DESIGNED FOR
YOU AND YOUR
INVESTMENT PROFESSIONAL
IN TODAY'S FAST-PACED MARKETS, PRUDENT,
INFORMED DECISIONS ARE THE KEY TO SUCCESSFUL
INVESTING. THE FIDELITY ADVISOR FUNDS PUT THE
RESOURCES OF ONE OF THE WORLD'S LARGEST MUTUAL
FUND MANAGERS AT THE SERVICE OF THE
INVEST-MENT PROFESSIONAL YOU HAVE CHOSEN TO
HELP YOU MAKE FINANCIAL DECISIONS. WE BELIEVE
YOUR INVESTMENT
PORTFOLIO AND YOUR INVESTMENT
RESULTS COULD BE STRONGER WITH THE PARTNERSHIP
OF FIDELITY(Registered trademark) AND YOUR INVESTMENT PROFESSIONAL.
OVERSEAS
FUND
ANNUAL REPORT
OCTOBER 31, 1993
(Registered trademark)
Fidelity Distributors Corporation
82 Devonshire Street
Boston, MA 02109
(Registered trademark)
AOS-1293A
PRESIDENT'S MESSAGE
As 1993 draws to a close and the stock market continues to climb, many of
you may be wondering if this is the top and what you should do. Making a
sound decision requires some perspective on the market and an understanding
of its risks.
Those of us who invested in the stock market during the '80s benefited from
a period of unusually good performance. During that time, the Standard
& Poor's 500 index - a common proxy for the U.S. stock market -
returned 18% on average each year. This was far above the market's average
annual return since 1926 of 10%. Although the S&P 500 was up 7.62% for
1992, that was less than half of what we saw in the '80s and below the
market's long-term average. Through September of 1993, the S&P was up
7.59%. We believe these could be examples of the more modest returns we
might see in the '90s.
It's impossible to predict where the market will go from here. What we do
know is that historically the market has on average had a decline of 10% or
more every two years. We haven't seen a 10% drop in the market since
October 1990. Furthermore, stocks today are not cheap. Current valuations -
yardsticks like high price-to-earnings ratios and low dividend yields - are
at extremes. Low interest rates and the record amount of money that has
poured into stock funds so far in 1993 have helped push the market higher.
As real estate investments have become less attractive, many people have
instead put money in stocks, also helping to fuel the market's rise.
When there is this much uncertainty about what's next, a long-term,
disciplined approach to the stock market seems to make the most sense. A
good definition of long term is a minimum of five years. If you leave your
money invested that long, you should be able to ride out the market's
declines. A regular investment plan - investing a certain amount of money
each month or quarter - should also help you avoid buying exclusively at
the peak of the market. While this strategy can't protect you from a loss
in a declining market, and won't guarantee a profit, it should over time
help lower the average cost of your purchase. The key is that you follow
your plan during both market ups and downs.
No matter what happens in the market, we believe you can benefit from
practicing these investment principles. If we can help, please call us at
1-800-544-8888.
Best regards,
Edward C. Johnson 3d
PERFORMANCE UPDATE
$10,000 OVER LIFE OF FUND
Advisor Overseas MS EAFE
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
$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
THE FUND'S MAXIMUM 4.75% SALES CHARGE. BY OCTOBER 31, 1993, THE VALUE OF
YOUR INVESTMENT WITH DIVIDENDS REINVESTED WOULD HAVE GROWN TO $12,740 - A
27.40% INCREASE ON YOUR INITIAL INVESTMENT. FOR COMPARISON, LOOK AT HOW A
$10,000 INVESTMENT IN THE MORGAN STANLEY EAFE INDEX (WITH DIVIDENDS
REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE GROWN TO $12,522 - A
25.22% INCREASE.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1993
One Year Life of
Fund
FIDELITY ADVISOR
OVERSEAS 44.13% 33.75%
EAFE 37.46% 25.22%
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1993
One Year Life of
Fund
FIDELITY ADVISOR
OVERSEAS 37.28% 7.10%
EAFE 37.46% 6.58%
THE CHARTS ABOVE SHOW FIDELITY ADVISOR OVERSEAS' TOTAL RETURNS, WHICH
INCLUDE CHANGES IN SHARE PRICE, AND REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS. CUMULATIVE TOTAL RETURNS DO NOT REFLECT THE FUND'S MAXIMUM 4.75%
SALES CHARGE WHICH, IF INCLUDED, WOULD HAVE RESULTED IN RETURNS OF 37.28%
FOR ONE YEAR, AND 27.40% FOR THE LIFE OF FUND. THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALIA, FAR EAST INDEX (EAFE INDEX) IS AN
UNMANAGED INDEX OF FOREIGN COMMON STOCK PRICES TRANSLATED INTO U.S. DOLLARS
AND COMPOSED OF MORE THAN 900 COMPANIES FROM EUROPE, AUSTRALIA AND THE FAR
EAST. IN EVALUATING THE LIFE OF FUND COMPARISON FIGURES, IT'S IMPORTANT TO
REMEMBER THAT BEFORE DECEMBER 1992, THE FUND WAS KNOWN AS FIDELITY ADVISOR
EUROPE FUND AND INVESTED MAINLY IN STOCKS IN EUROPE.
AVERAGE ANNUAL TOTAL RETURNS ARE LOAD ADJUSTED. 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, APRIL 23, 1990, TO THE
PERIODS LISTED ABOVE.
