(2_FIDELITY_LOGOS)
FIDELITY ADVISOR ANNUITY
FUND
FIDELITY ADVISOR ANNUITY MONEY MARKET FUND
FIDELITY ADVISOR ANNUITY GOVERNMENT INVESTMENT FUND
FIDELITY ADVISOR ANNUITY HIGH YIELD FUND
FIDELITY ADVISOR ANNUITY INCOME & GROWTH FUND
FIDELITY ADVISOR ANNUITY GROWTH OPPORTUNITIES FUND
FIDELITY ADVISOR ANNUITY OVERSEAS FUND
SEMIANNUAL REPORT
JUNE 30, 1996
CONTENTS
MONEY MARKET FUND 3 PERFORMANCE
4 FUND TALK: THE MANAGER'S OVERVIEW
5 INVESTMENTS
7 FINANCIAL STATEMENTS
GOVERNMENT INVESTMENT FUND 9 PERFORMANCE AND INVESTMENT SUMMARY
10 FUND TALK: THE MANAGER'S OVERVIEW
11 INVESTMENTS
13 FINANCIAL STATEMENTS
HIGH YIELD FUND 15 PERFORMANCE AND INVESTMENT SUMMARY
16 FUND TALK: THE MANAGER'S OVERVIEW
17 INVESTMENTS
22 FINANCIAL STATEMENTS
INCOME & GROWTH FUND 24 PERFORMANCE AND INVESTMENT SUMMARY
25 FUND TALK: THE MANAGER'S OVERVIEW
26 INVESTMENTS
33 FINANCIAL STATEMENTS
GROWTH OPPORTUNITIES FUND 35 PERFORMANCE AND INVESTMENT SUMMARY
36 FUND TALK: THE MANAGER'S OVERVIEW
37 INVESTMENTS
41 FINANCIAL STATEMENTS
OVERSEAS FUND 43 PERFORMANCE AND INVESTMENT SUMMARY
44 FUND TALK: THE MANAGER'S OVERVIEW
45 INVESTMENTS
49 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS 51 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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
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 Fidelity had not reimbursed certain fund
expenses during the periods shown, the total returns would have been lower.
Yield will vary.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 1 LIFE OF
YEAR FUND
Money Market 5.19% 5.25%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had achieved that return by
performing at a constant rate each year.
Figures for more than one year assume a steady compounded rate of return
and are not the fund's year-by-year results, which fluctuated over the
periods shown. The life of fund figures are from commencement of operations
January 3, 1995.
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, THE TOTAL RETURNS WOULD HAVE BEEN LOWER.
YIELD
Row: 1, Col: 1, Value: 4.99
Row: 1, Col: 2, Value: 2.87
Row: 2, Col: 1, Value: 4.94
Row: 2, Col: 2, Value: 2.86
Row: 3, Col: 1, Value: 5.39
Row: 3, Col: 2, Value: 2.83
Row: 4, Col: 1, Value: 5.1
Row: 4, Col: 2, Value: 2.71
Row: 5, Col: 1, Value: 5.149999999999999
Row: 5, Col: 2, Value: 2.66
6% -
5% -
4% -
3% -
2% -
1% -
0%
Money Market
MMDA
6/28/95 9/27/95 12/27/95 4/3/96 6/26/96
Money Market 4.99% 4.94% 5.39% 5.10% 5.15%
MMDA 2.87% 2.86% 2.83% 2.71% 2.66%
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 year. 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, HOW HAS THE INVESTMENT CLIMATE CHANGED DURING THE PAST SIX MONTHS?
A. It has changed dramatically. Six months ago, the economy was growing
slowly, inflationary pressures were mild and, on the fiscal front, Congress
and the White House appeared headed toward a balanced budget agreement. In
December 1995, just before the period began, the Federal Reserve lowered
the rate banks charge each other for overnight loans - known as the federal
funds rate - one-quarter percentage point. On January 31, 1996, the Fed cut
the federal funds rate again, to 5.25%. By then, market participants were
so optimistic about the prospect of further rate cuts that the money market
yield curve was inverted; that is, rates fell rather than rose at longer
maturities.
Q. WHEN DID THE SHIFT IN SENTIMENT OCCUR?
A. The first indication that conditions might be about to change was Fed
Chairman Alan Greenspan's February testimony before Congress, which
dampened hopes of further rate cuts. Then came the February employment
report, which came in well above analysts' predictions. Because they're so
volatile, monthly employment numbers aren't always very accurate indicators
of long-term trends. But with the release of subsequent monthly employment
numbers, the trend solidified. We know now that during the first six months
of 1996, the economy created more than 230,000 new jobs per month, much
higher than in 1995 and almost double the rate of growth in the labor
force. While the recent strength in the labor market is probably not
sustainable, it has shown no signs of abating and will likely contribute to
robust economic activity in the second quarter and beyond. Meanwhile, the
trend toward lower inflation began to deteriorate, albeit at a moderate
pace. Initially, increases in food and energy prices were the prime
drivers. More recently, signs of rising wage pressures have appeared. As a
result, market participants have pushed short-term interest rates steadily
higher while reassessing when the Fed might choose to raise the federal
funds rate.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS?
A. When the period began, the fund's average maturity was 59 days. I might
have gone slightly longer, given my belief at the time that rates were
headed lower. However, the inverted yield curve made some shorter-term
securities more attractive, and I took advantage of that. As market
sentiment shifted, I began shortening the fund's average maturity. It was
49 days at the end of March. Typically during periods of volatility, the
market overreacts, creating buying opportunities. That's why in recent
months I've occasionally added securities with maturities between six and
twelve months, rather than continue to shorten up aggressively. At the end
of June, the fund's average maturity was 59 days.
Q. WHAT'S THE OUTLOOK?
A. The consensus among most market participants as we head into the third
quarter of 1996 is that the economy has considerable momentum. Job growth
is very strong, unemployment is at a new low for the cycle, and wages are
beginning to move higher. It appears that during the second quarter, the
gross domestic product (GDP) expanded at an annual rate of at least 4%, on
the strength of consumer activity and inventory restocking. Earlier
forecasts for slower economic growth in the second half of the year, which
include those made by the Fed staff, appear less likely to be realized.
That increases the probability that the Fed will lift short-term rates to
curtail inflationary pressures in the economy. In the past, the Fed has
been reluctant to intervene on the eve of a presidential election. This
time, however, it may have no choice. If the Fed does act, the most likely
time would be at the next meeting of the Federal Open Market Committee in
August. When the period ended, the fund's average maturity was 59 days, or
slightly longer than neutral. Looking ahead, I'll probably aim to shorten
up even more, at least enough to get the fund on the short side of neutral,
probably between 40 and 50 days.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: income and share price stability by
investing in high-quality, short-term
investments
START DATE: January 4, 1995
SIZE: as of June 30, 1996, more than $35 million
MANAGER: Robert Litterst, since January 1995;
joined Fidelity in 1992
(checkmark)
FIDELITY ADVISOR ANNUITY: MONEY MARKET FUND
INVESTMENTS JUNE 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
BANKERS' ACCEPTANCES - 3.7%
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC BANKERS' ACCEPTANCES - 3.7%
Chase Manhattan Bank
7/5/96 5.41% $ 800,000 $ 799,286
Chemical Banking Corp.
10/25/96 5.51 515,257 506,222
TOTAL BANKERS' ACCEPTANCES 1,305,508
CERTIFICATES OF DEPOSIT - 15.5%
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 9.9%
Bayerische Landesbank Girozentrale
4/22/97 5.85 1,000,000 1,000,000
Landesbank Hessen - Thuringen
9/9/96 5.40 1,000,000 1,000,000
Societe Generale
9/3/96 5.13 1,000,000 1,000,000
Westdeutsche Landesbank
8/26/96 5.08 500,000 500,000
3,500,000
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 5.6%
Bayerische Hypotheken-und Weschel
11/27/96 5.50 1,000,000 999,918
Deutsche Bank, A.G.
9/9/96 5.41 1,000,000 1,000,000
1,999,918
TOTAL CERTIFICATES OF DEPOSIT 5,499,918
COMMERCIAL PAPER - 53.1%
ABN-AMRO North America Finance, Inc.
7/18/96 5.38 400,000 398,885
7/18/96 5.39 100,000 99,717
11/8/96 5.55 1,000,000 980,200
ANZ (Delaware), Inc.
7/22/96 5.40 1,000,000 996,588
American Home Products
8/7/96 5.40 1,000,000 994,204
8/12/96 5.44 700,000 695,389
Associates Corp. of North America
8/20/96 5.45 1,000,000 992,200
Beneficial Corp.
8/19/96 5.45 500,000 496,175
CIESCO, L.P.
8/7/96 5.53 105,000 104,375
9/19/96 5.54 425,000 419,705
Chrysler Financial Corporation
7/29/96 5.45 1,000,000 995,500
Commonwealth Bank of Australia
7/17/96 5.42 600,000 598,380
Den Danske Corp., Inc.
7/31/96 5.48 264,000 262,721
du Pont (E.I.) de Nemours & Co.
8/5/96 5.54 600,000 596,701
Enterprise Funding Corp.
8/5/96 5.44 1,086,000 1,079,973
8/23/96 5.43 400,000 396,724
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
Ford Motor Credit Corp.
7/15/96 5.42 $ 450,000 $ 448,920
GTE Corp.
7/17/9 5.45 700,000 698,103
7/19/96 5.43 1,000,000 997,000
General Electric Capital Corp.
8/14/96 5.39 1,000,000 993,227
9/27/96 5.44 750,000 739,987
General Motors Acceptance Corp.
7/22/96 5.42 500,000 498,285
Goldman Sachs Group, L.P. (The)
8/21/96 5.40 500,000 496,099
H.J. Heinz Co.
7/29/96 5.53 123,000 122,437
Hewlett-Packard Co.
7/23/96 5.38 301,000 299,934
J.C. Penney Funding Corp.
7/11/96 5.51 500,000 499,084
Morgan (J.P.) & Co.
12/3/96 5.75 500,000 487,790
Morgan Stanley Group, Inc.
7/22/96 5.12 1,000,000 996,805
National Rural Util. Coop. Fin. Corp.
7/10/96 5.39 500,000 499,185
New Center Asset Trust
9/27/96 5.43 500,000 493,388
Preferred Receivables Funding Corp.
7/22/96 5.45 165,000 164,428
Textron, Inc.
7/24/96 5.53 350,000 348,663
TOTAL COMMERCIAL PAPER 18,890,772
BANK NOTES (A) - 6.2%
PNC Bank, N.A.
7/8/96 5.46 700,000 699,526
7/20/96 5.43 1,000,000 999,793
Society National Bank, Cleveland
7/1/96 5.43 500,000 499,535
TOTAL BANK NOTES 2,198,854
FEDERAL AGENCIES - 1.4%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - AGENCY COUPONS - 1.4%
5/28/97 6.00 500,000 500,000
MASTER NOTES (A) - 5.6%
Goldman Sachs Group, (The)
8/14/96 5.50 1,000,000 1,000,000
J.P. Morgan Securities
7/17/96 5.50 1,000,000 1,000,000
TOTAL MASTER NOTES 2,000,000
MEDIUM-TERM NOTES (A) - 8.4%
ANNUALIZED
YIELD AT
DUE TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
Beneficial Corp.
8/3/96 5.46 $ 1,000,000 $ 999,739
General Motors Acceptance Corp.
8/1/96 5.48 1,000,000 1,000,000
Transamerica Life Insurance and Annuity Co.
9/15/96 5.61 1,000,000 1,000,000
TOTAL MEDIUM-TERM NOTES 2,999,739
SHORT-TERM NOTES (A) - 5.6%
Liquid Asset Backed Securities Trust (1996-1)
7/15/96 5.52 1,000,000 1,000,000
SMM Trust (1995-D)
7/27/96 5.54 1,000,000 1,000,000
TOTAL SHORT-TERM NOTES 2,000,000
REPURCHASE AGREEMENTS - 0.5%
MATURITY
AMOUNT
In a joint trading account
(U.S. Government Obligations)
dated 6/28/96 due 7/1/96:
At 5.62% $ 83,039 83,000
(U.S. Treasury Obligations)
dated 6/28/96 due 7/1/96:
At 5% 104,043 104,000
TOTAL REPURCHASE AGREEMENTS 187,000
TOTAL INVESTMENTS - 100% $ 35,581,791
Total Cost for Income Tax Purposes - $35,581,791
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
INCOME TAX INFORMATION
At December 31, 1995, the fund had a capital loss carryforward of $87 which
will expire on December 31, 2003.
FIDELITY ADVISOR ANNUITY FUND: MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
ASSETS
Investm $ 35,581,791
ent in
securit
ies, at
value
(includ
ing
repurc
hase
agree
ments
of
$187,0
00) -
See
accom
panyin
g
sched
ule
Interest 107,828
receiv
able
TOTAL 35,689,619
ASSETS
LIABILITI
ES
Payable $ 104,358
for
invest
ments
purcha
sed
Share 52,329
transa
ctions
in
proces
s
Accrued 5,896
manag
ement
fee
Other 30,048
payabl
es and
accrue
d
expen
ses
TOTAL 192,631
LIABILIT
IES
NET $ 35,496,988
ASSET
S
Net
Assets
consist
of:
Paid in $ 35,496,875
capital
Accumul 113
ated
net
realize
d gain
(loss)
on
invest
ments
NET $ 35,496,988
ASSET
S, for
35,496
,875
shares
outsta
nding
NET $1.00
ASSET
VALUE,
offerin
g price
and
redem
ption
price
per
share
($35,4
96,988
(divided by)
35,496
,875
shares
)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
INTEREST $ 897,210
INCOME
EXPENS
ES
Manage $ 33,302
ment
fee
Transfer 6,729
agent
fees
Accounti 20,003
ng
fees
and
expen
ses
Audit 9,002
TOTAL 69,036
EXPEN
SES
NET 828,174
INTERE
ST
INCOM
E
NET 200
REALIZE
D GAIN
(LOSS)
ON
INVESTM
ENTS
NET $ 828,374
INCREA
SE IN
NET
ASSETS
RESULTI
NG
FROM
OPERAT
IONS
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED JANUARY 4, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
Operatio $ 828,174 $ 574,410
ns
Net
interes
t
incom
e
Net 200 (87)
realize
d gain
(loss)
NET 828,374 574,323
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
OPER
ATIO
NS
Distributi (828,174) (574,410)
ons to
shareh
olders
from
net
interes
t
incom
e
Share 21,211,410 37,951,030
transa
ctions
at net
asset
value
of
$1.00
per
share
Procee
ds
from
sales
of
shares
Reinve 828,174 556,876
stment
of
distrib
utions
from
net
interes
t
incom
e
Cost (15,517,221) (9,533,394)
of
shares
redee
med
NET 6,522,363 28,974,512
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
SHAR
E
TRAN
SACTI
ONS
TOTAL 6,522,563 28,974,425
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
NET
ASSETS
Beginn 28,974,425 -
ing of
period
End of $ 35,496,988 $ 28,974,425
period
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 4, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
</TABLE>
SELECTED PER-SHARE DATA
Net $ 1.000 $ 1.000
asset
value,
beginn
ing of
period
Income .026 .051
from
Invest
ment
Operat
ions
Net
interes
t
incom
e
Less (.026) (.051)
Distrib
utions
From
net
interes
t
incom
e
Net $ 1.000 $ 1.000
asset
value,
end of
period
TOTAL 2.61% 5.17%
RETUR
N B, C
RATIOS
AND
SUPPL
EMENT
AL
DATA
Net $ 35,497 $ 28,974
assets
, end
of
period
(000
omitte
d)
Ratio of .43%A .74%A,
expen D
ses to
averag
e net
assets
Ratio of 5.19%A 5.13%A
net
interes
t
incom
e to
averag
e net
assets
1. ANNUALIZED
2. TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
3. TOTAL RETURN DOES NOT REFLECT CHARGES ATTRIBUTABLE TO
YOUR INSURANCE COMPANY'S SEPARATE ACCOUNT.
INCLUSION OF THESE CHARGES WOULD REDUCE THE TOTAL
RETURN SHOWN.
4. FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S
EXPENSES DURING THE PERIOD. WITHOUT THIS
REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
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. A fund's total return 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 periods shown, the total returns would have been lower.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 1 LIFE OF
YEAR FUND
Government Investment 3.27% 8.98%
Salomon Brothers Treasury/Agency Index 4.49% 10.61%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
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 returns to the Salomon Brothers Treasury/Agency
Index - a market capitalization weighted index of U.S. Treasury and U.S.
government agency securities with fixed-rate coupons and weighted average
lives of at least one year.
Figures for more than one year assume a steady compounded rate of return
and are not the fund's year-by-year results, which fluctuated over the
periods shown. The life of fund figures are from commencement of operations
January 3, 1995.
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
IMAHDR PRASUN SHR__CHT 19960630 19960712 113805 S00000000000001
FA Annuity Govt Inv Fund SB Treasury/Agency
00614 SB022
1995/01/03 10000.00 10000.00
1995/01/31 10130.00 10195.95
1995/02/28 10350.00 10409.66
1995/03/31 10410.00 10471.57
1995/04/30 10530.00 10606.50
1995/05/31 10940.00 11041.45
1995/06/30 11010.00 11125.12
1995/07/31 10970.00 11086.50
1995/08/31 11080.00 11213.22
1995/09/30 11180.00 11314.41
1995/10/31 11340.00 11490.83
1995/11/30 11500.00 11676.80
1995/12/31 11654.15 11838.58
1996/01/31 11706.74 11913.59
1996/02/29 11454.30 11675.91
1996/03/31 11349.12 11573.17
1996/04/30 11264.97 11482.40
1996/05/31 11243.94 11479.74
1996/06/28 11370.15 11624.43
IMATRL PRASUN SHR__CHT 19960630 19960712 113807 R00000000000021
Let's say hypothetically that $10,000 was invested in Government Investment
Fund on January 3, 1995, when the fund started. As the chart shows, by June
30, 1996, the value of the investment would have grown to $11,370 - a
13.70% increase on the initial investment. For comparison, look at how the
Salomon Brothers Treasury/Agency Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $11,624 - a 16.24% increase.
INVESTMENT SUMMARY
COUPON DISTRIBUTION AS OF JUNE 30, 1996
<TABLE>
<CAPTION>
<S> <C>
% OF FUND'S
INVESTMENTS
Under 6% 9.2
6 - 6.99% 18.1
7 - 7.99% 21.3
8 - 8.99% 26.0
9 - 9.99% 21.1
Over 10% 3.1
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, 1996
<TABLE>
<CAPTION>
<S> <C>
Years 8.6
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, 1996
<TABLE>
<CAPTION>
<S> <C>
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 HAS THE FUND PERFORMED?
A. For the six months ended June 30, 1996, the fund underperformed the
general U.S. government funds average - as tracked by Lipper Analytical
Services - which had a return of -1.86%. The fund also trailed the Salomon
Brothers Treasury/Agency Index which had a return of -1.81% for the same
period. For the 12 months ended June 30, 1996, the fund lagged both the
Lipper average and the Salomon Brothers index, which posted returns of
3.86% and 4.49%, respectively.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S LAGGING PERFORMANCE?
A. One of the underlying themes behind the bond market's performance over
the past six months was the surprisingly strong U.S. economy. As a result,
bond yields were up across the board, with the five- and 10-year issues
being hit the hardest. On an absolute basis, this development hurt both the
market and the fund. Another factor was my weighting in U.S. agency bonds.
These performed fairly well during the period, but I wasn't as heavily
weighted in them early on as I would have liked.
Q. HOW WOULD YOU SUM UP THE INVESTING CLIMATE OVER
THE PERIOD?
A. The first couple of months were relatively positive for the market, and
then it went through some difficult times in March and April. Toward the
end of the period, we began to see signs of improvement. The market had
been focused on any actions the Federal Reserve Board may take regarding
interest rates. With news of the surprisingly strong economy, the bond
market reacted accordingly. Strong employment reports and job creation may
push wages up, something which the Fed monitors quite closely. These
factors all contributed to the gyrations of the market during the period.
Q. IN TERMS OF THE FUND, WERE THERE ANY SIGNIFICANT CHANGES YOU MADE DURING
THE PERIOD?
A. Many of the changes I made resulted from the fact that the fund almost
doubled in size over the past six months, rising from about $11 million to
just over $18 million at the end of June. With this increased cash flow, I
was able to continue shifting more weight to agency securities and to begin
adding to the fund's holdings in the mortgage-related sector. Agency
securities, which offer higher yields relative to comparable Treasuries,
have continued to be attractive investments.
Q. YOU MENTIONED THE MORTGAGE SECTOR. WHAT'S BEHIND YOUR ADDING TO THE
FUND'S WEIGHTING THERE?
A. With mortgage securities, you'll generally get better performance in
return for taking on some additional risks, including prepayment risk. This
fund's asset level had been too small to increase its exposure to
mortgage-backed bonds. With the increase in asset size, though, this is an
area that offers good opportunity and potential value. The fund's weighting
in this sector rose slightly during the period, but I'll be looking to add
to that in the coming months.
Q. WERE THERE ANY ISSUES WHICH PERFORMED PARTICULARLY WELL? ANY
DISAPPOINTMENTS?
