(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
EQUITY INCOME FUND -
CLASS A AND CLASS B
ANNUAL REPORT
NOVEMBER 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 8 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 11 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 12 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 24 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 30 Notes to the financial statements.
REPORT OF INDEPENDENT 35 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 36
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets were fairly positive in 1995, no one can predict what
lies ahead for investors. The previous year, stocks posted below-average
returns and bonds had one of the worst years in history. This downturn
followed a period in which the investing environment was generally very
positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR EQUITY INCOME FUND - CLASS A
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can look at
the total percentage change in value, the average annual percentage change,
or the growth of a hypothetical $10,000 investment. A fund's total return
includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells investments that have grown in value). You can also look at income to
measure performance.
The initial offering of Class A shares took place on September 10, 1992.
Class A shares bear a .50% 12b-1 fee. Prior to January 1, 1996, this fee
was .65%, which is reflected in the returns below for periods after
September 10, 1992. Returns prior to that date are those of Institutional
Class, the original class of the fund. Had Class A's 12b-1 fee been
reflected, returns prior to September 10, 1992 would have been lower. If
Fidelity had not reimbursed certain expenses, the five and 10 year total
returns would have been lower. Effective January 1, 1996, the maximum 4.75%
sales charge on Class A shares was reduced to 3.50%.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1995 PAST 1 YEAR PAST 5 PAST 10
YEARS YEARS
Advisor Equity Income Fund - Class A 29.46% 146.88% 259.16%
Advisor Equity Income Fund - Class A
(incl. max. 3.50% sales charge) 1 24.93% 138.24% 246.59%
S&P 500(registered trademark) 36.98% 117.34% 311.99%
Average Equity Income Fund 27.94% 102.31% 212.38%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage terms
over a set period - in this case, one year, five years or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return, over the
past year, the value of your investment would be $1,050. You can compare
Class A's returns to the performance of the Standard & Poor's Composite
Index of 500 stocks - a common proxy for the U.S. stock market. To measure
how Class A's performance stacked up against its peers, you can compare it
to the average equity income fund, which reflects the performance of 122
funds with similar objectives tracked by Lipper Analytical Services over
the past 12 months. Both benchmarks include reinvested dividends and
capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1995 PAST 1 YEAR PAST 5 PAST 10
YEARS YEARS
Advisor Equity Income Fund - Class A 29.46% 19.81% 13.64%
Advisor Equity Income Fund - Class A
(incl. max. 3.50% sales charge) 1 24.93% 18.96% 13.24%
S&P 500(registered trademark) 36.98% 16.80% 15.21%
Average Equity Income Fund 27.94% 14.97% 11.72%
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' actual (or cumulative)
return and show you what would have happened if Class A shares had
performed at a constant rate each year.
1 HAD THE FORMER MAXIMUM 4.75% SALES CHARGE BEEN REFLECTED, CUMULATIVE AND
AVERAGE ANNUAL TOTAL RETURNS FOR THE PAST ONE, FIVE, AND 10 YEARS WOULD
HAVE BEEN 23.31% AND 23.31%, 135.16% AND 18.65%, AND 242.10% AND 13.09%,
RESPECTIVELY.
$10,000 OVER TEN YEARS
FA Eq Inc Cl A (280) S&P 500
11/30/85 9525.00 10000.00
12/31/85 9859.77 10484.00
01/31/86 10043.99 10542.71
02/28/86 10698.13 11331.31
03/31/86 11339.19 11963.59
04/30/86 11272.24 11828.40
05/31/86 11305.86 12457.67
06/30/86 11457.85 12668.21
07/31/86 11016.51 11960.06
08/31/86 11681.08 12847.49
09/30/86 11132.99 11785.00
10/31/86 11623.39 12465.00
11/30/86 11761.56 12767.90
12/31/86 11579.15 12442.32
01/31/87 12716.72 14118.30
02/28/87 13098.89 14675.97
03/31/87 13338.80 15100.11
04/30/87 13165.19 14965.72
05/31/87 13097.43 15095.92
06/30/87 13476.08 15858.26
07/31/87 13866.41 16662.27
08/31/87 14248.59 17283.78
09/30/87 13914.02 16905.26
10/31/87 11392.29 13263.87
11/30/87 10905.61 12170.93
12/31/87 11320.09 13097.13
01/31/88 12094.31 13648.52
02/29/88 12684.28 14284.54
03/31/88 12518.32 13843.15
04/30/88 12697.15 13996.81
05/31/88 12853.02 14118.58
06/30/88 13588.51 14766.63
07/31/88 13564.24 14710.51
08/31/88 13295.89 14210.36
09/30/88 13688.75 14815.72
10/31/88 13935.61 15227.59
11/30/88 13848.82 15009.84
12/31/88 13949.32 15272.51
01/31/89 14843.18 16390.46
02/28/89 14716.64 15982.34
03/31/89 15009.19 16354.72
04/30/89 15558.93 17203.54
05/31/89 15931.22 17900.28
06/30/89 15995.66 17798.25
07/31/89 17005.92 19405.43
08/31/89 17227.11 19785.77
09/30/89 17004.91 19704.65
10/31/89 16072.59 19247.51
11/30/89 16283.73 19640.15
12/31/89 16520.84 20111.52
01/31/90 15476.16 18762.04
02/28/90 15503.80 19004.07
03/31/90 15503.80 19507.67
04/30/90 14903.74 19019.98
05/31/90 15885.17 20874.43
06/30/90 15814.76 20732.48
07/31/90 15559.91 20666.14
08/31/90 14378.33 18797.92
09/30/90 13291.01 17882.46
10/31/90 12988.94 17805.57
11/30/90 13856.80 18955.81
12/31/90 14161.86 19484.67
01/31/91 14882.46 20334.21
02/28/91 15946.54 21788.10
03/31/91 16201.04 22315.37
04/30/91 16200.65 22368.93
05/31/91 17087.88 23335.27
06/30/91 16303.58 22266.51
07/31/91 17195.82 23304.13
08/31/91 17560.02 23856.44
09/30/91 17469.04 23458.04
10/31/91 17760.10 23772.38
11/30/91 17039.89 22814.35
12/31/91 18383.48 25424.31
01/31/92 18568.55 24951.42
02/29/92 19142.24 25275.79
03/31/92 18831.24 24782.91
04/30/92 19502.41 25511.53
05/31/92 19674.57 25636.53
06/30/92 19455.51 25254.55
07/31/92 19960.85 26287.46
08/31/92 19486.97 25748.57
09/30/92 19614.32 26052.40
10/31/92 19869.15 26143.58
11/30/92 20570.53 27035.08
12/31/92 21082.80 27367.61
01/31/93 21740.30 27597.50
02/28/93 22303.20 27972.82
03/31/93 23027.56 28563.05
04/30/93 22914.68 27871.82
05/31/93 23270.53 28618.79
06/30/93 23497.95 28701.78
07/31/93 23823.31 28586.98
08/31/93 24654.70 29670.42
09/30/93 24491.32 29441.96
10/31/93 24785.41 30051.41
11/30/93 24278.92 29765.92
12/31/93 24883.44 30126.09
01/31/94 26027.13 31150.38
02/28/94 25340.92 30306.20
03/31/94 24255.78 28984.85
04/30/94 25093.32 29355.86
05/31/94 25257.55 29837.29
06/30/94 25091.03 29106.28
07/31/94 25948.84 30060.97
08/31/94 27285.05 31293.46
09/30/94 26821.82 30526.77
10/31/94 27351.64 31213.63
11/30/94 26424.46 30076.83
12/31/94 26490.69 30522.87
01/31/95 26896.94 31314.32
02/28/95 27844.85 32534.64
03/31/95 28744.11 33494.74
04/30/95 29510.39 34481.16
05/31/95 30327.76 35859.37
06/30/95 30754.27 36692.39
07/31/95 31865.46 37909.11
08/31/95 32241.55 38004.26
09/30/95 33232.65 39608.04
10/31/95 32855.40 39466.64
11/30/95 34210.08 41199.22
$10,000 OVER TEN YEARS: Let's say you invested $10,000 in Fidelity Advisor
Equity Income Fund - Class A on November 30, 1985, and paid the current
maximum 3.50% sales charge. As the chart shows, by November 30, 1995, the
value of your investment would have grown to $34,659 - a 246.59% increase
on your initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends reinvested, the same $10,000
investment would have grown to $41,199 - a 311.99% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
ADVISOR EQUITY INCOME FUND - CLASS B
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can look at
the total percentage change in value, the average annual percentage change,
or the growth of a hypothetical $10,000 investment. A fund's total return
includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells investments that have grown in value). You can also look at income to
measure performance.
Initial offering of Class B shares took place on June 30, 1994. Class B
shares bear a 1.00% 12b-1/shareholder service fee. This fee is not
reflected in returns prior to that date. Returns between September 10, 1992
and June 30, 1994 are those of Class A, and reflect Class A's .65% 12b-1
fee. Returns prior to September 10, 1992 are those of Institutional Class,
the original class of the fund. Had Class B's 12b-1 fee been reflected,
prior returns would have been lower. Class B's contingent deferred sales
charges included in the past 1 year, past 5 years and past 10 years total
return figures are 4%, 1% and 0%, respectively. If Fidelity had not
reimbursed certain expenses, the past five and 10 year returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Equity Income Fund - Class B 28.95% 145.74% 257.49%
Advisor Equity Income Fund - Class B
(incl. contingent deferred sales charge) 24.95% 144.74% 257.49%
S&P 500(registered trademark) 36.98% 117.34% 311.99%
Average Equity Income Fund 27.94% 102.31% 212.38%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage terms
over a set period - in this case, one year, five years or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return, over the
past year, the value of your investment would be $1,050. You can compare
Class B's returns to the performance of the Standard & Poor's Composite
Index of 500 stocks - a common proxy for the U.S. stock market. To measure
how Class B's performance stacked up against its peers, you can compare it
to the average equity income fund, which reflects the performance of 122
funds with similar objectives tracked by Lipper Analytical Services over
the past 12 months. Both benchmarks include reinvested dividends and
capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Equity Income Fund - Class B 28.95% 19.70% 13.59%
Advisor Equity Income Fund - Class B
(incl. contingent deferred sales charge) 24.95% 19.60% 13.59%
S&P 500(registered trademark) 36.98% 16.80% 15.21%
Average Equity Income Fund 27.94% 14.97% 11.72%
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' actual (or cumulative)
return and show you what would have happened if Class B shares had
performed at a constant rate each year.
