1940 Act No. 811-7205
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 33-54837)
UNDER THE SECURITIES ACT OF 1933 []
Pre-Effective Amendment No. []
Post-Effective Amendment No. 1 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No. [ ]
Fidelity Advisor Annuity Fund
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Office)
Registrant's Telephone Number, Including Area Code 617-570-7000
Arthur S. Loring, Secretary, 82 Devonshire St., Boston, MA 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b)
(x) On August 25, 1995, pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
( ) On () pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
( ) On () pursuant to paragraph (a)(ii) of Rule 485
Registrant has registered an indefinite number of shares pursuant to Rule
24f-2 under the Investment Company Act of 1940. Registrant has been in
operation for less than one year and intends to file the notice required by
such rule on or before February 29, 1996.
FIDELITY ADVISOR ANNUITY FUND
CROSS REFERENCE SHEET
Form N-1A Item Number
Part A Prospectus Caption
1 a,b Cover Page
2 a,b,c *
3 a,b Financial Highlights
c Performance
4 a(i) The Trust and the Fidelity Organization
a(ii) Investment Objectives; Investment Policies;
Investment Limitations
b,c Investment Limitations; Investment Policies
5 a,b(i) The Trust and the Fidelity Organization
b(ii)(iii),c Management, Distribution and Service Fees
d, e, f Management, Distribution and Service
Fees; Portfolio Transactions
6 a(i) The Trust and the Fidelity Organization
a(ii) Redemptions
a(iii) *
b The Trust and the Fidelity Organization
c,d *
e Cover Page
f,g Distributions and Taxes
7 a The Trust and the Fidelity Organization
b(i),(ii) Valuation; Investments
b(iii,iv,v) *
c,d,e *
f Management, Distribution and Service Fees
8 a Redemptions
b,c *
d Redemptions
9 *
_______________
* Not Applicable
Part B Statement of Information Caption
10,11 Cover Page
12 Description of The Trust
13 a,b,c Investment Policies and Limitations
d Portfolio Transactions
14 a,b Trustees and Officers
c *
15 a, b, c *
16 a(i) FMR
a(ii) Trustees and Officers
a(iii),b, c Management and Other Services
b, c Management and Other Services, Contracts with
Companies Affiliated with FMR
d Contracts with Companies Affiliated with FMR
e *
f Distribution and Service Plans
g *
h Description of the Trust
i Contracts with Companies Affiliated with FMR;
Description of the Trust
17 a,c Portfolio Transactions
b, d, e *
18 a Description of the Trust
b *
19 a Additional Purchase and Redemption Information
b Valuation of Portfolio Securities; Additional
Purchase and
Redemption Information
c *
20 Distribution and Taxes
21 a(i),(ii) Contracts with Companies Affiliated with FMR
a(iii),b,c *
22 Performance
23 Financial Statements for the Semiannual period are
incorporated by reference into the Statement of
Additional Information
_________
* Not Applicable
crossreference
FIDELITY ADVISOR ANNUITY FUND
PROSPECTUS
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109
AUGUST 25 , 1995
Fidelity Advisor Annuity Fund (Trust) is an open-end, diversified
management investment company, commonly known as a mutual fund. The Trust
currently consists of six investment portfolios (funds), each with its own
investment objective and investment policies. Fidelity Management &
Research Company (FMR) is each fund's investment advisor. As of the date of
this Prospectus, shares of the Trust may be sold only to certain separate
accounts of Nationwide Life Insurance Company (Separate Account) to serve
as the underlying investment vehicles for variable annuity policies issued
by Nationwide Life Insurance Company.
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND
FIDELITY ADVISOR ANNUITY GOVERNMENT INVESTMENT FUND
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND
FIDELITY ADVISOR ANNUITY MONEY MARKET FUND
AN INVESTMENT IN FIDELITY ADVISOR ANNUITY MONEY MARKET FUND IS NEITHER
INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE CAN BE NO
ASSURANCE THAT THE FUND WILL MAINTAIN A STABLE $1.00 SHARE PRICE.
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND INVESTS IN LOWER-QUALITY DEBT
SECURITIES, SOMETIMES CALLED "JUNK BONDS." INVESTORS SHOULD CONSIDER THAT
THESE SECURITIES CARRY GREATER RISKS, SUCH AS THE RISK OF UNTIMELY INTEREST
AND PRINCIPAL PAYMENTS, DEFAULT, AND PRICE VOLATILITY THAN HIGHER-QUALITY
DEBT SECURITIES, AND MAY PRESENT PROBLEMS OF LIQUIDITY AND VALUATION.
Particular funds may not be available in your state due to various
insurance regulations. Please check with Nationwide Life Insurance Company
for available funds. Inclusion of a fund in this Prospectus which is not
available in your state is not to be considered a solicitation. This
Prospectus should be read in conjunction with the prospectus of the
separate account of the specific insurance product which accompanies this
Prospectus.
Please read this Prospectus before investing. It is designed to provide you
with information and help you decide if a fund's goals match your own.
Retain this document for future reference.
A Statement of Additional Information (SAI) dated August 25 , 1995
for the Trust has been filed with the Securities and Exchange Commission
(SEC) and is incorporated herein by reference. The SAI is available free
upon request from Nationwide Life Insurance Company, One Nationwide Plaza,
P.O. Box 182610, Columbus, Ohio 43216 or by calling 1-800-573-5775.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
(registered trademark)
TABLE OF CONTENTS Page
Financial Highlights
Investment Objectives and Policies
Management, Distribution and Service Fees
The Trust and the Fidelity Organization
Performance
Portfolio Transactions
Appendix
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow is as of each fund's semiannual
period and is unaudited. The financial highlights and the Semiannual report
are incorporated by reference into the funds' SAI, which may be obtained
free of charge by contacting Nationwide Life Insurance Company at
1-800-573-5775.
MONEY MARKET
<TABLE>
<CAPTION>
<S> <C>
1.Selected Per-Share Data and Ratios
2. Period ended June 30 1995D
3.Net asset value, beginning of period $ 1.000
4.Income from Investment Operations .026
Net interest income
5.Less Distributions (.026)
From net interest income
6.Net asset value, end of period $ 1.000
7.Total r eturn B ,C 2.59%
8.Net assets, end of period (000 omitted) $ 8,183
9.Ratio of expenses to average net assets E 1.00 %A
10.Ratio of expenses to average net assets before expense reductions E 2.38%A
11.Ratio of net interest income to average net assets 5.15%A
</TABLE>
GOVERNMENT INVESTMENT
<TABLE>
<CAPTION>
<S> <C>
12.Selected Per-Share Data and Ratios
13. Period ended June 30 1995D
14.Net asset value, beginning of period $ 10.000
15.Income from Investment Operations .197
Net investment income
16. Net realized and unrealized gain (loss) .813
17. Total from investment operations 1.010
18.Net asset value, end of period $ 11.010
19.Total r eturn B, C 10.10%
20.Net assets, end of period (000 omitted) $ 4,262
21.Ratio of expenses to average net assets E 1.00%
A
22.Ratio of expenses to average net assets before expense reductions E 2.85%
A
23.Ratio of net investment income to average net assets 5.74%
A
24.Portfolio turnover rate 504%
A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN IS FOR A PERIOD OF LESS THAN ONE YEAR AND IS NOT
ANNUALIZED .
C T HE T OTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN. TOTAL RETURNS DO NOT REFLECT
CHARGES ATTRIBUTABLE TO YOUR INSURANCE COMPANY'S SEPARATE ACCOUNT.
INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
D JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1995 (UNAUDITED)
E EFFECTIVE JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THE FUNDS'
INVESTMENT ADVISOR VOLUNTARILY AGREED TO LIMIT EXPENSES TO 1.00% OF EACH
FUND'S AVERAGE NET ASSETS.
HIGH YIELD
<TABLE>
<CAPTION>
<S> <C>
25.Selected Per-Share Data and Ratios
26. Period ended June 30 1995D
27.Net asset value, beginning of period $ 10.000
28.Income from Investment Operations .204
Net investment income
29. Net realized and unrealized gain (loss) .916
30. Total from investment operations 1.120
31.Net asset value, end of period $ 11.120
32.Total r eturn B, C 11.20%
33.Net assets, end of period (000 omitted) $ 10,920
34.Ratio of expenses to average net assets E 1.00%
A
35.Ratio of expenses to average net assets before expense reductions E 2.19%
A
36.Ratio of net investment income to average net assets 9.40%
A
37.Portfolio turnover rate 90%
A
</TABLE>
INCOME & GROWTH
<TABLE>
<CAPTION>
<S> <C>
38.Selected Per-Share Data and Ratios
39. Period ended June 30 1995D
40.Net asset value, beginning of period $ 10.00
41.Income from Investment Operations
42. Net investment income .07
43. Net realized and unrealized gain (loss) .67
44. Total from investment operations .74
45.Net asset value, end of period $ 10.74
46.Total r eturn B, C 7. 4 0%
47.Net assets, end of period (000 omitted) $ 12,082
48.Ratio of expenses to average net assets E 1. 50 %
A
49.Ratio of expenses to average net assets before expense reductions E 2.60%
A
50.Ratio of net investment income to average net assets 3.54%
A
51.Portfolio turnover rate 367%
A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN IS FOR A PERIOD OF LESS THAN ONE YEAR AND IS NOT
ANNUALIZED.
C T HE T OTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN. TOTAL RETURNS DO NOT REFLECT
CHARGES ATTRIBUTABLE TO YOUR INSURANCE COMPANY'S SEPARATE ACCOUNT.
INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
D JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1995 (UNAUDITED)
E EFFECTIVE JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THE FUNDS'
INVESTMENT ADVISOR VOLUNTARILY AGREED TO LIMIT EXPENSES TO 1.00% AND 1.50%
OF HIGH YIELD AND INCOME & GROWTH FUNDS' AVERAGE NET ASSETS,
RESPECTIVELY.
GROWTH OPPORTUNITIES
<TABLE>
<CAPTION>
<S> <C>
52.Selected Per-Share Data and Ratios
53. Period ended June 30 1995D
54.Net asset value, beginning of period $ 10.00
55.Income from Investment Operations
56. Net investment income .04
57. Net realized and unrealized gain (loss) 1.75
58. Total from investment operations 1.79
59.Net asset value, end of period $ 11.79
60.Total r eturn B, C 17.90 %
61.Net assets, end of period (000 omitted) $ 38,282
62.Ratio of expenses to average net assets E 1. 50 %
A
63.Ratio of expenses to average net assets before expense reductions E 1.65%
A
64.Ratio of net investment income to average net assets 2.46%
A
65.Portfolio turnover rate 14%
A
</TABLE>
OVERSEAS
<TABLE>
<CAPTION>
<S> <C>
66.Selected Per-Share Data and Ratios
67. Period ended June 30 1995D
68.Net asset value, beginning of period $ 10.00
69.Income from Investment Operations
70. Net investment income .08
71. Net realized and unrealized gain (loss) .53
72. Total from investment operations .61
73.Net asset value, end of period $ 10.61
74.Total r eturn B, C 6.10%
75.Net assets, end of period (000 omitted) $ 5,038
76.Ratio of expenses to average net assets E 1.50%
A
77.Ratio of expenses to average net assets before expense reductions E 4.85%
A
78.Ratio of net investment income to average net assets 3.32%
A
79.Portfolio turnover rate 12%
A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN IS FOR A PERIOD OF LESS THAN ONE YEAR AND IS NOT
ANNUALIZED. .
C THE T OTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN. TOTAL RETURNS DO NOT REFLECT
CHARGES ATTRIBUTABLE TO YOUR INSURANCE COMPANY'S SEPARATE ACCOUNT.
INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL RETURNS SHOWN.
D JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1995 (UNAUDITED)
E EFFECTIVE JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THE FUNDS'
INVESTMENT ADVISOR VOLUNTARILY AGREED TO LIMIT EXPENSES TO 1.50% OF GROWTH
OPPORTUNITIES AND OVERSEAS FUNDS' RESPECTIVE AVERAGE NET ASSETS.
INVESTMENT OBJECTIVES
FIDELITY ADVISOR ANNUITY OVERSEAS FUND seeks growth of capital primarily
through investments in foreign securities.
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND seeks to provide capital
growth by investing primarily in common stocks and securities convertible
into common stocks.
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND seeks both income and growth
of capital by investing in a diversified portfolio of equity and
fixed-income securities with income, growth of income and capital
appreciation potential.
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND seeks a combination of a high
level of income and the potential for capital gains by investing in a
diversified portfolio consisting primarily of high-yielding, fixed-income
and zero coupon securities, such as bonds, debentures and notes,
convertible securities and preferred stocks.
FIDELITY ADVISOR ANNUITY GOVERNMENT INVESTMENT FUND seeks a high level of
current income by investing primarily in obligations issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities.
FIDELITY ADVISOR ANNUITY MONEY MARKET FUND seeks to obtain as high a level
of current income as is consistent with preserving capital and providing
liquidity. The fund will invest only in high quality U.S.
dollar-denominated money market securities of domestic and foreign issuers.
The investment objective of each fund is fundamental and can only be
changed by vote of a majority of the outstanding shares of the respective
fund. Except as otherwise noted, the investment limitations and policies of
each fund are not fundamental. Non-fundamental investment limitations and
policies may be changed without shareholder approval.
Risks vary based on the type of fund you choose. As is the case with any
investment in securities, investment in the funds involves certain risks. A
fund may not always achieve its objective, but it will follow the
investment policies described below in "Investment Policies."
INVESTMENT POLICIES
Further information relating to the types of securities in which each fund
may invest and the investment policies of each fund in general are set
forth in the Appendix to this Prospectus and in the Trust's SAI.
EQUITY FUNDS: Equity funds invest in common stock and other equity
securities in search of growth or a combination of growth and income. The
share value of equity funds depends heavily on stock market conditions in
the U.S. and abroad, and can also be affected by changes in interest rates
or other economic conditions. Investments in equity funds are more suitable
for investors who take a long-term approach to investing.
FIDELITY ADVISOR ANNUITY OVERSEAS FUND seeks growth of capital primarily
through investments in foreign securities. The fund defines foreign
securities as securities of issuers whose principal activities are outside
of the United States. Normally, at least 65% of the fund's total assets
will be invested in securities of issuers from at least three different
countries outside of North America (the United States, Canada, Mexico, and
Central America). The fund expects to invest most of its assets in
securities of issuers located in developed countries in these general
geographic areas: The Americas (other than the United States), the Far East
and the Pacific Basin, and Western Europe. In determining whether a
company's or organization's principal activities are in a particular
region, FMR will look at such factors as the location of assets, personnel,
sales, and earnings.
FMR expects that opportunities for capital growth will come most often from
common stock and other equity securities, and therefore, expects that
equity securities will account for the majority of the fund's investments.
However, the fund also may find opportunities for capital growth from debt
securities of any quality or maturity by reason of anticipated changes in
such factors as interest rates, currency relationships, or the credit
standing of individual issuers. The fund will not consider dividend income
as a primary factor in choosing securities, unless FMR believes the income
will contribute to the securities' growth potential.
When allocating the investments of the fund among geographic regions and
individual countries, and among assets denominated in U.S. and foreign
currencies, FMR considers various factors, such as prospects for relative
economic growth among countries, regions or geographic areas; expected
levels of inflation; government policies influencing business conditions;
and the outlook for currency relationships. Although the fund has the
authority under normal conditions to invest up to 35% of its total assets
in the U.S., FMR currently intends to manage the fund to be as fully
invested outside the U.S. as is practicable in light of the fund's cash
flow and cash needs.
Securities in which the fund may invest include common stocks of companies
or closed-end investment companies, securities such as warrants or rights
that are convertible into common stock, preferred stocks, and depositary
receipts for those securities.
The fund may invest in debt securities of any type of issuer, including
governments and governmental entities (including supranational
organizations such as the World Bank) as well as corporations and other
business organizations. The fund has no limitation on the quality of debt
securities in which it may invest. The fund may invest in lower-quality,
high-yielding debt securities (sometimes referred to as "junk bonds"),
although it intends to limit its investments in these securities to 35% of
its assets. See the section entitled "Risks of Lower-Quality Debt
Securities" for more information. FMR may invest a portion of the fund's
assets in high-quality, short-term debt securities, bank deposits and money
market instruments (including repurchase agreements) denominated in U.S.
dollars or foreign currencies. When market conditions warrant, FMR can make
temporary defensive investments without limit in U.S. government securities
or investment-grade obligations of companies incorporated in, and having
principal business activities in, the United States.
The fund may also purchase or engage in indexed securities, illiquid
investments, loans and other direct debt instruments, options and futures
contracts, repurchase agreements and securities loans, restricted
securities, and swap agreements.
CONSIDERATIONS IN INVESTING IN SHARES OF
OVERSEAS FUND:
Investing outside the U.S. involves different opportunities and different
risks from U.S. investments. FMR believes that it may be possible to obtain
significant returns from a portfolio of foreign investments, or a
combination of foreign investments and U.S. investments, and to achieve
increased diversification in comparison to a portfolio invested solely in
U.S. securities. By including international investments in your investment
portfolio, you may gain increased diversification by combining securities
from various countries and geographic areas that offer different investment
opportunities and are affected by different economic trends. At the same
time, these opportunities and trends involve risks that may not be
encountered with U.S. investments.
International investing in general may involve greater risks than U.S.
investments. There is generally less publicly available information about
foreign issuers, and there may be less government regulation and
supervision of foreign stock exchanges, brokers, and listed companies.
There may be difficulty in enforcing legal rights outside the United
States. Foreign companies generally are not subject to uniform accounting,
auditing, and financial reporting standards, practices, and requirements
comparable to those that apply to U.S. companies. Security trading
practices abroad may offer less protection to investors such as the fund.
Settlement of transactions in some foreign markets may be delayed or may be
less frequent than in the U.S., which could affect the liquidity of the
fund. Additionally, in some foreign countries, there is the possibility of
expropriation or confiscatory taxation; limitations on the removal of
securities, property, or other assets of the fund; political or social
instability; or diplomatic developments which could affect U.S. investments
in foreign countries. FMR will take these factors into consideration in
managing the fund's investments.
The fund may invest a portion of its assets in developing countries, or in
countries with new or developing capital markets. The considerations noted
above are generally intensified for these investments. These countries may
have relatively unstable governments, economies based on only a few
industries, and securities markets that trade a small number of securities.
Securities of issuers located in these countries tend to have volatile
prices and may offer significant potential for loss as well as gain. For a
discussion of foreign currencies and currency management strategies, see
the Appendix.
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND seeks to provide capital
growth by investing primarily in common stocks and securities convertible
into common stocks. Under normal circumstances, at least 65% of the fund's
total assets will be invested in securities of companies that FMR believes
have long-term growth potential. Growth can be considered either
appreciation of the security itself or growth of the company's earnings or
gross sales. Accordingly, these securities will pay little, if any, income,
which will be entirely incidental to the objective of capital growth.
The fund also has the ability to purchase other securities, such as
preferred stock and bonds that may produce capital growth. Securities may
be of all types or quality. The fund may invest in lower-quality, high
yielding debt securities (sometimes referred to as "junk bonds"), although
it intends to limit its investments in these securities to 35% of its
assets. See the section entitled "Risks of Lower-Quality Debt Securities"
for more information.
The fund may purchase foreign investments of all types without limitation
and may enter into foreign forward currency exchange contracts. The fund
may purchase or engage in indexed securities, illiquid investments, loans
and other direct debt instruments, options and futures contracts,
repurchase agreements and securities loans, restricted securities, reverse
repurchase agreements, swap agreements, and warrants.
The fund may make temporary investments without limit in high-quality debt
securities and money market instruments, including commercial paper,
obligations of banks or the U.S. government and repurchase agreements for
defensive purposes when, in FMR's judgment, economic or market conditions
warrant.
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND seeks both income and growth
of capital by investing in a diversified portfolio of equity and
fixed-income securities with income, growth of income and capital
appreciation potential.
The fund will invest in equity securities, convertible securities,
preferred and common stocks paying any combination of dividends and capital
gains and in fixed-income securities. The fund also may buy securities that
are not providing dividends but offer prospects for growth of capital or
future income. The proportion of the fund's assets invested in each type of
security will vary from time to time in accordance with FMR's assessment of
economic conditions.
In selecting securities for the fund, FMR will consider such factors as the
company's financial strength, its outlook for increased dividend or
interest payments (defined herein as "growth of income") and capital gains.
In addition, industry factors and overall economic conditions may be
considered. The fund may invest in equity securities of some smaller, more
rapidly growing companies. Investing in smaller, less well-known companies,
especially those that have a narrow product line or are thinly traded,
often involves greater risk than investing in established companies with
proven track records. In selecting fixed-income securities for the fund
(such as bonds, notes, mortgage securities, convertible securities, and
short-term obligations such as bankers' acceptances, certificates of
deposit, and commercial paper), FMR will consider several factors,
including maturity, quality and expected yield.
The fund may invest in lower-quality high-yielding debt securities
(sometimes referred to as "junk bonds"). See the section entitled "Risks of
Lower-Quality Debt Securities" for more information. The fund currently
intends to limit its investments in these securities to 35% of its assets.
The fund also may invest in or engage in foreign investments, currency
contracts, indexed securities, illiquid instruments, loans and other direct
debt instruments, options and futures contracts, repurchase agreements and
securities loans, restricted securities, swap agreements, warrants, and
zero coupon bonds. The fund may, for temporary defensive purposes, invest
without limit in short-term securities.
FIXED-INCOME FUNDS: Fixed income funds invest primarily in debt securities
(e.g., bonds, debentures, notes and similar obligations). The share value
of fixed-income funds tends to vary inversely with changes in prevailing
interest rates. Shorter-term bonds are less sensitive to interest rate
changes, but longer-term bonds generally offer higher yields. It also is
important to note that high-yielding, lower quality bonds involve greater
risks, because there is a greater possibility of a financial reversal
affecting the issuer's ability to pay interest and principal on time. Share
value and yield are not guaranteed and will fluctuate based on credit
quality and changes in interest rates.
FMR will use its extensive research facilities in addition to considering
the ratings of Nationally Recognized Statistical Rating Organizations
(NRSROs) in selecting investments for the funds. Unrated securities are not
necessarily of lower quality than rated securities, but they may not be
attractive to as many buyers. This credit analysis includes consideration
of the economic feasibility of the obligation, the financial condition of
the issuer with respect to liquidity and cash flow, and political
developments that may affect credit quality. Since the risk of default is
higher for lower-quality obligations, FMR's research and analysis are an
integral part of choosing a fund's securities. Through portfolio
diversification and careful credit analysis, FMR can reduce risk, although
there can be no assurance that losses will not occur. FMR also considers
trends in the economy, in geographic areas, in various industries, and in
the financial markets.
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND seeks a combination of a high
level of income and the potential for capital gains by investing in a
diversified portfolio consisting primarily of high-yielding, fixed-income
and zero coupon securities, such as bonds, debentures and notes,
convertible securities and preferred stocks.
The fund normally will invest at least 65% of its total assets in
high-yielding, income producing debt securities and preferred stocks,
including convertible and zero coupon securities. The fund may invest all
or a substantial portion of its assets in lower-quality debt securities
(sometimes referred to as "junk bonds"). Please refer to the section
entitled "Risks of Lower-Quality Debt Securities." In addition, the fund
also may invest in government securities, securities of any state or any of
its respective subdivisions, agencies or instrumentalities and securities
of foreign issuers, including securities of foreign governments. The fund
may invest up to 35% of its assets in equity securities, including common
stocks, warrants and rights.
Debt instruments include securities such as bonds, notes, convertible
bonds, and mortgage-backed or asset-backed securities; commercial paper and
other money market instruments, including repurchase agreements; and loans,
trade claims, and similar instruments representing indebtedness of a
corporate borrower. These instruments may provide for interest payments in
cash or in kind, may pay no interest, or may be in default, and may have
warrants attached or otherwise include rights to purchase common stocks.
The fund may purchase debt instruments in public offerings or through
private placements. The fund has no specific limitations on the maturity or
credit ratings of the debt instruments in which it invests.
The fund may enter into forward foreign currency contracts and may purchase
or engage in foreign investments, indexed securities, illiquid investments,
loans and other direct debt instruments, options and futures contracts,
repurchase agreements and securities loans, restricted securities, reverse
repurchase agreements, and swap agreements.
RISKS OF LOWER-QUALITY DEBT SECURITIES
Lower-quality debt securities usually are defined as securities rated Ba or
lower by Moody's Investors Service, Inc. (Moody's) or BB or lower by
Standard & Poor's Corporation (S&P). Lower-quality debt securities are
considered speculative and involve greater risk of loss than higher quality
debt securities, and are more sensitive to changes in the issuer's capacity
to pay. This is an aggressive approach to income investing.
The 1980s saw a dramatic increase in the use of lower-quality debt
securities to finance highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
the future performance of lower-quality debt securities, especially during
periods of economic recession. In fact, from 1989 to 1991, the percentage
of lower-quality debt securities that defaulted rose significantly above
prior levels, although the default rate decreased in 1992 and 1993.
Lower-quality debt securities may be thinly traded, which can adversely
affect the prices at which these securities can be sold and can result in
high transaction costs. If market quotations are not available,
lower-quality debt securities will be valued in accordance with standards
set by the Board of Trustees, including the use of outside pricing
services. Judgment plays a greater role in valuing lower-quality debt
securities than securities for which more extensive quotations and
last-sale information are available. Adverse publicity and changing
investor perceptions may affect the ability of outside pricing services to
value lower-quality debt securities and a fund's ability to sell these
securities.
The market prices of lower-quality debt securities may decline
significantly in periods of general economic difficulty, which may follow
periods of rising interest rates. During an economic downturn or a
prolonged period of rising interest rates, the ability of issuers of
lower-quality debt to service their payment obligations, meet projected
goals, or obtain additional financing may be impaired.
The fund may choose, at its own expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as a security holder to
seek to protect the interests of security holders if it determines this to
be in the interest of fund shareholders.
The considerations discussed above for lower-quality debt securities also
apply to lower quality, unrated debt instruments of all types, including
loans and other direct indebtedness of businesses with poor credit
standing. Unrated debt instruments are not necessarily of lower quality
than rated securities, but they may not be attractive to as many buyers. A
fund relies more on FMR's credit analysis when investing in debt
instruments that are unrated. Please refer to the Appendix for a discussion
of Moody's and S&P ratings.
FIDELITY ADVISOR ANNUITY GOVERNMENT INVESTMENT FUND seeks a high level of
current income by investing primarily in obligations issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities. Under
normal circumstances, at least 65% of the fund's total assets will be
invested in government securities.
The fund invests primarily in obligations issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities (U.S. government
securities), including U.S. Treasury bonds, notes and bills, Government
National Mortgage Association mortgage-backed pass-through certificates
(Ginnie Maes) and mortgage-backed securities issued by the Federal National
Mortgage Association (Fannie Maes) or the Federal Home Loan Mortgage
Corporation (Freddie Macs). The U.S. government securities the fund invests
in may or may not be fully backed by the U.S. government. The fund may
enter into repurchase agreements involving any securities in which it may
invest and also may enter into reverse repurchase agreements. The fund
considers "government securities" to include U.S. government securities
subject to repurchase agreements. The fund is not restricted as to the
percentage of its assets that may be invested in any one type of U.S.
government security. The fund may for temporary defensive purposes invest
without limit in U.S. government securities having a maturity of 365 days
or less. The fund may invest in delayed delivery transactions, options and
futures contracts, indexed securities, swap agreements and zero coupon
bonds. In seeking current income, the fund also may consider the potential
for capital gain.
FIDELITY ADVISOR ANNUITY MONEY MARKET FUND seeks to obtain as high a level
of current income as is consistent with preserving capital and providing
liquidity. FMR will invest the fund's assets in the following types of
high-quality, U.S. dollar-denominated money market securities of domestic
and foreign issuers:
(solid bullet) obligations of financial institutions, such as banks,
savings and loan institutions, insurance companies and mortgage bankers.
These obligations include certificates of deposit, bankers' acceptances and
time deposits.
(solid bullet) obligations of governments and their agencies or
instrumentalities.
(solid bullet) short-term obligations, including high-quality debt
obligations such as commercial paper, notes and bonds deemed to have
remaining maturities of 397 days or less.
(solid bullet) other short-term debt obligations deemed to have remaining
maturities of 397 days or less.
Many of the fund's investments are described in the APPENDIX.
The fund may invest in obligations of U.S. banks, foreign branches of U.S.
banks (Eurodollars), U.S. branches and agencies of foreign banks (Yankee
dollars), and foreign branches of foreign banks. Euro and Yankee dollar
investments involve risks that are different from investments in securities
of U.S. banks. These risks may include future unfavorable political and
economic developments, possible withholding of taxes, seizure of foreign
deposits, currency controls, interest limitations or other governmental
restrictions which might affect payment of principal or interest.
Additionally, there may be less public information available about foreign
banks and their branches. Foreign branches of foreign banks are not
regulated by U.S. banking authorities, and generally are not bound by
accounting, auditing and financial reporting standards comparable to U.S.
banks. Although FMR carefully considers these factors when making
investments, the fund does not limit the amount of its assets which can be
invested in any one type of instrument or in any foreign country.
Investments in MONEY MARKET FUND earn income at current money market rates.
The fund's ability to achieve its investment objective depends on the
quality and maturity of its investments. Although its policies are designed
to help maintain a stable $1.00 share price, all money market instruments
can change in value when interest rates or issuers' creditworthiness
change, or if an issuer or guarantor of a security fails to pay interest or
principal when due. If these changes in value were large enough, the fund's
share price could deviate from $1.00. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields.
Money Market Fund will invest more than 25% of its total assets in the
securities of the financial services industry, under normal conditions.
Companies in the financial services industry are subject to various risks
related to that industry, such as government regulation, changes in
interest rates, and exposure on loans, including loans to foreign
borrowers. The fund's performance may be affected by conditions affecting
the financial services industry.
QUALITY. Pursuant to procedures adopted by the Board of Trustees, Money
Market Fund may purchase only high quality securities that FMR believes
present minimal credit risks. To be considered high quality, a security
must be rated in accordance with applicable rules in one of the two highest
categories for short-term securities by at least two nationally recognized
rating services (or by one, if only one rating service has rated the
security); or, if unrated, judged to be of equivalent quality by FMR.
High quality securities are divided into "first tier" and "second tier"
securities. FIRST TIER SECURITIES are those deemed to be in the highest
rating category (e.g., Standard & Poor's A-1) while SECOND TIER SECURITIES
are those deemed to be in the second highest rating category (e.g.,
Standard & Poor's A-2). If a security is deemed to have received different
ratings by different rating services, at least two rating services must
have assigned the higher rating in order for FMR to determine eligibility
on the basis of that higher rating. Based on procedures adopted by the
Board of Trustees, FMR may determine that an unrated security is of
equivalent quality to a rated first or second tier security.
DIVERSIFICATION. The fund may not invest more than 5% of its total assets
in second tier securities. In addition, the fund may not invest more than
1% of its total assets or $1 million (whichever is greater) in the second
tier securities of a single issuer.
MATURITY POLICIES. The fund currently intends to limit its investments to
securities deemed to have remaining maturities of 397 days or less and to
maintain a dollar-weighted average maturity of 90 days or less. When
determining the maturity of a security, the fund may look to an interest
rate reset or demand feature.
INVESTMENT LIMITATIONS
Each fund has adopted the following investment limitations designed to
reduce investment risk. The policies and limitations discussed below, and
in the Appendix, are considered at the time of purchase. With the exception
of each fund's borrowing policy, the sale of portfolio securities is not
required in the event of a subsequent change in circumstances.
DIVERSIFICATION: These limitations do not apply to U.S. government
securities.
(small solid bullet) As a non-fundamental policy, Money Market Fund
normally may not invest more than 5% of its total assets in the securities
of any single issuer. Under certain conditions, however, the fund may
invest up to 10% of its total assets in the first tier securities of a
single issuer for up to three business days. As a fundamental policy, the
fund will not purchase a security if, as a result more than 25% of its
total assets would be in a particular industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry, under normal conditions.
(small solid bullet) As fundamental policies, Overseas, Growth
Opportunities, Income & Growth, High Yield and Government Investment Funds
each may not, with respect to 75% of its total assets, purchase a security
if, as a result, more than 5% of its total assets would be invested in the
securities of any issuer or it would hold more than 10% of the outstanding
voting securities of that issuer.
(small solid bullet) Also, as a fundamental policy, Overseas, Growth
Opportunities, Income & Growth, High Yield and Government Investment Funds
each may not purchase the securities of any issuer if, as a result, more
than 25% of its total assets would be invested in the securities of issuers
having their principal business activities in the same industry.
BORROWING: The following limitations are not fundamental.
(small solid bullet) Each fund may borrow money or engage in reverse
repurchase agreements for temporary or emergency purposes, and Money Market
Fund may engage in reverse repurchase agreements for any purpose, but not
in an amount exceeding 25% of a fund's net assets. Each fund may borrow
money only from banks or other funds advised by FMR and will not purchase
securities when borrowings (excluding reverse repurchase agreements for
Money Market Fund) exceed 5% of its total assets.
LENDING: Percentage limitation is fundamental.
(small solid bullet) Each fund will limit loans in the aggregate to 33 1/3%
of its total assets.
Each fund may borrow money from and lend money to other mutual funds
advised by FMR or its affiliates, subject to certain restrictions (see the
Appendix). If a fund borrows money, its share price may be subject to
greater fluctuation until the borrowing is paid off. To this extent,
purchasing securities when borrowings are outstanding may involve an
element of leverage.
INTERNAL REVENUE SERVICE (IRS) LIMITATIONS. In addition to the above, each
fund also follows certain limitations imposed by the IRS on separate
accounts of insurance companies relating to the tax-deferred status of
variable contracts. More specific information may be contained in the
separate account prospectus.
MANAGEMENT, DISTRIBUTION AND SERVICE FEES
1.MANAGEMENT AND OTHER SERVICES. For managing its investments and business
affairs, each fund pays a monthly fee to FMR.
Each fund pays a monthly fee to FMR based on a basic fee rate, which is the
sum of two components:
1. A group fee rate based on the monthly average net assets of all of the
mutual funds advised by FMR. This rate for equity funds cannot rise above
.52% and it drops as total assets rise. For example, the effective equity
fund group fee rate for June 30 , 199 5 , was . 3145 %. The
group fee rate for fixed-income funds cannot rise above .37% and it drops
as total assets rise. For example, the effective fixed-income group fee
rate for June 30 , 199 5 , was .15 20 %.
2. An individual fund fee rate, which varies for each fund.
One-twelfth of the annual basic fee rate is applied to each fund's net
assets averaged over the most recent month, giving a dollar amount which is
the management fee for that month. For Money Market Fund, if the fund's
gross yield is 5% or less, the basic fee is the total management fee. An
income-based component is added to the basic fee only when the fund's yield
is greater than 5%. The income-based fee is 6% of that portion of the
fund's yield that represents a gross yield of more than 5% per year. The
maximum income-based component is .24%.
The following are the individual fund fee rates and total management fee
(estimated) for each fund:
TOTAL ESTIMATED
MANAGEMENT FEE
(PERCENT OF AVERAGE NET ASSETS)
INDIVIDUAL BEFORE REIMBURSEMENTS,
FUND FEE IF ANY
EQUITY PORTFOLIOS:
Overseas Fund 0.45% 0.77%(dagger)
Growth Opportunities Fund 0.30% 0.62%
Income & Growth Fund 0.20% 0.52%
FIXED INCOME PORTFOLIOS:
High Yield Fund 0.45% 0.61%
Government Investment Fund 0.30% 0.46%
Money Market Fund 0.03% 0.19%
(dagger) TOTAL FEES ARE HIGHER THAN THOSE CHARGED BY MOST DOMESTIC MUTUAL
FUNDS, BUT NOT NECESSARILY HIGHER THAN THOSE OF A TYPICAL INTERNATIONAL
FUND, DUE TO THE GREATER COMPLEXITY, EXPENSE AND COMMITMENT OF RESOURCES
INVOLVED IN INTERNATIONAL INVESTING.
Total estimated expenses (after any reimbursement) for fiscal year 1995 are
as follows: Overseas Fund: 1.10%; Growth Opportunities Fund: 0.79%; Income
& Growth Fund; 0.66%; High Yield Fund; 0.81%; Government Investment Fund:
1.00%; and Money Market Fund: 0.57%.
FMR may, from time to time, agree to reimburse a fund for management fees
and other expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses) above a specified percentage of average net assets.
FMR retains the ability to be repaid by a fund for these expense
reimbursements in the amount that expenses fall below the limit prior to
the end of the fiscal year. Fee reimbursements by FMR will increase a
fund's yield and total return, and repayment by a fund will lower its total
return. FMR has voluntarily agreed to reimburse expenses in excess of 1.50%
of Overseas, Growth Opportunities and Income & Growth Funds' respective
average net assets and reimburse total operating expenses in excess of
1.00% of High Yield, Government Investment and Money Market Funds'
respective average net assets.
FMR has entered into sub-advisory agreements on behalf of certain funds.
Sub-advisors provide research and investment advice and research services
with respect to issuers based outside the United States and FMR may grant
sub-advisors investment management authority to buy and sell securities if
FMR believes it would be beneficial to a fund. Overseas, Income & Growth,
Growth Opportunities and High Yield have entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc. (FMR U.K.), in
London, England, and Fidelity Management & Research (Far East) Inc. (FMR
Far East), in Tokyo, Japan. FMR U.K. focuses primarily on issuers based in
Europe, and FMR Far East focuses primarily on issuers based in Asia and the
Pacific Basin. Under the sub-advisory agreements, FMR, and not the funds,
pays FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively,
of each sub-advisor's costs incurred in connection with providing advice.
For providing investment management services, FMR pays FMR U.K. and FMR Far
East 50% of its monthly management fee with respect to each fund's assets
managed by the sub-advisor on a discretionary basis.
In addition, Overseas has entered into a sub-advisory agreement with
Fidelity International Investment Advisors (FIIA), in Pembroke, Bermuda.
FIIA, in turn, has entered into a sub-advisory agreement with its wholly
owned subsidiary Fidelity International Investment Advisors (U.K.) Limited
(FIIAL U.K.), in Kent, England. Currently, FIIAL U.K. focuses on issuers
based in countries other than the United States, including countries in
Europe, Asia, and the Pacific Basin. Under the sub-advisory agreement, FMR
pays FIIA 30% of its monthly management fee with respect to the average
market value of investments held by the fund for which FIIA has provided
FMR with investment advice. For providing investment management services,
FMR pays FIIA 50% of its monthly management fee with respect to the average
market value of investments held by the fund for which FIIA has managed on
a discretionary basis. FIIA, in turn, pays FIIAL U.K. a fee equal to 110%
of FIIAL U.K.'s costs incurred in connection with providing investment
advice and research services.
On behalf of Money Market Fund, FMR has entered into a sub-advisory
agreement with FMR Texas Inc. (FMR Texas), a Texas corporation with
principal offices at 400 East Las Colinas Boulevard in Irving, Texas.
Pursuant to the sub-advisory agreement, FMR Texas has primary
responsibility for providing investment management services. Under the
sub-advisory agreement, FMR, and not the fund, pays FMR Texas a fee equal
to 50% of the management fee payable to FMR under its management contract
with the fund. (The fees paid to FMR Texas are not reduced by any voluntary
or mandatory management fee waivers or expense reimbursements which may be
in effect from time to time.)
Each fund utilizes Fidelity Investments Institutional Operations Company
(FIIOC), 82 Devonshire Street, Boston, Massachusetts 02109, an affiliate of
FMR, to maintain the master accounts of any participating insurance
companies. Under the transfer agency agreement with FIIOC, each fund pays
fees based on the type, size and number of transactions made by
shareholders of each fund.
Each fund also has an agreement with Fidelity Service Co. (FSC), 82
Devonshire Street, Boston, Massachusetts 02109, an affiliate of FMR, under
which each fund pays FSC to calculate its daily share price and to maintain
the portfolio and general accounting records of each fund and to administer
each fund's securities lending program. The fees for pricing and
bookkeeping services are based on each fund's average net assets, but must
fall within a range of $20,000 to $$750,000 per year for Money Market Fund
and $45,000 to $750,000 per year for Overseas, Growth Opportunities, Income
& Growth, Government Investment, and High Yield Funds, respectively.
Each fund's operating expenses include custodial, legal and accounting
fees, charges to register a Trust or fund with federal and state regulatory
authorities and other miscellaneous expenses.
2.DISTRIBUTION AND SERVICE PLAN. Each fund has adopted a Distribution and
Service Plan (the Plans) pursuant to Rule 12b-1 under the Investment
Company Act of 1940. No separate payments are authorized to be made by the
funds under the Plans. Rather, each Plan recognizes that FMR may use its
management fee or other resources to pay expenses associated with
activities primarily intended to result in the sale of each fund's shares.
Each Plan also provides that FMR may make payments from these sources to
third parties, although the Board has not authorized these payments to
date.
DISTRIBUTIONS AND TAXES
For a discussion of the tax status of your variable contract, refer to your
insurance company's separate account prospectus. It is suggested you keep
all statements you receive to assist in your personal recordkeeping.
It is expected that shares of the funds will be held under the terms of
variable annuity contracts. Under current tax law, dividends or capital
gain distributions from any fund are not currently taxable when left to
accumulate within a variable annuity contract. Distributions from a
variable contract prior to age 59 1/2 may be subject to a 10% penalty tax
in addition to ordinary income tax.
Each fund is treated as a separate entity for federal income tax purposes
and intends to pay out all of its net investment income and net realized
capital gains, if any, each year. Dividends from Money Market Fund are
declared daily and paid monthly. Income & Growth Fund, Government
Investment Fund, High Yield Fund, Growth Opportunities and Overseas Funds
will distribute any dividends each year. Normally, net realized capital
gains, if any, are distributed each year for the funds. Such income and
capital gains are automatically reinvested in additional shares for the
funds.
Each fund (except Money Market) makes dividend and capital gain
distributions on a per-share basis. After every distribution from each of
these funds, the fund's share price drops by the amount of the
distribution. Because dividends and capital gain distributions are
reinvested, the total value of an account will not be affected because,
although the shares will have a lower price, there will be correspondingly
more of them.
THE TRUST AND THE FIDELITY ORGANIZATION
The Trust is an open-end diversified management investment company
organized as a Massachusetts business trust on July 15, 1994. The Trust has
its own Board of Trustees that supervises fund activities and reviews each
fund's contractual arrangements with companies that provide each fund with
services. As a Massachusetts business trust, the Trust is not required to
hold annual shareholder meetings, although special meetings may be called
for a specific fund or the Trust as a whole for purposes such as electing
or removing Trustees, changing fundamental investment policies or
limitations or approving a management contract or plan of distribution. The
number of shares entitled to vote is based on the dollar value of an
insurance company's investment in a fund. An insurance company issuing a
variable contract that participates in the Trust will vote shares in the
separate account as required by law and interpretations thereof, as may be
amended or changed from time to time. In accordance with current law and
interpretations thereof, a participating insurance company is required to
request voting instructions from policyowners and must vote fund shares
held in the separate account in proportion to the voting instructions
received. For a further discussion, please refer to the prospectus of your
insurance company's separate account. There is a remote possibility that
one fund might become liable for any misstatement in the Prospectus about
another fund.
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, Massachusetts. It includes a number of
different subsidiaries and divisions which provide a variety of financial
services and products. The funds employ various Fidelity companies to
perform activities required for their operation.
Fidelity Management & Research Company, the funds' manager, is the original
Fidelity company founded in 1946. It provides a number of mutual funds and
other clients with investment research and portfolio management services.
It maintains a large staff of experienced investment personnel and a full
complement of related support facilities. As of June 30, 1995 , FMR
advised funds having approximately 21 million shareholder accounts with a
total value of more than $2 9 0 billion. FMR U.K., FMR Far East, and
FMR Texas are wholly owned subsidiaries of FMR while FIIA is wholly owned
by a subsidiary of FMR, Fidelity International Limited (FIL). The
sub-advisors provide research, investment advice and portfolio management
services for certain funds advised by FMR with respect to foreign
securities (FMR U.K., FMR Far East, FIIA) and money market instruments (FMR
Texas). Fidelity Distributors Corporation distributes shares for the
Fidelity funds.
FMR Corp. is the ultimate parent company of FMR, FMR Texas, FMR U.K., and
FMR Far East. Through ownership of voting common stock, members of the
Edward C. Johnson 3d family form a controlling group with respect to FMR
Corp. Changes may occur in the Johnson family group, through death or
disability, which would result in changes in each individual family
members' holding of stock. Such changes could result in one or more family
members becoming holders of over 25% of the stock. FMR Corp. has received
an opinion of counsel that changes in the composition of the Johnson family
group under these circumstances would not result in the termination of the
funds' management or distribution contracts and, accordingly, would not
require a shareholder vote to continue operation under those contracts. The
Johnson family group also owns, directly or indirectly, more than 25% of
the voting common stock of FIL.
