(2_FIDELITY_LOGOS)FIDELITY ADVISOR
(registered trademark)
OVERSEAS
FUND - CLASS A
ANNUAL REPORT
OCTOBER 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
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 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 24 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 28 Notes to the financial statements.
REPORT OF INDEPENDENT 33 The auditor's opinion.
ACCOUNTANTS
DISTRIBUTIONS 34 Distribution from capital gains.
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. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR
GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY ADVISOR FUND
INCLUDING
CHARGES AND EXPENSES, CONTACT YOUR INVESTMENT PROFESSIONAL FOR A FREE
PROSPECTUS.
READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The unsettling period that began for investors when the Federal Reserve
Board raised short-term interest rates in February has continued into the
fourth quarter of 1994. The Board raised the federal funds rate - the rate
banks charge each other for overnight loans - five times from February
through August, taking it from 3.00% to 4.75%. A sixth increase in November
lifted the rate to 5.50%. The Fed rate hikes were intended to forestall
inflation that could result from an improving U.S. economy, and they led to
below-average returns for many stocks and negative returns for many bond
investments.
The volatility we have witnessed this year follows a period in which there
was a nearly perfect investing environment. Although there was a
late-summer rally in stocks and, to a lesser extent in bond markets, it is
impossible to predict where interest rates might go or what might happen in
the markets in the months ahead. That's why it probably is a good time to
again review your investment portfolio and how well it matches your goals.
If you can leave your money invested over the long term, you can avoid much
of the volatility that generally accompanies the stock market in the short
term, as we have been witnessing this year. You also can help to manage
risk through diversification of investments. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different stock funds or
in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. As with any mutual fund, of course, there is no assurance that
a money market fund will achieve its goal, and it is important to remember
that money market funds are not insured by any agency of the U.S.
government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically, as we have discussed here. A periodic investment
plan will not, of course, assure a profit or protect against a loss.
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1994 PAST LIFE OF
YEAR FUND
Advisor Overseas - Class A 8.91% 45.67%
Advisor Overseas - Class A (incl. 4.75% sales charge) 3.74% 38.75%
Morgan Stanley EAFE Index 10.09% 37.86%
Average International Fund 10.59% n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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 149 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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED OCTOBER 31, 1994 PAST LIFE OF
YEAR FUND
Advisor Overseas - Class A 8.91% 8.66%
Advisor Overseas - Class A (incl. 4.75% sales charge) 3.74% 7.50%
Morgan Stanley EAFE Index 10.09% 7.35%
Average International Fund 10.59% n/a
</TABLE>
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
Fidelity Advisor Overseas (175)Europe, Australi
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
04/30/94 13895.10 13218.63
05/31/94 13638.52 13142.74
06/30/94 13529.96 13328.47
07/31/94 13875.36 13456.65
08/31/94 14003.66 13775.24
09/30/94 13569.44 13341.38
10/31/94 13875.36 13785.64
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Advisor Overseas Fund - Class A on April 23, 1990, when the fund started,
and paid a 4.75% sales charge. As the chart shows, by October 31, 1994, the
value of your investment would have grown to $13,875 - a 38.75% 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 $13,786 - a 37.86% 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
MARKET RECAP
After producing unusually strong
returns in 1993, many overseas
markets experienced increased
volatility in 1994. Returns in several
markets were dampened by rising
interest rates and fears of inflation
that may result from expanding
economies. Other markets - mainly
emerging markets - suffered
corrections after reaching high levels
in late 1993. Overall, overseas stocks
outperformed their U.S. counterparts.
For the 12 months ended October
31, 1994, the Morgan Stanley EAFE
index - which measures stock
performance in Europe, Australia and
the Far East - had a total return of
10.09%. By comparison, the
Standard & Poor's Composite Index
of 500 Stocks - a broad measure of
U.S. stock performance - returned
3.87% during the same period.
Although European markets
produced mixed results, they
outperformed the U.S. market overall.
The Morgan Stanley Europe index
rose 11.24% during the 12 months
ended October 31. Many European
economies began to recover in 1994.
However, some of the positive effects
of that growth on corporate earnings
were outweighed by the negative
effects of higher interest rates.
Japan's stock market, meanwhile,
showed improvement in 1994 as the
country's economy appeared to
emerge from a long recession.
According to Morgan Stanley Capital
International, Japanese stocks rose
8.78% in U.S. dollars over the
12-month period. The Morgan
Stanley Far East ex-Japan index - a
measure of Far East Markets
excluding Japan - rose 15.46%,
mainly on the strength of gains
made in Southeast Asian stocks in
late 1993.
An interview with John Hickling, Portfolio Manager of Fidelity
Advisor Overseas Fund
Q. JOHN, HOW DID THE FUND DO?
A. Not as well as I would have liked. For the year ended October 31, 1994,
the fund had a total return of 8.91%. In contrast, the EAFE index - a broad
measure of stocks in Europe, Australia and the Far East - returned 10.09%.
Over the same period, the average international fund had a return of
10.59%, according to Lipper Analytical Services.
Q. WHY DID THE EAFE INDEX OUTPERFORM THE FUND OVER THE PAST YEAR?
A. There were two main reasons. The first was a matter of timing in the
Southeast Asian markets. I reduced the fund's holdings there late in 1993
and increased its weighting in Japan. At that point, the Southeast Asian
markets appeared to me to be overvalued and speculative. But, in fact, they
significantly outperformed Japan until the end of 1993. However, in 1994,
nearly all Southeast Asian markets experienced a notable correction and
Japan's performance improved. So essentially, I got out of Southeast Asia
too early in 1993, but was well positioned for Japanese growth in 1994.