$10,000 OVER TEN YEARS
FA Eq Inc Cl B (180) S&P 500
11/30/85 10000.00 10000.00
12/31/85 10351.46 10484.00
01/31/86 10544.87 10542.71
02/28/86 11231.64 11331.31
03/31/86 11904.66 11963.59
04/30/86 11834.37 11828.40
05/31/86 11869.67 12457.67
06/30/86 12029.24 12668.21
07/31/86 11565.89 11960.06
08/31/86 12263.60 12847.49
09/30/86 11688.18 11785.00
10/31/86 12203.04 12465.00
11/30/86 12348.10 12767.90
12/31/86 12156.59 12442.32
01/31/87 13350.89 14118.30
02/28/87 13752.12 14675.97
03/31/87 14003.99 15100.11
04/30/87 13821.72 14965.72
05/31/87 13750.58 15095.92
06/30/87 14148.11 15858.26
07/31/87 14557.91 16662.27
08/31/87 14959.15 17283.78
09/30/87 14607.90 16905.26
10/31/87 11960.41 13263.87
11/30/87 11449.46 12170.93
12/31/87 11884.61 13097.13
01/31/88 12697.44 13648.52
02/29/88 13316.83 14284.54
03/31/88 13142.59 13843.15
04/30/88 13330.34 13996.81
05/31/88 13493.98 14118.58
06/30/88 14266.15 14766.63
07/31/88 14240.67 14710.51
08/31/88 13958.93 14210.36
09/30/88 14371.39 14815.72
10/31/88 14630.56 15227.59
11/30/88 14539.45 15009.84
12/31/88 14644.95 15272.51
01/31/89 15583.39 16390.46
02/28/89 15450.54 15982.34
03/31/89 15757.68 16354.72
04/30/89 16334.84 17203.54
05/31/89 16725.69 17900.28
06/30/89 16793.35 17798.25
07/31/89 17853.98 19405.43
08/31/89 18086.20 19785.77
09/30/89 17852.92 19704.65
10/31/89 16874.11 19247.51
11/30/89 17095.78 19640.15
12/31/89 17344.72 20111.52
01/31/90 16247.94 18762.04
02/28/90 16276.95 19004.07
03/31/90 16276.95 19507.67
04/30/90 15646.97 19019.98
05/31/90 16677.35 20874.43
06/30/90 16603.42 20732.48
07/31/90 16335.87 20666.14
08/31/90 15095.36 18797.92
09/30/90 13953.82 17882.46
10/31/90 13636.68 17805.57
11/30/90 14547.82 18955.81
12/31/90 14868.10 19484.67
01/31/91 15624.63 20334.21
02/28/91 16741.78 21788.10
03/31/91 17008.96 22315.37
04/30/91 17008.56 22368.93
05/31/91 17940.03 23335.27
06/30/91 17116.62 22266.51
07/31/91 18053.36 23304.13
08/31/91 18435.72 23856.44
09/30/91 18340.20 23458.04
10/31/91 18645.77 23772.38
11/30/91 17889.65 22814.35
12/31/91 19300.24 25424.31
01/31/92 19494.54 24951.42
02/29/92 20096.84 25275.79
03/31/92 19770.33 24782.91
04/30/92 20474.97 25511.53
05/31/92 20655.72 25636.53
06/30/92 20425.74 25254.55
07/31/92 20956.28 26287.46
08/31/92 20458.76 25748.57
09/30/92 20592.47 26052.40
10/31/92 20860.00 26143.58
11/30/92 21596.36 27035.08
12/31/92 22134.17 27367.61
01/31/93 22824.46 27597.50
02/28/93 23415.43 27972.82
03/31/93 24175.92 28563.05
04/30/93 24057.41 27871.82
05/31/93 24431.00 28618.79
06/30/93 24669.76 28701.78
07/31/93 25011.35 28586.98
08/31/93 25884.20 29670.42
09/30/93 25712.67 29441.96
10/31/93 26021.43 30051.41
11/30/93 25489.68 29765.92
12/31/93 26124.35 30126.09
01/31/94 27325.07 31150.38
02/28/94 26604.64 30306.20
03/31/94 25465.39 28984.85
04/30/94 26344.70 29355.86
05/31/94 26517.11 29837.29
06/30/94 26342.29 29106.28
07/31/94 27242.88 30060.97
08/31/94 28663.04 31293.46
09/30/94 28176.55 30526.77
10/31/94 28698.34 31213.63
11/30/94 27724.34 30076.83
12/31/94 27794.29 30522.87
01/31/95 28185.26 31314.32
02/28/95 29162.68 32534.64
03/31/95 30124.44 33494.74
04/30/95 30910.61 34481.16
05/31/95 31750.37 35859.37
06/30/95 32179.85 36692.39
07/31/95 33345.14 37909.11
08/31/95 33721.62 38004.26
09/30/95 34743.19 39608.04
10/31/95 34330.01 39466.64
11/30/95 35749.20 41199.22
$10,000 OVER TEN YEARS: Let's say you invested $10,000 in Fidelity Advisor
Equity Income Fund - Class B on November 30, 1985. As the chart shows, by
November 30, 1995, the value of your investment would have grown to $35,749
- - a 257.49% increase on your initial investment. For comparison, look at
how the S&P 500 did over the same period. With dividends reinvested, the
same $10,000 investment would have grown to $41,199 - a 311.99% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Strong corporate earnings and a
favorable interest rate
environment helped the U.S.
stock market post robust returns
for the 12 months ended
November 30, 1995. The
Standard & Poor's Composite
Index of 500 Stocks finished the
12-month period with a total
return of 36.98% (including
reinvested dividends) - well
above its historical annual
average of roughly 12%. With
inflation posing little threat,
interest rates fell during the first
half of 1995. The Federal Reserve
Board cut the fed funds rate -
the rate banks charge each other
for overnight loans - by 0.25% on
July 6 to 5.75%.
Large-capitalization stocks led
the rally, with the weak dollar
helping to bolster overseas
business. Technology companies
posted the strongest earnings
growth and stock price gain,
although they faltered somewhat
in October and November. Lower
interest rates and continued
merger and acquisition activity
helped financial stocks perform well.
In November, the Dow Jones
Industrial Average closed above
5000 for the first time. Returns from
foreign markets suffered as
investors brought capital back to the
U.S. The Morgan Stanley
Emerging Markets Free Index
was down 16.52% for the 12
months ended November 30. The
Morgan Stanley EAFE (Europe,
Australia, Far East) Index was up
7.57% for the year ended
November 30. European markets
have fared well through the first
11 months of 1995, while the
Japanese market recently has
shown signs of recovery.
An interview with Bettina Doulton, Portfolio Manager of Fidelity Advisor
Equity Income Fund
Q. BETTINA, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended November 30, 1995, Fidelity Advisor Equity
Income Fund - Class A and Class B returned 29.46% and 28.95%, respectively.
That beat the 27.94% return for the average equity income fund tracked by
Lipper Analytical Services.
Q. WHAT HELPED THE FUND PERFORM BETTER THAN THE LIPPER AVERAGE?
A. The fund's performance came from a number of sectors, including finance
and telephone utilities, as well as from some of the larger holdings,
including the fund's largest investment, Philip Morris. This company's
business was propelled by gains in market share for its Marlboro brand
domestically, and by increased volumes and profits in its international
tobacco business.
Q. LET'S TAKE A LOOK AT YOUR INVESTMENTS IN THE FINANCE SECTOR. WHICH
STOCKS HAVE TURNED OUT WELL?
A. The fund's finance investments are fairly diverse. I pick the stocks for
the fund one-by-one, but many of the top performers over the past 12 months
came from this sector. Among them, Citicorp benefited from growth in its
emerging market credit card business. Fannie Mae - the Federal National
Mortgage Association - was helped by improved business conditions, a strong
supply of mortgages and widening spreads, such that profit growth was
solid. And American Express, having restructured in order to reduce costs,
posted strong and consistent earnings growth from improved marketing of its
existing and new credit card products. Beyond that, some of the fund's
insurance stocks - GenRe, American International Group, Aetna and CIGNA -
contributed well to the fund's return.
Q. HOW ABOUT TELEPHONE UTILITIES?
A. I've owned several of the regional Bell operating companies (RBOCs),
such as Ameritech, BellSouth, Bell Atlantic, NYNEX and SBC Communications.
The regulatory environment is improving on a state-by-state basis, allowing
these companies to focus more on profitability and competitiveness. They've
also been able to improve revenues by offering value-added services, such
as call waiting and caller identification, cellular services, and by adding
access lines for computer modem use.
Q. WHICH STOCKS DIDN'T TURN OUT AS WELL AS YOU WOULD HAVE LIKED?
A. A couple of areas were disappointing. First, Wal-Mart struggled as it
went through a major transition. It was upgrading and expanding its older,
most profitable stores, converting them into so-called super centers,
general merchandise stores with grocery stores attached. The negative
impact on the company's profits associated with this process - as well as
the difficult retail environment - was worse and more prolonged than
anticipated. Second, despite better managing their account bases and
internal operations, WMX Technologies and Browning-Ferris Industries -
broadly based pollution control companies - were hurt by the weakening
economy, such that the pace of revenue and profit growth was not as strong
as expected.
Q. GENERAL ELECTRIC WAS ONE OF THE FUND'S TOP FIVE STOCKS AT THE END OF THE
PERIOD. WHY WAS IT ATTRACTIVE TO YOU?
A. GE offered a diverse business portfolio, shareholder-oriented management
and a consistent earnings history, qualities that appeared attractive given
the economic climate. I felt the same way about Emerson Electric and Allied
Signal. These companies - through geographical expansion and improvements
in productivity - were able to sustain consistent earnings and free cash
flow. I believed the economy was weakening to an extent that the relative
performance expected from these companies would be rewarded.
Q. DOES THAT MEAN YOUR OUTLOOK IS COLORED BY CONCERNS FOR THE ECONOMY?
A. Yes it does. Economic indicators point out that the economy is slowing.
Wages have been stagnant and consumers' disposable income is down. In
addition, economies around the world also have slowed, leading me to
believe that demand for U.S. exports will wane. To get the economy moving
again, interest rates will have to decline, in part so that capital will
flow back into the developing economies, believed to be a prime driver for
future global economic growth, including U.S. exports. Given this economic
backdrop, I have concerns about corporate profitability in 1996 and think
it will be a tough investing environment. As a result, I'll be looking for
companies with aspects to their business that will enable them to sustain
good earnings growth despite a weakening economy.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER,
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: seeks to maintain a
yield which exceeds the
composite dividend of the S&P
500 stock index and consider
the potential for achieving
capital appreciation
START DATE: April 25, 1983
SIZE: as of November 30,
1995, more than $1.4 billion
MANAGER: Bettina Doulton,
since July 1993; joined Fidelity
in 1986
(checkmark)
BETTINA DOULTON ON THE
CONSUMER:
"Since consumer spending is
critical to how the U.S.
economy performs, a recent
trend in how people are paid
has me concerned.
Specifically, a greater
percentage of total
compensation has become
more cyclical, or subject to
economic influences. If you
look at recent wage
settlements, you'll see that
wage increases generally have
been low, with a greater
percentage of compensation
tied to profit sharing.
Essentially, employees have
a greater stake in corporate
profits, benefiting when
corporate profits are rising,
but pressured when corporate
profits are declining.
"Going into 1996, my concern is
that if overall profit growth
declines, incomes will suffer as
well, thus contributing to the
slowdown in end demand and
industrial activity."
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF NOVEMBER 30, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Philip Morris Companies, Inc. 4.2 3.8
Federal National Mortgage Association 3.2 2.1
Citicorp 2.0 1.1
General Electric Co. 2.0 0.4
NYNEX Corp. 1.9 1.5
TOP FIVE FIXED-INCOME SECURITIES AS OF NOVEMBER 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
(BY ISSUER, WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE HOLDINGS
6 MONTHS AGO
U.S. Treasury Obligations (various issues) 6.7 2.9
Viacom, Inc. 8%, 7/7/06 0.3 0.7
Roche Holdings, Inc.