IF THE ADVISER HAD NOT REDUCED CERTAIN FUND EXPENSES DURING THE PERIODS
SHOWN, THE TOTAL RETURNS WOULD HAVE BEEN LOWER.
ALL PERFORMANCE NUMBERS ARE HISTORICAL; THE FUND'S SHARE PRICE AND RETURN
WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
MARKET RECAP
THIS PAST YEAR'S INTERNATIONAL RALLY SIGNALED A DRAMATIC TURNAROUND FOR
MANY FOREIGN MARKETS THAT HAD PREVIOUSLY FALLEN OUT OF FAVOR. LOW INFLATION
AND FALLING INTEREST RATES AROUND THE WORLD HELPED FUEL STRONG RETURNS
OVERSEAS. THE EAFE INDEX - WHICH MEASURES STOCK PERFORMANCE IN EUROPE,
AUSTRALIA AND THE FAR EAST - WAS UP 37.46% FOR THE 12 MONTHS ENDED OCTOBER
31, 1993. THAT EASILY OUTDISTANCED THE 14.94% RETURN FOR THE STANDARD &
POOR'S 500 INDEX OF U.S. STOCKS OVER THE SAME PERIOD. IN ADDITION,
INVESTORS POURED INCREASING AMOUNTS OF MONEY INTO FOREIGN STOCKS AND BONDS,
WHICH ALSO PUSHED UP PRICES.
EUROPE: After trailing the U.S. market for five consecutive years, European
stocks performed strongly by historical standards, but still were easily
outpaced by other world markets. Slowly falling interest rates and
investors' hopes of economic recovery combined to lift stock prices. The
Morgan Stanley Europe Index rose 25.67% for the year ended October 31.
Europe struggled to move beyond the currency crisis that crippled much of
the continent last fall. The value of the British pound and German
deutschemark went down, which hurt foreign investments when translated back
into dollars. But strong stock gains followed currency devaluations as
exports became more attractive. Norwegian stocks, for example, returned
nearly 43% through October, while Sweden was up 41% and Germany 31%.
Disappointingly slow interest-rate cuts and sluggish economies hurt returns
in some of the larger, more stable European markets like the United Kingdom
and France, both of which gained about 15% through the end of October.
JAPAN & THE FAR EAST: This region outperformed all others, but Japan
took investors on a roller coaster ride along the way. The Morgan Stanley
Far East ex-Japan Free Index posted gains of 52.85% for the year ended
October 31. The TOPIX, an index that includes stocks from Japan's larger,
better known companies, was up 46.06% for the same period, but only 3.54%
for the last six months. Falling interest rates, a strengthening yen, and
government spending aimed at stimulating economic growth all helped trigger
the tremendous market rally in Japan that continued through late spring.
But political instability, thanks to a no-confidence vote given to Prime
Minister Miyazawa, dragged the market back down in the summer and early
fall. Also, the surging yen - up 15.02% over the U.S. dollar so far this
year - made the products of big Japanese exporters less attractive, which
further slowed the country's already troubled economy. From August through
October, the TOPIX actually lost ground, and was down 4.84%.
U.S. & CANADA: Low inflation, declining interest rates and a gradually
improving economy led to a 14.94% return for the Standard & Poor's 500
Index - a broad measure of the U.S. market's overall performance. This
return beat historical standards, but paled alongside most international
markets. In Canada, the Toronto Stock Exchange 300 Index fared better,
returning 23.19%. Canadian stocks were buoyed by falling interest rates and
an economy that was slowly climbing out of a recession. Jitters surrounding
national elections slowed returns in September and October.
AN INTERVIEW WITH
JOHN R. HICKLING,
PORTFOLIO MANAGER OF
FIDELITY ADVISOR OVERSEAS FUND
Q. HOW HAS THE FUND PERFORMED, JOHN?
A. The fund returned 44.13% for the year ended October 31, 1993. It
outperformed the EAFE Index - a broad measure of the performance of stocks
in Europe, Australia and the Far East - which rose 37.46% during the same
12 months. And it beat the average international fund, which was up 33.41%
during that period, according to Lipper Analytical Services.
Q. WHAT ACCOUNTS FOR THE FUND'S STRONG PERFORMANCE?
A. In general, the fund benefited from a great year for foreign financial
markets. I began the year with a heavy emphasis on European stocks, since
that was the fund's mission at the time. Because I believed that interest
rates were generally too high, I emphasized stocks that could benefit as
rates began to come down. I focused on bank and financial stocks in France,
Germany, Denmark and also in the Scandinavian countries during the second
half of the year. Among my largest investments were Swiss bank and
financial companies such as C.S. Holdings and Winterthur Schweiz. Both did
well during the period. And, because I don't envision a quick economic
recovery, I generally stayed away from European companies whose fortunes
are tied to the local economies. In the U.K., which has been ahead of the
continent in coming out of its recession, I stuck with financial stocks and
banks such as National Westminster and Barclays, and companies that could
benefit from a recovery, such as British Petroleum and British Steel. I
also managed to steer clear of some of the lagging sectors there, such as
pharmaceuticals, brewers, and food retailers, which helped the fund. Over
the last six months, I halved our stake in the U.K. as the fund's focus
expanded and was able to take advantage of better opportunities elsewhere.
This worked well, as other markets did much better over the period.