Q. WHAT WAS THE OTHER MAIN REASON?
A. The strong Japanese yen versus the weak U.S. dollar. During 1994, the
EAFE index was about 50% in Japan. The fund also held many Japanese
securities, but was underweighted in Japan compared to the index due to
stock selection. For example, I focused on auto and electronics companies,
but stayed away from large Japanese city banks, which I didn't think were
attractive. Over the period, these banks underperformed as I expected.
However, because Japanese stocks are denominated in yen, and the yen was
very strong against the dollar, these bank stocks actually ended up
boosting the performance of the index in dollar terms.
Q. AS YOU NOTED, THE JAPANESE MARKET PICKED UP EARLY IN 1994. HOW DID
JAPAN'S ECONOMY LOOK OVERALL AND WHAT STOCKS DID YOU LIKE?
A. Over this calendar year, the Japanese economy has been slowly
recovering. My goal during this period was to look for stocks whose
earnings were recovering faster than the economy. One good example was
automotive stocks, such as Toyota and Honda. These cyclical stocks - which
tend to perform well when the economy picks up and poorly when Japan's
economy falls - benefited from the economic upturn. In addition, they took
a number of cost-cutting measures that helped them reduce their production
costs.
Q. WERE OTHER TYPES OF JAPANESE COMPANIES WORTH NOTING?
A. Yes, Japanese consumer electronics companies, such as Hitachi and
Toshiba, also looked good for much of the period because their stocks were
inexpensive and were benefiting from improving global and Japanese trends
in the electronics industry. I also liked the Japanese investment firm
Nomura. While this stock experienced a correction over the past few months,
it may remain well positioned to benefit from expected growth in Japan.
That's because it cut costs, reduced head count, and closed unprofitable
offices over the period.
Q. STAYING WITH THAT PART OF THE WORLD, HOW HAVE THE SOUTHEAST ASIAN
MARKETS LOOKED SINCE THEY PLUMMETED EARLY IN 1994?
A. For the first six months of 1994, they fell badly, and I avoided the
region, especially Hong Kong, which dropped dramatically. But around
September of this year, some Southeast Asian markets started picking up
noticeably. My approach in this environment was to look for value on a
stock-by-stock basis. One standout was Matahari department store, which is
known as the Wal-Mart of Indonesia. Matahari is benefiting from an emerging
middle class that is demanding more consumer goods. Siam City Bank in
Thailand also was attractive because its stock was cheap, and it performed
well over the past six months. I should note that stock prices of many
Southeast Asian companies have fallen significantly, and, at the end of the
period, many companies there started looking like good buys.
Q. LET'S SWITCH TO EUROPE. HOW DID THE MARKETS THERE LOOK?
A. European markets went downhill during the period largely because
European bond prices tumbled along with U.S. bonds and European stocks
followed suit. I should note that many analysts were puzzled by the drop in
European markets. That's because many of these countries are about a year
behind the United States in the economic cycle, and there is virtually no
threat of inflation - a big enemy of bondholders since it eats away at a
bond's fixed-interest payments. Despite falling stock and bond prices,
corporate earnings in Europe generally came through and were positive.
Q. YOU WERE BIG ON EUROPEAN CYCLICAL STOCKS SIX MONTHS AGO. HOW DID THEY
DO IN THIS ENVIRONMENT?
A. Like the U.S. economy, the European economy was growing over the period,
despite the weak stock market. And cyclicals, such as chemical and
automobile companies, benefited from increased demand for their products.
However, early this fall, I thought their stock prices had begun to more
fully reflect their earnings recovery. Around this time, I started to
shift more of the fund into banks and financial stocks, which had been
battered by the market and were very cheap.
Q. WHICH EUROPEAN FINANCIALS LOOKED GOOD?
A. Deutsche Bank, Germany's pre-eminent bank, had a tough year, but looks
good going forward. Its stock price was low, and it took cost-cutting steps
that I think will improve its performance. In addition, if anyone is going
to benefit from the longer-term monetary trends in Eastern Europe, such as
the growth in loans and investment, brokerage and underwriting services, it
will be Deutsche Bank. CS Holding, a Swiss-based bank, was also an
attractive diversified financial services company.
Q. JOHN, LET'S TALK ABOUT DERIVATIVES. HOW DOES YOUR FUND USE THEM?
A. As I've noted in previous reports, the fund has the authority to use
derivatives to manage its investments more efficiently. I currently have an
investment roughly equivalent to about 6% of the fund in forward foreign
currency contracts to hedge the fund against currency volatility in both
Japan and Europe. I should point out that this is one of the fund's first
times hedging the highly volatile yen. Since the yen has appreciated
against the dollar over the period, my currency contracts have had a
somewhat negative impact on the fund.
Q. HOW DO YOU THINK THESE MARKETS LOOK GOING FORWARD?
A. I think Japan looks great for 1995 since I expect the economy to
continue improving. This is especially true in the short term because the
Japanese market often turns in its best performance in the late fall and
winter. I'm also fairly optimistic about European markets because I expect
- - barring any major interest rate increase in the United States - that the
stock and bond markets will begin recovering in 1995. However, as far as
Southeast Asia goes, I remain cautious. That's because all the market
optimists have jumped back on the bandwagon, and I think there's reason to
be concerned that stock prices could become overly inflated. This could
lead to another correction in this region like we saw early in 1994.
However, I should note that this could also result in more attractive
prices for Southeast Asian stocks.
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 October 31, more
than $653 million
MANAGER: John Hickling,
since February 1993; manager
Fidelity Overseas, since
January 1993; VIP: Overseas
since January 1993;
previously managed the
Fidelity Japan, Fidelity Europe,
International Growth and
Income, International
Opportunities (now Emerging
Markets), and Pacific Basin
funds; joined Fidelity in 1982
(checkmark)
JOHN HICKLING ON STOCK PICKING:
"I tend to choose the fund's
investments on a
stock-by-stock basis. This
summer I had the opportunity
to discover a number of
interesting stocks in Europe
during an extended visit to
Fidelity's London office.