liquid yield option notes 0%, 4/20/10 0.2 0.5
Tenet Healthcare Corp. (various issues) 0.2 0.0
Westpoint Stevens, Inc. (various issues) 0.1 0.2
</TABLE>
TOP FIVE MARKET SECTORS AS OF NOVEMBER 30, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Finance 18.2 15.3
Nondurables 8.9 9.0
Utilities 7.2 6.0
Industrial Machinery & Equipment 6.4 7.2
Health 6.1 4.9
ASSET ALLOCATION
AS OF NOVEMBER 30, 1995 * AS OF MAY 31, 1995 **
Row: 1, Col: 1, Value: 15.0
Row: 1, Col: 2, Value: 1.9
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 5, Value: 35.6
Row: 1, Col: 1, Value: 12.8
Row: 1, Col: 2, Value: 2.4
Row: 1, Col: 3, Value: 4.2
Row: 1, Col: 4, Value: 30.6
Row: 1, Col: 5, Value: 50.0
Stocks 76.6%
Bonds 7.5%
Convertible
securities 0.9%
Short-term
investments 15.0%
FOREIGN
INVESTMENTS 3.6%
Stocks 81.6%
Bonds 4.2%
Convertible
securities 1.4%
Short-term
investments 12.8%
FOREIGN
INVESTMENTS 5.2%
*
**
INVESTMENTS NOVEMBER 30, 1995
Showing Percentage of Total Value of Investments in Securities
COMMON STOCKS - 76.6%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 5.8%
AEROSPACE & DEFENSE - 3.1%
Alliant Techsystems, Inc. (a) 125,900 $ 6,452
Boeing Co. 96,000 6,996
General Motors Corp. Class H 28,100 1,335
Lockheed Martin Corp. 92,533 6,790
McDonnell Douglas Corp. 92,000 8,200
Rockwell International Corp. 202,300 9,913
Sundstrand Corp. 44,100 2,855
Thiokol Corp. 74,300 2,517
45,058
DEFENSE ELECTRONICS - 1.9%
Litton Industries, Inc. (a) 174,900 7,849
Loral Corp. 138,700 4,698
Raytheon Co. 345,000 15,353
27,900
SHIP BUILDING & REPAIR - 0.8%
General Dynamics Corp. 185,600 11,066
TOTAL AEROSPACE & DEFENSE 84,024
BASIC INDUSTRIES - 5.3%
CHEMICALS & PLASTICS - 4.1%
du Pont (E.I.) de Nemours & Co. 179,500 11,935
Ethyl Corp. 95,600 1,195
Great Lakes Chemical Corp. 51,700 3,677
Hercules, Inc. 170,900 9,378
Minnesota Mining & Manufacturing Co. 119,000 7,795
Monsanto Co. 44,200 5,061
Nalco Chemical Co. 114,500 3,507
Raychem Corp. 78,300 4,072
Schulman (A.), Inc. 17,200 325
Union Carbide Corp. 293,800 11,642
58,587
IRON & STEEL - 0.2%
Nucor Corp. 63,900 3,187
METALS & MINING - 0.7%
Alcan Aluminium Ltd. 145,086 4,838
Aluminum Co. of America 99,400 5,815
10,653
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - 0.3%
James River Corp. of Virginia 112,600 $ 3,547
TOTAL BASIC INDUSTRIES 75,974
CONGLOMERATES - 3.5%
Allied-Signal, Inc. 225,000 10,631
ITT Corp. 76,600 9,393
Tyco International Ltd. 522,124 16,382
United Technologies Corp. 144,800 13,575
49,981
CONSTRUCTION & REAL ESTATE - 0.4%
BUILDING MATERIALS - 0.2%
Cooper Cameron Corp. (a) 51,509 1,339
Sherwin-Williams Co. 63,000 2,496
3,835
CONSTRUCTION - 0.1%
American Homestar Corp. (a) 50,000 963
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Cali Realty Corp. 6,700 133
CenterPoint Properties Corp. 16,712 372
Starwood Lodging Trust combined certificate (SBI) 33,100 914
1,419
TOTAL CONSTRUCTION & REAL ESTATE 6,217
DURABLES - 2.4%
AUTOS, TIRES, & ACCESSORIES - 1.8%
Chrysler Corp. 88,000 4,565
Dana Corp. 128,200 3,750
General Motors Corp. 216,963 10,523
Johnson Controls, Inc. 13,300 921
PACCAR, Inc. 19,000 831
SPX Corp. 84,900 1,369
Snap-on Tools Corp. 92,300 4,084
26,043
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.4%
Whirlpool Corp. 109,300 $ 6,066
TEXTILES & APPAREL - 0.2%
Adidas AG (a)(c) 5,500 293
Adidas AG (a) 200 12
Westpoint Stevens, Inc. Class A 87,400 1,573
1,878
TOTAL DURABLES 33,987
ENERGY - 5.1%
ENERGY SERVICES - 1.3%
Baker Hughes, Inc. 115,000 2,343
Dresser Industries, Inc. 6,400 152
Halliburton Co. 36,800 1,596
Helmerich & Payne, Inc. 18,200 496
McDermott International, Inc. 95,400 1,729
Schlumberger Ltd. 200,000 12,700
19,016
OIL & GAS - 3.8%
Amerada Hess Corp. 260,000 12,350
British Petroleum PLC:
Ord. 1,751 15
ADR 265,166 25,357
Canada Occidental Petroleum Ltd. 50,000 1,745
Coastal Corp. (The) 114,300 3,800
Kerr-McGee Corp. 32,300 1,869
Occidental Petroleum Corp. 303,000 6,704
Petro-Canada 1st Installment Receipt (a)(d) 54,400 300
Total SA:
Class B 39,757 2,444
sponsored ADR 21,003 648
55,232
TOTAL ENERGY 74,248
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 18.2%
BANKS - 6.7%
Bank of Boston Corp. 108,590 $ 5,036
Chase Manhattan Corp. 65,060 3,960
Chemical Banking Corp. 193,500 11,610
Citicorp 414,800 29,347
First Bank System, Inc. 57,300 2,958
First Interstate Bancorp 118,100 15,825
First Union Corp. 138,174 7,548
Fleet Financial Group, Inc. 71,103 2,969
KeyCorp. 128,100 4,724
NationsBank Corp. 128,500 9,172
Shawmut National Corp. 86,800 3,255
96,404
CREDIT & OTHER FINANCE - 2.0%
American Express Co. 608,025 25,841
Countrywide Credit Industries, Inc. 12,000 264
Greenpoint Financial Corp. 57,100 1,499
Household International, Inc. 14,516 907
28,511
FEDERAL SPONSORED CREDIT - 4.2%
Federal Home Loan Mortgage Corporation 171,700 13,220
Federal National Mortgage Association 420,900 46,089
Student Loan Marketing Association 28,000 1,964
61,273
INSURANCE - 5.2%
Aetna Life & Casualty Co. 178,000 13,062
Allmerica Financial Corp. (a) 2,500 65
Allstate Corp. 262,900 10,779
American International Group, Inc. 118,200 10,608
CIGNA Corp. 98,400 10,824
General Re Corp. 81,900 12,254
Loews Corp. 74,600 11,451
Prudential Reinsurance Holdings, Inc. 60,700 1,267
Travelers, Inc. (The) 83,033 4,940
75,250
SAVINGS & LOANS - 0.1%
Charter One Financial Corp. 43,300 1,386
TOTAL FINANCE 262,824
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 5.7%
DRUGS & PHARMACEUTICALS - 3.7%
Allergan, Inc. 117,800 $ 3,652
American Home Products Corp. 131,900 12,035
Bristol-Myers Squibb Co. 206,300 16,556
Phamracia & Upjohn, Inc. 308,600 11,071
Schering-Plough Corp. 36,100 2,071
SmithKline Beecham PLC ADR 164,200 8,744
54,129
MEDICAL EQUIPMENT & SUPPLIES - 1.3%
Baxter International, Inc. 317,600 13,339
I-Stat Corp. (a) 46,500 1,616
Nellcor, Inc. (a) 58,128 3,342
18,297
MEDICAL FACILITIES MANAGEMENT - 0.7%
Columbia/HCA Healthcare Corp. 163,600 8,446
U.S. Healthcare, Inc. 42,900 1,952
10,398
TOTAL HEALTH 82,824
INDUSTRIAL MACHINERY & EQUIPMENT - 6.4%
ELECTRICAL EQUIPMENT - 2.8%
Emerson Electric Co. 146,400 11,419
General Electric Co. 423,600 28,487
Philips Electronics NV 13,700 536
40,442
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
Caterpillar, Inc. 100,800 6,187
Cooper Industries, Inc. 74,507 2,720
Deere & Co. 350,400 11,519
Ingersoll-Rand Co. 179,000 6,869
Varity Corp. (a) 14,900 577
27,872
POLLUTION CONTROL - 1.7%
Browning-Ferris Industries, Inc. 426,200 12,839
WMX Technologies, Inc. 366,500 10,812
23,651
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 91,965
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 1.6%
BROADCASTING - 0.9%
Viacom, Inc. Class B (non-vtg.) (a) 258,807 $ 12,487
PUBLISHING - 0.6%
Knight-Ridder, Inc. 64,600 4,167
Meredith Corp. 67,100 2,642
Times Mirror Co. Class A 67,900 2,207
9,016
RESTAURANTS - 0.1%
Darden Restaurants, Inc. 102,100 1,187
TOTAL MEDIA & LEISURE 22,690
NONDURABLES - 8.8%
BEVERAGES - 1.9%
Anheuser-Busch Companies, Inc. 112,300 7,440
PepsiCo, Inc. 355,000 19,614
27,054
FOODS - 0.7%
ConAgra, Inc. 92,700 3,696
Dole Food, Inc. 62,400 2,348
Kellogg Co. 24,200 1,848
Nabisco Holdings Class A 72,200 2,040
9,932
HOUSEHOLD PRODUCTS - 1.4%
Avon Products, Inc. 146,900 10,669
Colgate-Palmolive Co. 55,100 4,036
First Brands Corp. 85,400 3,907
Rubbermaid, Inc. 74,000 2,035
20,647
TOBACCO - 4.8%
Imasco Ltd. 52,700 949
Philip Morris Companies, Inc. 696,700 61,135
RJR Nabisco Holdings Corp. 137,280 3,998
UST, Inc. 119,200 3,889
69,971
TOTAL NONDURABLES 127,604
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 2.0%
APPAREL STORES - 0.4%
Limited, Inc. (The) 354,500 $ 6,337
GENERAL MERCHANDISE STORES - 1.3%
Dayton Hudson Corp. 22,000 1,598
May Department Stores Co. (The) 7,200 313
Sears, Roebuck & Co. 128,600 5,064
Wal-Mart Stores, Inc. 493,700 11,849
18,824
GROCERY STORES - 0.3%
Great Atlantic & Pacific Tea Co., Inc. 97,800 2,139
Vons Companies, Inc. (a) 71,500 1,895
4,034
TOTAL RETAIL & WHOLESALE 29,195
SERVICES - 0.3%
ADT Ltd. (a) 209,400 2,931
National Service Industries, Inc. 29,400 956
3,887
TECHNOLOGY - 2.5%
COMMUNICATIONS EQUIPMENT - 0.0%
Westell Technologies 900 12
COMPUTERS & OFFICE EQUIPMENT - 1.8%
International Business Machines Corp. 102,600 9,914
Pitney Bowes, Inc. 348,100 15,577
25,491
COMPUTER SERVICES & SOFTWARE - 0.0%
Objective Systems Integrators 1,000 19
ELECTRONICS - 0.7%
AMP, Inc. 211,100 8,468
Thomas & Betts Corp. 20,600 1,512
9,980
TOTAL TECHNOLOGY 35,502
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 1.4%
RAILROADS - 1.3%
Burlington Northern Santa Fe Corp. 186,826 $ 15,063
Canadian National Railway Co. 1st Installment Receipt (d) 13,800 209
CSX Corp. 46,700 4,092
19,364
TRUCKING & FREIGHT - 0.1%
Roadway Services, Inc. 31,400 1,578
TOTAL TRANSPORTATION 20,942
UTILITIES - 7.2%
TELEPHONE SERVICES - 7.2%
Ameritech Corp. 328,100 18,046
Bell Atlantic Corp. 253,100 15,945
BellSouth Corp. 491,200 19,095
Koninklijke PPT Nederland 63,300 2,257
Koninklijke PPT Nederland (c) 15,500 553
NYNEX Corp. 563,100 27,943
Pacific Telesis Group 91,500 2,745
SBC Communications, Inc. 259,000 13,986
Southern New England Telecommunications Corp. 78,300 2,838
103,408
TOTAL COMMON STOCKS
(Cost $937,791) 1,105,272
PREFERRED STOCKS - 0.6%
CONVERTIBLE PREFERRED STOCKS - 0.6%
BASIC INDUSTRIES - 0.1%
PAPER & FOREST PRODUCTS - 0.1%
James River Corp. of Virginia cumulative, Series P 80,600 2,417
ENERGY - 0.5%
OIL & GAS - 0.5%
Atlantic Richfield Co. exchangeable $0.5575 92,100 2,303
Occidental Petroleum Corp. Indexed $3.00 (a) 70,000 4,620
6,923
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 0.0%
PUBLISHING - 0.0%
Taylor, J.N. Holdings Ltd. 9 1/2% (a) 50,000 $ -
UTILITIES - 0.0%
GAS - 0.0%
Columbia Gas System, Inc. 118 5
TOTAL CONVERTIBLE PREFERRED STOCKS 9,345
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
UTILITIES - 0.0%
GAS - 0.0%
Columbia Gas System, Inc. 193 4
TOTAL PREFERRED STOCKS
(Cost $9,732) 9,349
CORPORATE BONDS - 1.1%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT
CONVERTIBLE BONDS - 0.3%
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Liberty Property exchangeable 8%, 7/1/01 - $ 115,000 114
HEALTH - 0.2%
DRUGS & PHARMACEUTICALS - 0.2%
Roche Holdings, Inc. liquid yield option notes
0%, 4/20/10 (c) - 6,000,000 2,618
PRECIOUS METALS - 0.1%
Pegasus Gold, Inc. euro
6 1/4%, 4/30/02 (c) Baa3 430,000 462
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - CONTINUED
SERVICES - 0.0%
ADT Operations, Inc. liquid yield option notes
0%, 7/6/10 Ba3 $ 960,000 $ 460
UTILITIES - 0.0%
GAS - 0.0%
SFP Pipeline Holdings, Inc. exchangeable
0%, 8/15/10 (b) Baa3 120,000 151
TOTAL CONVERTIBLE BONDS 3,805
NONCONVERTIBLE BONDS - 0.8%
AEROSPACE & DEFENSE - 0.0%
DEFENSE ELECTRONICS - 0.0%
Tracor, Inc. 10 7/8%, 8/15/01 B2 230,000 237
BASIC INDUSTRIES - 0.1%
PACKAGING & CONTAINERS - 0.0%
Owens Illinois, Inc. 10 1/4%, 4/1/99 B2 160,000 164
PAPER & FOREST PRODUCTS - 0.1%
Stone Container Corp. 9 7/8%, 2/1/01 B1 1,240,000 1,203
TOTAL BASIC INDUSTRIES 1,367
DURABLES - 0.1%
TEXTILES & APPAREL - 0.1%
Westpoint Stevens, Inc. :
8 3/4%, 12/15/01 B1 540,000 551
9 3/8%, 12/15/05 B3 1,250,000 1,262
1,813
FINANCE - 0.0%
BANKS - 0.0%
Signet Banking Corp. (b):
6%, 5/15/97 Baa2 180,000 179
6 1/8%, 4/15/98 Baa2 100,000 99
278
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 0.2%
MEDICAL FACILITIES MANAGEMENT - 0.2%
Tenet Healthcare Corp.:
9 5/8%, 9/1/02 Ba2 $ 540,000 $ 586
8 5/8%, 12/1/03 Ba2 1,940,000 2,008
2,594
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.3%
Viacom, Inc. 8%, 7/7/06 B1 4,870,000 4,943
NONDURABLES - 0.1%
BEVERAGES - 0.1%
Canandaigua Wine, Inc. 8 3/4%, 12/15/03 B1 1,000,000 990
UTILITIES - 0.0%
GAS - 0.0%
Columbia Gas System, Inc. 6.39%, 11/18/00 . 48,000 49
TOTAL NONCONVERTIBLE BONDS 12,271
TOTAL CORPORATE BONDS
(Cost $14,731) 16,076
U.S. TREASURY OBLIGATIONS - 6.7%
5 3/4%, 8/15/03 Aaa 12,500,000 12,518
7 1/2%, 11/15/24 Aaa 2,370,000 2,771
7 5/8%, 2/15/25 Aaa 15,430,000 18,354
6 7/8%, 8/15/25 Aaa 12,230,000 13,453
Stripped Principal:
0%, 11/15/18 Aaa 105,000,000 24,208
0%, 2/15/19 Aaa 112,000,000 25,383
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $92,610) 96,687
REPURCHASE AGREEMENTS - 15.0%
MATURITY VALUE (NOTE 1)
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.90%, dated
11/30/95 due 12/1/95 $ 216,504 $ 216,469
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,271,333) $ 1,443,853
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
(1.) Non-income producing
(2.) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(3.) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $3,926,000 or 0.3% of net
assets.