Q. HOW ABOUT JAPAN?
A. The Japanese stocks that I added to the fund when it's scope expanded
beyond Europe made a strong contribution to the fund's performance. I
emphasized brokerage and trust bank stocks and stayed away from the blue
chips and household names which I believe are more sensitive to currency
fluctuations and have more downside in terms of future earnings. Why the
differentiation? Because I don't believe the stop-gap government measures
that rescued the Japanese financial system were enough to significantly
bail out the economy. I expect it to remain weak for some time. As a
result, I cut back my Japanese investments during the second half of the
period, from about 33% six months ago to roughly 17% at the end of October.
Q. THE FUND'S CURRENCY CONTRACTS ARE UP SOMEWHAT FROM THE FIRST HALF OF THE
YEAR. HAS CURRENCY HEDGING HELPED THE FUND'S PERFORMANCE?
A. It has. In general, currency hedging adds flexibility to my ability to
manage an international portfolio. Over the period, hedging made a positive
contribution to the fund's performance, by offsetting devaluations of the
Spanish peseta, the Finnish markka, and the Swedish krona. I started the
period with approximately 3% in currency contracts for hedging purposes and
ended with approximately 6.5%.
Q. HAVE YOU HAD ANY DISAPPOINTMENTS?
A. Yes, on two fronts. In retrospect, I turned bearish on Hong Kong too
early and missed the most recent 20% upturn by cutting back on my
investments prematurely. Second, I missed out on the quick rise in gold
stocks, which had a very good move earlier this year. It was short, sharp,
and some of it has already been given back. Nevertheless, I'm disappointed
that I didn't have a bigger stake in gold.
Q. WHAT'S YOUR VIEW ON THE WORLD FINANCIAL MARKETS FOR THE PERIOD AHEAD?
A. I think any economic recovery in Europe or Japan will be muted. That
will make stock selection more important than ever. I'll continue to be
selective about stocks that are closely tied to the economic cycle and
instead focus more on companies that appear to have adjusted their sights
to the current slow growth environment. I expect interest rates to come
down in Europe and in Japan over the next year. However, I think the
improvement in earnings has probably been widely overestimated and I expect
disappointments to outnumber earnings surprises. Under these market
conditions, another year of double digit gains - like we've had this year -
could be hard for the fund to achieve.
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN STOCK HOLDINGS AS OF OCTOBER 31, 1993
% OF FUND'S INVESTMENTS
IN THESE STOCKS
% OF FUND'S INVESTMENTS 6 MONTHS AGO
C.S. Holdings (Bearer) (Switzerland, Finance) 1.3 0.9
Winterthur Schweiz Ord. (Reg.) (Switzerland, 1.3 1.5
Finance)
Baloise Holdings (Reg.) (Switzerland, Finance) 1.2 0.0
Zurich Versicherung (Reg.) (Switzerland, Finance) 1.2 0.0
Deutsche Bank AG Ord. (Germany, Finance) 1.2 0.0
SIP Spa (Italy, Utilities) 1.1 0.0
International Nederlanden Groep Ord. 1.1 0.0
(Netherlands, Finance)
Allianz Versich Holdings Ord. (Reg.) 1.0 0.0
(Germany, Finance)
Great Universal Stores PLC Ord. Class A 1.0 0.0
(United Kingdom, Retail and Wholesale)
Telefonica de Espana SA Ord. (Spain, Utilities) 0.9 0.0
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE INDUSTRIES AS OF OCTOBER 31, 1993
% OF FUND'S INVESTMENTS
IN THESE INDUSTRIES
% OF FUND'S INVESTMENTS 6 MONTHS AGO
Finance 31.1 30.3
Utilities 8.4 5.4
Construction and Real Estate 8.2 18.5
Retail and Wholesale 5.7 1.7
Technology 3.6 3.1
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF OCTOBER 31, 1993
% OF FUND'S INVESTMENTS
IN THESE COUNTRIES
% OF FUND'S INVESTMENTS 6 MONTHS AGO
Japan 16.6 32.6
United Kingdom 11.3 24.1
France 6.7 6.0
Switzerland 6.7 4.6
Germany 6.5 3.4
</TABLE>
FIDELITY ADVISOR OVERSEAS FUND
INVESTMENTS/OCTOBER 31, 1993
(Showing Percentage of Total Value of Investment in Securities)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 73.0%
AUSTRALIA - 3.3%
FAI Insurance Ltd. Ord. 1,410,500 $ 996,118 30239330
Lend Lease Corp. Ltd. 120,000 1,507,858 52599292
