(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
OVERSEAS
FUND
SEMIANNUAL REPORT
APRIL 30, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on stock market
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 23 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 27 Footnotes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The first few months of 1994 were an unsettling time for many investors.
After three years of a nearly perfect environment for stock market
investing, stock prices fell in March and April. Investors disagree about
whether this decline represents only a short-term correction or signals the
beginning of a longer bear market. One can collect statistics to support
either opinion, but of course, nobody knows for sure what will happen to
stock prices in the months ahead.
We do know, however, that market declines are a normal part of stock market
investing. We have historically seen corrections of 10% or more every two
years. That's why I thought this might be a good time to review three basic
investment principles that have proven helpful to successful stock market
investors in every market cycle.
First, take a long-term approach when investing in stocks and stock funds.
If you can afford to leave your money invested through the market's
inevitable ups and downs, you will greatly reduce your vulnerability to any
single decline. Over time, stock prices have gone up - and have
significantly outperformed other types of investments and stayed ahead of
inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
Remember to contact your investment professional if you need help with your
investments.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1994 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Advisor Overseas 9.07% 23.59% 45.88%
Advisor Overseas
(incl. 4.75% sales charge) 3.89% 17.72% 38.95%
Morgan Stanley EAFE Index 5.57% 16.64% 32.19%
Average International Fund 6.70% 21.97% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, or since the fund
started on April 23, 1990. For example, if you invested $1,000 in a fund
that then had a 5% return, you would end up with $1,050. You can compare
the fund's returns to the performance of the Morgan Stanley EAFE Index - a
broad measure of the performance of stocks in Europe, Australia, and the
Far East. You can also compare them to the average international fund,
which reflects the performance of 170 funds with similar objectives tracked
by Lipper Analytical Services. Both benchmarks include reinvested dividends
and capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1994 PAST 1 LIFE OF
YEAR FUND
Advisor Overseas 23.59% 9.84%
Advisor Overseas (incl. 4.75% sales charge) 17.72% 8.52%
Morgan Stanley EAFE Index 16.64% 7.18%
Average International Fund 21.97% n/a
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.
$10,000 OVER LIFE OF FUND
04/23/90 9525.00 10000.00
04/30/90 9420.23 9758.32
05/31/90 9829.80 10871.75
06/30/90 10325.10 10776.00
07/31/90 10934.70 10927.78
08/31/90 9629.78 9866.60
09/30/90 8810.63 8491.55
10/31/90 9096.38 9814.69
11/30/90 9105.90 9235.74
12/31/90 9017.59 9385.36
01/31/91 9238.47 9688.93
02/28/91 9651.42 10727.57
03/31/91 9113.63 10083.57
04/30/91 9104.02 10182.59
05/31/91 9113.63 10288.84
06/30/91 8431.79 9532.81
07/31/91 8911.96 10001.17
08/31/91 9046.40 9798.07
09/30/91 9516.97 10350.28
10/31/91 9392.13 10497.00
11/30/91 9152.04 10006.96
12/31/91 9628.87 10523.75
01/31/92 9658.11 10298.96
02/29/92 9882.26 9930.34
03/31/92 9580.14 9274.77
04/30/92 10077.18 9318.86
05/31/92 10486.50 9942.63
06/30/92 10320.82 9471.02
07/31/92 9921.24 9228.63
08/31/92 9648.36 9807.46
09/30/92 9502.17 9613.79
10/31/92 8839.46 9109.50
11/30/92 8722.51 9195.22
12/31/92 9163.43 9242.78
01/31/93 9626.53 9241.65
02/28/93 9833.44 9520.81
03/31/93 10434.49 10350.70
04/30/93 11242.44 11333.00
05/31/93 11538.04 11572.36
06/30/93 11222.74 11391.80
07/31/93 11774.51 11790.57
08/31/93 12552.91 12427.06
09/30/93 12424.82 12147.34
10/31/93 12740.12 12521.69
11/30/93 12247.47 11427.16
12/31/93 12997.05 12252.29
01/31/94 13855.63 13288.16
02/28/94 13668.12 13251.36
03/31/94 13322.72 12680.60
04/29/94 13895.10 13218.63
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Advisor Overseas Fund on April 23, 1990, when the fund started, and paid a
4.75% sales charge. As the chart shows, by April 30, 1994, the value of
your investment would have grown to $13,895 - a 38.95% increase on your
initial investment. For comparison, look at how the Morgan Stanley EAFE did
over the same period. With dividends reinvested, the same $10,000
investment would have grown to $13,219 - a 32.19% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
Interview with John R. Hickling,
Portfolio Manager of Fidelity
Advisor Overseas Fund
Q. JOHN, HOW DID THE FUND PERFORM?
A. Quite well. For the six months and year ended April 30, 1994, the fund
had a total return of 9.07% and 23.59%, respectively. It outperformed the
EAFE index - a broad measure of stocks in Europe, Australia and the Far
East - which rose 5.57% over six months and 16.64% over the year. The fund
also beat the average international fund, which had a return of 6.70% for
the past six months and 21.97% for the past year, according to Lipper
Analytical Services.
Q. WHY DID THE FUND OUTPERFORM THE INDEX?
A. There were two primary reasons. First, when Japanese stocks began
turning in solid results in 1994, I didn't rush in and buy stocks
indiscriminately as some investors did. I chose my stocks carefully,
focusing on auto, electronics and consumer electronics companies, which all
turned in strong performances. At the end of the period, Japanese companies
made up over 23% of the fund. The second reason the fund beat the index is
that it had substantially more money invested in Italy than the index did.