(4.) Purchased on an installment basis. Market value reflects only those
payments made through November 30, 1995. The remaining installment for
Canadian National Railway, aggregating CAD 148,000, is due November 26,
1996. The remaining installments for Petro-Canada, aggregating CAD
462,000, are due September 23, 1996 and March 24, 1997.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 6.7% AAA, AA, A 6.7%
Baa 0.1% BBB 0.0%
Ba 0.2% BB 0.6%
B 0.7% B 0.3%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.2%
INCOME TAX INFORMATION
At November 30, 1995, the aggregate cost of investment securities for
income tax purposes was $1,272,950,000. Net unrealized appreciation
aggregated $170,903,000 of which $177,874,000 related to appreciated
investment securities and $6,971,000 related to depreciated investment
securities.
The fund hereby designates $1,676,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1995
ASSETS
Investment in securities, at value (including repurchase $ 1,443,853
agreements of $216,469) (cost $1,271,333) -
See accompanying schedule
Receivable for investments sold 14,918
Receivable for fund shares sold 10,562
Dividends receivable 2,292
Interest receivable 1,155
Other receivables 168
TOTAL ASSETS 1,472,948
LIABILITIES
Payable for investments purchased $ 21,736
Payable for fund shares redeemed 1,875
Accrued management fee 572
Other payables and accrued expenses 1,157
TOTAL LIABILITIES 25,340
NET ASSETS $ 1,447,608
Net Assets consist of:
Paid in capital $ 1,232,345
Undistributed net investment income 4,024
Accumulated undistributed net realized gain (loss) on 38,720
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 172,519
investments and assets and liabilities in foreign
currencies
NET ASSETS $ 1,447,608
CALCULATION OF MAXIMUM OFFERING PRICE $19.95
CLASS A:
NET ASSET VALUE, and redemption price per share
($880,054 (divided by) 44,118 shares)
Maximum offering price per share (100/95.25 of $19.95) $20.94
CLASS B: $19.90
NET ASSET VALUE and offering price per share
($270,101 (divided by) 13,575 shares) A
INSTITUTIONAL CLASS: $20.09
NET ASSET VALUE, offering price and redemption price
per share ($297,453 (divided by) 14,809 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 17,324
Dividends
Interest 10,422
TOTAL INCOME 27,746
EXPENSES $ 4,257
Management fee
Transfer agent fees 1,069
Class A
Class B 340
Institutional Class 363
Distribution fees 3,050
Class A
Class B 1,329
Accounting fees and expenses 405
Non-interested trustees' compensation 8
Custodian fees and expenses 47
Registration fees 236
Class A
Class B 58
Institutional Class 73
Audit 50
Legal 5
Interest 3
Reports to shareholders 13
Miscellaneous 1
Total expenses before reductions 11,307
Expense reductions (90) 11,217
NET INVESTMENT INCOME 16,529
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 41,102
Foreign currency transactions (2) 41,100
Change in net unrealized appreciation (depreciation) on:
Investment securities 162,835
Assets and liabilities in foreign currencies 1 162,836
NET GAIN (LOSS) 203,936
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 220,465
FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 16,529 $ 6,375
Net investment income
Net realized gain (loss) 41,100 27,731
Change in net unrealized appreciation (depreciation) 162,836 (12,717)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 220,465 21,389
FROM OPERATIONS
Distributions to shareholders (6,671) (1,149)
From net investment income
Class A
Class B (1,442) (65)
Institutional Class (5,881) (3,609)
From net realized gain (3,300) -
Class A
Class B (681) -
Institutional Class (3,529) -
TOTAL DISTRIBUTIONS (21,504) (4,823)
Share transactions - net increase (decrease) 836,240 162,377
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,035,201 178,943
NET ASSETS
Beginning of period 412,407 233,464
End of period (including undistributed net investment $ 1,447,608 $ 412,407
income of $4,024 and $1,347, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30,
1995 1994 F 1993 1992 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 15.96 $ 14.86 $ 12.86 $ 12.37
Income from Investment Operations
Net investment income .31 .28 D .33 .13
Net realized and unrealized gain (loss) 4.26 1.03 1.97 .47
Total from investment operations 4.57 1.31 2.30 .60
Less Distributions
From net investment income (.30) (.21) (.30) (.11)
From net realized gain (.28) - - -
Total distributions (.58) (.21) (.30) (.11)
Net asset value, end of period $ 19.95 $ 15.96 $ 14.86 $ 12.86
TOTAL RETURN B, C 29.46 8.84% 18.03% 4.88%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 880,054 $ 179,501 $ 42,326 $ 1,462
Ratio of expenses to average net assets 1.48 1.67% 1.77% 1.55%
% A
Ratio of expenses to average net assets after 1.47 1.64% 1.77% 1.55%
expense reductions % A
Ratio of net investment income to average 1.78 1.69% 2.02% 3.39%
net assets % A
Portfolio turnover 80 140% 120% 51%
%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1992.
F EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER
30,
1995 1994 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 15.94 $ 15.21
Income from Investment Operations
Net investment income .26 .08 D
Net realized and unrealized gain (loss) 4.23 .72
Total from investment operations 4.49 .80
Less Distributions
From net investment income (.25) (.07)
From net realized gain (.28) -
Total distributions (.53) (.07)
Net asset value, end of period $ 19.90 $ 15.94
TOTAL RETURN B, C 28.95% 5.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 270,101 $ 35,373
Ratio of expenses to average net assets 1.85% 2.24%
A
Ratio of expenses to average net assets after expense reductions 1.84% 2.18%
A
Ratio of net investment income to average net assets 1.41% 1.15%
A
Portfolio turnover 80% 140%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1994.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30,
1995 1994 D 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, beginning $ 16.07 $ 14.93 $ 12.88 $ 11.08 $ 9.52
of period
Income from Investment
Operations
Net investment income .45 .41 C .39 .49 .63 E
Net realized and unrealized 4.28 1.05 2.02 1.79 1.52
gain (loss)
Total from investment 4.73 1.46 2.41 2.28 2.15
operations
Less Distributions
From net investment income (.43) (.32) (.36) (.48) (.59)
From net realized gain (.28) - - - -
Total distributions (.71) (.32) (.36) (.48) (.59)
Net asset value, end of period $ 20.09 $ 16.07 $ 14.93 $ 12.88 $ 11.08
TOTAL RETURN A, B 30.43 9.82% 18.90% 20.91% 22.97%
%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 297,453 $ 197,533 $ 191,138 $ 139,391 $ 168,590
(000 omitted)
Ratio of expenses to average .74 .73% .80% .79% .77%
net assets %
Ratio of expenses to average .73 .71% .79% .71% .67%
net assets after expense %
reductions
Ratio of net investment income 2.52 2.62% 3.00% 3.77% 5.66%
to average net assets %
Portfolio turnover 80 140% 120% 51% 91%
%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
E INCLUDES $0.04 PER SHARE FROM FOREIGN TAXES RECOVERED.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Equity Income Fund (the fund) is a fund of Fidelity
Advisor Series III(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 B, and Institutional Class shares, each of
which has equal rights as to assets and voting privileges. Each class has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the fund are allocated on a pro rata basis to each class based
on the relative net assets of each class to the total net assets of the
fund. Each class of shares differs in its respective distribution, transfer
agent, registration, and certain other class-specific fees and expenses.
The following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION.
The accounting records of the fund are maintained in U.S. dollars.
Investment securities and other assets and liabilities denominated in a
foreign currency are translated into U.S. dollars at the prevailing rates
of exchange at period end. Purchases and sales of securities, income
receipts, and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends are declared separately for each class,
while capital gain distributions are declared at the fund level and
allocated to each class on a pro rata basis based on the number of shares
held by each class 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. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, partnerships, non-taxable dividends, and losses
deferred due to wash sales. The fund also utilized earnings and profits
distributed to shareholders on redemption of shares as a part of the
dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
the same settlement date and broker are offset and any realized gain (loss)
is recognized on the date of offset; otherwise, gain (loss) is recognized
on settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission(the SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,274,516,000 and $589,204,000, respectively, of which U.S.
government and government agency obligations aggregated $118,801,000 and
$45,630,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee that
is computed daily at an annual rate of .50% of the fund's average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares ("Class A Plan"), Class B shares ("Class B
Plan"), and Institutional Class shares (collectively referred to as "the
Plans"). Under the Class A Plan and Class B Plan, the fund pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution and
service fee. This fee is based on annual rates of .65% and 1.00% (of which
.75% represents a distribution fee and .25% represents a shareholder
service fee) of the average net assets of the Class A and Class B shares,
respectively. Effective January 1, 1996, the Board of Trustees approved a
revised Class A distribution plan. Under the revised plan, the fee is based
on an annual rate of .50% of the average net assets of the Class A shares.
For the period, the fund paid FDC $3,050,000 and $1,329,000 under the Class
A Plan and Class B Plan, respectively, of which $2,340,000 and $332,000,
respectively, were paid to securities dealers, banks and other financial
institutions for the distribution of Class A and Class B shares and
providing shareholder support services.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
and Institutional Class shares. The Plans also authorize payments to third
parties that assist in the sale of the fund's shares or render shareholder
support services.
SALES LOAD. FDC receives a front-end sales charge of up to 4.75% for
selling Class A shares of the fund. Effective January 1, 1996, the Board of
Trustees approved a revised Class A sales charge. Under the revised
arrangement, FDC receives a front-end sales charge of up to 3.50% for
selling Class A shares of the fund. For the period, FDC received sales
charges of $10,584,000 on sales of Class A shares of the fund, of which
$8,907,000 was paid to securities dealers, banks, and other financial
institutions. FDC also receives the proceeds of a contingent deferred sales
charge levied on Class B shares redeemed within five years of purchase. The
charge is based on a declining scale that ranges from 4% to 1% of the
lesser of the original purchase price or the redemption proceeds of the
redeemed shares, excluding any reinvested dividends and capital gains. For
the period, FDC received contingent deferred sales charges of $127,000 on
Class B share redemptions from the fund. When Class B shares are sold, FDC
pays commissions from its own resources to dealers through which the sales
are made.