Although I am frequently
overseas for company visits,
this trip gave me the
opportunity to spend more
time with our London-based
analysts as well as with a
number of smaller
companies, which the fund
ended up investing in. While
these companies didn't make
up large positions in the fund,
they have turned out to be
very profitable investments.
" Some of the standout
companies I found were Arjo
Wiggins, a U.K. paper
distributor and manufacturer;
Duerr, a German machinery
company; and Rhone
Poulenc, a chemical company
that I feel is just beginning to
turn in its strongest
performance. Food retailers
based in the United Kingdom,
such as Tesco and Sainsbury,
were also good values
because they were just plain
unfairly oversold and cheap."
(solid bullet) Over the period, the fund
invested in several European oil
companies, including the French
company Total.
(solid bullet) At the end of October 31,
1994, the fund held 17.9% in
cash and short-term
investments. This compares
to 20.6% one year ago.
INVESTMENT CHANGES
TOP FIVE STOCKS AS OF OCTOBER 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Deutsche Bank AG
(Germany, Finance) 1.4 0.4
Total Compagnie Francaise des
Petroles Class B (France, 1.1 1.1
Energy)
Nomura Securities Co. Ltd.
(Japan, 1.0 0.6
Insurance)
Adia SA (Bearer)
(Switzerland, Services) 1.0 1.0
Alusuisse Lonza (Reg.)
(Switzerland, Basic Industries) 1.0 1.1
TOP FIVE INDUSTRIES AS OF OCTOBER 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Finance 18.6 12.0
Basic Industries 10.4 14.6
Durables 9.8 14.5
Technology 5.7 8.5
Retail & Wholesale 4.7 3.9
TOP FIVE COUNTRIES AS OF OCTOBER 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Japan 24.5 23.9
United Kingdom 8.9 8.0
France 8.2 9.7
Germany 7.5 9.1
Switzerland 6.3 5.9
ASSET ALLOCATION
AS OF OCTOBER 31, 1994 AS OF APRIL 30, 1994
Row: 1, Col: 1, Value: 17.9
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 41.5
Row: 1, Col: 4, Value: 40.0
Stocks 88.2%
Bonds 0.9%
Short-term
and other
investments 10.9%
Stocks 81.5%
Bonds 0.6%
Short-term
and other
investments 17.9%
Row: 1, Col: 1, Value: 10.9
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 48.2
Row: 1, Col: 4, Value: 40.0
INVESTMENTS OCTOBER 31, 1994
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 79.8%
SHARES VALUE (NOTE 1)
ARGENTINA - 0.5%
Buenos Aires Embotelladora SA sponsored ADR 21,000 $ 805,875 11942420
Perez Companc Class B (a) 137,900 744,921 71399723
Telecom Argentina Stet France Telecom SA 126,000 766,348 90899992
YPF Sociedad Anonima sponsored ADR representing
Class D shares 42,100 1,015,663 98424510
3,332,807
AUSTRALIA - 1.6%
Ampolex Ltd. Ord. 330,000 1,000,039 03212792
Brambles Industries Ltd. 238,150 2,384,422 10599010
FAI Insurance Ltd. Ord. 1,410,500 806,693 30239330
Lend Lease Corp. Ltd. 120,000 1,479,558 52599292
Pioneer International Ltd. 485,000 1,174,364 72371110
TNT Ltd. (a) 1,300,000 2,327,039 93599292
Westpac Banking Corp. 420,000 1,413,157 96121410
10,585,272
AUSTRIA - 1.2%
Mayr Melnhof Karton AG (a) 17,800 964,701 57847192
OEMV AG 44,800 4,087,506 67399592
Steyr-Daimler Puch AG (a) 62,500 1,160,516 86099322
VA Technologie AG (a)(c) 13,100 1,347,104 96399A23
7,559,827
BELGIUM - 1.6%
Bekaert SA 1,010 782,452 07799A22
Delhaize Freres & Cie Le Lion SA 80,300 3,226,026 24650010
Petrofina SA 3,500 1,078,926 71648510
Petrofina SA (warrants) (a) 175 3,815 71648592
Solvay & Cie SA 10,300 5,114,184 83425810
10,205,403
BERMUDA - 0.0%
Consolidated Electric Power Asia Ltd. sponsored ADR (a)(c) 10,700 246,100
20855210
CANADA - 0.1%
Abitibi Price, Inc. (a) 7,400 99,106 00368010
Midland Walwyn Inc. 81,200 479,994 59780110
579,100
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CHILE - 0.0%
Vina Concha y Toro SA sponsored ADR (a) 13,600 $ 243,100 92719110
FINLAND - 0.1%
Valmet Corp. OY Ord. 33,100 719,409 92029991
FRANCE - 8.1%
Accor SA 32,841 3,898,931 00439991
BNP CI Ord. 96,780 4,793,398 05599996
Carnaudmetalbox SA 30,000 1,070,825 20999092
Club Mediterranee SA Ord. 22,000 1,883,027 18947230
Compagnie Bancaire Ord. 8,700 848,616 20427310
