

4.875% 6/15/18

$ 870,000

$ 895,508

4.875% 6/15/20

795,000

812,299

5% 6/15/15

305,000

322,702

New York State Thruway Auth. State Personal Income Tax Rev. Series A, 5.5% 3/15/17

500,000

543,530

New York State Thruway Auth. Svc. Contract Rev.:

5.5% 4/1/16

305,000

336,632

5.5% 4/1/16 (Pre-Refunded to 4/1/12 @ 100) (f)

695,000

778,525

New York State Urban Dev. Corp. Rev. Series C1, 5.5% 3/15/18 (FGIC Insured)

1,000,000

1,087,880

New York Transitional Fin. Auth. Rev. Series A, 5.75% 2/15/16

400,000

445,016

Tobacco Settlement Fing. Corp. Series A1:

5.25% 6/1/21 (AMBAC Insured)

1,000,000

1,042,710

5.25% 6/1/22 (AMBAC Insured)

950,000

984,172

5.5% 6/1/16

4,700,000

4,984,820

60,137,636

New York & New Jersey - 0.1%

Port Auth. of New York & New Jersey 124th Series, 5% 8/1/13 (FGIC Insured) (e)

500,000

521,495

North Carolina - 3.5%

North Carolina Cap. Facilities Fin. Agcy. Rev. (Duke Univ. Proj.) Series A:

5.125% 10/1/41

1,050,000

1,052,804

5.125% 7/1/42

3,420,000

3,430,636

North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev.:

Series A, 5.5% 1/1/11

1,500,000

1,607,535

Series B:

5.875% 1/1/21 (MBIA Insured)

3,050,000

3,356,556

6% 1/1/06

5,820,000

6,141,322

7.25% 1/1/07

1,000,000

1,105,490

Series C:

5.5% 1/1/07

700,000

743,764

5.5% 1/1/07 (MBIA Insured)

2,000,000

2,166,040

Series D, 6.7% 1/1/19

1,115,000

1,222,397

North Carolina Infrastructure Fin. Corp. Ctfs. of Prtn. (North Carolina Correctional Facilities Proj.) Series A, 5% 2/1/18

1,000,000

1,042,570

21,869,114

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

North Dakota - 0.2%

North Dakota Bldg. Auth. Lease Rev. Series A, 5.25% 6/1/09 (FGIC Insured)

$ 1,400,000

$ 1,538,488

Ohio - 1.5%

Cincinnati Student Ln. Fdg. Corp. Student Ln. Rev. Series B, 8.875% 8/1/08 (e)

1,005,000

1,010,126

Delaware County Gen. Oblig. 6% 12/1/25

1,000,000

1,122,860

Fairborn City School District (School Impt. Proj.) 5.75% 12/1/26 (FSA Insured)

1,000,000

1,073,070

Franklin County Hosp. Rev. 5.5% 5/1/21 (AMBAC Insured)

1,455,000

1,552,922

Gateway Econ. Dev. Corp. Greater Cleveland Stadium Rev. Series 1990, 6.5% 9/15/14 (e)

3,000,000

3,071,880

Ohio Wtr. Dev. Auth. Rev. (Fresh Wtr. Impt. Proj.) 5.375% 12/1/17

1,000,000

1,089,180

Plain Local School District 6% 12/1/25 (FGIC Insured)

410,000

453,960

9,373,998

Oklahoma - 1.3%

Oklahoma Industries Auth. Rev.:

(Health Sys. Oblig. Group Proj.) Series A, 5.75% 8/15/29 (MBIA Insured)

1,500,000

1,584,765

6% 8/15/19 (MBIA Insured)

3,000,000

3,329,010

Tulsa Indl. Auth. Rev. (Univ. of Tulsa Proj.) Series 2000 A, 5.75% 10/1/25 (MBIA Insured)

3,000,000

3,213,150

8,126,925

Oregon - 0.6%

Portland Swr. Sys. Rev. Series 2000 A, 5.75% 8/1/18 (FGIC Insured)

500,000

557,750

Tri-County Metro. Trans. District Rev. Series A:

5.75% 8/1/18

1,000,000

1,115,500

5.75% 8/1/19

2,080,000

2,306,762

3,980,012

Pennsylvania - 3.8%

Allegheny County Arpt. Rev. (Pittsburgh Int'l. Arpt. Proj.) Series A1, 5.75% 1/1/07 (MBIA Insured) (e)

1,000,000

1,073,620

Canon McMillan School District:

Series 2001 B, 5.75% 12/1/33 (FGIC Insured)

1,000,000

1,075,630

Series 2002 B, 5.75% 12/1/35 (FGIC Insured)

1,595,000

1,713,493

Delaware County Auth. College Rev. (Haverford College Proj.) 5.75% 11/15/29

3,500,000

3,742,235

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Pennsylvania - continued

Delaware County Auth. Rev. (First Mtg. Riddle Village Proj.) 8.25% 6/1/22 (Escrowed to Maturity) (f)

$ 2,120,000

$ 2,193,076

Montgomery County Higher Ed. & Health Auth. Hosp. Rev. (Abington Memorial Hosp. Proj.) Series A, 6% 6/1/16 (AMBAC Insured)

1,860,000

2,128,379

Pennsylvania Econ. Dev. Fing. Auth. Exempt Facilities Rev. (Amtrak Proj.) Series 2001 A, 6.25% 11/1/31 (e)

2,000,000

2,041,620

Pennsylvania Gen. Oblig. Second Series, 5.5% 5/1/17 (FSA Insured)

600,000

659,412

Pennsylvania Higher Edl. Facilities Auth. Rev. (Lafayette College Proj.) 6% 5/1/30

3,065,000

3,381,308

Philadelphia School District Series 2002 A, 5.5% 2/1/31 (FSA Insured)

1,300,000

1,360,801

Tredyffrin-Easttown School District 5.5% 2/15/15

2,010,000

2,198,960

Westmoreland County Muni. Auth. Muni. Svc. Rev. Series A, 0% 8/15/21 (FGIC Insured)

5,000,000

2,077,700

23,646,234

Puerto Rico - 0.2%

Puerto Rico Commonwealth Infrastructure Fing. Auth. Series 2000 A, 5.5% 10/1/32 (Escrowed to Maturity) (f)

1,000,000

1,069,870

Rhode Island - 1.1%

North Kingstown Gen. Oblig. 5.8% 10/1/21
(FGIC Insured)

1,320,000

1,463,128

Providence Redev. Agcy. Rev. Series A, 5.75% 4/1/29 (AMBAC Insured)

800,000

857,760

Rhode Island Port Auth. & Econ. Dev. Corp. Arpt. Rev. Series A, 7% 7/1/14 (FSA Insured) (e)

4,000,000

4,772,760

7,093,648

South Carolina - 0.4%

South Carolina Ed. Assistance Auth. Rev. (Guaranteed Student Ln. Prog.) Series B, 5.7% 9/1/05 (e)

1,000,000

1,039,460

South Carolina Jobs Econ. Dev. Auth. Hosp. Facilities Rev. (Palmetto Health Alliance Proj.) Series A, 7.375% 12/15/21 (Pre-Refunded to 12/15/10 @ 102) (f)

1,000,000

1,233,410

Tobacco Settlement Rev. Mgmt. Auth. Series 2001 B, 6.375% 5/15/28

545,000

496,152

2,769,022

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Tennessee - 0.7%

Metro. Govt. Nashville & Davidson County Health & Edl. Facilities Board Rev. (Ascension Health Cr. Group Proj.) Series A:

5.875% 11/15/28 (Pre-Refunded to 11/15/09 @ 101) (f)

$ 400,000

$ 462,008

6% 11/15/30 (Pre-Refunded to 11/15/09 @ 101) (f)

600,000

696,810

Shelby County Health Edl. & Hsg. Facility Board Hosp. Rev. (Methodist Health Care Proj.) 6.5% 9/1/26

3,000,000

3,231,960

4,390,778

Texas - 15.2%

Aldine Independent School District 5.5% 2/15/13

3,150,000

3,441,533

Alvin Independent School District 5.75% 8/15/21

1,000,000

1,103,160

Austin Util. Sys. Rev. Series A, 0% 11/15/10 (MBIA Insured)

1,100,000

850,201

Canyon Independent School District Series A, 5.5% 2/15/18

1,575,000

1,713,506

Comal Independent School District 5.75% 8/1/28

2,000,000

2,141,780

Conroe Independent School District Lot B, 0% 2/15/09

750,000

633,893

Corpus Christi Util. Sys. Rev. 5.25% 7/15/18 (FSA Insured)

1,500,000

1,583,895

Cypress-Fairbanks Independent School District:

Series A:

0% 2/15/14

3,200,000

2,023,904

0% 2/15/16

1,400,000

792,596

5.75% 2/15/21

1,000,000

1,088,840

Denton County Lewisville Independent School District Series 2004, 5% 8/15/20

1,000,000

1,031,300

El Paso Gen. Oblig. 5.75% 8/15/25 (FSA Insured)

4,500,000

4,785,885

El Paso Wtr. & Swr. Rev. 5% 3/1/10 (AMBAC Insured)

1,205,000

1,307,148

Garland Independent School District 5.5% 2/15/19

2,500,000

2,676,475

Grapevine Gen. Oblig. 5.75% 8/15/18 (FGIC Insured)

1,250,000

1,387,788

Guadalupe-Blanco River Auth. Contract Rev. (Western Canyon Reg'l. Wtr. Supply Proj.) 5.25% 4/15/20 (MBIA Insured)

1,000,000

1,048,190

Harris County Gen. Oblig. 0% 10/1/17 (MBIA Insured)

2,500,000

1,294,825

Harris County Health Facilities Dev. Corp. Rev. (Saint Luke's Episcopal Hosp. Proj.):

Series 2001 A, 5.5% 2/15/12

1,000,000

1,090,020

5.75% 2/15/21

1,310,000

1,376,181

Houston Arpt. Sys. Rev.:

Series A, 5.625% 7/1/19 (FSA Insured) (e)

1,000,000

1,057,280

Series B, 5.5% 7/1/30 (FSA Insured)

1,400,000

1,456,658

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Texas - continued

Houston Independent School District 0% 8/15/13

$ 1,300,000

$ 856,310

Hurst Euless Bedford Independent School District 0% 8/15/11

1,000,000

739,830

Lewisville Independent School District 0% 8/15/19

2,340,000

1,084,403

Los Fresnos Independent School District:

5.75% 8/15/13

1,040,000

1,171,997

5.75% 8/15/14

1,100,000

1,235,652

Lower Colorado River Auth. Transmission Contract Rev. (LCRA Transmission Services Corp. Proj.) Series C, 5.25% 5/15/19 (AMBAC Insured)

1,000,000

1,050,090

Mansfield Independent School District 5.5% 2/15/17

2,000,000

2,175,280

Montgomery County Muni. Util. District #46 5% 3/1/21 (FSA Insured)

1,040,000

1,062,755

Mount Pleasant Independent School District 5.5% 2/15/22

2,590,000

2,744,157

Northside Independent School District 5.5% 2/15/15

2,000,000

2,173,940

Northwest Texas Independent School District 5.5% 8/15/21

3,185,000

3,397,726

Pearland Independent School District 5.875% 2/15/17

1,205,000

1,343,961

Sabine River Auth. Poll. Cont. Rev. (Texas Utils. Elec. Co. Proj.) Series B, 5.75%, tender 11/1/11 (b)(e)

4,000,000

4,289,120

San Antonio Elec. & Gas Systems Rev. 5.5% 2/1/20 (Pre-Refunded to 2/1/07 @ 101) (f)

75,000

82,226

San Benito Consolidated Independent School District 6% 2/15/25

900,000

990,162

Southwest Higher Ed. Auth. Rev. (Southern Methodist Univ. Proj.) 5.5% 10/1/14 (AMBAC Insured)

2,245,000

2,483,868

Spring Branch Independent School District 5.375% 2/1/18

1,000,000

1,077,980

Tarrant County Health Facilities Dev. Corp. Hosp. Rev. 5.375% 11/15/20

1,000,000

994,770

Texas Muni. Pwr. Agcy. Rev.:

0% 9/1/11 (AMBAC Insured)

4,705,000

3,474,501

0% 9/1/11 (Escrowed to Maturity) (f)

330,000

249,424

0% 9/1/15 (MBIA Insured)

1,000,000

581,290

Texas Pub. Fin. Auth. Bldg. Rev. (Texas Technical College Proj.) 6.25% 8/1/09 (MBIA Insured)

1,000,000

1,108,110

Texas Tpk. Auth. Central Tpk. Sys. Rev.:

Series A:

0% 8/15/25 (AMBAC Insured)

2,910,000

893,021

0% 8/15/29 (AMBAC Insured)

8,000,000

1,931,920

5.5% 8/15/39 (AMBAC Insured)

4,050,000

4,197,177

5.75% 8/15/38 (AMBAC Insured)

3,775,000

4,015,241

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Texas - continued

Texas Tpk. Auth. Dallas North Tollway Rev. 5.25% 1/1/23 (FGIC Insured)

$ 2,600,000

$ 2,703,532

Texas Wtr. Dev. Board Rev. Series A, 5.5% 7/15/21

1,000,000

1,055,920

Travis County Health Facilities Dev. Corp. Rev. (Ascension Health Cr. Prog.) Series A, 6.25% 11/15/19 (Pre-Refunded to 11/15/09 @ 101) (f)

4,000,000

4,696,000

Trinity River Auth. Reg'l. Wastewtr. Sys. Rev. 5.25% 8/1/11 (MBIA Insured)

2,000,000

2,202,020

Tyler Health Facilities Dev. Corp. Hosp. Rev. (Mother Frances Hosp. Reg'l. Health Care Ctr. Proj.) 6% 7/1/27

1,000,000

1,014,810

Williamson County Gen. Oblig. 6% 8/15/19 (FGIC Insured)

1,000,000

1,158,670

Yselta Independent School District 0% 8/15/09

4,065,000

3,367,446

95,488,367

Utah - 2.2%

Intermountain Pwr. Agcy. Pwr. Supply Rev.:

Series A:

6.5% 7/1/09 (AMBAC Insured)

365,000

421,352

6.5% 7/1/09 (Escrowed to Maturity) (f)

635,000

742,715

Series B:

5.75% 7/1/16 (MBIA Insured)

2,500,000

2,767,725

6% 7/1/16 (MBIA Insured)

7,000,000

7,680,890

Salt Lake County Hosp. Rev. (IHC Health Svcs., Inc. Proj.) 5.5% 5/15/10 (AMBAC Insured)

2,000,000

2,217,740

13,830,422

Vermont - 0.2%

Vermont Edl. & Health Bldgs. Fing. Agcy. Rev. (Fletcher Allen Health Care, Inc. Proj.):

Series 2000 A, 6.125% 12/1/27 (AMBAC Insured)

1,000,000

1,115,270

Series A, 5.75% 12/1/18 (AMBAC Insured)

400,000

445,376

1,560,646

Virginia - 0.9%

Loudoun County Indl. Dev. Auth. Residential Care Facilities Rev. (Falcons Landing Proj.) Series A, 9.25% 11/1/04 (Escrowed to Maturity) (f)

265,000

275,568

Virginia Commonwealth Trans. Board Trans. Rev.
(U.S. Route 58 Corridor Dev. Prog.) Series B, 5.75% 5/15/21

1,965,000

2,169,753

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Virginia - continued

Virginia Resources Auth. Clean Wtr. State Revolving Fund Rev.:

5.625% 10/1/22

$ 1,250,000

$ 1,355,550

5.75% 10/1/19

1,750,000

1,950,673

5,751,544

Washington - 9.1%

Chelan County Pub. Util. District #1 Rev. Series B, 4.5% 7/1/08 (FGIC Insured) (a)

1,040,000

1,064,482

Clark County School District #114, Evergreen 5.375% 12/1/14 (FSA Insured)

3,040,000

3,328,648

Clark County School District #37, Vancouver Series C, 0% 12/1/19 (FGIC Insured)

2,000,000

906,300

Energy Northwest Elec. Rev. (#1 Proj.) Series B, 6% 7/1/17 (MBIA Insured)

4,000,000

4,508,200

Grant County Pub. Util. District #2 (Priest Rapids Hydro-Elec. Proj.) Second Series B, 5.375% 1/1/16 (MBIA Insured) (e)

1,715,000

1,815,259

King County Swr. Rev. Series B:

5.125% 1/1/33 (FSA Insured)

2,800,000

2,807,728

5.5% 1/1/21 (FSA Insured)

1,615,000

1,712,191

Port of Seattle Passenger Facilities Charge Rev. Series B, 5.25% 12/1/14 (AMBAC Insured) (e)

3,000,000

3,152,040

Port of Seattle Rev. Series A, 5% 4/1/31 (FGIC Insured)

1,000,000

985,590

Seattle Wtr. Sys. Rev. Series B, 5.75% 7/1/23 (FGIC Insured)

1,000,000

1,090,090

Snohomish County Pub. Hosp. District #2 (Stevens Health Care Proj.) 4.5% 12/1/10 (FGIC Insured)

1,000,000

1,053,380

Spokane County School District #81 5.25% 12/1/18 (FSA Insured)

1,000,000

1,060,970

Spokane Pub. Facilities District Hotel & Motel Tax & Sales Use Tax Rev. 5.75% 12/1/24 (MBIA Insured)

1,000,000

1,082,110

Tacoma Elec. Sys. Rev. Series A, 5.625% 1/1/21
(FSA Insured)

1,300,000

1,408,446

Tumwater School District #33, Thurston County Series 1996 B, 0% 12/1/10 (FGIC Insured)

4,000,000

3,084,280

Univ. of Washington Univ. Revs. (Student Facilities Fee Prog.) 5.8% 6/1/30 (FSA Insured)

3,000,000

3,224,250

Washington Gen. Oblig.:

Series 2000 A, 5.625% 7/1/24

2,000,000

2,118,740

Series 2001 C, 5.25% 1/1/16

1,000,000

1,075,340

Series R 97A, 0% 7/1/19 (MBIA Insured)

1,200,000

559,536

Municipal Bonds - continued

Principal
Amount

Value (Note 1)

Washington - continued

Washington Health Care Facilities Auth. Rev. (Providence Health Systems Proj.) Series 2001 A, 5.5% 10/1/13 (MBIA Insured)

$ 3,000,000

$ 3,260,040

Washington Pub. Pwr. Supply Sys. Nuclear Proj. #2 Rev. 5.4% 7/1/12

16,000,000

17,494,064

Washington Pub. Pwr. Supply Sys. Nuclear Proj. #3 Rev. Series C, 5.1% 7/1/07

500,000

538,880

57,330,564

Wisconsin - 1.7%

Badger Tobacco Asset Securitization Corp. 6.125% 6/1/27

1,000,000

927,210

Douglas County Gen. Oblig. 5.5% 2/1/18
(FGIC Insured)

1,000,000

1,079,700

Fond Du Lac School District 5.75% 4/1/13
(Pre-Refunded to 4/1/10 @ 100) (f)

1,300,000

1,477,801

Milwaukee County Gen. Oblig. Series A:

0% 12/1/10 (Escrowed to Maturity) (f)

130,000

102,561

0% 12/1/10 (FGIC Insured)

3,370,000

2,620,411

Wisconsin Health & Edl. Facilities Auth. Rev.:

(Marshfield Clinic Proj.) Series B, 6% 2/15/25

1,500,000

1,524,045

(Wheaton Franciscan Svcs., Inc. Proj.):

Series A, 5.5% 8/15/16

1,000,000

1,046,280

5.75% 8/15/30

1,500,000

1,544,070

6.25% 8/15/22

600,000

642,744

10,964,822

TOTAL MUNICIPAL BONDS

(Cost $605,560,772)

630,468,924

Money Market Funds - 0.7%

Shares

Fidelity Municipal Cash Central Fund, 1.11% (c)(d)
(Cost $4,238,600)

4,238,600

4,238,600

TOTAL INVESTMENT PORTFOLIO - 100.8%

(Cost $609,799,372)

634,707,524

NET OTHER ASSETS - (0.8)%

(4,852,598)

NET ASSETS - 100%

$ 629,854,926

Legend

(a) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

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

(c) Information in this report regarding holdings by state and security types does not reflect the holdings of the Fidelity Municipal Cash Central Fund.

(d) 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.

(e) Private activity obligations whose interest is subject to the federal alternative minimum tax for individuals.

(f) Security collateralized by an amount sufficient to pay interest and principal.

Other Information

The distribution of municipal securities by revenue source, as a percentage of total net assets, is as follows:

General Obligations

35.0%

Electric Utilities

12.8%

Transportation

11.2%

Health Care

11.2%

Water & Sewer

10.8%

Education

6.1%

Others* (individually less than 5%)

12.9%

100.0%

*Includes cash equivalents and net other assets

Purchases and sales of securities, other than short-term securities, aggregated $52,667,660 and $63,964,685, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (cost $609,799,372) - See accompanying schedule

$ 634,707,524

Cash

62,871

Receivable for fund shares sold

1,102,075

Interest receivable

9,618,691

Prepaid expenses

2,372

Other receivables

171

Total assets

645,493,704

Liabilities

Payable for investments purchased
Regular delivery

$ 2,111,140

Delayed delivery

10,633,476

Payable for fund shares redeemed

1,647,885

Distributions payable

734,649

Accrued management fee

200,560

Distribution fees payable

213,630

Other affiliated payables

76,366

Other payables and accrued expenses

21,072

Total liabilities

15,638,778

Net Assets

$ 629,854,926

Net Assets consist of:

Paid in capital

$ 602,669,726

Undistributed net investment income

27,011

Accumulated undistributed net realized gain (loss) on investments

2,250,037

Net unrealized appreciation (depreciation) on investments

24,908,152

Net Assets

$ 629,854,926

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($95,813,463 ÷ 7,429,675 shares)

$ 12.90

Maximum offering price per share (100/95.25 of $12.90)

$ 13.54

Class T:
Net Asset Value and redemption price per share ($326,389,266 ÷ 25,260,955 shares)

$ 12.92

Maximum offering price per share (100/96.50 of $12.92)

$ 13.39

Class B:
Net Asset Value and offering price per share ($104,853,522 ÷ 8,147,486 shares) A

$ 12.87

Class C:
Net Asset Value and offering price per share ($61,172,582 ÷ 4,736,521 shares) A

$ 12.92

Institutional Class:
Net Asset Value, offering price and redemption price per share ($41,626,093 ÷ 3,238,268 shares)

$ 12.85

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 15,277,729

Expenses

Management fee

$ 1,224,025

Transfer agent fees

350,419

Distribution fees

1,310,032

Accounting fees and expenses

90,477

Non-interested trustees' compensation

2,112

Custodian fees and expenses

6,690

Registration fees

48,352

Audit

24,192

Legal

7,343

Miscellaneous

7,331

Total expenses before reductions

3,070,973

Expense reductions

(1,087)

3,069,886

Net investment income (loss)

12,207,843

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

2,629,933

Change in net unrealized appreciation (depreciation) on investment securities

(6,647,846)

Net gain (loss)

(4,017,913)

Net increase (decrease) in net assets resulting from operations

$ 8,189,930

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 12,207,843

$ 25,195,637

Net realized gain (loss)

2,629,933

9,116,247

Change in net unrealized appreciation (depreciation)

(6,647,846)

(3,367,057)

Net increase (decrease) in net assets resulting
from operations

8,189,930

30,944,827

Distributions to shareholders from net investment income

(12,183,194)

(25,330,647)

Distributions to shareholders from net realized gain

(1,087,798)

(96,841)

Total distributions

(13,270,992)

(25,427,488)

Share transactions - net increase (decrease)

(8,247,914)

22,471,782

Total increase (decrease) in net assets

(13,328,976)

27,989,121

Net Assets

Beginning of period

643,183,902

615,194,781

End of period (including undistributed net investment income of $27,011 and undistributed net investment income of $63,585, respectively)

$ 629,854,926

$ 643,183,902

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 13.00

$ 12.87

$ 12.70

$ 12.02

$ 11.69

$ 12.54

Income from Investment Operations

Net investment
income (loss)

.264E

.539E

.557E,G

.584E

.591E

.567

Net realized and unrealized gain (loss)

(.078)

.137

.168G

.679

.337

(.850)

Total from investment operations

.186

.676

.725

1.263

.928

(.283)

Distributions from net investment income

(.264)

(.544)

(.555)

(.583)

(.598)

(.567)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.286)

(.546)

(.555)

(.583)

(.598)

(.567)

Net asset value,
end of period

$ 12.90

$ 13.00

$ 12.87

$ 12.70

$ 12.02

$ 11.69

Total ReturnB,C,D

1.41%

5.33%

5.88%

10.72%

8.17%

(2.36)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.70%A

.68%

.69%

.69%

.72%

.72%

Expenses net of voluntary waivers, if any

.70%A

.68%

.69%

.69%

.72%

.72%

Expenses net of all
reductions

.70%A

.68%

.67%

.62%

.72%

.72%

Net investment income (loss)

4.02%A

4.15%

4.41%G

4.70%

5.02%

4.62%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 95,813

$ 87,406

$ 67,457

$ 46,796

$ 22,780

$ 10,722

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 13.03

$ 12.89

$ 12.72

$ 12.04

$ 11.70

$ 12.56

Income from Investment Operations

Net investment
income (loss)

.259E

.529E

.546E,G

.572E

.583E

.555

Net realized and unrealized gain (loss)

(.089)

.144

.166G

.679

.343

(.860)

Total from investment operations

.170

.673

.712

1.251

.926

(.305)

Distributions from net investment income

(.258)

(.531)

(.542)

(.571)

(.586)

(.555)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.280)

(.533)

(.542)

(.571)

(.586)

(.555)

Net asset value, end of period

$ 12.92

$ 13.03

$ 12.89

$ 12.72

$ 12.04

$ 11.70

Total ReturnB,C,D

1.28%

5.30%

5.76%

10.59%

8.14%

(2.53)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.79%A

.78%

.79%

.79%

.81%

.81%

Expenses net of voluntary waivers, if any

.79%A

.78%

.79%

.79%

.81%

.81%

Expenses net of all
reductions

.79%A

.77%

.77%

.72%

.81%

.81%

Net investment
income (loss)

3.93%A

4.06%

4.31%G

4.60%

4.93%

4.51%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 326,389

$ 340,542

$ 354,030

$ 369,295

$ 340,959

$ 329,926

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 12.98

$ 12.85

$ 12.67

$ 12.00

$ 11.67

$ 12.53

Income from Investment Operations

Net investment income (loss)

.215E

.443E

.462E,G

.489E

.504E

.476

Net realized and unrealized gain (loss)

(.088)

.136

.178G

.671

.336

(.860)

Total from investment operations

.127

.579

.640

1.160

.840

(.384)

Distributions from net investment income

(.215)

(.447)

(.460)

(.490)

(.510)

(.476)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.237)

(.449)

(.460)

(.490)

(.510)

(.476)

Net asset value,
end of period

$ 12.87

$ 12.98

$ 12.85

$ 12.67

$ 12.00

$ 11.67

Total ReturnB,C,D

.95%

4.56%

5.19%

9.83%

7.38%

(3.16)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.45%A

1.43%

1.44%

1.43%

1.46%

1.46%

Expenses net of voluntary waivers, if any

1.45%A

1.43%

1.44%

1.43%

1.46%

1.46%

Expenses net of all
reductions

1.45%A

1.42%

1.41%

1.37%

1.46%

1.46%

Net investment
income (loss)

3.27%A

3.41%

3.66%G

3.95%

4.28%

3.88%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 104,854

$ 110,853

$ 109,986

$ 91,687

$ 68,571

$ 63,464

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 13.02

$ 12.89

$ 12.71

$ 12.04

$ 11.70

$ 12.56

Income from Investment Operations

Net investment income (loss)

.209E

.430E

.451E,G

.478E

.493E

.465

Net realized and unrealized gain (loss)

(.079)

.135

.176G

.669

.345

(.860)

Total from investment operations

.130

.565

.627

1.147

.838

(.395)

Distributions from net investment income

(.208)

(.433)

(.447)

(.477)

(.498)

(.465)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.230)

(.435)

(.447)

(.477)

(.498)

(.465)

Net asset value,
end of period

$ 12.92

$ 13.02

$ 12.89

$ 12.71

$ 12.04

$ 11.70

Total ReturnB,C,D

.97%

4.44%

5.06%

9.69%

7.34%

(3.24)%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.55%A

1.53%

1.53%

1.53%

1.56%

1.56%

Expenses net of voluntary waivers, if any

1.55%A

1.53%

1.53%

1.53%

1.56%

1.56%

Expenses net of all
reductions

1.55%A

1.52%

1.51%

1.47%

1.56%

1.56%

Net investment
income (loss)

3.17%A

3.31%

3.57%G

3.85%

4.18%

3.79%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 61,173

$ 59,423

$ 52,019

$ 37,324

$ 17,120

$ 13,071

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 12.96

$ 12.83

$ 12.66

$ 11.98

$ 11.65

$ 12.51

Income from Investment Operations

Net investment income (loss)

.274D

.556D

.573D,F

.598D

.604D

.584

Net realized and unrealized gain (loss)

(.088)

.139

.170F

.682

.339

(.860)

Total from investment operations

.186

.695

.743

1.280

.943

(.276)

Distributions from net investment income

(.274)

(.563)

(.573)

(.600)

(.613)

(.584)

Distributions from net realized gain

(.022)

(.002)

-

-

-

-

Total distributions

(.296)

(.565)

(.573)

(.600)

(.613)

(.584)

Net asset value, end of period

$ 12.85

$ 12.96

$ 12.83

$ 12.66

$ 11.98

$ 11.65

Total ReturnB,C

1.41%

5.50%

6.05%

10.91%

8.34%

(2.31)%

Ratios to Average Net AssetsE

Expenses before
expense reductions

.55%A

.54%

.55%

.54%

.61%

.60%

Expenses net of voluntary waivers, if any

.55%A

.54%

.55%

.54%

.61%

.60%

Expenses net of all
reductions

.55%A

.53%

.52%

.48%

.61%

.60%

Net investment
income (loss)

4.17%A

4.30%

4.55%F

4.84%

5.13%

4.75%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 41,626

$ 44,960

$ 31,703

$ 21,842

$ 8,324

$ 3,431

Portfolio turnover rate

16%A

26%

20%

16%

39%

23%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Municipal 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 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. 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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 market discount and losses deferred due to futures transactions.

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

Unrealized appreciation

$ 29,503,120

Unrealized depreciation

(4,277,005)

Net unrealized appreciation (depreciation)

$ 25,226,115

Cost for federal income tax purposes

$ 609,481,409

2. Operating Policies.

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

Semiannual Report

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. Fidelity Management & Research Company (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 .25% 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 .38% of the fund's average net assets.

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%

$ 69,688

$ 652

Class T

0%

.25%

426,394

21,583

Class B

.65%

.25%

500,149

362,613

Class C

.75%

.25%

313,801

108,436

$ 1,310,032

$ 493,284

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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

Sales Load - continued

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

Retained
by FDC

Class A

$ 49,607

Class T

14,686

Class B*

110,773

Class C*

8,291

$ 183,357

* 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 and Accounting Fees. Citibank, N.A. (Citibank) is the custodian, transfer agent, and shareholder servicing agent for the fund's Class A, Class T, Class B, Class C, and Institutional Class shares. Citibank has entered into a sub-arrangement with Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, with respect to all classes of the fund to perform the transfer, dividend disbursing, and shareholder servicing agent functions. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. All fees are paid to FIIOC by Citibank, which is reimbursed by each class for such payments. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, each class paid the following transfer agent fees:

Amount

% of
Average
Net Assets

Class A

$ 50,631

.11*

Class T

180,620

.11*

Class B

61,163

.11*

Class C

33,831

.11*

Institutional Class

24,174

.11*

$ 350,419

* Annualized

Citibank also has a sub-arrangement with Fidelity Service Company, Inc. (FSC), an affiliate of FMR, under which FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month.

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

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Central Funds - continued

earned by the fund are recorded as income in the accompanying financial statements and totaled $15,387 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 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 $1,087.

7. Other Information.

At the end of the period, one unaffiliated shareholder was the owner of record of 11% of the total outstanding shares of the fund.

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,855,299

$ 3,352,432

Class T

6,643,669

14,468,124

Class B

1,809,584

3,967,761

Class C

987,057

1,950,363

Institutional Class

887,585

1,591,967

Total

$ 12,183,194

$ 25,330,647

From net realized gain

Class A

$ 149,850

$ 10,945

Class T

570,715

55,415

Class B

187,961

17,248

Class C

103,235

8,364

Institutional Class

76,037

4,869

Total

$ 1,087,798

$ 96,841

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

1,515,620

3,901,567

$ 20,066,606

$ 50,803,639

Reinvestment of distributions

96,469

162,162

1,271,182

2,110,532

Shares redeemed

(905,501)

(2,581,581)

(11,955,657)

(33,549,091)

Net increase (decrease)

706,588

1,482,148

$ 9,382,131

$ 19,365,080

Class T

Shares sold

1,509,731

5,300,881

$ 20,024,558

$ 69,054,270

Reinvestment of distributions

388,060

757,344

5,123,728

9,873,817

Shares redeemed

(2,780,452)

(7,372,291)

(36,792,934)

(95,857,703)

Net increase (decrease)

(882,661)

(1,314,066)

$ (11,644,648)

$ (16,929,616)

Class B

Shares sold

393,645

2,246,062

$ 5,194,764

$ 29,269,745

Reinvestment of distributions

87,516

172,328

1,150,820

2,238,503

Shares redeemed

(876,939)

(2,436,595)

(11,572,467)

(31,456,462)

Net increase (decrease)

(395,778)

(18,205)

$ (5,226,883)

$ 51,786

Class C

Shares sold

788,784

1,928,795

$ 10,429,904

$ 25,207,188

Reinvestment of distributions

52,856

97,383

697,543

1,268,933

Shares redeemed

(669,144)

(1,498,069)

(8,867,288)

(19,484,342)

Net increase (decrease)

172,496

528,109

$ 2,260,159

$ 6,991,779

Institutional Class

Shares sold

991,418

3,276,194

$ 13,079,792

$ 42,752,774

Reinvestment of distributions

15,702

31,935

206,116

414,731

Shares redeemed

(1,237,906)

(2,309,742)

(16,304,581)

(30,174,752)

Net increase (decrease)

(230,786)

998,387

$ (3,018,673)

$ 12,992,753

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Investments Money
Management, Inc.

Fidelity International Investment Advisors

Fidelity International Investment Advisors
(U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

Citibank, N.A.
New York, NY

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA

Custodian

Citibank, N.A.
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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

HIMI-USAN-0604
1.784902.101

Fidelity® Advisor

Mortgage Securities
Fund - Class A, Class T, Class B
and Class C

Semiannual Report

April 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.

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

Coupon Distribution as of April 30, 2004

% of fund's
investments

% of fund's investments
6 months ago

Less than 1%

0.2

0.6

1 - 1.99%

12.7

11.9

2 - 2.99%

2.7

2.3

3 - 3.99%

1.9

1.5

4 - 4.99%

16.6

8.3

5 - 5.99%

24.9

24.7

6 - 6.99%

24.7

24.3

7 - 7.99%

8.8

9.3

8% and over

1.2

1.7

Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments.

Average Years to Maturity as of April 30, 2004

6 months ago

Years

4.1

2.1

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

4.0

3.7

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Asset Allocation (% of fund's net assets)

As of April 30, 2004 *

As of October 31, 2003 **

Corporate Bonds 1.2%

Corporate Bonds 1.6%

Mortgage
Securities 82.7%

Mortgage
Securities 83.6%

CMOs and Other Mortgage Related Securities 20.4%

CMOs and Other Mortgage Related Securities 19.7%

U.S. Government
Agency Obligations 1.8%

U.S. Government
Agency Obligations 2.3%

Asset-Backed
Securities 10.4%

Asset-Backed
Securities 11.8%

Short-Term
Investments and
Net Other Assets(dagger) (16.5)%

Short-Term
Investments and
Net Other Assets(dagger) (19.0)%

* Foreign investments

0.6%

** Foreign investments

0.4%

* Futures and Swaps

0.2%

** Futures and Swaps

(0.3)%



(dagger) Short-Term Investments and Net Other Assets are not included in the pie chart.

The information in the above tables is based on the combined investments of the fund and its pro-rata share of the investments of Fidelity's fixed-income central fund.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

U.S. Government Agency - Mortgage Securities - 82.7%

Principal
Amount

Value
(Note 1)

Fannie Mae - 61.8%

4% 3/1/19 to 4/1/19

$ 21,192,722

$ 20,398,941

4% 5/1/19 (b)

61,541,276

59,156,549

4.5% 5/1/19 (b)

140,000,000

135,975,000

4.5% 9/1/31 to 12/1/33

154,913,600

145,567,690

5% 9/1/16 to 11/1/18

82,297,204

82,888,006

5% 5/1/19 (b)

60,000,000

59,445,313

5.5% 7/1/16 to 12/1/33

161,982,822

163,746,662

5.5% 5/1/19 (b)

144,288,210

145,963,205

6% 4/1/13 to 8/1/31

58,659,064

60,833,414

6% 5/1/34 (b)

63,470,400

64,918,319

6.5% 4/1/10 to 11/1/33

123,635,878

128,900,720

7% 3/1/17 to 10/1/33

24,479,921

25,929,166

7.5% 4/1/22 to 9/1/32

8,883,365

9,506,384

8% 9/1/07 to 12/1/29

80,184

86,431

8.25% 1/1/13

7,069

7,444

8.5% 1/1/16 to 7/1/31

1,248,221

1,340,366

8.75% 11/1/08

7,612

7,913

9% 1/1/08 to 10/1/30

2,016,047

2,202,895

9.5% 11/1/06 to 8/1/22

337,795

374,080

11% 8/1/10

193,382

216,053

12.25% 5/1/13 to 5/1/15

57,202

65,423

12.5% 8/1/15 to 3/1/16

93,564

107,545

12.75% 2/1/15

5,401

6,210

13.5% 9/1/14 to 12/1/14

36,787

42,798

14% 11/1/14

36,787

43,036

1,107,729,563

Freddie Mac - 7.5%

5% 5/1/33 to 12/1/33

97,518,610

94,619,149

5.5% 3/1/29 to 7/1/29

163,918

164,238

6% 5/1/16 to 7/1/29

2,780,617

2,885,311

6.5% 1/1/24 to 9/1/24

3,720,636

3,890,909

7.5% 2/1/08 to 7/1/32

27,672,370

29,658,631

8% 10/1/07 to 4/1/21

130,127

141,281

8.5% 7/1/09 to 9/1/20

385,305

420,719

9% 9/1/08 to 5/1/21

997,189

1,102,968

10% 1/1/09 to 5/1/19

360,506

400,161

10.5% 8/1/10 to 2/1/16

25,390

28,151

12.25% 6/1/14

16,315

18,652

12.5% 5/1/12 to 12/1/14

152,562

174,179

U.S. Government Agency - Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Freddie Mac - continued

12.75% 2/1/13 to 1/1/14

$ 12,171

$ 13,837

13% 12/1/13 to 6/1/15

281,518

323,300

133,841,486

Government National Mortgage Association - 13.4%

6% 10/20/33 to 1/20/34

145,276,536

148,871,663

6.5% 5/15/28 to 8/15/32

6,087,333

6,359,950

7% 2/15/24 to 7/15/32

6,890,638

7,332,044

7% 5/1/34 (b)

63,000,000

66,957,188

7.5% 7/15/05 to 4/15/32

4,718,668

5,077,281

8% 6/15/06 to 12/15/25

1,567,618

1,713,190

8.5% 7/15/16 to 10/15/28

2,853,581

3,154,097

9% 9/20/16 to 11/20/17

22,102

24,499

9.5% 12/15/24

4,868

5,474

10.5% 12/20/15 to 2/20/18

144,822

162,620

13% 10/15/13

33,118

38,386

13.5% 7/15/11 to 10/15/14

20,170

23,421

239,719,813

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $1,490,470,640)

1,481,290,862

Asset-Backed Securities - 1.5%

ACE Securities Corp. Series 2003-FM1 Class M2, 2.95% 11/25/32 (c)

1,450,000

1,479,448

Amortizing Residential Collateral Trust Series 2002-BC3N Class B2, 7% 6/25/32 (a)

21,309

21,213

CDC Mortgage Capital Trust Series 2003-HE2 Class M2, 3% 10/25/33 (c)

1,264,987

1,304,897

GSAMP NIMS Trust Series 2002-HE2N Class NOTE, 8.25% 10/20/32 (a)

13,030

13,037

Home Equity Asset Trust NIMS Trust:

Series 2002-4N Class A, 8% 5/27/33 (a)

470,690

470,690

Series 2003-2N Class A, 8% 9/27/33 (a)

716,887

720,471

Home Equity Residual Distributions Trust Series 2002-1 Class A, 12.25% 11/25/05 (a)

2,575,000

2,575,000

Long Beach Mortgage Loan Trust Series 2003-3:

Class M1, 1.85% 7/25/33 (c)

3,770,000

3,808,846

Class M2, 2.95% 7/25/33 (c)

2,600,000

2,674,811

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Morgan Stanley ABS Capital I, Inc.:

Series 2002-NC6N Class NOTE, 9.5% 9/25/32 (a)

$ 17,540

$ 17,650

Series 2003-NC6 Class M2, 3.05% 6/27/33 (c)

6,165,000

6,304,124

Morgan Stanley Dean Witter Capital I Trust, Series 2003-NC2N Class NOTE, 9.5% 12/25/32 (a)

1,053,966

1,058,577

Residential Asset Mortgage Products, Inc. Series 2003-RZ2 Class A1, 3.6% 4/25/33

3,208,330

3,132,759

Salomon Brothers Mortgage Securities VII, Inc. Series 2003-UP1 Class A, 3.45% 4/25/32 (a)

2,514,039

2,482,438

TOTAL ASSET-BACKED SECURITIES

(Cost $25,814,965)

26,063,961

Collateralized Mortgage Obligations - 9.3%

Private Sponsor - 2.9%

Countrywide Home Loans, Inc. sequential pay:

Series 2002-25 Class 2A1, 5.5% 11/27/17

2,111,909

2,144,264

Series 2002-5 Class 2A1, 6% 4/25/17

2,505,928

2,519,549

Credit Suisse First Boston Mortgage Acceptance Corp. sequential pay Series 2003-1 Class 3A8, 6% 1/25/33

15,140,000

14,875,050

CS First Boston Mortgage Securities Corp.:

sequential pay Series 2001-26 Class 3A1, 7.5% 11/25/31

859,139

873,607

Series 2002-15R Class A1, 8.1118% 1/28/32 (a)(c)

2,455,213

2,472,092

Series 2003-TFLA Class F, 1.9376% 4/15/13 (a)(c)

1,400,000

1,382,558

Master Alternative Loan Trust Series 2003-2 Class 4A1, 6.5% 4/25/18

21,591,012

22,260,718

Residential Asset Mortgage Products, Inc. sequential pay Series 2003-SL1 Class A31, 7.125% 4/25/31

3,806,217

3,967,981

WAMU Mortgage pass thru certificates sequential pay Series 2002-S6 Class A25, 6% 10/25/32

2,457,804

2,499,182

TOTAL PRIVATE SPONSOR

52,995,001

U.S. Government Agency - 6.4%

Fannie Mae:

planned amortization class:

Series 1993-187 Class L, 6.5% 7/25/23

4,187,000

4,440,446

Series 1999-1 Class PJ, 6.5% 2/25/29

10,049,260

10,531,307

Series 1999-15 Class PC, 6% 9/25/18

8,537,689

8,907,587

sequential pay Series 1999-10 Class MZ, 6.5% 9/17/38

4,284,375

4,494,744

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Fannie Mae guaranteed REMIC pass thru certificates:

planned amortization class:

Series 1999-51 Class LK, 6.5% 8/25/29

$ 10,000,000

$ 10,627,693

Series 2002-9 Class C, 6.5% 6/25/30

5,000,000

5,322,623

Series 2003-73 Class GA, 3.5% 5/25/31

15,530,393

14,948,447

sequential pay:

Series 2001-15 Class VA, 6% 6/25/10

324,068

327,977

Series 2001-82 Class VB, 6.5% 3/25/16

15,577,127

15,949,848

Series 2002-50 Class LE, 7% 12/25/29

1,253,909

1,292,823

Series 2003-122:

Class ZG, 5% 12/25/23

1,654,338

1,660,993

Class ZK, 5.5% 12/25/33

513,091

512,864

Series 2003-128 Class NZ, 4% 1/25/19

629,189

629,507

Series 2003-84 Class GZ, 4.5% 9/25/18

530,311

529,968

Series 2004-21 Class ZJ, 5.5% 6/25/32

1,202,054

1,211,283

Series 2004-28 Class ZK, 5.5% 5/25/34

1,500,000

1,492,969

Series 2004-29:

Class ZE, 4.5% 1/25/32

400,000

395,000

Class ZM, 5.5% 5/25/34

600,000

596,625

Freddie Mac:

planned amortization class:

Series 2343 Class GD, 6.5% 1/15/30

1,248,916

1,254,328

Series 70 Class C, 9% 9/15/20

412,594

413,234

Series 2794 Class ZL, 6% 5/1/34 (b)

650,000

646,344

Freddie Mac Multi-class participation certificates guaranteed:

planned amortization class:

Series 2368 Class PQ, 6.5% 8/15/30

1,372,560

1,392,627

Series 2435 Class GD, 6.5% 2/15/30

1,645,748

1,664,136

Series 2557 Class MA, 4.5% 7/15/16

942,921

960,968

sequential pay:

Series 2303 Class VT, 6% 2/15/12

978,685

980,999

Series 2445 Class BD, 6.5% 6/15/30

423,534

426,293

Series 2750 Class ZT, 5% 2/15/34

2,188,121

1,794,222

Series 1658 Class GZ, 7% 1/15/24

6,216,909

6,587,591

Series 2568 Class SA, 10.56% 9/15/28 (c)

1,748,782

1,780,496

Series 2691 Class ZE, 5.5% 5/15/33

241,900

241,720

Series 2706 Class EZ, 5% 11/15/23

492,571

495,139

Series 2707 Class ZA, 4.5% 11/15/18

607,870

605,590

Series 2750 Class CZ, 5% 11/15/32

1,765,496

1,766,657

Series 2756 Class ZY, 5% 2/15/24

2,222,686

2,227,622

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Freddie Mac Multi-class participation certificates guaranteed: - continued

Series 2764:

Class DZ, 5% 2/15/33

$ 1,750,036

$ 1,741,286

Class ZA, 5% 10/15/32

309,123

307,481

Class ZB, 5% 3/15/33

527,274

524,143

Class ZC, 4.5% 3/15/19

333,003

331,026

Series 2769 Class ZA, 5% 9/15/32

487,254

484,703

Series 2780:

Class AZ, 5.5% 3/15/33

700,000

694,531

Class KZ, 5% 4/15/32

1,135,000

1,131,453

Class ZJ, 4.5% 4/15/19

500,000

497,891

Ginnie Mae guaranteed REMIC pass thru securities planned amortization class Series 2001-53 Class TA, 6% 12/20/30

1,552,302

1,582,449

TOTAL U.S. GOVERNMENT AGENCY

114,405,633

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $165,139,975)

167,400,634

Commercial Mortgage Securities - 5.7%

Asset Securitization Corp.:

Series 1995-MD4 Class ACS2, 1.9777% 8/13/29 (c)(e)

31,062,600

2,544,490

Series 1997-D5 Class PS1, 1.3146% 2/14/43 (c)(e)

41,966,212

2,594,981

Banc of America Commercial Mortgage, Inc. Series 2003-1 Class XP1, 1.6731% 9/11/36 (a)(c)(e)

103,390,000

2,867,460

Chase Commercial Mortgage Securities Corp. Series 1999-2:

Class E, 7.734% 1/15/32

1,110,000

1,254,040

Class F, 7.734% 1/15/32

600,000

664,645

COMM floater Series 2001-FL5A:

Class D, 2.35% 11/15/13 (a)(c)

9,000,000

9,004,294

Class E, 2.6% 11/15/13 (a)(c)

5,000,000

5,002,294

CS First Boston Mortgage Securities Corp.:

sequential pay Series 1999-C1 Class A2, 7.29% 9/15/41

1,100,000

1,243,539

Series 1997-C2 Class D, 7.27% 1/17/35

5,175,000

5,718,384

Series 1998-C1 Class D, 7.17% 5/17/40

3,360,000

3,623,805

Series 2003-TFLA Class G, 1.9376% 4/15/13 (a)(c)

700,000

684,412

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class D, 7.231% 6/15/31

$ 935,000

$ 968,039

Fannie Mae sequential pay Series 2000-7 Class MB, 7.5104% 2/17/24 (c)

13,829,275

15,087,009

Fannie Mae guaranteed REMIC pass thru certificates Series 1998-49 Class MI, 0.8933% 6/17/38 (c)(e)

108,791,483

3,554,011

Global Signal Trust Series 2004-1 Class D, 5.098% 1/15/34 (a)

4,000,000

3,899,290

Greenwich Capital Commercial Funding Corp.:

floater Series 2003-FL1 Class MCH, 4.35% 7/5/18 (a)(c)

1,334,176

1,334,176

Series 2002-C1 Class SWDB 5.857% 11/11/19 (a)

2,600,000

2,608,531

GS Mortgage Securities Corp. II Series 1998-GLII Class E, 6.9706% 4/13/31 (c)

390,000

413,541

GS Mortgage Trust II floater Series 2001-FL4A Class D, 2.01% 12/15/10 (a)(c)

329,955

329,603

Leafs CMBS I Ltd. Series 2002 1A Class D, 4.13% 11/20/37 (a)

10,815,000

8,837,883

Morgan Stanley Capital I, Inc. Series 1997-RR Class C, 7.44% 4/30/39 (a)(c)

2,760,143

2,868,544

Thirteen Affiliates of General Growth Properties, Inc. Series 1 Class D1, 6.917% 11/15/04 (a)

18,200,000

18,595,104

Trizechahn Office Properties Trust Series 2001-TZHA Class E3, 7.253% 3/15/13 (a)

7,895,000

8,403,875

TOTAL COMMERCIAL MORTGAGE SECURITIES

(Cost $105,208,934)

102,101,950

Fixed-Income Funds - 23.6%

Shares

Fidelity Ultra-Short Central Fund (d)
(Cost $421,522,002)

4,246,960

423,209,594

Cash Equivalents - 7.0%

Maturity
Amount

Value
(Note 1)

Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.05%, dated 4/30/04 due 5/3/04)
(Cost $126,361,000)

$ 126,372,057

$ 126,361,000

TOTAL INVESTMENT PORTFOLIO - 129.8%

(Cost $2,334,517,516)

2,326,428,001

NET OTHER ASSETS - (29.8)%

(534,639,408)

NET ASSETS - 100%

$ 1,791,788,593

Legend

(a) 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 $75,649,192 or 4.2% of net assets.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

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

(d) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(e) Security represents right to receive monthly interest payments on an underlying pool of mortgages. Principal shown is the par amount of the mortgage pool.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $2,662,759,182 and $2,493,056,791, respectively, of which long-term U.S. government and government agency obligations aggregated $2,652,067,251 and $2,461,380,515, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $126,361,000) (cost $2,334,517,516) - - See accompanying schedule

$ 2,326,428,001

Cash

158,151

Receivable for investments sold

304,454

Receivable for fund shares sold

1,728,354

Interest receivable

7,513,322

Prepaid expenses

7,127

Total assets

2,336,139,409

Liabilities

Payable for investments purchased on a delayed delivery basis

$ 538,461,427

Payable for fund shares redeemed

4,137,078

Distributions payable

542,103

Accrued management fee

643,713

Distribution fees payable

214,474

Other affiliated payables

295,749

Other payables and accrued expenses

56,272

Total liabilities

544,350,816

Net Assets

$ 1,791,788,593

Net Assets consist of:

Paid in capital

$ 1,795,642,602

Undistributed net investment income

2,223,168

Accumulated undistributed net realized gain (loss) on investments

2,012,338

Net unrealized appreciation (depreciation) on investments

(8,089,515)

Net Assets

$ 1,791,788,593

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($59,372,306 ÷ 5,351,102 shares)

$ 11.10

Maximum offering price per share (100/95.25 of $11.10)

$ 11.65

Class T:
Net Asset Value and redemption price per share ($136,425,297 ÷ 12,280,004 shares)

$ 11.11

Maximum offering price per share (100/96.50 of $11.11)

$ 11.51

Class B:
Net Asset Value and offering price per share ($152,311,790 ÷ 13,729,546 shares) A

$ 11.09

Class C:
Net Asset Value and offering price per share ($69,834,081 ÷ 6,300,444 shares) A

$ 11.08

Fidelity Mortgage Securities Fund:
Net Asset Value, offering price and redemption price per share ($1,361,856,679 ÷ 122,540,405 shares)

$ 11.11

Institutional Class:
Net Asset Value, offering price and redemption price per share ($11,988,440 ÷ 1,081,302 shares)

$ 11.09

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 36,864,278

Expenses

Management fee

$ 3,855,373

Transfer agent fees

1,447,950

Distribution fees

1,404,172

Accounting fees and expenses

307,496

Non-interested trustees' compensation

5,784

Custodian fees and expenses

61,218

Registration fees

134,587

Audit

45,674

Legal

6,392

Miscellaneous

8,890

Total expenses before reductions

7,277,536

Expense reductions

(4,562)

7,272,974

Net investment income (loss)

29,591,304

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

4,568,669

Change in net unrealized appreciation (depreciation) on:

Investment securities

(13,148,529)

Delayed delivery commitments

265,969

Total change in net unrealized appreciation (depreciation)

(12,882,560)

Net gain (loss)

(8,313,891)

Net increase (decrease) in net assets resulting from operations

$ 21,277,413

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 29,591,304

$ 50,138,434

Net realized gain (loss)

4,568,669

31,027,960

Change in net unrealized appreciation (depreciation)

(12,882,560)

(15,647,323)

Net increase (decrease) in net assets resulting
from operations

21,277,413

65,519,071

Distributions to shareholders from net investment income

(30,176,733)

(48,528,197)

Distributions to shareholders from net realized gain

(23,782,795)

(12,938,149)

Total distributions

(53,959,528)

(61,466,346)

Share transactions - net increase (decrease)

2,183,448

89,912,217

Total increase (decrease) in net assets

(30,498,667)

93,964,942

Net Assets

Beginning of period

1,822,287,260

1,728,322,318

End of period (including undistributed net investment income of $2,223,168 and undistributed net investment income of $2,808,597, respectively)

$ 1,791,788,593

$ 1,822,287,260

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

$ 10.96

Income from Investment Operations

Net investment income (loss) E

.182

.282

.502 G

.630

.665

.646

Net realized and unrealized gain (loss)

(.047)

.112

.172 G

.613

.086

(.336)

Total from investment operations

.135

.394

.674

1.243

.751

.310

Distributions from net investment income

(.185)

(.274)

(.534)

(.653)

(.701)

(.640)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.335)

(.354)

(.534)

(.653)

(.701)

(.790)

Net asset value, end of period

$ 11.10

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

Total Return B, C, D

1.20%

3.56%

6.26%

12.15%

7.49%

2.93%

Ratios to Average Net Assets F

Expenses before expense reductions

.86% A

.81%

.84%

.85%

.88%

.99%

Expenses net of voluntary waivers, if any

.86% A

.81%

.84%

.85%

.88%

.90%

Expenses net of all reductions

.86% A

.81%

.84%

.85%

.88%

.90%

Net investment income (loss)

3.24% A

2.51%

4.55% G

5.86%

6.44%

6.09%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 59,372

$ 68,939

$ 63,201

$ 15,318

$ 4,610

$ 3,090

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.48

$ 10.96

Income from Investment Operations

Net investment income (loss) E

.175

.270

.492 G

.622

.653

.637

Net realized and unrealized gain (loss)

(.046)

.101

.171 G

.617

.092

(.338)

Total from investment operations

.129

.371

.663

1.239

.745

.299

Distributions from net investment income

(.179)

(.261)

(.523)

(.639)

(.685)

(.629)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.329)

(.341)

(.523)

(.639)

(.685)

(.779)

Net asset value, end of period

$ 11.11

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.48

Total Return B, C, D

1.14%

3.34%

6.15%

12.09%

7.42%

2.82%

Ratios to Average Net Assets F

Expenses before expense reductions

.98% A

.93%

.94%

.96%

1.00%

1.06%

Expenses net of voluntary waivers, if any

.98% A

.93%

.94%

.96%

1.00%

1.00%

Expenses net of all reductions

.97% A

.93%

.94%

.96%

1.00%

1.00%

Net investment income (loss)

3.12% A

2.39%

4.45% G

5.75%

6.33%

5.99%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 136,425

$ 154,810

$ 195,002

$ 106,167

$ 61,359

$ 29,052

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

$ 10.95

Income from Investment Operations

Net investment income (loss) E

.138

.197

.421 G

.551

.593

.567

Net realized and unrealized gain (loss)

(.056)

.112

.171 G

.611

.081

(.324)

Total from investment operations

.082

.309

.592

1.162

.674

.243

Distributions from net investment income

(.142)

(.189)

(.452)

(.572)

(.624)

(.563)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.292)

(.269)

(.452)

(.572)

(.624)

(.713)

Net asset value, end of period

$ 11.09

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

Total Return B, C, D

.72%

2.78%

5.48%

11.32%

6.70%

2.29%

Ratios to Average Net Assets F

Expenses before expense reductions

1.63% A

1.57%

1.58%

1.60%

1.60%

1.62%

Expenses net of voluntary waivers, if any

1.63% A

1.57%

1.58%

1.60%

1.60%

1.62%

Expenses net of all reductions

1.63% A

1.57%

1.57%

1.60%

1.60%

1.62%

Net investment income (loss)

2.46% A

1.75%

3.82% G

5.11%

5.73%

5.37%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 152,312

$ 181,666

$ 176,245

$ 57,034

$ 19,911

$ 19,101

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001 F

Selected Per-Share Data

Net asset value, beginning of period

$ 11.29

$ 11.25

$ 11.10

$ 10.89

Income from Investment Operations

Net investment income (loss) E

.136

.189

.413 H

.112

Net realized and unrealized gain (loss)

(.057)

.112

.173 H

.238

Total from investment operations

.079

.301

.586

.350

Distributions from net investment income

(.139)

(.181)

(.436)

(.140)

Distributions from net realized gain

(.150)

(.080)

-

-

Total distributions

(.289)

(.261)

(.436)

(.140)

Net asset value, end of period

$ 11.08

$ 11.29

$ 11.25

$ 11.10

Total Return B, C, D

.69%

2.71%

5.43%

3.22%

Ratios to Average Net Assets G

Expenses before expense reductions

1.68% A

1.64%

1.64%

1.60%A

Expenses net of voluntary waivers, if any

1.68% A

1.64%

1.64%

1.60%A

Expenses net of all reductions

1.68% A

1.64%

1.64%

1.60%A

Net investment income (loss)

2.42% A

1.68%

3.75% H

4.87%A

Supplemental Data

Net assets, end of period (000 omitted)

$ 69,834

$ 99,237

$ 73,747

$ 2,632

Portfolio turnover rate

227% A

356%

231%

194%

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 For the period August 16, 2001 (commencement of sale of shares) to October 31, 2001.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

H Effective November 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 - Fidelity Mortgage Securities Fund

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.49

$ 10.97

Income from Investment Operations

Net investment income (loss) D

.194

.306

.526 F

.654

.690

.674

Net realized and unrealized gain (loss)

(.046)

.102

.170 F

.619

.078

(.342)

Total from investment operations

.148

.408

.696

1.273

.768

.332

Distributions from net investment income

(.198)

(.298)

(.556)

(.673)

(.718)

(.662)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.348)

(.378)

(.556)

(.673)

(.718)

(.812)

Net asset value, end of period

$ 11.11

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.49

Total Return B, C

1.31%

3.68%

6.47%

12.44%

7.66%

3.14%

Ratios to Average Net Assets E

Expenses before expense reductions

.63% A

.60%

.63%

.66%

.67%

.70%

Expenses net of voluntary waivers, if any

.63% A

.60%

.63%

.66%

.67%

.70%

Expenses net of all reductions

.63% A

.60%

.63%

.66%

.67%

.70%

Net investment income (loss)

3.47% A

2.72%

4.76% F

6.04%

6.65%

6.29%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 1,361,857

$ 1,301,599

$ 1,207,967

$ 429,684

$ 371,107

$ 406,839

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.29

$ 11.25

$ 11.11

$ 10.52

$ 10.47

$ 10.95

Income from Investment Operations

Net investment income (loss) D

.193

.302

.513F

.644

.684

.669

Net realized and unrealized gain (loss)

(.047)

.112

.171F

.610

.080

(.343)

Total from investment operations

.146

.414

.684

1.254

.764

.326

Distributions from net investment income

(.196)

(.294)

(.544)

(.664)

(.714)

(.656)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.346)

(.374)

(.544)

(.664)

(.714)

(.806)

Net asset value,
end of period

$ 11.09

$ 11.29

$ 11.25

$ 11.11

$ 10.52

$ 10.47

Total Return B, C

1.30%

3.75%

6.36%

12.27%

7.64%

3.09%

Ratios to Average Net Assets E

Expenses before expense reductions

.66% A

.63%

.75%

.76%

.73%

.75%

Expenses net of voluntary waivers, if any

.66% A

.63%

.75%

.75%

.73%

.75%

Expenses net of all reductions

.66% A

.63%

.75%

.75%

.72%

.75%

Net investment income (loss)

3.44% A

2.69%

4.65%F

5.95%

6.60%

6.24%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 11,988

$ 16,036

$ 12,162

$ 7,319

$ 9,038

$ 15,422

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Mortgage Securities 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, Fidelity Mortgage Securities Fund 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 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. 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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 prior period premium and discount on debt securities, market discount, financing transactions and losses deferred due to wash sales.

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

Unrealized appreciation

$ 12,196,674

|

Unrealized depreciation

(16,812,790)

Net unrealized appreciation (depreciation)

$ (4,616,116)

Cost for federal income tax purposes

$ 2,331,044,117

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).

Semiannual Report

2. Operating Policies - continued

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

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.

Financing Transactions. To earn additional income, the fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but will be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the fund's right to repurchase or sell securities may be limited.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

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 .30% 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 .43% of the fund's average net assets.

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%

$ 48,623

$ 315

Class T

0%

.25%

177,595

5,014

Class B

.65%

.25%

753,109

545,080

Class C

.75%

.25%

424,845

162,224

$ 1,404,172

$ 712,633

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.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Sales Load - continued

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

Retained
by FDC

Class A

$ 20,719

Class T

10,755

Class B*

293,609

Class C

19,666

$ 344,749

* 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, except for Fidelity Mortgage Securities Fund. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, , is the transfer agent for Fidelity Mortgage Securities Fund shares. FIIOC and FSC receive account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC or FSC, were as follows:

Amount

% of
Average
Net Assets

Class A

$ 70,158

.22*

Class T

163,884

.23*

Class B

197,921

.24*

Class C

78,313

.19*

Fidelity Mortgage Securities Fund

926,143

.14*

Institutional Class

11,531

.17*

$ 1,447,950

* Annualized

Accounting Fees. FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

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 $3,588,762 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 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 and each class' transfer agent, 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 $4,038. During the period, credits reduced each class' transfer agent expense as noted in the table below.

Transfer Agent
expense reduction

|

Class A

$ 524

Semiannual Report

7. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,065,337

$ 1,812,935

Class T

2,244,891

4,490,594

Class B

2,096,653

3,348,473

Class C

1,044,290

1,676,928

Fidelity Mortgage Securities Fund

23,490,225

36,645,682

Institutional Class

235,337

553,585

Total

$ 30,176,733

$ 48,528,197

From net realized gain

Class A

$ 889,212

$ 479,109

Class T

1,953,109

1,375,548

Class B

2,324,329

1,317,977

Class C

1,222,549

596,490

Fidelity Mortgage Securities Fund

17,202,689

9,053,280

Institutional Class

190,907

115,745

Total

$ 23,782,795

$ 12,938,149

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

970,610

4,143,379

$ 10,937,504

$ 46,659,814

Reinvestment of distributions

149,394

170,427

1,677,007

1,915,973

Shares redeemed

(1,871,084)

(3,823,033)

(21,074,324)

(42,999,421)

Net increase (decrease)

(751,080)

490,773

$ (8,459,813)

$ 5,576,366

Class T

Shares sold

2,455,583

9,900,926

$ 27,703,636

$ 111,507,763

Reinvestment of distributions

347,898

461,144

3,908,946

5,189,781

Shares redeemed

(4,209,620)

(13,969,922)

(47,427,915)

(157,166,356)

Net increase (decrease)

(1,406,139)

(3,607,852)

$ (15,815,333)

$ (40,468,812)

Class B

Shares sold

472,150

7,431,196

$ 5,321,043

$ 83,615,486

Reinvestment of distributions

324,703

324,294

3,643,353

3,643,707

Shares redeemed

(3,149,622)

(7,323,983)

(35,462,992)

(82,328,932)

Net increase (decrease)

(2,352,769)

431,507

$ (26,498,596)

$ 4,930,261

Class C

Shares sold

450,112

7,174,688

$ 5,066,978

$ 80,647,975

Reinvestment of distributions

155,658

158,593

1,745,069

1,780,642

Shares redeemed

(3,098,042)

(5,094,649)

(34,856,896)

(57,171,194)

Net increase (decrease)

(2,492,272)

2,238,632

$ (28,044,849)

$ 25,257,423

Fidelity Mortgage Securities Fund

Shares sold

27,887,079

74,892,943

$ 314,595,084

$ 844,372,051

Reinvestment of distributions

3,321,499

3,676,167

37,344,245

41,396,427

Shares redeemed

(23,702,105)

(70,626,654)

(267,115,975)

(794,954,735)

Net increase (decrease)

7,506,473

7,942,456

$ 84,823,354

$ 90,813,743

Institutional Class

Shares sold

166,614

2,242,760

$ 1,874,213

$ 25,207,417

Reinvestment of distributions

26,698

42,862

299,426

481,820

Shares redeemed

(532,533)

(1,945,702)

(5,994,954)

(21,886,001)

Net increase (decrease)

(339,221)

339,920

$ (3,821,315)

$ 3,803,236

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Investments Money Management, 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

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

AMOR-USAN-0604
1.784898.101

Fidelity® Advisor

Mortgage Securities
Fund - Institutional Class

Semiannual Report

April 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.

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

Coupon Distribution as of April 30, 2004

% of fund's
investments

% of fund's investments
6 months ago

Less than 1%

0.2

0.6

1 - 1.99%

12.7

11.9

2 - 2.99%

2.7

2.3

3 - 3.99%

1.9

1.5

4 - 4.99%

16.6

8.3

5 - 5.99%

24.9

24.7

6 - 6.99%

24.7

24.3

7 - 7.99%

8.8

9.3

8% and over

1.2

1.7

Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments.

Average Years to Maturity as of April 30, 2004

6 months ago

Years

4.1

2.1

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

4.0

3.7

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Asset Allocation (% of fund's net assets)

As of April 30, 2004 *

As of October 31, 2003 **

Corporate Bonds 1.2%

Corporate Bonds 1.6%

Mortgage
Securities 82.7%

Mortgage
Securities 83.6%

CMOs and Other Mortgage Related Securities 20.4%

CMOs and Other Mortgage Related Securities 19.7%

U.S. Government
Agency Obligations 1.8%

U.S. Government
Agency Obligations 2.3%

Asset-Backed
Securities 10.4%

Asset-Backed
Securities 11.8%

Short-Term
Investments and
Net Other Assets(dagger) (16.5)%

Short-Term
Investments and
Net Other Assets(dagger) (19.0)%

* Foreign investments

0.6%

** Foreign investments

0.4%

* Futures and Swaps

0.2%

** Futures and Swaps

(0.3)%



(dagger) Short-Term Investments and Net Other Assets are not included in the pie chart.