TRANSFER AGENT FEES. State Street Bank and Trust Company (State Street) is
the transfer, dividend disbursing, and shareholder servicing agent for the
fund's Class A shares, while Fidelity Investments Institutional Operations
Company (FIIOC), an affiliate of FMR (collectively, with State Street,
referred to as the Transfer Agents) acts in that capacity for the fund's
Class B and Institutional Class shares. During the period December 1, 1994
to December 31, 1994, the Transfer Agents received fees based on the type,
size, number of accounts and the number of transactions made by the
shareholders of the respective classes of the fund. Effective January 1,
1995, the Board of Trustees approved revised transfer agent contracts
pursuant to which the Transfer Agents receive account fees and asset-based
fees that vary according to the account size and type of account of the
shareholders of the respective classes of the fund. With respect to the
Class A shares, State Street has delegated certain transfer, dividend
paying, and shareholder services to FIIOC for which FIIOC receives its
allocable share of all such fees. FIIOC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annual rate of .23%,
.25% and .15% of average net assets for Class A, Class B and Institutional
Class, respectively.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $557,000 for the period.
5. 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. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank
borrowings. The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted to
$5,410,000. The weighted average interest rate was 6.4%.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$90,000 under this arrangement.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
AMOUNTS IN THOUSANDS SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED NOVEMBER 30, NOVEMBER 30,
NOVEMBER 30, NOVEMBER 30,
1995 1994 A 1995 1994 A
CLASS A
Shares sold 38,362 11,106 $ 688,702 $ 175,899
Reinvestment of distributions 550 66 9,311 1,041
Shares redeemed (6,039) (2,775) (108,467) (43,122)
Net increase (decrease) 32,873 8,397 $ 589,546 $ 133,818
CLASS B
Shares sold 11,926 2,286 $ 213,878 $ 36,859
Reinvestment of distributions 114 4 1,932 60
Shares redeemed (684) (71) (12,443) (1,147)
Net increase (decrease) 11,356 2,219 $ 203,367 $ 35,772
INSTITUTIONAL CLASS
Shares sold 5,922 6,423 $ 104,505 $ 103,045
Reinvestment of distributions 331 78 5,439 1,233
Shares redeemed (3,735) (7,013) (66,617) (111,491)
Net increase (decrease) 2,518 (512) $ 43,327 $ (7,213)
A SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD JUNE 30, 1994
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1994.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series III and the Shareholders of
Fidelity Advisor Equity Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series III: Fidelity Advisor Equity Income Fund, including
the schedule of portfolio investments, as of November 30, 1995, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended (Institutional Class), and for the three years then ended and for the
period September 10, 1992 (commencement of sales of Class A shares) to
November 30, 1992 (Class A) and for the one year then ended and for the
period June 30, 1994 (commencement of sales of Class B shares) to November
30, 1994 (Class B). These financial statements and financial highlights are
the responsibility of the fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1995 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series III: Fidelity Advisor Equity Income Fund as of
November 30, 1995, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended (Institutional Class), and for the three years then ended
and for the period September 10, 1992 (commencement of sales of Class A
shares) to November 30, 1992 (Class A) and for the one year then ended and
for the period June 30, 1994 (commencement of sales of Class B shares) to
November 30, 1994 (Class B), in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 10, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Equity Income Fund voted to pay
to shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales of
portfolio securities, and dividends derived from net investment income:
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS
CLASS A 12/26/95 12/22/95 $.10 $.40
CLASS A 1/8/96 1/5/96 $- $.06
CLASS B 12/26/95 12/22/95 $.08 $.40
CLASS B 1/8/96 1/5/96 $- $.06
INSTITUTIONAL CLASS 12/26/95 12/22/95 $.13 $.40
INSTITUTIONAL CLASS 1/8/96 1/5/96 $- $.06
A total of 6.15% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
A total of 92% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders.
The fund will notify shareholders in January 1996 of these percentages for
use in preparing 1995 income tax returns.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Bettina Doulton, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
Boston, MA - Class A
Fidelity Investments Institutional
Operations Company
Boston, MA - Class B
* INDEPENDENT TRUSTEES
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Global Resources Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
(registered trademark)
(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
EQUITY INCOME FUND -
INSTITUTIONAL CLASS
ANNUAL REPORT
NOVEMBER 30, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 22 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 28 Notes to the financial statements.
REPORT OF INDEPENDENT 33 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 34
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND, INCLUDING CHARGES AND
EXPENSES,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU
INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets were fairly positive in 1995, no one can predict what
lies ahead for investors. The previous year, stocks posted below-average
returns and bonds had one of the worst years in history. This downturn
followed a period in which the investing environment was generally very
positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
ADVISOR EQUITY INCOME FUND - INSTITUTIONAL CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate historical performance. You can look at
the total percentage change in value, the average annual percentage change,
or the growth of a hypothetical $10,000 investment. A fund's total return
includes changes in a fund's share price, plus reinvestment of any
dividends (or income) and capital gains (the profits the fund earns when it
sells investments that have grown in value). You can also look at income to
measure performance. If Fidelity had not reimbursed certain expenses, the
past five and 10 year total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Equity Income Fund - Institutional Class 30.43% 153.21% 268.37%
S&P 500(registered trademark) 36.98% 117.34% 311.99%
Average Equity Income Fund 27.94% 102.31% 212.38%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, one, five, or 10 years.
For example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the Institutional Class' returns to the performance of the Standard &
Poor's Composite Index of 500 stocks - a common proxy for the U.S. stock
market. To measure how Institutional Class' performance stacked up against
its peers, you can compare it to the average equity income fund, which
reflects the performance of 122 funds with similar objectives tracked by
Lipper Analytical Services over the past 12 months. Both benchmarks include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Advisor Equity Income Fund - Institutional Class 30.43% 20.42% 13.93%
S&P 500(registered trademark) 36.98% 16.80% 15.21%
Average Equity Income Fund 27.94% 14.97% 11.72%
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' actual (or
cumulative) return and show you what would have happened if Institutional
Class had performed at a constant rate
each year.
$10,000 OVER TEN YEARS
FA Eq Inc Cl I (080) S&P 500
11/30/85 10000.00 10000.00
12/31/85 10351.46 10484.00
01/31/86 10544.87 10542.71
02/28/86 11231.64 11331.31
03/31/86 11904.66 11963.59
04/30/86 11834.37 11828.40
05/31/86 11869.67 12457.67
06/30/86 12029.24 12668.21
07/31/86 11565.89 11960.06
08/31/86 12263.60 12847.49
09/30/86 11688.18 11785.00
10/31/86 12203.04 12465.00
11/30/86 12348.10 12767.90
12/31/86 12156.59 12442.32
01/31/87 13350.89 14118.30
02/28/87 13752.12 14675.97
03/31/87 14003.99 15100.11
04/30/87 13821.72 14965.72
05/31/87 13750.58 15095.92
06/30/87 14148.11 15858.26
07/31/87 14557.91 16662.27
08/31/87 14959.15 17283.78
09/30/87 14607.90 16905.26
10/31/87 11960.41 13263.87
11/30/87 11449.46 12170.93
12/31/87 11884.61 13097.13
01/31/88 12697.44 13648.52
02/29/88 13316.83 14284.54
03/31/88 13142.59 13843.15
04/30/88 13330.34 13996.81
05/31/88 13493.98 14118.58
06/30/88 14266.15 14766.63
07/31/88 14240.67 14710.51
08/31/88 13958.93 14210.36
09/30/88 14371.39 14815.72
10/31/88 14630.56 15227.59
11/30/88 14539.45 15009.84
12/31/88 14644.95 15272.51
01/31/89 15583.39 16390.46
02/28/89 15450.54 15982.34
03/31/89 15757.68 16354.72
04/30/89 16334.84 17203.54
05/31/89 16725.69 17900.28
06/30/89 16793.35 17798.25
07/31/89 17853.98 19405.43
08/31/89 18086.20 19785.77
09/30/89 17852.92 19704.65
10/31/89 16874.11 19247.51
11/30/89 17095.78 19640.15
12/31/89 17344.72 20111.52
01/31/90 16247.94 18762.04
02/28/90 16276.95 19004.07
03/31/90 16276.95 19507.67
04/30/90 15646.97 19019.98
05/31/90 16677.35 20874.43
06/30/90 16603.42 20732.48
07/31/90 16335.87 20666.14
08/31/90 15095.36 18797.92
09/30/90 13953.82 17882.46
10/31/90 13636.68 17805.57
11/30/90 14547.82 18955.81
12/31/90 14868.10 19484.67
01/31/91 15624.63 20334.21
02/28/91 16741.78 21788.10
03/31/91 17008.96 22315.37
04/30/91 17008.56 22368.93
05/31/91 17940.03 23335.27
06/30/91 17116.62 22266.51
07/31/91 18053.36 23304.13
08/31/91 18435.72 23856.44
09/30/91 18340.20 23458.04
10/31/91 18645.77 23772.38
11/30/91 17889.65 22814.35
12/31/91 19300.24 25424.31
01/31/92 19494.54 24951.42
02/29/92 20096.84 25275.79
03/31/92 19770.33 24782.91
04/30/92 20474.97 25511.53
05/31/92 20655.72 25636.53
06/30/92 20425.74 25254.55
07/31/92 20956.28 26287.46
08/31/92 20458.76 25748.57
09/30/92 20625.80 26052.40
10/31/92 20876.68 26143.58
11/30/92 21629.84 27035.08
12/31/92 22184.64 27367.61
01/31/93 22858.60 27597.50
02/28/93 23450.29 27972.82
03/31/93 24228.79 28563.05
04/30/93 24144.05 27871.82
05/31/93 24535.70 28618.79
06/30/93 24792.42 28701.78
07/31/93 25135.23 28586.98
08/31/93 26045.69 29670.42
09/30/93 25890.66 29441.96
10/31/93 26200.73 30051.41
11/30/93 25718.40 29765.92
12/31/93 26355.76 30126.09
01/31/94 27596.03 31150.38
02/28/94 26906.99 30306.20
03/31/94 25760.28 28984.85
04/30/94 26662.32 29355.86
05/31/94 26870.48 29837.29
06/30/94 26710.57 29106.28
07/31/94 27636.44 30060.97
08/31/94 29103.86 31293.46
09/30/94 28629.97 30526.77
10/31/94 29192.37 31213.63
11/30/94 28243.31 30076.83
12/31/94 28331.63 30522.87
01/31/95 28781.91 31314.32
02/28/95 29808.55 32534.64
03/31/95 30802.24 33494.74
04/30/95 31637.18 34481.16
05/31/95 32544.73 35859.37
06/30/95 32999.62 36692.39
07/31/95 34222.50 37909.11
08/31/95 34642.30 38004.26
09/30/95 35736.83 39608.04
10/31/95 35351.78 39466.64
11/30/95 36836.99 41199.22
$10,000 OVER TEN YEARS: Let's say you invested $10,000 in Fidelity Advisor
Equity Income Fund - Institutional Class on November 30, 1985. As the chart
shows, by November 30, 1995, the value of your investment would have grown
to $36,837 - a 268.37% increase on your initial investment. For comparison,
look at how the S&P 500 did over the same period. With dividends
reinvested, the same $10,000 investment would have grown to $41,199 - a
311.99% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Strong corporate earnings and a
favorable interest rate
environment helped the U.S.
stock market post robust returns
for the 12 months ended
November 30, 1995. The Standard
& Poor's Composite Index of 500
Stocks finished the 12-month
period with a total return of
36.98% (including reinvested
dividends) - well above its
historical annual average of
roughly 12%. With inflation posing
little threat, interest rates fell
during the first half of 1995. The
Federal Reserve Board cut the fed
funds rate - the rate banks
charge each other for overnight
loans - by 0.25% on July 6 to
5.75%. Large-capitalization
stocks led the rally, with the weak
dollar helping to bolster overseas
business. Technology companies
posted the strongest earnings
growth and stock price gain,
although they faltered somewhat
in October and November. Lower
interest rates and continued
merger and acquisition activity
helped financial stocks perform well.
In November, the Dow Jones
Industrial Average closed above
5000 for the first time. Returns from
foreign markets suffered as
investors brought capital back to the
U.S. The Morgan Stanley Emerging
Markets Free Index was down
16.52% for the 12 months ended
November 30. The Morgan
Stanley EAFE (Europe, Australia,
Far East) Index was up 7.57% for
the year ended November 30.
European markets have fared well
through the first 11 months of
1995, while the Japanese market
recently has shown signs of
recovery.
An interview with Bettina Doulton, Portfolio Manager of Fidelity Advisor
Equity Income Fund
Q. BETTINA, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended November 30, 1995, Fidelity Advisor Equity
Income Fund - Institutional Class returned 30.43%. That beat the 27.94%
return for the average equity income fund tracked by Lipper Analytical
Services.