Credit Lyonnais 11,800 1,066,162 22799392
Elf Aquitaine 71,988 5,322,342 28627199
Eramet SA (a)(c) 4,000 292,237 29499H23
GAN (Groupe Des Assur Natl.) 39,400 2,185,699 36599792
Havas SA 25,700 2,141,791 00822292
Imetal SA Ord. 120 12,824 45099910
Lafarge Coppee SA 57,400 4,553,856 50586310
Pechiney International SA 24,300 752,160 71099094
Peugeot SA Ord. (a) 20,500 3,071,116 71682510
Rhone Poulenc SA Class A 250,000 6,174,100 76242695
Societe Generale Class A 23,500 2,652,968 83357799
Total SA Class B 109,700 7,117,231 20434510
Unibail 15,400 1,316,623 90499592
Valeo SA 29,900 1,623,832 91899010
Vallourec SA (a) 30,000 1,629,263 92017610
52,407,001
GERMANY - 6.8%
Allianz Versich Holdings Ord. (Reg.) 1,100 1,687,581 01882495
BASF AG 14,300 3,026,893 05526230
BMW AG 8,690 4,478,637 05528310
Continental Gummi-Werke AG 15,300 2,250,613 21199010
Deutsche Bank AG 17,900 8,820,549 25152592
Duerr Beteiligungs AG 5,000 2,144,638 26499292
Gildemeister AG (a) 9,003 850,159 37550099
Gildemeister AG (RFD) (rights) (a) 7,202 491,686 37550092
Hoechst AG Ord. 27,600 6,044,010 43439010
Kolbenschmidt AG (a) 12,500 1,620,948 50799792
MAN AG ord. 9,900 2,682,793 56154210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GERMANY - CONTINUED
Schmalbach-Lubeca AG 4,300 $ 1,166,683 80899792
Thyssen AG Ord. 24,500 4,680,864 88629110
Veba Vereinigte Elektrizitaets & Bergwerks AG Ord. 13,800 4,625,237
92239110
44,571,291
HONG KONG - 1.5%
Amoy Properties Ltd. 896,000 1,113,190 03199192
Dickson Concepts International Ltd. 1,085,000 842,503 25399210
HSBC Holdings PLC 200,000 2,368,318 42199192
Hong Kong Land Holdings Ltd. 969,000 2,483,004 43858292
Hopewell Holdings Ltd. 978,000 1,006,225 44099999
Jardine Matheson Holdings Ltd. Ord. 228,000 1,895,820 47111510
9,709,060
INDIA - 0.2%
ITC Ltd. (warrants) (a)(c) 3,000 24,750 45031811
Reliance Industries Ltd. 51,900 1,310,475 75947094
1,335,225
INDONESIA - 0.6%
Bank International Indonesia PT Ord. 168,000 568,737 06199B92
Jakarta International Hotels & Development Ord. 764,000 1,038,077
47399693
Matahari Putra Prima PT (For. Reg.) 210,000 444,931 57699C92
Sampoerna, Hanjaya Mandala (For. Reg.) 416,250 2,013,072 82299893
4,064,817
IRELAND - 0.8%
Bank of Ireland U.S. Holdings, Inc. 267,000 1,240,661 06278793
Fyffes PLC 725,000 1,186,209 34999G22
Independent News PLC 255,800 1,171,876 45399E92
Smurfit (Jefferson) Group PLC 183,400 1,120,161 84699793
Smurfit (Jefferson) Group PLC (rights) (a) 18,340 10,502 84699794
Waterford Wedgwood PLC Unit (a) 662,400 617,761 94151393
5,347,170
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - 1.6%
Alitalia Linee Aeree Italiane Class A (a) 903,300 $ 558,501 01608910
Assicurazioni Generali Spa 100,000 2,498,992 04542910
Editoriale L'Espresso Spa 152,000 435,275 28199K22
Istituto Mobiliare Italiano 152,900 1,003,677 45777M92
Istituto Nazionale Delle Assicurazionl Spa (a) 600,000 868,860 46523492
Montedison Spa Ord. 2,900,000 2,387,570 61237610
Simint Spa Priv. (a) 398,996 57,986 83799498
Telecom Italia Ord. 1,050,000 2,872,895 87999R22
10,683,756
JAPAN - 24.5%
Acom Co. Ltd. (a) 12,000 440,844 00499M22
Ado Electronic Industrial Co. Ltd. 15,000 510,810 00699992
Advantest Corp. 48,000 1,684,124 00799010
Aida Engineering Ltd. Ord. 17,000 155,080 00871210
Akita Bank Ltd. 44,000 367,329 00999692
Alps Electric Co. Ltd. 110,000 1,487,023 02199292
Amada Metrecs Co. Ltd. 16,000 298,849 02299292
Amadasonoike Co. Ltd. 162,000 1,462,773 02499492
Aoyama Trading Co. Ltd. Ord. 52,000 1,599,092 03799092
Autobacs Seven Co. Ltd. 16,800 2,115,061 05299392
Bridgestone Corp. 200,000 3,302,204 10844110
Canon, Inc. 235,000 4,365,099 13780199
Catena Corp. 28,000 690,573 14899792
Daicel Chemical Industries Co. Ltd. 162,000 987,999 23398110
East Japan Railway Co. Ord. (a) 200 996,853 27399722
Fanuc Ltd. 17,100 829,369 30729599
Fujitsu Ltd. 257,000 2,943,812 35959010
Futaba Industrial Co. Ltd. 69,000 1,488,158 38299192
Hachijuni Bank Ltd. 28,000 352,510 58799292
Hankyu Department Stores, Inc. 78,000 941,747 41099192
Hanshin Department Store Ltd. 49,000 396,935 41199292
Higo Bank Ltd. Ord. 40,000 338,476 43299192