The information in the above tables is based on the combined investments of the fund and its pro-rata share of the investments of Fidelity's fixed-income central fund.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

U.S. Government Agency - Mortgage Securities - 82.7%

Principal
Amount

Value
(Note 1)

Fannie Mae - 61.8%

4% 3/1/19 to 4/1/19

$ 21,192,722

$ 20,398,941

4% 5/1/19 (b)

61,541,276

59,156,549

4.5% 5/1/19 (b)

140,000,000

135,975,000

4.5% 9/1/31 to 12/1/33

154,913,600

145,567,690

5% 9/1/16 to 11/1/18

82,297,204

82,888,006

5% 5/1/19 (b)

60,000,000

59,445,313

5.5% 7/1/16 to 12/1/33

161,982,822

163,746,662

5.5% 5/1/19 (b)

144,288,210

145,963,205

6% 4/1/13 to 8/1/31

58,659,064

60,833,414

6% 5/1/34 (b)

63,470,400

64,918,319

6.5% 4/1/10 to 11/1/33

123,635,878

128,900,720

7% 3/1/17 to 10/1/33

24,479,921

25,929,166

7.5% 4/1/22 to 9/1/32

8,883,365

9,506,384

8% 9/1/07 to 12/1/29

80,184

86,431

8.25% 1/1/13

7,069

7,444

8.5% 1/1/16 to 7/1/31

1,248,221

1,340,366

8.75% 11/1/08

7,612

7,913

9% 1/1/08 to 10/1/30

2,016,047

2,202,895

9.5% 11/1/06 to 8/1/22

337,795

374,080

11% 8/1/10

193,382

216,053

12.25% 5/1/13 to 5/1/15

57,202

65,423

12.5% 8/1/15 to 3/1/16

93,564

107,545

12.75% 2/1/15

5,401

6,210

13.5% 9/1/14 to 12/1/14

36,787

42,798

14% 11/1/14

36,787

43,036

1,107,729,563

Freddie Mac - 7.5%

5% 5/1/33 to 12/1/33

97,518,610

94,619,149

5.5% 3/1/29 to 7/1/29

163,918

164,238

6% 5/1/16 to 7/1/29

2,780,617

2,885,311

6.5% 1/1/24 to 9/1/24

3,720,636

3,890,909

7.5% 2/1/08 to 7/1/32

27,672,370

29,658,631

8% 10/1/07 to 4/1/21

130,127

141,281

8.5% 7/1/09 to 9/1/20

385,305

420,719

9% 9/1/08 to 5/1/21

997,189

1,102,968

10% 1/1/09 to 5/1/19

360,506

400,161

10.5% 8/1/10 to 2/1/16

25,390

28,151

12.25% 6/1/14

16,315

18,652

12.5% 5/1/12 to 12/1/14

152,562

174,179

U.S. Government Agency - Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Freddie Mac - continued

12.75% 2/1/13 to 1/1/14

$ 12,171

$ 13,837

13% 12/1/13 to 6/1/15

281,518

323,300

133,841,486

Government National Mortgage Association - 13.4%

6% 10/20/33 to 1/20/34

145,276,536

148,871,663

6.5% 5/15/28 to 8/15/32

6,087,333

6,359,950

7% 2/15/24 to 7/15/32

6,890,638

7,332,044

7% 5/1/34 (b)

63,000,000

66,957,188

7.5% 7/15/05 to 4/15/32

4,718,668

5,077,281

8% 6/15/06 to 12/15/25

1,567,618

1,713,190

8.5% 7/15/16 to 10/15/28

2,853,581

3,154,097

9% 9/20/16 to 11/20/17

22,102

24,499

9.5% 12/15/24

4,868

5,474

10.5% 12/20/15 to 2/20/18

144,822

162,620

13% 10/15/13

33,118

38,386

13.5% 7/15/11 to 10/15/14

20,170

23,421

239,719,813

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $1,490,470,640)

1,481,290,862

Asset-Backed Securities - 1.5%

ACE Securities Corp. Series 2003-FM1 Class M2, 2.95% 11/25/32 (c)

1,450,000

1,479,448

Amortizing Residential Collateral Trust Series 2002-BC3N Class B2, 7% 6/25/32 (a)

21,309

21,213

CDC Mortgage Capital Trust Series 2003-HE2 Class M2, 3% 10/25/33 (c)

1,264,987

1,304,897

GSAMP NIMS Trust Series 2002-HE2N Class NOTE, 8.25% 10/20/32 (a)

13,030

13,037

Home Equity Asset Trust NIMS Trust:

Series 2002-4N Class A, 8% 5/27/33 (a)

470,690

470,690

Series 2003-2N Class A, 8% 9/27/33 (a)

716,887

720,471

Home Equity Residual Distributions Trust Series 2002-1 Class A, 12.25% 11/25/05 (a)

2,575,000

2,575,000

Long Beach Mortgage Loan Trust Series 2003-3:

Class M1, 1.85% 7/25/33 (c)

3,770,000

3,808,846

Class M2, 2.95% 7/25/33 (c)

2,600,000

2,674,811

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Morgan Stanley ABS Capital I, Inc.:

Series 2002-NC6N Class NOTE, 9.5% 9/25/32 (a)

$ 17,540

$ 17,650

Series 2003-NC6 Class M2, 3.05% 6/27/33 (c)

6,165,000

6,304,124

Morgan Stanley Dean Witter Capital I Trust, Series 2003-NC2N Class NOTE, 9.5% 12/25/32 (a)

1,053,966

1,058,577

Residential Asset Mortgage Products, Inc. Series 2003-RZ2 Class A1, 3.6% 4/25/33

3,208,330

3,132,759

Salomon Brothers Mortgage Securities VII, Inc. Series 2003-UP1 Class A, 3.45% 4/25/32 (a)

2,514,039

2,482,438

TOTAL ASSET-BACKED SECURITIES

(Cost $25,814,965)

26,063,961

Collateralized Mortgage Obligations - 9.3%

Private Sponsor - 2.9%

Countrywide Home Loans, Inc. sequential pay:

Series 2002-25 Class 2A1, 5.5% 11/27/17

2,111,909

2,144,264

Series 2002-5 Class 2A1, 6% 4/25/17

2,505,928

2,519,549

Credit Suisse First Boston Mortgage Acceptance Corp. sequential pay Series 2003-1 Class 3A8, 6% 1/25/33

15,140,000

14,875,050

CS First Boston Mortgage Securities Corp.:

sequential pay Series 2001-26 Class 3A1, 7.5% 11/25/31

859,139

873,607

Series 2002-15R Class A1, 8.1118% 1/28/32 (a)(c)

2,455,213

2,472,092

Series 2003-TFLA Class F, 1.9376% 4/15/13 (a)(c)

1,400,000

1,382,558

Master Alternative Loan Trust Series 2003-2 Class 4A1, 6.5% 4/25/18

21,591,012

22,260,718

Residential Asset Mortgage Products, Inc. sequential pay Series 2003-SL1 Class A31, 7.125% 4/25/31

3,806,217

3,967,981

WAMU Mortgage pass thru certificates sequential pay Series 2002-S6 Class A25, 6% 10/25/32

2,457,804

2,499,182

TOTAL PRIVATE SPONSOR

52,995,001

U.S. Government Agency - 6.4%

Fannie Mae:

planned amortization class:

Series 1993-187 Class L, 6.5% 7/25/23

4,187,000

4,440,446

Series 1999-1 Class PJ, 6.5% 2/25/29

10,049,260

10,531,307

Series 1999-15 Class PC, 6% 9/25/18

8,537,689

8,907,587

sequential pay Series 1999-10 Class MZ, 6.5% 9/17/38

4,284,375

4,494,744

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Fannie Mae guaranteed REMIC pass thru certificates:

planned amortization class:

Series 1999-51 Class LK, 6.5% 8/25/29

$ 10,000,000

$ 10,627,693

Series 2002-9 Class C, 6.5% 6/25/30

5,000,000

5,322,623

Series 2003-73 Class GA, 3.5% 5/25/31

15,530,393

14,948,447

sequential pay:

Series 2001-15 Class VA, 6% 6/25/10

324,068

327,977

Series 2001-82 Class VB, 6.5% 3/25/16

15,577,127

15,949,848

Series 2002-50 Class LE, 7% 12/25/29

1,253,909

1,292,823

Series 2003-122:

Class ZG, 5% 12/25/23

1,654,338

1,660,993

Class ZK, 5.5% 12/25/33

513,091

512,864

Series 2003-128 Class NZ, 4% 1/25/19

629,189

629,507

Series 2003-84 Class GZ, 4.5% 9/25/18

530,311

529,968

Series 2004-21 Class ZJ, 5.5% 6/25/32

1,202,054

1,211,283

Series 2004-28 Class ZK, 5.5% 5/25/34

1,500,000

1,492,969

Series 2004-29:

Class ZE, 4.5% 1/25/32

400,000

395,000

Class ZM, 5.5% 5/25/34

600,000

596,625

Freddie Mac:

planned amortization class:

Series 2343 Class GD, 6.5% 1/15/30

1,248,916

1,254,328

Series 70 Class C, 9% 9/15/20

412,594

413,234

Series 2794 Class ZL, 6% 5/1/34 (b)

650,000

646,344

Freddie Mac Multi-class participation certificates guaranteed:

planned amortization class:

Series 2368 Class PQ, 6.5% 8/15/30

1,372,560

1,392,627

Series 2435 Class GD, 6.5% 2/15/30

1,645,748

1,664,136

Series 2557 Class MA, 4.5% 7/15/16

942,921

960,968

sequential pay:

Series 2303 Class VT, 6% 2/15/12

978,685

980,999

Series 2445 Class BD, 6.5% 6/15/30

423,534

426,293

Series 2750 Class ZT, 5% 2/15/34

2,188,121

1,794,222

Series 1658 Class GZ, 7% 1/15/24

6,216,909

6,587,591

Series 2568 Class SA, 10.56% 9/15/28 (c)

1,748,782

1,780,496

Series 2691 Class ZE, 5.5% 5/15/33

241,900

241,720

Series 2706 Class EZ, 5% 11/15/23

492,571

495,139

Series 2707 Class ZA, 4.5% 11/15/18

607,870

605,590

Series 2750 Class CZ, 5% 11/15/32

1,765,496

1,766,657

Series 2756 Class ZY, 5% 2/15/24

2,222,686

2,227,622

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Freddie Mac Multi-class participation certificates guaranteed: - continued

Series 2764:

Class DZ, 5% 2/15/33

$ 1,750,036

$ 1,741,286

Class ZA, 5% 10/15/32

309,123

307,481

Class ZB, 5% 3/15/33

527,274

524,143

Class ZC, 4.5% 3/15/19

333,003

331,026

Series 2769 Class ZA, 5% 9/15/32

487,254

484,703

Series 2780:

Class AZ, 5.5% 3/15/33

700,000

694,531

Class KZ, 5% 4/15/32

1,135,000

1,131,453

Class ZJ, 4.5% 4/15/19

500,000

497,891

Ginnie Mae guaranteed REMIC pass thru securities planned amortization class Series 2001-53 Class TA, 6% 12/20/30

1,552,302

1,582,449

TOTAL U.S. GOVERNMENT AGENCY

114,405,633

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $165,139,975)

167,400,634

Commercial Mortgage Securities - 5.7%

Asset Securitization Corp.:

Series 1995-MD4 Class ACS2, 1.9777% 8/13/29 (c)(e)

31,062,600

2,544,490

Series 1997-D5 Class PS1, 1.3146% 2/14/43 (c)(e)

41,966,212

2,594,981

Banc of America Commercial Mortgage, Inc. Series 2003-1 Class XP1, 1.6731% 9/11/36 (a)(c)(e)

103,390,000

2,867,460

Chase Commercial Mortgage Securities Corp. Series 1999-2:

Class E, 7.734% 1/15/32

1,110,000

1,254,040

Class F, 7.734% 1/15/32

600,000

664,645

COMM floater Series 2001-FL5A:

Class D, 2.35% 11/15/13 (a)(c)

9,000,000

9,004,294

Class E, 2.6% 11/15/13 (a)(c)

5,000,000

5,002,294

CS First Boston Mortgage Securities Corp.:

sequential pay Series 1999-C1 Class A2, 7.29% 9/15/41

1,100,000

1,243,539

Series 1997-C2 Class D, 7.27% 1/17/35

5,175,000

5,718,384

Series 1998-C1 Class D, 7.17% 5/17/40

3,360,000

3,623,805

Series 2003-TFLA Class G, 1.9376% 4/15/13 (a)(c)

700,000

684,412

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class D, 7.231% 6/15/31

$ 935,000

$ 968,039

Fannie Mae sequential pay Series 2000-7 Class MB, 7.5104% 2/17/24 (c)

13,829,275

15,087,009

Fannie Mae guaranteed REMIC pass thru certificates Series 1998-49 Class MI, 0.8933% 6/17/38 (c)(e)

108,791,483

3,554,011

Global Signal Trust Series 2004-1 Class D, 5.098% 1/15/34 (a)

4,000,000

3,899,290

Greenwich Capital Commercial Funding Corp.:

floater Series 2003-FL1 Class MCH, 4.35% 7/5/18 (a)(c)

1,334,176

1,334,176

Series 2002-C1 Class SWDB 5.857% 11/11/19 (a)

2,600,000

2,608,531

GS Mortgage Securities Corp. II Series 1998-GLII Class E, 6.9706% 4/13/31 (c)

390,000

413,541

GS Mortgage Trust II floater Series 2001-FL4A Class D, 2.01% 12/15/10 (a)(c)

329,955

329,603

Leafs CMBS I Ltd. Series 2002 1A Class D, 4.13% 11/20/37 (a)

10,815,000

8,837,883

Morgan Stanley Capital I, Inc. Series 1997-RR Class C, 7.44% 4/30/39 (a)(c)

2,760,143

2,868,544

Thirteen Affiliates of General Growth Properties, Inc. Series 1 Class D1, 6.917% 11/15/04 (a)

18,200,000

18,595,104

Trizechahn Office Properties Trust Series 2001-TZHA Class E3, 7.253% 3/15/13 (a)

7,895,000

8,403,875

TOTAL COMMERCIAL MORTGAGE SECURITIES

(Cost $105,208,934)

102,101,950

Fixed-Income Funds - 23.6%

Shares

Fidelity Ultra-Short Central Fund (d)
(Cost $421,522,002)

4,246,960

423,209,594

Cash Equivalents - 7.0%

Maturity
Amount

Value
(Note 1)

Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.05%, dated 4/30/04 due 5/3/04)
(Cost $126,361,000)

$ 126,372,057

$ 126,361,000

TOTAL INVESTMENT PORTFOLIO - 129.8%

(Cost $2,334,517,516)

2,326,428,001

NET OTHER ASSETS - (29.8)%

(534,639,408)

NET ASSETS - 100%

$ 1,791,788,593

Legend

(a) 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 $75,649,192 or 4.2% of net assets.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

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

(d) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(e) Security represents right to receive monthly interest payments on an underlying pool of mortgages. Principal shown is the par amount of the mortgage pool.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $2,662,759,182 and $2,493,056,791, respectively, of which long-term U.S. government and government agency obligations aggregated $2,652,067,251 and $2,461,380,515, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $126,361,000) (cost $2,334,517,516) - - See accompanying schedule

$ 2,326,428,001

Cash

158,151

Receivable for investments sold

304,454

Receivable for fund shares sold

1,728,354

Interest receivable

7,513,322

Prepaid expenses

7,127

Total assets

2,336,139,409

Liabilities

Payable for investments purchased on a delayed delivery basis

$ 538,461,427

Payable for fund shares redeemed

4,137,078

Distributions payable

542,103

Accrued management fee

643,713

Distribution fees payable

214,474

Other affiliated payables

295,749

Other payables and accrued expenses

56,272

Total liabilities

544,350,816

Net Assets

$ 1,791,788,593

Net Assets consist of:

Paid in capital

$ 1,795,642,602

Undistributed net investment income

2,223,168

Accumulated undistributed net realized gain (loss) on investments

2,012,338

Net unrealized appreciation (depreciation) on investments

(8,089,515)

Net Assets

$ 1,791,788,593

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($59,372,306 ÷ 5,351,102 shares)

$ 11.10

Maximum offering price per share (100/95.25 of $11.10)

$ 11.65

Class T:
Net Asset Value and redemption price per share ($136,425,297 ÷ 12,280,004 shares)

$ 11.11

Maximum offering price per share (100/96.50 of $11.11)

$ 11.51

Class B:
Net Asset Value and offering price per share ($152,311,790 ÷ 13,729,546 shares) A

$ 11.09

Class C:
Net Asset Value and offering price per share ($69,834,081 ÷ 6,300,444 shares) A

$ 11.08

Fidelity Mortgage Securities Fund:
Net Asset Value, offering price and redemption price per share ($1,361,856,679 ÷ 122,540,405 shares)

$ 11.11

Institutional Class:
Net Asset Value, offering price and redemption price per share ($11,988,440 ÷ 1,081,302 shares)

$ 11.09

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 36,864,278

Expenses

Management fee

$ 3,855,373

Transfer agent fees

1,447,950

Distribution fees

1,404,172

Accounting fees and expenses

307,496

Non-interested trustees' compensation

5,784

Custodian fees and expenses

61,218

Registration fees

134,587

Audit

45,674

Legal

6,392

Miscellaneous

8,890

Total expenses before reductions

7,277,536

Expense reductions

(4,562)

7,272,974

Net investment income (loss)

29,591,304

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

4,568,669

Change in net unrealized appreciation (depreciation) on:

Investment securities

(13,148,529)

Delayed delivery commitments

265,969

Total change in net unrealized appreciation (depreciation)

(12,882,560)

Net gain (loss)

(8,313,891)

Net increase (decrease) in net assets resulting from operations

$ 21,277,413

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 29,591,304

$ 50,138,434

Net realized gain (loss)

4,568,669

31,027,960

Change in net unrealized appreciation (depreciation)

(12,882,560)

(15,647,323)

Net increase (decrease) in net assets resulting
from operations

21,277,413

65,519,071

Distributions to shareholders from net investment income

(30,176,733)

(48,528,197)

Distributions to shareholders from net realized gain

(23,782,795)

(12,938,149)

Total distributions

(53,959,528)

(61,466,346)

Share transactions - net increase (decrease)

2,183,448

89,912,217

Total increase (decrease) in net assets

(30,498,667)

93,964,942

Net Assets

Beginning of period

1,822,287,260

1,728,322,318

End of period (including undistributed net investment income of $2,223,168 and undistributed net investment income of $2,808,597, respectively)

$ 1,791,788,593

$ 1,822,287,260

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

$ 10.96

Income from Investment Operations

Net investment income (loss) E

.182

.282

.502 G

.630

.665

.646

Net realized and unrealized gain (loss)

(.047)

.112

.172 G

.613

.086

(.336)

Total from investment operations

.135

.394

.674

1.243

.751

.310

Distributions from net investment income

(.185)

(.274)

(.534)

(.653)

(.701)

(.640)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.335)

(.354)

(.534)

(.653)

(.701)

(.790)

Net asset value, end of period

$ 11.10

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

Total Return B, C, D

1.20%

3.56%

6.26%

12.15%

7.49%

2.93%

Ratios to Average Net Assets F

Expenses before expense reductions

.86% A

.81%

.84%

.85%

.88%

.99%

Expenses net of voluntary waivers, if any

.86% A

.81%

.84%

.85%

.88%

.90%

Expenses net of all reductions

.86% A

.81%

.84%

.85%

.88%

.90%

Net investment income (loss)

3.24% A

2.51%

4.55% G

5.86%

6.44%

6.09%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 59,372

$ 68,939

$ 63,201

$ 15,318

$ 4,610

$ 3,090

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.48

$ 10.96

Income from Investment Operations

Net investment income (loss) E

.175

.270

.492 G

.622

.653

.637

Net realized and unrealized gain (loss)

(.046)

.101

.171 G

.617

.092

(.338)

Total from investment operations

.129

.371

.663

1.239

.745

.299

Distributions from net investment income

(.179)

(.261)

(.523)

(.639)

(.685)

(.629)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.329)

(.341)

(.523)

(.639)

(.685)

(.779)

Net asset value, end of period

$ 11.11

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.48

Total Return B, C, D

1.14%

3.34%

6.15%

12.09%

7.42%

2.82%

Ratios to Average Net Assets F

Expenses before expense reductions

.98% A

.93%

.94%

.96%

1.00%

1.06%

Expenses net of voluntary waivers, if any

.98% A

.93%

.94%

.96%

1.00%

1.00%

Expenses net of all reductions

.97% A

.93%

.94%

.96%

1.00%

1.00%

Net investment income (loss)

3.12% A

2.39%

4.45% G

5.75%

6.33%

5.99%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 136,425

$ 154,810

$ 195,002

$ 106,167

$ 61,359

$ 29,052

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

$ 10.95

Income from Investment Operations

Net investment income (loss) E

.138

.197

.421 G

.551

.593

.567

Net realized and unrealized gain (loss)

(.056)

.112

.171 G

.611

.081

(.324)

Total from investment operations

.082

.309

.592

1.162

.674

.243

Distributions from net investment income

(.142)

(.189)

(.452)

(.572)

(.624)

(.563)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.292)

(.269)

(.452)

(.572)

(.624)

(.713)

Net asset value, end of period

$ 11.09

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

Total Return B, C, D

.72%

2.78%

5.48%

11.32%

6.70%

2.29%

Ratios to Average Net Assets F

Expenses before expense reductions

1.63% A

1.57%

1.58%

1.60%

1.60%

1.62%

Expenses net of voluntary waivers, if any

1.63% A

1.57%

1.58%

1.60%

1.60%

1.62%

Expenses net of all reductions

1.63% A

1.57%

1.57%

1.60%

1.60%

1.62%

Net investment income (loss)

2.46% A

1.75%

3.82% G

5.11%

5.73%

5.37%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 152,312

$ 181,666

$ 176,245

$ 57,034

$ 19,911

$ 19,101

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001 F

Selected Per-Share Data

Net asset value, beginning of period

$ 11.29

$ 11.25

$ 11.10

$ 10.89

Income from Investment Operations

Net investment income (loss) E

.136

.189

.413 H

.112

Net realized and unrealized gain (loss)

(.057)

.112

.173 H

.238

Total from investment operations

.079

.301

.586

.350

Distributions from net investment income

(.139)

(.181)

(.436)

(.140)

Distributions from net realized gain

(.150)

(.080)

-

-

Total distributions

(.289)

(.261)

(.436)

(.140)

Net asset value, end of period

$ 11.08

$ 11.29

$ 11.25

$ 11.10

Total Return B, C, D

.69%

2.71%

5.43%

3.22%

Ratios to Average Net Assets G

Expenses before expense reductions

1.68% A

1.64%

1.64%

1.60%A

Expenses net of voluntary waivers, if any

1.68% A

1.64%

1.64%

1.60%A

Expenses net of all reductions

1.68% A

1.64%

1.64%

1.60%A

Net investment income (loss)

2.42% A

1.68%

3.75% H

4.87%A

Supplemental Data

Net assets, end of period (000 omitted)

$ 69,834

$ 99,237

$ 73,747

$ 2,632

Portfolio turnover rate

227% A

356%

231%

194%

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 For the period August 16, 2001 (commencement of sale of shares) to October 31, 2001.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

H Effective November 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 - Fidelity Mortgage Securities Fund

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.49

$ 10.97

Income from Investment Operations

Net investment income (loss) D

.194

.306

.526 F

.654

.690

.674

Net realized and unrealized gain (loss)

(.046)

.102

.170 F

.619

.078

(.342)

Total from investment operations

.148

.408

.696

1.273

.768

.332

Distributions from net investment income

(.198)

(.298)

(.556)

(.673)

(.718)

(.662)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.348)

(.378)

(.556)

(.673)

(.718)

(.812)

Net asset value, end of period

$ 11.11

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.49

Total Return B, C

1.31%

3.68%

6.47%

12.44%

7.66%

3.14%

Ratios to Average Net Assets E

Expenses before expense reductions

.63% A

.60%

.63%

.66%

.67%

.70%

Expenses net of voluntary waivers, if any

.63% A

.60%

.63%

.66%

.67%

.70%

Expenses net of all reductions

.63% A

.60%

.63%

.66%

.67%

.70%

Net investment income (loss)

3.47% A

2.72%

4.76% F

6.04%

6.65%

6.29%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 1,361,857

$ 1,301,599

$ 1,207,967

$ 429,684

$ 371,107

$ 406,839

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.29

$ 11.25

$ 11.11

$ 10.52

$ 10.47

$ 10.95

Income from Investment Operations

Net investment income (loss) D

.193

.302

.513F

.644

.684

.669

Net realized and unrealized gain (loss)

(.047)

.112

.171F

.610

.080

(.343)

Total from investment operations

.146

.414

.684

1.254

.764

.326

Distributions from net investment income

(.196)

(.294)

(.544)

(.664)

(.714)

(.656)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.346)

(.374)

(.544)

(.664)

(.714)

(.806)

Net asset value,
end of period

$ 11.09

$ 11.29

$ 11.25

$ 11.11

$ 10.52

$ 10.47

Total Return B, C

1.30%

3.75%

6.36%

12.27%

7.64%

3.09%

Ratios to Average Net Assets E

Expenses before expense reductions

.66% A

.63%

.75%

.76%

.73%

.75%

Expenses net of voluntary waivers, if any

.66% A

.63%

.75%

.75%

.73%

.75%

Expenses net of all reductions

.66% A

.63%

.75%

.75%

.72%

.75%

Net investment income (loss)

3.44% A

2.69%

4.65%F

5.95%

6.60%

6.24%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 11,988

$ 16,036

$ 12,162

$ 7,319

$ 9,038

$ 15,422

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Mortgage Securities 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, Fidelity Mortgage Securities Fund 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 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. 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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 prior period premium and discount on debt securities, market discount, financing transactions and losses deferred due to wash sales.

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

Unrealized appreciation

$ 12,196,674

|

Unrealized depreciation

(16,812,790)

Net unrealized appreciation (depreciation)

$ (4,616,116)

Cost for federal income tax purposes

$ 2,331,044,117

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).

Semiannual Report

2. Operating Policies - continued

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

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.

Financing Transactions. To earn additional income, the fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but will be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the fund's right to repurchase or sell securities may be limited.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

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 .30% 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 .43% of the fund's average net assets.

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%

$ 48,623

$ 315

Class T

0%

.25%

177,595

5,014

Class B

.65%

.25%

753,109

545,080

Class C

.75%

.25%

424,845

162,224

$ 1,404,172

$ 712,633

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.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Sales Load - continued

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

Retained
by FDC

Class A

$ 20,719

Class T

10,755

Class B*

293,609

Class C

19,666

$ 344,749

* 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, except for Fidelity Mortgage Securities Fund. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, , is the transfer agent for Fidelity Mortgage Securities Fund shares. FIIOC and FSC receive account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC or FSC, were as follows:

Amount

% of
Average
Net Assets

Class A

$ 70,158

.22*

Class T

163,884

.23*

Class B

197,921

.24*

Class C

78,313

.19*

Fidelity Mortgage Securities Fund

926,143

.14*

Institutional Class

11,531

.17*

$ 1,447,950

* Annualized

Accounting Fees. FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

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 $3,588,762 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 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 and each class' transfer agent, 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 $4,038. During the period, credits reduced each class' transfer agent expense as noted in the table below.

Transfer Agent
expense reduction

|

Class A

$ 524

Semiannual Report

7. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,065,337

$ 1,812,935

Class T

2,244,891

4,490,594

Class B

2,096,653

3,348,473

Class C

1,044,290

1,676,928

Fidelity Mortgage Securities Fund

23,490,225

36,645,682

Institutional Class

235,337

553,585

Total

$ 30,176,733

$ 48,528,197

From net realized gain

Class A

$ 889,212

$ 479,109

Class T

1,953,109

1,375,548

Class B

2,324,329

1,317,977

Class C

1,222,549

596,490

Fidelity Mortgage Securities Fund

17,202,689

9,053,280

Institutional Class

190,907

115,745

Total

$ 23,782,795

$ 12,938,149

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

970,610

4,143,379

$ 10,937,504

$ 46,659,814

Reinvestment of distributions

149,394

170,427

1,677,007

1,915,973

Shares redeemed

(1,871,084)

(3,823,033)

(21,074,324)

(42,999,421)

Net increase (decrease)

(751,080)

490,773

$ (8,459,813)

$ 5,576,366

Class T

Shares sold

2,455,583

9,900,926

$ 27,703,636

$ 111,507,763

Reinvestment of distributions

347,898

461,144

3,908,946

5,189,781

Shares redeemed

(4,209,620)

(13,969,922)

(47,427,915)

(157,166,356)

Net increase (decrease)

(1,406,139)

(3,607,852)

$ (15,815,333)

$ (40,468,812)

Class B

Shares sold

472,150

7,431,196

$ 5,321,043

$ 83,615,486

Reinvestment of distributions

324,703

324,294

3,643,353

3,643,707

Shares redeemed

(3,149,622)

(7,323,983)

(35,462,992)

(82,328,932)

Net increase (decrease)

(2,352,769)

431,507

$ (26,498,596)

$ 4,930,261

Class C

Shares sold

450,112

7,174,688

$ 5,066,978

$ 80,647,975

Reinvestment of distributions

155,658

158,593

1,745,069

1,780,642

Shares redeemed

(3,098,042)

(5,094,649)

(34,856,896)

(57,171,194)

Net increase (decrease)

(2,492,272)

2,238,632

$ (28,044,849)

$ 25,257,423

Fidelity Mortgage Securities Fund

Shares sold

27,887,079

74,892,943

$ 314,595,084

$ 844,372,051

Reinvestment of distributions

3,321,499

3,676,167

37,344,245

41,396,427

Shares redeemed

(23,702,105)

(70,626,654)

(267,115,975)

(794,954,735)

Net increase (decrease)

7,506,473

7,942,456

$ 84,823,354

$ 90,813,743

Institutional Class

Shares sold

166,614

2,242,760

$ 1,874,213

$ 25,207,417

Reinvestment of distributions

26,698

42,862

299,426

481,820

Shares redeemed

(532,533)

(1,945,702)

(5,994,954)

(21,886,001)

Net increase (decrease)

(339,221)

339,920

$ (3,821,315)

$ 3,803,236

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Investments Money Management, 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

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

Fidelity Investments Institutional Operations Company, Inc.

Boston, MA

Custodian

The Bank of New York

New York, NY

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

AMORI-USAN-0604
1.784899.101

Fidelity

Mortgage Securities

Fund

(A Class of Fidelity® Advisor Mortgage
Securities Fund)

Semiannual Report

April 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 visit www.fidelity.com/goto/proxyguidelines, call 1-800-544-8544, 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 fund, including charges and expenses, call 1-800-544-6666 for a free prospectus. Read it carefully before you invest or send money.

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

Coupon Distribution as of April 30, 2004

% of fund's
investments

% of fund's investments
6 months ago

Less than 1%

0.2

0.6

1 - 1.99%

12.7

11.9

2 - 2.99%

2.7

2.3

3 - 3.99%

1.9

1.5

4 - 4.99%

16.6

8.3

5 - 5.99%

24.9

24.7

6 - 6.99%

24.7

24.3

7 - 7.99%

8.8

9.3

8% and over

1.2

1.7

Coupon distribution shows the range of stated interest rates on the fund's investments, excluding short-term investments.

Average Years to Maturity as of April 30, 2004

6 months ago

Years

4.1

2.1

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

4.0

3.7

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Asset Allocation (% of fund's net assets)

As of April 30, 2004 *

As of October 31, 2003 **

Corporate Bonds 1.2%

Corporate Bonds 1.6%

Mortgage
Securities 82.7%

Mortgage
Securities 83.6%

CMOs and Other Mortgage Related Securities 20.4%

CMOs and Other Mortgage Related Securities 19.7%

U.S. Government
Agency Obligations 1.8%

U.S. Government
Agency Obligations 2.3%

Asset-Backed
Securities 10.4%

Asset-Backed
Securities 11.8%

Short-Term
Investments and
Net Other Assets(dagger) (16.5)%

Short-Term
Investments and
Net Other Assets(dagger) (19.0)%

* Foreign investments

0.6%

** Foreign investments

0.4%

* Futures and Swaps

0.2%

** Futures and Swaps

(0.3)%



(dagger) Short-Term Investments and Net Other Assets are not included in the pie chart.

The information in the above tables is based on the combined investments of the fund and its pro-rata share of the investments of Fidelity's fixed-income central fund.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

U.S. Government Agency - Mortgage Securities - 82.7%

Principal
Amount

Value
(Note 1)

Fannie Mae - 61.8%

4% 3/1/19 to 4/1/19

$ 21,192,722

$ 20,398,941

4% 5/1/19 (b)

61,541,276

59,156,549

4.5% 5/1/19 (b)

140,000,000

135,975,000

4.5% 9/1/31 to 12/1/33

154,913,600

145,567,690

5% 9/1/16 to 11/1/18

82,297,204

82,888,006

5% 5/1/19 (b)

60,000,000

59,445,313

5.5% 7/1/16 to 12/1/33

161,982,822

163,746,662

5.5% 5/1/19 (b)

144,288,210

145,963,205

6% 4/1/13 to 8/1/31

58,659,064

60,833,414

6% 5/1/34 (b)

63,470,400

64,918,319

6.5% 4/1/10 to 11/1/33

123,635,878

128,900,720

7% 3/1/17 to 10/1/33

24,479,921

25,929,166

7.5% 4/1/22 to 9/1/32

8,883,365

9,506,384

8% 9/1/07 to 12/1/29

80,184

86,431

8.25% 1/1/13

7,069

7,444

8.5% 1/1/16 to 7/1/31

1,248,221

1,340,366

8.75% 11/1/08

7,612

7,913

9% 1/1/08 to 10/1/30

2,016,047

2,202,895

9.5% 11/1/06 to 8/1/22

337,795

374,080

11% 8/1/10

193,382

216,053

12.25% 5/1/13 to 5/1/15

57,202

65,423

12.5% 8/1/15 to 3/1/16

93,564

107,545

12.75% 2/1/15

5,401

6,210

13.5% 9/1/14 to 12/1/14

36,787

42,798

14% 11/1/14

36,787

43,036

1,107,729,563

Freddie Mac - 7.5%

5% 5/1/33 to 12/1/33

97,518,610

94,619,149

5.5% 3/1/29 to 7/1/29

163,918

164,238

6% 5/1/16 to 7/1/29

2,780,617

2,885,311

6.5% 1/1/24 to 9/1/24

3,720,636

3,890,909

7.5% 2/1/08 to 7/1/32

27,672,370

29,658,631

8% 10/1/07 to 4/1/21

130,127

141,281

8.5% 7/1/09 to 9/1/20

385,305

420,719

9% 9/1/08 to 5/1/21

997,189

1,102,968

10% 1/1/09 to 5/1/19

360,506

400,161

10.5% 8/1/10 to 2/1/16

25,390

28,151

12.25% 6/1/14

16,315

18,652

12.5% 5/1/12 to 12/1/14

152,562

174,179

U.S. Government Agency - Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Freddie Mac - continued

12.75% 2/1/13 to 1/1/14

$ 12,171

$ 13,837

13% 12/1/13 to 6/1/15

281,518

323,300

133,841,486

Government National Mortgage Association - 13.4%

6% 10/20/33 to 1/20/34

145,276,536

148,871,663

6.5% 5/15/28 to 8/15/32

6,087,333

6,359,950

7% 2/15/24 to 7/15/32

6,890,638

7,332,044

7% 5/1/34 (b)

63,000,000

66,957,188

7.5% 7/15/05 to 4/15/32

4,718,668

5,077,281

8% 6/15/06 to 12/15/25

1,567,618

1,713,190

8.5% 7/15/16 to 10/15/28

2,853,581

3,154,097

9% 9/20/16 to 11/20/17

22,102

24,499

9.5% 12/15/24

4,868

5,474

10.5% 12/20/15 to 2/20/18

144,822

162,620

13% 10/15/13

33,118

38,386

13.5% 7/15/11 to 10/15/14

20,170

23,421

239,719,813

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $1,490,470,640)

1,481,290,862

Asset-Backed Securities - 1.5%

ACE Securities Corp. Series 2003-FM1 Class M2, 2.95% 11/25/32 (c)

1,450,000

1,479,448

Amortizing Residential Collateral Trust Series 2002-BC3N Class B2, 7% 6/25/32 (a)

21,309

21,213

CDC Mortgage Capital Trust Series 2003-HE2 Class M2, 3% 10/25/33 (c)

1,264,987

1,304,897

GSAMP NIMS Trust Series 2002-HE2N Class NOTE, 8.25% 10/20/32 (a)

13,030

13,037

Home Equity Asset Trust NIMS Trust:

Series 2002-4N Class A, 8% 5/27/33 (a)

470,690

470,690

Series 2003-2N Class A, 8% 9/27/33 (a)

716,887

720,471

Home Equity Residual Distributions Trust Series 2002-1 Class A, 12.25% 11/25/05 (a)

2,575,000

2,575,000

Long Beach Mortgage Loan Trust Series 2003-3:

Class M1, 1.85% 7/25/33 (c)

3,770,000

3,808,846

Class M2, 2.95% 7/25/33 (c)

2,600,000

2,674,811

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Morgan Stanley ABS Capital I, Inc.:

Series 2002-NC6N Class NOTE, 9.5% 9/25/32 (a)

$ 17,540

$ 17,650

Series 2003-NC6 Class M2, 3.05% 6/27/33 (c)

6,165,000

6,304,124

Morgan Stanley Dean Witter Capital I Trust, Series 2003-NC2N Class NOTE, 9.5% 12/25/32 (a)

1,053,966

1,058,577

Residential Asset Mortgage Products, Inc. Series 2003-RZ2 Class A1, 3.6% 4/25/33

3,208,330

3,132,759

Salomon Brothers Mortgage Securities VII, Inc. Series 2003-UP1 Class A, 3.45% 4/25/32 (a)

2,514,039

2,482,438

TOTAL ASSET-BACKED SECURITIES

(Cost $25,814,965)

26,063,961

Collateralized Mortgage Obligations - 9.3%

Private Sponsor - 2.9%

Countrywide Home Loans, Inc. sequential pay:

Series 2002-25 Class 2A1, 5.5% 11/27/17

2,111,909

2,144,264

Series 2002-5 Class 2A1, 6% 4/25/17

2,505,928

2,519,549

Credit Suisse First Boston Mortgage Acceptance Corp. sequential pay Series 2003-1 Class 3A8, 6% 1/25/33

15,140,000

14,875,050

CS First Boston Mortgage Securities Corp.:

sequential pay Series 2001-26 Class 3A1, 7.5% 11/25/31

859,139

873,607

Series 2002-15R Class A1, 8.1118% 1/28/32 (a)(c)

2,455,213

2,472,092

Series 2003-TFLA Class F, 1.9376% 4/15/13 (a)(c)

1,400,000

1,382,558

Master Alternative Loan Trust Series 2003-2 Class 4A1, 6.5% 4/25/18

21,591,012

22,260,718

Residential Asset Mortgage Products, Inc. sequential pay Series 2003-SL1 Class A31, 7.125% 4/25/31

3,806,217

3,967,981

WAMU Mortgage pass thru certificates sequential pay Series 2002-S6 Class A25, 6% 10/25/32

2,457,804

2,499,182

TOTAL PRIVATE SPONSOR

52,995,001

U.S. Government Agency - 6.4%

Fannie Mae:

planned amortization class:

Series 1993-187 Class L, 6.5% 7/25/23

4,187,000

4,440,446

Series 1999-1 Class PJ, 6.5% 2/25/29

10,049,260

10,531,307

Series 1999-15 Class PC, 6% 9/25/18

8,537,689

8,907,587

sequential pay Series 1999-10 Class MZ, 6.5% 9/17/38

4,284,375

4,494,744

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Fannie Mae guaranteed REMIC pass thru certificates:

planned amortization class:

Series 1999-51 Class LK, 6.5% 8/25/29

$ 10,000,000

$ 10,627,693

Series 2002-9 Class C, 6.5% 6/25/30

5,000,000

5,322,623

Series 2003-73 Class GA, 3.5% 5/25/31

15,530,393

14,948,447

sequential pay:

Series 2001-15 Class VA, 6% 6/25/10

324,068

327,977

Series 2001-82 Class VB, 6.5% 3/25/16

15,577,127

15,949,848

Series 2002-50 Class LE, 7% 12/25/29

1,253,909

1,292,823

Series 2003-122:

Class ZG, 5% 12/25/23

1,654,338

1,660,993

Class ZK, 5.5% 12/25/33

513,091

512,864

Series 2003-128 Class NZ, 4% 1/25/19

629,189

629,507

Series 2003-84 Class GZ, 4.5% 9/25/18

530,311

529,968

Series 2004-21 Class ZJ, 5.5% 6/25/32

1,202,054

1,211,283

Series 2004-28 Class ZK, 5.5% 5/25/34

1,500,000

1,492,969

Series 2004-29:

Class ZE, 4.5% 1/25/32

400,000

395,000

Class ZM, 5.5% 5/25/34

600,000

596,625

Freddie Mac:

planned amortization class:

Series 2343 Class GD, 6.5% 1/15/30

1,248,916

1,254,328

Series 70 Class C, 9% 9/15/20

412,594

413,234

Series 2794 Class ZL, 6% 5/1/34 (b)

650,000

646,344

Freddie Mac Multi-class participation certificates guaranteed:

planned amortization class:

Series 2368 Class PQ, 6.5% 8/15/30

1,372,560

1,392,627

Series 2435 Class GD, 6.5% 2/15/30

1,645,748

1,664,136

Series 2557 Class MA, 4.5% 7/15/16

942,921

960,968

sequential pay:

Series 2303 Class VT, 6% 2/15/12

978,685

980,999

Series 2445 Class BD, 6.5% 6/15/30

423,534

426,293

Series 2750 Class ZT, 5% 2/15/34

2,188,121

1,794,222

Series 1658 Class GZ, 7% 1/15/24

6,216,909

6,587,591

Series 2568 Class SA, 10.56% 9/15/28 (c)

1,748,782

1,780,496

Series 2691 Class ZE, 5.5% 5/15/33

241,900

241,720

Series 2706 Class EZ, 5% 11/15/23

492,571

495,139

Series 2707 Class ZA, 4.5% 11/15/18

607,870

605,590

Series 2750 Class CZ, 5% 11/15/32

1,765,496

1,766,657

Series 2756 Class ZY, 5% 2/15/24

2,222,686

2,227,622

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

U.S. Government Agency - continued

Freddie Mac Multi-class participation certificates guaranteed: - continued

Series 2764:

Class DZ, 5% 2/15/33

$ 1,750,036

$ 1,741,286

Class ZA, 5% 10/15/32

309,123

307,481

Class ZB, 5% 3/15/33

527,274

524,143

Class ZC, 4.5% 3/15/19

333,003

331,026

Series 2769 Class ZA, 5% 9/15/32

487,254

484,703

Series 2780:

Class AZ, 5.5% 3/15/33

700,000

694,531

Class KZ, 5% 4/15/32

1,135,000

1,131,453

Class ZJ, 4.5% 4/15/19

500,000

497,891

Ginnie Mae guaranteed REMIC pass thru securities planned amortization class Series 2001-53 Class TA, 6% 12/20/30

1,552,302

1,582,449

TOTAL U.S. GOVERNMENT AGENCY

114,405,633

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $165,139,975)

167,400,634

Commercial Mortgage Securities - 5.7%

Asset Securitization Corp.:

Series 1995-MD4 Class ACS2, 1.9777% 8/13/29 (c)(e)

31,062,600

2,544,490

Series 1997-D5 Class PS1, 1.3146% 2/14/43 (c)(e)

41,966,212

2,594,981

Banc of America Commercial Mortgage, Inc. Series 2003-1 Class XP1, 1.6731% 9/11/36 (a)(c)(e)

103,390,000

2,867,460

Chase Commercial Mortgage Securities Corp. Series 1999-2:

Class E, 7.734% 1/15/32

1,110,000

1,254,040

Class F, 7.734% 1/15/32

600,000

664,645

COMM floater Series 2001-FL5A:

Class D, 2.35% 11/15/13 (a)(c)

9,000,000

9,004,294

Class E, 2.6% 11/15/13 (a)(c)

5,000,000

5,002,294

CS First Boston Mortgage Securities Corp.:

sequential pay Series 1999-C1 Class A2, 7.29% 9/15/41

1,100,000

1,243,539

Series 1997-C2 Class D, 7.27% 1/17/35

5,175,000

5,718,384

Series 1998-C1 Class D, 7.17% 5/17/40

3,360,000

3,623,805

Series 2003-TFLA Class G, 1.9376% 4/15/13 (a)(c)

700,000

684,412

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class D, 7.231% 6/15/31

$ 935,000

$ 968,039

Fannie Mae sequential pay Series 2000-7 Class MB, 7.5104% 2/17/24 (c)

13,829,275

15,087,009

Fannie Mae guaranteed REMIC pass thru certificates Series 1998-49 Class MI, 0.8933% 6/17/38 (c)(e)

108,791,483

3,554,011

Global Signal Trust Series 2004-1 Class D, 5.098% 1/15/34 (a)

4,000,000

3,899,290

Greenwich Capital Commercial Funding Corp.:

floater Series 2003-FL1 Class MCH, 4.35% 7/5/18 (a)(c)

1,334,176

1,334,176

Series 2002-C1 Class SWDB 5.857% 11/11/19 (a)

2,600,000

2,608,531

GS Mortgage Securities Corp. II Series 1998-GLII Class E, 6.9706% 4/13/31 (c)

390,000

413,541

GS Mortgage Trust II floater Series 2001-FL4A Class D, 2.01% 12/15/10 (a)(c)

329,955

329,603

Leafs CMBS I Ltd. Series 2002 1A Class D, 4.13% 11/20/37 (a)

10,815,000

8,837,883

Morgan Stanley Capital I, Inc. Series 1997-RR Class C, 7.44% 4/30/39 (a)(c)

2,760,143

2,868,544

Thirteen Affiliates of General Growth Properties, Inc. Series 1 Class D1, 6.917% 11/15/04 (a)

18,200,000

18,595,104

Trizechahn Office Properties Trust Series 2001-TZHA Class E3, 7.253% 3/15/13 (a)

7,895,000

8,403,875

TOTAL COMMERCIAL MORTGAGE SECURITIES

(Cost $105,208,934)

102,101,950

Fixed-Income Funds - 23.6%

Shares

Fidelity Ultra-Short Central Fund (d)
(Cost $421,522,002)

4,246,960

423,209,594

Cash Equivalents - 7.0%

Maturity
Amount

Value
(Note 1)

Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.05%, dated 4/30/04 due 5/3/04)
(Cost $126,361,000)

$ 126,372,057

$ 126,361,000

TOTAL INVESTMENT PORTFOLIO - 129.8%

(Cost $2,334,517,516)

2,326,428,001

NET OTHER ASSETS - (29.8)%

(534,639,408)

NET ASSETS - 100%

$ 1,791,788,593

Legend

(a) 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 $75,649,192 or 4.2% of net assets.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

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

(d) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(e) Security represents right to receive monthly interest payments on an underlying pool of mortgages. Principal shown is the par amount of the mortgage pool.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $2,662,759,182 and $2,493,056,791, respectively, of which long-term U.S. government and government agency obligations aggregated $2,652,067,251 and $2,461,380,515, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $126,361,000) (cost $2,334,517,516) - - See accompanying schedule

$ 2,326,428,001

Cash

158,151

Receivable for investments sold

304,454

Receivable for fund shares sold

1,728,354

Interest receivable

7,513,322

Prepaid expenses

7,127

Total assets

2,336,139,409

Liabilities

Payable for investments purchased on a delayed delivery basis

$ 538,461,427

Payable for fund shares redeemed

4,137,078

Distributions payable

542,103

Accrued management fee

643,713

Distribution fees payable

214,474

Other affiliated payables

295,749

Other payables and accrued expenses

56,272

Total liabilities

544,350,816

Net Assets

$ 1,791,788,593

Net Assets consist of:

Paid in capital

$ 1,795,642,602

Undistributed net investment income

2,223,168

Accumulated undistributed net realized gain (loss) on investments

2,012,338

Net unrealized appreciation (depreciation) on investments

(8,089,515)

Net Assets

$ 1,791,788,593

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($59,372,306 ÷ 5,351,102 shares)

$ 11.10

Maximum offering price per share (100/95.25 of $11.10)

$ 11.65

Class T:
Net Asset Value and redemption price per share ($136,425,297 ÷ 12,280,004 shares)

$ 11.11

Maximum offering price per share (100/96.50 of $11.11)

$ 11.51

Class B:
Net Asset Value and offering price per share ($152,311,790 ÷ 13,729,546 shares) A

$ 11.09

Class C:
Net Asset Value and offering price per share ($69,834,081 ÷ 6,300,444 shares) A

$ 11.08

Fidelity Mortgage Securities Fund:
Net Asset Value, offering price and redemption price per share ($1,361,856,679 ÷ 122,540,405 shares)

$ 11.11

Institutional Class:
Net Asset Value, offering price and redemption price per share ($11,988,440 ÷ 1,081,302 shares)

$ 11.09

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 36,864,278

Expenses

Management fee

$ 3,855,373

Transfer agent fees

1,447,950

Distribution fees

1,404,172

Accounting fees and expenses

307,496

Non-interested trustees' compensation

5,784

Custodian fees and expenses

61,218

Registration fees

134,587

Audit

45,674

Legal

6,392

Miscellaneous

8,890

Total expenses before reductions

7,277,536

Expense reductions

(4,562)

7,272,974

Net investment income (loss)

29,591,304

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

4,568,669

Change in net unrealized appreciation (depreciation) on:

Investment securities

(13,148,529)

Delayed delivery commitments

265,969

Total change in net unrealized appreciation (depreciation)

(12,882,560)

Net gain (loss)

(8,313,891)

Net increase (decrease) in net assets resulting from operations

$ 21,277,413

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 29,591,304

$ 50,138,434

Net realized gain (loss)

4,568,669

31,027,960

Change in net unrealized appreciation (depreciation)

(12,882,560)

(15,647,323)

Net increase (decrease) in net assets resulting
from operations

21,277,413

65,519,071

Distributions to shareholders from net investment income

(30,176,733)

(48,528,197)

Distributions to shareholders from net realized gain

(23,782,795)

(12,938,149)

Total distributions

(53,959,528)

(61,466,346)

Share transactions - net increase (decrease)

2,183,448

89,912,217

Total increase (decrease) in net assets

(30,498,667)

93,964,942

Net Assets

Beginning of period

1,822,287,260

1,728,322,318

End of period (including undistributed net investment income of $2,223,168 and undistributed net investment income of $2,808,597, respectively)

$ 1,791,788,593

$ 1,822,287,260

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

$ 10.96

Income from Investment Operations

Net investment income (loss) E

.182

.282

.502 G

.630

.665

.646

Net realized and unrealized gain (loss)

(.047)

.112

.172 G

.613

.086

(.336)

Total from investment operations

.135

.394

.674

1.243

.751

.310

Distributions from net investment income

(.185)

(.274)

(.534)

(.653)

(.701)

(.640)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.335)

(.354)

(.534)

(.653)

(.701)

(.790)

Net asset value, end of period

$ 11.10

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

Total Return B, C, D

1.20%

3.56%

6.26%

12.15%

7.49%

2.93%

Ratios to Average Net Assets F

Expenses before expense reductions

.86% A

.81%

.84%

.85%

.88%

.99%

Expenses net of voluntary waivers, if any

.86% A

.81%

.84%

.85%

.88%

.90%

Expenses net of all reductions

.86% A

.81%

.84%

.85%

.88%

.90%

Net investment income (loss)

3.24% A

2.51%

4.55% G

5.86%

6.44%

6.09%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 59,372

$ 68,939

$ 63,201

$ 15,318

$ 4,610

$ 3,090

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.48

$ 10.96

Income from Investment Operations

Net investment income (loss) E

.175

.270

.492 G

.622

.653

.637

Net realized and unrealized gain (loss)

(.046)

.101

.171 G

.617

.092

(.338)

Total from investment operations

.129

.371

.663

1.239

.745

.299

Distributions from net investment income

(.179)

(.261)

(.523)

(.639)

(.685)

(.629)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.329)

(.341)

(.523)

(.639)

(.685)

(.779)

Net asset value, end of period

$ 11.11

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.48

Total Return B, C, D

1.14%

3.34%

6.15%

12.09%

7.42%

2.82%

Ratios to Average Net Assets F

Expenses before expense reductions

.98% A

.93%

.94%

.96%

1.00%

1.06%

Expenses net of voluntary waivers, if any

.98% A

.93%

.94%

.96%

1.00%

1.00%

Expenses net of all reductions

.97% A

.93%

.94%

.96%

1.00%

1.00%

Net investment income (loss)

3.12% A

2.39%

4.45% G

5.75%

6.33%

5.99%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 136,425

$ 154,810

$ 195,002

$ 106,167

$ 61,359

$ 29,052

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

$ 10.95

Income from Investment Operations

Net investment income (loss) E

.138

.197

.421 G

.551

.593

.567

Net realized and unrealized gain (loss)

(.056)

.112

.171 G

.611

.081

(.324)

Total from investment operations

.082

.309

.592

1.162

.674

.243

Distributions from net investment income

(.142)

(.189)

(.452)

(.572)

(.624)

(.563)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.292)

(.269)

(.452)

(.572)

(.624)

(.713)

Net asset value, end of period

$ 11.09

$ 11.30

$ 11.26

$ 11.12

$ 10.53

$ 10.48

Total Return B, C, D

.72%

2.78%

5.48%

11.32%

6.70%

2.29%

Ratios to Average Net Assets F

Expenses before expense reductions

1.63% A

1.57%

1.58%

1.60%

1.60%

1.62%

Expenses net of voluntary waivers, if any

1.63% A

1.57%

1.58%

1.60%

1.60%

1.62%

Expenses net of all reductions

1.63% A

1.57%

1.57%

1.60%

1.60%

1.62%

Net investment income (loss)

2.46% A

1.75%

3.82% G

5.11%

5.73%

5.37%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 152,312

$ 181,666

$ 176,245

$ 57,034

$ 19,911

$ 19,101

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001 F

Selected Per-Share Data

Net asset value, beginning of period

$ 11.29

$ 11.25

$ 11.10

$ 10.89

Income from Investment Operations

Net investment income (loss) E

.136

.189

.413 H

.112

Net realized and unrealized gain (loss)

(.057)

.112

.173 H

.238

Total from investment operations

.079

.301

.586

.350

Distributions from net investment income

(.139)

(.181)

(.436)

(.140)

Distributions from net realized gain

(.150)

(.080)

-

-

Total distributions

(.289)

(.261)

(.436)

(.140)

Net asset value, end of period

$ 11.08

$ 11.29

$ 11.25

$ 11.10

Total Return B, C, D

.69%

2.71%

5.43%

3.22%

Ratios to Average Net Assets G

Expenses before expense reductions

1.68% A

1.64%

1.64%

1.60%A

Expenses net of voluntary waivers, if any

1.68% A

1.64%

1.64%

1.60%A

Expenses net of all reductions

1.68% A

1.64%

1.64%

1.60%A

Net investment income (loss)

2.42% A

1.68%

3.75% H

4.87%A

Supplemental Data

Net assets, end of period (000 omitted)

$ 69,834

$ 99,237

$ 73,747

$ 2,632

Portfolio turnover rate

227% A

356%

231%

194%

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 For the period August 16, 2001 (commencement of sale of shares) to October 31, 2001.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

H Effective November 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 - Fidelity Mortgage Securities Fund

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.49

$ 10.97

Income from Investment Operations

Net investment income (loss) D

.194

.306

.526 F

.654

.690

.674

Net realized and unrealized gain (loss)

(.046)

.102

.170 F

.619

.078

(.342)

Total from investment operations

.148

.408

.696

1.273

.768

.332

Distributions from net investment income

(.198)

(.298)

(.556)

(.673)

(.718)

(.662)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.348)

(.378)

(.556)

(.673)

(.718)

(.812)

Net asset value, end of period

$ 11.11

$ 11.31

$ 11.28

$ 11.14

$ 10.54

$ 10.49

Total Return B, C

1.31%

3.68%

6.47%

12.44%

7.66%

3.14%

Ratios to Average Net Assets E

Expenses before expense reductions

.63% A

.60%

.63%

.66%

.67%

.70%

Expenses net of voluntary waivers, if any

.63% A

.60%

.63%

.66%

.67%

.70%

Expenses net of all reductions

.63% A

.60%

.63%

.66%

.67%

.70%

Net investment income (loss)

3.47% A

2.72%

4.76% F

6.04%

6.65%

6.29%

Supplemental Data

Net assets,
end of period (000 omitted)

$ 1,361,857

$ 1,301,599

$ 1,207,967

$ 429,684

$ 371,107

$ 406,839

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.29

$ 11.25

$ 11.11

$ 10.52

$ 10.47

$ 10.95

Income from Investment Operations

Net investment income (loss) D

.193

.302

.513F

.644

.684

.669

Net realized and unrealized gain (loss)

(.047)

.112

.171F

.610

.080

(.343)

Total from investment operations

.146

.414

.684

1.254

.764

.326

Distributions from net investment income

(.196)

(.294)

(.544)

(.664)

(.714)

(.656)

Distributions from net realized gain

(.150)

(.080)

-

-

-

(.150)

Total distributions

(.346)

(.374)

(.544)

(.664)

(.714)

(.806)

Net asset value,
end of period

$ 11.09

$ 11.29

$ 11.25

$ 11.11

$ 10.52

$ 10.47

Total Return B, C

1.30%

3.75%

6.36%

12.27%

7.64%

3.09%

Ratios to Average Net Assets E

Expenses before expense reductions

.66% A

.63%

.75%

.76%

.73%

.75%

Expenses net of voluntary waivers, if any

.66% A

.63%

.75%

.75%

.73%

.75%

Expenses net of all reductions

.66% A

.63%

.75%

.75%

.72%

.75%

Net investment income (loss)

3.44% A

2.69%

4.65%F

5.95%

6.60%

6.24%

Supplemental Data

Net assets,
end of period
(000 omitted)

$ 11,988

$ 16,036

$ 12,162

$ 7,319

$ 9,038

$ 15,422

Portfolio turnover rate

227% A

356%

231%

194%

99%

183%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Mortgage Securities 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, Fidelity Mortgage Securities Fund 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 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. 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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 prior period premium and discount on debt securities, market discount, financing transactions and losses deferred due to wash sales.

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

Unrealized appreciation

$ 12,196,674

|

Unrealized depreciation

(16,812,790)

Net unrealized appreciation (depreciation)

$ (4,616,116)

Cost for federal income tax purposes

$ 2,331,044,117

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).

Semiannual Report

2. Operating Policies - continued

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

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.

Financing Transactions. To earn additional income, the fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but will be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the fund's right to repurchase or sell securities may be limited.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

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 .30% 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 .43% of the fund's average net assets.

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%

$ 48,623

$ 315

Class T

0%

.25%

177,595

5,014

Class B

.65%

.25%

753,109

545,080

Class C

.75%

.25%

424,845

162,224

$ 1,404,172

$ 712,633

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.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Sales Load - continued

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

Retained
by FDC

Class A

$ 20,719

Class T

10,755

Class B*

293,609

Class C

19,666

$ 344,749

* 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, except for Fidelity Mortgage Securities Fund. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, , is the transfer agent for Fidelity Mortgage Securities Fund shares. FIIOC and FSC receive account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period the total transfer agent fees paid by each class to FIIOC or FSC, were as follows:

Amount

% of
Average
Net Assets

Class A

$ 70,158

.22*

Class T

163,884

.23*

Class B

197,921

.24*

Class C

78,313

.19*

Fidelity Mortgage Securities Fund

926,143

.14*

Institutional Class

11,531

.17*

$ 1,447,950

* Annualized

Accounting Fees. FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

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 $3,588,762 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 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 and each class' transfer agent, 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 $4,038. During the period, credits reduced each class' transfer agent expense as noted in the table below.

Transfer Agent
expense reduction

|

Class A

$ 524

Semiannual Report

7. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,065,337

$ 1,812,935

Class T

2,244,891

4,490,594

Class B

2,096,653

3,348,473

Class C

1,044,290

1,676,928

Fidelity Mortgage Securities Fund

23,490,225

36,645,682

Institutional Class

235,337

553,585

Total

$ 30,176,733

$ 48,528,197

From net realized gain

Class A

$ 889,212

$ 479,109

Class T

1,953,109

1,375,548

Class B

2,324,329

1,317,977

Class C

1,222,549

596,490

Fidelity Mortgage Securities Fund

17,202,689

9,053,280

Institutional Class

190,907

115,745

Total

$ 23,782,795

$ 12,938,149

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

970,610

4,143,379

$ 10,937,504

$ 46,659,814

Reinvestment of distributions

149,394

170,427

1,677,007

1,915,973

Shares redeemed

(1,871,084)

(3,823,033)

(21,074,324)

(42,999,421)

Net increase (decrease)

(751,080)

490,773

$ (8,459,813)

$ 5,576,366

Class T

Shares sold

2,455,583

9,900,926

$ 27,703,636

$ 111,507,763

Reinvestment of distributions

347,898

461,144

3,908,946

5,189,781

Shares redeemed

(4,209,620)

(13,969,922)

(47,427,915)

(157,166,356)

Net increase (decrease)

(1,406,139)

(3,607,852)

$ (15,815,333)

$ (40,468,812)

Class B

Shares sold

472,150

7,431,196

$ 5,321,043

$ 83,615,486

Reinvestment of distributions

324,703

324,294

3,643,353

3,643,707

Shares redeemed

(3,149,622)

(7,323,983)

(35,462,992)

(82,328,932)

Net increase (decrease)

(2,352,769)

431,507

$ (26,498,596)

$ 4,930,261

Class C

Shares sold

450,112

7,174,688

$ 5,066,978

$ 80,647,975

Reinvestment of distributions

155,658

158,593

1,745,069

1,780,642

Shares redeemed

(3,098,042)

(5,094,649)

(34,856,896)

(57,171,194)

Net increase (decrease)

(2,492,272)

2,238,632

$ (28,044,849)

$ 25,257,423

Fidelity Mortgage Securities Fund

Shares sold

27,887,079

74,892,943

$ 314,595,084

$ 844,372,051

Reinvestment of distributions

3,321,499

3,676,167

37,344,245

41,396,427

Shares redeemed

(23,702,105)

(70,626,654)

(267,115,975)

(794,954,735)

Net increase (decrease)

7,506,473

7,942,456

$ 84,823,354

$ 90,813,743

Institutional Class

Shares sold

166,614

2,242,760

$ 1,874,213

$ 25,207,417

Reinvestment of distributions

26,698

42,862

299,426

481,820

Shares redeemed

(532,533)

(1,945,702)

(5,994,954)

(21,886,001)

Net increase (decrease)

(339,221)

339,920

$ (3,821,315)

$ 3,803,236

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

Fidelity Investment Money
Management Inc.

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

Fidelity Management & Research
(Far East) Inc.

Fidelity Investment Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors
(U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agent

Fidelity Service Company, Inc.

Boston, MA

Custodian

The Bank of New York

New York, NY

Fidelity's Taxable Bond Funds

Capital & Income

Floating Rate High Income

Ginnie Mae

Government Income

High Income

Inflation-Protected Bond

Intermediate Bond

Intermediate Government Income

Investment Grade Bond

Mortgage Securities

New Markets Income

Short-Term Bond

Spartan® Government Income

Spartan Investment Grade Bond

Strategic Income

Total Bond

Ultra-Short Bond

U.S. Bond Index

The Fidelity Telephone Connection

Mutual Fund 24-Hour Service

Exchanges/Redemptions
and Account Assistance 1-800-544-6666

Product Information 1-800-544-6666

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated Service
Telephone (FAST®) (automated graphic)    1-800-544-5555

(automated graphic)    Automated line for quickest service

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

MOR-USAN-0604
1.784900.101

Fidelity® Advisor

Intermediate Bond

Fund - Institutional Class

Semiannual Report

April 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 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.

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

Quality Diversification (% of fund's net assets)

As of April 30, 2004

As of October 31, 2003

U.S. Government
and U.S. Government Agency Obligations 26.2%

U.S. Government
and U.S. Government Agency Obligations 32.2%

AAA 14.7%

AAA 15.8%

AA 5.8%

AA 6.3%

A 22.2%

A 19.6%

BBB 25.6%

BBB 23.3%

BB and Below 1.4%

BB and Below 2.0%

Not Rated 0.4%

Not Rated 1.5%

Short-Term
Investments and
Net Other Assets 3.7%

Short-Term
Investments and
Net Other Assets(dagger) (0.7)%



We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. Securities rated BB or below were rated investment grade at the time of acquisition.

Average Years to Maturity as of April 30, 2004

6 months ago

Years

4.4

4.8

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

3.8

3.9

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Asset Allocation (% of fund's net assets)

As of April 30, 2004 *

As of October 31, 2003 **

Corporate Bonds 42.5%

Corporate Bonds 42.4%

U.S. Government
and U.S. Government Agency Obligations 26.2%

U.S. Government and
U.S. Government
Agency Obligations 32.2%

Asset-Backed
Securities 12.9%

Asset-Backed
Securities 13.4%

CMOs and
Other Mortgage
Related Securities 13.3%

CMOs and
Other Mortgage
Related Securities 10.7%

Municipal Bonds 0.0%

Municipal Bonds 0.1%

Other Investments 1.4%

Other Investments 1.9%

Short-Term
Investments and
Net Other Assets 3.7%

Short-Term
Investments and
Net Other Assets(dagger) (0.7)%



* Foreign investments

10.1%

** Foreign investments

9.2%

* Futures and Swaps

9.8%

** Futures and Swaps

9.2%

(dagger)Short-Term Investments and Net Other Assets are not included in the pie chart.

The information in the above tables is based on the combined investments of the fund and its pro-rata share of the investments of Fidelity's fixed-income central fund.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Nonconvertible Bonds - 41.9%

Principal
Amount

Value
(Note 1)

CONSUMER DISCRETIONARY - 4.1%

Auto Components - 0.7%

DaimlerChrysler NA Holding Corp.:

4.75% 1/15/08

$ 2,400,000

$ 2,434,738

6.4% 5/15/06

1,000,000

1,063,959

6.9% 9/1/04

1,500,000

1,523,289

7.2% 9/1/09

680,000

747,823

7.4% 1/20/05

800,000

830,509

7.75% 6/15/05

2,100,000

2,227,821

8,828,139

Automobiles - 0.1%

General Motors Corp. 7.2% 1/15/11

2,000,000

2,126,700

Media - 3.1%

AOL Time Warner, Inc.:

6.125% 4/15/06

2,400,000

2,545,262

6.75% 4/15/11

1,700,000

1,849,717

6.875% 5/1/12

4,300,000

4,701,018

British Sky Broadcasting Group PLC (BSkyB) yankee 7.3% 10/15/06

2,000,000

2,192,270

Clear Channel Communications, Inc.:

5.75% 1/15/13

700,000

715,735

7.65% 9/15/10

5,185,000

5,924,739

Continental Cablevision, Inc. 8.3% 5/15/06

6,520,000

7,183,984

Cox Communications, Inc.:

7.125% 10/1/12

1,235,000

1,367,664

7.5% 8/15/04

1,850,000

1,879,674

7.75% 8/15/06

1,450,000

1,600,255

Hearst-Argyle Television, Inc. 7% 11/15/07

1,000,000

1,086,023

Liberty Media Corp. 5.7% 5/15/13

1,900,000

1,899,827

News America Holdings, Inc. 7.375% 10/17/08

2,000,000

2,235,490

News America, Inc.:

4.75% 3/15/10

2,000,000

1,999,816

6.625% 1/9/08

1,700,000

1,855,239

Walt Disney Co. 5.375% 6/1/07

2,000,000

2,098,592

41,135,305

Specialty Retail - 0.2%

Boise Cascade Corp. 7.5% 2/1/08

2,175,000

2,338,329

TOTAL CONSUMER DISCRETIONARY

54,428,473

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

CONSUMER STAPLES - 2.2%

Beverages - 0.3%

Miller Brewing Co. 4.25% 8/15/08 (a)

$ 3,740,000

$ 3,752,866

Food & Staples Retailing - 1.1%

Fred Meyer, Inc. 7.375% 3/1/05

10,359,000

10,814,610

Safeway, Inc. 6.5% 3/1/11

4,000,000

4,305,756

15,120,366

Food Products - 0.0%

Kraft Foods, Inc. 5.25% 6/1/07

330,000

346,762

Tobacco - 0.8%

Altria Group, Inc. 7% 11/4/13

2,380,000

2,533,498

Philip Morris Companies, Inc.:

7.2% 2/1/07

2,000,000

2,156,526

7.65% 7/1/08

4,635,000

5,115,770

9,805,794

TOTAL CONSUMER STAPLES

29,025,788

ENERGY - 1.4%

Energy Equipment & Services - 0.7%

Cooper Cameron Corp. 2.65% 4/15/07

1,555,000

1,519,103

Kinder Morgan, Inc. 6.5% 9/1/12

5,730,000

6,167,388

Weatherford International Ltd. 4.95% 10/15/13

1,300,000

1,257,120

8,943,611

Oil & Gas - 0.7%

Anadarko Petroleum Corp. 5% 10/1/12

1,600,000

1,583,714

Duke Energy Field Services LLC 7.875% 8/16/10

3,250,000

3,757,052

EnCana Corp. 4.75% 10/15/13

1,040,000

999,314

Union Pacific Resources Group, Inc. 7% 10/15/06

2,700,000

2,950,036

9,290,116

TOTAL ENERGY

18,233,727

FINANCIALS - 22.3%

Capital Markets - 2.5%

Amvescap PLC:

5.9% 1/15/07

665,000

709,489

yankee 6.6% 5/15/05

3,490,000

3,631,715

Bank of New York Co., Inc.:

3.4% 3/15/13 (e)

1,300,000

1,259,454

4.25% 9/4/12 (e)

1,510,000

1,517,659

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Capital Markets - continued

BankAmerica Corp. 5.875% 2/15/09

$ 575,000

$ 618,188

Goldman Sachs Group, Inc.:

4.125% 1/15/08

4,550,000

4,611,780

6.6% 1/15/12

3,000,000

3,285,018

J.P. Morgan Chase & Co.:

4% 2/1/08

1,125,000

1,134,828

4.875% 3/15/14

2,190,000

2,094,354

Legg Mason, Inc. 6.75% 7/2/08

3,710,000

4,063,270

Lehman Brothers Holdings, Inc. 7% 2/1/08

2,400,000

2,673,254

Merrill Lynch & Co., Inc. 6.15% 1/26/06

625,000

667,089

Morgan Stanley 4.75% 4/1/14

8,035,000

7,507,020

33,773,118

Commercial Banks - 2.8%

Bank of America Corp.:

4.75% 10/15/06

985,000

1,026,813

6.25% 4/15/12

840,000

913,351

7.125% 9/15/06

2,000,000

2,189,900

BB&T Corp. 4.75% 10/1/12

2,000,000

1,965,922

Chase Manhattan Corp. 6.375% 4/1/08

360,000

392,194

Export-Import Bank of Korea:

4.125% 2/10/09 (a)

685,000

674,430

5.25% 2/10/14 (a)

2,565,000

2,521,287

Fleet Financial Group, Inc. 7.125% 4/15/06

2,240,000

2,431,392

FleetBoston Financial Corp.:

3.85% 2/15/08

1,000,000

1,005,337

7.25% 9/15/05

1,315,000

1,404,100

Korea Development Bank:

3.875% 3/2/09

2,600,000

2,528,666

5.75% 9/10/13

5,315,000

5,430,144

Mellon Bank NA, Pittsburgh 7.375% 5/15/07

1,800,000

2,026,028

Mercantile Bancorp, Inc. 7.3% 6/15/07

835,000

940,025

PNC Funding Corp. 5.75% 8/1/06

5,215,000

5,534,998

Popular North America, Inc. 6.125% 10/15/06

1,295,000

1,385,871

U.S. Bank NA, Minnesota 5.7% 12/15/08

2,000,000

2,138,516

Wachovia Corp. 4.875% 2/15/14

2,600,000

2,512,424

37,021,398

Consumer Finance - 5.3%

American General Finance Corp.:

2.75% 6/15/08

65,000

62,053

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Consumer Finance - continued

American General Finance Corp.: - continued

4% 3/15/11

$ 3,020,000

$ 2,882,161

5.375% 10/1/12

3,050,000

3,101,652

Capital One Bank:

4.875% 5/15/08

2,170,000

2,218,326

6.5% 7/30/04

2,000,000

2,023,896

6.5% 6/13/13

2,315,000

2,414,577

Ford Motor Credit Co.:

6.5% 1/25/07

300,000

318,134

7% 10/1/13

2,000,000

2,056,860

7.375% 10/28/09

11,915,000

12,879,746

General Motors Acceptance Corp.:

6.125% 2/1/07

910,000

960,591

6.125% 8/28/07

910,000

961,604

6.75% 1/15/06

8,310,000

8,799,501

6.875% 9/15/11

6,415,000

6,733,255

7.75% 1/19/10

2,060,000

2,265,732

Household Finance Corp.:

5.875% 2/1/09

1,055,000

1,129,437

6.375% 11/27/12

1,595,000

1,717,550

6.5% 1/24/06

2,140,000

2,283,921

6.75% 5/15/11

3,000,000

3,321,522

7% 5/15/12

5,235,000

5,865,195

Household International, Inc. 8.875% 2/15/08

2,550,000

2,814,407

MBNA Corp. 6.25% 1/17/07

1,155,000

1,236,493

SLM Corp. 3.625% 3/17/08

3,900,000

3,880,383

69,926,996

Diversified Financial Services - 6.7%

Alliance Capital Management LP 5.625% 8/15/06

1,495,000

1,577,016

Ameritech Capital Funding Corp. euro 6.25% 5/18/09

1,100,000

1,184,700

Cadbury Schweppes U.S. Finance LLC:

3.875% 10/1/08 (a)

1,675,000

1,657,240

5.125% 10/1/13 (a)

1,055,000

1,041,409

CIT Group, Inc. 3.875% 11/3/08

530,000

523,355

Citigroup, Inc.:

3.5% 2/1/08

2,770,000

2,752,208

7.25% 10/1/10

3,400,000

3,883,266

Delta Air Lines, Inc. pass thru trust certificates:

7.57% 11/18/10

2,020,000

1,964,011

7.92% 5/18/12

4,845,000

3,990,830

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Diversified Financial Services - continued

Deutsche Telekom International Finance BV:

5.25% 7/22/13

$ 1,635,000

$ 1,622,971

8.5% 6/15/10

5,700,000

6,734,983

Hutchison Whampoa International Ltd. 6.25% 1/24/14 (a)

2,100,000

2,061,331

International Lease Finance Corp. 4.375% 11/1/09

2,000,000

2,005,574

Mizuho Financial Group Cayman Ltd. 5.79% 4/15/14 (a)

1,870,000

1,854,329

Monumental Global Funding II 3.85% 3/3/08 (a)

4,500,000

4,517,204

NiSource Finance Corp. 7.875% 11/15/10

5,575,000

6,489,830

Pemex Project Funding Master Trust:

6.125% 8/15/08

1,000,000

1,040,000

7.375% 12/15/14

3,000,000

3,135,000

7.875% 2/1/09 (e)

3,000,000

3,307,500

Petronas Capital Ltd. 7% 5/22/12 (a)

4,495,000

4,953,076

Salomon Smith Barney Holdings, Inc. 6.5% 2/15/08

2,425,000

2,662,092

Sprint Capital Corp.:

6.125% 11/15/08

2,100,000

2,248,640

8.375% 3/15/12

6,550,000

7,687,388

Telecom Italia Capital 4% 11/15/08 (a)

3,000,000

2,973,753

TIAA Global Markets, Inc. 3.875% 1/22/08 (a)

1,680,000

1,701,509

Verizon Global Funding Corp.:

7.25% 12/1/10

4,837,000

5,468,325

7.375% 9/1/12

7,135,000

8,160,949

7.75% 6/15/32

2,000,000

2,291,540

89,490,029

Insurance - 1.5%

Aegon NV 4.75% 6/1/13

3,400,000

3,304,892

Allstate Corp. 7.875% 5/1/05

2,060,000

2,177,910

Assurant, Inc. 5.625% 2/15/14 (a)

995,000

997,279

Principal Life Global Funding I:

5.125% 6/28/07 (a)

4,000,000

4,201,852

6.25% 2/15/12 (a)

5,000,000

5,447,520

Prudential Financial, Inc. 3.75% 5/1/08

1,640,000

1,629,783

St. Paul Companies, Inc. 8.125% 4/15/10

1,750,000

2,056,525

Travelers Property Casualty Corp. 5% 3/15/13

835,000

817,487

20,633,248

Real Estate - 2.5%

AMB Property LP 7.2% 12/15/05

2,000,000

2,154,440

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Real Estate - continued

Arden Realty LP:

7% 11/15/07

$ 3,460,000

$ 3,808,643

8.875% 3/1/05

2,590,000

2,726,617

AvalonBay Communities, Inc. 5% 8/1/07

1,380,000

1,443,330

Boston Properties, Inc. 6.25% 1/15/13

2,500,000

2,640,125

BRE Properties, Inc. 5.95% 3/15/07

875,000

932,485

Camden Property Trust 5.875% 11/30/12

1,700,000

1,753,644

CarrAmerica Realty Corp. 5.25% 11/30/07

1,940,000

2,036,498

Developers Diversified Realty Corp. 4.625% 8/1/10

2,325,000

2,283,906

EOP Operating LP:

4.75% 3/15/14

2,600,000

2,424,898

7.75% 11/15/07

3,775,000

4,273,153

Gables Realty LP 5.75% 7/15/07

5,245,000

5,547,794

Healthcare Realty Trust, Inc. 5.125% 4/1/14

1,970,000

1,850,114

33,875,647

Thrifts & Mortgage Finance - 1.0%

Abbey National PLC 6.69% 10/17/05

1,020,000

1,084,582

Countrywide Home Loans, Inc.:

3.25% 5/21/08

3,460,000

3,358,885

4% 3/22/11

3,290,000

3,105,178

6.935% 7/16/07

2,450,000

2,696,637

Independence Community Bank Corp. 3.75% 4/1/14 (e)

895,000

857,574

Washington Mutual, Inc.:

4.375% 1/15/08

1,665,000

1,692,025

4.625% 4/1/14

175,000

161,898

12,956,779

TOTAL FINANCIALS

297,677,215

INDUSTRIALS - 1.8%

Aerospace & Defense - 0.8%

Bombardier, Inc. 6.3% 5/1/14 (a)

715,000

705,082

Raytheon Co.:

6.15% 11/1/08

3,000,000

3,229,401

8.3% 3/1/10

5,195,000

6,131,077

10,065,560

Commercial Services & Supplies - 0.1%

Boise Cascade Office Products Corp. 7.05% 5/15/05

1,830,000

1,889,603

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

INDUSTRIALS - continued

Industrial Conglomerates - 0.5%

Tyco International Group SA yankee:

6.125% 1/15/09

$ 2,500,000

$ 2,638,618

6.375% 6/15/05

1,750,000

1,820,406

6.75% 2/15/11

2,455,000

2,647,563

7,106,587

Road & Rail - 0.4%

Canadian Pacific Railway Co. yankee 6.25% 10/15/11

2,700,000

2,920,968

Norfolk Southern Corp. 7.35% 5/15/07

1,900,000

2,111,556

5,032,524

TOTAL INDUSTRIALS

24,094,274

INFORMATION TECHNOLOGY - 1.6%

Communications Equipment - 1.0%

Motorola, Inc.:

7.625% 11/15/10

5,000,000

5,654,360

8% 11/1/11

6,340,000

7,343,914

12,998,274

Computers & Peripherals - 0.6%

Hewlett-Packard Co.:

6.5% 7/1/12

3,000,000

3,312,912

7.15% 6/15/05

2,400,000

2,529,274

NCR Corp. 7.125% 6/15/09

2,270,000

2,507,758

8,349,944

TOTAL INFORMATION TECHNOLOGY

21,348,218

MATERIALS - 1.5%

Containers & Packaging - 0.1%

Sealed Air Corp. 5.625% 7/15/13 (a)

510,000

514,506

Metals & Mining - 1.2%

Corporacion Nacional del Cobre (Codelco):

5.5% 10/15/13 (a)

2,335,000

2,327,061

6.375% 11/30/12 (a)

5,580,000

5,960,874

Falconbridge Ltd. yankee 7.35% 6/5/12

710,000

798,636

Noranda, Inc. yankee 6% 10/15/15

7,300,000

7,371,306

16,457,877

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

MATERIALS - continued

Paper & Forest Products - 0.2%

International Paper Co.:

4.25% 1/15/09

$ 495,000

$ 491,218

5.5% 1/15/14

1,240,000

1,228,820

Weyerhaeuser Co. 7.375% 3/15/32

1,170,000

1,281,757

3,001,795

TOTAL MATERIALS

19,974,178

TELECOMMUNICATION SERVICES - 2.9%

Diversified Telecommunication Services - 1.8%

AT&T Broadband Corp. 8.375% 3/15/13

5,046,000

6,020,524

AT&T Corp. 6% 3/15/09

720,000

721,015

British Telecommunications PLC:

8.375% 12/15/10

2,835,000

3,374,464

8.875% 12/15/30

775,000

980,396

France Telecom SA 8.75% 3/1/11

3,800,000

4,492,352

Koninklijke KPN NV yankee 8% 10/1/10

5,940,000

6,947,905

Telecomunicaciones de Puerto Rico, Inc. 6.65% 5/15/06

175,000

186,441

TELUS Corp. yankee 7.5% 6/1/07

1,310,000

1,447,605

24,170,702

Wireless Telecommunication Services - 1.1%

America Movil SA de CV:

4.125% 3/1/09 (a)

1,310,000

1,255,897

5.5% 3/1/14 (a)

3,120,000

2,919,375

AT&T Wireless Services, Inc.:

7.5% 5/1/07

5,000,000

5,552,225

7.875% 3/1/11

2,330,000

2,683,736

Cingular Wireless LLC 5.625% 12/15/06

2,000,000

2,117,516

14,528,749

TOTAL TELECOMMUNICATION SERVICES

38,699,451

UTILITIES - 4.1%

Electric Utilities - 3.5%

Detroit Edison Co. 6.125% 10/1/10

1,440,000

1,548,835

Dominion Resources, Inc.:

6.25% 6/30/12

3,330,000

3,552,604

8.125% 6/15/10

1,625,000

1,903,242

DTE Energy Co. 7.05% 6/1/11

3,320,000

3,658,590

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

UTILITIES - continued

Electric Utilities - continued

Exelon Corp. 6.75% 5/1/11

$ 1,735,000

$ 1,915,350

Exelon Generation Co. LLC 5.35% 1/15/14 (a)

8,000,000

7,838,944

FirstEnergy Corp.:

5.5% 11/15/06

1,500,000

1,565,157

6.45% 11/15/11

3,235,000

3,405,805

MidAmerican Energy Holdings, Inc. 5.875% 10/1/12

4,135,000

4,274,246

Monongahela Power Co. 5% 10/1/06

1,370,000

1,388,838

Niagara Mohawk Power Corp. 8.875% 5/15/07

400,000

459,357

Oncor Electric Delivery Co.:

5% 9/1/07

2,000,000

2,094,696

6.375% 5/1/12

1,155,000

1,251,343

Pacific Gas & Electric Co.:

3.6% 3/1/09

395,000

383,156

4.8% 3/1/14

615,000

588,422

Progress Energy, Inc. 7.1% 3/1/11

1,800,000

2,006,050

PSI Energy, Inc. 6.65% 6/15/06

3,775,000

4,066,743

Public Service Co. of Colorado 7.875% 10/1/12

1,465,000

1,749,572

Southern California Edison Co. 4.65% 4/1/15

855,000

802,558

Virginia Electric & Power Co. 5.75% 3/31/06

2,000,000

2,109,668

46,563,176

Gas Utilities - 0.3%

Kinder Morgan Energy Partners LP 5.35% 8/15/07

1,070,000

1,127,697

Ras Laffan Liquid Natural Gas Co. Ltd. yankee 8.294% 3/15/14 (a)

2,100,000

2,437,170

Texas Eastern Transmission Corp. 7.3% 12/1/10

1,010,000

1,140,818

4,705,685

Multi-Utilities & Unregulated Power - 0.3%

Constellation Energy Group, Inc. 7% 4/1/12

1,000,000

1,107,139

Williams Companies, Inc. 7.125% 9/1/11

2,175,000

2,272,875

3,380,014

TOTAL UTILITIES

54,648,875

TOTAL NONCONVERTIBLE BONDS

(Cost $543,341,097)

558,130,199

U.S. Government and Government Agency Obligations - 12.4%

Principal
Amount

Value
(Note 1)

U.S. Government Agency Obligations - 10.9%

Fannie Mae:

4.375% 7/17/13

$ 4,850,000

$ 4,578,735

4.75% 1/2/07

25,000,000

26,051,525

5.25% 8/1/12

215,000

216,814

5.5% 3/15/11

19,700,000

20,833,085

6.25% 2/1/11

735,000

796,848

6.25% 3/22/12

4,800,000

4,969,325

6.625% 9/15/09

37,000,000

41,460,709

Freddie Mac:

3.625% 9/15/08

5,532,000

5,494,322

4.5% 1/15/14

6,550,000

6,290,744

5.25% 11/5/12

1,405,000

1,389,454

5.5% 9/15/11

17,200,000

18,121,094

5.875% 3/21/11

2,655,000

2,820,128

6.625% 9/15/09

11,400,000

12,746,819

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

145,769,602

U.S. Treasury Obligations - 1.5%

U.S. Treasury Bills, yield at date of purchase 0.91% to 0.92% 5/20/04 (c)

490,000

489,816

U.S. Treasury Bonds 11.25% 2/15/15

3,825,000

5,965,057

U.S. Treasury Notes:

5% 8/15/11 (d)

7,956,000

8,364,986

6.5% 2/15/10

4,000,000

4,548,752

TOTAL U.S. TREASURY OBLIGATIONS

19,368,611

TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS

(Cost $166,235,527)

165,138,213

U.S. Government Agency - Mortgage Securities - 9.5%

Fannie Mae - 9.2%

4% 5/1/19 (b)

4,696,788

4,514,787

4.5% 5/1/19 (b)

26,000,000

25,593,750

4.5% 5/18/19 (b)

2,000,000

1,968,750

4.5% 8/1/33 to 9/1/33

1,935,356

1,818,468

5% 5/13/34 (b)

9,000,000

8,721,563

5.5% 9/1/10 to 12/1/14

6,599,396

6,807,728

6% 5/1/16 to 4/1/17

2,711,682

2,829,995

U.S. Government Agency - Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Fannie Mae - continued

6.5% 2/1/14 to 5/1/33

$ 25,481,958

$ 26,727,352

6.5% 5/1/19 (b)

12,155,546

12,865,886

6.5% 5/1/34 (b)

5,379,742

5,599,975

7% 12/1/10 to 9/1/28

790,569

840,228

7% 5/1/19 (b)

4,525

4,825

7% 5/1/34 (b)