Margaret L. Eagle is manager of Fidelity Advisor Annuity High Yield Fund.
Ms. Eagle also manages Advisor High Yield and several pension fund
accounts. Previously, she managed Spartan High Income, and High Income (now
Capital & Income). She also managed the bond portion of Puritan. Ms. Eagle
joined Fidelity in 1980.
Robert Haber is manager and vice president of Fidelity Advisor Annuity
Income & Growth Fund. Mr. Haber also manages Advisor Income & Growth,
Balanced and co-manages Global Balanced. Previously, he managed Convertible
Securities. Mr. Haber joined Fidelity in 1985.
John R. Hickling is manager of Fidelity Advisor Annuity Overseas Fund. Mr.
Hickling also manages Advisor Overseas, Japan, Overseas, VIP: Overseas and
International Growth & Income. Previously he managed Emerging Markets,
Europe and Pacific Basin. Mr. Hickling joined Fidelity in 1982.
Robert Ives is manager of Fidelity Advisor Annuity Government Investment
Fund, which he has managed since February 1995. Mr. Ives also manages
Government Securities, Spartan Government Income and Advisor Government
Investment. Previously, he managed Ginnie Mae and Spartan Ginnie Mae. Mr.
Ives joined Fidelity in 1991, after receiving an M.B.A. from the University
of Chicago. Previously, Mr. Ives was a consultant to the U.S. Air Force for
MITRE Corp. and an engineer at Bell Labs.
George A. Vanderheiden is manager and vice president of Fidelity Advisor
Annuity Growth Opportunities Fund. Mr. Vanderheiden also manages Advisor
Growth Opportunities, Destiny I and Destiny II. Mr. Vanderheiden is a
managing director of FMR Corp. Mr. Vanderheiden joined Fidelity in 1971.
VALUATION
The NAV refers to the worth of one share. NAV is computed by adding the
value of each fund's security holdings and other assets, deducting
liabilities and dividing the result by the number of shares outstanding.
NAV normally is calculated as of the close of business of the NYSE
(normally 4:00 p.m. Eastern time). The funds are open for business and NAV
is calculated each day the NYSE is open for trading. Money Market Fund's
securities are valued on the basis of amortized cost. This means of
valuation assumes a steady rate of amortization of any premium or discount
from the date of purchase until maturity instead of looking at actual
changes in market value. Each of the other fund's securities and other
assets are valued primarily on the basis of market quotations furnished by
pricing services, or if quotations are not available or if the values have
been materially affected by events occurring after the closing of a foreign
market, by a method that the Board of Trustees believes accurately reflects
fair value. Foreign securities are valued based on quotations from the
primary market in which they are traded and are converted from the local
currency into U.S. dollars using current exchange rates.
PURCHASES AND REDEMPTIONS
Investments in each fund may be made only by separate accounts established
and maintained by insurance companies for the purpose of funding variable
insurance contracts. Please refer to the prospectus of your insurance
company's separate account for information on how to invest and redeem from
each fund.
Investments by separate accounts in each fund are expressed in terms of
full and fractional shares of each fund. Each Participating insurance
company receives orders from its variable contract owners to purchase or
redeem shares of the funds each Business Day. That night, all orders
received by that insurance company on that Business Day are aggregated, and
the insurance company places a net purchase or redemption order for shares
of one or more funds the morning of the next Business Day. These orders are
generally executed at the NAV that was next computed at the close of the
previous Business Day in order to provide a match between the variable
contract owners' orders to the insurance compa ny and the insurance
compan y ' s orders to a fund. In some cases, an insurance
company's orders for fund shares may be executed at the NAV next computed
after the order is actually transmitted to a fund.
The offering of shares of a fund may be suspended for a period of time and
each fund reserves the right to reject any purchase order. Purchase orders
may be refused if, in FMR's opinion, they are of a size that would disrupt
the management of a fund.
Redemption proceeds will normally be wired to the insurance company on the
next business day after receipt of the redemption instructions by a fund
but in no event later than 7 days following receipt of instructions. Each
fund may suspend redemptions or postpone payment dates on days when the
NYSE is closed (other than weekend or holidays), when trading on the NYSE
is restricted, or as permitted by the Securities and Exchange Commission.
PERFORMANCE
Each fund's performance may be quoted in advertising in terms of yield and
total return if accompanied by performance of your insurance company's
separate account. Performance is based on historical results and not
intended to indicate future performance. For additional performance
information, contact your insurance company for a free annual report.
Money Market Fund's YIELD refers to the income generated by an investment
in the fund over a specified seven day period, expressed as an annual
percentage rate. Its EFFECTIVE YIELD is calculated similarly, but assumes
that the income earned from investments is reinvested. Money Market Fund's
effective yield will tend to be slightly higher than its yield because of
this compounding effect.
YIELD is a way of showing the rate of income a fund earns on its
investments as a percentage of the fund's share price. To calculate yield,
a fund takes the dividend and interest income, if any, it earned from its
portfolio of investments for a specified 30-day period (net of expenses),
divides it by the number of its shares entitled to receive dividends and
expresses the result as an annualized percentage rate based on a fund's
share price at the end of the 30-day period. Yields are calculated
according to accounting methods that are standardized for all stock and
bond funds. Because yield accounting methods differ from the methods used
for other accounting purposes, a fund's yield may not equal its
distribution rate, the income paid to an account or the income reported in
the funds' financial statements.
TOTAL RETURNS are based on the overall dollar or percentage change in value
of a hypothetical investment in each fund, including changes in share price
(except for Money Market Fund) and assuming each fund's dividends and
capital gain distributions, if any, are reinvested. A CUMULATIVE TOTAL
RETURN reflects a fund's performance over a stated period of time. An
AVERAGE ANNUAL TOTAL RETURN reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if a
fund's performance had been constant over the entire period. Because
average annual returns tend to smooth out variations in a fund's return,
you should recognize that they are not the same as actual year-by-year
results. To illustrate the components of overall performance, a fund may
separate its cumulative and average annual returns into income results and
capital gain or loss.
A fund may quote its ADJUSTED NET ASSET VALUES, including all distributions
paid, and may be averaged over specified periods. A fund may use these
averages to calculate its MOMENTUM INDICATORS, which track changes in
adjusted net asset values over specified periods.
YIELDS AND TOTAL RETURNS QUOTED FOR THE FUNDS INCLUDE THE EFFECT OF
DEDUCTING EACH FUND'S EXPENSES, BUT MAY NOT INCLUDE CHARGES AND EXPENSES
ATTRIBUTABLE TO ANY PARTICULAR INSURANCE PRODUCT. SINCE SHARES OF THE FUNDS
MAY CURRENTLY ONLY BE PURCHASED THROUGH A VARIABLE ANNUITY CONTRACT, YOU
SHOULD CAREFULLY REVIEW THE PROSPECTUS OF THE INSURANCE PRODUCT YOU HAVE
CHOSEN FOR INFORMATION ON RELEVANT CHARGES AND EXPENSES. Excluding these
charges from quotations of each fund's performance has the effect of
increasing the performance quoted. You should bear in mind the effect of
these charges when comparing a fund's performance to that of other mutual
funds.
PORTFOLIO TRANSACTIONS
FMR uses various brokerage firms to carry out a fund's equity security
transactions. Money market obligations and government securities are
generally traded in the over-the-counter market through broker-dealers. A
broker-dealer makes a market for securities by offering to buy at one price
and sell at a slightly higher price. The difference is known as a spread.
Foreign securities are normally traded in foreign markets. In transactions
on foreign stock exchanges, brokers' commissions are generally fixed and
are often higher than in the United States, where commissions are
negotiated. Since FMR, directly or through affiliated sub-advisers, places
a large number of transactions, including those of Fidelity's other funds,
the funds pay lower commissions than those paid by individual investors,
and broker-dealers are willing to work with the funds on a more favorable
spread. Certain funds will pay commissions in connection with transactions
in futures contracts and options.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of
FMR Corp., if commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services.
FMR may also allocate brokerage transactions to a fund's custodian, acting
as a broker-dealer, or other broker-dealers, so long as transaction quality
and commission rates are comparable to those of other qualified
broker-dealers, where the broker-dealer will credit a portion of the
commissions paid toward payment of a fund's expenses. These expenses
currently include transfer agent fees and custodian fees. The custodian may
credit a portion of the commissions paid toward payment of a fund's
custodian charges.
Higher commissions may be paid to those firms that provide research,
valuation and other services to the extent permitted by law. FMR also is
authorized to allocate brokerage transactions to FBSI in order to secure
from FBSI research services produced by third party, independent entities.
FMR may use this research information in managing each fund's assets, as
well as assets of other clients.
When consistent with its investment objective, each fixed-income fund may
engage in short-term trading. Also, a security may be sold and another of
comparable quality simultaneously purchased to take advantage of what FMR
believes to be a temporary disparity in the normal yield relationship of
the two securities.
The frequency of portfolio transactions - the turnover rate - will vary
from year to year depending on market conditions. The annualized portfolio
turnover rates for Overseas, Growth Opportunities, Income & Growth, High
Yield and Government Investment are not expected to exceed 50%, 51%, 204%,
126% and 333%, respectively, in the first fiscal period. Because a high
turnover rate increases transaction costs, FMR carefully weighs the
anticipated benefits of short-term investing against these consequences.
APPENDIX
The following paragraphs provide a brief description of securities in which
the funds may invest and transactions they may make. The funds are not
limited by this discussion, however, and may purchase other types of
securities and enter into other types of transactions if they are
consistent with a fund's investment objective and policies.
MONEY MARKET refers to the marketplace where short-term, high grade debt
securities are traded and includes U.S. government obligations, commercial
paper, certificates of deposit and bankers' acceptances, time deposits and
short-term corporate obligations. Money market instruments may carry fixed
rates of return or have variable or floating interest rates.
COMMERCIAL PAPER represents short-term obligations issued by banks,
broker-dealers, corporations and other entities for purposes such as
financing their current operations.
CERTIFICATES OF DEPOSIT represent a commercial bank's obligations to repay
funds deposited with it earning specified rates of interest over given
periods.
BANKER'S ACCEPTANCES are obligations of a bank to pay a draft which has
been drawn on it by a customer. These obligations are backed by large banks
and usually backed by goods in international trade.
TIME DEPOSITS are non-negotiable deposits in a banking institution earning
a specified interest rate over a given period of time.
U.S. GOVERNMENT OBLIGATIONS are debt securities issued or guaranteed as to
principal and interest by the U.S. Treasury or by an agency or
instrumentality of the U.S. government. Not all U.S. government obligations
are backed by the full faith and credit of the United States. For example,
securities issued by the Federal Farm Credit Bank or by the Federal
National Mortgage Association are supported by the agency's right to borrow
money from the U.S. Treasury under certain circumstances. Securities issued
by the Federal Home Loan Bank are supported only by the credit of the
agency. There is no guarantee that the government will support these types
of securities, and therefore they involve more risk than other government
obligations.
CORPORATE OBLIGATIONS are bonds and notes issued by corporations and other
business organizations in order to finance their long-term credit needs.
ASSET-BACKED SECURITIES may include pools of mortgages, loans, receivables
or other assets. Payment of principal and interest may be largely dependent
upon the cash flows generated by the asset backing the securities.
DELAYED-DELIVERY TRANSACTIONS. Securities may be bought and sold on a
when-issued or delayed-delivery basis, with payment and delivery taking
place at a future date. The market value of securities purchased in this
way may change before the delivery date which could increase fluctuations
in a fund's yield. Ordinarily, a fund will not earn interest on securities
purchased until they are delivered.
FOREIGN CURRENCIES. The value of a fund's investments, and the value of
dividends and interest earned by a fund, may be significantly affected by
changes in currency exchange rates. Some foreign currency values may be
volatile, and there is the possibility of governmental controls on currency
exchange or governmental intervention in currency markets, which could
adversely affect the fund. Although FMR may attempt to manage currency
exchange rate risks, there is no assurance that FMR will do so at an
appropriate time or that FMR will be able to predict exchange rates
accurately. For example, if FMR increases a fund's exposure to a foreign
currency, and that currency's value subsequently falls, FMR's currency
management may result in increased losses to the fund. Similarly, if FMR
hedges a fund's exposure to a foreign currency, and that currency's value
rises, the fund will lose the opportunity to participate in the currency's
appreciation.
Money Market Fund may not use investment techniques which are inconsistent
with the fund's goal of maintaining a stable share price.
CURRENCY MANAGEMENT. The relative performance of foreign currencies is an
important factor in a fund's performance. FMR may manage a fund's exposure
to various currencies to take advantage of different yield, risk, and
return characteristics that different currencies can provide for U.S.
investors.
To manage exposure to currency fluctuations, a fund may enter into forward
currency exchange contracts (agreements to exchange one currency for
another at a future date) or currency swap agreements, buy and sell options
and futures contracts relating to foreign currencies, and purchase
securities indexed to foreign currencies. A fund will use currency forward
contracts in the normal course of business to lock in an exchange rate in
connection with purchases and sales of securities denominated in foreign
currencies. Other currency management strategies allow FMR to hedge
portfolio securities, to shift investment exposure from one currency to
another, or to attempt to profit from anticipated declines in the value of
a foreign currency relative to the U.S. dollar. There is no limitation on
the amount of a fund's assets that may be committed to currency management
strategies.
Money Market Fund may not use investment techniques which are inconsistent
with the fund's goal of maintaining a stable share price.
FOREIGN INVESTMENTS involve additional risks. Foreign securities and
securities denominated in or indexed to foreign currencies may be affected
by the strength of foreign currencies relative to the U.S. dollar, or by
political or economic developments in foreign countries. Foreign companies
may not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public information
about their operations. Foreign markets may be less liquid or more volatile
than U.S. markets, and may offer less protection to investors such as the
funds. In addition to the political and economic factors that can affect
foreign securities, a governmental issuer may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. These factors could make foreign investments,
especially those in developing countries more volatile. FMR considers these
factors in making investments for the funds.
The funds may enter into currency forward contracts (agreements to exchange
one currency for another at a future date) to manage currency risks and to
facilitate transactions in foreign securities. Although currency forward
contracts can be used to protect a fund from adverse exchange rate changes,
they involve a risk of loss if FMR fails to predict foreign currency values
correctly.
Money Market Fund may not use investment techniques which are inconsistent
with the fund's goal of maintaining a stable share price.
Pursuant to certain state insurance regulations, each fund may not invest
more than 20% of its assets in any one foreign country. Each fund may have
an additional 15% invested in securities of issuers located in any one (but
only one) of the following countries: Australia, Canada, France, Japan, the
United Kingdom or Germany.
ILLIQUID INVESTMENTS. Overseas and High Yield fund may invest up to 15%,
Growth Opportunities, Income & Growth and Government Investment may invest
up to 10% and Money Market will invest less than 10% of its assets in
illiquid investments. Under the supervision of the Board of Trustees, FMR
determines the liquidity of each fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for a fund to sell them promptly at an acceptable price.
INDEXED SECURITIES values are linked to currencies, interest rates,
commodities, indices, or other financial indicators. Most indexed
securities are short to intermediate term fixed-income securities whose
values at maturity or interest rates rise or fall according to the change
in one or more specified underlying instruments. Indexed securities may be
positively or negatively indexed (i.e., their value may increase or
decrease if the underlying instrument appreciates), and may have return
characteristics similar to direct investments in the underlying instrument
or to one or more options on the underlying instrument. Indexed securities
may be more volatile than the underlying instrument itself.
Money Market Fund may not use investment techniques which are inconsistent
with the fund's goal of maintaining a stable share price.
INTERFUND BORROWING PROGRAM. Each fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally will extend overnight,
but can have a maximum duration of seven days. The funds will lend through
the program only when the returns are higher than those available at the
same time from other short-term instruments (such as repurchase
agreements), and will borrow through the program only when the costs are
equal to or lower than the cost of bank loans. Growth Opportunities,
Overseas and Income & Growth Funds each will not lend more than 5% of its
assets, High Yield and Government Investment Funds each will not lend more
than 7.5% of its assets and Money Market Fund will not lend more than 10%
of its assets to other funds, and will not borrow through the program if,
after doing so, total outstanding borrowings would exceed 15% of total
assets. Loans may be called on one day's notice, and a fund may have to
borrow from a bank at a higher interest rate if an interfund loan is called
or not renewed. Any delay in repayment to a lending fund could result in a
lost investment opportunity or additional borrowing costs.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the risk
of loss in case of default or insolvency of the borrower. Direct debt
instruments may offer less legal protection to a fund in the event of fraud
or misrepresentations. In addition, loan participations involve a risk of
insolvency of the lending bank or other financial intermediary. Direct debt
instruments may also include standby financing commitments that obligate a
fund to supply additional cash to the borrower on demand.
Money Market Fund may not use investment techniques which are inconsistent
with the fund's goal of maintaining a stable share price.
MORTGAGE-BACKED SECURITIES are issued by government entities and
non-government entities such as banks, mortgage lenders, or other financial
institutions.
A mortgage-backed security may be an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized mortgage
obligations or CMOs, make payments of both principal and interest at a
variety of intervals; others make semiannual interest payments at a
predetermined rate and repay principal at maturity (like a typical bond).
Mortgage-backed securities are based on different types of mortgages
including those on commercial real estate or residential properties. Other
types of mortgage-backed securities will likely be developed in the future,
and each fund may invest in them if FMR determines they are consistent with
a fund's investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security. The prices of stripped mortgage-backed
securities may be particularly affected by changes in interest rates. As
interest rates fall, prepayment rates tend to increase, which tends to
reduce prices of IOs and increase prices of POs. Rising interest rates can
have the opposite effect.
OPTIONS AND FUTURES CONTRACTS are bought and sold to manage a fund's
exposure to changing interest rates, security prices, and currency exchange
rates. Some options and futures strategies, including selling futures,
buying puts, and writing calls, tend to hedge a fund's investment against
price fluctuations. Other strategies, including buying futures, writing
puts, and buying calls, tend to increase market exposure. Options and
futures may be combined with each other or with forward contracts in order
to adjust the risk and return characteristics of the overall strategy. A
fund may invest in options and futures based on any type of security,
index, or currency, including options and futures traded on foreign
exchanges and options not traded on exchanges.
Options and futures can be volatile investments, and involve certain risks.
If FMR applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower a fund's return. A
fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could
not close out its positions because of an illiquid secondary market.
A fund will not hedge more than 25% of its total assets by selling futures,
buying puts, and writing calls under normal conditions. In addition each
fund will not buy futures or write puts whose underlying value exceeds 25%
of its total assets, and will not buy calls with a value exceeding 5% of
its total assets.
Money Market Fund may not use investment techniques which are inconsistent
with the fund's goal of maintaining a stable share price.
REAL ESTATE BACKED SECURITIES. Real estate industry companies may include
among others: real estate investment trusts; brokers or real estate
developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. Companies
engaged in the real estate industry may be subject to certain risks
including: declines in the value of real estate, risks related to general
and local conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, and variations in rental income.
REPURCHASE AGREEMENTS AND SECURITIES LOANS. In a repurchase agreement, a
fund buys a security at one price and simultaneously agrees to sell it back
at a higher price. A fund may also make securities loans to broker-dealers
and institutional investors, including FBSI. In the event of the bankruptcy
of the other party to either a repurchase agreement or a securities loan, a
fund could experience delays in recovering its cash or the securities it
lent. To the extent that, in the meantime, the value of the securities
purchased had decreased or the value of the securities lent had increased,
the fund could experience a loss. A fund (excluding Money Market) may enter
into a foreign repurchase agreement with respect to foreign securities and
repurchase agreements denominated in foreign currencies. Foreign repurchase
agreements may be less well secured than repurchase agreements in U.S.
markets, and may involve greater risk of default. In all cases, FMR must
find the creditworthiness of the other party to the transaction
satisfactory.
RESTRICTED SECURITIES are securities which cannot be sold to the public
without registration under the Securities Act of 1933 (restricted
securities). Unless registered for sale, these securities can only be sold
in privately negotiated transactions or pursuant to an exemption from
registration.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another
party, such as a bank or broker-dealer, in return for cash. At the same
time, the fund agrees to repurchase the instrument at an agreed-upon price
and time. The funds expect that they will engage in reverse repurchase
agreements for temporary purposes such as to fund redemptions or when they
are able to invest the cash so acquired at a rate higher than the cost of
the agreement, which would increase the income earned by a fund. Reverse
repurchase agreements may increase the risk of fluctuation in the market
value of a fund's assets or in its yield.
SHORT SALES. A fund may enter into short sales with respect to stocks
underlying its convertible security holdings. These transactions may help
to hedge against the effect of stock price declines, but may result in
losses if a convertible security's price does not track the price of its
underlying equity. Convertible securities hedged with short sales are not
currently expected to exceed 15% of a fund's total assets under normal
conditions.
SWAP AGREEMENTS. As one way of managing exposure to different types of
investments, a fund may enter into interest rate swaps, currency swaps, and
other types of swap agreements such as caps, collars, and floors. In a
typical interest rate swap, one party agrees to make regular payments equal
to a floating interest rate times a "notional principal amount," in return
for payments equal to a fixed rate times the same amount, for a specified
period of time. If a swap agreement provides for payments in different
currencies, the parties might agree to exchange the notional principal
amount as well. Swaps may also depend on other prices or rates, such as the
value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if a fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a fund's investments and its share price and yield.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on a fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A fund may also
suffer losses if it is unable to terminate outstanding swap agreements or
reduce its exposure through offsetting transactions.
Money Market Fund may not use investment techniques which are inconsistent
with the fund's goal of maintaining a stable share price.
VARIABLE OR FLOATING RATE OBLIGATIONS have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes. Inverse floaters have interest rates that move in the
opposite direction from a benchmark, making the security's market value
more volatile.
Money Market Fund may not use investment techniques which are inconsistent
with the fund's goal of maintaining a stable share price.
WARRANTS entitle the holder to buy equity securities at a specific price
for a specific period of time. Warrants tend to be more volatile than their
underlying securities. Also, the value of the warrant does not necessarily
change with the value of the underlying securities and a warrant ceases to
have value if it is not exercised prior to the expiration date.
ZERO COUPON BONDS do not make interest payments; instead, they are sold at
a deep discount from their face value and are redeemed at face value when
they mature. Because zero coupon bonds do not pay current income, their
prices can be very volatile when interest rates change. In calculating its
daily dividend, a fund takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.
A broker-dealer creates a DERIVATIVE ZERO by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros. Government Investment Fund has
been advised that the staff of the Division of Investment Management of the
SEC does not consider these instruments U.S. government securities as
defined by the 1940 Act. Therefore, Government Investment Fund will not
treat these obligations as U.S. government securities for purposes of its
65% portfolio composition test.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. These are considered to be government securities.
Bonds issued by the Resolution Funding Corporation (REFCORP) and the
Financing Corporation (FICO) can also be separated in this fashion.
ORIGINAL ISSUE ZEROS are zero coupon securities originally issued by the
U.S. government or a government agency.
DESCRIPTION OF MOODY'S INVESTORS
SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through C in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S
CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating will also
be used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
The ratings from AA to D may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related Statement of Additional
Information, in connection with the offer contained in this Prospectus. If
given or made, such other information or representations must not be relied
upon as having been authorized by a fund or Fidelity Distributors
Corporation. This Prospectus and the related Statement of Additional
Information does not constitute an offer by a fund or by Fidelity
Distributors Corporation to sell or to buy shares of a fund to any person
to whom it is unlawful to make such offer.
FIDELITY ADVISOR ANNUITY FUND:
Fidelity Advisor Annuity Overseas Fund, Fidelity Advisor Annuity Growth
Opportunities Fund, Fidelity Advisor Annuity Income & Growth Fund, Fidelity
Advisor Annuity Government Investment Fund, Fidelity Advisor Annuity High
Yield Fund and Fidelity Advisor Annuity Money Market Fund (the funds).
STATEMENT OF ADDITIONAL INFORMATION
August 25, 1995
This Statement is not a prospectus but should be read in conjunction with
the current Prospectus (dated August 25 , 1995) for Fidelity Advisor
Annuity Fund (the Trust). Please retain this document for future
reference. Additional copies of the Prospectus or Statement of Additional
Information are available upon request from Nationwide Life Insurance
Company, One Nationwide Plaza, P.O. Box 182610, Columbus, Ohio 43216 or by
calling 1-800-573-5775.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations 2
Portfolio Transactions 13
Valuation of Fund Securities 14
Performance 15
General Information 17
Additional Purchase and Redemption Information 18
Taxes 19
FMR 19
Trustees and Officers 20
Management and Other Services 21
Distribution and Service Plans 25
Contracts With Companies Affiliated With FMR 25
Description of the Trust 25
Financial Statements 26
Appendix 26
INVESTMENT ADVISOR
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISORS
Overseas Fund:
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.)
Money Market Fund
FMR Texas Inc. (FMR Texas)
Growth Opportunities Fund, Income & Growth Fund and High Yield Fund
FMR U.K.
FMR Far East
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Investments Institutional Operations Company (FIIOC)
CUSTODIAN(S)
Money Market Fund: Morgan Guaranty Trust Company of New York;
High Yield and Government Investment Funds: The Bank of New York;
Income & Growth and Overseas Funds: The Chase Manhattan Bank, N.A.; and
Growth Opportunities Fund: Brown Brothers Harriman & Co.
ADV.INS- 0895
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other assets, or sets forth a policy regarding
quality standards, such percentage limitation or standard shall be
determined immediately after and as a result of a fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets or other circumstances will not be considered when
determining whether the investment complies with a fund's investment
policies and limitations.
Each fund's fundamental policies and limitations may not be changed without
approval by a "majority of the outstanding voting securities" (as defined
in the Investment Company Act of 1940) of each fund. However, except for
the fundamental investment limitations set forth below, the investment
policies and limitations described in this Statement of Additional
Information are not fundamental and may be changed without shareholder
approval.
THE FOLLOWING ARE MONEY MARKET FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the United States, its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of such issuer, provided, however, that
with respect to 25% of its total assets, 10% of its assets may be invested
in the securities of any single issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS FOR MONEY MARKET FUND ARE NOT
FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER NOTIFICATION.
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment advisor or (b) by engaging in reverse repurchase agreements with
any party. The fund will not borrow money in excess of 25% of net assets
so long as this limitation is required for certification by certain state
insurance departments. The fund will not purchase any security while
borrowings (excluding reverse repurchase agreements) representing more than
5% of its total assets are outstanding. The fund will not borrow from
other funds advised by FMR or its affiliates if total outstanding
borrowings immediately after such borrowing would exceed 15% of the fund's
total assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment advisor. (This limit does
not apply to purchases of debt securities or to repurchase agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company managed by
Fidelity Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
Investments may be made in U.S. dollar-denominated time deposits,
certificates of deposit and bankers' acceptances of U.S. banks and their
branches located outside of the U.S., U.S. branches and agencies of foreign
banks, and foreign branches of foreign banks. The fund may also invest in
U.S. dollar-denominated securities issued or guaranteed by other U.S. or
foreign issuers, including U.S. and foreign corporations or other business
organizations, foreign governments and foreign government agencies or
instrumentalities, and U.S. and foreign financial institutions, including
savings and loan institutions, insurance companies, mortgage bankers and
real estate investment trusts, as well as banks. The fund may purchase
obligations of banks, savings and loan institutions and other financial
institutions whose creditworthiness might not otherwise meet the fund's
standards, provided that (i) the principal amount of the instrument
acquired by the fund is insured in full by the Federal Deposit Insurance
Corporation and (ii) the aggregate investment made in any one such bank or
institution does not exceed $100,000.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation. Payment of interest and principal upon these obligations may
also be affected by governmental action in the country of domicile of the
branch (generally referred to as sovereign risk). In addition, evidences
of ownership of portfolio securities may be held outside of the U.S. and
the fund may be subject to the risks associated with the holding of such
property overseas. Various provisions of federal law governing the
establishment and operation of domestic branches do not apply to foreign
branches of domestic banks.
Obligations of U.S. branches and agencies of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation as well as by governmental action in the country in which the
foreign bank has its head office.
Obligations of foreign issuers also involve certain additional risks.
Foreign issuers may be subject to less governmental regulation and
supervision than U.S. issuers. Foreign issuers also generally are not
bound by uniform accounting, auditing and financial reporting requirements
comparable to those applicable to U.S. issuers.
OVERSEAS, GROWTH OPPORTUNITIES, INCOME & GROWTH, GOVERNMENT INVESTMENT AND
HIGH YIELD FUNDS
THE FOLLOWING ARE OVERSEAS, GROWTH OPPORTUNITIES, INCOME & GROWTH,
GOVERNMENT INVESTMENT AND HIGH YIELD FUNDS' FUNDAMENTAL INVESTMENT
LIMITATIONS. EACH FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund (i) may borrow money for temporary
or emergency purposes (not for leveraging or investment) or (ii) engage in
reverse repurchase agreements, provided that (i) and (ii) in combination
(borrowings) do not exceed 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed 33 1/3% of the value of the fund's total assets by
reason of a decline in net assets will be reduced within three days
(exclusive of Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of its total assets would
be invested in the securities of companies whose principal business
activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) Each fund may, notwithstanding any other other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS FOR OVERSEAS, GROWTH OPPORTUNITIES,
INCOME & GROWTH, GOVERNMENT INVESTMENT AND HIGH YIELD FUNDS ARE NOT
FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER NOTIFICATION.
(i) Each fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) Each fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) Each fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment advisor or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). Each fund will not
borrow money in excess of 25% of net assets so long as this limitation is
required for certification by certain state insurance departments. Any
borrowings that come to exceed this amount will be reduced within seven
days (not including Sundays and holidays) to the extent necessary to comply
with the 25% limitation. Each fund will not purchase any security while
borrowings representing more than 5% of its total assets are outstanding.
Each fund will not borrow from other funds advised by FMR or its affiliates
if total outstanding borrowings immediately after such borrowing would
exceed 15% of the fund's total assets.
(iv) Each fund does not currently intend to purchase any security if, as a
result, more than 10% of Growth Opportunities, Income & Growth and
Government Investment Funds' net assets and 15% of High Yield and Overseas
Funds' net assets would be invested in securities that are deemed to be
illiquid because they are subject to legal or contractual restrictions on
resale or because they cannot be sold or disposed of in the ordinary course
of business at approximately the prices at which they are valued.
(v) Each fund does not currently intend to lend assets other than
securities to other parties, except by: (a) lending money (up to 5% of net
assets for Growth Opportunities, Income & Growth and Overseas Funds and
7.5% for High Yield and Government Investment Funds' net assets) to a
registered investment company or portfolio for which FMR or an affiliate
serves as investment advisor or (b) acquiring loans, loan participations,
or other forms of direct debt instruments and, in connection therewith,
assuming any associated unfunded commitments of the sellers. (This
limitation does not apply to purchases of debt securities or to repurchase
agreements.)
(vi) Each fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(vii) Each fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(viii) Each fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(ix) Each fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For each fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions." For
each fund's limitations on short sales, see the section entitled "Short
Sales."
Higher yielding, fixed-income securities of the type in which High Yield
Fund invests will at times be purchased at a discount from or a premium
over par value. The total return on such securities includes the potential
for a capital gain or loss. High Yield Fund generally does not intend to
hold securities for the purpose of achieving capital gains, however, unless
current yields on these securities remain attractive. Capital gain or loss
may also be realized upon the sale of portfolio securities.
The U.S. government has from time to time in the past imposed restrictions,
through taxation and otherwise, on foreign investments by U.S. investors
such as the funds. If such restrictions should be reinstituted, it might
become necessary for Overseas Fund to invest all or substantially all of
its assets in U.S. securities. In such event, the Board of Trustees would
reevaluate the fund's investment objective and policies.
In accordance with the funds' fundamental investment policies, there are no
limitations on the percentage of the funds' assets which may be invested in
any one type of instrument. Nor are there limitations (except those
imposed by certain state insurance regulations) on the percentage of the
funds' assets which may be invested in any foreign country. However, in
order to comply with diversification requirements under Section 817(h) of
the Internal Revenue Code of 1986, as amended, in connection with FMR
serving as investment advisor, each fund has agreed to certain
non-fundamental limitations. Please refer to your insurance company's
separate account prospectus for more information.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions; and short-term
borrowings. In accordance with exemptive orders issued by the Securities
and Exchange Commission (SEC), the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
FUNDS' RIGHTS AS A SHAREHOLDER. Each fund does not intend to direct or
administer the day-to-day operations of any company. Each fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of each fund's investment in the company.
The activities that each fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is increasingly
prone to litigation and it is possible that each fund could be involved in
lawsuits related to such activities. FMR will monitor such activities with
a view to mitigating, to the extent possible, the risk of litigation
against each fund and the risk of actual liability if each fund is involved
in litigation. No guarantee can be made, however, that litigation against
each fund will not be undertaken or liabilities incurred.
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
ASSET-BACKED SECURITIES may include interests in pools of mortgages, loans,
receivables or other assets. Payment of principal and interest may be
largely dependent upon the cash flows generated by the assets backing the
securities, and, in certain cases, supported by letters of credit, surety
bonds, or other credit enhancements. The value of asset-backed securities
may also be affected by the creditworthiness of the servicing agent for the
pool, the originator of the loans or receivables, or the financial
institution(s) providing the credit support.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
A demand instrument with a conditional demand feature must have received
both a short-term and a long-term high-quality rating or, if unrated, have
been determined to be of comparable quality pursuant to procedures adopted
by the Board of Trustees. A demand instrument with an unconditional demand
feature may be acquired solely in reliance upon a short-term high-quality
rating or, if unrated, upon a finding of comparable short-term quality
pursuant to procedures adopted by the Board of Trustees.
Money Market Fund may invest in variable or floating rate instruments that
ultimately mature in more than 397 days, if the fund acquires a right to
sell the instruments that meets certain requirements set forth in Rule
2a-7. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less and U.S. government securities
with a variable rate of interest adjusted no less frequently than 762 days
may be deemed to have maturities equal to the period remaining until the
next readjustment of the interest rate. Other variable rate instruments
with demand features may be deemed to have a maturity equal to the period
remaining until the next adjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand. A
floating rate instrument subject to a demand feature may be deemed to have
a maturity equal to the period remaining until the principal amount can be
recovered through demand.
REPURCHASE AGREEMENTS are transactions in which a fund purchases a security
and simultaneously commits to sell that security back to the original
seller at an agreed upon price. The resale price reflects the purchase
price plus an agreed upon incremental amount which is unrelated to the
coupon rate or maturity of the purchased security. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility that the value of the underlying security
will be less than the resale price as well as delays and costs to a fund in
connection with bankruptcy proceedings), it is each fund's current policy
to engage in repurchase agreement transactions with parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
Pursuant to an Exemptive Order issued by the SEC, Money Market Fund, along
with other registered investment companies having management contracts with
FMR, may invest in a pool of one or more large overnight repurchase
agreements. The repurchase agreements' underlying securities are U.S.
government securities in which the fund is permitted to invest.
FOREIGN REPURCHASE AGREEMENTS may include agreements to purchase and sell
foreign securities in exchange for fixed U.S. dollar amounts, or in
exchange for specified amounts of foreign currency. Unlike typical U.S.
repurchase agreements, foreign repurchase agreements may not be fully
collateralized at all times. However, pursuant to certain state insurance
regulations, any foreign repurchase agreements a fund enters into will be
secured by collateral consisting of liquid assets having a market value of
not less than 102% of the cash or assets transferred to the other party.
The value of the security purchased by a fund may be more or less than the
price at which the counterparty has agreed to repurchase the security. In
the event of a default by the counterparty, a fund may suffer a loss if the
value of the security purchased is less than the agreed-upon repurchase
price, or if a fund is unable to successfully assert a claim to the
collateral under foreign laws. As a result, foreign repurchase agreements
may involve higher credit risks than repurchase agreements in U.S. markets,
as well as risks associated with currency fluctuations. In addition, as
with other emerging market investments, repurchase agreements with
counterparties located in emerging markets or relating to emerging market
securities may involve issuers or counterparties with lower credit ratings
than typical U.S. repurchase agreements.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, a fund will maintain appropriate liquid assets in a segregated
custodial account to cover its obligation under the agreement. A fund will
enter into reverse repurchase agreements only with parties whose
creditworthiness has been reviewed and found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of a fund's
assets and may be viewed as a form of leverage.
SECURITIES LENDING. Each fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange
(NYSE) and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which the fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
DELAYED DELIVERY TRANSACTIONS are transactions that involve a commitment by
fund to purchase or sell specific securities at a predetermined price
and/or yield, with payment and delivery taking place after the customary
settlement period for that type of security (and more than seven days in
the future). Typically, no interest accrues to the purchaser until the
security is delivered. A fund may receive fees for entering into
delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, a fund assumes the
rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
a fund's other investments. If a fund remains substantially fully invested
at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, a fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a
delayed-delivery basis, that fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities, a
fund could miss a favorable price or yield opportunity, or could suffer a
loss. A fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of each fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of each fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset each fund's rights and
obligations relating to the investment).
Investments currently considered by Money Market Fund to be illiquid
include repurchase agreements not entitling the holder to payment of
principal and interest within seven days. Also, FMR may determine some
restricted securities and time deposits to be illiquid. Investments
currently considered by each fund other than Money Market Fund to be
illiquid include repurchase agreements not entitling the holder to payment
of principal and interest within seven days, over-the-counter options and
non-government stripped fixed-rate mortgage-backed securities. Also, FMR
may determine some restricted securities, government-stripped fixed-rate
mortgage-backed securities, loans and other direct debt instruments, and
swap agreements to be illiquid. However, with respect to over-the-counter
options a fund writes, all or a portion of the value of the underlying
instrument may be illiquid depending on the assets held to cover the option
and the nature and terms of any agreement each fund may have to close out
the option before expiration.
In the absence of market quotations, illiquid investments for Money Market
Fund are valued for purposes of monitoring amortized cost valuation at fair
value as determined in good faith by a committee appointed by the Board of
Trustees. For all other funds, illiquid investments are priced at fair
value as determined in good faith by a committee appointed by the Board of
Trustees. If through a change in values, net assets, or other
circumstances, a fund were in a position where more than 10% of Money
Market, Income & Growth, Growth Opportunities and Government Investment
Funds' net assets and more than 15% of High Yield and Overseas Fund's net
assets were invested in illiquid securities, each fund would seek to take
appropriate steps to protect liquidity. Money Market Fund will invest less
than 10% of its assets in illiquid securities.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, each fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time each fund may be
permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, each
fund might obtain a less favorable price than prevailed when it decided to
seek registration of the security. However, in general, Money Market Fund
anticipates holding restricted securities to maturity or selling them in an
exempt transaction.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease a fund's exposure to long or short-term
interest rates (in the U.S. or abroad), foreign currency values, mortgage
securities, corporate borrowing rates, or other factors such as security
prices or inflation rates. Swap agreements can take many different forms
and are known by a variety of names. The funds are not limited to any
particular form of swap agreement if FMR determines it is consistent with a
fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from one
type of investment to another. For example, if a fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreements
would tend to decrease the fund's exposure to U.S. interest rates and
increase exposure to foreign currency and interest rates. Caps and floors
have an effect similar to buying or writing options. Depending on how they
are used, swap agreements may increase or decrease the overall volatility
of a fund's investments and its share price and yield.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from a fund. If a swap
agreement calls for payments by a fund, it must be prepared to make such
payments when due. In addition, if the counterparty's creditworthiness
declined, the value of a swap agreement would be likely to decline,
potentially resulting in losses. Each fund expects to be able to eliminate
its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
Each fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If a fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of its accrued
obligations under the swap agreement over the accrued amount it is entitled
to receive under the agreement. If a fund enters into a swap agreement on
other than a net basis, it will segregate assets with a value equal to the
full amount of its accrued obligations under the agreement.
INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. FMR will use its judgment in determining
whether indexed securities should be treated as short-term instruments,
bonds, stocks, or as a separate asset class for purposes of a fund's
investment allocations, depending on the individual characteristics of the
securities. Indexed securities may be more volatile than the underlying
instruments.
WARRANTS. (excludes Money Market Fund) Warrants are securities that give a
fund the right to purchase equity securities from the issuer at a specific
price (the strike price) for a limited period of time. The strike price of
warrants typically is much lower than the current market price of the
underlying securities, yet they are subject to similar price fluctuations.
As a result, warrants may be more volatile investments than the underlying
securities and may offer greater potential for capital appreciation as well
as capital loss.
Warrants do not entitle a holder to dividends or voting rights with respect
to the underlying securities and do not represent any rights in the assets
of the issuing company. Also, the value of the warrant does not
necessarily change with the value of the underlying securities and a
warrant ceases to have value if it is not exercised prior to the expiration
date. These factors can make warrants more speculative than other types of
investments.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to a fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If a fund does not receive scheduled interest or
principal payments on such indebtedness, the fund's share price and yield
could be adversely affected. Loans that are fully secured offer a fund more
protections than an unsecured loan in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the liquidation
of collateral from a secured loan would satisfy the borrower's obligation,
or that the collateral could be liquidated. Indebtedness of borrowers whose
creditworthiness is poor involves substantially greater risks and may be
highly speculative. Borrowers that are in bankruptcy or restructuring may
never pay off their indebtedness, or may pay only a small fraction of the
amount owed. Direct indebtedness of developing countries also involves a
risk that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal when
due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a fund.
For example, if a loan is foreclosed, the fund could become part owner of
any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, the fund could be held
liable as a co-lender. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary. Direct debt
instruments that are not in the form of securities may offer less legal
protection to a fund in the event of fraud or misrepresentation. In the
absence of definitive regulatory guidance, a fund relies on FMR's research
in an attempt to avoid situations where fraud or misrepresentation could
adversely affect a fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, a fund has direct recourse against the borrower, it may
have to rely on the agent to apply appropriate credit remedies against a
borrower. If assets held by the agent for the benefit of a fund were
determined to be subject to the claims of the agent's general creditors,
the fund might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by a fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring the fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever be repaid.
A fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing
commitments.
A fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations 1 and 5).
For purposes of these limitations, a fund generally will treat the borrower
as the "issuer" of indebtedness held by the fund. In the case of loan
participations where a bank or other lending institution serves as
financial intermediary between a fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict a fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be
difficult to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises. Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
A fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject
to transfer restrictions may be marketable abroad, they may be less liquid
than foreign securities of the same class that are not subject to such
restrictions.
American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs) are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
FOREIGN CURRENCY TRANSACTIONS. The following information is of particular
importance to Overseas Fund. A fund may conduct foreign currency
transactions on a spot (i.e., cash) basis or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. A fund will convert currency on a spot basis from time to time, and
investors should be aware of the costs of currency conversion. Although
foreign exchange dealers generally do not charge a fee for conversion, they
do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. Thus, a dealer may offer to
sell a foreign currency to the fund at one rate, while offering a lesser
rate of exchange should the fund desire to resell that currency to the
dealer. Forward contracts are generally traded in an interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange.
A fund may use currency forward contracts for any purpose consistent with
its investment objective. The following discussion summarizes the principal
currency management strategies involving forward contracts that could be
used by a fund. A fund may also use swap agreements, indexed securities,
and options and futures contracts relating to foreign currencies for the
same purposes.
When a fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security.
By entering into a forward contract for the purchase or sale, for a fixed
amount of U.S. dollars, of the amount of foreign currency involved in the
underlying security transaction, the fund will be able to protect itself
against an adverse change in foreign currency values between the date the
security is purchased or sold and the date on which payment is made or
received. This technique is sometimes referred to as a "settlement hedge"
or "transaction hedge." A fund may also enter into forward contracts to
purchase or sell a foreign currency in anticipation of future purchases or
sales of securities denominated in foreign currency, even if the specific
investments have not yet been selected by FMR.
A fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For
example, if a fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such
a hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. A fund could also hedge
the position by selling another currency expected to perform similarly to
the pound sterling - for example, by entering into a forward contract to
sell Deutschemarks or European Currency Units in return for U.S. dollars.
This type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
A fund may enter into forward contracts to shift its investment exposure
from one currency into another. This may include shifting exposure from
U.S. dollars to a foreign currency, or from one foreign currency to another
foreign currency. For example, if a fund held investments denominated in
Deutschemarks, the fund could enter into forward contracts to sell
Deutschemarks and purchase Swiss Francs. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to the
currency that is sold, and increase exposure to the currency that is
purchased, much as if the fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the hedged
currency, but will cause the fund to assume the risk of fluctuations in the
value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, a fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. A fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of currency management strategies will depend on FMR's skill
in analyzing and predicting currency values. Currency management
strategies may substantially change a fund's investment exposure to changes
in currency exchange rates, and could result in losses to the fund if
currencies do not perform as FMR anticipates. For example, if a currency's
value rose at a time when FMR had hedged a fund by selling that currency in
exchange for U.S. dollars, the fund would be unable to participate in the
currency's appreciation. If FMR hedges currency exposure through proxy
hedges, a fund could realize currency losses from the hedge and the
security position at the same time if the two currencies do not move in
tandem. Similarly, if FMR increases a fund's exposure to a foreign
currency, and that currency's value declines, the fund will realize a loss.