Hitachi Ltd. 445,000 4,638,048 43357810
Honda Motor Co. Ltd. 147,000 2,563,645 43812810
Ishihara Sangyo Kaisha Ltd. (a) 250,000 1,117,073 46427899
Izumi Co. Ord. 75,000 1,934,885 46399292
Japan Airlines Co. Ltd. 300,000 2,321,862 47103420
Joshin Denki Co. Ltd. Ord. 65,000 838,450 48199999
Kawasaki Steel Corp. 506,000 2,370,610 48636810
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Komatsu Limited Ord. 320,000 $ 3,038,026 50045899
Konica Corp. 290,000 2,250,452 50046M10
Kyocera Corp. 38,000 2,893,968 50155610
Marubeni Corp. 267,000 1,542,956 57381010
Marukyo Corp. 16,000 566,328 57899792
Matsushita Electric Industrial Co. Ltd. 75,000 1,246,066 57687910
Minebea Co. Ltd. 300,000 2,603,580 60299392
Mitsubishi Chemical Industries Ltd. (a) 336,700 1,987,436 60799D22
Mitsubishi Corp. 89,000 1,212,322 60676910
Mitsubishi Estate, Co. Ltd. 59,000 694,082 60678310
Mitsubishi Heavy Industries Ltd. 118,000 960,755 60699310
Mitsubishi Trust & Banking Corp. 224,000 3,467,314 60699410
Mitsui Trust and Banking 103,000 1,190,444 60684699
Mitsui Petrochemical Industries Ltd. 238,000 2,244,797 60691110
Mitsui OSK Lines Ltd. 167,000 732,419 60799792
Murata Manufacturing Co. Ltd. Ord. 34,100 1,393,488 62699110
Nichido Fire & Marine Insurance Co. Ltd. 200,000 1,752,232 65399920
Nikko Securities Co. Ltd. 183,000 2,152,830 65399010
Nintendo Co. Ltd. Ord. 32,000 1,796,398 65443999
Nippon Shinpan Co. Ltd. 52,000 408,895 65461710
Nippon Telegraph & Telephone Corp. Ord. 204 1,905,165 65462492
Nippon Yusen Kabushiki Kaisha 118,000 801,239 65463310
Nippon Zeon Co. Ltd. (a) 109,000 665,890 66499692
Nissan Motor Co. Ltd. Ord. 439,000 3,746,483 65474491
Nisshinbo Industries 198,000 2,308,860 65411310
Nitto Denko Corp. 51,000 878,902 65480230
Nomura Securities Co. Ltd. 310,000 6,493,989 65536110
Oji Paper Co. Ltd. 155,000 1,727,466 67811810
Omron Corp. 70,000 1,264,124 68215110
Pioneer Electronic Corp. 144,000 3,759,558 72365710
Rohm Co. Ltd. 60,000 2,643,826 77536110
Sankyo Co. Ltd. 180,000 4,680,873 80029710
Santen Pharmaceutical Co. Ord. 2,000 53,042 80299110
Sanwa Bank Ltd. 32,000 670,347 80399410
Seino Transpotation Co. Ltd. 73,000 1,438,832 81605210
Sekisui House Ltd. 118,000 1,339,456 81607810
Sharp Corp. 74,000 1,382,179 81989991
Sho Bond Corp. Ord. 29,000 808,008 82699692
Sony Corp. 43,000 2,622,466 83569999
Sumitomo Marine and Fire Insurance Co. Ltd. 210,000 1,900,521 94599392
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Sumitomo Realty & Development Co. Ltd. 375,000 $ 2,399,258 86562310
Sumitomo Rubber Industries Ltd. 105,000 1,094,371 86699892
Sumitomo Trust & Banking Co. Ltd. 210,000 3,055,569 86599310
TDK Corp. 43,000 2,112,172 87235110
Tadano Ltd. 9,000 89,995 87357899
Takashimaya Co. Ltd. 100,000 1,413,756 87346710
Takeda Chemical Industries Ltd. 256,000 3,170,115 87405810
Tanabe Seiyaku Co. Ltd. 3,000 25,386 87599010
Tokio Marine & Fire Insurance Co. Ltd. (The) 513,000 6,087,920 88909099
Tokyo Electron Ltd. 37,000 1,237,088 89499999
Tokyo Steel Manufacturing Co. Ltd. 91,100 2,284,434 88998799
Tokyo Style Co. Ltd. 110,000 1,907,023 88999410
Toshiba Corp. 596,000 4,698,870 89149310
Toyobo Co. 370,000 1,630,361 90899392
Toyota Motor Corp. 217,000 4,792,115 89399999
Tsugami Corp. 96,000 627,088 89853699
Yamanouchi Pharmaceutical Co. Ltd. 173,000 3,409,835 98414010
Yoshinoya D&C Co. Ltd. Ord. 30 371,498 98999192
159,172,161
LUXEMBOURG - 0.1%
Quilmes Industries, SA 26,051 683,839 74899692
MALAYSIA - 1.1%
Aokam Perdana BHD 29,000 239,374 01899792
Hong Leong Credit BHD 31,000 184,333 44699492
Kuala Lumpar Industries Holdings BHD (a) 290,000 553,625 49799B92
Magnum Corp. BHD 405,000 911,003 55999392
Malaysan Banking 67,000 456,059 56090499
Resorts World BHD 218,000 1,381,555 76199592
Sime Darby BHD 359,000 990,104 82861792
Telekom Malaysia BHD 277,000 2,243,091 94099892
Time Engineering BHD 119,000 353,800 93099592
7,312,944
MEXICO - 1.0%
Cemex SA, Series B 171,900 1,585,001 15299293
Cifra SA Class C 711,200 1,915,567 17178594
Consorcio G Group Dina SA ADR (a) 31,000 399,125 21030610