A. The fund realized good performance from its holdings in Agency for
International Development/Israel bonds - loans made to Israel by the U.S.
government - as well as Guaranteed Export Trust certificates. On the
negative side, there were no clear-cut disappointments, but I would again
point to the light agency weighting at the beginning of the period.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. I think the market will continue to focus on potential interest-rate
activity by the Fed and how quickly those changes occur. Though we haven't
seen any indications yet, inflation could become an issue as well, and the
market will track that situation closely. As far as the fund, I'm
optimistic about the mortgage sector. I think the yields and the
supply/demand aspects are attractive.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: 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, 1996, more than $18 million
MANAGER: Robert Ives, since February 1995;
joined Fidelity in 1991
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: GOVERNMENT INVESTMENT FUND
INVESTMENTS JUNE 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS - 94.3%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 45.8%
7 3/8%, 11/15/97 $ 2,200,000 $ 2,239,182
9%, 5/15/98 1,230,000 1,292,078
8 7/8%, 2/15/99 210,000 223,091
6 7/8%, 3/31/00 48,000 48,697
9%, 11/15/18 30,000 36,563
8 7/8%, 2/15/19 3,135,000 3,779,148
12%, 8/15/23 390,000 549,776
8,168,535
U.S. GOVERNMENT AGENCY OBLIGATIONS - 48.5%
Farm Credit System Financial Assistance
Corp. Series A, 9 3/8%, 7/21/03 170,000 193,985
Federal Agricultural Mortgage Corp.
7.01%, 2/10/05 10,000 9,994
Federal Home Loan Bank:
9.20%, 8/25/97 450,000 465,539
8.45%, 7/26/99 140,000 147,832
8.60%, 8/25/99 300,000 317,673
8.85%, 6/21/00 40,000 43,131
6.46%, 8/24/00 220,000 218,797
6 3/4%, 4/5/04 375,000 370,898
7.38%, 8/5/04 110,000 112,973
7.46%, 9/9/04 50,000 51,602
7.70%, 9/20/04 40,000 41,881
8.09%, 12/28/04 10,000 10,714
7.59%, 3/10/05 10,000 10,408
7.315%, 4/21/05 10,000 10,225
Federal Home Loan Mortgage Corp.:
6.395%, 5/16/00 70,000 69,508
5.76%, 6/9/00 250,000 242,930
6.155%, 9/15/00 450,000 442,548
7 3/4%, 11/7/01 500,000 522,580
6.77%, 9/15/02 150,000 149,270
6.22%, 3/24/03 30,000 29,020
8%, 1/26/05 20,000 21,291
Federal National Mortgage Association:
9.15%, 4/10/98 500,000 524,532
6.32%, 8/3/00 110,000 108,848
5.45%, 10/10/03 20,000 18,422
Guaranteed Export Trust Certificates:
(assets of Trust guaranteed by U.S.
Government through Export-Import Bank):
Series 1993-C, 5.20%, 10/15/04 7,556 7,140
Series 1993-D, 5.23%, 5/15/05 15,319 14,429
Series 1994-A, 7.12%, 4/15/06 8,862 8,934
Series 1994-C, 6.61%, 9/15/99 2,550 2,562
Series 1996-A, 6.55%, 6/15/04 40,000 39,700
Guaranteed Trade Trust Certificates:
(assets of Trust guaranteed by U.S.
Government through Export-Import Bank):
Series 1994-B, 7 1/2%, 1/26/06 8,981 9,231
Government Trust Certificates:
(assets of Trust guaranteed by U.S.
Government through Defense Security
Assistance Agency):
Class 1-C 9 1/4%, 11/15/01 1,132,000 1,209,033
Class 2-E 9.40%, 5/15/02 45,000 48,245
Israel Export Trust Certificates Series
1994-1 (assets of Trust guaranteed by
U.S. Government through Export-Import
Bank) 6.88%, 1/26/03 16,471 16,522
PRINCIPAL VALUE
AMOUNT (NOTE 1)
Overseas Private Investment Corp.
(U.S. Government guaranteed
participation certificate) Series 1994-1995,
6.08%, 8/15/04 $ 140,000 $ 133,573
Private Export Funding Corp. secured:
5 1/2%, 3/15/01 600,000 573,582
5.65%, 3/15/03 283,500 276,033
8 3/4%, 6/30/03 60,000 66,224
Series LL, 7.90%, 3/31/00 400,000 416,156
Series SS, 5.80%, 2/1/04 5,000 4,790
Series VV, 6.24%, 5/15/02 20,000 19,497
State of Israel (guaranteed by U.S.
Government through Agency for
International Development):
4 7/8%, 9/15/98 30,000 29,109
8%, 11/15/01 20,000 21,118
6 1/4%, 8/15/02 422,000 411,671
6 1/8%, 3/15/03 70,000 67,343
6 5/8%, 2/15/04 180,000 175,738
7 5/8%, 8/15/04 330,000 342,362
5.89%, 8/15/05 485,000 449,069
8 1/2%, 4/1/06 10,000 10,812
U.S. Housing & Urban Development
6.98%, 8/1/05 180,000 179,674
8,667,148
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $17,224,387) 16,835,683
U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES - 4.2%
Federal National Mortgage Association:
6.345%, 3/1/99 79,106 79,007
6 1/2%, 2/1/10 2,040 2,010
6%, 12/1/10 to 4/1/16 695,145 657,343
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $749,228) 738,360
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.3%
U.S. GOVERNMENT AGENCY - 0.3%
Federal National Mortgage Association:
planned amortization class Series 1993
Class 135-PC, 5 1/2%, 7/25/02 30,000 29,531
Series 1994-M3 Class A,
7.71%, 4/1/06 29,225 29,718
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS
(Cost $58,431) 59,249
REPURCHASE AGREEMENTS - 1.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.46%, dated
6/28/96 due 7/1/96 $ 217,099 217,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $18,249,046) $ 17,850,292
OTHER INFORMATION
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $18,744,725 and $10,570,562, respectively.
INCOME TAX INFORMATION
At June 30, 1996, the aggregate cost of investment securities for income
tax purposes was $18,249,046. Net unrealized depreciation aggregated
$398,754, of which $17,840 related to appreciated investment securities and
$416,594 related to depreciated investment securities.
FIDELITY ADVISOR ANNUITY FUND: GOVERNMENT INVESTMENT FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
ASSETS
In $ 17,850,292
vestm
e
nt in
securit
ies, at
value
(includ
ing
repurc
hase
agree
ments
of
$217,0
00)
(cost
$18,24
9,046)
- - See
accom
panyin
g
sched
ule
Cash 262
Receiva 202,678
ble for
invest
ments
sold
Receiva 19,854
ble for
fund
shares
sold
Interest 335,069
receiv
able
TOTAL 18,408,155
ASSETS
LIABILITI
ES
Payable $ 152,260
for
invest
ments
purcha
sed
Accrued 11,680
manag
ement
fee
Other 16,624
payabl
es and
accrue
d
expen
ses
TOTAL 180,564
LIABILIT
IES
NET $ 18,227,591
ASSET
S
Net
Assets
consist
of:
Paid in $ 18,320,683
capital
Undistrib 457,299
uted
net
invest
ment
incom
e
Accumul (151,637
ated )
undistr
ibuted
net
realize
d gain
(loss)
on
invest
ments
Net (398,754
unreali )
zed
apprec
iation
(depre
ciation
) on
invest
ments
NET $ 18,227,591
ASSET
S, for
1,685,
681
shares
outsta
nding
NET $10.81
ASSET
VALUE,
offerin
g price
and
redem
ption
price
per
share
($18,2
27,591
(divided by)
1,685,
681
shares
)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
INVESTM $ 530,412
ENT
INCOME
Interest
EXPENS
ES
Manage $ 33,252
ment
fee
Transfer 6,538
agent
fees
Accounti 30,000
ng
fees
and
expen
ses
Non-inte 26
rested
trustee
s'
compe
nsatio
n
Custodia 1,954
n fees
and
expen
ses
Audit 9,894
Legal 20
Miscella 28
neous
Total 81,712
expen
ses
before
reducti
ons
Expen (8,599 73,113
se )
reducti
ons
NET 457,299
INVEST
MENT
INCOM
E
REALIZE (151,619
D AND )
UNREALIZ
ED GAIN
(LOSS)
Net
realize
d gain
(loss)
on
invest
ment
securit
ies
Change (612,072
in net )
unreali
zed
apprec
iation
(depre
ciation
)
on
invest
ment
securit
ies
NET GAIN (763,691
(LOSS) )
NET $ (306,392
INCREA )
SE
(DECRE
ASE) IN
NET
ASSETS
RESULTI
NG
FROM
OPERAT
IONS
OTHER $ 8,599
INFORM
ATION
Expense
reducti
ons
FMR
reimbu
rseme
nt
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
Operatio $ 457,299 $ 279,228
ns
Net
invest
ment
incom
e
Net (151,619) 210,750
realize
d gain
(loss)
Chang (612,072) 213,318
e in
net
unreali
zed
apprec
iation
(depre
ciation
)
NET (306,392) 703,296
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
OPER
ATIO
NS
Distributi - (287,183)
ons to
shareh
olders
From
net
invest
ment
incom
e
From - (208,860)
net
realize
d gain
TOTAL - (496,043)
DISTRIB
UTIONS
Share 8,100,113 10,213,975
transa
ctions
Net
procee
ds
from
sales
of
shares
Reinve - 496,043
stment
of
distrib
utions
Cost (291,650) (191,751)
of
shares
redee
med
NET 7,808,463 10,518,267
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
SHAR
E
TRAN
SACTI
ONS
TOTAL 7,502,071 10,725,520
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
NET
ASSETS
Beginn 10,725,520 -
ing of
period
End of $ 18,227,591 $ 10,725,520
perio
d
(incl
udin
g
undi
strib
uted
net
inve
stme
nt
inco
me
of
$457
,299
and
$0,
resp
ectiv
ely)
OTHER
INFORMAT
ION
Shares
Sold 744,449 940,275
Issued - 45,095
in
reinve
stment
of
distrib
utions
Redee (26,806) (17,332)
med
Net 717,643 968,038
increa
se
(decre
ase)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
</TABLE>
SELECTE $ 11.080 $ 10.000
D
PER-S
HARE
DATA
Net
asset
value,
beginn
ing of
period
Income .271 .330
from
Invest
ment
Operat
ions
Net
invest
ment
incom
e
Net (.541) 1.320
realize
d and
unreali
zed
gain
(loss)
Total (.270) 1.650
from
invest
ment
operati
ons
Less - (.330)
Distrib
utions
From
net
invest
ment
incom
e
From - (.240)
net
realize
d gain
Total - (.570)
distrib
utions
Net $ 10.810 $ 11.080
asset
value,
end of
period
TOTAL (2.44)% 16.54%
RETUR
N B, C
RATIOS
AND
SUPPL
EMENT
AL
DATA
Net $ 18,228 $ 10,726
assets
, end
of
period
(000
omitte
d)
Ratio of .99% A, 1.00% A,
expen D D
ses to
averag
e net
assets
Ratio of 6.17% A 5.87% A
net
invest
ment
incom
e to
averag
e net
assets
Portfolio 149% A 220% A
turnov
er rate
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED AND DO NOT REFLECT
CHARGES ATTRIBUTED TO YOUR INSURANCE COMPANY'S
SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD
REDUCE THE TOTAL RETURNS SHOWN. C THE TOTAL RETURNS
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). D FMR AGREED
TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
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. A fund's total return 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
securities that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns would
have been lower.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 1 LIFE OF
YEAR FUND
High Yield 13.34% 16.77%
Merrill Lynch High Yield Master Index 9.37% 15.08%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund performed at a constant rate
each year.
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 returns to that of the Merrill Lynch High Yield
Master Index - a market-capitalization weighted index which includes all
domestic and yankee high-yield bonds. Issues included in the Index have
maturities of at least one year and have a credit rating of less than BBB-
/Baa3, but are not in default.
Figures for more than one year assume a steady compounded rate of return
and are not the fund's year-by-year results, which fluctuated over the
periods shown. The life of fund figures are from commencement of operations
January 3, 1995.
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
IMAHDR PRASUN SHR__CHT 19960630 19960712 114208 S00000000000001
FA Annuity High Yield ML High Yield Master
00615 ML002
1995/01/03 10000.00 10000.00
1995/01/31 9960.00 10141.30
1995/02/28 10350.00 10457.72
1995/03/31 10500.00 10603.26
1995/04/30 10920.00 10851.52
1995/05/31 11160.00 11190.55
1995/06/30 11120.00 11276.02
1995/07/31 11400.00 11404.93
1995/08/31 11410.00 11474.15
1995/09/30 11580.00 11605.42
1995/10/31 11770.00 11687.69
1995/11/30 11800.00 11801.78
1995/12/31 12012.24 11991.22
1996/01/31 12302.69 12180.60
1996/02/29 12427.24 12198.94
1996/03/31 12375.33 12165.81
1996/04/30 12468.77 12171.32
1996/05/31 12645.26 12259.10
1996/06/28 12614.12 12332.74
IMATRL PRASUN SHR__CHT 19960630 19960712 114210 R00000000000021
Let's say hypothetically that $10,000 was invested in High Yield Fund on
January 3, 1995, when the fund started. As the chart shows, by June 30,
1996, the value of the investment would have grown to $12,604 - a 26.04%
increase on the initial investment. For comparison, look at how the Merrill
Lynch High Yield Master Index did over the same period. With dividends and
capital gains, if any, reinvested, the same $10,000 investment would have
grown to $12,333 - a 23.33% increase.
INVESTMENT SUMMARY
TOP FIVE HOLDINGS AS OF JUNE 30, 1996
(BY ISSUER, EXCLUDING REPURCHASE AGREEMENTS) % OF FUND'S
INVESTMENTS
Nextlink Communications LLC 3.5
Unisys Corp. 3.1
Grupo Televisa SA de CV (various issues) 2.7
Smith's Food & Drug Centers, Inc. 2.6
Specialty Foods Corp. (various issues) 2.5
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1996
% OF FUND'S
INVESTMENTS
Media & Leisure 22.7
Utilities 13.9
Basic Industries 9.5
Nondurables 7.6
Retail & Wholesale 6.8
QUALITY DIVERSIFICATION AS OF JUNE 30, 1996
(MOODY'S RATINGS) % OF FUND'S
INVESTMENTS
Aaa, Aa, A 0.0
Baa 0.0
Ba 10.2
B 51.4
Caa, Ca, C 8.8
Nonrated 10.4
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW ACCOUNTED FOR 10.4% OF THE FUND'S INVESTMENTS.
TABLE EXCLUDES SHORT-TERM INVESTMENTS.
FIDELITY ADVISOR ANNUITY FUND: HIGH YIELD FUND
FUND TALK: THE MANAGER'S OVERVIEW
s
An interview with Margaret Eagle, Portfolio Manager of Fidelity Advisor
Annuity High Yield Fund
Q. HOW DID THE FUND DO, MARGARET?
A. The fund performed well, both on an absolute and relative basis,
outperforming the Merrill Lynch High Yield Master Index, which returned
2.85% and 9.37%, respectively, for the six- and 12-month periods ended June
30, 1996.
Q. WHICH OF THE FUND'S HOLDINGS DID WELL?
A. Several of the fund's large holdings performed very well during the
period, which accounts for its above-average performance. The fund's
holdings in satellite broadcaster Echostar Communications Corp. appreciated
as the company successfully launched its first satellite late last year and
rapidly added new subscribers. Echostar is one of just three companies that
have an orbital slot - an address in the sky. When MCI purchased another
orbital slot, it helped to reaffirm the value of Echostar's assets. Another
of the fund's top performers over the past six months was Revlon. The
success of its new products helped to boost sales and growth. Another
positive was that the company issued stock through an initial public
offering (IPO) early this year. The success of the IPO highlighted the
value of the Revlon brand name and the impressive turnaround of the
company.
Q. WHICH OF THE FUND'S OTHER HOLDINGS POSTED STRONG PERFORMANCE?
A. GPA Holland, one of the world's largest aircraft leasing companies, did
quite well. GPA did a major refinancing in the first quarter of 1996, which
essentially put to rest its liquidity concerns, or its ability to meet its
debt-service payments. The fund still owns a short-maturity subordinated
bond. Those bonds enjoyed healthy appreciation during the refinancing
process. Other strong performers were subordinated bonds issued by
Thrifty-Payless, which I added in the fourth quarter of 1995. These bonds,
which I bought at a discount to their par value - or below their face value
- - carried with them the requirement that if the company were to do an IPO,
the debt would be retired at par plus accrued interest. The company
successfully did an IPO in April and purchased our holdings in
Thrifty-Payless, to the fund's benefit.
Q. DESPITE THE FUND'S OUTPERFORMANCE OF THE MARKET IN GENERAL, THERE MUST
HAVE BEEN SOME DISAPPOINTMENTS.
A. Transamerican Refining proved to be disappointing. The company announced
that there would be construction delays and cost overruns for the
construction of its new refinery. During the period, I eliminated these
bonds from the fund.
Q. THROUGHOUT THE PERIOD, YOU HAD AN EMPHASIS ON THE HIGHER-QUALITY TIERS
OF THE MARKET. DO YOU ANTICIPATE THAT YOU'LL CONTINUE TO DO SO OVER THE
NEXT SIX MONTHS?
A. As I have over the past year, I'll most likely keep a good portion of
the fund in the relatively higher-quality bonds within the high-yield
sector. Over the long-term, I believe these bonds offer the best potential
risk/reward payoff. However, these bonds could be more sensitive to rising
interest rates, if that occurs. Therefore, I am also, as always, looking
for opportunities where strong credit improvements - even with
lower-quality bonds - can provide capital appreciation.
Q. WHAT'S YOUR OUTLOOK?
A. Several things will shape the high-yield market's performance during the
months to come. One important factor is the direction of interest rates.
While high-yield bonds tend to outperform high-grade corporate and Treasury
bonds when interest rates rise, an increase in rates generally causes price
deterioration for all bonds. From an economic standpoint, I think
conditions provide a favorable backdrop for the market. While we've seen
some earnings trouble with paper and steel companies, such other sectors as
media companies and supermarkets are actually posting better earnings.
Investor demand for high-yield issues has been quite strong. Barring any
major uptick in interest rates or negative credit development, I think we
could continue to see a relatively strong demand for high-yield
investments.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: 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, 1996, more than $67 million
MANAGER: Margaret Eagle, since January 1995;
joined Fidelity in 1980
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: HIGH YIELD FUND
INVESTMENTS JUNE 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
CORPORATE BONDS - 79.9%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CONVERTIBLE BONDS - 1.2%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
Exide Corp.
2.90%, 12/15/05 (e) B2 $ 350,000 $ 193,375
UTILITIES - 0.9%
TELEPHONE SERVICES - 0.9%
GST Telecommunications, Inc.
0%, 12/15/05 (c)(e) - 20,000 19,900
Winstar Communications, Inc.
0%, 10/15/05 (c)(e) - 870,000 600,300
TOTAL UTILITIES 620,200
TOTAL CONVERTIBLE BONDS 813,575
NONCONVERTIBLE BONDS - 78.7%
AEROSPACE & DEFENSE - 2.2%
Alliant Techsystems, Inc.
11 3/4%, 3/1/03 B2 40,000 43,100
Be Aerospace, Inc.
9 7/8%, 2/1/06 B2 40,000 39,300
RHI Holdings, Inc.
11 7/8%, 3/1/99 B2 1,000,000 1,000,000
Rohr, Inc.
11 5/8%, 5/15/03 Ba3 70,000 77,000
Wyman-Gordon Co.
10 3/4%, 3/15/03 B1 250,000 262,500
1,421,900
BASIC INDUSTRIES - 9.3%
CHEMICALS & PLASTICS - 3.2%
Acetex Corp. yankee
9 3/4%, 10/1/03 B1 1,050,000 1,026,370
Foamex-JPS Automotive LP/
Foamex-JPS Capital Corp.,
Series B, 0%, 7/1/04 (c) Caa 570,000 400,425
Foamex LP/Foamex Capital
Corp. 11 1/4%, 10/1/02 B1 500,000 511,250
Texas Petrochemicals Corp.
11 1/8%, 7/1/06 (e) B3 120,000 121,800
Viridian, Inc. yankee
10 1/2%, 3/31/14 B1 30,000 31,050
2,090,895
METALS & MINING - 1.3%
Kaiser Aluminum & Chemical
Corp. 12 3/4%, 2/1/03 B2 600,000 637,500
Renco Metals, Inc.
11 1/2%, 7/1/03 B2 240,000 240,000
877,500
PACKAGING & CONTAINERS - 0.9%
Four M Corp.
12%, 6/1/06 (e) B2 150,000 153,375
Gaylord Container
12 3/4%, 5/15/05 Caa 450,000 473,625
627,000
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PAPER & FOREST PRODUCTS - 3.9%
Florida Coast Paper Co. LLC
12 3/4, 6/1/03 (e) B3 $ 190,000 $ 197,600
Rapp International Finance Co. BV
yankee 13 1/4%, 12/15/05 Ba3 980,000 1,060,850
Riverwood International
10 7/8%, 4/1/08 B3 920,000 903,900
Stone Container Corp.