Over the period, Italy was one of the top-performing markets in the world
for several reasons. First, its economy started to recover a bit, and,
along with this, many Italian companies, such as Fiat, took steps to
significantly cut costs. In addition, interest rates came down and the
country's currency was devalued. As a result of this devaluation, Italy's
exports became less expensive in other countries, and thus, more
competitive. Finally, a new group of conservative politicians with a
pro-business agenda came into power.
Q. WHAT'S BEHIND THE TURNAROUND IN JAPAN?
A. A couple of things. First, the economy, which had been depressed,
started to pick up. In addition, many Japanese companies were well placed
to profit from the improving economy because they had taken significant
steps to reduce their costs over the past few years. I should note that
Japanese companies have been able to avoid cutting costs the American way -
through factory closings and layoffs - because in Japan most workers' jobs
have built-in wage flexibility. This means an employee's pay is based
largely on overtime and bonuses, both of which tend to drop off when the
economy falls. As a result, Japanese companies can trim expenses without
reducing head count. Japan's economy also experienced a boost from tax
cuts, an increase in the government's investment spending, dropping oil
prices (an important factor because Japan imports all of its oil), and low
interest rates. Keeping all these factors in mind, I think that if the yen
stops strengthening, many Japanese companies could show a substantial
profit. Remember, a strong yen makes Japan's exports more expensive in
other countries, and thus, less competitive.
Q. BESIDES CUTTING COSTS, ARE JAPANESE COMPANIES TAKING OTHER STEPS TO
IMPROVE PRODUCTIVITY?
A. Yes. A number of Japanese companies are moving their operations overseas
to less expensive locations, such as Malaysia and the United States. Then
they're importing the goods they produce back to Japan. This makes a lot of
sense because it's more expensive to buy or make a product in Japan than
just about anywhere else in the world. Japanese companies also are
importing more goods from other countries. For instance, Mazda just
announced it was testing Korean steel, which many market watchers see as an
indication that the car maker plans to buy steel from Korea.
Q. LET'S SWITCH THE FOCUS TO EUROPE. ON THE WHOLE, HOW DID IT LOOK?
A. Europe's economy is several years behind the United States'. The United
States went into recession before Europe did, and while it started coming
out of recession early in 1993, Europe is just beginning to emerge.
However, over the past six months, Europe turned in good performance
because many companies there have implemented strict cost-cutting measures.
Going forward, I believe many companies could see significant increases in
productivity and profits as long as the European economic outlook doesn't
worsen.
Q. WHAT INDUSTRIES LOOKED GOOD?
A. Over the past year as European economies began to improve, there was a
major shift out of banks and insurance companies and into cyclicals, such
as chemical and automobile companies. Financial stocks fell out of favor
after their stock prices rose dramatically and many investors sold them to
take profits. Cyclicals are stocks that tend to perform well when the
economy does well, or poorly when the economy is weak. Some cyclicals that
turned in good results were the Swiss chemical and pharmaceutical company
Ciba-Geigy; German chemical companies Bayer and Hoechst; and the French
auto maker Peugeot. I also was big on oil companies, such as French
companies Elf Aquitaine and Total.
Q. THERE'S BEEN A LOT OF TALK LATELY ABOUT DERIVATIVES. DOES THE FUND USE
THEM?
A. The fund has the authority to use derivatives to help manage its
investments more efficiently. I currently am using forward contracts to
hedge a portion of the fund against currency volatility. I also have a
small position in indexed securities linked to European bond markets.
Q. IN HINDSIGHT, DO YOU REGRET ANY OF YOUR INVESTMENT DECISIONS?
A. Yes. I was a bit too cautious with my investments in Southeast Asia. I
sold my stocks in some Asian markets, such as Singapore and Malaysia, too
soon, probably about two months before they hit their peak. I should note,
however, that as a result, the fund was out of those markets before they
began falling dramatically in 1994. I also regret not dropping the fund's
European financial stocks earlier because their prices dropped very
quickly.
Q. WHAT DO YOU THINK SHAREHOLDERS CAN EXPECT GOING FORWARD?
A. In general, I expect 1994 to be a fine year. If the Japanese economy
improves, even slightly, and the yen stays where it is, many companies will
profit from their cost-cutting efforts. I have similar expectations for
Europe. Given the measures many European companies have taken to reduce
expenses and an expected moderate economic environment, I think European
companies may become increasingly profitable.
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: April 23, 1990
SIZE: as of April 30, more
than $435 million
MANAGER: John Hickling,
since February 1993; joined
Fidelity in 1982
(checkmark)
JOHN HICKLING ON PICKING
STOCKS:
"I tend to be a bottom up
investor. That means I usually
invest in specific companies I
expect to perform well, instead
of certain countries or regions
that look good. I try to visit as
many companies as I can. And
if I can't go there, a lot of
companies' representatives
visit us in the United States. In
addition to me, Fidelity has
about 50 analysts traveling
around the globe and meeting
with companies.
"When I visit a country, I try to
visit at least four companies a
day. I come away with a great
deal of knowledge of what's
happening in the company and
country. That's because I'm
talking to the guys on the front
line of the economy, not an
economics professor in an
ivory tower.
"In Japan, company meetings
are extremely important
because there isn't as much
written information - or formal
disclosure - as you have
access to in most western
companies. Japan is very
much what I call a `relationship
market,' and it also is a much
more formal society. You can't
just walk into a company cold
and expect to get information.
On the other hand, if you've
been meeting with a company
for years, Japanese business
people tend to speak with you
freely. That's why it's important
that Fidelity has an established
presence in Japan."
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF APRIL 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Hoechst AG Ord.
(Germany, Basic Industries) 1.3 0.6
Bayer AG
(Germany, Basic Industries) 1.2 0.5
DSM NV
(Netherlands, Basic Industries) 1.2 -
Fiat Spa Priv cumulative
(Italy, Durables) 1.2 -
Ciba-Geigy AG (Reg.)