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEXICO - CONTINUED
Grupo Dina Sponsored ADR, Series L (a) 11,173 $ 113,127 21030620
Grupo Financiero Bancomer SA de CV sponsored ADR,
Series C (c) 35,000 805,000 40048610
Telefonos de Mexico SA sponsored ADR representing
shares Ord. Class L 29,200 1,609,650 87940378
6,427,470
NETHERLANDS - 4.1%
AKZO NV Ord. 22,000 2,779,209 01019910
DSM NV 32,600 2,824,186 23332H92
Frans Maas Groep NV 25,200 801,472 35399322
Hoogovens en Staalfabrieken NV (a) 36,800 1,716,300 43888410
Internationale Nederlanden Groep NV 95,832 4,486,527 46099892
KLM Royal Dutch Airlines Ord. 161,100 4,483,231 48251620
Koninklijke PPT Nederland 79,400 2,529,983 72699422
Koninklijke PTT Nederland (c) 37,800 1,204,450 72699423
Philips Electronics (a) 116,900 3,870,539 71833799
Pirelli Tyre Holdings NV Ord. 265,500 1,843,202 72499092
26,539,099
NEW ZEALAND - 0.3%
Fletcher Challenge Ltd. (Reg.) 765,800 2,067,361 33999592
NORWAY - 1.7%
08399010Bergesen Group:
Class A 40,000 868,701Class B 145,000 3,171,217 08399011
Den Norske Bank Class A Free shares (a) 100,500 261,298 25299792
Norsk Hydro AS 44,450 1,791,324 65653150
Norsk Hydro AS ADR 30,000 1,207,500 65653160
Norske Skogindustrier AS Class A Free shares 5,170 143,117 66499594
Orkla AS Class B (non-vtg.) 26,100 748,451 39299192
Saga Petroleum AS Class B 90,700 1,033,440 84099794
Unitor AS 100,000 1,804,695 91699392
11,029,743
PAKISTAN - 0.1%
Pakistan Telecommunications Voucher GDR (a)(c) 4,300 709,500 69584910
PHILIPPINES - 0.1%
Filinvest Land, Inc. ORD (a) 1,000,500 452,396 31699J22
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SINGAPORE - 0.5%
Kim Eng Holdings Ltd. 1,386,000 $ 1,727,774 49499D92
Overseas Union Bank Ltd. (For. Reg.) 135,000 772,479 68990192
Van Der Horst Ltd. (a) 210,000 944,141 92099C22
3,444,394
SPAIN - 2.9%
Banco Bilbao Vizcaya SA Ord. (Reg.) 57,500 1,510,380 05945891
Banco Intercontinental Espanol 5,000 461,477 24699592
Banco Santander SA (RFD) 9,587 375,443 05957494
Corporacion Mapfrecia International de Reaseguros SA (Reg.) 79,450
3,507,853 16899192
Iberdrola SA 175,000 1,152,695 45499892
Repsol SA Ord. 46,300 1,480,491 76026T10
Tabacalera SA, Series A 38,200 1,027,816 87399410
Telefonica de Espana SA Ord. 423,600 5,732,549 87938210
Union Electrica Fenosa SA 538,300 2,475,534 90659510
Uralita SA (a) 114,000 1,192,335 91799310
18,916,573
SWEDEN - 2.5%
Electrolux 61,500 3,209,010 01019810
Frontline (a) 54,000 158,423 35999F22
Investor AB Class B Free shares 104,300 2,622,781 46199A92
Marieberg Tidnings AB Class A (a) 39,300 971,787 56799392
SKF AB Ord. (a) 146,200 2,675,616 78437530
Skandia International Holding 15,000 274,516 83055510
Skandinaviska Enskilada Banken Class A Free shares 333,900 2,192,397
88099222
Volvo AB Class B 219,500 4,354,399 92885630
16,458,929
SWITZERLAND - 6.3%
Adia SA (Bearer) 35,700 6,307,521 00699793
Alusuisse-Lonza Holdings AG (Reg.) 12,633 6,293,878 02239994
Ascom Holding AG (Bearer) (a) 705 855,651 04364492
Baloise Holding:
(Reg.) (a) 2,845 5,354,895 05899195
(warrants) 980 12,869 05899196
CIBA-GEIGY AG (Reg.) 6,700 3,903,223 17199492
C. S. Holding:
(Bearer) (warrants) (a) 7,000 58,496 15099427
(Bearer) (a) 12,900 5,636,371 17599792
Fischer (Georg) AG (Reg.) 14,100 3,029,845 33771192
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Globus Magazine (Part. Cert.) 1,875 $ 1,246,021 37957792
Holderbank Financiere Glarus AG:
(warrants) (a) 12,760 17,772 43479595
(Bearer) 2,552 1,968,076 43479593
Oerlikon-Buhrle Holding Ltd. (Reg.) (a) 5,900 610,426 67199092
Swiss Bank Corp. (Bearer) (a) 18,800 5,416,315 87083610
40,711,359
THAILAND - 1.0%
Bank of Asia PCL (For. Reg.) 155,900 425,358 06199D22
Krung Thai Bank (For. Reg.) 801,100 2,732,152 50599293
Ruam Pattana Fund II (For. Reg.) 1,700,000 1,210,723 76999523
Siam City Bank Ltd. (For. Reg.) 1,689,200 2,389,137 81199593
6,757,370
TURKEY - 0.0%
Cimentas AS 200,000 128,782 17199G22
Tofas Turkey Otomobil Fabrikasi AS ADR (c) 44,600 156,100 90011010
284,882
UNITED KINGDOM - 8.9%
Amstrad PLC 174,600 79,988 03299110
Argyll Group PLC Ord. 323,800 1,382,739 04099210