19,000,000

20,086,563

7.5% 8/1/17 to 9/1/28

2,118,005

2,271,664

8.5% 6/1/11 to 9/1/25

257,622

281,380

9.5% 2/1/25

219,632

246,947

10.5% 8/1/20

80,324

91,920

11% 8/1/15

375,168

418,255

12.5% 12/1/13 to 4/1/15

17,717

20,408

TOTAL FANNIE MAE

121,710,444

Freddie Mac - 0.0%

8.5% 9/1/24 to 8/1/27

295,957

322,573

9.5% 1/1/17

11,008

12,318

10% 4/1/06 to 5/1/09

12,280

13,346

10.5% 5/1/21

65,953

73,128

11% 12/1/11

4,742

5,269

11.5% 10/1/15

8,743

9,925

11.75% 10/1/10

13,812

15,353

TOTAL FREDDIE MAC

451,912

Government National Mortgage Association - 0.3%

6.5% 2/15/29

929,255

971,422

7% 2/15/28 to 11/15/28

2,032,993

2,164,664

7.5% 2/15/28 to 10/15/28

33,015

35,490

8% 11/15/05 to 6/15/25

289,974

309,059

8.5% 4/15/17 to 10/15/21

217,021

241,096

11% 7/20/19 to 8/20/19

13,296

15,054

TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION

3,736,785

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $125,624,484)

125,899,141

Asset-Backed Securities - 8.7%

Principal
Amount

Value
(Note 1)

ACE Securities Corp.:

Series 2002-HE2 Class A2A, 1.53% 8/25/32 (e)

$ 907,207

$ 909,483

Series 2003-FM1 Class M2, 2.95% 11/25/32 (e)

955,000

974,395

Series 2004-HE1:

Class M1, 1.6% 2/25/34 (e)

525,000

525,059

Class M2, 2.2% 2/25/34 (e)

600,000

600,125

American Express Credit Account Master Trust:

Series 1999-2 Class B, 6.1% 12/15/06

1,100,000

1,102,244

Series 2001-2 Class A, 5.53% 10/15/08

1,020,000

1,069,490

Series 2004-1 Class B, 1.35% 9/15/11 (e)

1,430,000

1,433,311

AmeriCredit Automobile Receivables Trust:

Series 2001-C Class A4, 5.01% 7/14/08

6,000,000

6,195,839

Series 2002-A Class A4, 4.61% 1/12/09

5,800,000

5,969,454

Ameriquest Mortgage Securities, Inc. Series 2004-R2:

Class M1, 1.53% 4/25/34 (e)

300,000

300,305

Class M2, 1.58% 4/25/34 (e)

225,000

225,246

Amortizing Residential Collateral Trust Series 2002-BC3N Class B2, 7% 6/25/32 (a)

26,423

26,304

Asset Backed Securities Corp. Home Equity Loan Trust:

Series 2003-HE2 Class A2, 1.48% 4/15/33 (e)

2,016,589

2,023,472

Series 2003-HE7 Class A3, 1.46% 12/15/33 (e)

2,808,671

2,817,434

Bayview Financial Mortgage Loan Trust Series 2004-A Class A, 1.55% 2/28/44 (e)

2,388,919

2,394,611

Capital One Master Trust:

Series 2001-1 Class B, 1.61% 12/15/10 (e)

2,130,000

2,147,555

Series 2001-8A Class B, 1.65% 8/17/09 (e)

3,015,000

3,042,401

Capital One Multi-Asset Execution Trust:

Series 2002-B1 Class B1, 1.78% 7/15/08 (e)

875,000

880,205

Series 2003-2B Class B2, 3.5% 2/17/09

1,860,000

1,881,691

Series 2003-A4 Class A4, 3.65% 7/15/11

860,000

848,495

Series 2003-B1 Class B1, 2.27% 2/17/09 (e)

3,535,000

3,598,171

Series 2003-B4 Class B4, 1.9% 7/15/11 (e)

1,680,000

1,713,959

CDC Mortgage Capital Trust Series 2003-HE2 Class M2, 3% 10/25/33 (e)

824,992

851,020

Chase Credit Card Master Trust Series 2003-6 Class B, 1.45% 2/15/11 (e)

2,435,000

2,453,545

Chase Credit Card Owner Trust Series 2004-1 Class B, 1.3% 5/15/09 (e)

1,020,000

1,019,999

Chase Manhattan Auto Owner Trust Series 2001-A
Class CTFS, 5.06% 2/15/08

190,817

194,303

Citibank Credit Card Issuance Trust:

Series 2000-C2 Class C2, 1.79% 10/15/07 (e)

3,500,000

3,511,442

Series 2002-B1 Class B1, 1.44% 6/25/09 (e)

2,175,000

2,183,506

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Countrywide Home Loans, Inc.:

Series 2004-2 Class M1, 1.6% 5/25/34 (e)

$ 1,275,000

$ 1,273,805

Series 2004-3 Class M1, 1.6% 6/25/34 (e)

350,000

349,672

Discover Card Master Trust I Series 2001-6 Class A, 5.75% 12/15/08

8,000,000

8,501,333

Fieldstone Mortgage Investment Corp. Series 2003-1:

Class M1, 1.78% 11/25/33 (e)

300,000

303,047

Class M2, 2.85% 11/25/33 (e)

200,000

201,000

First Franklin Mortgage Loan Trust Series 2004-FF2:

Class M3, 1.65% 3/25/34 (e)

100,000

99,766

Class M4, 2% 3/25/34 (e)

75,000

74,824

Class M6, 2.35% 3/25/34 (e)

100,000

99,766

Fleet Credit Card Master Trust II Series 2001-C Class A, 3.86% 3/15/07

2,605,000

2,628,068

Ford Credit Auto Owner Trust Series 2001-B Class B, 5.71% 9/15/05

560,000

564,982

Fremont Home Loan Trust Series 2004-A:

Class M1, 1.65% 1/25/34 (e)

1,100,000

1,097,647

Class M2, 2.25% 1/25/34 (e)

1,275,000

1,272,351

GSAMP Trust Series 2004-FM2:

Class M1, 1.6% 1/25/34 (e)

750,000

750,000

Class M2, 2.2% 1/25/34 (e)

400,000

400,000

Class M3, 2.4% 1/25/34 (e)

400,000

399,999

Home Equity Asset Trust:

Series 2003-2:

Class A2, 1.48% 8/25/33 (e)

401,512

402,965

Class M1, 1.98% 8/25/33 (e)

765,000

776,679

Series 2003-4:

Class M1, 1.9% 10/25/33 (e)

1,045,000

1,058,126

Class M2, 3% 10/25/33 (e)

1,240,000

1,260,004

Series 2003-5N Class A, 7.5% 1/27/34 (a)

168,830

169,674

Series 2004-3:

Class M2, 2.29% 8/25/34 (b)(e)

535,000

535,000

Class M3, 2.54% 8/25/34 (b)(e)

225,000

225,000

Home Equity Asset Trust NIMS Trust:

Series 2002-4N Class A, 8% 5/27/33 (a)

307,517

307,517

Series 2003-2N Class A, 8% 9/27/33 (a)

520,107

522,707

Long Beach Mortgage Loan Trust Series 2003-3:

Class M1, 1.85% 7/25/33 (e)

2,460,000

2,485,348

Class M2, 2.95% 7/25/33 (e)

1,260,000

1,296,254

MBNA Credit Card Master Note Trust:

Series 2003-B3 Class B3, 1.475% 1/18/11 (e)

1,685,000

1,691,048

Series 2003-B5 Class B5, 1.47% 2/15/11 (e)

2,360,000

2,378,326

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Meritage Mortgage Loan Trust Series 2004-1:

Class M1, 1.6% 7/25/34 (e)

$ 500,000

$ 498,828

Class M2, 1.65% 7/25/34 (e)

100,000

99,766

Class M3, 2.05% 7/25/34 (e)

200,000

199,531

Class M4, 2.2% 7/25/34 (e)

125,000

124,707

Morgan Stanley ABS Capital I, Inc.:

Series 2002-HE3 Class M1, 2.2% 12/27/32 (e)

460,000

468,985

Series 2002-NC6N Class NOTE, 9.5% 9/25/32 (a)

11,693

11,767

Series 2003-HE1 Class M2, 3% 5/25/33 (e)

1,450,000

1,471,967

Series 2003-NC8 Class M1, 1.8% 9/25/33 (e)

665,000

667,632

Morgan Stanley Dean Witter Capital I Trust:

Series 2001-NC4 Class M1, 2.1% 1/25/32 (e)

1,350,000

1,374,049

Series 2002-NC1 Class M1, 1.9% 2/25/32 (a)(e)

865,000

874,504

Series 2002-NC3 Class M1, 1.82% 8/25/32 (e)

375,000

379,045

Series 2002-NC5N Class NOTE, 9.5% 9/25/32 (a)

129,792

130,076

Series 2003-NC2 Class M2, 3.1% 2/25/33 (e)

710,000

729,145

Morgan Stanley Dean Witter Capital I, Inc. Series 2003-NC2N Class NOTE, 9.5% 12/25/32 (a)

354,871

356,423

New Century Home Equity Loan Trust Series 2003-2 Class A2, 1.53% 1/25/33 (e)

1,696,758

1,700,510

Nissan Auto Lease Trust Series 2003-A Class A3B, 2.57% 6/15/09

10,000,000

9,998,128

NovaStar Home Equity Loan Series 2004-1:

Class M1, 1.55% 6/25/34 (e)

350,000

350,602

Class M4, 2.075% 6/25/34 (e)

585,000

586,280

Residential Asset Mortgage Products, Inc. Series 2003-RP2 Class A1, 1.54% 9/25/33 (a)(e)

2,112,531

2,118,679

Sears Credit Account Master Trust II:

Series 1996-3 Class A, 7% 7/15/08

637,500

641,990

Series 1999-1 Class A, 5.65% 3/17/09

916,667

933,538

Series 2002-4 Class A, 1.23% 8/18/09 (e)

2,700,000

2,703,863

SLM Private Credit Student Loan Trust Series 2004-A Class C, 2.07% 6/15/33 (e)

1,190,000

1,192,278

Superior Wholesale Inventory Financing Trust VII Series 2003-A8 Class CTFS, 1.55% 3/15/11 (a)(e)

2,320,000

2,323,625

West Penn Funding LLC Series 1999-A Class A3, 6.81% 9/25/08

3,881,959

4,090,139

TOTAL ASSET-BACKED SECURITIES

(Cost $114,244,886)

116,044,029

Collateralized Mortgage Obligations - 6.0%

Principal
Amount

Value
(Note 1)

Private Sponsor - 4.1%

Banc America Mortgage Securities, Inc. Series 2004-D:

Class 1A1, 3.6188% 5/25/34 (e)

$ 3,210,000

$ 3,202,978

Class 2A2, 4.2236% 5/25/34 (e)

3,210,000

3,205,737

Bank of America Mortgage Securities, Inc.:

Series 2003-K:

Class 1A1, 3.4069% 12/25/33 (e)

890,103

897,165

Class 2A1, 4.2457% 12/25/33 (e)

2,136,922

2,138,675

Series 2003-L Class 2A1, 4.0764% 1/25/34 (e)

3,954,965

3,929,293

Series 2004-B:

Class 1A1, 3.4996% 3/25/34 (e)

1,874,930

1,878,446

Class 2A2, 4.1831% 3/25/34

1,459,971

1,458,726

Series 2004-C Class 1A1, 3.4467% 4/25/34 (e)

2,974,628

2,977,068

CS First Boston Mortgage Securities Corp. floater
Series 2004-AR3 Class 6A2, 1.47% 3/25/34 (e)

1,279,532

1,276,973

Merrill Lynch Mortgage Investors, Inc.:

Series 2003-E Class XA1, 1% 10/25/28 (e)(g)

19,179,487

300,610

Series 2003-G Class XA1, 1% 1/25/29 (g)

16,899,405

285,177

Series 2003-H Class XA1, 1% 1/25/29 (a)(g)

14,722,274

250,739

Residential Asset Mortgage Products, Inc. sequential pay Series 2003-SL1 Class A31, 7.125% 4/25/31

5,695,434

5,937,490

Residential Finance LP/Residential Finance Development Corp. floater:

Series 2003-B:

Class B3, 2.65% 7/10/35 (a)(e)

2,369,107

2,407,143

Class B4, 2.85% 7/10/35 (a)(e)

1,776,831

1,805,149

Class B5, 3.45% 7/10/35 (a)(e)

1,678,118

1,709,517

Class B6, 3.95% 7/10/35 (a)(e)

789,702

804,201

Series 2003-CB1:

Class B3, 2.55% 6/10/35 (a)(e)

828,663

841,740

Class B4, 2.75% 6/10/35 (a)(e)

739,877

751,438

Class B5, 3.35% 6/10/35 (a)(e)

503,117

512,668

Class B6, 3.85% 6/10/35 (a)(e)

300,883

306,454

Series 2003-D Class B3, 2.4% 12/10/35 (a)(e)

9,945,663

9,987,378

Sequoia Mortgage Funding Trust Series 2003-A
Class AX1, 0.8% 10/21/08 (a)(g)

67,931,316

756,266

WAMU Mortgage pass thru certificates:

sequential pay Series 2002-S6 Class A25, 6% 10/25/32

1,765,596

1,795,321

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

Private Sponsor - continued

WAMU Mortgage pass thru certificates: - continued

Series 2003-AR12 Class A5, 4.043% 2/25/34

$ 5,000,000

$ 4,988,690

Washington Mutual Mortgage Securities Corp. sequential pay Series 2003-MS9 Class 2A1, 7.5% 12/25/33

577,220

602,289

TOTAL PRIVATE SPONSOR

55,007,331

U.S. Government Agency - 1.9%

Fannie Mae planned amortization class:

Series 1994-51 Class PH, 6.5% 1/25/23

272,304

273,947

Series 1994-81 Class PJ, 8% 7/25/23

1,962,672

1,995,363

Fannie Mae guaranteed REMIC pass thru certificates planned amortization class Series 2001-53 Class OH, 6.5% 6/25/30

195,839

198,171

Freddie Mac planned amortization class Series 2355 Class CD, 6.5% 6/15/30

234,256

237,172

Freddie Mac Multi-class participation certificates guaranteed:

planned amortization class Series 2435 Class EL, 6% 9/15/27

941,757

946,571

sequential pay Series 2473 Class VK, 6.5% 10/15/18

13,087,343

13,685,470

Series 2749 Class MZ, 5% 2/15/24

573,086

571,700

Series 2764:

Class ZA, 5% 10/15/32

230,812

229,586

Class ZB, 5% 3/15/33

388,517

386,211

Class ZC, 4.5% 3/15/19

246,669

245,204

Series 2769 Class ZA, 5% 9/15/32

362,206

360,310

Ginnie Mae guaranteed Multi-family pass thru securities sequential pay Series 2002-35 Class C, 5.8705% 10/16/23 (e)

370,000

391,975

Ginnie Mae guaranteed REMIC pass thru securities:

planned amortization class Series 2001-45 Class GC, 6.5% 10/20/30

2,020,340

2,065,679

sequential pay Series 2003-59 Class D, 3.654% 10/16/27

3,060,000

2,836,405

TOTAL U.S. GOVERNMENT AGENCY

24,423,764

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $79,927,995)

79,431,095

Commercial Mortgage Securities - 8.2%

Principal
Amount

Value
(Note 1)

Asset Securitization Corp.:

sequential pay Series 1995-MD4 Class A1, 7.1% 8/13/29

$ 730,217

$ 773,209

Series 1997-D5 Class PS1, 1.3146% 2/14/43 (e)(g)

18,318,481

1,132,723

Banc of America Commercial Mortgage, Inc. Series 2002-2 Class XP, 2.0359% 7/11/43 (a)(e)(g)

12,355,000

957,505

Banc of America Large Loan, Inc. floater Series 2003-BBA2:

Class C, 1.57% 11/15/15 (a)(e)

265,000

265,901

Class D, 1.65% 11/15/15 (a)(e)

410,000

411,554

Class F, 2% 11/15/15 (a)(e)

295,000

298,538

Class H, 2.5% 11/15/15 (a)(e)

265,000

268,313

Class J, 3.05% 11/15/15 (a)(e)

275,000

279,361

Class K, 3.7% 11/15/15 (a)(e)

245,000

246,292

Bayview Commercial Asset Trust floater Series 2004-1:

Class A, 1.46% 4/25/34 (a)(e)

1,890,327

1,890,327

Class B, 3% 4/25/34 (a)(e)

198,982

198,982

Class M1, 1.66% 4/25/34 (a)(e)

198,982

198,982

Class M2, 2.3% 4/25/34 (a)(e)

99,491

99,491

Bear Stearns Commercial Mortgage Securities, Inc. floater Series 2003-BA1A Class A1, 1.38% 4/14/15 (a)(e)

3,710,655

3,709,483

Chase Commercial Mortgage Securities Corp. Series 2001-245 Class A2, 6.0658% 2/12/16 (a)(e)

980,000

1,050,118

COMM floater:

Series 2001-FL5A:

Class A2, 1.65% 11/15/13 (a)(e)

369,320

369,331

Class D, 2.35% 11/15/13 (a)(e)

2,200,000

2,201,050

Series 2002-FL7:

Class A2, 1.45% 11/15/14 (a)(e)

1,905,000

1,904,704

Class D, 1.67% 11/15/14 (a)(e)

600,000

599,503

Commercial Mortgage Asset Trust sequential pay
Series 1999-C2 Class A1, 7.285% 11/17/32

2,564,823

2,790,335

Commercial Resecuritization Trust sequential pay
Series 1999-ABC1 Class A, 6.74% 1/27/09 (a)

1,359,075

1,421,720

CS First Boston Mortgage Securities Corp.:

sequential pay:

Series 1997-C2 Class A3, 6.55% 1/17/35

1,245,000

1,352,474

Series 1998-C1 Class A1B, 6.48% 5/17/40

2,885,000

3,139,311

Series 1999-C1 Class A2, 7.29% 9/15/41

7,550,000

8,535,198

Series 2000-C1 Class A1, 7.325% 4/15/62

1,595,422

1,726,336

Series 2001-CK3 Class A2, 6.04% 6/15/34

2,050,000

2,164,332

Series 1997-C2 Class D, 7.27% 1/17/35

755,000

834,276

Series 2001-CK6 Class AX, 0.645% 9/15/18 (g)

35,232,334

1,372,194

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

CS First Boston Mortgage Securities Corp.: - continued

Series 2003-TFLA Class G, 1.9376% 4/15/13 (a)(e)

$ 520,000

$ 508,420

Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class D, 7.231% 6/15/31

610,000

631,555

DLJ Commercial Mortgage Corp. sequential pay:

Series 1998-CF1 Class A1B, 6.41% 2/18/31

4,500,000

4,884,701

Series 2000-CF1 Class A1A, 7.45% 6/10/33

1,572,855

1,667,815

Equitable Life Assurance Society of the United States:

sequential pay Series 174 Class A1, 7.24% 5/15/06 (a)

1,500,000

1,619,725

Series 174 Class C1, 7.52% 5/15/06 (a)

1,000,000

1,084,079

GE Capital Commercial Mortgage Corp. Series 2001-1 Class X1, 0.5342% 5/15/33 (a)(e)(g)

23,761,171

985,015

GE Commercial Mortgage Corp. Series 2004-C1
Class X2, 1.1954% 11/10/38 (e)(g)

15,694,700

844,389

GGP Mall Properties Trust sequential pay Series 2001-C1A Class A2, 5.007% 11/15/11 (a)

4,897,102

5,092,852

Ginnie Mae guaranteed REMIC pass thru securities:

sequential pay:

Series 2003-22 Class B, 3.963% 5/16/32

2,030,000

1,962,167

Series 2003-36 Class C, 4.254% 2/16/31

1,685,000

1,638,581

Series 2003-47 Class C, 4.227% 10/16/27

3,015,000

2,934,250

Series 2003-47 Class XA, 0.0215% 6/16/43 (e)(g)

9,457,479

461,422

GS Mortgage Securities Corp. II:

sequential pay:

Series 2001-LIBA Class A2, 6.615% 2/14/16 (a)

2,180,000

2,361,846

Series 2003-C1 Class A2A, 3.59% 1/10/40

1,560,000

1,546,880

Series 2001-LIBA Class C, 6.733% 2/14/16 (a)

815,000

887,847

Heller Financial Commercial Mortgage Asset Corp. sequential pay Series 2000-PH1 Class A1, 7.715% 1/17/34

2,320,094

2,520,131

Hilton Hotel Pool Trust sequential pay Series 2000-HLTA Class A1, 7.055% 10/3/15 (a)

1,504,696

1,627,124

J.P. Morgan Chase Commercial Mortgage Securities Corp. Series 2004-C1 Class X2, 1.2011% 1/15/38 (e)(g)

5,195,000

266,076

J.P. Morgan Commercial Mortgage Finance Corp. sequential pay Series 2000-C10 Class A1, 7.1075% 8/15/32

1,225,654

1,325,103

LB-UBS Commercial Mortgage Trust:

sequential pay Series 2000-C3 Class A1, 7.95% 7/15/09

2,547,388

2,796,025

Series 2004-C1 Class XCP, 1.0545% 1/15/36 (a)(e)(g)

16,255,000

812,019

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Leafs CMBS I Ltd./Leafs CMBS I Corp. Series 2002-1A Class B, 4.13% 11/20/37 (a)

$ 4,000,000

$ 3,726,250

Morgan Stanley Capital I, Inc.:

sequential pay Series 1997-HF1 Class A2, 7.27% 7/15/29 (a)

2,387,357

2,567,077

Series 2004-TOP13, Class X2, 1.2196% 9/13/45 (a)(e)(g)

10,975,000

567,071

Morgan Stanley Dean Witter Capital I Trust sequential pay Series 2001-PPM Class A2, 6.4% 2/15/31

3,107,577

3,346,778

Nationslink Funding Corp. sequential pay Series 1999-2 Class A1C, 7.03% 6/20/31

1,271,226

1,363,331

Thirteen Affiliates of General Growth Properties, Inc. sequential pay Series 1 Class A2, 6.602% 11/15/07 (a)

2,500,000

2,703,586

Trizechahn Office Properties Trust Series 2001-TZHA:

Class C3, 6.522% 3/15/13 (a)

3,675,000

3,862,998

Class C4, 6.893% 5/15/16 (a)

8,000,000

8,699,533

Wachovia Bank Commercial Mortgage Trust:

sequential pay Series 2003-C8 Class A3, 4.445% 11/15/35

4,050,000

3,995,956

Series 2004-C10 Class XP, 1.025% 2/15/41 (a)(e)(g)

7,475,000

365,403

TOTAL COMMERCIAL MORTGAGE SECURITIES

(Cost $107,570,834)

109,847,548

Foreign Government and Government Agency Obligations - 1.4%

Chilean Republic:

5.5% 1/15/13

1,655,000

1,665,261

5.625% 7/23/07

1,210,000

1,278,819

7.125% 1/11/12

2,900,000

3,246,188

Quebec Province yankee 6.5% 1/17/06

2,000,000

2,128,036

State of Israel 4.625% 6/15/13

480,000

444,600

United Mexican States:

4.625% 10/8/08

4,030,000

4,009,850

7.5% 1/14/12

3,650,000

4,005,875

8% 9/24/22

2,000,000

2,110,000

TOTAL FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS

(Cost $17,854,907)

18,888,629

Fixed-Income Funds - 11.2%

Shares

Value
(Note 1)

Fidelity Ultra-Short Central Fund (f)
(Cost $148,493,868)

1,496,000

$ 149,076,390

Cash Equivalents - 5.8%

Maturity
Amount

Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.05%, dated 4/30/04 due 5/3/04)
(Cost $76,833,000)

$ 76,839,723

76,833,000

TOTAL INVESTMENT PORTFOLIO - 105.1%

(Cost $1,380,126,598)

1,399,288,244

NET OTHER ASSETS - (5.1)%

(68,137,772)

NET ASSETS - 100%

$ 1,331,150,472

Futures Contracts

Expiration
Date

Underlying
Face Amount
at Value

Unrealized
Appreciation/
(Depreciation)

Purchased

Eurodollar Contracts

20 Eurodollar 90 Day Index Contracts

March 2005

$ 19,866,250

$ 106,130

20 Eurodollar 90 Day Index Contracts

June 2005

19,843,500

90,880

41 Eurodollar 90 Day Index Contracts

Sept. 2005

40,639,713

111,067

87 Eurodollar 90 Day Index Contracts

Dec. 2005

86,163,713

179,053

57 Eurodollar 90 Day Index Contracts

March 2006

56,414,325

117,257

65 Eurodollar 90 Day Index Contracts

June 2006

64,293,938

61,210

65 Eurodollar 90 Day Index Contracts

Sept. 2006

64,259,813

55,848

95 Eurodollar 90 Day Index Contracts

Dec. 2006

93,870,688

41,468

65 Eurodollar 90 Day Index Contracts

March 2007

64,200,500

38,885

60 Eurodollar 90 Day Index Contracts

June 2007

59,238,750

97,890

899,688

Swap Agreements

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Credit Default Swap

Receive quarterly notional amount multiplied by .35% and pay Goldman Sachs upon default event of Devon Energy Corp., par value of the notional amount of Devon Energy Corp. 7.95% 4/15/32

June 2006

$ 900,000

$ 623

Receive quarterly notional amount multiplied by .53% and pay Deutsche Bank upon default event of SBC Communications, Inc., par value of the notional amount of SBC Communications, Inc. 6.25% 3/15/11

March 2009

1,400,000

7,161

Receive quarterly notional amount multiplied by .53% and pay Lehman Brothers, Inc., upon default event of SBC Communications, Inc., par value of the notional amount of SBC Communications, Inc. 6.25% 3/15/11

March 2009

1,000,000

2,813

Receive quarterly notional amount multiplied by .62% and pay Goldman Sachs upon default of SLM Corp., par value of the notional amount of SLM Corp. 1.12% 7/25/35

August 2007

490,000

6,424

Receive quarterly notional amount multiplied by 1.38% and pay Merrill Lynch, Inc. upon default event of Bombardier, Inc., par value of the notional amount of Bombardier, Inc. 6.75% 5/1/12

March 2009

300,000

(1,935)

Receive quarterly notional amount multiplied by 1.4% and pay Merrill Lynch, Inc. upon default event of Bombardier, Inc., par value of the notional amount of Bombardier, Inc. 6.75% 5/1/12

March 2009

900,000

(4,977)

TOTAL CREDIT DEFAULT SWAP

4,990,000

10,109

Interest Rate Swap

Receive quarterly a fixed rate equal to 3.098% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.

April 2007

14,440,000

(39,679)

Receive quarterly a fixed rate equal to 3.1422% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.

April 2007

12,300,000

(36,105)

Swap Agreements - continued

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Interest Rate Swap - continued

Receive quarterly a fixed rate equal to 3.857% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.

April 2008

$ 12,000,000

$ (154,484)

Receive quarterly a fixed rate equal to 4.6775% and pay quarterly a floating rate based on 3-month LIBOR with Merrill Lynch, Inc.

April 2010

9,145,000

(72,011)

TOTAL INTEREST RATE SWAP

47,885,000

(302,279)

Total Return Swap

Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 65 basis points with Lehman Brothers, Inc.

Oct. 2004

2,700,000

(131,877)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

August 2004

2,945,000

(96,669)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

Sept. 2004

2,600,000

(79,695)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 55 basis points with Deutsche Bank

Dec. 2004

2,100,000

(9,071)

Receive quarterly a return equal to Banc of America Securities LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 75 basis points with Bank of America

May 2004

2,700,000

(81,231)

Swap Agreements - continued

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Total Return Swap - continued

Receive quarterly a return equal to Banc of America Securities LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 80 basis points with Bank of America

July 2004

$ 2,700,000

$ (65,682)

Receive quarterly a return equal to Banc of America Securities LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 80 basis points with Bank of America

Nov. 2004

5,400,000

(17,740)

TOTAL RETURN SWAP

21,145,000

(481,965)

$ 74,020,000

$ (774,135)

Legend

(a) 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 $143,129,963 or 10.8% of net assets.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(c) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $489,816.

(d) Security or a portion of the security has been segregated as collateral for open swap agreements. At the period end, the value of securities pledged amounted to $262,851.

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

(f) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(g) Security represents right to receive monthly interest payments on an underlying pool of mortgages. Principal shown is the par amount of the mortgage pool.

Other Information

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

United States of America

89.9%

Cayman Islands

2.1%

Netherlands

1.4%

Mexico

1.1%

United Kingdom

1.1%

Canada

1.1%

Chile

1.0%

Others (individually less than 1%)

2.3%

100.0%

Purchases and sales of securities, other than short-term securities, aggregated $766,961,423 and $805,016,090, respectively, of which long-term U.S. government and government agency obligations aggregated $550,522,275 and $633,448,547, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $76,833,000) (cost $1,380,126,598) - - See accompanying schedule

$ 1,399,288,244

Cash

93,094

Receivable for investments sold

1,443,087

Receivable for fund shares sold

3,761,074

Interest receivable

12,456,583

Receivable for daily variation on futures contracts

77,050

Prepaid expenses

4,940

Receivable from investment adviser for expense reductions

4,757

Total assets

1,417,128,829

Liabilities

Payable for investments purchased on a delayed delivery basis

$ 80,754,014

Payable for fund shares redeemed

2,970,884

Distributions payable

331,965

Unrealized loss on swap agreements

774,135

Accrued management fee

474,471

Distribution fees payable

349,636

Other affiliated payables

290,064

Other payables and accrued expenses

33,188

Total liabilities

85,978,357

Net Assets

$ 1,331,150,472

Net Assets consist of:

Paid in capital

$ 1,298,472,037

Undistributed net investment income

4,028,919

Accumulated undistributed net realized gain (loss) on investments

9,362,317

Net unrealized appreciation (depreciation) on investments

19,287,199

Net Assets

$ 1,331,150,472

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($174,213,333 ÷ 15,600,580 shares)

$ 11.17

Maximum offering price per share (100/96.25 of $11.17)

$ 11.61

Class T:
Net Asset Value and redemption price per share ($685,411,772 ÷ 61,351,550 shares)

$ 11.17

Maximum offering price per share (100/97.25 of $11.17)

$ 11.49

Class B:
Net Asset Value and offering price per share ($129,898,926 ÷ 11,642,394 shares) A

$ 11.16

Class C:
Net Asset Value and offering price per share ($99,285,091 ÷ 8,904,691 shares) A

$ 11.15

Institutional Class:
Net Asset Value, offering price and redemption price per share ($242,341,350 ÷ 21,663,278 shares)

$ 11.19

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 28,447,906

Security lending

925

Total income

28,448,831

Expenses

Management fee

$ 2,830,581

Transfer agent fees

1,444,370

Distribution fees

2,187,972

Accounting and security lending fees

227,881

Non-interested trustees' compensation

4,194

Custodian fees and expenses

26,884

Registration fees

86,793

Audit

30,215

Legal

5,063

Miscellaneous

9,008

Total expenses before reductions

6,852,961

Expense reductions

(17,212)

6,835,749

Net investment income (loss)

21,613,082

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities

11,426,628

Swap agreements

661,648

Total net realized gain (loss)

12,088,276

Change in net unrealized appreciation (depreciation) on:

Investment securities

(17,309,906)

Futures contracts

14,726

Swap agreements

(951,470)

Total change in net unrealized appreciation (depreciation)

(18,246,650)

Net gain (loss)

(6,158,374)

Net increase (decrease) in net assets resulting from operations

$ 15,454,708

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 21,613,082

$ 46,478,120

Net realized gain (loss)

12,088,276

24,355,364

Change in net unrealized appreciation (depreciation)

(18,246,650)

2,572,375

Net increase (decrease) in net assets resulting
from operations

15,454,708

73,405,859

Distributions to shareholders from net investment income

(21,631,476)

(45,500,193)

Distributions to shareholders from net realized gain

(11,495,156)

-

Total distributions

(33,126,632)

(45,500,193)

Share transactions - net increase (decrease)

47,009,811

65,287,174

Total increase (decrease) in net assets

29,337,887

93,192,840

Net Assets

Beginning of period

1,301,812,585

1,208,619,745

End of period (including undistributed net investment income of $4,028,919 and undistributed net investment income of $4,047,313, respectively)

$ 1,331,150,472

$ 1,301,812,585

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.32

$ 11.06

$ 11.01

$ 10.30

$ 10.30

$ 10.77

Income from Investment Operations

Net investment income (loss)E

.195

.420

.521G

.619

.629

.580

Net realized and unrealized gain (loss)

(.050)

.254

.055G

.713

(.002)

(.474)

Total from investment operations

.145

.674

.576

1.332

.627

.106

Distributions from net investment income

(.195)

(.414)

(.526)

(.622)

(.627)

(.576)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.295)

(.414)

(.526)

(.622)

(.627)

(.576)

Net asset value,
end of period

$ 11.17

$ 11.32

$ 11.06

$ 11.01

$ 10.30

$ 10.30

Total ReturnB,C,D

1.28%

6.16%

5.44%

13.28%

6.32%

1.00%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.85%A

.81%

.83%

.83%

.84%

.87%

Expenses net of voluntary waivers, if any

.85%A

.81%

.83%

.83%

.84%

.87%

Expenses net of all
reductions

.85%A

.81%

.82%

.82%

.84%

.86%

Net investment income (loss)

3.46%A

3.72%

4.82%G

5.82%

6.20%

5.58%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 174,213

$ 166,701

$ 133,236

$ 92,027

$ 48,177

$ 22,628

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.32

$ 11.06

$ 11.02

$ 10.31

$ 10.31

$ 10.77

Income from Investment Operations

Net investment income (loss)E

.189

.408

.508G

.603

.620

.576

Net realized and unrealized gain (loss)

(.050)

.253

.044G

.713

(.006)

(.473)

Total from investment operations

.139

.661

.552

1.316

.614

.103

Distributions from net investment income

(.189)

(.401)

(.512)

(.606)

(.614)

(.563)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.289)

(.401)

(.512)

(.606)

(.614)

(.563)

Net asset value,
end of period

$ 11.17

$ 11.32

$ 11.06

$ 11.02

$ 10.31

$ 10.31

Total ReturnB,C,D

1.23%

6.03%

5.21%

13.11%

6.18%

.98%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.95%A

.93%

.95%

.97%

.97%

.97%

Expenses net of voluntary waivers, if any

.95%A

.93%

.95%

.97%

.97%

.97%

Expenses net of all
reductions

.95%A

.93%

.95%

.97%

.97%

.97%

Net investment income (loss)

3.35%A

3.60%

4.70%G

5.67%

6.07%

5.48%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 685,412

$ 711,263

$ 684,618

$ 546,276

$ 313,887

$ 315,350

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.31

$ 11.05

$ 11.01

$ 10.30

$ 10.30

$ 10.76

Income from Investment Operations

Net investment income (loss)E

.150

.331

.436G

.534

.553

.506

Net realized and unrealized gain (loss)

(.050)

.253

.044G

.713

(.006)

(.467)

Total from investment operations

.100

.584

.480

1.247

.547

.039

Distributions from net investment income

(.150)

(.324)

(.440)

(.537)

(.547)

(.499)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.250)

(.324)

(.440)

(.537)

(.547)

(.499)

Net asset value,
end of period

$ 11.16

$ 11.31

$ 11.05

$ 11.01

$ 10.30

$ 10.30

Total ReturnB,C,D

.88%

5.32%

4.52%

12.40%

5.50%

.37%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.67%A

1.60%

1.61%

1.62%

1.62%

1.61%

Expenses net of voluntary waivers, if any

1.65%A

1.60%

1.61%

1.62%

1.62%

1.61%

Expenses net of all
reductions

1.65%A

1.60%

1.61%

1.62%

1.62%

1.61%

Net investment income (loss)

2.66%A

2.92%

4.03%G

5.02%

5.42%

4.83%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 129,899

$ 154,697

$ 178,062

$ 113,424

$ 63,584

$ 64,532

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.30

$ 11.04

$ 11.00

$ 10.29

$ 10.29

$ 10.76

Income from Investment Operations

Net investment income (loss)E

.147

.322

.428G

.525

.545

.492

Net realized and unrealized gain (loss)

(.050)

.254

.044G

.716

(.005)

(.472)

Total from investment operations

.097

.576

.472

1.241

.540

.020

Distributions from net investment income

(.147)

(.316)

(.432)

(.531)

(.540)

(.490)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.247)

(.316)

(.432)

(.531)

(.540)

(.490)

Net asset value, end of period

$ 11.15

$ 11.30

$ 11.04

$ 11.00

$ 10.29

$ 10.29

Total ReturnB,C,D

.85%

5.26%

4.45%

12.34%

5.42%

.19%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.70%A

1.67%

1.68%

1.69%

1.69%

1.71%

Expenses net of voluntary waivers, if any

1.70%A

1.67%

1.68%

1.69%

1.69%

1.71%

Expenses net of all
reductions

1.70%A

1.67%

1.68%

1.69%

1.69%

1.71%

Net investment income (loss)

2.60%A

2.86%

3.96%G

4.96%

5.35%

4.73%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 99,285

$ 113,849

$ 98,158

$ 63,538

$ 20,530

$ 17,099

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.34

$ 11.08

$ 11.03

$ 10.32

$ 10.31

$ 10.78

Income from Investment Operations

Net investment income (loss)D

.203

.437

.539F

.638

.656

.610

Net realized and unrealized gain (loss)

(.049)

.254

.053F

.711

(.002)

(.485)

Total from investment operations

.154

.691

.592

1.349

.654

.125

Distributions from net investment income

(.204)

(.431)

(.542)

(.639)

(.644)

(.595)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.304)

(.431)

(.542)

(.639)

(.644)

(.595)

Net asset value,
end of period

$ 11.19

$ 11.34

$ 11.08

$ 11.03

$ 10.32

$ 10.31

Total ReturnB,C

1.36%

6.30%

5.59%

13.45%

6.59%

1.19%

Ratios to Average Net AssetsE

Expenses before
expense reductions

.69%A

.66%

.67%

.66%

.65%

.66%

Expenses net of voluntary waivers, if any

.69%A

.66%

.67%

.66%

.65%

.66%

Expenses net of all
reductions

.69%A

.66%

.67%

.66%

.65%

.66%

Net investment income (loss)

3.61%A

3.87%

4.97%F

5.98%

6.39%

5.78%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 242,341

$ 155,302

$ 114,546

$ 91,168

$ 88,350

$ 157,131

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Intermediate Bond 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 four 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 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. 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

1. Significant Accounting Policies - continued

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 futures transactions, prior period premium and discount on debt securities, market discount, financing transactions, capital loss carryforwards and losses deferred due to wash sales.

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

Unrealized appreciation

$ 32,742,334

Unrealized depreciation

(11,367,019)

Net unrealized appreciation (depreciation)

$ 21,375,315

Cost for federal income tax purposes

$ 1,377,912,929

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).

Semiannual Report

2. Operating Policies - continued

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

Futures Contracts. The fund may use futures contracts to manage its exposure to the bond market and to fluctuations in interest rates. Buying futures tends to increase the fund's exposure to the underlying instrument, while selling futures tends to decrease the fund's exposure to the underlying instrument or hedge other fund investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counter-parties do not perform under the contracts' terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.

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

2. Operating Policies - continued

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.

Total return swaps are agreements to exchange the return generated by one instrument for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the index exceeds the offsetting interest obligation, the fund will receive a payment from the counterparty. To the extent it is less, the fund will make a payment to the counterparty. Periodic payments received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a "guarantor" receiving a periodic payment that is a fixed percentage applied to a notional principal amount. In return the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the swap. The fund may enter into credit default swaps in which the fund or its counterparty act as guarantors. By acting as the guarantor of a swap, the fund assumes the market and credit risk of the underlying instrument including liquidity and loss of value. Premiums received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

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. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. These risks include changes in the returns of the underlying instruments, failure of the counterparties to perform under the contracts' terms and the possible lack of liquidity with respect to the swap agreements. Details of swap agreements open at period end are included in the fund's Schedule of Investments under the caption "Swap Agreements."

Semiannual Report

2. Operating Policies - continued

Financing Transactions. To earn additional income, the fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but will be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the fund's right to repurchase or sell securities may be limited.

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 .30% 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 .43% of the fund's average net assets.

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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan - continued

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%

$ 128,564

$ 1,173

Class T

0%

.25%

881,156

12,460

Class B

.65%

.25%

642,657

465,115

Class C

.75%

.25%

535,595

112,492

$ 2,187,972

$ 591,240

Sales Load. FDC receives a front-end sales charge of up to 3.75% for selling Class A shares, and 2.75% 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 3% 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

$ 49,032

Class T

12,020

Class B*

161,461

Class C*

15,116

$ 237,629

* 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

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

shareholder 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

$ 178,412

.21

Class T

749,960

.21

Class B

196,977

.28

Class C

112,040

.21

Institutional Class

206,981

.21

$ 1,444,370

* Annualized

Accounting and Security Lending Fees. FSC maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

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 $1,184,757 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 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. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

6. Security Lending - continued

the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. At period end there were no security loans outstanding.

7. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class B

1.65%

$ 13,887

In addition, through arrangements with the fund's custodian and each class' transfer agent, 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 $1,823. During the period, credits reduced each class' transfer agent expense as noted in the table below.

Transfer Agent
expense reduction

Class A

$ 1,502

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 2,950,454

$ 6,007,552

Class T

11,775,169

26,063,302

Class B

1,897,882

5,170,345

Class C

1,395,533

3,124,274

Institutional Class

3,612,438

5,134,720

Total

$ 21,631,476

$ 45,500,193

From net realized gain

Class A

$ 1,464,510

$ -

Class T

6,264,742

-

Class B

1,325,877

-

Class C

978,409

-

Institutional Class

1,461,618

-

Total

$ 11,495,156

$ -

Semiannual Report

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

3,430,721

10,510,963

$ 38,909,260

$ 119,339,179

Reinvestment of distributions

350,664

465,922

3,964,720

5,276,440

Shares redeemed

(2,913,391)

(8,293,215)

(33,050,754)

(93,804,272)

Net increase (decrease)

867,994

2,683,670

$ 9,823,226

$ 30,811,347

Class T

Shares sold

12,558,986

33,381,968

$ 142,533,375

$ 377,422,827

Reinvestment of distributions

1,516,514

2,175,248

17,153,725

24,637,768

Shares redeemed

(15,556,626)

(34,611,992)

(176,480,410)

(391,598,532)

Net increase (decrease)

(1,481,126)

945,224

$ (16,793,310)

$ 10,462,063

Class B

Shares sold

747,983

5,268,992

$ 8,479,899

$ 59,474,046

Reinvestment of distributions

225,786

351,056

2,549,384

3,970,085

Shares redeemed

(3,014,555)

(8,053,311)

(34,143,083)

(90,955,890)

Net increase (decrease)

(2,040,786)

(2,433,263)

$ (23,113,800)

$ (27,511,759)

Class C

Shares sold

1,064,274

5,050,415

$ 12,054,414

$ 57,002,414

Reinvestment of distributions

171,665

219,498

1,937,507

2,481,384

Shares redeemed

(2,408,155)

(4,082,715)

(27,259,040)

(46,050,425)

Net increase (decrease)

(1,172,216)

1,187,198

$ (13,267,119)

$ 13,433,373

Institutional Class

Shares sold

10,384,911

6,597,666

$ 117,875,237

$ 74,769,322

Reinvestment of distributions

369,380

328,037

4,184,232

3,720,880

Shares redeemed

(2,791,658)

(3,566,218)

(31,698,655)

(40,398,052)

Net increase (decrease)

7,962,633

3,359,485

$ 90,360,814

$ 38,092,150

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

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

Fidelity Management & Research
(Far East) Inc.

Fidelity Investments Money
Management, Inc.

Fidelity Investments Japan Limited

Fidelity International
Investment Advisors

Fidelity International Investment
Advisors (U.K.) Limited

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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

LTBI-USAN-0604
1.784889.101

Fidelity® Advisor

Intermediate Bond

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

Semiannual Report

April 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.

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

Quality Diversification (% of fund's net assets)

As of April 30, 2004

As of October 31, 2003

U.S. Government
and U.S. Government Agency Obligations 26.2%

U.S. Government
and U.S. Government Agency Obligations 32.2%

AAA 14.7%

AAA 15.8%

AA 5.8%

AA 6.3%

A 22.2%

A 19.6%

BBB 25.6%

BBB 23.3%

BB and Below 1.4%

BB and Below 2.0%

Not Rated 0.4%

Not Rated 1.5%

Short-Term
Investments and
Net Other Assets 3.7%

Short-Term
Investments and
Net Other Assets(dagger) (0.7)%



We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. Securities rated BB or below were rated investment grade at the time of acquisition.

Average Years to Maturity as of April 30, 2004

6 months ago

Years

4.4

4.8

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Duration as of April 30, 2004

6 months ago

Years

3.8

3.9

Duration shows how much a bond fund's price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five-year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund's performance and share price. Accordingly, a bond fund's actual performance may differ from this example.

Asset Allocation (% of fund's net assets)

As of April 30, 2004 *

As of October 31, 2003 **

Corporate Bonds 42.5%

Corporate Bonds 42.4%

U.S. Government
and U.S. Government Agency Obligations 26.2%

U.S. Government and
U.S. Government
Agency Obligations 32.2%

Asset-Backed
Securities 12.9%

Asset-Backed
Securities 13.4%

CMOs and
Other Mortgage
Related Securities 13.3%

CMOs and
Other Mortgage
Related Securities 10.7%

Municipal Bonds 0.0%

Municipal Bonds 0.1%

Other Investments 1.4%

Other Investments 1.9%

Short-Term
Investments and
Net Other Assets 3.7%

Short-Term
Investments and
Net Other Assets(dagger) (0.7)%



* Foreign investments

10.1%

** Foreign investments

9.2%

* Futures and Swaps

9.8%

** Futures and Swaps

9.2%

(dagger)Short-Term Investments and Net Other Assets are not included in the pie chart.

The information in the above tables is based on the combined investments of the fund and its pro-rata share of the investments of Fidelity's fixed-income central fund.

Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Nonconvertible Bonds - 41.9%

Principal
Amount

Value
(Note 1)

CONSUMER DISCRETIONARY - 4.1%

Auto Components - 0.7%

DaimlerChrysler NA Holding Corp.:

4.75% 1/15/08

$ 2,400,000

$ 2,434,738

6.4% 5/15/06

1,000,000

1,063,959

6.9% 9/1/04

1,500,000

1,523,289

7.2% 9/1/09

680,000

747,823

7.4% 1/20/05

800,000

830,509

7.75% 6/15/05

2,100,000

2,227,821

8,828,139

Automobiles - 0.1%

General Motors Corp. 7.2% 1/15/11

2,000,000

2,126,700

Media - 3.1%

AOL Time Warner, Inc.:

6.125% 4/15/06

2,400,000

2,545,262

6.75% 4/15/11

1,700,000

1,849,717

6.875% 5/1/12

4,300,000

4,701,018

British Sky Broadcasting Group PLC (BSkyB) yankee 7.3% 10/15/06

2,000,000

2,192,270

Clear Channel Communications, Inc.:

5.75% 1/15/13

700,000

715,735

7.65% 9/15/10

5,185,000

5,924,739

Continental Cablevision, Inc. 8.3% 5/15/06

6,520,000

7,183,984

Cox Communications, Inc.:

7.125% 10/1/12

1,235,000

1,367,664

7.5% 8/15/04

1,850,000

1,879,674

7.75% 8/15/06

1,450,000

1,600,255

Hearst-Argyle Television, Inc. 7% 11/15/07

1,000,000

1,086,023

Liberty Media Corp. 5.7% 5/15/13

1,900,000

1,899,827

News America Holdings, Inc. 7.375% 10/17/08

2,000,000

2,235,490

News America, Inc.:

4.75% 3/15/10

2,000,000

1,999,816

6.625% 1/9/08

1,700,000

1,855,239

Walt Disney Co. 5.375% 6/1/07

2,000,000

2,098,592

41,135,305

Specialty Retail - 0.2%

Boise Cascade Corp. 7.5% 2/1/08

2,175,000

2,338,329

TOTAL CONSUMER DISCRETIONARY

54,428,473

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

CONSUMER STAPLES - 2.2%

Beverages - 0.3%

Miller Brewing Co. 4.25% 8/15/08 (a)

$ 3,740,000

$ 3,752,866

Food & Staples Retailing - 1.1%

Fred Meyer, Inc. 7.375% 3/1/05

10,359,000

10,814,610

Safeway, Inc. 6.5% 3/1/11

4,000,000

4,305,756

15,120,366

Food Products - 0.0%

Kraft Foods, Inc. 5.25% 6/1/07

330,000

346,762

Tobacco - 0.8%

Altria Group, Inc. 7% 11/4/13

2,380,000

2,533,498

Philip Morris Companies, Inc.:

7.2% 2/1/07

2,000,000

2,156,526

7.65% 7/1/08

4,635,000

5,115,770

9,805,794

TOTAL CONSUMER STAPLES

29,025,788

ENERGY - 1.4%

Energy Equipment & Services - 0.7%

Cooper Cameron Corp. 2.65% 4/15/07

1,555,000

1,519,103

Kinder Morgan, Inc. 6.5% 9/1/12

5,730,000

6,167,388

Weatherford International Ltd. 4.95% 10/15/13

1,300,000

1,257,120

8,943,611

Oil & Gas - 0.7%

Anadarko Petroleum Corp. 5% 10/1/12

1,600,000

1,583,714

Duke Energy Field Services LLC 7.875% 8/16/10

3,250,000

3,757,052

EnCana Corp. 4.75% 10/15/13

1,040,000

999,314

Union Pacific Resources Group, Inc. 7% 10/15/06

2,700,000

2,950,036

9,290,116

TOTAL ENERGY

18,233,727

FINANCIALS - 22.3%

Capital Markets - 2.5%

Amvescap PLC:

5.9% 1/15/07

665,000

709,489

yankee 6.6% 5/15/05

3,490,000

3,631,715

Bank of New York Co., Inc.:

3.4% 3/15/13 (e)

1,300,000

1,259,454

4.25% 9/4/12 (e)

1,510,000

1,517,659

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Capital Markets - continued

BankAmerica Corp. 5.875% 2/15/09

$ 575,000

$ 618,188

Goldman Sachs Group, Inc.:

4.125% 1/15/08

4,550,000

4,611,780

6.6% 1/15/12

3,000,000

3,285,018

J.P. Morgan Chase & Co.:

4% 2/1/08

1,125,000

1,134,828

4.875% 3/15/14

2,190,000

2,094,354

Legg Mason, Inc. 6.75% 7/2/08

3,710,000

4,063,270

Lehman Brothers Holdings, Inc. 7% 2/1/08

2,400,000

2,673,254

Merrill Lynch & Co., Inc. 6.15% 1/26/06

625,000

667,089

Morgan Stanley 4.75% 4/1/14

8,035,000

7,507,020

33,773,118

Commercial Banks - 2.8%

Bank of America Corp.:

4.75% 10/15/06

985,000

1,026,813

6.25% 4/15/12

840,000

913,351

7.125% 9/15/06

2,000,000

2,189,900

BB&T Corp. 4.75% 10/1/12

2,000,000

1,965,922

Chase Manhattan Corp. 6.375% 4/1/08

360,000

392,194

Export-Import Bank of Korea:

4.125% 2/10/09 (a)

685,000

674,430

5.25% 2/10/14 (a)

2,565,000

2,521,287

Fleet Financial Group, Inc. 7.125% 4/15/06

2,240,000

2,431,392

FleetBoston Financial Corp.:

3.85% 2/15/08

1,000,000

1,005,337

7.25% 9/15/05

1,315,000

1,404,100

Korea Development Bank:

3.875% 3/2/09

2,600,000

2,528,666

5.75% 9/10/13

5,315,000

5,430,144

Mellon Bank NA, Pittsburgh 7.375% 5/15/07

1,800,000

2,026,028

Mercantile Bancorp, Inc. 7.3% 6/15/07

835,000

940,025

PNC Funding Corp. 5.75% 8/1/06

5,215,000

5,534,998

Popular North America, Inc. 6.125% 10/15/06

1,295,000

1,385,871

U.S. Bank NA, Minnesota 5.7% 12/15/08

2,000,000

2,138,516

Wachovia Corp. 4.875% 2/15/14

2,600,000

2,512,424

37,021,398

Consumer Finance - 5.3%

American General Finance Corp.:

2.75% 6/15/08

65,000

62,053

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Consumer Finance - continued

American General Finance Corp.: - continued

4% 3/15/11

$ 3,020,000

$ 2,882,161

5.375% 10/1/12

3,050,000

3,101,652

Capital One Bank:

4.875% 5/15/08

2,170,000

2,218,326

6.5% 7/30/04

2,000,000

2,023,896

6.5% 6/13/13

2,315,000

2,414,577

Ford Motor Credit Co.:

6.5% 1/25/07

300,000

318,134

7% 10/1/13

2,000,000

2,056,860

7.375% 10/28/09

11,915,000

12,879,746

General Motors Acceptance Corp.:

6.125% 2/1/07

910,000

960,591

6.125% 8/28/07

910,000

961,604

6.75% 1/15/06

8,310,000

8,799,501

6.875% 9/15/11

6,415,000

6,733,255

7.75% 1/19/10

2,060,000

2,265,732

Household Finance Corp.:

5.875% 2/1/09

1,055,000

1,129,437

6.375% 11/27/12

1,595,000

1,717,550

6.5% 1/24/06

2,140,000

2,283,921

6.75% 5/15/11

3,000,000

3,321,522

7% 5/15/12

5,235,000

5,865,195

Household International, Inc. 8.875% 2/15/08

2,550,000

2,814,407

MBNA Corp. 6.25% 1/17/07

1,155,000

1,236,493

SLM Corp. 3.625% 3/17/08

3,900,000

3,880,383

69,926,996

Diversified Financial Services - 6.7%

Alliance Capital Management LP 5.625% 8/15/06

1,495,000

1,577,016

Ameritech Capital Funding Corp. euro 6.25% 5/18/09

1,100,000

1,184,700

Cadbury Schweppes U.S. Finance LLC:

3.875% 10/1/08 (a)

1,675,000

1,657,240

5.125% 10/1/13 (a)

1,055,000

1,041,409

CIT Group, Inc. 3.875% 11/3/08

530,000

523,355

Citigroup, Inc.:

3.5% 2/1/08

2,770,000

2,752,208

7.25% 10/1/10

3,400,000

3,883,266

Delta Air Lines, Inc. pass thru trust certificates:

7.57% 11/18/10

2,020,000

1,964,011

7.92% 5/18/12

4,845,000

3,990,830

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Diversified Financial Services - continued

Deutsche Telekom International Finance BV:

5.25% 7/22/13

$ 1,635,000

$ 1,622,971

8.5% 6/15/10

5,700,000

6,734,983

Hutchison Whampoa International Ltd. 6.25% 1/24/14 (a)

2,100,000

2,061,331

International Lease Finance Corp. 4.375% 11/1/09

2,000,000

2,005,574

Mizuho Financial Group Cayman Ltd. 5.79% 4/15/14 (a)

1,870,000

1,854,329

Monumental Global Funding II 3.85% 3/3/08 (a)

4,500,000

4,517,204

NiSource Finance Corp. 7.875% 11/15/10

5,575,000

6,489,830

Pemex Project Funding Master Trust:

6.125% 8/15/08

1,000,000

1,040,000

7.375% 12/15/14

3,000,000

3,135,000

7.875% 2/1/09 (e)

3,000,000

3,307,500

Petronas Capital Ltd. 7% 5/22/12 (a)

4,495,000

4,953,076

Salomon Smith Barney Holdings, Inc. 6.5% 2/15/08

2,425,000

2,662,092

Sprint Capital Corp.:

6.125% 11/15/08

2,100,000

2,248,640

8.375% 3/15/12

6,550,000

7,687,388

Telecom Italia Capital 4% 11/15/08 (a)

3,000,000

2,973,753

TIAA Global Markets, Inc. 3.875% 1/22/08 (a)

1,680,000

1,701,509

Verizon Global Funding Corp.:

7.25% 12/1/10

4,837,000

5,468,325

7.375% 9/1/12

7,135,000

8,160,949

7.75% 6/15/32

2,000,000

2,291,540

89,490,029

Insurance - 1.5%

Aegon NV 4.75% 6/1/13

3,400,000

3,304,892

Allstate Corp. 7.875% 5/1/05

2,060,000

2,177,910

Assurant, Inc. 5.625% 2/15/14 (a)

995,000

997,279

Principal Life Global Funding I:

5.125% 6/28/07 (a)

4,000,000

4,201,852

6.25% 2/15/12 (a)

5,000,000

5,447,520

Prudential Financial, Inc. 3.75% 5/1/08

1,640,000

1,629,783

St. Paul Companies, Inc. 8.125% 4/15/10

1,750,000

2,056,525

Travelers Property Casualty Corp. 5% 3/15/13

835,000

817,487

20,633,248

Real Estate - 2.5%

AMB Property LP 7.2% 12/15/05

2,000,000

2,154,440

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

FINANCIALS - continued

Real Estate - continued

Arden Realty LP:

7% 11/15/07

$ 3,460,000

$ 3,808,643

8.875% 3/1/05

2,590,000

2,726,617

AvalonBay Communities, Inc. 5% 8/1/07

1,380,000

1,443,330

Boston Properties, Inc. 6.25% 1/15/13

2,500,000

2,640,125

BRE Properties, Inc. 5.95% 3/15/07

875,000

932,485

Camden Property Trust 5.875% 11/30/12

1,700,000

1,753,644

CarrAmerica Realty Corp. 5.25% 11/30/07

1,940,000

2,036,498

Developers Diversified Realty Corp. 4.625% 8/1/10

2,325,000

2,283,906

EOP Operating LP:

4.75% 3/15/14

2,600,000

2,424,898

7.75% 11/15/07

3,775,000

4,273,153

Gables Realty LP 5.75% 7/15/07

5,245,000

5,547,794

Healthcare Realty Trust, Inc. 5.125% 4/1/14

1,970,000

1,850,114

33,875,647

Thrifts & Mortgage Finance - 1.0%

Abbey National PLC 6.69% 10/17/05

1,020,000

1,084,582

Countrywide Home Loans, Inc.:

3.25% 5/21/08

3,460,000

3,358,885

4% 3/22/11

3,290,000

3,105,178

6.935% 7/16/07

2,450,000

2,696,637

Independence Community Bank Corp. 3.75% 4/1/14 (e)

895,000

857,574

Washington Mutual, Inc.:

4.375% 1/15/08

1,665,000

1,692,025

4.625% 4/1/14

175,000

161,898

12,956,779

TOTAL FINANCIALS

297,677,215

INDUSTRIALS - 1.8%

Aerospace & Defense - 0.8%

Bombardier, Inc. 6.3% 5/1/14 (a)

715,000

705,082

Raytheon Co.:

6.15% 11/1/08

3,000,000

3,229,401

8.3% 3/1/10

5,195,000

6,131,077

10,065,560

Commercial Services & Supplies - 0.1%

Boise Cascade Office Products Corp. 7.05% 5/15/05

1,830,000

1,889,603

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

INDUSTRIALS - continued

Industrial Conglomerates - 0.5%

Tyco International Group SA yankee:

6.125% 1/15/09

$ 2,500,000

$ 2,638,618

6.375% 6/15/05

1,750,000

1,820,406

6.75% 2/15/11

2,455,000

2,647,563

7,106,587

Road & Rail - 0.4%

Canadian Pacific Railway Co. yankee 6.25% 10/15/11

2,700,000

2,920,968

Norfolk Southern Corp. 7.35% 5/15/07

1,900,000

2,111,556

5,032,524

TOTAL INDUSTRIALS

24,094,274

INFORMATION TECHNOLOGY - 1.6%

Communications Equipment - 1.0%

Motorola, Inc.:

7.625% 11/15/10

5,000,000

5,654,360

8% 11/1/11

6,340,000

7,343,914

12,998,274

Computers & Peripherals - 0.6%

Hewlett-Packard Co.:

6.5% 7/1/12

3,000,000

3,312,912

7.15% 6/15/05

2,400,000

2,529,274

NCR Corp. 7.125% 6/15/09

2,270,000

2,507,758

8,349,944

TOTAL INFORMATION TECHNOLOGY

21,348,218

MATERIALS - 1.5%

Containers & Packaging - 0.1%

Sealed Air Corp. 5.625% 7/15/13 (a)

510,000

514,506

Metals & Mining - 1.2%

Corporacion Nacional del Cobre (Codelco):

5.5% 10/15/13 (a)

2,335,000

2,327,061

6.375% 11/30/12 (a)

5,580,000

5,960,874

Falconbridge Ltd. yankee 7.35% 6/5/12

710,000

798,636

Noranda, Inc. yankee 6% 10/15/15

7,300,000

7,371,306

16,457,877

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

MATERIALS - continued

Paper & Forest Products - 0.2%

International Paper Co.:

4.25% 1/15/09

$ 495,000

$ 491,218

5.5% 1/15/14

1,240,000

1,228,820

Weyerhaeuser Co. 7.375% 3/15/32

1,170,000

1,281,757

3,001,795

TOTAL MATERIALS

19,974,178

TELECOMMUNICATION SERVICES - 2.9%

Diversified Telecommunication Services - 1.8%

AT&T Broadband Corp. 8.375% 3/15/13

5,046,000

6,020,524

AT&T Corp. 6% 3/15/09

720,000

721,015

British Telecommunications PLC:

8.375% 12/15/10

2,835,000

3,374,464

8.875% 12/15/30

775,000

980,396

France Telecom SA 8.75% 3/1/11

3,800,000

4,492,352

Koninklijke KPN NV yankee 8% 10/1/10

5,940,000

6,947,905

Telecomunicaciones de Puerto Rico, Inc. 6.65% 5/15/06

175,000

186,441

TELUS Corp. yankee 7.5% 6/1/07

1,310,000

1,447,605

24,170,702

Wireless Telecommunication Services - 1.1%

America Movil SA de CV:

4.125% 3/1/09 (a)

1,310,000

1,255,897

5.5% 3/1/14 (a)

3,120,000

2,919,375

AT&T Wireless Services, Inc.:

7.5% 5/1/07

5,000,000

5,552,225

7.875% 3/1/11

2,330,000

2,683,736

Cingular Wireless LLC 5.625% 12/15/06

2,000,000

2,117,516

14,528,749

TOTAL TELECOMMUNICATION SERVICES

38,699,451

UTILITIES - 4.1%

Electric Utilities - 3.5%

Detroit Edison Co. 6.125% 10/1/10

1,440,000

1,548,835

Dominion Resources, Inc.:

6.25% 6/30/12

3,330,000

3,552,604

8.125% 6/15/10

1,625,000

1,903,242

DTE Energy Co. 7.05% 6/1/11

3,320,000

3,658,590

Nonconvertible Bonds - continued

Principal
Amount

Value
(Note 1)

UTILITIES - continued

Electric Utilities - continued

Exelon Corp. 6.75% 5/1/11

$ 1,735,000

$ 1,915,350

Exelon Generation Co. LLC 5.35% 1/15/14 (a)

8,000,000

7,838,944

FirstEnergy Corp.:

5.5% 11/15/06

1,500,000

1,565,157

6.45% 11/15/11

3,235,000

3,405,805

MidAmerican Energy Holdings, Inc. 5.875% 10/1/12

4,135,000

4,274,246

Monongahela Power Co. 5% 10/1/06

1,370,000

1,388,838

Niagara Mohawk Power Corp. 8.875% 5/15/07

400,000

459,357

Oncor Electric Delivery Co.:

5% 9/1/07

2,000,000

2,094,696

6.375% 5/1/12

1,155,000

1,251,343

Pacific Gas & Electric Co.:

3.6% 3/1/09

395,000

383,156

4.8% 3/1/14

615,000

588,422

Progress Energy, Inc. 7.1% 3/1/11

1,800,000

2,006,050

PSI Energy, Inc. 6.65% 6/15/06

3,775,000

4,066,743

Public Service Co. of Colorado 7.875% 10/1/12

1,465,000

1,749,572

Southern California Edison Co. 4.65% 4/1/15

855,000

802,558

Virginia Electric & Power Co. 5.75% 3/31/06

2,000,000

2,109,668

46,563,176

Gas Utilities - 0.3%

Kinder Morgan Energy Partners LP 5.35% 8/15/07

1,070,000

1,127,697

Ras Laffan Liquid Natural Gas Co. Ltd. yankee 8.294% 3/15/14 (a)

2,100,000

2,437,170

Texas Eastern Transmission Corp. 7.3% 12/1/10

1,010,000

1,140,818

4,705,685

Multi-Utilities & Unregulated Power - 0.3%

Constellation Energy Group, Inc. 7% 4/1/12

1,000,000

1,107,139

Williams Companies, Inc. 7.125% 9/1/11

2,175,000

2,272,875

3,380,014

TOTAL UTILITIES

54,648,875

TOTAL NONCONVERTIBLE BONDS

(Cost $543,341,097)

558,130,199

U.S. Government and Government Agency Obligations - 12.4%

Principal
Amount

Value
(Note 1)

U.S. Government Agency Obligations - 10.9%

Fannie Mae:

4.375% 7/17/13

$ 4,850,000

$ 4,578,735

4.75% 1/2/07

25,000,000

26,051,525

5.25% 8/1/12

215,000

216,814

5.5% 3/15/11

19,700,000

20,833,085

6.25% 2/1/11

735,000

796,848

6.25% 3/22/12

4,800,000

4,969,325

6.625% 9/15/09

37,000,000

41,460,709

Freddie Mac:

3.625% 9/15/08

5,532,000

5,494,322

4.5% 1/15/14

6,550,000

6,290,744

5.25% 11/5/12

1,405,000

1,389,454

5.5% 9/15/11

17,200,000

18,121,094

5.875% 3/21/11

2,655,000

2,820,128

6.625% 9/15/09

11,400,000

12,746,819

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

145,769,602

U.S. Treasury Obligations - 1.5%

U.S. Treasury Bills, yield at date of purchase 0.91% to 0.92% 5/20/04 (c)

490,000

489,816

U.S. Treasury Bonds 11.25% 2/15/15

3,825,000

5,965,057

U.S. Treasury Notes:

5% 8/15/11 (d)

7,956,000

8,364,986

6.5% 2/15/10

4,000,000

4,548,752

TOTAL U.S. TREASURY OBLIGATIONS

19,368,611

TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS

(Cost $166,235,527)

165,138,213

U.S. Government Agency - Mortgage Securities - 9.5%

Fannie Mae - 9.2%

4% 5/1/19 (b)

4,696,788

4,514,787

4.5% 5/1/19 (b)

26,000,000

25,593,750

4.5% 5/18/19 (b)

2,000,000

1,968,750

4.5% 8/1/33 to 9/1/33

1,935,356

1,818,468

5% 5/13/34 (b)

9,000,000

8,721,563

5.5% 9/1/10 to 12/1/14

6,599,396

6,807,728

6% 5/1/16 to 4/1/17

2,711,682

2,829,995

U.S. Government Agency - Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Fannie Mae - continued

6.5% 2/1/14 to 5/1/33

$ 25,481,958

$ 26,727,352

6.5% 5/1/19 (b)

12,155,546

12,865,886

6.5% 5/1/34 (b)

5,379,742

5,599,975

7% 12/1/10 to 9/1/28

790,569

840,228

7% 5/1/19 (b)

4,525

4,825

7% 5/1/34 (b)

19,000,000

20,086,563

7.5% 8/1/17 to 9/1/28

2,118,005

2,271,664

8.5% 6/1/11 to 9/1/25

257,622

281,380

9.5% 2/1/25

219,632

246,947

10.5% 8/1/20

80,324

91,920

11% 8/1/15

375,168

418,255

12.5% 12/1/13 to 4/1/15

17,717

20,408

TOTAL FANNIE MAE

121,710,444

Freddie Mac - 0.0%

8.5% 9/1/24 to 8/1/27

295,957

322,573

9.5% 1/1/17

11,008

12,318

10% 4/1/06 to 5/1/09

12,280

13,346

10.5% 5/1/21

65,953

73,128

11% 12/1/11

4,742

5,269

11.5% 10/1/15

8,743

9,925

11.75% 10/1/10

13,812

15,353

TOTAL FREDDIE MAC

451,912

Government National Mortgage Association - 0.3%

6.5% 2/15/29

929,255

971,422

7% 2/15/28 to 11/15/28

2,032,993

2,164,664

7.5% 2/15/28 to 10/15/28

33,015

35,490

8% 11/15/05 to 6/15/25

289,974

309,059

8.5% 4/15/17 to 10/15/21

217,021

241,096

11% 7/20/19 to 8/20/19

13,296

15,054

TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION

3,736,785

TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES

(Cost $125,624,484)

125,899,141

Asset-Backed Securities - 8.7%

Principal
Amount

Value
(Note 1)

ACE Securities Corp.:

Series 2002-HE2 Class A2A, 1.53% 8/25/32 (e)

$ 907,207

$ 909,483

Series 2003-FM1 Class M2, 2.95% 11/25/32 (e)

955,000

974,395

Series 2004-HE1:

Class M1, 1.6% 2/25/34 (e)

525,000

525,059

Class M2, 2.2% 2/25/34 (e)

600,000

600,125

American Express Credit Account Master Trust:

Series 1999-2 Class B, 6.1% 12/15/06

1,100,000

1,102,244

Series 2001-2 Class A, 5.53% 10/15/08

1,020,000

1,069,490

Series 2004-1 Class B, 1.35% 9/15/11 (e)

1,430,000

1,433,311

AmeriCredit Automobile Receivables Trust:

Series 2001-C Class A4, 5.01% 7/14/08

6,000,000

6,195,839

Series 2002-A Class A4, 4.61% 1/12/09

5,800,000

5,969,454

Ameriquest Mortgage Securities, Inc. Series 2004-R2:

Class M1, 1.53% 4/25/34 (e)

300,000

300,305

Class M2, 1.58% 4/25/34 (e)

225,000

225,246

Amortizing Residential Collateral Trust Series 2002-BC3N Class B2, 7% 6/25/32 (a)

26,423

26,304

Asset Backed Securities Corp. Home Equity Loan Trust:

Series 2003-HE2 Class A2, 1.48% 4/15/33 (e)

2,016,589

2,023,472

Series 2003-HE7 Class A3, 1.46% 12/15/33 (e)

2,808,671

2,817,434

Bayview Financial Mortgage Loan Trust Series 2004-A Class A, 1.55% 2/28/44 (e)

2,388,919

2,394,611

Capital One Master Trust:

Series 2001-1 Class B, 1.61% 12/15/10 (e)

2,130,000

2,147,555

Series 2001-8A Class B, 1.65% 8/17/09 (e)

3,015,000

3,042,401

Capital One Multi-Asset Execution Trust:

Series 2002-B1 Class B1, 1.78% 7/15/08 (e)

875,000

880,205

Series 2003-2B Class B2, 3.5% 2/17/09

1,860,000

1,881,691

Series 2003-A4 Class A4, 3.65% 7/15/11

860,000

848,495

Series 2003-B1 Class B1, 2.27% 2/17/09 (e)

3,535,000

3,598,171

Series 2003-B4 Class B4, 1.9% 7/15/11 (e)

1,680,000

1,713,959

CDC Mortgage Capital Trust Series 2003-HE2 Class M2, 3% 10/25/33 (e)

824,992

851,020

Chase Credit Card Master Trust Series 2003-6 Class B, 1.45% 2/15/11 (e)

2,435,000

2,453,545

Chase Credit Card Owner Trust Series 2004-1 Class B, 1.3% 5/15/09 (e)

1,020,000

1,019,999

Chase Manhattan Auto Owner Trust Series 2001-A
Class CTFS, 5.06% 2/15/08

190,817

194,303

Citibank Credit Card Issuance Trust:

Series 2000-C2 Class C2, 1.79% 10/15/07 (e)

3,500,000

3,511,442

Series 2002-B1 Class B1, 1.44% 6/25/09 (e)

2,175,000

2,183,506

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Countrywide Home Loans, Inc.:

Series 2004-2 Class M1, 1.6% 5/25/34 (e)

$ 1,275,000

$ 1,273,805

Series 2004-3 Class M1, 1.6% 6/25/34 (e)

350,000

349,672

Discover Card Master Trust I Series 2001-6 Class A, 5.75% 12/15/08

8,000,000

8,501,333

Fieldstone Mortgage Investment Corp. Series 2003-1:

Class M1, 1.78% 11/25/33 (e)

300,000

303,047

Class M2, 2.85% 11/25/33 (e)

200,000

201,000

First Franklin Mortgage Loan Trust Series 2004-FF2:

Class M3, 1.65% 3/25/34 (e)

100,000

99,766

Class M4, 2% 3/25/34 (e)

75,000

74,824

Class M6, 2.35% 3/25/34 (e)

100,000

99,766

Fleet Credit Card Master Trust II Series 2001-C Class A, 3.86% 3/15/07

2,605,000

2,628,068

Ford Credit Auto Owner Trust Series 2001-B Class B, 5.71% 9/15/05

560,000

564,982

Fremont Home Loan Trust Series 2004-A:

Class M1, 1.65% 1/25/34 (e)

1,100,000

1,097,647

Class M2, 2.25% 1/25/34 (e)

1,275,000

1,272,351

GSAMP Trust Series 2004-FM2:

Class M1, 1.6% 1/25/34 (e)

750,000

750,000

Class M2, 2.2% 1/25/34 (e)

400,000

400,000

Class M3, 2.4% 1/25/34 (e)

400,000

399,999

Home Equity Asset Trust:

Series 2003-2:

Class A2, 1.48% 8/25/33 (e)

401,512

402,965

Class M1, 1.98% 8/25/33 (e)

765,000

776,679

Series 2003-4:

Class M1, 1.9% 10/25/33 (e)

1,045,000

1,058,126

Class M2, 3% 10/25/33 (e)

1,240,000

1,260,004

Series 2003-5N Class A, 7.5% 1/27/34 (a)

168,830

169,674

Series 2004-3:

Class M2, 2.29% 8/25/34 (b)(e)

535,000

535,000

Class M3, 2.54% 8/25/34 (b)(e)

225,000

225,000

Home Equity Asset Trust NIMS Trust:

Series 2002-4N Class A, 8% 5/27/33 (a)

307,517

307,517

Series 2003-2N Class A, 8% 9/27/33 (a)

520,107

522,707

Long Beach Mortgage Loan Trust Series 2003-3:

Class M1, 1.85% 7/25/33 (e)

2,460,000

2,485,348

Class M2, 2.95% 7/25/33 (e)

1,260,000

1,296,254

MBNA Credit Card Master Note Trust:

Series 2003-B3 Class B3, 1.475% 1/18/11 (e)

1,685,000

1,691,048

Series 2003-B5 Class B5, 1.47% 2/15/11 (e)

2,360,000

2,378,326

Asset-Backed Securities - continued

Principal
Amount

Value
(Note 1)

Meritage Mortgage Loan Trust Series 2004-1:

Class M1, 1.6% 7/25/34 (e)

$ 500,000

$ 498,828

Class M2, 1.65% 7/25/34 (e)

100,000

99,766

Class M3, 2.05% 7/25/34 (e)

200,000

199,531

Class M4, 2.2% 7/25/34 (e)

125,000

124,707

Morgan Stanley ABS Capital I, Inc.:

Series 2002-HE3 Class M1, 2.2% 12/27/32 (e)

460,000

468,985

Series 2002-NC6N Class NOTE, 9.5% 9/25/32 (a)

11,693

11,767

Series 2003-HE1 Class M2, 3% 5/25/33 (e)

1,450,000

1,471,967

Series 2003-NC8 Class M1, 1.8% 9/25/33 (e)

665,000

667,632

Morgan Stanley Dean Witter Capital I Trust:

Series 2001-NC4 Class M1, 2.1% 1/25/32 (e)

1,350,000

1,374,049

Series 2002-NC1 Class M1, 1.9% 2/25/32 (a)(e)

865,000

874,504

Series 2002-NC3 Class M1, 1.82% 8/25/32 (e)

375,000

379,045

Series 2002-NC5N Class NOTE, 9.5% 9/25/32 (a)

129,792

130,076

Series 2003-NC2 Class M2, 3.1% 2/25/33 (e)

710,000

729,145

Morgan Stanley Dean Witter Capital I, Inc. Series 2003-NC2N Class NOTE, 9.5% 12/25/32 (a)

354,871

356,423

New Century Home Equity Loan Trust Series 2003-2 Class A2, 1.53% 1/25/33 (e)

1,696,758

1,700,510

Nissan Auto Lease Trust Series 2003-A Class A3B, 2.57% 6/15/09

10,000,000

9,998,128

NovaStar Home Equity Loan Series 2004-1:

Class M1, 1.55% 6/25/34 (e)

350,000

350,602

Class M4, 2.075% 6/25/34 (e)

585,000

586,280

Residential Asset Mortgage Products, Inc. Series 2003-RP2 Class A1, 1.54% 9/25/33 (a)(e)

2,112,531

2,118,679

Sears Credit Account Master Trust II:

Series 1996-3 Class A, 7% 7/15/08

637,500

641,990

Series 1999-1 Class A, 5.65% 3/17/09

916,667

933,538

Series 2002-4 Class A, 1.23% 8/18/09 (e)

2,700,000

2,703,863

SLM Private Credit Student Loan Trust Series 2004-A Class C, 2.07% 6/15/33 (e)

1,190,000

1,192,278

Superior Wholesale Inventory Financing Trust VII Series 2003-A8 Class CTFS, 1.55% 3/15/11 (a)(e)

2,320,000

2,323,625

West Penn Funding LLC Series 1999-A Class A3, 6.81% 9/25/08

3,881,959

4,090,139

TOTAL ASSET-BACKED SECURITIES

(Cost $114,244,886)

116,044,029

Collateralized Mortgage Obligations - 6.0%

Principal
Amount

Value
(Note 1)

Private Sponsor - 4.1%

Banc America Mortgage Securities, Inc. Series 2004-D:

Class 1A1, 3.6188% 5/25/34 (e)

$ 3,210,000

$ 3,202,978

Class 2A2, 4.2236% 5/25/34 (e)

3,210,000

3,205,737

Bank of America Mortgage Securities, Inc.:

Series 2003-K:

Class 1A1, 3.4069% 12/25/33 (e)

890,103

897,165

Class 2A1, 4.2457% 12/25/33 (e)