11 1/2%, 10/1/04 B1 50,000 50,313
Tjiwi Kimia International Finance
Co. 13 1/4%, 8/1/01 Ba3 290,000 320,450
2,533,113
TOTAL BASIC INDUSTRIES 6,128,508
CONSTRUCTION & REAL ESTATE - 2.4%
Greystone Homes, Inc.
10 3/4%, 3/1/04 B1 1,600,000 1,568,000
DURABLES - 0.9%
AUTOS, TIRES, & ACCESSORIES - 0.5%
Hayes Wheels International, Inc.
11%, 7/15/06 B3 280,000 283,500
HOME FURNISHINGS - 0.2%
Interlake Corp.
12 1/8%, 3/1/02 B3 150,000 150,000
TEXTILES & APPAREL - 0.2%
CMI Industries, Inc.
9 1/2%, 10/1/03 B1 80,000 69,000
JPS Automotive Products Corp.
11 1/8%, 4/1/01 B2 60,000 62,100
131,100
TOTAL DURABLES 564,600
ENERGY - 4.6%
ENERGY SERVICES - 1.8%
Empire Gas Corp.
7%, 7/15/04 (d) Caa 1,390,000 1,181,500
OIL & GAS - 2.8%
Chesapeake Energy Corp.
10 1/2%, 6/1/02 Ba3 690,000 721,050
Flores & Rucks, Inc.
13 1/2%, 12/1/04 B3 390,000 450,450
KCS Energy, Inc.
11%, 1/15/03 B1 270,000 286,200
Mesa Operating Co.
10 5/8%, 7/1/06 B2 180,000 183,600
United Meridian Corp.
10 3/8%, 10/15/05 B2 190,000 195,700
1,837,000
TOTAL ENERGY 3,018,500
FINANCE - 2.5%
ASSET-BACKED SECURITIES - 1.0%
Airplanes 10 7/8%, 3/15/19 Ba2 670,000 700,150
CORPORATE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.5%
Homeside, Inc.
11 1/4%, 5/15/03 (e) B+ $ 100,000 $ 103,000
Polysindo International Finance
Co. BV yankee
11 3/8%, 6/15/06 Ba3 220,000 224,125
327,125
INSURANCE - 0.9%
Penncorp Financial Group, Inc.
9 1/4%, 12/15/03 B1 560,000 562,800
SAVINGS & LOANS - 0.1%
First Nationwide Holdings, Inc.
12 1/4%, 5/15/01 Ba2 50,000 54,000
TOTAL FINANCE 1,644,075
HEALTH - 1.1%
MEDICAL EQUIPMENT & SUPPLIES - 1.1%
Dade International, Inc.
11 1/8%, 5/1/06 (e) B3 700,000 726,250
HOLDING COMPANIES - 0.6%
BPC Holdings Corp.
12 1/2%, 6/15/06 (e) - 350,000 353,500
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
INDUSTRIAL MACHINERY & EQUIPMENT - 1.3%
Calmar, Inc., Series B,
11 1/2%, 8/15/05 B3 750,000 729,375
MVE, Inc. 12 1/2%, 2/15/02 B3 140,000 145,600
874,975
POLLUTION CONTROL - 0.4%
Envirosource, Inc.
9 3/4%, 6/15/03 B3 300,000 273,750
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,148,725
MEDIA & LEISURE - 17.5%
BROADCASTING - 11.4%
Allbritton Communications Co.
11 1/2%, 8/15/20 B3 120,000 121,800
American Telecasting, Inc.
0%, 8/15/05 (c) - 70,000 40,950
CAI Wireless system, Inc.
12 1/4%, 9/15/02 B3 420,000 438,900
Chancellor Broadcasting
12 1/2%, 10/1/04 B3 100,000 109,750
Continental Cablevision, Inc.
11%, 6/1/07 B1 270,000 304,088
CS Wireless Systems, Inc. 0%,
3/1/06 unit (c)(e) - 150,000 309,000
Diamond Cable Communications
PLC yankee (c):
0%, 9/30/04 B3 950,000 674,500
0%, 12/15/05 B3 975,000 572,813
PRINCIPAL VALUE
AMOUNT (NOTE 1)
Grupo Televisa SA de CV (e):
11 3/8%, 5/15/03 Ba3 $ 430,000 $ 434,300
yankee 11 7/8%, 5/15/06 Ba3 1,310,000 1,341,113
JCAC, Inc. 10 1/8%, 6/15/06 B2 50,000 49,500
NWCG Holdings Corp.
0%, 6/15/99 Caa 290,000 214,600
Peoples Choice TV Corp.
0%, 6/1/04 unit (c) Caa 1,440,000 817,200
Robin Media Group, Inc.
11 1/8%, 4/1/97 - 520,000 520,000
SFX Broadcasting, Inc.
10 3/4%, 5/15/06 (e) B3 1,470,000 1,462,650
Videotron Holdings PLC yankee
0%, 7/1/04 (c) B3 90,000 66,375
7,477,539
ENTERTAINMENT - 0.7%
AMF Group, Inc. 10 7/8%,
3/15/06 (e) B2 400,000 395,500
Cobb Theatres LLC/ Cobb
Financial Corp. 10 5/8%,
3/1/03 (e) B2 50,000 50,625
446,125
LEISURE DURABLES & TOYS - 1.7%
ICON Health and Fitness, Inc.
13%, 7/15/02 B3 1,000,000 1,115,000
LODGING & GAMING - 2.1%
Casino America, Inc.
11 1/2%, 11/15/96 B1 20,000 21,200
Casino Magic Financial Corp.
11.5%, 10/15/01 B1 145,000 149,350
Horseshoe Gaming LLC,
Series A, 12 3/4%, 9/30/00 B1 460,000 494,500
Mohegan Tribal Gaming
Authority 13 1/2%,
11/15/02 (e) - 490,000 614,950
Wyndham Hotel Corp.
10 1/2%, 5/15/06 B2 110,000 109,450
1,389,450
RESTAURANTS - 1.6%
SC International Services, Inc.
13%, 10/1/05 B3 990,000 1,084,050
TOTAL MEDIA & LEISURE 11,512,164
NONDURABLES - 7.5%
AGRICULTURE - 1.1%
Doane Products Co.
10 5/8%, 3/1/06 B3 740,000 740,000
FOODS - 3.3%
Fresh Del Monte Produce NV,
Series B, 10%, 5/1/03 Caa 550,000 511,500
Specialty Foods Corp.:
10 1/4%, 8/15/01 B3 1,310,000 1,231,400
Series B, 11 1/4%, 8/15/03 Caa 460,000 399,050
2,141,950
CORPORATE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 3.1%
MacAndrews & Forbes Group,
Inc. 12 1/4%, 7/1/96 - $ 50,000 $ 50,000
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 1,000,000 1,010,000
Revlon Worldwide Corp. secured
0%, 3/15/98 B3 1,200,000 999,000
2,059,000
TOTAL NONDURABLES 4,940,950
RETAIL & WHOLESALE - 6.6%
APPAREL STORES - 0.2%
Apparel Retailers, Inc. 0%,
8/15/05 (c) Caa 10,000 8,700
Mothers Work, Inc.
12 5/8%, 8/1/05 B3 130,000 137,475
146,175
GENERAL MERCHANDISE STORES - 1.5%
K mart Corp.:
8.71%, 4/7/97 Ba2 50,000 49,500
8.70%, 8/1/97 Ba2 250,000 247,500
Series A, 9.55%, 6/30/98 Ba2 250,000 245,000
12 1/2%, 3/01/05 Ba3 380,000 414,200
956,200
GROCERY STORES - 4.3%
Dominick's Finer Foods, Inc.,
Series B, 10 7/8%, 5/1/05 B3 200,000 211,000
Pathmark Stores, Inc.:
11 5/8%, 6/15/02 B3 90,000 89,775
12 5/8%, 6/15/02 B3 60,000 60,450
Ralph's Grocery Co.
11%, 6/15/05 B3 470,000 432,400
Smith's Food & Drug Centers,
Inc. 11 1/4%, 5/15/07 B3 1,660,000 1,676,600
Star Markets, Inc.
13%, 11/1/04 B3 370,000 382,950
2,853,175
RETAIL & WHOLESALE, MISCELLANEOUS - 0.6%
Alliance Entertainment Corp.,
Series B, 11 1/4%, 7/15/05 B3 320,000 304,000
Guitar Center Management Co.,
Inc. 11%, 7/1/06 (e) B2 90,000 91,575
395,575
TOTAL RETAIL & WHOLESALE 4,351,125
SERVICES - 2.8%
ADVERTISING - 0.4%
Outdoor Systems, Inc.
10 3/4%, 8/15/03 B2 290,000 300,150
LEASING & RENTAL - 0.8%
GPA Holland
8.94%, 2/16/99 - 500,000 497,500
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PRINTING - 1.6%
Sullivan Graphics, Inc.
12 3/4%, 8/1/05 Caa $ 1,090,000 $ 1,053,213
TOTAL SERVICES 1,850,863
TECHNOLOGY - 6.3%
COMMUNICATIONS EQUIPMENT - 2.8%
Echostar Communications Corp.
0%, 6/1/04 (c) B2 2,000,000 1,460,000
Echostar Satellite Broadcasting
Corp. 0%, 3/15/04 (c)(e) Caa 630,000 389,025
1,849,025
COMPUTERS & OFFICE EQUIPMENT - 3.5%
Exide Electronics Group, Inc.
11 1/2%, 3/15/06 unit (e) B 220,000 224,400
Unisys Corp. 12%, 4/15/03 (e) B1 1,990,000 2,029,800
2,254,200
TOTAL TECHNOLOGY 4,103,225
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.2%
Trans World Airlines, Inc.
12%, 11/3/98 - 20,000 19,580
US Air, Inc.:
9 5/8%, 2/1/01 B3 70,000 65,625
10%, 7/1/03 B3 40,000 37,400
122,605
UTILITIES - 12.5%
CELLULAR - 5.8%
Comunicacion Celular SA yankee
0%, 11/15/03 (c) B3 70,000 41,650
Fonorola, Inc.
12 1/2%, 8/15/02 B2 1,020,000 1,101,600
Intercel, Inc. 0%, 2/1/06
unit (c) B2 920,000 552,000
International Cabletel, Inc.,
Series B, 0%, 2/1/06 (c) B3 120,000 67,500
Microcell Telecommunications, Inc.
0%, 6/1/06 unit (c)(e) B3 1,180,000 575,250
Millicom International Cellular SA
0%, 6/1/06 (c)(e) B3 2,050,000 1,071,125
Pagemart Nationwide, Inc.
exchangeable 0%, 2/1/05 (c) - 610,000 404,125
3,813,250
ELECTRIC UTILITY - 0.7%
El Paso Electric Co., Series D,
1st Mtg. 8.90%, 2/1/06 Ba3 510,000 503,625
TELEPHONE SERVICES - 6.0%
Brooks Fiber Properties, Inc.
0%, 3/1/06 (c)(e) - 510,000 269,025
Call-Net Enterprises, Inc. yankee
0%, 12/1/04 (c) B2 360,000 264,600
GST USA, Inc.
0%, 12/15/05 (c) - 160,000 88,800
Intelcom Group USA, Inc.
0%, 9/15/05 (c) - 960,000 576,000
CORPORATE BONDS - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Nextlink Communications LLC
12 1/2%, 4/15/06 (e) - $ 2,330,000 $ 2,315,438
Winstar Communications, Inc.
0%, 10/15/05 (c) - 730,000 401,500
3,915,363
TOTAL UTILITIES 8,232,238
TOTAL NONCONVERTIBLE BONDS 51,687,228
TOTAL CORPORATE BONDS
(Cost $51,846,040) 52,500,803
COMMERCIAL MORTGAGE SECURITIES - 0.9%
Lennar Central Partners LP
commercial Series 1995-1
Class F, 11.70%, 5/15/05 (e) - 100,000 100,938
Resolution Trust Corp.:
commercial Series 1994-C1
Class E, 8%, 6/25/26 BB 361,019 308,220
sequential pay Series 1994-C1
Class F, 8%, 6/25/26 B 251,764 205,225
TOTAL COMMERCIAL MORTGAGE SECURITIES
(Cost $612,635) 614,383
COMMON STOCKS - 2.4%
SHARES
BASIC INDUSTRIES - 0.0%
CHEMICALS & PLASTICS - 0.0%
Foamex-JPS Automotive LP/Foamex-JPS
Capital Corp. (warrants) (a) 530 2,385
ENERGY - 1.0%
OIL & GAS - 1.0%
Flores & Rucks, Inc. (a) 13,000 448,500
Mesa, Inc. 35,400 194,700
TOTAL ENERGY 643,200
HEALTH - 0.2%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
MVE, Inc. (warrants) (a) 230 6,900
MEDICAL FACILITIES MANAGEMENT - 0.2%
Tenet Healthcare Corp. (a) 5,000 106,875
TOTAL HEALTH 113,775
HOLDING COMPANIES - 0.0%
SDW Holdings Corp. (warrants) (a) 3,889 11,667
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.4%
PanAmSat Corp. (a) 8,200 237,800
Telemundo Group, Inc. Class A (a) 600 13,950
TOTAL MEDIA & LEISURE 251,750
SHARES VALUE (NOTE 1)
NONDURABLES - 0.1%
HOUSEHOLD PRODUCTS - 0.1%
Revlon, Inc. Class A (a) 2,200 $ 64,075
SERVICES - 0.3%
Protection One, Inc. (a) 14,300 234,163
TECHNOLOGY - 0.4%
COMPUTERS & OFFICE EQUIPMENT - 0.4%
Bell & Howell Co. (a) 7,400 241,425
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
Trans World Airlines, Inc. (a) 128 1,824
UTILITIES - 0.0%
CELLULAR - 0.0%
Comunicacion Celular SA
(warrants) (a)(e) 70 3,500
TOTAL COMMON STOCKS
(Cost $1,380,082) 1,567,764
PREFERRED STOCKS - 6.3%
CONVERTIBLE PREFERRED STOCKS - 0.2%
RETAIL & WHOLESALE - 0.2%
GENERAL MERCHANDISE STORES - 0.0%
K mart Financing I $3.875 1,000 54,250
GROCERY STORES - 0.2%
Supermarkets General Holdings Corp.
exchangeable pay-in-kind $3.52 4,000 104,000
TOTAL CONVERTIBLE PREFERRED STOCKS 158,250
NONCONVERTIBLE PREFERRED STOCKS - 6.1%
BASIC INDUSTRIES - 0.2%
PAPER & FOREST PRODUCTS - 0.2%
S D Warren Co. exchangeable
pay-in-kind 3,889 135,143
FINANCE - 0.6%
SAVINGS & LOANS - 0.6%
First Nationwide Bank $11.50 1,778 194,691
Greater New York Savings Bank,
Series B, 12% 5,660 175,460
TOTAL FINANCE 370,151
MEDIA & LEISURE - 4.8%
BROADCASTING - 3.8%
Cablevision Systems Corp., Series H,
$11.75 exchangeable pay-in-kind (a) 6,607 637,576
PanAmSat Corp. 12 3/4% pay-in-kind 933 1,058,955
Time Warner, Inc., Series K,
exchangeable 828 811,440
2,507,971
PUBLISHING - 1.0%
K-III Communications Corp. (a):
Series B, $11.625 pay-in-kind 1,101 110,375
Series C, exchangeable (e) 5,400 494,100
604,475
TOTAL MEDIA & LEISURE 3,112,446
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
NONDURABLES - 0.0%
HOUSEHOLD PRODUCTS - 0.0%
Revlon Group, Inc., Series B,
exchangeable 14 7/8% 310 $ 31,000
UTILITIES - 0.5%
ELECTRIC UTILITY - 0.5%
El Paso Electric Co., Series A,
pay-in-kind (a) 3,200 336,000
TOTAL NONCONVERTIBLE PREFERRED STOCKS 3,984,740
TOTAL PREFERRED STOCKS
(Cost $4,098,055) 4,142,990
REPURCHASE AGREEMENTS - 10.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.46%, dated
6/28/96 due 7/1/96 $ 6,897,137 6,894,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $64,830,812) $ 65,719,940
LEGEND
(a) Non-income producing
(a) Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
(a) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(a) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
(a) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $14,641,414 or 21.7% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $49,164,892 and $26,907,896, 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 0.5%
Ba 9.7% BB 10.5%
B 50.6% B 54.6%
Caa 8.8% CCC 3.3%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 10.4%. FMR
has determined that unrated debt securities that are lower quality account
for 10.4% of the total value of investment in securities.
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 89.1%
Mexico 2.7
Canada 2.0
United Kingdom 2.0
Netherlands 2.0
Luxembourg 1.6
Others (individually less than 1%) 0.6
TOTAL 100.0%
INCOME TAX INFORMATION
At June 30, 1996, the aggregate cost of investment securities for income
tax purposes was $64,830,812. Net unrealized appreciation aggregated
$889,128, of which $1,621,092 related to appreciated investment securities
and $731,964 related to depreciated investment securities.
FIDELITY ADVISOR ANNUITY FUND: HIGH YIELD FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
ASSETS
Investm $ 65,719,940
ent in
securit
ies, at
value
(includ
ing
repurc
hase
agree
ments
of
$6,894
,000)
(cost
$64,83
0,812)
- - See
accom
panyin
g
sched
ule
Cash 912
Receiva 3,896,364
ble for
invest
ments
sold
Receiva 462,004
ble for
fund
shares
sold
Dividend 37,003
s
receiv
able
Interest 1,088,309
receiv
able
TOTAL 71,204,532
ASSETS
LIABILITI
ES
Payable $ 3,719,774
for
invest
ments
purcha
sed
Accrued 32,639
manag
ement
fee
Other 40,939
payabl
es and
accrue
d
expen
ses
TOTAL 3,793,352
LIABILIT
IES
NET $ 67,411,180
ASSET
S
Net
Assets
consist
of:
Paid in $ 64,282,221
capital
Undistrib 2,493,160
uted
net
invest
ment
incom
e
Accumul (253,329)
ated
undistr
ibuted
net
realize
d gain
(loss)
on
invest
ments
and
foreign
curren
cy
transa
ctions
Net 889,128
unreali
zed
apprec
iation
(depre
ciation
) on
invest
ments
NET $ 67,411,180
ASSET
S, for
5,552,
237
shares
outsta
nding
NET $12.14
ASSET
VALUE,
offerin
g price
and
redem
ption
price
per
share
($67,4
11,180
(divided by)
5,552,
237
shares
)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
INVESTM $ 166,931
ENT
INCOME
Dividend
s
Interest 2,547,606
TOTAL 2,714,537
INCOM
E
EXPENS
ES
Manage $ 162,719
ment
fee
Transfer 14,780
agent
fees
Accounti 30,000
ng
fees
and
expen
ses
Non-inte 95
rested
trustee
s'
compe
nsatio
n
Custodia 3,891
n fees
and
expen
ses
Audit 10,528
Legal 76
Miscella 75
neous
Total 221,164
expen
ses
before
reducti
ons
Expen (787 221,377
se )
reducti
ons
NET 2,493,160
INVEST
MENT
INCOM
E
REALIZE (239,079
D AND )
UNREALIZ
ED GAIN
(LOSS)
Net
realize
d gain
(loss)
on
invest
ment
securit
ies
Change 191,742
in net
unreali
zed
apprec
iation
(depre
ciation
)
on
invest
ment
securit
ies
NET GAIN (47,337
(LOSS) )
NET $ 2,445,823
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
RESULTI
NG
FROM
OPERAT
IONS
OTHER $ 210
INFORM
ATION
Expense
reducti
ons
Directe
d
broker
age
arrang
ements
Custod 577
ian
interest
credits
$ 787
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
Operatio $ 2,493,160 $ 1,303,649
ns
Net
invest
ment
incom
e
Net (239,079) 124,375
realize
d gain
(loss)
Chang 191,742 697,386
e in
net
unreali
zed
apprec
iation
(depre
ciation
)
NET 2,445,823 2,125,410
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
OPER
ATIO
NS
Distributi - (1,337,415)
ons to
shareh
olders
From
net
invest
ment
incom
e
From (39,619) (65,240)
net
realize
d gain
TOTAL (39,619) (1,402,655)
DISTRIB
UTIONS
Share 26,722,847 40,127,909
transa
ctions
Net
procee
ds
from
sales
of
shares
Reinve 39,619 1,402,655
stment
of
distrib
utions
Cost (2,980,998) (1,029,811)
of
shares
redee
med
NET 23,781,468 40,500,753
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
SHAR
E
TRAN
SACTI
ONS
TOTAL 26,187,672 41,223,508
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
NET
ASSETS
Beginn 41,223,508 -
ing of
period
End of $ 67,411,180 $ 41,223,508
perio
d
(incl
udin
g
undi
strib
uted
net
inve
stme
nt
inco
me
of
$2,4
93,1
60
and
$0,
resp
ectiv
ely)
OTHER
INFORMAT
ION
Shares
Sold 2,237,546 3,529,704
Issued 3,332 121,758
in
reinve
stment
of
distrib
utions
Redee (249,467) (90,636)
med
Net 1,991,411 3,560,826
increa
se
(decre
ase)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
</TABLE>
SELECTE $ 11.580 $ 10.000
D
PER-SHA
RE DATA
Net
asset
value,
beginnin
g of
period
Income .787 E .410
from
Invest
ment
Operat
ions
Net
invest
ment
incom
e
Net (.217) 1.600
realize
d and
unreali
zed
gain
(loss)
Total .570 2.010
from
invest
ment
operati
ons
Less - (.410)
Distrib
utions
From
net
invest
ment
incom
e
From (.010) (.020)
net
realize
d gain
Total (.010) (.430)
distrib
utions
Net $ 12.140 $ 11.580
asset
value,
end of
period
TOTAL 4.92% 20.12%
RETUR
N B, C
RATIOS
AND
SUPPL
EMENT
AL
DATA
Net $ 67,411 $ 41,224
assets
, end
of
period
(000
omitte
d)
Ratio of .82% A 1.00% A,
expen D
ses to
averag
e net
assets
Ratio of 9.18% A 9.23% A
net
invest
ment
incom
e to
averag
e net
assets
Portfolio 109% A 98% A
turnov
er rate
Average $ .0384
commi
ssion
rate F
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED AND DO NOT REFLECT
CHARGES ATTRIBUTABLE TO YOUR INSURANCE COMPANY'S
SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD
REDUCE THE TOTAL RETURN SHOWN. C THE TOTAL RETURNS
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). D FMR AGREED
TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). E NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE
PERIOD. F FOR FISCAL YEARS BEGINNING ON OR AFTER
SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS
AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
FIDELITY ADVISOR ANNUITY FUND: INCOME & GROWTH FUND
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. A fund's total return 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
securities that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns would
have been lower.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 1 LIFE OF
YEAR FUND
Income & Growth Fund 6.64% 9.51%
S&P 500 26.00% 32.05%
Lehman Brothers Aggregate Bond Index 5.02% 11.11%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund performed at a constant rate
each year.