TNT Ltd. (a) 1,300,000 1,515,719 93599292
Westpac Banking Corp. 520,000 1,569,419 96121410
Woolworths Ltd. 690,000 1,503,260 98088892
7,092,374
CHILE - 0.2%
Maderas Y Sinteticos Sociedad
Anonima Masisa sponsored ADR (a) 20,600 370,800 55646510
FINLAND - 0.6%
America Group Ltd. Class A free shares 28,000 448,691 02351210
Repola OY 45,800 676,320 75999A92
Unitas Bank Ltd. B free shares 37,300 102,191 90499123
1,227,202
FRANCE - 6.2%
Assurances Generales (Reg.) 5,000 615,476 04557510
BNP CI 31,400 1,507,264 05599910
BNP CI (warrants) (a) 31,400 52,103 05599995
Bail Investissement (a) 200 38,266 05699092
Banque National de Paris Ord. 1,500 73,527 05599996
Credit Lyonnais CI 3,300 414,595 22799392
Elf Aquitaine 3,400 264,470 28627199
Elf Gabon 6,000 1,209,956 87399A22
Financiere Bank de Suez Cie 30,500 1,805,418 31799110
GAN (Groupe Des Assur Natl) 17,600 1,636,031 36599792
IMETAL SA Ord. 7,400 670,335 45099910
Paribas SA (Cie Financiere) Class A (a) 20,000 1,625,466 73999192
Pechiney SA CIP 3,600 204,199 70599310
Societe Generale Class A 8,000 941,416 83357799
Sophia SA 5,300 455,875 84199C22
UFB Locabail SA (a) 11,240 721,294 90599B92
Unibail 13,400 1,182,086 90499592
13,417,777
GERMANY - 5.8%
Allianz Versich Holdings Ord. (Reg.) (a) 1,300 2,202,331 01882495
BHF Bank (Bank Berlin Hand) 5,266 1,636,791 05549991
Bayer AG 5,450 1,033,523 07273010
Commerzbanksip AG 5,700 1,157,007 20259710
Deutsche Bank AG Ord. 5,000 2,507,044 25152592
Hoechst AG Ord. 7,300 1,236,261 43439010
Munich Reinsurance (Reg.) 340 806,715 62699492
Veba Vereinigte Elektrizetaets &
Bergwerks AG Ord. 7,000 1,948,216 92239110
12,527,888
HONG KONG - 0.3%
Cathay Pacific Airways Ltd. 400,000 $ 652,216 14890610
INDIA - 0.1%
ITC Ltd. (c):
(warrants) (a) 3,000 15,750 45031811
GDR 9,000 157,500 45031810
173,250
INDONESIA - 0.5%
Bank International Indonesia Ord. (a) 168,000 559,586 06199B92
Jakarta International Hotels &
Development Ord. 86,000 552,449 47399693
1,112,035
IRELAND - 0.4%
Anglo Irish Bank 351,400 316,264 03599592
Bank of Ireland U.S. Holdings, Inc. 133,600 556,179 06278793
872,443
ITALY - 1.8%
Falck Ord. (a) 66,500 129,734 30699692
SIP Spa 1,050,000 2,274,326 78401792
Saipem Spa Ord. (a) 493,000 835,946 79299292
Simint Spa Ord. (New) 398,996 533,478 83799498
Stet Societa Finanziaria
Telefonica SPA Ord. 30,000 75,665 85982510
3,849,149
JAPAN - 16.6%
ADO Electronic Industrial Co. 18,000 416,214 00699992
Acom Co. Ltd. (a) 6,000 533,947 00499M22
Aoyama Trading Co. Ord. 12,000 897,651 03799092
Canon, Inc. 35,000 480,424 13780199
Catena Corp. 28,000 928,604 14899792
Cosmo Oil Company Ltd. 152,000 1,219,640 22199092
Daikyo, Inc. 113,000 1,207,554 23376610
Fujitsu Ltd. 147,000 1,160,562 35959010
Getz Bros Co. Ltd. 11,000 739,751 37499392
Hankyu Department Stores, Inc. 78,000 898,204 41099192
Hitachi Ltd. 117,000 928,024 43357810
Honda Motor Co. Ltd. 67,000 981,391 43812810
IO Data Device, Inc. 13,000 1,058,683 45099A92
Izumi Co. Ord. 75,000 1,526,946 46399292
Konica Corp. 165,000 1,092,907 50046M10
Kyocera Corporation 8,000 453,247 50155610
Marubeni Corp. 217,000 1,027,528 57381010
Marukyo Corp. 16,000 456,932 57899792
Mitsubishi Bank of Japan 21,000 595,854 60674210
Mitsubishi Corp. 89,000 975,679 60676910
Mitsubishi Heavy Industry 118,000 733,763 60699310
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
JAPAN - CONTINUED
Mitsubishi Trust & Banking 120,000 $ 1,636,112 60699410
Nippon Shinpan Ltd. 52,000 488,623 65461710
Nomura Securities Co. Ltd. 80,000 1,466,606 65536130
Oji Paper Ltd. 55,000 521,880 67811810
Sankyo Co. Ltd. 3,000 245,970 82299792
Santen Pharmaceutical Co. Ord. 20,000 554,583 80299110
Sanwa Bank 63,000 1,375,495 80399410
Sekisui House Ltd. 118,000 1,565,362 81607810
Sho Bond Corp. Ord. 27,000 741,225 82699692
Sony Corp. 30,000 1,359,742 83569999
Sumitomo Realty & Development Co. Ltd. 75,000 525,103 86562310
Sumitomo Trust & Banking Co. 90,000 1,210,502 86599310
Tobu Railway 50,000 344,081 88739110
Tohoku Electric Power, Inc. 22,000 654,629 88906099
Tokio Marine & Fire Insurance Co. Ltd. (The) 112,000 1,372,271