2,136,922

2,138,675

Series 2003-L Class 2A1, 4.0764% 1/25/34 (e)

3,954,965

3,929,293

Series 2004-B:

Class 1A1, 3.4996% 3/25/34 (e)

1,874,930

1,878,446

Class 2A2, 4.1831% 3/25/34

1,459,971

1,458,726

Series 2004-C Class 1A1, 3.4467% 4/25/34 (e)

2,974,628

2,977,068

CS First Boston Mortgage Securities Corp. floater
Series 2004-AR3 Class 6A2, 1.47% 3/25/34 (e)

1,279,532

1,276,973

Merrill Lynch Mortgage Investors, Inc.:

Series 2003-E Class XA1, 1% 10/25/28 (e)(g)

19,179,487

300,610

Series 2003-G Class XA1, 1% 1/25/29 (g)

16,899,405

285,177

Series 2003-H Class XA1, 1% 1/25/29 (a)(g)

14,722,274

250,739

Residential Asset Mortgage Products, Inc. sequential pay Series 2003-SL1 Class A31, 7.125% 4/25/31

5,695,434

5,937,490

Residential Finance LP/Residential Finance Development Corp. floater:

Series 2003-B:

Class B3, 2.65% 7/10/35 (a)(e)

2,369,107

2,407,143

Class B4, 2.85% 7/10/35 (a)(e)

1,776,831

1,805,149

Class B5, 3.45% 7/10/35 (a)(e)

1,678,118

1,709,517

Class B6, 3.95% 7/10/35 (a)(e)

789,702

804,201

Series 2003-CB1:

Class B3, 2.55% 6/10/35 (a)(e)

828,663

841,740

Class B4, 2.75% 6/10/35 (a)(e)

739,877

751,438

Class B5, 3.35% 6/10/35 (a)(e)

503,117

512,668

Class B6, 3.85% 6/10/35 (a)(e)

300,883

306,454

Series 2003-D Class B3, 2.4% 12/10/35 (a)(e)

9,945,663

9,987,378

Sequoia Mortgage Funding Trust Series 2003-A
Class AX1, 0.8% 10/21/08 (a)(g)

67,931,316

756,266

WAMU Mortgage pass thru certificates:

sequential pay Series 2002-S6 Class A25, 6% 10/25/32

1,765,596

1,795,321

Collateralized Mortgage Obligations - continued

Principal
Amount

Value
(Note 1)

Private Sponsor - continued

WAMU Mortgage pass thru certificates: - continued

Series 2003-AR12 Class A5, 4.043% 2/25/34

$ 5,000,000

$ 4,988,690

Washington Mutual Mortgage Securities Corp. sequential pay Series 2003-MS9 Class 2A1, 7.5% 12/25/33

577,220

602,289

TOTAL PRIVATE SPONSOR

55,007,331

U.S. Government Agency - 1.9%

Fannie Mae planned amortization class:

Series 1994-51 Class PH, 6.5% 1/25/23

272,304

273,947

Series 1994-81 Class PJ, 8% 7/25/23

1,962,672

1,995,363

Fannie Mae guaranteed REMIC pass thru certificates planned amortization class Series 2001-53 Class OH, 6.5% 6/25/30

195,839

198,171

Freddie Mac planned amortization class Series 2355 Class CD, 6.5% 6/15/30

234,256

237,172

Freddie Mac Multi-class participation certificates guaranteed:

planned amortization class Series 2435 Class EL, 6% 9/15/27

941,757

946,571

sequential pay Series 2473 Class VK, 6.5% 10/15/18

13,087,343

13,685,470

Series 2749 Class MZ, 5% 2/15/24

573,086

571,700

Series 2764:

Class ZA, 5% 10/15/32

230,812

229,586

Class ZB, 5% 3/15/33

388,517

386,211

Class ZC, 4.5% 3/15/19

246,669

245,204

Series 2769 Class ZA, 5% 9/15/32

362,206

360,310

Ginnie Mae guaranteed Multi-family pass thru securities sequential pay Series 2002-35 Class C, 5.8705% 10/16/23 (e)

370,000

391,975

Ginnie Mae guaranteed REMIC pass thru securities:

planned amortization class Series 2001-45 Class GC, 6.5% 10/20/30

2,020,340

2,065,679

sequential pay Series 2003-59 Class D, 3.654% 10/16/27

3,060,000

2,836,405

TOTAL U.S. GOVERNMENT AGENCY

24,423,764

TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS

(Cost $79,927,995)

79,431,095

Commercial Mortgage Securities - 8.2%

Principal
Amount

Value
(Note 1)

Asset Securitization Corp.:

sequential pay Series 1995-MD4 Class A1, 7.1% 8/13/29

$ 730,217

$ 773,209

Series 1997-D5 Class PS1, 1.3146% 2/14/43 (e)(g)

18,318,481

1,132,723

Banc of America Commercial Mortgage, Inc. Series 2002-2 Class XP, 2.0359% 7/11/43 (a)(e)(g)

12,355,000

957,505

Banc of America Large Loan, Inc. floater Series 2003-BBA2:

Class C, 1.57% 11/15/15 (a)(e)

265,000

265,901

Class D, 1.65% 11/15/15 (a)(e)

410,000

411,554

Class F, 2% 11/15/15 (a)(e)

295,000

298,538

Class H, 2.5% 11/15/15 (a)(e)

265,000

268,313

Class J, 3.05% 11/15/15 (a)(e)

275,000

279,361

Class K, 3.7% 11/15/15 (a)(e)

245,000

246,292

Bayview Commercial Asset Trust floater Series 2004-1:

Class A, 1.46% 4/25/34 (a)(e)

1,890,327

1,890,327

Class B, 3% 4/25/34 (a)(e)

198,982

198,982

Class M1, 1.66% 4/25/34 (a)(e)

198,982

198,982

Class M2, 2.3% 4/25/34 (a)(e)

99,491

99,491

Bear Stearns Commercial Mortgage Securities, Inc. floater Series 2003-BA1A Class A1, 1.38% 4/14/15 (a)(e)

3,710,655

3,709,483

Chase Commercial Mortgage Securities Corp. Series 2001-245 Class A2, 6.0658% 2/12/16 (a)(e)

980,000

1,050,118

COMM floater:

Series 2001-FL5A:

Class A2, 1.65% 11/15/13 (a)(e)

369,320

369,331

Class D, 2.35% 11/15/13 (a)(e)

2,200,000

2,201,050

Series 2002-FL7:

Class A2, 1.45% 11/15/14 (a)(e)

1,905,000

1,904,704

Class D, 1.67% 11/15/14 (a)(e)

600,000

599,503

Commercial Mortgage Asset Trust sequential pay
Series 1999-C2 Class A1, 7.285% 11/17/32

2,564,823

2,790,335

Commercial Resecuritization Trust sequential pay
Series 1999-ABC1 Class A, 6.74% 1/27/09 (a)

1,359,075

1,421,720

CS First Boston Mortgage Securities Corp.:

sequential pay:

Series 1997-C2 Class A3, 6.55% 1/17/35

1,245,000

1,352,474

Series 1998-C1 Class A1B, 6.48% 5/17/40

2,885,000

3,139,311

Series 1999-C1 Class A2, 7.29% 9/15/41

7,550,000

8,535,198

Series 2000-C1 Class A1, 7.325% 4/15/62

1,595,422

1,726,336

Series 2001-CK3 Class A2, 6.04% 6/15/34

2,050,000

2,164,332

Series 1997-C2 Class D, 7.27% 1/17/35

755,000

834,276

Series 2001-CK6 Class AX, 0.645% 9/15/18 (g)

35,232,334

1,372,194

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

CS First Boston Mortgage Securities Corp.: - continued

Series 2003-TFLA Class G, 1.9376% 4/15/13 (a)(e)

$ 520,000

$ 508,420

Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class D, 7.231% 6/15/31

610,000

631,555

DLJ Commercial Mortgage Corp. sequential pay:

Series 1998-CF1 Class A1B, 6.41% 2/18/31

4,500,000

4,884,701

Series 2000-CF1 Class A1A, 7.45% 6/10/33

1,572,855

1,667,815

Equitable Life Assurance Society of the United States:

sequential pay Series 174 Class A1, 7.24% 5/15/06 (a)

1,500,000

1,619,725

Series 174 Class C1, 7.52% 5/15/06 (a)

1,000,000

1,084,079

GE Capital Commercial Mortgage Corp. Series 2001-1 Class X1, 0.5342% 5/15/33 (a)(e)(g)

23,761,171

985,015

GE Commercial Mortgage Corp. Series 2004-C1
Class X2, 1.1954% 11/10/38 (e)(g)

15,694,700

844,389

GGP Mall Properties Trust sequential pay Series 2001-C1A Class A2, 5.007% 11/15/11 (a)

4,897,102

5,092,852

Ginnie Mae guaranteed REMIC pass thru securities:

sequential pay:

Series 2003-22 Class B, 3.963% 5/16/32

2,030,000

1,962,167

Series 2003-36 Class C, 4.254% 2/16/31

1,685,000

1,638,581

Series 2003-47 Class C, 4.227% 10/16/27

3,015,000

2,934,250

Series 2003-47 Class XA, 0.0215% 6/16/43 (e)(g)

9,457,479

461,422

GS Mortgage Securities Corp. II:

sequential pay:

Series 2001-LIBA Class A2, 6.615% 2/14/16 (a)

2,180,000

2,361,846

Series 2003-C1 Class A2A, 3.59% 1/10/40

1,560,000

1,546,880

Series 2001-LIBA Class C, 6.733% 2/14/16 (a)

815,000

887,847

Heller Financial Commercial Mortgage Asset Corp. sequential pay Series 2000-PH1 Class A1, 7.715% 1/17/34

2,320,094

2,520,131

Hilton Hotel Pool Trust sequential pay Series 2000-HLTA Class A1, 7.055% 10/3/15 (a)

1,504,696

1,627,124

J.P. Morgan Chase Commercial Mortgage Securities Corp. Series 2004-C1 Class X2, 1.2011% 1/15/38 (e)(g)

5,195,000

266,076

J.P. Morgan Commercial Mortgage Finance Corp. sequential pay Series 2000-C10 Class A1, 7.1075% 8/15/32

1,225,654

1,325,103

LB-UBS Commercial Mortgage Trust:

sequential pay Series 2000-C3 Class A1, 7.95% 7/15/09

2,547,388

2,796,025

Series 2004-C1 Class XCP, 1.0545% 1/15/36 (a)(e)(g)

16,255,000

812,019

Commercial Mortgage Securities - continued

Principal
Amount

Value
(Note 1)

Leafs CMBS I Ltd./Leafs CMBS I Corp. Series 2002-1A Class B, 4.13% 11/20/37 (a)

$ 4,000,000

$ 3,726,250

Morgan Stanley Capital I, Inc.:

sequential pay Series 1997-HF1 Class A2, 7.27% 7/15/29 (a)

2,387,357

2,567,077

Series 2004-TOP13, Class X2, 1.2196% 9/13/45 (a)(e)(g)

10,975,000

567,071

Morgan Stanley Dean Witter Capital I Trust sequential pay Series 2001-PPM Class A2, 6.4% 2/15/31

3,107,577

3,346,778

Nationslink Funding Corp. sequential pay Series 1999-2 Class A1C, 7.03% 6/20/31

1,271,226

1,363,331

Thirteen Affiliates of General Growth Properties, Inc. sequential pay Series 1 Class A2, 6.602% 11/15/07 (a)

2,500,000

2,703,586

Trizechahn Office Properties Trust Series 2001-TZHA:

Class C3, 6.522% 3/15/13 (a)

3,675,000

3,862,998

Class C4, 6.893% 5/15/16 (a)

8,000,000

8,699,533

Wachovia Bank Commercial Mortgage Trust:

sequential pay Series 2003-C8 Class A3, 4.445% 11/15/35

4,050,000

3,995,956

Series 2004-C10 Class XP, 1.025% 2/15/41 (a)(e)(g)

7,475,000

365,403

TOTAL COMMERCIAL MORTGAGE SECURITIES

(Cost $107,570,834)

109,847,548

Foreign Government and Government Agency Obligations - 1.4%

Chilean Republic:

5.5% 1/15/13

1,655,000

1,665,261

5.625% 7/23/07

1,210,000

1,278,819

7.125% 1/11/12

2,900,000

3,246,188

Quebec Province yankee 6.5% 1/17/06

2,000,000

2,128,036

State of Israel 4.625% 6/15/13

480,000

444,600

United Mexican States:

4.625% 10/8/08

4,030,000

4,009,850

7.5% 1/14/12

3,650,000

4,005,875

8% 9/24/22

2,000,000

2,110,000

TOTAL FOREIGN GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS

(Cost $17,854,907)

18,888,629

Fixed-Income Funds - 11.2%

Shares

Value
(Note 1)

Fidelity Ultra-Short Central Fund (f)
(Cost $148,493,868)

1,496,000

$ 149,076,390

Cash Equivalents - 5.8%

Maturity
Amount

Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.05%, dated 4/30/04 due 5/3/04)
(Cost $76,833,000)

$ 76,839,723

76,833,000

TOTAL INVESTMENT PORTFOLIO - 105.1%

(Cost $1,380,126,598)

1,399,288,244

NET OTHER ASSETS - (5.1)%

(68,137,772)

NET ASSETS - 100%

$ 1,331,150,472

Futures Contracts

Expiration
Date

Underlying
Face Amount
at Value

Unrealized
Appreciation/
(Depreciation)

Purchased

Eurodollar Contracts

20 Eurodollar 90 Day Index Contracts

March 2005

$ 19,866,250

$ 106,130

20 Eurodollar 90 Day Index Contracts

June 2005

19,843,500

90,880

41 Eurodollar 90 Day Index Contracts

Sept. 2005

40,639,713

111,067

87 Eurodollar 90 Day Index Contracts

Dec. 2005

86,163,713

179,053

57 Eurodollar 90 Day Index Contracts

March 2006

56,414,325

117,257

65 Eurodollar 90 Day Index Contracts

June 2006

64,293,938

61,210

65 Eurodollar 90 Day Index Contracts

Sept. 2006

64,259,813

55,848

95 Eurodollar 90 Day Index Contracts

Dec. 2006

93,870,688

41,468

65 Eurodollar 90 Day Index Contracts

March 2007

64,200,500

38,885

60 Eurodollar 90 Day Index Contracts

June 2007

59,238,750

97,890

899,688

Swap Agreements

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Credit Default Swap

Receive quarterly notional amount multiplied by .35% and pay Goldman Sachs upon default event of Devon Energy Corp., par value of the notional amount of Devon Energy Corp. 7.95% 4/15/32

June 2006

$ 900,000

$ 623

Receive quarterly notional amount multiplied by .53% and pay Deutsche Bank upon default event of SBC Communications, Inc., par value of the notional amount of SBC Communications, Inc. 6.25% 3/15/11

March 2009

1,400,000

7,161

Receive quarterly notional amount multiplied by .53% and pay Lehman Brothers, Inc., upon default event of SBC Communications, Inc., par value of the notional amount of SBC Communications, Inc. 6.25% 3/15/11

March 2009

1,000,000

2,813

Receive quarterly notional amount multiplied by .62% and pay Goldman Sachs upon default of SLM Corp., par value of the notional amount of SLM Corp. 1.12% 7/25/35

August 2007

490,000

6,424

Receive quarterly notional amount multiplied by 1.38% and pay Merrill Lynch, Inc. upon default event of Bombardier, Inc., par value of the notional amount of Bombardier, Inc. 6.75% 5/1/12

March 2009

300,000

(1,935)

Receive quarterly notional amount multiplied by 1.4% and pay Merrill Lynch, Inc. upon default event of Bombardier, Inc., par value of the notional amount of Bombardier, Inc. 6.75% 5/1/12

March 2009

900,000

(4,977)

TOTAL CREDIT DEFAULT SWAP

4,990,000

10,109

Interest Rate Swap

Receive quarterly a fixed rate equal to 3.098% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.

April 2007

14,440,000

(39,679)

Receive quarterly a fixed rate equal to 3.1422% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.

April 2007

12,300,000

(36,105)

Swap Agreements - continued

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Interest Rate Swap - continued

Receive quarterly a fixed rate equal to 3.857% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.

April 2008

$ 12,000,000

$ (154,484)

Receive quarterly a fixed rate equal to 4.6775% and pay quarterly a floating rate based on 3-month LIBOR with Merrill Lynch, Inc.

April 2010

9,145,000

(72,011)

TOTAL INTEREST RATE SWAP

47,885,000

(302,279)

Total Return Swap

Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 65 basis points with Lehman Brothers, Inc.

Oct. 2004

2,700,000

(131,877)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

August 2004

2,945,000

(96,669)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 50 basis points with Lehman Brothers, Inc.

Sept. 2004

2,600,000

(79,695)

Receive monthly a return equal to Lehman Brothers CMBS Erisa Eligible and pay monthly a floating rate based on 1-month LIBOR minus 55 basis points with Deutsche Bank

Dec. 2004

2,100,000

(9,071)

Receive quarterly a return equal to Banc of America Securities LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 75 basis points with Bank of America

May 2004

2,700,000

(81,231)

Swap Agreements - continued

Expiration
Date

Notional
Amount

Unrealized
Appreciation/
(Depreciation)

Total Return Swap - continued

Receive quarterly a return equal to Banc of America Securities LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 80 basis points with Bank of America

July 2004

$ 2,700,000

$ (65,682)

Receive quarterly a return equal to Banc of America Securities LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 80 basis points with Bank of America

Nov. 2004

5,400,000

(17,740)

TOTAL RETURN SWAP

21,145,000

(481,965)

$ 74,020,000

$ (774,135)

Legend

(a) 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 $143,129,963 or 10.8% of net assets.

(b) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(c) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $489,816.

(d) Security or a portion of the security has been segregated as collateral for open swap agreements. At the period end, the value of securities pledged amounted to $262,851.

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

(f) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(g) Security represents right to receive monthly interest payments on an underlying pool of mortgages. Principal shown is the par amount of the mortgage pool.

Other Information

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

United States of America

89.9%

Cayman Islands

2.1%

Netherlands

1.4%

Mexico

1.1%

United Kingdom

1.1%

Canada

1.1%

Chile

1.0%

Others (individually less than 1%)

2.3%

100.0%

Purchases and sales of securities, other than short-term securities, aggregated $766,961,423 and $805,016,090, respectively, of which long-term U.S. government and government agency obligations aggregated $550,522,275 and $633,448,547, respectively.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $76,833,000) (cost $1,380,126,598) - - See accompanying schedule

$ 1,399,288,244

Cash

93,094

Receivable for investments sold

1,443,087

Receivable for fund shares sold

3,761,074

Interest receivable

12,456,583

Receivable for daily variation on futures contracts

77,050

Prepaid expenses

4,940

Receivable from investment adviser for expense reductions

4,757

Total assets

1,417,128,829

Liabilities

Payable for investments purchased on a delayed delivery basis

$ 80,754,014

Payable for fund shares redeemed

2,970,884

Distributions payable

331,965

Unrealized loss on swap agreements

774,135

Accrued management fee

474,471

Distribution fees payable

349,636

Other affiliated payables

290,064

Other payables and accrued expenses

33,188

Total liabilities

85,978,357

Net Assets

$ 1,331,150,472

Net Assets consist of:

Paid in capital

$ 1,298,472,037

Undistributed net investment income

4,028,919

Accumulated undistributed net realized gain (loss) on investments

9,362,317

Net unrealized appreciation (depreciation) on investments

19,287,199

Net Assets

$ 1,331,150,472

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($174,213,333 ÷ 15,600,580 shares)

$ 11.17

Maximum offering price per share (100/96.25 of $11.17)

$ 11.61

Class T:
Net Asset Value and redemption price per share ($685,411,772 ÷ 61,351,550 shares)

$ 11.17

Maximum offering price per share (100/97.25 of $11.17)

$ 11.49

Class B:
Net Asset Value and offering price per share ($129,898,926 ÷ 11,642,394 shares) A

$ 11.16

Class C:
Net Asset Value and offering price per share ($99,285,091 ÷ 8,904,691 shares) A

$ 11.15

Institutional Class:
Net Asset Value, offering price and redemption price per share ($242,341,350 ÷ 21,663,278 shares)

$ 11.19

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Interest

$ 28,447,906

Security lending

925

Total income

28,448,831

Expenses

Management fee

$ 2,830,581

Transfer agent fees

1,444,370

Distribution fees

2,187,972

Accounting and security lending fees

227,881

Non-interested trustees' compensation

4,194

Custodian fees and expenses

26,884

Registration fees

86,793

Audit

30,215

Legal

5,063

Miscellaneous

9,008

Total expenses before reductions

6,852,961

Expense reductions

(17,212)

6,835,749

Net investment income (loss)

21,613,082

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities

11,426,628

Swap agreements

661,648

Total net realized gain (loss)

12,088,276

Change in net unrealized appreciation (depreciation) on:

Investment securities

(17,309,906)

Futures contracts

14,726

Swap agreements

(951,470)

Total change in net unrealized appreciation (depreciation)

(18,246,650)

Net gain (loss)

(6,158,374)

Net increase (decrease) in net assets resulting from operations

$ 15,454,708

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 21,613,082

$ 46,478,120

Net realized gain (loss)

12,088,276

24,355,364

Change in net unrealized appreciation (depreciation)

(18,246,650)

2,572,375

Net increase (decrease) in net assets resulting
from operations

15,454,708

73,405,859

Distributions to shareholders from net investment income

(21,631,476)

(45,500,193)

Distributions to shareholders from net realized gain

(11,495,156)

-

Total distributions

(33,126,632)

(45,500,193)

Share transactions - net increase (decrease)

47,009,811

65,287,174

Total increase (decrease) in net assets

29,337,887

93,192,840

Net Assets

Beginning of period

1,301,812,585

1,208,619,745

End of period (including undistributed net investment income of $4,028,919 and undistributed net investment income of $4,047,313, respectively)

$ 1,331,150,472

$ 1,301,812,585

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.32

$ 11.06

$ 11.01

$ 10.30

$ 10.30

$ 10.77

Income from Investment Operations

Net investment income (loss)E

.195

.420

.521G

.619

.629

.580

Net realized and unrealized gain (loss)

(.050)

.254

.055G

.713

(.002)

(.474)

Total from investment operations

.145

.674

.576

1.332

.627

.106

Distributions from net investment income

(.195)

(.414)

(.526)

(.622)

(.627)

(.576)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.295)

(.414)

(.526)

(.622)

(.627)

(.576)

Net asset value,
end of period

$ 11.17

$ 11.32

$ 11.06

$ 11.01

$ 10.30

$ 10.30

Total ReturnB,C,D

1.28%

6.16%

5.44%

13.28%

6.32%

1.00%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.85%A

.81%

.83%

.83%

.84%

.87%

Expenses net of voluntary waivers, if any

.85%A

.81%

.83%

.83%

.84%

.87%

Expenses net of all
reductions

.85%A

.81%

.82%

.82%

.84%

.86%

Net investment income (loss)

3.46%A

3.72%

4.82%G

5.82%

6.20%

5.58%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 174,213

$ 166,701

$ 133,236

$ 92,027

$ 48,177

$ 22,628

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.32

$ 11.06

$ 11.02

$ 10.31

$ 10.31

$ 10.77

Income from Investment Operations

Net investment income (loss)E

.189

.408

.508G

.603

.620

.576

Net realized and unrealized gain (loss)

(.050)

.253

.044G

.713

(.006)

(.473)

Total from investment operations

.139

.661

.552

1.316

.614

.103

Distributions from net investment income

(.189)

(.401)

(.512)

(.606)

(.614)

(.563)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.289)

(.401)

(.512)

(.606)

(.614)

(.563)

Net asset value,
end of period

$ 11.17

$ 11.32

$ 11.06

$ 11.02

$ 10.31

$ 10.31

Total ReturnB,C,D

1.23%

6.03%

5.21%

13.11%

6.18%

.98%

Ratios to Average Net AssetsF

Expenses before
expense reductions

.95%A

.93%

.95%

.97%

.97%

.97%

Expenses net of voluntary waivers, if any

.95%A

.93%

.95%

.97%

.97%

.97%

Expenses net of all
reductions

.95%A

.93%

.95%

.97%

.97%

.97%

Net investment income (loss)

3.35%A

3.60%

4.70%G

5.67%

6.07%

5.48%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 685,412

$ 711,263

$ 684,618

$ 546,276

$ 313,887

$ 315,350

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.31

$ 11.05

$ 11.01

$ 10.30

$ 10.30

$ 10.76

Income from Investment Operations

Net investment income (loss)E

.150

.331

.436G

.534

.553

.506

Net realized and unrealized gain (loss)

(.050)

.253

.044G

.713

(.006)

(.467)

Total from investment operations

.100

.584

.480

1.247

.547

.039

Distributions from net investment income

(.150)

(.324)

(.440)

(.537)

(.547)

(.499)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.250)

(.324)

(.440)

(.537)

(.547)

(.499)

Net asset value,
end of period

$ 11.16

$ 11.31

$ 11.05

$ 11.01

$ 10.30

$ 10.30

Total ReturnB,C,D

.88%

5.32%

4.52%

12.40%

5.50%

.37%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.67%A

1.60%

1.61%

1.62%

1.62%

1.61%

Expenses net of voluntary waivers, if any

1.65%A

1.60%

1.61%

1.62%

1.62%

1.61%

Expenses net of all
reductions

1.65%A

1.60%

1.61%

1.62%

1.62%

1.61%

Net investment income (loss)

2.66%A

2.92%

4.03%G

5.02%

5.42%

4.83%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 129,899

$ 154,697

$ 178,062

$ 113,424

$ 63,584

$ 64,532

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.30

$ 11.04

$ 11.00

$ 10.29

$ 10.29

$ 10.76

Income from Investment Operations

Net investment income (loss)E

.147

.322

.428G

.525

.545

.492

Net realized and unrealized gain (loss)

(.050)

.254

.044G

.716

(.005)

(.472)

Total from investment operations

.097

.576

.472

1.241

.540

.020

Distributions from net investment income

(.147)

(.316)

(.432)

(.531)

(.540)

(.490)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.247)

(.316)

(.432)

(.531)

(.540)

(.490)

Net asset value, end of period

$ 11.15

$ 11.30

$ 11.04

$ 11.00

$ 10.29

$ 10.29

Total ReturnB,C,D

.85%

5.26%

4.45%

12.34%

5.42%

.19%

Ratios to Average Net AssetsF

Expenses before
expense reductions

1.70%A

1.67%

1.68%

1.69%

1.69%

1.71%

Expenses net of voluntary waivers, if any

1.70%A

1.67%

1.68%

1.69%

1.69%

1.71%

Expenses net of all
reductions

1.70%A

1.67%

1.68%

1.69%

1.69%

1.71%

Net investment income (loss)

2.60%A

2.86%

3.96%G

4.96%

5.35%

4.73%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 99,285

$ 113,849

$ 98,158

$ 63,538

$ 20,530

$ 17,099

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 11.34

$ 11.08

$ 11.03

$ 10.32

$ 10.31

$ 10.78

Income from Investment Operations

Net investment income (loss)D

.203

.437

.539F

.638

.656

.610

Net realized and unrealized gain (loss)

(.049)

.254

.053F

.711

(.002)

(.485)

Total from investment operations

.154

.691

.592

1.349

.654

.125

Distributions from net investment income

(.204)

(.431)

(.542)

(.639)

(.644)

(.595)

Distributions from net realized gain

(.100)

-

-

-

-

-

Total distributions

(.304)

(.431)

(.542)

(.639)

(.644)

(.595)

Net asset value,
end of period

$ 11.19

$ 11.34

$ 11.08

$ 11.03

$ 10.32

$ 10.31

Total ReturnB,C

1.36%

6.30%

5.59%

13.45%

6.59%

1.19%

Ratios to Average Net AssetsE

Expenses before
expense reductions

.69%A

.66%

.67%

.66%

.65%

.66%

Expenses net of voluntary waivers, if any

.69%A

.66%

.67%

.66%

.65%

.66%

Expenses net of all
reductions

.69%A

.66%

.67%

.66%

.65%

.66%

Net investment income (loss)

3.61%A

3.87%

4.97%F

5.98%

6.39%

5.78%

Supplemental Data

Net assets, end of
period (000 omitted)

$ 242,341

$ 155,302

$ 114,546

$ 91,168

$ 88,350

$ 157,131

Portfolio turnover rate

115%A

108%

121%

112%

153%

138%

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 November 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 April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor Intermediate Bond 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 four 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 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. 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

1. Significant Accounting Policies - continued

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 futures transactions, prior period premium and discount on debt securities, market discount, financing transactions, capital loss carryforwards and losses deferred due to wash sales.

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

Unrealized appreciation

$ 32,742,334

Unrealized depreciation

(11,367,019)

Net unrealized appreciation (depreciation)

$ 21,375,315

Cost for federal income tax purposes

$ 1,377,912,929

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).

Semiannual Report

2. Operating Policies - continued

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in the fund's Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

Futures Contracts. The fund may use futures contracts to manage its exposure to the bond market and to fluctuations in interest rates. Buying futures tends to increase the fund's exposure to the underlying instrument, while selling futures tends to decrease the fund's exposure to the underlying instrument or hedge other fund investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counter-parties do not perform under the contracts' terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.

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

2. Operating Policies - continued

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.

Total return swaps are agreements to exchange the return generated by one instrument for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the index exceeds the offsetting interest obligation, the fund will receive a payment from the counterparty. To the extent it is less, the fund will make a payment to the counterparty. Periodic payments received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a "guarantor" receiving a periodic payment that is a fixed percentage applied to a notional principal amount. In return the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the swap. The fund may enter into credit default swaps in which the fund or its counterparty act as guarantors. By acting as the guarantor of a swap, the fund assumes the market and credit risk of the underlying instrument including liquidity and loss of value. Premiums received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

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. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. These risks include changes in the returns of the underlying instruments, failure of the counterparties to perform under the contracts' terms and the possible lack of liquidity with respect to the swap agreements. Details of swap agreements open at period end are included in the fund's Schedule of Investments under the caption "Swap Agreements."

Semiannual Report

2. Operating Policies - continued

Financing Transactions. To earn additional income, the fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but will be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, the fund's right to repurchase or sell securities may be limited.

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 .30% 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 .43% of the fund's average net assets.

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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan - continued

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%

$ 128,564

$ 1,173

Class T

0%

.25%

881,156

12,460

Class B

.65%

.25%

642,657

465,115

Class C

.75%

.25%

535,595

112,492

$ 2,187,972

$ 591,240

Sales Load. FDC receives a front-end sales charge of up to 3.75% for selling Class A shares, and 2.75% 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 3% 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

$ 49,032

Class T

12,020

Class B*

161,461

Class C*

15,116

$ 237,629

* 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

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

shareholder 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

$ 178,412

.21

Class T

749,960

.21

Class B

196,977

.28

Class C

112,040

.21

Institutional Class

206,981

.21

$ 1,444,370

* Annualized

Accounting and Security Lending Fees. FSC maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

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 $1,184,757 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 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. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

6. Security Lending - continued

the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. At period end there were no security loans outstanding.

7. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class B

1.65%

$ 13,887

In addition, through arrangements with the fund's custodian and each class' transfer agent, 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 $1,823. During the period, credits reduced each class' transfer agent expense as noted in the table below.

Transfer Agent
expense reduction

Class A

$ 1,502

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 2,950,454

$ 6,007,552

Class T

11,775,169

26,063,302

Class B

1,897,882

5,170,345

Class C

1,395,533

3,124,274

Institutional Class

3,612,438

5,134,720

Total

$ 21,631,476

$ 45,500,193

From net realized gain

Class A

$ 1,464,510

$ -

Class T

6,264,742

-

Class B

1,325,877

-

Class C

978,409

-

Institutional Class

1,461,618

-

Total

$ 11,495,156

$ -

Semiannual Report

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

3,430,721

10,510,963

$ 38,909,260

$ 119,339,179

Reinvestment of distributions

350,664

465,922

3,964,720

5,276,440

Shares redeemed

(2,913,391)

(8,293,215)

(33,050,754)

(93,804,272)

Net increase (decrease)

867,994

2,683,670

$ 9,823,226

$ 30,811,347

Class T

Shares sold

12,558,986

33,381,968

$ 142,533,375

$ 377,422,827

Reinvestment of distributions

1,516,514

2,175,248

17,153,725

24,637,768

Shares redeemed

(15,556,626)

(34,611,992)

(176,480,410)

(391,598,532)

Net increase (decrease)

(1,481,126)

945,224

$ (16,793,310)

$ 10,462,063

Class B

Shares sold

747,983

5,268,992

$ 8,479,899

$ 59,474,046

Reinvestment of distributions

225,786

351,056

2,549,384

3,970,085

Shares redeemed

(3,014,555)

(8,053,311)

(34,143,083)

(90,955,890)

Net increase (decrease)

(2,040,786)

(2,433,263)

$ (23,113,800)

$ (27,511,759)

Class C

Shares sold

1,064,274

5,050,415

$ 12,054,414

$ 57,002,414

Reinvestment of distributions

171,665

219,498

1,937,507

2,481,384

Shares redeemed

(2,408,155)

(4,082,715)

(27,259,040)

(46,050,425)

Net increase (decrease)

(1,172,216)

1,187,198

$ (13,267,119)

$ 13,433,373

Institutional Class

Shares sold

10,384,911

6,597,666

$ 117,875,237

$ 74,769,322

Reinvestment of distributions

369,380

328,037

4,184,232

3,720,880

Shares redeemed

(2,791,658)

(3,566,218)

(31,698,655)

(40,398,052)

Net increase (decrease)

7,962,633

3,359,485

$ 90,360,814

$ 38,092,150

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

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

Fidelity Management & Research
(Far East) Inc.

Fidelity Investments Money
Management, Inc.

Fidelity Investments Japan Limited

Fidelity International
Investment Advisors

Fidelity International Investment
Advisors (U.K.) Limited

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

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

LTB-USAN-0604
1.784888.101

Fidelity® Advisor

High Income Advantage

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

Semiannual Report

April 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.

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 April 30, 2004

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

AES Corp.

6.0

6.7

Qwest Services Corp.

5.3

4.9

Revlon, Inc.

5.1

0.0

Level 3 Communications, Inc.

4.9

4.0

Ahold Fin Usa, Inc.

3.4

3.8

24.7

Top Five Market Sectors as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Telecommunications

22.9

22.1

Energy

11.8

10.3

Electric Utilities

9.2

15.0

Food and Drug Retail

7.5

9.9

Consumer Products

5.4

2.9

Quality Diversification (% of fund's net assets) as of April 30, 2004

As of April 30, 2004

As of October 31, 2003

AAA,AA,A 0.0%

AAA,AA,A 0.0%

BBB 2.4%

BBB 0.2%

BB 1.8%

BB 1.4%

B 29.5%

B 36.1%

CCC,CC,C 39.1%

CCC,CC,C 36.7%

D 0.0%

D 0.2%

Not Rated 6.6%

Not Rated 6.5%

Equities 17.7%

Equities 10.6%

Short-Term
Investments and
Net Other Assets 2.9%

Short-Term
Investments and
Net Other Assets 8.3%



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 April 30, 2004*

As of October 31, 2003**

Nonconvertible
Bonds 72.8%

Nonconvertible
Bonds 75.9%

Convertible Bonds, Preferred Stocks 2.1%

Convertible Bonds, Preferred Stocks 2.6%

Common Stocks 16.8%

Common Stocks 9.1%

Other Investments 5.4%

Other Investments 4.1%

Short-Term
Investments and
Net Other Assets 2.9%

Short-Term
Investments and
Net Other Assets 8.3%

* Foreign investments

6.3%

** Foreign investments

5.3%



Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Corporate Bonds - 74.0%

Principal Amount (000s)

Value (Note 1) (000s)

Convertible Bonds - 1.2%

Cable TV - 0.5%

Telewest Finance Jersey Ltd. 6% 7/7/05 (c)(f)

$ 11,375

$ 11,432

Energy - 0.1%

Hanover Compressor Co. 4.75% 3/15/08

2,360

2,195

Technology - 0.5%

Conexant Systems, Inc. 4% 2/1/07

13,260

13,061

Telecommunications - 0.1%

Level 3 Communications, Inc. 6% 9/15/09

4,920

2,558

TOTAL CONVERTIBLE BONDS

29,246

Nonconvertible Bonds - 72.8%

Aerospace - 1.6%

Primus International, Inc. 10.5% 4/15/09 (f)

4,100

4,100

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

36,470

35,741

39,841

Air Transportation - 3.0%

American Airlines, Inc. pass thru trust certificates:

6.817% 5/23/11

13,320

12,288

6.977% 11/23/22

833

760

7.377% 5/23/19

16,846

12,634

7.379% 5/23/16

10,460

7,845

7.8% 4/1/08

9,740

9,253

10.18% 1/2/13

5,055

3,993

Continental Airlines, Inc. pass thru trust certificates:

6.795% 8/2/18

322

274

6.9% 1/2/18

2,165

2,133

7.256% 9/15/21

679

678

8.307% 4/2/18

360

320

Delta Air Lines, Inc.:

7.9% 12/15/09

5,000

2,750

10% 8/15/08 (f)

4,000

2,400

Delta Air Lines, Inc. pass thru trust certificates:

7.299% 9/18/06

985

778

7.779% 11/18/05

1,250

1,000

7.779% 1/2/12

2,133

1,493

Northwest Airlines, Inc.:

7.875% 3/15/08

4,675

3,460

9.875% 3/15/07

800

672

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Air Transportation - continued

Northwest Airlines, Inc.: - continued

10.5% 4/1/09

$ 13,637

$ 10,910

Northwest Airlines, Inc. pass thru trust certificates 9.179% 10/1/11

1,846

1,496

75,137

Automotive - 1.1%

Delco Remy International, Inc. 9.375% 4/15/12 (f)

2,940

2,896

Keystone Automotive Operations, Inc. 9.75% 11/1/13 (f)

1,640

1,788

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

13,765

15,004

Visteon Corp. 7% 3/10/14

7,155

6,971

26,659

Building Materials - 1.0%

Owens Corning:

7% 3/15/09 (c)

25,600

10,496

7.5% 5/1/05 (c)

12,000

4,920

7.5% 8/1/18 (c)

4,000

1,640

7.7% 5/1/08 (c)

1,440

590

Texas Industries, Inc. 10.25% 6/15/11

7,000

7,910

25,556

Cable TV - 3.2%

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

25,300

25,237

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

4,030

4,141

Pegasus Communications Corp. 12.5% 8/1/07

2,070

1,573

Pegasus Satellite Communications, Inc.:

11.25% 1/15/10 (f)

12,169

8,762

13.5% 3/1/07

9,895

5,937

Telewest Communications PLC yankee:

9.875% 2/1/10 (c)

14,745

8,773

11.25% 11/1/08 (c)

6,627

4,109

Telewest PLC yankee 9.625% 10/1/06 (c)

38,485

23,476

82,008

Capital Goods - 0.8%

Hexcel Corp. 9.75% 1/15/09

12,074

12,678

Sensus Metering Systems, Inc. 8.625% 12/15/13 (f)

1,800

1,778

Thermadyne Holdings Corp. 9.25% 2/1/14 (f)

5,710

5,824

20,280

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Chemicals - 1.5%

Avecia Group PLC 11% 7/1/09

$ 2,505

$ 2,004

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

5,920

6,601

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

2,680

2,801

HMP Equity Holdings Corp. 0% 5/15/08 unit (f)

4,930

3,796

Huntsman ICI Chemicals LLC 10.125% 7/1/09

13,210

13,771

Huntsman LLC 11.625% 10/15/10

5,240

5,712

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

2,800

3,010

37,695

Consumer Products - 0.3%

Amscan Holdings, Inc. 8.75% 5/1/14 (f)

2,760

2,801

Interactive Health LLC/Interactive Health Finance Corp. 7.25% 4/1/11 (f)

5,430

4,724

7,525

Containers - 1.0%

Applied Extrusion Technologies, Inc. 10.75% 7/1/11

9,710

7,404

Owens-Illinois, Inc. 7.5% 5/15/10

3,490

3,368

U.S. Can Corp. 10.875% 7/15/10

4,690

4,831

Vitro SA de CV 11.75% 11/1/13 (f)

10,670

10,083

25,686

Diversified Financial Services - 0.3%

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

1,860

1,934

Metris Companies, Inc.:

10% 11/1/04

430

430

10.125% 7/15/06

6,480

6,383

8,747

Electric Utilities - 6.4%

AES Corp.:

7.75% 3/1/14

40,370

39,664

8.75% 6/15/08

9,699

10,038

9.375% 9/15/10

20,364

21,789

9.5% 6/1/09

11,516

12,308

Allegheny Energy Supply Co. LLC:

7.8% 3/15/11

21,396

20,968

8.75% 4/15/12 (f)

24,645

24,707

CMS Energy Corp.:

7.5% 1/15/09

6,000

6,030

8.5% 4/15/11

10,000

10,400

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Electric Utilities - continued

CMS Energy Corp.: - continued

8.9% 7/15/08

$ 2,685

$ 2,833

NRG Energy, Inc. 8% 12/15/13 (f)

14,180

14,322

163,059

Energy - 11.1%

El Paso Corp.:

7% 5/15/11

55,485

47,578

7.875% 6/15/12

12,620

11,216

El Paso Energy Corp.:

6.75% 5/15/09

47,730

42,360

6.95% 12/15/07

37,805

35,064

7.375% 12/15/12

22,275

19,129

7.8% 8/1/31

2,125

1,679

El Paso Production Holding Co. 7.75% 6/1/13

6,500

6,175

General Maritime Corp. 10% 3/15/13

6,700

7,571

GulfTerra Energy Partners LP/GulfTerra Energy Finance Corp. 8.5% 6/1/10

7,222

8,016

Hanover Compressor Co.:

0% 3/31/07

22,830

17,294

8.625% 12/15/10

2,030

2,142

J. Ray McDermott SA 11% 12/15/13 (f)

3,560

3,400

Parker Drilling Co. 9.625% 10/1/13

3,050

3,294

Petroleum Geo-Services ASA 10% 11/5/10

13,060

14,105

The Coastal Corp.:

6.5% 6/1/08

14,245

12,215

6.95% 6/1/28

370

269

7.5% 8/15/06

5,730

5,444

7.625% 9/1/08

970

861

7.75% 6/15/10

30,265

26,179

7.75% 10/15/35

1,970

1,517

Williams Companies, Inc.:

7.5% 1/15/31

10,225

9,560

7.875% 9/1/21

5,600

5,453

280,521

Entertainment/Film - 0.6%

AMC Entertainment, Inc. 8% 3/1/14 (f)

6,960

6,803

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

9,640

6,049

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

11,100

1,887

14,739

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Food and Drug Retail - 6.3%

Ahold Finance USA, Inc.:

6.25% 5/1/09

$ 10,000

$ 10,025

6.875% 5/1/29

24,961

22,340

8.25% 7/15/10

49,237

53,668

Nutritional Sourcing Corp. 10.125% 8/1/09

21,526

13,346

Rite Aid Corp.:

8.125% 5/1/10

8,080

8,747

9.5% 2/15/11

2,700

3,031

11.25% 7/1/08

2,335

2,592

12.5% 9/15/06

8,905

10,285

The Great Atlantic & Pacific Tea Co.:

7.75% 4/15/07

21,350

19,962

9.125% 12/15/11

19,180

16,687

160,683

Food/Beverage/Tobacco - 0.5%

Doane Pet Care Co.:

9.75% 5/15/07

3,730

3,413

10.75% 3/1/10

6,605

7,034

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

1,870

1,987

12,434

Gaming - 0.2%

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

5,130

5,964

Healthcare - 0.4%

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

2,150

2,494

Tenet Healthcare Corp.:

6.375% 12/1/11

5,725

4,952

6.5% 6/1/12

810

693

7.375% 2/1/13

1,615

1,454

9,593

Homebuilding/Real Estate - 0.9%

Champion Home Builders Co. 11.25% 4/15/07

20,705

22,776

Hotels - 0.1%

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

1,630

1,785

Insurance - 2.0%

Provident Companies, Inc.:

7% 7/15/18

17,420

16,418

7.25% 3/15/28

12,340

11,518

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Insurance - continued

UnumProvident Corp.:

6.75% 12/15/28

$ 11,350

$ 10,385

7.19% 2/1/28

3,250

2,974

7.375% 6/15/32

9,190

8,662

49,957

Leisure - 0.0%

Equinox Holdings Ltd. 9% 12/15/09 (f)

1,000

1,030

Metals/Mining - 0.8%

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

1,830

1,899

Haynes International, Inc. 11.625% 9/1/04 (c)

27,835

18,649

20,548

Paper - 0.9%

Blue Ridge Paper Products, Inc. 9.5% 12/15/08 (f)

1,700

1,564

Cellu Tissue Holdings, Inc. 9.75% 3/15/10 (f)

3,680

3,606

Georgia-Pacific Corp.:

7.375% 12/1/25

1,330

1,293

8% 1/15/24 (f)

16,580

17,222

23,685

Publishing/Printing - 0.3%

NBC Acquisition Corp. 0% 3/15/13 (d)(f)

12,830

8,211

Railroad - 0.4%

TFM SA de CV 12.5% 6/15/12

8,880

9,835

Restaurants - 0.2%

Friendly Ice Cream Corp. 8.375% 6/15/12 (f)

5,220

5,311

Steels - 1.7%

Allegheny Ludlum Corp. 6.95% 12/15/25

10,530

9,477

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

20,310

22,747

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

9,340

9,527

41,751

Super Retail - 2.3%

Barneys, Inc. 9% 4/1/08

6,720

6,922

Golfsmith International, Inc. 8.375% 10/15/09

8,930

8,305

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

28,649

23,062

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

19,545

19,545

57,834

Technology - 1.6%

Danka Business Systems PLC 11% 6/15/10

7,240

7,385

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Technology - continued

Marconi Corp. PLC 8% 4/30/08 (f)

$ 8,149

$ 8,883

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

2,030

2,923

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

12,680

14,075

Xerox Corp. 7.2% 4/1/16

6,660

6,593

39,859

Telecommunications - 18.8%

Cincinnati Bell, Inc. 8.375% 1/15/14

3,400

3,196

Citizens Communications Co. 9.25% 5/15/11

6,410

6,714

Crown Castle International Corp. 7.5% 12/1/13

10,000

9,950

Level 3 Communications, Inc.:

0% 3/15/10 (d)

9,940

6,660

9.125% 5/1/08

40,005

28,304

10.5% 12/1/08

51,370

36,730

11% 3/15/08

49,600

36,952

11.25% 3/15/10

14,455

10,408

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

13,350

11,948

MCI, Inc.:

5.908% 5/1/07

17,156

16,963

6.688% 5/1/09

17,155

16,276

7.735% 5/1/14

14,704

13,693

Nextel Partners, Inc.:

8.125% 7/1/11

23,705

24,594

11% 3/15/10

5,720

6,435

11% 3/15/10

11,720

13,185

12.5% 11/15/09

9,583

11,260

Qwest Services Corp. 13.5% 12/15/10 (f)

115,564

133,470

SBA Communication Corp./SBA Telcommunications, Inc. 0% 12/15/11 (d)(f)

3,620

2,661

SBA Communications Corp. 10.25% 2/1/09

7,380

7,380

SpectraSite, Inc. 8.25% 5/15/10

4,960

5,258

Time Warner Telecom LLC/Time Warner Telecom, Inc. 9.75% 7/15/08

16,450

14,229

Time Warner Telecom, Inc. 10.125% 2/1/11

12,950

11,137

Triton PCS, Inc.:

8.75% 11/15/11

27,760

25,678

9.375% 2/1/11

21,694

20,501

U.S. West Communications:

6.875% 9/15/33

1,755

1,474

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Telecommunications - continued

U.S. West Communications: - continued

7.25% 10/15/35

$ 595

$ 544

7.5% 6/15/23

704

644

476,244

Textiles & Apparel - 3.5%

Kosa Lux Finance BV/Kosa UK Finance BV/Arteva Global Holdings BV/Kosa Canada Co. 9.25% 5/1/12 (f)

5,010

5,010

Levi Strauss & Co.:

7% 11/1/06

33,610

28,316

11.625% 1/15/08

29,805

27,123

12.25% 12/15/12

31,200

28,080

88,529

TOTAL NONCONVERTIBLE BONDS

1,843,482

TOTAL CORPORATE BONDS

(Cost $1,802,835)

1,872,728

Common Stocks - 16.8%

Shares

Automotive - 0.0%

Exide Technologies warrants 3/18/06 (a)

15,928

0

Cable TV - 1.2%

EchoStar Communications Corp. Class A (a)

702,396

23,313

NTL, Inc. (a)

125,900

7,147

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

3

0

Pegasus Communications Corp. warrants 1/1/07 (a)

6,509

0

30,460

Chemicals - 0.2%

Hercules Trust II unit

5,500

4,267

Consumer Products - 5.1%

Revlon, Inc. Class A (a)(e)

38,853,884

130,161

Containers - 1.6%

Owens-Illinois, Inc. (a)

2,920,800

40,774

Trivest 1992 Special Fund Ltd. (a)(h)

3,037,732

30

40,804

Common Stocks - continued

Shares

Value (Note 1) (000s)

Electric Utilities - 2.7%

AES Corp. (a)

8,006,409

$ 69,416

Energy - 0.6%

Chesapeake Energy Corp.

1,000,000

13,750

Entertainment/Film - 0.5%

AMC Entertainment, Inc. (a)

772,300

12,318

Livent, Inc. (a)

125,200

0

12,318

Food and Drug Retail - 1.2%

Pathmark Stores, Inc. (a)(e)

2,811,078

24,035

Pathmark Stores, Inc. warrants 9/19/10 (a)

747,828

740

Rite Aid Corp. (a)

1,218,172

5,969

30,744

Healthcare - 2.3%

DaVita, Inc. (a)

1,143,564

58,436

Hotels - 0.1%

Wyndham International, Inc. Class A (a)

2,420,800

2,469

Super Retail - 0.0%

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

6,720

168

Technology - 0.9%

ChipPAC, Inc. Class A (a)

300,000

1,839

Viasystems Group, Inc. (a)(h)

1,026,780

20,536

22,375

Telecommunications - 0.4%

Cincinnati Bell, Inc. (a)

954,428

3,770

Covad Communications Group, Inc. (a)

1,948

4

Crown Castle International Corp. (a)

41,274

576

Level 3 Communications, Inc. (a)

700,000

1,981

McLeodUSA, Inc. Class A (a)

1,977,550

1,760

SpectraSite, Inc. (a)

73,143

2,733

10,824

Textiles & Apparel - 0.0%

Arena Brands Holding Corp. Class B (h)

42,253

510

Pillowtex Corp. (a)

490,256

1

511

TOTAL COMMON STOCKS

(Cost $313,040)

426,703

Preferred Stocks - 0.9%

Shares

Value (Note 1) (000s)

Convertible Preferred Stocks - 0.8%

Paper - 0.5%

Temple-Inland, Inc. 7.50% DECS

232,000

$ 13,015

Telecommunications - 0.3%

Crown Castle International Corp. 6.25% PIERS

151,600

6,974

TOTAL CONVERTIBLE PREFERRED STOCKS

19,989

Nonconvertible Preferred Stocks - 0.1%

Broadcasting - 0.1%

Spanish Broadcasting System, Inc. Class B, 10.75%

2,656

2,696

Cable TV - 0.0%

CSC Holdings, Inc. Series H, 11.75%

1

0

TOTAL NONCONVERTIBLE PREFERRED STOCKS

2,696

TOTAL PREFERRED STOCKS

(Cost $19,739)

22,685

Floating Rate Loans - 5.4%

Principal Amount (000s)

Building Materials - 0.2%

Owens Corning revolver loan 6% 11/15/04 (g)

$ 6,587

4,809

Electric Utilities - 0.1%

NRG Energy, Inc.:

Term Loan 5.5% 6/23/10 (g)

1,557

1,603

Credit-Linked Deposit 5.5% 6/23/10 (g)

875

901

2,504

Hotels - 1.8%

Wyndham International, Inc. term loan:

5.875% 6/30/06 (g)

38,083

36,560

6.875% 4/1/06 (g)

9,131

9,017

45,577

Telecommunications - 3.3%

Choice One Communications, Inc.:

Tranche A term loan 0% 7/31/08 (g)

4,310

2,974

Tranche B term loan 5.88% 1/31/09 (g)

8,220

5,672

McLeodUSA, Inc.:

revolver loan 4.6533% 5/31/07 (g)

9,402

6,111

Tranche A term loan 4.6527% 5/31/07 (g)

9,875

6,617

Floating Rate Loans - continued

Principal Amount (000s)

Value (Note 1) (000s)

Telecommunications - continued

Tranche B term loan 5.3999% 5/30/08 (g)

$ 93,438

$ 61,669

SpectraSite Communications, Inc. term loan 3.42% 12/31/07 (g)

1,647

1,669

84,712

TOTAL FLOATING RATE LOANS

(Cost $131,266)

137,602

Money Market Funds - 1.6%

Shares

Fidelity Cash Central Fund, 1.06% (b)
(Cost $40,172)

40,171,947

40,172

Cash Equivalents - 0.1%

Maturity Amount (000s)

Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 0.94%, dated 4/30/04 due 5/3/04)
(Cost $2,141)

$ 2,141

2,141

TOTAL INVESTMENT PORTFOLIO - 98.8%

(Cost $2,309,193)

2,502,031

NET OTHER ASSETS - 1.2%

30,229

NET ASSETS - 100%

$ 2,532,260

Security Type Abbreviations

DECS - Dividend Enhanced
Convertible Stock/Debt
Exchangeable for Common
Stock

PIERS - Preferred Income Equity
Redeemable Securities

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) Affiliated company

(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 $420,350,000 or 16.6% of net assets.

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

(h) 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 $21,076,000 or 0.8% of net assets.

Additional information on each holding is as follows:

Security

Acquisition
Date

Acquisition
Cost (000s)

Arena Brands Holding Corp. Class B

6/18/97 - 7/13/98

$ 1,538

Trivest 1992 Special Fund Ltd.

7/30/92

$ -

Viasystems Group, Inc.

2/13/04

$ 20,664

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $992,779,000 and $1,184,437,000, respectively.

The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $26,000 for the period.

The fund invested in loans and loan participations, trade claims or other receivables. At period end the value of these investments amounted to $137,602,000 or 5.4% of net assets.

The fund participated in the interfund lending program as a borrower. The average daily loan balance during the period for which loans were outstanding amounted to $35,260,000. The weighted average interest rate was 1.12%. At period end there were no interfund loans outstanding.

Income Tax Information

At October 31, 2003, the fund had a capital loss carryforward of approximately $1,282,168,000 of which $314,609,000, $488,641,000 and $478,918,000 will expire on October 31, 2008, 2009 and 2010, respectively.

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) April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including securities loaned of $2,743 and repurchase agreements of $2,141)(cost $2,309,193) - See accompanying schedule

$ 2,502,031

Cash

1

Receivable for investments sold

20,940

Receivable for fund shares sold

3,109

Interest receivable

46,157

Prepaid expenses

10

Other affiliated receivables

12

Other receivables

15

Total assets

2,572,275

Liabilities

Payable for investments purchased

$ 21,733

Payable for fund shares redeemed

8,448

Distributions payable

2,469

Accrued management fee

1,244

Distribution fees payable

908

Other affiliated payables

559

Other payables and accrued expenses

39

Collateral on securities loaned, at value

4,615

Total liabilities

40,015

Net Assets

$ 2,532,260

Net Assets consist of:

Paid in capital

$ 3,471,023

Undistributed net investment income

60,551

Accumulated undistributed net realized gain (loss) on investments

(1,192,153)

Net unrealized appreciation (depreciation) on investments

192,839

Net Assets

$ 2,532,260

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

Semiannual Report

Statement of Assets and Liabilities - continued

Amounts in thousands (except per-share amounts) April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($272,851 ÷ 28,696 shares)

$ 9.51

Maximum offering price per share (100/95.25 of $9.51)

$ 9.98

Class T:
Net Asset Value and redemption price per share ($1,278,402 ÷ 134,071 shares)

$ 9.54

Maximum offering price per share (100/96.50 of $9.54)

$ 9.89

Class B:
Net Asset Value and offering price per share
($555,590 ÷ 58,635 shares)A

$ 9.48

Class C:
Net Asset Value and offering price per share
($207,556 ÷ 21,844 shares)A

$ 9.50

Institutional Class:
Net Asset Value, offering price and redemption price per share ($217,861 ÷ 23,611 shares)

$ 9.23

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 April 30, 2004 (Unaudited)

Investment Income

Dividends

$ 1,316

Interest

121,650

Security lending

42

Total income

123,008

Expenses

Management fee

$ 8,005

Transfer agent fees

2,623

Distribution fees

5,820

Accounting and security lending fees

463

Non-interested trustees' compensation

9

Appreciation in deferred trustee compensation account

6

Custodian fees and expenses

36

Registration fees

109

Audit

40

Legal

36

Interest

4

Miscellaneous

22

Total expenses before reductions

17,173

Expense reductions

(5)

17,168

Net investment income (loss)

105,840

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities (including realized gain (loss) of $878 on sales of investments in affiliated issuers)

94,786

Change in net unrealized appreciation (depreciation) on

investment securities

(3,855)

Net gain (loss)

90,931

Net increase (decrease) in net assets resulting from operations

$ 196,771

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

Semiannual Report

Statement of Changes in Net Assets

Amounts in thousands

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 105,840

$ 251,457

Net realized gain (loss)

94,786

198,118

Change in net unrealized appreciation (depreciation)

(3,855)

677,026

Net increase (decrease) in net assets resulting
from operations

196,771

1,126,601

Distributions to shareholders from net investment income

(193,890)

(187,268)

Share transactions - net increase (decrease)

(226,226)

(50,567)

Redemption fees

5

-

Total increase (decrease) in net assets

(223,340)

888,766

Net Assets

Beginning of period

2,755,600

1,866,834

End of period (including undistributed net investment income of $60,551 and undistributed net investment income of $148,601, respectively)

$ 2,532,260

$ 2,755,600

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.50

$ 6.40

$ 8.17

$ 9.64

$ 11.12

$ 11.09

Income from Investment Operations

Net investment income (loss) E

.380

.873

.767 G,I

.869

1.059

1.022

Net realized and unrealized gain (loss)

.299

2.875

(1.866) G,I

(1.558)

(1.634)

.287

Total from investment operations

.679

3.748

(1.099)

(.689)

(.575)

1.309

Distributions from net investment income

(.669)

(.648)

(.671)

(.781)

(.905)

(1.030)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.049)

Total distributions

(.669)

(.648)

(.671)

(.781)

(.905)

(1.279)

Redemption fees added to paid in capitalE

-H

-

-

-

-

-

Net asset value, end of period

$ 9.51

$ 9.50

$ 6.40

$ 8.17

$ 9.64

$ 11.12

Total Return B,C,D

7.29%

60.58%

(14.39)%

(7.64)%

(5.66)%

11.98%

Ratios to Average Net Assets F

Expenses before expense reductions

.98%A

.99%

1.02%

.97%

.94%

.95%

Expenses net of voluntary waivers, if any

.98%A

.99%

1.02%

.97%

.94%

.95%

Expenses net of all reductions

.98%A

.99%

1.01%

.97%

.94%

.95%

Net investment income (loss)

7.92%A

10.45%

10.12% G,I

9.53%

9.86%

8.89%

Supplemental Data

Net assets, end of period (in millions)

$ 273

$ 307

$ 157

$ 189

$ 209

$ 221

Portfolio turnover rate

77% A

111%

85%

68%

63%

61%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FExpense 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. GEffective November 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. HAmount represents less than $.001 per share. IAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended October 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.068 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 11.01% to 10.12%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Financial Highlights - Class T

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.52

$ 6.42

$ 8.18

$ 9.66

$ 11.14

$ 11.11

Income from Investment Operations

Net investment income (loss)E

.377

.859

.766 G,I

.865

1.055

1.021

Net realized and unrealized gain (loss)

.310

2.883

(1.860) G,I

(1.572)

(1.640)

.274

Total from investment operations

.687

3.742

(1.094)

(.707)

(.585)

1.295

Distributions from net investment income

(.667)

(.642)

(.666)

(.773)

(.895)

(1.017)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.048)

Total distributions

(.667)

(.642)

(.666)

(.773)

(.895)

(1.265)

Redemption fees added to paid in capitalE

-H

-

-

-

-

-

Net asset value, end of period

$ 9.54

$ 9.52

$ 6.42

$ 8.18

$ 9.66

$ 11.14

Total ReturnB,C,D

7.35%

60.26%

(14.30)%

(7.81)%

(5.73)%

11.83%

Ratios to Average Net AssetsF

Expenses before expense reductions

1.06%A

1.06%

1.08%

1.06%

1.03%

1.04%

Expenses net of voluntary waivers, if any

1.06%A

1.06%

1.08%

1.06%

1.03%

1.04%

Expenses net of all reductions

1.06%A

1.06%

1.08%

1.05%

1.03%

1.04%

Net investment income (loss)

7.84%A

10.38%

10.05%G,I

9.45%

9.76%

8.80%

Supplemental Data

Net assets, end of period (in millions)

$ 1,278

$ 1,398

$ 1,070

$ 1,473

$ 1,777

$ 2,351

Portfolio turnover rate

77%A

111%

85%

68%

63%

61%

A Annualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FExpense 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. GEffective November 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. HAmount represents less than $.001 per share. IAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended October 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.068 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 10.95% to 10.05%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Financial Highlights - Class B

Six months ended April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.47

$ 6.38

$ 8.15

$ 9.61

$ 11.09

$ 11.07

Income from Investment Operations

Net investment income (loss)E

.342

.802

.712G,I

.801

.978

.938

Net realized and unrealized gain (loss)

.302

2.873

(1.868) G,I

(1.549)

(1.634)

.276

Total from investment operations

.644

3.675

(1.156)

(.748)

(.656)

1.214

Distributions from net investment income

(.634)

(.585)

(.614)

(.712)

(.824)

(.949)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.045)

Total distributions

(.634)

(.585)

(.614)

(.712)

(.824)

(1.194)

Redemption fees added to paid in capitalE

-H

-

-

-

-

-

Net asset value, end of period

$ 9.48

$ 9.47

$ 6.38

$ 8.15

$ 9.61

$ 11.09

Total ReturnB,C,D

6.92%

59.42%

(15.07)%

(8.25)%

(6.39)%

11.10%

Ratios to Average Net AssetsF

Expenses before expense reductions

1.75%A

1.75%

1.78%

1.73%

1.70%

1.70%

Expenses net of voluntary waivers, if any

1.75%A

1.75%

1.78%

1.73%

1.70%

1.70%

Expenses net of all reductions

1.75%A

1.75%

1.77%

1.72%

1.70%

1.69%

Net investment income (loss)

7.15%A

9.69%

9.36%G,I

8.78%

9.10%

8.15%

Supplemental Data

Net assets, end of period (in millions)

$ 556

$ 613

$ 426

$ 704

$ 956

$ 1,192

Portfolio turnover rate

77%A

111%

85%

68%

63%

61%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FExpense 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. GEffective November 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. HAmount represents less than $.001 per share. IAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended Ocrober 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.068 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 10.25% to 9.36%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Financial Highlights - Class C

Six months ended April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.49

$ 6.40

$ 8.16

$ 9.63

$ 11.11

$ 11.09

Income from Investment Operations

Net investment income (loss)E

.339

.801

.708G,I

.796

.969

.926

Net realized and unrealized gain (loss)

.302

2.868

(1.859) G,I

(1.560)

(1.634)

.280

Total from investment operations

.641

3.669

(1.151)

(.764)

(.665)

1.206

Distributions from net investment income

(.631)

(.579)

(.609)

(.706)

(.815)

(.941)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.045)

Total distributions

(.631)

(.579)

(.609)

(.706)

(.815)

(1.186)

Redemption fees added to paid in capitalE

-H

-

-

-

-

-

Net asset value, end of period

$ 9.50

$ 9.49

$ 6.40

$ 8.16

$ 9.63

$ 11.11

Total ReturnB,C,D

6.86%

59.11%

(14.98)%

(8.41)%

(6.45)%

11.00%

Ratios to Average Net AssetsF

Expenses before expense reductions

1.82%A

1.82%

1.84%

1.80%

1.78%

1.78%

Expenses net of voluntary waivers, if any

1.82%A

1.82%

1.84%

1.80%

1.78%

1.78%

Expenses net of all reductions

1.82%A

1.82%

1.84%

1.79%

1.78%

1.78%

Net investment income (loss)

7.08%A

9.62%

9.29%G,I

8.71%

9.02%

8.06%

Supplemental Data

Net assets, end of period (in millions)

$ 208

$ 219

$ 132

$ 197

$ 247

$ 269

Portfolio turnover rate

77%A

111%

85%

68%

63%

61%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FExpense 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. GEffective November 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. HAmount represents less than $.001 per share. IAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended October 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.068 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 10.19% to 9.29%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Financial Highlights - Institutional Class

Six months ended April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.24

$ 6.24

$ 7.97

$ 9.43

$ 10.90

$ 10.90

Income from Investment Operations

Net investment income (loss)D

.376

.867

.759F,H

.862

1.055

1.024

Net realized and unrealized gain (loss)

.294

2.796

(1.805)F,H

(1.528)

(1.606)

.269

Total from investment operations

.670

3.663

(1.046)

(.666)

(.551)

1.293

Distributions from net investment income

(.680)

(.663)

(.684)

(.794)

(.919)

(1.044)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.049)

Total distributions

(.680)

(.663)

(.684)

(.794)

(.919)

(1.293)

Redemption fees added to paid in capitalD

-G

-

-

-

-

-

Net asset value, end of period

$ 9.23

$ 9.24

$ 6.24

$ 7.97

$ 9.43

$ 10.90

Total ReturnB,C

7.39%

60.82%

(14.09)%

(7.58)%

(5.56)%

12.05%

Ratios to Average Net AssetsE

Expenses before expense reductions

.82%A

.82%

.85%

.83%

.82%

.82%

Expenses net of voluntary waivers, if any

.82%A

.82%

.85%

.83%

.82%

.82%

Expenses net of all reductions

.82%A

.82%

.85%

.83%

.82%

.81%

Net investment income (loss)

8.08%A

10.62%

10.28%F,H

9.67%

9.98%

9.03%

Supplemental Data

Net assets, end of period (in millions)

$ 218

$ 218

$ 82

$ 87

$ 89

$ 123

Portfolio turnover rate

77%A

111%

85%

68%

63%

61%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EExpense 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. FEffective November 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. GAmount represents less than $.001 per share. HAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended October 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.067 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 11.18% to 10.28%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Notes to Financial Statements

For the period ended April 30, 2004 (Unaudited)

(Amounts in thousands except ratios)

1. Significant Accounting Policies.

Fidelity Advisor High Income Advantage 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 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 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

1. Significant Accounting Policies - continued

Security Valuation - continued

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.

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.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), non-interested Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the fund or are invested

Semiannual Report

1. Significant Accounting Policies - continued

Deferred Trustee Compensation - continued

in a cross-section of other Fidelity funds, and are marked-to-market. Deferred amounts remain in the fund until distributed in accordance with the Plan.

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 prior period premium and discount on debt securities, market discount, partnerships, non-taxable dividends, capital loss carryforwards and losses deferred due to wash sales.

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

Unrealized appreciation

$ 358,319

Unrealized depreciation

(133,547)

Net unrealized appreciation (depreciation)

$ 224,772

Cost for federal income tax purposes

$ 2,277,259

Short-Term Trading (Redemption) Fees. Shares purchased after March, 31, 2004 and held in the fund less than 90 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.

2. Operating Policies.

Repurchase Agreements. 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

2. Operating Policies - continued

Repurchase Agreements - continued

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.

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, including revolving credit facilities, 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. At the end of the period, the fund had unfunded loan commitments of $433. 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.

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%

$ 229

$ 1

Class T

0%

.25%

1,755

48

Class B

.65%

.25%

2,715

1,965

Class C

.75%

.25%

1,121

242

$ 5,820

$ 2,256

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

$ 89

Class T

95

Class B*

574

Class C*

31

$ 789

* 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

4. Fees and Other Transactions with Affiliates - continued

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 shareholder 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

$ 302

.20*

Class T

1,251

.18*

Class B

640

.21*

Class C

204

.18*

Institutional Class

226

.19*

$ 2,623

* Annualized

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

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 $841 for the period.

Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Interfund Lending Program - continued

participating funds. Information regarding the fund's participation in the program is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

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 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. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.

7. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $2 for the period. In addition, 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 $3.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 22,133

$ 18,374

Class T

98,592

106,158

Class B

40,403

38,278

Class C

15,009

12,553

Institutional Class

17,753

11,905

Total

$ 193,890

$ 187,268

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

10,852

34,832

$ 104,615

$ 293,119

Reinvestment of distributions

1,467

1,400

13,955

11,574

Shares redeemed

(15,977)

(28,472)

(153,646)

(242,005)

Net increase (decrease)

(3,658)

7,760

$ (35,076)

$ 62,688

Class T

Shares sold

28,423

147,909

$ 274,732

$ 1,204,516

Reinvestment of distributions

8,331

10,623

79,490

86,420

Shares redeemed

(49,475)

(178,448)

(475,950)

(1,494,673)

Net increase (decrease)

(12,721)

(19,916)

$ (121,728)

$ (203,737)

Class B

Shares sold

3,242

13,142

$ 31,124

$ 110,687

Reinvestment of distributions

2,762

2,927

26,178

23,946

Shares redeemed

(12,107)

(18,040)

(115,909)

(149,301)

Net increase (decrease)

(6,103)

(1,971)

$ (58,607)

$ (14,668)

Class C

Shares sold

4,968

12,912

$ 47,812

$ 109,440

Reinvestment of distributions

1,034

918

9,827

7,575

Shares redeemed

(7,235)

(11,394)

(69,336)

(96,409)

Net increase (decrease)

(1,233)

2,436

$ (11,697)

$ 20,606

Institutional Class

Shares sold

13,856

37,471

$ 129,640

$ 306,562

Reinvestment of distributions

1,624

1,212

15,011

9,794

Shares redeemed

(15,497)

(28,190)

(143,769)

(231,812)

Net increase (decrease)

(17)

10,493

$ 882

$ 84,544

Semiannual Report

10. Transactions with Affiliated Companies.

An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Companies which are affiliates of the fund at period-end are noted in the fund's Schedule of Investments. Transactions during the period with companies which are or were affiliates are as follows:

Affiliate

Value,
beginning of
period

Purchases

Sales
Proceeds

Dividend
Income

Value,
end of
period

Revlon, Inc. Class A

$ 708

$ 2,097

$ 1,815

$ -

$ 130,161

Pathmark Stores, Inc.

19,526

-

-

-

24,035

TOTALS

$ 20,234

$ 2,097

$ 1,815

$ -

$ 154,196

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 International
Investment Advisors

Fidelity Investments Japan Limited

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

HY-USAN-0604
1.784886.101

Fidelity® Advisor

High Income Advantage

Fund - Institutional Class

Semiannual Report

April 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.

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 April 30, 2004

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

AES Corp.

6.0

6.7

Qwest Services Corp.

5.3

4.9

Revlon, Inc.

5.1

0.0

Level 3 Communications, Inc.

4.9

4.0

Ahold Fin Usa, Inc.