Q. WHAT HELPED THE FUND PERFORM BETTER THAN THE LIPPER AVERAGE?
A. The fund's performance came from a number of sectors, including finance
and telephone utilities, as well as from some of the larger holdings,
including the fund's largest investment, Philip Morris. This company's
business was propelled by gains in market share for its Marlboro brand
domestically, and by increased volumes and profits in its international
tobacco business.
Q. LET'S TAKE A LOOK AT YOUR INVESTMENTS IN THE FINANCE SECTOR. WHICH
STOCKS HAVE TURNED OUT WELL?
A. The fund's finance investments are fairly diverse. I pick the stocks for
the fund one-by-one, but many of the top performers over the past 12 months
came from this sector. Among them, Citicorp benefited from growth in its
emerging market credit card business. Fannie Mae - the Federal National
Mortgage Association - was helped by improved business conditions, a strong
supply of mortgages and widening spreads, such that profit growth was
solid. And American Express, having restructured in order to reduce costs,
posted strong and consistent earnings growth from improved marketing of its
existing and new credit card products. Beyond that, some of the fund's
insurance stocks - GenRe, American International Group, Aetna and CIGNA -
contributed well to the fund's return.
Q. HOW ABOUT TELEPHONE UTILITIES?
A. I've owned several of the regional Bell operating companies (RBOCs),
such as Ameritech, BellSouth, Bell Atlantic, NYNEX and SBC Communications.
The regulatory environment is improving on a state-by-state basis, allowing
these companies to focus more on profitability and competitiveness. They've
also been able to improve revenues by offering value-added services, such
as call waiting and caller identification, cellular services, and by adding
access lines for computer modem use.
Q. WHICH STOCKS DIDN'T TURN OUT AS WELL AS YOU WOULD HAVE LIKED?
A. A couple of areas were disappointing. First, Wal-Mart struggled as it
went through a major transition. It was upgrading and expanding its older,
most profitable stores, converting them into so-called super centers,
general merchandise stores with grocery stores attached. The negative
impact on the company's profits associated with this process - as well as
the difficult retail environment - was worse and more prolonged than
anticipated. Second, despite better managing their account bases and
internal operations, WMX Technologies and Browning-Ferris Industries -
broadly based pollution control companies - were hurt by the weakening
economy, such that the pace of revenue and profit growth was not as strong
as expected.
Q. GENERAL ELECTRIC WAS ONE OF THE FUND'S TOP FIVE STOCKS AT THE END OF THE
PERIOD. WHY WAS IT ATTRACTIVE TO YOU?
A. GE offered a diverse business portfolio, shareholder-oriented management
and a consistent earnings history, qualities that appeared attractive given
the economic climate. I felt the same way about Emerson Electric and Allied
Signal. These companies - through geographical expansion and improvements
in productivity - were able to sustain consistent earnings and free cash
flow. I believed the economy was weakening to an extent that the relative
performance expected from these companies would be rewarded.
Q. DOES THAT MEAN YOUR OUTLOOK IS COLORED BY CONCERNS FOR THE ECONOMY?
A. Yes it does. Economic indicators point out that the economy is slowing.
Wages have been stagnant and consumers' disposable income is down. In
addition, economies around the world also have slowed, leading me to
believe that demand for U.S. exports will wane. To get the economy moving
again, interest rates will have to decline, in part so that capital will
flow back into the developing economies, believed to be a prime driver for
future global economic growth, including U.S. exports. Given this economic
backdrop, I have concerns about corporate profitability in 1996 and think
it will be a tough investing environment. As a result, I'll be looking for
companies with aspects to their business that will enable them to sustain
good earnings growth despite a weakening economy.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER,
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: seeks to maintain a
yield which exceeds the
composite dividend of the S&P
500 stock index and consider
the potential for achieving
capital appreciation
START DATE: April 25, 1983
SIZE: as of November 30,
1995, more than $1.4 billion
MANAGER: Bettina Doulton,
since July 1993; joined Fidelity
in 1986
(checkmark)
BETTINA DOULTON ON THE
CONSUMER:
"Since consumer spending is
critical to how the U.S.
economy performs, a recent
trend in how people are paid
has me concerned.
Specifically, a greater
percentage of total
compensation has become
more cyclical, or subject to
economic influences. If you
look at recent wage
settlements, you'll see that
wage increases generally have
been low, with a greater
percentage of compensation
tied to profit sharing.
Essentially, employees have
a greater stake in corporate
profits, benefiting when
corporate profits are rising,
but pressured when corporate
profits are declining.
"Going into 1996, my concern is
that if overall profit growth
declines, incomes will suffer as
well, thus contributing to the
slowdown in end demand and
industrial activity."
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF NOVEMBER 30, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Philip Morris Companies, Inc. 4.2 3.8
Federal National Mortgage Association 3.2 2.1
Citicorp 2.0 1.1
General Electric Co. 2.0 0.4
NYNEX Corp. 1.9 1.5
TOP FIVE FIXED-INCOME SECURITIES AS OF NOVEMBER 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
(BY ISSUER, WITH MATURITIES OF MORE THAN ONE YEAR) % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE HOLDINGS
6 MONTHS AGO
U.S. Treasury Obligations (various issues) 6.7 2.9
Viacom, Inc. 8%, 7/7/06 0.3 0.7
Roche Holdings, Inc.
liquid yield option notes 0%, 4/20/10 0.2 0.5
Tenet Healthcare Corp. (various issues) 0.2 0.0
Westpoint Stevens, Inc. (various issues) 0.1 0.2
</TABLE>
TOP FIVE MARKET SECTORS AS OF NOVEMBER 30, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO
Finance 18.2 15.3
Nondurables 8.9 9.0
Utilities 7.2 6.0
Industrial Machinery & Equipment 6.4 7.2
Health 6.1 4.9
ASSET ALLOCATION
AS OF NOVEMBER 30, 1995 * AS OF MAY 31, 1995 **
Row: 1, Col: 1, Value: 15.0
Row: 1, Col: 2, Value: 1.9
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 5, Value: 35.6
Row: 1, Col: 1, Value: 12.8
Row: 1, Col: 2, Value: 2.4
Row: 1, Col: 3, Value: 4.2
Row: 1, Col: 4, Value: 30.6
Row: 1, Col: 5, Value: 50.0
Stocks 76.6%
Bonds 7.5%
Convertible
securities 0.9%
Short-term
investments 15.0%
FOREIGN
INVESTMENTS 3.6%
Stocks 81.6%
Bonds 4.2%
Convertible
securities 1.4%
Short-term
investments 12.8%
FOREIGN
INVESTMENTS 5.2%
*
**
INVESTMENTS NOVEMBER 30, 1995
Showing Percentage of Total Value of Investments in Securities
COMMON STOCKS - 76.6%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 5.8%
AEROSPACE & DEFENSE - 3.1%
Alliant Techsystems, Inc. (a) 125,900 $ 6,452
Boeing Co. 96,000 6,996
General Motors Corp. Class H 28,100 1,335
Lockheed Martin Corp. 92,533 6,790
McDonnell Douglas Corp. 92,000 8,200
Rockwell International Corp. 202,300 9,913
Sundstrand Corp. 44,100 2,855
Thiokol Corp. 74,300 2,517
45,058
DEFENSE ELECTRONICS - 1.9%
Litton Industries, Inc. (a) 174,900 7,849
Loral Corp. 138,700 4,698
Raytheon Co. 345,000 15,353
27,900
SHIP BUILDING & REPAIR - 0.8%
General Dynamics Corp. 185,600 11,066
TOTAL AEROSPACE & DEFENSE 84,024
BASIC INDUSTRIES - 5.3%
CHEMICALS & PLASTICS - 4.1%
du Pont (E.I.) de Nemours & Co. 179,500 11,935
Ethyl Corp. 95,600 1,195
Great Lakes Chemical Corp. 51,700 3,677
Hercules, Inc. 170,900 9,378
Minnesota Mining & Manufacturing Co. 119,000 7,795
Monsanto Co. 44,200 5,061
Nalco Chemical Co. 114,500 3,507
Raychem Corp. 78,300 4,072
Schulman (A.), Inc. 17,200 325
Union Carbide Corp. 293,800 11,642
58,587
IRON & STEEL - 0.2%
Nucor Corp. 63,900 3,187
METALS & MINING - 0.7%
Alcan Aluminium Ltd. 145,086 4,838
Aluminum Co. of America 99,400 5,815
10,653
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - 0.3%
James River Corp. of Virginia 112,600 $ 3,547
TOTAL BASIC INDUSTRIES 75,974
CONGLOMERATES - 3.5%
Allied-Signal, Inc. 225,000 10,631
ITT Corp. 76,600 9,393
Tyco International Ltd. 522,124 16,382
United Technologies Corp. 144,800 13,575
49,981
CONSTRUCTION & REAL ESTATE - 0.4%
BUILDING MATERIALS - 0.2%
Cooper Cameron Corp. (a) 51,509 1,339
Sherwin-Williams Co. 63,000 2,496
3,835
CONSTRUCTION - 0.1%
American Homestar Corp. (a) 50,000 963
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Cali Realty Corp. 6,700 133
CenterPoint Properties Corp. 16,712 372
Starwood Lodging Trust combined certificate (SBI) 33,100 914
1,419
TOTAL CONSTRUCTION & REAL ESTATE 6,217
DURABLES - 2.4%
AUTOS, TIRES, & ACCESSORIES - 1.8%
Chrysler Corp. 88,000 4,565
Dana Corp. 128,200 3,750
General Motors Corp. 216,963 10,523
Johnson Controls, Inc. 13,300 921
PACCAR, Inc. 19,000 831
SPX Corp. 84,900 1,369
Snap-on Tools Corp. 92,300 4,084
26,043
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 0.4%
Whirlpool Corp. 109,300 $ 6,066
TEXTILES & APPAREL - 0.2%
Adidas AG (a)(c) 5,500 293
Adidas AG (a) 200 12
Westpoint Stevens, Inc. Class A 87,400 1,573
1,878
TOTAL DURABLES 33,987
ENERGY - 5.1%
ENERGY SERVICES - 1.3%
Baker Hughes, Inc. 115,000 2,343
Dresser Industries, Inc. 6,400 152
Halliburton Co. 36,800 1,596
Helmerich & Payne, Inc. 18,200 496
McDermott International, Inc. 95,400 1,729
Schlumberger Ltd. 200,000 12,700
19,016
OIL & GAS - 3.8%
Amerada Hess Corp. 260,000 12,350
British Petroleum PLC:
Ord. 1,751 15