88909099
Tokyo Electric Power Co., Inc. 27,000 858,130 88910710
Toshiba Corp. 171,000 1,099,568 89149310
Toyota Motor Corporation 57,000 987,195 89399999
Yoshinoya D&C Co. Ltd. Ord. 30 525,104 98999192
35,845,686
MALAYSIA - 2.3%
Ekran Berhad Ord. (a) 81,000 491,197 28299792
Magnum Corp. BHD 405,000 998,240 55999392
Telekom Malaysia BHD 211,000 1,783,098 94099892
Tenega Nasional BHD 345,000 1,795,188 92099992
5,067,723
MEXICO - 1.3%
Grupo Dina (Consorcio G) ADR (a) 31,000 651,000 21030610
Grupo Financiero Bancomer SA de
CV sponsored ADR, Series C (c) 35,000 1,023,750 40048610
Telefonos de Mexico SA de CV
sponsored ADR, Class L 20,000 1,095,000 87940378
2,769,750
NETHERLANDS - 4.8%
ABN-AMRO Holdings NV 39,792 1,508,881 00399192
Aegon NV Ord. 9,062 466,620 00792493
Akzo NV Ord. 12,000 1,136,308 01019910
Hoogovensen Staalfabrieken (a) 12,600 282,144 43888410
International Nederlanden Groep Ord. 52,300 2,270,430 46099892
KBB NV Ord. 12,300 630,753 48130092
Philips Electronics 62,000 1,280,275 71833799
Pirelli Tyre Holdings (warrants) (a) 45,500 72,089 72499093
Stad Rotterdam 32,100 744,225 85299822
Wereldhave NV 31,900 1,913,832 95199E22
10,305,557
NEW ZEALAND - 0.1%
Brierley Investments Ltd. 414,700 $ 294,072 10901410
NORWAY - 1.4%
Bergesen Group Class B 80,000 1,619,235 08399011
Den Norske Bank Class A free shares (a) 114,500 396,625 25299792
Mosvold Shipping AS `B' 3,900 33,641 62099294
Orkla AS Class B (non-vtg.) 26,100 964,369 39299192
Smedvig AS 4,900 113,156 79799892
3,127,026
PHILIPPINES - 0.1%
Filinvest Land, Inc. Ord. (a) 667,000 179,710 31699J22
SINGAPORE - 0.3%
Kim Eng Holdings Ltd. 310,000 660,573 49499D92
SPAIN - 5.0%
Argentaria Corp. Bancaria de Esp (a) 12,600 564,667 21991392
Banco Bilbao Vizcaya SA Ord. (Reg.) 17,500 447,870 05945891
Banco Intercontinental Espanol 5,000 436,296 24699592
Banesto (Reg.) 65,000 1,319,259 05981699
Corporacion Mapfre
International Reas (Reg.) 29,200 1,345,363 16899192
Hidro Cantabrico 23,500 524,833 42899999
Iberdrola SA 175,000 1,152,406 45499892
Repsol SA Ord. 36,000 1,076,000 76026T10
Telefonica de Espana SA:
Ord. (a) 150,000 1,955,556 87938210
sponsored ADR 12,000 466,500 87938220
Vallehermoso SA 75,000 1,383,333 91899210
10,672,083
SWEDEN - 3.0%
Aktiebolaget Electrolux 30,100 1,052,911 01019810
Frontline (a) 54,000 178,327 35999F22
SKF AB Ord. (a) 102,800 1,584,247 78437530
Scribona AB B free shares (a) 50,100 214,469 81199B92
Securitas B free shares 7,500 210,066 81399792
Skandia International Holding Co. AB ADR (a) 15,000 317,392 83055510
Skandinaviska Enskilda Banken
Class A free shares 173,900 1,276,174 88099222
Skanska Class B (a) 78,300 1,647,211 93899392
6,480,797
SWITZERLAND - 6.7%
Baloise Holdings (Reg.) (a) 1,700 2,656,161 05899195
C.S. Holdings:
(Bearer) (a) 1,215 2,782,381 17599792
(Bearer) (warrants) (a) 315 23,764 15099426
Globus Magazine Part. Cert. 1,875 1,251,048 37957792
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
SWITZERLAND - CONTINUED
Swiss Bank Corp.:
(Bearer) (a) 5,000 $ 1,683,152 87083610
(Reg.) 3,280 536,677 87083694
Swiss Reinsurance Corp. (Bearer) 100 259,514 87099392
Winterthur Schweiz Ord. (Reg.) 5,250 2,707,293 97629994
Zurich Versicherung (Reg.) 2,800 2,538,541 99499597
14,438,531
THAILAND - 0.9%
Krung Thai Bank (Loc. Reg.) 410,000 962,707 50599292
Ruam Pattana Fund II (a) 1,700,000 955,998 76999522
1,918,705
UNITED KINGDOM - 11.3%
BET Public Ltd. Co. Ord. 425,400 794,090 05538H10
Barclays PLC Ord. 121,000 1,021,791 06738E10
Bass PLC Ord. 210,000 1,516,685 06990492
Bellway Ord. 90,000 606,675 07999192
British Petroleum PLC Ord. 230,000 1,189,201 11088910
British Steel PLC Ord. 449,300 860,338 11101510
British Vita Ord. 113,200 419,264 11199192
Burton Group PLC Ord. 515,000 572,229 12304910
Dixons Group PLC 286,600 1,106,078 25587592
First National Finance Corporation PLC 95,700 121,930 33599392
Great Universal Stores PLC Ord. Class A 260,000 2,060,768 39133420
Hambros Ord. 144,700 868,212 40699292
Hammerson Property Ord. 109,200 601,821 40831592
Hartstone Group PLC Ord. 750,000 677,786 41722610