There is no assurance that FMR's use of currency management strategies will
be advantageous to a fund or that it will hedge at an appropriate time.
SHORT SALES "AGAINST THE BOX". Money Market Fund may sell securities short
when it owns or has the right to obtain securities equivalent in kind or
amount to the securities sold short. Short sales could be used to protect
the net asset value per share of the fund in anticipation of increased
interest rates, without sacrificing the current yield of the securities
sold short.
SHORT SALES. A fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a convertible
security it holds, it may sell the stock short. If the stock price
subsequently declines, the proceeds of the short sale could be expected to
offset all or a portion of the effect of the stock's decline on the value
of the convertible security. Each fund currently intends to hedge no more
than 15% of its total assets with short sales on equity securities
underlying its convertible security holdings under normal circumstances.
When a fund enters into a short sale or short sale against the box, it will
be required to set aside securities equivalent in kind and amount to those
sold short (or securities convertible or exchangeable into such securities)
and will be required to continue to hold them while the short sale is
outstanding. Each fund will incur transaction costs, including interest
expense, in connection with opening, maintaining, and closing short sales
and short sales against the box.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund (other than
Money Market Fund) has filed a notice of eligibility for exclusion from the
definition of the term "commodity pool operator" with the Commodity Futures
Trading Commission (CFTC) and the National Futures Association, which
regulate trading in the futures markets. The funds intend to comply with
Section 4.5 of the regulations under the Commodity Exchange Act, which
limits the extent to which a fund can commit assets to initial margin
deposits and option premiums.
In addition, each fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of each
fund's total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, each fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by each fund would
exceed 5% of each fund's total assets. These limitations for each fund do
not apply to options attached to or acquired or traded together with their
underlying securities, and do not apply to securities that incorporate
features similar to options.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date.
When a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when a fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's Composite Index of 500
Stocks (S&P 500) and the Bond Buyer Index of municipal bonds. Futures can
be held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, a fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to a
fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, a fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. A fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
a fund will lose the entire premium it paid. If a fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, a fund assumes the obligation to pay the
strike price for the option's underlying instrument if the other party to
the option chooses to exercise it. When writing an option on a futures
contract a fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option a fund has written, however, a fund
must continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. Each fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, each fund may purchase a put option and write a
call option on the same underlying instrument, in order to construct a
combined position whose risk and return characteristics are similar to
selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call option
at a lower price, in order to reduce the risk of the written call option in
the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction costs
and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match each fund's current or
anticipated investments exactly. Each fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of each fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match each
fund's investments well. Options and futures prices are affected by such
factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same
way. Imperfect correlation may also result from differing levels of demand
in the options and futures markets and the securities markets, from
structural differences in how options and futures and securities are
traded, or from imposition of daily price fluctuation limits or trading
halts. Each fund may purchase or sell options and futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends
to purchase in order to attempt to compensate for differences in volatility
between the contract and the securities, although this may not be
successful in all cases. If price changes in each fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that
are not offset by gains in other investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for each fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require each fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, each fund's access to other assets held to cover its options
or futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows each
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. Each
fund may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. Each fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
each fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
each fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of each fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of each fund's investments exactly over
time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. Each fund will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot
be sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of each fund's assets
could impede portfolio management or each fund's ability to meet redemption
requests or other current obligations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of a fund by FMR pursuant to authority contained in each fund's
Management Contract. Since FMR has granted investment management authority
to the sub-advisors (see the section entitled "Management Contracts"), the
sub-advisors are authorized to place orders for the purchase and sale of
portfolio securities, and will do so in accordance with the policies
described below. FMR is also responsible for the placement of transaction
orders for other investment companies and accounts for which it or its
affiliates act as investment advisor. Money market securities purchased
and sold by a fund generally will be traded on a net basis (i.e., without
commission). In selecting broker-dealers subject to applicable limitations
of the federal securities laws, FMR will consider various relevant factors,
including, but not limited to, the size and type of the transaction; the
nature and character of the markets for the security to be purchased or
sold; the execution efficiency, settlement capability, and financial
condition of the broker-dealer firm; the broker-dealer's execution services
rendered on a continuing basis; the reasonableness of any commissions; and
arrangements for payment of fund expenses. FMR may allocate brokerage
transactions to broker-dealers who have entered into arrangements with FMR
under which the broker-dealer allocates a portion of the commissions paid
by a fund toward payment of a fund's expenses, such as transfer agent fees
or custodian fees. The transaction quality must, however, be comparable to
those of other qualified broker-dealers. Generally, commissions for
foreign investments traded will be higher than for U.S. investments and may
not be subject to negotiation.
Each fund may execute portfolio transactions with broker-dealers who
provide research and execution services to a fund or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers
who provide such services on a regular basis. However, as many
transactions on behalf of a fund's money market securities are placed with
broker-dealers (including broker-dealers on the list) without regard to the
furnishing of such services, it is not possible to estimate the proportion
of such transactions directed to such broker-dealers solely because such
services were provided. The selection of such broker-dealers is generally
made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by FMR's investment staff based upon the quality of research
and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of a fund may be useful to FMR in rendering investment management
services to a fund or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to a fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research or execution services. In order to cause a
fund to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers viewed in
terms of a particular transaction or FMR's overall responsibilities to a
fund and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the compensation should
be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of each fund or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of
FMR Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except if certain
requirements are satisfied. Pursuant to such requirements, the Board of
Trustees has authorized FBSI to execute portfolio transactions on national
securities exchanges in accordance with approved procedures and applicable
SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of
each fund and review the commissions paid by the funds over representative
periods of time to determine if they are reasonable in relation to the
benefits to the funds.
Because a high turnover rate increases brokerage costs, FMR carefully
weighs the added costs of short-term investment against anticipated gain.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. The funds seek to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to
continue to review whether recapture opportunities are available and are
legally permissible and, if so, to determine in the exercise of their
business judgment whether it would be advisable for the funds to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for the funds
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment advisor, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as the funds are concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment advisor to the funds outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF FUND SECURITIES
MONEY MARKET FUND
Like most money market funds, the fund values its investments on the basis
of amortized cost. This technique involves initially valuing an instrument
at its cost and thereafter assuming a constant amortization to maturity of
any discount or premium, regardless of the market value of the instrument.
The amortized-cost value of an instrument may be higher or lower than the
price the fund would receive if it sold the instrument.
During periods of declining interest rates, the fund's yield based on
amortized cost may be higher than a yield based on market prices and
estimates of market prices. Under these circumstances, a new investor in
the fund would be able to obtain a somewhat higher yield than would result
from investment in a fund solely utilizing market quotations to determine
its NAV, and existing shareholders would receive less investment income.
The converse would apply in a period of rising interest rates.
Valuing the fund's instruments on the basis of amortized cost and use of
the term "money market fund" are permitted by Rule 2a-7 under the
Investment Company Act of 1940 (the 1940 Act). The fund must adhere to
certain conditions under Rule 2a-7.
The Board of Trustees of the fund oversees FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize the fund's NAV calculated on the basis of amortized cost. At
such intervals as they deem appropriate, the Trustees review reports used
to determine whether NAV calculated by using available market quotations
would deviate from $1.00. If such a deviation would result in material
dilution or otherwise would be unfair to shareholders, the Trustees have
agreed to take such corrective action, if any, as they deem necessary and
appropriate. This may include selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity, withholding dividends, redeeming shares in kind, or establishing
NAV by using available market quotations.
HIGH YIELD AND GOVERNMENT INVESTMENT FUNDS
Securities and other assets for which market quotations are readily
available are valued at market values determined by their most recent bid
prices (sales prices if the principal market is an exchange) in the
principal market in which such securities normally are traded. Securities
and other assets for which market quotations are not readily available
(including restricted securities, if any) are appraised at their fair value
as determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
Securities may also be valued on the basis of valuations furnished by a
pricing service that uses both dealer-supplied valuations and evaluations
based on expert analysis of market data and other factors if such
valuations are believed to reflect more accurately the fair value of such
securities. Use of a pricing service has been approved by the Board of
Trustees. There are a number of pricing services available, and the
Trustees, or officers acting on behalf of the Trustees, on the basis of
ongoing evaluation of these pricing services, may use other pricing
services or may discontinue the use of any pricing service in whole or in
part.
Securities not valued by the pricing service, and for which quotations are
readily available, are valued at market values determined on the basis of
their latest available bid prices as furnished by recognized dealers in
such securities.
GROWTH OPPORTUNITIES, INCOME & GROWTH AND OVERSEAS FUNDS
Portfolio securities are valued by various methods depending on the primary
market or exchange on which they trade. Most equity securities for which
the primary market is the U.S. are valued at last sale price or, if no sale
has occurred, at the closing bid price. Most equity securities for which
the primary market is outside the U.S. are valued using the official
closing price or the last sale price in the principal market where they are
traded. If the last sale price (on the local exchange) is unavailable, the
last evaluated quote or last bid price is normally used. Short-term
securities are valued either at amortized cost or at original cost plus
accrued interest, both of which approximate current value. Convertible
securities and fixed-income securities are valued primarily by a pricing
service that uses a vendor security valuation matrix which incorporates
both dealer-supplied valuations and electronic data processing techniques.
This twofold approach is believed to more accurately reflect fair value
because it takes into account appropriate factors such as institutional
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics, and other market data,
without exclusive reliance upon quoted, exchange, or over-the counter
prices. Use of pricing services has been approved by the Board of
Trustees.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as well
as corporate bonds, U.S. government securities, money market instruments,
and repurchase agreements, is substantially completed each day at the close
of the NYSE. The values of any such securities held by the fund are
determined as of such time for the purpose of computing the fund's net
asset value. Foreign security prices are furnished by independent brokers
or quotation services which express the value of securities in their local
currency. Fidelity Service Co. (FSC) gathers all exchange rates daily at
the close of the NYSE using the last quoted price on the local currency and
then translates the value of foreign securities from their local currency
into U.S. dollars. Any changes in the value of forward contracts due to
exchange rate fluctuations and days to maturity are included in the
calculation of net asset value. If an extraordinary event that is expected
to materially affect the value of a portfolio security occurs after the
close of an exchange on which that security is traded, then the security
will be valued as determined in good faith by a committee appointed by the
Board of Trustees.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's share price (except for
Money Market Fund), yield and total return fluctuate in response to market
conditions and other factors, and the value of fund shares (except for
Money Market Fund) when redeemed may be more or less than their original
cost.
YIELD CALCULATIONS. Yields (except for Money Market Fund) for the funds
are computed by dividing a fund's interest and dividend income for a given
30-day or one month period, net of expenses, by the average number of
shares entitled to receive dividends during the period, dividing this
figure by the fund's NAV at the end of the period and annualizing the
result (assuming compounding of income) in order to arrive at an annual
percentage rate. Income is calculated for purposes of yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. Dividends from equity investments are treated as if they were
accrued on a daily basis, solely for the purposes of yield calculations.
In general, interest income is reduced with respect to bonds trading at a
premium over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds trading at
a discount by adding a portion of the discount to daily income. For a
fund's investments denominated in foreign currencies, income and expenses
are calculated first in their respective currencies, and are then converted
to U.S. dollars, either when they are actually converted or at the end of
the 30-day or one month period, whichever is earlier. Capital gains and
losses generally are excluded from the calculation as are gains and losses
from currency exchange rate fluctuations.
Income calculated for the purpose of determining fund's yield differs from
income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding assumed
in yield calculations, a fund's yield may not equal its distribution rate,
the income paid over the same period or the income reported in the funds'
financial statements.
In calculating yield, a fund may from time to time use a portfolio
security's coupon rate instead of its yield to maturity in order to reflect
the risk premium on that security. This practice will have the effect of
reducing a fund's yield.
To compute Money Market Fund's yield for a period, the net change in value
of a hypothetical account containing one share reflects the value of
additional shares purchased with dividends from the one original share and
dividends declared on both the original share and any additional shares.
The net change is then divided by the value of the account at the beginning
of the period to obtain a base period return. This base period return is
annualized to obtain a current annualized yield. Money Market Fund also
may calculate a compound effective yield by compounding the base period
return over a one-year period. In addition to the current yield, the fund
may quote yields in advertising based on any historical seven-day
period(s). Yields for the fund are calculated on the same basis as other
money market funds, as required by regulation.
Yield information may be useful in reviewing a fund's performance and in
providing a basis for comparison with other investment alternatives.
However, yields fluctuate, unlike investments which pay a fixed interest
rate for a stated period of time. When comparing investment alternatives,
investors should also note the quality and maturity of the portfolio
securities of respective investment companies they have chosen to consider.
In addition, investors should refer to the insurance company's separate
account prospectus for information on fees and charges which may not be
reflected in a yield quotation.
Investors should recognize that in periods of declining interest rates a
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates a fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns reflect all aspects of each
fund's return, including the effect of reinvesting dividends and capital
gain distributions, and any change in each fund's NAV over a stated period.
Average annual total returns are calculated by determining the growth or
decline in value of a hypothetical historical investment in a fund over a
stated period, and then calculating the annually compounded percentage rate
that would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative
return of 100% over ten years would produce an average annual return of
7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. Average annual returns covering
periods of less than one year are calculated by determining a fund's total
return for the period, extending that return for a full year (assuming that
return remains constant over the year), and quoting the result as an annual
return. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that a fund's performance
is not constant over time, but changes from year to year, and that average
annual returns represent averaged figures as opposed to the actual
year-to-year performance of a fund.
In addition to average annual total returns, the funds may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns, yields and other
performance information may be quoted numerically or in a table, graph, or
similar illustration.
NET ASSET VALUE. Charts and graphs using a fund's net asset values or an
insurance company's sub-account unit values, adjusted net asset values, and
benchmark indices may be used to exhibit performance. An adjusted NAV
includes any distributions paid by a fund and reflects all elements of its
return. Unless otherwise indicated, a fund's adjusted NAVs (or an
insurance company's sub-account unit values) are not adjusted for sales
charges, if any.
MOVING AVERAGES. A fund may illustrate performance using moving averages.
A long-term moving average is the average of each week's adjusted closing
NAV or an insurance company's sub-account unit value for a specified
period. A short-term moving average is the average of each day's adjusted
closing NAV or an insurance company's sub-account unit value for a
specified period. Moving Average Activity Indicators combine adjusted
closing NAVs from the last business day of each week with moving averages
for a specified period to produce indicators showing when an NAV or
sub-account has crossed, stayed above, or stayed below its moving average.
The funds are only available for purchase through variable annuity or
variable life insurance contracts offering deferral of income taxes on
earnings, which may produce superior after-tax returns over time. For
example, a $1,000 investment earning a taxable return of 10% annually would
have an after-tax value of $1,949 after ten years, assuming tax was
deducted from the return each year at a 31% rate. An equivalent
tax-deferred investment would have an after-tax value of $2,100 after 10
years, assuming tax was deducted at the 31% rate from the deferred earnings
at the end of the ten year period. Individuals holding shares of the funds
through a variable annuity or variable life insurance contract may receive
additional tax benefits from the deferral of income taxes associated with
variable contracts. Individuals should consult their tax advisors to
determine the effect of holding variable contracts on their individual tax
situations.
YIELDS AND TOTAL RETURNS QUOTED FOR A FUND INCLUDE THE EFFECT OF DEDUCTING
THE FUND'S EXPENSES, BUT MAY NOT INCLUDE CHARGES AND EXPENSES ATTRIBUTABLE
TO ANY PARTICULAR INSURANCE PRODUCT. SINCE YOU CAN ONLY PURCHASE SHARES OF
A FUND THROUGH A VARIABLE ANNUITY AND/OR A VARIABLE LIFE INSURANCE
CONTRACT, YOU SHOULD CAREFULLY REVIEW THE PROSPECTUS OF THE INSURANCE
PRODUCT YOU HAVE CHOSEN FOR INFORMATION ON RELEVANT CHARGES AND EXPENSES.
Excluding these charges from quotations of a fund's performance has the
effect of increasing the performance quoted.
GENERAL INFORMATION
A fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to
the mutual fund rankings, a fund's performance may be compared to mutual
fund performance indices prepared by Lipper. In addition to the mutual
fund rankings, a fund's performance may be compared to stock, bond, and
money market mutual fund performance indices prepared by Lipper or other
organizations. When comparing these indices, it is important to remember
the risk and return characteristics of each type of investment. For
example, while stock mutual funds may offer higher potential returns, they
also carry the highest degree of share price volatility. Likewise, money
market funds may offer greater stability of principal, but generally do not
offer the higher potential returns from stock mutual funds. High Yield
Fund may compare its performance to the Salomon Brothers High Yield
Composite Index, an index of high-yielding utility and corporate bonds with
a minimum maturity of seven years and with total debt outstanding of at
least $50 million. Issues included in the index are rated Baa or lower by
Moody's Investors Service or BBB or lower by Standard & Poor's Corporation.
Overseas Fund may quote its performance in advertising and other types of
literature as compared to the performance of the Morgan Stanley Capital
International EAFE Index, an unmanaged index of over 820 foreign common
stocks. A fund may also compare its performance against the Consumer Price
Index (CPI) and the funds in Lipper Annuity & Closed-End Survey (LACES).
LACES consists of periodic reports that track the performance of closed-end
mutual funds and variable annuities at the separate account level. A fund
will compare itself only to annuities, not to closed-end funds in LACES.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, a fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a
fund may offer greater liquidity or higher potential returns than CDs, but
a fund does not guarantee your principal or your return, and fund shares
are not FDIC insured.
Your insurance company may provide information designed to help individuals
understand their investment goals and explore various financial strategies.
Such information may include information about current economic, market,
and political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's other funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
A fund may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
Money Market, High Yield and Government Investment Funds each may compare
its performance or the performance of securities in which it may invest to
averages published by IBC USA (Publications), Inc. of Ashland,
Massachusetts. These averages assume reinvestment of distributions. The
IBC/Donoghue's MONEY FUND AVERAGES(trademark)/taxable money market funds,
which is reported in the MONEY FUND REPORT(registered trademark), covers
money market funds. The Bond Fund Report AverageS(trademark)/taxable bond
funds, which is reported in the BOND FUND REPORT(registered trademark),
covers bond funds. When evaluating comparisons to money market funds,
investors should consider the relevant differences in investment objectives
and policies. Specifically, money market funds invest in short-term,
high-quality instruments and seek to maintain a stable $1.00 share price.
Bond funds however, typically invest in longer-term instruments and their
share price changes daily in response to a variety of factors.
Each fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. A fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, a fund may compare these measures
to those of other funds. Measures of volatility seek to compare a fund's
historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a
comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
MOMENTUM INDICATORS indicate a fund's price movements over specific periods
of time. Each point on the momentum indicator represents a fund's
percentage change in price movements over that period.
The funds may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, a policyowner invests a fixed dollar amount in an insurance
company's sub-account at periodic intervals which in turn invests in a
fund, thereby purchasing fewer units when prices are high and more units
when prices are low. While such a strategy does not assure a profit nor
guard against loss in a declining market, the policyowner's average cost
per unit can be lower than if fixed numbers of units had been purchased at
those intervals. In evaluating such a plan, policyowners should consider
their ability to continue purchasing units through periods of low price
levels.
Each fund has an investment objective similar to an existing Fidelity fund.
Fidelity Advisor Annuity Money Market Fund is most similar to Variable
Insurance Products Fund: Money Market Portfolio; Fidelity Advisor Annuity
High Yield Fund is most similar to Fidelity Advisor High Yield Fund;
Fidelity Advisor Annuity Government Investment Fund is most similar to
Fidelity Advisor Government Investment Fund; Fidelity Advisor Annuity
Overseas Fund is most similar to Fidelity Advisor Overseas Fund; Fidelity
Advisor Annuity Growth Opportunities Fund is most similar to Fidelity
Advisor Growth Opportunities Fund; and Fidelity Advisor Annuity Income &
Growth Fund is most similar to Fidelity Advisor Income & Growth Fund.
Performance will differ between the funds and their corresponding retail
funds due in part to differences in investment policies and the effect of
insurance charges.
TRADITION OF PERFORMANCE
Fidelity's tradition of performance is achieved through:
(medium solid bullet) MONEY MANAGEMENT: a proud tradition of money
management motivated by the expectation of excellence backed by solid
analysis and worldwide resources. Fidelity employs a bottom-up approach to
security selection based upon in-depth analysis of the fundamentals of that
investment opportunity.
(medium solid bullet) INNOVATION: constant attention to the changing needs
of today's investors and vigilance to the opportunities that arise from
changing global markets. Research is central to Fidelity's investment
decision-making process. Fidelity's greatest resource--over 200 skilled
investment professionals--is supported with the most sophisticated
technology available.
Fidelity provides:
(medium solid bullet) Global research resources: an opportunity to
diversify portfolios and share in the growth of markets outside the United
States.
(medium solid bullet) In-house, proprietary bond-rating system, constantly
updated, which provides extremely sensitive credit analysis.
(medium solid bullet) Comprehensive chart room with over 1500 exhibits to
provide sophisticated charting of worldwide economic, financial, and
technical indicators, as well as to provide tracking of over 800 individual
stocks for portfolio managers.
(medium solid bullet) State-of-the-art trading desk, with access to over
200 brokerage houses, providing real-time information to achieve the best
executions and optimize the value of each transaction.
(medium solid bullet) Use of extensive on-line computer-based research
services.
(medium solid bullet) SERVICE: Timely, accurate and complete reporting.
Prompt and expert attention when an investor or an investment professional
needs it.
As of September 30, 1994, FMR advised over $65 billion in money market fund
assets, $165 billion in equity fund assets, and $40 billion in
international fund assets. The funds may reference the growth and variety
of money market mutual funds and the advisor's innovation and participation
in the industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment advisor in the United States, making FMR America's leading
equity (stock) fund manager.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its NAV is calculated each day the NYSE
is open for trading. The NYSE has designated the following holiday closings
for 1995: New Year's Day (observed), Washington's Birthday (observed), Good
Friday, Memorial Day (observed), Independence Day, Labor Day (observed),
Thanksgiving Day, and Christmas Day. Although FMR expects the same holiday
schedule to be observed in the future, the NYSE may modify its holiday
schedule at any time. FSC normally determines each fund's NAV as of the
close of the NYSE (normally 4:00 p.m. Eastern time). However, NAV may be
calculated earlier if trading on the NYSE is restricted or as permitted by
the SEC. To the extent that portfolio securities are traded in other
markets on days when the NYSE is closed, a fund's NAV may be affected on
days when investors do not have access to the fund to purchase or redeem
shares. In addition, trading in some of a fund's portfolio securities may
not occur on days when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
TAXES
For a discussion of tax consequences of variable contracts, please refer to
your insurance company's separate account prospectus.
Variable contracts purchased through insurance company separate accounts
provide for the accumulation of all earnings from interest, dividends, and
capital appreciation without current federal income tax liability to the
owner. Depending on the variable contract, distributions from the contract
may be subject to ordinary income tax and a 10% penalty tax on
distributions before age 59 1/2. Only the portion of a distribution
attributable to income is subject to federal income tax. Investors should
consult with competent tax advisors for a more complete discussion of
possible tax consequences in a particular situation.
Section 817(h) of the Internal Revenue Code provides that the investments
of a separate account underlying a variable insurance contract (or the
investments of a mutual fund, the shares of which are owned by the variable
separate account) must be "adequately diversified" in order for the
contract to be treated as an annuity or life insurance for tax purposes.
The Treasury Department has issued regulations prescribing these
diversification requirements. Each fund intends to comply with these
requirements.
Each fund intends to qualify each year as a "regulated investment company"
for tax purposes so that it will not be liable for federal tax on income
and capital gains distributed to shareholders. In order to qualify as a
regulated investment company and avoid being subject to federal income or
excise taxes, each fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar year
as well as on a fiscal year basis. The funds also intend to comply with
other tax rules applicable to regulated investment companies including a
requirement that capital gains from the sale of securities held less than
three months constitute less than 30% of a fund's gross income for each
fiscal year. Gains from some forward currency contracts, futures
contracts, and options are included in this 30% calculation, which may
limit a fund's investments in such instruments. Income and capital gain
distributions are reinvested in additional shares of each fund. This is
done to preserve the tax advantaged status of the variable contracts. Each
fund is treated as a separate entity for tax purposes.
MONEY MARKET FUND. This fund may distribute any net realized short-term
gains once each year, or more frequently if necessary, in order to maintain
the fund's NAV at $1.00 per share and to comply with tax regulations.
HIGH YIELD AND GOVERNMENT INVESTMENT FUNDS. Income from these funds is
primarily derived from interest rather than dividends.
OVERSEAS FUND. Withholding or other taxes that the fund paid to foreign
governments (if any), will reduce the fund's dividends. Foreign tax
withholding from dividends and interest (if any) is typically at a rate
between 10% and 35%. Shareholders will bear the cost of foreign tax
withholding, but generally not be able to claim a foreign tax credit or
deduction for foreign taxes paid by the fund by reason of the tax-deferred
status of investments through separate accounts.
FMR
All of the stock of FMR is owned by FMR Corp., its parent company organized
in 1972. Through ownership of voting common stock and the execution of a
shareholders' voting agreement, Edward C. Johnson 3d, Johnson family
members, and various trusts for the benefit of the Johnson family form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers; and funds sold through intermediaries, and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on
the timing of personal investing relative to trades by Fidelity funds and
on short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trust's Trustees and executive officers are listed below. Except as
indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
and officers also serve in similar capacities for other funds advised by
FMR. Unless otherwise noted, the business address of each Trustee and
officer is 82 Devonshire Street, Boston, Massachusetts, 02109, which is
also the address of FMR. Those Trustees who are "interested persons" (as
defined in the Investment Company Act of 1940) by virtue of their
affiliation with the Trust or FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Sanifill Corporation (non-hazardous
waste, 1993) and CH2M Hill Companies (engineering). In addition, he served
on the Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she is a member of the President's
Advisory Council of The University of Vermont School of Business
Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as
a Trustee of First Union Real Estate Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee of Corporate Property Investors, the EPS
Foundation at Trinity College, the Naples Philharmonic Center for the Arts,
and Rensselaer Polytechnic Institute, and he is a member of the Advisory
Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership
Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company of
Vermont, American Software, Inc. (1989), and AppleSouth, Inc. (restaurants,
1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and Senior
Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
JOHN H. COSTELLO, Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH, Assistant Treasurer (1994), is an employee of FMR (1994).
Prior to becoming Assistant Treasurer of the Fidelity funds, Mr. Rush was
Chief Compliance Officer of FMR Corp. (1993-1994); Chief Financial Officer
of Fidelity Brokerage Services, Inc. (1990-1993); and Vice President,
Assistant Controller, and Director of the Accounting Department - First
Boston Corp. (1986-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President (1993) and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Vice President and
Clerk of FDC.
WILLIAM J. HAYES, Vice President (1994), is Vice President of Fidelity's
equity funds; Senior Vice President of FMR; and Managing Director of FMR
Corp.
ROBERT A. LAWRENCE, Vice President (1994), is Vice President of Fidelity's
high income funds and Senior Vice President of FMR (1993). Prior to
joining FMR, Mr. Lawrence was Managing Director of the High Yield
Department for Citicorp (1984-1991).
THOMAS J. STEFFANCI, Vice President (1994), is Vice President of Fidelity's
fixed-income funds and Senior Vice President of FMR (1993). Prior to
joining FMR, Mr. Steffanci was Senior Managing Director of CMB Investment
Counselors (1984-1990).
FRED L. HENNING, JR., Vice President (1994), is Vice President of
Fidelity's money market funds and Senior Vice President of FMR Texas Inc.
ROBERT H. MORRISON, Manager of Security Transactions of Fidelity's equity
funds, is Vice President of FMR.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc. (1990). Prior to 1990, Mr. Maher was an
employee of FMR and Assistant Secretary of all the Fidelity funds
(1985-1989).
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. William R. Spaulding, Bertram H. Witham, and
David L. Yunich participate in the program.
MANAGEMENT AND OTHER SERVICES
Each fund employs FMR to furnish it with investment advisory and other
services. Under FMR's Management Contract with each fund, FMR acts as
investment advisor and, subject to the supervision of the Board of
Trustees, directs the investments of each fund in accordance with its
investment objective, policies and limitations. FMR also provides each
fund with all necessary office facilities and personnel for servicing each
fund's investments, and compensates all officers of the Trust, all Trustees
who are "interested persons" of the Trust or of FMR and all personnel of
the Trust or FMR performing services relating to research, statistical and
investment activities. In addition, FMR or its affiliates, subject to the
supervision of the Board of Trustees, provide the management and
administrative services necessary for the operation of each fund. These
services include providing facilities for maintaining each fund's
organization, supervising relations with custodians, transfer and pricing
agents, accountants, underwriters and other persons dealing with each fund,
preparing all general shareholder communications and conducting shareholder
relations, maintaining each fund's records and the registration of each
fund's shares under federal and state law, developing management and
shareholder services for each fund and furnishing reports, evaluations and
analyses on a variety of subjects to the Trust's Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC and FIIOC, each fund pays all its expenses, without limitation, that
are not assumed by those parties. Each fund pays for typesetting, printing
and mailing its Prospectuses, Statements of Additional Information, reports
and proxy material to existing shareholders, legal expenses and the fees of
the custodian, auditor and non-interested Trustees. Other charges paid by
each fund include interest, taxes, brokerage commissions, each fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. Each fund is also liable for such nonrecurring expenses
as may arise, including costs of litigation to which each fund may be a
party and any obligation they may have to indemnify the officers and
Trustees of the Trust with respect to litigation.
MONEY MARKET FUND. FMR is the fund's manager pursuant to a Management
Contract dated November 18, 1994, and approved by the fund's sole
shareholder November 21, 1994. For the services of FMR under the contract,
the fund pays FMR a monthly management fee calculated by adding a basic
fee, which consists of a group fee rate and an individual fund fee rate
(.03% of the fund's average net assets), to an income-based component of 6%
of the fund's gross income in excess of a 5% yield, and multiplying the
result by the fund's average net assets. A discussion of the group fee
rate is below.
GOVERNMENT INVESTMENT AND HIGH YIELD FUNDS. FMR is Government Investment
and High Yield Funds' manager pursuant to Management Contracts each dated
November 18, 1994, and approved by each fund's sole shareholder November
21, 1994. For the services of FMR under each Contract, each fund pays FMR
a monthly management fee composed of the sum of two elements: a group fee
rate and an individual fund fee rate.
THE GROUP FEE RATE. The group fee rate for Money Market, Government
Investment and High Yield Funds is based on the monthly average net assets
of all of the registered investment companies with which FMR has management
contracts and is calculated on a cumulative basis pursuant to the graduated
fee rate schedule shown on the left of the chart below. On the right, the
effective fee rate schedule shows the results of cumulatively applying the
annualized rates at varying asset levels. For example, the effective
annual fee rate at $270 billion of group net assets--their approximate
level for the month of October 1994 was .1561%, which is the weighted
average of the respective fee rates for each level of group net assets up
to that level.
GROUP FEE RATE EFFECTIVE ANNUAL
SCHEDULE FEE RATES
Rate Group Effective
Asset Levels Net Annual
Assets Fee Rate
0 - $ 3 billion .3700% $ 25 billion .2664%
3 - 6 .3400 50 .2188
6 - 9 .3100 75 .1986
9 - 12 .2800 100 .1869
12 - 15 .2500 125 .1793
15 - 18 .2200 150 .1736
18 - 21 .2000 175 .1690
21 - 24 .1900 200 .1652
24 - 30 .1800 225 .1618
30 - 36 .1750 250 .1587
36 - 42 .1700 275 .1560
42 - 48 .1650 300 .1536
48 - 66 .1600 325 .1514
66 - 84 .1550 350 .1494
84 - 120 .1500 375 .1476
120 - 156 .1450 400 .1459
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over - 372 .1200
The individual fund fee rate for Money Market Fund is .03%. Based on the
average net assets of funds advised by FMR for October 1994, the basic fee
rate would have been calculated as follows:
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
.1561% + .03% = .1861%
If the fund's monthly gross yield is 5% or less, the total management fee
is the sum of the group fee and the individual fund fee. If the fund's
monthly gross yield is greater than 5%, the management fee that FMR
receives includes an income-based component. The income-based component
equals 6% of that portion of the fund's gross income that represents a
gross yield of more than 5% per year. The maximum income-based component
is .24% (annualized) of average net assets, at a fund gross yield of 9% or
more. Gross income for this purpose, includes interest accrued and/or
discount earned (including both original issue discount and market
discount) on portfolio obligations, less amortization of premium. Realized
and unrealized gains and losses, if any, are not included in gross income.
One twelfth (1/12) of the basic fee plus the income-based component is
applied to the fund's average net assets for the current month, giving a
dollar amount which is the fee for that month.
The individual fund fee rate for Government Investment Fund is .30%. Based
on the average net assets of funds advised by FMR for October 1994, the
basic fee rate would have been calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
.1561% + .30% = .4561%
The individual fund fee rate for High Yield Fund is .45%. Based on the
average net assets of funds advised by FMR for September 1994, the basic
fee rate would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
.1561% + .45% = .6061%
One twelfth (1/12) of this annual management fee rate is then applied to
each fund's average net assets for the current month, giving a dollar
amount which is the fee for that month.
INCOME & GROWTH, GROWTH OPPORTUNITIES AND OVERSEAS FUNDS. FMR is each
fund's manager pursuant to Management Contracts each dated November 18,
1994, and approved by each fund's sole shareholder November 21, 1994. For
the services of FMR under the Contracts, each fund pays FMR a monthly
management fee composed of the sum of two elements: a group fee rate and an
individual fund fee rate.
THE GROUP FEE RATE. Each fund's group fee rate is based on the monthly
average net assets of all of the registered investment companies with which
FMR has management contracts and is calculated on a cumulative basis
pursuant to the graduated fee rate schedule shown on the left of the chart
below. On the right, the effective fee rate schedule shows the results of
cumulatively applying the annualized rates at varying asset levels. For
example, the effective annual fee rate at $270 billion of group net
assets--their approximate level for the month of October 1994 was .3191%,
which is the weighted average of the respective fee rates for each level of
group net assets up to that level.
GROUP FEE RATE EFFECTIVE ANNUAL
SCHEDULE* FEE RATES
Rate Group Effective
Asset Levels Net Annual
Assets Fee Rate
0 - $ 3 billion .520% $ 0.5 billion .5200%
3 - 6 .490 25 .4238
6 - 9 .460 50 .3823
9 - 12 .430 75 .3626
12 - 15 .400 100 .3512
15 - 18 .385 125 .3430
18 - 21 .370 150 .3371
21 - 24 .360 175 .3325
24 - 30 .350 200 .3284
30 - 36 .345 225 .3249
36 - 42 .340 250 .3219
42 - 48 .335 275 .3190
48 - 66 .325 300 .3163
66 - 84 .320 325 .3137
84 - 102 .315 350 .3113
102 - 138 .310 375 .3090
138 - 174 .305 400 .3067
174 - 210 .300
210 - 246 .295
246 - 282 .290
282 318 .285
318 354 .280
354 390 .275
Over 390 .270
Based on the average net assets of the funds advised by FMR for October
1994, the annual management fee rate would have been calculated as follows:
The individual fund fee rate for Income & Growth Fund is .20%.
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
.3191% + .20% = .5191%
The individual fund fee rate for Growth Opportunities Fund is .30%.
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
.3191% + .30% = .6191%
The individual fund fee rate for Overseas Fund is .45%.
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
.3191% + .45% = .7691%
One twelfth (1/12) of this annual management fee rate is then applied to
each fund's average net assets for the current month, giving a dollar
amount which is the fee for that month.
FMR may, from time to time, agree to voluntarily reimburse each fund for
expenses above a specified percentage of average net assets. FMR retains
the ability to be repaid for these expense reimbursements in the amount
that expenses fall below the limit prior to the end of the fiscal year.
Fee reimbursements by FMR will increase a fund's yield and total return,
and repayment by a fund will lower its yield and total return.
FMR has voluntarily agreed to reimburse each fund if, and to the extent
that, the fund's aggregate operating expenses (including the management
fee, but generally excluding interest, taxes, brokerage commissions, and
extraordinary expenses) exceed an annual rate of 1.00% of Money Market,
Government Investment and High Yield Funds' average net assets, and 1.50%
of Income & Growth, Growth Opportunities and Overseas Funds' average net
assets for any fiscal year, or for a portion of such year if FMR's
agreement is terminated or revised.
SUB-ADVISORS. On behalf of HIGH YIELD, GROWTH OPPORTUNITIES AND INCOME &
GROWTH FUNDS, FMR has entered into sub-advisory agreements with FMR U.K.
and FMR Far East. On behalf of OVERSEAS FUND, FMR has entered into
sub-advisory agreements with FMR U.K., FMR Far East, and FIIA. FIIA, in
turn, has entered into a sub-advisory agreement with FIIAL U.K. Pursuant
to the sub-advisory agreements, FMR may receive investment advice and
research services outside the United States from the sub-advisors and may
also grant the sub-advisors investment management authority as well as the
authority to buy and sell securities if FMR believes it would be beneficial
to a fund.
Currently, FMR U.K., FMR Far East, FIIA and FIIAL U.K. each focus on
issuers in countries other than the United States such as those in Europe,
Asia, and the Pacific Basin.
FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR. FIIA is a
wholly owned subsidiary of Fidelity International Limited (FIL), a Bermuda
company formed in 1968 which primarily provides investment advisory
services to non-U.S. investment companies and institutional investors
investing in securities throughout the world. Edward C. Johnson 3d, Johnson
family members, and various trusts for the benefit of the Johnson family
owns, directly or indirectly, more than 25% of the voting common stock of
FIL. FIIA was organized in Bermuda in 1983. FIIAL U.K. was organized in the
United Kingdom in 1984, and is a wholly owned subsidiary of Fidelity
International Management Holdings Limited, an indirect wholly owned
subsidiary of FIL.
Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR Far
East, and FIIA. FIIA, in turn, pays the fees of FIIAL U.K. For providing
non-discretionary investment advice and research services, the sub-advisors
are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal to 110%
and 105%, respectively, of FMR U.K.'s and FMR Far East's costs incurred in
connection with providing investment advice and research services.
(small solid bullet) FMR pays FIIA a fee equal to 30% of FMR's monthly
management fee with respect to the average net assets held by a fund for
which the sub-advisor has provided FMR with investment advice and research
services.
(small solid bullet) FIIA pays FIIAL U.K. a fee equal to 110% of FIIAL
U.K.'s costs incurred in connection with providing investment advice and
research services.
For providing discretionary investment management and executing portfolio
transactions, the sub-advisors are compensated as follows:
(small solid bullet) FMR pays FMR U.K., FMR Far East, and FIIA a fee equal
to 50% of its monthly management fee with respect to a fund's average net
assets managed by the sub-advisor on a discretionary basis.
(small solid bullet) FIIA pays FIIAL U.K. a fee equal to 110% of FIIAL
U.K.'s costs incurred in connection with providing discretionary investment
management services.
FMR entered into the sub-advisory agreements described above with respect
to each fund on November 18, 1994.
FMR entered into a sub-advisory agreement with FMR Texas Inc. (FMR Texas),
dated November 18, 1994, pursuant to which FMR Texas has primary
responsibility for providing investment management services to the MONEY
MARKET FUND.
FMR Texas, a wholly owned subsidiary of FMR was formed in 1989 and
registered under the Investment Advisers Act of 1940 on June 9, 1989 to
provide investment management services to money market mutual funds; to
advise FMR generally with respect to money market instruments; and to
manage or provide advice with respect to cash flow management.
The sub-advisory agreement provides that FMR and not the fund, will pay
fees to FMR Texas equal to 50% of the management fee payable to FMR under
its current Management Contract with the fund. The fees paid to FMR Texas
are not reduced by any voluntary or mandatory fee waivers or expense
reimbursements that may be in effect from time to time.
DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the Plans) under
Rule 12b-1 under the Investment Company Act of 1940 (the Rule). The Rule
provides, in substance, that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. The Trust's Board of Trustees has adopted the Plans
to allow each of these funds and FMR to incur certain expenses that might
be considered to constitute indirect payment by the funds of distribution
expenses. Under the Plans, if the payment by a fund to FMR of management
fees should be deemed to be indirect financing by a fund of the
distribution of its shares, such payment is authorized by the Plans.
The Plans specifically recognize that FMR, either directly or through FDC,
may use its management fee revenue, past profits or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition,
the Plans provide that FMR may use its resources, including its management
fee revenues, to make payments to third parties that provide assistance in
selling shares of the funds or to third parties including banks, that
render shareholder support services. However, no such payments to third
parties are currently contemplated.
Each fund's Plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of each Plan prior to its approval, and have determined
that there is a reasonable likelihood that the Plan will benefit the
respective fund and its shareholders. In particular, the Trustees noted
that the Plan does not authorize payments by the fund other than those made
to FMR under the Management Contract with each fund. To the extent that a
Plan gives FMR and FDC greater flexibility in connection with the
distribution of shares of a fund, additional sales of the fund's shares may
result. Additionally, certain shareholder support services may be provided
more effectively under a Plan by local entities with whom shareholders have
other relationships.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
Each fund has an agreement with FSC, an affiliate of FMR Corp., under which
FSC determines the NAV per share and dividends of each fund and maintains
the portfolio and general accounting records of each fund. The fee rates
in effect are based on each fund's average net assets as follows: for Money
Market Fund, .0175% for the first $500 million of average net assets and
.0075% for average net assets in excess of $500 million. The fee is
limited to a minimum of $20,000 and a maximum of $750,000 per year; for
High Yield and Government Investment Funds, .04% for the first $500 million
of average net assets and .02% for average net assets in excess of $500
million. For Income & Growth, Growth Opportunities and Overseas Funds,
.06% for the first $500 million of average net assets and .03% for average
net assets in excess of $500 million. The fee for High Yield, Government
Investment, Income & Growth, Growth Opportunities and Overseas Funds is
limited to a minimum of $45,000 and a maximum of $750,000 per year.
Each fund utilizes FIIOC, an affiliate of FMR Corp., to maintain the master
accounts of the participating insurance companies. Under the contract,
each fund pays a fee of $95 per shareholder account per year and a fee of
$20 for each monetary transaction. In addition to providing transfer agent
and shareholder servicing functions, FIIOC pays all transfer agent
out-of-pocket expenses and also pays for typesetting, printing and mailing
Prospectuses, Statements of Additional Information, reports, notices and
statements to shareholders allocable to the master account of participating
insurance companies.
Each fund has a Distribution Agreement with FDC, a Massachusetts
corporation organized July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The Distribution Agreement calls
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of the funds which are continuously offered
at net asset value. Promotional and administrative expenses, in connection
with the offer and sale of shares, are paid for by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Money Market Fund, High Yield Fund, Income & Growth
Fund, Growth Opportunities Fund, Government Investment Fund and Overseas
Fund are funds of Fidelity Advisor Annuity Fund, an open-end management
investment company, organized July 15, 1994. The Declaration of Trust
permits the Trustees to create additional funds.
Investments in the Trust may be made only by the separate accounts of
insurance companies for the purpose of funding variable annuity and
variable life insurance contracts issued by insurance companies.
In the event that FMR ceases to be the investment advisor to the Trust or a
fund, the right of the Trust or fund to use the identifying name "Fidelity"
may be withdrawn. There is a remote possibility that one fund might become
liable for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the Trust received for the issue or sale of shares of its
funds and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general liabilities of the Trust. Expenses with respect to the Trust are to
be allocated in proportion to the asset value of the funds, except where
allocations of direct expense can otherwise be fairly made. The officers of
the Trust, subject to the general supervision of the Board of Trustees,
have the power to determine which expenses are allocable to a given fund,
or which are general or allocable to all of the funds of the Trust. In the
event of the dissolution or liquidation of the Trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The Trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a Trust may, under certain circumstances, be held
personally liable for the obligations of the Trust. The Declaration of
Trust provides that the Trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
Trust or its Trustees shall include a provision limiting the obligations
created thereby to the Trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any shareholder
held personally liable for the obligations of the fund. The Declaration of
Trust also provides that its funds shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the Trust or fund may, as
set forth in the Declaration of Trust, call meetings of the Trust or fund
for any purpose related to the Trust or fund, as the case may be,
including, in the case of a meeting of the entire Trust, the purpose of
voting on removal of one or more Trustees. The Trust or fund may be
terminated upon the sale of its assets to another open-end management
investment company, or upon liquidation and distribution of its assets, if
approved by vote of the holders of a majority of the outstanding shares of
the Trust or the fund. If not so terminated, the Trust or fund will
continue indefinitely.