(Switzerland, Health) 1.1 -
TOP FIVE INDUSTRIES AS OF APRIL 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Basic Industries 14.6 3.2
Durables 14.5 2.8
Finance 12.0 31.1
Technology 8.5 3.6
Construction and Real Estate 6.5 8.2
TOP FIVE COUNTRIES AS OF APRIL 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Japan 23.9 16.6
France 9.7 6.7
Germany 9.1 6.5
United Kingdom 8.0 11.3
Switzerland 5.9 6.7
ASSET ALLOCATION
AS OF APRIL 30, 1994 AS OF OCTOBER 31, 1993
Row: 1, Col: 1, Value: 10.9
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 48.2
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 1, Value: 21.8
Row: 1, Col: 2, Value: 2.2
Row: 1, Col: 3, Value: 36.0
Row: 1, Col: 4, Value: 40.0
Stocks 88.2%
Bonds 0.9%
Short-term
and other
investments 10.9%
Stocks 76.0%
Bonds 2.2%
Short-term
and other
investments 21.8%
INVESTMENTS APRIL 30, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 83.9%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.2%
YPF Sociedad Anonima sponsored ADR representing
Class D shares 42,100 $ 1,041,975
AUSTRALIA - 2.5%
Ampolex Ltd. Ord. 330,000 1,038,616
Brambles Industries 238,150 2,456,429
FAI Insurance Ltd. Ord. 1,410,500 968,576
Hazelton Airlines Ltd. 277,400 555,588
Lend Lease Corp. Ltd. 120,000 1,466,078
Pioneer International Ltd. 485,000 999,129
TNT Ltd. (a) 1,300,000 1,989,962
Westpac Banking Corp. 420,000 1,427,026
10,901,404
AUSTRIA - 1.0%
Austrian Airlines/Oster Luftve 1,200 205,552
Mayr Melnhof Karton AG (c) 16,600 1,060,228
OEMV AG 20,000 1,680,224
Steyr Daimler Puch AG 62,500 1,307,295
4,253,299
BELGIUM - 2.1%
Delhaize 80,300 3,216,097
Petrofina SA 3,500 1,095,466
Solvay 9,800 4,769,765
9,081,328
BERMUDA - 0.0%
Consolidated Electric Power Asia Ltd. sponsored ADR (c) 10,700 153,813
CANADA - 0.0%
Abitibi-Price Inc. 7,400 87,636
FINLAND - 0.3%
America Group Ltd. Class A 28,000 721,373
Repola OY 31,300 556,294
Unitas Bank Ltd. B free shares 37,300 99,579
1,377,246
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FRANCE - 9.5%
Accor SA 20,600 $ 2,679,675
Assurances Generales (Reg.) 3,000 287,911
BNP CI Ord. 44,180 2,072,353
Bail Investissement (a) 200 34,288
Club Mediterranee Ord. 5,100 387,142
Credit Lyonnais CI 3,300 322,534
Elf Aquitaine 62,400 4,572,471
Elf Gabon 6,000 1,306,469
Financiere Bank de Suez Cie 30,500 1,762,186
GAN (Groupe Des Assur Natl.) 22,600 1,753,517
IMETAL SA Ord. 7,400 810,887
Lafarge Coppee 53,900 4,372,587
Paribas SA (Cie Financiere) Class A (a) 20,000 1,533,051
Pechiney SA CIP 3,600 255,779
Peugeot SA Ord. (a) 30,500 4,824,585
Plastic Omnium, CIE 10,600 1,397,596
Rhone Poulenc SA Class A 140,000 3,832,804
Salomon SA 2,700 1,006,893
Skis Rossignol SA 560 199,929
Sophia SA 6,800 581,690
Total Compagnie Francaise des Petroles Class B 80,700 4,692,524
Unibail (a) 15,400 1,388,123
Union Assurancesfederale SA 3,800 395,581
Vallourec 20,000 1,161,188
41,631,763
GERMANY - 7.7%
Allianz Versich Holdings Ord. (Reg.) (a) 1,300 2,034,099
BASF AG 15,000 2,986,397
BMW (a) 7,600 4,140,024
Bayer AG 22,450 5,345,088
Computer 2000 AG (a) 3,000 1,342,201
Continental Gummi-Werke AG (a) 22,800 3,994,825
Deutsche Bank AG 4,000 1,889,238
Hoechst AG Ord. 26,300 5,795,859
Kolbenschmidt AG 7,500 1,070,133
Thyssen AG Ord. 22,900 3,963,888
Veba Vereinigte Elektrizetaets & Bergwerks AG Ord. 4,000 1,242,805
33,804,557
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GHANA - 0.1%
Ashanti Goldfields GDR (c) 25,000 $ 550,000
HONG KONG - 0.5%
Dairy Farm International Holdings Ltd. Ord. 603,000 882,093
Dickson Concept 585,000 393,804
Jardine Matheson & Co. Ltd. Ord. 160,000 1,045,995
2,321,892
INDIA - 0.0%
ITC Ltd. (warrants) (a)(c) 3,000 22,500
INDONESIA - 0.2%
Bank International Indonesia Ord. (a) 168,000 486,893
Jakarta International Hotels & Development Ord. 258,000 370,872
857,765
IRELAND - 0.8%
Bank of Ireland U.S. Holdings, Inc. 83,600 343,799
Fyffes PLC (U.K.) 675,000 993,586
Independent News 202,500 1,014,069
Smurfit (Jeff) Group PLC (U.K.) 183,400 890,590
3,242,044
ITALY - 2.4%
Alitalia (Linee Aeree Italy) Class A 903,300 843,077
Montedison Spa Ord. 3,900,000 3,885,921
SIP Spa 1,050,000 3,141,936
Safilo (Sta Azionaria Fab) Spa 111,800 662,737
Saipem Spa Ord. (a) 493,000 1,181,415
Simint Spa Priv 398,996 406,864
Stet Societa Finanziaria Telefonica Spa Ord. 30,000 116,350