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 returns to the performance of the Standard &
Poor's 500 Index - a widely recognized, unmanaged index of common stocks.
The S&P 500 returns reflect reinvestment of all dividends paid by stocks
included in the Index, but do not reflect any brokerage commissions or
other fees you might pay if you actually invested in those stocks - and the
performance of the Lehman Brothers Aggregate Bond Index, which is comprised
of fixed-rate debt issues, including government, corporate, asset-backed,
and mortgage-backed securities. Issues included in this Index are rated
investment-grade or above and have maturities of at least one year.
Figures for more than one year assume a steady compounded rate of return
and are not the fund's year-by-year results, which fluctuated over the
periods shown. The life of fund figures are from commencement of operations
January 3, 1995.
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
IMAHDR PRASUN SHR__CHT 19960630 19960717 094950 S00000000000001
FA Annuity Inc & Grwth SP Standard & Poor 500 LB
Aggregate Bond
00616 SP001 LB001
1995/01/03 10000.00 10000.00
10000.00
1995/01/31 9990.00 10258.23
10197.90
1995/02/28 10190.00 10658.00
10440.37
1995/03/31 10260.00 10972.51
10504.42
1995/04/30 10390.00 11295.66
10651.15
1995/05/31 10610.00 11747.14
11063.32
1995/06/30 10740.00 12020.03
11144.43
1995/07/31 10880.00 12418.61
11119.54
1995/08/31 10920.00 12449.78
11253.74
1995/09/30 11020.00 12975.16
11363.22
1995/10/31 10890.00 12928.84
11511.00
1995/11/30 11210.00 13496.42
11683.49
1995/12/31 11391.59 13756.36
11847.46
1996/01/31 11473.17 14224.63
11926.13
1996/02/29 11319.47 14356.49
11718.83
1996/03/31 11227.28 14494.74
11637.37
1996/04/30 11258.01 14708.39
11571.92
1996/05/31 11380.93 15087.72
11548.42
1996/06/28 11452.64 15145.21
11703.51
IMATRL PRASUN SHR__CHT 19960630 19960717 094952 R00000000000021
Let's say hypothetically that $10,000 was invested in Income & Growth Fund
on January 3, 1995, when the fund started. As the chart shows, by June 30,
1996, the value of the investment would have grown to $11,453 - a 14.53%
increase on the initial investment. For comparison, look at how both the
S&P 500 and Lehman Brothers Aggregate Bond Index did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment in the S&P 500 would have grown to $15,145 - a 51.45% increase.
If you had put $10,000 in the bond index, it would have grown to $11,704 -
a 17.04% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1996
% OF FUND'S
INVESTMENTS
Philip Morris Companies, Inc. 3.6
General Electric Co. 3.0
American Express Co. 1.9
Citicorp 1.8
Royal Dutch Petroleum Co. ADR 1.8
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1996
% OF FUND'S
INVESTMENTS
Finance 14.8
Energy 8.8
Nondurables 7.8
Industrial Machinery & Equipment 5.9
Basic Industries 5.9
ASSET ALLOCATION AS OF JUNE 30, 1996*
Row: 1, Col: 1, Value: 9.0
Row: 1, Col: 2, Value: 29.4
Row: 1, Col: 3, Value: 30.0
Row: 1, Col: 4, Value: 31.6
Stocks 61.6%
Bonds 29.4%
Short-term investments 9.0%
FOREIGN INVESTMENTS 8.2%
*
FIDELITY ADVISOR ANNUITY FUND: INCOME & GROWTH FUND
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: On March 26, 1996,
Bettina Doulton became Portfolio Manager of Fidelity Advisor Annuity Income
& Growth Fund
Q. BETTINA, HOW HAS THE FUND PERFORMED?
A. It's important to remind shareholders that because the fund invests in
both stocks and bonds, its total return, in theory, should fall somewhere
between its two benchmark indices, the Standard & Poor's 500 Index and the
Lehman Brothers Aggregate Bond Index - a broad measure of the performance
of U.S. taxable bonds. Over the past six months, that's exactly what
happened. The fund performed better than the Lehman Brothers index, which
returned -1.21% and 5.02% during the six- and 12-month periods,
respectively, but underperformed the S&P 500, which returned 10.10% and
26.00% over the past six and 12 months, respectively.
Q. WHAT WERE THE MAIN DRIVERS OF THE FUND'S PERFORMANCE OVER THE PAST SIX
MONTHS?
A. I think four factors had the greatest influence over the fund's
performance over the past six months. First and foremost, it was a
reflection of the investing environment we saw over that time. While stocks
generally sustained a rally that started in 1995, bonds went through a
difficult period. As a result, the fund's six-month performance beat the
bond index because the fund held stocks, while it lagged the S&P 500
because it held bonds. Second, the fund suffered from the way it was
positioned earlier in the period prior to my taking over the fund. At that
time, it had less invested in U.S. equities and more in bond investments
and foreign stocks, both of which turned in weaker performances than the
U.S. stock market. Third, the fund's bond investments were, for the most
part, in long-duration Treasury bonds that performed poorly. Duration is a
measure of a bond's sensitivity to interest rates, and the longer a bond's
duration, the more sensitive it is to changes in interest rates. When
interest rates go up, as they did markedly over the past six months, bonds
with longer durations drop in value more than those with shorter durations.
Finally, some of the stocks the fund held earlier in the period produced
returns that lagged the overall market.
Q. WHAT CHANGES DID YOU MAKE SINCE TAKING OVER THE FUND?
A. I reduced the fund's stake in bonds, redeploying those assets into
stocks. In addition, the composition of the bond component was changed;
most notably, the duration was dramatically reduced. I replaced the
long-term Treasury bonds with more corporate and mortgage-backed
securities, aiming to increase the income produced by the fund's bond
holdings, while, at the same time, reducing their sensitivity to interest
rates. On the stock side, I generally reduced foreign investments as well
as some small-company stocks. I intend to make yield a larger component of
the fund's total return, and thus invested more in the stocks of medium and
large companies that tend to have larger dividends. Holdings of finance,
nondurables and energy have been increased. Purchases in the finance sector
included Citicorp, BankAmerica and NationsBank. I also have added to the
fund's energy exposure with purchases of British Petroleum and Royal Dutch
Petroleum, supplementing existing holdings of oil service stocks.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. A number of issues will have an impact on the investment climate. First,
is the recent economic rebound sustainable? Next, will consumer spending
sustain corporate profit growth as the benefits of restructuring moderate,
foreign exchange becomes less favorable and capital spending slows? I'm
increasingly concerned that the backdrop for corporate profitability
improvement may be less conducive than over the prior five years, so I'm
searching for companies that offer low cost structures, solid franchises,
strong cash flows and high-return project development opportunities. The
bond market will have to contend with the prospects for economic growth and
inflation. My biggest concern is a pick-up in wage inflation stemming from
tighter labor markets, the upcoming Big Three auto maker labor negotiations
or political posturing. Accelerating wage inflation could cause increases
in interest rates and put pressure on corporate profit margins, since there
is no offsetting pricing flexibility. Given the uncertainties for economic
growth and profitability, my industry weightings are well diversified and
reflect individual stock selection. Within the bond component, the fund
will maintain a neutral duration position, relative to the market index.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: 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, 1996, more than $76 million
MANAGER: Bettina Doulton, since March 1996;
joined Fidelity in 1986
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: INCOME & GROWTH FUND
INVESTMENTS JUNE 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 59.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.8%
AEROSPACE & DEFENSE - 0.8%
Lockheed Martin Corp. 4,500 $ 378,000
Rockwell International Corp. 3,100 177,475
555,475
SHIP BUILDING & REPAIR - 0.0%
General Dynamics Corp. 500 31,000
TOTAL AEROSPACE & DEFENSE 586,475
BASIC INDUSTRIES - 5.7%
CHEMICALS & PLASTICS - 5.3%
Dow Chemical Co. 10,100 767,600
du Pont (E.I.) de Nemours & Co. 12,400 981,150
Great Lakes Chemical Corp. 3,600 224,100
Monsanto Co. 35,000 1,137,482
Praxair, Inc. 19,200 811,200
Union Carbide Corp. 100 3,975
Witco Corp. 2,800 96,250
4,021,757
PACKAGING & CONTAINERS - 0.2%
Crown Cork & Seal Co., Inc. 2,500 112,500
Tupperware Corp. (a) 200 8,450
120,950
PAPER & FOREST PRODUCTS - 0.2%
International Paper Co. 1,600 59,000
Pentair, Inc. 4,000 120,000
179,000
TOTAL BASIC INDUSTRIES 4,321,707
CONGLOMERATES - 2.6%
Allied-Signal, Inc. 18,200 1,039,675
Crane Co. 2,300 94,300
Tyco International Ltd. 1,700 69,275
United Technologies Corp. 6,600 759,000
1,962,250
CONSTRUCTION & REAL ESTATE - 0.3%
BUILDING MATERIALS - 0.3%
Masco Corp. 2,500 75,625
Sherwin-Williams Co. 2,500 116,250
191,875
ENGINEERING - 0.0%
EG&G, Inc. 200 4,275
TOTAL CONSTRUCTION & REAL ESTATE 196,150
DURABLES - 3.8%
AUTOS, TIRES, & ACCESSORIES - 3.1%
Cummins Engine Co., Inc. 900 36,338
Eaton Corp. 1,900 111,388
Ford Motor Co. 29,300 948,588
General Motors Corp. 9,500 497,563
Johnson Controls, Inc. 3,100 215,450
Michelin SA (Compagnie Generale
des Etablissements) Class B 5,700 278,200
Scania AB:
Class A 1,000 27,678
Class B 1,000 27,754
Snap-on Tools Corp. 5,600 265,300
2,408,259
CONSUMER DURABLES - 0.6%
Minnesota Mining & Manufacturing Co. 6,700 462,300
SHARES VALUE (NOTE 1)
CONSUMER ELECTRONICS - 0.1%
Newell Co. 1,400 $ 42,875
TOTAL DURABLES 2,913,434
ENERGY - 7.6%
ENERGY SERVICES - 1.2%
Baker Hughes, Inc. 4,000 131,500
Schlumberger Ltd. 9,200 775,100
906,600
OIL & GAS - 6.4%
Amerada Hess Corp. 200 10,725
Atlantic Richfield Co. 2,400 284,400
British Petroleum PLC:
ADR 3,600 384,750
Ord. 102,000 894,619
Exxon Corp. 9,500 825,313
Kerr-McGee Corp. 2,100 127,838
Mobil Corp. 5,300 594,263
Occidental Petroleum Corp. 12,200 301,950
Royal Dutch Petroleum Co.:
ADR 8,800 1,353,000
Ord. 500 77,090
4,853,948
TOTAL ENERGY 5,760,548
FINANCE - 12.9%
BANKS - 5.0%
Bank of Boston Corp. 3,900 193,050
BankAmerica Corp. 16,000 1,212,000
Canadian Imperial Bank of Commerce 12,000 387,665
Chase Manhattan Corp. 3,000 211,875
Citicorp 17,000 1,404,625
National City Corp. 3,100 108,888
NationsBank Corp. 3,700 305,713
3,823,816
CREDIT & OTHER FINANCE - 2.1%
American Express Co. 32,200 1,436,925
Associates First Capital Corp. (a) 1,000 37,625
First Chicago NBD Corp. 3,000 117,375
1,591,925
FEDERAL SPONSORED CREDIT - 2.3%
Federal Home Loan Mortgage
Corporation 10,100 863,550
Federal National Mortgage
Association 25,700 860,950
1,724,500
INSURANCE - 3.5%
Aetna Life & Casualty Co. 7,200 514,800
Allstate Corp. 16,800 766,500
ITT Hartford Group, Inc. 9,700 516,525
Loews Corp. 9,400 741,425
Old Republic International Corp. 6,750 145,125
2,684,375
TOTAL FINANCE 9,824,616
HEALTH - 3.2%
DRUGS & PHARMACEUTICALS - 3.0%
American Home Products Corp. 5,000 300,625
Bristol-Myers Squibb Co. 3,000 270,000
Glaxo PLC sponsored ADR 4,800 128,400
Pfizer, Inc. 3,400 242,675
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Pharmacia & Upjohn, Inc. 12,200 $ 541,375
SmithKline Beecham PLC ADR 14,800 804,750
Warner-Lambert Co. 100 5,500
2,293,325
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
Hillenbrand Industries, Inc. 4,800 178,800
TOTAL HEALTH 2,472,125
INDUSTRIAL MACHINERY & EQUIPMENT - 5.2%
ELECTRICAL EQUIPMENT - 3.7%
Emerson Electric Co. 4,900 442,838
General Electric Co. 26,300 2,274,950
Honeywell, Inc. 1,900 103,550
2,821,338
INDUSTRIAL MACHINERY & EQUIPMENT - 0.9%
Cooper Industries, Inc. 8,200 340,300
Goulds Pumps, Inc. 2,700 69,188
Harnischfeger Industries, Inc. 4,200 139,650
Stanley Works 1,000 29,750
Tenneco, Inc. 2,500 127,813
706,701
POLLUTION CONTROL - 0.6%
WMX Technologies, Inc. 14,500 474,875
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,002,914
MEDIA & LEISURE - 1.4%
ENTERTAINMENT - 0.2%
Cedar Fair LP (depositary unit) 5,000 186,875
LEISURE DURABLES & TOYS - 0.3%
Brunswick Corp. 7,900 158,000
Fleetwood Enterprises, Inc. 1,500 46,500
204,500
LODGING & GAMING - 0.2%
ITT Corp. 2,300 152,375
PUBLISHING - 0.7%
Dun & Bradstreet Corp. 1,300 81,250
Harcourt General, Inc. 1,000 50,000
Knight-Ridder, Inc. 6,000 435,000
566,250
TOTAL MEDIA & LEISURE 1,110,000
NONDURABLES - 6.3%
BEVERAGES - 0.6%
Anheuser-Busch Companies, Inc. 6,400 480,000
FOODS - 0.3%
General Mills, Inc. 700 38,150
Nabisco Holdings Corp. Class A 2,000 70,750
Quaker Oats Co. 4,100 139,913
248,813
HOUSEHOLD PRODUCTS - 1.4%
Avon Products, Inc. 8,600 388,075
Premark International, Inc. 600 11,100
Procter & Gamble Co. 6,800 616,250
Rubbermaid, Inc. 300 8,175
1,023,600
SHARES VALUE (NOTE 1)
TOBACCO - 4.0%
Philip Morris Companies, Inc. 26,300 $ 2,735,200
RJR Nabisco Holdings Corp. 6,900 213,900
UST, Inc. 2,300 78,775
3,027,875
TOTAL NONDURABLES 4,780,288
RETAIL & WHOLESALE - 3.0%
APPAREL STORES - 0.6%
Melville Corp. 10,500 425,250
Payless Shoesource, Inc. (a) 300 9,525
434,775
GENERAL MERCHANDISE STORES - 1.7%
Penney (J.C.) Co., Inc. 1,900 99,750
Sears, Roebuck & Co. 7,700 374,413
Wal-Mart Stores, Inc. 33,400 847,525
1,321,688
RETAIL & WHOLESALE, MISCELLANEOUS - 0.7%
Tandy Corp. 4,700 222,663
Toys "R" Us, Inc. 11,000 313,500
536,163
TOTAL RETAIL & WHOLESALE 2,292,626
SERVICES - 0.8%
PRINTING - 0.3%
Deluxe Corp. 7,100 252,050
SERVICES - 0.5%
ADT Ltd. (a) 9,100 171,763
Block (H&R), Inc. 5,700 185,963
357,726
TOTAL SERVICES 609,776
TECHNOLOGY - 3.6%
COMPUTERS & OFFICE EQUIPMENT - 1.9%
Pitney Bowes, Inc. 14,700 701,925
Xerox Corp. 14,000 749,000
1,450,925
ELECTRONICS - 0.9%
AMP, Inc. 12,100 485,513
Thomas & Betts Corp. 4,750 178,125
663,638
PHOTOGRAPHIC EQUIPMENT - 0.8%
Eastman Kodak Co. 7,800 606,450
Polaroid Corp. 200 9,125
615,575
TOTAL TECHNOLOGY 2,730,138
TRANSPORTATION - 1.0%
RAILROADS - 0.6%
Burlington Northern Santa Fe Corp. 5,800 469,075
TRUCKING & FREIGHT - 0.4%
Caliber System, Inc. 6,400 217,600
Consolidated Freightways, Inc. 5,400 114,075
Roadway Express, Inc. 100 1,413
333,088
TOTAL TRANSPORTATION 802,163
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UTILITIES - 1.2%
GAS - 0.2%
Consolidated Natural Gas Co. 3,300 $ 172,425
TELEPHONE SERVICES - 1.0%
Bell Atlantic Corp. 2,400 153,000
BellSouth Corp. 7,300 309,338
NYNEX Corp. 2,500 118,750
SBC Communications, Inc. 2,700 132,975
714,063
TOTAL UTILITIES 886,488
TOTAL COMMON STOCKS
(Cost $44,120,511) 45,251,698
PREFERRED STOCKS - 2.2%
CONVERTIBLE PREFERRED STOCKS - 1.9%
ENERGY - 0.8%
OIL & GAS - 0.8%
Occidental Petroleum Corp.
Indexed $3.00 9,100 565,338
FINANCE - 0.0%
INSURANCE - 0.0%
Aetna Life & Casualty Co. $4.76 (e) 400 29,150
NONDURABLES - 0.8%
TOBACCO - 0.8%
RJR Nabisco Holdings Corp., Series C,
depositary shares representing
1/10 pfd 96,100 624,650
RETAIL & WHOLESALE - 0.3%
APPAREL STORES - 0.2%
TJX Companies, Inc., Series E,
$7.00 1,000 188,000
GENERAL MERCHANDISE STORES - 0.1%
K mart Financing I $3.875 1,000 54,250
TOTAL RETAIL & WHOLESALE 242,250
TOTAL CONVERTIBLE PREFERRED STOCKS 1,461,388
NONCONVERTIBLE PREFERRED STOCKS - 0.3%
FINANCE - 0.0%
SAVINGS & LOANS - 0.0%
Greater New York Savings Bank
Series B, 12% 231 7,161
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.2%
Cablevision System Corp. $11.125
pay-in-kind (d) 312 29,172
Time Warner, Inc., Series K,
exchangeable 122 119,560
148,732
SHARES VALUE (NOTE 1)
PUBLISHING - 0.1%
K-III Communications Corp.,
Series C, exchangeable (a)(d) 600 $ 54,900
TOTAL MEDIA & LEISURE 203,632
TOTAL NONCONVERTIBLE PREFERRED STOCKS 210,793
TOTAL PREFERRED STOCKS
(Cost $1,663,294) 1,672,181
CORPORATE BONDS - 7.8%
MOODY'S PRINCIPAL
RATINGS (F) AMOUNT
CONVERTIBLE BONDS - 0.7%
FINANCE - 0.0%
CREDIT & OTHER FINANCE - 0.0%
Huntingdon International
Holdings PLC
7 1/2%, 9/25/06 - $ 30,000 21,300
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Cooper Industries, Inc.
7.05%, 1/1/15 A3 50,000 53,875
POLLUTION CONTROL - 0.1%
WMX Technologies, Inc.
2%, 1/24/05 A2 80,000 72,600
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 126,475
MEDIA & LEISURE - 0.0%
LEISURE DURABLES & TOYS - 0.0%
Hasbro Corp. 6%, 11/15/98 A3 24,000 29,640
RETAIL & WHOLESALE - 0.2%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Price Co. sub. deb.