CUSTODIAN. Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York is custodian of Money Market Fund's assets; The Bank of New
York, 110 Washington Street, New York New York, is custodian of High Yield
and Government Investment Funds' assets; The Chase Manhattan Bank, N.A.,
1211 Avenue of the Americas, New York, New York 10036, is custodian of
Income & Growth and Overseas Funds' assets; and Brown Brothers Harriman &
Co., 40 Water Street, Boston, Massachusetts, is custodian of Growth
Opportunities Fund's assets. The custodians take no part in determining
the investment policies of the funds or in deciding which securities are
purchased or sold by the funds. The funds, however, may invest in
obligations of the custodians and may purchase or sell securities from or
to the custodians. Investors should understand that the expense ratio for
Overseas Fund may be higher than that of investment companies which invest
exclusively in domestic securities since the cost of maintaining the
custody of foreign securities is higher.
FMR, its officers and directors and its affiliated companies from time to
time have transactions with various banks, including the custodian banks
for certain of the funds advised by FMR. The Boston branch of Brown
Brothers Harriman & Co. leases its office space from an affiliate of FMR at
a lease payment which, when entered into, was consistent with prevailing
market rates. Other transactions that have occurred to date include
mortgages and personal and general business loans. In the judgment of FMR,
the terms and conditions of those transactions were not influenced by
existing or potential custodial or other fund relationships.
AUDITOR. Price Waterhouse LLP, 160 Federal Street, Boston,
Massachusetts serves as the Trust's independent accountant, providing audit
services including (1) audits of annual financial statements, (2)
assistance and consultation in connection with SEC filings and (3) review
of the annual federal income tax returns filed on behalf of each fund.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the period
January 3, 1995 (commencement of operations) to June 30, 1995, are included
in the funds' Semiannual Report, which is a separate report supplied with
this Statement of Additional Information and unaudited. Each fund's
financial statements and financial highlights are incorporated herein by
reference.
APPENDIX
The DOLLAR-WEIGHTED AVERAGE MATURITY of a fund's fixed-income holdings is
derived by multiplying the value of each fixed-income investment held by a
fund by the number of days remaining to its maturity, adding these
calculations, and then dividing the total by the value the fund's
fixed-income holdings. An obligation's maturity is typically determined on
a stated final maturity basis, although there are some exceptions to this
rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
Also, the maturities of mortgage-backed securities and some asset-backed
securities. such as collateralized mortgage obligations, are determined on
a weighted average life basis, which is the average time for principal to
be repaid. For a mortgage security, this average time is calculated by
assuming a constant prepayment rate for the life of the mortgage. The
weighted average life of these securities is likely to be substantially
shorter than their stated final maturity.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S COMMERCIAL PAPER RATINGS:
PRIME-1 (or related institutions) have a superior capacity for repayment of
short-term
promissory obligations. Prime-1 repayment capacity will normally be
evidenced by the following characteristics:
- - Leading market positions in well established industries.
- - High rates of return on funds employed.
- - Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
- - Broad margins in earnings coverage of fixed financial charges with high
internal cash generation.
- - Well established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2 (or related supporting institution) have a strong capacity for
repayment of short-term promissory obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S COMMERCIAL PAPER RATINGS:
A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation.
A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated A-1.
DESCRIPTION OF FITCH INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS:
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded
as having the strongest degree of assurance for timely payment.
FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance
of timely payment only slightly less in degree than the strongest issues.
DESCRIPTION OF FITCH INVESTORS SERVICE, INC. CORPORATE BOND RATINGS:
AAA--rated bonds are considered to be investment grade and of the highest
quality. The obligor has an extraordinary ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--rated bonds are considered to be investment grade and of high quality.
The obligor's ability to pay interest and repay principal, while very
strong, is somewhat less than for AAA rated securities or more subject to
possible change over the term of the issue.
DESCRIPTION OF DUFF & PHELPS INC. COMMERCIAL PAPER RATINGS:
DUFF 1--Very high certainty of timely payment. Liquidity factors are
excellent and supported by strong fundamental protection factors. Risk
factors are minor.
DUFF 2--Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing internal funds needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
DESCRIPTION OF DUFF & PHELPS INC. CORPORATE BOND RATINGS:
DUFF 1--Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
DUFF 2,3,4--High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic
conditions.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) 1. Financial Statements and Financial Highlights, included in the
Semiannual Report for Fidelity Advisor Annuity Fund for the fiscal period
January 3, 1995 (commencement of operations) through June 30, 1995, are
incorporated herein by reference into the fund's Statement of Additional
Information and are filed herein as Exhibit 24(a)(1).
(b) Exhibits:
(1) (a) Declaration of Trust, dated July 14, 1994, is incorporated herein
by reference to Exhibit 1 to the Registration Statement filed on July 29,
1994.
(2) By-laws for Fidelity Advisor Annuity Fund is incorporated herein by
reference to Exhibit 2 to the Registration Statement.
(3) None.
(4) None.
(5) (a) Management Contract between Fidelity Advisor Annuity Overseas
Fund and Fidelity Management & Research Company, dated November 18, 1994,
is filed herein as Exhibit 5(a).
(b) Management Contract between Fidelity Advisor Annuity Growth
Opportunities Fund and Fidelity Management & Research Company, dated
November 18, 1994, is filed herein as Exhibit 5(b).
(c) Management Contract between Fidelity Advisor Annuity Income & Growth
Fund and Fidelity Management & Research Company, dated November 18, 1994,
is filed herein as Exhibit 5(c).
(d) Management Contract between Fidelity Advisor Annuity Government
Investment Fund and Fidelity Management & Research Company, dated November
18, 1994, is filed herein as Exhibit 5(d).
(e) Management Contract between Fidelity Advisor Annuity High Yield Fund
and Fidelity Management & Research Company, dated November 18, 1994, is
filed herein as Exhibit 5(e).
(f) Management Contract between Fidelity Advisor Annuity Money Market Fund
and Fidelity Management & Research Company, dated November 18, 1994, is
filed herein as Exhibit 5(f).
(g) Sub-Advisory Agreement between Fidelity Management & Research Company
and FMR Texas Inc. on behalf of Fidelity Advisor Annuity Money Market Fund,
dated November 18, 1994, is filed herein as Exhibit 5(g).
(h) Sub-Advisory Agreement between Fidelity Management & Research Company,
Fidelity Management & Research (U.K.) Inc. and Fidelity Advisor Annuity
Fund on behalf of Fidelity Advisor Annuity High Yield Fund, dated November
18, 1994, is filed herein as Exhibit 5(h).
(i) Sub-Advisory Agreement between Fidelity Management & Research Company,
Fidelity Management & Research (U.K.) Inc. and Fidelity Advisor Annuity
Fund on behalf of Fidelity Advisor Annuity Growth Opportunities Fund, dated
November 18, 1994, is filed herein as Exhibit 5(i).
(j) Sub-Advisory Agreement between Fidelity Management & Research Company,
Fidelity Management & Research (U.K.) Inc. and Fidelity Advisor Annuity
Fund on behalf of Fidelity Advisor Annuity Income & Growth Fund, dated
November 18, 1994, is filed herein as Exhibit 5(j).
(k) Sub-Advisory Agreement between Fidelity Management & Research Company,
Fidelity Management & Research (U.K.) Inc. and Fidelity Advisor Annuity
Fund on behalf of Fidelity Advisor Annuity Overseas Fund, dated November
18, 1994, is filed herein as Exhibit 5(k).
(l) Sub-Advisory Agreement between Fidelity Management & Research
Company, Fidelity Management & Research (Far East) Inc. and Fidelity
Advisor Annuity Fund on behalf of Fidelity Advisor Annuity High Yield Fund,
dated November 18, 1994, is filed herein as Exhibit 5(l).
(m) Sub-Advisory Agreement between Fidelity Management & Research
Company, Fidelity Management & Research (Far East) Inc. and Fidelity
Advisor Annuity Fund on behalf of Fidelity Advisor Annuity Growth
Opportunities Fund, dated November 18, 1994, is filed herein as Exhibit
5(m).
(n) Sub-Advisory Agreement between Fidelity Management & Research
Company, Fidelity Management & Research (Far East) Inc. and Fidelity
Advisor Annuity Fund on behalf of Fidelity Advisor Annuity Income & Growth
Fund, dated November 18, 1994, is filed herein as Exhibit 5(n).
(o) Sub-Advisory Agreement between Fidelity Management & Research
Company, Fidelity Management & Research (Far East) Inc. and Fidelity
Advisor Annuity Fund on behalf of Fidelity Advisor Annuity Overseas Fund,
dated November 18, 1994, is filed herein as Exhibit 5(o).
(p) Sub-Advisory Agreement among Fidelity Management & Research Company,
Fidelity International Investment Advisors and Fidelity Advisor Annuity
Fund on behalf of Fidelity Advisor Annuity Overseas Fund, dated November
18, 1994, is filed herein as Exhibit 5(p).
(q) Sub-Advisory Agreement between Fidelity International Investment
Advisors and Fidelity International Investment Advisors (U.K.) Limited on
behalf of Fidelity Advisor Annuity Overseas Fund, dated November 18, 1994,
is filed herein as Exhibit 5(q).
(6) (a) General Distribution Agreement between Fidelity Advisor Annuity
Overseas Fund and Fidelity Distributors Corporation, dated November 18,
1994, is filed herein as Exhibit 6(a).
(b) General Distribution Agreement between Fidelity Advisor Annuity Growth
Opportunities Fund and Fidelity Distributors Corporation, dated November
18, 1994, is filed herein as Exhibit 6(b).
(c) General Distribution Agreement between Fidelity Advisor Annuity Income
& Growth Fund and Fidelity Distributors Corporation, dated November 18,
1994, is filed herein as Exhibit 6(c).
(d) General Distribution Agreement between Fidelity Advisor Annuity
Government Investment Fund and Fidelity Distributors Corporation, dated
November 18, 1994, is filed herein as Exhibit 6(d).
(e) General Distribution Agreement between Fidelity Advisor Annuity High
Yield Fund and Fidelity Distributors Corporation, dated November 18, 1994,
is filed herein as Exhibit 6(e).
(f) General Distribution Agreement between Fidelity Advisor Annuity Money
Market Fund and Fidelity Distributors Corporation, dated November 18, 1994,
is filed herein as Exhibit 6(f).
(7) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, effective August 1, 1993, is incorporated herein by
reference to Exhibit 7 to Fidelity Union Street Trust's Post-Effective
Amendment No. 87 (File No. 2-50318).
(8) (a) Custodian Agreement, Appendix A, and Appendix C, dated December 1,
1994, between Morgan Guaranty Trust Co. of New York and Fidelity Advisor
Annuity Fund on behalf of Money Market Fund is incorporated herein by
reference to Exhibit 8(c) to Fidelity Hereford Street Trust's
Post-Effective Amendment No. 4 (File No. 33-52577).
(b) Appendix B, dated April 20, 1995, to the Custodian Agreement, dated
December 1, 1994, between Morgan Guaranty Trust Co. of New York and
Fidelity Advisor Annuity Fund on behalf of Money Market Fund is
incorporated herein by reference to Exhibit 8(d) to Fidelity Hereford
Street Trust's Post-Effective Amendment No. 5 (File No. 33-52577).
(c) Custodian Agreement, Appendix A, and Appendix C, dated December 1,
1994, between The Bank of New York and Fidelity Advisor Annuity Fund on
behalf of Government Investment Fund and High Yield Fund is incorporated
herein by reference to Exhibit 8(a) to Fidelity Hereford Street Trust's
Post-Effective Amendment No. 4 (File No. 33-52577).
(d) Appendix B, dated April 20, 1995, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and Fidelity Advisor Annuity
Fund on behalf of Government Investment Fund and High Yield Fund is
incorporated herein by reference to Exhibit 8(b) to Fidelity Hereford
Street Trust's Post-Effective Amendment No. 5 (File No. 33-52577).
(e) Custodian Agreement, Appendix A, and Appendix C, dated August 1, 1994,
between The Chase Manhattan Bank, N.A. and Fidelity Advisor Annuity Fund on
behalf of Income & Growth Fund and Overseas Fund is incorporated herein by
reference to Exhibit 8(a) to Fidelity Investment Trust's Post-Effective
Amendment No. 59 (File No. 2-90649).
(f) Appendix B, dated April 20, 1995, to the Custodian Agreement, dated
August 1, 1994, between The Chase Manhattan Bank, N.A. and Fidelity Advisor
Annuity Fund on behalf of Income & Growth Fund and Overseas Fund is
incorporated herein by reference to Exhibit 8(b) to Fidelity Investment
Trust's Post-Effective Amendment No. 59 (File No. 2-90649).
(g) Custodian Agreement, Appendix A, and Appendix C, dated September 1,
1994, between Brown Brothers Harriman & Company and Fidelity Advisor
Annuity Fund on behalf of Growth Opportunities Fund is incorporated herein
by reference to Exhibit 8(a) to Fidelity Commonwealth Trust's
Post-Effective Amendment No. 56 (File No. 2-52322).
(h) Appendix B, dated December 15, 1994, to the Custodian Agreement, dated
September 1, 1994, between Brown Brothers Harriman & Company and Variable
Insurance Products Fund II on behalf of Growth Opportunities Fund is
incorporated herein by reference to Exhibit 8(b) to Fidelity Commonwealth
Trust's Post-Effective Amendment No. 56 (File No. 2-52322).
(9) None.
(10) None.
(11) Consent of Price Waterhouse LLP is filed herein as Exhibit 11.
(12) None.
(13) None.
(14) None.
(15) (a) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Annuity Overseas Fund was filed as Exhibit 15(a) to the
Registration Statement.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Annuity Growth Opportunities Fund was filed as Exhibit 15(b) to the
Registration Statement.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Annuity Income & Growth Fund was filed as Exhibit 15(c) to the
Registration Statement.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Annuity Government Investment Fund was filed as Exhibit 15(d) to
the Registration Statement.
(e) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Annuity High Yield Fund was filed as Exhibit 15(e) to the
Registration Statement.
(f) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Advisor Annuity Money Market Fund was filed as Exhibit 15(f) to the
Registration Statement.
(16) Schedule for Computation of performance quotations was filed as
Exhibit 16 to the Registration Statement.
(17) Financial Data Schedules are filed herein as Exhibit 17.
(18) Not Applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Board of Trustees of Registrant is the same as the Board of Trustees
of other funds advised by Fidelity Management & Research Company ("FMR").
In addition, the officers of these funds are substantially identical.
Registrant takes the position that it is not under common control with any
of the above funds since the power residing in the respective companies,
boards and officers arises in each instance as the result of an official
position with the respective funds.
Item 26. Number of Holders of Securities
June 30, 1995
Title of Class Number of Record Holders
Money Market Fund 1
Government Investment Fund 1
High Yield Fund 1
Income & Growth Fund 1
Growth Opportunities Fund 1
Overseas Fund 1
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee, or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.; President
and Trustee of funds advised by FMR.
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman and Director of FMR.
Robert Beckwitt Vice President of FMR and of funds advised by FMR.
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
William Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lawrence Greenberg Vice President of FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Richard Haberman Senior Vice President of FMR (1993).
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR; and Director of Technical
Research.
Stephen P. Jonas Treasurer and Vice President of FMR (1993)); Treasurer of
FMR Texas Inc. (1993), Fidelity Management & Research
(U.K.) Inc. (1993), and Fidelity Management & Research
(Far East) Inc. (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Division Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Malcolm W. MacNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit Vice President of FMR (1993).
Judy Pagliuca Vice President of FMR (1993).
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund advised by
FMR.
Thomas T. Soviero Vice President of FMR (1993).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management &
Research Company and Fidelity Management Trust Company. The directors and
officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., and Fidelity Management & Research
(Far East) Inc.; President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR U.K.; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee of funds advised
by FMR.
Richard C. Habermann Senior Vice President of FMR U.K.; Senior Vice President of
Fidelity Management & Research (Far East) Inc.; Director of
Worldwide Research of FMR.
Rick Spillane Senior Vice President and Director of Operations and
Compliance of FMR U.K. (1993).
Stephen P. Jonas Treasurer of FMR U.K. (1993), Fidelity Management &
Research (Far East) Inc. (1993), and FMR Texas Inc. (1993);
and Treasurer and Vice President of FMR (1993).
David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management & Research
(Far East) Inc.; Secretary of FMR Texas Inc.
</TABLE>
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The directors
and officers of the Sub-Adviser have held the following positions of a
substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of
FMR, FMR Corp., FMR Texas Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Far East; President of
FMR; Managing Director of FMR Corp.; President and a
Director of FMR Texas Inc. and Fidelity Management &
Research (U.K.) Inc.; Senior Vice President and Trustee
of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR Far East; Senior Vice
President of Fidelity Management & Research (U.K.)
Inc.; Director of Worldwide Research of FMR.
William R. Ebsworth Vice President of FMR Far East.
Bill Wilder Vice President of FMR Far East (1993).
Stephen P. Jonas Treasurer of FMR Far East (1993), Fidelity Management
& Research (U.K.) Inc. (1993), and FMR Texas Inc.
(1993); and Treasurer and Vice President of FMR
(1993).
David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management &
Research (U.K.) Inc.; Secretary of FMR Texas Inc.
</TABLE>
(4) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management &
Research Company. The directors and officers of the Sub-Adviser have held
the following positions of a substantial nature during the past two fiscal
years.
<TABLE>
<CAPTION>
<C> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief
Exective Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., Fidelity
Management & Research (Far East) Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a
Director of Fidelity Management & Research (Far East)
Inc. and Fidelity Management & Research (U.K.) Inc.;
Senior Vice President and Trustee of funds advised by
FMR.
Fred L. Henning, Jr. Senior Vice President of FMR Texas; Money Market
Division Leader.
Robert Auld Vice President of FMR Texas (1993).
Leland Barron Vice President of FMR Texas and of funds advised by
FMR.
Robert Litterst Vice President of FMR Texas and of funds advised by
FMR (1993).
Thomas D. Maher Vice President of FMR Texas and Assistant Vice
President of funds advised by FMR.
Burnell R. Stehman Vice President of FMR Texas and of funds advised by
FMR.
John J. Todd Vice President of FMR Texas and of funds advised by
FMR.
Sarah H. Zenoble Vice President of FMR Texas and of funds advised by
FMR.
Stephen P. Jonas Treasurer of FMR Texas Inc. (1993), Fidelity
Management & Research (U.K.) Inc. (1993), and Fidelity
Mangement & Research (Far East) Inc. (1993); and
Treasurer and Vice President of FMR (1993).
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management
& Research (U.K.) Inc.; Clerk of Fidelity Management &
Research (Far East) Inc.
(5) FIDELITY INTERNATIONAL INVESTMENT ADVISORS
Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda
The directors and officers of Fidelity International Investment Advisors
(FIIA) have held, during the past two fiscal years, the following positions
of a substantial nature.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Anthony Bolton Director of FIIA and FIIAL (U.K.); Director of Fidelity
International Management Holdings Limited.
Martin P. Cambridge Director of FIIAand FIIAL (U.K.); Chief Financial
Officer of Fidelity International Ltd. and Fidelity
Investment Services Ltd.
Kirk Caza Vice President of FIIA.
Charles T. M. Collis Director and Secretary of FIIA; Partner in Conyers, Dill
& Pearman, Hamilton, Bermuda; Secretary to many
companies in the Fidelity international group of
companies.
Philip de Cristo Vice President and Treasurer of FIIA (1993).
William R. Ebsworth Director of FIIA (1992).
Frank Mutch Assistant Secretary of FIIA.
David J. Saul President, Director, and Controller of FIIA; Director of
Fidelity International Limited.
Michael Sommerville Vice President of FIIA; Vice President of Fidelity
International Limited.
Toshiaki Wakabayashi Director of FIIA.
</TABLE>
(6) FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
27-28 Lovat Lane, London, England
The directors and officers of Fidelity International Investment Advisors
(U.K.) Limited (FIIAL (U.K.)) have held, during the past two fiscal years,
the following positions of a substantial nature.
<TABLE>
<CAPTION>
<C> <C>
Anthony Bolton Director of FIIAL (U.K.) and FIIA; Director of Fidelity
International Management Holdings Limited.
Martin P. Cambridge Director and Secretary of FIIAL (U.K.) and FIIA; Chief
Financial Officer of Fidelity Investments Japan Limited,
Fidelity International Ltd., and Fidelity Investment
Services Ltd.
C. Bruce Johnstone Director of FIIAL (U.K.).
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity Service
Co., 82 Devonshire Street, Boston, MA 02109, or the funds' respective
custodian: The Bank of New York, 110 Washington Street, New York, N.Y, The
Chase Manhattan Bank, 1211 Avenue of the Americas, New York, N.Y, Brown
Brothers Harriman & Co., 40 Water Street, Boston, MA., and Morgan Guaranty
Trust Company of New York, 61 Wall Street, 37th Floor, New York, N.Y.
Item 31. Management Services - Not applicable.
Item 32. Undertakings
The Registrant undertakes for Fidelity Advisor Annuity Overseas Fund,
Fidelity Advisor Annuity Growth Opportunities Fund, Fidelity Advisor Income
& Growth Fund, Fidelity Annuity Government Investment Fund, Fidelity
Annuity High Yield Fund and Fidelity Advisor Annuity Money Market Fund: (1)
to call a meeting of shareholders for the purpose of voting upon the
questions of removal of a trustee or trustees, when requested to do so by
record holders of not less than 10% of its outstanding shares; and (2) to
assist in communications with other shareholders pursuant to Section
16(c)(1) and (2), whenever shareholders meeting the qualifications set
forth in Section 16(c) seek the opportunity to communicate with other
shareholders with a view toward requesting a meeting.
The Registrant, on behalf of Fidelity Advisor Annuity Overseas Fund,
Fidelity Advisor Annuity Growth Opportunities Fund, Fidelity Advisor Income
& Growth Fund, Fidelity Annuity Government Investment Fund and Fidelity
Annuity High Yield Fund, provided the information required by Item 5A is
contained in the annual report, undertakes to furnish to each person to
whom a prospectus has been delivered, upon their request and without
charge, a copy of the Registrant's latest annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 1 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Boston, and Commonwealth of Massachusetts, on the 28th day of
July 1995.
FIDELITY ADVISOR ANNUITY FUND
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee July 28, 1995
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Kenneth A. Rathgeber Treasurer July 28, 1995
Kenneth A. Rathgeber
/s/J. Gary Burkhead Trustee July 28, 1995
J. Gary Burkhead
/s/Ralph F. Cox * Trustee July 28, 1995
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee July 28, 1995
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee July 28, 1995
Richard J. Flynn
/s/E. Bradley Jones * Trustee July 28, 1995
E. Bradley Jones
/s/Donald J. Kirk * Trustee July 28, 1995
Donald J. Kirk
/s/Peter S. Lynch * Trustee July 28, 1995
Peter S. Lynch
/s/Edward H. Malone * Trustee July 28, 1995
Edward H. Malone
/s/Marvin L. Mann_____* Trustee July 28, 1995
Marvin L. Mann
/s/Gerald C. McDonough* Trustee July 28, 1995
Gerald C. McDonough
/s/Thomas R. Williams * Trustee July 28, 1995
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated December 15, 1994 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Annuity Fund Fidelity Income Fund
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Djinis, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this fifteenth day of December, 1994.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Annuity Fund Fidelity Institutional Trust
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series II Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series V Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VI Fidelity Municipal Trust
Fidelity Advisor Series VII Fidelity New York Municipal Trust
Fidelity Advisor Series VIII Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Securities Fund
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Corporate Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Court Street Trust Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Exchange Fund Fund
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company acts as investment adviser and for which the undersigned individual
serves as President and Board Member (collectively, the "Funds"), hereby
severally constitute and appoint J. Gary Burkhead, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
sign for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorney-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission. I hereby ratify
and confirm all that said attorneys-in-fact or their substitutes may do or
cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d December 15, 1994
Edward C. Johnson 3d
(2_FIDELITY_LOGOS)
FIDELITY ADVISOR ANNUITY
FUND
MONEY MARKET FUND
GOVERNMENT INVESTMENT FUND
HIGH YIELD FUND
INCOME & GROWTH FUND
GROWTH OPPORTUNITIES FUND
OVERSEAS FUND
SEMIANNUAL REPORT
JUNE 30, 1995
CONTENTS
MONEY MARKET FUND 3 PERFORMANCE
4 FUND TALK: THE MANAGER'S OVERVIEW
5 INVESTMENTS
6 FINANCIAL STATEMENTS
GOVERNMENT INVESTMENT FUND 8 PERFORMANCE AND INVESTMENT SUMMARY
9 FUND TALK: THE MANAGER'S OVERVIEW
10 INVESTMENTS
11 FINANCIAL STATEMENTS
HIGH YIELD FUND 13 PERFORMANCE AND INVESTMENT SUMMARY
14 FUND TALK: THE MANAGER'S OVERVIEW
15 INVESTMENTS
18 FINANCIAL STATEMENTS
INCOME & GROWTH FUND 20 PERFORMANCE AND INVESTMENT SUMMARY
21 FUND TALK: THE MANAGER'S OVERVIEW
22 INVESTMENTS
26 FINANCIAL STATEMENTS
GROWTH OPPORTUNITIES FUND 28 PERFORMANCE AND INVESTMENT SUMMARY
29 FUND TALK: THE MANAGER'S OVERVIEW
30 INVESTMENTS
32 FINANCIAL STATEMENTS
OVERSEAS FUND 34 PERFORMANCE AND INVESTMENT SUMMARY
35 FUND TALK: THE MANAGER'S OVERVIEW
36 INVESTMENTS
39 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS 41 NOTES TO THE FINANCIAL STATEMENTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS
NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS
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, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FIDELITY ADVISOR ANNUITY FUND: MONEY MARKET FUND
PERFORMANCE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects both the change
in a fund's share price over a given period, and reinvestment of its
dividends (or income). Yield measures the income paid by a fund. Since a
money market fund tries to maintain a $1 share price, yield is an important
measure of performance.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JUNE 30, 1995 LIFE OF
FUND
MONEY MARKET 2.59%
Consumer Price Index 1.87%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on January 3,
1995.
Comparing the fund's performance to the consumer price index (CPI) helps
show how your investment did compared to inflation. (The periods covered by
the CPI numbers are the closest available match to those covered by the
fund.)
If the advisor had not reimbursed certain fund expenses during
the period shown, the total return would have been lower. Yield
will vary.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
Past performance is no guarantee of future results.
YIELD
Row: 1, Col: 1, Value: 3.24
Row: 1, Col: 2, Value: 2.34
Row: 2, Col: 1, Value: 3.47
Row: 2, Col: 2, Value: 2.29
Money Market
MMDA
6% -
5% -
4% -
3% -
2% -
1% -
0%
3/29/95 6/28/95
Money Market 4.95% 4.99%
MMDA 2.89% 2.87%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income earned is
reinvested or compounded is called an effective yield. The chart above
shows the fund's current seven-day yield at quarterly intervals over the
past six months. This is compared to similar yields for the average bank
money market deposit account (MMDA). The MMDA average is supplied by BANK
RATE MONITOR.(Trademark)
COMPARING PERFORMANCE
There are some important differences between
a bank money market deposit account (MMDA)
and a money market fund. First, the U.S.
government neither insures nor guarantees a
money market fund. In fact, there is no
assurance that a money fund will maintain a $1
share price. Second, a money market fund
returns to its shareholders income earned by the
fund's investments after expenses. This is in
contrast to banks, which set their MMDA rates
periodically based on current interest rates,
competitors' rates, and internal criteria.
(checkmark)
An interview with Bob Litterst, Portfolio Manager of Advisor Annuity Money
Market Fund
Q. BOB, CAN YOU BRING US UP TO DATE ON MARKET CONDITIONS?
A. Sure. The economic growth rate has slowed down dramatically during the
past six months. During the fourth quarter of 1995, the gross domestic
product expanded at a rate of 5.1%, a very strong showing. Moreover, final
sales rose 5.7%, meaning sales exceeded production and depleted
inventories. Those signs of growth, along with disturbing trends in such
leading indicators of inflation as unemployment and capacity utilization,
prompted the Federal Reserve to raise the federal funds rate - the rate
banks charge each other for overnight loans - another one-half percentage
point in February.
Q. HOW HAS THE INTEREST-RATE ENVIRONMENT CHANGED SINCE THEN?
A. Even as the Fed was tightening credit for the seventh time in a little
more than a year, there were signs that the economy was beginning to lose
steam. Led by softening consumer activity and weakness in
interest-sensitive sectors such as housing and autos, the growth rate
during the first quarter of 1995 slowed to 2.7%. Currently, most economists
have long since stopped worrying about the economy overheating. Now they
have an altogether different concern: that we might be headed for another
recession. By the end of June, it was clear to all that the latest cycle of
interest-rate increases was over. Instead, speculation centered on when the
Fed might feel compelled to lower rates.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS?
A. The fund only began operating in January. For the first several months
until I had enough assets to satisfy the SEC's diversification requirements
I invested only in overnight repurchase agreements. Eventually, though, as
the asset base became large enough, I began making investments in the
one-to six-month maturity range. By the end of June, the fund's average
maturity was around 40 days. Ideally it would have been longer than that
but with only about $7 million in assets to work with at the end of the
period, our investment alternatives were quite limited. That's normal for a
new fund, and should be less of a factor going forward.
Q. TO DATE, HOW HAVE YOU STRUCTURED THE FUND?
A. As can be seen on the accompanying schedule of investments, I've focused
primarily on the commercial paper market. This market is extremely flexible
in terms of the dollar amount and maturity date of investments, important
considerations for a new fund with a relatively small asset base. In
addition, I continued to utilize repurchase agreements to provide liquidity
and a competitive yield. Over time, I expect to manage the fund with a
broad mix of traditional money market instruments, such as bank
certificates of deposit, commercial paper, Treasury and agency securities
and short-term floating rate instruments. The fund's average maturity will
depend on my outlook for short-term rates, but will typically fall in a
range between 40 and 75 days.
Q. WHAT'S THE OUTLOOK?
A. The next few months should be interesting. With the information
currently available, it appears that growth during the second quarter of
1995 will be quite weak. And we know now that on July 6, shortly after the
period ended, the Fed lowered the federal funds rate one-quarter percentage
point. As we look ahead, though, much uncertainty remains. Some market
participants believe that we're in the early stages of an extended
downturn. Others believe that what's happening is merely a brief but severe
inventory correction, and that the economy will resume growing at its
long-term trend rate of around 2.5% once the temporary buildup in
inventories sells off.
Q. WHAT'S YOUR VIEW?
A. I tend to side with those in the latter camp. The typical prerequisites
for a recession including high inflation and tight bank lending standards
simply don't exist. That said, I'm concerned that if this springs weakness
in the labor market persists, it could evolve into a self-reinforcing
slowdown, forcing the Fed to continue lowering rates. While I don't think
that will happen, I have to respect the possibility of such a development.
I/m targeting an average maturity of between 50 to 65 days, assuming
sufficient growth in the fund's assets.
FUND FACTS
GOAL: Income and share price stability by
investing in high-quality, short-term
investments
START DATE: January 3, 1995
SIZE: as of June 30, 1995, more than $8 million
MANAGER: Robert Litterst, since January 1995;
joined Fidelity in 1992
(checkmark)
FIDELITY ADVISOR ANNUITY: MONEY MARKET FUND
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
BANKERS' ACCEPTANCES - 4.6%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC BANKERS' ACCEPTANCES
Chemical Bank
10/26/95 6.37% $ 146,766 $ 143,827
NationsBank of Georgia
8/1/95 6.00 200,000 198,975
TOTAL BANKERS' ACCEPTANCES 342,802
COMMERCIAL PAPER - 87.3%
ANZ (DE), Inc.
8/8/95 6.03 280,000 278,233
American Express Credit Corp.
7/17/95 6.00 150,000 149,603
American Home Food Products, Inc.
7/19/95 6.06 155,000 154,535
Asset Securitization Cooperative Corp.
9/7/95 5.95 300,000 296,668
BHF Finance (Delaware), Inc.
7/18/95 6.02 150,000 149,576
Banc One Corp.
8/31/95 5.96 294,000 291,061
CIESCO, L.P.
7/11/95 6.16 350,000 349,402
Campbell Soup Co.
11/6/95 6.07 190,000 186,014
Cheltenham & Gloucester Building Society
7/18/95 6.12 300,000 299,136
Chevron Corp.
7/14/95 6.27 360,000 359,188
Commerzbank U.S. Finance, Inc.
9/29/95 6.30 150,000 147,705
12/15/95 5.76 130,000 126,623
Cooper Industries, Inc.
7/5/95 6.41 350,000 349,751
Dayton Hudson Corp.
7/21/95 6.03 200,000 199,337
Exxon Imperial U.S., Inc.
10/6/95 6.02 220,000 216,491
12/28/95 5.75 150,000 145,815
General Electric Capital Corp.
8/1/95 5.94 230,000 228,835
General Motors Acceptance Corp.
7/17/95 6.18 165,000 164,553
Hewlett-Packard Co.
7/18/95 6.00 200,000 199,437
Kredietbank, N.A. Finance Corp.
9/1/95 6.22 152,000 150,408
MetLife Funding, Inc.
7/28/95 6.07 200,000 199,100
Monsanto Co.
7/24/95 6.08 175,000 174,329
National Rural Util. Coop. Fin. Corp.
11/16/95 5.91 250,000 244,475
National & Provincial Building Society
10/16/95 5.89 250,000 245,713
Norwest Corp.
9/19/95 5.99 200,000 197,388
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
Penny (JC) Funding Corp.
7/12/95 6.16% $ 100,000 $ 99,812
Prospect Street Senior Portfolio LP
8/24/95 6.11 367,000 363,669
Prudential Funding Corp.
8/23/95 6.06 280,000 277,527
Transamerica Finance Corp.
8/7/95 6.03 280,000 278,279
TOTAL COMMERCIAL PAPER 6,522,663
FEDERAL AGENCIES - 3.3%
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 3.3%
2/26/96 6.06 100,000 96,147
4/1/96 6.09 155,000 148,168
TOTAL FEDERAL AGENCIES 244,315
MEDIUM-TERM NOTES (A) - 2.3%
Dean Witter, Discover & Co.
7/15/95 6.10 175,000 175,158
REPURCHASE AGREEMENTS - 2.5%
MATURITY
AMOUNT
In a joint trading account
(U.S. Government Obligations)
dated 6/30/95 due 7/3/95:
At 6.28% $ 184,096 184,000
TOTAL INVESTMENTS - 100% $ 7,468,938
Total Cost for Income Tax Purposes - $7,468,938
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
FIDELITY ADVISOR ANNUITY FUND: MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $184,000) - See accompanying $ 7,468,938
schedule
Cash 726,336
Interest receivable 1,177
Receivable from investment adviser for expense reductions 1,879
TOTAL ASSETS 8,198,330
LIABILITIES
Accrued management fee $ 1,190
Other payables and accrued expenses 14,357
TOTAL LIABILITIES 15,547
NET ASSETS $ 8,182,783
Net Assets consist of:
Paid in capital $ 8,182,783
NET ASSETS, for 8,182,783 shares outstanding $ 8,182,783
NET ASSET VALUE, offering price and redemption price per share ($8,182,783 (divided by) 8,182,783 shares) $1.00
</TABLE>
STATEMENT OF OPERATIONS
JANUARY 3, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
INTEREST INCOME $ 83,439
EXPENSES
Management fee $ 3,437
Transfer agent fees 942
Accounting fees and expenses 9,841
Custodian fees and expenses 7,539
Registration fees 1,399
Audit 9,038
Miscellaneous 121
Total expenses before reductions 32,317
Expense reductions (18,819 13,498
)
NET INTEREST INCOME 69,941
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 69,941
STATEMENT OF CHANGES IN NET ASSETS
JANUARY 3, 1995
(COMMENCEMEN
T OF OPERATIONS)
TO JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 69,941
Net interest income
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 69,941
Distributions to shareholders from net interest income (69,941
)
Share transactions at net asset value of $1.00 per share 9,527,342
Proceeds from sales of shares
Reinvestment of distributions from net interest income 69,941
Cost of shares redeemed (1,414,500
)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES RESULTING FROM SHARE TRANSACTIONS 8,182,783
TOTAL INCREASE (DECREASE) IN NET ASSETS 8,182,783
NET ASSETS
Beginning of period -
End of period $ 8,182,783
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C>
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 1.000
Income from Investment Operations .026
Net interest income
Less Distributions (.026)
From net interest income
Net asset value, end of period $ 1.000
TOTAL RETURN B 2.59%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 8,183
Ratio of expenses to average net assets 1.00%A
Ratio of expenses to average net assets before expense reductions 2.38%A
Ratio of net interest income to average net assets 5.15%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
FIDELITY ADVISOR ANNUITY FUND: GOVERNMENT INVESTMENT FUND
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells bonds that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period shown, the total return would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JUNE 30, 1995 LIFE OF
FUND
GOVERNMENT INVESTMENT 10.10%
Lehman Brothers Government Bond Index n/a
Salomon Brothers Treasury/Agency Index n/a
Consumer Price Index 1.87%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on January 3,
1995.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. Bond prices, for
example, generally move in the opposite
direction of interest rates. In turn, the share price,
return, and yield of a fund that invests in bonds
will vary. That means if you sell your shares
during a market downturn, you might lose
money. But if you can ride out the market's ups
and downs, you may have a gain.
(checkmark)
You can compare the fund's return to the Lehman Brothers Government Bond
Index and the Salomon Brothers Treasury/Agency Index - both broad measures
of the performance of U.S. government bonds. These benchmarks includes
reinvested dividends and capital gains, if any, and exclude the effects of
sales charges. Comparing the fund's performance to the consumer price index
(CPI) helps show how your fund did compared to inflation. (The CPI returns
begin on the month end closest to the fund's start date.)
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
Past performance is no guarantee of future results. Principal and
investment return will vary and you may have a gain or loss when you
withdraw your money.
$10,000 OVER LIFE OF FUND
FA Annuity Govt.Salomon Brothers T
01/31/95 10000.00 10000.00
02/28/95 10217.18 10210.00
03/31/95 10276.41 10270.24
04/30/95 10394.87 10402.73
05/31/95 10799.61 10829.24
06/30/95 10868.71 10911.54
Let's say you invested $10,000 in Government Investment Fund on January 31,
1995, shortly after the fund started. By June 30, 1995, your investment
would have grown to $10,869 - an 8.69% increase. With reinvested dividends
and capital gains, if any, a $10,000 investment in the Salomon Brothers
Treasury/Agency Index would have grown to $10,912 over the same period - a
9.12% increase.
INVESTMENT SUMMARY
COUPON DISTRIBUTION AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
<S> <C>
% OF FUND'S
INVESTMENTS
Under 6% 17.9
6 - 6.99% 24.6
7 - 7.99% 32.9
8 - 8.99% 11.3
9 - 9.99% 2.2
Over 10% 5.4
COUPON DISTRIBUTION SHOWS THE RANGE OF STATED INTEREST RATES ON THE FUND'S INVESTMENTS, EXCLUDING REPURCHASE AGREEMENTS.
</TABLE>
AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
<S> <C>
Years
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
</TABLE>
DURATION AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
<S> <C>
Years
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR
EXAMPLE, A FUND WITH A FIVE-YEAR DURATION IS
LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY
DIFFER FROM THIS EXAMPLE.
</TABLE>
FIDELITY ADVISOR ANNUITY FUND: GOVERNMENT INVESTMENT FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
Robert Ives, Portfolio Manager of Fidelity
Advisor Annuity Government Investment Fund
Q. BOB, HOW DID THE FUND DO?
A. It's difficult to make a meaningful performance comparison, since the
fund has been in existence only for a short time. However, for the six
months ended June 10, 1995, the fund slightly trained the Salomon Brothers
Treasury/Agency Index, which returned 11.25%.
Q. WHAT HAS THE BOND INVESTING ENVIRONMENT BEEN LIKE?
A. The bond market has had a pretty dramatic rally over the past six
months, largely a reversal of the losses bond investors saw in 1994.
Interest rates have dropped and prices have risen. Interest rates dropped
for two reasons. First, there were quite a few signs that the economy was
weakening, including slower growth in jobs and weakness in auto sales and
housing sales. Second, investors saw signs that inflation had remained
pretty much under control. These two factors helped fuel the rally in the
bond market.
Q. DO YOU TRY TO POSITION THE FUND TO TAKE ADVANTAGE OF RISING OR FALLING
INTEREST RATES?
A. No. Instead, I keep the fund's duration - a measure of how sensitive its
share price is to changes in interest rates - in line with the fund's
benchmark index - the Salomon Brothers Treasury/Agency Index. In my view,
finding sectors - and individual issues within those sectors - that offer
the best value is the most prudent way to achieve total return. With this
strategy I try to buy securities when they are inexpensive - based on what
I believe to be their actual value - before the market comes to the same
conclusion. I look for opportunities with good risk/reward trade-offs -
those situations where I feel there is a combination of low risk and high
potential for gain. I also seek to diversify my investments, so that the
fund's performance is not overly dependent on the performance of a
particular type or class of security.
Q. AT THE SAME TIME, THOUGH, THE FUND IS HEAVILY WEIGHTED IN TREASURY
SECURITIES . . .
A. True. That's largely a result of the newness of the fund. I'm continuing
to develop the structure of the fund as time goes on. I'll seek to
diversify the fund's investments by adding to the agency and mortgage
weightings, although at the moment there aren't many attractive
opportunities in the mortgage market. At the same time, I'm interested in
investing in more agency issues. That's because I believe the extra yield
they offer more than compensates for whatever small additional risk they
bring to the portfolio.
Q. HOW HAVE YOU POSITIONED THE FUND IN TERMS OF BOND MATURITIES?
A. It's had a relatively bulleted structure by focusing on intermediate
bonds with maturities of seven to 10 years. This has been a positive
structure, because it is one that does well in the environment of economic
weakening and rate drops that we've seen. Going forward, however, the fund
probably will be set up in a more laddered structure - with the bonds
spaced fairly evenly along the maturity spectrum - because the market
already anticipates that the Federal Reserve Board will ease short-term
interest rates. In fact, shortly after the period, the Fed dropped the Fed
funds rate - a key short-term interest rate - by 0.25%. Since further
easing is fully priced into the market, the fund is unlikely to benefit
further from its bulleted structure.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. From an economic perspective, the second half of the year should be very
interesting. The market is anticipating further drops in interest rates. It
also seems to be anticipating a further economic slowdown, though some
economists think the economy will pick up in the latter half of the year,
which would hurt the bond market. That being said, I don't manage the fund
with an eye toward where I think rates or the market will go. In managing
against the index, I'll look to ladder the fund's maturity structure IN
CASE there is a disappointment from the economic data. Beyond that, I'll
look to the mortgage sector for opportunities, and seek to increase the
fund's investments in agency bonds.
FUND FACTS
GOAL: high current income by investing
primarily in obligations issued or guaranteed
by the U.S. Government
START DATE: January 3, 1995
SIZE: as of June 30, 1995, more than $4 million
MANAGER: Robert Ives, since February 1995;
joined Fidelity in 1991
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: GOVERNMENT INVESTMENT FUND
INVESTMENTS JUNE 30, 1995
Showing Percentage of Total Value of Investments
U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS - 88.8%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B)
U.S. TREASURY OBLIGATIONS - 82.0%
8%, 10/15/96 $ 348,000 $ 357,243
4 3/8%, 11/15/96 310,000 304,237
5 5/8%, 1/31/98 50,000 49,664
5 1/8%, 6/30/98 20,000 19,572
4 3/4%, 8/31/98 30,000 28,969
7 3/4%, 12/31/99 750,000 800,745
6 1/4%, 2/15/03 985,000 987,620
10 3/4%, 5/15/03 10,000 12,783
11 7/8%, 11/15/03 70,000 95,386
7 1/4%, 5/15/04 104,000 111,037
9%, 11/15/18 30,000 37,927
8 7/8%, 2/15/19 70,000 87,511
12%, 8/15/23 80,000 118,000
7 1/2%, 11/15/24 385,000 425,968
3,436,662
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.8%
Federal Agricultural Mortgage Corp.
7.01%, 2/10/05 10,000 10,389
Federal Home Loan Mortgage Corp.:
4.78%, 2/10/97 (callable) 10,000 9,802
6.47%, 7/7/97 20,000 20,159
Federal National Mortgage Association:
4.38%, 10/23/98 (callable) (a) 10,000 9,656
4.94%, 10/30/98 (callable) 50,000 47,953
Government Trust Certificates
(assets of the Trust guaranteed by
U.S. Government through Defense
Security Assistance Agency):
8.55%, 11/15/97 6,957 7,120
9 1/4%, 11/15/01 50,000 55,076
Guaranteed Export Trust 6.28%,
6/15/04 20,000 19,914
Private Export Funding Corp.:
5.65%, 3/15/03 36,000 34,973
8 3/4%, 6/30/03 10,000 11,407
State of Israel (guaranteed by U.S.