10,238,300
JAPAN - 23.9%
ADO Electronic Industrial Co. 15,000 500,837
Acom Co. Ltd. (a) 12,000 632,325
Advantest Corp. 48,000 1,631,045
Alpine Electronics, Inc. (warrants) (a) 100 245,000
Alps Electric Co. Ltd. 110,000 1,538,461
Amadasonoike Co. Ltd. 76,000 576,382
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Aoyama Trading Co. Ord. 32,000 $ 1,481,336
Autobacs Seven Co. Ltd. 16,800 2,151,088
Bridgestone Corp. 180,000 2,694,771
Canon, Inc. 235,000 3,819,067
Casio Computer Co. Ltd. Ord. 165,000 2,047,671
Catena Corp. 28,000 910,076
Cosmo Oil Company Ltd. 202,000 1,663,272
East Japan Railway Ord. (a) 200 949,473
Fujitsu Ltd. (a) 257,000 2,581,897
Futaba Industrial Co. Ltd. (a) 56,000 1,047,966
Hankyu Department Stores, Inc. 78,000 1,014,084
Hanshin Department Store 61,000 480,646
Hitachi, Ltd. 445,000 4,207,622
Honda Motor Co. Ltd. 147,000 2,432,384
Ishihara Sangyo Kaisha Ltd. 250,000 1,051,412
Izumi Co. Ord. 75,000 1,802,423
Japan Airlines Co. Ltd. 300,000 2,097,903
Joshin Denki Co. Ltd. Ord. 65,000 1,030,730
Kawasaki Steel Corp. 470,000 1,717,422
Komatsu Limited Ord. 320,000 2,861,814
Konica Corp. 290,000 1,913,722
Kyocera Corporation 38,000 2,395,351
Marubeni Corp. (a) 267,000 1,364,848
Marukyo Corp. 16,000 567,320
Matsushita Electric Industrial Co. Ltd. 75,000 1,233,625
Minebea Co. 300,000 2,009,259
Mitsubishi Corp. (a) 89,000 1,043,140
Mitsubishi Heavy Industry 118,000 784,497
Mitsubishi Petro Chemical 259,000 1,734,660
Mitsubishi Trust & Banking 120,000 1,772,875
Mitsui Petrochemical Industries Inc. (a) 238,000 1,910,469
Mitsui Trust and Banking 103,000 1,115,927
Murata Manufacturing Co. Ord. 31,000 1,343,445
Nikko Securities 78,000 937,260
Nippon Shinpan Ltd. 52,000 491,677
Nippon Telegraph & Telephone Ord. (a) 100 868,709
Nissan Motor Co. Ltd. Ord. 339,000 2,871,466
Nomura Securities Co. Ltd. 125,000 2,720,871
NGK Spark Plug Co. (warrants) (a) 100 310,000
Oji Paper Ltd. 155,000 1,480,844
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Pioneer Electronic Corp. 100,000 $ 2,570,669
Rohm Co. Ltd. 64,000 2,534,029
Santen Pharmaceutical Co. Ord. 2,000 53,383
Sanwa Bank 32,000 693,391
Sekisui House Ltd. 118,000 1,476,017
Sharp Corp. 74,000 1,209,889
Sharp Corp. (warrants) (a) 600 348,502
Sho Bond Corp. Ord. 27,000 837,683
Sony Corp. 51,000 2,893,332
Sumitomo Realty & Development Co. Ltd. 175,000 1,137,594
Sumitomo Rubber Industries 105,000 1,023,835
Sumitomo Trust & Banking Co. 110,000 1,516,793
TDK Corp. 80,000 3,608,786
Tokio Marine & Fire Insurance Co. Ltd. (The) 112,000 1,434,059
Tokyo Electron Ltd. 37,000 1,177,091
Tokyo Electron Ltd. (warrants) (a) 150 78,750
Toshiba Corp. 496,000 3,761,649
Toyobo Co. 370,000 1,643,555
Toyota Motor Corporation 207,000 4,057,225
Yamaha Motor Co. Ltd. (a) 3,000 26,593
Yoshinoya D&C Co. Ltd. Ord. 30 555,501
104,675,398
LUXEMBOURG - 0.5%
Arbed SA 14,500 2,083,181
MALAYSIA - 0.9%
Ekran Berhad Ord. (a) 179,000 1,517,403
KL Industries Holdings BHD 290,000 457,017
Magnum Corp. BHD 405,000 952,835
Telekom Malaysia BHD 81,000 604,974
Time Engineering BHD (a) 119,000 375,514
3,907,743
MEXICO - 0.7%
Grupo Dina (Consorcio G) ADR (a) 31,000 399,125
Grupo Financiero Bancomer SA de CV sponsored ADR,
Series C (c) 35,000 861,875
Telefonos de Mexico SA sponsored ADR representing
shares Ord. Class L 29,200 1,719,150
2,980,150
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NETHERLANDS - 4.9%
Akzo NV Ord. 22,000 $ 2,650,902
DSM NV 71,000 5,292,970
Fokker Aircraft Ord. 40,000 357,662
Frans Maas Groep NV (Koninklj) 25,200 685,483
Hoogovens en Staalfabrieken (a) 32,600 1,267,827
International Nederlanden Groep CVA 52,300 2,186,092
KBB (Kon Bijenkorf Beheer) NV:
Ord. 12,300 704,277
Ord. (rights) (a) 12,300 5,300
KLM Royal Dutch Airlines Ord. (a) 42,000 1,210,342
Philips Electronics (a) 112,000 3,275,842
Pirelli Tyre Holdings NV Ord. (a) 265,500 2,645,705
Wereldhave NV 17,800 1,056,590
21,338,992
NEW ZEALAND - 0.3%
Fletcher Challenge Ltd. (Reg.) (a) 765,800 1,490,124
NORWAY - 1.9%
Bergesen Group:
Class A 40,000 887,512
Class B 145,000 3,217,231
Den Norske Bank Class A free shares (a) 100,500 271,371
Norsk Hydro AS ADR (a) 30,000 1,016,250
Norske Skogindustrier:
A free (a) 4,700 111,497
AS (rights) (a) 4,700 1,246