Hillsdown Holdings PLC 300,000 724,455 43258610
Ladbroke Group PLC Ord. 460,400 1,176,592 50572799
McAlpine (Alfred) Ord. 243,000 756,009 57999010
Mirror Group Newspaper PLC (a) 342,900 812,810 60499792
National Westminster Bank PLC Ord. 176,000 1,444,522 63853930
North West Water Ord. 21,500 168,646 67299195
Persimmon PLC Ord. 130,000 568,156 71499092
Royale Insurance Co. Ltd. 120,000 561,785 78074910
Tesco PLC Ord. (a) 49,600 149,170 88157510
Tomkins PLC Ord. 330,000 1,217,350 89003010
Trafalgar House PLC Ord. 300,100 433,482 89270710
Vodafone Group PLC 100,000 819,270 92857T92
Westbury PLC 365,000 876,011 95799292
Westland Group PLC Ord. 250,000 803,715 96090210
Whitbread Class A 180,000 1,381,351 96341499
24,310,192
TOTAL COMMON STOCKS
(Cost $141,032,477) 157,365,539
PREFERRED STOCKS - 3.0%
CONVERTIBLE PREFERRED STOCKS - 0.0%
NETHERLANDS - 0.0%
ABN-AMRO Holdings NV 6% 652 $ 24,723 00399194
NONCONVERTIBLE PREFERRED STOCKS - 3.0%
AUSTRIA - 0.9%
Creditanstaldt Bank (a) 13,500 927,284 22539210
MaCulan Holding Ord. 10,000 1,059,996 55699594
1,987,280
GERMANY - 0.7%
RWE AG 6,100 1,387,276 76204599
ITALY - 1.4%
Banco Ambro Veneto N/C Risp 299,600 511,651 06399592
SAI (Sta Assicur Industriale) N/C Risp 156,700 931,585 78399192
Simint Spa Priv. Ord. 399,000 380,227 83799496
Stet Societa Finanziaria Telefonica Spa 631,000 1,227,169 85982592
3,050,632
TOTAL NONCONVERTIBLE PREFERRED STOCKS 6,425,188
TOTAL PREFERRED STOCKS
(Cost $6,010,706) 6,449,911
PRINCIPAL
AMOUNT (B)
CORPORATE BONDS - 0.7%
CONVERTIBLE BONDS - 0.2%
SPAIN - 0.2%
Banco Santander SA 9%,
6/24/94 ESP 50,000,000 478,705 0595749B
NONCONVERTIBLE BONDS - 0.5%
BRAZIL - 0.5%
Federative Republic of Brazil IDU
Euro 8 3/4%, 1/1/01 (d) 1,300,000 1,036,750 1057569E
TOTAL CORPORATE BONDS
(Cost $1,379,151) 1,515,455
GOVERNMENT OBLIGATIONS - 1.5%
ARGENTINA - 0.6%
Argentina Republic BOCON
3 1/4%, 4/1/01 (d) 1,444,617 1,169,418 039995AF
DENMARK - 0.4%
Danish Government Bullet
7%, 12/15/04 DKK 6,250,000 965,241 249998AV
PRINCIPAL VALUE
AMOUNT (B) (NOTE 1)
GOVERNMENT OBLIGATIONS - CONTINUED
FRANCE - 0.5%
French Government Stripped
Coupon 4/25/23 (e) FRF 42,000,000 $ 1,063,868 351996BL
TOTAL GOVERNMENT OBLIGATIONS
(Cost $2,973,923) 3,198,527
INDEXED SECURITIES - 1.2%
UNITED STATES OF AMERICA - 1.2%
Bankers Trust Company (d) (f):
note 8.0225%, 10/28/94 (coupon
inversely indexed to JPY LIBOR
and principal indexed to value of
9-year Japanese securities,
both multiplied by 3) 1,200,000 1,199,400 0669918T
floating rate 10.245%, 7/23/96 (coupon
inversely indexed to 6-month JPY
LIBOR, multiplied by 10) 1,000,000 1,272,600 0669917H
Citibank Nassau 4.625%, 7/30/96
(inversely indexed to 1-year SEK
swap rate, multiplied by 10) 225,000 219,285 223991AH
TOTAL INDEXED SECURITIES
(Cost $2,425,000) 2,691,285
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 20.6%
Investments in repurchase agreements,
(U.S. Treasury obligations), in a
joint trading account at 2.96%
dated 10/29/93 due 11/1/93 (Note 3) $ 44,382,945 44,372,000
TOTAL investment in securities - 100%
(Cost $198,193,257) $ 215,592,717
Forward Foreign Currency Contracts
SETTLEMENT UNREALIZED
CONTRACTS TO SELL DATE VALUE GAIN/LOSS
73,700,000 BEF 2/4/94 $ 1,994,623 $ 86,710
6,737,393 DKK 2/9/94 978,601 29,734
427,275,000 ESP 11/15/93 3,155,204 95,235
23,435,051 FRF 1/27/94 3,934,366 110,110
14,776,000 NOK 2/8/94 1,994,744 23,725
16,361,000 SEK 2/4/94 1,980,072 37,389
TOTAL CONTRACTS TO SELL
(Receivable amount $14,420,513) $ 14,037,610 $ 382,903
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 6.5%.
CURRENCY TYPE ABBREVIATIONS:
BEF - Belgian franc
DKK - Danish krone
FRF - French franc
JPY - Japanese yen
NOK - Norwegian krone
ESP - Spanish peseta
SEK - Swedish krona
LEGEND:
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) 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 $1,197,000 or 0.5% of net
assets.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(e) Principal Only Strips represent the right to receive the monthly
principal payments on an underlying pool of mortgage loans.