Government through Agency for
International Development):
4 7/8%, 9/15/98 30,000 28,903
5 3/4%, 3/15/00 20,000 19,563
8 1/2%, 4/1/06 10,000 11,100
286,015
TOTAL U.S. GOVERNMENT AND GOVERNMENT
AGENCY OBLIGATIONS
(Cost $3,616,200) 3,722,677
U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES - 0.1%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.1%
6.50%, 2/15/10 (Cost $2,740) 2,761 2,728
COLLATERALIZED MORTGAGE OBLIGATIONS - 4.7%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B)
U.S. GOVERNMENT AGENCY - 4.7%
Federal Home Loan Mortgage Corp.
planned amortization class, Class 1496-C,
5%, 4/15/11 $ 20,000 $ 19,650
Federal National Mortgage Association
planned amortization class:
Series 1992 Class 1993-D,
5 3/4%, 12/25/01 35,000 34,409
Series 1993 Class 18-PC,
5 1/2%, 3/25/01 35,000 34,584
Series 1993 Class 72-B,
5%, 1/25/02 29,468 28,943
Series 1993 Class 135-PC,
5 1/2%, 7/25/02 30,000 29,325
Series 1993 Class 196-CA,
5%, 2/25/03 50,000 48,594
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS
(Cost $194,518) 195,505
COMMERCIAL MORTGAGE SECURITIES - 0.7%
Federal National Mortgage Association
commercial Series 1994-M3 Class A,
7.71%, 4/1/06 (Cost $29,825) 29,727 30,672
REPURCHASE AGREEMENTS - 5.7%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 $239,124 239,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,082,283) $ 4,190,582
LEGEND
(g) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
OTHER INFORMATION
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $9,649,890 and $5,882,970, respectively.
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $4,082,283. Net unrealized appreciation aggregated
$108,299, of which $114,824 related to appreciated investment securities
and $6,525 related to depreciated investment securities.
FIDELITY ADVISOR ANNUITY FUND: GOVERNMENT INVESTMENT FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $239,000) (cost $4,082,283) - See $ 4,190,582
accompanying schedule
Cash 35,023
Interest receivable 49,180
Receivable from investment adviser for expense reductions 995
TOTAL ASSETS 4,275,780
LIABILITIES
Accrued management fee $ 1,486
Other payables and accrued expenses 11,830
TOTAL LIABILITIES 13,316
NET ASSETS $ 4,262,464
Net Assets consist of:
Paid in capital $ 4,001,540
Undistributed net investment income 76,262
Accumulated undistributed net realized gain (loss) on investments 76,363
Net unrealized appreciation (depreciation) on investments 108,299
NET ASSETS, for 387,057 shares outstanding $ 4,262,464
NET ASSET VALUE, offering price and redemption price per share ($4,262,464 (divided by) 387,057 shares) $11.01
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 3, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 89,553
Interest
EXPENSES
Management fee $ 6,065
Transfer agent fees 1,296
Accounting fees and expenses 22,137
Custodian fees and expenses 863
Audit 7,531
Miscellaneous 7
Total expenses before reductions 37,899
Expense reductions (24,608 13,291
)
NET INVESTMENT INCOME 76,262
REALIZED AND UNREALIZED GAIN (LOSS) 76,363
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 108,299
NET GAIN (LOSS) 184,662
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 260,924
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C>
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 76,262
Net investment income
Net realized gain (loss) 76,363
Change in net unrealized appreciation (depreciation) 108,299
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 260,924
Share transactions 4,061,567
Net proceeds from sales of shares
Cost of shares redeemed (60,027)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 4,001,540
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,262,464
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $76,262) $ 4,262,464
OTHER INFORMATION
Shares
Sold 392,658
Redeemed (5,601)
Net increase (decrease) 387,057
</TABLE>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C>
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations .197
Net investment income
Net realized and unrealized gain (loss) .813
Total from investment operations 1.010
Net asset value, end of period $ 11.010
TOTAL RETURN B, C 10.10%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 4,262
Ratio of expenses to average net assets 1.00% A
Ratio of expenses to average net assets before expense reductions 2.50% A, D
Ratio of net investment income to average net assets 5.74% A
Portfolio turnover rate 504% A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
FIDELITY ADVISOR ANNUITY FUND: HIGH YIELD FUND
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period shown, the total return would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JUNE 30, 1995 LIFE OF
FUND
HIGH YIELD 11.20%
Merrill Lynch High Yield Master 12.76%
Consumer Price Index 1.87%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on January 3,
1995.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. Bond prices, for
example, generally move in the opposite
direction of interest rates. In turn, the share price,
return, and yield of a fund that invests in bonds
will vary. That means if you sell your shares
during a market downturn, you might lose
money. But if you can ride out the market's ups
and downs, you may have a gain.
(checkmark)
You can compare the fund's return to that of the Merrill Lynch High Yield
Master Index - a broad measure of the high yield bond market. This
benchmark includes reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index (CPI) helps
show how your fund did compared to inflation. (The CPI returns begin on the
month end closest to the fund's start date.)
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
Past performance is no guarantee of future results. Principal and
investment return will vary and you may have a gain or loss when you
withdraw your money. The fund includes high yielding, lower-rated
securities which are subject to greater price volatility and may involve
greater risk of default. The market for these securities may be less
liquid.
$10,000 OVER LIFE OF FUND
FA Annuity HighHigh Yield Master
01/03/95 10000.00 10000.00
01/31/95 9960.00 10141.30
02/28/95 10350.00 10457.72
03/31/95 10500.00 10603.26
04/30/95 10920.00 10851.52
05/31/95 11160.00 11190.55
06/30/95 11120.00 11276.02
Let's say you invested $10,000 in High Yield Fund on January 3, 1995, when
the fund started. By June 30, 1995, your investment would have grown to
$11,120 - an 11.20% increase. That compares to $10,000 invested in the
Merrill Lynch High Yield Master Index, which would have grown to $11,276
over the same period - a 12.76% increase.
INVESTMENT SUMMARY
TOP FIVE HOLDINGS AS OF JUNE 30, 1995
(BY ISSUER, EXCLUDING REPURCHASE AGREEMENTS) % OF FUND'S
INVESTMENTS
International Wire Group, Inc. 11 3/4%, 6/1/05 5.7
Transamerican Refining Corp. 16 1/2%, 2/15/02 4.4
Players International, Inc. 10 7/8%, 4/15/05 4.4
Republic Engineered Steels, Inc. 9 7/8%, 12/15/01 3.8
Revlon Consumer Products Corp. 10 1/2%, 2/15/03 3.5
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Media & Leisure 19.0
Basic Industries 16.5
Energy 8.7
Utilities 7.5
Nondurables 6.3
QUALITY DIVERSIFICATION AS OF JUNE 30, 1995
(MOODY'S RATINGS) % OF FUND'S
INVESTMENTS
Aaa, Aa, A 0.0
Baa 0.0
Ba 7.0
B 47.9
Caa, Ca, C 17.1
Nonrated 0.8
TABLE EXCLUDES SHORT-TERM INVESTMENTS.
FIDELITY ADVISOR ANNUITY FUND: HIGH YIELD FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Margaret Eagle, Portfolio Manager of Fidelity Advisor
Annuity High Yield Fund
Q. MARGARET, HOW DID THE FUND DO?
A. It's difficult to make a meaningful performance comparison, since the
fund has been in existence only for a short time. However, for the six
months ended June 30, 1995, the fund slightly trailed the Merrill Lynch
High Yield Master Index, which returned 12.76%.
Q. WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE FOR HIGH-YIELD BONDS?
A. For the most part, the high-yield market has been strong, largely due to
the forces of supply and demand. Demand has been very strong, influenced by
the fact that interest rates, in general, dropped in the first half of the
year, making the investments in the high yield market more attractive. At
the same time, there has been a paucity of new issues, for two reasons. One
is that banks have been very aggressive lenders, so that many companies
that may have come to the high yield market turned to them instead. The
other reason was that the strong stock market encouraged companies to
finance through equity offerings. In the last part of the period, through
parts of May and June, this situation reversed itself. Demand softened as
data suggested the possibility of a recession, an economic environment
unfriendly for high-yield issues. In addition, new issues came to market in
May and June. By the end of the period, however, this negative backdrop
subsided and the outlook turned positive again.
Q. WHAT SORT OF STRATEGY HAVE YOU PURSUED?
A. I invest from the bottom up. That is, I don't follow broad investing
themes. Instead, I invest credit by credit, company by company, looking for
high total return. In looking for new investments, my preference has been
and will continue to be high current yield bonds from companies where I see
either stable or improving credit quality. The fund does have some
investments in zero coupon bonds - bonds which make no periodic payments,
but are sold at a discount to their face value, with the buyer receiving
the rate of return by gradual appreciation of the security. But most of the
fund's investments are in high current coupon bonds. I've also tried to
select a collection of higher-quality securities within the junk bond
universe.
Q. CAN YOU GIVE US SOME EXAMPLES OF INVESTMENTS THAT HAVE DONE WELL?
A. Viacom is an example of a company whose credit quality is improving. The
company acquired Paramount and Blockbuster Video, and as it has
consolidated its operations, it has shown improvement. It has been selling
assets such as Madison Square Garden and using the proceeds to pay down
debt, causing the credit quality to improve. Nextel has been another
positive performer. I bought Nextel securities when they were selling at
very cheap levels, after a deal in which MCI was going to make an equity
infusion into the company fell through. Nextel has since rebounded, as a
result of an equity infusion by Craig McCaw, a well-known communications
investor with a proven track record. Kaiser Aluminum bonds are paying a
high current coupon. The outlook for aluminum is quite good, so the company
should benefit from stronger cash flows that will allow it to pay back debt
and improve its credit.
Q. THERE MUST HAVE BEEN SOME DISAPPOINTMENTS DURING THE PERIOD . . .
A. Yes. The direct broadcast equipment provider Echo Star suffered when the
Chinese company it planned to use to launch its satellite experienced
difficulty launching a similar model. The bonds have bounced back, although
with less impact because the position makes up a smaller proportion of this
growing portfolio. Star Market also underperformed. Even though Star is
making strides in its fundamental strategy of adding new stores and
improving the quality of its produce and deli sections, its wholesale
business had a disappointing quarter in terms of earnings.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I'm cautiously optimistic. The economy may strengthen through the second
half, for two reasons. First, the lower interest rates we've seen over the
past few months will start to have a stimulating effect. Also, Mexico, one
of our biggest trading partners, has been in recession since the beginning
of the year. A stabilization of that situation would have a beneficial
effect on corporate earnings in the U.S. At the same time, there's a
possibility that interest rates could rise, so I'll try to avoid bonds that
are interest rate-sensitive. I'll invest in cyclical companies - those that
are economically sensitive - provided they use their cash flow to pay down
debt. And even though I'm looking to limit the fund's investments in zero
coupon bonds, I will still buy zeros of companies that I perceive have a
big potential for credit improvement. And I'll continue to look for high
current coupon bonds of companies with stable or improving credit quality.
FUND FACTS
GOAL: to provide a high level of income and
the potential for capital gains by investing
primarily in high-yield bonds
START DATE: January 3, 1995
SIZE: as of June 30, 1995, more than $10 million
MANAGER: Margaret Eagle, since January
1995; joined Fidelity in 1980
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: HIGH YIELD FUND
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
NONCONVERTIBLE BONDS - 72.1%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B)
BASIC INDUSTRIES - 15.6%
CHEMICALS & PLASTICS - 1.7%
G-I Holdings, Inc., Series B,
0%, 10/1/98 Ba3 $ 160,000 $ 108,000
NL Industries, Inc. 11 3/4%,
10/15/03 B1 90,000 93,825
201,825
IRON & STEEL - 3.8%
Republic Engineered Steels, Inc.
9 7/8%, 12/15/01 B2 500,000 456,250
METALS & MINING - 6.5%
International Wire Group, Inc.
11 3/4%, 6/1/05 B3 680,000 684,250
Kaiser Aluminum & Chemical
Corp. 12 3/4%, 2/1/03 B2 80,000 86,000
770,250
PAPER & FOREST PRODUCTS - 3.6%
Repap New Brunswick, Inc. yankee
10 5/8%, 4/15/05 B2 100,000 100,750
Stone Container Corp.
11 1/2%,10/1/04 B1 90,000 94,950
Tjiwi Kimia International Finance Co.
13 1/4%, 8/1/01 B1 220,000 233,200
428,900
TOTAL BASIC INDUSTRIES 1,857,225
CONSTRUCTION & REAL ESTATE - 1.7%
BUILDING MATERIALS - 1.7%
MVE, Inc. Unit
12 1/2%, 2/15/02 B3 200,000 208,000
ENERGY - 8.7%
ENERGY SERVICES - 3.4%
Transtexas Gas Corp. 11 1/2%,
6/15/02 B2 400,000 409,000
OIL & GAS - 5.3%
Flores & Rucks, Inc.
13 1/2%, 12/1/04 B3 90,000 101,250
Transamerican Refining Corp.
16 1/2%, 2/15/02 (c) Caa 500,000 528,750
630,000
TOTAL ENERGY 1,039,000
FINANCE - 1.9%
CREDIT & OTHER FINANCE - 1.2%
Mesa Capital Corp. secured
12 3/4%, 6/30/98 (d) Caa 160,000 145,200
INSURANCE - 0.7%
I.C.H. Corp.
11 1/4%, 12/1/1996 C 100,000 79,500
TOTAL FINANCE 224,700
INDUSTRIAL MACHINERY & EQUIPMENT - 2.2%
POLLUTION CONTROL - 2.2%
Envirosource, Inc. 9 3/4%,
6/15/03 B3 300,000 267,000
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B)
MEDIA & LEISURE - 17.0%
BROADCASTING - 7.6%
Allbritton Communications Co.
11 1/2%, 8/15/20 B3 $ 150,000 $ 159,000
Chancellor Broadcasting
12 1/2%, 10/1/04 B3 150,000 149,625
Diamond Cable Communications
PLC 0%, 9/30/04 (d) B3 300,000 196,500
Peoples Choice TV Corp. Unit
0%, 6/1/04 (d) Caa 800,000 387,000
Viacom, Inc. 8%, 7/7/06 B1 10,000 9,725
901,850
ENTERTAINMENT - 4.4%
Players International, Inc.
10 7/8%, 4/15/05 Ba3 530,000 522,050
LODGING & GAMING - 1.7%
HMH Properties, Inc. 9 1/2%,
5/15/05 B1 210,000 203,700
RESTAURANTS - 3.3%
Flagstar Corp. 11 1/4%,
11/1/04 Caa 260,000 202,800
Host Marriott Travel Plazas, Inc.
9 1/2%, 5/15/05 B1 200,000 191,000
393,800
TOTAL MEDIA & LEISURE 2,021,400
NONDURABLES - 6.3%
BEVERAGES - 1.7%
Cott Corp. Quebec 9 3/8%,
7/1/05 Ba3 200,000 200,500
HOUSEHOLD PRODUCTS - 4.6%
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 420,000 412,650
Revlon Worldwide Corp.
secured 0%, 3/15/98 B3 190,000 130,625
543,275
TOTAL NONDURABLES 743,775
RETAIL & WHOLESALE - 4.7%
APPAREL STORES - 1.3%
Apparel Retailers, Inc.
0%, 8/15/05 (d) Caa 250,000 147,500
DRUG STORES - 1.0%
Thrifty Payless, Inc.
12 1/4%, 4/15/04 B3 120,000 123,600
GENERAL MERCHANDISE STORES - 0.1%
Parisian, Inc. 9 7/8%,
7/15/03 Caa 20,000 15,400
GROCERY STORES - 2.3%
Dominicks Fine Foods 10 7/8%,
5/1/05 B3 200,000 202,500
Star Markets, Inc. 13%,
11/1/04 B3 70,000 69,300
271,800
TOTAL RETAIL & WHOLESALE 558,300
NONCONVERTIBLE BONDS - CONTINUED
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B)
SERVICES - 3.3%
ADVERTISING - 2.4%
Outdoor Systems, Inc.
10 3/4%, 8/15/03 B2 $ 290,000 $ 278,400
LEASING & RENTAL - 0.9%
GPA Delaware, Inc. gtd. notes
8 3/4%, 12/15/98 Caa 130,000 109,200
TOTAL SERVICES 387,600
TECHNOLOGY - 1.9%
COMMUNICATIONS EQUIPMENT - 0.9%
Echostar Communications Corp.
Unit 0%, 6/1/04 Caa 190,000 104,500
COMPUTERS & OFFICE EQUIPMENT - 1.0%
Bell & Howell Holdings Co.
0%, 3/1/05 (d) B3 200,000 116,000
TOTAL TECHNOLOGY 220,500
TRANSPORTATION - 1.3%
AIR TRANSPORTATION - 1.3%
US Air, Inc.:
9 5/8%, 2/1/01 B3 120,000 103,800
10%, 7/1/03 B3 60,000 50,850
TOTAL TRANSPORTATION 154,650
UTILITIES - 7.5%
CELLULAR - 4.2%
Dial Page, Inc.
12 1/4%, 2/15/00 Caa 120,000 124,500
Horizon Cellular Telephone
0%, 10/1/00 (d) Caa 250,000 196,250
Nextel Communications, Inc.
0%, 8/15/04 (d) B3 370,000 177,138
497,888
GAS - 3.3%
Columbia Gas Systems, Inc.:
7 1/2%, 6/1/97 B3 150,000 198,000
7 1/2%, 10/1/97 B3 150,000 200,250
398,250
TOTAL UTILITIES 896,138
TOTAL NONCONVERTIBLE BONDS
(Cost $8,489,713) 8,578,288
COMMERCIAL MORTGAGE SECURITIES - 0.8%
Lennar Central Partners LP
commercial Series 1995-1
Class F, 11.70%,
5/15/05 (Cost $99,481) - 100,000 99,500
COMMON STOCKS - 0.2%
SHARES VALUE (NOTE 1)
HOLDING COMPANIES - 0.2%
SDW Holdings Corp. (warrants)
(Cost $17,898) (a) 3,750 $ 22,500
NONCONVERTIBLE PREFERRED STOCKS - 4.3%
BASIC INDUSTRIES - 0.9%
PAPER & FOREST PRODUCTS - 0.9%
S D Warren Co. exchangeable
pay-in-kind 3,750 105,000
FINANCE - 1.4%
SAVINGS & LOANS - 1.4%
First Nationwide Bank 11 1/2%, 108 11,664
Greater New York Savings Bank
Series B, 12% 5,660 155,650
167,314
MEDIA & LEISURE - 2.0%
BROADCASTING - 2.0%
Panamsat Corp. 12 3/4% 238 241,570
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $483,873) 513,884
REPURCHASE AGREEMENTS - 22.6%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 (Note 3) $ 2,695,396 2,694,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $11,784,965) $ 11,908,172
LEGEND
(a) Non-income producing
(b) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(c) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(d) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $10,710,941 and $1,723,645, respectively.
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 0.0% AAA, AA, A 0.0%
Baa 0.0% BBB 0.0%
Ba 7.0% BB 14.9%
B 47.9% B 40.3%
Caa 16.5% CCC 11.4%
Ca, C 0.7% CC, C 0.0%
D 1.7%
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $11,784,965. Net unrealized appreciation aggregated
$123,207, of which $209,868 related to appreciated investment securities
and $86,661 related to depreciated investment securities.
FIDELITY ADVISOR ANNUITY FUND: HIGH YIELD FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $2,694,000) (cost $11,784,965) - See $ 11,908,172
accompanying schedule
Cash 268,895
Dividends receivable 5,075
Interest receivable 155,299
Receivable from investment adviser for expense reductions 4,190
TOTAL ASSETS 12,341,631
LIABILITIES
Payable for investments purchased $ 1,405,326
Accrued management fee 4,372
Other payables and accrued expenses 12,393
TOTAL LIABILITIES 1,422,091
NET ASSETS $ 10,919,540
Net Assets consist of:
Paid in capital $ 10,540,716
Undistributed net investment income 200,362
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 55,255
Net unrealized appreciation (depreciation) on investments 123,207
NET ASSETS, for 981,634 shares outstanding $ 10,919,540
NET ASSET VALUE, offering price and redemption price per share ($10,919,540 (divided by) 981,634 shares) $11.12
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 3, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 19,670
Dividends
Interest 202,004
TOTAL INCOME 221,674
EXPENSES
Management fee $ 12,918
Transfer agent fees 1,648
Accounting fees and expenses 22,137
Custodian fees and expenses 2,428
Audit 7,501
Miscellaneous 84
Total expenses before reductions 46,716
Expense reductions (25,404 21,312
)
NET INVESTMENT INCOME 200,362
REALIZED AND UNREALIZED GAIN (LOSS) 55,255
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 123,207
NET GAIN (LOSS) 178,462
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 378,824
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 200,362
Net investment income
Net realized gain (loss) 55,255
Change in net unrealized appreciation (depreciation) 123,207
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 378,824
Share transactions 10,793,882
Net proceeds from sales of shares
Cost of shares redeemed (253,166)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 10,540,716
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,919,540
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $200,362) $ 10,919,540
OTHER INFORMATION
Shares
Sold 1,004,392
Redeemed (22,758)
Net increase (decrease) 981,634
</TABLE>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
FINANCIAL HIGHLIGHTS
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.000
Income from Investment Operations .204
Net investment income
Net realized and unrealized gain (loss) .916
Total from investment operations 1.120
Net asset value, end of period $ 11.120
TOTAL RETURN B, C 11.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 10,920
Ratio of expenses to average net assets 1.00% A
Ratio of expenses to average net assets before expense reductions 2.19% A
Ratio of net investment income to average net assets 9.40% A
Portfolio turnover rate 90% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
FIDELITY ADVISOR ANNUITY FUND: INCOME & GROWTH FUND
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period shown, the total return would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JUNE 30, 1995 LIFE OF
FUND
INCOME & GROWTH FUND 7.40%
S&P 500 20.21%
Lehman Brothers Aggregate Bond Index 11.44%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on January 3,
1995.
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)
You can compare the fund's return to the performance of the Standard &
Poor's Composite Index of 500 stocks- a common proxy for the U.S. stock
market - and the performance of the Lehman Brothers Aggregate Bond Index, a
broad measure of the bond market. These benchmarks includes reinvested
dividends and capital gains, if any.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
Past performance is no guarantee of future results. Principal and
investment return will vary and you may have a gain or loss when you
withdraw your money.
$10,000 OVER LIFE OF FUND
FA Annuity Inc & GStandard & Poor's
01/03/95 10000.00 10000.00
01/31/95 9990.00 10259.30
02/28/95 10190.00 10659.10
03/31/95 10260.00 10973.66
04/30/95 10390.00 11296.83
05/31/95 10610.00 11748.36
06/30/95 10740.00 12021.28
Let's say you invested $10,000 in Income & Growth Fund on January 3, 1995,
when the fund started. By June 30, 1995, your investment would have grown
to $10,740 - a 7.40% increase. For comparison, look at how both the S&P 500
and Lehman Brothers Aggregate Bond Index did over the same period. With
dividends reinvested, the same $10,000 investment in the S&P 500 would have
grown to 12,021 - a 20.12% increase. If you had put $10,000 in the bond
index, it would have grown to $11,440 - a 11.44% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Apple Computer Inc. 1.6
Union Camp Corp. 1.5
Wal-Mart Stores Inc. 1.1
IBM France 5 3/4% 1.0
International Paper Co. 1.0
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Basic Industries 9.7
Technology 6.1
Energy 5.0
Utilities 3.4
Durables 3.2
ASSET ALLOCATION AS OF JUNE 30, 1995*
Row: 1, Col: 1, Value: 22.5
Row: 1, Col: 2, Value: 46.6
Row: 1, Col: 3, Value: 30.9
Stocks 30.9%
Bonds 46.6%
Short-term investments 22.5%
FOREIGN INVESTMENTS 17.4%
*
FIDELITY ADVISOR ANNUITY FUND: INCOME & GROWTH FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Robert Haber, Portfolio Manager of Fidelity Advisor
Annuity Income & Growth Fund
Q. BOB, HOW DID THE FUND DO?
A. Because the fund invests in both stocks and bonds, in theory, its total
return should fall somewhere between its two benchmark indexes, the
Standard & Poor's Composite Index of 500 Stocks and the Lehman Brothers
Aggregate Bond Index - a broad measure of the performance of U.S. taxable
bonds. However, the fund's total return from its inception on January 3,
1995, through June 30, 1995, trailed both the S&P 500, which returned
20.21% during the same period, and the Lehman Brothers bond index, which
returned 11.44%.
Q. WHAT INFLUENCED THE FUND'S PERFORMANCE?
A. First, it's important to note that relatively few mutual funds that
invest primarily in stocks topped the performance of the S&P 500 over the
past six months, let alone balanced funds like this one. That's because
this recent market rally was led by the very large-cap growth stocks that
make up most of the index. That said, there were two key factors that
influenced the fund's performance. First, the fund emphasized cyclical
stocks - those that tend to rise and fall with the economy - based on my
belief that strong worldwide demand for commodities such as aluminum,
chemicals and paper would translate into excellent earnings growth for
well-run cyclical companies. As it turned out, I was correct on most of my
earnings estimates for these companies; earnings were strong. However,
early in 1995, many investors worried that 1994's interest rate hikes would
slow the economy, which, in turn, might slow the profits of cyclical
companies. That led to a broad market shift away from cyclicals toward the
stocks of companies that might have more predictable earnings growth in the
face of higher rates. These included consumer nondurables in groups such as
beverages, food and tobacco.
Q. AND THE OTHER FACTOR?
A. The second factor had to do with asset allocation. In January, I felt
that bonds generally offered better risk/reward prospects than stocks.
Stock valuations - prices relative to other measures such as earnings -
still were historically high, while bonds appeared to be oversold after
their worst period of performance in decades. For those reasons I kept the
portfolio relatively overweighted in bonds and underweighted in stocks. As
1995 progressed, bonds did rally in the U.S. and in many overseas
countries. However, U.S. stocks were the big winners. Continued strong
earnings and a favorable interest rate environment propelled the market to
record highs.
Q. CONCERNING THE FUND'S EMPHASIS ON CYCLICAL STOCKS, HAVE YOU SHIFTED YOUR
STRATEGY AT ALL?
A. I've made small shifts here and there, but my overall strategy with
regard to cyclicals hasn't changed. I still believe that many world
economies - including those in Europe and Japan - are showing signs of
strengthening. In addition, many cyclical companies effectively cut costs
when times were lean a few years back. Now that the supply-demand
environment has improved for most cyclical industries, earnings growth has
been strong, which I expect will continue. If it does, I believe that the
market, at some point, will have to reward the strong earnings growth of
cyclical companies with higher stock prices. A few of the fund's largest
cyclical stock investments include paper manufacturers Union Camp and
International Paper, and chemical company Olin.
Q. LOOKING BEYOND THESE BASIC INDUSTRIES STOCKS, THE FUND'S NEXT LARGEST
SECTORS ARE TECHNOLOGY AND ENERGY. WHERE HAVE YOU FOUND OPPORTUNITIES IN
THOSE GROUPS?
A. These two groups have produced some of the fund's best performing stock
investments in 1995. On the technology side, computer hardware
manufacturers IBM and Apple Computer benefited from increasing demand for
their products, which helped both companies produce strong earnings growth.
As for energy stocks, rising oil prices and an effective multi-year
restructuring effort have resulted in strong earnings for British
Petroleum, which was among the fund's top energy stock investments on June
30.
Q. BOB, WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Stock valuations are certainly higher than they were six months ago,
which is worrisome. However, corporate earnings continue to be very strong.
Assuming interest rates remain relatively stable and economic growth
remains steady, albeit slower, stocks could do well. In that type of
environment, I believe positive market sentiment would have to broaden to
include cyclical stocks. The big risk for stocks is if interest rates have
slowed the economy enough to trigger a recession. As for bonds, the key is
inflation. Bond valuations remain relatively attractive, so if the economy
can indeed grow without triggering higher inflation, bonds could continue
to do well. However, if the economy should get a second wind and strengthen
through the rest of the year, bonds could be at risk.
FUND FACTS
GOAL: to provide income and growth of capital
by investing in a diversified portfolio of stocks
and bonds
START DATE: January 3, 1995
SIZE: as of June 30, 1995, more than $11 million
MANAGER: Robert Haber, since January 1995;
joined Fidelity in 1985
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: INCOME & GROWTH FUND
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 26.7%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.3%
DEFENSE ELECTRONICS - 0.3%
Litton Industries, Inc. 700 $ 25,847
Tech-Sym Corp. 300 8,237
TOTAL AEROSPACE & DEFENSE 34,084
BASIC INDUSTRIES - 8.1%
CHEMICALS & PLASTICS - 1.3%
International Specialty Products, Inc. 800 6,800
Kemira OY 4,600 38,284
Methanex Corp. (a) 200 1,694
Olin Corp. 900 46,350
Union Carbide Corp. 1,500 50,063
Vigoro Corp. 300 12,450
155,641
IRON & STEEL - 0.2%
Huntco, Inc. Class A 100 1,625
Material Sciences Corp. 1,000 20,375
22,000
METALS & MINING - 1.3%
Aluminum Co. of America 1,100 55,138
Alcan Australia Ltd. 15,700 28,285
Comalco Ltd. 2,800 10,109
IMCO Recycling, Inc. 200 3,750
Reynolds Metals Co. 1,100 56,925
154,207
PAPER & FOREST PRODUCTS - 5.3%
Aracruz Celulose SA ADR 3,966 46,601
Boise Cascade Corp. 2,700 109,350
Cascades, Inc. (a) 6,500 34,927
Consolidated Papers, Inc. 800 46,100
Georgia-Pacific Corp. 200 17,350
Harmac Pacific, Inc.
(2nd Installment Receipt) 1,400 14,918
International Paper Co. 1,400 120,050
Mead Corp. 1,100 65,313
Pope & Talbot, Inc. 200 3,250
Smurfit (Jefferson) Group PLC 400 1,202
Union Camp Corp. 3,200 185,200
644,261
TOTAL BASIC INDUSTRIES 976,109
CONGLOMERATES - 0.9%
Harris Corp. 500 25,813
Tyco International Ltd. 1,600 86,400
112,213
CONSTRUCTION & REAL ESTATE - 0.4%
BUILDING MATERIALS - 0.1%
Vulcan Materials Co. 200 10,900
REAL ESTATE INVESTMENT TRUSTS - 0.3%
Glimcher Realty Trust 100 2,075
National Golf Properties, Inc. 400 8,397
Shurgard Storage Centers, Inc. 400 9,150
Sovran Self Storage 100 2,300
Speiker Properties, Inc. 400 8,950
Starwood Lodging Trust combined
certificate (SBI) 100 2,300
33,172
TOTAL CONSTRUCTION & REAL ESTATE 44,072
SHARES VALUE (NOTE 1)
DURABLES - 2.5%
AUTOS, TIRES, & ACCESSORIES - 2.2%
Bandag, Inc. 300 $ 18,750
Borg-Warner Automotive, Inc. 500 14,250
Chrysler Corp. 1,100 52,663
Goodyear Tire & Rubber Co. 600 24,750
Johnson Controls, Inc. 600 33,900
Michelin SA Cie Generale des
Etablissements, Class B 900 39,948
Snap-on Tools Corp. 700 27,125
Suzuki Motor Corp. 1,000 11,164
TRW, Inc. 500 39,938
262,488
HOME FURNISHINGS - 0.0%
Heilig-Meyers Co. 100 2,477
TEXTILES & APPAREL - 0.3%
Galey & Lord, Inc. 100 1,388
Unifi, Inc. 1,500 36,000
37,388
TOTAL DURABLES 302,353
ENERGY - 2.6%
ENERGY SERVICES - 0.3%
Transocean Drilling AS 2,700 36,845
OIL & GAS - 2.3%
Amerada Hess Corp. 500 24,438
Atlantic Richfield Co. 300 32,925
Berry Petroleum Co. Class A 300 2,925
British Petroleum PLC ADR 900 77,063
Coastal Corp. (The) 1,200 36,450
Imperial Oil Ltd. 600 22,295
Morrison Petroleums Ltd. 200 1,403
Pancanadian Petroleum Ltd. 1,300 44,517
Santa Fe Energy Resources, Inc. 700 6,650
Wascana Energy, Inc. 3,500 30,282
278,948
TOTAL ENERGY 315,793
FINANCE - 0.9%
BANKS - 0.9%
Deutsche Bank AG 2,300 111,882
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
AMSCO International, Inc. 900 12,488
INDUSTRIAL MACHINERY & EQUIPMENT - 1.8%
ELECTRICAL EQUIPMENT - 0.5%
California Microwave Corp. 100 2,513
Mitsubishi Electric Co. Ord. 3,000 21,122
Omron Corp. 2,000 38,275
61,910
INDUSTRIAL MACHINERY & EQUIPMENT - 1.1%
Caterpillar, Inc. 1,700 109,225
Varlen Corp. 1,210 28,435
137,660
POLLUTION CONTROL - 0.2%
WMX Technologies, Inc. 400 11,350
Wheelabrator Technologies, Inc. 500 7,688
19,038
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 218,608
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 0.1%
LEISURE DURABLES & TOYS - 0.1%
Hasbro, Inc. 300 $ 9,525
NONDURABLES - 0.1%
FOODS - 0.0%
Flowers Industries, Inc. 200 3,950
HOUSEHOLD PRODUCTS - 0.1%
Clorox Co. 100 6,525
TOTAL NONDURABLES 10,475
PRECIOUS METALS - 0.2%
Battle Mountain Gold Co. 1,000 9,625
Free State Consolidated Gold Mines Ltd.
Ord. 600 7,675
ADR 1,000 12,375
29,675
RETAIL & WHOLESALE - 1.9%
APPAREL STORES - 0.1%
Claire's Stores, Inc. 400 7,250
GENERAL MERCHANDISE STORES - 1.4%
Consolidated Stores Corp. 700 14,613
Mac Frugals Bargains Co., Inc. 900 15,750
Wal-Mart Stores, Inc. 5,100 136,425
166,788
GROCERY STORES - 0.3%
Great Atlantic & Pacific Tea Co., Inc. 300 7,913
Vons Companies, Inc. 1,500 30,188
38,101
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Pier 1 Imports, Inc. 1,100 10,175
TOTAL RETAIL & WHOLESALE 222,314
SERVICES - 0.2%
BET PLC Ord. 14,600 28,634
TECHNOLOGY - 4.2%
COMPUTER SERVICES & SOFTWARE - 0.2%
Policy Management Systems Corp. 300 13,875
SHL Systemhouse, Inc. 1,700 12,077
25,952
COMPUTERS & OFFICE EQUIPMENT - 2.0%
Apple Computer, Inc. 4,200 195,038
Tandem Computers, Inc. (a) 2,800 45,150
240,188
ELECTRONICS - 2.0%
Dallas Semiconductor Corp. 1,200 24,600
Hitachi Ltd. 7,000 69,876
Kyocera Corp. 1,000 82,457
Marshall Industries 600 20,100
Methode Electronics, Inc. Class A 700 13,650
Nitto Denko Corp. 2,000 31,187
241,870
TOTAL TECHNOLOGY 508,010
SHARES VALUE (NOTE 1)
UTILITIES - 2.4%
ELECTRIC UTILITY - 0.1%
Fuji Electric Co. Ltd. 3,000 $ 15,133
TELEPHONE SERVICES - 2.1%
Ameritech Corp. 100 4,400
Bell Atlantic Corp. 2,000 112,000
BellSouth Corp. 300 19,050
Koninklijke PPT Nederland 1,900 68,379
NYNEX Corp. 800 32,200
Southern New England
Telecommunications Corp. 500 17,625
253,654
WATER - 0.2%
Yorkshire Water Ord. 2,600 23,879
TOTAL UTILITIES 292,666
TOTAL COMMON STOCKS
(Cost $3,119,650) 3,228,901
CONVERTIBLE PREFERRED STOCKS - 4.2%
BASIC INDUSTRIES - 0.8%
METALS & MINING - 0.8%
Alumax, Inc., Series A, $4.00 200 26,600
Kaiser Aluminum Corp. despositary
shares representing 1/10 share,
Series A, $.65 3,200 30,800
Kaiser Aluminum Corp. $0.96 1,200 16,200
Reynolds Metals Co. $3.31 500 24,125
TOTAL BASIC INDUSTRIES 97,725
DURABLES - 0.4%
AUTOS, TIRES, & ACCESSORIES - 0.4%
Ford Motor Co. (Del.), Series A, $4.20 500 48,563
ENERGY - 1.8%
OIL & GAS - 1.8%
Occidental Petroleum Corp.
Indexed $3.00 2,000 118,500
Santa Fe Energy Resources, Inc. $.732 1,100 10,588
Unocal Corp. $3.50 (b) 1,600 86,400
TOTAL ENERGY 215,488
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT - 0.2%
Westinghouse Electric Corp. $1.30 (b) 1,400 20,475
PRECIOUS METALS - 0.0%
Newmont Mining Corp. depositary
shares representing 1/2 share,
$1.375 (b) 100 5,800
TECHNOLOGY - 1.0%
COMPUTERS & OFFICE EQUIPMENT - 1.0%
IBM France 5 3/4% 1,200 126,600
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $478,421) 514,651
CONVERTIBLE BONDS - 5.3%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B)
BASIC INDUSTRIES - 0.8%
PAPER & FOREST PRODUCTS - 0.8%
Domtar, Inc. 8%, 3/18/03 - $ 30,000 $ 44,372
Harmac Pacific, Inc. 8%,
10/5/04 - 16,000 14,747
Stone Container Corp.
8 7/8%, 7/15/00 (b) B2 20,000 39,600
TOTAL BASIC INDUSTRIES 98,719
CONSTRUCTION & REAL ESTATE - 0.2%
BUILDING MATERIALS - 0.1%
BPB Industries 7 1/4%,
8/25/08 - 11,000 22,275
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Liberty Property LP
8%, 7/1/01 - 11,000 10,780
TOTAL CONSTRUCTION & REAL ESTATE 33,055
DURABLES - 0.3%
CONSUMER ELECTRONICS - 0.3%
Whirlpool Corp. liquid
yield option notes 0%,
5/14/11 Baa1 94,000 38,540
ENERGY - 0.6%
OIL & GAS - 0.6%
Horsham Corp. 3 1/4%,
12/10/18 Ba2 83,000 73,870
FINANCE - 1.3%
BANKS - 0.1%
Bangkok Bank Public Ltd.
euro 3 1/4%, 3/3/04 (b) - 22,000 22,330
CREDIT & OTHER FINANCE - 0.1%
Huntingdon International
Holdings PLC 7 1/2%,
9/25/06 - 10,000 6,950
INSURANCE - 1.1%
Axa SA 6%, 1/1/01 - 300 94,000
Royal Insurance Holdings
PLC euro 7 1/4%,
12/12/07 - 20,000 34,742
128,742
TOTAL FINANCE 158,022
HEALTH - 0.5%
DRUGS & PHARMACEUTICALS - 0.5%
Roche Holdings, Inc. liquid
yield option notes 0%,
4/20/10 (b) - 140,000 56,000
MEDIA & LEISURE - 0.2%
PUBLISHING - 0.2%
Daily Mail General Trust PLC
8 3/4%, 9/27/05 - 7,000 18,193
TECHNOLOGY - 0.9%
COMPUTERS & OFFICE EQUIPMENT - 0.6%
NEC Corp. 1.90%, 3/30/01 A3 6,000,000 73,928
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B)
ELECTRONICS - 0.3%
Nitto Denko Corp.
3.90% 3/30/ 01 Baa1 $ 2,000,000 $ 27,100
United Microelectronics Corp.
1 1/4%, 6/8/04 - 4,000 6,800
33,900
TOTAL TECHNOLOGY 107,828
TRANSPORTATION - 0.4%
AIR TRANSPORTATION - 0.4%
Alaska Air Group, Inc.
6 1/2%, 6/15/05 Ba3 50,000 51,625
UTILITIES - 0.1%
WATER - 0.1%
Yorkshire Water PLC 6 3/4%
euro 9/23/08 - 7,000 11,494
TOTAL CONVERTIBLE BONDS
(Cost $629,539) 647,346
U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS - 35.9%
U.S. TREASURY OBLIGATIONS - 32.0%
U.S. Treasury Bills, yields at date
of purchase 5.37% to 5.75%,
7/20/95 to 8/31/95 Aaa 915,000 909,290
7 1/4%, 11/15/96 Aaa 141,000 143,732
6 3/4%, 6/30/99 Aaa 120,000 123,094
7 1/8%, 9/30/99 Aaa 370,000 385,263
7 3/4%, 12/31/99 Aaa 60,000 64,060
6 1/4%, 2/15/03 Aaa 1,017,000 1,019,705
9%, 11/15/18 Aaa 267,000 337,547
8 7/8%, 2/15/19 Aaa 100,000 125,016
8 1/8%, 8/15/19 Aaa 642,000 746,928
7 1/2%, 11/15/24 Aaa 15,000 16,596
3,871,231
U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.9%
Federal Home Loan Bank
discount 0%, 7/5/95 Aaa 100,000 100,000
Federal National Mortgage
Association discount 0%,
7/19/95 Aaa 380,000 379,091
479,091
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $4,276,693) 4,350,322
FOREIGN GOVERNMENT OBLIGATIONS (C) - 5.4%
French Government OAT
7 3/4%, 10/25/05 Aaa 450,000 93,616
Republic of France
8 1/2%, 10/25/08 Aaa 370,000 80,595
Treuhandanstalt:
6 5/8%, 7/9/03 Aaa 75,000 52,928
7 1/2%, 9/9/04 Aaa 190,000 141,236
FOREIGN GOVERNMENT OBLIGATIONS (C) - CONTINUED
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B)
United Kingdom, Great
Britain & Northern Ireland
9%, 10/13/08 Aaa $ 170,000 $ 281,908
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $670,502) 650,283
REPURCHASE AGREEMENTS - 22.5%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 (Note 3) $ 2,724,411 2,723,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $11,897,805) $ 12,114,503
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
2,069 AUD 9/7/95 $ 1,463 $ (36)
149,743 CAD 8/3/95 to 8/15/95 108,992 449
22,941 CHF 9/7/95 20,069 213
483,171 DEM 8/31/95 to 9/5/95 350,706 5,207
862,133 FRF 8/3/95 to 8/23/95 177,810 4,205
44,252,285 ITL 6/7/95 26,964 223
23,950,061 JPY 7/26/95 to 9/7/95 284,739 (883)
TOTAL CONTRACTS TO BUY
(Payable amount $961,365) $ 970,743 9,378
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 8.0%
CONTRACTS TO SELL
47,754 AUD 9/7/95 $ 33,773 237
379,030 CAD 8/3/95 to 8/15/95 275,897 274
22,941 CHF 9/7/95 20,069 (69)
483,171 DEM 8/31/95 to 9/5/95 350,706 (5,403)
862,133 FRF 8/3/95 to 8/23/95 177,810 (9,131)
44,252,285 ITL 8/10/95 26,964 61
23,950,061 JPY 7/26/95 to 9/7/95 284,739 (2,120)
TOTAL CONTRACTS TO SELL
(Receivable amount $1,153,807) $ 1,169,958 (16,151)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 9.7%
$ (6,773)
CURRENCY ABBREVIATIONS
AUD - Australian dollar
CAD - Canadian dollar
CHF - Swiss franc
DEM - German deutsche mark
FRF - French franc
ITL - Italian lira
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) 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 $230,605 or 1.9% of net
assets.
(c) Some foreign government obligations have not been individually rated by
S&P or Moody's. The ratings listed are assigned to securities by FMR, the
fund's investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $12,887,112 and $5,164,750, respectively, of which U.S.
government and government agency obligations aggregated $5,550,639 and
$2,696,534, respectively.
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 28.1% AAA, AA, A 26.1%
Baa 0.5% BBB 0.0%
Ba 1.0% BB 0.0%
B 0.3% B 0.7%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
For some foreign government obligations, FMR has assigned the ratings of
the sovereign credit of the issuing government. The percentage not rated by
either S&P or Moody's amounted to 1.8%.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 82.9%
United Kingdom 4.0
Japan 3.1
France 2.8
Germany 2.5
Canada 2.4
Others (individually less than 1%) 2.3
TOTAL 100.0%
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $11,897,805. Net unrealized appreciation aggregated
$216,698, of which $286,418 related to appreciated investment securities
and $69,719 related to depreciated investment securities.