3.4

3.8

24.7

Top Five Market Sectors as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Telecommunications

22.9

22.1

Energy

11.8

10.3

Electric Utilities

9.2

15.0

Food and Drug Retail

7.5

9.9

Consumer Products

5.4

2.9

Quality Diversification (% of fund's net assets) as of April 30, 2004

As of April 30, 2004

As of October 31, 2003

AAA,AA,A 0.0%

AAA,AA,A 0.0%

BBB 2.4%

BBB 0.2%

BB 1.8%

BB 1.4%

B 29.5%

B 36.1%

CCC,CC,C 39.1%

CCC,CC,C 36.7%

D 0.0%

D 0.2%

Not Rated 6.6%

Not Rated 6.5%

Equities 17.7%

Equities 10.6%

Short-Term
Investments and
Net Other Assets 2.9%

Short-Term
Investments and
Net Other Assets 8.3%



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 April 30, 2004*

As of October 31, 2003**

Nonconvertible
Bonds 72.8%

Nonconvertible
Bonds 75.9%

Convertible Bonds, Preferred Stocks 2.1%

Convertible Bonds, Preferred Stocks 2.6%

Common Stocks 16.8%

Common Stocks 9.1%

Other Investments 5.4%

Other Investments 4.1%

Short-Term
Investments and
Net Other Assets 2.9%

Short-Term
Investments and
Net Other Assets 8.3%

* Foreign investments

6.3%

** Foreign investments

5.3%



Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Corporate Bonds - 74.0%

Principal Amount (000s)

Value (Note 1) (000s)

Convertible Bonds - 1.2%

Cable TV - 0.5%

Telewest Finance Jersey Ltd. 6% 7/7/05 (c)(f)

$ 11,375

$ 11,432

Energy - 0.1%

Hanover Compressor Co. 4.75% 3/15/08

2,360

2,195

Technology - 0.5%

Conexant Systems, Inc. 4% 2/1/07

13,260

13,061

Telecommunications - 0.1%

Level 3 Communications, Inc. 6% 9/15/09

4,920

2,558

TOTAL CONVERTIBLE BONDS

29,246

Nonconvertible Bonds - 72.8%

Aerospace - 1.6%

Primus International, Inc. 10.5% 4/15/09 (f)

4,100

4,100

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

36,470

35,741

39,841

Air Transportation - 3.0%

American Airlines, Inc. pass thru trust certificates:

6.817% 5/23/11

13,320

12,288

6.977% 11/23/22

833

760

7.377% 5/23/19

16,846

12,634

7.379% 5/23/16

10,460

7,845

7.8% 4/1/08

9,740

9,253

10.18% 1/2/13

5,055

3,993

Continental Airlines, Inc. pass thru trust certificates:

6.795% 8/2/18

322

274

6.9% 1/2/18

2,165

2,133

7.256% 9/15/21

679

678

8.307% 4/2/18

360

320

Delta Air Lines, Inc.:

7.9% 12/15/09

5,000

2,750

10% 8/15/08 (f)

4,000

2,400

Delta Air Lines, Inc. pass thru trust certificates:

7.299% 9/18/06

985

778

7.779% 11/18/05

1,250

1,000

7.779% 1/2/12

2,133

1,493

Northwest Airlines, Inc.:

7.875% 3/15/08

4,675

3,460

9.875% 3/15/07

800

672

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Air Transportation - continued

Northwest Airlines, Inc.: - continued

10.5% 4/1/09

$ 13,637

$ 10,910

Northwest Airlines, Inc. pass thru trust certificates 9.179% 10/1/11

1,846

1,496

75,137

Automotive - 1.1%

Delco Remy International, Inc. 9.375% 4/15/12 (f)

2,940

2,896

Keystone Automotive Operations, Inc. 9.75% 11/1/13 (f)

1,640

1,788

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

13,765

15,004

Visteon Corp. 7% 3/10/14

7,155

6,971

26,659

Building Materials - 1.0%

Owens Corning:

7% 3/15/09 (c)

25,600

10,496

7.5% 5/1/05 (c)

12,000

4,920

7.5% 8/1/18 (c)

4,000

1,640

7.7% 5/1/08 (c)

1,440

590

Texas Industries, Inc. 10.25% 6/15/11

7,000

7,910

25,556

Cable TV - 3.2%

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

25,300

25,237

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

4,030

4,141

Pegasus Communications Corp. 12.5% 8/1/07

2,070

1,573

Pegasus Satellite Communications, Inc.:

11.25% 1/15/10 (f)

12,169

8,762

13.5% 3/1/07

9,895

5,937

Telewest Communications PLC yankee:

9.875% 2/1/10 (c)

14,745

8,773

11.25% 11/1/08 (c)

6,627

4,109

Telewest PLC yankee 9.625% 10/1/06 (c)

38,485

23,476

82,008

Capital Goods - 0.8%

Hexcel Corp. 9.75% 1/15/09

12,074

12,678

Sensus Metering Systems, Inc. 8.625% 12/15/13 (f)

1,800

1,778

Thermadyne Holdings Corp. 9.25% 2/1/14 (f)

5,710

5,824

20,280

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Chemicals - 1.5%

Avecia Group PLC 11% 7/1/09

$ 2,505

$ 2,004

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

5,920

6,601

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

2,680

2,801

HMP Equity Holdings Corp. 0% 5/15/08 unit (f)

4,930

3,796

Huntsman ICI Chemicals LLC 10.125% 7/1/09

13,210

13,771

Huntsman LLC 11.625% 10/15/10

5,240

5,712

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

2,800

3,010

37,695

Consumer Products - 0.3%

Amscan Holdings, Inc. 8.75% 5/1/14 (f)

2,760

2,801

Interactive Health LLC/Interactive Health Finance Corp. 7.25% 4/1/11 (f)

5,430

4,724

7,525

Containers - 1.0%

Applied Extrusion Technologies, Inc. 10.75% 7/1/11

9,710

7,404

Owens-Illinois, Inc. 7.5% 5/15/10

3,490

3,368

U.S. Can Corp. 10.875% 7/15/10

4,690

4,831

Vitro SA de CV 11.75% 11/1/13 (f)

10,670

10,083

25,686

Diversified Financial Services - 0.3%

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

1,860

1,934

Metris Companies, Inc.:

10% 11/1/04

430

430

10.125% 7/15/06

6,480

6,383

8,747

Electric Utilities - 6.4%

AES Corp.:

7.75% 3/1/14

40,370

39,664

8.75% 6/15/08

9,699

10,038

9.375% 9/15/10

20,364

21,789

9.5% 6/1/09

11,516

12,308

Allegheny Energy Supply Co. LLC:

7.8% 3/15/11

21,396

20,968

8.75% 4/15/12 (f)

24,645

24,707

CMS Energy Corp.:

7.5% 1/15/09

6,000

6,030

8.5% 4/15/11

10,000

10,400

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Electric Utilities - continued

CMS Energy Corp.: - continued

8.9% 7/15/08

$ 2,685

$ 2,833

NRG Energy, Inc. 8% 12/15/13 (f)

14,180

14,322

163,059

Energy - 11.1%

El Paso Corp.:

7% 5/15/11

55,485

47,578

7.875% 6/15/12

12,620

11,216

El Paso Energy Corp.:

6.75% 5/15/09

47,730

42,360

6.95% 12/15/07

37,805

35,064

7.375% 12/15/12

22,275

19,129

7.8% 8/1/31

2,125

1,679

El Paso Production Holding Co. 7.75% 6/1/13

6,500

6,175

General Maritime Corp. 10% 3/15/13

6,700

7,571

GulfTerra Energy Partners LP/GulfTerra Energy Finance Corp. 8.5% 6/1/10

7,222

8,016

Hanover Compressor Co.:

0% 3/31/07

22,830

17,294

8.625% 12/15/10

2,030

2,142

J. Ray McDermott SA 11% 12/15/13 (f)

3,560

3,400

Parker Drilling Co. 9.625% 10/1/13

3,050

3,294

Petroleum Geo-Services ASA 10% 11/5/10

13,060

14,105

The Coastal Corp.:

6.5% 6/1/08

14,245

12,215

6.95% 6/1/28

370

269

7.5% 8/15/06

5,730

5,444

7.625% 9/1/08

970

861

7.75% 6/15/10

30,265

26,179

7.75% 10/15/35

1,970

1,517

Williams Companies, Inc.:

7.5% 1/15/31

10,225

9,560

7.875% 9/1/21

5,600

5,453

280,521

Entertainment/Film - 0.6%

AMC Entertainment, Inc. 8% 3/1/14 (f)

6,960

6,803

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

9,640

6,049

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

11,100

1,887

14,739

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Food and Drug Retail - 6.3%

Ahold Finance USA, Inc.:

6.25% 5/1/09

$ 10,000

$ 10,025

6.875% 5/1/29

24,961

22,340

8.25% 7/15/10

49,237

53,668

Nutritional Sourcing Corp. 10.125% 8/1/09

21,526

13,346

Rite Aid Corp.:

8.125% 5/1/10

8,080

8,747

9.5% 2/15/11

2,700

3,031

11.25% 7/1/08

2,335

2,592

12.5% 9/15/06

8,905

10,285

The Great Atlantic & Pacific Tea Co.:

7.75% 4/15/07

21,350

19,962

9.125% 12/15/11

19,180

16,687

160,683

Food/Beverage/Tobacco - 0.5%

Doane Pet Care Co.:

9.75% 5/15/07

3,730

3,413

10.75% 3/1/10

6,605

7,034

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

1,870

1,987

12,434

Gaming - 0.2%

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

5,130

5,964

Healthcare - 0.4%

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

2,150

2,494

Tenet Healthcare Corp.:

6.375% 12/1/11

5,725

4,952

6.5% 6/1/12

810

693

7.375% 2/1/13

1,615

1,454

9,593

Homebuilding/Real Estate - 0.9%

Champion Home Builders Co. 11.25% 4/15/07

20,705

22,776

Hotels - 0.1%

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

1,630

1,785

Insurance - 2.0%

Provident Companies, Inc.:

7% 7/15/18

17,420

16,418

7.25% 3/15/28

12,340

11,518

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Insurance - continued

UnumProvident Corp.:

6.75% 12/15/28

$ 11,350

$ 10,385

7.19% 2/1/28

3,250

2,974

7.375% 6/15/32

9,190

8,662

49,957

Leisure - 0.0%

Equinox Holdings Ltd. 9% 12/15/09 (f)

1,000

1,030

Metals/Mining - 0.8%

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

1,830

1,899

Haynes International, Inc. 11.625% 9/1/04 (c)

27,835

18,649

20,548

Paper - 0.9%

Blue Ridge Paper Products, Inc. 9.5% 12/15/08 (f)

1,700

1,564

Cellu Tissue Holdings, Inc. 9.75% 3/15/10 (f)

3,680

3,606

Georgia-Pacific Corp.:

7.375% 12/1/25

1,330

1,293

8% 1/15/24 (f)

16,580

17,222

23,685

Publishing/Printing - 0.3%

NBC Acquisition Corp. 0% 3/15/13 (d)(f)

12,830

8,211

Railroad - 0.4%

TFM SA de CV 12.5% 6/15/12

8,880

9,835

Restaurants - 0.2%

Friendly Ice Cream Corp. 8.375% 6/15/12 (f)

5,220

5,311

Steels - 1.7%

Allegheny Ludlum Corp. 6.95% 12/15/25

10,530

9,477

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

20,310

22,747

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

9,340

9,527

41,751

Super Retail - 2.3%

Barneys, Inc. 9% 4/1/08

6,720

6,922

Golfsmith International, Inc. 8.375% 10/15/09

8,930

8,305

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

28,649

23,062

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

19,545

19,545

57,834

Technology - 1.6%

Danka Business Systems PLC 11% 6/15/10

7,240

7,385

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Technology - continued

Marconi Corp. PLC 8% 4/30/08 (f)

$ 8,149

$ 8,883

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

2,030

2,923

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

12,680

14,075

Xerox Corp. 7.2% 4/1/16

6,660

6,593

39,859

Telecommunications - 18.8%

Cincinnati Bell, Inc. 8.375% 1/15/14

3,400

3,196

Citizens Communications Co. 9.25% 5/15/11

6,410

6,714

Crown Castle International Corp. 7.5% 12/1/13

10,000

9,950

Level 3 Communications, Inc.:

0% 3/15/10 (d)

9,940

6,660

9.125% 5/1/08

40,005

28,304

10.5% 12/1/08

51,370

36,730

11% 3/15/08

49,600

36,952

11.25% 3/15/10

14,455

10,408

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

13,350

11,948

MCI, Inc.:

5.908% 5/1/07

17,156

16,963

6.688% 5/1/09

17,155

16,276

7.735% 5/1/14

14,704

13,693

Nextel Partners, Inc.:

8.125% 7/1/11

23,705

24,594

11% 3/15/10

5,720

6,435

11% 3/15/10

11,720

13,185

12.5% 11/15/09

9,583

11,260

Qwest Services Corp. 13.5% 12/15/10 (f)

115,564

133,470

SBA Communication Corp./SBA Telcommunications, Inc. 0% 12/15/11 (d)(f)

3,620

2,661

SBA Communications Corp. 10.25% 2/1/09

7,380

7,380

SpectraSite, Inc. 8.25% 5/15/10

4,960

5,258

Time Warner Telecom LLC/Time Warner Telecom, Inc. 9.75% 7/15/08

16,450

14,229

Time Warner Telecom, Inc. 10.125% 2/1/11

12,950

11,137

Triton PCS, Inc.:

8.75% 11/15/11

27,760

25,678

9.375% 2/1/11

21,694

20,501

U.S. West Communications:

6.875% 9/15/33

1,755

1,474

Corporate Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Nonconvertible Bonds - continued

Telecommunications - continued

U.S. West Communications: - continued

7.25% 10/15/35

$ 595

$ 544

7.5% 6/15/23

704

644

476,244

Textiles & Apparel - 3.5%

Kosa Lux Finance BV/Kosa UK Finance BV/Arteva Global Holdings BV/Kosa Canada Co. 9.25% 5/1/12 (f)

5,010

5,010

Levi Strauss & Co.:

7% 11/1/06

33,610

28,316

11.625% 1/15/08

29,805

27,123

12.25% 12/15/12

31,200

28,080

88,529

TOTAL NONCONVERTIBLE BONDS

1,843,482

TOTAL CORPORATE BONDS

(Cost $1,802,835)

1,872,728

Common Stocks - 16.8%

Shares

Automotive - 0.0%

Exide Technologies warrants 3/18/06 (a)

15,928

0

Cable TV - 1.2%

EchoStar Communications Corp. Class A (a)

702,396

23,313

NTL, Inc. (a)

125,900

7,147

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

3

0

Pegasus Communications Corp. warrants 1/1/07 (a)

6,509

0

30,460

Chemicals - 0.2%

Hercules Trust II unit

5,500

4,267

Consumer Products - 5.1%

Revlon, Inc. Class A (a)(e)

38,853,884

130,161

Containers - 1.6%

Owens-Illinois, Inc. (a)

2,920,800

40,774

Trivest 1992 Special Fund Ltd. (a)(h)

3,037,732

30

40,804

Common Stocks - continued

Shares

Value (Note 1) (000s)

Electric Utilities - 2.7%

AES Corp. (a)

8,006,409

$ 69,416

Energy - 0.6%

Chesapeake Energy Corp.

1,000,000

13,750

Entertainment/Film - 0.5%

AMC Entertainment, Inc. (a)

772,300

12,318

Livent, Inc. (a)

125,200

0

12,318

Food and Drug Retail - 1.2%

Pathmark Stores, Inc. (a)(e)

2,811,078

24,035

Pathmark Stores, Inc. warrants 9/19/10 (a)

747,828

740

Rite Aid Corp. (a)

1,218,172

5,969

30,744

Healthcare - 2.3%

DaVita, Inc. (a)

1,143,564

58,436

Hotels - 0.1%

Wyndham International, Inc. Class A (a)

2,420,800

2,469

Super Retail - 0.0%

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

6,720

168

Technology - 0.9%

ChipPAC, Inc. Class A (a)

300,000

1,839

Viasystems Group, Inc. (a)(h)

1,026,780

20,536

22,375

Telecommunications - 0.4%

Cincinnati Bell, Inc. (a)

954,428

3,770

Covad Communications Group, Inc. (a)

1,948

4

Crown Castle International Corp. (a)

41,274

576

Level 3 Communications, Inc. (a)

700,000

1,981

McLeodUSA, Inc. Class A (a)

1,977,550

1,760

SpectraSite, Inc. (a)

73,143

2,733

10,824

Textiles & Apparel - 0.0%

Arena Brands Holding Corp. Class B (h)

42,253

510

Pillowtex Corp. (a)

490,256

1

511

TOTAL COMMON STOCKS

(Cost $313,040)

426,703

Preferred Stocks - 0.9%

Shares

Value (Note 1) (000s)

Convertible Preferred Stocks - 0.8%

Paper - 0.5%

Temple-Inland, Inc. 7.50% DECS

232,000

$ 13,015

Telecommunications - 0.3%

Crown Castle International Corp. 6.25% PIERS

151,600

6,974

TOTAL CONVERTIBLE PREFERRED STOCKS

19,989

Nonconvertible Preferred Stocks - 0.1%

Broadcasting - 0.1%

Spanish Broadcasting System, Inc. Class B, 10.75%

2,656

2,696

Cable TV - 0.0%

CSC Holdings, Inc. Series H, 11.75%

1

0

TOTAL NONCONVERTIBLE PREFERRED STOCKS

2,696

TOTAL PREFERRED STOCKS

(Cost $19,739)

22,685

Floating Rate Loans - 5.4%

Principal Amount (000s)

Building Materials - 0.2%

Owens Corning revolver loan 6% 11/15/04 (g)

$ 6,587

4,809

Electric Utilities - 0.1%

NRG Energy, Inc.:

Term Loan 5.5% 6/23/10 (g)

1,557

1,603

Credit-Linked Deposit 5.5% 6/23/10 (g)

875

901

2,504

Hotels - 1.8%

Wyndham International, Inc. term loan:

5.875% 6/30/06 (g)

38,083

36,560

6.875% 4/1/06 (g)

9,131

9,017

45,577

Telecommunications - 3.3%

Choice One Communications, Inc.:

Tranche A term loan 0% 7/31/08 (g)

4,310

2,974

Tranche B term loan 5.88% 1/31/09 (g)

8,220

5,672

McLeodUSA, Inc.:

revolver loan 4.6533% 5/31/07 (g)

9,402

6,111

Tranche A term loan 4.6527% 5/31/07 (g)

9,875

6,617

Floating Rate Loans - continued

Principal Amount (000s)

Value (Note 1) (000s)

Telecommunications - continued

Tranche B term loan 5.3999% 5/30/08 (g)

$ 93,438

$ 61,669

SpectraSite Communications, Inc. term loan 3.42% 12/31/07 (g)

1,647

1,669

84,712

TOTAL FLOATING RATE LOANS

(Cost $131,266)

137,602

Money Market Funds - 1.6%

Shares

Fidelity Cash Central Fund, 1.06% (b)
(Cost $40,172)

40,171,947

40,172

Cash Equivalents - 0.1%

Maturity Amount (000s)

Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 0.94%, dated 4/30/04 due 5/3/04)
(Cost $2,141)

$ 2,141

2,141

TOTAL INVESTMENT PORTFOLIO - 98.8%

(Cost $2,309,193)

2,502,031

NET OTHER ASSETS - 1.2%

30,229

NET ASSETS - 100%

$ 2,532,260

Security Type Abbreviations

DECS - Dividend Enhanced
Convertible Stock/Debt
Exchangeable for Common
Stock

PIERS - Preferred Income Equity
Redeemable Securities

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) Affiliated company

(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 $420,350,000 or 16.6% of net assets.

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

(h) 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 $21,076,000 or 0.8% of net assets.

Additional information on each holding is as follows:

Security

Acquisition
Date

Acquisition
Cost (000s)

Arena Brands Holding Corp. Class B

6/18/97 - 7/13/98

$ 1,538

Trivest 1992 Special Fund Ltd.

7/30/92

$ -

Viasystems Group, Inc.

2/13/04

$ 20,664

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $992,779,000 and $1,184,437,000, respectively.

The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $26,000 for the period.

The fund invested in loans and loan participations, trade claims or other receivables. At period end the value of these investments amounted to $137,602,000 or 5.4% of net assets.

The fund participated in the interfund lending program as a borrower. The average daily loan balance during the period for which loans were outstanding amounted to $35,260,000. The weighted average interest rate was 1.12%. At period end there were no interfund loans outstanding.

Income Tax Information

At October 31, 2003, the fund had a capital loss carryforward of approximately $1,282,168,000 of which $314,609,000, $488,641,000 and $478,918,000 will expire on October 31, 2008, 2009 and 2010, respectively.

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)

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including securities loaned of $2,743 and repurchase agreements of $2,141)(cost $2,309,193) - See accompanying schedule

$ 2,502,031

Cash

1

Receivable for investments sold

20,940

Receivable for fund shares sold

3,109

Interest receivable

46,157

Prepaid expenses

10

Other affiliated receivables

12

Other receivables

15

Total assets

2,572,275

Liabilities

Payable for investments purchased

$ 21,733

Payable for fund shares redeemed

8,448

Distributions payable

2,469

Accrued management fee

1,244

Distribution fees payable

908

Other affiliated payables

559

Other payables and accrued expenses

39

Collateral on securities loaned, at value

4,615

Total liabilities

40,015

Net Assets

$ 2,532,260

Net Assets consist of:

Paid in capital

$ 3,471,023

Undistributed net investment income

60,551

Accumulated undistributed net realized gain (loss) on investments

(1,192,153)

Net unrealized appreciation (depreciation) on investments

192,839

Net Assets

$ 2,532,260

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

Semiannual Report

Statement of Assets and Liabilities - continued

Amounts in thousands (except per-share amounts)

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($272,851 ÷ 28,696 shares)

$ 9.51

Maximum offering price per share (100/95.25 of $9.51)

$ 9.98

Class T:
Net Asset Value and redemption price per share ($1,278,402 ÷ 134,071 shares)

$ 9.54

Maximum offering price per share (100/96.50 of $9.54)

$ 9.89

Class B:
Net Asset Value and offering price per share
($555,590 ÷ 58,635 shares)A

$ 9.48

Class C:
Net Asset Value and offering price per share
($207,556 ÷ 21,844 shares)A

$ 9.50

Institutional Class:
Net Asset Value, offering price and redemption price per share ($217,861 ÷ 23,611 shares)

$ 9.23

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 April 30, 2004 (Unaudited)

Investment Income

Dividends

$ 1,316

Interest

121,650

Security lending

42

Total income

123,008

Expenses

Management fee

$ 8,005

Transfer agent fees

2,623

Distribution fees

5,820

Accounting and security lending fees

463

Non-interested trustees' compensation

9

Appreciation in deferred trustee compensation account

6

Custodian fees and expenses

36

Registration fees

109

Audit

40

Legal

36

Interest

4

Miscellaneous

22

Total expenses before reductions

17,173

Expense reductions

(5)

17,168

Net investment income (loss)

105,840

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities (including realized gain (loss) of $878 on sales of investments in affiliated issuers)

94,786

Change in net unrealized appreciation (depreciation) on

investment securities

(3,855)

Net gain (loss)

90,931

Net increase (decrease) in net assets resulting from operations

$ 196,771

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

Semiannual Report

Statement of Changes in Net Assets

Amounts in thousands

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 105,840

$ 251,457

Net realized gain (loss)

94,786

198,118

Change in net unrealized appreciation (depreciation)

(3,855)

677,026

Net increase (decrease) in net assets resulting
from operations

196,771

1,126,601

Distributions to shareholders from net investment income

(193,890)

(187,268)

Share transactions - net increase (decrease)

(226,226)

(50,567)

Redemption fees

5

-

Total increase (decrease) in net assets

(223,340)

888,766

Net Assets

Beginning of period

2,755,600

1,866,834

End of period (including undistributed net investment income of $60,551 and undistributed net investment income of $148,601, respectively)

$ 2,532,260

$ 2,755,600

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.50

$ 6.40

$ 8.17

$ 9.64

$ 11.12

$ 11.09

Income from Investment Operations

Net investment income (loss) E

.380

.873

.767 G,I

.869

1.059

1.022

Net realized and unrealized gain (loss)

.299

2.875

(1.866) G,I

(1.558)

(1.634)

.287

Total from investment operations

.679

3.748

(1.099)

(.689)

(.575)

1.309

Distributions from net investment income

(.669)

(.648)

(.671)

(.781)

(.905)

(1.030)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.049)

Total distributions

(.669)

(.648)

(.671)

(.781)

(.905)

(1.279)

Redemption fees added to paid in capitalE

-H

-

-

-

-

-

Net asset value, end of period

$ 9.51

$ 9.50

$ 6.40

$ 8.17

$ 9.64

$ 11.12

Total Return B,C,D

7.29%

60.58%

(14.39)%

(7.64)%

(5.66)%

11.98%

Ratios to Average Net Assets F

Expenses before expense reductions

.98%A

.99%

1.02%

.97%

.94%

.95%

Expenses net of voluntary waivers, if any

.98%A

.99%

1.02%

.97%

.94%

.95%

Expenses net of all reductions

.98%A

.99%

1.01%

.97%

.94%

.95%

Net investment income (loss)

7.92%A

10.45%

10.12% G,I

9.53%

9.86%

8.89%

Supplemental Data

Net assets, end of period (in millions)

$ 273

$ 307

$ 157

$ 189

$ 209

$ 221

Portfolio turnover rate

77% A

111%

85%

68%

63%

61%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FExpense 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. GEffective November 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. HAmount represents less than $.001 per share. IAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended October 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.068 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 11.01% to 10.12%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Financial Highlights - Class T

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.52

$ 6.42

$ 8.18

$ 9.66

$ 11.14

$ 11.11

Income from Investment Operations

Net investment income (loss)E

.377

.859

.766 G,I

.865

1.055

1.021

Net realized and unrealized gain (loss)

.310

2.883

(1.860) G,I

(1.572)

(1.640)

.274

Total from investment operations

.687

3.742

(1.094)

(.707)

(.585)

1.295

Distributions from net investment income

(.667)

(.642)

(.666)

(.773)

(.895)

(1.017)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.048)

Total distributions

(.667)

(.642)

(.666)

(.773)

(.895)

(1.265)

Redemption fees added to paid in capitalE

-H

-

-

-

-

-

Net asset value, end of period

$ 9.54

$ 9.52

$ 6.42

$ 8.18

$ 9.66

$ 11.14

Total ReturnB,C,D

7.35%

60.26%

(14.30)%

(7.81)%

(5.73)%

11.83%

Ratios to Average Net AssetsF

Expenses before expense reductions

1.06%A

1.06%

1.08%

1.06%

1.03%

1.04%

Expenses net of voluntary waivers, if any

1.06%A

1.06%

1.08%

1.06%

1.03%

1.04%

Expenses net of all reductions

1.06%A

1.06%

1.08%

1.05%

1.03%

1.04%

Net investment income (loss)

7.84%A

10.38%

10.05%G,I

9.45%

9.76%

8.80%

Supplemental Data

Net assets, end of period (in millions)

$ 1,278

$ 1,398

$ 1,070

$ 1,473

$ 1,777

$ 2,351

Portfolio turnover rate

77%A

111%

85%

68%

63%

61%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the sales charges. ECalculated based on average shares outstanding during the period. FExpense 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. GEffective November 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. HAmount represents less than $.001 per share. IAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended October 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.068 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 10.95% to 10.05%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Financial Highlights - Class B

Six months ended April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.47

$ 6.38

$ 8.15

$ 9.61

$ 11.09

$ 11.07

Income from Investment Operations

Net investment income (loss)E

.342

.802

.712G,I

.801

.978

.938

Net realized and unrealized gain (loss)

.302

2.873

(1.868) G,I

(1.549)

(1.634)

.276

Total from investment operations

.644

3.675

(1.156)

(.748)

(.656)

1.214

Distributions from net investment income

(.634)

(.585)

(.614)

(.712)

(.824)

(.949)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.045)

Total distributions

(.634)

(.585)

(.614)

(.712)

(.824)

(1.194)

Redemption fees added to paid in capitalE

-H

-

-

-

-

-

Net asset value, end of period

$ 9.48

$ 9.47

$ 6.38

$ 8.15

$ 9.61

$ 11.09

Total ReturnB,C,D

6.92%

59.42%

(15.07)%

(8.25)%

(6.39)%

11.10%

Ratios to Average Net AssetsF

Expenses before expense reductions

1.75%A

1.75%

1.78%

1.73%

1.70%

1.70%

Expenses net of voluntary waivers, if any

1.75%A

1.75%

1.78%

1.73%

1.70%

1.70%

Expenses net of all reductions

1.75%A

1.75%

1.77%

1.72%

1.70%

1.69%

Net investment income (loss)

7.15%A

9.69%

9.36%G,I

8.78%

9.10%

8.15%

Supplemental Data

Net assets, end of period (in millions)

$ 556

$ 613

$ 426

$ 704

$ 956

$ 1,192

Portfolio turnover rate

77%A

111%

85%

68%

63%

61%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FExpense 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. GEffective November 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. HAmount represents less than $.001 per share. IAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended Ocrober 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.068 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 10.25% to 9.36%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Financial Highlights - Class C

Six months ended April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.49

$ 6.40

$ 8.16

$ 9.63

$ 11.11

$ 11.09

Income from Investment Operations

Net investment income (loss)E

.339

.801

.708G,I

.796

.969

.926

Net realized and unrealized gain (loss)

.302

2.868

(1.859) G,I

(1.560)

(1.634)

.280

Total from investment operations

.641

3.669

(1.151)

(.764)

(.665)

1.206

Distributions from net investment income

(.631)

(.579)

(.609)

(.706)

(.815)

(.941)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.045)

Total distributions

(.631)

(.579)

(.609)

(.706)

(.815)

(1.186)

Redemption fees added to paid in capitalE

-H

-

-

-

-

-

Net asset value, end of period

$ 9.50

$ 9.49

$ 6.40

$ 8.16

$ 9.63

$ 11.11

Total ReturnB,C,D

6.86%

59.11%

(14.98)%

(8.41)%

(6.45)%

11.00%

Ratios to Average Net AssetsF

Expenses before expense reductions

1.82%A

1.82%

1.84%

1.80%

1.78%

1.78%

Expenses net of voluntary waivers, if any

1.82%A

1.82%

1.84%

1.80%

1.78%

1.78%

Expenses net of all reductions

1.82%A

1.82%

1.84%

1.79%

1.78%

1.78%

Net investment income (loss)

7.08%A

9.62%

9.29%G,I

8.71%

9.02%

8.06%

Supplemental Data

Net assets, end of period (in millions)

$ 208

$ 219

$ 132

$ 197

$ 247

$ 269

Portfolio turnover rate

77%A

111%

85%

68%

63%

61%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DTotal returns do not include the effect of the contingent deferred sales charge. ECalculated based on average shares outstanding during the period. FExpense 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. GEffective November 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. HAmount represents less than $.001 per share. IAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended October 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.068 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 10.19% to 9.29%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Financial Highlights - Institutional Class

Six months ended April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999

Selected Per-Share Data

Net asset value, beginning of period

$ 9.24

$ 6.24

$ 7.97

$ 9.43

$ 10.90

$ 10.90

Income from Investment Operations

Net investment income (loss)D

.376

.867

.759F,H

.862

1.055

1.024

Net realized and unrealized gain (loss)

.294

2.796

(1.805)F,H

(1.528)

(1.606)

.269

Total from investment operations

.670

3.663

(1.046)

(.666)

(.551)

1.293

Distributions from net investment income

(.680)

(.663)

(.684)

(.794)

(.919)

(1.044)

Distributions from net realized gain

-

-

-

-

-

(.120)

Distributions in excess of net realized gain

-

-

-

-

-

(.080)

Distributions from return of capital

-

-

-

-

-

(.049)

Total distributions

(.680)

(.663)

(.684)

(.794)

(.919)

(1.293)

Redemption fees added to paid in capitalD

-G

-

-

-

-

-

Net asset value, end of period

$ 9.23

$ 9.24

$ 6.24

$ 7.97

$ 9.43

$ 10.90

Total ReturnB,C

7.39%

60.82%

(14.09)%

(7.58)%

(5.56)%

12.05%

Ratios to Average Net AssetsE

Expenses before expense reductions

.82%A

.82%

.85%

.83%

.82%

.82%

Expenses net of voluntary waivers, if any

.82%A

.82%

.85%

.83%

.82%

.82%

Expenses net of all reductions

.82%A

.82%

.85%

.83%

.82%

.81%

Net investment income (loss)

8.08%A

10.62%

10.28%F,H

9.67%

9.98%

9.03%

Supplemental Data

Net assets, end of period (in millions)

$ 218

$ 218

$ 82

$ 87

$ 89

$ 123

Portfolio turnover rate

77%A

111%

85%

68%

63%

61%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns would have been lower had certain expenses not been reduced during the periods shown. DCalculated based on average shares outstanding during the period. EExpense 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. FEffective November 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. GAmount represents less than $.001 per share. HAs a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended October 31, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income of $0.067 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income to average net assets decreased from 11.18% to 10.28%. The reclassification has no impact on the net assets of the fund.

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

Semiannual Report

Notes to Financial Statements

For the period ended April 30, 2004 (Unaudited)

(Amounts in thousands except ratios)

1. Significant Accounting Policies.

Fidelity Advisor High Income Advantage 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 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 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

1. Significant Accounting Policies - continued

Security Valuation - continued

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.

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.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), non-interested Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the fund or are invested

Semiannual Report

1. Significant Accounting Policies - continued

Deferred Trustee Compensation - continued

in a cross-section of other Fidelity funds, and are marked-to-market. Deferred amounts remain in the fund until distributed in accordance with the Plan.

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 prior period premium and discount on debt securities, market discount, partnerships, non-taxable dividends, capital loss carryforwards and losses deferred due to wash sales.

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

Unrealized appreciation

$ 358,319

Unrealized depreciation

(133,547)

Net unrealized appreciation (depreciation)

$ 224,772

Cost for federal income tax purposes

$ 2,277,259

Short-Term Trading (Redemption) Fees. Shares purchased after March, 31, 2004 and held in the fund less than 90 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.

2. Operating Policies.

Repurchase Agreements. 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

2. Operating Policies - continued

Repurchase Agreements - continued

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.

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, including revolving credit facilities, 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. At the end of the period, the fund had unfunded loan commitments of $433. 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.

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%

$ 229

$ 1

Class T

0%

.25%

1,755

48

Class B

.65%

.25%

2,715

1,965

Class C

.75%

.25%

1,121

242

$ 5,820

$ 2,256

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

$ 89

Class T

95

Class B*

574

Class C*

31

$ 789

* 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

4. Fees and Other Transactions with Affiliates - continued

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 shareholder 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

$ 302

.20*

Class T

1,251

.18*

Class B

640

.21*

Class C

204

.18*

Institutional Class

226

.19*

$ 2,623

* Annualized

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

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 $841 for the period.

Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Interfund Lending Program - continued

participating funds. Information regarding the fund's participation in the program is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

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 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. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. The fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the fund and any additional required collateral is delivered to the fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.

7. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $2 for the period. In addition, 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 $3.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 22,133

$ 18,374

Class T

98,592

106,158

Class B

40,403

38,278

Class C

15,009

12,553

Institutional Class

17,753

11,905

Total

$ 193,890

$ 187,268

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

10,852

34,832

$ 104,615

$ 293,119

Reinvestment of distributions

1,467

1,400

13,955

11,574

Shares redeemed

(15,977)

(28,472)

(153,646)

(242,005)

Net increase (decrease)

(3,658)

7,760

$ (35,076)

$ 62,688

Class T

Shares sold

28,423

147,909

$ 274,732

$ 1,204,516

Reinvestment of distributions

8,331

10,623

79,490

86,420

Shares redeemed

(49,475)

(178,448)

(475,950)

(1,494,673)

Net increase (decrease)

(12,721)

(19,916)

$ (121,728)

$ (203,737)

Class B

Shares sold

3,242

13,142

$ 31,124

$ 110,687

Reinvestment of distributions

2,762

2,927

26,178

23,946

Shares redeemed

(12,107)

(18,040)

(115,909)

(149,301)

Net increase (decrease)

(6,103)

(1,971)

$ (58,607)

$ (14,668)

Class C

Shares sold

4,968

12,912

$ 47,812

$ 109,440

Reinvestment of distributions

1,034

918

9,827

7,575

Shares redeemed

(7,235)

(11,394)

(69,336)

(96,409)

Net increase (decrease)

(1,233)

2,436

$ (11,697)

$ 20,606

Institutional Class

Shares sold

13,856

37,471

$ 129,640

$ 306,562

Reinvestment of distributions

1,624

1,212

15,011

9,794

Shares redeemed

(15,497)

(28,190)

(143,769)

(231,812)

Net increase (decrease)

(17)

10,493

$ 882

$ 84,544

Semiannual Report

10. Transactions with Affiliated Companies.

An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Companies which are affiliates of the fund at period-end are noted in the fund's Schedule of Investments. Transactions during the period with companies which are or were affiliates are as follows:

Affiliate

Value,
beginning of
period

Purchases

Sales
Proceeds

Dividend
Income

Value,
end of
period

Revlon, Inc. Class A

$ 708

$ 2,097

$ 1,815

$ -

$ 130,161

Pathmark Stores, Inc.

19,526

-

-

-

24,035

TOTALS

$ 20,234

$ 2,097

$ 1,815

$ -

$ 154,196

Semiannual Report

Semiannual Report

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 International
Investment Advisors

Fidelity Investments Japan Limited

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

HYI-USAN-0604
1.784887.101

Fidelity® Advisor

High Income

Fund - Institutional Class

Semiannual Report

April 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.

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 April 30, 2004

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

AES Corp.

2.5

2.5

CSC Holdings, Inc.

1.8

2.5

Lyondell Chemical Co.

1.7

0.0

American Airlines, Inc. pass thru trust certificates

1.6

0.6

Qwest Capital Funding, Inc.

1.5

2.2

9.1

Top Five Market Sectors as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Telecommunications

10.9

10.5

Electric Utilities

7.1

7.2

Energy

6.8

11.0

Technology

6.1

8.1

Healthcare

5.0

5.2

Quality Diversification (% of fund's net assets) as of April 30, 2004

As of April 30, 2004

As of October 31, 2003

AAA,AA,A 0.0%

AAA,AA,A 0.0%

BBB 0.4%

BBB 0.6%

BB 23.0%

BB 24.9%

B 51.5%

B 52.2%

CCC,CC,C 14.4%

CCC,CC,C 12.0%

Not Rated 4.2%

Not Rated 2.1%

Equities 1.7%

Equities 2.6%

Short-Term
Investments and
Net Other Assets 4.8%

Short-Term
Investments and
Net Other Assets 5.6%



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 April 30, 2004 *

As of October 31, 2003 **

Nonconvertible
Bonds 90.8%

Nonconvertible
Bonds 89.8%

Convertible Bonds, Preferred Stocks 2.0%

Convertible Bonds, Preferred Stocks 3.3%

Other Investments 2.4%

Other Investments 1.3%

Short-Term
Investments and
Net Other Assets 4.8%

Short-Term
Investments and
Net Other Assets 5.6%

* Foreign
investments

13.5%

** Foreign
investments

10.9%



Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Corporate Bonds - 91.1%

Principal
Amount

Value
(Note 1)

Convertible Bonds - 0.3%

Technology - 0.3%

Amkor Technology, Inc.:

5% 3/15/07

$ 630,000

$ 587,475

5.75% 6/1/06

630,000

614,250

1,201,725

Nonconvertible Bonds - 90.8%

Aerospace - 2.4%

BE Aerospace, Inc. 8% 3/1/08

595,000

571,200

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

3,105,000

3,283,538

Orbital Sciences Corp. 9% 7/15/11

1,440,000

1,576,800

Primus International, Inc. 10.5% 4/15/09 (d)

760,000

760,000

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

4,555,000

4,463,900

10,655,438

Air Transportation - 4.2%

American Airlines, Inc. pass thru trust certificates:

6.817% 5/23/11

2,340,000

2,158,650

6.977% 11/23/22

116,638

106,432

7.324% 4/15/11

370,000

321,900

7.377% 5/23/19

2,466,278

1,849,708

7.379% 5/23/16

1,379,966

1,034,974

7.8% 4/1/08

995,000

945,250

8.608% 10/1/12

515,000

491,825

10.18% 1/2/13

430,000

339,700

AMR Corp.:

9% 8/1/12

1,230,000

1,039,350

10.2% 3/15/20

60,000

48,600

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

770,000

779,625

Continental Airlines, Inc.:

7.875% 7/2/18

1,160,000

1,142,600

8% 12/15/05

320,000

302,400

Continental Airlines, Inc. pass thru trust certificates:

6.748% 9/15/18

73,573

61,801

6.795% 8/2/18

326,582

277,595

6.9% 1/2/17

261,040

216,664

6.954% 2/2/11

148,602

124,825

7.73% 9/15/12

383,792

310,872

7.82% 4/15/15

317,624

266,804

8.307% 4/2/18

908,419

808,493

8.312% 10/2/12

129,864

111,033

Corporate Bonds - continued

Principal
Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Air Transportation - continued

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

8.321% 11/1/06

$ 435,000

$ 411,075

Delta Air Lines, Inc.:

equipment trust certificates 8.54% 1/2/07

50,365

42,810

7.9% 12/15/09

2,400,000

1,320,000

10% 8/15/08 (d)

560,000

336,000

10.14% 8/14/12

60,000

37,200

Delta Air Lines, Inc. pass thru trust certificates:

7.299% 9/18/06

360,000

284,400

7.779% 1/2/12

1,168,777

818,144

Northwest Airlines Corp. 10% 2/1/09

2,280,000

1,801,200

Northwest Airlines, Inc. pass thru trust certificates:

7.068% 7/2/17

292,946

249,004

7.67% 1/2/15

184,840

160,811

8.07% 1/2/15

580,544

412,186

NWA Trust 10.23% 6/21/14

18,231

16,590

18,628,521

Automotive - 1.0%

Cummins, Inc. 5.65% 3/1/98

1,065,000

724,200

Dana Corp. 6.5% 3/1/09

155,000

162,750

Delco Remy International, Inc. 9.375% 4/15/12 (d)

895,000

881,575

Stoneridge, Inc. 11.5% 5/1/12

870,000

1,037,475

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

1,000,000

1,060,000

Visteon Corp. 7% 3/10/14

700,000

682,024

4,548,024

Banks and Thrifts - 0.5%

Chevy Chase Bank FSB 6.875% 12/1/13

585,000

585,000

Western Financial Bank 9.625% 5/15/12

1,285,000

1,452,050

2,037,050

Broadcasting - 1.4%

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

1,775,000

1,739,500

Gray Television, Inc. 9.25% 12/15/11

935,000

1,049,538

Nexstar Finance, Inc. 7% 1/15/14 (d)

450,000

438,750

Sinclair Broadcast Group, Inc. 8% 3/15/12

1,310,000

1,391,875

Spanish Broadcasting System, Inc. 9.625% 11/1/09

390,000

412,425

XM Satellite Radio, Inc. 6.65% 5/1/09 (d)(e)

1,280,000

1,292,800

6,324,888

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Building Materials - 1.7%

FastenTech, Inc. 11.5% 5/1/11 (d)

$ 610,000

$ 671,000

FIMEP SA 10.5% 2/15/13

1,000,000

1,156,250

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

1,045,000

1,165,175

Juno Lighting, Inc. 11.875% 7/1/09

865,000

926,631

Nortek Holdings, Inc. 0% 5/15/11 (c)(d)

395,000

302,175

Texas Industries, Inc. 10.25% 6/15/11

2,435,000

2,751,550

U.S. Concrete, Inc. 8.375% 4/1/14 (d)

680,000

686,800

7,659,581

Cable TV - 2.9%

Cablevision Systems Corp.:

5.66% 4/1/09 (d)(e)

2,130,000

2,220,525

8% 4/15/12 (d)

2,050,000

2,044,875

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

385,000

382,113

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

730,000

757,375

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

8% 4/30/12 (d)

1,160,000

1,149,850

8.375% 4/30/14 (d)

1,200,000

1,188,000

CSC Holdings, Inc.:

7.875% 2/15/18

400,000

413,000

9.875% 2/15/13

795,000

826,800

NTL Cable PLC:

6.14% 10/15/12 (d)(e)

730,000

750,075

8.75% 4/15/14 (d)

1,725,000

1,772,438

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

2,080,000

1,310,400

12,815,451

Capital Goods - 2.1%

AGCO Corp.:

8.5% 3/15/06

695,000

695,000

9.5% 5/1/08

120,000

131,400

Case New Holland, Inc. 9.25% 8/1/11 (d)

80,000

89,200

Columbus McKinnon Corp. 10% 8/1/10

140,000

149,100

Dresser, Inc. 9.375% 4/15/11

1,605,000

1,733,400

Invensys PLC 9.875% 3/15/11 (d)

2,585,000

2,733,638

Leucadia National Corp.:

7% 8/15/13

2,050,000

2,050,000

7% 8/15/13 (d)

550,000

550,000

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Capital Goods - continued

Sensus Metering Systems, Inc. 8.625% 12/15/13 (d)

$ 765,000

$ 755,438

Trinity Industries, Inc. 6.5% 3/15/14 (d)

615,000

598,088

9,485,264

Chemicals - 4.7%

Equistar Chemicals LP/Equistar Funding Corp.:

8.75% 2/15/09

705,000

742,013

10.125% 9/1/08

565,000

625,738

10.625% 5/1/11

2,310,000

2,575,650

HMP Equity Holdings Corp.:

0% 5/15/08 (d)

150,000

88,500

0% 5/15/08 unit (d)

1,560,000

1,201,200

Huntsman ICI Chemicals LLC 10.125% 7/1/09

925,000

964,313

Huntsman ICI Holdings LLC 0% 12/31/09

720,000

367,200

Huntsman International LLC 9.875% 3/1/09

1,435,000

1,592,850

Lyondell Chemical Co.:

9.5% 12/15/08

515,000

539,463

9.5% 12/15/08

1,570,000

1,644,575

9.625% 5/1/07

2,505,000

2,636,513

9.875% 5/1/07

1,230,000

1,293,038

10.875% 5/1/09

1,380,000

1,438,650

Millennium America, Inc.:

9.25% 6/15/08

1,695,000

1,839,075

9.25% 6/15/08 (d)

960,000

1,041,600

Nalco Co.:

7.75% 11/15/11 (d)

590,000

623,925

8.875% 11/15/13 (d)

600,000

633,000

Nalco Finance Holdings LLC/Nalco Finance Holdings, Inc. 0% 2/1/14 (c)(d)

850,000

535,500

NOVA Chemicals Corp. 6.5% 1/15/12

660,000

663,300

21,046,103

Consumer Products - 0.9%

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

420,000

281,400

Sealy Mattress Co. 8.25% 6/15/14 (d)

1,915,000

1,876,700

The Hockey Co. 11.25% 4/15/09

1,445,000

1,705,100

3,863,200

Containers - 2.3%

Anchor Glass Container Corp. 11% 2/15/13

995,000

1,154,200

Berry Plastics Corp. 10.75% 7/15/12

1,335,000

1,508,550

BWAY Corp. 10% 10/15/10

660,000

712,800

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Containers - continued

Crown European Holdings SA 10.875% 3/1/13

$ 930,000

$ 1,083,450

Owens-Brockway Glass Container, Inc.:

7.75% 5/15/11

530,000

556,500

8.25% 5/15/13

370,000

381,100

Owens-Illinois, Inc.:

7.35% 5/15/08

575,000

569,250

7.5% 5/15/10

1,515,000

1,461,975

7.8% 5/15/18

781,000

720,473

8.1% 5/15/07

985,000

1,004,700

Pliant Corp.:

0% 6/15/09 (c)(d)

1,000,000

835,000

11.125% 9/1/09

370,000

395,900

10,383,898

Diversified Media - 0.5%

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

340,000

374,000

LBI Media Holdings, Inc. 0% 10/15/13 (c)

1,240,000

874,200

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

1,020,000

1,157,700

2,405,900

Electric Utilities - 6.2%

AES Corp.:

7.75% 3/1/14

2,650,000

2,603,625

8.375% 8/15/07

485,000

487,425

8.5% 11/1/07

270,000

274,050

8.75% 6/15/08

751,000

777,285

8.75% 5/15/13 (d)

1,435,000

1,551,594

8.875% 2/15/11

1,154,000

1,210,258

9.375% 9/15/10

2,170,000

2,321,900

9.5% 6/1/09

1,291,000

1,379,756

10% 12/12/05 (d)

362,311

362,311

AES Gener SA 7.5% 3/25/14 (d)

1,530,000

1,464,975

CMS Energy Corp.:

7.5% 1/15/09

95,000

95,475

7.75% 8/1/10 (d)

450,000

453,938

8.5% 4/15/11

2,150,000

2,236,000

8.9% 7/15/08

290,000

305,950

9.875% 10/15/07

1,555,000

1,694,950

Midland Funding Corp. II 11.75% 7/23/05

769,811

808,302

Midwest Generation LLC/Midwest Finance Corp.
8.75% 5/1/34 (d)

1,140,000

1,140,000

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Electric Utilities - continued

MSW Energy Holding LLC/MSW Energy Finance Co., Inc. 8.5% 9/1/10

$ 180,000

$ 195,300

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

720,000

745,200

NRG Energy, Inc. 8% 12/15/13 (d)

4,600,000

4,646,000

Sierra Pacific Power Co. 6.25% 4/15/12 (d)

360,000

355,500

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

760,000

771,400

TECO Energy, Inc.:

7% 5/1/12

710,000

702,900

7.2% 5/1/11

1,160,000

1,165,800

27,749,894

Energy - 6.8%

ANR Pipeline, Inc. 9.625% 11/1/21

360,000

410,400

Chesapeake Energy Corp. 8.375% 11/1/08

290,000

319,000

El Paso Corp. 7.875% 6/15/12

90,000

79,988

El Paso Energy Corp. 6.95% 12/15/07

500,000

463,750

El Paso Production Holding Co. 7.75% 6/1/13

1,585,000

1,505,750

General Maritime Corp. 10% 3/15/13

2,075,000

2,344,750

Hanover Compressor Co.:

0% 3/31/07

1,685,000

1,276,388

8.625% 12/15/10

290,000

305,950

Hilcorp Energy I LP/Hilcorp Finance Co.
10.5% 9/1/10 (d)

1,150,000

1,285,125

OAO Gazprom 9.625% 3/1/13 (d)

810,000

834,300

OMI Corp. 7.625% 12/1/13

2,145,000

2,209,350

Pecom Energia SA 9% 5/1/09 (Reg. S)

1,050,000

1,044,750

Petrobras International Finance Co. Ltd.
8.375% 12/10/18

795,000

742,331

Range Resources Corp. 7.375% 7/15/13

1,160,000

1,189,000

SESI LLC 8.875% 5/15/11

630,000

680,400

Sonat, Inc.:

6.625% 2/1/08

620,000

552,575

6.75% 10/1/07

545,000

497,994

7.625% 7/15/11

815,000

710,069

Southern Natural Gas Co.:

7.35% 2/15/31

595,000

554,838

8% 3/1/32

725,000

712,313

Teekay Shipping Corp. 8.875% 7/15/11

1,820,000

2,074,800

Tennessee Gas Pipeline Co. 7.5% 4/1/17

335,000

338,350

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Energy - continued

The Coastal Corp.:

6.375% 2/1/09

$ 240,000

$ 202,200

6.5% 5/15/06

210,000

197,925

6.5% 6/1/08

845,000

724,588

7.5% 8/15/06

1,810,000

1,719,500

7.75% 6/15/10

3,240,000

2,802,600

Western Oil Sands, Inc. 8.375% 5/1/12

470,000

528,750

Williams Companies, Inc.:

7.875% 9/1/21

1,465,000

1,426,544

8.125% 3/15/12

2,190,000

2,365,200

8.625% 6/1/10

485,000

531,075

30,630,553

Entertainment/Film - 0.6%

AMC Entertainment, Inc. 8% 3/1/14 (d)

840,000

821,100

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

2,975,000

1,866,813

2,687,913

Environmental - 0.8%

Allied Waste North America, Inc.:

5.75% 2/15/11 (d)

570,000

547,200

6.125% 2/15/14 (d)

230,000

217,350

6.375% 4/15/11 (d)

600,000

592,500

7.375% 4/15/14 (d)

1,090,000

1,076,375

7.875% 4/15/13

305,000

329,400

9.25% 9/1/12

750,000

851,250

Browning-Ferris Industries, Inc. 6.375% 1/15/08

25,000

25,750

3,639,825

Food and Drug Retail - 1.4%

Ahold Finance USA, Inc.:

6.25% 5/1/09

865,000

867,163

8.25% 7/15/10

1,645,000

1,793,050

Rite Aid Corp.:

6% 12/15/05 (d)

515,000

517,575

6.875% 8/15/13

1,605,000

1,500,675

9.25% 6/1/13

1,095,000

1,155,225

9.5% 2/15/11

360,000

404,100

6,237,788

Food/Beverage/Tobacco - 2.6%

Del Monte Corp. 9.25% 5/15/11

1,375,000

1,519,375

Doane Pet Care Co. 9.75% 5/15/07

785,000

718,275

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Food/Beverage/Tobacco - continued

Dole Food Co., Inc. 7.25% 6/15/10

$ 2,170,000

$ 2,191,700

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

1,120,000

1,209,600

Smithfield Foods, Inc.:

7.625% 2/15/08

1,640,000

1,738,400

7.75% 5/15/13

775,000

837,000

8% 10/15/09

2,410,000

2,626,900

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

740,000

786,250

11,627,500

Gaming - 3.1%

Argosy Gaming Co. 7% 1/15/14 (d)

445,000

453,900

Boyd Gaming Corp.:

7.75% 12/15/12

355,000

373,638

8.75% 4/15/12

350,000

386,750

Chumash Casino & Resort Enterprise 9% 7/15/10 (d)

345,000

384,675

MGM MIRAGE:

5.875% 2/27/14

1,310,000

1,265,788

5.875% 2/27/14 (d)

410,000

396,163

MTR Gaming Group, Inc. 9.75% 4/1/10

1,340,000

1,433,800

Park Place Entertainment Corp. 7.875% 3/15/10

1,170,000

1,294,313

Resorts International Hotel & Casino, Inc.
11.5% 3/15/09

120,000

132,600

Seneca Gaming Corp. 7.25% 5/1/12 (d)

770,000

780,588

Station Casinos, Inc.:

6% 4/1/12 (d)

640,000

640,000

6.5% 2/1/14 (d)

990,000

972,675

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

1,545,000

1,707,225

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

1,235,000

1,435,688

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

2,130,000

2,300,400

13,958,203

Healthcare - 5.0%

AmeriPath, Inc. 10.5% 4/1/13

1,300,000

1,326,000

AmerisourceBergen Corp. 7.25% 11/15/12

1,885,000

2,007,525

Biovail Corp. yankee 7.875% 4/1/10

1,905,000

1,871,663

Concentra Operating Corp. 9.5% 8/15/10

450,000

499,500

Fisher Scientific International, Inc. 8% 9/1/13

720,000

788,400

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

3,580,000

3,750,050

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

725,000

732,250

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Healthcare - continued

Omega Healthcare Investors, Inc. 7% 4/1/14 (d)

$ 920,000

$ 938,400

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

1,382,000

1,603,120

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

1,205,000

1,376,713

Senior Housing Properties Trust:

7.875% 4/15/15

945,000

1,001,700

8.625% 1/15/12

1,595,000

1,786,400

Tenet Healthcare Corp.:

6.375% 12/1/11

360,000

311,400

7.375% 2/1/13

1,705,000

1,534,500

Triad Hospitals, Inc. 7% 5/15/12 (d)

1,090,000

1,092,725

UAP Holding Corp. 0% 7/15/12 (c)(d)

1,240,000

979,600

VWR International, Inc.:

6.875% 4/15/12 (d)

350,000

359,625

8% 4/15/14 (d)

350,000

360,500

22,320,071

Homebuilding/Real Estate - 4.2%

Beazer Homes USA, Inc.:

6.5% 11/15/13 (d)

1,960,000

1,920,800

8.375% 4/15/12

580,000

627,850

iStar Financial, Inc. 6.5% 12/15/13

510,000

507,450

K. Hovnanian Enterprises, Inc.:

6.5% 1/15/14

985,000

940,675

7.75% 5/15/13

520,000

535,600

8.875% 4/1/12

1,985,000

2,123,950

KB Home 7.75% 2/1/10

1,170,000

1,228,500

LNR Property Corp.:

7.25% 10/15/13

815,000

835,375

7.625% 7/15/13

460,000

469,200

Meritage Corp. 7% 5/1/14 (d)

810,000

793,800

Standard Pacific Corp.:

5.125% 4/1/09

700,000

665,000

6.5% 10/1/08

490,000

496,125

6.875% 5/15/11

370,000

371,850

7.75% 3/15/13

940,000

977,600

Technical Olympic USA, Inc.:

7.5% 3/15/11 (d)

720,000

691,200

9% 7/1/10

1,520,000

1,596,000

10.375% 7/1/12

255,000

280,500

WCI Communities, Inc. 7.875% 10/1/13

930,000

971,850

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Homebuilding/Real Estate - continued

William Lyon Homes, Inc.:

7.5% 2/15/14 (d)

$ 1,080,000

$ 1,080,000

10.75% 4/1/13

1,315,000

1,512,250

18,625,575

Hotels - 0.4%

Host Marriott LP:

7.125% 11/1/13

1,515,000

1,537,725

9.25% 10/1/07

22,000

24,695

ITT Corp. 7.375% 11/15/15

100,000

104,250

1,666,670

Insurance - 0.7%

Crum & Forster Holdings Corp. 10.375% 6/15/13

1,545,000

1,691,775

Fairfax Financial Holdings Ltd. 7.75% 4/26/12 (d)

322,000

322,000

TIG Capital Trust I 8.597% 1/15/27 (d)

1,085,000

933,100

2,946,875

Leisure - 2.1%

Royal Caribbean Cruises Ltd.:

6.875% 12/1/13

900,000

904,500

8% 5/15/10

250,000

272,500

Six Flags, Inc.:

8.875% 2/1/10

1,690,000

1,717,463

9.75% 4/15/13

1,150,000

1,208,938

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

1,195,000

630,363

Town Sports International, Inc. 9.625% 4/15/11

1,305,000

1,350,675

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

2,940,000

3,410,400

9,494,839

Metals/Mining - 2.2%

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

1,570,000

1,628,875

Compass Minerals International, Inc.:

0% 12/15/12 (c)

1,135,000

919,350

0% 6/1/13 (c)

1,780,000

1,352,800

Freeport-McMoRan Copper & Gold, Inc.:

6.875% 2/1/14 (d)

1,475,000

1,312,750

10.125% 2/1/10

2,295,000

2,507,288

Peabody Energy Corp.:

5.875% 4/15/16

920,000

864,800

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Metals/Mining - continued

Peabody Energy Corp.: - continued

6.875% 3/15/13

$ 580,000

$ 606,100

Wise Metals Group LLC 10.25% 5/15/12 (d)

760,000

760,000

9,951,963

Paper - 4.3%

Ainsworth Lumber Co. Ltd. 6.75% 3/15/14 (d)

960,000

950,400

Bowater, Inc.:

4.11% 3/15/10 (e)

1,070,000

1,080,700

6.5% 6/15/13

415,000

401,513

Buckeye Technologies, Inc. 8.5% 10/1/13

775,000

821,500

Cellu Tissue Holdings, Inc. 9.75% 3/15/10 (d)

610,000

597,800

Georgia-Pacific Corp.:

8% 1/15/14

1,240,000

1,388,800

8.125% 5/15/11

1,735,000

1,954,044

9.125% 7/1/22

295,000

301,638

9.375% 2/1/13

600,000

699,000

9.5% 12/1/11

995,000

1,206,438

Graphic Packaging International, Inc. 8.5% 8/15/11

285,000

316,350

Jefferson Smurfit Corp. U.S. 7.5% 6/1/13

1,880,000

1,974,000

Norske Skog Canada Ltd.:

7.375% 3/1/14 (d)

470,000

478,225

8.625% 6/15/11

1,450,000

1,569,625

Stone Container Corp.:

8.375% 7/1/12

2,405,000

2,591,388

9.75% 2/1/11

310,000

341,000

Tembec Industries, Inc.:

7.75% 3/15/12

235,000

229,125

8.5% 2/1/11

1,060,000

1,095,775

yankee 8.625% 6/30/09

1,095,000

1,105,950

19,103,271

Publishing/Printing - 1.6%

Dex Media West LLC/Dex Media West Finance Co.:

8.5% 8/15/10 (d)

180,000

195,300

9.875% 8/15/13 (d)

520,000

566,800

Dex Media, Inc.:

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

830,000

506,300

8% 11/15/13 (d)

860,000

825,600

Houghton Mifflin Co.:

0% 10/15/13 (c)(d)

355,000

184,600

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Publishing/Printing - continued

Houghton Mifflin Co.: - continued

8.25% 2/1/11

$ 825,000

$ 833,250

9.875% 2/1/13

1,145,000

1,133,550

NBC Acquisition Corp. 0% 3/15/13 (c)(d)

1,700,000

1,088,000

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

805,000

935,813

Reader's Digest Association, Inc. 6.5% 3/1/11 (d)

1,110,000

1,115,550

7,384,763

Railroad - 0.4%

TFM SA de CV yankee:

10.25% 6/15/07

50,000

51,250

11.75% 6/15/09

1,555,000

1,551,113

1,602,363

Restaurants - 0.3%

Friendly Ice Cream Corp. 8.375% 6/15/12 (d)

1,250,000

1,271,875

Services - 1.3%

Iron Mountain, Inc. 6.625% 1/1/16

1,835,000

1,724,900

United Rentals North America, Inc.:

6.5% 2/15/12 (d)

2,650,000

2,583,750

7% 2/15/14 (d)

800,000

748,000

7.75% 11/15/13

770,000

743,050

5,799,700

Shipping - 0.5%

Overseas Shipholding Group, Inc. 8.25% 3/15/13

2,115,000

2,337,075

Steels - 2.8%

AK Steel Corp.:

7.75% 6/15/12

405,000

364,500

7.875% 2/15/09

400,000

368,000

Allegheny Ludlum Corp. 6.95% 12/15/25

795,000

715,500

Allegheny Technologies, Inc. 8.375% 12/15/11

1,165,000

1,176,650

California Steel Industries, Inc. 6.125% 3/15/14 (d)

480,000

457,200

CSN Islands VII Corp. 10.75% 9/12/08 (d)

1,110,000

1,115,550

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

1,835,000

1,642,325

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

2,350,000

2,632,000

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

1,900,000

1,814,500

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

2,065,000

2,106,300

12,392,525

Super Retail - 2.4%

Asbury Automotive Group, Inc. 9% 6/15/12

2,000,000

2,070,000

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Super Retail - continued

Barneys, Inc. 9% 4/1/08

$ 2,410,000

$ 2,482,300

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

902,596

726,590

Nebraska Book Co., Inc. 8.625% 3/15/12 (d)

1,180,000

1,188,850

Sonic Automotive, Inc. 8.625% 8/15/13

720,000

777,600

Toys 'R' US, Inc. 7.875% 4/15/13

3,535,000

3,658,725

10,904,065

Technology - 5.8%

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

1,465,000

1,717,713

Amkor Technology, Inc.:

7.125% 3/15/11 (d)

605,000

592,900

7.75% 5/15/13

3,455,000

3,455,000

Corning, Inc.:

5.9% 3/15/14

1,070,000

1,043,250

6.2% 3/15/16

870,000

846,075

Flextronics International Ltd. 6.5% 5/15/13

2,850,000

2,864,250

General Cable Corp. 9.5% 11/15/10 (d)

670,000

737,000

Lucent Technologies, Inc.:

5.5% 11/15/08

840,000

802,200

6.45% 3/15/29

765,000

608,175

Micron Technology, Inc. 6.5% 9/30/05 (f)

3,000,000

2,985,000

Nortel Networks Corp. 6.125% 2/15/06

360,000

355,500

Northern Telecom Ltd. yankee 6.875% 9/1/23

360,000

324,000

PerkinElmer, Inc. 8.875% 1/15/13

1,580,000

1,785,400

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

300,000

432,000

United Agriculture Products, Inc. 8.25% 12/15/11 (d)

1,110,000

1,232,100

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

800,000

888,000

Xerox Capital Trust I 8% 2/1/27

2,452,000

2,353,920

Xerox Corp.:

7.125% 6/15/10

670,000

683,400

7.2% 4/1/16

1,220,000

1,207,800

7.625% 6/15/13

1,060,000

1,086,500

26,000,183

Telecommunications - 10.7%

Centennial Cellular Operating Co. LLC/Centennial Finance Corp. 10.75% 12/15/08

1,282,000

1,323,665

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

1,040,000

962,000

Cincinnati Bell, Inc. 8.375% 1/15/14

3,245,000

3,050,300

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Telecommunications - continued

Citizens Communications Co.:

7.625% 8/15/08

$ 530,000

$ 549,875

9% 8/15/31

265,000

259,700

9.25% 5/15/11

265,000

277,588

Crown Castle International Corp.:

7.5% 12/1/13

1,060,000

1,054,700

7.5% 12/1/13

200,000

199,000

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

1,415,000

1,503,438

Eschelon Operating Co. 8.375% 3/15/10 (d)

2,860,000

2,445,300

GCI, Inc. 7.25% 2/15/14 (d)

845,000

821,763

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

1,947,000

2,112,495

Level 3 Communications, Inc.:

9.125% 5/1/08

765,000

541,238

10.5% 12/1/08

575,000

411,125

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

215,000

192,425

MCI, Inc.:

5.908% 5/1/07

1,020,000

1,008,525

6.688% 5/1/09

1,020,000

967,725

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

2,165,000

2,273,250

Nextel Communications, Inc.:

6.875% 10/31/13

3,025,000

3,055,250

7.375% 8/1/15

1,110,000

1,157,175

Primus Telecom Holding, Inc. 8% 1/15/14 (d)

1,110,000

1,021,200

Qwest Capital Funding, Inc.:

7% 8/3/09

1,500,000

1,260,000

7.25% 2/15/11

540,000

437,400

7.75% 8/15/06

5,095,000

4,993,076

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

3,415,000

3,628,438

Qwest Services Corp.:

13.5% 12/15/10 (d)

775,000

895,125

14% 12/15/14 (d)

2,735,000

3,268,325

Rogers Wireless, Inc.:

6.375% 3/1/14 (d)

2,090,000

2,006,400

9.625% 5/1/11

1,615,000

1,873,400

U.S. West Capital Funding, Inc. 6.375% 7/15/08

1,965,000

1,680,075

U.S. West Communications:

6.875% 9/15/33

465,000

390,600

7.125% 11/15/43

875,000

730,625

7.2% 11/10/26

540,000

464,400

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Telecommunications - continued

U.S. West Communications: - continued

7.5% 6/15/23

$ 825,000

$ 754,875

Western Wireless Corp. 9.25% 7/15/13

500,000

515,000

48,085,476

TOTAL NONCONVERTIBLE BONDS

406,272,283

TOTAL CORPORATE BONDS

(Cost $397,406,685)

407,474,008

Commercial Mortgage Securities - 0.3%

Banc of America Commercial Mortgage, Inc. Series 2003-2:

Class BWD, 6.947% 10/11/37 (d)

115,000

110,139

Class BWE, 7.226% 10/11/37 (d)

160,000

153,225

Class BWF, 7.55% 10/11/37 (d)

139,000

133,098

Class BWG, 8.155% 10/11/37 (d)

135,000

127,744

Class BWH, 9.073% 10/11/37 (d)

100,000

96,250

Class BWJ, 9.99% 10/11/37 (d)

115,000

110,629

Class BWK, 10.676% 10/11/37 (d)

100,000

95,910

Class BWL, 10.1596% 10/11/37 (d)

163,000

143,841

CS First Boston Mortgage Securities Corp. Series 2000-FL1A Class F, 3.8806% 12/15/09 (d)(e)

67,867

57,941

Mortgage Capital Funding, Inc. Series 1998-MC3 Class F, 7.2995% 11/18/31 (d)(e)

400,000

391,922

TOTAL COMMERCIAL MORTGAGE SECURITIES

(Cost $1,360,633)

1,420,699

Common Stocks - 0.0%

Shares

Automotive - 0.0%

Exide Technologies warrants 3/18/06 (a)

10

0

Super Retail - 0.0%

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

2,350

58,750

Telecommunications - 0.0%

Covad Communications Group, Inc. (a)

110

220

TOTAL COMMON STOCKS

(Cost $219)

58,970

Nonconvertible Preferred Stocks - 1.7%

Shares

Value (Note 1)

Broadcasting - 0.2%

Granite Broadcasting Corp. 12.75% pay-in-kind (a)

1,795

$ 861,600

Cable TV - 1.5%

CSC Holdings, Inc.:

(depositary shares) Series M, 11.125%

22,125

2,316,488

Series H, 11.75%

42,910

4,505,550

6,822,038

TOTAL NONCONVERTIBLE PREFERRED STOCKS

(Cost $7,692,058)

7,683,638

Floating Rate Loans - 2.1%

Principal Amount

Cable TV - 0.5%

Century Cable Holdings LLC Tranche B term loan
6% 12/31/09 (e)

$ 700,000

682,500

Hilton Head Communications LP Tranche B term loan 5.25% 3/31/08 (e)

1,450,000

1,406,500

2,089,000

Electric Utilities - 0.9%

Allegheny Energy Supply Co. LLC Tranche C term loan 5.35% 6/8/11 (e)

1,400,000

1,408,750

Astoria Energy LLC term loan:

6.7011% 4/15/12 (e)

1,650,000

1,662,375

9.9% 4/15/12 (e)

810,000

822,150

3,893,275

Hotels - 0.5%

Wyndham International, Inc. term loan:

5.875% 6/30/06 (e)

2,130,279

2,045,068

6.875% 4/1/06 (e)

449,332

443,716

2,488,784

Telecommunications - 0.2%

Qwest Corp. Tranche B term loan 6.95% 6/30/10 (e)

925,000

906,500

TOTAL FLOATING RATE LOANS

(Cost $9,080,507)

9,377,559

Money Market Funds - 3.5%

Shares

Value (Note 1)

Fidelity Cash Central Fund, 1.06% (b)
(Cost $15,740,598)

15,740,598

$ 15,740,598

TOTAL INVESTMENT PORTFOLIO - 98.7%

(Cost $431,280,700)

441,755,472

NET OTHER ASSETS - 1.3%

5,701,986

NET ASSETS - 100%

$ 447,457,458

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) 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.

(d) 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 $122,405,998 or 27.4% of net assets.

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

(f) 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 $2,985,000 or 0.7% of net assets.

Additional information on each holding is as follows:

Security

Acquisition Date

Acquisition Cost

Micron Technology, Inc. 6.5% 9/30/05

8/8/02 - 1/21/03

$ 2,633,750

Other Information

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

United States of America

86.5%

Canada

4.5%

United Kingdom

1.9%

Marshall Islands

1.5%

Cayman Islands

1.0%

Others (individually less than 1%)

4.6%

100.0%

Purchases and sales of securities, other than short-term securities, aggregated $352,074,206 and $290,406,494, respectively.

The fund invested in loans and loan participations, trade claims or other receivables. At period end the value of these investments amounted to $9,377,559 or 2.1% of net assets.

Income Tax Information

At October 31, 2003, the fund had a capital loss carryforward of approximately $2,456,000 all of which will expire on October 31, 2010.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (cost $431,280,700) - See accompanying schedule

$ 441,755,472

Cash

360,754

Receivable for investments sold

7,204,183

Receivable for fund shares sold

895,158

Interest receivable

8,519,369

Prepaid expenses

1,356

Receivable from investment adviser for expense reductions

20,340

Other affiliated receivables

19

Total assets

458,756,651

Liabilities

Payable for investments purchased

$ 8,147,142

Payable for fund shares redeemed

2,115,662

Distributions payable

547,825

Accrued management fee

215,686

Distribution fees payable

138,669

Other affiliated payables

97,245

Other payables and accrued expenses

36,964

Total liabilities

11,299,193

Net Assets

$ 447,457,458

Net Assets consist of:

Paid in capital

$ 424,938,159

Undistributed net investment income

3,084,634

Accumulated undistributed net realized gain (loss) on investments

8,959,876

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

10,474,789

Net Assets

$ 447,457,458

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($80,028,246 ÷ 8,528,900 shares)

$ 9.38

Maximum offering price per share (100/95.25 of $9.38)

$ 9.85

Class T:
Net Asset Value and redemption price per share ($86,306,449 ÷ 9,207,740 shares)

$ 9.37

Maximum offering price per share (100/96.50 of $9.37)

$ 9.71

Class B:
Net Asset Value and offering price per share ($76,667,271 ÷ 8,181,611 shares) A

$ 9.37

Class C:
Net Asset Value and offering price per share ($61,697,805 ÷ 6,583,549 shares) A

$ 9.37

Institutional Class:
Net Asset Value, offering price and redemption price per share ($142,757,687 ÷ 15,201,514 shares)

$ 9.39

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Dividends

$ 438,859

Interest

16,858,153

Total income

17,297,012

Expenses

Management fee

$ 1,230,469

Transfer agent fees

473,158

Distribution fees

820,840

Accounting fees and expenses

102,457

Non-interested trustees' compensation

959

Custodian fees and expenses

15,875

Registration fees

51,743

Audit

30,664

Legal

4,059

Miscellaneous

2,600

Total expenses before reductions

2,732,824

Expense reductions

(115,155)

2,617,669

Net investment income (loss)

14,679,343

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

11,524,668

Change in net unrealized appreciation (depreciation) on:

Investment securities

(9,100,961)

Assets and liabilities in foreign currencies

13

Total change in net unrealized appreciation (depreciation)

(9,100,948)

Net gain (loss)

2,423,720

Net increase (decrease) in net assets resulting from operations

$ 17,103,063

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 14,679,343

$ 23,675,802

Net realized gain (loss)

11,524,668

15,982,876

Change in net unrealized appreciation (depreciation)

(9,100,948)

24,806,908

Net increase (decrease) in net assets resulting
from operations

17,103,063

64,465,586

Distributions to shareholders from net investment income

(15,960,547)

(20,668,292)

Share transactions - net increase (decrease)

64,292,656

169,064,247

Redemption fees

1,275

-

Total increase (decrease) in net assets

65,436,447

212,861,541

Net Assets

Beginning of period

382,021,011

169,159,470

End of period (including undistributed net investment income of $3,084,634 and undistributed net investment income of $4,365,838, respectively)

$ 447,457,458

$ 382,021,011

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.33

$ 7.89

$ 8.75

$ 9.35

$ 9.92

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.336

.725

.709 H

.760

.895

.116

Net realized and unrealized gain (loss)

.082

1.360

(.908) H

(.602)

(.640)

(.091)

Total from investment operations

.418

2.085

(.199)

.158

.255

.025

Distributions from net investment income

(.368)

(.645)

(.661)

(.758)

(.825)

(.105)

Redemption fees added to paid in capital

- E, I

-

-

-

-

-

Net asset value, end of period

$ 9.38

$ 9.33

$ 7.89

$ 8.75

$ 9.35

$ 9.92

Total Return B, C, D

4.50%

27.23%

(2.49)%

1.83%

2.40%

.25%

Ratios to Average Net Assets G

Expenses before expense reductions

1.01% A

1.00%

1.02%

1.14%

1.70%

11.82% A

Expenses net of voluntary waivers, if any

1.00% A

1.00%

1.00%

1.00%

1.00%

1.00% A

Expenses net of all reductions

1.00% A

1.00%

1.00%

.99%

.98%

1.00% A

Net investment income (loss)

7.15% A

8.26%

8.42% H

8.50%

9.17%

7.92% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 80,028

$ 61,084

$ 31,456

$ 28,046

$ 13,295

$ 739

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

AAnnualized 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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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. H Effective November 30, 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. I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Class T

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.33

$ 7.89

$ 8.74

$ 9.35

$ 9.92

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.332

.717

.695 H

.753

.898

.112

Net realized and unrealized gain (loss)

.071

1.359

(.893) H

(.613)

(.656)

(.089)

Total from investment operations

.403

2.076

(.198)

.140

.242

.023

Distributions from net investment income

(.363)

(.636)

(.652)

(.750)

(.812)

(.103)

Redemption fees added to paid in capital

- E, I

-

-

-

-

-

Net asset value, end of period

$ 9.37

$ 9.33

$ 7.89

$ 8.74

$ 9.35

$ 9.92

Total Return B, C, D

4.34%

27.11%

(2.47)%

1.63%

2.27%

.23%

Ratios to Average Net Assets G

Expenses before expense reductions

1.19% A

1.19%

1.24%

1.39%

1.83%

11.91% A

Expenses net of voluntary waivers, if any

1.10% A

1.10%

1.10%

1.10%

1.10%

1.10% A

Expenses net of all reductions

1.10% A

1.10%

1.10%

1.09%

1.08%

1.10% A

Net investment income (loss)

7.05% A

8.16%

8.32% H

8.40%

9.07%

7.82% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 86,306

$ 81,735

$ 35,751

$ 16,814

$ 8,936

$ 2,422

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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. H Effective November 30, 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. I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Class B

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.32

$ 7.88

$ 8.74

$ 9.34

$ 9.92

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.301

.658

.641 H

.692

.830

.102

Net realized and unrealized gain (loss)

.081

1.361

(.904) H

(.601)

(.663)

(.083)

Total from investment operations

.382

2.019

(.263)

.091

.167

.019

Distributions from net investment income

(.332)

(.579)

(.597)

(.691)

(.747)

(.099)

Redemption fees added to paid in capital

- E, I

-

-

-

-

-

Net asset value, end of period

$ 9.37

$ 9.32

$ 7.88

$ 8.74

$ 9.34

$ 9.92

Total Return B, C, D

4.12%

26.32%

(3.23)%

1.08%

1.50%

.19%

Ratios to Average Net Assets G

Expenses before expense reductions

1.80% A

1.80%

1.83%

1.94%

2.47%

12.54% A

Expenses net of voluntary waivers, if any

1.75% A

1.75%

1.75%

1.75%

1.75%

1.75% A

Expenses net of all reductions

1.75% A

1.75%

1.75%

1.75%

1.73%

1.75% A

Net investment income (loss)

6.40% A

7.51%

7.67% H

7.74%

8.42%

7.17% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 76,667

$ 70,661

$ 32,854

$ 19,694

$ 10,054

$ 2,089

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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. H Effective November 30, 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. I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Class C

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.32

$ 7.88

$ 8.74

$ 9.35

$ 9.91

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.297

.651

.635 H

.684

.819

.101

Net realized and unrealized gain (loss)

.081

1.359

(.906) H

(.612)

(.643)

(.093)

Total from investment operations

.378

2.010

(.271)

.072

.176

.008

Distributions from net investment income

(.328)

(.570)

(.589)

(.682)

(.736)

(.098)

Redemption fees added to paid in capital

- E, I

-

-

-

-

-

Net asset value, end of period

$ 9.37

$ 9.32

$ 7.88

$ 8.74

$ 9.35

$ 9.91

Total Return B, C, D

4.06%

26.19%

(3.32)%

.86%

1.60%

.08%

Ratios to Average Net Assets G

Expenses before expense reductions

1.87% A

1.88%

1.90%

2.03%

2.60%

12.67% A

Expenses net of voluntary waivers, if any

1.85% A

1.85%

1.85%

1.85%

1.85%

1.85% A

Expenses net of all reductions

1.85% A

1.85%

1.85%

1.84%

1.83%

1.85% A

Net investment income (loss)

6.30% A

7.41%

7.57% H

7.65%

8.32%

7.07% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 61,698

$ 59,655

$ 20,719

$ 14,218

$ 6,563

$ 1,854

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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. H Effective November 30, 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. I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Institutional Class

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 E

Selected Per-Share Data

Net asset value, beginning of period

$ 9.34

$ 7.90

$ 8.75

$ 9.35

$ 9.92

$ 10.00

Income from Investment Operations

Net investment income (loss) D

.343

.739

.709 G

.772

.910

.118

Net realized and unrealized gain (loss)

.082

1.359

(.886) G

(.599)

(.638)

(.091)

Total from investment operations

.425

2.098

(.177)

.173

.272

.027

Distributions from net investment income

(.375)

(.658)

(.673)

(.773)

(.842)

(.107)

Redemption fees added to paid in capital

- D, H

-

-

-

-

-

Net asset value, end of period

$ 9.39

$ 9.34

$ 7.90

$ 8.75

$ 9.35

$ 9.92

Total Return B, C

4.57%

27.38%

(2.23)%

2.00%

2.57%

.28%

Ratios to Average Net Assets F

Expenses before expense reductions

.92% A

.96%

.96%

1.04%

1.62%

11.66% A

Expenses net of voluntary waivers, if any

.85% A

.85%

.85%

.85%

.85%

.85% A

Expenses net of all reductions

.85% A

.85%

.85%

.84%

.83%

.85% A

Net investment income (loss)

7.30% A

8.41%

8.57% G

8.65%

9.32%

8.07% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 142,758

$ 108,885

$ 48,379

$ 11,381

$ 4,910

$ 719

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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 November 30, 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. H Amount represents less than $.001 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor High 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 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 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

Security Valuation - continued

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.

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.

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. Income dividends and capital

Semiannual Report

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

gain distributions are declared separately for each class. 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 and capital 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 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 including unrealized appreciation (depreciation) as of period end was as follows:

Unrealized appreciation

$ 18,291,277

|

Unrealized depreciation

(6,435,030)

Net unrealized appreciation (depreciation)

$ 11,856,247

Cost for federal income tax purposes

$ 429,899,225

Short-Term Trading (Redemption) Fees. Shares purchased after March 31, 2004, and held in the fund less than 90 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.

2. Operating Policies.

Repurchase Agreements. 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).

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

2. Operating Policies - continued

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.

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.

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.

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

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan - continued

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%

$ 55,097

$ 161

Class T

0%

.25%

108,627

415

Class B

.65%

.25%

341,578

247,108

Class C

.75%

.25%

315,538

134,509

$ 820,840

$ 382,193

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

$ 44,790

Class T

13,286

Class B*

112,061

Class C*

9,745

$ 179,882

* 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder 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

$ 65,654

.18*

Class T

114,637

.27*

Class B

83,034

.22*

Class C

58,745

.19*

Institutional Class

151,088

.24*

$ 473,158

* 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 $95,120 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 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.

Semiannual Report

6. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class A

1.00%

$ 2,165

Class T

1.10%

40,876

Class B

1.75%

19,904

Class C

1.85%

6,564

Institutional Class

.85%

41,523

$ 111,032

Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $23 for the period. In addition, 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 $4,100.

7. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 2,812,145

$ 3,463,982

Class T

3,327,411

5,285,877

Class B

2,651,119

3,522,659

Class C

2,182,056

2,720,372

Institutional Class

4,987,816

5,675,402

Total

$ 15,960,547

$ 20,668,292

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

2,872,780

5,078,597

$ 27,281,425

$ 44,740,558

Reinvestment of distributions

246,167

329,086

2,332,239

2,911,571

Shares redeemed

(1,134,263)

(2,849,082)

(10,759,587)

(25,436,110)

Net increase (decrease)

1,984,684

2,558,601

$ 18,854,077

$ 22,216,019

Class T

Shares sold

2,516,280

10,067,102

$ 23,867,721

$ 87,281,226

Reinvestment of distributions

290,775

428,290

2,752,085

3,800,828

Shares redeemed

(2,361,961)

(6,266,128)

(22,386,152)

(55,411,229)

Net increase (decrease)

445,094

4,229,264

$ 4,233,654

$ 35,670,825

Class B

Shares sold

1,521,029

5,222,668

$ 14,425,127

$ 45,487,161

Reinvestment of distributions

158,085

216,886

1,496,113

1,919,716

Shares redeemed

(1,075,936)

(2,028,953)

(10,192,843)

(17,785,865)

Net increase (decrease)

603,178

3,410,601

$ 5,728,397

$ 29,621,012

Class C

Shares sold

1,557,171

5,869,016

$ 14,763,228

$ 51,408,339

Reinvestment of distributions

140,880

179,833

1,333,398

1,600,340

Shares redeemed

(1,511,970)

(2,279,628)

(14,325,441)

(20,253,596)

Net increase (decrease)

186,081

3,769,221

$ 1,771,185

$ 32,755,083

Institutional Class

Shares sold

4,379,672

9,351,108

$ 41,625,969

$ 82,152,855

Reinvestment of distributions

419,593

470,456

3,978,948

4,177,210

Shares redeemed

(1,251,541)

(4,293,095)

(11,899,574)

(37,528,757)

Net increase (decrease)

3,547,724

5,528,469

$ 33,705,343

$ 48,801,308

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

Semiannual Report

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 International
Investment Advisors

Fidelity Investments Japan Limited

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

AHII-USAN-0604
1.784885.101

Fidelity® Advisor

High Income

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

Semiannual Report

April 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.

