FIDELITY ADVISOR ANNUITY FUND, N-30D, 1995-08-28

FIDELITY ADVISOR ANNUITY FUND
N-30D, 1995-08-28

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(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. If the advisor had not reimbursed certain fund
expenses during the period shown, the total return would have been lower.
Yield will vary.
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 4,
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.)
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 Fidelity 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 dramatically during the past
six months. During the fourth quarter of 1994, 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. 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, 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 Spring's 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 and 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 4, 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 AT
DUE 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 AT
DUE 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
LEGEND
(a) 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 schedule $ 7,468,938

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 4, 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 4, 1995
(COMMENCEMEN
T
OF OPERATIONS) T
O
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 4, 1995
(COMMENCEMEN
T
OF OPERATIONS) T
O
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 ,C 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 2.39%A

Ratio of net interest income to average net assets 5.18%A

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIOD SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS).
TOTAL RETURN DOES NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR INSURANCE
COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD REDUCE THE
TOTAL RETURNS 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 11.20%

Salomon Brothers Treasury/Agency Index 11.25%

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 include
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. Although many of the fund's investments are guaranteed
by the U.S. government, the fund itself is not guaranteed.
$10,000 OVER LIFE OF FUND
FA Annuity Govt. ISalomon Brothers
01/03/95 10000.00 10000.00
01/31/95 10130.00 10196.00
02/28/95 10350.00 10410.12
03/31/95 10410.00 10471.54
04/30/95 10530.00 10606.62
05/31/95 10940.00 11041.49
06/30/95 11010.00 11125.41

Let's say you invested $10,000 in Government Investment Fund on January 3,
1995, when the fund started. By June 30, 1995, your investment would have
grown to $11,010 - a 10.10% increase. With reinvested dividends and capital
gains, if any, a $10,000 investment in the Salomon Brothers Treasury/Agency
Index would have grown to $11,125 over the same period - an 11.25%
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 8.4

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

Years 4.8

DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN COMPARABLE INTEREST RATES. IF RATES
RISE 1%, FOR EXAMPLE, A FUND WITH A FIVE-YEAR DURATION IS
LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE
PRICE. ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY
DIFFER FROM THIS EXAMPLE.

</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 30, 1995, the fund slightly trailed 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 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS - 88.8%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
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 - 5.4%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
U.S. GOVERNMENT AGENCY - 5.4%
Federal Home Loan Mortgage Corp.
planned amortization class, Class 1496-C,
5%, 4/15/11 $ 20,000 $ 19,650
Federal National Mortgage Association
Series 1994-MS Class A,
7.71%, 4/1/06 29,727 30,672
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 $224,343) 226,177
REPURCHASE AGREEMENTS - 5.7%
MATURITY
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
(b) 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 .300 D
Net investment income

Net realized and unrealized gain (loss) .710

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 2.85% A

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). TOTAL RETURN DOES NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR
INSURANCE COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD
REDUCE THE TOTAL RETURNS SHOWN.
D NET INVESTMENT INCOME PER-SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
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 9.9

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 Echostar 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 period 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 still will 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%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
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
ENERGY - 9.9%
OIL & GAS - 9.9%
Flores & Rucks, Inc.
13 1/2%, 12/1/04 B3 90,000 101,250
Mesa Capital Corp. secured
12 3/4%, 6/30/98 (d) Caa 160,000 145,200
Transamerican Refining Corp.
16 1/2%, 2/15/02 (c) Caa 500,000 528,750
Transtexas Gas Corp. 11 1/2%,
6/15/02 B2 400,000 409,000
1,184,200
FINANCE - 0.7%
INSURANCE - 0.7%
I.C.H. Corp.
11 1/4%, 12/1/96 C 100,000 79,500
INDUSTRIAL MACHINERY & EQUIPMENT - 3.9%
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
MVE, Inc. Unit
12 1/2%, 2/15/02 B3 200,000 208,000
POLLUTION CONTROL - 2.2%
Envirosource, Inc. 9 3/4%,
6/15/03 B3 300,000 267,000
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 475,000