6 3/4%, 3/1/01 Baa1 140,000 150,325
TECHNOLOGY - 0.2%
COMPUTERS & OFFICE EQUIPMENT - 0.2%
Acer, Inc. euro 4%, 6/10/01 - 40,000 100,000
ELECTRONICS - 0.0%
United Microelectronics Corp.
euro 1 1/4%, 6/8/04 - 25,000 31,813
TOTAL TECHNOLOGY 131,813
TRANSPORTATION - 0.1%
TRUCKING & FREIGHT - 0.1%
Airborne Freight Corp.
6 3/4%, 8/15/01 Ba1 32,000 31,680
TOTAL CONVERTIBLE BONDS 491,233
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (F) AMOUNT (NOTE 1)
NONCONVERTIBLE BONDS - 7.1%
AEROSPACE & DEFENSE - 0.4%
Alliant Techsystems, Inc.
11 3/4%, 3/1/03 B2 $ 13,000 $ 14,008
Be Aerospace, Inc.
9 7/8%, 2/1/06 B2 23,000 22,598
Lockheed Martin Corp.
7.20%, 5/1/36 A3 300,000 299,112
335,718
BASIC INDUSTRIES - 0.2%
CHEMICALS & PLASTICS - 0.1%
Atlantis Group, Inc.
11%, 2/15/03 B2 10,000 9,550
Foamex-JPS Automotive LP/
Foamex-JPS Capital Corp.,
Series B, 0%,7/1/04 Caa 10,000 7,025
Foamex LP/Foamex Capital
Corp., 11 7/8%, 10/1/04 B3 20,000 20,500
37,075
METALS & MINING - 0.0%
Kaiser Aluminum & Chemical
Corp. 12 3/4%, 2/1/03 B2 10,000 10,625
Renco Metals, Inc.
11 1/2%, 7/1/03 B2 10,000 10,000
20,625
PAPER & FOREST PRODUCTS - 0.1%
Florida Coast Paper Co. LLC
12 3/4, 6/1/03 (d) B3 40,000 41,600
Riverwood International
10 7/8%, 4/1/08 B3 10,000 9,825
51,425
TOTAL BASIC INDUSTRIES 109,125
CONGLOMERATES - 0.1%
Jordan Industries, Inc.
10 3/8%, 8/1/03 B3 10,000 9,500
Talley Industries, Inc.
0%, 10/15/05 (b) B2 30,000 23,850
33,350
DURABLES - 0.2%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Collins & Aikman Products Co.
11 1/2%, 4/15/06 B3 40,000 40,700
Harvard Industries, Inc.
11 1/8%, 8/1/05 B3 20,000 18,800
Hayes Wheels International, Inc.
11%, 7/15/06 B3 10,000 10,125
Venture Holdings Trust
9 3/4%, 4/1/04 B3 10,000 8,250
77,875
HOME FURNISHINGS - 0.1%
Interlake Corp.
12 1/8%, 3/1/02 B3 30,000 30,000
Knoll, Inc.
10 7/8%, 3/15/06 B3 58,000 59,160
89,160
MOODY'S PRINCIPAL VALUE
RATINGS (F) AMOUNT (NOTE 1)
TEXTILES & APPAREL - 0.0%
Dominion Textile USA, Inc.
9 1/4%, 4/1/06 Ba2 $ 20,000 $ 19,225
TOTAL DURABLES 186,260
ENERGY - 0.4%
ENERGY SERVICES - 0.2%
Petroliam Nasional BHD yankee
6 7/8%, 7/1/03 (d) A1 130,000 128,024
OIL & GAS - 0.2%
Clark USA, Inc., Series B,
10 7/8%, 12/1/05 B2 20,000 20,500
Norcen Energy Resources Ltd.
yankee 7 3/8%, 5/15/06 Baa3 150,000 148,350
Wainoco Oil Corp.
12%, 8/1/02 B1 10,000 10,000
178,850
TOTAL ENERGY 306,874
FINANCE - 1.9%
ASSET-BACKED SECURITIES - 0.2%
Airplanes 10 7/8%, 3/15/19 Ba2 80,000 83,600
Green Tree Financial Corp.
6.10%, 4/15/27 Aaa 94,644 93,890
177,490
BANKS - 1.3%
Export Import Bank of Korea
6 3/8%, 2/15/06 A1 230,000 213,424
Korea Development Bank
yankee 7 1/4%, 5/15/06 A1 500,000 492,515
Midland Bank PLC yankee
7 5/8%, 6/15/06 A1 250,000 253,285
959,224
CREDIT & OTHER FINANCE - 0.3%
HMC Acquisition Properties, Inc.
Series B, 9%, 12/15/07 Ba3 60,000 54,900
Homeside, Inc. 11 1/4%,
5/15/03 (d) B+ 10,000 10,300
MCN Investment Corp.
6.03%, 2/1/01 Baa2 180,000 173,588
Polysindo International Finance
Co. BV yankee 11 3/8%,
6/15/06 Ba3 10,000 10,188
248,976
INSURANCE - 0.0%
American Life Holdings
11 1/4%, 9/15/04 B1 4,000 4,210
SAVINGS & LOANS - 0.1%
First Nationwide Parent Holdings
Ltd. 12 1/2%, 4/15/03 B2 60,000 62,550
TOTAL FINANCE 1,452,450
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Wright Medical Technology,
Inc., Series B, 10 3/4%, 7/1/00 B3 10,000 10,000
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (F) AMOUNT (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
ELECTRICAL EQUIPMENT - 0.1%
Magnetek, Inc. 10 3/4%,
11/15/98 B1 $ 50,000 $ 49,000
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
Exide Corp. 10%, 4/15/05 B1 20,000 19,450
Tenneco, Inc.
7 7/8%, 10/1/02 Baa2 300,000 308,835
328,285
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 377,285
MEDIA & LEISURE - 0.4%
BROADCASTING - 0.2%
Adelphia Communications
Corp. 12 1/2%, 5/15/02 B3 10,000 10,163
Cablevision Systems Corp.
10 1/2%, 5/15/16 B2 50,000 48,500
CS Wireless Systems, Inc. 0%,
3/1/06 unit (b)(d) - 10,000 20,600
Diamond Cable
Communications PLC yankee
0%, 12/15/05 (b) B3 30,000 17,625
Grupo Televisa SA de CV
yankee 11 7/8%,
5/15/06 (d) Ba3 20,000 20,475
Peoples Choice TV Corp.
0%, 6/1/04 unit (b) Caa 30,000 17,025
UIH Australia/Pacific, Inc. 0%,
5/15/06 (b)(d) B2 70,000 36,925
171,313
ENTERTAINMENT - 0.0%
Alliance Gaming Corp.
12 7/8%, 6/30/03 B2 20,000 20,000
AMF Group, Inc. 10 7/8%,
3/15/06 (d) B2 10,000 9,888
29,888
LODGING & GAMING - 0.1%
American Skiing Co. 12%,
7/15/06 (d) B3 20,000 19,600
Casino Magic Financial Corp.
11.5%, 10/15/01 B1 5,000 5,150
Horseshoe Gaming LLC, Series A,
12 3/4%, 9/30/00 B1 20,000 21,500
46,250
PUBLISHING - 0.1%
Hollinger International
Publishing, Inc. 9 1/4%, 2/1/06 B1 20,000 18,300
Marvel Holdings, Inc., Series B,
0%, 4/15/98 B3 70,000 56,000
74,300
TOTAL MEDIA & LEISURE 321,751
MOODY'S PRINCIPAL VALUE
RATINGS (F) AMOUNT (NOTE 1)
NONDURABLES - 0.7%
FOODS - 0.6%
Nabisco, Inc.
6.85%, 6/15/05 Baa2 $ 250,000 $ 238,935
Quaker Oats Co.:
9.05%, 12/15/03 A3 100,000 110,667
9.10%, 12/15/03 A3 100,000 110,951
Specialty Foods Corp., Series B:
11 1/8%, 10/1/02 B3 10,000 9,550
11 1/4%, 8/15/03 Caa 15,000 13,013
483,116
HOUSEHOLD PRODUCTS - 0.1%
Revlon Consumer Products Corp.
10 1/2%, 2/15/03 B3 15,000 15,150
Revlon Worldwide Corp.
secured 0%, 3/15/98 B3 50,000 41,625
56,775
TOTAL NONDURABLES 539,891
RETAIL & WHOLESALE - 0.7%
APPAREL STORES - 0.0%
Specialty Retailers, Inc.
10%, 8/15/00 B1 10,000 10,300
GENERAL MERCHANDISE STORES - 0.5%
Dayton Hudson Corp.
6.40%, 2/15/03 Baa1 400,000 379,096
Pantry, Inc., Series B,
12%, 11/15/00 B2 20,000 17,600
396,696
GROCERY STORES - 0.2%
Pathmark Stores, Inc.:
11 5/8%, 6/15/02 B3 20,000 19,950
9 5/8%, 5/1/03 B2 60,000 56,325
Ralph's Grocery Co.
10.45%, 6/15/04 (d) B1 50,000 47,875
124,150
TOTAL RETAIL & WHOLESALE 531,146
SERVICES - 0.0%
PRINTING - 0.0%
Sullivan Graphics, Inc.
12 3/4%, 8/1/05 Caa 30,000 28,988
TECHNOLOGY - 0.2%
COMMUNICATIONS EQUIPMENT - 0.1%
Echostar Satellite Broadcasting
Corp. 0%, 3/15/04 (b)(d) Caa 50,000 30,875
Hyperion Telecommunication, Inc.
0%, 4/15/03 unit (b)(d) - 80,000 44,400
75,275
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Bell & Howell Co., Series B
0%, 3/1/05 (b) B3 40,000 27,400
Unisys Corp. 12%,
4/15/03 (d) B1 50,000 51,000
78,400
TOTAL TECHNOLOGY 153,675
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (F) AMOUNT (NOTE 1)
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.0%
US Air, Inc.:
9 5/8%, 2/1/01 B3 $ 2,000 $ 1,875
10%, 7/1/03 B3 10,000 9,350
11,225
RAILROADS - 0.2%
Burlington Northern Santa Fe
Corp. 7.29%, 6/1/36 Baa2 150,000 149,682
TOTAL TRANSPORTATION 160,907
UTILITIES - 1.2%
CELLULAR - 0.6%
Arch Communications Group,
Inc. 0%, 3/15/08 (b) B3 70,000 36,050
Intercel, Inc. 0%,
5/1/06 (b) B2 30,000 16,350
Microcell Telecommunications,
Inc. 0%, 6/1/06 unit (b)(d) B3 120,000 58,500
Millicom International Cellular
SA 0%, 6/1/06 (b)(d) B3 170,000 88,825
Mobilmedia Communications,
Inc. 0%, 12/1/03 (b) B3 20,000 14,200
360 Degrees Communications
Co. 7 1/8%, 3/1/03 Ba2 200,000 191,252
Western Wireless Corp.
10 1/2%, 6/1/06 B3 10,000 9,975
415,152
GAS - 0.5%
Columbia Gas System, Inc.
6.61%, 11/28/02 Baa3 379,000 369,332
TELEPHONE SERVICES - 0.1%
Intermedia Communications, Inc.
0%, 5/15/06 (b) B3 40,000 22,400
MFS Communications, Inc. 0%,
1/15/06 (b) B1 50,000 30,375
Pagemart, Inc. 0%,
11/1/03 (b) - 20,000 15,200
Shared Technologies Fairchild
Corp. 0%, 3/1/06 (b)(d) Caa 37,000 27,935
95,910
TOTAL UTILITIES 880,394
TOTAL NONCONVERTIBLE BONDS 5,427,814
TOTAL CORPORATE BONDS
(Cost $6,016,413) 5,919,047
U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS - 14.1%
MOODY'S PRINCIPAL VALUE
RATINGS (F) AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 12.3%
8 1/2%, 5/15/97 Aaa $ 1,290,000 $ 1,319,631
7 3/8%, 11/15/97 Aaa 1,700,000 1,730,277
7 3/4%, 12/31/99 Aaa 2,955,000 3,078,726
7 7/8%, 8/15/01 Aaa 275,000 291,327
8 1/8%, 8/15/19 Aaa 1,243,000 1,395,268
12%, 8/15/23 Aaa 1,100,000 1,550,659
TOTAL U.S. TREASURY OBLIGATIONS 9,365,888
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.8%
Federal Home Loan Bank:
7.56% 9/1/04 Aaa 310,000 321,067
7.59% 3/10/05 Aaa 190,000 197,748
Government Trust Certificates
(assets of Trust guaranteed by
U.S. Government through
Defense Security Assistance
Agency) Class 2-E
9.40%, 5/15/02 Aaa 140,000 150,097
Guaranteed Export Trust
Certificates (assets of Trust
guaranteed by U.S. Government
through Export-Import Bank)
Series 1996-A, 6.55%,
6/15/04 Aaa 190,000 177,480
Private Export Funding Corp.
secured, Series SS,
5.80%, 2/1/04 Aaa 40,000 38,322
State of Israel (guaranteed by
U.S. Government through
Agency for International
Development):
8%, 11/15/01 Aaa 220,000 232,294
5.89%, 8/15/05 Aaa 310,000 287,034
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 1,404,042
TOTAL U.S. GOVERNMENT AND
GOVERNMENT AGENCY OBLIGATIONS
(Cost $11,068,723) 10,769,930
U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES - 7.2%
FEDERAL HOME LOAN GUARANTEE - 0.5%
7%, 6/1/99 to 6/1/01 Aaa 178,900 179,626
7%, 6/1/01 (e) Aaa 200,000 200,812
380,438
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 5.3%
5 1/2%, 2/1/03 to 2/1/26 Aaa 1,254,127 1,178,167
6%, 4/1/11 Aaa 3,004,938 2,841,531
4,019,698
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 1.4%
7%, 10/15/23 to 1/15/26 Aaa 1,167,150 1,120,556
TOTAL U.S. GOVERNMENT AGENCY -
MORTGAGE-BACKED SECURITIES
(Cost $5,651,031) 5,520,692
FOREIGN GOVERNMENT OBLIGATIONS - 0.3%
MOODY'S PRINCIPAL VALUE
RATINGS (F) AMOUNT (NOTE 1)
Quebec Province yankee
6.86%, 4/15/26 (c)
(Cost $240,223) A2 $ 250,000 $ 242,055
REPURCHASE AGREEMENTS - 9.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.46%, dated
6/28/96 due 7/1/96 $ 6,835,109 $ 6,832,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $75,592,195) $ 76,207,603
LEGEND
(a) Non-income producing
(a) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(a) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
(a) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $720,894 or 0.9% of net
assets.
(a) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(a) Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $95,683,282 and $63,315,455, respectively, of which U.S.
government and government agency obligations aggregated $17,683,814 and
$17,066,943, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $23,002 for the period (see
Note 4 of Notes to Financial Statements).
The market value of futures contracts opened and closed during the period
amounted to $14,268,932 and $15,811,555, 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 24.1% AAA, AA, A 23.3%
Baa 2.5% BBB 3.3%
Ba 0.5% BB 0.3%
B 1.8% B 1.8%
Caa 0.2% CCC 0.1%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 0.3%.
INCOME TAX INFORMATION
At June 30, 1996, the aggregate cost of investment securities for income
tax purposes was $75,592,377. Net unrealized appreciation aggregated
$615,226, of which $2,005,411 related to appreciated investment securities
and $1,390,185 related to depreciated investment securities.
At December 31, 1995, the fund was required to defer $3,096 of losses on
futures contracts and options.
FIDELITY ADVISOR ANNUITY FUND: INCOME & GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
ASSETS
Investm $ 76,207,603
ent in
securit
ies, at
value
(includ
ing
repurc
hase
agree
ments
of
$6,832
,000)
(cost
$75,59
2,195)
- - See
accom
panyin
g
sched
ule
Receiva 827,477
ble for
invest
ments
sold
Receiva 148,422
ble for
fund
shares
sold
Dividend 99,110
s
receiv
able
Interest 373,813
receiv
able
TOTAL 77,656,425
ASSETS
LIABILITI
ES
Payable $ 25,044
to
custod
ian
bank
Payable 917,792
for
invest
ments
purcha
sed
Regula
r
deliver
y
Delaye 230,418
d
deliver
y
Accrued 31,397
manag
ement
fee
Other 25,494
payabl
es and
accrue
d
expen
ses
TOTAL 1,230,145
LIABILIT
IES
NET $ 76,426,280
ASSET
S
Net
Assets
consist
of:
Paid in $ 74,851,173
capital
Undistrib 1,094,584
uted
net
invest
ment
incom
e
Accumul (134,866
ated )
undistr
ibuted
net
realize
d gain
(loss)
on
invest
ments
and
foreign
curren
cy
transa
ctions
Net 615,389
unreali
zed
apprec
iation
(depre
ciation
) on
invest
ments
and
assets
and
liabiliti
es in
foreign
curren
cies
NET $ 76,426,280
ASSET
S, for
6,837,
150
shares
outsta
nding
NET $11.18
ASSET
VALUE,
offerin
g price
and
redem
ption
price
per
share
($76,4
26,280
(divided by)
6,837,
150
shares
)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
INVESTM $ 383,051
ENT
INCOME
Dividend
s
Interest 947,738
TOTAL 1,330,789
INCOM
E
EXPENS
ES
Manage $ 151,977
ment
fee
Transfer 14,824
agent
fees
Accounti 28,801
ng
fees
and
expen
ses
Non-inte 103
rested
trustee
s'
compe
nsatio
n
Custodia 41,005
n fees
and
expen
ses
Audit 8,385
Legal 81
Miscella 32
neous
Total 245,208
expen
ses
before
reducti
ons
Expen (6,096 239,112
se )
reducti
ons
NET 1,091,677
INVEST
MENT
INCOM
E
REALIZE
D AND
UNREALIZ
ED GAIN
(LOSS)
Net
realize
d gain
(loss)
on:
Invest (186,323
ment )
securit
ies
Foreig 2,429
n
curren
cy
transa
ctions
Future 98,897 (84,997
s )
contra
cts
Change
in net
unreali
zed
apprec
iation
(depre
ciation
) on:
Invest (381,083
ment )
securit
ies
Assets (64,971
and )
liabiliti
es in
forei
gn
curren
cies
Future (4,099 (450,153
s ) )
contra
cts
NET GAIN (535,150
(LOSS) )
NET $ 556,527
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
RESULTI
NG
FROM
OPERAT
IONS
OTHER $ 5,633
INFORM
ATION
Expense
reducti
ons
Directe
d
broker
age
arrang
ements
Custod 463
ian
interest
credits
$ 6,096
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
Operatio $ 1,091,677 $ 527,063
ns
Net
invest
ment
incom
e
Net (84,997) 442,330
realize
d gain
(loss)
Chang (450,153) 1,065,542
e in
net
unreali
zed
apprec
iation
(depre
ciation
)
NET 556,527 2,034,935
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
OPER
ATIO
NS
Distributi - (507,432)
ons to
shareh
olders
From
net
invest
ment
incom
e
From (179,173) (289,961)
net
realize
d gain
In (39,789) -
excess
of net
realize
d gain
TOTAL (218,962) (797,393)
DISTRIB
UTIONS
Share 32,716,209 42,321,007
transa
ctions
Net
procee
ds
from
sales
of
shares
Reinve 218,962 797,393
stment
of
distrib
utions
Cost (1,690) (1,200,708)
of
shares
redee
med
NET 32,933,481 41,917,692
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
SHAR
E
TRAN
SACTI
ONS
TOTAL 33,271,046 43,155,234
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
NET 43,155,234 -
ASSETS
Beginn
ing of
period
End of $ 76,426,280 $ 43,155,234
perio
d
(incl
udin
g
undi
strib
uted
net
inve
stme
nt
inco
me
of
$1,0
94,5
84
and
$2,9
07,
resp
ectiv
ely)
OTHER
INFORMAT
ION
Shares
Sold 2,954,553 3,901,795
Issued 19,533 71,902
in
reinve
stment
of
distrib
utions
Redee (157) (110,476)
med
Net 2,973,929 3,863,221
increa
se
(decre
ase)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
</TABLE>
SELECTE $ 11.17 $ 10.00
D
PER-S
HARE
DATA
Net
asset
value,
beginn
ing of
period
Income
from
Invest
ment
Operat
ions
Net .16 .14
invest
ment
incom
e
Net (.10) 1.25
realize
d and
unreali
zed
gain
(loss)
Total .06 1.39
from
invest
ment
operati
ons
Less - (.14)
Distrib
utions
From
net
invest
ment
incom
e
From (.04) (.08)
net
realize
d gain
In (.01) -
excess
of net
realize
d gain
Total (.05) (.22)
distrib
utions
Net $ 11.18 $ 11.17
asset
value,
end of
period
TOTAL .54% 13.92%
RETUR
N B, C
RATIOS
AND
SUPPL
EMENT
AL
DATA
Net $ 76,426 $ 43,155
assets
, end
of
period
(000
omitte
d)
Ratio of .83% A 1.42% A,
expen D
ses to
averag
e net
assets
Ratio of .80% A, 1.42% A
expen E
ses to
averag
e net
assets
after
expen
se
reducti
ons
Ratio of 3.67% A 3.56% A
net
invest
ment
incom
e to
averag
e net
assets
Portfolio 243% A 248% A
turnov
er rate
Average $ .0124
commi
ssion
rate F
1. ANNUALIZED 2. TOTAL RETURNS FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT REFLECT
CHARGES ATTRIBUTABLE TO YOUR INSURANCE COMPANY'S
SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD
REDUCE THE TOTAL RETURN SHOWN. 3. THE TOTAL RETURNS
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). 4. FMR AGREED
TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER. 5. FMR OR
THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS). 6. FOR FISCAL YEARS BEGINNING
ON OR AFTER SEPTEMBER 1, 1995 A FUND IS REQUIRED TO
DISCLOSE ITS AVERAGE COMMISION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISIONS ARE CHARGED.
THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD
AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES
AND COMMISSION RATE STRUCTURES MAY DIFFER.
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. A fund's total return 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
securities that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns would
have been lower.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 1 LIFE OF
YEAR FUND
Growth Opportunities 18.95% 25.43%
S&P 500 26.00% 32.05%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund performed at a constant rate
each year.
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 returns to the performance of the Standard &
Poor's 500 Index - a widely recognized, unmanaged index of common stocks.
The S&P 500 returns reflect reinvestment of all dividends paid by stocks
included in the Index, but do not reflect any brokerage commissions or
other fees you might pay if you actually invested in those stocks.
Figures for more than one year assume a steady compounded rate of return
and are not the fund's year-by-year results, which fluctuated over the
periods shown. The life of fund figures are from commencement of operations
January 3, 1995.
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
IMAHDR PRASUN SHR__CHT 19960630 19960712 114007 S00000000000001
FA Annuity Growth Opport SP Standard & Poor 500
00617 SP001
1995/01/03 10000.00 10000.00
1995/01/31 10060.00 10258.23
1995/02/28 10370.00 10658.00
1995/03/31 10560.00 10972.51
1995/04/30 10930.00 11295.66
1995/05/31 11440.00 11747.14
1995/06/30 11790.00 12020.03
1995/07/31 12180.00 12418.61
1995/08/31 12260.00 12449.78
1995/09/30 12470.00 12975.16
1995/10/31 12560.00 12928.84
1995/11/30 12920.00 13496.42
1995/12/31 13251.81 13756.36
1996/01/31 13444.45 14224.63
1996/02/29 13434.43 14356.49
1996/03/31 13393.72 14494.74
1996/04/30 13607.45 14708.39
1996/05/31 13912.77 15087.72
1996/06/28 14024.73 15145.21
IMATRL PRASUN SHR__CHT 19960630 19960712 114008 R00000000000021
Let's say hypothetically that $10,000 was invested in Growth Opportunities
Fund on January 3, 1995, when the fund started. As the chart shows, by June
30, 1996, the value of the investment would have grown to $14,025 - a
40.25% increase on the initial investment. For comparison, look at how the
S&P 500 did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $15,145 over
the same period - a 51.45% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1996
% OF FUND'S
INVESTMENTS
Philip Morris Companies, Inc. 7.5
Federal National Mortgage Association 7.2
General Motors Corp. 4.2
Compaq Computer Corp. 3.1
Royal Dutch Petroleum Co. ADR 3.0
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1996
% OF FUND'S
INVESTMENTS
Finance 17.8
Nondurables 8.6
Energy 8.6
Technology 8.3
Durables 7.9
ASSET ALLOCATION AS OF JUNE 30, 1996*
Row: 1, Col: 1, Value: 4.6
Row: 1, Col: 2, Value: 15.0
Row: 1, Col: 3, Value: 40.4
Row: 1, Col: 4, Value: 40.0
Stocks 80.4%
Bonds 15.0%
Short-term investments 4.6%
FOREIGN INVESTMENTS 9.7%
*
FIDELITY ADVISOR ANNUITY FUND: GROWTH OPPORTUNITIES FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with George Vanderheiden, Portfolio Manager of Fidelity
Advisor Annuity Growth Opportunities Fund
Q. HOW DID THE FUND PERFORM, GEORGE?
A. For the six and 12 months ended June 30, 1996, the fund's performance
lagged the Standard & Poor's 500 Index, which returned 10.10% and 26.00%,
respectively.
Q. WHY DID THE FUND UNDERPERFORM THE S&P 500 DURING THE PAST SIX MONTHS?
A. The fund took a sizable position of about 17% in U.S. Treasury bonds
coming into the period because I felt that bonds would do better than
stocks. In fact, the reverse has happened, and that has hurt the
performance of the fund over the past six months.
Q. WHAT WAS YOUR RATIONALE FOR BONDS?
A. Over the long term, stocks have fairly consistently appreciated faster
than bonds. Bonds pay a fixed rate of return, whereas stocks' performance
is a function of corporate earnings and dividend growth, which,
historically, grow faster than the yield on Treasury Bonds. So why own
bonds at all? There are times when corporate earnings decline due to a weak
economy. When this happens, bonds typically outperform stocks. In a Salomon
Brothers study from 1960 to 1995, it was shown that when economic growth
was below the median and inflation was low, bonds outperformed stocks 76%
of the time.
Q. MANY GROWTH AREAS OF THE STOCK MARKET SEEM PICKED OVER. WHERE DO YOU SEE
OPPORTUNITIES LONGER TERM?
A. Telecommunications, for one. The price of cellular service continues to
drop thanks to semiconductor technology and, in some parts of the world,
wireless telephone service is cheaper than land line. Penetration levels in
the U.S. - about 13% - are far below the 25% levels in the Scandinavian
countries. The number of cellular users could grow several fold beyond the
current 80 million users over the coming years. Another sector is
technology - both the companies that develop it and the companies that
benefit from it. We're in the early stages of becoming a society where the
basic economic resource is knowledge rather than land, labor or capital.
Carnegie and Rockefeller built great companies based on natural resources
100 years ago. Today, great software and semiconductor companies are being
built on a foundation of knowledge. Not only will companies that develop
useful technologies prosper, but companies that find ways to apply this
technology better than anyone else also will benefit.
Q. WITH YOUR EXPECTATION OF A SLOW-GROWING ECONOMY AND LOWER EARNINGS,
WHERE DOES THAT LEAVE THE STOCK MARKET FOR THE REST OF 1996?
A. The stock market is clearly ahead of itself on a short-term basis and
has been driven by the tremendous inflows into mutual funds over the past
year. Normally, the stock market would react to a slowing and/or decline in
corporate earnings with at least a 10% to 15% correction, if not something
worse. I suspect this will be postponed to a time when we least expect it.
Besides earnings, the other critical determinant to the market is
inflation, and the outlook here remains positive. Low inflation means low
interest rates and, thus, the high price-to-earnings ratios which
contribute to the high valuation of the market. While we are currently
witnessing a slight rise in food and energy inflation, these increases will
only serve to bring on higher supplies which, in turn, will drive down
prices again. By far, the major part of inflation - unit labor costs and
industrial prices - remains subdued. In conclusion, while the outlook isn't
as rosy as it was a few years ago, there will always be opportunities for
appreciation in individual sectors and stocks. If the road to successful
investing was always a sunny walk in the park, everyone would be a
successful investor. There will be stormy periods, and those who are
prepared to take advantage of them may be rewarded in the long term.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: to seek capital growth by investing
primarily in common stocks and securities
convertible into common stocks
START DATE: January 3, 1995
SIZE: as of June 30, 1996, more than
$286 million
MANAGER: George Vanderheiden, since
January, 1995; joined Fidelity in 1971
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: GROWTH OPPORTUNITIES FUND
INVESTMENTS JUNE 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 80.4%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.6%
AEROSPACE & DEFENSE - 0.2%
Boeing Co. 7,500 $ 653,438
DEFENSE ELECTRONICS - 0.4%
Raytheon Co. 20,900 1,078,963
TOTAL AEROSPACE & DEFENSE 1,732,401
BASIC INDUSTRIES - 5.3%
CHEMICALS & PLASTICS - 2.9%
Air Products & Chemicals, Inc. 7,800 450,450
Betz Laboratories, Inc. 400 17,550
Dow Chemical Co. 1,600 121,600
du Pont (E.I.) de Nemours & Co. 66,600 5,269,725
Raychem Corp. 19,600 1,408,750
Rohm & Haas Co. 1,100 69,025
Union Carbide Corp. 27,400 1,089,150
8,426,250
METALS & MINING - 0.5%
Aluminum Co. of America 1,300 74,588
Broken Hill Proprietary Co. Ltd. (The) 15,767 218,172
Reynolds Metals Co. 22,000 1,146,750
1,439,510
PACKAGING & CONTAINERS - 0.6%
Owens-Illinois, Inc. (a) 89,400 1,430,400
Tupperware Corp. (a) 3,700 156,325
1,586,725
PAPER & FOREST PRODUCTS - 1.3%
Boise Cascade Corp. 15,700 575,013
Champion International Corp. 28,000 1,169,000
Georgia-Pacific Corp. 2,400 170,400
International Paper Co. 25,400 936,625
Temple-Inland, Inc. 11,100 518,925
Willamette Industries, Inc. 6,200 368,900
3,738,863
TOTAL BASIC INDUSTRIES 15,191,348
CONSTRUCTION & REAL ESTATE - 0.8%
BUILDING MATERIALS - 0.2%
Armstrong World Industries, Inc. 4,500 259,313
Masco Corp. 4,200 127,050
Tecumseh Products Co. Class A 5,200 279,500
665,863
CONSTRUCTION - 0.3%
Centex Corp. 15,000 466,875
DR Horton, Inc. 9,236 96,978
Kaufman & Broad Home Corp. 22,100 320,450
Ryland Group, Inc. 1,500 22,500
U.S. Home Corp. (a) 2,300 56,638
963,441
ENGINEERING - 0.3%
Fluor Corp. 11,900 777,963
TOTAL CONSTRUCTION & REAL ESTATE 2,407,267
DURABLES - 7.9%
AUTOS, TIRES, & ACCESSORIES - 7.2%
Chrysler Corp. 12,200 756,400
Cummins Engine Co., Inc. 16,800 678,300
Dana Corp. 20,000 620,000
SHARES VALUE (NOTE 1)
Discount Auto Parts, Inc. (a) 7,800 $ 197,925
Federal-Mogul Corp. 19,800 363,825
Ford Motor Co. 4,800 155,400
General Motors Corp. 232,100 12,156,238
Goodyear Tire & Rubber Co. 5,900 284,675
Honda Motor Co. Ltd. 24,000 621,303
Magna International, Inc. Class A 59,600 2,753,694
Scania AB:
Class A 9,100 251,873
Class B 8,400 233,130
Superior Industries International, Inc. 28,700 760,550
Volvo AB Class B 46,200 1,049,400
20,882,713
CONSUMER DURABLES - 0.0%
Swedish Match AB 38,200 118,373
CONSUMER ELECTRONICS - 0.4%
Newell Co. 11,800 361,375
Whirlpool Corp. 14,000 694,750
1,056,125
HOME FURNISHINGS - 0.0%
Haverty Furniture Companies, Inc. 11,200 114,800
TEXTILES & APPAREL - 0.3%
Burlington Industries, Inc. (a) 50,400 711,900
TOTAL DURABLES 22,883,911
ENERGY - 8.6%
ENERGY SERVICES - 0.2%
McDermott International, Inc. 22,900 478,038
OIL & GAS - 8.4%
Amerada Hess Corp. 14,000 750,750
Amoco Corp. 3,600 260,550
Anadarko Petroleum Corp. 2,000 116,000
Apache Corp. 3,700 121,638
Atlantic Richfield Co. 26,400 3,128,400
British Petroleum PLC ADR 28,480 3,043,800
Burlington Resources, Inc. 30,100 1,294,300
Canada Occidental Petroleum Ltd. 33,000 555,425
Elf Aquitaine SA sponsored ADR 7,200 264,600
Enron Oil & Gas Co. 2,200 61,325
Kerr-McGee Corp. 7,500 456,563
Louisiana Land & Exploration Co. 32,200 1,855,525
Noble Affiliates, Inc. 4,400 166,100
Occidental Petroleum Corp. 25,300 626,175
Royal Dutch Petroleum Co. ADR 56,800 8,733,000
Santa Fe Energy Resources, Inc. (a) 23,200 275,500
Seagull Energy Corp. (a) 6,200 155,000
Sun Co., Inc. 22,900 695,588
Tosco Corp. 18,400 924,600
Total SA:
Class B 2,600 192,566
sponsored ADR 7,900 293,288
Ultramar Corp. 3,300 95,700
Union Pacific Resources Group, Inc. 5,500 147,125
24,213,518
TOTAL ENERGY 24,691,556
FINANCE - 17.8%
BANKS - 2.8%
Canadian Imperial Bank of Commerce 3,200 103,377
Fleet Financial Group, Inc. 177,082 7,703,067
State Street Boston Corp. 6,200 316,200
8,122,644
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.0%
Associates First Capital Corp. (a) 3,200 $ 120,400
FEDERAL SPONSORED CREDIT - 9.5%
Federal Home Loan Mortgage Corporation 72,200 6,173,100
Federal National Mortgage Association 622,600 20,857,100
Student Loan Marketing Association 6,200 458,800
27,489,000
INSURANCE - 4.4%
AFLAC, Inc. 12,050 359,994
Allmerica Financial Corp. 16,900 502,775
Allstate Corp. 91,359 4,168,254
American International Group, Inc. 30,500 3,008,063
CIGNA Corp. 1,900 223,963
Chubb Corp., (The) 1,400 69,825
Equitable of Iowa Companies 2,100 74,550
General Re Corp. 14,900 2,268,525
MGIC Investment Corp. 5,200 291,850
Providian Corp. 21,800 934,675
Torchmark Corp. 15,100 660,625
Travelers/Aetna Property Casualty Corp.
Class A (a) 2,200 62,425
12,625,524
SAVINGS & LOANS - 0.6%
Golden West Financial Corp. 27,700 1,551,200
SECURITIES INDUSTRY - 0.5%
Nomura Securities Co. Ltd. 33,000 643,726
United Asset Management Corp. 31,900 781,550
1,425,276
TOTAL FINANCE 51,334,044
HEALTH - 3.5%
DRUGS & PHARMACEUTICALS - 0.9%
Pharmacia & Upjohn, Inc. 31,800 1,411,125
Sandoz AG (Reg.) 500 570,688
Schering-Plough Corp. 8,800 552,200
2,534,013
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
Bard (C.R.), Inc. 200 6,800
Baxter International, Inc. 8,300 392,175
Biomet, Inc. (a) 27,500 395,313
794,288
MEDICAL FACILITIES MANAGEMENT - 2.3%
Columbia/HCA Healthcare Corp. 125,600 6,703,900
TOTAL HEALTH 10,032,201
HOLDING COMPANIES - 0.2%
U.S. Industries, Inc. (a) 28,700 692,388
INDUSTRIAL MACHINERY & EQUIPMENT - 2.5%
ELECTRICAL EQUIPMENT - 0.9%
Alcatel Alsthom Cie Generale
d'Electricite SA 1,000 87,100
Emerson Electric Co. 3,000 271,125
General Electric Co. 12,600 1,089,900
Scientific-Atlanta, Inc. 24,300 376,650
Sensormatic Electronics Corp. 33,000 540,375
Westinghouse Electric Corp. 15,600 292,500
2,657,650
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
Caterpillar, Inc. 26,700 $ 1,808,925
Deere & Co. 37,700 1,508,000
Dover Corp. 2,000 92,250
3,409,175
POLLUTION CONTROL - 0.4%
Browning-Ferris Industries, Inc. 40,700 1,180,300
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 7,247,125
MEDIA & LEISURE - 2.8%
BROADCASTING - 0.1%
CAI Wireless Systems, Inc. (a) 1,800 16,650
Comcast Corp.:
Class A 1,300 23,888
Class A special 17,200 318,200
358,738
ENTERTAINMENT - 0.4%
Cedar Fair LP (depositary unit) 1,200 44,850
Royal Caribbean Cruises Ltd. 35,400 1,008,900
1,053,750
LEISURE DURABLES & TOYS - 1.3%
Brunswick Corp. 12,900 258,000
Fleetwood Enterprises, Inc. 67,200 2,083,200
Nintendo Co. Ltd. Ord. 15,500 1,152,910
Outboard Marine Corp. 12,200 221,125
3,715,235
LODGING & GAMING - 0.6%
Circus Circus Enterprises, Inc. (a) 44,400 1,820,400
Mirage Resorts, Inc. (a) 1,500 80,625
1,901,025
PUBLISHING - 0.1%
Dow Jones & Co., Inc. 1,100 45,925
Knight-Ridder, Inc. 1,300 94,250
Times Mirror Co. Class A 2,400 104,400
244,575
RESTAURANTS - 0.3%
Bertucci's, Inc. (a) 9,000 48,375
Brinker International, Inc. (a) 15,400 231,000
Darden Restaurants, Inc. 16,000 172,000
McDonald's Corp. 7,500 350,625
802,000
TOTAL MEDIA & LEISURE 8,075,323
NONDURABLES - 8.6%
FOODS - 0.2%
General Mills, Inc. 8,700 474,150
Tyson Foods, Inc. 2,700 73,913
548,063
HOUSEHOLD PRODUCTS - 0.0%
Premark International, Inc. 7,000 129,500
TOBACCO - 8.4%
Philip Morris Companies, Inc. 207,600 21,590,384
RJR Nabisco Holdings Corp. 79,160 2,453,960
UST, Inc. 6,900 236,325
24,280,669
TOTAL NONDURABLES 24,958,232
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PRECIOUS METALS - 0.2%
Barrick Gold Corp. 5,300 $ 144,010
Santa Fe Pacific Gold Corp. 21,500 303,688
447,698
RETAIL & WHOLESALE - 6.9%
APPAREL STORES - 0.4%
Donna Karan International, Inc. 700 16,800
Limited, Inc., (The) 2,866 61,619
Melville Corp. 5,800 234,900
TJX Companies, Inc. 21,100 712,125
Talbots, Inc. 1,100 35,613
1,061,057
GENERAL MERCHANDISE STORES - 2.7%
Aoyama Trading Co. Ord. 1,500 39,242
Dillard Department Stores, Inc. Class A 12,200 445,300
Federated Department Stores, Inc. (a) 81,000 2,764,125
K mart Corp. 5,900 73,013
Price/Costco, Inc. 2,700 58,388
Wal-Mart Stores, Inc. 164,200 4,166,575
Woolworth Corp. (a) 13,500 303,750
7,850,393
GROCERY STORES - 0.0%
Safeway, Inc. (a) 1,000 33,000
RETAIL & WHOLESALE, MISCELLANEOUS - 3.8%
Circuit City Stores, Inc. 91,900 3,319,888
Good Guys, Inc. (a) 11,800 103,250
Home Depot, Inc., (The) 60,000 3,240,000
Lowe's Companies, Inc. 34,000 1,228,250
Officemax, Inc. (a) 24,050 574,194
Office Depot, Inc. (a) 19,800 403,425
Rex Stores Corp. (a) 8,700 133,763
Tandy Corp. 16,900 800,638
Toys "R" Us, Inc. 41,500 1,182,750
10,986,158
TOTAL RETAIL & WHOLESALE 19,930,608
SERVICES - 0.0%
ADVERTISING - 0.0%
Interpublic Group of Companies, Inc. 2,200 103,125
TECHNOLOGY - 8.3%
COMMUNICATIONS EQUIPMENT - 0.1%
Cisco Systems, Inc. 2,900 164,213
General Instrument Corp. (a) 7,400 213,675
377,888
COMPUTER SERVICES & SOFTWARE - 1.0%
Adobe Systems, Inc. 1,500 53,813
America Online, Inc. 1,600 70,000
Automatic Data Processing, Inc. 19,400 749,325
Electronic Data Systems Corp. 3,400 182,750
Metromail Corp. (a) 2,400 53,700
Microsoft Corp. (a) 3,300 396,413
Oracle Corp. (a) 16,050 632,972
Policy Management Systems Corp. (a) 17,200 860,000
2,998,973
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 5.5%
Compaq Computer Corp. (a) 182,900 $ 9,007,825
Digital Equipment Corp. (a) 6,900 310,500
Hewlett-Packard Co. 8,800 876,700
International Business Machines Corp. 48,800 4,831,200
SCI Systems, Inc. (a) 100 4,063
Seagate Technology 3,700 166,500
Tech Data Corp. (a) 23,700 515,475
15,712,263
ELECTRONICS - 1.7%
Intel Corp. 16,700 1,226,406
Methode Electronics, Inc. Class A 84,600 1,438,200
Molex, Inc. 7,375 216,641
Solectron Corp. (a) 49,800 1,886,175
4,767,422
TOTAL TECHNOLOGY 23,856,546
TRANSPORTATION - 1.0%
AIR TRANSPORTATION - 0.0%
Southwest Airlines Co. 4,400 128,150
RAILROADS - 0.8%
Bombardier, Inc. Class B 15,500 232,463
Burlington Northern Santa Fe Corp. 21,400 1,730,725
CSX Corp. 5,400 260,550
2,223,738
SHIPPING - 0.1%
Overseas Shipholding Group, Inc. 2,100 38,063
Stolt-Nielsen SA Class B sponsored ADR 11,000 204,875
Stolt-Nielsen SA 3,200 58,000
Storli AS Class B (non-vtg.) 1,300 24,777
325,715
TRUCKING & FREIGHT - 0.1%
Caliber System, Inc. 2,500 85,000
Consolidated Freightways, Inc. 3,600 76,050
161,050
TOTAL TRANSPORTATION 2,838,653
UTILITIES - 5.4%
CELLULAR - 2.6%
AirTouch Communications, Inc. (a) 41,900 1,183,675
Vodafone Group PLC sponsored ADR 169,700 6,257,688
Vodafone Group PLC 23,600 87,742
7,529,105
TELEPHONE SERVICES - 2.8%
Ameritech Corp. (a) 24,300 1,442,813
Bell Atlantic Corp. 16,200 1,032,750
BellSouth Corp. 39,600 1,678,050
NYNEX Corp. 32,500 1,543,750
SBC Communications, Inc. 45,900 2,260,575
7,957,938
TOTAL UTILITIES 15,487,043
TOTAL COMMON STOCKS
(Cost $213,244,509) 231,909,469
U.S. TREASURY OBLIGATIONS - 15.0%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
stripped principal 0%, 8/15/20 $ 20,000,000 $ 3,605,200
8 1/8%, 8/15/19 21,674,000 24,329,065
6 1/4%, 8/15/23 16,693,000 15,133,206
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $44,790,494) 43,067,471
REPURCHASE AGREEMENTS - 4.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.46%, dated
6/28/96 due 7/1/96 $ 13,361,077 13,355,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $271,390,003) $ 288,331,940
LEGEND
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $148,368,613 and $31,563,935, respectively, of which U.S.
government and government agency obligations aggregated $21,474,189 and
$2,140,000, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $32,135 for the period (see
Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At June 30, 1996, the aggregate cost of investment securities for income
tax purposes was $271,401,015. Net unrealized appreciation aggregated
$16,930,925, of which $22,359,832 related to appreciated investment
securities and $5,428,907 related to depreciated investment securities.