FIDELITY ADVISOR ANNUITY FUND: INCOME & GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $2,723,000) (cost $11,897,805) - See $ 12,114,503
accompanying schedule
Cash 830
Receivable for investments sold 333,419
Unrealized appreciation on foreign currency contracts 11,771
Receivable for closed foreign currency contracts 1,300
Receivable for fund shares sold 196,439
Dividends receivable 8,996
Interest receivable 88,675
TOTAL ASSETS 12,755,933
LIABILITIES
Payable for investments purchased $ 629,863
Unrealized depreciation on foreign currency contracts 18,544
Payable for closed foreign currency contracts 494
Accrued management fee 4,152
Other payables and accrued expenses 20,472
TOTAL LIABILITIES 673,525
NET ASSETS $ 12,082,408
Net Assets consist of:
Paid in capital $ 11,735,208
Undistributed net investment income 73,553
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 63,443
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 210,204
NET ASSETS, for 1,124,562 shares outstanding $ 12,082,408
NET ASSET VALUE, offering price and redemption price per share ($12,082,408 (divided by) 1,124,562 shares) $10.74
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 3, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 16,211
Dividends
Interest 88,239
TOTAL INCOME 104,450
EXPENSES
Management fee $ 10,430
Transfer agent fees 1,263
Accounting fees and expenses 22,322
Custodian fees and expenses 8,325
Registration fees 4,047
Audit 7,595
Miscellaneous 25
Total expenses before reductions 54,007
Expense reductions (23,110 30,897
)
NET INVESTMENT INCOME 73,553
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 69,311
Foreign currency transactions (5,868 63,443
)
Change in net unrealized appreciation (depreciation) on:
Investment securities 216,698
Assets and liabilities in foreign (6,494 210,204
currencies )
NET GAIN (LOSS) 273,647
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 347,200
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 73,553
Net investment income
Net realized gain (loss) 63,443
Change in net unrealized appreciation (depreciation) 210,204
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 347,200
Share transactions 11,735,405
Net proceeds from sales of shares
Cost of shares redeemed (197)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 11,735,208
TOTAL INCREASE (DECREASE) IN NET ASSETS 12,082,408
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $73,553) $ 12,082,408
OTHER INFORMATION
Shares
Sold 1,124,581
Redeemed (19)
Net increase (decrease) 1,124,562
</TABLE>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
FINANCIAL HIGHLIGHTS
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .07
Net realized and unrealized gain (loss) .67
Total from investment operations .74
Net asset value, end of period $ 10.74
TOTAL RETURN B, C 7.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 12,082
Ratio of expenses to average net assets 1.50% A
Ratio of expenses to average net assets before expense reductions 2.50% A, D
Ratio of net investment income to average net assets 3.54% A
Portfolio turnover rate 367% A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 7 OF NOTES TO FINANCIAL
STATEMENTS).
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
FIDELITY ADVISOR ANNUITY FUND: GROWTH OPPORTUNITIES FUND
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period shown, the total return would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JUNE 30, 1995 LIFE OF
FUND
GROWTH OPPORTUNITIES 17.90%
S&P 500 20.21%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on January 3,
1995.
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)
You can compare the fund's return to the performance of the Standard &
Poor's Composite Index of 500 Stocks- a common proxy for the U.S. stock
market. This benchmark includes reinvested dividends and capital gains, if
any, and excludes the effects of sales charges.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
Past performance is no guarantee of future results. Principal and
investment return will vary and you may have a gain or loss when you
withdraw your money.
$10,000 OVER LIFE OF FUND
FA Annuity Growth Standard & Poor's
01/03/95 10000.00 10000.00
01/31/95 10060.00 10259.30
02/28/95 10370.00 10659.10
03/31/95 10560.00 10973.66
04/30/95 10930.00 11296.83
05/31/95 11440.00 11748.36
06/30/95 11790.00 12021.28
Let's say you invested $10,000 in Growth Opportunities Fund on January 3,
1995, when the fund started. By June 30, 1995, your investment would have
grown to $11,790 - a 17.90% increase. That compares to $10,000 invested in
the S&P 500, which would have grown to $12,021 over the same period - a
20.21% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Philip Morris Companies, Inc. 4.6
General Motors Corp. 3.9
Intel Corp. 3.9
Compaq Computer Corp. 3.7
Chrysler Corp. 2.6
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Technology 15.2
Finance 14.6
Durables 8.5
Utilities 6.4
Nondurable 5.7
ASSET ALLOCATION AS OF JUNE 30, 1995
Row: 1, Col: 1, Value: 18.2
Row: 1, Col: 2, Value: 10.6
Row: 1, Col: 3, Value: 50.0
Row: 1, Col: 4, Value: 21.2
Stocks 71.2%
Bonds 10.6%
Short-term investments 18.2%
FIDELITY ADVISOR ANNUITY FUND: GROWTH OPPORTUNITIES FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
George A. Vanderheiden, Portfolio Manager of Fidelity Advisor Annuity
Growth Opportunities Fund
Q. GEORGE, HOW HAS THE FUND PERFORMED?
A. Since the fund's inception on January 3, 1995, the S&P 500 Index had a
total return of 20.21. The fund's performance slightly trailed the index
during the period. For the six months ended June 30, 1995, the Standard &
Poor's 500 index had a total return of 20.01% and the fund's performance
slightly trailed the index during the period.
Q. WHAT ARE SOME OF THE FUND'S GROWTH POSITIONS?
A. In the technology sector the fund has important positions in personal
computer stocks including Compaq, Intel and Microsoft. Compaq is among the
lowest cost manufacturers of personal computers, and has rapidly grown
market share over the past few years. It has a debt-free balance sheet and
is selling at a modest price-earnings ratio of around 11 times trailing
earnings versus the S&P 500 ratio of 17 times. While Compaq assembles the
PC, Intel makes the brains of the machine - the microprocessor. Intel is
now distributing its fifth generation of microprocessors, the Pentium, and
it should provide a boost to earnings. As Intel is the dominant supplier of
microprocessors, Microsoft is the dominant supplier of PC software. Other
important growth positions Vodafone, the largest cellular phone company
outside North America; Motorola, the largest supplier of cellular
equipment; and Wal-Mart.
Q. WHAT ABOUT THE FUND'S POSITION IN AUTOS?
A. I lately have re-acquired a large position in two auto stocks, GM and
Chrysler. The stocks have declined over the past year and are already
anticipating a decline in auto sales. If this economic cycle does in fact
turn into an extended cycle like I think it will, auto sales will plateau
at a high level and the auto companies should be able to generate
substantial excess cash flow over the next two years. They will use this
cash to increase dividends and repurchase stock.
Q. HAVE YOU UNCOVERED ANY OVERALL THEMES IN THE MARKET?
A. Yes. Something's happening to corporate income statements and balance
sheets that was not fully anticipated. Cash flow is going through the roof.
As a result of two trends - namely the right-sizing of factories during the
past recession and better working capital management - earnings and cash
flow have exploded in this recovery. Liquidity is also surging in banks. In
fact, the banks used their excess liquidity to make record share
repurchases last year. There were 134 buyback announcements for a total of
$9.4 billion in stock. This is why I think the capital spending theme is
not over - companies have lots of cash and instead of letting it pile up on
the balance sheet and attract unwanted attention, they will increasingly be
inclined to use it to buy back shares and to expand capacity. I continue to
think that this is the decade that capital goods stocks will excel at the
expense of consumer goods stocks.
Q. SOME MARKET COMMENTATORS SAY THAT THE MARKET IS DANGEROUSLY HIGH,
SELLING AT 37 TIMES DIVIDENDS. THE ONLY OTHER TIME THIS HAPPENED WAS IN
1973 AND 1987, AND WAS FOLLOWED BY LARGE DECLINES.
A. I admit dividend yields are low and this is troublesome - troublesome if
you only look at dividend yields. The truth of the matter is that dividends
are paid out of earnings and earnings are very healthy. Over the past 70
years, companies have paid out 40%-60% of their earnings in dividends,
averaging about 55% in recent years. The current dividend payout rate is
about 41% - at the bottom of the range. The other two periods when the
dividend yield was low, 1973 and 1987, payout ratios were over 50% and are
not comparable to current payout ratios. Instead of using excess earnings
to reward shareholders with larger dividends, corporations are using the
cash to enhance shareholder value by repurchasing their stocks. Yes,
dividend yields are low, but price-earnings ratios are also low. As long as
earnings continue to grow, I'm not overly worried about the dividend yield.
Remember, it's a market of stocks, and opportunities are always available
as long as one chooses to seek them out.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Given that the market has soared during the past six months, its logical
to expect some consolidation over the coming months. I will use this period
to reduce holding in non-cyclical stocks and increase weightings in
economy-sensitive stocks, especially those that are poised for growth.
However, over the long term I expect the economy and corporate earnings to
continue growing at slower but more sustainable rates. I also expect
inflation to remain subdued as inventory accumulation abates and reverses.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing primarily in common
stocks with above-average growth potential
START DATE: January 3, 1995
SIZE: as of June 30, 1995, more than $38 million
MANAGER: George Vanderheiden, since
January, 1995; manager, Advisor Growth
Opportunities since 1987; also manages Destiny
I and Destiny II funds; joined Fidelity in 1971
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: GROWTH OPPORTUNITIES FUND
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 71.2%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.5%
AEROSPACE & DEFENSE - 0.6%
Boeing Co. 3,600 $ 225,435
DEFENSE ELECTRONICS - 0.9%
Loral Corp. 1,100 56,925
Raytheon Co. 4,000 310,500
367,425
TOTAL AEROSPACE & DEFENSE 592,860
BASIC INDUSTRIES - 2.3%
CHEMICALS & PLASTICS - 0.6%
Raychem Corp. 6,200 237,925
METALS & MINING - 0.8%
Reynolds Metals Co. 6,100 315,675
PACKAGING & CONTAINERS - 0.9%
Corning, Inc. 3,400 111,350
Owens-Illinois, Inc. 17,100 222,300
333,650
TOTAL BASIC INDUSTRIES 887,250
CONSTRUCTION & REAL ESTATE - 0.7%
BUILDING MATERIALS - 0.4%
Armstrong World Industries, Inc. 1,600 80,200
Tecumseh Products Co. Class A 1,800 79,200
159,400
ENGINEERING - 0.3%
Fluor Corp. 2,000 104,000
TOTAL CONSTRUCTION & REAL ESTATE 263,400
DURABLES - 8.5%
AUTOS, TIRES, & ACCESSORIES - 8.0%
Chrysler Corp. 21,200 1,014,950
Dana Corp. 4,700 134,538
Discount Auto Parts, Inc. 2,700 68,513
Eaton Corp. 1,900 110,438
Ford Motor Co. 3,400 101,150
General Motors Corp. 32,800 1,537,500
Magna International, Inc. Class A 4,300 190,719
3,157,808
CONSUMER ELECTRONICS - 0.5%
Black & Decker Corp. 1,700 52,488
Whirlpool Corp. 2,400 132,000
184,488
TOTAL DURABLES 3,342,296
ENERGY - 5.5%
ENERGY SERVICES - 0.5%
Schlumberger Ltd. 3,100 192,588
OIL & GAS - 5.0%
Amerada Hess Corp. 3,800 185,725
Amoco Corp. 2,000 133,250
Atlantic Richfield Co. 1,300 142,675
British Petroleum PLC ADR 5,904 505,530
Burlington Resources, Inc. 6,400 236,000
Canada Occidental Petroleum Ltd. 2,300 71,430
Kerr-McGee Corp. 2,600 139,425
Louisiana Land & Exploration Co. 4,300 171,463
Texaco, Inc. 1,100 72,188
Tosco Corp. 3,700 117,938
Unocal Corp. 6,900 190,613
1,966,237
TOTAL ENERGY 2,158,825
SHARES VALUE (NOTE 1)
FINANCE - 14.6%
BANKS - 5.8%
Bank of Boston Corp. 3,100 $ 116,250
Barnett Banks, Inc. 3,000 153,750
Comerica, Inc. 2,700 86,738
First Union Corp. 5,700 257,925
Fleet Financial Group, Inc. 17,700 657,113
Keycorp 2,900 90,988
NationsBank Corp. 4,500 241,313
Shawmut National Corp. 18,600 592,875
State Street Boston Corp. 2,100 77,438
2,274,390
FEDERAL SPONSORED CREDIT - 6.6%
Federal Home Loan Mortgage
Corporation 6,400 440,000
Federal National Mortgage Association 23,000 2,170,625
2,610,625
INSURANCE - 1.4%
Allstate Corp. 6,500 192,563
General Re Corp. 1,700 227,588
Providian Corp. 1,800 65,250
Torchmark Corp. 2,200 83,050
568,451
SAVINGS & LOANS - 0.3%
Ahmanson (H.F.) & Co. 4,600 101,200
SECURITIES INDUSTRY - 0.5%
Merrill Lynch & Co., Inc. 1,100 57,750
Nomura Securities Co. Ltd. 6,000 104,903
Salomon, Inc. 1,300 52,163
214,816
TOTAL FINANCE 5,769,482
HEALTH - 1.8%
DRUGS & PHARMACEUTICALS - 0.4%
Elan Corp. PLC ADR 2,800 114,100
Schering-Plough Corp. 1,300 57,363
171,463
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Baxter International, Inc. 4,000 145,500
MEDICAL FACILITIES MANAGEMENT - 1.0%
Columbia/HCA Healthcare Corp. (a) 9,100 393,575
TOTAL HEALTH 710,538
INDUSTRIAL MACHINERY & EQUIPMENT - 2.4%
ELECTRICAL EQUIPMENT - 0.6%
General Electric Co. 1,900 107,113
Mitsubishi Electric Co. Ord. 17,000 119,693
226,806
INDUSTRIAL MACHINERY & EQUIPMENT - 1.8%
Caterpillar, Inc. 5,800 372,650
Deere & Co. 3,900 333,938
706,588
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 933,394
MEDIA & LEISURE - 1.0%
BROADCASTING - 0.2%
Tele-Communications, Inc. Class A 3,100 72,656
ENTERTAINMENT - 0.1%
Royal Carribean Cruises Ltd. 1,900 41,800
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.4%
Fleetwood Enterprises, Inc. 8,400 $ 165,900
RESTAURANTS - 0.3%
McDonald's Corp. 3,200 125,200
TOTAL MEDIA & LEISURE 405,556
NONDURABLES - 5.7%
HOUSEHOLD PRODUCTS - 0.1%
Tambrands, Inc. 1,100 47,025
TOBACCO - 5.6%
Philip Morris Companies, Inc. 24,200 1,799,875
RJR Nabisco Holdings Corp. 14,760 411,435
2,211,310
TOTAL NONDURABLES 2,258,335
PRECIOUS METALS - 0.1%
Santa Fe Pacific Gold Corp. 4,300 52,138
RETAIL & WHOLESALE - 4.1%
GENERAL MERCHANDISE STORES - 2.3%
Federated Department Stores, Inc. (a) 4,200 108,150
Sears, Roebuck & Co. 3,300 197,588
Wal-Mart Stores, Inc. 21,800 583,150
888,888
RETAIL & WHOLESALE, MISC - 1.8%
Best Buy Co., Inc. 5,200 138,450
Circuit City Stores, Inc. 4,800 151,800
Home Depot, Inc. 4,900 199,063
Office Depot, Inc. 2,800 78,750
Officemax, Inc. 2,900 80,838
Toys "R" Us, Inc. (a) 1,800 52,650
701,551
TOTAL RETAIL & WHOLESALE 1,590,439
TECHNOLOGY - 15.2%
COMPUTER SERVICES & SOFTWARE - 0.9%
Microsoft Corp. 4,000 361,500
COMPUTERS & OFFICE EQUIPMENT - 8.0%
Bay Networks, Inc. 5,200 215,150
Compaq Computer Corp. 32,200 1,461,075
Digital Equipment Corp. 2,500 101,875
Hewlett-Packard Co. 3,200 238,400
International Business Machines Corp. 10,300 988,800
SCI Systems, Inc. 100 2,500
Sun Microsystems, Inc. 2,400 116,400
3,124,200
ELECTRONICS - 6.3%
Hitachi Ltd. 13,000 129,770
Intel Corp. 24,000 1,519,500
Methode Electronics, Inc. Class A 12,100 235,950
Motorola, Inc. 3,700 248,363
Solectron Corp. (a) 9,900 337,838
2,471,421
TOTAL TECHNOLOGY 5,957,121
TRANSPORTATION - 1.4%
RAILROADS - 1.4%
Burlington Northern, Inc. 1,800 114,075
CSX Corp. 2,200 165,275
SHARES VALUE (NOTE 1)
Canadian Pacific Ltd. Ord. 4,600 $ 79,180
Southern Pacific Rail Corp. 11,800 185,850
544,380
UTILITIES - 6.4%
CELLULAR - 2.7%
AirTouch Communications, Inc. 5,000 142,500
Vodafone Group PLC sponsored ADR 24,100 912,788
1,055,288
ELECTRIC UTILITY - 0.1%
Consolidated Edison Co. of
New York, Inc. 1,400 41,300
TELEPHONE SERVICES - 3.6%
Ameritech Corp. 6,800 299,200
Bell Atlantic Corp. 3,300 184,800
BellSouth Corp. 3,800 241,300
NYNEX Corp. 3,800 152,950
SBC Communications, Inc. 9,100 433,388
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 3,100 91,838
1,403,476
TOTAL UTILITIES 2,500,064
TOTAL COMMON STOCKS
(Cost $26,250,903) 27,966,078
U.S. TREASURY OBLIGATIONS - 10.6%
PRINCIPAL
AMOUNT
U.S. Treasury Bonds:
8 1/8%, 8/15/19 $ 3,435,000 3,996,416
stripped principal 0%, 8/15/19 827,000 158,065
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,954,478) 4,154,481
REPURCHASE AGREEMENTS - 18.2%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 $ 7,168,714 7,165,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $37,370,381) $ 39,285,559
LEGEND
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $30,778,340 and $711,841, respectively, of which U.S. government
and government agency obligations aggregated $3,951,280 and $0,
respectively.
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $37,370,381. Net unrealized appreciation aggregated
$1,915,178, of which $2,174,471 related to appreciated investment
securities and $259,293 related to depreciated investment securities.
FIDELITY ADVISOR ANNUITY FUND: GROWTH OPPORTUNITIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $7,165,000) (cost $37,370,381) - See $ 39,285,559
accompanying schedule
Cash 56
Receivable for fund shares sold 922,466
Dividends receivable 60,716
Interest receivable 104,082
TOTAL ASSETS 40,372,879
LIABILITIES
Payable for investments purchased $ 2,035,302
Accrued management fee 15,090
Other payables and accrued expenses 40,683
TOTAL LIABILITIES 2,091,075
NET ASSETS $ 38,281,804
Net Assets consist of:
Paid in capital $ 36,094,929
Undistributed net investment income 135,921
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 135,775
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 1,915,179
NET ASSETS, for 3,246,549 shares outstanding $ 38,281,804
NET ASSET VALUE, offering price and redemption price per share ($38,281,804 (divided by) 3,246,549 shares) $11.79
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 3, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 96,750
Dividends
Interest 121,644
TOTAL INCOME 218,394
EXPENSES
Management fee $ 32,926
Transfer agent fees 2,753
Accounting fees and expenses 24,419
Custodian fees and expenses 9,342
Registration fees 12,447
Audit 9,113
Miscellaneous 5
Total expenses before reductions 91,005
Expense reductions (8,532 82,473
)
NET INVESTMENT INCOME 135,921
REALIZED AND UNREALIZED GAIN (LOSS) 135,775
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on:
Investment securities 1,915,178
Assets and liabilities in foreign 1 1,915,179
currencies
NET GAIN (LOSS) 2,050,954
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,186,875
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 135,921
Net investment income
Net realized gain (loss) 135,775
Change in net unrealized appreciation (depreciation) 1,915,179
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,186,875
Share transactions 36,094,929
Net proceeds from sales of shares
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 36,094,929
TOTAL INCREASE (DECREASE) IN NET ASSETS 38,281,804
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $135,921) $ 38,281,804
OTHER INFORMATION 3,246,549
Shares sold
</TABLE>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
FINANCIAL HIGHLIGHTS
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .04
Net realized and unrealized gain (loss) 1.75
Total from investment operations 1.79
Net asset value, end of period $ 11.79
TOTAL RETURN B, C 17.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 38,282
Ratio of expenses to average net assets 1.49% A
Ratio of expenses to average net assets before expense reductions 1.65% A
Ratio of net investment income to average net assets 2.46% A
Portfolio turnover rate 14% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
FIDELITY ADVISOR ANNUITY FUND: OVERSEAS FUND
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period shown, the total return would be
lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED JUNE 30, 1995 LIFE OF
FUND
OVERSEAS 6.10%
Morgan Stanley EAFE Index 2.60%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, since the fund started on January 3,
1995.
UNDERSTANDING PERFORMANCE
Many markets around the globe offer the potential
for significant growth over time; however,
investing in foreign markets means assuming
greater risks than investing in the United States.
Factors like changes in a country's financial
markets, its local political and economic
climate, and the fluctuating value of its currency
create these risks. For these reasons an
international fund's performance may be more
volatile than a fund that invests exclusively in the
United States.
(checkmark)
You can compare the fund's return to the performance of the Morgan Stanley
EAFE index - a broad measure of the performance of stocks in Europe,
Australia, and the Far East. This benchmark includes reinvested dividends
and capital gains, if any, and excludes the effects of sales charges.
PERFORMANCE NUMBERS ARE NET OF ALL FUND OPERATING EXPENSES, BUT DO NOT
INCLUDE ANY INSURANCE CHARGES IMPOSED BY YOUR INSURANCE COMPANY'S SEPARATE
ACCOUNT. IF PERFORMANCE INFORMATION INCLUDED THE EFFECT OF THESE ADDITIONAL
CHARGES, IT WOULD HAVE BEEN LOWER.
Past performance is no guarantee of future results. Principal and
investment return will vary and you may have a gain or loss when you
withdraw your money. Foreign investments involve greater risks and
potential rewards than U.S. investments. These risks include political and
economic uncertainties of foreign countries, as well as the risk of
currency fluctuations.
$10,000 OVER LIFE OF FUND
FA Annuity OverseEurope, Australia
01/03/95 10000.00 10000.00
01/31/95 9920.00 9615.85
02/28/95 9930.00 9588.25
03/31/95 10230.00 10186.28
04/30/95 10460.00 10569.37
05/31/95 10470.00 10443.38
06/30/95 10610.00 10260.24
Let's say you invested $10,000 in Overseas Fund on January 3, 1995, when
the fund started. By June 30, 1995, your investment would have grown to
$10,610 - a 6.10% increase. That compares to $10,000 invested in the Morgan
Stanley EAFE Index, which would have grown to $10,260 over the same period
- - a 2.60% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Nestle SA (Reg.) 1.7
Canon, Inc. 1.6
CIBA-GEIGY AG (Reg.) 1.3
Deutsche Bank AG 1.3
C.S. Holdings (Reg.) 1.2
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS
Finance 19.2
Nondurables 6.9
Durables 6.6
Technology 6.4
Utilities 6.3
GEOGRAPHIC DIVERSIFICATION AS OF JUNE 30, 1995
(BY LOCATION OF ISSUER) % OF FUND'S
INVESTMENTS
Japan 16.8
United Kingdom 8.4
Switzerland 7.9
Germany 7.0
France 5.2
FIDELITY ADVISOR ANNUITY FUND: OVERSEAS FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
John Hickling, Portfolio Manager of Fidelity Advisor Annuity Overseas Fund
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. For the six months ended June 30, 1995, the fund's performance topped
that of the Morgan Stanley EAFE index - a broad measure of stocks in
Europe, Australia and the Far East. The index had a total return of 2.60%
for the six-month period.
Q. WHAT WERE THE KEYS TO THE FUND'S PERFORMANCE?
A. First of all, I kept the fund fully invested through much of the period.
Second, some of the stocks I picked in Japan and Europe fared well. And
finally, the fund was able to benefit from new positions in emerging market
investments.
Q. GRANTED, THE FUND PERFORMED BETTER THAN THE INDEX. AT THE SAME TIME, WHY
DID THE EAFE INDEX OFFER A RELATIVELY LOW RETURN?
A. While the European markets have fared relatively well - though not as
well as the U.S. market - emerging markets and Japan have not. Japan was
affected by a number of factors that dampened investor enthusiasm during
the period, even though some of them may have occurred before it - the
Barings debacle, the Kobe earthquake and the subway gas attack. Alone,
these occurrences would have had fleeting impact, but together they set a
negative tone. The Japanese market also was hurt by the strength of the yen
versus the dollar. On the heels of Mexico's devaluation of the peso in late
1994, emerging markets also struggled, although they appear to have pretty
much bottomed out.
Q. WHAT'S THE STORY BEHIND THE FUND'S INVESTMENTS IN JAPAN?
A. Even though Japan has the highest country representation in the fund,
I've kept the fund underweighted there, relative to the index. I've focused
much of the fund's investments on technology, including consumer electronic
companies - such as Toshiba and Hitachi - and other manufacturers and
exporters that are poised to take advantage of economic activity both in
Japan and globally. While the technology sector has done well in the U.S.,
it has been weak in Japan, where I found valuations to be attractive. The
sector recently has shown some strong gains. In addition, I've targeted
some financial stocks, such as Nomura Securities and Sumitomo Trust. The
Japanese market has started to pick up a bit lately, and Nomura is poised
to take advantage because it has been cutting costs aggressively. It
appears the trust banks will be able to improve interest margins - the
difference between what they charge for loans and what they pay to
depositors - because of changing regulations.
Q. THE FUND IS OVERWEIGHTED IN EUROPE, RELATIVE TO THE INDEX. WHERE HAVE
YOU FOUND OPPORTUNITIES THERE?
A. Mainly in financial and consumer nondurable stocks, as well as interest
rate-sensitive issues - because European bond markets have been rallying -
and cyclicals - those that tend to rise and fall with the economy. The
European markets have rallied lately, mainly on the strength of the
technology sector. In the short run, I've missed some opportunity there,
because I found the tech stocks to be too expensive and risky, and thus
didn't own them. Some of the appealing consumer nondurable names have been
Guinness, Cadbury-Schweppes, Bass and Nestle. Barclay's, National
Westminster, Swiss Bank and C.S. Holdings were among the fund's financial
stock investments. I've added investments in cyclical stocks because they
got cheap, such as paper companies Mo Och Domsjoe and Svenska Cellulosa;
auto stocks Volvo and Porsche; and tire companies such as Michelin.
Q. WHAT ABOUT THE FUND'S EMERGING MARKET INVESTMENTS?
A. I've been more active there because, as I said, I felt they had hit
bottom, and there were a lot of very interesting stocks. Among the stocks
that have caught my eye have been Hong Kong/Shanghai Bank (HSBC) and Hong
Kong Land Holdings; Philippine Long Distance Telephone; cigarette
manufacturer Gudang Garam in Indonesia; Krung Thai Bank; Telecom Argentina;
and Mexican companies Bancomer, Telmex, Cemex and Grupo Carso.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Several factors are important to consider. First of all, it seems most
stock markets reflect the sentiment that any worldwide recession will stay
pretty shallow and that growth will resume. Of course, this is the best
possible scenario, with interest rates coming down, inflation under control
and earnings progressing. At the same time, if the U.S. market stumbles,
one would expect there to be a drop in foreign markets. In such a scenario,
I believe overseas markets wouldn't drop as far as the U.S., because they
haven't gained as much, but it's impossible to say for sure. How the dollar
does also will be important. Going forward, I'll stay with my usual game
plan, looking for opportunities in any markets that appear to have
excellent value.
FUND FACTS
GOAL: to increase the value of the fund's
shares by investing mainly in stocks in
Europe, the Far East, and the Pacific Basin
START DATE: January 3, 1995
SIZE: as of June 30, 1995, more than $5 million
MANAGER: John Hickling, since January 1995;
joined Fidelity in 1982
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: OVERSEAS FUND
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 67.2%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.5%
Telecom Argentina sponsored ADR
Class B 400 $ 18,200
YPF Sociedad Anonima sponsored ADR
representing Class D shares 400 7,552
25,752
AUSTRALIA - 0.6%
Brambles Industries Ltd. 2,000 18,924
Westpac Banking Corp. 2,800 10,129
29,053
BELGIUM - 0.8%
Bekaert SA 35 27,945
Delhaize Freres & Cie Le Lion SA 250 11,426
39,371
CANADA - 0.2%
Midland Walwyn, Inc. 1,000 7,832
CHILE - 0.2%
Vina Concha Stet y Toro SA
sponsored ADR 600 11,625
FINLAND - 1.6%
Kymmene Corp. 400 12,472
Pohjola Class B 3,000 47,122
Valmet Corp. OY Ord. 1,000 22,623
82,217
FRANCE - 5.2%
Accor SA 90 12,009
Axa SA 808 43,725
BQE National Paris Ord. 720 34,799
Club Mediterranee SA Ord. 400 40,855
Compagnie Bancaire Ord. 110 13,178
Elf Aquitaine 200 14,809
Generale des Eaux 300 33,461
IMETAL SA Ord. 100 11,773
L'Oreal Co. Ord. 50 12,568
Michelin SA Cie Generale des
Etablissements, Class B 700 31,071
Total SA Class B 270 16,284
264,532
GERMANY - 5.5%
Asko 50 31,271
Bayerische Vereinsbank AG Ord. 100 30,367
Continental Gummi-Werke AG 100 14,535
Deutsche Bank AG 1,400 68,102
Duerr Beteiligungs AG (RFD) 30 10,663
Hoechst, AG Ord. 100 21,629
Karstadt AG 100 43,939
Kaufhof Holding AG 130 46,487
Veba AG Ord. 30 11,803
278,796
HONG KONG - 1.5%
Consolidated Electric Power Asia Ltd. 4,000 9,279
HSBC Holdings PLC 1,100 14,109
Hong Kong Land Holdings Ltd. 5,000 9,100
Peregrine Investments HoldingsLtd. 20,000 28,432
Sun Hung Kai Properties Ltd. 2,000 14,798
75,718
SHARES VALUE (NOTE 1)
INDONESIA - 0.9%
Gudang Garam PT Perusahaan 4,000 $ 30,714
Sampoerna Hanjaya Mandala
(For. Reg.) 2,000 15,716
46,430
IRELAND - 1.2%
Aran Energy (a) 15,000 9,447
Bank of Ireland U.S. Holdings, Inc. 3,800 21,813
Fyffes PLC 10,000 18,257
Waterford Wedgwood PLC Unit 16,400 13,990
63,507
ITALY - 0.7%
Fiat Spa 5,000 17,687
Italgas Spa 7,500 19,539
37,226
JAPAN - 16.8%
Aida Engineering Ltd. Ord. 4,000 27,265
Amada Metrecs Co. Ltd. 1,000 12,877
Bridgestone Corp. 1,000 14,767
Canon, Inc. 5,000 81,512
East Japan Railway Co. Ord. 4 20,555
Fuji Photo Film Co. Ltd. 1,000 23,745
Fujitsu Ltd. 2,000 19,965
Hitachi Ltd. 5,000 49,911
Honda Motor Co. Ltd. 3,000 46,072
Mitsubishi Trust & Banking Corp. 1,000 14,176
Mori Seiki Co. Ltd. Ord. 1,000 17,838
Murata Mfg. Co. Ltd. 1,000 37,921
Nikko Securities Co. Ltd. 1,000 8,128
Nippon Telegraph & Telephone
Corp. Ord. 2 16,775
Nitto Denko Corp. 1,000 15,594
Nomura Securities Co. Ltd. 2,000 34,968
Omron Corp. 2,000 38,275
Orix Corp. 1,000 33,314
Rohm Co. Ltd. 1,000 51,742
Sankyo Co. Ltd. 1,000 23,272
Sony Corp. 700 33,656
Sumitomo Marine and
Fire Insurance Co. Ltd. 2,000 15,901
Sumitomo Realty & Development Co. Ltd. 3,000 17,933
Sumitomo Trust & Banking Co. Ltd. 1,000 12,168
Tadano Ltd. 2,000 14,861
Takeda Chemical Industries Ltd. 3,000 39,693
Tokio Marine & Fire Insurance Co.
Ltd. (The) 3,000 34,448
Toshiba Corp. 8,000 50,750
Toyota Motor Corp. 1,000 19,846
Yamanouchi Pharmaceutical Co. Ltd. 1,000 22,564
850,492
MEXICO - 1.8%
Banacci SA de CV:
Class B 1,000 1,536
Class L 50 76
Cemex SA, Series B 1,900 6,852
Cifra SA Class C 8,000 10,547
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
Empresas Ica Sociedad Controladora
SA de CV sponsored ADR
representing Ord. (Part. Cert.) 3,500 $ 35,875
Grupo Carso SA de CV Class A-1 (a) 2,000 10,944
Grupo Financiero Bancomer, SA de C.V.:
Series B 60,000 17,568
Series L 2,222 587
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 200 5,925
89,910
MALAYSIA - 0.2%
Tenega Nasional BHD 2,000 8,162
NETHERLANDS - 4.5%
AKZO NV Ord. 300 35,898
Heineken NV 70 10,606
International Nederlanden Groep NV 912 50,500
Koninklijke PPT Nederland 500 17,994
Oce Van der Grinten NV 500 28,235
Pirelli Tyre Holdings NV Ord. 3,500 23,519
Royal Dutch Petroleum Co. Ord. 90 11,002
Unilever NV Ord. 390 50,801
228,555
NORWAY - 0.8%
Bergesen Group Class A 400 9,098
Christiania Bank Free shares Ord. 5,000 11,616
Den Norske Bank Class A Free shares 3,700 10,038
Petroleum Geo-Services AS (ADR) (a) 400 11,500
42,252
PHILIPPINES - 0.6%
Philippine Long Distance Telephone Co.
sponsored ADR 400 28,700
SPAIN - 3.4%
Argentaria Corporacion Bancaria
de Espana SA 800 29,642
Banco Bilbao Vizcaya SA Ord. (Reg.) 1,200 34,726
Corporacion Mapfrecia International
de Reaseguros SA (Reg.) 500 24,633
el Aguila SA (a) 1,300 9,741
Repsol SA Ord. 300 9,464
Tabacalera SA, Series A 300 11,252
Telefonica de Espana SA Ord. 800 10,333
Union Electrica Fenosa SA 8,500 39,975
169,766
SWEDEN - 3.0%
Investor AB Class B Free shares 800 23,128
Mo Och Domsjoe (MoDo) Class B
Free shares 400 23,100
SKF AB Ord. 1,000 20,237
Svenska Cellulosa AB SCA
Class B Ord. 1,500 27,877
Volvo AB Class B 3,000 57,200
151,542
SWITZERLAND - 7.9%
Adia SA (Bearer) (a) 160 33,296
Baloise Holding (Reg.) 20 45,712
CIBA-GEIGY AG (Reg.) 100 73,487
SHARES VALUE (NOTE 1)
C. S. Holdings (Reg.) 640 $ 58,790
Nestle SA (Reg.) 81 84,562
Roche Holdings Ltd. (part. certs.) 2 12,930
Surveillance, Societe Generale (Bearer) 7 12,190
Swiss Bank Corp. (Bearer) 100 35,525
Zurich Versicherung (Reg.) 160 40,317
396,809
THAILAND - 0.5%
Krung Thai Bank (For. Reg.) 3,410 13,814
Siam City Bank PCL (For. Reg.) 7,700 10,606
24,420
TURKEY - 0.4%
Aksigorta 50,100 9,745
Tofas Turk Otomobil Fabrikasi AS (a) 13,000 11,467
21,212
UNITED KINGDOM - 8.4%
BTR PLC Ord. 3,000 15,283
Barclays PLC Ord. 2,000 21,542
Bass PLC Ord. 1,000 9,591
Berkeley Group PLC 4,200 23,807
Booker PLC 3,000 19,899
British Land Ord. 3,800 24,206
Burmah Oil 800 11,614
Cadbury-Schweppes PLC Ord. 1,500 10,978
Commercial Union PLC 2,500 23,320
De La Rue PLC 600 8,955
Forte PLC 2,600 9,431
Glaxo Holdings PLC Ord. 1,400 17,222
Guinness PLC Ord. 1,500 11,313
Iceland Group PLC 4,000 11,480
Lasmo PLC 4,000 10,938
Lloyds Abbey Life PLC 2,000 12,469
National Westminster Bank PLC Ord. 3,000 26,142
Prudential Corp. PLC 2,000 10,651
Redland PLC Ord. 2,700 17,716
Royal Insurance Holdings PLC 5,000 24,635
Scottish Hydro-Electric PLC Ord. 3,000 15,259
Scottish Power PLC ADR 3,000 15,475
Shell Transport & Trading PLC 1,400 16,776
Unigate Ltd. Ord. 2,000 12,931
Vodafone Group PLC 3,500 13,031
Whitbread Co. PLC Class A 3,100 29,658
424,322
TOTAL COMMON STOCKS
(Cost $3,286,879) 3,398,201
NONCONVERTIBLE PREFERRED STOCKS - 2.4%
GERMANY - 1.5%
Henkel KGAA 80 30,866
Porsche AG Ord. 100 43,614
74,480
ITALY - 0.9%
Stet (Societa Finanziaria Telefonica) Spa 22,000 48,887
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $122,106) 123,367
REPURCHASE AGREEMENTS - 30.4%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 6.22% dated
6/30/95 due 7/3/95 (Note 3) $ 1,535,796 $ 1,535,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,943,985) $ 5,056,568
LEGEND
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $3,496,567 and $85,541, respectively.
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $4,943,985. Net unrealized appreciation aggregated
$112,583, of which $175,617 related to appreciated investment securities
and $63,034 related to depreciated investment securities.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Basic Industries 3.7%
Conglomerates 0.2
Construction & Real Estate 3.1
Durables 6.6
Energy 2.0
Finance 19.2
Health 3.7
Holding Companies 0.3
Industrial Machinery & Equipment 3.8
Media & Leisure 1.2
Nondurables 6.9
Retail & Wholesale 3.4
Services 1.8
Repurchase Agreements 30.4
Technology 6.4
Transportation 1.0
Utilities 6.3
100.0%
FIDELITY ADVISOR ANNUITY FUND: OVERSEAS FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase agreements of $1,535,000) (cost $4,943,985) - See $ 5,056,568
accompanying schedule
Cash 261
Receivable for investments sold 40,195
Receivable for fund shares sold 118,593
Dividends receivable 9,834
Receivable from investment adviser for expense reductions 5,348
TOTAL ASSETS 5,230,799
LIABILITIES
Payable for investments purchased $ 171,304
Accrued management fee 2,739
Other payables and accrued expenses 18,788
TOTAL LIABILITIES 192,831
NET ASSETS $ 5,037,968
Net Assets consist of:
Paid in capital $ 4,889,395
Undistributed net investment income 37,981
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (2,053
)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 112,645
NET ASSETS, for 474,799 shares outstanding $ 5,037,968
NET ASSET VALUE, offering price and redemption price per share ($5,037,968 (divided by) 474,799 shares) $10.61
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 3, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
INVESTMENT INCOME $ 31,795
Dividends
Interest 29,962
61,757
Less foreign taxes withheld (6,614
)
TOTAL INCOME 55,143
EXPENSES
Management fee $ 8,614
Transfer agent fees 893
Accounting fees and expenses 22,322
Custodian fees and expenses 14,487
Audit 9,114
Miscellaneous 24
Total expenses before reductions 55,454
Expense reductions (38,292 17,162
)
NET INVESTMENT INCOME 37,981
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (2,041
)
Foreign currency transactions (12 (2,053
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 112,583
Assets and liabilities in foreign 62 112,645
currencies
NET GAIN (LOSS) 110,592
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 148,573
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 37,981
Net investment income
Net realized gain (loss) (2,053)
Change in net unrealized appreciation (depreciation) 112,645
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 148,573
Share transactions 5,224,992
Net proceeds from sales of shares
Cost of shares redeemed (335,597)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 4,889,395
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,037,968
NET ASSETS
Beginning of period -
End of period (including undistributed net investment income of $37,981) $ 5,037,968
OTHER INFORMATION
Shares
Sold 506,794
Redeemed (31,995)
Net increase (decrease) 474,799
</TABLE>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
FINANCIAL HIGHLIGHTS
JANUARY 3, 1995
(COMMENCEMENT
OF OPERATIONS) TO
JUNE 30, 1995
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .08
Net realized and unrealized gain (loss) .53
Total from investment operations .61
Net asset value, end of period $ 10.61
TOTAL RETURN B, C 17.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 5,038
Ratio of expenses to average net assets 1.50% A
Ratio of expenses to average net assets before expense reductions 2.60%
A, D
Ratio of net investment income to average net assets 3.32% A
Portfolio turnover rate 12% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1995 (Unaudited)
a SIGNIFICANT ACCOUNTING POLICIES.
The Money Market Fund, Government Investment Fund, High Yield Fund, Income
& Growth Fund, Growth Opportunities Fund and Overseas Fund (the funds) are
funds of Fidelity Advisor Annuity Fund (the trust). 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. Each fund is authorized to issue an unlimited number of
shares. Shares of each fund may be purchased only by certain separate
accounts of Nationwide Life Insurance Company to serve as the underlying
investment vehicles for variable annuity policies issued by Nationwide Life
Insurance Company. The following summarizes the significant accounting
policies of the funds:
SECURITY VALUATION:
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
GOVERNMENT INVESTMENT FUND AND HIGH YIELD FUND. Securities are valued based
upon a computerized matrix system and/or appraisals by a pricing service,
both of which consider market transactions and dealer-supplied valuations.
Short-term securities maturing within sixty days of their purchase date are
valued either at amortized cost or original cost plus accrued interest,
both of which approximate current value. Securities for which quotations
are not readily available through the pricing service are valued at their
fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities 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.
INCOME & GROWTH FUND AND GROWTH OPPORTUNITIES FUND. 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.
OVERSEAS FUND. Securities for which quotations are readily available are
valued at the last sale price, or if no sale price, at the closing bid
price in the principal market in which such securities are normally traded.
Securities (including restricted securities) for which quotations are not
readily available 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 funds 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. Each fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so qualifying,
each fund will not be subject to income taxes to the extent that each
distributes substantially all of its taxable income for its fiscal year.
The schedules of investments include information regarding income taxes
under the caption "Income Tax Information."
INVESTMENT INCOME:
MONEY MARKET FUND. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
GOVERNMENT INVESTMENT, HIGH YIELD, INCOME & GROWTH, GROWTH OPPORTUNITIES,
AND OVERSEAS FUNDS. 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 funds are informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income for the Money Market Fund. Distributions
are recorded on the ex-dividend date for all other funds.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences may result in distribution reclassifications.
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 (loss) 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.
b OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. Each fund, except for the Money Market
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. These contracts involve market risk in excess of the unrealized
gain or loss reflected in the fund's Statement of Assets and Liabilities.
The U.S. dollar value of the currencies the fund has committed to buy or
sell is shown in the schedule of investments under the caption "Forward
Foreign Currency Contracts." This amount represents the aggregate exposure
to each currency the fund has acquired or hedged through currency contracts
at period end. 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 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. Contracts that have been offset with different
counterparties are reflected as both a contract to buy and a contract to
sell in the schedules of investments under the caption "Forward Foreign
Currency Contracts."
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the funds, 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 funds, through their custodian, receive delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. FMR, the funds'
investment adviser, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
FUTURES CONTRACTS AND OPTIONS. Each fund, except for the Money Market Fund,
may use futures and options contracts to manage its exposure to the stock
and bond markets and to fluctuations in interest rates and currency values.
Buying futures, writing puts, and buying calls tend to increase the fund's
exposure to the underlying instrument. Selling futures, buying puts, and
writing calls tend to decrease the fund's exposure to the underlying
instrument, or hedge other fund investments. Losses may arise from changes
in the value of the underlying instruments, if there is an illiquid
secondary market for the contracts, or if the counterparties do not perform
under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
c JOINT TRADING ACCOUNT.
At the end of the period, the following funds had 20% or more of their
total investments in repurchase agreements through a joint trading account.
These repurchase agreements were with entities whose creditworthiness has
been reviewed and found satisfactory by FMR. The repurchase agreements were
dated June 30, 1995 and due July 3, 1995. The maturity values of the joint
trading account investments were $2,694,000, $2,723,000 and $1,535,000 at
6.22% for High Yield Fund, Income & Growth Fund and Overseas Fund,
respectively. The investments in repurchase agreements through the joint
trading account are summarized as follows:
SUMMARY OF JOINT TRADING
Number of dealers or banks 5
Maximum amount with one dealer or bank 70.6%
Aggregate principal amount of agreements $1,282,110,000
Aggregate maturity amount of agreements $1,282,775,069
Aggregate market value of collateral $1,308,691,809
Coupon rates of collateral 0% to 11 5/8%
Maturity dates of collateral 7/31/95 to 2/15/25
d PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities) is included under the caption "Other Information" at
the end of each applicable fund's schedule of investments.
e FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee.
For the Money Market Fund, FMR receives a monthly fee that is calculated on
the basis of a basic fund fee rate of .03% of the fund's average net
assets, plus a fixed income group fee rate and an income based fee. The
group fee rate is the weighted average of a series of rates ranging from
.1200% to .3700% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The income-based fee is added only when the
fund's gross yield exceeds 5%. At that time the income-based fee would
equal 6% of that portion of the fund's gross income that represents a gross
yield of more than 5% per year. The maximum income based component is .24%
of average net assets. For the period, the management fee was equivalent to
an annualized rate of .25% of average net assets.