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 April 30, 2004

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

AES Corp.

2.5

2.5

CSC Holdings, Inc.

1.8

2.5

Lyondell Chemical Co.

1.7

0.0

American Airlines, Inc. pass thru trust certificates

1.6

0.6

Qwest Capital Funding, Inc.

1.5

2.2

9.1

Top Five Market Sectors as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Telecommunications

10.9

10.5

Electric Utilities

7.1

7.2

Energy

6.8

11.0

Technology

6.1

8.1

Healthcare

5.0

5.2

Quality Diversification (% of fund's net assets) as of April 30, 2004

As of April 30, 2004

As of October 31, 2003

AAA,AA,A 0.0%

AAA,AA,A 0.0%

BBB 0.4%

BBB 0.6%

BB 23.0%

BB 24.9%

B 51.5%

B 52.2%

CCC,CC,C 14.4%

CCC,CC,C 12.0%

Not Rated 4.2%

Not Rated 2.1%

Equities 1.7%

Equities 2.6%

Short-Term
Investments and
Net Other Assets 4.8%

Short-Term
Investments and
Net Other Assets 5.6%



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 April 30, 2004 *

As of October 31, 2003 **

Nonconvertible
Bonds 90.8%

Nonconvertible
Bonds 89.8%

Convertible Bonds, Preferred Stocks 2.0%

Convertible Bonds, Preferred Stocks 3.3%

Other Investments 2.4%

Other Investments 1.3%

Short-Term
Investments and
Net Other Assets 4.8%

Short-Term
Investments and
Net Other Assets 5.6%

* Foreign
investments

13.5%

** Foreign
investments

10.9%



Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Corporate Bonds - 91.1%

Principal
Amount

Value
(Note 1)

Convertible Bonds - 0.3%

Technology - 0.3%

Amkor Technology, Inc.:

5% 3/15/07

$ 630,000

$ 587,475

5.75% 6/1/06

630,000

614,250

1,201,725

Nonconvertible Bonds - 90.8%

Aerospace - 2.4%

BE Aerospace, Inc. 8% 3/1/08

595,000

571,200

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

3,105,000

3,283,538

Orbital Sciences Corp. 9% 7/15/11

1,440,000

1,576,800

Primus International, Inc. 10.5% 4/15/09 (d)

760,000

760,000

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

4,555,000

4,463,900

10,655,438

Air Transportation - 4.2%

American Airlines, Inc. pass thru trust certificates:

6.817% 5/23/11

2,340,000

2,158,650

6.977% 11/23/22

116,638

106,432

7.324% 4/15/11

370,000

321,900

7.377% 5/23/19

2,466,278

1,849,708

7.379% 5/23/16

1,379,966

1,034,974

7.8% 4/1/08

995,000

945,250

8.608% 10/1/12

515,000

491,825

10.18% 1/2/13

430,000

339,700

AMR Corp.:

9% 8/1/12

1,230,000

1,039,350

10.2% 3/15/20

60,000

48,600

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

770,000

779,625

Continental Airlines, Inc.:

7.875% 7/2/18

1,160,000

1,142,600

8% 12/15/05

320,000

302,400

Continental Airlines, Inc. pass thru trust certificates:

6.748% 9/15/18

73,573

61,801

6.795% 8/2/18

326,582

277,595

6.9% 1/2/17

261,040

216,664

6.954% 2/2/11

148,602

124,825

7.73% 9/15/12

383,792

310,872

7.82% 4/15/15

317,624

266,804

8.307% 4/2/18

908,419

808,493

8.312% 10/2/12

129,864

111,033

Corporate Bonds - continued

Principal
Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Air Transportation - continued

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

8.321% 11/1/06

$ 435,000

$ 411,075

Delta Air Lines, Inc.:

equipment trust certificates 8.54% 1/2/07

50,365

42,810

7.9% 12/15/09

2,400,000

1,320,000

10% 8/15/08 (d)

560,000

336,000

10.14% 8/14/12

60,000

37,200

Delta Air Lines, Inc. pass thru trust certificates:

7.299% 9/18/06

360,000

284,400

7.779% 1/2/12

1,168,777

818,144

Northwest Airlines Corp. 10% 2/1/09

2,280,000

1,801,200

Northwest Airlines, Inc. pass thru trust certificates:

7.068% 7/2/17

292,946

249,004

7.67% 1/2/15

184,840

160,811

8.07% 1/2/15

580,544

412,186

NWA Trust 10.23% 6/21/14

18,231

16,590

18,628,521

Automotive - 1.0%

Cummins, Inc. 5.65% 3/1/98

1,065,000

724,200

Dana Corp. 6.5% 3/1/09

155,000

162,750

Delco Remy International, Inc. 9.375% 4/15/12 (d)

895,000

881,575

Stoneridge, Inc. 11.5% 5/1/12

870,000

1,037,475

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

1,000,000

1,060,000

Visteon Corp. 7% 3/10/14

700,000

682,024

4,548,024

Banks and Thrifts - 0.5%

Chevy Chase Bank FSB 6.875% 12/1/13

585,000

585,000

Western Financial Bank 9.625% 5/15/12

1,285,000

1,452,050

2,037,050

Broadcasting - 1.4%

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

1,775,000

1,739,500

Gray Television, Inc. 9.25% 12/15/11

935,000

1,049,538

Nexstar Finance, Inc. 7% 1/15/14 (d)

450,000

438,750

Sinclair Broadcast Group, Inc. 8% 3/15/12

1,310,000

1,391,875

Spanish Broadcasting System, Inc. 9.625% 11/1/09

390,000

412,425

XM Satellite Radio, Inc. 6.65% 5/1/09 (d)(e)

1,280,000

1,292,800

6,324,888

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Building Materials - 1.7%

FastenTech, Inc. 11.5% 5/1/11 (d)

$ 610,000

$ 671,000

FIMEP SA 10.5% 2/15/13

1,000,000

1,156,250

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

1,045,000

1,165,175

Juno Lighting, Inc. 11.875% 7/1/09

865,000

926,631

Nortek Holdings, Inc. 0% 5/15/11 (c)(d)

395,000

302,175

Texas Industries, Inc. 10.25% 6/15/11

2,435,000

2,751,550

U.S. Concrete, Inc. 8.375% 4/1/14 (d)

680,000

686,800

7,659,581

Cable TV - 2.9%

Cablevision Systems Corp.:

5.66% 4/1/09 (d)(e)

2,130,000

2,220,525

8% 4/15/12 (d)

2,050,000

2,044,875

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

385,000

382,113

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

730,000

757,375

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

8% 4/30/12 (d)

1,160,000

1,149,850

8.375% 4/30/14 (d)

1,200,000

1,188,000

CSC Holdings, Inc.:

7.875% 2/15/18

400,000

413,000

9.875% 2/15/13

795,000

826,800

NTL Cable PLC:

6.14% 10/15/12 (d)(e)

730,000

750,075

8.75% 4/15/14 (d)

1,725,000

1,772,438

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

2,080,000

1,310,400

12,815,451

Capital Goods - 2.1%

AGCO Corp.:

8.5% 3/15/06

695,000

695,000

9.5% 5/1/08

120,000

131,400

Case New Holland, Inc. 9.25% 8/1/11 (d)

80,000

89,200

Columbus McKinnon Corp. 10% 8/1/10

140,000

149,100

Dresser, Inc. 9.375% 4/15/11

1,605,000

1,733,400

Invensys PLC 9.875% 3/15/11 (d)

2,585,000

2,733,638

Leucadia National Corp.:

7% 8/15/13

2,050,000

2,050,000

7% 8/15/13 (d)

550,000

550,000

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Capital Goods - continued

Sensus Metering Systems, Inc. 8.625% 12/15/13 (d)

$ 765,000

$ 755,438

Trinity Industries, Inc. 6.5% 3/15/14 (d)

615,000

598,088

9,485,264

Chemicals - 4.7%

Equistar Chemicals LP/Equistar Funding Corp.:

8.75% 2/15/09

705,000

742,013

10.125% 9/1/08

565,000

625,738

10.625% 5/1/11

2,310,000

2,575,650

HMP Equity Holdings Corp.:

0% 5/15/08 (d)

150,000

88,500

0% 5/15/08 unit (d)

1,560,000

1,201,200

Huntsman ICI Chemicals LLC 10.125% 7/1/09

925,000

964,313

Huntsman ICI Holdings LLC 0% 12/31/09

720,000

367,200

Huntsman International LLC 9.875% 3/1/09

1,435,000

1,592,850

Lyondell Chemical Co.:

9.5% 12/15/08

515,000

539,463

9.5% 12/15/08

1,570,000

1,644,575

9.625% 5/1/07

2,505,000

2,636,513

9.875% 5/1/07

1,230,000

1,293,038

10.875% 5/1/09

1,380,000

1,438,650

Millennium America, Inc.:

9.25% 6/15/08

1,695,000

1,839,075

9.25% 6/15/08 (d)

960,000

1,041,600

Nalco Co.:

7.75% 11/15/11 (d)

590,000

623,925

8.875% 11/15/13 (d)

600,000

633,000

Nalco Finance Holdings LLC/Nalco Finance Holdings, Inc. 0% 2/1/14 (c)(d)

850,000

535,500

NOVA Chemicals Corp. 6.5% 1/15/12

660,000

663,300

21,046,103

Consumer Products - 0.9%

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

420,000

281,400

Sealy Mattress Co. 8.25% 6/15/14 (d)

1,915,000

1,876,700

The Hockey Co. 11.25% 4/15/09

1,445,000

1,705,100

3,863,200

Containers - 2.3%

Anchor Glass Container Corp. 11% 2/15/13

995,000

1,154,200

Berry Plastics Corp. 10.75% 7/15/12

1,335,000

1,508,550

BWAY Corp. 10% 10/15/10

660,000

712,800

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Containers - continued

Crown European Holdings SA 10.875% 3/1/13

$ 930,000

$ 1,083,450

Owens-Brockway Glass Container, Inc.:

7.75% 5/15/11

530,000

556,500

8.25% 5/15/13

370,000

381,100

Owens-Illinois, Inc.:

7.35% 5/15/08

575,000

569,250

7.5% 5/15/10

1,515,000

1,461,975

7.8% 5/15/18

781,000

720,473

8.1% 5/15/07

985,000

1,004,700

Pliant Corp.:

0% 6/15/09 (c)(d)

1,000,000

835,000

11.125% 9/1/09

370,000

395,900

10,383,898

Diversified Media - 0.5%

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

340,000

374,000

LBI Media Holdings, Inc. 0% 10/15/13 (c)

1,240,000

874,200

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

1,020,000

1,157,700

2,405,900

Electric Utilities - 6.2%

AES Corp.:

7.75% 3/1/14

2,650,000

2,603,625

8.375% 8/15/07

485,000

487,425

8.5% 11/1/07

270,000

274,050

8.75% 6/15/08

751,000

777,285

8.75% 5/15/13 (d)

1,435,000

1,551,594

8.875% 2/15/11

1,154,000

1,210,258

9.375% 9/15/10

2,170,000

2,321,900

9.5% 6/1/09

1,291,000

1,379,756

10% 12/12/05 (d)

362,311

362,311

AES Gener SA 7.5% 3/25/14 (d)

1,530,000

1,464,975

CMS Energy Corp.:

7.5% 1/15/09

95,000

95,475

7.75% 8/1/10 (d)

450,000

453,938

8.5% 4/15/11

2,150,000

2,236,000

8.9% 7/15/08

290,000

305,950

9.875% 10/15/07

1,555,000

1,694,950

Midland Funding Corp. II 11.75% 7/23/05

769,811

808,302

Midwest Generation LLC/Midwest Finance Corp.
8.75% 5/1/34 (d)

1,140,000

1,140,000

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Electric Utilities - continued

MSW Energy Holding LLC/MSW Energy Finance Co., Inc. 8.5% 9/1/10

$ 180,000

$ 195,300

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

720,000

745,200

NRG Energy, Inc. 8% 12/15/13 (d)

4,600,000

4,646,000

Sierra Pacific Power Co. 6.25% 4/15/12 (d)

360,000

355,500

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

760,000

771,400

TECO Energy, Inc.:

7% 5/1/12

710,000

702,900

7.2% 5/1/11

1,160,000

1,165,800

27,749,894

Energy - 6.8%

ANR Pipeline, Inc. 9.625% 11/1/21

360,000

410,400

Chesapeake Energy Corp. 8.375% 11/1/08

290,000

319,000

El Paso Corp. 7.875% 6/15/12

90,000

79,988

El Paso Energy Corp. 6.95% 12/15/07

500,000

463,750

El Paso Production Holding Co. 7.75% 6/1/13

1,585,000

1,505,750

General Maritime Corp. 10% 3/15/13

2,075,000

2,344,750

Hanover Compressor Co.:

0% 3/31/07

1,685,000

1,276,388

8.625% 12/15/10

290,000

305,950

Hilcorp Energy I LP/Hilcorp Finance Co.
10.5% 9/1/10 (d)

1,150,000

1,285,125

OAO Gazprom 9.625% 3/1/13 (d)

810,000

834,300

OMI Corp. 7.625% 12/1/13

2,145,000

2,209,350

Pecom Energia SA 9% 5/1/09 (Reg. S)

1,050,000

1,044,750

Petrobras International Finance Co. Ltd.
8.375% 12/10/18

795,000

742,331

Range Resources Corp. 7.375% 7/15/13

1,160,000

1,189,000

SESI LLC 8.875% 5/15/11

630,000

680,400

Sonat, Inc.:

6.625% 2/1/08

620,000

552,575

6.75% 10/1/07

545,000

497,994

7.625% 7/15/11

815,000

710,069

Southern Natural Gas Co.:

7.35% 2/15/31

595,000

554,838

8% 3/1/32

725,000

712,313

Teekay Shipping Corp. 8.875% 7/15/11

1,820,000

2,074,800

Tennessee Gas Pipeline Co. 7.5% 4/1/17

335,000

338,350

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Energy - continued

The Coastal Corp.:

6.375% 2/1/09

$ 240,000

$ 202,200

6.5% 5/15/06

210,000

197,925

6.5% 6/1/08

845,000

724,588

7.5% 8/15/06

1,810,000

1,719,500

7.75% 6/15/10

3,240,000

2,802,600

Western Oil Sands, Inc. 8.375% 5/1/12

470,000

528,750

Williams Companies, Inc.:

7.875% 9/1/21

1,465,000

1,426,544

8.125% 3/15/12

2,190,000

2,365,200

8.625% 6/1/10

485,000

531,075

30,630,553

Entertainment/Film - 0.6%

AMC Entertainment, Inc. 8% 3/1/14 (d)

840,000

821,100

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

2,975,000

1,866,813

2,687,913

Environmental - 0.8%

Allied Waste North America, Inc.:

5.75% 2/15/11 (d)

570,000

547,200

6.125% 2/15/14 (d)

230,000

217,350

6.375% 4/15/11 (d)

600,000

592,500

7.375% 4/15/14 (d)

1,090,000

1,076,375

7.875% 4/15/13

305,000

329,400

9.25% 9/1/12

750,000

851,250

Browning-Ferris Industries, Inc. 6.375% 1/15/08

25,000

25,750

3,639,825

Food and Drug Retail - 1.4%

Ahold Finance USA, Inc.:

6.25% 5/1/09

865,000

867,163

8.25% 7/15/10

1,645,000

1,793,050

Rite Aid Corp.:

6% 12/15/05 (d)

515,000

517,575

6.875% 8/15/13

1,605,000

1,500,675

9.25% 6/1/13

1,095,000

1,155,225

9.5% 2/15/11

360,000

404,100

6,237,788

Food/Beverage/Tobacco - 2.6%

Del Monte Corp. 9.25% 5/15/11

1,375,000

1,519,375

Doane Pet Care Co. 9.75% 5/15/07

785,000

718,275

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Food/Beverage/Tobacco - continued

Dole Food Co., Inc. 7.25% 6/15/10

$ 2,170,000

$ 2,191,700

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

1,120,000

1,209,600

Smithfield Foods, Inc.:

7.625% 2/15/08

1,640,000

1,738,400

7.75% 5/15/13

775,000

837,000

8% 10/15/09

2,410,000

2,626,900

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

740,000

786,250

11,627,500

Gaming - 3.1%

Argosy Gaming Co. 7% 1/15/14 (d)

445,000

453,900

Boyd Gaming Corp.:

7.75% 12/15/12

355,000

373,638

8.75% 4/15/12

350,000

386,750

Chumash Casino & Resort Enterprise 9% 7/15/10 (d)

345,000

384,675

MGM MIRAGE:

5.875% 2/27/14

1,310,000

1,265,788

5.875% 2/27/14 (d)

410,000

396,163

MTR Gaming Group, Inc. 9.75% 4/1/10

1,340,000

1,433,800

Park Place Entertainment Corp. 7.875% 3/15/10

1,170,000

1,294,313

Resorts International Hotel & Casino, Inc.
11.5% 3/15/09

120,000

132,600

Seneca Gaming Corp. 7.25% 5/1/12 (d)

770,000

780,588

Station Casinos, Inc.:

6% 4/1/12 (d)

640,000

640,000

6.5% 2/1/14 (d)

990,000

972,675

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

1,545,000

1,707,225

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

1,235,000

1,435,688

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

2,130,000

2,300,400

13,958,203

Healthcare - 5.0%

AmeriPath, Inc. 10.5% 4/1/13

1,300,000

1,326,000

AmerisourceBergen Corp. 7.25% 11/15/12

1,885,000

2,007,525

Biovail Corp. yankee 7.875% 4/1/10

1,905,000

1,871,663

Concentra Operating Corp. 9.5% 8/15/10

450,000

499,500

Fisher Scientific International, Inc. 8% 9/1/13

720,000

788,400

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

3,580,000

3,750,050

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

725,000

732,250

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Healthcare - continued

Omega Healthcare Investors, Inc. 7% 4/1/14 (d)

$ 920,000

$ 938,400

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

1,382,000

1,603,120

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

1,205,000

1,376,713

Senior Housing Properties Trust:

7.875% 4/15/15

945,000

1,001,700

8.625% 1/15/12

1,595,000

1,786,400

Tenet Healthcare Corp.:

6.375% 12/1/11

360,000

311,400

7.375% 2/1/13

1,705,000

1,534,500

Triad Hospitals, Inc. 7% 5/15/12 (d)

1,090,000

1,092,725

UAP Holding Corp. 0% 7/15/12 (c)(d)

1,240,000

979,600

VWR International, Inc.:

6.875% 4/15/12 (d)

350,000

359,625

8% 4/15/14 (d)

350,000

360,500

22,320,071

Homebuilding/Real Estate - 4.2%

Beazer Homes USA, Inc.:

6.5% 11/15/13 (d)

1,960,000

1,920,800

8.375% 4/15/12

580,000

627,850

iStar Financial, Inc. 6.5% 12/15/13

510,000

507,450

K. Hovnanian Enterprises, Inc.:

6.5% 1/15/14

985,000

940,675

7.75% 5/15/13

520,000

535,600

8.875% 4/1/12

1,985,000

2,123,950

KB Home 7.75% 2/1/10

1,170,000

1,228,500

LNR Property Corp.:

7.25% 10/15/13

815,000

835,375

7.625% 7/15/13

460,000

469,200

Meritage Corp. 7% 5/1/14 (d)

810,000

793,800

Standard Pacific Corp.:

5.125% 4/1/09

700,000

665,000

6.5% 10/1/08

490,000

496,125

6.875% 5/15/11

370,000

371,850

7.75% 3/15/13

940,000

977,600

Technical Olympic USA, Inc.:

7.5% 3/15/11 (d)

720,000

691,200

9% 7/1/10

1,520,000

1,596,000

10.375% 7/1/12

255,000

280,500

WCI Communities, Inc. 7.875% 10/1/13

930,000

971,850

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Homebuilding/Real Estate - continued

William Lyon Homes, Inc.:

7.5% 2/15/14 (d)

$ 1,080,000

$ 1,080,000

10.75% 4/1/13

1,315,000

1,512,250

18,625,575

Hotels - 0.4%

Host Marriott LP:

7.125% 11/1/13

1,515,000

1,537,725

9.25% 10/1/07

22,000

24,695

ITT Corp. 7.375% 11/15/15

100,000

104,250

1,666,670

Insurance - 0.7%

Crum & Forster Holdings Corp. 10.375% 6/15/13

1,545,000

1,691,775

Fairfax Financial Holdings Ltd. 7.75% 4/26/12 (d)

322,000

322,000

TIG Capital Trust I 8.597% 1/15/27 (d)

1,085,000

933,100

2,946,875

Leisure - 2.1%

Royal Caribbean Cruises Ltd.:

6.875% 12/1/13

900,000

904,500

8% 5/15/10

250,000

272,500

Six Flags, Inc.:

8.875% 2/1/10

1,690,000

1,717,463

9.75% 4/15/13

1,150,000

1,208,938

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

1,195,000

630,363

Town Sports International, Inc. 9.625% 4/15/11

1,305,000

1,350,675

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

2,940,000

3,410,400

9,494,839

Metals/Mining - 2.2%

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

1,570,000

1,628,875

Compass Minerals International, Inc.:

0% 12/15/12 (c)

1,135,000

919,350

0% 6/1/13 (c)

1,780,000

1,352,800

Freeport-McMoRan Copper & Gold, Inc.:

6.875% 2/1/14 (d)

1,475,000

1,312,750

10.125% 2/1/10

2,295,000

2,507,288

Peabody Energy Corp.:

5.875% 4/15/16

920,000

864,800

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Metals/Mining - continued

Peabody Energy Corp.: - continued

6.875% 3/15/13

$ 580,000

$ 606,100

Wise Metals Group LLC 10.25% 5/15/12 (d)

760,000

760,000

9,951,963

Paper - 4.3%

Ainsworth Lumber Co. Ltd. 6.75% 3/15/14 (d)

960,000

950,400

Bowater, Inc.:

4.11% 3/15/10 (e)

1,070,000

1,080,700

6.5% 6/15/13

415,000

401,513

Buckeye Technologies, Inc. 8.5% 10/1/13

775,000

821,500

Cellu Tissue Holdings, Inc. 9.75% 3/15/10 (d)

610,000

597,800

Georgia-Pacific Corp.:

8% 1/15/14

1,240,000

1,388,800

8.125% 5/15/11

1,735,000

1,954,044

9.125% 7/1/22

295,000

301,638

9.375% 2/1/13

600,000

699,000

9.5% 12/1/11

995,000

1,206,438

Graphic Packaging International, Inc. 8.5% 8/15/11

285,000

316,350

Jefferson Smurfit Corp. U.S. 7.5% 6/1/13

1,880,000

1,974,000

Norske Skog Canada Ltd.:

7.375% 3/1/14 (d)

470,000

478,225

8.625% 6/15/11

1,450,000

1,569,625

Stone Container Corp.:

8.375% 7/1/12

2,405,000

2,591,388

9.75% 2/1/11

310,000

341,000

Tembec Industries, Inc.:

7.75% 3/15/12

235,000

229,125

8.5% 2/1/11

1,060,000

1,095,775

yankee 8.625% 6/30/09

1,095,000

1,105,950

19,103,271

Publishing/Printing - 1.6%

Dex Media West LLC/Dex Media West Finance Co.:

8.5% 8/15/10 (d)

180,000

195,300

9.875% 8/15/13 (d)

520,000

566,800

Dex Media, Inc.:

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

830,000

506,300

8% 11/15/13 (d)

860,000

825,600

Houghton Mifflin Co.:

0% 10/15/13 (c)(d)

355,000

184,600

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Publishing/Printing - continued

Houghton Mifflin Co.: - continued

8.25% 2/1/11

$ 825,000

$ 833,250

9.875% 2/1/13

1,145,000

1,133,550

NBC Acquisition Corp. 0% 3/15/13 (c)(d)

1,700,000

1,088,000

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

805,000

935,813

Reader's Digest Association, Inc. 6.5% 3/1/11 (d)

1,110,000

1,115,550

7,384,763

Railroad - 0.4%

TFM SA de CV yankee:

10.25% 6/15/07

50,000

51,250

11.75% 6/15/09

1,555,000

1,551,113

1,602,363

Restaurants - 0.3%

Friendly Ice Cream Corp. 8.375% 6/15/12 (d)

1,250,000

1,271,875

Services - 1.3%

Iron Mountain, Inc. 6.625% 1/1/16

1,835,000

1,724,900

United Rentals North America, Inc.:

6.5% 2/15/12 (d)

2,650,000

2,583,750

7% 2/15/14 (d)

800,000

748,000

7.75% 11/15/13

770,000

743,050

5,799,700

Shipping - 0.5%

Overseas Shipholding Group, Inc. 8.25% 3/15/13

2,115,000

2,337,075

Steels - 2.8%

AK Steel Corp.:

7.75% 6/15/12

405,000

364,500

7.875% 2/15/09

400,000

368,000

Allegheny Ludlum Corp. 6.95% 12/15/25

795,000

715,500

Allegheny Technologies, Inc. 8.375% 12/15/11

1,165,000

1,176,650

California Steel Industries, Inc. 6.125% 3/15/14 (d)

480,000

457,200

CSN Islands VII Corp. 10.75% 9/12/08 (d)

1,110,000

1,115,550

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

1,835,000

1,642,325

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

2,350,000

2,632,000

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

1,900,000

1,814,500

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

2,065,000

2,106,300

12,392,525

Super Retail - 2.4%

Asbury Automotive Group, Inc. 9% 6/15/12

2,000,000

2,070,000

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Super Retail - continued

Barneys, Inc. 9% 4/1/08

$ 2,410,000

$ 2,482,300

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

902,596

726,590

Nebraska Book Co., Inc. 8.625% 3/15/12 (d)

1,180,000

1,188,850

Sonic Automotive, Inc. 8.625% 8/15/13

720,000

777,600

Toys 'R' US, Inc. 7.875% 4/15/13

3,535,000

3,658,725

10,904,065

Technology - 5.8%

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

1,465,000

1,717,713

Amkor Technology, Inc.:

7.125% 3/15/11 (d)

605,000

592,900

7.75% 5/15/13

3,455,000

3,455,000

Corning, Inc.:

5.9% 3/15/14

1,070,000

1,043,250

6.2% 3/15/16

870,000

846,075

Flextronics International Ltd. 6.5% 5/15/13

2,850,000

2,864,250

General Cable Corp. 9.5% 11/15/10 (d)

670,000

737,000

Lucent Technologies, Inc.:

5.5% 11/15/08

840,000

802,200

6.45% 3/15/29

765,000

608,175

Micron Technology, Inc. 6.5% 9/30/05 (f)

3,000,000

2,985,000

Nortel Networks Corp. 6.125% 2/15/06

360,000

355,500

Northern Telecom Ltd. yankee 6.875% 9/1/23

360,000

324,000

PerkinElmer, Inc. 8.875% 1/15/13

1,580,000

1,785,400

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

300,000

432,000

United Agriculture Products, Inc. 8.25% 12/15/11 (d)

1,110,000

1,232,100

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

800,000

888,000

Xerox Capital Trust I 8% 2/1/27

2,452,000

2,353,920

Xerox Corp.:

7.125% 6/15/10

670,000

683,400

7.2% 4/1/16

1,220,000

1,207,800

7.625% 6/15/13

1,060,000

1,086,500

26,000,183

Telecommunications - 10.7%

Centennial Cellular Operating Co. LLC/Centennial Finance Corp. 10.75% 12/15/08

1,282,000

1,323,665

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

1,040,000

962,000

Cincinnati Bell, Inc. 8.375% 1/15/14

3,245,000

3,050,300

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Telecommunications - continued

Citizens Communications Co.:

7.625% 8/15/08

$ 530,000

$ 549,875

9% 8/15/31

265,000

259,700

9.25% 5/15/11

265,000

277,588

Crown Castle International Corp.:

7.5% 12/1/13

1,060,000

1,054,700

7.5% 12/1/13

200,000

199,000

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

1,415,000

1,503,438

Eschelon Operating Co. 8.375% 3/15/10 (d)

2,860,000

2,445,300

GCI, Inc. 7.25% 2/15/14 (d)

845,000

821,763

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

1,947,000

2,112,495

Level 3 Communications, Inc.:

9.125% 5/1/08

765,000

541,238

10.5% 12/1/08

575,000

411,125

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

215,000

192,425

MCI, Inc.:

5.908% 5/1/07

1,020,000

1,008,525

6.688% 5/1/09

1,020,000

967,725

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

2,165,000

2,273,250

Nextel Communications, Inc.:

6.875% 10/31/13

3,025,000

3,055,250

7.375% 8/1/15

1,110,000

1,157,175

Primus Telecom Holding, Inc. 8% 1/15/14 (d)

1,110,000

1,021,200

Qwest Capital Funding, Inc.:

7% 8/3/09

1,500,000

1,260,000

7.25% 2/15/11

540,000

437,400

7.75% 8/15/06

5,095,000

4,993,076

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

3,415,000

3,628,438

Qwest Services Corp.:

13.5% 12/15/10 (d)

775,000

895,125

14% 12/15/14 (d)

2,735,000

3,268,325

Rogers Wireless, Inc.:

6.375% 3/1/14 (d)

2,090,000

2,006,400

9.625% 5/1/11

1,615,000

1,873,400

U.S. West Capital Funding, Inc. 6.375% 7/15/08

1,965,000

1,680,075

U.S. West Communications:

6.875% 9/15/33

465,000

390,600

7.125% 11/15/43

875,000

730,625

7.2% 11/10/26

540,000

464,400

Corporate Bonds - continued

Principal Amount

Value
(Note 1)

Nonconvertible Bonds - continued

Telecommunications - continued

U.S. West Communications: - continued

7.5% 6/15/23

$ 825,000

$ 754,875

Western Wireless Corp. 9.25% 7/15/13

500,000

515,000

48,085,476

TOTAL NONCONVERTIBLE BONDS

406,272,283

TOTAL CORPORATE BONDS

(Cost $397,406,685)

407,474,008

Commercial Mortgage Securities - 0.3%

Banc of America Commercial Mortgage, Inc. Series 2003-2:

Class BWD, 6.947% 10/11/37 (d)

115,000

110,139

Class BWE, 7.226% 10/11/37 (d)

160,000

153,225

Class BWF, 7.55% 10/11/37 (d)

139,000

133,098

Class BWG, 8.155% 10/11/37 (d)

135,000

127,744

Class BWH, 9.073% 10/11/37 (d)

100,000

96,250

Class BWJ, 9.99% 10/11/37 (d)

115,000

110,629

Class BWK, 10.676% 10/11/37 (d)

100,000

95,910

Class BWL, 10.1596% 10/11/37 (d)

163,000

143,841

CS First Boston Mortgage Securities Corp. Series 2000-FL1A Class F, 3.8806% 12/15/09 (d)(e)

67,867

57,941

Mortgage Capital Funding, Inc. Series 1998-MC3 Class F, 7.2995% 11/18/31 (d)(e)

400,000

391,922

TOTAL COMMERCIAL MORTGAGE SECURITIES

(Cost $1,360,633)

1,420,699

Common Stocks - 0.0%

Shares

Automotive - 0.0%

Exide Technologies warrants 3/18/06 (a)

10

0

Super Retail - 0.0%

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

2,350

58,750

Telecommunications - 0.0%

Covad Communications Group, Inc. (a)

110

220

TOTAL COMMON STOCKS

(Cost $219)

58,970

Nonconvertible Preferred Stocks - 1.7%

Shares

Value (Note 1)

Broadcasting - 0.2%

Granite Broadcasting Corp. 12.75% pay-in-kind (a)

1,795

$ 861,600

Cable TV - 1.5%

CSC Holdings, Inc.:

(depositary shares) Series M, 11.125%

22,125

2,316,488

Series H, 11.75%

42,910

4,505,550

6,822,038

TOTAL NONCONVERTIBLE PREFERRED STOCKS

(Cost $7,692,058)

7,683,638

Floating Rate Loans - 2.1%

Principal Amount

Cable TV - 0.5%

Century Cable Holdings LLC Tranche B term loan
6% 12/31/09 (e)

$ 700,000

682,500

Hilton Head Communications LP Tranche B term loan 5.25% 3/31/08 (e)

1,450,000

1,406,500

2,089,000

Electric Utilities - 0.9%

Allegheny Energy Supply Co. LLC Tranche C term loan 5.35% 6/8/11 (e)

1,400,000

1,408,750

Astoria Energy LLC term loan:

6.7011% 4/15/12 (e)

1,650,000

1,662,375

9.9% 4/15/12 (e)

810,000

822,150

3,893,275

Hotels - 0.5%

Wyndham International, Inc. term loan:

5.875% 6/30/06 (e)

2,130,279

2,045,068

6.875% 4/1/06 (e)

449,332

443,716

2,488,784

Telecommunications - 0.2%

Qwest Corp. Tranche B term loan 6.95% 6/30/10 (e)

925,000

906,500

TOTAL FLOATING RATE LOANS

(Cost $9,080,507)

9,377,559

Money Market Funds - 3.5%

Shares

Value (Note 1)

Fidelity Cash Central Fund, 1.06% (b)
(Cost $15,740,598)

15,740,598

$ 15,740,598

TOTAL INVESTMENT PORTFOLIO - 98.7%

(Cost $431,280,700)

441,755,472

NET OTHER ASSETS - 1.3%

5,701,986

NET ASSETS - 100%

$ 447,457,458

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) 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.

(d) 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 $122,405,998 or 27.4% of net assets.

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

(f) 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 $2,985,000 or 0.7% of net assets.

Additional information on each holding is as follows:

Security

Acquisition Date

Acquisition Cost

Micron Technology, Inc. 6.5% 9/30/05

8/8/02 - 1/21/03

$ 2,633,750

Other Information

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

United States of America

86.5%

Canada

4.5%

United Kingdom

1.9%

Marshall Islands

1.5%

Cayman Islands

1.0%

Others (individually less than 1%)

4.6%

100.0%

Purchases and sales of securities, other than short-term securities, aggregated $352,074,206 and $290,406,494, respectively.

The fund invested in loans and loan participations, trade claims or other receivables. At period end the value of these investments amounted to $9,377,559 or 2.1% of net assets.

Income Tax Information

At October 31, 2003, the fund had a capital loss carryforward of approximately $2,456,000 all of which will expire on October 31, 2010.

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (cost $431,280,700) - See accompanying schedule

$ 441,755,472

Cash

360,754

Receivable for investments sold

7,204,183

Receivable for fund shares sold

895,158

Interest receivable

8,519,369

Prepaid expenses

1,356

Receivable from investment adviser for expense reductions

20,340

Other affiliated receivables

19

Total assets

458,756,651

Liabilities

Payable for investments purchased

$ 8,147,142

Payable for fund shares redeemed

2,115,662

Distributions payable

547,825

Accrued management fee

215,686

Distribution fees payable

138,669

Other affiliated payables

97,245

Other payables and accrued expenses

36,964

Total liabilities

11,299,193

Net Assets

$ 447,457,458

Net Assets consist of:

Paid in capital

$ 424,938,159

Undistributed net investment income

3,084,634

Accumulated undistributed net realized gain (loss) on investments

8,959,876

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

10,474,789

Net Assets

$ 447,457,458

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

Semiannual Report

Statement of Assets and Liabilities - continued

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($80,028,246 ÷ 8,528,900 shares)

$ 9.38

Maximum offering price per share (100/95.25 of $9.38)

$ 9.85

Class T:
Net Asset Value and redemption price per share ($86,306,449 ÷ 9,207,740 shares)

$ 9.37

Maximum offering price per share (100/96.50 of $9.37)

$ 9.71

Class B:
Net Asset Value and offering price per share ($76,667,271 ÷ 8,181,611 shares) A

$ 9.37

Class C:
Net Asset Value and offering price per share ($61,697,805 ÷ 6,583,549 shares) A

$ 9.37

Institutional Class:
Net Asset Value, offering price and redemption price per share ($142,757,687 ÷ 15,201,514 shares)

$ 9.39

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

Six months ended April 30, 2004 (Unaudited)

Investment Income

Dividends

$ 438,859

Interest

16,858,153

Total income

17,297,012

Expenses

Management fee

$ 1,230,469

Transfer agent fees

473,158

Distribution fees

820,840

Accounting fees and expenses

102,457

Non-interested trustees' compensation

959

Custodian fees and expenses

15,875

Registration fees

51,743

Audit

30,664

Legal

4,059

Miscellaneous

2,600

Total expenses before reductions

2,732,824

Expense reductions

(115,155)

2,617,669

Net investment income (loss)

14,679,343

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

11,524,668

Change in net unrealized appreciation (depreciation) on:

Investment securities

(9,100,961)

Assets and liabilities in foreign currencies

13

Total change in net unrealized appreciation (depreciation)

(9,100,948)

Net gain (loss)

2,423,720

Net increase (decrease) in net assets resulting from operations

$ 17,103,063

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

Semiannual Report

Statement of Changes in Net Assets

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 14,679,343

$ 23,675,802

Net realized gain (loss)

11,524,668

15,982,876

Change in net unrealized appreciation (depreciation)

(9,100,948)

24,806,908

Net increase (decrease) in net assets resulting
from operations

17,103,063

64,465,586

Distributions to shareholders from net investment income

(15,960,547)

(20,668,292)

Share transactions - net increase (decrease)

64,292,656

169,064,247

Redemption fees

1,275

-

Total increase (decrease) in net assets

65,436,447

212,861,541

Net Assets

Beginning of period

382,021,011

169,159,470

End of period (including undistributed net investment income of $3,084,634 and undistributed net investment income of $4,365,838, respectively)

$ 447,457,458

$ 382,021,011

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.33

$ 7.89

$ 8.75

$ 9.35

$ 9.92

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.336

.725

.709 H

.760

.895

.116

Net realized and unrealized gain (loss)

.082

1.360

(.908) H

(.602)

(.640)

(.091)

Total from investment operations

.418

2.085

(.199)

.158

.255

.025

Distributions from net investment income

(.368)

(.645)

(.661)

(.758)

(.825)

(.105)

Redemption fees added to paid in capital

- E, I

-

-

-

-

-

Net asset value, end of period

$ 9.38

$ 9.33

$ 7.89

$ 8.75

$ 9.35

$ 9.92

Total Return B, C, D

4.50%

27.23%

(2.49)%

1.83%

2.40%

.25%

Ratios to Average Net Assets G

Expenses before expense reductions

1.01% A

1.00%

1.02%

1.14%

1.70%

11.82% A

Expenses net of voluntary waivers, if any

1.00% A

1.00%

1.00%

1.00%

1.00%

1.00% A

Expenses net of all reductions

1.00% A

1.00%

1.00%

.99%

.98%

1.00% A

Net investment income (loss)

7.15% A

8.26%

8.42% H

8.50%

9.17%

7.92% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 80,028

$ 61,084

$ 31,456

$ 28,046

$ 13,295

$ 739

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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. H Effective November 30, 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. I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Class T

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.33

$ 7.89

$ 8.74

$ 9.35

$ 9.92

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.332

.717

.695 H

.753

.898

.112

Net realized and unrealized gain (loss)

.071

1.359

(.893) H

(.613)

(.656)

(.089)

Total from investment operations

.403

2.076

(.198)

.140

.242

.023

Distributions from net investment income

(.363)

(.636)

(.652)

(.750)

(.812)

(.103)

Redemption fees added to paid in capital

- E, I

-

-

-

-

-

Net asset value, end of period

$ 9.37

$ 9.33

$ 7.89

$ 8.74

$ 9.35

$ 9.92

Total Return B, C, D

4.34%

27.11%

(2.47)%

1.63%

2.27%

.23%

Ratios to Average Net Assets G

Expenses before expense reductions

1.19% A

1.19%

1.24%

1.39%

1.83%

11.91% A

Expenses net of voluntary waivers, if any

1.10% A

1.10%

1.10%

1.10%

1.10%

1.10% A

Expenses net of all reductions

1.10% A

1.10%

1.10%

1.09%

1.08%

1.10% A

Net investment income (loss)

7.05% A

8.16%

8.32% H

8.40%

9.07%

7.82% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 86,306

$ 81,735

$ 35,751

$ 16,814

$ 8,936

$ 2,422

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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. H Effective November 30, 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. I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Class B

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.32

$ 7.88

$ 8.74

$ 9.34

$ 9.92

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.301

.658

.641 H

.692

.830

.102

Net realized and unrealized gain (loss)

.081

1.361

(.904) H

(.601)

(.663)

(.083)

Total from investment operations

.382

2.019

(.263)

.091

.167

.019

Distributions from net investment income

(.332)

(.579)

(.597)

(.691)

(.747)

(.099)

Redemption fees added to paid in capital

- E, I

-

-

-

-

-

Net asset value, end of period

$ 9.37

$ 9.32

$ 7.88

$ 8.74

$ 9.34

$ 9.92

Total Return B, C, D

4.12%

26.32%

(3.23)%

1.08%

1.50%

.19%

Ratios to Average Net Assets G

Expenses before expense reductions

1.80% A

1.80%

1.83%

1.94%

2.47%

12.54% A

Expenses net of voluntary waivers, if any

1.75% A

1.75%

1.75%

1.75%

1.75%

1.75% A

Expenses net of all reductions

1.75% A

1.75%

1.75%

1.75%

1.73%

1.75% A

Net investment income (loss)

6.40% A

7.51%

7.67% H

7.74%

8.42%

7.17% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 76,667

$ 70,661

$ 32,854

$ 19,694

$ 10,054

$ 2,089

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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. H Effective November 30, 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. I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Class C

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.32

$ 7.88

$ 8.74

$ 9.35

$ 9.91

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.297

.651

.635 H

.684

.819

.101

Net realized and unrealized gain (loss)

.081

1.359

(.906) H

(.612)

(.643)

(.093)

Total from investment operations

.378

2.010

(.271)

.072

.176

.008

Distributions from net investment income

(.328)

(.570)

(.589)

(.682)

(.736)

(.098)

Redemption fees added to paid in capital

- E, I

-

-

-

-

-

Net asset value, end of period

$ 9.37

$ 9.32

$ 7.88

$ 8.74

$ 9.35

$ 9.91

Total Return B, C, D

4.06%

26.19%

(3.32)%

.86%

1.60%

.08%

Ratios to Average Net Assets G

Expenses before expense reductions

1.87% A

1.88%

1.90%

2.03%

2.60%

12.67% A

Expenses net of voluntary waivers, if any

1.85% A

1.85%

1.85%

1.85%

1.85%

1.85% A

Expenses net of all reductions

1.85% A

1.85%

1.85%

1.84%

1.83%

1.85% A

Net investment income (loss)

6.30% A

7.41%

7.57% H

7.65%

8.32%

7.07% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 61,698

$ 59,655

$ 20,719

$ 14,218

$ 6,563

$ 1,854

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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. H Effective November 30, 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. I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Institutional Class

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000

1999 E

Selected Per-Share Data

Net asset value, beginning of period

$ 9.34

$ 7.90

$ 8.75

$ 9.35

$ 9.92

$ 10.00

Income from Investment Operations

Net investment income (loss) D

.343

.739

.709 G

.772

.910

.118

Net realized and unrealized gain (loss)

.082

1.359

(.886) G

(.599)

(.638)

(.091)

Total from investment operations

.425

2.098

(.177)

.173

.272

.027

Distributions from net investment income

(.375)

(.658)

(.673)

(.773)

(.842)

(.107)

Redemption fees added to paid in capital

- D, H

-

-

-

-

-

Net asset value, end of period

$ 9.39

$ 9.34

$ 7.90

$ 8.75

$ 9.35

$ 9.92

Total Return B, C

4.57%

27.38%

(2.23)%

2.00%

2.57%

.28%

Ratios to Average Net Assets F

Expenses before expense reductions

.92% A

.96%

.96%

1.04%

1.62%

11.66% A

Expenses net of voluntary waivers, if any

.85% A

.85%

.85%

.85%

.85%

.85% A

Expenses net of all reductions

.85% A

.85%

.85%

.84%

.83%

.85% A

Net investment income (loss)

7.30% A

8.41%

8.57% G

8.65%

9.32%

8.07% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 142,758

$ 108,885

$ 48,379

$ 11,381

$ 4,910

$ 719

Portfolio turnover rate

145% A

129%

105%

139%

157%

331% A

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 For the period September 7, 1999 (commencement of operations) to October 31, 1999. 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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 November 30, 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. H Amount represents less than $.001 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended April 30, 2004 (Unaudited)

1. Significant Accounting Policies.

Fidelity Advisor High 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 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 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

Security Valuation - continued

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.

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.

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. Income dividends and capital

Semiannual Report

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

gain distributions are declared separately for each class. 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 and capital 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 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 including unrealized appreciation (depreciation) as of period end was as follows:

Unrealized appreciation

$ 18,291,277

|

Unrealized depreciation

(6,435,030)

Net unrealized appreciation (depreciation)

$ 11,856,247

Cost for federal income tax purposes

$ 429,899,225

Short-Term Trading (Redemption) Fees. Shares purchased after March 31, 2004, and held in the fund less than 90 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.

2. Operating Policies.

Repurchase Agreements. 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).

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

2. Operating Policies - continued

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.

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.

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.

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

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan - continued

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%

$ 55,097

$ 161

Class T

0%

.25%

108,627

415

Class B

.65%

.25%

341,578

247,108

Class C

.75%

.25%

315,538

134,509

$ 820,840

$ 382,193

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

$ 44,790

Class T

13,286

Class B*

112,061

Class C*

9,745

$ 179,882

* 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

respective classes of the fund. FIIOC pays for typesetting, printing and mailing of shareholder 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

$ 65,654

.18*

Class T

114,637

.27*

Class B

83,034

.22*

Class C

58,745

.19*

Institutional Class

151,088

.24*

$ 473,158

* 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 $95,120 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 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.

Semiannual Report

6. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class A

1.00%

$ 2,165

Class T

1.10%

40,876

Class B

1.75%

19,904

Class C

1.85%

6,564

Institutional Class

.85%

41,523

$ 111,032

Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $23 for the period. In addition, 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 $4,100.

7. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 2,812,145

$ 3,463,982

Class T

3,327,411

5,285,877

Class B

2,651,119

3,522,659

Class C

2,182,056

2,720,372

Institutional Class

4,987,816

5,675,402

Total

$ 15,960,547

$ 20,668,292

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

2,872,780

5,078,597

$ 27,281,425

$ 44,740,558

Reinvestment of distributions

246,167

329,086

2,332,239

2,911,571

Shares redeemed

(1,134,263)

(2,849,082)

(10,759,587)

(25,436,110)

Net increase (decrease)

1,984,684

2,558,601

$ 18,854,077

$ 22,216,019

Class T

Shares sold

2,516,280

10,067,102

$ 23,867,721

$ 87,281,226

Reinvestment of distributions

290,775

428,290

2,752,085

3,800,828

Shares redeemed

(2,361,961)

(6,266,128)

(22,386,152)

(55,411,229)

Net increase (decrease)

445,094

4,229,264

$ 4,233,654

$ 35,670,825

Class B

Shares sold

1,521,029

5,222,668

$ 14,425,127

$ 45,487,161

Reinvestment of distributions

158,085

216,886

1,496,113

1,919,716

Shares redeemed

(1,075,936)

(2,028,953)

(10,192,843)

(17,785,865)

Net increase (decrease)

603,178

3,410,601

$ 5,728,397

$ 29,621,012

Class C

Shares sold

1,557,171

5,869,016

$ 14,763,228

$ 51,408,339

Reinvestment of distributions

140,880

179,833

1,333,398

1,600,340

Shares redeemed

(1,511,970)

(2,279,628)

(14,325,441)

(20,253,596)

Net increase (decrease)

186,081

3,769,221

$ 1,771,185

$ 32,755,083

Institutional Class

Shares sold

4,379,672

9,351,108

$ 41,625,969

$ 82,152,855

Reinvestment of distributions

419,593

470,456

3,978,948

4,177,210

Shares redeemed

(1,251,541)

(4,293,095)

(11,899,574)

(37,528,757)

Net increase (decrease)

3,547,724

5,528,469

$ 33,705,343

$ 48,801,308

Semiannual Report

Semiannual Report

Semiannual Report

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 International
Investment Advisors

Fidelity Investments Japan Limited

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

AHI-USAN-0604
1.784884.101

Fidelity® Advisor

Floating Rate High Income

Fund - Institutional Class

Semiannual Report

April 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.

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 April 30, 2004

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

Charter Communication Operating LLC

3.5

1.7

EchoStar DBS Corp.

3.1

2.8

Qwest Corp.

2.5

2.1

Nextel Communications, Inc.

2.5

0.0

Centerpoint Energy House Electric LLC

1.2

1.2

12.8

Top Five Market Sectors as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Cable TV

12.8

9.7

Telecommunications

11.7

10.2

Electric Utilities

6.1

7.6

Healthcare

5.3

7.7

Energy

4.3

3.7

Quality Diversification (% of fund's net assets)

As of April 30, 2004

As of October 31, 2003

AAA,AA,A 0.0%

AAA,AA,A 0.0%

BBB 2.8%

BBB 3.8%

BB 35.4%

BB 43.2%

B 24.9%

B 20.4%

CCC,CC,C 2.8%

CCC,CC,C 0.8%

D 0.1%

D 0.1%

Not Rated 21.0%

Not Rated 10.7%

Equities 0.0%

Equities 0.0%

Short-Term
Investments and
Net Other Assets 13.0%

Short-Term
Investments and
Net Other Assets 21.0%



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 April 30, 2004 *

As of October 31, 2003 **

Floating Rate
Loans 70.6%

Floating Rate
Loans 71.4%

Nonconvertible
Bonds 16.4%

Nonconvertible
Bonds 7.5%

Other Investments 0.0%

Other Investments 0.1%

Short-Term
Investments and
Net Other Assets 13.0%

Short-Term
Investments and
Net Other Assets 21.0%

* Foreign
investments

4.3%

** Foreign
investments

4.1%



Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Floating Rate Loans (e) - 70.6%

Principal
Amount (000s)

Value (Note 1)
(000s)

Aerospace - 0.5%

DRS Technologies, Inc. term loan 2.9532% 11/4/10 (d)

$ 1,022

$ 1,033

Titan Corp. Tranche B term loan 4.3778% 6/30/09 (d)

2,948

2,951

Transdigm, Inc. term loan 6% 7/22/10 (d)

1,596

1,607

United Defense Industries, Inc. Tranche B term loan 3.1% 8/13/09 (d)

5,004

5,048

10,639

Automotive - 1.5%

Collins & Aikman Products Co.:

Revolving Credit-Linked Deposit 6% 12/31/05 (d)

702

709

Tranche A1 term loan 6% 12/31/05 (d)

1,298

1,311

Tranche B term loan 7.75% 12/31/05 (d)

480

486

CSK Automotive, Inc. Tranche B term loan 3.39% 6/20/09 (d)

4,000

4,020

Enersys Capital, Inc. term loan 3.62% 3/17/11 (d)

1,000

1,014

Federal-Mogul Financing Trust Tranche B term loan 3.6% 2/24/05 (d)

2,000

1,800

Goodyear Dunlop Tire Europe BV term loan 3.12% 4/30/05 (d)

5,776

5,791

New Flyer Industries Ltd.:

Tranche A Credit-Linked Deposit 3.85% 2/27/10 (d)

714

723

Tranche B term loan 3.85% 2/27/10 (d)

2,286

2,314

Plastech Engineered Products, Inc. Tranche B1 term loan 3.85% 3/31/10 (d)

2,000

2,030

Tenneco Automotive, Inc.:

Tranche B term loan 4.36% 12/12/10 (d)

3,440

3,500

Tranche B1 Credit-Linked Deposit 4.35% 12/12/10 (d)

1,552

1,579

TRW Automotive Holdings Corp. Tranche D1 term loan 2.9375% 2/28/11 (d)

4,870

4,930

United Components, Inc. Tranche C term loan 5.75% 6/30/10 (d)

2,570

2,602

32,809

Broadcasting - 2.2%

Cumulus Media, Inc. Tranche D term loan 3.375% 3/28/10 (d)

8,024

8,124

Emmis Communications Corp. Tranche B term loan 3.375% 8/31/09 (d)

10,006

10,031

Gray Television, Inc. Tranche C term loan 3.6375% 12/31/10 (d)

3,990

4,045

LIN Television Corp. Tranche B term loan 3.3645% 12/31/07 (d)

9,720

9,817

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Broadcasting - continued

Nexstar Broadcasting Group, Inc. Tranche C term loan 3.36% 12/31/10 (d)

$ 1,995

$ 2,022

Sinclair Broadcast Group, Inc.:

term loan 3.375% 12/31/09 (d)

6,545

6,635

Tranche A1 term loan 3.375% 12/31/09 (d)

2,166

2,193

Spanish Broadcasting System, Inc. term loan 4.36% 10/30/09 (d)

4,838

4,898

47,765

Building Materials - 0.4%

Atrium Companies, Inc. term loan 3.8896% 12/10/08 (d)

798

809

Goodman Global Holdings, Inc. Tranche B term loan 3.25% 11/21/09 (d)

1,700

1,723

National Waterworks, Inc. Tranche B1 term loan 3.86% 11/22/09 (d)

1,929

1,948

PGT Industries Tranche A term loan 4.17% 1/29/10 (d)

998

1,005

Ply Gem Industries, Inc. term loan 3.61% 2/12/11 (d)

3,000

3,008

8,493

Cable TV - 8.4%

Adelphia Communications Corp. Tranche B term loan 4.5622% 6/25/04 (d)

7,500

7,575

Atlantic Broadband Finance LLC/Atlantic Broadband Finance, Inc. Tranche B term loan 4.37% 9/1/11 (d)

2,700

2,727

Cebridge Connections, Inc. Tranche 1 term loan 4.3918% 2/23/09 (d)

3,000

3,008

Century Cable Holdings LLC Tranche B term loan:

6% 6/30/09 (d)

2,200

2,156

6% 12/31/09 (d)

2,750

2,681

Century-TCI California LP term loan 6.86% 12/31/07 (d)

6,016

5,896

Charter Communication Operating LLC Tranche B term loan 4.42% 4/27/11 (d)

75,000

74,754

DIRECTV Holdings LLC Tranche B2 term loan 3.3994% 3/6/10 (d)

15,114

15,284

Hilton Head Communications LP Tranche B term loan 5.25% 3/31/08 (d)

8,150

7,906

Insight Midwest Holdings LLC:

Tranche A, term loan 2.9356% 6/30/09 (d)

8,000

7,980

Tranche B term loan:

3.9373% 12/31/09 (d)

10,973

11,041

3.9375% 12/31/09 (d)

998

1,005

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Cable TV - continued

Mediacom Broadband LLC/Mediacom Broadband Corp. Tranche B term loan 3.62% 9/30/10 (d)

$ 3,000

$ 3,041

Olympus Cable Holdings LLC:

Tranche A term loan 5.25% 6/30/10 (d)

8,200

7,811

Tranche B term loan 6% 9/30/10 (d)

6,500

6,338

PanAmSat Corp. Tranche B1 term loan 3.6% 9/30/10 (d)

5,312

5,339

Pegasus Media & Communications, Inc.:

term loan 4.6875% 7/31/05 (d)

4,000

3,990

Tranche B term loan 4.6875% 4/30/05 (d)

536

528

Rainbow Media Holdings, Inc. Tranche C term loan 3.38% 3/31/09 (d)

4,975

5,000

United Pan-Europe Communications NV Tranche C2 term loan 6.64% 3/31/09 (d)

6,390

6,398

180,458

Capital Goods - 2.6%

AGCO Corp. term loan 3.35% 1/31/06 (d)

8,886

9,020

Douglas Dynamics Holdings, Inc. term loan 3.8767% 3/31/10 (d)

1,000

1,011

Dresser, Inc. Tranche C term loan 3.62% 3/1/10 (d)

2,066

2,107

Flowserve Corp. Tranche C term loan 3.875% 6/30/09 (d)

2,464

2,476

Invensys International Holding Ltd. Tranche B1 term loan 4.6113% 9/4/09 (d)

12,000

12,045

Mueller Group, Inc. term loan 4.35% 4/23/11 (d)

2,000

2,000

Roper Industries, Inc. term loan 3.127% 12/29/08 (d)

9,875

10,011

Sensus Metering Systems, Inc. Tranche B term loan 4.1699% 12/17/10 (d)

3,591

3,609

SPX Corp. Tranche B1 term loan 3.125% 9/30/09 (d)

5,553

5,632

Terex Corp.:

term loan 3.7429% 12/31/09 (d)

2,448

2,460

Tranche B term loan 3.1238% 7/3/09 (d)

5,165

5,191

TriMas Corp. Tranche B term loan 4.6% 12/31/09 (d)

872

876

56,438

Chemicals - 2.4%

CP Kelco:

Tranche B term loan 5.1527% 3/31/08 (d)

256

258

Tranche C term loan 5.41% 9/30/08 (d)

84

85

Geo Specialty Chemicals, Inc. Tranche B term loan 9.25% 12/31/07 (d)

1,149

1,057

Georgia Gulf Corp. Tranche D term loan 3.625% 12/2/10 (d)

4,291

4,334

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Chemicals - continued

Hercules, Inc. Tranche B term loan 3.4697% 10/8/10 (d)

$ 2,500

$ 2,531

Huntsman ICI Chemicals LLC:

Tranche B term loan 5.216% 6/30/07 (d)

4,645

4,668

Tranche C term loan 5.4375% 6/30/08 (d)

4,645

4,668

Kraton Polymers LLC term loan 5% 12/23/10 (d)

5,285

5,351

Messer Griesheim Holding AG:

Tranche B2 term loan 3.8313% 4/28/09 (d)

702

702

Tranche C2 term loan 4.3313% 4/28/10 (d)

1,010

1,010

Nalco Co. Tranche B term loan 3.629% 11/4/10 (d)

16,443

16,567

Noveon International, Inc. Tranche B term loan 3.9375% 12/31/09 (d)

2,776

2,773

SGL Carbon LLC term loan 4.22% 12/31/09 (d)

3,000

3,000

United Industries Corp. term loan 3.8376% 4/28/11 (d)

4,000

4,045

51,049

Consumer Products - 3.1%

American Achievement Corp. Tranche B term loan 5.5% 3/25/11 (d)

2,500

2,531

American Safety Razor Co. Tranche B term loan 4.35% 4/29/11 (d)

3,000

3,030

Amscan Holdings, Inc. term loan 3.85% 4/30/12 (d)

4,000

4,030

Armkel LLC Tranche B term loan 4.125% 3/28/09 (d)

679

685

Bombardier Recreational Products, Inc. term loan 4.13% 12/18/10 (d)

1,000

1,000

Central Garden & Pet Co. Tranche B term loan 3.35% 5/14/09 (d)

993

1,002

Church & Dwight Co., Inc. Tranche B term loan 3.34% 9/30/07 (d)

5,429

5,497

Jostens, Inc. term loan 3.72% 7/29/10 (d)

4,739

4,763

Prestige Brands, Inc. Tranche B term loan 4.0844% 4/6/11 (d)

5,000

5,050

Revlon Consumer Products Corp.:

term loan 8.5% 5/30/05 (d)

979

979

Tranche A term loan 8% 5/30/05 (d)

4,000

4,000

Sealy Mattress Co. term loan 3.86% 4/6/12 (d)

9,900

10,036

Simmons Co.:

term loan 5.125% 6/19/12 (d)

2,000

2,000

Tranche B term loan 4.0893% 12/19/11 (d)

5,876

5,949

Sola International, Inc. term loan 3.65% 12/11/09 (d)

4,000

4,045

Tempur Pedic, Inc. Tranche B term loan 4.61% 6/30/09 (d)

1,985

2,005

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Consumer Products - continued

The Scotts Co. term loan 3.125% 9/30/10 (d)

$ 8,991

$ 9,115

Weight Watchers International, Inc. Tranche B term loan 2.92% 3/31/10 (d)

1,230

1,236

66,953

Containers - 2.4%

Ball Corp. Tranche B1 term loan 2.86% 12/19/09 (d)

3,427

3,453

Berry Plastics Corp. Tranche C term loan 3.63% 7/22/10 (d)

1,970

2,000

Crown Cork & Seal Americas, Inc. Tranche B1 term loan 4.1% 9/15/08 (d)

1,900

1,933

Owens Illinois Group, Inc.:

Tranche A1 term loan 3.92% 4/1/07 (d)

10,000

10,038

Tranche B1 term loan 3.88% 4/1/08 (d)

9,200

9,258

Printpack Holdings, Inc. Tranche C term loan 3.375% 3/31/09 (d)

873

880

Silgan Holdings, Inc. Tranche B term loan 3.39% 11/30/08 (d)

12,825

12,969

Solo Cup Co. term loan 3.61% 2/27/11 (d)

9,850

9,998

50,529

Diversified Financial Services - 0.4%

Global Cash Access LLC/Global Cash Access Finance Corp. Tranche B term loan 3.85% 3/10/10 (d)

6,900

6,995

Newkirk Master LP term loan 5.7099% 11/24/06 (d)

2,072

2,103

9,098

Diversified Media - 1.3%

Adams Outdoor Advertisng Ltd. term loan 3.4% 10/15/11 (d)

2,650

2,680

Blockbuster, Inc. Tranche B term loan 2.36% 7/1/04 (d)

400

400

CanWest Media, Inc. Tranche D term loan 3.8719% 5/15/09 (d)

1,990

2,020

Cinram International, Inc. Tranche B term loan 4.84% 9/30/09 (d)

1,977

1,994

Lamar Media Corp.:

Tranche A term loan 2.9375% 6/30/09 (d)

1,000

1,005

Tranche C term loan 3.1875% 6/30/10 (d)

7,741

7,818

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Diversified Media - continued

R.H. Donnelly Corp. Tranche B2 term loan 3.369% 6/30/10 (d)

$ 3,807

$ 3,859

Vivendi Universal Entertainment LLC term loan 3.85% 9/30/08 (d)

9,000

9,023

28,799

Electric Utilities - 4.8%

AES Corp. term loan 5.32% 4/30/08 (d)

5,429

5,496

Allegheny Energy Supply Co. LLC:

term loan 4.1% 3/8/11 (d)

5,000

5,019

Tranche C term loan 5.35% 6/8/11 (d)

8,000

8,050

Aquila Networks Canada Corp. term loan 7.25% 7/30/04 (d)

7,000

7,000

Aquila, Inc. term loan 8% 5/15/06 (d)

683

706

Astoria Energy LLC term loan 6.7011% 4/15/12 (d)

14,000

14,105

Calpine Corp. Tranche B1 term loan 4.6875% 7/15/07 (d)

2,978

3,000

Centerpoint Energy House Electric LLC term loan 12.75% 11/11/05 (d)

22,450

25,369

CenterPoint Energy, Inc. term loan 4.7225% 10/7/06 (d)

2,984

3,043

Cogentrix Delaware Holdings, Inc. term loan 3.35% 2/25/09 (d)

5,550

5,557

Midwest Generation LLC term loan 4.475% 4/27/11 (d)

2,000

2,020

Northwestern Corp. term loan 6.74% 12/1/06 (d)

983

1,002

NRG Energy, Inc.:

Credit-Linked Deposit 5.5% 6/23/10 (d)

2,916

3,004

term loan 5.5% 6/23/10 (d)

5,189

5,344

Teton Power Funding LLC term loan 4.36% 3/12/11 (d)

6,500

6,565

Tucson Electric Power Co. Tranche B Credit-Linked Deposit 3.36% 6/30/09 (d)

7,000

7,026

102,306

Energy - 1.5%

Citgo Petroleum Corp. term loan 8.25% 2/27/06 (d)

1,000

1,033

Magellan Midstream Holdings LP Tranche A term loan 4.67% 6/17/08 (d)

2,569

2,598

Magellan Midstream Partners LP Tranche C term loan 3.1% 8/6/08 (d)

3,900

3,929

Parker Drilling Co. term loan 5.35% 10/10/07 (d)

500

506

Premcor Refining Group, Inc. Credit-Linked Deposit 3.1% 4/13/09 (d)

9,000

9,068

Pride Offshore, Inc. term loan 3.63% 1/15/09 (d)

664

671

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Energy - continued

Tesoro Petroleum Corp. term loan 6.6105% 4/15/08 (d)

$ 1,980

$ 2,039

Williams Production RMT Co. Tranche C term loan 3.6% 5/30/07 (d)

11,662

11,793

31,637

Entertainment/Film - 2.4%

Carmike Cinemas, Inc. term loan 4.4375% 2/4/09 (d)

1,397

1,424

Cinemark USA, Inc. term loan 5.25% 3/31/11 (d)

10,950

11,128

Lions Gate Entertainment Corp. term loan 4.36% 12/31/08 (d)

4,000

4,020

Metro-Goldwyn-Mayer Studios, Inc. Tranche B, term loan 5.5% 4/30/11 (d)

15,000

15,038

Regal Cinemas Corp. Tranche D term loan 3.375% 6/30/09 (d)

5,730

5,816

Warner Music Group term loan 3.8938% 2/28/11 (d)

14,300

14,497

51,923

Environmental - 1.5%

Allied Waste Industries, Inc.:

Tranche A Credit-Linked Deposit 3.84% 1/15/10 (d)

1,143

1,159

Tranche B term loan 3.8662% 1/15/10 (d)

14,746

14,986

Tranche C term loan 3.86% 1/15/10 (d)

3,000

3,049

Tranche D term loan 3.64% 1/15/10 (d)

3,000

3,041

Casella Waste Systems, Inc. Tranche B term loan 3.9554% 1/24/10 (d)

2,970

3,000

Ionics, Inc. term loan 3.87% 2/13/11 (d)

3,800

3,838

Stericycle, Inc. Tranche B term loan 3.35% 9/5/07 (d)

364

366

Waste Connections, Inc. term loan 2.875% 10/22/10 (d)

2,000

2,015

31,454

Food and Drug Retail - 0.5%

Rite Aid Corp. term loan 4.1% 4/30/08 (d)

10,000

10,225

Food/Beverage/Tobacco - 2.6%

Atkins Nutritional Holdings II, Inc. term loan:

4.36% 10/29/09 (d)

2,751

2,754

6.86% 10/29/09 (d)

4,600

4,612

B&G Foods, Inc. term loan 4.52% 8/31/09 (d)

2,985

2,989

Commonwealth Brands, Inc. term loan 5.1875% 8/28/07 (d)

648

656

Constellation Brands, Inc. Tranche B term loan 3.2125% 11/30/08 (d)

3,125

3,172

Del Monte Corp. Tranche B term loan 3.4078% 12/20/10 (d)

6,206

6,299

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Food/Beverage/Tobacco - continued

Dr Pepper/Seven Up Bottling Group, Inc. Tranche B term loan 3.6493% 12/19/10 (d)

$ 7,082

$ 7,161

Luigino's, Inc. term loan 4.125% 4/2/11 (d)

314

319

Merisant Co. Tranche B term loan 3.92% 1/11/10 (d)

1,379

1,382

Michael Foods, Inc. Tranche B term loan 3.9151% 11/21/10 (d)

8,479

8,606

NBTY, Inc. Tranche C term loan 3.1% 7/25/09 (d)

1,478

1,486

Nellson Nutraceutical, Inc. term loan 4.11% 10/4/09 (d)

1,077

1,077

Reddy Ice Group, Inc. term loan:

3.6% 8/15/09 (d)

796

800

3.6% 8/15/09 (d)

299

301

Suiza Foods Corp.:

Tranche B1 term loan 3.11% 7/15/08 (d)

9,942

10,079

Tranche C term loan 2.89% 7/15/08 (d)

4,000

4,040

55,733

Gaming - 1.1%

Alliance Gaming Corp. term loan 3.7875% 9/5/09 (d)

6,350

6,437

Ameristar Casinos, Inc. Tranche B term loan 3.125% 12/20/06 (d)

2,525

2,550

Argosy Gaming Co. Tranche B term loan 3.36% 7/31/08 (d)

2,628

2,648

Green Valley Ranch Gaming LLC term loan 3.86% 12/26/10 (d)

1,995

2,025

Marina District Finance Co., Inc. Tranche B term loan 5.192% 12/13/07 (d)

2,985

3,030

Penn National Gaming, Inc. Tranche D term loan 3.6112% 9/1/07 (d)

1,896

1,924

Scientific Games Corp. Tranche C term loan 4.6731% 12/31/09 (d)

1,995

2,025

Venetian Casino Resort LLC Tranche B term loan 4.11% 6/4/08 (d)

2,653

2,686

23,325

Healthcare - 5.1%

Accredo Health, Inc. Tranche B term loan 3.35% 3/31/09 (d)

980

993

ALARIS Medical Systems, Inc. term loan 3.36% 6/30/09 (d)

666

678

Alliance Imaging, Inc. Tranche C term loan 3.5739% 6/10/08 (d)

838

831

Alpharma, Inc. Tranche B term loan 4.4406% 7/31/08 (d)

1,436

1,443

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Healthcare - continued

AmeriPath, Inc. term loan 4.1% 3/27/10 (d)

$ 1,667

$ 1,677

AMN Healthcare, Inc. Tranche B term loan 4.11% 10/2/08 (d)

1,050

1,066

Apria Healthcare Group, Inc. Tranche B term loan 3.11% 7/20/08 (d)

2,945

2,982

Beverly Enterprises, Inc. term loan 4.4567% 10/22/08 (d)

1,990

2,015

Community Health Systems, Inc. term loan:

3.62% 7/16/10 (d)

6,018

6,124

3.62% 1/16/11 (d)

4,478

4,556

Concentra Operating Corp. term loan 4.9409% 6/30/09 (d)

1,985

2,010

CONMED Corp. Tranche C term loan 3.3887% 12/15/09 (d)

861

872

Connecticare Capital LLC term loan 5.0098% 10/30/09 (d)

1,850

1,869

DaVita, Inc. Tranche B term loan 3.1643% 3/31/09 (d)

16,865

17,034

Express Scripts, Inc. Tranche B term loan 2.8541% 2/13/10 (d)

5,000

5,031

Fisher Scientific International, Inc. Tranche C term loan 3.11% 3/31/10 (d)

7,077

7,148

Fresenius Medical Care Holdings, Inc. Tranche C term loan 3.34% 2/21/10 (d)

6,948

6,939

Genesis HealthCare Corp. Tranche B term loan 3.86% 12/1/10 (d)

898

910

Hanger Orthopedic Group, Inc. Tranche B term loan 3.86% 9/30/09 (d)

2,935

2,968

HCA, Inc. term loan 2.1% 4/30/06 (d)

5,607

5,593

IASIS Healthcare Corp. Tranche B term loan 3.85% 2/7/09 (d)

1,835

1,853

Kinetic Concepts, Inc. Tranche B1 term loan 3.36% 8/11/10 (d)

5,078

5,116

Mariner Health Care, Inc. Tranche B term loan 3.9966% 1/2/10 (d)

680

686

Multiplan, Inc. term loan 3.86% 3/4/09 (d)

3,000

3,038

Oxford Health Plans, Inc. term loan 3.1892% 4/30/09 (d)

1,980

1,980

PacifiCare Health Systems, Inc. term loan 3.7094% 6/3/08 (d)

3,970

4,010

Renal Care Group, Inc. term loan 2.6% 2/10/09 (d)

3,000

3,008

Sybron Dental Management, Inc. term loan 3.3635% 6/6/09 (d)

678

680

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Healthcare - continued

Triad Hospitals, Inc.:

Tranche A term loan 3.35% 3/31/07 (d)

$ 430

$ 436

Tranche B term loan 3.35% 9/30/08 (d)

7,456

7,577

Vanguard Health Systems, Inc. Tanche B term loan 5.35% 1/3/10 (d)

1,975

1,990

Ventas Realty LP/Ventas Capital Corp. Tranche B term loan 3.6% 4/17/07 (d)

983

986

VWR Corp. Tranche B term loan 3.6% 4/7/11 (d)

4,900

4,974

109,073

Homebuilding/Real Estate - 0.9%

AIMCO Properties LP term loan 3.96% 3/11/05 (d)

977

979

Apartment Investment & Management Co. term loan 3.86% 5/30/08 (d)

3,000

3,023

CB Richard Ellis Services, Inc. term loan 4.4392% 12/31/08 (d)

2,950

2,980

Corrections Corp. of America Tranche C term loan 3.8711% 3/31/08 (d)

1,340

1,357

Crescent Real Estate Funding XII LP term loan 3.3482% 1/12/06 (d)

4,000

4,040

Landsource Communication Development LLC Tranche B term loan 3.625% 3/31/10 (d)

5,800

5,887

18,266

Hotels - 1.2%

Extended Stay America, Inc.:

Tranche A3 term loan 4.35% 7/24/07 (d)

916

916

Tranche B term loan 4.85% 1/15/08 (d)

2,323

2,323

Starwood Hotels & Resorts Worldwide, Inc. term loan 2.725% 10/9/06 (d)

4,000

4,000

Wyndham International, Inc. term loan:

5.875% 6/30/06 (d)

13,202

12,674

6.875% 4/1/06 (d)

5,579

5,509

25,422

Insurance - 0.5%

Conseco, Inc.:

Tranche A term loan 7.25% 9/10/09 (d)

6,127

6,142

Tranche B term loan 9.5% 9/10/10 (d)

1,838

1,843

USI Holdings Corp. term loan 3.67% 8/11/09 (d)

1,985

2,010

9,995

Leisure - 1.0%

24 Hour Fitness Worldwide, Inc. term loan 4.75% 7/1/09 (d)

2,993

3,022

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Leisure - continued

Six Flags Theme Park, Inc. Tranche B term loan 3.5935% 6/30/09 (d)

$ 13,582

$ 13,700

True Temper Corp. term loan 3.6% 3/15/11 (d)

3,000

3,015

Vail Corp. term loan 3.42% 12/10/08 (d)

990

1,000

20,737

Metals/Mining - 0.3%

Compass Minerals Group, Inc. Tranche B term loan 3.6484% 11/28/09 (d)

340

344

Peabody Energy Corp. term loan 2.859% 3/21/10 (d)

6,947

7,034

7,378

Paper - 2.9%

Buckeye Technologies, Inc. term loan 3.6904% 3/15/08 (d)

4,876

4,924

Georgia-Pacific Corp. term loan 3.315% 11/28/05 (d)

7,000

7,000

Graphic Packaging International, Inc. Tranche B term loan 3.86% 8/8/10 (d)

15,522

15,755

Jefferson Smurfit Corp. Tranche B term loan 4.375% 3/31/07 (d)

3,569

3,605

Jefferson Smurfit Corp. U.S.:

Tranche B term loan 3.89% 9/16/10 (d)

500

507

Tranche C term loan 4.39% 9/16/11 (d)

500

507

Roseburg Forest Products Co. Tranche B term loan 5% 2/24/10 (d)

4,988

5,012

SP Newsprint Co. Tranche B:

Credit-Linked Deposit 4.1% 1/8/10 (d)

1,289

1,307

term loan 4.1% 1/8/10 (d)

706

716

Stone Container Corp.:

Tranche B term loan 3.6875% 6/30/09 (d)

17,400

17,487

Tranche C term loan 3.6756% 6/30/09 (d)

2,472

2,485

White Birch Paper 2nd Ltd. Tranche B2 term loan 7.5% 8/26/05 (d)

346

351

White Birch Paper Ltd. Tranche B1 term loan 7.5% 2/26/10 (d)

2,654

2,694

62,350

Publishing/Printing - 2.6%

Advanstar Communications, Inc. Tranche B term loan 5.6% 10/11/07 (d)

188

188

American Media Operations, Inc. Tranche C1 term loan 3.88% 4/1/07 (d)

2,597

2,642

CBD Media, Inc. Tranche B term loan 3.34% 12/31/09 (d)

2,940

2,977

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Publishing/Printing - continued

Dex Media East LLC/Dex Media East Finance Co.:

Tranche A term loan 3.3674% 11/8/08 (d)

$ 4,378

$ 4,427

Tranche B term loan 3.6172% 5/8/09 (d)

4,240

4,298

Dex Media West LLC/Dex Media West Finance Co.:

Tranche A term loan 3.3241% 9/9/09 (d)

5,600

5,684

Tranche B term loan 3.4592% 9/9/10 (d)

14,744

14,965

Medianews Group, Inc. Tranche B term loan 3.1% 12/30/10 (d)

7,481

7,575

Morris Publishing Group LLC/Morris Publishing Finance Co. Tranche B term loan 3.375% 3/31/11 (d)

3,000

3,030

Reader's Digest Association, Inc. Tranche B term loan 4.2366% 5/20/08 (d)

2,054

2,067

Sun Media Corp. Canada Tranche B term loan 3.4182% 2/7/09 (d)

1,905

1,924

Transwestern Publishing Co. LP/Township Capital Corp. II Tranche B1 term loan 3.6563% 2/25/11 (d)

6,000

6,060

55,837

Railroad - 0.3%

Kansas City Southern Railway Co. Tranche B term loan 3.1117% 3/30/08 (d)

6,000

6,090

Restaurants - 0.3%

AFC Enterprises, Inc. Tranche B term loan 4.1656% 5/23/09 (d)

979

981

CKE Restaurants, Inc. term loan 4.875% 4/1/08 (d)

405

405

Domino's, Inc. term loan 3.75% 6/25/10 (d)