FIDELITY ADVISOR ANNUITY FUND: GROWTH OPPORTUNITIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
ASSETS
Investm $ 288,331,940
ent in
securit
ies, at
value
(includ
ing
repurc
hase
agree
ments
of
$13,35
5,000)
(cost
$271,3
90,003
) -
See
accom
panyin
g
sched
ule
Receiva 883,583
ble for
invest
ments
sold
Receiva 263,060
ble for
fund
shares
sold
Dividend 536,665
s
receiv
able
Interest 1,047,770
receiv
able
TOTAL 291,063,018
ASSETS
LIABILITI
ES
Payable $ 4,755
to
custod
ian
bank
Payable 4,090,894
for
invest
ments
purcha
sed
Accrued 140,769
manag
ement
fee
Other 53,590
payabl
es and
accrue
d
expen
ses
TOTAL 4,290,008
LIABILIT
IES
NET $ 286,773,010
ASSET
S
Net
Assets
consist
of:
Paid in $ 263,087,868
capital
Undistrib 2,743,907
uted
net
invest
ment
incom
e
Accumul 3,999,527
ated
undistr
ibuted
net
realize
d gain
(loss)
on
invest
ments
and
foreign
curren
cy
transa
ctions
Net 16,941,708
unreali
zed
apprec
iation
(depre
ciation
) on
invest
ments
and
assets
and
liabiliti
es in
foreign
curren
cies
NET $ 286,773,010
ASSET
S, for
20,813
,880
shares
outsta
nding
NET $13.78
ASSET
VALUE,
offerin
g price
and
redem
ption
price
per
share
($286,
773,01
0 (divided by)
20,813
,880
shares
)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
INVESTM $ 2,080,769
ENT
INCOME
Dividend
s
Interest 1,518,791
TOTAL 3,599,560
INCOM
E
EXPENS
ES
Manage $ 685,804
ment
fee
Transfer 66,595
agent
fees
Accounti 68,012
ng
fees
and
expen
ses
Non-inte 389
rested
trustee
s'
compe
nsatio
n
Custodia 33,765
n fees
and
expen
ses
Registrat 7
ion
fees
Audit 10,797
Legal 308
Miscella 92
neous
Total 865,769
expen
ses
before
reducti
ons
Expen (10,116 855,653
se )
reducti
ons
NET 2,743,907
INVEST
MENT
INCOM
E
REALIZE
D AND
UNREALIZ
ED GAIN
(LOSS)
Net
realize
d gain
(loss)
on:
Invest 4,086,145
ment
securit
ies
Foreig (406 4,085,739
n )
curren
cy
transa
ctions
Change
in net
unreali
zed
apprec
iation
(depre
ciation
) on:
Invest 6,612,537
ment
securit
ies
Assets 886 6,613,423
and
liabiliti
es in
forei
gn
curren
cies
NET GAIN 10,699,162
(LOSS)
NET $ 13,443,069
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
RESULTI
NG
FROM
OPERAT
IONS
OTHER $ 9,660
INFORM
ATION
Expense
reducti
ons
Directe
d
broker
age
arrang
ements
Custod 456
ian
interest
credits
$ 10,116
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
Operatio $ 2,743,907 $ 1,265,580
ns
Net
invest
ment
incom
e
Net 4,085,739 1,487,955
realize
d gain
(loss)
Chang 6,613,423 10,328,285
e in
net
unreali
zed
apprec
iation
(depre
ciation
)
NET 13,443,069 13,081,820
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
OPER
ATIO
NS
Distributi - (1,304,508)
ons to
shareh
olders
From
net
invest
ment
incom
e
From (705,098) (830,141)
net
realize
d gain
TOTAL (705,098) (2,134,649)
DISTRIB
UTIONS
Share 110,446,573 152,442,844
transa
ctions
Net
procee
ds
from
sales
of
shares
Reinve 705,098 2,134,649
stment
of
distrib
utions
Cost (1,419,284) (1,222,012)
of
shares
redee
med
NET 109,732,387 153,355,481
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
SHAR
E
TRAN
SACTI
ONS
TOTAL 122,470,358 164,302,652
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
NET
ASSETS
Beginn 164,302,652 -
ing of
period
End of $ 286,773,010 $ 164,302,652
perio
d
(incl
udin
g
undi
strib
uted
net
inve
stme
nt
inco
me
of
$2,7
43,9
07
and
$0,
resp
ectiv
ely)
OTHER
INFORMAT
ION
Shares
Sold 8,299,579 12,503,896
Issued 53,538 164,965
in
reinve
stment
of
distrib
utions
Redee (108,097) (100,001)
med
Net 8,245,020 12,568,860
increa
se
(decre
ase)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
</TABLE>
SELECTE $ 13.07 $ 10.00
D
PER-S
HARE
DATA
Net
asset
value,
beginn
ing of
period
Income
from
Invest
ment
Operat
ions
Net .13 .11
invest
ment
incom
e
Net .63 3.14
realize
d and
unreali
zed
gain
(loss)
Total .76 3.25
from
invest
ment
operati
ons
Less - (.11)
Distrib
utions
From
net
invest
ment
incom
e
From (.05) (.07)
net
realize
d gain
Total (.05) (.18)
distrib
utions
Net $ 13.78 $ 13.07
asset
value,
end of
period
TOTAL 5.83% 32.52%
RETUR
N B, C
RATIOS
AND
SUPPL
EMENT
AL
DATA
Net $ 286,773 $ 164,303
assets
, end
of
period
(000
omitte
d)
Ratio of .77% A .85% A,
expen D
ses to
averag
e net
assets
Ratio of .76% A, .83% A,
expen E E
ses to
averag
e net
assets
after
expen
se
reducti
ons
Ratio of 2.45% A 2.49% A
net
invest
ment
incom
e to
averag
e net
assets
Portfolio 30% A 38% A
turnov
er rate
Average $ .0355
commi
ssion
rate F
1. ANNUALIZED 2. TOTAL RETURNS FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED AND DO NOT REFLECT
CHARGES ATTRIBUTABLE TO YOUR INSURANCE COMPANY'S
SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD
REDUCE THE TOTAL RETURN SHOWN. 3. THE TOTAL RETURNS
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). 4. FMR AGREED
TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER. 5. FMR OR
THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF
THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
6. FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1,
1995 A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE
COMMISION RATE PER SHARE FOR SECURITY TRADES ON
WHICH COMMISIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND
TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
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. A fund's total return 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
securities that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns would be
lower.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1996 PAST 1 LIFE OF
YEAR FUND
Overseas 11.17% 11.69%
Morgan Stanley EAFE Index 13.28% 10.59%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund performed at a constant rate
each year.
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 returns to the performance of the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE) Index - an
unmanaged index of over 1,000 foreign stocks. The EAFE Index may be
compiled in two ways: a capitalization weighted (cap-weighted) version and
a gross domestic product (GDP weighted) version.
Figures for more than one year assume a steady compounded rate of return
and are not the fund's year-by-year results, which fluctuated over the
periods shown. The life of fund figures are from commencement of operations
January 3, 1995.
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
IMAHDR PRASUN SHR__CHT 19960630 19960712 114558 S00000000000001
FA Annuity Overseas Fund MS EAFE Index
00618 MS001
1995/01/03 10000.00 10000.00
1995/01/31 9920.00 9615.02
1995/02/28 9930.00 9587.43
1995/03/31 10230.00 10185.41
1995/04/30 10460.00 10568.47
1995/05/31 10470.00 10442.49
1995/06/30 10610.00 10259.36
1995/07/31 10960.00 10898.07
1995/08/31 10670.00 10482.34
1995/09/30 10790.00 10687.07
1995/10/31 10580.00 10399.80
1995/11/30 10710.00 10689.16
1995/12/31 11020.16 11119.83
1996/01/31 11211.21 11165.48
1996/02/29 11251.40 11203.22
1996/03/31 11422.49 11441.14
1996/04/30 11714.34 11773.77
1996/05/31 11704.27 11557.11
1996/06/28 11794.85 11622.15
IMATRL PRASUN SHR__CHT 19960630 19960712 114559 R00000000000021
Let's say hypothetically that $10,000 was invested in Overseas Fund on
January 3, 1995, when the fund started. As the chart shows, by June 30,
1996, the value of the investment would have grown to $11,795 - a 17.95%
increase on the initial investment. For comparison, look at how the Morgan
Stanley EAFE Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 investment would have grown to
$11,622 - a 16.22% increase.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF JUNE 30, 1996
% OF FUND'S
INVESTMENTS
Veba AG Ord. 2.9
Volvo AB Class B 2.7
Honda Motor Co. Ltd. 2.0
Total SA Class B 1.9
Matsushita Electric Industrial Co. Ltd. 1.9
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1996
% OF FUND'S
INVESTMENTS
Finance 15.6
Durables 15.3
Utilities 9.9
Basic Industries 6.5
Energy 5.7
GEOGRAPHIC DIVERSIFICATION AS OF JUNE 30, 1996
(BY LOCATION OF ISSUER) % OF FUND'S
INVESTMENTS
Japan 25.1
United Kingdom 12.3
France 8.2
Germany 7.3
Sweden 6.5
FIDELITY ADVISOR ANNUITY FUND: OVERSEAS FUND
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS:
On March 26, 1996, Rick Mace became Portfolio Manager of Fidelity Advisor
Annuity Overseas Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. For the six months ended June 30, 1996, the fund outperformed the Morgan
Stanley Capital International EAFE Index - which tracks the performance of
stocks in Europe, Australia and the Far East. The index had a total return
of 4.52% for the six-month period. For the 12-month period, however, the
fund underperformed the 13.28% return of the index.
Q. IN YOUR OPINION, WHY DID THE FUND OUTPERFORM ITS BENCHMARK FOR THE PAST
SIX MONTHS?
A. In my opinion, good individual stock selection was important to the
fund's performance. Because I use a bottom-up, stock-by-stock approach to
investing, I believe stock selection plays a greater role in fund
performance than country or sector investing.
Q. JAPAN CONTINUES TO BE THE TOP WEIGHTING IN THE FUND . . .
A. The fund's Japanese position is somewhat below the Japanese weighting of
the EAFE index, but much larger than many international funds. What made
Japanese equities so attractive was the weak yen, low interest rates, a
recovering economy and a great variety of undervalued stocks. These
characteristics benefited broadly based export companies such as Sony and
Omron, retailers such as Ito-Yokado and auto companies such as Toyota and
Honda.
Q. SPECIFICALLY, WHAT IS THE ADVANTAGE OF A WEAK YEN?
A. It improves the competitiveness of Japanese companies by reducing the
prices of Japanese exports measured in foreign currencies. Additionally,
reported profits are favorably impacted by the translation of overseas
earnings back into yen. For example, when you consider a company like
Canon, a 1% weakening in the yen helps their earnings by almost 5%.
Q. TURNING TO EUROPE, WHAT'S BEEN THE STORY THERE?
A. The new investments in Europe have come mainly in French stocks and, to
a lesser extent, the United Kingdom and Germany. I believe that the
aggressive cost cutting of many European companies, the cheapness of
European stocks and the potential for a more robust European economy have
provided outstanding investment opportunities. Investors may remember the
spectacular performance of the stocks of U.S. companies in the early 1990s.
This performance was driven by cost cutting, increased corporate earnings
and a strong economy. Of course, there can be no guarantee this scenario
will occur in Europe.
Q. CAN YOU GIVE EXAMPLES OF SOME EUROPEAN COMPANIES YOU PURCHASED DURING
THE PERIOD?
A. Sure. Veba, a German conglomerate; Pechiney, a French aluminum company;
Alcatel Alsthom Compagnie Generale d'Electricite, a French telecom company;
and Volvo, the Swedish car and truck manufacturer; all exemplify my reasons
for raising the fund's European position.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Unfortunately, Deutsche Bank has not exhibited the ability to cut costs
that I had hoped it would. The stock remains at very inexpensive levels,
and I am hopeful that the bank's continued cost-cutting efforts will
produce more meaningful results.
Q. SINCE THIS IS YOUR FIRST REPORT AS MANAGER OF THE FUND, WOULD YOU MIND
SUMMARIZING YOUR INVESTMENT STYLE?
A. Sure. When I look at a stock, I attempt to establish its worth as a
means of determining the return I can expect and as a way of comparing
potential rewards and potential risks. I try to minimize surprises by
thoroughly understanding the downside possibilities for each stock I own. I
attempt to select stocks that I believe have two or three times as much
upside potential as downside risk. I also focus on a company's cash flow
and balance sheet. I've found that while accounting conventions vary
dramatically from country to country, the items that are most comparable
are cash flow and balance sheets.
Q. WHAT'S YOUR OUTLOOK?
A. The economy has already begun to recover in Japan - to the benefit of
the fund - and I am hopeful for a similar scenario to occur in Europe. I
believe there is the potential for economic improvement in many areas of
the world and, in my opinion, the fund is well positioned to take advantage
of any recoveries.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: 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, 1996, more than $35 million
MANAGER: Richard Mace, since March 1996;
joined Fidelity in 1987
(checkmark)
FIDELITY ADVISOR ANNUITY FUND: OVERSEAS FUND
INVESTMENTS JUNE 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.6%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.9%
Banco de Galicia Y Buenos Aires SA
sponsored ADR representing
Class B shares 1,000 $ 25,875
Perez Companc Class B 9,489 62,176
Telecom Argentina Class B sponsored ADR 2,900 137,032
Telecom Argentina Stet France Telecom SA 1,300 6,112
YPF Sociedad Anonima sponsored
ADR representing Class D shares 3,600 81,000
312,195
AUSTRALIA - 0.9%
Brambles Industries Ltd. 8,300 115,568
CSR Ltd. 8,498 30,050
Coles Myer Ltd. 11,300 41,115
Western Mining Holdings Ltd. 11,000 78,834
Woolworths Ltd. 25,300 61,170
326,737
AUSTRIA - 0.1%
EVN (Energie-Versor Nieder) 240 33,127
BELGIUM - 0.5%
Bekaert SA 130 104,673
Delhaize Freres & Cie Le Lion SA 1,200 60,269
164,942
BRAZIL - 1.7%
Compania Cervejaria Brahma PN
(Pfd. Reg.) 122,400 73,015
Telebras sponsored ADR 6,600 459,525
Telebras PN (Pfd. Reg.) 1,021,600 71,318
603,858
CANADA - 1.5%
Alcan Aluminium Ltd. 4,000 121,888
BCE, Inc. 2,400 94,606
Barrick Gold Corp. 1,400 38,008
Bre-X Minerals Ltd. 1,400 23,096
Canadian Natural Resources Ltd. 1,400 25,952
Greenstone Resources Ltd. 2,000 22,935
Inco Ltd. 3,495 112,651
Magna International, Inc. Class A 700 32,342
Midland Walwyn, Inc. 4,200 26,952
Renaissance Energy Ltd. 1,000 26,364
524,794
DENMARK - 0.8%
International Service Systems AS, Series B 8,140 181,539
Unidanmark AS Class A 2,650 122,712
304,251
FINLAND - 1.5%
Cultor OY, Series 1 1,600 78,178
Huhtamaki Ord. 3,700 123,445
Nokia Corp. AB, Series A 1,100 40,488
Pohjola Class B 8,100 136,866
Valmet OY Class A 5,900 99,692
Valmet OY (b) 3,800 64,209
542,878
FRANCE - 8.2%
Alcatel Alsthom Compagnie Generale
d'Electricite SA 5,800 505,179
Axa SA 3,808 208,018
Canal Plus SA 639 156,062
SHARES VALUE (NOTE 1)
Club Mediterranee SA Ord. 700 $ 62,599
Credit Commercial de France Ord. 1,100 50,914
Eramet SA 2,000 134,433
Generale des Eaux 650 72,502
IMETAL SA Ord. 900 127,449
Lafarge Coppee SA 830 50,154
Michelin SA (Compagnie Generale
des Etablissements) Class B 5,800 283,081
Nationale Elf Aquitaine 1,800 132,198
Pechiney SA Class A 5,900 237,946
Peugeot SA Ord. 300 40,097
Societe Generale Class A 500 54,898
Total SA Class B 9,290 688,055
Usinor Sacilor 5,100 73,458
Vallourec SA 1,400 63,550
2,940,593
GERMANY - 7.0%
Asko 150 110,692
BASF AG 1,000 28,534
Bayer AG 9,000 317,317
Continental Gummi-Werke AG 6,100 98,832
Daimler-Benz AG Ord. (a) 3,000 160,282
Deutsche Bank AG 3,000 141,686
Hoechst AG Ord. 3,500 118,465
Karstadt AG 100 40,374
Kaufhof Holding AG 230 86,870
Mannesmann AG Ord. 400 138,012
Veba AG Ord. 19,500 1,034,415
Volkswagen AG 600 222,565
2,498,044
HONG KONG - 2.2%
Amoy Properties Ltd. 56,000 67,640
Consolidated Electric Power Asia Ltd.