Arjo Wiggins Appleton, PLC 336,700 1,476,389 04199592
Avon Rubber PLC 110,000 959,275 05399010
BET PLC Ord. 725,400 1,305,553 05538H10
Barclays PLC Ord. 489,800 4,664,085 06738E10
Bass PLC Ord. 298,600 2,721,249 06990492
Boots Co. PLC (the) 216,200 1,874,800 09999410
British Gas PLC Ord. 156,700 751,207 11090199
British Steel PLC Ord. 449,300 1,178,033 11101510
British Vita PLC Ord. 371,300 1,439,783 11199192
De La Rue PLC 153,600 2,462,864 24642110
Dixons Group PLC 632,300 2,027,691 25587592
Electrocomponents PLC 122,300 922,466 28599192
English China Clay PLC 422,583 2,509,813 29321792
Forte PLC 1,091,100 4,097,037 34999592
General Electric Co. PLC Ord. 400,000 1,806,308 36963940
Great Universal Stores PLC Ord Class A 260,000 2,382,234 39133420
Hanson Trust PLC Ord. 324,700 1,227,207 41135210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Ladbroke Group PLC Ord. 660,400 $ 1,642,382 50572799
Lloyds Abbey Life PLC 372,500 2,133,132 53801099
London International Group PLC 1,955,800 2,767,985 54183310
Morrison (WM) Supermarkets PLC 131,300 285,568 61899894
National Westminster Bank PLC Ord. 445,400 3,665,566 63853930
Royal Insurance Holdings PLC 500,000 2,392,870 78074910
Sainsbury (J) PLC Ord. 351,900 2,297,288 78710310
Shanks & Mcewan Group PLC 554,700 834,968 81999294
Spring Ram Corp. PLC 706,400 508,544 83899492
Sturge Holdings PLC 52,700 63,807 86399822
Tesco PLC Ord. (a) 697,100 2,680,315 88157510
Transport Development Group PLC 264,700 939,804 89399610
Vodafone Group PLC 300,000 1,039,365 92857T92
Whitbread & Co. PLC Class A 180,000 1,681,636 96341499
58,201,951
TOTAL COMMON STOCKS
(Cost $476,796,787) 520,759,309
PREFERRED STOCKS - 1.7%
NONCONVERTIBLE PREFERRED STOCKS - 1.7%
AUSTRIA - 0.1%
Creditanstaldt Bankverein 10,500 626,467 22539210
GERMANY - 0.7%
FAG Kugelfischer Georg Schaef 22,000 3,262,511 50105492
Fuchs Petrolub AG Oel & Chemie 3,730 434,081 36499F22
Porsche AG Ord. (a) 2,800 1,195,411 73380110
4,892,003
ITALY - 0.9%
Banco Ambro Veneto 799,600 1,223,468 06399592
Fiat Spa (a) 894,100 2,166,440 31562120
SAI Sta Assicur Industriale 156,700 1,061,970 78399192
Stet Societa Finanziaria Telefonica Spa 571,000 1,414,401 85982592
5,866,279
TOTAL NONCONVERTIBLE PREFERRED STOCKS
(Cost $9,879,374) 11,384,749
GOVERNMENT OBLIGATIONS - 0.6%
MOODY'S PRINCIPAL VALUE
RATINGS (F) AMOUNT (B) (NOTE 1)
(UNAUDITED)
ARGENTINA - 0.2%
Argentina Republic BOCON 5.125%,
4/1/01 (d) B1 $ 1,500,041 $ 1,068,577 039995AF
BRAZIL - 0.2%
Brazil Federative Republic IDU euro 6.0625%,
1/1/01 (d) B2 XEU 1,274,000 1,039,903 1057569E
DENMARK - 0.1%
Danish Government Bullet 7%,
12/15/04 Aa1 DKK 6,250,000 924,471 249998AV
FRANCE - 0.1%
French Government Strips
0%, 4/25/23 (e) Aaa FRF 42,000,000 680,064 351996BL
TOTAL GOVERNMENT OBLIGATIONS
(Cost $4,051,341) 3,713,015
REPURCHASE AGREEMENTS - 17.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 4.78%
dated 10/31/94 due 11/1/94 $ 116,879,517 116,864,000 99799N9L
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $607,591,502) $ 652,721,073
FORWARD FOREIGN CURRENCY CONTRACTS
SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO SELL
9,368,400 CHF 11/9/94 $ 7,036,107 $ (421,921)
3,874,719 NLG 12/13/94 2,232,276 (67,665)
86,233,871 FRF 1/27/95 16,908,271 152,117
1,689,223,400 JPY 1/11/95 17,080,633 (468,281)
TOTAL CONTRACTS TO SELL
(Receivable amount $44,063,037) $ 43,257,287 (805,750)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 6.6%
CURRENCY ABBREVIATIONS
NLG - Dutch guilder
XEU - European currency unit
FRF - French franc
JPY - Japanese yen
CHF - Swiss franc
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 $4,785,241 or 0.7% 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) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
INCOME TAX INFORMATION
At October 31, 1994 the aggregate cost of investment securities for income
tax purposes was $607,727,508. Net unrealized appreciation aggregated
$44,993,565, of which $58,360,966 related to appreciated investment
securities and $13,367,401related to depreciated investment securities.