Orkla AS Class B (non-vtg.) 26,100 826,768
Unitor AS 100,000 1,995,507
8,327,382
PHILIPPINES - 0.1%
Filinvest Land, Inc. Ord. (a) 1,000,500 272,516
SINGAPORE - 0.2%
Van Der Horst Ltd. 210,000 999,421
SPAIN - 4.9%
Argentaria Corp. Bancaria de Esp 16,500 716,992
Banco Bilbao Vizcaya SA Ord. (Reg.) 57,500 1,373,166
Banco Intercontinental Espanol 5,000 445,682
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SPAIN - CONTINUED
Corporacion Mapfre International Reas (Reg.) (a) 39,150 $ 1,660,512
Empresa Nacional De Celulosa SA 70,000 1,214,114
FOCSA (Fomento de Obras Y Construcciones)
Ord. (c) 5,000 555,246
SA 16,300 1,810,102
Hidro Cantabrico 23,500 731,402
Iberdrola SA 175,000 1,257,011
Repsol SA:
Ord. (a) 97,000 3,235,134
sponsored ADR 30,000 990,000
Telefonica de Espana SA:
Ord. 275,000 3,738,163
sponsored ADR 12,000 489,000
Union Electrica Fenosa 357,100 1,787,821
Uralita SA (a) 114,000 1,185,516
Vallehermoso SA 12,500 241,411
21,431,272
SWEDEN - 4.0%
ASG AB Class B Free shares Ord. 25,400 433,498
Aktiebolaget Electrolux (a) 60,300 3,214,058
Frontline (a) 54,000 145,331
Investor AB Free shares B 40,000 982,001
Marieberg Tidnings 'A' (a) 39,300 1,037,048
SKF AB Ord. (a) 188,800 3,891,455
Scribona AB B free shares (a) 9,800 64,329
Skendia Forsikring (rights) (a) 15,000 17,133
Skandia International Holding Co. AB ADR (a) 15,000 269,788
Skandinaviska Enskilda Banken Class A free shares 173,900 1,198,587
Skanska Class B (a) 78,300 1,932,547
Volvo Aktiebolaget Class B 44,100 4,116,409
17,302,184
SWITZERLAND - 5.9%
Adia SA (BR) 24,000 4,173,467
Alusuisse Lonza (Reg.) 10,033 4,862,231
Baloise Holding (Reg.) (a) 980 1,794,961
Ciba-Geigy AG (Reg.) 8,300 4,951,074
Fischer (Georg) AG (Reg.) 14,000 2,773,759
Globus Magazine Part. Cert 1,875 1,249,421
Holderbank Financiere AG PC (Bearer) 5,552 3,798,539
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Swiss Bank Corp.:
(Bearer) (a) 3,000 $ 838,114
(Reg.) 3,280 455,832
Von Roll AG (Reg.) 8,550 914,015
25,811,413
THAILAND - 0.4%
Krung Thai Bank (For.) 410,000 846,703
Ruam Pattana Fund II (For.) 1,700,000 995,826
1,842,529
UNITED KINGDOM - 8.0%
Avon Rubber 110,000 1,009,897
BET Public Ltd. Co. Ord. 525,400 988,645
Barclays de Zoete Wedd Ltd. (warrants) (a) 25,000 36,041
Barclays PLC Ord. 121,000 936,449
Bass PLC Ord. 260,000 2,244,991
Bellway Ord. 180,000 635,074
British Petroleum PLC Ord. 400,000 2,343,020
British Steel PLC Ord. 449,300 1,039,766
British Vita Ord. 296,400 1,380,848
Burton Group PLC Ord. 515,000 429,834
English China Clay PLC (a) 413,000 3,027,096
Forte PLC (a) 741,100 2,665,351
General Electric PLC Ord. 5 pence 400,000 1,839,212
Great Universal Stores PLC Ord Class A 260,000 2,367,300
Hartstone Group PLC Ord. (a) 750,000 523,537
Ladbroke Group PLC Ord. 460,400 1,296,008
Lloyds Abbey Life 222,500 1,277,982
London International Group 238,200 379,543
Midlands Electricity PLC 100,000 864,975
National Westminster Bank PLC Ord. 51,000 349,427
North West Water Ord. 56,000 410,454
Persimmon PLC Ord. 130,000 570,125
RTZ Corp. PLC Ord. (a) 57,500 738,188
Ross Group PLC 3,000,000 933,270
Sainsbury J PLC Ord. 100,000 564,510
Shanks & McEwan Group PLC 266,400 432,562
Trafalgar House PLC Ord. 300,100 478,173
Vodafone Group PLC (a) 100,000 824,761
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Westbury PLC (a) 365,000 $ 1,033,001
Westland Group PLC Ord. (a) 250,000 1,259,525
Whitbread Class A 180,000 1,485,936
Willis Coroon PLC Ord. (a) 220,000 767,855
35,133,356
TOTAL COMMON STOCKS
(Cost $327,488,651) 367,161,183
NONCONVERTIBLE PREFERRED STOCKS - 4.3%
AUSTRIA - 0.4%
Creditanstaldt Bank (a) 10,500 617,302
MaCulan Holding Ord. 10,000 963,202
1,580,504
GERMANY - 1.4%
FAG Kugelfischer Georg Schaef 17,000 2,425,635
Porsche AG Ord. (a) 4,000 2,111,245
RWE AG (a) 6,100 1,353,507
5,890,387
ITALY - 2.5%
Banco Ambro Veneto N/C Risp 799,600 1,679,144
Fiat Spa Priv cumulative 1,894,100 5,273,572
Gilardini Risp Spa 336,000 675,931
SAI (Sta Assicur Industriale) N/C Risp 156,700 1,213,499
Stet Societa Finanziaria Telefonica Spa 631,000 2,065,231
10,907,377
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $13,753,557) 18,378,268
CONVERTIBLE BONDS - 0.1%
MOODY'S RATINGS (G) PRINCIPAL
AMOUNT (B)
GRAND CAYMAN (U.K. OVERSEAS TER.) - 0.0%
Peregrine Investment Finance, Cayman Ltd.