sponsored ADR (b) 300 4,875
Consolidated Electric Power Asia Ltd. 20,200 33,401
Dickson Concepts International Ltd. 58,000 74,176
Great Eagle Holdings Ltd. 24,000 70,223
HSBC Holdings PLC 17,100 261,736
Hong Kong & China Gas Co. Ltd. 52,000 82,961
Hysan Development Co. Ltd. 34,000 104,095
Oriental Press Group Ltd. 58,000 31,094
Peregrine Investments Holdings Ltd. 20,000 28,808
Sun Hung Kai Properties Ltd. 2,000 20,217
779,226
IRELAND - 0.6%
Bank of Ireland, Inc. 23,200 158,734
Independent Newspapers PLC 11,333 52,778
Independent Newspapers PLC (rights) (a) 2,266 352
211,864
ITALY - 0.4%
Magneti Marelli Spa 26,800 38,463
Montedison Spa Ord. (a) 24,600 14,295
Olivetti & Co. Spa Ord. (a) 99,900 53,660
Pirelli Spa Ord. 7,700 12,962
SAI (Sta Assieuratrice Industriale) Spa 3,500 33,397
152,777
JAPAN - 25.0%
Acom Co. Ltd. 1,000 39,105
Amway Japan Ltd. 1,500 75,202
Aoyama Trading Co. Ord. 2,500 65,403
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Bridgestone Corp. 11,000 $ 209,562
Canon, Inc. 18,000 374,094
Citizen Watch Co. Ltd. Ord. 8,000 66,579
Dai-Ichi Kangyo Bank 3,000 55,786
DDI Corp. Ord. 22 191,714
Daiwa House Industry Co. Ltd. 13,000 201,449
Daiwa Securities Co. Ltd. 18,000 231,348
Dennys Japan Co. Ltd. 2,000 70,917
Daito Trust Construction 9,400 140,522
East Japan Railway Co. Ord. 12 62,896
Fanuc Ltd. 2,300 91,409
Fuji Bank Ltd. 4,000 86,049
Fuji Photo Film Co. Ltd. 10,000 315,391
Hitachi Koki Co. Ltd. Ord. 3,000 29,534
Hitachi Ltd. 28,000 260,335
Hitachi Maxell Ltd. 6,000 125,245
Honda Motor Co. Ltd. 28,000 724,853
Ito-Yokado Co. Ltd. 7,000 421,767
Japan Airlines Co. Ltd. (a) 8,000 64,683
Kao Corp. 2,000 26,981
Kobe Steel Ltd. (a) 36,000 103,368
Komatsu Ltd. Ord. 31,000 305,182
Komatsu Seiren Co. Ltd. 2,000 23,700
Matsushita Electric Industrial Co. Ltd. 36,000 669,432
Minebea Co. Ltd. 6,000 50,371
Mitsubishi Electric Co. Ord. 23,000 160,175
Mitsubishi Estate Co. Ltd. 5,000 68,821
Mitsubishi Heavy Industries Ltd. 11,000 95,556
Mitsui Trust and Banking Co. Ltd. 5,000 58,338
Mitsukoshi Ltd. 7,000 74,655
Nikko Securities Co. Ltd. 11,000 123,331
Nichido Fire & Marine Insurance Co. Ltd. 14,550 112,336
Nintendo Co. Ltd. Ord. 1,000 74,381
Nippon Shokubai Co. Ltd. 4,000 38,649
Nitto Denko Corp. 2,000 35,185
Nomura Securities Co. Ltd. 18,000 351,123
Nippon Thompson Co. Ltd. 3,000 25,842
Omron Corp. 4,000 84,955
Onward Kashiyama & Co. Ltd. 7,000 114,215
Orix Corp. 6,000 222,050
Ricoh Co. Ltd. Ord. 13,000 137,460
Rohm Co. Ltd. 1,000 65,995
Sakura Bank Ltd. 3,000 33,362
Sankyo Co. Ltd. 4,000 103,550
Seino Transportation Co. Ltd. 3,000 47,309
Sekisui Chemical Co. Ltd. 8,000 97,717
Sho Bond Corp. Ord. 600 22,424
Sony Corp. 4,100 269,459
Sumitomo Realty & Development Co. Ltd. 16,000 126,448
Sumitomo Trust & Banking Co. Ltd. 8,000 109,384
Sumitomo Marine and Fire Insurance
Co. Ltd. 9,000 78,346
TDK Corp. 2,000 119,229
Takashimaya Co. Ltd. 8,000 123,969
Takeda Chemical Industries Ltd. 11,000 194,522
Tokio Marine & Fire Insurance Co. Ltd. (The) 6,000 79,851
Toyota Motor Corp. 17,000 424,593
Uny Co. Ltd. 2,000 39,561
Yamanouchi Pharmaceutical Co. Ltd. 5,000 108,473
York Benimaru Co. 900 35,769
8,939,910
SHARES VALUE (NOTE 1)
KOREA (SOUTH) - 0.5%
Korea Electric Power Corp. 4,190 $ 169,212
MEXICO - 0.2%
BANACCI SA de CV Class B (a) 6,000 12,467
Cifra SA Class C (a) 40,000 57,060
69,527
NETHERLANDS - 5.4%
AKZO NV 2,500 299,029
DSM NV 600 59,484
ING Groep NV 13,262 394,827
KLM Royal Dutch Air Lines NV 2,736 87,375
Philips Electronics NV (Bearer) 700 22,723
Pirelli Tyre Holdings NV Ord. (a) 12,500 110,399
Royal Dutch Petroleum Co. Ord. 2,590 399,324
Royal Ptt Nederland NV 5,100 192,700
Unilever NV Ord. 900 130,023
Vendex International NV 2,300 80,043
Vendex International NV (b) 4,100 142,686
1,918,613
NORWAY - 1.1%
Den Norske Bank Class A Free shares 27,000 81,755
Norsk Hydro AS 3,400 166,185
Orkla AS Class B (non-vtg.) 1,400 67,999
Saga Petroleum AS Class B 5,600 75,745
391,684
PERU - 0.1%
Compania de Minas Buenaventura SA
Class B sponsored ADR 1,600 31,800
SINGAPORE - 0.2%
Kim Engineering Holdings Ltd. 59,000 55,593
Overseas Union Bank Ltd. (For. Reg.) 4,000 27,488
Van Der Horst Ltd. 2,000 9,352
92,433
SPAIN - 3.2%
Banco Bilbao Vizcaya SA Ord. (Reg.) 6,400 259,105
Banco de Santander SA Ord. (Reg.) 4,800 223,909
Banco Intercontinental Espanol 1,300 145,318
Tabacalera SA, Series A 6,300 316,978
Telefonica de Espana SA Ord. 10,000 184,095
1,129,405
SWEDEN - 6.5%
Bure Investment AB (b) 1,300 11,929
Electrolux AB 3,350 168,059
Ericsson (L.M.) Telephone Co. Class B 2,000 43,022
Esselte AB Class B Free shares 1,700 34,651
Investor AB Class B Free shares 3,100 115,880
SKF AB Ord. 3,100 73,445
Scania AB:
Class A 2,700 74,731
Class B 14,400 399,651
Series B (warrants) (a) 3,100 3,358
Skandia Foersaekrings AB 6,100 161,038
Skandinaviska Enskilda Banken
Class A Free shares 22,300 177,788
Swedish Match AB 30,100 93,273
Volvo AB Class B 42,100 956,271
2,313,096
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - 2.1%
CIBA-GEIGY AG (Reg.) 127 $ 154,477
Nestle SA (Reg.) 262 298,623
Roche Holdings Ltd. participation
certificates 26 197,942
Sandoz AG (Reg.) 100 114,138
765,180
THAILAND - 0.3%
Ruang Khao Unit Trust (For. Reg.) 13,800 8,830
Siam City Bank PLC:
(Loc. Reg.) 5,200 4,812
(For. Reg.) 95,600 102,575
116,217
UNITED KINGDOM - 12.3%
Allied Domecq PLC 9,502 66,819
Argyll Group PLC Ord. 41 221
Barclays PLC Ord. 19,300 231,444
Barratt Developments PLC 31,700 124,992
Bass PLC Ord. 14,100 176,966
Booker PLC 5,400 31,267
Boots Co. PLC (The) 6,700 60,220
British Airways PLC Ord. 11,900 102,155
British Petroleum PLC Ord. 38,300 335,921
British Telecommunications PLC Ord. 12,900 69,288
Cable & Wireless PLC Ord. 14,600 96,437
Caradon PLC 25,900 86,644
Christies International PLC 600 1,965
Cookson Group PLC 64,300 282,480
Courtaulds PLC Ord. 800 5,278
Dixons Group PLC 27,800 227,429
Glaxo Holdings PLC 9,500 127,859
Granada Group PLC 7,400 98,964
Grand Metropolitan PLC 25,946 171,984
Hanson Trust PLC Ord. 11,200 31,295
Lloyds Abbey Life PLC 13,500 106,460
Lloyds TSB Group PLC 13,161 64,356
MFI Furniture Group PLC 28,900 77,837
Mirror Group Newspaper PLC 40,800 128,889
National Westminster Bank PLC Ord. 21,000 200,160
Prudential Corp. PLC 8,405 52,973
RTZ Corp. PLC Ord. 3,600 53,258
Redland PLC Ord. 6,000 37,070
Rolls Royce PLC Ord. 20,771 72,224
Royal Insurance Holdings PLC 22,700 140,072
Rugby Group 13,700 23,394
Scottish Power PLC ADR 1,900 8,966
Shell Transport & Trading Co. PLC:
(Reg.) 19,400 284,291
ADR 300 26,400
Sema Group PLC 5,700 65,036
SmithKline Beecham PLC Ord. 8,500 90,847
South West Water PLC Ord. 8,400 85,280
T & N PLC 19,600 42,596
Unigate Ltd. Ord. 4,600 28,420
United Utilities PLC 7,276 61,162
Vodafone Group PLC 26,425 98,245
WPP Group PLC ADR 600 20,100
WPP Group PLC (b) 29,300 98,700
Whitbread & Co. PLC Class A 11,700 128,772
Wickes PLC 11,300 12,016
Yorkshire Water PLC Ord. 3,900 39,957
4,377,109
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - 0.4%
Dresser Industries, Inc. 1,100 $ 32,450
Newmont Mining Corp. 500 24,688
Pharmacia & Upjohn, Inc. 2,100 93,188
150,326
TOTAL COMMON STOCKS
(Cost $28,479,579) 29,859,798
PREFERRED STOCKS - 1.4%
CONVERTIBLE PREFERRED STOCKS - 0.1%
JAPAN - 0.1%
AJL participating trust exchangeable 1,300 27,463
NONCONVERTIBLE PREFERRED STOCKS - 1.3%
AUSTRIA - 0.2%
Creditanstalt Bankverein 1,200 60,657
GERMANY - 0.3%
Porsche AG (a) 100 60,020
Volkswagen AG 4% 200 54,772
114,792
ITALY - 0.8%
Fiat Spa 11,000 19,241
SAI (Sta Assieuratrice Industriale) Spa 7,100 27,401
Stet (Societa Finanziaria Telefonica) Spa 90,600 237,862
284,504
TOTAL NONCONVERTIBLE PREFERRED STOCKS 459,953
TOTAL PREFERRED STOCKS
(Cost $445,418) 487,416
CORPORATE BONDS - 0.3%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
BERMUDA - 0.3%
MBL International Finance
of Bermuda 3%, 11/30/02
(Cost $90,280) Aa3 $ 80,000 93,400
REPURCHASE AGREEMENTS - 14.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.46%, dated
6/28/96 due 7/1/96 $ 5,257,391 5,255,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $34,270,277) $ 35,695,614
LEGEND
(a) Non-income producing
(a) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $322,399 or 0.9% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $24,457,894 and $10,682,148, respectively.
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $2,843 for the period (see
Note 4 of Notes to Financial Statements).
INCOME TAX INFORMATION
At June 30, 1996, the aggregate cost of investment securities for income
tax purposes was $34,272,707. Net unrealized appreciation aggregated
$1,422,907, of which $2,117,632 related to appreciated investment
securities and $694,725 related to depreciated investment securities.
At December 31, 1995, the fund had a capital loss carryforward of
approximately $42,000, all of which will expire on December 31, 2003.
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.2%
Basic Industries 6.5
Conglomerates 0.1
Construction & Real Estate 3.6
Durables 15.3
Energy 5.7
Finance 15.6
Health 3.3
Holding Companies 0.9
Industrial Machinery & Equipment 4.4
Media & Leisure 1.9
Nondurables 4.9
Precious Metals 0.6
Retail & Wholesale 5.4
Repurchase Agreements 14.7
Services 0.9
Technology 4.8
Transportation 1.3
Utilities 9.9
100.0%
FIDELITY ADVISOR ANNUITY FUND: OVERSEAS FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
ASSETS
Investm $ 35,695,614
ent in
securit
ies, at
value
(includ
ing
repurc
hase
agree
ments
of
$5,255
,000)
(cost
$34,27
0,277)
- - See
accom
panyin
g
sched
ule
Cash 586
Receiva 171,393
ble for
invest
ments
sold
Receiva 92,279
ble for
fund
shares
sold
Dividend 86,991
s
receiv
able
Interest 200
receiv
able
Receiva 27,180
ble
from
invest
ment
advise
r for
expen
se
reducti
ons
TOTAL 36,074,243
ASSETS
LIABILITI
ES
Payable $ 564,612
for
invest
ments
purcha
sed
Accrued 21,487
manag
ement
fee
Other 49,187
payabl
es and
accrue
d
expen
ses
TOTAL 635,286
LIABILIT
IES
NET $ 35,438,957
ASSET
S
Net
Assets
consist
of:
Paid in $ 33,184,564
capital
Undistrib 297,929
uted
net
invest
ment
incom
e
Accumul 531,363
ated
undistr
ibuted
net
realize
d gain
(loss)
on
invest
ments
and
foreign
curren
cy
transa
ctions
Net 1,425,101
unreali
zed
apprec
iation
(depre
ciation
) on
invest
ments
and
assets
and
liabiliti
es in
foreign
curren
cies
NET $ 35,438,957
ASSET
S, for
3,022,
922
shares
outsta
nding
NET $11.72
ASSET
VALUE,
offerin
g price
and
redem
ption
price
per
share
($35,4
38,957
(divided by)
3,022,
922
shares
)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
INVESTM $ 465,803
ENT
INCOME
Dividend
s
Interest 122,428
588,231
Less (62,936
foreign )
taxes
withhel
d
TOTAL 525,295
INCOM
E
EXPENS
ES
Manage $ 100,449
ment
fee
Transfer 10,295
agent
fees
Accounti 30,027
ng
fees
and
expen
ses
Non-inte 44
rested
trustee
s'
compe
nsatio
n
Custodia 92,059
n fees
and
expen
ses
Registrat 90
ion
fees
Audit 9,114
Legal 33
Miscella 91
neous
Total 242,202
expen
ses
before
reducti
ons
Expen (47,964 194,238
se )
reducti
ons
NET 331,057
INVEST
MENT
INCOM
E
REALIZE
D AND
UNREALIZ
ED GAIN
(LOSS)
Net
realize
d gain
(loss)
on:
Invest 578,911
ment
securit
ies
Foreig (1,216 577,695
n )
curren
cy
transa
ctions
Change
in net
unreali
zed
apprec
iation
(depre
ciation
) on:
Invest 835,131
ment
securit
ies
Assets (135 834,996
and )
liabiliti
es in
forei
gn
curren
cies
NET GAIN 1,412,691
(LOSS)
NET $ 1,743,748
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
RESULTI
NG
FROM
OPERAT
IONS
OTHER $ 47,964
INFORM
ATION
Expense
reducti
ons
FMR
reimbu
rseme
nt
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
Operatio $ 331,057 $ 77,870
ns
Net
invest
ment
incom
e
Net 577,695 (47,389)
realize
d gain
(loss)
Chang 834,996 590,105
e in
net
unreali
zed
apprec
iation
(depre
ciation
)
NET 1,743,748 620,586
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
OPER
ATIO
NS
Distributi (18,918) (77,870)
ons to
shareh
olders
From
net
invest
ment
incom
e
In - (13,153)
excess
of net
invest
ment
incom
e
TOTAL (18,918) (91,023)
DISTRIB
UTIONS
Share 16,363,959 17,966,550
transa
ctions
Net
procee
ds
from
sales
of
shares
Reinve 18,918 91,023
stment
of
distrib
utions
Cost (263,642) (992,244)
of
shares
redee
med
NET 16,119,235 17,065,329
INCR
EASE
(DEC
REAS
E) IN
NET
ASSE
TS
RESU
LTING
FROM
SHAR
E
TRAN
SACTI
ONS
TOTAL 17,844,065 17,594,892
INCREA
SE
(DECRE
ASE) IN
NET
ASSETS
NET
ASSETS
Beginn 17,594,892 -
ing of
period
End of $ 35,438,957 $ 17,594,892
perio
d
(incl
udin
g
unde
r
(over
)
distri
butio
n of
net
inve
stme
nt
inco
me
of
$297
,929
and
$(14,
210),
resp
ectiv
ely)
OTHER
INFORMAT
ION
Shares
Sold 1,438,924 1,690,464
Issued 1,688 8,327
in
reinve
stment
of
distrib
utions
Redee (23,558) (92,923)
med
Net 1,417,054 1,605,868
increa
se
(decre
ase)
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED JANUARY 3, 1995
JUNE 30, 1996 (COMMENCEMENT
(UNAUDITED) OF
OPERATIONS) TO
DECEMBER 31, 1995
</TABLE>
SELECTE $ 10.96 $ 10.00
D
PER-S
HARE
DATA
Net
asset
value,
beginn
ing of
period
Income
from
Invest
ment
Operat
ions
Net .12 F .05
invest
ment
incom
e
Net .65 .97
realize
d and
unreali
zed
gain
(loss)
Total .77 1.02
from
invest
ment
operati
ons
Less (.01) (.05)
Distrib
utions
From
net
invest
ment
incom
e
In - (.01)
excess
of net
invest
ment
incom
e
Total (.01) (.06)
distrib
utions
Net $ 11.72 $ 10.96
asset
value,
end of
period
TOTAL 7.03% 10.20%
RETUR
N B, C
RATIOS
AND
SUPPL
EMENT
AL
DATA
Net $ 35,439 $ 17,595
assets
, end
of
period
(000
omitte
d)
Ratio of 1.48% A, 1.50% A,
expen D D
ses to
averag
e net
assets
Ratio of 2.52% A 1.23% A
net
invest
ment
incom
e to
averag
e net
assets
Portfolio 95% A 43% A
turnov
er rate
Average $ .0201
commi
ssion
rate E
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN
ONE YEAR ARE NOT ANNUALIZED AND DO NOT REFLECT
CHARGES ATTRIBUTABLE TO YOUR INSURANCE COMPANY'S
SEPARATE ACCOUNT. INCLUSION OF THESE CHARGES WOULD
REDUCE THE TOTAL RETURN SHOWN. C THE TOTAL RETURNS
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5
OF NOTES TO FINANCIAL STATEMENTS). D FMR AGREED
TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S
EXPENSE RATIO WOULD HAVE BEEN HIGHER (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS). E FOR FISCAL YEARS
BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE
CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
F NET INVESTMENT INCOME PER SHARE HAS BEEN
CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1996 (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 financial statements have been prepared in
conformity with generally accepted accounting principles which permit
management to make certain estimates and assumptions at the date of the
financial statements. 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 (including restricted
securities) for which quotations are not readily available are valued at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
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 and foreign currency options, disposition of foreign currencies,
currency gains and losses realized between the trade and settlement dates
on securities transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or loss
on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the 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 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.
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
1.SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
accepted accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing treatments
for paydown gains/losses on certain securities, futures and options
transactions, foreign currency transactions, passive foreign investment
companies (PFIC), market discount, and losses deferred due to wash sales
and futures and options.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. Each fund, except 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. 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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, 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 for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the funds'
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The
market value of the securities purchased or sold on a when-issued or
forward commitment basis are identified as such in the fund's schedule of
investments. Each fund may receive compensation for interest forgone in the
purchase of a delayed delivery security. Losses may arise due to changes in
the market value of the underlying securities or if the counterparty does
not perform under the contract.
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. Options traded
on an exchange 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. PURCHASES AND SALES OF INVESTMENTS
Information regarding purchases and sales of securities (other than
short-term securities) and the market value of future contracts opened and
closed is included under the caption "Other Information" at the end of each
applicable fund's schedule of investments.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, 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
.1100% to .3700% and is based on
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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 .21% of
average net assets.
For all other funds, FMR receives a monthly fee that is calculated on the
basis of a group 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. The rates ranged from .2500% to .5200% for
the period for the Income & Growth, Growth Opportunities and Overseas
funds. The rates ranged from .1100% 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 the period, 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 .45%, .60%, .51%, .61%, and .76%, of average net assets
for the Government Investment, High Yield, Income & Growth, Growth
Opportunities and Overseas funds, respectively. Effective August 1, 1996,
FMR voluntarily agreed to reduce Income & Growth Fund's individual fund fee
rate from .20% to .15%.
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.
FMR, on behalf of the High Yield, Income & Growth, Growth Opportunities,
and Overseas funds, entered into sub-advisory agreements with Fidelity
Management & Research (U.K.) Inc., Fidelity Management & Research Far East
Inc., and Fidelity International Investment Advisors (FIIA). In addition,
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. For the period, the transfer agent fees
were equivalent to annualized rates of .04%, .09%, .05%, .05%, .06%, and
.08% of the average net assets of the Money Market, Government Investment,
High Yield, Income & Growth, Growth Opportunities and Overseas funds,
respectively.
ACCOUNTING FEES. Fidelity Service Co. (FSC), an affiliate of FMR, maintains
the funds' accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. Certain funds placed a portion of their portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms are shown under the caption
"Other Information" at the end of each applicable fund's schedule of
investments.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of 1.00% of average net assets for the Money
Market, High Yield, and Government Investment Funds, and 1.50% of average
net assets for the Income & Growth, Growth Opportunities, and Overseas
funds.
In addition, FMR agreed to reimburse a portion of the Government Investment
and Overseas funds' operating expenses.
FMR has directed certain portfolio trades to brokers who paid a portion of
certain funds' expenses. In addition, certain funds have entered into
arrangements with their custodian whereby interest earned on uninvested
cash balances was used to offset a portion of certain funds' expenses.
For the period, the reductions under these arrangements are shown under the
caption "Other Information" on each applicable fund's Statement of
Operations.
6. BENEFICIAL INTEREST.
At the end of the period, an unaffiliated insurance company was record
owner of approximately 10% or more of the total outstanding shares of the
following funds:
BENEFICIAL INTEREST
PERCENT
FUND OF OWNERSHIP
Money Market 100
Government Investment 88
High Yield 100
Income & Growth 100
Growth Opportunities 100
Overseas 97
At the end of the period, an affiliate of FMR was record owner of
approximately 12% of the total outstanding shares of the Government
Investment fund.
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
Pembroke, Bermuda
OVERSEAS FUND
Fidelity International Investment Advisors (U.K.) Limited
Kent, England
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
Robert A. Lawrence, VICE PRESIDENT
Bettina Doulton, VICE PRESIDENT
Kevin E. Grant, VICE PRESIDENT
Bob Litterst, VICE PRESIDENT
Richard R. Mace, Jr., VICE PRESIDENT
George A. Vanderheiden, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Kenneth A. Rathgeber, TREASURER
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
Thomas J. Simpson, ASSISTANT TREASURER - MONEY MARKET
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
* INDEPENDENT TRUSTEES
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Co.
Boston, MA
CUSTODIANS
The Bank of New York, New York, NY
MONEY MARKET, 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