For all other funds, FMR receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of each fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. For the period, the rates ranged
from .2700% to .5200% for the Income & Growth, Growth Opportunities and
Overseas Funds. The rates ranged from .1200% to .3700% for the period, for
the Government Investment and High Yield Funds. In the event that these
rates were lower than the contractual rates in effect during those periods,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .20% for
the Income & Growth Fund, .30% for the Government Investment and Growth
Opportunities Funds, and .45% for the High Yield and Overseas Funds,
respectively. For the period, the management fees were equivalent to
annualized rates of .46%, .61%, .50%, .60%, and .75%, of average net
assets, for the Government Investment, High Yield, Income & Growth, Growth
Opportunities, and Overseas Funds, respectively.
SUB-ADVISER FEE. As the Money Market Fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
FMR, on behalf of the High Yield, Income & Growth, Growth Opportunities,
and Overseas Funds, entered into sub-advisory agreements with affiliates of
FMR. In addition, one of the sub-advisers, Fidelity International
Investment Advisors (FIIA), entered into a sub-advisory agreement with its
subsidiary, Fidelity International Investment Advisors (U.K.) Limited
(FIIAL U.K.). Under the sub-advisory arrangements, FMR may receive
investment advice and research services and may grant the sub-advisers
investment management authority to buy and sell securities. FMR pays its
sub-advisers either a portion of its management fee or a fee based on costs
incurred for these services. FIIA pays FIIAL U.K. a fee based on costs
incurred for either service.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations Company
(FIIOC), an affiliate of FMR, is the funds' transfer, dividend disbursing
and shareholder servicing agent. FIIOC receives account fees and
asset-based fees that vary according to account size and type of account.
FIIOC pays for typesetting, printing and mailing of all shareholder
reports, except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. Fidelity Service Co. (FSC), an
affiliate of FMR, maintains the funds' accounting records. The accounting
fee is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. Certain funds placed a portion of their portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms are shown under the caption
"Other Information" at the end of each applicable fund's schedule of
investments.
f EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the fund's operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 1.00% of the respective average net
assets for the Money Market, High Yield, and Government Investment Funds,
and 1.50% of the respective average net assets for the Income & Growth,
Growth Opportunities, and Overseas Funds. For the period, the reimbursement
under this arrangement reduced expenses by $18,819, $24,608, $25,404,
$23,110, $8,532, and $38,292 for Money Market, Government Investment, High
Yield, Income & Growth, Growth Opportunities, and Overseas Funds,
respectively.
g BENEFICIAL INTEREST
At the end of the period, certain unaffiliated insurance companies were
record owners of approximately 10% or more of the total outstanding shares
of the following funds:
BENEFICIAL INTEREST
NUMBER OF
UNAFFILIATED INSURANCE PERCENT
FUND COMPANIES OF OWNERSHIP
Money Market 1 86
Government Investment 1 48
High Yield 1 79
Income & Growth 1 91
Growth Opportunities 1 97
Overseas 1 78
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
FMR Texas Inc., Irving, TX
MONEY MARKET FUND
Fidelity Management & Research (U.K.) Inc.,
London, England
INCOME & GROWTH, GROWTH OPPORTUNITIES,
HIGH YIELD AND OVERSEAS FUNDS
Fidelity Management & Research (Far East) Inc.,
Tokyo, Japan
INCOME & GROWTH, GROWTH OPPORTUNITIES,
HIGH YIELD AND OVERSEAS FUNDS
Fidelity International Investment Advisors
OVERSEAS FUND
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
William J. Hayes, VICE PRESIDENT
Fred L. Henning, Jr., VICE PRESIDENT, MONEY MARKET FUND
Robert A. Lawrence, VICE PRESIDENT
Robert Haber, VICE PRESIDENT
George A. Vanderheiden, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Stephen P. Jonas, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
Michael D. Conway, ASSISTANT TREASURER, MONEY MARKET FUND
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 Co.
Boston, MA
CUSTODIANS
Morgan Guaranty Trust Company of New York,
New York, NY
MONEY MARKET FUND
The Bank of New York, New York, NY
GOVERNMENT INVESTMENT AND HIGH YIELD FUNDS
The Chase Manhattan Bank, N.A., New York, NY
INCOME & GROWTH AND OVERSEAS FUNDS
Brown Brothers Harriman & Co., Boston, MA
GROWTH OPPORTUNITIES FUND
AVA-SANN0895
2682
EXHIBIT 5(a)
MANAGEMENT CONTRACT
between
FIDELITY ADVISOR ANNUITY FUND:
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 18th day of November 1994, by and between Fidelity
Advisor Annuity Fund, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Advisor Annuity Overseas Fund (hereinafter
called the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or the
other accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the Fund's Declaration of Trust or other
organizational document) determined as of the close of business on each
business day throughout the month. The Group Fee Rate shall be determined
on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .5200%
3 - 6 .4900%
6 - 9 .4600%
9 - 12 .4300%
12 - 15 .4000%
15 - 18 .3850%
18 - 21 .3700%
21 - 24 .3600%
24 - 30 .3500%
30 - 36 .3450%
36 - 42 .3400%
42 - 48 .3350%
48 - 66 .3250%
66 - 84 .3200%
84 - 102 .3150%
102 - 138 .3100%
138 - 174 .3050%
174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
Over 390 .2700%
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .45%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual Management Fee Rate. One-twelfth of the Annual Management Fee Rate
shall be applied to the average of the net assets of the Portfolio
(computed in the manner set forth in the Fund's Declaration of Trust or
other organizational document) determined as of the close of business on
each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, 1995
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY ADVISOR ANNUITY FUND
on behalf of Fidelity Advisor Annuity Overseas Fund
By /s/ J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ J. Gary Burkhead
President
EXHIBIT 5(b)
MANAGEMENT CONTRACT
between
FIDELITY ADVISOR ANNUITY FUND:
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 18th day of November 1994, by and between Fidelity
Advisor Annuity Fund, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Advisor Annuity Growth Opportunities Fund
(hereinafter called the "Portfolio"), and Fidelity Management & Research
Company, a Massachusetts corporation (hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or the
other accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the Fund's Declaration of Trust or other
organizational document) determined as of the close of business on each
business day throughout the month. The Group Fee Rate shall be determined
on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .5200%
3 - 6 .4900%
6 - 9 .4600%
9 - 12 .4300%
12 - 15 .4000%
15 - 18 .3850%
18 - 21 .3700%
21 - 24 .3600%
24 - 30 .3500%
30 - 36 .3450%
36 - 42 .3400%
42 - 48 .3350%
48 - 66 .3250%
66 - 84 .3200%
84 - 102 .3150%
102 - 138 .3100%
138 - 174 .3050%
174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
Over 390 .2700%
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .30%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual Management Fee Rate. One-twelfth of the Annual Management Fee Rate
shall be applied to the average of the net assets of the Portfolio
(computed in the manner set forth in the Fund's Declaration of Trust or
other organizational document) determined as of the close of business on
each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, 1995
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY ADVISOR ANNUITY FUND
on behalf of Fidelity Advisor Annuity Growth Opportunities Fund
By /s/ J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ J. Gary Burkhead
President
EXHIBIT 5(c)
MANAGEMENT CONTRACT
between
FIDELITY ADVISOR ANNUITY FUND:
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 18th day of November 1994, by and between Fidelity
Advisor Annuity Fund, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Advisor Annuity Income & Growth Fund
(hereinafter called the "Portfolio"), and Fidelity Management & Research
Company, a Massachusetts corporation (hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or the
other accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the Fund's Declaration of Trust or other
organizational document) determined as of the close of business on each
business day throughout the month. The Group Fee Rate shall be determined
on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .5200%
3 - 6 .4900%
6 - 9 .4600%
9 - 12 .4300%
12 - 15 .4000%
15 - 18 .3850%
18 - 21 .3700%
21 - 24 .3600%
24 - 30 .3500%
30 - 36 .3450%
36 - 42 .3400%
42 - 48 .3350%
48 - 66 .3250%
66 - 84 .3200%
84 - 102 .3150%
102 - 138 .3100%
138 - 174 .3050%
174 - 210 .3000%
210 - 246 .2950%
246 - 282 .2900%
282 - 318 .2850%
318 - 354 .2800%
354 - 390 .2750%
Over 390 .2700%
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .20%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual Management Fee Rate. One-twelfth of the Annual Management Fee Rate
shall be applied to the average of the net assets of the Portfolio
(computed in the manner set forth in the Fund's Declaration of Trust or
other organizational document) determined as of the close of business on
each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, 1995
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY ADVISOR ANNUITY FUND
on behalf of Fidelity Advisor Annuity Income & Growth Fund
By /s/ J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ J. Gary Burkhead
President
EXHIBIT 5(d)
MANAGEMENT CONTRACT
between
FIDELITY ADVISOR ANNUITY FUND:
FIDELITY ADVISOR ANNUITY GOVERNMENT INVESTMENT FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 18th day of November 1994, by and between Fidelity
Advisor Annuity Fund, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Advisor Annuity Government Investment Fund
(hereinafter called the "Portfolio"), and Fidelity Management & Research
Company, a Massachusetts corporation (hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or the
other accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the Fund's Declaration of Trust or other
organizational document) determined as of the close of business on each
business day throughout the month. The Group Fee Rate shall be determined
on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over 372 .1200
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .30%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual Management Fee Rate. One-twelfth of the Annual Management Fee Rate
shall be applied to the average of the net assets of the Portfolio
(computed in the manner set forth in the Fund's Declaration of Trust or
other organizational document) determined as of the close of business on
each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, 1995
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY ADVISOR ANNUITY FUND
on behalf of Fidelity Advisor Annuity Government Investment Fund
By /s/ J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ J. Gary Burkhead
President
EXHIBIT 5(e)
MANAGEMENT CONTRACT
between
FIDELITY ADVISOR ANNUITY FUND:
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 18th day of November 1994, by and between Fidelity
Advisor Annuity Fund, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Advisor Annuity High Yield Fund (hereinafter
called the "Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or the
other accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the Fund's Declaration of Trust or other
organizational document) determined as of the close of business on each
business day throughout the month. The Group Fee Rate shall be determined
on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over 372 .1200
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .45%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual Management Fee Rate. One-twelfth of the Annual Management Fee Rate
shall be applied to the average of the net assets of the Portfolio
(computed in the manner set forth in the Fund's Declaration of Trust or
other organizational document) determined as of the close of business on
each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, 1995
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY ADVISOR ANNUITY FUND
on behalf of Fidelity Advisor Annuity High Yield Fund
By /s/ J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ J. Gary Burkhead
President
EXHIBIT 5(f)
MANAGEMENT CONTRACT
between
FIDELITY ADVISOR ANNUITY FUND:
FIDELITY ADVISOR ANNUITY MONEY MARKET FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 18th day of November 1994, by and between Fidelity
Advisor Annuity Fund, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Advisor Annuity Money Market Fund
(hereinafter called the "Portfolio"), and Fidelity Management & Research
Company, a Massachusetts corporation (hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Portfolio and/or the
other accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination
may be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee, an Individual Fund Fee,
and an Income Component.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the fund's Declaration of Trust or other
organizational document) determined as of the close of business on each
business day throughout the month. The Group Fee Rate shall be determined
on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over 372 .1200
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .03%.
One-twelfth of the Group Fee Rate (calculated as described above to the
nearest millionth) and of the Individual Fund Fee Rate shall be applied to
the average net assets of the Portfolio (computed in the manner set forth
in the Fund's Declaration of Trust or other organizational document)
determined as of the close of business on each business day throughout the
month to determine the Group Fee and the Individual Fee for such month.
(c) The Income Component. The Adviser shall receive a monthly payment
computed on the basis of the Portfolio's gross income. With respect to
that amount of the Portfolio's monthly gross income which is in excess of
that amount which is equivalent to an annualized yield of 5%, the Adviser
shall receive 6% of the amount of such excess. Gross income, for this
purpose, includes interest accrued and/or discount earned (including both
original issue discount and market discount) on portfolio obligations, less
amortization of premium on portfolio obligations computed in accordance
with generally accepted accounting practices. Annualized yield shall be
determined by dividing the Portfolio's gross income for the month by
average daily net assets of the Portfolio for the month and dividing the
result by the number of days in the month over 365 days.
(Gross Income for the Month) (divided by) (Days
in the Month)
(Average Daily Net Assets for the Month) (365 Days)
Notwithstanding the foregoing, in no event shall the Adviser be entitled to
receive an income component for any month that is in excess of an amount
equal to 0.24% of the Portfolio's average net assets for such month.
(d) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until May 31, 1995
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any
penalty, by action of its Trustees or Board of Directors, as the case may
be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY ADVISOR ANNUITY FUND
on behalf of Fidelity Advisor Annuity Money Market Fund
By /s/ J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ J. Gary Burkhead
President
EXHIBIT 5(g)
SUB-ADVISORY AGREEMENT
between
FMR TEXAS INC.
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 18th day of November, 1994, by and between FMR Texas
Inc., a Texas corporation with principal offices at 400 East Las Colinas
Boulevard, Irving, Texas (hereinafter called the "Sub-Adviser") and
Fidelity Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Adviser").
WHEREAS the Adviser has entered into a Management Contract with Fidelity
Advisor Annuity Fund, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the
"Fund"), on behalf of Fidelity Advisor Annuity Money Market Fund
(hereinafter called the "Portfolio"), pursuant to which the Adviser is to
act as investment manager and adviser to the Portfolio, and
WHEREAS the Sub-Adviser was formed for the purpose of providing investment
management of money market mutual funds, both taxable and tax-exempt,
advising generally with respect to money market instruments, and managing
or providing advice with respect to cash management.
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Adviser and the Sub-Adviser agree as follows:
1. (a) The Sub-Adviser shall, subject to the supervision of the Adviser,
direct the investments of the Portfolio in accordance with the investment
objective, policies and limitations as provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of l940 and rules thereunder, as amended from
time to time (the "l940 Act"), and such other limitations as the Portfolio
may impose by notice in writing to the Adviser or Sub-Adviser. The
Sub-Adviser shall also furnish for the use of the Portfolio office space
and all necessary office facilities, equipment and personnel for servicing
the investments of the Portfolio; and shall pay the salaries and fees of
all personnel of the Sub-Adviser performing services for the Portfolio
relating to research, statistical and investment activities. The
Sub-Adviser is authorized, in its discretion and without prior consultation
with the Portfolio or the Adviser, to buy, sell, lend and otherwise trade
in any stocks, bonds and other securities and investment instruments on
behalf of the Portfolio. The investment policies and all other actions of
the Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) The Sub-Adviser shall also furnish such reports, evaluations,
information or analyses to the Fund and the Adviser as the Fund's Board of
Trustees or the Adviser may request from time to time or as the Sub-Adviser
may deem to be desirable. The Sub-Adviser shall make recommendations to
the Fund's Board of Trustees with respect to Portfolio policies, and shall
carry out such policies as are adopted by the Trustees. The Sub-Adviser
shall, subject to review by the Board of Trustees, furnish such other
services as the Sub-Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Agreement and
which are not otherwise furnished by the Adviser.
(c) The Sub-Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Sub-Adviser, which may include brokers or dealers
affiliated with the Adviser or Sub-Adviser. The Sub-Adviser shall use its
best efforts to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are reasonable
in relation to the benefits received. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of l934) to the
Portfolio and/or the other accounts over which the Sub-Adviser, Adviser or
their affiliates exercise investment discretion. The Sub-Adviser is
authorized to pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for
the Portfolio which is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction if the
Sub-Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed in
terms of either that particular transaction or the overall responsibilities
which the Sub-Adviser and its affiliates have with respect to accounts over
which they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
2. The Sub-Adviser will be compensated by the Adviser on the following
basis for the services to be furnished hereunder: the Adviser agrees to
pay the Sub-Adviser a monthly fee equal to 50% of the management fee which
the Portfolio is obligated to pay the Adviser under the Portfolio's
Management Contract with the Adviser. Such fee shall not be reduced to
reflect expense reimbursements or fee waivers by the Adviser, if any, in
effect from time to time.
3. It is understood that Trustees, officers, and shareholders of the Fund
are or may be or become interested in the Adviser or the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser or the Sub-Adviser are or may be or become
similarly interested in the Fund, and that the Adviser or the Sub-Adviser
may be or become interested in the Fund as a shareholder or otherwise.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Sub-Adviser hereunder or
by the Adviser under the Management Contract with the Portfolio, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund, the Sub-Adviser or the
Adviser; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Fund and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefor;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Fund's Trustees and officers with respect thereto.
5. The Services of the Sub-Adviser to the Adviser are not to be deemed to
be exclusive, the Sub-Adviser being free to render services to others and
engage in other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Adviser's ability to meet all of its
obligations with respect to rendering investment advice hereunder. The
Sub-Adviser shall for all purposes be an independent contractor and not an
agent or employee of the Adviser or the Fund. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Sub-Adviser, the
Sub-Adviser shall not be subject to liability to the Adviser, the Fund or
to any shareholder of the Portfolio for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Agreement shall continue in force until May 30, 1995
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Adviser, the
Sub-Adviser and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of the Agreement
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to such Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Adviser, the Sub-Adviser or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event of
its assignment.
7. The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust or other
organizational document of the Fund and agrees that any obligations of the
Fund or the Portfolio arising in connection with this Agreement shall be
limited in all cases to the Portfolio and its assets, and the Sub-Adviser
shall not seek satisfaction of any such obligation from the shareholders or
any shareholder of the Portfolio. Nor shall the Sub-Adviser seek
satisfaction of any such obligation from the Trustees or any individual
Trustee.
8. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, WITHOUT GIVING EFFECT TO THE
CHOICE OF LAWS PROVISIONS THEREOF.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
Investment Company Act of 1940 as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FMR TEXAS INC.
By /s/ Stephen Jonas
Treasurer
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ J. Gary Burkhead
President
LG912940.008
EXHIBIT 5(h)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY ANNUITY ADVISOR FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND
AGREEMENT made this 18th day of November, 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (U.K.) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Advisor Annuity Fund, a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Trust") on behalf of
Fidelity Advisor Annuity High Yield Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until June 30, 1995 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
BY: /s/ Stephen Jonas
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ J. Gary Burkhead
Title
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND
BY: /s/ J. Gary Burkhead
Title
EXHIBIT 5(i)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY ANNUITY ADVISOR FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND
AGREEMENT made this 18th day of November, 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (U.K.) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Advisor Annuity Fund, a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Trust") on behalf of
Fidelity Advisor Annuity Growth Opportunities Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1995 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
BY: /s/ Stephen Jonas
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ J. Gary Burkhead
Title
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND
BY: /s/ J. Gary Burkhead
Title
EXHIBIT 5(j)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY ANNUITY ADVISOR FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND
AGREEMENT made this 18th day of November, 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (U.K.) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Advisor Annuity Fund, a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Trust") on behalf of
Fidelity Advisor Annuity Income & Growth Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1995 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
BY: /s/ Stephen Jonas
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ J. Gary Burkhead
Title
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND
BY: /s/ J. Gary Burkhead
Title
EXHIBIT 5(k)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY ANNUITY ADVISOR FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
AGREEMENT made this 18th day of November, 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (U.K.) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Advisor Annuity Fund, a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Trust") on behalf of
Fidelity Advisor Annuity Overseas Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1995 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
BY: /s/ Stephen Jonas
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ J. Gary Burkhead
Title
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
BY: /s/ J. Gary Burkhead
Title
EXHIBIT 5(l)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND
AGREEMENT made this 18th day of November, 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Advisor Annuity Fund, a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Trust") on behalf of
Fidelity Advisor Annuity High Yield Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 105% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until June 30, 1995
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
BY: /s/ Stephen Jonas
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ J. Gary Burkhead
Title
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND
BY: /s/ J. Gary Burkhead
Title
EXHIBIT 5(m)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND
AGREEMENT made this 18th day of November, 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Advisor Annuity Fund, a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Trust") on behalf of
Fidelity Advisor Annuity Growth Opportunities Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 105% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1995
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
BY: /s/ Stephen Jonas
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ J. Gary Burkhead
Title
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND
BY: /s/ J. Gary Burkhead
Title
EXHIBIT 5(n)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND
AGREEMENT made this 18th day of November, 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Advisor Annuity Fund, a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Trust") on behalf of
Fidelity Advisor Annuity Income & Growth Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 105% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1995
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
BY: /s/ Stephen Jonas
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ J. Gary Burkhead
Title
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND
BY: /s/ J. Gary Burkhead
Title
EXHIBIT 5(o)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
AGREEMENT made this 18th day of November, 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Advisor Annuity Fund, a
Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Trust") on behalf of
Fidelity Advisor Annuity Overseas Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 105% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1995
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
BY: /s/ Stephen Jonas
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ J. Gary Burkhead
Title
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
BY: /s/ J. Gary Burkhead
Title
EXHIBIT 5(p)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
AGREEMENT made this 18th day of November, 1994 by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity International Investment Advisors, a Bermuda
company with principal offices at Pembroke Hall, Pembroke, Bermuda
(hereinafter called the "Sub-Advisor"); and Fidelity Advisor Annuity Fund,
a Massachusetts business trust which may issue one or more series of shares
of beneficial interest (hereinafter called the "Trust") on behalf of
Fidelity Advisor Annuity Overseas Fund (hereinafter called the
"Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only
to the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction of
the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to
the other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Advisor determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Sub-Advisor has with respect to
accounts over which it exercises investment discretion. The Trustees of
the Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to: (i)
30% of the monthly management fee rate (including performance adjustments,
if any) that the Portfolio is obligated to pay the Advisor under its
Management Contract with the Advisor, multiplied by (ii) the fraction equal
to the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment advice divided by the net assets of the Portfolio for
that month. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from time
to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefor;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1995
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
BY: /s/ Anthony Bolton
Director
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/ J. Gary Burkhead
President
FIDELITY ADVISOR ANNUITY FUND ON BEHALF OF
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
BY: /s/ J. Gary Burkhead
Senior Vice President
EXHIBIT 5(q)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
AND
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
AGREEMENT made this 18th day of November, 1994, by and between Fidelity
International Investment Advisors (U.K.) Limited, 27-28 Lovat Lane, London,
England (hereinafter called the "U.K. Sub-Advisor") and Fidelity
International Investment Advisors, a Bermuda company with principal offices
at Pembroke Hall, Pembroke, Bermuda (hereinafter called the "Sub-Advisor").
WHEREAS Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Advisor"), has entered into a
Management Contract with Fidelity Advisor Annuity Fund, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust"), on behalf of Fidelity Advisor
Annuity Overseas Fund (hereinafter called the "Portfolio"), pursuant to
which the Advisor is act as investment advisor to the Portfolio, and
WHEREAS, the Sub-Advisor has entered into a Sub-Advisory Agreement with
the Advisor (the "Sub-Advisory Agreement") pursuant to which the
Sub-Advisor, directly or through certain of its subsidiaries or other
affiliated persons, shall provide investment advice or investment
management and order execution services to the Portfolio, and
WHEREAS the U.K. Sub-Advisor has personnel in Western Europe and has been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located outside of North America, principally in the
U.K. and Europe.
NOW THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Sub-Advisor and the U.K. Sub-Advisor agree as
follows:
1. Duties: The Sub-Advisor may, in its discretion, appoint the U.K.
Sub-Advisor to perform one or more of the following services with respect
to all or a portion of the investments of the Portfolio, in connection with
the Sub-Advisor's duties under the Sub-Advisory Agreement. The services
and the portion of the investments of the Portfolio advised or managed by
the U.K. Sub-Advisor shall be as agreed upon from time to time by the
Sub-Advisor and the U.K. Sub-Advisor. The U.K. Sub-Advisor shall pay the
salaries and fees of all personnel of the U.K. Sub-Advisor performing
services for the Portfolio relating to research, statistical and investment
activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Sub-Advisor,
the U.K. Sub-Advisor shall provide investment advice to the Sub-Advisor
with respect to all or a portion of the investments of the Portfolio, and
in connection with such advice shall furnish the Sub-Advisor such factual
information, research reports and investment recommendations as the Advisor
may reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Sub-Advisor, the U.K. Sub-Advisor shall manage all or a portion of the
investments of the Portfolio in accordance with the investment objective,
policies and limitations provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment Company
Act of 1940 (the "1940 Act") and rules thereunder, as amended from time to
time, and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the U.K. Sub-Advisor. With respect
to the portion of the investments of the Portfolio under its management,
the U.K. Sub-Advisor is authorized to make investment decisions on behalf
of the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale of
such securities through such broker-dealers as the U.K. Sub-Advisor may
select. The U.K. Sub-Advisor may also be authorized, but only to the
extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money or lending securities on behalf of the Portfolio. All investment
management and any other activities of the U.K. Sub-Advisor shall at all
times be subject to the control and direction of the Sub-Advisor, the
Advisor and the Trust's Board of Trustees.
2. Information to be Provided to the Trust and the Advisor: The U.K.
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust, the Advisor, and the Sub-Advisor as the Trust's
Board of Trustees, the Advisor or the Sub-Advisor may reasonably request
from time to time, or as the U.K. Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the U.K. Sub-Advisor
shall place all orders for the purchase and sale of portfolio securities
for the Portfolio's account with brokers or dealers selected by the U.K.
Sub-Advisor, which may include brokers or dealers affiliated with the
Advisor, Sub-Advisor or U.K. Sub-Advisor. The U.K. Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices which
are advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers or
dealers qualified to execute a particular transaction, brokers or dealers
may be selected who also provide brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of l934)
to the Portfolio and/or to the other accounts over which the U.K.
Sub-Advisor, the Sub-Advisor or Advisor exercise investment discretion.
The U.K. Sub-Advisor is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the U.K. Sub-Advisor determines in good faith that such
amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the U.K. Sub-Advisor and the
Sub-Advisor have with respect to accounts over which they exercise
investment discretion. The Trustees of the Trust shall periodically review
the commissions paid by the Portfolio to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits to the Portfolio.
4. Compensation: The Sub-Advisor shall compensate the U.K. Sub-Advisor
on the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Sub-Advisor agrees to pay the U.K.
Sub-Advisor a monthly U.K. Sub-Advisory Fee. The U.K. Sub-Advisory Fee
shall be equal to 110% of the U.K. Sub-Advisor's costs incurred in
connection rendering the services referred to in subparagraph (a) of
paragraph 1 of this Agreement. The U.K. Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the Sub-Advisor
or Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor agrees to pay the
U.K. Sub-Advisor a monthly Investment Management Fee. The Investment
Management Fee shall be equal to 110% of the U.K. Sub-Advisor's costs
incurred in connection rendering the services referred to in subparagraph
(b) of paragraph 1 of this Agreement. The U.K. Sub-Advisory Fee shall not
be reduced to reflect expense reimbursements or fee waivers by the
Sub-Advisor or Advisor, if any, in effect from time to time.
(c) PROVISION OF MULTIPLE SERVICES: If the U.K. Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the U.K. Sub-Advisor with respect to such investments
shall be calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the U.K.
Sub-Advisor hereunder, by the Sub-Advisor under the Sub-Advisory Agreement
or by the Advisor under the Management Contract with the Portfolio.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor, the Sub-Advisor or the U.K. Sub-Advisor as directors, officers or
otherwise and that directors, officers and stockholders of the Advisor, the
Sub-Advisor or the U.K. Sub-Advisor are or may be or become similarly
interested in the Trust, and that the Advisor, the Sub-Advisor or the U.K.
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The Services of the U.K.
Sub-Advisor to the Sub-Advisor are not to be deemed to be exclusive, the
U.K. Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the U.K. Sub-Advisor's ability to meet all of its
obligations hereunder. The U.K. Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor, the
Sub-Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the U.K. Sub-Advisor, the U.K. Sub-Advisor shall not be
subject to liability to the Sub-Advisor, the Advisor, the Trust or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1995 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
U.K. Sub-Advisor, the Sub-Advisor and the Portfolio, such consent on the
part of the Portfolio to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor, the U.K. Sub-Advisor or the
Portfolio may, at any time on sixty (60) days' prior written notice to the
other parties, terminate this Agreement, without payment of any penalty, by
action of its Board of Trustees or Directors, or with respect to the
Portfolio by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its assignment.
10. Limitation of Liability: The U.K. Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the U.K. Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the U.K. Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any individual
Trustee.
11. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
BY: /s/Anthony Bolton
Anthony Bolton
Director
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
BY: /s/Anthony Bolton
Anthony Bolton
Director
EXHIBIT 6(a)
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY ADVISOR ANNUITY FUND
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this 18th day of November, 1994, between Fidelity Advisor
Annuity Fund, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts and which may issue one or more series of
beneficial interest ("Issuer"), with respect to shares of Fidelity Advisor
Annuity Overseas Fund, a series of the Issuer, and Fidelity Distributors
Corporation, a Massachusetts corporation having its principal place of
business in Boston, Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein contained,
the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to sell
shares on behalf of the Issuer during the term of this Agreement and
subject to the registration requirements of the Securities Act of 1933, as
amended ("1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws") under the following terms and
conditions: Distributors (i) shall have the right to sell, as agent on
behalf of the Issuer, shares authorized for issue and registered under the
1933 Act, and (ii) may sell shares under offers of exchange, if available,
between and among the funds advised by Fidelity Management & Research
Company ("FMR").
2. Sale of Shares by the Issuer - The rights granted to Distributors shall
be nonexclusive in that the Issuer reserves the right to sell its shares to
investors on applications received and accepted by the Issuer. Further,
the Issuer reserves the right to issue shares in connection with the merger
or consolidation, or acquisition by the Issuer through purchase or
otherwise, with any other investment company, trust, or personal holding
company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its treasury in
the event that in the discretion of the Issuer treasury shares shall be
sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all shares
sold to investors by Distributors or the Issuer will be sold at the public
offering price. The public offering price for all accepted subscriptions
will be the net asset value per share, as determined in the manner
described in the Issuer's current Prospectus and/or Statement of Additional
Information, plus a sales charge (if any) described in the Issuer's current
Prospectus and/or Statement of Additional Information. The Issuer shall in
all cases receive the net asset value per share on all sales. If a sales
charge is in effect, Distributors shall have the right subject to such
rules or regulations of the Securities and Exchange Commission as may then
be in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares of the
Issuer. If a fee in connection with shareholder redemptions is in effect,
the Issuer shall collect the fee on behalf of Distributors and, unless
otherwise agreed upon by the Issuer and Distributors, Distributors shall be
entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further
orders for shares shall be processed by Distributors except such
unconditional orders as may have been placed with Distributors before it
had knowledge of the suspension. In addition, the Issuer reserves the
right to suspend sales and Distributors' authority to process orders for
shares on behalf of the Issuer if, in the judgment of the Issuer, it is in
the best interests of the Issuer to do so. Suspension will continue for
such period as may be determined by the Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
Distributors, Distributors agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Issuer.
This shall not prevent Distributors from entering into like arrangements
(including arrangements involving the payment of underwriting commissions)
with other issuers. This does not obligate Distributors to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction in which it is
not now registered or to maintain its registration in any jurisdiction in
which it is now registered. If a sales charge is in effect, Distributors
shall have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the public
offering price only and fix in such agreements the portion of the sales
charge which may be retained by dealers, provided that the Issuer shall
approve the form of the dealer agreement and the dealer discounts set forth
therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act.
7. Authorized Representations - Distributors is not authorized by the
Issuer to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses
and Statements of Additional Information filed with the Securities and
Exchange Commission under the 1933 Act (as these registration statements,
Prospectuses and Statements of Additional Information may be amended from
time to time), or contained in shareholder reports or other material that
may be prepared by or on behalf of the Issuer for Distributors' use. This
shall not be construed to prevent Distributors from preparing and
distributing sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be bought
or sold by or through Distributors, and Distributors may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all action
necessary to register shares under the 1933 Act (subject to the necessary
approval of its shareholders) so that there will be available for sale the
number of shares Distributors may reasonably be expected to sell. The
Issuer shall make available to Distributors such number of copies of its
currently effective Prospectus and Statement of Additional Information as
Distributors may reasonably request. The Issuer shall furnish to
Distributors copies of all information, financial statements and other
papers which Distributors may reasonably request for use in connection with
the distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration
statement, Prospectus and Statement of Additional Information under the
1933 Act and amendments for the issue of its shares, (b) in connection with
the registration and qualification of shares for sale in the various states
in which the Board of Trustees of the Issuer shall determine it advisable
to qualify such shares for sale (including registering the Issuer as a
broker or dealer or any officer of the Issuer as agent or salesman in any
state), (c) of preparing, setting in type, printing and mailing any report
or other communication to shareholders of the Issuer in their capacity as
such, and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the Issuer, it
is recognized by the Issuer that FMR may reimburse Distributors for any
direct expenses incurred in the distribution of shares of the Issuer from
any source available to it, including advisory and service or management
fees paid to it by the Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
Distributors and each of its directors and officers and each person, if
any, who controls Distributors within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
based upon the ground that the registration statement, Prospectus,
Statement of Additional Information, shareholder reports or other
information filed or made public by the Issuer (as from time to time
amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make
the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Issuer does not agree to indemnify
Distributors or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Issuer by or on behalf of Distributors. In no case (i) is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any person against any
liability to the Issuer or its security holders to which Distributors or
such person would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement,
or (ii) is the Issuer to be liable under its indemnity agreement contained
in this paragraph with respect to any claim made against Distributors or
any person indemnified unless Distributors or person, as the case may be,
shall have notified the Issuer in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon
Distributors or any such person (or after Distributors or such person shall
have received notice of service on any designated agent). However, failure
to notify the Issuer of any claim shall not relieve the Issuer from any
liability which it may have to Distributors or any person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Issuer shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the
defense of any suit brought to enforce any claims, but if the Issuer elects
to assume the defense, the defense shall be conducted by counsel chosen by
it and satisfactory to Distributors or person or persons, defendant or
defendants in the suit. In the event the Issuer elects to assume the
defense of any suit and retain counsel, Distributors, officers or directors
or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by
them. If the Issuer does not elect to assume the defense of any suit, it
will reimburse Distributors, officers or directors or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Issuer agrees to notify
Distributors promptly of the commencement of any litigation or proceedings
against it or any of its officers or trustees in connection with the
issuance or sale of any of the shares.
Distributors also covenants and agrees that it will indemnify and hold
harmless the Issuer and each of its Board members and officers and each
person, if any, who controls the Issuer within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring
any shares, based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of Distributors or any of its employees or
alleging that the registration statement, Prospectus, Statement of
Additional Information, shareholder reports or other information filed or
made public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
Distributors. In no case (i) is the indemnity of Distributors in favor of
the Issuer or any person indemnified to be deemed to protect the Issuer or
any person against any liability to which the Issuer or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is
Distributors to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Issuer or any person
indemnified unless the Issuer or person, as the case may be, shall have
notified Distributors in writing of the claim within a reasonable time
after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice of
service on any designated agent). However, failure to notify Distributors
of any claim shall not relieve Distributors from any liability which it may
have to the Issuer or any person against whom the action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. In the case of any notice to Distributors, it shall be entitled
to participate, at its own expense, in the defense or, if it so elects, to
assume the defense of any suit brought to enforce the claim, but if
Distributors elects to assume the defense, the defense shall be conducted
by counsel chosen by it and satisfactory to the Issuer, to its officers and
Board and to any controlling person or persons, defendant or defendants in
the suit. In the event that Distributors elects to assume the defense of
any suit and retain counsel, the Issuer or controlling persons, defendant
or defendants in the suit, shall bear the fees and expense of any
additional counsel retained by them. If Distributors does not elect to
assume the defense of any suit, it will reimburse the Issuer, officers and
Board or controlling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained by them.
Distributors agrees to notify the Issuer promptly of the commencement of
any litigation or proceedings against it in connection with the issue and
sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force until January
31, 1995 and thereafter from year to year, provided continuance is approved
annually by the vote of a majority of the Board members of the Issuer, and
by the vote of those Board members of the Issuer who are not "interested
persons" of the Issuer and, if a plan under Rule 12b-1 under the Investment
Company Act of 1940 is in effect, by the vote of those Board members of the
Issuer who are not "interested persons" of the Issuer and who are not
parties to the Distribution and Service Plan or this Agreement and have no
financial interest in the operation of the Distribution and Service Plan or
in any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As
used in this paragraph, the terms "assignment" and "interested persons"
shall have the respective meanings specified in the Investment Company Act
of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated by either party upon not less than
sixty days' prior written notice to the other party.
13. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party giving
notice: if to the Issuer, at 82 Devonshire Street, Boston, Massachusetts,
and if to Distributors, at 82 Devonshire Street, Boston, Massachusetts.
14. Limitation of Liability - Distributors is expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of
Trust or other organizational document of the Issuer and agrees that the
obligations assumed by the Issuer under this contract shall be limited in
all cases to the Issuer and its assets. Distributors shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall Distributors seek satisfaction of any
such obligation from the Trustees or any individual Trustee of the Issuer.
Distributors understands that the rights and obligations of each series of
shares of the Issuer under the Issuer's Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other series.
15. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its name
and behalf, and its seal affixed, by one of its officers duly authorized,
and Distributors has executed this instrument in its name and behalf by one
of its officers duly authorized, as of the day and year first above
written.
FIDELITY ADVISOR ANNUITY FUND
By /s/ J. Gary Burkhead
FIDELITY DISTRIBUTORS CORPORATION
By /s/ Kurt A. Lange
EXHIBIT 6(b)
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY ADVISOR ANNUITY FUND
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this 18th day of November, 1994, between Fidelity Advisor
Annuity Fund, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts and which may issue one or more series of
beneficial interest ("Issuer"), with respect to shares of Fidelity Advisor
Annuity Growth Opportunities Fund, a series of the Issuer, and Fidelity
Distributors Corporation, a Massachusetts corporation having its principal
place of business in Boston, Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein contained,
the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to sell
shares on behalf of the Issuer during the term of this Agreement and
subject to the registration requirements of the Securities Act of 1933, as
amended ("1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws") under the following terms and
conditions: Distributors (i) shall have the right to sell, as agent on
behalf of the Issuer, shares authorized for issue and registered under the
1933 Act, and (ii) may sell shares under offers of exchange, if available,
between and among the funds advised by Fidelity Management & Research
Company ("FMR").
2. Sale of Shares by the Issuer - The rights granted to Distributors shall
be nonexclusive in that the Issuer reserves the right to sell its shares to
investors on applications received and accepted by the Issuer. Further,
the Issuer reserves the right to issue shares in connection with the merger
or consolidation, or acquisition by the Issuer through purchase or
otherwise, with any other investment company, trust, or personal holding
company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its treasury in
the event that in the discretion of the Issuer treasury shares shall be
sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all shares
sold to investors by Distributors or the Issuer will be sold at the public
offering price. The public offering price for all accepted subscriptions
will be the net asset value per share, as determined in the manner
described in the Issuer's current Prospectus and/or Statement of Additional
Information, plus a sales charge (if any) described in the Issuer's current
Prospectus and/or Statement of Additional Information. The Issuer shall in
all cases receive the net asset value per share on all sales. If a sales
charge is in effect, Distributors shall have the right subject to such
rules or regulations of the Securities and Exchange Commission as may then
be in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares of the
Issuer. If a fee in connection with shareholder redemptions is in effect,
the Issuer shall collect the fee on behalf of Distributors and, unless
otherwise agreed upon by the Issuer and Distributors, Distributors shall be
entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further
orders for shares shall be processed by Distributors except such
unconditional orders as may have been placed with Distributors before it
had knowledge of the suspension. In addition, the Issuer reserves the
right to suspend sales and Distributors' authority to process orders for
shares on behalf of the Issuer if, in the judgment of the Issuer, it is in
the best interests of the Issuer to do so. Suspension will continue for
such period as may be determined by the Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
Distributors, Distributors agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Issuer.
This shall not prevent Distributors from entering into like arrangements
(including arrangements involving the payment of underwriting commissions)
with other issuers. This does not obligate Distributors to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction in which it is
not now registered or to maintain its registration in any jurisdiction in
which it is now registered. If a sales charge is in effect, Distributors
shall have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the public
offering price only and fix in such agreements the portion of the sales
charge which may be retained by dealers, provided that the Issuer shall
approve the form of the dealer agreement and the dealer discounts set forth
therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act.
7. Authorized Representations - Distributors is not authorized by the
Issuer to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses
and Statements of Additional Information filed with the Securities and
Exchange Commission under the 1933 Act (as these registration statements,
Prospectuses and Statements of Additional Information may be amended from
time to time), or contained in shareholder reports or other material that
may be prepared by or on behalf of the Issuer for Distributors' use. This
shall not be construed to prevent Distributors from preparing and
distributing sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be bought
or sold by or through Distributors, and Distributors may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all action
necessary to register shares under the 1933 Act (subject to the necessary
approval of its shareholders) so that there will be available for sale the
number of shares Distributors may reasonably be expected to sell. The
Issuer shall make available to Distributors such number of copies of its
currently effective Prospectus and Statement of Additional Information as
Distributors may reasonably request. The Issuer shall furnish to
Distributors copies of all information, financial statements and other
papers which Distributors may reasonably request for use in connection with
the distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration
statement, Prospectus and Statement of Additional Information under the
1933 Act and amendments for the issue of its shares, (b) in connection with
the registration and qualification of shares for sale in the various states
in which the Board of Trustees of the Issuer shall determine it advisable
to qualify such shares for sale (including registering the Issuer as a
broker or dealer or any officer of the Issuer as agent or salesman in any
state), (c) of preparing, setting in type, printing and mailing any report
or other communication to shareholders of the Issuer in their capacity as
such, and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the Issuer, it
is recognized by the Issuer that FMR may reimburse Distributors for any
direct expenses incurred in the distribution of shares of the Issuer from
any source available to it, including advisory and service or management
fees paid to it by the Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
Distributors and each of its directors and officers and each person, if
any, who controls Distributors within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
based upon the ground that the registration statement, Prospectus,
Statement of Additional Information, shareholder reports or other
information filed or made public by the Issuer (as from time to time
amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make
the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Issuer does not agree to indemnify
Distributors or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Issuer by or on behalf of Distributors. In no case (i) is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any person against any
liability to the Issuer or its security holders to which Distributors or
such person would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement,
or (ii) is the Issuer to be liable under its indemnity agreement contained
in this paragraph with respect to any claim made against Distributors or
any person indemnified unless Distributors or person, as the case may be,
shall have notified the Issuer in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon
Distributors or any such person (or after Distributors or such person shall
have received notice of service on any designated agent). However, failure
to notify the Issuer of any claim shall not relieve the Issuer from any
liability which it may have to Distributors or any person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Issuer shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the
defense of any suit brought to enforce any claims, but if the Issuer elects
to assume the defense, the defense shall be conducted by counsel chosen by
it and satisfactory to Distributors or person or persons, defendant or
defendants in the suit. In the event the Issuer elects to assume the
defense of any suit and retain counsel, Distributors, officers or directors
or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by
them. If the Issuer does not elect to assume the defense of any suit, it
will reimburse Distributors, officers or directors or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Issuer agrees to notify
Distributors promptly of the commencement of any litigation or proceedings
against it or any of its officers or trustees in connection with the
issuance or sale of any of the shares.
Distributors also covenants and agrees that it will indemnify and hold
harmless the Issuer and each of its Board members and officers and each
person, if any, who controls the Issuer within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring
any shares, based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of Distributors or any of its employees or
alleging that the registration statement, Prospectus, Statement of
Additional Information, shareholder reports or other information filed or
made public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
Distributors. In no case (i) is the indemnity of Distributors in favor of
the Issuer or any person indemnified to be deemed to protect the Issuer or
any person against any liability to which the Issuer or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is
Distributors to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Issuer or any person
indemnified unless the Issuer or person, as the case may be, shall have
notified Distributors in writing of the claim within a reasonable time
after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice of
service on any designated agent). However, failure to notify Distributors
of any claim shall not relieve Distributors from any liability which it may
have to the Issuer or any person against whom the action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. In the case of any notice to Distributors, it shall be entitled
to participate, at its own expense, in the defense or, if it so elects, to
assume the defense of any suit brought to enforce the claim, but if
Distributors elects to assume the defense, the defense shall be conducted
by counsel chosen by it and satisfactory to the Issuer, to its officers and
Board and to any controlling person or persons, defendant or defendants in
the suit. In the event that Distributors elects to assume the defense of
any suit and retain counsel, the Issuer or controlling persons, defendant
or defendants in the suit, shall bear the fees and expense of any
additional counsel retained by them. If Distributors does not elect to
assume the defense of any suit, it will reimburse the Issuer, officers and
Board or controlling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained by them.
Distributors agrees to notify the Issuer promptly of the commencement of
any litigation or proceedings against it in connection with the issue and
sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force until January
31, 1995 and thereafter from year to year, provided continuance is approved
annually by the vote of a majority of the Board members of the Issuer, and
by the vote of those Board members of the Issuer who are not "interested
persons" of the Issuer and, if a plan under Rule 12b-1 under the Investment
Company Act of 1940 is in effect, by the vote of those Board members of the
Issuer who are not "interested persons" of the Issuer and who are not
parties to the Distribution and Service Plan or this Agreement and have no
financial interest in the operation of the Distribution and Service Plan or
in any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As
used in this paragraph, the terms "assignment" and "interested persons"
shall have the respective meanings specified in the Investment Company Act
of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated by either party upon not less than
sixty days' prior written notice to the other party.
13. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party giving
notice: if to the Issuer, at 82 Devonshire Street, Boston, Massachusetts,
and if to Distributors, at 82 Devonshire Street, Boston, Massachusetts.
14. Limitation of Liability - Distributors is expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of
Trust or other organizational document of the Issuer and agrees that the
obligations assumed by the Issuer under this contract shall be limited in
all cases to the Issuer and its assets. Distributors shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall Distributors seek satisfaction of any
such obligation from the Trustees or any individual Trustee of the Issuer.
Distributors understands that the rights and obligations of each series of
shares of the Issuer under the Issuer's Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other series.
15. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its name
and behalf, and its seal affixed, by one of its officers duly authorized,
and Distributors has executed this instrument in its name and behalf by one
of its officers duly authorized, as of the day and year first above
written.
FIDELITY ADVISOR ANNUITY FUND
By /s/ J. Gary Burkhead
FIDELITY DISTRIBUTORS CORPORATION
By /s/ Kurt A. Lange
EXHIBIT 6(c)
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY ADVISOR ANNUITY FUND
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this 18th day of November, 1994, between Fidelity Advisor
Annuity Fund, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts and which may issue one or more series of
beneficial interest ("Issuer"), with respect to shares of Fidelity Advisor
Annuity Income & Growth Fund, a series of the Issuer, and Fidelity
Distributors Corporation, a Massachusetts corporation having its principal
place of business in Boston, Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein contained,
the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to sell
shares on behalf of the Issuer during the term of this Agreement and
subject to the registration requirements of the Securities Act of 1933, as
amended ("1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws") under the following terms and
conditions: Distributors (i) shall have the right to sell, as agent on
behalf of the Issuer, shares authorized for issue and registered under the
1933 Act, and (ii) may sell shares under offers of exchange, if available,
between and among the funds advised by Fidelity Management & Research
Company ("FMR").
2. Sale of Shares by the Issuer - The rights granted to Distributors shall
be nonexclusive in that the Issuer reserves the right to sell its shares to
investors on applications received and accepted by the Issuer. Further,
the Issuer reserves the right to issue shares in connection with the merger
or consolidation, or acquisition by the Issuer through purchase or
otherwise, with any other investment company, trust, or personal holding
company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its treasury in
the event that in the discretion of the Issuer treasury shares shall be
sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all shares
sold to investors by Distributors or the Issuer will be sold at the public
offering price. The public offering price for all accepted subscriptions
will be the net asset value per share, as determined in the manner
described in the Issuer's current Prospectus and/or Statement of Additional
Information, plus a sales charge (if any) described in the Issuer's current
Prospectus and/or Statement of Additional Information. The Issuer shall in
all cases receive the net asset value per share on all sales. If a sales
charge is in effect, Distributors shall have the right subject to such
rules or regulations of the Securities and Exchange Commission as may then
be in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares of the
Issuer. If a fee in connection with shareholder redemptions is in effect,
the Issuer shall collect the fee on behalf of Distributors and, unless
otherwise agreed upon by the Issuer and Distributors, Distributors shall be
entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further
orders for shares shall be processed by Distributors except such
unconditional orders as may have been placed with Distributors before it
had knowledge of the suspension. In addition, the Issuer reserves the
right to suspend sales and Distributors' authority to process orders for
shares on behalf of the Issuer if, in the judgment of the Issuer, it is in
the best interests of the Issuer to do so. Suspension will continue for
such period as may be determined by the Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
Distributors, Distributors agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Issuer.
This shall not prevent Distributors from entering into like arrangements
(including arrangements involving the payment of underwriting commissions)
with other issuers. This does not obligate Distributors to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction in which it is
not now registered or to maintain its registration in any jurisdiction in
which it is now registered. If a sales charge is in effect, Distributors
shall have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the public
offering price only and fix in such agreements the portion of the sales
charge which may be retained by dealers, provided that the Issuer shall
approve the form of the dealer agreement and the dealer discounts set forth
therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act.
7. Authorized Representations - Distributors is not authorized by the
Issuer to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses
and Statements of Additional Information filed with the Securities and
Exchange Commission under the 1933 Act (as these registration statements,
Prospectuses and Statements of Additional Information may be amended from
time to time), or contained in shareholder reports or other material that
may be prepared by or on behalf of the Issuer for Distributors' use. This
shall not be construed to prevent Distributors from preparing and
distributing sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be bought
or sold by or through Distributors, and Distributors may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all action
necessary to register shares under the 1933 Act (subject to the necessary
approval of its shareholders) so that there will be available for sale the
number of shares Distributors may reasonably be expected to sell. The
Issuer shall make available to Distributors such number of copies of its
currently effective Prospectus and Statement of Additional Information as
Distributors may reasonably request. The Issuer shall furnish to
Distributors copies of all information, financial statements and other
papers which Distributors may reasonably request for use in connection with
the distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration
statement, Prospectus and Statement of Additional Information under the
1933 Act and amendments for the issue of its shares, (b) in connection with
the registration and qualification of shares for sale in the various states
in which the Board of Trustees of the Issuer shall determine it advisable
to qualify such shares for sale (including registering the Issuer as a
broker or dealer or any officer of the Issuer as agent or salesman in any
state), (c) of preparing, setting in type, printing and mailing any report
or other communication to shareholders of the Issuer in their capacity as
such, and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the Issuer, it
is recognized by the Issuer that FMR may reimburse Distributors for any
direct expenses incurred in the distribution of shares of the Issuer from
any source available to it, including advisory and service or management
fees paid to it by the Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
Distributors and each of its directors and officers and each person, if
any, who controls Distributors within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
based upon the ground that the registration statement, Prospectus,
Statement of Additional Information, shareholder reports or other
information filed or made public by the Issuer (as from time to time
amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make
the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Issuer does not agree to indemnify
Distributors or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Issuer by or on behalf of Distributors. In no case (i) is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any person against any
liability to the Issuer or its security holders to which Distributors or
such person would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement,
or (ii) is the Issuer to be liable under its indemnity agreement contained
in this paragraph with respect to any claim made against Distributors or
any person indemnified unless Distributors or person, as the case may be,
shall have notified the Issuer in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon
Distributors or any such person (or after Distributors or such person shall
have received notice of service on any designated agent). However, failure
to notify the Issuer of any claim shall not relieve the Issuer from any
liability which it may have to Distributors or any person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Issuer shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the
defense of any suit brought to enforce any claims, but if the Issuer elects
to assume the defense, the defense shall be conducted by counsel chosen by
it and satisfactory to Distributors or person or persons, defendant or
defendants in the suit. In the event the Issuer elects to assume the
defense of any suit and retain counsel, Distributors, officers or directors
or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by
them. If the Issuer does not elect to assume the defense of any suit, it
will reimburse Distributors, officers or directors or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Issuer agrees to notify
Distributors promptly of the commencement of any litigation or proceedings
against it or any of its officers or trustees in connection with the
issuance or sale of any of the shares.
Distributors also covenants and agrees that it will indemnify and hold
harmless the Issuer and each of its Board members and officers and each
person, if any, who controls the Issuer within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring
any shares, based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of Distributors or any of its employees or
alleging that the registration statement, Prospectus, Statement of
Additional Information, shareholder reports or other information filed or
made public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
Distributors. In no case (i) is the indemnity of Distributors in favor of
the Issuer or any person indemnified to be deemed to protect the Issuer or
any person against any liability to which the Issuer or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is
Distributors to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Issuer or any person
indemnified unless the Issuer or person, as the case may be, shall have
notified Distributors in writing of the claim within a reasonable time
after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice of
service on any designated agent). However, failure to notify Distributors
of any claim shall not relieve Distributors from any liability which it may
have to the Issuer or any person against whom the action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. In the case of any notice to Distributors, it shall be entitled
to participate, at its own expense, in the defense or, if it so elects, to
assume the defense of any suit brought to enforce the claim, but if
Distributors elects to assume the defense, the defense shall be conducted
by counsel chosen by it and satisfactory to the Issuer, to its officers and
Board and to any controlling person or persons, defendant or defendants in
the suit. In the event that Distributors elects to assume the defense of
any suit and retain counsel, the Issuer or controlling persons, defendant
or defendants in the suit, shall bear the fees and expense of any
additional counsel retained by them. If Distributors does not elect to
assume the defense of any suit, it will reimburse the Issuer, officers and
Board or controlling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained by them.
Distributors agrees to notify the Issuer promptly of the commencement of
any litigation or proceedings against it in connection with the issue and
sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force until January
31, 1995 and thereafter from year to year, provided continuance is approved
annually by the vote of a majority of the Board members of the Issuer, and
by the vote of those Board members of the Issuer who are not "interested
persons" of the Issuer and, if a plan under Rule 12b-1 under the Investment
Company Act of 1940 is in effect, by the vote of those Board members of the
Issuer who are not "interested persons" of the Issuer and who are not
parties to the Distribution and Service Plan or this Agreement and have no
financial interest in the operation of the Distribution and Service Plan or
in any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As
used in this paragraph, the terms "assignment" and "interested persons"
shall have the respective meanings specified in the Investment Company Act
of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated by either party upon not less than
sixty days' prior written notice to the other party.
13. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party giving
notice: if to the Issuer, at 82 Devonshire Street, Boston, Massachusetts,
and if to Distributors, at 82 Devonshire Street, Boston, Massachusetts.
14. Limitation of Liability - Distributors is expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of
Trust or other organizational document of the Issuer and agrees that the
obligations assumed by the Issuer under this contract shall be limited in
all cases to the Issuer and its assets. Distributors shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall Distributors seek satisfaction of any
such obligation from the Trustees or any individual Trustee of the Issuer.
Distributors understands that the rights and obligations of each series of
shares of the Issuer under the Issuer's Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other series.
15. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its name
and behalf, and its seal affixed, by one of its officers duly authorized,
and Distributors has executed this instrument in its name and behalf by one
of its officers duly authorized, as of the day and year first above
written.
FIDELITY ADVISOR ANNUITY FUND
By /s/ J. Gary Burkhead
FIDELITY DISTRIBUTORS CORPORATION
By /s/ Kurt A. Lange
EXHIBIT 6(d)
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY ADVISOR ANNUITY FUND
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this 18th day of November, 1994, between Fidelity Advisor
Annuity Fund, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts and which may issue one or more series of
beneficial interest ("Issuer"), with respect to shares of Fidelity Advisor
Annuity Government Investment Fund, a series of the Issuer, and Fidelity
Distributors Corporation, a Massachusetts corporation having its principal
place of business in Boston, Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein contained,
the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to sell
shares on behalf of the Issuer during the term of this Agreement and
subject to the registration requirements of the Securities Act of 1933, as
amended ("1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws") under the following terms and
conditions: Distributors (i) shall have the right to sell, as agent on
behalf of the Issuer, shares authorized for issue and registered under the
1933 Act, and (ii) may sell shares under offers of exchange, if available,
between and among the funds advised by Fidelity Management & Research
Company ("FMR").
2. Sale of Shares by the Issuer - The rights granted to Distributors shall
be nonexclusive in that the Issuer reserves the right to sell its shares to
investors on applications received and accepted by the Issuer. Further,
the Issuer reserves the right to issue shares in connection with the merger
or consolidation, or acquisition by the Issuer through purchase or
otherwise, with any other investment company, trust, or personal holding
company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its treasury in
the event that in the discretion of the Issuer treasury shares shall be
sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all shares
sold to investors by Distributors or the Issuer will be sold at the public
offering price. The public offering price for all accepted subscriptions
will be the net asset value per share, as determined in the manner
described in the Issuer's current Prospectus and/or Statement of Additional
Information, plus a sales charge (if any) described in the Issuer's current
Prospectus and/or Statement of Additional Information. The Issuer shall in
all cases receive the net asset value per share on all sales. If a sales
charge is in effect, Distributors shall have the right subject to such
rules or regulations of the Securities and Exchange Commission as may then
be in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares of the
Issuer. If a fee in connection with shareholder redemptions is in effect,
the Issuer shall collect the fee on behalf of Distributors and, unless
otherwise agreed upon by the Issuer and Distributors, Distributors shall be
entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further
orders for shares shall be processed by Distributors except such
unconditional orders as may have been placed with Distributors before it
had knowledge of the suspension. In addition, the Issuer reserves the
right to suspend sales and Distributors' authority to process orders for
shares on behalf of the Issuer if, in the judgment of the Issuer, it is in
the best interests of the Issuer to do so. Suspension will continue for
such period as may be determined by the Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
Distributors, Distributors agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Issuer.
This shall not prevent Distributors from entering into like arrangements
(including arrangements involving the payment of underwriting commissions)
with other issuers. This does not obligate Distributors to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction in which it is
not now registered or to maintain its registration in any jurisdiction in
which it is now registered. If a sales charge is in effect, Distributors
shall have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the public
offering price only and fix in such agreements the portion of the sales
charge which may be retained by dealers, provided that the Issuer shall
approve the form of the dealer agreement and the dealer discounts set forth
therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act.
7. Authorized Representations - Distributors is not authorized by the
Issuer to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses
and Statements of Additional Information filed with the Securities and
Exchange Commission under the 1933 Act (as these registration statements,
Prospectuses and Statements of Additional Information may be amended from
time to time), or contained in shareholder reports or other material that
may be prepared by or on behalf of the Issuer for Distributors' use. This
shall not be construed to prevent Distributors from preparing and
distributing sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be bought
or sold by or through Distributors, and Distributors may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all action
necessary to register shares under the 1933 Act (subject to the necessary
approval of its shareholders) so that there will be available for sale the
number of shares Distributors may reasonably be expected to sell. The
Issuer shall make available to Distributors such number of copies of its
currently effective Prospectus and Statement of Additional Information as
Distributors may reasonably request. The Issuer shall furnish to
Distributors copies of all information, financial statements and other
papers which Distributors may reasonably request for use in connection with
the distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration
statement, Prospectus and Statement of Additional Information under the
1933 Act and amendments for the issue of its shares, (b) in connection with
the registration and qualification of shares for sale in the various states
in which the Board of Trustees of the Issuer shall determine it advisable
to qualify such shares for sale (including registering the Issuer as a
broker or dealer or any officer of the Issuer as agent or salesman in any
state), (c) of preparing, setting in type, printing and mailing any report
or other communication to shareholders of the Issuer in their capacity as
such, and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the Issuer, it
is recognized by the Issuer that FMR may reimburse Distributors for any
direct expenses incurred in the distribution of shares of the Issuer from
any source available to it, including advisory and service or management
fees paid to it by the Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
Distributors and each of its directors and officers and each person, if
any, who controls Distributors within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
based upon the ground that the registration statement, Prospectus,
Statement of Additional Information, shareholder reports or other
information filed or made public by the Issuer (as from time to time
amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make
the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Issuer does not agree to indemnify
Distributors or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Issuer by or on behalf of Distributors. In no case (i) is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any person against any
liability to the Issuer or its security holders to which Distributors or
such person would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement,
or (ii) is the Issuer to be liable under its indemnity agreement contained
in this paragraph with respect to any claim made against Distributors or
any person indemnified unless Distributors or person, as the case may be,
shall have notified the Issuer in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon
Distributors or any such person (or after Distributors or such person shall
have received notice of service on any designated agent). However, failure
to notify the Issuer of any claim shall not relieve the Issuer from any
liability which it may have to Distributors or any person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Issuer shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the
defense of any suit brought to enforce any claims, but if the Issuer elects
to assume the defense, the defense shall be conducted by counsel chosen by
it and satisfactory to Distributors or person or persons, defendant or
defendants in the suit. In the event the Issuer elects to assume the
defense of any suit and retain counsel, Distributors, officers or directors
or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by
them. If the Issuer does not elect to assume the defense of any suit, it
will reimburse Distributors, officers or directors or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Issuer agrees to notify
Distributors promptly of the commencement of any litigation or proceedings
against it or any of its officers or trustees in connection with the
issuance or sale of any of the shares.
Distributors also covenants and agrees that it will indemnify and hold
harmless the Issuer and each of its Board members and officers and each
person, if any, who controls the Issuer within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring
any shares, based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of Distributors or any of its employees or
alleging that the registration statement, Prospectus, Statement of
Additional Information, shareholder reports or other information filed or
made public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
Distributors. In no case (i) is the indemnity of Distributors in favor of
the Issuer or any person indemnified to be deemed to protect the Issuer or
any person against any liability to which the Issuer or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is
Distributors to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Issuer or any person
indemnified unless the Issuer or person, as the case may be, shall have
notified Distributors in writing of the claim within a reasonable time
after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice of
service on any designated agent). However, failure to notify Distributors
of any claim shall not relieve Distributors from any liability which it may
have to the Issuer or any person against whom the action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. In the case of any notice to Distributors, it shall be entitled
to participate, at its own expense, in the defense or, if it so elects, to
assume the defense of any suit brought to enforce the claim, but if
Distributors elects to assume the defense, the defense shall be conducted
by counsel chosen by it and satisfactory to the Issuer, to its officers and
Board and to any controlling person or persons, defendant or defendants in
the suit. In the event that Distributors elects to assume the defense of
any suit and retain counsel, the Issuer or controlling persons, defendant
or defendants in the suit, shall bear the fees and expense of any
additional counsel retained by them. If Distributors does not elect to
assume the defense of any suit, it will reimburse the Issuer, officers and
Board or controlling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained by them.
Distributors agrees to notify the Issuer promptly of the commencement of
any litigation or proceedings against it in connection with the issue and
sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force until January
31, 1995 and thereafter from year to year, provided continuance is approved
annually by the vote of a majority of the Board members of the Issuer, and
by the vote of those Board members of the Issuer who are not "interested
persons" of the Issuer and, if a plan under Rule 12b-1 under the Investment
Company Act of 1940 is in effect, by the vote of those Board members of the
Issuer who are not "interested persons" of the Issuer and who are not
parties to the Distribution and Service Plan or this Agreement and have no
financial interest in the operation of the Distribution and Service Plan or
in any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As
used in this paragraph, the terms "assignment" and "interested persons"
shall have the respective meanings specified in the Investment Company Act
of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated by either party upon not less than
sixty days' prior written notice to the other party.
13. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party giving
notice: if to the Issuer, at 82 Devonshire Street, Boston, Massachusetts,
and if to Distributors, at 82 Devonshire Street, Boston, Massachusetts.
14. Limitation of Liability - Distributors is expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of
Trust or other organizational document of the Issuer and agrees that the
obligations assumed by the Issuer under this contract shall be limited in
all cases to the Issuer and its assets. Distributors shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall Distributors seek satisfaction of any
such obligation from the Trustees or any individual Trustee of the Issuer.
Distributors understands that the rights and obligations of each series of
shares of the Issuer under the Issuer's Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other series.
15. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its name
and behalf, and its seal affixed, by one of its officers duly authorized,
and Distributors has executed this instrument in its name and behalf by one
of its officers duly authorized, as of the day and year first above
written.
FIDELITY ADVISOR ANNUITY FUND
By /s/ J. Gary Burkhead
FIDELITY DISTRIBUTORS CORPORATION
By /s/ Kurt A. Lange
EXHIBIT 6(e)
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY ADVISOR ANNUITY FUND
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this 18th day of November, 1994, between Fidelity Advisor
Annuity Fund, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts and which may issue one or more series of
beneficial interest ("Issuer"), with respect to shares of Fidelity Advisor
Annuity High Yield Fund, a series of the Issuer, and Fidelity Distributors
Corporation, a Massachusetts corporation having its principal place of
business in Boston, Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein contained,
the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to sell
shares on behalf of the Issuer during the term of this Agreement and
subject to the registration requirements of the Securities Act of 1933, as
amended ("1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws") under the following terms and
conditions: Distributors (i) shall have the right to sell, as agent on
behalf of the Issuer, shares authorized for issue and registered under the
1933 Act, and (ii) may sell shares under offers of exchange, if available,
between and among the funds advised by Fidelity Management & Research
Company ("FMR").
2. Sale of Shares by the Issuer - The rights granted to Distributors shall
be nonexclusive in that the Issuer reserves the right to sell its shares to
investors on applications received and accepted by the Issuer. Further,
the Issuer reserves the right to issue shares in connection with the merger
or consolidation, or acquisition by the Issuer through purchase or
otherwise, with any other investment company, trust, or personal holding
company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its treasury in
the event that in the discretion of the Issuer treasury shares shall be
sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all shares
sold to investors by Distributors or the Issuer will be sold at the public
offering price. The public offering price for all accepted subscriptions
will be the net asset value per share, as determined in the manner
described in the Issuer's current Prospectus and/or Statement of Additional
Information, plus a sales charge (if any) described in the Issuer's current
Prospectus and/or Statement of Additional Information. The Issuer shall in
all cases receive the net asset value per share on all sales. If a sales
charge is in effect, Distributors shall have the right subject to such
rules or regulations of the Securities and Exchange Commission as may then
be in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares of the
Issuer. If a fee in connection with shareholder redemptions is in effect,
the Issuer shall collect the fee on behalf of Distributors and, unless
otherwise agreed upon by the Issuer and Distributors, Distributors shall be
entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further
orders for shares shall be processed by Distributors except such
unconditional orders as may have been placed with Distributors before it
had knowledge of the suspension. In addition, the Issuer reserves the
right to suspend sales and Distributors' authority to process orders for
shares on behalf of the Issuer if, in the judgment of the Issuer, it is in
the best interests of the Issuer to do so. Suspension will continue for
such period as may be determined by the Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
Distributors, Distributors agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Issuer.
This shall not prevent Distributors from entering into like arrangements
(including arrangements involving the payment of underwriting commissions)
with other issuers. This does not obligate Distributors to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction in which it is
not now registered or to maintain its registration in any jurisdiction in
which it is now registered. If a sales charge is in effect, Distributors
shall have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the public
offering price only and fix in such agreements the portion of the sales
charge which may be retained by dealers, provided that the Issuer shall
approve the form of the dealer agreement and the dealer discounts set forth
therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act.
7. Authorized Representations - Distributors is not authorized by the
Issuer to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses
and Statements of Additional Information filed with the Securities and
Exchange Commission under the 1933 Act (as these registration statements,
Prospectuses and Statements of Additional Information may be amended from
time to time), or contained in shareholder reports or other material that
may be prepared by or on behalf of the Issuer for Distributors' use. This
shall not be construed to prevent Distributors from preparing and
distributing sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be bought
or sold by or through Distributors, and Distributors may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all action
necessary to register shares under the 1933 Act (subject to the necessary
approval of its shareholders) so that there will be available for sale the
number of shares Distributors may reasonably be expected to sell. The
Issuer shall make available to Distributors such number of copies of its
currently effective Prospectus and Statement of Additional Information as
Distributors may reasonably request. The Issuer shall furnish to
Distributors copies of all information, financial statements and other
papers which Distributors may reasonably request for use in connection with
the distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration
statement, Prospectus and Statement of Additional Information under the
1933 Act and amendments for the issue of its shares, (b) in connection with
the registration and qualification of shares for sale in the various states
in which the Board of Trustees of the Issuer shall determine it advisable
to qualify such shares for sale (including registering the Issuer as a
broker or dealer or any officer of the Issuer as agent or salesman in any
state), (c) of preparing, setting in type, printing and mailing any report
or other communication to shareholders of the Issuer in their capacity as
such, and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the Issuer, it
is recognized by the Issuer that FMR may reimburse Distributors for any
direct expenses incurred in the distribution of shares of the Issuer from
any source available to it, including advisory and service or management
fees paid to it by the Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
Distributors and each of its directors and officers and each person, if
any, who controls Distributors within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
based upon the ground that the registration statement, Prospectus,
Statement of Additional Information, shareholder reports or other
information filed or made public by the Issuer (as from time to time
amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make
the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Issuer does not agree to indemnify
Distributors or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Issuer by or on behalf of Distributors. In no case (i) is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any person against any
liability to the Issuer or its security holders to which Distributors or
such person would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement,
or (ii) is the Issuer to be liable under its indemnity agreement contained
in this paragraph with respect to any claim made against Distributors or
any person indemnified unless Distributors or person, as the case may be,
shall have notified the Issuer in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon
Distributors or any such person (or after Distributors or such person shall
have received notice of service on any designated agent). However, failure
to notify the Issuer of any claim shall not relieve the Issuer from any
liability which it may have to Distributors or any person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Issuer shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the
defense of any suit brought to enforce any claims, but if the Issuer elects
to assume the defense, the defense shall be conducted by counsel chosen by
it and satisfactory to Distributors or person or persons, defendant or
defendants in the suit. In the event the Issuer elects to assume the
defense of any suit and retain counsel, Distributors, officers or directors
or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by
them. If the Issuer does not elect to assume the defense of any suit, it
will reimburse Distributors, officers or directors or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Issuer agrees to notify
Distributors promptly of the commencement of any litigation or proceedings
against it or any of its officers or trustees in connection with the
issuance or sale of any of the shares.
Distributors also covenants and agrees that it will indemnify and hold
harmless the Issuer and each of its Board members and officers and each
person, if any, who controls the Issuer within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring
any shares, based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of Distributors or any of its employees or
alleging that the registration statement, Prospectus, Statement of
Additional Information, shareholder reports or other information filed or
made public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
Distributors. In no case (i) is the indemnity of Distributors in favor of
the Issuer or any person indemnified to be deemed to protect the Issuer or
any person against any liability to which the Issuer or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is
Distributors to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Issuer or any person
indemnified unless the Issuer or person, as the case may be, shall have
notified Distributors in writing of the claim within a reasonable time
after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice of
service on any designated agent). However, failure to notify Distributors
of any claim shall not relieve Distributors from any liability which it may
have to the Issuer or any person against whom the action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. In the case of any notice to Distributors, it shall be entitled
to participate, at its own expense, in the defense or, if it so elects, to
assume the defense of any suit brought to enforce the claim, but if
Distributors elects to assume the defense, the defense shall be conducted
by counsel chosen by it and satisfactory to the Issuer, to its officers and
Board and to any controlling person or persons, defendant or defendants in
the suit. In the event that Distributors elects to assume the defense of
any suit and retain counsel, the Issuer or controlling persons, defendant
or defendants in the suit, shall bear the fees and expense of any
additional counsel retained by them. If Distributors does not elect to
assume the defense of any suit, it will reimburse the Issuer, officers and
Board or controlling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained by them.
Distributors agrees to notify the Issuer promptly of the commencement of
any litigation or proceedings against it in connection with the issue and
sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force until January
31, 1995 and thereafter from year to year, provided continuance is approved
annually by the vote of a majority of the Board members of the Issuer, and
by the vote of those Board members of the Issuer who are not "interested
persons" of the Issuer and, if a plan under Rule 12b-1 under the Investment
Company Act of 1940 is in effect, by the vote of those Board members of the
Issuer who are not "interested persons" of the Issuer and who are not
parties to the Distribution and Service Plan or this Agreement and have no
financial interest in the operation of the Distribution and Service Plan or
in any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As
used in this paragraph, the terms "assignment" and "interested persons"
shall have the respective meanings specified in the Investment Company Act
of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated by either party upon not less than
sixty days' prior written notice to the other party.
13. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party giving
notice: if to the Issuer, at 82 Devonshire Street, Boston, Massachusetts,
and if to Distributors, at 82 Devonshire Street, Boston, Massachusetts.
14. Limitation of Liability - Distributors is expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of
Trust or other organizational document of the Issuer and agrees that the
obligations assumed by the Issuer under this contract shall be limited in
all cases to the Issuer and its assets. Distributors shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall Distributors seek satisfaction of any
such obligation from the Trustees or any individual Trustee of the Issuer.
Distributors understands that the rights and obligations of each series of
shares of the Issuer under the Issuer's Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other series.
15. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its name
and behalf, and its seal affixed, by one of its officers duly authorized,
and Distributors has executed this instrument in its name and behalf by one
of its officers duly authorized, as of the day and year first above
written.
FIDELITY ADVISOR ANNUITY FUND
By /s/ J. Gary Burkhead
FIDELITY DISTRIBUTORS CORPORATION
By /s/ Kurt A. Lange
EXHIBIT 6(f)
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY ADVISOR ANNUITY FUND
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this 18th day of November, 1994, between Fidelity Advisor
Annuity Fund, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts and which may issue one or more series of
beneficial interest ("Issuer"), with respect to shares of Fidelity Advisor
Annuity Money Market Fund, a series of the Issuer, and Fidelity
Distributors Corporation, a Massachusetts corporation having its principal
place of business in Boston, Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein contained,
the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to sell
shares on behalf of the Issuer during the term of this Agreement and
subject to the registration requirements of the Securities Act of 1933, as
amended ("1933 Act"), and of the laws governing the sale of securities in
the various states ("Blue Sky Laws") under the following terms and
conditions: Distributors (i) shall have the right to sell, as agent on
behalf of the Issuer, shares authorized for issue and registered under the
1933 Act, and (ii) may sell shares under offers of exchange, if available,
between and among the funds advised by Fidelity Management & Research
Company ("FMR").
2. Sale of Shares by the Issuer - The rights granted to Distributors shall
be nonexclusive in that the Issuer reserves the right to sell its shares to
investors on applications received and accepted by the Issuer. Further,
the Issuer reserves the right to issue shares in connection with the merger
or consolidation, or acquisition by the Issuer through purchase or
otherwise, with any other investment company, trust, or personal holding
company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its treasury in
the event that in the discretion of the Issuer treasury shares shall be
sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all shares
sold to investors by Distributors or the Issuer will be sold at the public
offering price. The public offering price for all accepted subscriptions
will be the net asset value per share, as determined in the manner
described in the Issuer's current Prospectus and/or Statement of Additional
Information, plus a sales charge (if any) described in the Issuer's current
Prospectus and/or Statement of Additional Information. The Issuer shall in
all cases receive the net asset value per share on all sales. If a sales
charge is in effect, Distributors shall have the right subject to such
rules or regulations of the Securities and Exchange Commission as may then
be in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares of the
Issuer. If a fee in connection with shareholder redemptions is in effect,
the Issuer shall collect the fee on behalf of Distributors and, unless
otherwise agreed upon by the Issuer and Distributors, Distributors shall be
entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further
orders for shares shall be processed by Distributors except such
unconditional orders as may have been placed with Distributors before it
had knowledge of the suspension. In addition, the Issuer reserves the
right to suspend sales and Distributors' authority to process orders for
shares on behalf of the Issuer if, in the judgment of the Issuer, it is in
the best interests of the Issuer to do so. Suspension will continue for
such period as may be determined by the Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
Distributors, Distributors agrees to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Issuer.
This shall not prevent Distributors from entering into like arrangements
(including arrangements involving the payment of underwriting commissions)
with other issuers. This does not obligate Distributors to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction in which it is
not now registered or to maintain its registration in any jurisdiction in
which it is now registered. If a sales charge is in effect, Distributors
shall have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the public
offering price only and fix in such agreements the portion of the sales
charge which may be retained by dealers, provided that the Issuer shall
approve the form of the dealer agreement and the dealer discounts set forth
therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act.
7. Authorized Representations - Distributors is not authorized by the
Issuer to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses
and Statements of Additional Information filed with the Securities and
Exchange Commission under the 1933 Act (as these registration statements,
Prospectuses and Statements of Additional Information may be amended from
time to time), or contained in shareholder reports or other material that
may be prepared by or on behalf of the Issuer for Distributors' use. This
shall not be construed to prevent Distributors from preparing and
distributing sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be bought
or sold by or through Distributors, and Distributors may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all action
necessary to register shares under the 1933 Act (subject to the necessary
approval of its shareholders) so that there will be available for sale the
number of shares Distributors may reasonably be expected to sell. The
Issuer shall make available to Distributors such number of copies of its
currently effective Prospectus and Statement of Additional Information as
Distributors may reasonably request. The Issuer shall furnish to
Distributors copies of all information, financial statements and other
papers which Distributors may reasonably request for use in connection with
the distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration
statement, Prospectus and Statement of Additional Information under the
1933 Act and amendments for the issue of its shares, (b) in connection with
the registration and qualification of shares for sale in the various states
in which the Board of Trustees of the Issuer shall determine it advisable
to qualify such shares for sale (including registering the Issuer as a
broker or dealer or any officer of the Issuer as agent or salesman in any
state), (c) of preparing, setting in type, printing and mailing any report
or other communication to shareholders of the Issuer in their capacity as
such, and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the Issuer, it
is recognized by the Issuer that FMR may reimburse Distributors for any
direct expenses incurred in the distribution of shares of the Issuer from
any source available to it, including advisory and service or management
fees paid to it by the Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
Distributors and each of its directors and officers and each person, if
any, who controls Distributors within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in
connection therewith) arising by reason of any person acquiring any shares,
based upon the ground that the registration statement, Prospectus,
Statement of Additional Information, shareholder reports or other
information filed or made public by the Issuer (as from time to time
amended) included an untrue statement of a material fact or omitted to
state a material fact required to be stated or necessary in order to make
the statements not misleading under the 1933 Act, or any other statute or
the common law. However, the Issuer does not agree to indemnify
Distributors or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Issuer by or on behalf of Distributors. In no case (i) is
the indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any person against any
liability to the Issuer or its security holders to which Distributors or
such person would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement,
or (ii) is the Issuer to be liable under its indemnity agreement contained
in this paragraph with respect to any claim made against Distributors or
any person indemnified unless Distributors or person, as the case may be,
shall have notified the Issuer in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon
Distributors or any such person (or after Distributors or such person shall
have received notice of service on any designated agent). However, failure
to notify the Issuer of any claim shall not relieve the Issuer from any
liability which it may have to Distributors or any person against whom such
action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Issuer shall be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the
defense of any suit brought to enforce any claims, but if the Issuer elects
to assume the defense, the defense shall be conducted by counsel chosen by
it and satisfactory to Distributors or person or persons, defendant or
defendants in the suit. In the event the Issuer elects to assume the
defense of any suit and retain counsel, Distributors, officers or directors
or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by
them. If the Issuer does not elect to assume the defense of any suit, it
will reimburse Distributors, officers or directors or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Issuer agrees to notify
Distributors promptly of the commencement of any litigation or proceedings
against it or any of its officers or trustees in connection with the
issuance or sale of any of the shares.
Distributors also covenants and agrees that it will indemnify and hold
harmless the Issuer and each of its Board members and officers and each
person, if any, who controls the Issuer within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring
any shares, based upon the 1933 Act or any other statute or common law,
alleging any wrongful act of Distributors or any of its employees or
alleging that the registration statement, Prospectus, Statement of
Additional Information, shareholder reports or other information filed or
made public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
Distributors. In no case (i) is the indemnity of Distributors in favor of
the Issuer or any person indemnified to be deemed to protect the Issuer or
any person against any liability to which the Issuer or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is
Distributors to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Issuer or any person
indemnified unless the Issuer or person, as the case may be, shall have
notified Distributors in writing of the claim within a reasonable time
after the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice of
service on any designated agent). However, failure to notify Distributors
of any claim shall not relieve Distributors from any liability which it may
have to the Issuer or any person against whom the action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. In the case of any notice to Distributors, it shall be entitled
to participate, at its own expense, in the defense or, if it so elects, to
assume the defense of any suit brought to enforce the claim, but if
Distributors elects to assume the defense, the defense shall be conducted
by counsel chosen by it and satisfactory to the Issuer, to its officers and
Board and to any controlling person or persons, defendant or defendants in
the suit. In the event that Distributors elects to assume the defense of
any suit and retain counsel, the Issuer or controlling persons, defendant
or defendants in the suit, shall bear the fees and expense of any
additional counsel retained by them. If Distributors does not elect to
assume the defense of any suit, it will reimburse the Issuer, officers and
Board or controlling person or persons, defendant or defendants in the
suit, for the reasonable fees and expenses of any counsel retained by them.
Distributors agrees to notify the Issuer promptly of the commencement of
any litigation or proceedings against it in connection with the issue and
sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force until January
31, 1995 and thereafter from year to year, provided continuance is approved
annually by the vote of a majority of the Board members of the Issuer, and
by the vote of those Board members of the Issuer who are not "interested
persons" of the Issuer and, if a plan under Rule 12b-1 under the Investment
Company Act of 1940 is in effect, by the vote of those Board members of the
Issuer who are not "interested persons" of the Issuer and who are not
parties to the Distribution and Service Plan or this Agreement and have no
financial interest in the operation of the Distribution and Service Plan or
in any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval. This
Agreement shall automatically terminate in the event of its assignment. As
used in this paragraph, the terms "assignment" and "interested persons"
shall have the respective meanings specified in the Investment Company Act
of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this
Agreement may at any time be terminated by either party upon not less than
sixty days' prior written notice to the other party.
13. Notice - Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other
party at the last address furnished by the other party to the party giving
notice: if to the Issuer, at 82 Devonshire Street, Boston, Massachusetts,
and if to Distributors, at 82 Devonshire Street, Boston, Massachusetts.
14. Limitation of Liability - Distributors is expressly put on notice of
the limitation of shareholder liability as set forth in the Declaration of
Trust or other organizational document of the Issuer and agrees that the
obligations assumed by the Issuer under this contract shall be limited in
all cases to the Issuer and its assets. Distributors shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall Distributors seek satisfaction of any
such obligation from the Trustees or any individual Trustee of the Issuer.
Distributors understands that the rights and obligations of each series of
shares of the Issuer under the Issuer's Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other series.
15. This agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its name
and behalf, and its seal affixed, by one of its officers duly authorized,
and Distributors has executed this instrument in its name and behalf by one
of its officers duly authorized, as of the day and year first above
written.
FIDELITY ADVISOR ANNUITY FUND
By /s/ J. Gary Burkhead
FIDELITY DISTRIBUTORS CORPORATION
By /s/ Kurt A. Lange
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference to our Firm under the heading "Auditor"
in the Statement of Additional Information constituting part of
Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A
of Fidelity Advisor Annuity Fund.
/s/PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
July 25, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000927384
<NAME> Fidelity Advisor Annuity Fund
<SERIES>
<NUMBER> 11
<NAME> Fidelity Advisor Annuity Money Market Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> dec-31-1995
<PERIOD-END> jun-30-1995
<INVESTMENTS-AT-COST> 7,469
<INVESTMENTS-AT-VALUE> 7,469
<RECEIVABLES> 3
<ASSETS-OTHER> 726
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,198
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15
<TOTAL-LIABILITIES> 15
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,183
<SHARES-COMMON-STOCK> 8,183
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,183
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 83
<OTHER-INCOME> 0
<EXPENSES-NET> 13
<NET-INVESTMENT-INCOME> 70
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 70
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 70
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,527
<NUMBER-OF-SHARES-REDEEMED> 1,415
<SHARES-REINVESTED> 70
<NET-CHANGE-IN-ASSETS> 8,182
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32
<AVERAGE-NET-ASSETS> 2,768
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .026
<PER-SHARE-GAIN-APPREC> (9.000)
<PER-SHARE-DIVIDEND> .026
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000927384
<NAME> Fidelity Advisor Annuity Fund
<SERIES>
<NUMBER> 21
<NAME> Fidelity Advisor Annuity Government Investment Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> dec-31-1995
<PERIOD-END> jun-30-1995
<INVESTMENTS-AT-COST> 4,082
<INVESTMENTS-AT-VALUE> 4,191
<RECEIVABLES> 50
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,276
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14
<TOTAL-LIABILITIES> 14
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,002
<SHARES-COMMON-STOCK> 387
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 76
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 76
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 108
<NET-ASSETS> 4,262
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 90
<OTHER-INCOME> 0
<EXPENSES-NET> 14
<NET-INVESTMENT-INCOME> 76
<REALIZED-GAINS-CURRENT> 77
<APPREC-INCREASE-CURRENT> 108
<NET-CHANGE-FROM-OPS> 261
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 393
<NUMBER-OF-SHARES-REDEEMED> 6
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,262
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 38
<AVERAGE-NET-ASSETS> 2,710
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .200
<PER-SHARE-GAIN-APPREC> .810
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.010
<EXPENSE-RATIO> 100
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000927384
<NAME> Fidelity Advisor Annuity Fund
<SERIES>
<NUMBER> 31
<NAME> Fidelity Advisor Annuity High Yield Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> dec-31-1995
<PERIOD-END> jun-30-1995
<INVESTMENTS-AT-COST> 11,785
<INVESTMENTS-AT-VALUE> 11,908
<RECEIVABLES> 165
<ASSETS-OTHER> 269
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,342
<PAYABLE-FOR-SECURITIES> 1,405
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17
<TOTAL-LIABILITIES> 1,422
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,541
<SHARES-COMMON-STOCK> 982
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 200
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 56
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 123
<NET-ASSETS> 10,920
<DIVIDEND-INCOME> 20
<INTEREST-INCOME> 202
<OTHER-INCOME> 0
<EXPENSES-NET> 22
<NET-INVESTMENT-INCOME> 200
<REALIZED-GAINS-CURRENT> 56
<APPREC-INCREASE-CURRENT> 123
<NET-CHANGE-FROM-OPS> 379
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,004
<NUMBER-OF-SHARES-REDEEMED> 23
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 10,920
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 47
<AVERAGE-NET-ASSETS> 4,346
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .200
<PER-SHARE-GAIN-APPREC> .920
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.120
<EXPENSE-RATIO> 100
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000927384
<NAME> Fidelity Advisor Annuity Fund
<SERIES>
<NUMBER> 41
<NAME> Fidelity Advisor Annuity Income & Growth Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> dec-31-1995
<PERIOD-END> jun-30-1995
<INVESTMENTS-AT-COST> 11,898
<INVESTMENTS-AT-VALUE> 12,115
<RECEIVABLES> 628
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,756
<PAYABLE-FOR-SECURITIES> 630
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44
<TOTAL-LIABILITIES> 674
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,735
<SHARES-COMMON-STOCK> 1,125
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 74
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 63
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 210
<NET-ASSETS> 12,082
<DIVIDEND-INCOME> 16
<INTEREST-INCOME> 88
<OTHER-INCOME> 0
<EXPENSES-NET> 30
<NET-INVESTMENT-INCOME> 74
<REALIZED-GAINS-CURRENT> 63
<APPREC-INCREASE-CURRENT> 210
<NET-CHANGE-FROM-OPS> 347
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,125
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,082
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 54
<AVERAGE-NET-ASSETS> 4,153
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .070
<PER-SHARE-GAIN-APPREC> .670
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.740
<EXPENSE-RATIO> 150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000927384
<NAME> Fidelity Advisor Annuity Fund
<SERIES>
<NUMBER> 51
<NAME> Fidelity Advisor Annuity Growth Opportunities Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> dec-31-1995
<PERIOD-END> jun-30-1995
<INVESTMENTS-AT-COST> 37,370
<INVESTMENTS-AT-VALUE> 39,286
<RECEIVABLES> 1,087
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,373
<PAYABLE-FOR-SECURITIES> 2,035
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56
<TOTAL-LIABILITIES> 2,091
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 36,095
<SHARES-COMMON-STOCK> 3,247
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 136
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 136
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,915
<NET-ASSETS> 38,282
<DIVIDEND-INCOME> 97
<INTEREST-INCOME> 122
<OTHER-INCOME> 0
<EXPENSES-NET> 83
<NET-INVESTMENT-INCOME> 136
<REALIZED-GAINS-CURRENT> 136
<APPREC-INCREASE-CURRENT> 1,915
<NET-CHANGE-FROM-OPS> 2,187
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,247
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 38,282
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 33
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 91
<AVERAGE-NET-ASSETS> 11,040
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .040
<PER-SHARE-GAIN-APPREC> 1.750
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.790
<EXPENSE-RATIO> 150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000927384
<NAME> Fidelity Advisor Annuity Fund
<SERIES>
<NUMBER> 61
<NAME> Fidelity Advisor Annuity Overseas Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> dec-31-1995
<PERIOD-END> jun-30-1995
<INVESTMENTS-AT-COST> 4,944
<INVESTMENTS-AT-VALUE> 5,057
<RECEIVABLES> 174
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,231
<PAYABLE-FOR-SECURITIES> 171
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22
<TOTAL-LIABILITIES> 193
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,889
<SHARES-COMMON-STOCK> 475
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 38
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 113
<NET-ASSETS> 5,038
<DIVIDEND-INCOME> 32
<INTEREST-INCOME> 30
<OTHER-INCOME> (7)
<EXPENSES-NET> 17
<NET-INVESTMENT-INCOME> 38
<REALIZED-GAINS-CURRENT> (2)
<APPREC-INCREASE-CURRENT> 113
<NET-CHANGE-FROM-OPS> 149
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 507
<NUMBER-OF-SHARES-REDEEMED> 32
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,038
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 55
<AVERAGE-NET-ASSETS> 2,288
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .080
<PER-SHARE-GAIN-APPREC> .530
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.610
<EXPENSE-RATIO> 150
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