4,328

4,360

5,746

Services - 1.6%

CACI International, Inc. term loan 3.1798% 4/30/11 (d)

6,000

6,053

Coinmach Corp. Tranche B term loan 3.875% 7/25/09 (d)

2,254

2,285

CSG Systems International, Inc. Tranche B term loan 4.6601% 2/28/08 (d)

6,851

6,920

Hillman Companies, Inc. Tranche B term loan 6.25% 3/31/11 (d)

3,000

3,030

Iron Mountain, Inc. term loan 3.125% 4/2/11 (d)

4,890

4,939

JohnsonDiversey, Inc. Tranche B term loan 3.3778% 11/3/09 (d)

1,582

1,598

United Rentals, Inc.:

term loan 3.41% 2/14/11 (d)

4,167

4,219

Tranche B Credit-Linked Deposit 3.36% 2/14/11 (d)

833

844

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Services - continued

Wackenhut Corrections Corp. term loan 3.6344% 7/9/09 (d)

$ 1,925

$ 1,942

Worldspan LP Tranche B term loan 4.875% 6/30/07 (d)

1,303

1,305

33,135

Shipping - 0.2%

Baker Tanks, Inc. term loan 3.9311% 1/30/11 (d)

3,392

3,408

Steels - 0.1%

Steel Dynamics, Inc. Tranche B1 term loan 4.14% 3/26/08 (d)

1,334

1,357

Super Retail - 1.2%

Advance Stores Co., Inc.:

Tranche D term loan 3.125% 11/30/06 (d)

432

437

Tranche E term loan 3.1569% 11/30/07 (d)

1,735

1,761

Alimentation Couche-Tard, Inc. term loan 3.375% 12/17/10 (d)

1,588

1,616

Buhrmann US, Inc. Tranche B1 term loan 3.86% 12/31/10 (d)

1,995

2,020

FTD, Inc. term loan 3.86% 2/28/11 (d)

1,400

1,418

General Nutrition Centers, Inc. Tranche B term loan 4.2039% 12/5/09 (d)

3,993

4,022

Hollywood Entertainment Corp. Tranche B term loan 4.6% 3/31/08 (d)

2,382

2,388

Oriental Trading Co., Inc.:

term loan 7.125% 1/8/11 (d)

3,300

3,333

Tranche B term loan 3.875% 8/4/10 (d)

4,092

4,102

PETCO Animal Supplies, Inc. Tranche D term loan 3.61% 10/2/08 (d)

1,452

1,470

Rent-A-Center, Inc. term loan 3.1916% 5/28/09 (d)

1,985

2,010

Travelcenters of America, Inc. term loan 4.4708% 11/14/08 (d)

877

888

25,465

Technology - 2.4%

Alliant Techsystems, Inc. Tranche B term loan 2.924% 3/31/11 (d)

4,850

4,886

AMI Semiconductor, Inc. term loan 3.6% 9/26/08 (d)

2,388

2,406

Amphenol Corp. Tranche B1 term loan 2.9729% 5/6/10 (d)

8,180

8,262

Anteon International Corp. term loan 3.11% 12/31/10 (d)

4,988

5,025

Communications & Power Industries, Inc. term loan 4.1094% 7/23/10 (d)

1,600

1,624

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Technology - continued

Fairchild Semiconductor Corp. Tranche B1 term loan 3.75% 6/19/08 (d)

$ 4,963

$ 5,049

Global Imaging Systems, Inc. term loan 3.6043% 6/25/09 (d)

993

1,002

ON Semiconductor Corp. Tranche F term loan 3.875% 8/4/09 (d)

4,958

4,982

Seagate Technology Holdings, Inc. term loan 3.1872% 5/13/07 (d)

1,970

1,990

The Relizon Co. Tranche B term loan 4.26% 2/20/11 (d)

1,943

1,941

Viasystems Group, Inc. Tranche B term loan 6.47% 9/30/08 (d)

2,991

3,021

Xerox Corp. term loan 2.86% 9/30/08 (d)

12,000

12,075

52,263

Telecommunications - 10.1%

Allegiance Telecom, Inc.:

revolver loan LIBOR + 4.5% 12/31/06 (d)

2,090

2,079

term loan LIBOR + 4.5% 12/31/06 (d)

1,910

1,901

American Tower LP:

Tranche A term loan 3.3609% 6/30/07 (d)

17,568

17,568

Tranche C term loan 3.3993% 12/31/07 (d)

6,988

6,988

Centennial Cellular Operating Co. LLC term loan 3.905% 2/9/11 (d)

12,000

12,000

Cincinnati Bell, Inc. Tranche D term loan 3.6286% 6/30/08 (d)

6,799

6,867

Consolidated Communications, Inc. Tranche B term loan 3.973% 10/14/11 (d)

1,000

1,008

Crown Castle International Corp. Tranche A term loan 3.36% 9/15/07 (d)

650

653

Crown Castle Operating Co. Tranche B term loan 4.61% 9/30/10 (d)

15,385

15,616

Dobson Cellular Systems, Inc. term loan 4.3664% 3/31/10 (d)

3,975

3,970

Microcell Solutions, Inc. Tranche A term loan 5.11% 3/17/11 (d)

3,000

3,023

Nextel Communications, Inc. Tranche E term loan 3.375% 12/15/10 (d)

51,671

52,316

Nextel Finance Co. Tranche A term loan 2.375% 12/31/07 (d)

3,787

3,782

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

51,500

52,788

SBA Senior Finance, Inc. term loan 4.65% 10/31/08 (d)

7,095

7,148

SpectraSite Communications, Inc.:

term loan 3.42% 12/31/07 (d)

6,230

6,315

Tranche A term loan 3.7336% 6/30/07 (d)

8,236

8,329

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Telecommunications - continued

Telepak, Inc. term loan 3.61% 5/4/11 (d)

$ 2,900

$ 2,918

Western Wireless Corp.:

Tranche A term loan 3.1499% 3/31/08 (d)

4,582

4,559

Tranche B term loan 4.38% 9/30/08 (d)

6,073

6,073

215,901

Textiles & Apparel - 0.3%

Kosa Lux Finance BV/Kosa UK Finance BV/Arteva Global Holdings BV/Kosa Canada Co. Tranche B term loan 4.7419% 4/29/11 (d)

5,000

5,038

Polymer Group, Inc. term loan 4.35% 4/27/10 (d)

1,000

1,008

William Carter Co. Tranche C term loan 3.7111% 9/30/08 (d)

736

749

6,795

TOTAL FLOATING RATE LOANS

(Cost $1,495,993)

1,508,851

Nonconvertible Bonds - 16.4%

Aerospace - 0.2%

L-3 Communications Corp. 6.125% 1/15/14 (c)

1,000

978

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

3,620

3,548

4,526

Air Transportation - 0.0%

American Airlines, Inc. pass thru trust certificates 6.977% 11/23/22

539

492

Automotive - 0.1%

Delco Remy International, Inc. 5.1688% 4/15/09 (c)(d)

2,000

2,030

Broadcasting - 1.8%

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

4,545

4,454

Gray Television, Inc. 9.25% 12/15/11

1,000

1,123

Nexstar Finance, Inc. 7% 1/15/14 (c)

4,760

4,641

Paxson Communications Corp.:

3.89% 1/15/10 (c)(d)

7,000

7,044

10.75% 7/15/08

2,000

2,090

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

5,000

5,550

Spanish Broadcasting System, Inc. 9.625% 11/1/09

3,000

3,173

XM Satellite Radio, Inc. 6.65% 5/1/09 (c)(d)

10,700

10,807

38,882

Building Materials - 0.1%

Nortek, Inc. 4.17% 12/31/10 (c)(d)

3,000

3,038

Nonconvertible Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Cable TV - 4.4%

Cablevision Systems Corp. 5.66% 4/1/09 (c)(d)

$ 7,000

$ 7,298

CSC Holdings, Inc.:

7.875% 12/15/07

2,000

2,130

10.5% 5/15/16

2,000

2,295

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

2,000

2,250

EchoStar DBS Corp.:

4.36% 10/1/08 (c)(d)

60,625

63,050

10.375% 10/1/07

1,965

2,122

NTL Cable PLC 6.14% 10/15/12 (c)(d)

14,000

14,385

PanAmSat Corp. 6.125% 1/15/05

1,000

1,020

94,550

Capital Goods - 0.1%

Tyco International Group SA yankee 6.375% 2/15/06

3,000

3,161

Chemicals - 0.8%

Georgia Gulf Corp. 7.625% 11/15/05

2,000

2,100

Huntsman Advanced Materials LLC 10% 7/15/08 (c)(d)

3,310

3,442

Huntsman ICI Chemicals LLC 10.125% 7/1/09

2,000

2,085

Methanex Corp. yankee 7.75% 8/15/05

9,125

9,627

17,254

Consumer Products - 0.2%

Armkel Finance, Inc. 9.5% 8/15/09

2,555

2,791

Chattem, Inc. 4.12% 3/1/10 (c)(d)

1,000

1,015

3,806

Containers - 0.4%

Ball Corp. 7.75% 8/1/06

5,000

5,350

Owens-Brockway Glass Container, Inc. 8.875% 2/15/09

2,000

2,170

7,520

Diversified Media - 0.5%

Liberty Media Corp. 2.61% 9/17/06 (d)

10,000

10,175

Electric Utilities - 1.3%

AES Corp.:

8.375% 8/15/07

3,000

3,015

8.5% 11/1/07

4,000

4,060

Allegheny Energy Supply Co. LLC 10.25% 11/15/07 (c)

3,000

3,300

Allegheny Energy, Inc. 7.75% 8/1/05

3,000

3,120

CMS Energy Corp. 9.875% 10/15/07

7,000

7,630

Power Contract Financing LLC 5.2% 2/1/06 (c)

960

972

Nonconvertible Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Electric Utilities - continued

Southern California Edison Co.:

5.875% 9/1/04

$ 1,250

$ 1,275

8% 2/15/07

2,000

2,240

TECO Energy, Inc. 6.125% 5/1/07

2,000

2,030

27,642

Energy - 2.8%

BRL Universal Equipment 2001 A LP/BRL Universal Equipment Corp. 8.875% 2/15/08

2,000

2,160

Chesapeake Energy Corp. 8.375% 11/1/08

6,000

6,600

El Paso Corp. 7.875% 6/15/12

3,000

2,666

El Paso Energy Corp. 6.95% 12/15/07

4,350

4,035

Gemstone Investor Ltd./Gemstone Investor, Inc. 7.71% 10/31/04 (c)

3,000

3,030

General Maritime Corp. 10% 3/15/13

5,000

5,650

OMI Corp. 7.625% 12/1/13

2,000

2,060

Pemex Project Funding Master Trust:

2.64% 1/7/05 (c)(d)

2,000

2,018

2.94% 10/15/09 (c)(d)

5,500

5,734

Pride International, Inc. 10% 6/1/09

5,000

5,300

Pride Petroleum Services, Inc. 9.375% 5/1/07

2,538

2,589

Sonat, Inc. 7.625% 7/15/11

5,000

4,356

Southern Natural Gas Co. 8.875% 3/15/10

840

935

Tesoro Petroleum Corp. 8% 4/15/08

1,000

1,075

The Coastal Corp. 6.2% 5/15/04

2,000

2,000

Transcontinental Gas Pipe Line Corp. 8.875% 7/15/12

2,000

2,325

Williams Companies, Inc. 6.625% 11/15/04

3,000

3,060

Williams Cos., Inc. Credit Linked Certificate Trust 4.42% 5/1/09 (c)(d)

5,000

5,006

60,599

Food and Drug Retail - 0.3%

Rite Aid Corp.:

6% 12/15/05 (c)

5,000

5,025

8.125% 5/1/10

1,000

1,083

6,108

Food/Beverage/Tobacco - 0.1%

Canandaigua Brands, Inc. 8.625% 8/1/06

1,000

1,100

Gaming - 0.0%

Penn National Gaming, Inc. 6.875% 12/1/11 (c)

1,000

1,000

Healthcare - 0.2%

Express Scripts, Inc. 9.625% 6/15/09

4,000

4,230

Nonconvertible Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Homebuilding/Real Estate - 0.1%

William Lyon Homes, Inc. 7.5% 2/15/14 (c)

$ 1,060

$ 1,060

Metals/Mining - 0.3%

Freeport-McMoRan Copper & Gold, Inc. 6.875% 2/1/14 (c)

8,000

7,120

Paper - 0.2%

Bowater, Inc. 4.11% 3/15/10 (d)

4,000

4,040

Publishing/Printing - 0.2%

CBD Media LLC/ CBD Finance, Inc. 8.625% 6/1/11

430

459

Dex Media, Inc. 8% 11/15/13 (c)

5,000

4,800

5,259

Shipping - 0.1%

Teekay Shipping Corp. yankee 8.32% 2/1/08

1,225

1,292

Steels - 0.3%

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

1,000

1,120

Ispat Inland ULC 7.86% 4/1/10 (c)(d)

5,000

5,113

6,233

Technology - 0.3%

Amkor Technology, Inc. 10.5% 5/1/09

5,000

5,263

IOS Capital LLC 7.25% 6/30/08

85

90

5,353

Telecommunications - 1.6%

America Movil SA de CV 1.795% 4/27/07 (c)(d)

2,000

1,995

American Tower Corp. 9.375% 2/1/09

4,000

4,300

Crown Castle International Corp. 10.75% 8/1/11

2,000

2,270

Mobile Telesystems Finance SA 5.13% 8/5/04 (c)(d)

3,000

3,000

Primus Telecom Holding, Inc. 8% 1/15/14 (c)

1,000

920

Qwest Communications International, Inc. 4.63% 2/15/09 (c)(d)

3,000

2,775

Rogers Wireless, Inc. 6.375% 3/1/14 (c)

3,000

2,880

Rural Cellular Corp. 5.61% 3/15/10 (c)(d)

7,000

7,210

U.S. West Communications:

5.65% 11/1/04

3,000

3,000

7.2% 11/1/04

6,000

6,075

34,425

TOTAL NONCONVERTIBLE BONDS

(Cost $349,620)

350,895

Commercial Mortgage Securities - 0.0%

Principal Amount (000s)

Value (Note 1) (000s)

CS First Boston Mortgage Securities Corp. Series 2000-FL1A Class F, 3.8806% 12/15/09 (c)(d)
(Cost $657)

$ 679

$ 579

Common Stocks - 0.0%

Shares

Automotive - 0.0%

Exide Technologies warrants 3/18/06 (a)
(Cost $0)

45

0

Money Market Funds - 15.9%

Fidelity Cash Central Fund, 1.06% (b)

213,884,452

213,884

Fidelity Money Market Central Fund, 1.17% (b)

124,683,581

124,684

TOTAL MONEY MARKET FUNDS

(Cost $338,568)

338,568

Cash Equivalents - 0.6%

Maturity
Amount (000s)

Value (Note 1)
(000s)

Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 0.94%, dated 4/30/04 due 5/3/04)
(Cost $13,534)

$ 13,535

$ 13,534

TOTAL INVESTMENT PORTFOLIO - 103.5%

(Cost $2,198,372)

2,212,427

NET OTHER ASSETS - (3.5)%

(74,167)

NET ASSETS - 100%

$ 2,138,260

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) 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 $189,267,000 or 8.9% of net assets.

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

(e) Remaining maturities of floating rate loans may be less than the stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $1,227,230,000 and $534,674,000, respectively.

The fund participated in the bank borrowing program. The average daily loan balance during the period for which the loan was outstanding amounted to $6,792,000. The weighted average interest rate was 1.5%. At period end, there were no bank borrowings outstanding.

Income Tax Information

At October 31, 2003, the fund had a capital loss carryforward of approximately $11,146,000 of which $5,000, $818,000, $8,246,000 and $2,077,000 will expire on October 31, 2008, 2009, 2010 and 2011, respectively.

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)

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $13,534) (cost $2,198,372) - See accompanying schedule

$ 2,212,427

Cash

5,131

Receivable for investments sold

20,236

Receivable for fund shares sold

23,114

Interest receivable

10,348

Prepaid expenses

4

Receivable from investment adviser for expense reductions

3

Other affiliated receivables

18

Total assets

2,271,281

Liabilities

Payable for investments purchased

$ 127,305

Payable for fund shares redeemed

3,038

Distributions payable

836

Accrued management fee

1,139

Distribution fees payable

353

Other affiliated payables

259

Other payables and accrued expenses

91

Total liabilities

133,021

Net Assets

$ 2,138,260

Net Assets consist of:

Paid in capital

$ 2,128,241

Undistributed net investment income

927

Accumulated undistributed net realized gain (loss) on investments

(4,963)

Net unrealized appreciation (depreciation) on investments

14,055

Net Assets

$ 2,138,260

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

Semiannual Report

Statement of Assets and Liabilities - continued

Amounts in thousands (except per-share amounts)

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($168,195 ÷ 16,974 shares)

$ 9.91

Maximum offering price per share (100/96.25 of $9.91)

$ 10.30

Class T:
Net Asset Value and redemption price per share ($138,605 ÷ 14,001 shares)

$ 9.90

Maximum offering price per share (100/97.25 of $9.90)

$ 10.18

Class B:
Net Asset Value and offering price per share
($143,096 ÷ 14,455 shares) A

$ 9.90

Class C:
Net Asset Value and offering price per share
($352,203 ÷ 35,548 shares) A

$ 9.91

Fidelity Floating Rate High Income Fund:
Net Asset Value, offering price and redemption price per share ($1,265,186 ÷ 127,789 shares)

$ 9.90

Institutional Class:
Net Asset Value, offering price and redemption price per share ($70,975 ÷ 7,171 shares)

$ 9.90

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 April 30, 2004 (Unaudited)

Investment Income

Interest

$ 34,137

Expenses

Management fee

$ 5,966

Transfer agent fees

1,090

Distribution fees

1,943

Accounting fees and expenses

313

Non-interested trustees' compensation

4

Custodian fees and expenses

39

Registration fees

180

Audit

42

Legal

28

Interest

1

Miscellaneous

9

Total expenses before reductions

9,615

Expense reductions

(12)

9,603

Net investment income (loss)

24,534

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

6,367

Change in net unrealized appreciation (depreciation) on investment securities

1,309

Net gain (loss)

7,676

Net increase (decrease) in net assets resulting from operations

$ 32,210

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

Semiannual Report

Statement of Changes in Net Assets

Amounts in thousands

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 24,534

$ 23,331

Net realized gain (loss)

6,367

279

Change in net unrealized appreciation (depreciation)

1,309

31,433

Net increase (decrease) in net assets resulting
from operations

32,210

55,043

Distributions to shareholders from net investment income

(27,026)

(23,105)

Share transactions - net increase (decrease)

681,974

917,582

Redemption fees

189

181

Total increase (decrease) in net assets

687,347

949,701

Net Assets

Beginning of period

1,450,913

501,212

End of period (including undistributed net investment income of $927 and undistributed net investment income of $3,419, respectively)

$ 2,138,260

$ 1,450,913

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.88

$ 9.45

$ 9.70

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.137

.292

.352

.580

.136

Net realized and unrealized gain (loss)

.046

.447

(.264)

(.185)

(.047)

Total from investment operations

.183

.739

.088

.395

.089

Distributions from net investment income

(.154)

(.311)

(.339)

(.638)

(.150)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.91

$ 9.88

$ 9.45

$ 9.70

$ 9.94

Total Return B, C, D

1.87%

7.95%

.90%

4.08%

.90%

Ratios to Average Net Assets G

Expenses before expense reductions

1.09% A

1.10%

1.12%

1.14%

1.75% A

Expenses net of voluntary waivers, if any

1.09% A

1.10%

1.10%

.99%

.78% A

Expenses net of all reductions

1.08% A

1.09%

1.09%

.98%

.78% A

Net investment income (loss)

2.81% A

3.04%

3.64%

5.93%

7.21% A

Supplemental Data

Net assets, end of period (in millions)

$ 168

$ 88

$ 37

$ 41

$ 9

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class T

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.44

$ 9.69

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.133

.285

.342

.573

.131

Net realized and unrealized gain (loss)

.045

.446

(.263)

(.195)

(.045)

Total from investment operations

.178

.731

.079

.378

.086

Distributions from net investment income

(.149)

(.303)

(.330)

(.631)

(.147)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.90

$ 9.87

$ 9.44

$ 9.69

$ 9.94

Total Return B, C, D

1.82%

7.87%

.80%

3.90%

.88%

Ratios to Average Net Assets G

Expenses before expense reductions

1.19% A

1.18%

1.20%

1.22%

1.81% A

Expenses net of voluntary waivers, if any

1.19% A

1.18%

1.19%

1.06%

.93% A

Expenses net of all reductions

1.19% A

1.18%

1.19%

1.06%

.93% A

Net investment income (loss)

2.71% A

2.96%

3.54%

5.86%

7.06% A

Supplemental Data

Net assets, end of period (in millions)

$ 139

$ 113

$ 75

$ 76

$ 25

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class B

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.44

$ 9.69

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.110

.243

.298

.525

.134

Net realized and unrealized gain (loss)

.045

.444

(.263)

(.194)

(.056)

Total from investment operations

.155

.687

.035

.331

.078

Distributions from net investment income

(.126)

(.259)

(.286)

(.584)

(.139)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.90

$ 9.87

$ 9.44

$ 9.69

$ 9.94

Total Return B, C, D

1.59%

7.38%

.35%

3.42%

.79%

Ratios to Average Net Assets G

Expenses before expense reductions

1.65% A

1.64%

1.65%

1.66%

2.74% A

Expenses net of voluntary waivers, if any

1.65% A

1.63%

1.64%

1.54%

1.23% A

Expenses net of all reductions

1.65% A

1.63%

1.64%

1.54%

1.23% A

Net investment income (loss)

2.25% A

2.50%

3.09%

5.38%

6.75% A

Supplemental Data

Net assets, end of period (in millions)

$ 143

$ 134

$ 118

$ 125

$ 24

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class C

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.45

$ 9.70

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.107

.235

.290

.516

.125

Net realized and unrealized gain (loss)

.054

.434

(.263)

(.184)

(.051)

Total from investment operations

.161

.669

.027

.332

.074

Distributions from net investment income

(.122)

(.251)

(.278)

(.575)

(.135)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.91

$ 9.87

$ 9.45

$ 9.70

$ 9.94

Total Return B, C, D

1.65%

7.18%

.26%

3.42%

.76%

Ratios to Average Net Assets G

Expenses before expense reductions

1.72% A

1.72%

1.73%

1.75%

2.41% A

Expenses net of voluntary waivers, if any

1.72% A

1.71%

1.73%

1.64%

1.44% A

Expenses net of all reductions

1.72% A

1.71%

1.73%

1.63%

1.44% A

Net investment income (loss)

2.18% A

2.42%

3.00%

5.28%

6.55% A

Supplemental Data

Net assets, end of period (in millions)

$ 352

$ 269

$ 235

$ 278

$ 48

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Fidelity Floating Rate High Income Fund

Six months ended
April 30, 2004

Years ended
October 31,

(Unaudited)

2003

2002 E

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.44

$ 9.52

Income from Investment Operations

Net investment income (loss) D

.149

.311

.040

Net realized and unrealized gain (loss)

.046

.450

(.084)

Total from investment operations

.195

.761

(.044)

Distributions from net investment income

(.166)

(.333)

(.037)

Redemption fees added to paid in capital D

.001

.002

.001

Net asset value, end of period

$ 9.90

$ 9.87

$ 9.44

Total Return B, C

2.00%

8.20%

(.45)%

Ratios to Average Net Assets F

Expenses before expense reductions

.84% A

.86%

1.15% A

Expenses net of voluntary waivers, if any

.84% A

.86%

.95% A

Expenses net of all reductions

.84% A

.86%

.94% A

Net investment income (loss)

3.06% A

3.27%

3.99% A

Supplemental Data

Net assets, end of period (in millions)

$ 1,265

$ 811

$ 18

Portfolio turnover rate

73% A

55%

77%

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 For the period September 19, 2002 (commencement of sale of shares) to October 31, 2002.

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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Institutional Class

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 E

Selected Per-Share Data

Net asset value, beginning of period

$ 9.86

$ 9.44

$ 9.69

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) D

.147

.312

.365

.590

.151

Net realized and unrealized gain (loss)

.056

.436

(.262)

(.193)

(.058)

Total from investment operations

.203

.748

.103

.397

.093

Distributions from net investment income

(.164)

(.330)

(.354)

(.650)

(.154)

Redemption fees added to paid in capital D

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.90

$ 9.86

$ 9.44

$ 9.69

$ 9.94

Total Return B, C

2.08%

8.06%

1.06%

4.11%

.94%

Ratios to Average Net AssetsF

Expenses before expense reductions

.88% A

.90%

.94%

1.02%

2.32% A

Expenses net of voluntary waivers, if any

.88% A

.89%

.94%

.87%

.49% A

Expenses net of all reductions

.87% A

.89%

.93%

.87%

.49% A

Net investment income (loss)

3.02% A

3.24%

3.79%

6.05%

7.50% A

Supplemental Data

Net assets, end of period (in millions)

$ 71

$ 36

$ 18

$ 7

$ 1

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Notes to Financial Statements

For the period ended April 30, 2004 (Unaudited)

(Amounts in thousands except ratios)

1. Significant Accounting Policies.

Fidelity Advisor Floating Rate High 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, Fidelity Floating Rate High Income Fund, 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 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 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

1. Significant Accounting Policies - continued

Security Valuation - continued

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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. The Fund earns certain fees in connection with its floating rate loan purchasing activites. These fees are in addition to interest payments earned and may include amendment fees, consent fees and prepayment fees. These fees are recorded as Income in the accompanying financial statements.

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 market discount, capital loss carryforwards and losses deferred due to wash sales.

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

Unrealized appreciation

$ 19,393

Unrealized depreciation

(4,966)

Net unrealized appreciation (depreciation)

$ 14,427

Cost for federal income tax purposes

$ 2,198,000

Semiannual Report

1. Significant Accounting Policies - continued

Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.

2. Operating Policies.

Repurchase Agreements. 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.

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, including revolving credit facilities, 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. The fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments. At the end of the period, the fund had unfunded loan commitments of $18,376.

3. Purchases and Sales of Investments.

Purchases and sales of securities (including principal repayments of floating rate loans), is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

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 .55% 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 .68% of the fund's average net assets.

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 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%

$ 94

$ -

Class T

0%

.25%

150

-

Class B

.55%

.15%

479

377

Class C

.55%

.25%

1,220

534

$ 1,943

$ 911

Sales Load. FDC receives a front-end sales charge of up to 3.75% for selling Class A shares, and 2.75% 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 3.50% 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

$ 111

Class T

46

Class B*

171

Class C*

59

$ 387

* 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.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

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, except for Fidelity Floating Rate High Income Fund. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the transfer agent for Fidelity Floating Rate High Income Fund shares. FIIOC and FSC receive account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class to FIIOC or FSC were as follows:

Amount

% of
Average
Net Assets

Class A

$ 115

.18*

Class T

111

.19*

Class B

135

.20*

Class C

247

.16*

Fidelity Floating Rate High Income Fund

451

.09*

Institutional Class

31

.12*

$ 1,090

* Annualized

Accounting Fees. FSC 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 $1,839 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 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

6. Bank Borrowings.

The fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. Information regarding the fund's participation in the program is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

7. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class B

1.65%

$ 3

In addition, 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 $9.

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,903

$ 1,379

Class T

1,798

2,412

Class B

1,739

3,198

Class C

3,730

5,977

Fidelity Floating Rate High Income Fund

17,055

9,407

Institutional Class

801

732

Total

$ 27,026

$ 23,105

Semiannual Report

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

10,675

6,904

$ 105,717

$ 67,614

Reinvestment of distributions

134

98

1,329

956

Shares redeemed

(2,788)

(1,953)

(27,612)

(18,942)

Net increase (decrease)

8,021

5,049

$ 79,434

$ 49,628

Class T

Shares sold

7,486

7,102

$ 74,054

$ 69,392

Reinvestment of distributions

142

214

1,406

2,081

Shares redeemed

(5,063)

(3,806)

(50,066)

(36,871)

Net increase (decrease)

2,565

3,510

$ 25,394

$ 34,602

Class B

Shares sold

2,419

3,767

$ 23,927

$ 36,736

Reinvestment of distributions

126

231

1,247

2,235

Shares redeemed

(1,644)

(2,978)

(16,260)

(28,855)

Net increase (decrease)

901

1,020

$ 8,914

$ 10,116

Class C

Shares sold

11,772

10,474

$ 116,571

$ 102,347

Reinvestment of distributions

245

411

2,427

3,982

Shares redeemed

(3,762)

(8,522)

(37,244)

(82,608)

Net increase (decrease)

8,255

2,363

$ 81,754

$ 23,721

Fidelity Floating Rate High Income Fund

Shares sold

69,626

91,211

$ 688,832

$ 889,648

Reinvestment of distributions

1,502

840

14,856

8,216

Shares redeemed

(25,508)

(11,804)

(252,359)

(115,507)

Net increase (decrease)

45,620

80,247

$ 451,329

$ 782,357

Institutional Class

Shares sold

4,767

2,601

$ 47,166

$ 25,410

Reinvestment of distributions

30

31

298

305

Shares redeemed

(1,245)

(880)

(12,315)

(8,557)

Net increase (decrease)

3,552

1,752

$ 35,149

$ 17,158

Semiannual Report

Semiannual Report

Semiannual Report

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 International
Investment Advisors

Fidelity Investments Japan Limited

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

AFRI-USAN-0604
1.784878.101

Fidelity® Advisor

Floating Rate High Income

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

Semiannual Report

April 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.

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 April 30, 2004

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

Charter Communication Operating LLC

3.5

1.7

EchoStar DBS Corp.

3.1

2.8

Qwest Corp.

2.5

2.1

Nextel Communications, Inc.

2.5

0.0

Centerpoint Energy House Electric LLC

1.2

1.2

12.8

Top Five Market Sectors as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Cable TV

12.8

9.7

Telecommunications

11.7

10.2

Electric Utilities

6.1

7.6

Healthcare

5.3

7.7

Energy

4.3

3.7

Quality Diversification (% of fund's net assets)

As of April 30, 2004

As of October 31, 2003

AAA,AA,A 0.0%

AAA,AA,A 0.0%

BBB 2.8%

BBB 3.8%

BB 35.4%

BB 43.2%

B 24.9%

B 20.4%

CCC,CC,C 2.8%

CCC,CC,C 0.8%

D 0.1%

D 0.1%

Not Rated 21.0%

Not Rated 10.7%

Equities 0.0%

Equities 0.0%

Short-Term
Investments and
Net Other Assets 13.0%

Short-Term
Investments and
Net Other Assets 21.0%



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 April 30, 2004 *

As of October 31, 2003 **

Floating Rate
Loans 70.6%

Floating Rate
Loans 71.4%

Nonconvertible
Bonds 16.4%

Nonconvertible
Bonds 7.5%

Other Investments 0.0%

Other Investments 0.1%

Short-Term
Investments and
Net Other Assets 13.0%

Short-Term
Investments and
Net Other Assets 21.0%

* Foreign
investments

4.3%

** Foreign
investments

4.1%



Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Floating Rate Loans (e) - 70.6%

Principal
Amount (000s)

Value (Note 1)
(000s)

Aerospace - 0.5%

DRS Technologies, Inc. term loan 2.9532% 11/4/10 (d)

$ 1,022

$ 1,033

Titan Corp. Tranche B term loan 4.3778% 6/30/09 (d)

2,948

2,951

Transdigm, Inc. term loan 6% 7/22/10 (d)

1,596

1,607

United Defense Industries, Inc. Tranche B term loan 3.1% 8/13/09 (d)

5,004

5,048

10,639

Automotive - 1.5%

Collins & Aikman Products Co.:

Revolving Credit-Linked Deposit 6% 12/31/05 (d)

702

709

Tranche A1 term loan 6% 12/31/05 (d)

1,298

1,311

Tranche B term loan 7.75% 12/31/05 (d)

480

486

CSK Automotive, Inc. Tranche B term loan 3.39% 6/20/09 (d)

4,000

4,020

Enersys Capital, Inc. term loan 3.62% 3/17/11 (d)

1,000

1,014

Federal-Mogul Financing Trust Tranche B term loan 3.6% 2/24/05 (d)

2,000

1,800

Goodyear Dunlop Tire Europe BV term loan 3.12% 4/30/05 (d)

5,776

5,791

New Flyer Industries Ltd.:

Tranche A Credit-Linked Deposit 3.85% 2/27/10 (d)

714

723

Tranche B term loan 3.85% 2/27/10 (d)

2,286

2,314

Plastech Engineered Products, Inc. Tranche B1 term loan 3.85% 3/31/10 (d)

2,000

2,030

Tenneco Automotive, Inc.:

Tranche B term loan 4.36% 12/12/10 (d)

3,440

3,500

Tranche B1 Credit-Linked Deposit 4.35% 12/12/10 (d)

1,552

1,579

TRW Automotive Holdings Corp. Tranche D1 term loan 2.9375% 2/28/11 (d)

4,870

4,930

United Components, Inc. Tranche C term loan 5.75% 6/30/10 (d)

2,570

2,602

32,809

Broadcasting - 2.2%

Cumulus Media, Inc. Tranche D term loan 3.375% 3/28/10 (d)

8,024

8,124

Emmis Communications Corp. Tranche B term loan 3.375% 8/31/09 (d)

10,006

10,031

Gray Television, Inc. Tranche C term loan 3.6375% 12/31/10 (d)

3,990

4,045

LIN Television Corp. Tranche B term loan 3.3645% 12/31/07 (d)

9,720

9,817

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Broadcasting - continued

Nexstar Broadcasting Group, Inc. Tranche C term loan 3.36% 12/31/10 (d)

$ 1,995

$ 2,022

Sinclair Broadcast Group, Inc.:

term loan 3.375% 12/31/09 (d)

6,545

6,635

Tranche A1 term loan 3.375% 12/31/09 (d)

2,166

2,193

Spanish Broadcasting System, Inc. term loan 4.36% 10/30/09 (d)

4,838

4,898

47,765

Building Materials - 0.4%

Atrium Companies, Inc. term loan 3.8896% 12/10/08 (d)

798

809

Goodman Global Holdings, Inc. Tranche B term loan 3.25% 11/21/09 (d)

1,700

1,723

National Waterworks, Inc. Tranche B1 term loan 3.86% 11/22/09 (d)

1,929

1,948

PGT Industries Tranche A term loan 4.17% 1/29/10 (d)

998

1,005

Ply Gem Industries, Inc. term loan 3.61% 2/12/11 (d)

3,000

3,008

8,493

Cable TV - 8.4%

Adelphia Communications Corp. Tranche B term loan 4.5622% 6/25/04 (d)

7,500

7,575

Atlantic Broadband Finance LLC/Atlantic Broadband Finance, Inc. Tranche B term loan 4.37% 9/1/11 (d)

2,700

2,727

Cebridge Connections, Inc. Tranche 1 term loan 4.3918% 2/23/09 (d)

3,000

3,008

Century Cable Holdings LLC Tranche B term loan:

6% 6/30/09 (d)

2,200

2,156

6% 12/31/09 (d)

2,750

2,681

Century-TCI California LP term loan 6.86% 12/31/07 (d)

6,016

5,896

Charter Communication Operating LLC Tranche B term loan 4.42% 4/27/11 (d)

75,000

74,754

DIRECTV Holdings LLC Tranche B2 term loan 3.3994% 3/6/10 (d)

15,114

15,284

Hilton Head Communications LP Tranche B term loan 5.25% 3/31/08 (d)

8,150

7,906

Insight Midwest Holdings LLC:

Tranche A, term loan 2.9356% 6/30/09 (d)

8,000

7,980

Tranche B term loan:

3.9373% 12/31/09 (d)

10,973

11,041

3.9375% 12/31/09 (d)

998

1,005

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Cable TV - continued

Mediacom Broadband LLC/Mediacom Broadband Corp. Tranche B term loan 3.62% 9/30/10 (d)

$ 3,000

$ 3,041

Olympus Cable Holdings LLC:

Tranche A term loan 5.25% 6/30/10 (d)

8,200

7,811

Tranche B term loan 6% 9/30/10 (d)

6,500

6,338

PanAmSat Corp. Tranche B1 term loan 3.6% 9/30/10 (d)

5,312

5,339

Pegasus Media & Communications, Inc.:

term loan 4.6875% 7/31/05 (d)

4,000

3,990

Tranche B term loan 4.6875% 4/30/05 (d)

536

528

Rainbow Media Holdings, Inc. Tranche C term loan 3.38% 3/31/09 (d)

4,975

5,000

United Pan-Europe Communications NV Tranche C2 term loan 6.64% 3/31/09 (d)

6,390

6,398

180,458

Capital Goods - 2.6%

AGCO Corp. term loan 3.35% 1/31/06 (d)

8,886

9,020

Douglas Dynamics Holdings, Inc. term loan 3.8767% 3/31/10 (d)

1,000

1,011

Dresser, Inc. Tranche C term loan 3.62% 3/1/10 (d)

2,066

2,107

Flowserve Corp. Tranche C term loan 3.875% 6/30/09 (d)

2,464

2,476

Invensys International Holding Ltd. Tranche B1 term loan 4.6113% 9/4/09 (d)

12,000

12,045

Mueller Group, Inc. term loan 4.35% 4/23/11 (d)

2,000

2,000

Roper Industries, Inc. term loan 3.127% 12/29/08 (d)

9,875

10,011

Sensus Metering Systems, Inc. Tranche B term loan 4.1699% 12/17/10 (d)

3,591

3,609

SPX Corp. Tranche B1 term loan 3.125% 9/30/09 (d)

5,553

5,632

Terex Corp.:

term loan 3.7429% 12/31/09 (d)

2,448

2,460

Tranche B term loan 3.1238% 7/3/09 (d)

5,165

5,191

TriMas Corp. Tranche B term loan 4.6% 12/31/09 (d)

872

876

56,438

Chemicals - 2.4%

CP Kelco:

Tranche B term loan 5.1527% 3/31/08 (d)

256

258

Tranche C term loan 5.41% 9/30/08 (d)

84

85

Geo Specialty Chemicals, Inc. Tranche B term loan 9.25% 12/31/07 (d)

1,149

1,057

Georgia Gulf Corp. Tranche D term loan 3.625% 12/2/10 (d)

4,291

4,334

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Chemicals - continued

Hercules, Inc. Tranche B term loan 3.4697% 10/8/10 (d)

$ 2,500

$ 2,531

Huntsman ICI Chemicals LLC:

Tranche B term loan 5.216% 6/30/07 (d)

4,645

4,668

Tranche C term loan 5.4375% 6/30/08 (d)

4,645

4,668

Kraton Polymers LLC term loan 5% 12/23/10 (d)

5,285

5,351

Messer Griesheim Holding AG:

Tranche B2 term loan 3.8313% 4/28/09 (d)

702

702

Tranche C2 term loan 4.3313% 4/28/10 (d)

1,010

1,010

Nalco Co. Tranche B term loan 3.629% 11/4/10 (d)

16,443

16,567

Noveon International, Inc. Tranche B term loan 3.9375% 12/31/09 (d)

2,776

2,773

SGL Carbon LLC term loan 4.22% 12/31/09 (d)

3,000

3,000

United Industries Corp. term loan 3.8376% 4/28/11 (d)

4,000

4,045

51,049

Consumer Products - 3.1%

American Achievement Corp. Tranche B term loan 5.5% 3/25/11 (d)

2,500

2,531

American Safety Razor Co. Tranche B term loan 4.35% 4/29/11 (d)

3,000

3,030

Amscan Holdings, Inc. term loan 3.85% 4/30/12 (d)

4,000

4,030

Armkel LLC Tranche B term loan 4.125% 3/28/09 (d)

679

685

Bombardier Recreational Products, Inc. term loan 4.13% 12/18/10 (d)

1,000

1,000

Central Garden & Pet Co. Tranche B term loan 3.35% 5/14/09 (d)

993

1,002

Church & Dwight Co., Inc. Tranche B term loan 3.34% 9/30/07 (d)

5,429

5,497

Jostens, Inc. term loan 3.72% 7/29/10 (d)

4,739

4,763

Prestige Brands, Inc. Tranche B term loan 4.0844% 4/6/11 (d)

5,000

5,050

Revlon Consumer Products Corp.:

term loan 8.5% 5/30/05 (d)

979

979

Tranche A term loan 8% 5/30/05 (d)

4,000

4,000

Sealy Mattress Co. term loan 3.86% 4/6/12 (d)

9,900

10,036

Simmons Co.:

term loan 5.125% 6/19/12 (d)

2,000

2,000

Tranche B term loan 4.0893% 12/19/11 (d)

5,876

5,949

Sola International, Inc. term loan 3.65% 12/11/09 (d)

4,000

4,045

Tempur Pedic, Inc. Tranche B term loan 4.61% 6/30/09 (d)

1,985

2,005

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Consumer Products - continued

The Scotts Co. term loan 3.125% 9/30/10 (d)

$ 8,991

$ 9,115

Weight Watchers International, Inc. Tranche B term loan 2.92% 3/31/10 (d)

1,230

1,236

66,953

Containers - 2.4%

Ball Corp. Tranche B1 term loan 2.86% 12/19/09 (d)

3,427

3,453

Berry Plastics Corp. Tranche C term loan 3.63% 7/22/10 (d)

1,970

2,000

Crown Cork & Seal Americas, Inc. Tranche B1 term loan 4.1% 9/15/08 (d)

1,900

1,933

Owens Illinois Group, Inc.:

Tranche A1 term loan 3.92% 4/1/07 (d)

10,000

10,038

Tranche B1 term loan 3.88% 4/1/08 (d)

9,200

9,258

Printpack Holdings, Inc. Tranche C term loan 3.375% 3/31/09 (d)

873

880

Silgan Holdings, Inc. Tranche B term loan 3.39% 11/30/08 (d)

12,825

12,969

Solo Cup Co. term loan 3.61% 2/27/11 (d)

9,850

9,998

50,529

Diversified Financial Services - 0.4%

Global Cash Access LLC/Global Cash Access Finance Corp. Tranche B term loan 3.85% 3/10/10 (d)

6,900

6,995

Newkirk Master LP term loan 5.7099% 11/24/06 (d)

2,072

2,103

9,098

Diversified Media - 1.3%

Adams Outdoor Advertisng Ltd. term loan 3.4% 10/15/11 (d)

2,650

2,680

Blockbuster, Inc. Tranche B term loan 2.36% 7/1/04 (d)

400

400

CanWest Media, Inc. Tranche D term loan 3.8719% 5/15/09 (d)

1,990

2,020

Cinram International, Inc. Tranche B term loan 4.84% 9/30/09 (d)

1,977

1,994

Lamar Media Corp.:

Tranche A term loan 2.9375% 6/30/09 (d)

1,000

1,005

Tranche C term loan 3.1875% 6/30/10 (d)

7,741

7,818

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Diversified Media - continued

R.H. Donnelly Corp. Tranche B2 term loan 3.369% 6/30/10 (d)

$ 3,807

$ 3,859

Vivendi Universal Entertainment LLC term loan 3.85% 9/30/08 (d)

9,000

9,023

28,799

Electric Utilities - 4.8%

AES Corp. term loan 5.32% 4/30/08 (d)

5,429

5,496

Allegheny Energy Supply Co. LLC:

term loan 4.1% 3/8/11 (d)

5,000

5,019

Tranche C term loan 5.35% 6/8/11 (d)

8,000

8,050

Aquila Networks Canada Corp. term loan 7.25% 7/30/04 (d)

7,000

7,000

Aquila, Inc. term loan 8% 5/15/06 (d)

683

706

Astoria Energy LLC term loan 6.7011% 4/15/12 (d)

14,000

14,105

Calpine Corp. Tranche B1 term loan 4.6875% 7/15/07 (d)

2,978

3,000

Centerpoint Energy House Electric LLC term loan 12.75% 11/11/05 (d)

22,450

25,369

CenterPoint Energy, Inc. term loan 4.7225% 10/7/06 (d)

2,984

3,043

Cogentrix Delaware Holdings, Inc. term loan 3.35% 2/25/09 (d)

5,550

5,557

Midwest Generation LLC term loan 4.475% 4/27/11 (d)

2,000

2,020

Northwestern Corp. term loan 6.74% 12/1/06 (d)

983

1,002

NRG Energy, Inc.:

Credit-Linked Deposit 5.5% 6/23/10 (d)

2,916

3,004

term loan 5.5% 6/23/10 (d)

5,189

5,344

Teton Power Funding LLC term loan 4.36% 3/12/11 (d)

6,500

6,565

Tucson Electric Power Co. Tranche B Credit-Linked Deposit 3.36% 6/30/09 (d)

7,000

7,026

102,306

Energy - 1.5%

Citgo Petroleum Corp. term loan 8.25% 2/27/06 (d)

1,000

1,033

Magellan Midstream Holdings LP Tranche A term loan 4.67% 6/17/08 (d)

2,569

2,598

Magellan Midstream Partners LP Tranche C term loan 3.1% 8/6/08 (d)

3,900

3,929

Parker Drilling Co. term loan 5.35% 10/10/07 (d)

500

506

Premcor Refining Group, Inc. Credit-Linked Deposit 3.1% 4/13/09 (d)

9,000

9,068

Pride Offshore, Inc. term loan 3.63% 1/15/09 (d)

664

671

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Energy - continued

Tesoro Petroleum Corp. term loan 6.6105% 4/15/08 (d)

$ 1,980

$ 2,039

Williams Production RMT Co. Tranche C term loan 3.6% 5/30/07 (d)

11,662

11,793

31,637

Entertainment/Film - 2.4%

Carmike Cinemas, Inc. term loan 4.4375% 2/4/09 (d)

1,397

1,424

Cinemark USA, Inc. term loan 5.25% 3/31/11 (d)

10,950

11,128

Lions Gate Entertainment Corp. term loan 4.36% 12/31/08 (d)

4,000

4,020

Metro-Goldwyn-Mayer Studios, Inc. Tranche B, term loan 5.5% 4/30/11 (d)

15,000

15,038

Regal Cinemas Corp. Tranche D term loan 3.375% 6/30/09 (d)

5,730

5,816

Warner Music Group term loan 3.8938% 2/28/11 (d)

14,300

14,497

51,923

Environmental - 1.5%

Allied Waste Industries, Inc.:

Tranche A Credit-Linked Deposit 3.84% 1/15/10 (d)

1,143

1,159

Tranche B term loan 3.8662% 1/15/10 (d)

14,746

14,986

Tranche C term loan 3.86% 1/15/10 (d)

3,000

3,049

Tranche D term loan 3.64% 1/15/10 (d)

3,000

3,041

Casella Waste Systems, Inc. Tranche B term loan 3.9554% 1/24/10 (d)

2,970

3,000

Ionics, Inc. term loan 3.87% 2/13/11 (d)

3,800

3,838

Stericycle, Inc. Tranche B term loan 3.35% 9/5/07 (d)

364

366

Waste Connections, Inc. term loan 2.875% 10/22/10 (d)

2,000

2,015

31,454

Food and Drug Retail - 0.5%

Rite Aid Corp. term loan 4.1% 4/30/08 (d)

10,000

10,225

Food/Beverage/Tobacco - 2.6%

Atkins Nutritional Holdings II, Inc. term loan:

4.36% 10/29/09 (d)

2,751

2,754

6.86% 10/29/09 (d)

4,600

4,612

B&G Foods, Inc. term loan 4.52% 8/31/09 (d)

2,985

2,989

Commonwealth Brands, Inc. term loan 5.1875% 8/28/07 (d)

648

656

Constellation Brands, Inc. Tranche B term loan 3.2125% 11/30/08 (d)

3,125

3,172

Del Monte Corp. Tranche B term loan 3.4078% 12/20/10 (d)

6,206

6,299

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Food/Beverage/Tobacco - continued

Dr Pepper/Seven Up Bottling Group, Inc. Tranche B term loan 3.6493% 12/19/10 (d)

$ 7,082

$ 7,161

Luigino's, Inc. term loan 4.125% 4/2/11 (d)

314

319

Merisant Co. Tranche B term loan 3.92% 1/11/10 (d)

1,379

1,382

Michael Foods, Inc. Tranche B term loan 3.9151% 11/21/10 (d)

8,479

8,606

NBTY, Inc. Tranche C term loan 3.1% 7/25/09 (d)

1,478

1,486

Nellson Nutraceutical, Inc. term loan 4.11% 10/4/09 (d)

1,077

1,077

Reddy Ice Group, Inc. term loan:

3.6% 8/15/09 (d)

796

800

3.6% 8/15/09 (d)

299

301

Suiza Foods Corp.:

Tranche B1 term loan 3.11% 7/15/08 (d)

9,942

10,079

Tranche C term loan 2.89% 7/15/08 (d)

4,000

4,040

55,733

Gaming - 1.1%

Alliance Gaming Corp. term loan 3.7875% 9/5/09 (d)

6,350

6,437

Ameristar Casinos, Inc. Tranche B term loan 3.125% 12/20/06 (d)

2,525

2,550

Argosy Gaming Co. Tranche B term loan 3.36% 7/31/08 (d)

2,628

2,648

Green Valley Ranch Gaming LLC term loan 3.86% 12/26/10 (d)

1,995

2,025

Marina District Finance Co., Inc. Tranche B term loan 5.192% 12/13/07 (d)

2,985

3,030

Penn National Gaming, Inc. Tranche D term loan 3.6112% 9/1/07 (d)

1,896

1,924

Scientific Games Corp. Tranche C term loan 4.6731% 12/31/09 (d)

1,995

2,025

Venetian Casino Resort LLC Tranche B term loan 4.11% 6/4/08 (d)

2,653

2,686

23,325

Healthcare - 5.1%

Accredo Health, Inc. Tranche B term loan 3.35% 3/31/09 (d)

980

993

ALARIS Medical Systems, Inc. term loan 3.36% 6/30/09 (d)

666

678

Alliance Imaging, Inc. Tranche C term loan 3.5739% 6/10/08 (d)

838

831

Alpharma, Inc. Tranche B term loan 4.4406% 7/31/08 (d)

1,436

1,443

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Healthcare - continued

AmeriPath, Inc. term loan 4.1% 3/27/10 (d)

$ 1,667

$ 1,677

AMN Healthcare, Inc. Tranche B term loan 4.11% 10/2/08 (d)

1,050

1,066

Apria Healthcare Group, Inc. Tranche B term loan 3.11% 7/20/08 (d)

2,945

2,982

Beverly Enterprises, Inc. term loan 4.4567% 10/22/08 (d)

1,990

2,015

Community Health Systems, Inc. term loan:

3.62% 7/16/10 (d)

6,018

6,124

3.62% 1/16/11 (d)

4,478

4,556

Concentra Operating Corp. term loan 4.9409% 6/30/09 (d)

1,985

2,010

CONMED Corp. Tranche C term loan 3.3887% 12/15/09 (d)

861

872

Connecticare Capital LLC term loan 5.0098% 10/30/09 (d)

1,850

1,869

DaVita, Inc. Tranche B term loan 3.1643% 3/31/09 (d)

16,865

17,034

Express Scripts, Inc. Tranche B term loan 2.8541% 2/13/10 (d)

5,000

5,031

Fisher Scientific International, Inc. Tranche C term loan 3.11% 3/31/10 (d)

7,077

7,148

Fresenius Medical Care Holdings, Inc. Tranche C term loan 3.34% 2/21/10 (d)

6,948

6,939

Genesis HealthCare Corp. Tranche B term loan 3.86% 12/1/10 (d)

898

910

Hanger Orthopedic Group, Inc. Tranche B term loan 3.86% 9/30/09 (d)

2,935

2,968

HCA, Inc. term loan 2.1% 4/30/06 (d)

5,607

5,593

IASIS Healthcare Corp. Tranche B term loan 3.85% 2/7/09 (d)

1,835

1,853

Kinetic Concepts, Inc. Tranche B1 term loan 3.36% 8/11/10 (d)

5,078

5,116

Mariner Health Care, Inc. Tranche B term loan 3.9966% 1/2/10 (d)

680

686

Multiplan, Inc. term loan 3.86% 3/4/09 (d)

3,000

3,038

Oxford Health Plans, Inc. term loan 3.1892% 4/30/09 (d)

1,980

1,980

PacifiCare Health Systems, Inc. term loan 3.7094% 6/3/08 (d)

3,970

4,010

Renal Care Group, Inc. term loan 2.6% 2/10/09 (d)

3,000

3,008

Sybron Dental Management, Inc. term loan 3.3635% 6/6/09 (d)

678

680

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Healthcare - continued

Triad Hospitals, Inc.:

Tranche A term loan 3.35% 3/31/07 (d)

$ 430

$ 436

Tranche B term loan 3.35% 9/30/08 (d)

7,456

7,577

Vanguard Health Systems, Inc. Tanche B term loan 5.35% 1/3/10 (d)

1,975

1,990

Ventas Realty LP/Ventas Capital Corp. Tranche B term loan 3.6% 4/17/07 (d)

983

986

VWR Corp. Tranche B term loan 3.6% 4/7/11 (d)

4,900

4,974

109,073

Homebuilding/Real Estate - 0.9%

AIMCO Properties LP term loan 3.96% 3/11/05 (d)

977

979

Apartment Investment & Management Co. term loan 3.86% 5/30/08 (d)

3,000

3,023

CB Richard Ellis Services, Inc. term loan 4.4392% 12/31/08 (d)

2,950

2,980

Corrections Corp. of America Tranche C term loan 3.8711% 3/31/08 (d)

1,340

1,357

Crescent Real Estate Funding XII LP term loan 3.3482% 1/12/06 (d)

4,000

4,040

Landsource Communication Development LLC Tranche B term loan 3.625% 3/31/10 (d)

5,800

5,887

18,266

Hotels - 1.2%

Extended Stay America, Inc.:

Tranche A3 term loan 4.35% 7/24/07 (d)

916

916

Tranche B term loan 4.85% 1/15/08 (d)

2,323

2,323

Starwood Hotels & Resorts Worldwide, Inc. term loan 2.725% 10/9/06 (d)

4,000

4,000

Wyndham International, Inc. term loan:

5.875% 6/30/06 (d)

13,202

12,674

6.875% 4/1/06 (d)

5,579

5,509

25,422

Insurance - 0.5%

Conseco, Inc.:

Tranche A term loan 7.25% 9/10/09 (d)

6,127

6,142

Tranche B term loan 9.5% 9/10/10 (d)

1,838

1,843

USI Holdings Corp. term loan 3.67% 8/11/09 (d)

1,985

2,010

9,995

Leisure - 1.0%

24 Hour Fitness Worldwide, Inc. term loan 4.75% 7/1/09 (d)

2,993

3,022

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Leisure - continued

Six Flags Theme Park, Inc. Tranche B term loan 3.5935% 6/30/09 (d)

$ 13,582

$ 13,700

True Temper Corp. term loan 3.6% 3/15/11 (d)

3,000

3,015

Vail Corp. term loan 3.42% 12/10/08 (d)

990

1,000

20,737

Metals/Mining - 0.3%

Compass Minerals Group, Inc. Tranche B term loan 3.6484% 11/28/09 (d)

340

344

Peabody Energy Corp. term loan 2.859% 3/21/10 (d)

6,947

7,034

7,378

Paper - 2.9%

Buckeye Technologies, Inc. term loan 3.6904% 3/15/08 (d)

4,876

4,924

Georgia-Pacific Corp. term loan 3.315% 11/28/05 (d)

7,000

7,000

Graphic Packaging International, Inc. Tranche B term loan 3.86% 8/8/10 (d)

15,522

15,755

Jefferson Smurfit Corp. Tranche B term loan 4.375% 3/31/07 (d)

3,569

3,605

Jefferson Smurfit Corp. U.S.:

Tranche B term loan 3.89% 9/16/10 (d)

500

507

Tranche C term loan 4.39% 9/16/11 (d)

500

507

Roseburg Forest Products Co. Tranche B term loan 5% 2/24/10 (d)

4,988

5,012

SP Newsprint Co. Tranche B:

Credit-Linked Deposit 4.1% 1/8/10 (d)

1,289

1,307

term loan 4.1% 1/8/10 (d)

706

716

Stone Container Corp.:

Tranche B term loan 3.6875% 6/30/09 (d)

17,400

17,487

Tranche C term loan 3.6756% 6/30/09 (d)

2,472

2,485

White Birch Paper 2nd Ltd. Tranche B2 term loan 7.5% 8/26/05 (d)

346

351

White Birch Paper Ltd. Tranche B1 term loan 7.5% 2/26/10 (d)

2,654

2,694

62,350

Publishing/Printing - 2.6%

Advanstar Communications, Inc. Tranche B term loan 5.6% 10/11/07 (d)

188

188

American Media Operations, Inc. Tranche C1 term loan 3.88% 4/1/07 (d)

2,597

2,642

CBD Media, Inc. Tranche B term loan 3.34% 12/31/09 (d)

2,940

2,977

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Publishing/Printing - continued

Dex Media East LLC/Dex Media East Finance Co.:

Tranche A term loan 3.3674% 11/8/08 (d)

$ 4,378

$ 4,427

Tranche B term loan 3.6172% 5/8/09 (d)

4,240

4,298

Dex Media West LLC/Dex Media West Finance Co.:

Tranche A term loan 3.3241% 9/9/09 (d)

5,600

5,684

Tranche B term loan 3.4592% 9/9/10 (d)

14,744

14,965

Medianews Group, Inc. Tranche B term loan 3.1% 12/30/10 (d)

7,481

7,575

Morris Publishing Group LLC/Morris Publishing Finance Co. Tranche B term loan 3.375% 3/31/11 (d)

3,000

3,030

Reader's Digest Association, Inc. Tranche B term loan 4.2366% 5/20/08 (d)

2,054

2,067

Sun Media Corp. Canada Tranche B term loan 3.4182% 2/7/09 (d)

1,905

1,924

Transwestern Publishing Co. LP/Township Capital Corp. II Tranche B1 term loan 3.6563% 2/25/11 (d)

6,000

6,060

55,837

Railroad - 0.3%

Kansas City Southern Railway Co. Tranche B term loan 3.1117% 3/30/08 (d)

6,000

6,090

Restaurants - 0.3%

AFC Enterprises, Inc. Tranche B term loan 4.1656% 5/23/09 (d)

979

981

CKE Restaurants, Inc. term loan 4.875% 4/1/08 (d)

405

405

Domino's, Inc. term loan 3.75% 6/25/10 (d)

4,328

4,360

5,746

Services - 1.6%

CACI International, Inc. term loan 3.1798% 4/30/11 (d)

6,000

6,053

Coinmach Corp. Tranche B term loan 3.875% 7/25/09 (d)

2,254

2,285

CSG Systems International, Inc. Tranche B term loan 4.6601% 2/28/08 (d)

6,851

6,920

Hillman Companies, Inc. Tranche B term loan 6.25% 3/31/11 (d)

3,000

3,030

Iron Mountain, Inc. term loan 3.125% 4/2/11 (d)

4,890

4,939

JohnsonDiversey, Inc. Tranche B term loan 3.3778% 11/3/09 (d)

1,582

1,598

United Rentals, Inc.:

term loan 3.41% 2/14/11 (d)

4,167

4,219

Tranche B Credit-Linked Deposit 3.36% 2/14/11 (d)

833

844

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Services - continued

Wackenhut Corrections Corp. term loan 3.6344% 7/9/09 (d)

$ 1,925

$ 1,942

Worldspan LP Tranche B term loan 4.875% 6/30/07 (d)

1,303

1,305

33,135

Shipping - 0.2%

Baker Tanks, Inc. term loan 3.9311% 1/30/11 (d)

3,392

3,408

Steels - 0.1%

Steel Dynamics, Inc. Tranche B1 term loan 4.14% 3/26/08 (d)

1,334

1,357

Super Retail - 1.2%

Advance Stores Co., Inc.:

Tranche D term loan 3.125% 11/30/06 (d)

432

437

Tranche E term loan 3.1569% 11/30/07 (d)

1,735

1,761

Alimentation Couche-Tard, Inc. term loan 3.375% 12/17/10 (d)

1,588

1,616

Buhrmann US, Inc. Tranche B1 term loan 3.86% 12/31/10 (d)

1,995

2,020

FTD, Inc. term loan 3.86% 2/28/11 (d)

1,400

1,418

General Nutrition Centers, Inc. Tranche B term loan 4.2039% 12/5/09 (d)

3,993

4,022

Hollywood Entertainment Corp. Tranche B term loan 4.6% 3/31/08 (d)

2,382

2,388

Oriental Trading Co., Inc.:

term loan 7.125% 1/8/11 (d)

3,300

3,333

Tranche B term loan 3.875% 8/4/10 (d)

4,092

4,102

PETCO Animal Supplies, Inc. Tranche D term loan 3.61% 10/2/08 (d)

1,452

1,470

Rent-A-Center, Inc. term loan 3.1916% 5/28/09 (d)

1,985

2,010

Travelcenters of America, Inc. term loan 4.4708% 11/14/08 (d)

877

888

25,465

Technology - 2.4%

Alliant Techsystems, Inc. Tranche B term loan 2.924% 3/31/11 (d)

4,850

4,886

AMI Semiconductor, Inc. term loan 3.6% 9/26/08 (d)

2,388

2,406

Amphenol Corp. Tranche B1 term loan 2.9729% 5/6/10 (d)

8,180

8,262

Anteon International Corp. term loan 3.11% 12/31/10 (d)

4,988

5,025

Communications & Power Industries, Inc. term loan 4.1094% 7/23/10 (d)

1,600

1,624

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Technology - continued

Fairchild Semiconductor Corp. Tranche B1 term loan 3.75% 6/19/08 (d)

$ 4,963

$ 5,049

Global Imaging Systems, Inc. term loan 3.6043% 6/25/09 (d)

993

1,002

ON Semiconductor Corp. Tranche F term loan 3.875% 8/4/09 (d)

4,958

4,982

Seagate Technology Holdings, Inc. term loan 3.1872% 5/13/07 (d)

1,970

1,990

The Relizon Co. Tranche B term loan 4.26% 2/20/11 (d)

1,943

1,941

Viasystems Group, Inc. Tranche B term loan 6.47% 9/30/08 (d)

2,991

3,021

Xerox Corp. term loan 2.86% 9/30/08 (d)

12,000

12,075

52,263

Telecommunications - 10.1%

Allegiance Telecom, Inc.:

revolver loan LIBOR + 4.5% 12/31/06 (d)

2,090

2,079

term loan LIBOR + 4.5% 12/31/06 (d)

1,910

1,901

American Tower LP:

Tranche A term loan 3.3609% 6/30/07 (d)

17,568

17,568

Tranche C term loan 3.3993% 12/31/07 (d)

6,988

6,988

Centennial Cellular Operating Co. LLC term loan 3.905% 2/9/11 (d)

12,000

12,000

Cincinnati Bell, Inc. Tranche D term loan 3.6286% 6/30/08 (d)

6,799

6,867

Consolidated Communications, Inc. Tranche B term loan 3.973% 10/14/11 (d)

1,000

1,008

Crown Castle International Corp. Tranche A term loan 3.36% 9/15/07 (d)

650

653

Crown Castle Operating Co. Tranche B term loan 4.61% 9/30/10 (d)

15,385

15,616

Dobson Cellular Systems, Inc. term loan 4.3664% 3/31/10 (d)

3,975

3,970

Microcell Solutions, Inc. Tranche A term loan 5.11% 3/17/11 (d)

3,000

3,023

Nextel Communications, Inc. Tranche E term loan 3.375% 12/15/10 (d)

51,671

52,316

Nextel Finance Co. Tranche A term loan 2.375% 12/31/07 (d)

3,787

3,782

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

51,500

52,788

SBA Senior Finance, Inc. term loan 4.65% 10/31/08 (d)

7,095

7,148

SpectraSite Communications, Inc.:

term loan 3.42% 12/31/07 (d)

6,230

6,315

Tranche A term loan 3.7336% 6/30/07 (d)

8,236

8,329

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Telecommunications - continued

Telepak, Inc. term loan 3.61% 5/4/11 (d)

$ 2,900

$ 2,918

Western Wireless Corp.:

Tranche A term loan 3.1499% 3/31/08 (d)

4,582

4,559

Tranche B term loan 4.38% 9/30/08 (d)

6,073

6,073

215,901

Textiles & Apparel - 0.3%

Kosa Lux Finance BV/Kosa UK Finance BV/Arteva Global Holdings BV/Kosa Canada Co. Tranche B term loan 4.7419% 4/29/11 (d)

5,000

5,038

Polymer Group, Inc. term loan 4.35% 4/27/10 (d)

1,000

1,008

William Carter Co. Tranche C term loan 3.7111% 9/30/08 (d)

736

749

6,795

TOTAL FLOATING RATE LOANS

(Cost $1,495,993)

1,508,851

Nonconvertible Bonds - 16.4%

Aerospace - 0.2%

L-3 Communications Corp. 6.125% 1/15/14 (c)

1,000

978

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

3,620

3,548

4,526

Air Transportation - 0.0%

American Airlines, Inc. pass thru trust certificates 6.977% 11/23/22

539

492

Automotive - 0.1%

Delco Remy International, Inc. 5.1688% 4/15/09 (c)(d)

2,000

2,030

Broadcasting - 1.8%

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

4,545

4,454

Gray Television, Inc. 9.25% 12/15/11

1,000

1,123

Nexstar Finance, Inc. 7% 1/15/14 (c)

4,760

4,641

Paxson Communications Corp.:

3.89% 1/15/10 (c)(d)

7,000

7,044

10.75% 7/15/08

2,000

2,090

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

5,000

5,550

Spanish Broadcasting System, Inc. 9.625% 11/1/09

3,000

3,173

XM Satellite Radio, Inc. 6.65% 5/1/09 (c)(d)

10,700

10,807

38,882

Building Materials - 0.1%

Nortek, Inc. 4.17% 12/31/10 (c)(d)

3,000

3,038

Nonconvertible Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Cable TV - 4.4%

Cablevision Systems Corp. 5.66% 4/1/09 (c)(d)

$ 7,000

$ 7,298

CSC Holdings, Inc.:

7.875% 12/15/07

2,000

2,130

10.5% 5/15/16

2,000

2,295

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

2,000

2,250

EchoStar DBS Corp.:

4.36% 10/1/08 (c)(d)

60,625

63,050

10.375% 10/1/07

1,965

2,122

NTL Cable PLC 6.14% 10/15/12 (c)(d)

14,000

14,385

PanAmSat Corp. 6.125% 1/15/05

1,000

1,020

94,550

Capital Goods - 0.1%

Tyco International Group SA yankee 6.375% 2/15/06

3,000

3,161

Chemicals - 0.8%

Georgia Gulf Corp. 7.625% 11/15/05

2,000

2,100

Huntsman Advanced Materials LLC 10% 7/15/08 (c)(d)

3,310

3,442

Huntsman ICI Chemicals LLC 10.125% 7/1/09

2,000

2,085

Methanex Corp. yankee 7.75% 8/15/05

9,125

9,627

17,254

Consumer Products - 0.2%

Armkel Finance, Inc. 9.5% 8/15/09

2,555

2,791

Chattem, Inc. 4.12% 3/1/10 (c)(d)

1,000

1,015

3,806

Containers - 0.4%

Ball Corp. 7.75% 8/1/06

5,000

5,350

Owens-Brockway Glass Container, Inc. 8.875% 2/15/09

2,000

2,170

7,520

Diversified Media - 0.5%

Liberty Media Corp. 2.61% 9/17/06 (d)

10,000

10,175

Electric Utilities - 1.3%

AES Corp.:

8.375% 8/15/07

3,000

3,015

8.5% 11/1/07

4,000

4,060

Allegheny Energy Supply Co. LLC 10.25% 11/15/07 (c)

3,000

3,300

Allegheny Energy, Inc. 7.75% 8/1/05

3,000

3,120

CMS Energy Corp. 9.875% 10/15/07

7,000

7,630

Power Contract Financing LLC 5.2% 2/1/06 (c)

960

972

Nonconvertible Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Electric Utilities - continued

Southern California Edison Co.:

5.875% 9/1/04

$ 1,250

$ 1,275

8% 2/15/07

2,000

2,240

TECO Energy, Inc. 6.125% 5/1/07

2,000

2,030

27,642

Energy - 2.8%

BRL Universal Equipment 2001 A LP/BRL Universal Equipment Corp. 8.875% 2/15/08

2,000

2,160

Chesapeake Energy Corp. 8.375% 11/1/08

6,000

6,600

El Paso Corp. 7.875% 6/15/12

3,000

2,666

El Paso Energy Corp. 6.95% 12/15/07

4,350

4,035

Gemstone Investor Ltd./Gemstone Investor, Inc. 7.71% 10/31/04 (c)

3,000

3,030

General Maritime Corp. 10% 3/15/13

5,000

5,650

OMI Corp. 7.625% 12/1/13

2,000

2,060

Pemex Project Funding Master Trust:

2.64% 1/7/05 (c)(d)

2,000

2,018

2.94% 10/15/09 (c)(d)

5,500

5,734

Pride International, Inc. 10% 6/1/09

5,000

5,300

Pride Petroleum Services, Inc. 9.375% 5/1/07

2,538

2,589

Sonat, Inc. 7.625% 7/15/11

5,000

4,356

Southern Natural Gas Co. 8.875% 3/15/10

840

935

Tesoro Petroleum Corp. 8% 4/15/08

1,000

1,075

The Coastal Corp. 6.2% 5/15/04

2,000

2,000

Transcontinental Gas Pipe Line Corp. 8.875% 7/15/12

2,000

2,325

Williams Companies, Inc. 6.625% 11/15/04

3,000

3,060

Williams Cos., Inc. Credit Linked Certificate Trust 4.42% 5/1/09 (c)(d)

5,000

5,006

60,599

Food and Drug Retail - 0.3%

Rite Aid Corp.:

6% 12/15/05 (c)

5,000

5,025

8.125% 5/1/10

1,000

1,083

6,108

Food/Beverage/Tobacco - 0.1%

Canandaigua Brands, Inc. 8.625% 8/1/06

1,000

1,100

Gaming - 0.0%

Penn National Gaming, Inc. 6.875% 12/1/11 (c)

1,000

1,000

Healthcare - 0.2%

Express Scripts, Inc. 9.625% 6/15/09

4,000

4,230

Nonconvertible Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Homebuilding/Real Estate - 0.1%

William Lyon Homes, Inc. 7.5% 2/15/14 (c)

$ 1,060

$ 1,060

Metals/Mining - 0.3%

Freeport-McMoRan Copper & Gold, Inc. 6.875% 2/1/14 (c)

8,000

7,120

Paper - 0.2%

Bowater, Inc. 4.11% 3/15/10 (d)

4,000

4,040

Publishing/Printing - 0.2%

CBD Media LLC/ CBD Finance, Inc. 8.625% 6/1/11

430

459

Dex Media, Inc. 8% 11/15/13 (c)

5,000

4,800

5,259

Shipping - 0.1%

Teekay Shipping Corp. yankee 8.32% 2/1/08

1,225

1,292

Steels - 0.3%

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

1,000

1,120

Ispat Inland ULC 7.86% 4/1/10 (c)(d)

5,000

5,113

6,233

Technology - 0.3%

Amkor Technology, Inc. 10.5% 5/1/09

5,000

5,263

IOS Capital LLC 7.25% 6/30/08

85

90

5,353

Telecommunications - 1.6%

America Movil SA de CV 1.795% 4/27/07 (c)(d)

2,000

1,995

American Tower Corp. 9.375% 2/1/09

4,000

4,300

Crown Castle International Corp. 10.75% 8/1/11

2,000

2,270

Mobile Telesystems Finance SA 5.13% 8/5/04 (c)(d)

3,000

3,000

Primus Telecom Holding, Inc. 8% 1/15/14 (c)

1,000

920

Qwest Communications International, Inc. 4.63% 2/15/09 (c)(d)

3,000

2,775

Rogers Wireless, Inc. 6.375% 3/1/14 (c)

3,000

2,880

Rural Cellular Corp. 5.61% 3/15/10 (c)(d)

7,000

7,210

U.S. West Communications:

5.65% 11/1/04

3,000

3,000

7.2% 11/1/04

6,000

6,075

34,425

TOTAL NONCONVERTIBLE BONDS

(Cost $349,620)

350,895

Commercial Mortgage Securities - 0.0%

Principal Amount (000s)

Value (Note 1) (000s)

CS First Boston Mortgage Securities Corp. Series 2000-FL1A Class F, 3.8806% 12/15/09 (c)(d)
(Cost $657)

$ 679

$ 579

Common Stocks - 0.0%

Shares

Automotive - 0.0%

Exide Technologies warrants 3/18/06 (a)
(Cost $0)

45

0

Money Market Funds - 15.9%

Fidelity Cash Central Fund, 1.06% (b)

213,884,452

213,884

Fidelity Money Market Central Fund, 1.17% (b)

124,683,581

124,684

TOTAL MONEY MARKET FUNDS

(Cost $338,568)

338,568

Cash Equivalents - 0.6%

Maturity
Amount (000s)

Value (Note 1)
(000s)

Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 0.94%, dated 4/30/04 due 5/3/04)
(Cost $13,534)

$ 13,535

$ 13,534

TOTAL INVESTMENT PORTFOLIO - 103.5%

(Cost $2,198,372)

2,212,427

NET OTHER ASSETS - (3.5)%

(74,167)

NET ASSETS - 100%

$ 2,138,260

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) 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 $189,267,000 or 8.9% of net assets.

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

(e) Remaining maturities of floating rate loans may be less than the stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $1,227,230,000 and $534,674,000, respectively.

The fund participated in the bank borrowing program. The average daily loan balance during the period for which the loan was outstanding amounted to $6,792,000. The weighted average interest rate was 1.5%. At period end, there were no bank borrowings outstanding.

Income Tax Information

At October 31, 2003, the fund had a capital loss carryforward of approximately $11,146,000 of which $5,000, $818,000, $8,246,000 and $2,077,000 will expire on October 31, 2008, 2009, 2010 and 2011, respectively.