(f) Inverse floating rate security (inverse floater) 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 of an inverse floater may be
considerably more volatile than the price of a comparable fixed rate
security.
INCOME TAX INFORMATION:
At October 31, 1993, the aggregate cost of investment securities for income
tax purposes was $198,216,404. Net unrealized appreciation aggregated
$17,376,313, of which $20,697,460 related to appreciated investment
securities and $3,321,147 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.
For the period, interest and dividends from foreign countries were $999,660
or $.06 per share. Taxes paid to foreign countries were $194,435 or $.01
per share.
INDUSTRY DIVERSIFICATION
(Unaudited)
AS A PERCENTAGE OF TOTAL VALUE OF INVESTMENTS
Aerospace and Defense 0.4%
Basic Industries - 3.2%
Chemicals and Plastics 1.8
Iron and Steel 0.6
Metals and Mining 0.1
Paper and Forest Products 0.7
Conglomerates 1.6
Construction and Real Estate - 8.2%
Building Materials 0.3
Construction 3.3
Engineering 1.2
Real Estate 2.7
Real Estate Investment Trusts 0.7
Durables - 2.8%
Autos, Tires, and Accessories 1.2
Consumer Durables 0.1
Consumer Electronics 1.1
Textiles and Apparel 0.4
Energy - 2.9%
Energy Services 0.1
Oil and Gas 2.8
Finance - 31.1%
Banks 17.1
Closed End Investment Company 0.4
Credit and Other Finance 2.2
Insurance 10.4
Securities Industry 1.0
Government Obligations 2.0
Health - 0.6%
Drugs and Pharmaceuticals 0.3
Medical Equipment and Supplies 0.3
Industrial Machinery and Equipment - 1.7%
Electrical Equipment 0.6
Industrial Machinery and Equipment 1.1
Media and Leisure - 1.9%
Lodging and Gaming 1.3
Publishing 0.4
Restaurants 0.2
Nondurables - 2.5%
Beverages 1.3
Foods 0.3
Household Products 0.8
Tobacco 0.1
Retail and Wholesale - 5.7%
Apparel Stores 0.6%
General Merchandise Stores 2.1
Grocery Stores 1.0
Retail and Wholesale, Miscellaneous 1.5
Trading Companies 0.5
Services 0.8
Repurchase Agreements 20.6
Technology - 3.6%
Computers and Office Equipment 1.8
Electronics 1.3
Photographic Equipment 0.5
Transportation - 2.0%
Air Transportation 0.3
Railroads 0.2
Shipping 0.8
Trucking and Freight 0.7
Utilities - 8.4%
Cellular 0.4
Electric Utility 3.8
Telephone Services 4.1
Water 0.1
100.0%
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
October 31, 1993
ASSETS
Investment in securities, at value (including repurchase agreements of $44,372,000)
(cost $198,193,257) (Notes $ 215,592,717
1, 2 and 3) - See accompanying schedule
Short foreign currency contracts (Note 2) $ (14,037,610)
Contracts held, at value
Receivable for contracts held 14,420,513 382,903
Cash 411
Receivable for investments sold 4,364,756
Receivable for fund shares sold 9,944,851
Dividends receivable 215,512
Interest receivable 142,173
Total assets 230,643,323
LIABILITIES
Payable for investments purchased 8,623,381
Payable for fund shares redeemed 256,368
Accrued management fee 124,782
Other payables and accrued expenses 268,483
Total liabilities 9,273,014
NET ASSETS $ 221,370,309
Net Assets consist of:
Paid in capital $ 205,154,246
Accumulated net investment (208,608)
(loss)
Accumulated undistributed net realized gain (loss) on investments (1,357,692)
Net unrealized appreciation (depreciation) on:
Investment securities 17,399,460
Foreign currency contracts 382,903
NET ASSETS, for 17,116,868 shares outstanding $ 221,370,309
NET ASSET VALUE and redemption price per share ($221,370,309 (divided by) 17,116,868 shares) $12.93
Maximum offering price per share (100/95.25 of $12.93) (Note 5) $13.57
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended October 31, 1993
INVESTMENT INCOME $ 1,232,094
Dividends
Interest 436,145
Foreign exchange gain (loss) (33,055)
1,635,184
Less foreign taxes withheld (194,435)
(Note 1)
Total income 1,440,749
EXPENSES
Management fee (Note 5) $ 506,995
Basic fee
Performance adjustment (3,885)
Transfer agent fees (Note 5) 309,346
Distribution fees (Note 5) 422,735
Accounting fees and expenses (Note 5) 57,711
Non-interested trustees' compensation 314
Custodian fees and expenses 85,008
Registration fees 108,657
Audit 52,981
Legal 4,150
Miscellaneous 13,722
Total expenses 1,557,734
Net investment income (loss) (116,985)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1, 2 AND 4)
Net realized gain (loss) on:
Investment securities 1,114,424
Foreign currency contracts (411,915) 702,509
Change in net unrealized appreciation (depreciation) on:
Investment securities 18,349,767
Foreign currency contracts 382,903 18,732,670
Net gain (loss) 19,435,179
Net increase (decrease) in net assets resulting from operations $ 19,318,194
</TABLE>
Statement Of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations $ (116,985) $ 90,237
Net investment income (loss)
Net realized gain (loss) on investments 702,509 1,106,799
Change in net unrealized appreciation (depreciation) on investments 18,732,670 (2,322,943)
Net increase (decrease) in net assets resulting from operations 19,318,194 (1,125,907)
Distributions to shareholders from: (148,613) (267,173)
Net investment income
Net realized gain (59,260) -
Share transactions 202,379,717 6,987,589
Net proceeds from sales of shares
Reinvestment of distributions from: 117,994 201,073
Net investment income
Net realized gain 47,051 -
Cost of shares redeemed (18,936,702) (6,234,902)
Net increase (decrease) in net assets resulting from share transactions 183,608,060 953,760
Total increase (decrease) in net assets 202,718,381 (439,320)
NET ASSETS
Beginning of period 18,651,928 19,091,248
End of period (including accumulated net investment income (loss) of $(208,608) and
$56,990, respectively) $ 221,370,309 $ 18,651,928
OTHER INFORMATION