4 1/2%,12/1/00 (c) - $ 200,000 159,000
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (G) PRINCIPAL VALUE (NOTE 1)
AMOUNT (B)
SPAIN - 0.1%
Banco Santander euro 9%, 6/24/94 A1 ESP 50,000,000 $ 393,685
TOTAL CONVERTIBLE BONDS
(Cost $570,838) 552,685
GOVERNMENT OBLIGATIONS - 0.8%
ARGENTINA - 0.2%
Argentina Republic BOCON 0%, 4/1/01 (e) B1 1,472,025 1,029,844
BRAZIL - 0.2%
Brazil Federative Republic IDU euro
4.3125%, 1/1/01 (e) B2 1,287,000 934,684
DENMARK - 0.2%
Danish Government Bullet 7%, 12/15/04 Aa1 DKK 6,250,000 950,484
FRANCE - 0.2%
French Government Stripped Coupon 4/25/23 (f) Aaa FRF 42,000,000 861,823
TOTAL GOVERNMENT OBLIGATIONS
(Cost $4,033,408) 3,776,835
INDEXED SECURITIES - 0.4%
UNITED STATES OF AMERICA - 0.4%
Bankers Trust Company note 0%, 1/31/95 (coupon inversely
indexed to STIBOR and principal indexed to value of 2-year
Swedish securities, both multiplied by 9) (d) 600,000 341,700
Bayerische Landesbank cert. of dep. 6.2675%, 1/27/95
(coupon inversely indexed to HELIBOR and principal
indexed to value of 2-year Finnish securities, both
multiplied by 8) (d) 1,400,000 863,800
Citibank Nassau:
0%, 1/31/95 (coupon inversely indexed to STIBOR and
principal indexed to 2-year Swedish securities, both
multiplied by 9) (d) 500,000 294,900
4 5/8%, 7/30/96 (inversely indexed to 1-year
SEK swap rate, multiplied by 10) 225,000 176,692
TOTAL INDEXED SECURITIES
(Cost $2,725,000) 1,677,092
REPURCHASE AGREEMENTS - 10.5%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.56%
dated 4/29/94 due 5/2/94 $ 45,803,584 $ 45,790,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $394,361,454) $ 437,336,063
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
34,858,040 ATS 5/10/94 $ 2,999,091 $ 66,394
91,864,862 BEF 5/4/94 2,692,794 52,013
5,715,400 CHF 5/9/94 4,073,177 73,176
3,337,393 DKK 5/16/94 514,445 11,780
1,130,097,500 ESP 5/3/94 8,390,484 203,009
9,587,490 FIM 5/13/94 1,789,135 73,959
14,776,000 NOK 5/2/94 2,061,715 44,266
16,361,000 SEK 5/5/94 2,146,614 82,981
TOTAL CONTRACTS TO BUY
(Payable amount $24,059,877) $ 24,667,455 $ 607,578
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 5.6%
CONTRACTS TO SELL
34,858,040 ATS 5/10/94 $ 2,999,091 $ (199,091)
91,864,862 BEF 5/4/94 2,692,794 (140,815)
15,083,800 CHF 5/9/94 10,749,726 (369,441)
3,337,393 DKK 5/16/94 514,445 (22,596)
1,130,097,500 ESP 5/3/94 8,390,484 (495,703)
9,587,490 FIM 5/13/94 1,789,135 (89,135)
14,776,000 NOK 5/2/94 2,061,715 (86,710)
16,361,000 SEK 5/5/94 2,146,614 (99,058)
3,874,719 NLG 6/13/94 2,084,101 (20,468)
86,233,871 FRF 5/16/94 to 7/27/94 15,215,561 (404,126)
1,273,907,400 JPY 7/6/94 12,594,987 (240,468)
TOTAL CONTRACTS TO SELL
(Receivable amount $59,071,042) $ 61,238,653 $ (2,167,611)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 14.0%
CURRENCY ABBREVIATIONS
ATS - Austrian schilling
BEF - Belgian franc
DKK - Danish krone
NLG - Dutch guilder
FIM - Finnish markka
FRF - French franc
JPY - Japanese yen
NOK - Norwegian krone
ESP - Spanish peseta
SEK - Swedish krona
CHF - Swiss franc
LEGEND
1. Non-income producing
2. Principal amount is stated in United States dollars unless otherwise
noted.