ADR 265,166 25,357
Canada Occidental Petroleum Ltd. 50,000 1,745
Coastal Corp. (The) 114,300 3,800
Kerr-McGee Corp. 32,300 1,869
Occidental Petroleum Corp. 303,000 6,704
Petro-Canada 1st Installment Receipt (a)(d) 54,400 300
Total SA:
Class B 39,757 2,444
sponsored ADR 21,003 648
55,232
TOTAL ENERGY 74,248
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 18.2%
BANKS - 6.7%
Bank of Boston Corp. 108,590 $ 5,036
Chase Manhattan Corp. 65,060 3,960
Chemical Banking Corp. 193,500 11,610
Citicorp 414,800 29,347
First Bank System, Inc. 57,300 2,958
First Interstate Bancorp 118,100 15,825
First Union Corp. 138,174 7,548
Fleet Financial Group, Inc. 71,103 2,969
KeyCorp. 128,100 4,724
NationsBank Corp. 128,500 9,172
Shawmut National Corp. 86,800 3,255
96,404
CREDIT & OTHER FINANCE - 2.0%
American Express Co. 608,025 25,841
Countrywide Credit Industries, Inc. 12,000 264
Greenpoint Financial Corp. 57,100 1,499
Household International, Inc. 14,516 907
28,511
FEDERAL SPONSORED CREDIT - 4.2%
Federal Home Loan Mortgage Corporation 171,700 13,220
Federal National Mortgage Association 420,900 46,089
Student Loan Marketing Association 28,000 1,964
61,273
INSURANCE - 5.2%
Aetna Life & Casualty Co. 178,000 13,062
Allmerica Financial Corp. (a) 2,500 65
Allstate Corp. 262,900 10,779
American International Group, Inc. 118,200 10,608
CIGNA Corp. 98,400 10,824
General Re Corp. 81,900 12,254
Loews Corp. 74,600 11,451
Prudential Reinsurance Holdings, Inc. 60,700 1,267
Travelers, Inc. (The) 83,033 4,940
75,250
SAVINGS & LOANS - 0.1%
Charter One Financial Corp. 43,300 1,386
TOTAL FINANCE 262,824
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 5.7%
DRUGS & PHARMACEUTICALS - 3.7%
Allergan, Inc. 117,800 $ 3,652
American Home Products Corp. 131,900 12,035
Bristol-Myers Squibb Co. 206,300 16,556
Phamracia & Upjohn, Inc. 308,600 11,071
Schering-Plough Corp. 36,100 2,071
SmithKline Beecham PLC ADR 164,200 8,744
54,129
MEDICAL EQUIPMENT & SUPPLIES - 1.3%
Baxter International, Inc. 317,600 13,339
I-Stat Corp. (a) 46,500 1,616
Nellcor, Inc. (a) 58,128 3,342
18,297
MEDICAL FACILITIES MANAGEMENT - 0.7%
Columbia/HCA Healthcare Corp. 163,600 8,446
U.S. Healthcare, Inc. 42,900 1,952
10,398
TOTAL HEALTH 82,824
INDUSTRIAL MACHINERY & EQUIPMENT - 6.4%
ELECTRICAL EQUIPMENT - 2.8%
Emerson Electric Co. 146,400 11,419
General Electric Co. 423,600 28,487
Philips Electronics NV 13,700 536
40,442
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
Caterpillar, Inc. 100,800 6,187
Cooper Industries, Inc. 74,507 2,720
Deere & Co. 350,400 11,519
Ingersoll-Rand Co. 179,000 6,869
Varity Corp. (a) 14,900 577
27,872
POLLUTION CONTROL - 1.7%
Browning-Ferris Industries, Inc. 426,200 12,839
WMX Technologies, Inc. 366,500 10,812
23,651
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 91,965
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 1.6%
BROADCASTING - 0.9%
Viacom, Inc. Class B (non-vtg.) (a) 258,807 $ 12,487
PUBLISHING - 0.6%
Knight-Ridder, Inc. 64,600 4,167
Meredith Corp. 67,100 2,642
Times Mirror Co. Class A 67,900 2,207
9,016
RESTAURANTS - 0.1%
Darden Restaurants, Inc. 102,100 1,187
TOTAL MEDIA & LEISURE 22,690
NONDURABLES - 8.8%
BEVERAGES - 1.9%
Anheuser-Busch Companies, Inc. 112,300 7,440
PepsiCo, Inc. 355,000 19,614
27,054
FOODS - 0.7%
ConAgra, Inc. 92,700 3,696
Dole Food, Inc. 62,400 2,348
Kellogg Co. 24,200 1,848
Nabisco Holdings Class A 72,200 2,040
9,932
HOUSEHOLD PRODUCTS - 1.4%
Avon Products, Inc. 146,900 10,669
Colgate-Palmolive Co. 55,100 4,036
First Brands Corp. 85,400 3,907
Rubbermaid, Inc. 74,000 2,035
20,647
TOBACCO - 4.8%
Imasco Ltd. 52,700 949
Philip Morris Companies, Inc. 696,700 61,135
RJR Nabisco Holdings Corp. 137,280 3,998
UST, Inc. 119,200 3,889
69,971
TOTAL NONDURABLES 127,604
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 2.0%
APPAREL STORES - 0.4%
Limited, Inc. (The) 354,500 $ 6,337
GENERAL MERCHANDISE STORES - 1.3%
Dayton Hudson Corp. 22,000 1,598
May Department Stores Co. (The) 7,200 313
Sears, Roebuck & Co. 128,600 5,064
Wal-Mart Stores, Inc. 493,700 11,849
18,824
GROCERY STORES - 0.3%
Great Atlantic & Pacific Tea Co., Inc. 97,800 2,139
Vons Companies, Inc. (a) 71,500 1,895
4,034
TOTAL RETAIL & WHOLESALE 29,195
SERVICES - 0.3%
ADT Ltd. (a) 209,400 2,931
National Service Industries, Inc. 29,400 956
3,887
TECHNOLOGY - 2.5%
COMMUNICATIONS EQUIPMENT - 0.0%
Westell Technologies 900 12
COMPUTERS & OFFICE EQUIPMENT - 1.8%
International Business Machines Corp. 102,600 9,914
Pitney Bowes, Inc. 348,100 15,577
25,491
COMPUTER SERVICES & SOFTWARE - 0.0%
Objective Systems Integrators 1,000 19
ELECTRONICS - 0.7%
AMP, Inc. 211,100 8,468
Thomas & Betts Corp. 20,600 1,512
9,980
TOTAL TECHNOLOGY 35,502
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 1.4%
RAILROADS - 1.3%
Burlington Northern Santa Fe Corp. 186,826 $ 15,063
Canadian National Railway Co. 1st Installment Receipt (d) 13,800 209
CSX Corp. 46,700 4,092
19,364
TRUCKING & FREIGHT - 0.1%
Roadway Services, Inc. 31,400 1,578
TOTAL TRANSPORTATION 20,942
UTILITIES - 7.2%
TELEPHONE SERVICES - 7.2%
Ameritech Corp. 328,100 18,046
Bell Atlantic Corp. 253,100 15,945
BellSouth Corp. 491,200 19,095
Koninklijke PPT Nederland 63,300 2,257
Koninklijke PPT Nederland (c) 15,500 553
NYNEX Corp. 563,100 27,943
Pacific Telesis Group 91,500 2,745
SBC Communications, Inc. 259,000 13,986
Southern New England Telecommunications Corp. 78,300 2,838
103,408
TOTAL COMMON STOCKS
(Cost $937,791) 1,105,272
PREFERRED STOCKS - 0.6%
CONVERTIBLE PREFERRED STOCKS - 0.6%
BASIC INDUSTRIES - 0.1%
PAPER & FOREST PRODUCTS - 0.1%
James River Corp. of Virginia cumulative, Series P 80,600 2,417
ENERGY - 0.5%
OIL & GAS - 0.5%
Atlantic Richfield Co. exchangeable $0.5575 92,100 2,303
Occidental Petroleum Corp. Indexed $3.00 (a) 70,000 4,620
6,923
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 0.0%
PUBLISHING - 0.0%
Taylor, J.N. Holdings Ltd. 9 1/2% (a) 50,000 $ -
UTILITIES - 0.0%
GAS - 0.0%
Columbia Gas System, Inc. 118 5
TOTAL CONVERTIBLE PREFERRED STOCKS 9,345
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
UTILITIES - 0.0%
GAS - 0.0%
Columbia Gas System, Inc. 193 4
TOTAL PREFERRED STOCKS
(Cost $9,732) 9,349
CORPORATE BONDS - 1.1%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT
CONVERTIBLE BONDS - 0.3%
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Liberty Property exchangeable 8%, 7/1/01 - $ 115,000 114
HEALTH - 0.2%
DRUGS & PHARMACEUTICALS - 0.2%
Roche Holdings, Inc. liquid yield option notes
0%, 4/20/10 (c) - 6,000,000 2,618
PRECIOUS METALS - 0.1%
Pegasus Gold, Inc. euro
6 1/4%, 4/30/02 (c) Baa3 430,000 462
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - CONTINUED
SERVICES - 0.0%
ADT Operations, Inc. liquid yield option notes
0%, 7/6/10 Ba3 $ 960,000 $ 460
UTILITIES - 0.0%
GAS - 0.0%
SFP Pipeline Holdings, Inc. exchangeable
0%, 8/15/10 (b) Baa3 120,000 151
TOTAL CONVERTIBLE BONDS 3,805
NONCONVERTIBLE BONDS - 0.8%
AEROSPACE & DEFENSE - 0.0%
DEFENSE ELECTRONICS - 0.0%
Tracor, Inc. 10 7/8%, 8/15/01 B2 230,000 237
BASIC INDUSTRIES - 0.1%
PACKAGING & CONTAINERS - 0.0%
Owens Illinois, Inc. 10 1/4%, 4/1/99 B2 160,000 164
PAPER & FOREST PRODUCTS - 0.1%
Stone Container Corp. 9 7/8%, 2/1/01 B1 1,240,000 1,203
TOTAL BASIC INDUSTRIES 1,367
DURABLES - 0.1%
TEXTILES & APPAREL - 0.1%
Westpoint Stevens, Inc. :
8 3/4%, 12/15/01 B1 540,000 551
9 3/8%, 12/15/05 B3 1,250,000 1,262
1,813
FINANCE - 0.0%
BANKS - 0.0%
Signet Banking Corp. (b):
6%, 5/15/97 Baa2 180,000 179
6 1/8%, 4/15/98 Baa2 100,000 99
278
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 0.2%
MEDICAL FACILITIES MANAGEMENT - 0.2%
Tenet Healthcare Corp.:
9 5/8%, 9/1/02 Ba2 $ 540,000 $ 586
8 5/8%, 12/1/03 Ba2 1,940,000 2,008
2,594
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.3%
Viacom, Inc. 8%, 7/7/06 B1 4,870,000 4,943
NONDURABLES - 0.1%
BEVERAGES - 0.1%
Canandaigua Wine, Inc. 8 3/4%, 12/15/03 B1 1,000,000 990
UTILITIES - 0.0%
GAS - 0.0%
Columbia Gas System, Inc. 6.39%, 11/18/00 . 48,000 49
TOTAL NONCONVERTIBLE BONDS 12,271
TOTAL CORPORATE BONDS
(Cost $14,731) 16,076
U.S. TREASURY OBLIGATIONS - 6.7%
5 3/4%, 8/15/03 Aaa 12,500,000 12,518
7 1/2%, 11/15/24 Aaa 2,370,000 2,771
7 5/8%, 2/15/25 Aaa 15,430,000 18,354
6 7/8%, 8/15/25 Aaa 12,230,000 13,453
Stripped Principal:
0%, 11/15/18 Aaa 105,000,000 24,208
0%, 2/15/19 Aaa 112,000,000 25,383
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $92,610) 96,687
REPURCHASE AGREEMENTS - 15.0%
MATURITY VALUE (NOTE 1)
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.90%, dated
11/30/95 due 12/1/95 $ 216,504 $ 216,469
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,271,333) $ 1,443,853
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
(1.) Non-income producing
(2.) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(3.) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $3,926,000 or 0.3% of net
assets.
(4.) Purchased on an installment basis. Market value reflects only those
payments made through November 30, 1995. The remaining installment for
Canadian National Railway, aggregating CAD 148,000, is due November 26,
1996. The remaining installments for Petro-Canada, aggregating CAD
462,000, are due September 23, 1996 and March 24, 1997.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 6.7% AAA, AA, A 6.7%
Baa 0.1% BBB 0.0%
Ba 0.2% BB 0.6%
B 0.7% B 0.3%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.2%
INCOME TAX INFORMATION
At November 30, 1995, the aggregate cost of investment securities for
income tax purposes was $1,272,950,000. Net unrealized appreciation
aggregated $170,903,000 of which $177,874,000 related to appreciated
investment securities and $6,971,000 related to depreciated investment
securities.