Shares
Sold 16,705,346 710,845
Issued in reinvestment of distributions from: 12,994 21,300
Net investment income
Net realized gain 5,182 -
Redeemed (1,663,185) (627,858)
Net increase (decrease) 15,060,337 104,287
</TABLE>
FINANCIAL HIGHLIGHTS
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, APRIL 23, 1990
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1993 1992 1991 1990
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.07 $ 9.78 $ 9.55 $ 10.00
Income from Investment Operations
Net investment income .03 .05 .14 .05
Net realized and unrealized gain (loss) on investments 3.93 (.62) .17 (.50)
Total from investment operations 3.96 (.57) .31 (.45)
Less Distributions
From net investment income (.07) (.14) (.07) -
From net realized gain (.03)** - (.01)** -
Total distributions (.10) (.14) (.08) -
Net asset value, end of period $ 12.93 $ 9.07 $ 9.78 $ 9.55
TOTAL RETURN (dagger) (double dagger) 44.13% (5.88)% 3.25% (4.50)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 221,370 $ 18,652 $ 19,091 $ 18,161
Ratio of expenses to average net assets 2.38% 2.64% 2.85% 3.07%*#
Ratio of net investment income to average net assets (.18)% .48% 1.48% 1.45%*
Portfolio turnover rate 42% 168% 226% 137%*
</TABLE>
* ANNUALIZED
** INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT
REDUCED CERTAIN EXPENSES DURING THE PERIOD SHOWN.
(double dagger) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
# LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED OCTOBER 31, 1993
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Overseas Fund (the fund) (formerly Fidelity Advisor
Overseas Portfolio) is a fund of Fidelity Advisor Series VII (the trust)
(formerly Fidelity Securities 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, 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 practical 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 where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income 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.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may 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. JOINT TRADING ACCOUNT.
At the end of the period, the fund had 20% or more of its total investments
in repurchase agreements through a joint trading account. These repurchase
agreements were with entities whose creditworthiness has been reviewed and
found satisfactory by FMR. The repurchase agreements were dated October 29,
1993 and due November 1, 1993. The maturity values of the joint trading
account investments were $44,382,945 at 2.96%. The investments in
repurchase agreements through the joint trading account are summarized as
follows:
MAXIMUM
AMOUNT AGGREGATE AGGREGATE AGGREGATE
NO. OF WITH ONE PRINCIPAL MATURITY MARKET COUPON MATURITY
DEALERS DEALER AMOUNT OF AMOUNT OF VALUE OF RATES OF DATES OF
OR BANKS OR BANK AGREEMENTS AGREEMENTS COLLATERAL COLLATERAL COLLATERAL
25 11.7% $15,915,716,000 $15,919,637,945 $15,957,867,622 3.875% to 11/4/93
to
14.25% 8/15/23
4. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $160,053,014 and $24,891,725, respectively.
5. 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 annual rate of .77% 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%. 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
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
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.
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 $422,735 of which
$325,181 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 $3,509 for the
period.
SALES LOAD. FDC received sales charges for selling shares of 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 $3,895,423 of which
$3,327,440 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. Fidelity Service Co. an affiliate of FMR, 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 $800 for the period.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VII and the Shareholders of
Fidelity Advisor Overseas Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Advisor Overseas Fund (formerly Fidelity Advisor Overseas
Portfolio (a fund of Fidelity Advisor Series VII (formerly Fidelity
Securities Trust)) at October 31, 1993, the results of its operations for
the year then ended, the changes in its net assets and the financial
highlights for the periods indicated in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
the Fidelity Advisor Overseas Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at October 31, 1993 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Boston, Massachusetts
December 8, 1993
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.
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
THE FIDELITY ADVISOR FUND FAMILY
ASK YOUR INVESTMENT PROFESSIONAL ABOUT THE ADVISOR FUND OR FUNDS THAT BEST
SUIT YOUR INVESTMENT NEEDS.
INCOME
GROWTH
EQUITY FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund(dagger)
Fidelity Advisor Global Resources Fund(dagger)(dagger)
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Portfolio Income
Fidelity Advisor Income & Growth Fund
FIXED-INCOME FUNDS
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
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
ABOUT THESE CHARTS. The bar graphs shown above are intended as a relative
comparison of current income and growth potential among the various fund
types. The graphs are based solely on the general investment objective of
each fund category and do not represent actual or implied fund performance
or
portfolio composition.
(dagger) Formerly the Fidelity Special Situations Fund: Advisor Class.
(dagger)(dagger) Formerly the Fidelity Advisor Global Natural Resources
Portfolio.