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $3,362,662 or 0.8% of net
assets.
4. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a comparable fixed rate security.
5. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
6. Principal Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans.
7. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
INCOME TAX INFORMATION
At April 30, 1994, the aggregate cost of investment securities for income
tax purposes was $394,382,165. Net unrealized appreciation aggregated
$42,953,898, of which $50,632,132 related to appreciated investment
securities and $7,678,234 related to depreciated investment securities.
At October 31, 1993, the fund had a capital loss carryforward of
approximately $949,000 which will expire on October 31, 1999.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities (Unaudited)
Aerospace and Defense 0.4%
Basic Industries - 14.6%
Chemicals and Plastics 7.8
Iron and Steel 3.4
Metals and Mining 2.0
Paper and Forest Products 1.4
Construction and Real Estate - 6.5%
Building Materials 2.3
Construction 2.6
Engineering 0.5
Real Estate 0.8
Real Estate Investment Trusts 0.3
Durables - 14.5%
Autos, Tires, and Accessories 11.1
Consumer Electronics 2.9
Textiles and Apparel 0.5
Energy - 6.2%
Oil and Gas 6.2
Finance - 12.0%
Banks 6.1
Closed End Investment Company 0.2
Credit and Other Finance 1.3
Insurance 3.6
Securities Industry 0.8
Government Obligations 0.8
Health - 2.2%
Drugs and Pharmaceuticals 2.0
Medical Equipment and Supplies 0.2
Industrial Machinery and Equipment - 4.3%
Electrical Equipment 1.5
Industrial Machinery and Equipment 2.7
Pollution Control 0.1
Media and Leisure - 2.8%
Leisure Durables and Toys 0.3
Lodging and Gaming 1.9
Publishing 0.5
Restaurants 0.1
Nondurables - 2.2%
Beverages 0.9%
Foods 0.9
Household Products 0.4
Precious Metals 0.1
Retail and Wholesale - 3.9%
Apparel Stores 0.3
General Merchandise Stores 1.0
Grocery Stores 1.8
Retail, Miscellaneous 0.6
Trading Companies 0.2
Services - 2.0%
Leasing and Rental 0.3
Services 1.7
Repurchase Agreements 10.5
Technology - 8.5%
Computer Services and Software 0.3
Computers and Office Equipment 2.2
Electronic Instruments 0.6
Electronics 5.0
Photographic Equipment 0.4
Transportation - 3.6%
Air Transportation 1.7
Railroads 0.3
Shipping 1.0
Trucking and Freight 0.6
Utilities - 4.9%
Cellular 0.2
Electric Utility 1.7
Telephone Services 2.9
Water 0.1
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
APRIL 30, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 437,336,063
agreements of $45,790,000) (cost $394,361,454)
(Notes 1 and 2) - See accompanying schedule
Long foreign currency contracts held, at value (cost 24,667,455
$24,059,877) (Note 2)
Short foreign currency contracts (Note 2) $ (61,238,653)
Contracts held, at value
Receivable for contracts held 59,071,042 (2,167,611)
Cash 20,951
Receivable for investments sold 2,999,628
Receivable for fund shares sold 7,266,734
Dividends receivable 1,028,743
Interest receivable 109,177
TOTAL ASSETS 471,261,140
LIABILITIES
Payable for foreign currency contracts held (Note 2) 24,059,877
Payable for investments purchased 10,575,675
Net payable for closed foreign currency contracts 209,567
Payable for fund shares redeemed 436,823
Accrued management fee 273,635
Other payables and accrued expenses 555,453
TOTAL LIABILITIES 36,111,030
NET ASSETS $ 435,150,110
Net Assets consist of (Note 1):
Paid in capital $ 391,584,467
Distributions in excess of net investment income (776,168)
Accumulated undistributed net realized gain (loss) on 2,927,235
investments
Net unrealized appreciation (depreciation) on:
Investment securities 42,974,609
Foreign currency contracts (1,560,033)
NET ASSETS, for 30,916,740 shares outstanding $ 435,150,110
NET ASSET VALUE and redemption price per share $14.07
($435,150,110 (divided by) 30,916,740 shares)
Maximum offering price per share (100/95.25 of $14.07) $14.77
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED APRIL 30, 1994 (UNAUDITED)
INVESTMENT INCOME $ 2,590,748
Dividends
Interest 1,139,364
Foreign exchange gain (loss) 11,190
3,741,302
Less foreign taxes withheld (Note 1) (452,072)
TOTAL INCOME 3,289,230
EXPENSES
Management fee (Note 4) $ 1,217,145
Basic fee
Performance adjustment 40,944
Transfer agent fees (Note 4) 690,424
Distribution fees (Note 4) 1,022,477
Accounting fees and expenses (Note 4) 95,070
Non-interested trustees' compensation 834
Custodian fees and expenses 145,258
Registration fees 93,866
Audit 25,337
Legal 4,348
Interest (Note 5) 300
Miscellaneous 3,185
TOTAL EXPENSES 3,339,188
NET INVESTMENT INCOME (LOSS) (49,958)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:
Investment securities 5,238,804
Foreign currency contracts (1,340,429) 3,898,375
Change in net unrealized appreciation (depreciation) on:
Investment securities 25,575,149
Foreign currency contracts (1,942,936) 23,632,213
NET GAIN (LOSS) 27,530,588
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 27,480,630
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1994 1993
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ (49,958) $ (116,985)
Net investment income (loss)
Net realized gain (loss) on investments 3,898,375 702,509
Change in net unrealized appreciation (depreciation) 23,632,213 18,732,670
on
investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 27,480,630 19,318,194
FROM
OPERATIONS
Distributions to shareholders - (148,613)
From net investment income
In excess of net investment income (363,881) -
From net realized gain - (59,260)
TOTAL DISTRIBUTIONS (363,881) (207,873)
Share transactions 256,019,357 202,379,717
Net proceeds from sales of shares
Reinvestment of distributions 300,560 165,045
Cost of shares redeemed (69,656,865) (18,936,702)
Net increase (decrease) in net assets resulting from 186,663,052 183,608,060
share
transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 213,779,801 202,718,381
NET ASSETS
Beginning of period 221,370,309 18,651,928
End of period (including distributions in excess of net $ 435,150,110 $ 221,370,309
investment income of $(776,168) and $(208,608),
respectively)
OTHER INFORMATION
Shares
Sold 19,016,238 16,705,346
Issued in reinvestment of distributions 23,685 18,176
Redeemed (5,240,051) (1,663,185)
Net increase (decrease) 13,799,872 15,060,337
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED OCTOBER 31, APRIL 23, 1990
ENDED (COMMENCEMENT
APRIL 30, 1994 OF