The fund hereby designates $1,676,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1995
ASSETS
Investment in securities, at value (including repurchase $ 1,443,853
agreements of $216,469) (cost $1,271,333) -
See accompanying schedule
Receivable for investments sold 14,918
Receivable for fund shares sold 10,562
Dividends receivable 2,292
Interest receivable 1,155
Other receivables 168
TOTAL ASSETS 1,472,948
LIABILITIES
Payable for investments purchased $ 21,736
Payable for fund shares redeemed 1,875
Accrued management fee 572
Other payables and accrued expenses 1,157
TOTAL LIABILITIES 25,340
NET ASSETS $ 1,447,608
Net Assets consist of:
Paid in capital $ 1,232,345
Undistributed net investment income 4,024
Accumulated undistributed net realized gain (loss) on 38,720
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 172,519
investments and assets and liabilities in foreign
currencies
NET ASSETS $ 1,447,608
CALCULATION OF MAXIMUM OFFERING PRICE $19.95
CLASS A:
NET ASSET VALUE, and redemption price per share
($880,054 (divided by) 44,118 shares)
Maximum offering price per share (100/95.25 of $19.95) $20.94
CLASS B: $19.90
NET ASSET VALUE and offering price per share
($270,101 (divided by) 13,575 shares) A
INSTITUTIONAL CLASS: $20.09
NET ASSET VALUE, offering price and redemption price
per share ($297,453 (divided by) 14,809 shares)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME $ 17,324
Dividends
Interest 10,422
TOTAL INCOME 27,746
EXPENSES $ 4,257
Management fee
Transfer agent fees 1,069
Class A
Class B 340
Institutional Class 363
Distribution fees 3,050
Class A
Class B 1,329
Accounting fees and expenses 405
Non-interested trustees' compensation 8
Custodian fees and expenses 47
Registration fees 236
Class A
Class B 58
Institutional Class 73
Audit 50
Legal 5
Interest 3
Reports to shareholders 13
Miscellaneous 1
Total expenses before reductions 11,307
Expense reductions (90) 11,217
NET INVESTMENT INCOME 16,529
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 41,102
Foreign currency transactions (2) 41,100
Change in net unrealized appreciation (depreciation) on:
Investment securities 162,835
Assets and liabilities in foreign currencies 1 162,836
NET GAIN (LOSS) 203,936
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 220,465
FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994
INCREASE (DECREASE) IN NET ASSETS
Operations $ 16,529 $ 6,375
Net investment income
Net realized gain (loss) 41,100 27,731
Change in net unrealized appreciation (depreciation) 162,836 (12,717)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 220,465 21,389
FROM OPERATIONS
Distributions to shareholders (6,671) (1,149)
From net investment income
Class A
Class B (1,442) (65)
Institutional Class (5,881) (3,609)
From net realized gain (3,300) -
Class A
Class B (681) -
Institutional Class (3,529) -
TOTAL DISTRIBUTIONS (21,504) (4,823)
Share transactions - net increase (decrease) 836,240 162,377
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,035,201 178,943
NET ASSETS
Beginning of period 412,407 233,464
End of period (including undistributed net investment $ 1,447,608 $ 412,407
income of $4,024 and $1,347, respectively)
</TABLE>
FINANCIAL HIGHLIGHTS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30,
1995 1994 F 1993 1992 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 15.96 $ 14.86 $ 12.86 $ 12.37
Income from Investment Operations
Net investment income .31 .28 D .33 .13
Net realized and unrealized gain (loss) 4.26 1.03 1.97 .47
Total from investment operations 4.57 1.31 2.30 .60
Less Distributions
From net investment income (.30) (.21) (.30) (.11)
From net realized gain (.28) - - -
Total distributions (.58) (.21) (.30) (.11)
Net asset value, end of period $ 19.95 $ 15.96 $ 14.86 $ 12.86
TOTAL RETURN B, C 29.46 8.84% 18.03% 4.88%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 880,054 $ 179,501 $ 42,326 $ 1,462
Ratio of expenses to average net assets 1.48 1.67% 1.77% 1.55%
% A
Ratio of expenses to average net assets after 1.47 1.64% 1.77% 1.55%
expense reductions % A
Ratio of net investment income to average 1.78 1.69% 2.02% 3.39%
net assets % A
Portfolio turnover 80 140% 120% 51%
%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1992.
F EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER
30,
1995 1994 E
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 15.94 $ 15.21
Income from Investment Operations
Net investment income .26 .08 D
Net realized and unrealized gain (loss) 4.23 .72
Total from investment operations 4.49 .80
Less Distributions
From net investment income (.25) (.07)
From net realized gain (.28) -
Total distributions (.53) (.07)
Net asset value, end of period $ 19.90 $ 15.94
TOTAL RETURN B, C 28.95% 5.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 270,101 $ 35,373
Ratio of expenses to average net assets 1.85% 2.24%
A
Ratio of expenses to average net assets after expense reductions 1.84% 2.18%
A
Ratio of net investment income to average net assets 1.41% 1.15%
A
Portfolio turnover 80% 140%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1994.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30,
1995 1994 D 1993 1992 1991
SELECTED PER-SHARE DATA
Net asset value, beginning $ 16.07 $ 14.93 $ 12.88 $ 11.08 $ 9.52
of period
Income from Investment
Operations
Net investment income .45 .41 C .39 .49 .63 E
Net realized and unrealized 4.28 1.05 2.02 1.79 1.52
gain (loss)
Total from investment 4.73 1.46 2.41 2.28 2.15
operations
Less Distributions
From net investment income (.43) (.32) (.36) (.48) (.59)
From net realized gain (.28) - - - -
Total distributions (.71) (.32) (.36) (.48) (.59)
Net asset value, end of period $ 20.09 $ 16.07 $ 14.93 $ 12.88 $ 11.08
TOTAL RETURN A, B 30.43 9.82% 18.90% 20.91% 22.97%
%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 297,453 $ 197,533 $ 191,138 $ 139,391 $ 168,590
(000 omitted)
Ratio of expenses to average .74 .73% .80% .79% .77%
net assets %
Ratio of expenses to average .73 .71% .79% .71% .67%
net assets after expense %
reductions
Ratio of net investment income 2.52 2.62% 3.00% 3.77% 5.66%
to average net assets %
Portfolio turnover 80 140% 120% 51% 91%
%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT
CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
E INCLUDES $0.04 PER SHARE FROM FOREIGN TAXES RECOVERED.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Equity Income Fund (the fund) is a fund of Fidelity
Advisor Series III(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 B, and Institutional Class shares, each of
which has equal rights as to assets and voting privileges. Each class has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the fund are allocated on a pro rata basis to each class based
on the relative net assets of each class to the total net assets of the
fund. Each class of shares differs in its respective distribution, transfer
agent, registration, and certain other class-specific fees and expenses.
The following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION.
The accounting records of the fund are maintained in U.S. dollars.
Investment securities and other assets and liabilities denominated in a
foreign currency are translated into U.S. dollars at the prevailing rates
of exchange at period end. Purchases and sales of securities, income
receipts, and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends are declared separately for each class,
while capital gain distributions are declared at the fund level and
allocated to each class on a pro rata basis based on the number of shares
held by each class 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. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, partnerships, non-taxable dividends, and losses
deferred due to wash sales. The fund also utilized earnings and profits
distributed to shareholders on redemption of shares as a part of the
dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
the same settlement date and broker are offset and any realized gain (loss)
is recognized on the date of offset; otherwise, gain (loss) is recognized
on settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission(the SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency Securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,274,516,000 and $589,204,000, respectively, of which U.S.
government and government agency obligations aggregated $118,801,000 and
$45,630,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee that
is computed daily at an annual rate of .50% of the fund's average net
assets.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the 1940
Act, the Trustees have adopted separate distribution plans with respect to
the fund's Class A shares ("Class A Plan"), Class B shares ("Class B
Plan"), and Institutional Class shares (collectively referred to as "the
Plans"). Under the Class A Plan and Class B Plan, the fund pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution and
service fee. This fee is based on annual rates of .65% and 1.00% (of which
.75% represents a distribution fee and .25% represents a shareholder
service fee) of the average net assets of the Class A and Class B shares,
respectively. Effective January 1, 1996, the Board of Trustees approved a
revised Class A distribution plan. Under the revised plan, the fee is based
on an annual rate of .50% of the average net assets of the Class A shares.
For the period, the fund paid FDC $3,050,000 and $1,329,000 under the Class
A Plan and Class B Plan, respectively, of which $2,340,000 and $332,000,
respectively, were paid to securities dealers, banks and other financial
institutions for the distribution of Class A and Class B shares and
providing shareholder support services.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's Class A, Class B,
and Institutional Class shares. The Plans also authorize payments to third
parties that assist in the sale of the fund's shares or render shareholder
support services.
SALES LOAD. FDC receives a front-end sales charge of up to 4.75% for
selling Class A shares of the fund. Effective January 1, 1996, the Board of
Trustees approved a revised Class A sales charge. Under the revised
arrangement, FDC receives a front-end sales charge of up to 3.50% for
selling Class A shares of the fund. For the period, FDC received sales
charges of $10,584,000 on sales of Class A shares of the fund, of which
$8,907,000 was paid to securities dealers, banks, and other financial
institutions. FDC also receives the proceeds of a contingent deferred sales
charge levied on Class B shares redeemed within five years of purchase. The
charge is based on a declining scale that ranges from 4% to 1% of the
lesser of the original purchase price or the redemption proceeds of the
redeemed shares, excluding any reinvested dividends and capital gains. For
the period, FDC received contingent deferred sales charges of $127,000 on
Class B share redemptions from the fund. When Class B shares are sold, FDC
pays commissions from its own resources to dealers through which the sales
are made.
TRANSFER AGENT FEES. State Street Bank and Trust Company (State Street) is
the transfer, dividend disbursing, and shareholder servicing agent for the
fund's Class A shares, while Fidelity Investments Institutional Operations
Company (FIIOC), an affiliate of FMR (collectively, with State Street,
referred to as the Transfer Agents) acts in that capacity for the fund's
Class B and Institutional Class shares. During the period December 1, 1994
to December 31, 1994, the Transfer Agents received fees based on the type,
size, number of accounts and the number of transactions made by the
shareholders of the respective classes of the fund. Effective January 1,
1995, the Board of Trustees approved revised transfer agent contracts
pursuant to which the Transfer Agents receive account fees and asset-based
fees that vary according to the account size and type of account of the
shareholders of the respective classes of the fund. With respect to the
Class A shares, State Street has delegated certain transfer, dividend
paying, and shareholder services to FIIOC for which FIIOC receives its
allocable share of all such fees. FIIOC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annual rate of .23%,
.25% and .15% of average net assets for Class A, Class B and Institutional
Class, respectively.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $557,000 for the period.
5. 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. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank
borrowings. The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted to
$5,410,000. The weighted average interest rate was 6.4%.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$90,000 under this arrangement.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
AMOUNTS IN THOUSANDS SHARES DOLLARS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED NOVEMBER 30, NOVEMBER 30,
NOVEMBER 30, NOVEMBER 30,
1995 1994 A 1995 1994 A
CLASS A
Shares sold 38,362 11,106 $ 688,702 $ 175,899
Reinvestment of distributions 550 66 9,311 1,041
Shares redeemed (6,039) (2,775) (108,467) (43,122)
Net increase (decrease) 32,873 8,397 $ 589,546 $ 133,818
CLASS B
Shares sold 11,926 2,286 $ 213,878 $ 36,859
Reinvestment of distributions 114 4 1,932 60
Shares redeemed (684) (71) (12,443) (1,147)
Net increase (decrease) 11,356 2,219 $ 203,367 $ 35,772
INSTITUTIONAL CLASS
Shares sold 5,922 6,423 $ 104,505 $ 103,045
Reinvestment of distributions 331 78 5,439 1,233
Shares redeemed (3,735) (7,013) (66,617) (111,491)
Net increase (decrease) 2,518 (512) $ 43,327 $ (7,213)
A SHARE TRANSACTIONS FOR CLASS B ARE FOR THE PERIOD JUNE 30, 1994
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1994.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series III and the Shareholders of
Fidelity Advisor Equity Income Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series III: Fidelity Advisor Equity Income Fund, including
the schedule of portfolio investments, as of November 30, 1995, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended (Institutional Class), and for the three years then ended and for the
period September 10, 1992 (commencement of sales of Class A shares) to
November 30, 1992 (Class A) and for the one year then ended and for the
period June 30, 1994 (commencement of sales of Class B shares) to November
30, 1994 (Class B). These financial statements and financial highlights are
the responsibility of the fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1995 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series III: Fidelity Advisor Equity Income Fund as of
November 30, 1995, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the
period then ended (Institutional Class), and for the three years then ended
and for the period September 10, 1992 (commencement of sales of Class A
shares) to November 30, 1992 (Class A) and for the one year then ended and
for the period June 30, 1994 (commencement of sales of Class B shares) to
November 30, 1994 (Class B), in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 10, 1996
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Equity Income Fund voted to pay
to shareholders of record at the opening of business on record date, the
following distributions derived from capital gains realized from sales of
portfolio securities, and dividends derived from net investment income:
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS
CLASS A 12/26/95 12/22/95 $.10 $.40
CLASS A 1/8/96 1/5/96 $- $.06
CLASS B 12/26/95 12/22/95 $.08 $.40
CLASS B 1/8/96 1/5/96 $- $.06
INSTITUTIONAL CLASS 12/26/95 12/22/95 $.13 $.40
INSTITUTIONAL CLASS 1/8/96 1/5/96 $- $.06
A total of 6.15% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
A total of 92% of the dividends distributed during the fiscal year
qualifies for the dividends-received deductions for corporate shareholders.
The fund will notify shareholders in January 1996 of these percentages for
use in preparing 1995 income tax returns.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Bettina Doulton, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Global Resources Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Income Fund
Fidelity Advisor Income & Growth Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income
Municipal Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS
Fidelity Advisor New York Municipal Income Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
(registered trademark)