PRINCIPAL VALUE
AMOUNT (NOTE 1)
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
LODGING & GAMING - 6.1%
HMH Properties, Inc. 9 1/2%,
5/15/05 B1 210,000 203,700
Players International, Inc.
10 7/8%, 4/15/05 Ba3 530,000 522,050
725,750
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
PRINCIPAL VALUE
AMOUNT (NOTE 1)
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. (e):
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%
SD 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
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.
(e) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
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 .490 D
Net investment income

Net realized and unrealized gain (loss) .630

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

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 20.20%

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 include 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 Aggregate Bond I
01/03/95 10000.00 10000.00 10000.00
01/31/95 9990.00 10259.30 10197.90
02/28/95 10190.00 10659.10 10440.37
03/31/95 10260.00 10973.66 10504.42
04/30/95 10390.00 11296.83 10651.15
05/31/95 10610.00 11748.36 11063.32
06/30/95 10740.00 12021.28 11144.43

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 $12,020 - a 20.20% increase. If you had put $10,000 in the bond
index, it would have grown to $11,144 - an 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

Durables 3.2

Utilities 2.5

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
20.20% 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 couple of the fund's largest
cyclical stock investments include paper manufacturers Union Camp and
International Paper.
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 $12 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
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%
Alcan Australia Ltd. 15,700 28,285
Aluminum Co. of America 1,100 55,138
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) (d) 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. 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. depositary
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%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
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
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

PRINCIPAL VALUE
AMOUNT (NOTE 1)
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 euro
6 3/4% 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
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
PRINCIPAL VALUE
AMOUNT (NOTE 1)
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
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.
(d) Purchased on an installment basis. Market value reflects only those
payments made through June 30, 1995. The remaining installment of CAD
$5,600 is due in November of 1995.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $12,884,303 and $5,158,066, 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:
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 1.7%.
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 $69,720 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)

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 2.60% A

Ratio of net investment income to average net assets 3.54% A

Portfolio turnover rate 366% 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). TOTAL RETURN DOES NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR
INSURANCE COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD
REDUCE THE TOTAL RETURNS SHOWN.
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 20.20%

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 $12,020 over the same period - a
20.20% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1995
% OF FUND'S
INVESTMENTS

Federal National Mortgage Association 5.5

Philip Morris Companies, Inc. 4.6

General Motors Corp. 3.9

Intel Corp. 3.9

Compaq Computer Corp. 3.7

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 20.20%. 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 include 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 increasingly will 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 holdings 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; 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
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 135,775

Net unrealized appreciation (depreciation) on investments 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) 1,915,179
on investment securities

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

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 1.50% 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). TOTAL RETURN DOES NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR
INSURANCE COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD
REDUCE THE TOTAL RETURNS SHOWN.
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.) 1.5

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, some of the stocks I picked in Japan and Europe fared
well. Second, 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
electronics 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. Barclays, 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. Those include 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 Holdings Ltd. 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. 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
Empresas Ica Sociedad Controladora
SA de CV sponsored ADR
representing Ord. (part. cert.) 3,500 35,875
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
Grupo Carso SA de CV Class A-1 (a) 2,000 $ 10,944
Grupo Financiero Bancomer, SA de C.V.:
Class 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
C. S. Holdings (Reg.) 640 58,790
Nestle SA (Reg.) 81 84,562
Roche Holdings Ltd. (part. certs.) 2 12,930

SHARES VALUE (NOTE 1)
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
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.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities (Unaudited)
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
Repurchase Agreements 30.4
Retail & Wholesale 3.4
Services 1.8
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 6.10%

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 4.85% A

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). TOTAL RETURN DOES NOT REFLECT CHARGES ATTRIBUTABLE TO YOUR
INSURANCE COMPANY'S SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD
REDUCE THE TOTAL RETURNS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1995 (Unaudited)

1. 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.
2. 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.
3. 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
4. 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.
5. 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 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 were $2,270, $9,846 and $183 for
Income & Growth, Growth Opportunities and Overseas Funds, respectively.
6. 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.
7. 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
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