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)

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $13,534) (cost $2,198,372) - See accompanying schedule

$ 2,212,427

Cash

5,131

Receivable for investments sold

20,236

Receivable for fund shares sold

23,114

Interest receivable

10,348

Prepaid expenses

4

Receivable from investment adviser for expense reductions

3

Other affiliated receivables

18

Total assets

2,271,281

Liabilities

Payable for investments purchased

$ 127,305

Payable for fund shares redeemed

3,038

Distributions payable

836

Accrued management fee

1,139

Distribution fees payable

353

Other affiliated payables

259

Other payables and accrued expenses

91

Total liabilities

133,021

Net Assets

$ 2,138,260

Net Assets consist of:

Paid in capital

$ 2,128,241

Undistributed net investment income

927

Accumulated undistributed net realized gain (loss) on investments

(4,963)

Net unrealized appreciation (depreciation) on investments

14,055

Net Assets

$ 2,138,260

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

Semiannual Report

Statement of Assets and Liabilities - continued

Amounts in thousands (except per-share amounts)

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($168,195 ÷ 16,974 shares)

$ 9.91

Maximum offering price per share (100/96.25 of $9.91)

$ 10.30

Class T:
Net Asset Value and redemption price per share ($138,605 ÷ 14,001 shares)

$ 9.90

Maximum offering price per share (100/97.25 of $9.90)

$ 10.18

Class B:
Net Asset Value and offering price per share
($143,096 ÷ 14,455 shares) A

$ 9.90

Class C:
Net Asset Value and offering price per share
($352,203 ÷ 35,548 shares) A

$ 9.91

Fidelity Floating Rate High Income Fund:
Net Asset Value, offering price and redemption price per share ($1,265,186 ÷ 127,789 shares)

$ 9.90

Institutional Class:
Net Asset Value, offering price and redemption price per share ($70,975 ÷ 7,171 shares)

$ 9.90

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 April 30, 2004 (Unaudited)

Investment Income

Interest

$ 34,137

Expenses

Management fee

$ 5,966

Transfer agent fees

1,090

Distribution fees

1,943

Accounting fees and expenses

313

Non-interested trustees' compensation

4

Custodian fees and expenses

39

Registration fees

180

Audit

42

Legal

28

Interest

1

Miscellaneous

9

Total expenses before reductions

9,615

Expense reductions

(12)

9,603

Net investment income (loss)

24,534

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

6,367

Change in net unrealized appreciation (depreciation) on investment securities

1,309

Net gain (loss)

7,676

Net increase (decrease) in net assets resulting from operations

$ 32,210

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

Semiannual Report

Statement of Changes in Net Assets

Amounts in thousands

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 24,534

$ 23,331

Net realized gain (loss)

6,367

279

Change in net unrealized appreciation (depreciation)

1,309

31,433

Net increase (decrease) in net assets resulting
from operations

32,210

55,043

Distributions to shareholders from net investment income

(27,026)

(23,105)

Share transactions - net increase (decrease)

681,974

917,582

Redemption fees

189

181

Total increase (decrease) in net assets

687,347

949,701

Net Assets

Beginning of period

1,450,913

501,212

End of period (including undistributed net investment income of $927 and undistributed net investment income of $3,419, respectively)

$ 2,138,260

$ 1,450,913

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.88

$ 9.45

$ 9.70

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.137

.292

.352

.580

.136

Net realized and unrealized gain (loss)

.046

.447

(.264)

(.185)

(.047)

Total from investment operations

.183

.739

.088

.395

.089

Distributions from net investment income

(.154)

(.311)

(.339)

(.638)

(.150)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.91

$ 9.88

$ 9.45

$ 9.70

$ 9.94

Total Return B, C, D

1.87%

7.95%

.90%

4.08%

.90%

Ratios to Average Net Assets G

Expenses before expense reductions

1.09% A

1.10%

1.12%

1.14%

1.75% A

Expenses net of voluntary waivers, if any

1.09% A

1.10%

1.10%

.99%

.78% A

Expenses net of all reductions

1.08% A

1.09%

1.09%

.98%

.78% A

Net investment income (loss)

2.81% A

3.04%

3.64%

5.93%

7.21% A

Supplemental Data

Net assets, end of period (in millions)

$ 168

$ 88

$ 37

$ 41

$ 9

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class T

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.44

$ 9.69

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.133

.285

.342

.573

.131

Net realized and unrealized gain (loss)

.045

.446

(.263)

(.195)

(.045)

Total from investment operations

.178

.731

.079

.378

.086

Distributions from net investment income

(.149)

(.303)

(.330)

(.631)

(.147)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.90

$ 9.87

$ 9.44

$ 9.69

$ 9.94

Total Return B, C, D

1.82%

7.87%

.80%

3.90%

.88%

Ratios to Average Net Assets G

Expenses before expense reductions

1.19% A

1.18%

1.20%

1.22%

1.81% A

Expenses net of voluntary waivers, if any

1.19% A

1.18%

1.19%

1.06%

.93% A

Expenses net of all reductions

1.19% A

1.18%

1.19%

1.06%

.93% A

Net investment income (loss)

2.71% A

2.96%

3.54%

5.86%

7.06% A

Supplemental Data

Net assets, end of period (in millions)

$ 139

$ 113

$ 75

$ 76

$ 25

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class B

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.44

$ 9.69

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.110

.243

.298

.525

.134

Net realized and unrealized gain (loss)

.045

.444

(.263)

(.194)

(.056)

Total from investment operations

.155

.687

.035

.331

.078

Distributions from net investment income

(.126)

(.259)

(.286)

(.584)

(.139)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.90

$ 9.87

$ 9.44

$ 9.69

$ 9.94

Total Return B, C, D

1.59%

7.38%

.35%

3.42%

.79%

Ratios to Average Net Assets G

Expenses before expense reductions

1.65% A

1.64%

1.65%

1.66%

2.74% A

Expenses net of voluntary waivers, if any

1.65% A

1.63%

1.64%

1.54%

1.23% A

Expenses net of all reductions

1.65% A

1.63%

1.64%

1.54%

1.23% A

Net investment income (loss)

2.25% A

2.50%

3.09%

5.38%

6.75% A

Supplemental Data

Net assets, end of period (in millions)

$ 143

$ 134

$ 118

$ 125

$ 24

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class C

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.45

$ 9.70

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.107

.235

.290

.516

.125

Net realized and unrealized gain (loss)

.054

.434

(.263)

(.184)

(.051)

Total from investment operations

.161

.669

.027

.332

.074

Distributions from net investment income

(.122)

(.251)

(.278)

(.575)

(.135)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.91

$ 9.87

$ 9.45

$ 9.70

$ 9.94

Total Return B, C, D

1.65%

7.18%

.26%

3.42%

.76%

Ratios to Average Net Assets G

Expenses before expense reductions

1.72% A

1.72%

1.73%

1.75%

2.41% A

Expenses net of voluntary waivers, if any

1.72% A

1.71%

1.73%

1.64%

1.44% A

Expenses net of all reductions

1.72% A

1.71%

1.73%

1.63%

1.44% A

Net investment income (loss)

2.18% A

2.42%

3.00%

5.28%

6.55% A

Supplemental Data

Net assets, end of period (in millions)

$ 352

$ 269

$ 235

$ 278

$ 48

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Fidelity Floating Rate High Income Fund

Six months ended
April 30, 2004

Years ended
October 31,

(Unaudited)

2003

2002 E

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.44

$ 9.52

Income from Investment Operations

Net investment income (loss) D

.149

.311

.040

Net realized and unrealized gain (loss)

.046

.450

(.084)

Total from investment operations

.195

.761

(.044)

Distributions from net investment income

(.166)

(.333)

(.037)

Redemption fees added to paid in capital D

.001

.002

.001

Net asset value, end of period

$ 9.90

$ 9.87

$ 9.44

Total Return B, C

2.00%

8.20%

(.45)%

Ratios to Average Net Assets F

Expenses before expense reductions

.84% A

.86%

1.15% A

Expenses net of voluntary waivers, if any

.84% A

.86%

.95% A

Expenses net of all reductions

.84% A

.86%

.94% A

Net investment income (loss)

3.06% A

3.27%

3.99% A

Supplemental Data

Net assets, end of period (in millions)

$ 1,265

$ 811

$ 18

Portfolio turnover rate

73% A

55%

77%

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 For the period September 19, 2002 (commencement of sale of shares) to October 31, 2002.

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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Institutional Class

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 E

Selected Per-Share Data

Net asset value, beginning of period

$ 9.86

$ 9.44

$ 9.69

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) D

.147

.312

.365

.590

.151

Net realized and unrealized gain (loss)

.056

.436

(.262)

(.193)

(.058)

Total from investment operations

.203

.748

.103

.397

.093

Distributions from net investment income

(.164)

(.330)

(.354)

(.650)

(.154)

Redemption fees added to paid in capital D

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.90

$ 9.86

$ 9.44

$ 9.69

$ 9.94

Total Return B, C

2.08%

8.06%

1.06%

4.11%

.94%

Ratios to Average Net AssetsF

Expenses before expense reductions

.88% A

.90%

.94%

1.02%

2.32% A

Expenses net of voluntary waivers, if any

.88% A

.89%

.94%

.87%

.49% A

Expenses net of all reductions

.87% A

.89%

.93%

.87%

.49% A

Net investment income (loss)

3.02% A

3.24%

3.79%

6.05%

7.50% A

Supplemental Data

Net assets, end of period (in millions)

$ 71

$ 36

$ 18

$ 7

$ 1

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Notes to Financial Statements

For the period ended April 30, 2004 (Unaudited)

(Amounts in thousands except ratios)

1. Significant Accounting Policies.

Fidelity Advisor Floating Rate High 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, Fidelity Floating Rate High Income Fund, 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 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 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

1. Significant Accounting Policies - continued

Security Valuation - continued

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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. The Fund earns certain fees in connection with its floating rate loan purchasing activites. These fees are in addition to interest payments earned and may include amendment fees, consent fees and prepayment fees. These fees are recorded as Income in the accompanying financial statements.

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 market discount, capital loss carryforwards and losses deferred due to wash sales.

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

Unrealized appreciation

$ 19,393

Unrealized depreciation

(4,966)

Net unrealized appreciation (depreciation)

$ 14,427

Cost for federal income tax purposes

$ 2,198,000

Semiannual Report

1. Significant Accounting Policies - continued

Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.

2. Operating Policies.

Repurchase Agreements. 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.

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, including revolving credit facilities, 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. The fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments. At the end of the period, the fund had unfunded loan commitments of $18,376.

3. Purchases and Sales of Investments.

Purchases and sales of securities (including principal repayments of floating rate loans), is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

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 .55% 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 .68% of the fund's average net assets.

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 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%

$ 94

$ -

Class T

0%

.25%

150

-

Class B

.55%

.15%

479

377

Class C

.55%

.25%

1,220

534

$ 1,943

$ 911

Sales Load. FDC receives a front-end sales charge of up to 3.75% for selling Class A shares, and 2.75% 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 3.50% 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

$ 111

Class T

46

Class B*

171

Class C*

59

$ 387

* 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.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

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, except for Fidelity Floating Rate High Income Fund. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the transfer agent for Fidelity Floating Rate High Income Fund shares. FIIOC and FSC receive account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class to FIIOC or FSC were as follows:

Amount

% of
Average
Net Assets

Class A

$ 115

.18*

Class T

111

.19*

Class B

135

.20*

Class C

247

.16*

Fidelity Floating Rate High Income Fund

451

.09*

Institutional Class

31

.12*

$ 1,090

* Annualized

Accounting Fees. FSC 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 $1,839 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 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

6. Bank Borrowings.

The fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. Information regarding the fund's participation in the program is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

7. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class B

1.65%

$ 3

In addition, 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 $9.

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,903

$ 1,379

Class T

1,798

2,412

Class B

1,739

3,198

Class C

3,730

5,977

Fidelity Floating Rate High Income Fund

17,055

9,407

Institutional Class

801

732

Total

$ 27,026

$ 23,105

Semiannual Report

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

10,675

6,904

$ 105,717

$ 67,614

Reinvestment of distributions

134

98

1,329

956

Shares redeemed

(2,788)

(1,953)

(27,612)

(18,942)

Net increase (decrease)

8,021

5,049

$ 79,434

$ 49,628

Class T

Shares sold

7,486

7,102

$ 74,054

$ 69,392

Reinvestment of distributions

142

214

1,406

2,081

Shares redeemed

(5,063)

(3,806)

(50,066)

(36,871)

Net increase (decrease)

2,565

3,510

$ 25,394

$ 34,602

Class B

Shares sold

2,419

3,767

$ 23,927

$ 36,736

Reinvestment of distributions

126

231

1,247

2,235

Shares redeemed

(1,644)

(2,978)

(16,260)

(28,855)

Net increase (decrease)

901

1,020

$ 8,914

$ 10,116

Class C

Shares sold

11,772

10,474

$ 116,571

$ 102,347

Reinvestment of distributions

245

411

2,427

3,982

Shares redeemed

(3,762)

(8,522)

(37,244)

(82,608)

Net increase (decrease)

8,255

2,363

$ 81,754

$ 23,721

Fidelity Floating Rate High Income Fund

Shares sold

69,626

91,211

$ 688,832

$ 889,648

Reinvestment of distributions

1,502

840

14,856

8,216

Shares redeemed

(25,508)

(11,804)

(252,359)

(115,507)

Net increase (decrease)

45,620

80,247

$ 451,329

$ 782,357

Institutional Class

Shares sold

4,767

2,601

$ 47,166

$ 25,410

Reinvestment of distributions

30

31

298

305

Shares redeemed

(1,245)

(880)

(12,315)

(8,557)

Net increase (decrease)

3,552

1,752

$ 35,149

$ 17,158

Semiannual Report

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 International
Investment Advisors

Fidelity Investments Japan Limited

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agents

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

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

AFR-USAN-0604
1.784877.101

Fidelity

Floating Rate High Income

Fund

(A Class of Fidelity® Advisor
Floating Rate High Income Fund)

Semiannual Report

April 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 visit www.fidelity.com/goto/proxyguidelines, call 1-800-544-8544, 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.

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 April 30, 2004

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

Charter Communication Operating LLC

3.5

1.7

EchoStar DBS Corp.

3.1

2.8

Qwest Corp.

2.5

2.1

Nextel Communications, Inc.

2.5

0.0

Centerpoint Energy House Electric LLC

1.2

1.2

12.8

Top Five Market Sectors as of April 30, 2004

% of fund's
net assets

% of fund's net assets
6 months ago

Cable TV

12.8

9.7

Telecommunications

11.7

10.2

Electric Utilities

6.1

7.6

Healthcare

5.3

7.7

Energy

4.3

3.7

Quality Diversification (% of fund's net assets)

As of April 30, 2004

As of October 31, 2003

AAA,AA,A 0.0%

AAA,AA,A 0.0%

BBB 2.8%

BBB 3.8%

BB 35.4%

BB 43.2%

B 24.9%

B 20.4%

CCC,CC,C 2.8%

CCC,CC,C 0.8%

D 0.1%

D 0.1%

Not Rated 21.0%

Not Rated 10.7%

Equities 0.0%

Equities 0.0%

Short-Term
Investments and
Net Other Assets 13.0%

Short-Term
Investments and
Net Other Assets 21.0%



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 April 30, 2004 *

As of October 31, 2003 **

Floating Rate
Loans 70.6%

Floating Rate
Loans 71.4%

Nonconvertible
Bonds 16.4%

Nonconvertible
Bonds 7.5%

Other Investments 0.0%

Other Investments 0.1%

Short-Term
Investments and
Net Other Assets 13.0%

Short-Term
Investments and
Net Other Assets 21.0%

* Foreign
investments

4.3%

** Foreign
investments

4.1%



Semiannual Report

Investments April 30, 2004 (Unaudited)

Showing Percentage of Net Assets

Floating Rate Loans (e) - 70.6%

Principal
Amount (000s)

Value (Note 1)
(000s)

Aerospace - 0.5%

DRS Technologies, Inc. term loan 2.9532% 11/4/10 (d)

$ 1,022

$ 1,033

Titan Corp. Tranche B term loan 4.3778% 6/30/09 (d)

2,948

2,951

Transdigm, Inc. term loan 6% 7/22/10 (d)

1,596

1,607

United Defense Industries, Inc. Tranche B term loan 3.1% 8/13/09 (d)

5,004

5,048

10,639

Automotive - 1.5%

Collins & Aikman Products Co.:

Revolving Credit-Linked Deposit 6% 12/31/05 (d)

702

709

Tranche A1 term loan 6% 12/31/05 (d)

1,298

1,311

Tranche B term loan 7.75% 12/31/05 (d)

480

486

CSK Automotive, Inc. Tranche B term loan 3.39% 6/20/09 (d)

4,000

4,020

Enersys Capital, Inc. term loan 3.62% 3/17/11 (d)

1,000

1,014

Federal-Mogul Financing Trust Tranche B term loan 3.6% 2/24/05 (d)

2,000

1,800

Goodyear Dunlop Tire Europe BV term loan 3.12% 4/30/05 (d)

5,776

5,791

New Flyer Industries Ltd.:

Tranche A Credit-Linked Deposit 3.85% 2/27/10 (d)

714

723

Tranche B term loan 3.85% 2/27/10 (d)

2,286

2,314

Plastech Engineered Products, Inc. Tranche B1 term loan 3.85% 3/31/10 (d)

2,000

2,030

Tenneco Automotive, Inc.:

Tranche B term loan 4.36% 12/12/10 (d)

3,440

3,500

Tranche B1 Credit-Linked Deposit 4.35% 12/12/10 (d)

1,552

1,579

TRW Automotive Holdings Corp. Tranche D1 term loan 2.9375% 2/28/11 (d)

4,870

4,930

United Components, Inc. Tranche C term loan 5.75% 6/30/10 (d)

2,570

2,602

32,809

Broadcasting - 2.2%

Cumulus Media, Inc. Tranche D term loan 3.375% 3/28/10 (d)

8,024

8,124

Emmis Communications Corp. Tranche B term loan 3.375% 8/31/09 (d)

10,006

10,031

Gray Television, Inc. Tranche C term loan 3.6375% 12/31/10 (d)

3,990

4,045

LIN Television Corp. Tranche B term loan 3.3645% 12/31/07 (d)

9,720

9,817

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Broadcasting - continued

Nexstar Broadcasting Group, Inc. Tranche C term loan 3.36% 12/31/10 (d)

$ 1,995

$ 2,022

Sinclair Broadcast Group, Inc.:

term loan 3.375% 12/31/09 (d)

6,545

6,635

Tranche A1 term loan 3.375% 12/31/09 (d)

2,166

2,193

Spanish Broadcasting System, Inc. term loan 4.36% 10/30/09 (d)

4,838

4,898

47,765

Building Materials - 0.4%

Atrium Companies, Inc. term loan 3.8896% 12/10/08 (d)

798

809

Goodman Global Holdings, Inc. Tranche B term loan 3.25% 11/21/09 (d)

1,700

1,723

National Waterworks, Inc. Tranche B1 term loan 3.86% 11/22/09 (d)

1,929

1,948

PGT Industries Tranche A term loan 4.17% 1/29/10 (d)

998

1,005

Ply Gem Industries, Inc. term loan 3.61% 2/12/11 (d)

3,000

3,008

8,493

Cable TV - 8.4%

Adelphia Communications Corp. Tranche B term loan 4.5622% 6/25/04 (d)

7,500

7,575

Atlantic Broadband Finance LLC/Atlantic Broadband Finance, Inc. Tranche B term loan 4.37% 9/1/11 (d)

2,700

2,727

Cebridge Connections, Inc. Tranche 1 term loan 4.3918% 2/23/09 (d)

3,000

3,008

Century Cable Holdings LLC Tranche B term loan:

6% 6/30/09 (d)

2,200

2,156

6% 12/31/09 (d)

2,750

2,681

Century-TCI California LP term loan 6.86% 12/31/07 (d)

6,016

5,896

Charter Communication Operating LLC Tranche B term loan 4.42% 4/27/11 (d)

75,000

74,754

DIRECTV Holdings LLC Tranche B2 term loan 3.3994% 3/6/10 (d)

15,114

15,284

Hilton Head Communications LP Tranche B term loan 5.25% 3/31/08 (d)

8,150

7,906

Insight Midwest Holdings LLC:

Tranche A, term loan 2.9356% 6/30/09 (d)

8,000

7,980

Tranche B term loan:

3.9373% 12/31/09 (d)

10,973

11,041

3.9375% 12/31/09 (d)

998

1,005

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Cable TV - continued

Mediacom Broadband LLC/Mediacom Broadband Corp. Tranche B term loan 3.62% 9/30/10 (d)

$ 3,000

$ 3,041

Olympus Cable Holdings LLC:

Tranche A term loan 5.25% 6/30/10 (d)

8,200

7,811

Tranche B term loan 6% 9/30/10 (d)

6,500

6,338

PanAmSat Corp. Tranche B1 term loan 3.6% 9/30/10 (d)

5,312

5,339

Pegasus Media & Communications, Inc.:

term loan 4.6875% 7/31/05 (d)

4,000

3,990

Tranche B term loan 4.6875% 4/30/05 (d)

536

528

Rainbow Media Holdings, Inc. Tranche C term loan 3.38% 3/31/09 (d)

4,975

5,000

United Pan-Europe Communications NV Tranche C2 term loan 6.64% 3/31/09 (d)

6,390

6,398

180,458

Capital Goods - 2.6%

AGCO Corp. term loan 3.35% 1/31/06 (d)

8,886

9,020

Douglas Dynamics Holdings, Inc. term loan 3.8767% 3/31/10 (d)

1,000

1,011

Dresser, Inc. Tranche C term loan 3.62% 3/1/10 (d)

2,066

2,107

Flowserve Corp. Tranche C term loan 3.875% 6/30/09 (d)

2,464

2,476

Invensys International Holding Ltd. Tranche B1 term loan 4.6113% 9/4/09 (d)

12,000

12,045

Mueller Group, Inc. term loan 4.35% 4/23/11 (d)

2,000

2,000

Roper Industries, Inc. term loan 3.127% 12/29/08 (d)

9,875

10,011

Sensus Metering Systems, Inc. Tranche B term loan 4.1699% 12/17/10 (d)

3,591

3,609

SPX Corp. Tranche B1 term loan 3.125% 9/30/09 (d)

5,553

5,632

Terex Corp.:

term loan 3.7429% 12/31/09 (d)

2,448

2,460

Tranche B term loan 3.1238% 7/3/09 (d)

5,165

5,191

TriMas Corp. Tranche B term loan 4.6% 12/31/09 (d)

872

876

56,438

Chemicals - 2.4%

CP Kelco:

Tranche B term loan 5.1527% 3/31/08 (d)

256

258

Tranche C term loan 5.41% 9/30/08 (d)

84

85

Geo Specialty Chemicals, Inc. Tranche B term loan 9.25% 12/31/07 (d)

1,149

1,057

Georgia Gulf Corp. Tranche D term loan 3.625% 12/2/10 (d)

4,291

4,334

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Chemicals - continued

Hercules, Inc. Tranche B term loan 3.4697% 10/8/10 (d)

$ 2,500

$ 2,531

Huntsman ICI Chemicals LLC:

Tranche B term loan 5.216% 6/30/07 (d)

4,645

4,668

Tranche C term loan 5.4375% 6/30/08 (d)

4,645

4,668

Kraton Polymers LLC term loan 5% 12/23/10 (d)

5,285

5,351

Messer Griesheim Holding AG:

Tranche B2 term loan 3.8313% 4/28/09 (d)

702

702

Tranche C2 term loan 4.3313% 4/28/10 (d)

1,010

1,010

Nalco Co. Tranche B term loan 3.629% 11/4/10 (d)

16,443

16,567

Noveon International, Inc. Tranche B term loan 3.9375% 12/31/09 (d)

2,776

2,773

SGL Carbon LLC term loan 4.22% 12/31/09 (d)

3,000

3,000

United Industries Corp. term loan 3.8376% 4/28/11 (d)

4,000

4,045

51,049

Consumer Products - 3.1%

American Achievement Corp. Tranche B term loan 5.5% 3/25/11 (d)

2,500

2,531

American Safety Razor Co. Tranche B term loan 4.35% 4/29/11 (d)

3,000

3,030

Amscan Holdings, Inc. term loan 3.85% 4/30/12 (d)

4,000

4,030

Armkel LLC Tranche B term loan 4.125% 3/28/09 (d)

679

685

Bombardier Recreational Products, Inc. term loan 4.13% 12/18/10 (d)

1,000

1,000

Central Garden & Pet Co. Tranche B term loan 3.35% 5/14/09 (d)

993

1,002

Church & Dwight Co., Inc. Tranche B term loan 3.34% 9/30/07 (d)

5,429

5,497

Jostens, Inc. term loan 3.72% 7/29/10 (d)

4,739

4,763

Prestige Brands, Inc. Tranche B term loan 4.0844% 4/6/11 (d)

5,000

5,050

Revlon Consumer Products Corp.:

term loan 8.5% 5/30/05 (d)

979

979

Tranche A term loan 8% 5/30/05 (d)

4,000

4,000

Sealy Mattress Co. term loan 3.86% 4/6/12 (d)

9,900

10,036

Simmons Co.:

term loan 5.125% 6/19/12 (d)

2,000

2,000

Tranche B term loan 4.0893% 12/19/11 (d)

5,876

5,949

Sola International, Inc. term loan 3.65% 12/11/09 (d)

4,000

4,045

Tempur Pedic, Inc. Tranche B term loan 4.61% 6/30/09 (d)

1,985

2,005

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Consumer Products - continued

The Scotts Co. term loan 3.125% 9/30/10 (d)

$ 8,991

$ 9,115

Weight Watchers International, Inc. Tranche B term loan 2.92% 3/31/10 (d)

1,230

1,236

66,953

Containers - 2.4%

Ball Corp. Tranche B1 term loan 2.86% 12/19/09 (d)

3,427

3,453

Berry Plastics Corp. Tranche C term loan 3.63% 7/22/10 (d)

1,970

2,000

Crown Cork & Seal Americas, Inc. Tranche B1 term loan 4.1% 9/15/08 (d)

1,900

1,933

Owens Illinois Group, Inc.:

Tranche A1 term loan 3.92% 4/1/07 (d)

10,000

10,038

Tranche B1 term loan 3.88% 4/1/08 (d)

9,200

9,258

Printpack Holdings, Inc. Tranche C term loan 3.375% 3/31/09 (d)

873

880

Silgan Holdings, Inc. Tranche B term loan 3.39% 11/30/08 (d)

12,825

12,969

Solo Cup Co. term loan 3.61% 2/27/11 (d)

9,850

9,998

50,529

Diversified Financial Services - 0.4%

Global Cash Access LLC/Global Cash Access Finance Corp. Tranche B term loan 3.85% 3/10/10 (d)

6,900

6,995

Newkirk Master LP term loan 5.7099% 11/24/06 (d)

2,072

2,103

9,098

Diversified Media - 1.3%

Adams Outdoor Advertisng Ltd. term loan 3.4% 10/15/11 (d)

2,650

2,680

Blockbuster, Inc. Tranche B term loan 2.36% 7/1/04 (d)

400

400

CanWest Media, Inc. Tranche D term loan 3.8719% 5/15/09 (d)

1,990

2,020

Cinram International, Inc. Tranche B term loan 4.84% 9/30/09 (d)

1,977

1,994

Lamar Media Corp.:

Tranche A term loan 2.9375% 6/30/09 (d)

1,000

1,005

Tranche C term loan 3.1875% 6/30/10 (d)

7,741

7,818

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Diversified Media - continued

R.H. Donnelly Corp. Tranche B2 term loan 3.369% 6/30/10 (d)

$ 3,807

$ 3,859

Vivendi Universal Entertainment LLC term loan 3.85% 9/30/08 (d)

9,000

9,023

28,799

Electric Utilities - 4.8%

AES Corp. term loan 5.32% 4/30/08 (d)

5,429

5,496

Allegheny Energy Supply Co. LLC:

term loan 4.1% 3/8/11 (d)

5,000

5,019

Tranche C term loan 5.35% 6/8/11 (d)

8,000

8,050

Aquila Networks Canada Corp. term loan 7.25% 7/30/04 (d)

7,000

7,000

Aquila, Inc. term loan 8% 5/15/06 (d)

683

706

Astoria Energy LLC term loan 6.7011% 4/15/12 (d)

14,000

14,105

Calpine Corp. Tranche B1 term loan 4.6875% 7/15/07 (d)

2,978

3,000

Centerpoint Energy House Electric LLC term loan 12.75% 11/11/05 (d)

22,450

25,369

CenterPoint Energy, Inc. term loan 4.7225% 10/7/06 (d)

2,984

3,043

Cogentrix Delaware Holdings, Inc. term loan 3.35% 2/25/09 (d)

5,550

5,557

Midwest Generation LLC term loan 4.475% 4/27/11 (d)

2,000

2,020

Northwestern Corp. term loan 6.74% 12/1/06 (d)

983

1,002

NRG Energy, Inc.:

Credit-Linked Deposit 5.5% 6/23/10 (d)

2,916

3,004

term loan 5.5% 6/23/10 (d)

5,189

5,344

Teton Power Funding LLC term loan 4.36% 3/12/11 (d)

6,500

6,565

Tucson Electric Power Co. Tranche B Credit-Linked Deposit 3.36% 6/30/09 (d)

7,000

7,026

102,306

Energy - 1.5%

Citgo Petroleum Corp. term loan 8.25% 2/27/06 (d)

1,000

1,033

Magellan Midstream Holdings LP Tranche A term loan 4.67% 6/17/08 (d)

2,569

2,598

Magellan Midstream Partners LP Tranche C term loan 3.1% 8/6/08 (d)

3,900

3,929

Parker Drilling Co. term loan 5.35% 10/10/07 (d)

500

506

Premcor Refining Group, Inc. Credit-Linked Deposit 3.1% 4/13/09 (d)

9,000

9,068

Pride Offshore, Inc. term loan 3.63% 1/15/09 (d)

664

671

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Energy - continued

Tesoro Petroleum Corp. term loan 6.6105% 4/15/08 (d)

$ 1,980

$ 2,039

Williams Production RMT Co. Tranche C term loan 3.6% 5/30/07 (d)

11,662

11,793

31,637

Entertainment/Film - 2.4%

Carmike Cinemas, Inc. term loan 4.4375% 2/4/09 (d)

1,397

1,424

Cinemark USA, Inc. term loan 5.25% 3/31/11 (d)

10,950

11,128

Lions Gate Entertainment Corp. term loan 4.36% 12/31/08 (d)

4,000

4,020

Metro-Goldwyn-Mayer Studios, Inc. Tranche B, term loan 5.5% 4/30/11 (d)

15,000

15,038

Regal Cinemas Corp. Tranche D term loan 3.375% 6/30/09 (d)

5,730

5,816

Warner Music Group term loan 3.8938% 2/28/11 (d)

14,300

14,497

51,923

Environmental - 1.5%

Allied Waste Industries, Inc.:

Tranche A Credit-Linked Deposit 3.84% 1/15/10 (d)

1,143

1,159

Tranche B term loan 3.8662% 1/15/10 (d)

14,746

14,986

Tranche C term loan 3.86% 1/15/10 (d)

3,000

3,049

Tranche D term loan 3.64% 1/15/10 (d)

3,000

3,041

Casella Waste Systems, Inc. Tranche B term loan 3.9554% 1/24/10 (d)

2,970

3,000

Ionics, Inc. term loan 3.87% 2/13/11 (d)

3,800

3,838

Stericycle, Inc. Tranche B term loan 3.35% 9/5/07 (d)

364

366

Waste Connections, Inc. term loan 2.875% 10/22/10 (d)

2,000

2,015

31,454

Food and Drug Retail - 0.5%

Rite Aid Corp. term loan 4.1% 4/30/08 (d)

10,000

10,225

Food/Beverage/Tobacco - 2.6%

Atkins Nutritional Holdings II, Inc. term loan:

4.36% 10/29/09 (d)

2,751

2,754

6.86% 10/29/09 (d)

4,600

4,612

B&G Foods, Inc. term loan 4.52% 8/31/09 (d)

2,985

2,989

Commonwealth Brands, Inc. term loan 5.1875% 8/28/07 (d)

648

656

Constellation Brands, Inc. Tranche B term loan 3.2125% 11/30/08 (d)

3,125

3,172

Del Monte Corp. Tranche B term loan 3.4078% 12/20/10 (d)

6,206

6,299

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Food/Beverage/Tobacco - continued

Dr Pepper/Seven Up Bottling Group, Inc. Tranche B term loan 3.6493% 12/19/10 (d)

$ 7,082

$ 7,161

Luigino's, Inc. term loan 4.125% 4/2/11 (d)

314

319

Merisant Co. Tranche B term loan 3.92% 1/11/10 (d)

1,379

1,382

Michael Foods, Inc. Tranche B term loan 3.9151% 11/21/10 (d)

8,479

8,606

NBTY, Inc. Tranche C term loan 3.1% 7/25/09 (d)

1,478

1,486

Nellson Nutraceutical, Inc. term loan 4.11% 10/4/09 (d)

1,077

1,077

Reddy Ice Group, Inc. term loan:

3.6% 8/15/09 (d)

796

800

3.6% 8/15/09 (d)

299

301

Suiza Foods Corp.:

Tranche B1 term loan 3.11% 7/15/08 (d)

9,942

10,079

Tranche C term loan 2.89% 7/15/08 (d)

4,000

4,040

55,733

Gaming - 1.1%

Alliance Gaming Corp. term loan 3.7875% 9/5/09 (d)

6,350

6,437

Ameristar Casinos, Inc. Tranche B term loan 3.125% 12/20/06 (d)

2,525

2,550

Argosy Gaming Co. Tranche B term loan 3.36% 7/31/08 (d)

2,628

2,648

Green Valley Ranch Gaming LLC term loan 3.86% 12/26/10 (d)

1,995

2,025

Marina District Finance Co., Inc. Tranche B term loan 5.192% 12/13/07 (d)

2,985

3,030

Penn National Gaming, Inc. Tranche D term loan 3.6112% 9/1/07 (d)

1,896

1,924

Scientific Games Corp. Tranche C term loan 4.6731% 12/31/09 (d)

1,995

2,025

Venetian Casino Resort LLC Tranche B term loan 4.11% 6/4/08 (d)

2,653

2,686

23,325

Healthcare - 5.1%

Accredo Health, Inc. Tranche B term loan 3.35% 3/31/09 (d)

980

993

ALARIS Medical Systems, Inc. term loan 3.36% 6/30/09 (d)

666

678

Alliance Imaging, Inc. Tranche C term loan 3.5739% 6/10/08 (d)

838

831

Alpharma, Inc. Tranche B term loan 4.4406% 7/31/08 (d)

1,436

1,443

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Healthcare - continued

AmeriPath, Inc. term loan 4.1% 3/27/10 (d)

$ 1,667

$ 1,677

AMN Healthcare, Inc. Tranche B term loan 4.11% 10/2/08 (d)

1,050

1,066

Apria Healthcare Group, Inc. Tranche B term loan 3.11% 7/20/08 (d)

2,945

2,982

Beverly Enterprises, Inc. term loan 4.4567% 10/22/08 (d)

1,990

2,015

Community Health Systems, Inc. term loan:

3.62% 7/16/10 (d)

6,018

6,124

3.62% 1/16/11 (d)

4,478

4,556

Concentra Operating Corp. term loan 4.9409% 6/30/09 (d)

1,985

2,010

CONMED Corp. Tranche C term loan 3.3887% 12/15/09 (d)

861

872

Connecticare Capital LLC term loan 5.0098% 10/30/09 (d)

1,850

1,869

DaVita, Inc. Tranche B term loan 3.1643% 3/31/09 (d)

16,865

17,034

Express Scripts, Inc. Tranche B term loan 2.8541% 2/13/10 (d)

5,000

5,031

Fisher Scientific International, Inc. Tranche C term loan 3.11% 3/31/10 (d)

7,077

7,148

Fresenius Medical Care Holdings, Inc. Tranche C term loan 3.34% 2/21/10 (d)

6,948

6,939

Genesis HealthCare Corp. Tranche B term loan 3.86% 12/1/10 (d)

898

910

Hanger Orthopedic Group, Inc. Tranche B term loan 3.86% 9/30/09 (d)

2,935

2,968

HCA, Inc. term loan 2.1% 4/30/06 (d)

5,607

5,593

IASIS Healthcare Corp. Tranche B term loan 3.85% 2/7/09 (d)

1,835

1,853

Kinetic Concepts, Inc. Tranche B1 term loan 3.36% 8/11/10 (d)

5,078

5,116

Mariner Health Care, Inc. Tranche B term loan 3.9966% 1/2/10 (d)

680

686

Multiplan, Inc. term loan 3.86% 3/4/09 (d)

3,000

3,038

Oxford Health Plans, Inc. term loan 3.1892% 4/30/09 (d)

1,980

1,980

PacifiCare Health Systems, Inc. term loan 3.7094% 6/3/08 (d)

3,970

4,010

Renal Care Group, Inc. term loan 2.6% 2/10/09 (d)

3,000

3,008

Sybron Dental Management, Inc. term loan 3.3635% 6/6/09 (d)

678

680

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Healthcare - continued

Triad Hospitals, Inc.:

Tranche A term loan 3.35% 3/31/07 (d)

$ 430

$ 436

Tranche B term loan 3.35% 9/30/08 (d)

7,456

7,577

Vanguard Health Systems, Inc. Tanche B term loan 5.35% 1/3/10 (d)

1,975

1,990

Ventas Realty LP/Ventas Capital Corp. Tranche B term loan 3.6% 4/17/07 (d)

983

986

VWR Corp. Tranche B term loan 3.6% 4/7/11 (d)

4,900

4,974

109,073

Homebuilding/Real Estate - 0.9%

AIMCO Properties LP term loan 3.96% 3/11/05 (d)

977

979

Apartment Investment & Management Co. term loan 3.86% 5/30/08 (d)

3,000

3,023

CB Richard Ellis Services, Inc. term loan 4.4392% 12/31/08 (d)

2,950

2,980

Corrections Corp. of America Tranche C term loan 3.8711% 3/31/08 (d)

1,340

1,357

Crescent Real Estate Funding XII LP term loan 3.3482% 1/12/06 (d)

4,000

4,040

Landsource Communication Development LLC Tranche B term loan 3.625% 3/31/10 (d)

5,800

5,887

18,266

Hotels - 1.2%

Extended Stay America, Inc.:

Tranche A3 term loan 4.35% 7/24/07 (d)

916

916

Tranche B term loan 4.85% 1/15/08 (d)

2,323

2,323

Starwood Hotels & Resorts Worldwide, Inc. term loan 2.725% 10/9/06 (d)

4,000

4,000

Wyndham International, Inc. term loan:

5.875% 6/30/06 (d)

13,202

12,674

6.875% 4/1/06 (d)

5,579

5,509

25,422

Insurance - 0.5%

Conseco, Inc.:

Tranche A term loan 7.25% 9/10/09 (d)

6,127

6,142

Tranche B term loan 9.5% 9/10/10 (d)

1,838

1,843

USI Holdings Corp. term loan 3.67% 8/11/09 (d)

1,985

2,010

9,995

Leisure - 1.0%

24 Hour Fitness Worldwide, Inc. term loan 4.75% 7/1/09 (d)

2,993

3,022

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Leisure - continued

Six Flags Theme Park, Inc. Tranche B term loan 3.5935% 6/30/09 (d)

$ 13,582

$ 13,700

True Temper Corp. term loan 3.6% 3/15/11 (d)

3,000

3,015

Vail Corp. term loan 3.42% 12/10/08 (d)

990

1,000

20,737

Metals/Mining - 0.3%

Compass Minerals Group, Inc. Tranche B term loan 3.6484% 11/28/09 (d)

340

344

Peabody Energy Corp. term loan 2.859% 3/21/10 (d)

6,947

7,034

7,378

Paper - 2.9%

Buckeye Technologies, Inc. term loan 3.6904% 3/15/08 (d)

4,876

4,924

Georgia-Pacific Corp. term loan 3.315% 11/28/05 (d)

7,000

7,000

Graphic Packaging International, Inc. Tranche B term loan 3.86% 8/8/10 (d)

15,522

15,755

Jefferson Smurfit Corp. Tranche B term loan 4.375% 3/31/07 (d)

3,569

3,605

Jefferson Smurfit Corp. U.S.:

Tranche B term loan 3.89% 9/16/10 (d)

500

507

Tranche C term loan 4.39% 9/16/11 (d)

500

507

Roseburg Forest Products Co. Tranche B term loan 5% 2/24/10 (d)

4,988

5,012

SP Newsprint Co. Tranche B:

Credit-Linked Deposit 4.1% 1/8/10 (d)

1,289

1,307

term loan 4.1% 1/8/10 (d)

706

716

Stone Container Corp.:

Tranche B term loan 3.6875% 6/30/09 (d)

17,400

17,487

Tranche C term loan 3.6756% 6/30/09 (d)

2,472

2,485

White Birch Paper 2nd Ltd. Tranche B2 term loan 7.5% 8/26/05 (d)

346

351

White Birch Paper Ltd. Tranche B1 term loan 7.5% 2/26/10 (d)

2,654

2,694

62,350

Publishing/Printing - 2.6%

Advanstar Communications, Inc. Tranche B term loan 5.6% 10/11/07 (d)

188

188

American Media Operations, Inc. Tranche C1 term loan 3.88% 4/1/07 (d)

2,597

2,642

CBD Media, Inc. Tranche B term loan 3.34% 12/31/09 (d)

2,940

2,977

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Publishing/Printing - continued

Dex Media East LLC/Dex Media East Finance Co.:

Tranche A term loan 3.3674% 11/8/08 (d)

$ 4,378

$ 4,427

Tranche B term loan 3.6172% 5/8/09 (d)

4,240

4,298

Dex Media West LLC/Dex Media West Finance Co.:

Tranche A term loan 3.3241% 9/9/09 (d)

5,600

5,684

Tranche B term loan 3.4592% 9/9/10 (d)

14,744

14,965

Medianews Group, Inc. Tranche B term loan 3.1% 12/30/10 (d)

7,481

7,575

Morris Publishing Group LLC/Morris Publishing Finance Co. Tranche B term loan 3.375% 3/31/11 (d)

3,000

3,030

Reader's Digest Association, Inc. Tranche B term loan 4.2366% 5/20/08 (d)

2,054

2,067

Sun Media Corp. Canada Tranche B term loan 3.4182% 2/7/09 (d)

1,905

1,924

Transwestern Publishing Co. LP/Township Capital Corp. II Tranche B1 term loan 3.6563% 2/25/11 (d)

6,000

6,060

55,837

Railroad - 0.3%

Kansas City Southern Railway Co. Tranche B term loan 3.1117% 3/30/08 (d)

6,000

6,090

Restaurants - 0.3%

AFC Enterprises, Inc. Tranche B term loan 4.1656% 5/23/09 (d)

979

981

CKE Restaurants, Inc. term loan 4.875% 4/1/08 (d)

405

405

Domino's, Inc. term loan 3.75% 6/25/10 (d)

4,328

4,360

5,746

Services - 1.6%

CACI International, Inc. term loan 3.1798% 4/30/11 (d)

6,000

6,053

Coinmach Corp. Tranche B term loan 3.875% 7/25/09 (d)

2,254

2,285

CSG Systems International, Inc. Tranche B term loan 4.6601% 2/28/08 (d)

6,851

6,920

Hillman Companies, Inc. Tranche B term loan 6.25% 3/31/11 (d)

3,000

3,030

Iron Mountain, Inc. term loan 3.125% 4/2/11 (d)

4,890

4,939

JohnsonDiversey, Inc. Tranche B term loan 3.3778% 11/3/09 (d)

1,582

1,598

United Rentals, Inc.:

term loan 3.41% 2/14/11 (d)

4,167

4,219

Tranche B Credit-Linked Deposit 3.36% 2/14/11 (d)

833

844

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Services - continued

Wackenhut Corrections Corp. term loan 3.6344% 7/9/09 (d)

$ 1,925

$ 1,942

Worldspan LP Tranche B term loan 4.875% 6/30/07 (d)

1,303

1,305

33,135

Shipping - 0.2%

Baker Tanks, Inc. term loan 3.9311% 1/30/11 (d)

3,392

3,408

Steels - 0.1%

Steel Dynamics, Inc. Tranche B1 term loan 4.14% 3/26/08 (d)

1,334

1,357

Super Retail - 1.2%

Advance Stores Co., Inc.:

Tranche D term loan 3.125% 11/30/06 (d)

432

437

Tranche E term loan 3.1569% 11/30/07 (d)

1,735

1,761

Alimentation Couche-Tard, Inc. term loan 3.375% 12/17/10 (d)

1,588

1,616

Buhrmann US, Inc. Tranche B1 term loan 3.86% 12/31/10 (d)

1,995

2,020

FTD, Inc. term loan 3.86% 2/28/11 (d)

1,400

1,418

General Nutrition Centers, Inc. Tranche B term loan 4.2039% 12/5/09 (d)

3,993

4,022

Hollywood Entertainment Corp. Tranche B term loan 4.6% 3/31/08 (d)

2,382

2,388

Oriental Trading Co., Inc.:

term loan 7.125% 1/8/11 (d)

3,300

3,333

Tranche B term loan 3.875% 8/4/10 (d)

4,092

4,102

PETCO Animal Supplies, Inc. Tranche D term loan 3.61% 10/2/08 (d)

1,452

1,470

Rent-A-Center, Inc. term loan 3.1916% 5/28/09 (d)

1,985

2,010

Travelcenters of America, Inc. term loan 4.4708% 11/14/08 (d)

877

888

25,465

Technology - 2.4%

Alliant Techsystems, Inc. Tranche B term loan 2.924% 3/31/11 (d)

4,850

4,886

AMI Semiconductor, Inc. term loan 3.6% 9/26/08 (d)

2,388

2,406

Amphenol Corp. Tranche B1 term loan 2.9729% 5/6/10 (d)

8,180

8,262

Anteon International Corp. term loan 3.11% 12/31/10 (d)

4,988

5,025

Communications & Power Industries, Inc. term loan 4.1094% 7/23/10 (d)

1,600

1,624

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Technology - continued

Fairchild Semiconductor Corp. Tranche B1 term loan 3.75% 6/19/08 (d)

$ 4,963

$ 5,049

Global Imaging Systems, Inc. term loan 3.6043% 6/25/09 (d)

993

1,002

ON Semiconductor Corp. Tranche F term loan 3.875% 8/4/09 (d)

4,958

4,982

Seagate Technology Holdings, Inc. term loan 3.1872% 5/13/07 (d)

1,970

1,990

The Relizon Co. Tranche B term loan 4.26% 2/20/11 (d)

1,943

1,941

Viasystems Group, Inc. Tranche B term loan 6.47% 9/30/08 (d)

2,991

3,021

Xerox Corp. term loan 2.86% 9/30/08 (d)

12,000

12,075

52,263

Telecommunications - 10.1%

Allegiance Telecom, Inc.:

revolver loan LIBOR + 4.5% 12/31/06 (d)

2,090

2,079

term loan LIBOR + 4.5% 12/31/06 (d)

1,910

1,901

American Tower LP:

Tranche A term loan 3.3609% 6/30/07 (d)

17,568

17,568

Tranche C term loan 3.3993% 12/31/07 (d)

6,988

6,988

Centennial Cellular Operating Co. LLC term loan 3.905% 2/9/11 (d)

12,000

12,000

Cincinnati Bell, Inc. Tranche D term loan 3.6286% 6/30/08 (d)

6,799

6,867

Consolidated Communications, Inc. Tranche B term loan 3.973% 10/14/11 (d)

1,000

1,008

Crown Castle International Corp. Tranche A term loan 3.36% 9/15/07 (d)

650

653

Crown Castle Operating Co. Tranche B term loan 4.61% 9/30/10 (d)

15,385

15,616

Dobson Cellular Systems, Inc. term loan 4.3664% 3/31/10 (d)

3,975

3,970

Microcell Solutions, Inc. Tranche A term loan 5.11% 3/17/11 (d)

3,000

3,023

Nextel Communications, Inc. Tranche E term loan 3.375% 12/15/10 (d)

51,671

52,316

Nextel Finance Co. Tranche A term loan 2.375% 12/31/07 (d)

3,787

3,782

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

51,500

52,788

SBA Senior Finance, Inc. term loan 4.65% 10/31/08 (d)

7,095

7,148

SpectraSite Communications, Inc.:

term loan 3.42% 12/31/07 (d)

6,230

6,315

Tranche A term loan 3.7336% 6/30/07 (d)

8,236

8,329

Floating Rate Loans (e) - continued

Principal Amount (000s)

Value (Note 1) (000s)

Telecommunications - continued

Telepak, Inc. term loan 3.61% 5/4/11 (d)

$ 2,900

$ 2,918

Western Wireless Corp.:

Tranche A term loan 3.1499% 3/31/08 (d)

4,582

4,559

Tranche B term loan 4.38% 9/30/08 (d)

6,073

6,073

215,901

Textiles & Apparel - 0.3%

Kosa Lux Finance BV/Kosa UK Finance BV/Arteva Global Holdings BV/Kosa Canada Co. Tranche B term loan 4.7419% 4/29/11 (d)

5,000

5,038

Polymer Group, Inc. term loan 4.35% 4/27/10 (d)

1,000

1,008

William Carter Co. Tranche C term loan 3.7111% 9/30/08 (d)

736

749

6,795

TOTAL FLOATING RATE LOANS

(Cost $1,495,993)

1,508,851

Nonconvertible Bonds - 16.4%

Aerospace - 0.2%

L-3 Communications Corp. 6.125% 1/15/14 (c)

1,000

978

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

3,620

3,548

4,526

Air Transportation - 0.0%

American Airlines, Inc. pass thru trust certificates 6.977% 11/23/22

539

492

Automotive - 0.1%

Delco Remy International, Inc. 5.1688% 4/15/09 (c)(d)

2,000

2,030

Broadcasting - 1.8%

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

4,545

4,454

Gray Television, Inc. 9.25% 12/15/11

1,000

1,123

Nexstar Finance, Inc. 7% 1/15/14 (c)

4,760

4,641

Paxson Communications Corp.:

3.89% 1/15/10 (c)(d)

7,000

7,044

10.75% 7/15/08

2,000

2,090

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

5,000

5,550

Spanish Broadcasting System, Inc. 9.625% 11/1/09

3,000

3,173

XM Satellite Radio, Inc. 6.65% 5/1/09 (c)(d)

10,700

10,807

38,882

Building Materials - 0.1%

Nortek, Inc. 4.17% 12/31/10 (c)(d)

3,000

3,038

Nonconvertible Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Cable TV - 4.4%

Cablevision Systems Corp. 5.66% 4/1/09 (c)(d)

$ 7,000

$ 7,298

CSC Holdings, Inc.:

7.875% 12/15/07

2,000

2,130

10.5% 5/15/16

2,000

2,295

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

2,000

2,250

EchoStar DBS Corp.:

4.36% 10/1/08 (c)(d)

60,625

63,050

10.375% 10/1/07

1,965

2,122

NTL Cable PLC 6.14% 10/15/12 (c)(d)

14,000

14,385

PanAmSat Corp. 6.125% 1/15/05

1,000

1,020

94,550

Capital Goods - 0.1%

Tyco International Group SA yankee 6.375% 2/15/06

3,000

3,161

Chemicals - 0.8%

Georgia Gulf Corp. 7.625% 11/15/05

2,000

2,100

Huntsman Advanced Materials LLC 10% 7/15/08 (c)(d)

3,310

3,442

Huntsman ICI Chemicals LLC 10.125% 7/1/09

2,000

2,085

Methanex Corp. yankee 7.75% 8/15/05

9,125

9,627

17,254

Consumer Products - 0.2%

Armkel Finance, Inc. 9.5% 8/15/09

2,555

2,791

Chattem, Inc. 4.12% 3/1/10 (c)(d)

1,000

1,015

3,806

Containers - 0.4%

Ball Corp. 7.75% 8/1/06

5,000

5,350

Owens-Brockway Glass Container, Inc. 8.875% 2/15/09

2,000

2,170

7,520

Diversified Media - 0.5%

Liberty Media Corp. 2.61% 9/17/06 (d)

10,000

10,175

Electric Utilities - 1.3%

AES Corp.:

8.375% 8/15/07

3,000

3,015

8.5% 11/1/07

4,000

4,060

Allegheny Energy Supply Co. LLC 10.25% 11/15/07 (c)

3,000

3,300

Allegheny Energy, Inc. 7.75% 8/1/05

3,000

3,120

CMS Energy Corp. 9.875% 10/15/07

7,000

7,630

Power Contract Financing LLC 5.2% 2/1/06 (c)

960

972

Nonconvertible Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Electric Utilities - continued

Southern California Edison Co.:

5.875% 9/1/04

$ 1,250

$ 1,275

8% 2/15/07

2,000

2,240

TECO Energy, Inc. 6.125% 5/1/07

2,000

2,030

27,642

Energy - 2.8%

BRL Universal Equipment 2001 A LP/BRL Universal Equipment Corp. 8.875% 2/15/08

2,000

2,160

Chesapeake Energy Corp. 8.375% 11/1/08

6,000

6,600

El Paso Corp. 7.875% 6/15/12

3,000

2,666

El Paso Energy Corp. 6.95% 12/15/07

4,350

4,035

Gemstone Investor Ltd./Gemstone Investor, Inc. 7.71% 10/31/04 (c)

3,000

3,030

General Maritime Corp. 10% 3/15/13

5,000

5,650

OMI Corp. 7.625% 12/1/13

2,000

2,060

Pemex Project Funding Master Trust:

2.64% 1/7/05 (c)(d)

2,000

2,018

2.94% 10/15/09 (c)(d)

5,500

5,734

Pride International, Inc. 10% 6/1/09

5,000

5,300

Pride Petroleum Services, Inc. 9.375% 5/1/07

2,538

2,589

Sonat, Inc. 7.625% 7/15/11

5,000

4,356

Southern Natural Gas Co. 8.875% 3/15/10

840

935

Tesoro Petroleum Corp. 8% 4/15/08

1,000

1,075

The Coastal Corp. 6.2% 5/15/04

2,000

2,000

Transcontinental Gas Pipe Line Corp. 8.875% 7/15/12

2,000

2,325

Williams Companies, Inc. 6.625% 11/15/04

3,000

3,060

Williams Cos., Inc. Credit Linked Certificate Trust 4.42% 5/1/09 (c)(d)

5,000

5,006

60,599

Food and Drug Retail - 0.3%

Rite Aid Corp.:

6% 12/15/05 (c)

5,000

5,025

8.125% 5/1/10

1,000

1,083

6,108

Food/Beverage/Tobacco - 0.1%

Canandaigua Brands, Inc. 8.625% 8/1/06

1,000

1,100

Gaming - 0.0%

Penn National Gaming, Inc. 6.875% 12/1/11 (c)

1,000

1,000

Healthcare - 0.2%

Express Scripts, Inc. 9.625% 6/15/09

4,000

4,230

Nonconvertible Bonds - continued

Principal Amount (000s)

Value (Note 1) (000s)

Homebuilding/Real Estate - 0.1%

William Lyon Homes, Inc. 7.5% 2/15/14 (c)

$ 1,060

$ 1,060

Metals/Mining - 0.3%

Freeport-McMoRan Copper & Gold, Inc. 6.875% 2/1/14 (c)

8,000

7,120

Paper - 0.2%

Bowater, Inc. 4.11% 3/15/10 (d)

4,000

4,040

Publishing/Printing - 0.2%

CBD Media LLC/ CBD Finance, Inc. 8.625% 6/1/11

430

459

Dex Media, Inc. 8% 11/15/13 (c)

5,000

4,800

5,259

Shipping - 0.1%

Teekay Shipping Corp. yankee 8.32% 2/1/08

1,225

1,292

Steels - 0.3%

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

1,000

1,120

Ispat Inland ULC 7.86% 4/1/10 (c)(d)

5,000

5,113

6,233

Technology - 0.3%

Amkor Technology, Inc. 10.5% 5/1/09

5,000

5,263

IOS Capital LLC 7.25% 6/30/08

85

90

5,353

Telecommunications - 1.6%

America Movil SA de CV 1.795% 4/27/07 (c)(d)

2,000

1,995

American Tower Corp. 9.375% 2/1/09

4,000

4,300

Crown Castle International Corp. 10.75% 8/1/11

2,000

2,270

Mobile Telesystems Finance SA 5.13% 8/5/04 (c)(d)

3,000

3,000

Primus Telecom Holding, Inc. 8% 1/15/14 (c)

1,000

920

Qwest Communications International, Inc. 4.63% 2/15/09 (c)(d)

3,000

2,775

Rogers Wireless, Inc. 6.375% 3/1/14 (c)

3,000

2,880

Rural Cellular Corp. 5.61% 3/15/10 (c)(d)

7,000

7,210

U.S. West Communications:

5.65% 11/1/04

3,000

3,000

7.2% 11/1/04

6,000

6,075

34,425

TOTAL NONCONVERTIBLE BONDS

(Cost $349,620)

350,895

Commercial Mortgage Securities - 0.0%

Principal Amount (000s)

Value (Note 1) (000s)

CS First Boston Mortgage Securities Corp. Series 2000-FL1A Class F, 3.8806% 12/15/09 (c)(d)
(Cost $657)

$ 679

$ 579

Common Stocks - 0.0%

Shares

Automotive - 0.0%

Exide Technologies warrants 3/18/06 (a)
(Cost $0)

45

0

Money Market Funds - 15.9%

Fidelity Cash Central Fund, 1.06% (b)

213,884,452

213,884

Fidelity Money Market Central Fund, 1.17% (b)

124,683,581

124,684

TOTAL MONEY MARKET FUNDS

(Cost $338,568)

338,568

Cash Equivalents - 0.6%

Maturity
Amount (000s)

Value (Note 1)
(000s)

Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 0.94%, dated 4/30/04 due 5/3/04)
(Cost $13,534)

$ 13,535

$ 13,534

TOTAL INVESTMENT PORTFOLIO - 103.5%

(Cost $2,198,372)

2,212,427

NET OTHER ASSETS - (3.5)%

(74,167)

NET ASSETS - 100%

$ 2,138,260

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) 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 $189,267,000 or 8.9% of net assets.

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

(e) Remaining maturities of floating rate loans may be less than the stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $1,227,230,000 and $534,674,000, respectively.

The fund participated in the bank borrowing program. The average daily loan balance during the period for which the loan was outstanding amounted to $6,792,000. The weighted average interest rate was 1.5%. At period end, there were no bank borrowings outstanding.

Income Tax Information

At October 31, 2003, the fund had a capital loss carryforward of approximately $11,146,000 of which $5,000, $818,000, $8,246,000 and $2,077,000 will expire on October 31, 2008, 2009, 2010 and 2011, respectively.

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)

April 30, 2004 (Unaudited)

Assets

Investment in securities, at value (including repurchase agreements of $13,534) (cost $2,198,372) - See accompanying schedule

$ 2,212,427

Cash

5,131

Receivable for investments sold

20,236

Receivable for fund shares sold

23,114

Interest receivable

10,348

Prepaid expenses

4

Receivable from investment adviser for expense reductions

3

Other affiliated receivables

18

Total assets

2,271,281

Liabilities

Payable for investments purchased

$ 127,305

Payable for fund shares redeemed

3,038

Distributions payable

836

Accrued management fee

1,139

Distribution fees payable

353

Other affiliated payables

259

Other payables and accrued expenses

91

Total liabilities

133,021

Net Assets

$ 2,138,260

Net Assets consist of:

Paid in capital

$ 2,128,241

Undistributed net investment income

927

Accumulated undistributed net realized gain (loss) on investments

(4,963)

Net unrealized appreciation (depreciation) on investments

14,055

Net Assets

$ 2,138,260

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

Semiannual Report

Statement of Assets and Liabilities - continued

Amounts in thousands (except per-share amounts)

April 30, 2004 (Unaudited)

Calculation of Maximum Offering Price
Class A:
Net Asset Value and redemption price per share
($168,195 ÷ 16,974 shares)

$ 9.91

Maximum offering price per share (100/96.25 of $9.91)

$ 10.30

Class T:
Net Asset Value and redemption price per share ($138,605 ÷ 14,001 shares)

$ 9.90

Maximum offering price per share (100/97.25 of $9.90)

$ 10.18

Class B:
Net Asset Value and offering price per share
($143,096 ÷ 14,455 shares) A

$ 9.90

Class C:
Net Asset Value and offering price per share
($352,203 ÷ 35,548 shares) A

$ 9.91

Fidelity Floating Rate High Income Fund:
Net Asset Value, offering price and redemption price per share ($1,265,186 ÷ 127,789 shares)

$ 9.90

Institutional Class:
Net Asset Value, offering price and redemption price per share ($70,975 ÷ 7,171 shares)

$ 9.90

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 April 30, 2004 (Unaudited)

Investment Income

Interest

$ 34,137

Expenses

Management fee

$ 5,966

Transfer agent fees

1,090

Distribution fees

1,943

Accounting fees and expenses

313

Non-interested trustees' compensation

4

Custodian fees and expenses

39

Registration fees

180

Audit

42

Legal

28

Interest

1

Miscellaneous

9

Total expenses before reductions

9,615

Expense reductions

(12)

9,603

Net investment income (loss)

24,534

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on investment securities

6,367

Change in net unrealized appreciation (depreciation) on investment securities

1,309

Net gain (loss)

7,676

Net increase (decrease) in net assets resulting from operations

$ 32,210

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

Semiannual Report

Statement of Changes in Net Assets

Amounts in thousands

Six months ended
April 30, 2004
(Unaudited)

Year ended
October 31,
2003

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 24,534

$ 23,331

Net realized gain (loss)

6,367

279

Change in net unrealized appreciation (depreciation)

1,309

31,433

Net increase (decrease) in net assets resulting
from operations

32,210

55,043

Distributions to shareholders from net investment income

(27,026)

(23,105)

Share transactions - net increase (decrease)

681,974

917,582

Redemption fees

189

181

Total increase (decrease) in net assets

687,347

949,701

Net Assets

Beginning of period

1,450,913

501,212

End of period (including undistributed net investment income of $927 and undistributed net investment income of $3,419, respectively)

$ 2,138,260

$ 1,450,913

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

Semiannual Report

Financial Highlights - Class A

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.88

$ 9.45

$ 9.70

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.137

.292

.352

.580

.136

Net realized and unrealized gain (loss)

.046

.447

(.264)

(.185)

(.047)

Total from investment operations

.183

.739

.088

.395

.089

Distributions from net investment income

(.154)

(.311)

(.339)

(.638)

(.150)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.91

$ 9.88

$ 9.45

$ 9.70

$ 9.94

Total Return B, C, D

1.87%

7.95%

.90%

4.08%

.90%

Ratios to Average Net Assets G

Expenses before expense reductions

1.09% A

1.10%

1.12%

1.14%

1.75% A

Expenses net of voluntary waivers, if any

1.09% A

1.10%

1.10%

.99%

.78% A

Expenses net of all reductions

1.08% A

1.09%

1.09%

.98%

.78% A

Net investment income (loss)

2.81% A

3.04%

3.64%

5.93%

7.21% A

Supplemental Data

Net assets, end of period (in millions)

$ 168

$ 88

$ 37

$ 41

$ 9

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class T

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.44

$ 9.69

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.133

.285

.342

.573

.131

Net realized and unrealized gain (loss)

.045

.446

(.263)

(.195)

(.045)

Total from investment operations

.178

.731

.079

.378

.086

Distributions from net investment income

(.149)

(.303)

(.330)

(.631)

(.147)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.90

$ 9.87

$ 9.44

$ 9.69

$ 9.94

Total Return B, C, D

1.82%

7.87%

.80%

3.90%

.88%

Ratios to Average Net Assets G

Expenses before expense reductions

1.19% A

1.18%

1.20%

1.22%

1.81% A

Expenses net of voluntary waivers, if any

1.19% A

1.18%

1.19%

1.06%

.93% A

Expenses net of all reductions

1.19% A

1.18%

1.19%

1.06%

.93% A

Net investment income (loss)

2.71% A

2.96%

3.54%

5.86%

7.06% A

Supplemental Data

Net assets, end of period (in millions)

$ 139

$ 113

$ 75

$ 76

$ 25

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class B

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.44

$ 9.69

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.110

.243

.298

.525

.134

Net realized and unrealized gain (loss)

.045

.444

(.263)

(.194)

(.056)

Total from investment operations

.155

.687

.035

.331

.078

Distributions from net investment income

(.126)

(.259)

(.286)

(.584)

(.139)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.90

$ 9.87

$ 9.44

$ 9.69

$ 9.94

Total Return B, C, D

1.59%

7.38%

.35%

3.42%

.79%

Ratios to Average Net Assets G

Expenses before expense reductions

1.65% A

1.64%

1.65%

1.66%

2.74% A

Expenses net of voluntary waivers, if any

1.65% A

1.63%

1.64%

1.54%

1.23% A

Expenses net of all reductions

1.65% A

1.63%

1.64%

1.54%

1.23% A

Net investment income (loss)

2.25% A

2.50%

3.09%

5.38%

6.75% A

Supplemental Data

Net assets, end of period (in millions)

$ 143

$ 134

$ 118

$ 125

$ 24

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Class C

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 F

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.45

$ 9.70

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) E

.107

.235

.290

.516

.125

Net realized and unrealized gain (loss)

.054

.434

(.263)

(.184)

(.051)

Total from investment operations

.161

.669

.027

.332

.074

Distributions from net investment income

(.122)

(.251)

(.278)

(.575)

(.135)

Redemption fees added to paid in capital E

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.91

$ 9.87

$ 9.45

$ 9.70

$ 9.94

Total Return B, C, D

1.65%

7.18%

.26%

3.42%

.76%

Ratios to Average Net Assets G

Expenses before expense reductions

1.72% A

1.72%

1.73%

1.75%

2.41% A

Expenses net of voluntary waivers, if any

1.72% A

1.71%

1.73%

1.64%

1.44% A

Expenses net of all reductions

1.72% A

1.71%

1.73%

1.63%

1.44% A

Net investment income (loss)

2.18% A

2.42%

3.00%

5.28%

6.55% A

Supplemental Data

Net assets, end of period (in millions)

$ 352

$ 269

$ 235

$ 278

$ 48

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

G 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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Fidelity Floating Rate High Income Fund

Six months ended
April 30, 2004

Years ended
October 31,

(Unaudited)

2003

2002 E

Selected Per-Share Data

Net asset value, beginning of period

$ 9.87

$ 9.44

$ 9.52

Income from Investment Operations

Net investment income (loss) D

.149

.311

.040

Net realized and unrealized gain (loss)

.046

.450

(.084)

Total from investment operations

.195

.761

(.044)

Distributions from net investment income

(.166)

(.333)

(.037)

Redemption fees added to paid in capital D

.001

.002

.001

Net asset value, end of period

$ 9.90

$ 9.87

$ 9.44

Total Return B, C

2.00%

8.20%

(.45)%

Ratios to Average Net Assets F

Expenses before expense reductions

.84% A

.86%

1.15% A

Expenses net of voluntary waivers, if any

.84% A

.86%

.95% A

Expenses net of all reductions

.84% A

.86%

.94% A

Net investment income (loss)

3.06% A

3.27%

3.99% A

Supplemental Data

Net assets, end of period (in millions)

$ 1,265

$ 811

$ 18

Portfolio turnover rate

73% A

55%

77%

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 For the period September 19, 2002 (commencement of sale of shares) to October 31, 2002.

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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Financial Highlights - Institutional Class

Six months ended
April 30, 2004

Years ended October 31,

(Unaudited)

2003

2002

2001

2000 E

Selected Per-Share Data

Net asset value, beginning of period

$ 9.86

$ 9.44

$ 9.69

$ 9.94

$ 10.00

Income from Investment Operations

Net investment income (loss) D

.147

.312

.365

.590

.151

Net realized and unrealized gain (loss)

.056

.436

(.262)

(.193)

(.058)

Total from investment operations

.203

.748

.103

.397

.093

Distributions from net investment income

(.164)

(.330)

(.354)

(.650)

(.154)

Redemption fees added to paid in capital D

.001

.002

.001

.003

.001

Net asset value, end of period

$ 9.90

$ 9.86

$ 9.44

$ 9.69

$ 9.94

Total Return B, C

2.08%

8.06%

1.06%

4.11%

.94%

Ratios to Average Net AssetsF

Expenses before expense reductions

.88% A

.90%

.94%

1.02%

2.32% A

Expenses net of voluntary waivers, if any

.88% A

.89%

.94%

.87%

.49% A

Expenses net of all reductions

.87% A

.89%

.93%

.87%

.49% A

Net investment income (loss)

3.02% A

3.24%

3.79%

6.05%

7.50% A

Supplemental Data

Net assets, end of period (in millions)

$ 71

$ 36

$ 18

$ 7

$ 1

Portfolio turnover rate

73% A

55%

77%

55%

12% A

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 For the period August 16, 2000 (commencement of operations) to October 31, 2000.

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. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. 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.

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

Semiannual Report

Notes to Financial Statements

For the period ended April 30, 2004 (Unaudited)

(Amounts in thousands except ratios)

1. Significant Accounting Policies.

Fidelity Advisor Floating Rate High 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, Fidelity Floating Rate High Income Fund, 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 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 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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

1. Significant Accounting Policies - continued

Security Valuation - continued

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.

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. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. The Fund earns certain fees in connection with its floating rate loan purchasing activites. These fees are in addition to interest payments earned and may include amendment fees, consent fees and prepayment fees. These fees are recorded as Income in the accompanying financial statements.

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. Income dividends and capital gain distributions are declared separately for each class. 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 and capital 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 market discount, capital loss carryforwards and losses deferred due to wash sales.

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

Unrealized appreciation

$ 19,393

Unrealized depreciation

(4,966)

Net unrealized appreciation (depreciation)

$ 14,427

Cost for federal income tax purposes

$ 2,198,000

Semiannual Report

1. Significant Accounting Policies - continued

Short-Term Trading (Redemption) Fees. Shares held in the fund less than 60 days are subject to a redemption fee equal to 1.00% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by Fidelity Management & Research Company (FMR), are retained by the fund and accounted for as an addition to paid in capital.

2. Operating Policies.

Repurchase Agreements. 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.

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, including revolving credit facilities, 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. The fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments. At the end of the period, the fund had unfunded loan commitments of $18,376.

3. Purchases and Sales of Investments.

Purchases and sales of securities (including principal repayments of floating rate loans), is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

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 .55% 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 .68% of the fund's average net assets.

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 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%

$ 94

$ -

Class T

0%

.25%

150

-

Class B

.55%

.15%

479

377

Class C

.55%

.25%

1,220

534

$ 1,943

$ 911

Sales Load. FDC receives a front-end sales charge of up to 3.75% for selling Class A shares, and 2.75% 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 3.50% 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

$ 111

Class T

46

Class B*

171

Class C*

59

$ 387

* 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.

Semiannual Report

4. Fees and Other Transactions with Affiliates - continued

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, except for Fidelity Floating Rate High Income Fund. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the transfer agent for Fidelity Floating Rate High Income Fund shares. FIIOC and FSC receive account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the fund. FIIOC and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class to FIIOC or FSC were as follows:

Amount

% of
Average
Net Assets

Class A

$ 115

.18*

Class T

111

.19*

Class B

135

.20*

Class C

247

.16*

Fidelity Floating Rate High Income Fund

451

.09*

Institutional Class

31

.12*

$ 1,090

* Annualized

Accounting Fees. FSC 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 $1,839 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 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

6. Bank Borrowings.

The fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. Information regarding the fund's participation in the program is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

7. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

Expense
Limitations

Reimbursement
from adviser

Class B

1.65%

$ 3

In addition, 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 $9.

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
April 30,
2004

Year ended
October 31,
2003

From net investment income

Class A

$ 1,903

$ 1,379

Class T

1,798

2,412

Class B

1,739

3,198

Class C

3,730

5,977

Fidelity Floating Rate High Income Fund

17,055

9,407

Institutional Class

801

732

Total

$ 27,026

$ 23,105

Semiannual Report

9. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
April 30,
2004

Year ended
October 31,
2003

Six months ended
April 30,
2004

Year ended
October 31,
2003

Class A

Shares sold

10,675

6,904

$ 105,717

$ 67,614

Reinvestment of distributions

134

98

1,329

956

Shares redeemed

(2,788)

(1,953)

(27,612)

(18,942)

Net increase (decrease)

8,021

5,049

$ 79,434

$ 49,628

Class T

Shares sold

7,486

7,102

$ 74,054

$ 69,392

Reinvestment of distributions

142

214

1,406

2,081

Shares redeemed

(5,063)

(3,806)

(50,066)

(36,871)

Net increase (decrease)

2,565

3,510

$ 25,394

$ 34,602

Class B

Shares sold

2,419

3,767

$ 23,927

$ 36,736

Reinvestment of distributions

126

231

1,247

2,235

Shares redeemed

(1,644)

(2,978)

(16,260)

(28,855)

Net increase (decrease)

901

1,020

$ 8,914

$ 10,116

Class C

Shares sold

11,772

10,474

$ 116,571

$ 102,347

Reinvestment of distributions

245

411

2,427

3,982

Shares redeemed

(3,762)

(8,522)

(37,244)

(82,608)

Net increase (decrease)

8,255

2,363

$ 81,754

$ 23,721

Fidelity Floating Rate High Income Fund

Shares sold

69,626

91,211

$ 688,832

$ 889,648

Reinvestment of distributions

1,502

840

14,856

8,216

Shares redeemed

(25,508)

(11,804)

(252,359)

(115,507)

Net increase (decrease)

45,620

80,247

$ 451,329

$ 782,357

Institutional Class

Shares sold

4,767

2,601

$ 47,166

$ 25,410

Reinvestment of distributions

30

31

298

305

Shares redeemed

(1,245)

(880)

(12,315)

(8,557)

Net increase (decrease)

3,552

1,752

$ 35,149

$ 17,158

Semiannual Report

Managing Your Investments

Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.

By Phone

Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.

(phone_graphic)Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555

Press

1   For mutual fund and brokerage trading.

2   For quotes.*

3   For account balances and holdings.

4   To review orders and mutual
fund activity.

5   To change your PIN.

*0   To speak to a Fidelity representative.

By PC

Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.

(computer_graphic)Fidelity's Web Site
www.fidelity.com

* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.

Semiannual Report

To Write Fidelity

We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.

(letter_graphic)Making Changes
To Your Account

(such as changing name, address, bank, etc.)

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002

(letter_graphic)For Non-Retirement
Accounts

Buying shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

Selling shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

General Correspondence

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

(letter_graphic)For Retirement
Accounts

Buying shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003

Selling shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

General Correspondence

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

Semiannual Report

To Visit Fidelity

For directions and hours,
please call 1-800-544-9797.

Arizona

7001 West Ray Road
Chandler, AZ

7373 N. Scottsdale Road
Scottsdale, AZ

California

815 East Birch Street
Brea, CA

1411 Chapin Avenue
Burlingame, CA

851 East Hamilton Avenue
Campbell, CA

123 South Lake Avenue
Pasadena, CA

19200 Von Karman Avenue
Irvine, CA

601 Larkspur Landing Circle
Larkspur, CA

10100 Santa Monica Blvd.
Los Angeles, CA

27101 Puerta Real
Mission Viejo, CA

73-575 El Paseo
Palm Desert, CA

251 University Avenue
Palo Alto, CA

1760 Challenge Way
Sacramento, CA

7676 Hazard Center Drive
San Diego, CA

8 Montgomery Street
San Francisco, CA

21701 Hawthorne Boulevard
Torrance, CA

2001 North Main Street
Walnut Creek, CA

6300 Canoga Avenue
Woodland Hills, CA

Colorado

1625 Broadway
Denver, CO

9185 East Westview Road
Littleton, CO

Connecticut

48 West Putnam Avenue
Greenwich, CT

265 Church Street
New Haven, CT

300 Atlantic Street
Stamford, CT

29 South Main Street
West Hartford, CT

Delaware

222 Delaware Avenue
Wilmington, DE

Florida

4400 N. Federal Highway
Boca Raton, FL

121 Alhambra Plaza
Coral Gables, FL

2948 N. Federal Highway
Ft. Lauderdale, FL

1907 West State Road 434
Longwood, FL

8880 Tamiami Trail, North
Naples, FL

3501 PGA Boulevard
West Palm Beach, FL

8065 Beneva Road
Sarasota, FL

1502 N. Westshore Blvd.
Tampa, FL

Georgia

3445 Peachtree Road, N.E.
Atlanta, GA

1000 Abernathy Road
Atlanta, GA

Illinois

One North LaSalle Street
Chicago, IL

1415 West 22nd Street
Oak Brook, IL

1700 East Golf Road
Schaumburg, IL

3232 Lake Avenue
Wilmette, IL

Indiana

4729 East 82nd Street
Indianapolis, IN

Kansas

5400 College Boulevard
Overland Park, KS

Maine

Three Canal Plaza
Portland, ME

Maryland

7401 Wisconsin Avenue
Bethesda, MD

One W. Pennsylvania Ave.
Towson, MD

Massachusetts

801 Boylston Street
Boston, MA

155 Congress Street
Boston, MA

300 Granite Street
Braintree, MA

44 Mall Road
Burlington, MA

405 Cochituate Road
Framingham, MA

416 Belmont Street
Worcester, MA

Semiannual Report

Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC

Michigan

280 Old N. Woodward Ave.
Birmingham, MI

43420 Grand River Avenue
Novi, MI

29155 Northwestern Hwy.
Southfield, MI

Minnesota

7600 France Avenue South
Edina, MN

Missouri

8885 Ladue Road
Ladue, MO

New Jersey

150 Essex Street
Millburn, NJ

56 South Street
Morristown, NJ

501 Route 17, South
Paramus, NJ

3518 Route 1 North
Princeton, NJ

New York

1055 Franklin Avenue
Garden City, NY

37 West Jericho Turnpike
Huntington Station, NY

1271 Avenue of the Americas
New York, NY

61 Broadway
New York, NY

350 Park Avenue
New York, NY

North Carolina

4611 Sharon Road
Charlotte, NC

Ohio

3805 Edwards Road
Cincinnati, OH

28699 Chagrin Boulevard
Woodmere Village, OH

1324 Polaris Parkway
Columbus, OH

Oregon

16850 SW 72nd Avenue
Tigard, OR

Pennsylvania

600 West DeKalb Pike
King of Prussia, PA

1735 Market Street
Philadelphia, PA

12001 Perry Highway
Wexford, PA

Rhode Island

47 Providence Place
Providence, RI

Tennessee

6150 Poplar Avenue
Memphis, TN

Texas

10000 Research Boulevard
Austin, TX

4017 Northwest Parkway
Dallas, TX

12532 Memorial Drive
Houston, TX

2701 Drexel Drive
Houston, TX

400 East Las Colinas Blvd.
Irving, TX

14100 San Pedro
San Antonio, TX

19740 IH 45 North
Spring, TX

6005 West Park Boulevard
Plano, TX

Utah

215 South State Street
Salt Lake City, UT

Virginia

1861 International Drive
McLean, VA

Washington

411 108th Avenue, N.E.
Bellevue, WA

1518 6th Avenue
Seattle, WA

Washington, DC

1900 K Street, N.W.
Washington, DC

Wisconsin

595 North Barker Road
Brookfield, WI

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

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Shareholder
Servicing Agent

Fidelity Service Company, Inc.

Boston, MA

Custodian

The Bank of New York

New York, NY

Fidelity's Taxable Bond Funds

Capital & Income

Floating Rate High Income

Ginnie Mae

Government Income

High Income

Inflation-Protected Bond

Intermediate Bond

Intermediate Government Income

Investment Grade Bond

Mortgage Securities

New Markets Income

Short-Term Bond

Spartan® Government Income

Spartan Investment Grade Bond

Strategic Income

Total Bond

Ultra-Short Bond

U.S. Bond Index

The Fidelity Telephone Connection

Mutual Fund 24-Hour Service

Exchanges/Redemptions
and Account Assistance 1-800-544-6666

Product Information 1-800-544-6666

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated Service
Telephone (FAST®) (automated graphic)    1-800-544-5555

(automated graphic)    Automated line for quickest service

(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com

FHI-USAN-0604
1.784879.101

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:

June 25, 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:

June 25, 2004

By:

/s/Timothy F. Hayes

Timothy F. Hayes

Chief Financial Officer

Date:

June 25, 2004

EX-99.CERT 2 ad299cert.htm

Exhibit EX-99.CERT

I, Christine Reynolds, certify that:

1. I have reviewed this report on Form N-CSR of Fidelity Advisor Series II;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based upon such evaluation; and

c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 25, 2004

/s/Christine Reynolds

Christine Reynolds

President and Treasurer

I, Timothy F. Hayes, certify that:

1. I have reviewed this report on Form N-CSR of Fidelity Advisor Series II;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based upon such evaluation; and

c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 25, 2004

/s/Timothy F. Hayes

Timothy F. Hayes

Chief Financial Officer

EX-99.906 CERT 3 ad2906cert.htm

Exhibit EX-99.906CERT

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code)

In connection with the attached Report of Fidelity Advisor Series II (the "Trust") on Form N-CSR to be filed with the Securities and Exchange Commission (the "Report"), each of the undersigned officers of the Trust does hereby certify that, to the best of such officer's knowledge:

1. The Report fully complies with the requirements of 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust as of, and for, the periods presented in the Report.

Dated: June 25, 2004

/s/Christine Reynolds

Christine Reynolds

President and Treasurer

Dated: June 25, 2004

/s/Timothy F. Hayes

Timothy F. Hayes

Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Trust and will be retained by the Trust and furnished to the Securities and Exchange Commission or its staff upon request.

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