OPERATIONS) TO
OCTOBER 31,
(UNAUDITED) 1993 1992 1991 1990
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 12.93 $ 9.07 $ 9.78 $ 9.55 $ 10.00
beginning of period
Income from
Investment
Operations
Net investment -** .03 .05 .14 .05
income
Net realized and 1.16 3.93 (.62) .17 (.50)
unrealized gain
(loss) on
investments
Total from 1.16 3.96 (.57) .31 (.45)
investment
operations
Less Distributions - (.07) (.14) (.07) -
From net
investment
income
In excess of net (.02) - - - -
investment
income
From net realized - (.03)# - (.01)# -
gain
Total distributions (.02) (.10) (.14) (.08) -
Net asset value, end $ 14.07 $ 12.93 $ 9.07 $ 9.78 $ 9.55
of period
TOTAL RETURN(dagger) 9.07% 44.13% (5.88) 3.25% (4.50)%(dagger)(dagger)
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 435,150 $ 221,370 $ 18,652 $ 19,091 $ 18,161
period (000 omitted)
Ratio of expenses to 2.16%* 2.38% 2.64% 2.85% 3.07%*(double dagger)
average net assets
Ratio of net (.03)%* (.18) .48% 1.48% 1.45%*
investment income %
(loss) to average
net assets
Portfolio turnover 50%* 42% 168% 226% 137%*
rate
</TABLE>
* ANNUALIZED
** NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
(dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(dagger)(dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE ADVISOR NOT
REDUCED CERTAIN EXPENSES DURING THE PERIOD SHOWN.
(double dagger) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
# INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Advisor Overseas Fund (the fund) is a fund of Fidelity Advisor
Series VII (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of 1940,
as amended (the 1940 Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. 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 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 are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practicable to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, 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 not assured.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Certain foreign currency gains (losses) are taxable as
ordinary income and, therefore, increase (decrease) taxable ordinary income
available for distribution.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions and losses deferred due to excise tax
regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income 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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective November
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of October 31, 1993 have been reclassified to
reflect a decrease in paid in capital of $232,831, an increase in
undistributed net investment loss of $153,721 and a decrease in accumulated
net realized loss on investments of $386,552.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
INDEXED SECURITIES. The fund may invest in indexed securities whose value
is linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other reference instruments.
Indexed securities may be more volatile than the reference instrument
itself, but any loss is limited to the amount of the original investment.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $255,194,300 and $65,724,347, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.30% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .45%.
The basic fee is subject to a performance adjustment (up to a maximum of +
or - .20%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annualized rate of .81% of average net
assets after the performance adjustment.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with affiliates of FMR. In addition, one of the sub-advisers,
Fidelity International Investment Advisors (FIIA), entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (FIIAL U.K.). Under the sub-advisory
arrangements, FMR may receive investment advice and research
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
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.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, the
fund pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a
distribution and service fee that is based on an annual rate of .65% of its
average net assets. For the period, the fund paid FDC $1,022,477 of which
$786,521 was paid to securities dealers, banks and other financial
institutions for selling shares of the fund and providing shareholder
support services.
In addition, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $17,622 for the
period.
SALES LOAD. FDC received sales charges for selling shares of the the fund.
The sales charge rates ranged from 2.00% to 4.75% based on purchase amounts
of less than $1,000,000. Purchase amounts of $1,000,000 or more are not
charged a sales load. For the period, FDC received $4,773,315 of which
$4,059,715 was paid to securities dealers, banks and other financial
institutions.
TRANSFER AGENT FEE. State Street Bank and Trust Company (SSB) is the
transfer, dividend disbursing and shareholder servicing agent for the fund.
SSB has an arrangement for certain transfer, dividend disbursing and
shareholder servicing to be performed by Fidelity Investments Institutional
Operations Company (FIIOC), an affiliate of FMR. Under revised fee
arrangements which became effective January 1, 1993, the fund pays fees
based on the type, size, number of accounts and the number of transactions
made by shareholders.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $277 for the period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $2,783,000. The weighted average
interest rate was 3.9%.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
London, England
Fidelity Management & Research
(Far East) Inc. (FMR Far East) Tokyo, Japan
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.)
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
Boston, MA
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
EQUITY FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Global Resources Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Portfolio Income
Fidelity Advisor Income & Growth Fund
FIXED-INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Limited Term Bond Fund
Fidelity Advisor Short Fixed-Income Fund
TAX-EXEMPT FUNDS
Fidelity Advisor High Income Municipal Fund
Fidelity Advisor Limited Term Tax-Exempt Fund
Fidelity Advisor Short-Intermediate Tax-Exempt Fund
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
(REGISTERED TRADEMARK)