The fund hereby designates $327,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
Aerospace & Defense 0.1%
Basic Industries - 10.4%
Chemicals & Plastics 4.8
Iron & Steel 2.5
Metals & Mining 1.4
Packaging & Containers 0.6
Paper & Forest Products 1.1
Conglomerates 0.2
Construction & Real Estate - 3.7%
Building Materials 1.5
Construction 0.9
Engineering 0.2
Real Estate 0.9
Real Estate Investment Trusts 0.2
Durables - 9.8%
Autos, Tires, & Accessories 6.8
Consumer Durables 0.1
Consumer Electronics 2.0
Textiles and Apparel 0.9
Energy - 4.3%
Oil & Gas 4.3
Finance - 18.6%
Banks 10.3
Closed End Investment Company 0.2
Credit & Other Finance 0.7
Insurance 5.7
Securities Industry 1.7
Government Obligations 0.6
Health - 3.3 %
Drugs & Pharmaceuticals 3.3
Holding Companies 0.7
Industrial Machinery & Equipment - 4.2%
Electrical Equipment 1.4
Industrial Machinery & Equipment 2.7
Pollution Control 0.1
Media & Leisure - 3.1%
Leisure Durables & Toys 0.3%
Lodging & Gaming 2.3
Restaurants 0.1
Publishing 0.4
Nondurables - 2.3%
Beverages 0.9
Foods 0.4
Household Products 0.5
Tobacco 0.5
Repurchase Agreements 17.9
Retail & Wholesale - 4.7%
General Merchandise Stores 1.2
Grocery Stores 2.1
Retail, Miscellaneous 1.2
Trading Companies 0.2
Services - 2.4%
Advertising 0.3
Leasing & Rental 0.2
Services 1.9
Technology - 5.7%
Computer Equipment 0.1
Computers & Office Equipment 1.2
Electronic Instruments 0.3
Electronics 3.8
Photographic Equipment 0.3
Transportation - 3.4 %
Air Transportation 1.5
Railroads 0.2
Shipping 0.9
Trucking & Freight 0.8
Utilities - 4.6%
Cellular 0.2
Electric Utility 1.3
Gas 0.1
Telephone Services 3.0
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1994
ASSETS
Investment in securities, at value (including repurchase $ 652,721,073
agreements of $116,864,000) (cost $607,591,502) -
See accompanying schedule
Cash 245
Receivable for investments sold 800,303
Unrealized appreciation on foreign currency contracts 152,117
Receivable for fund shares sold 6,370,758
Dividends receivable 1,402,539
Interest receivable 152,311
TOTAL ASSETS 661,599,346
LIABILITIES
Payable for investments purchased $ 4,485,245
Unrealized depreciation on foreign currency contracts 957,867
Payable for fund shares redeemed 1,022,754
Accrued management fee 410,875
Distribution fees payable 337,610
Other payables and accrued expenses 611,425
TOTAL LIABILITIES 7,825,776
NET ASSETS $ 653,773,570
Net Assets consist of:
Paid in capital $ 604,247,763
Undistributed net investment income 348,359
Accumulated undistributed net realized gain (loss) on 4,825,458
investments and foreign currency transactions
Net unrealized appreciation (depreciation) on 44,351,990
investments and assets and liabilities in foreign
currencies
NET ASSETS, for 46,514,118 shares outstanding $ 653,773,570
NET ASSET VALUE and redemption price per share $14.06
($653,773,570 (divided by) 46,514,118 shares)
Maximum offering price per share (100/95.25 of $14.06) $14.76
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1994
INVESTMENT INCOME $ 7,466,464
Dividends
Interest 3,027,209
10,493,673
Less foreign taxes withheld (1,189,031)
TOTAL INCOME 9,304,642
EXPENSES
Management fee 3,302,663
Basic fee
Performance adjustment 133,032
Transfer agent fees 1,830,174
Distribution fees 2,781,822
Accounting fees and expenses 251,241
Non-interested trustees' compensation 2,187
Custodian fees and expenses 399,862
Registration fees 265,051
Audit 52,129
Legal 9,842
Interest 300
Reports to shareholders 75,256
Miscellaneous 3,696
TOTAL EXPENSES 9,107,255
NET INVESTMENT INCOME 197,387
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 6,504,241
Foreign currency transactions (5,328,117) 1,176,124
Change in net unrealized appreciation (depreciation) on:
Investment securities 27,730,111
Assets and liabilities in foreign currencies (1,160,484) 26,569,627
NET GAIN (LOSS) 27,745,751
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 27,943,138
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ 197,387 $ (116,985)
Net investment income (loss)
Net realized gain (loss) 1,176,124 702,509
Change in net unrealized appreciation (depreciation) 26,569,627 18,732,670
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 27,943,138 19,318,194
FROM OPERATIONS
Distributions to shareholders: - (148,613)
From net investment income
From net realized gain (363,877) (59,260)
TOTAL DISTRIBUTIONS (363,877) (207,873)
Share transactions 540,291,103 202,379,717
Net proceeds from sales of shares
Reinvestment of distributions 300,557 165,045
Cost of shares redeemed (135,767,660) (18,936,702)
Net increase (decrease) in net assets resulting from 404,824,000 183,608,060
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS 432,403,261 202,718,381
NET ASSETS
Beginning of period 221,370,309 18,651,928
End of period (including undistributed net investment $ 653,773,570 $ 221,370,309
income (loss) of $348,359 and $(208,608),
respectively)
OTHER INFORMATION
Shares
Sold 39,367,897 16,705,346
Issued in reinvestment of distributions 23,685 18,176
Redeemed (9,994,332) (1,663,185)
Net increase (decrease) 29,397,250 15,060,337
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, APRIL 23, 1990
(COMMENCEMENT
OF
OPERATIONS) TO
OCTOBER 31,
1994 1993 1992 1991 1990
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 .01 .03 .05 .14 .05
income
Net realized and 1.14 3.93 (.62) .17 (.50)
unrealized gain
(loss)
Total from 1.15 3.96 (.57) .31 (.45)
investment
operations
Less Distributions - (.07) (.14) (.07) -
From net investment
income
From net realized (.02) (.03)E - (.01)E -
gain
Total distributions (.02) (.10) (.14) (.08) -
Net asset value, end $ 14.06 $ 12.93 $ 9.07 $ 9.78 $ 9.55
of period
TOTAL RETURNC 8.91% 44.13% (5.88) 3.25% (4.50)%B
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 653,774 $ 221,370 $ 18,652 $ 19,091 $ 18,161
period (000 omitted)
Ratio of expenses to 2.12% 2.38% 2.64% 2.85% 3.07%A, D
average net assets
Ratio of net .05% (.18) .48% 1.48% 1.45%A
investment income %
to average net
assets
Portfolio turnover rate 34% 42% 168% 226% 137%A
</TABLE>
1. ANNUALIZED
2. THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
3. TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS
OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
4. LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
5. INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN CURRENCY
RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Advisor Overseas Fund - Class A (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 of their purchase date are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the 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 prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Effective November 1, 1993, the fund adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts, disposition
of foreign currencies, currency gains and losses realized between the trade
and settlement dates on securities transactions, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. Further, as permitted under the SOP, the effects of
changes in foreign currency exchange rates on investments in securities are
not segregated in the Statement of Operations from the effects of changes
in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment in securities.
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
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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 uncertain.
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.
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 and may
affect net investment income per share. 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 the beginning of the fiscal year 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, as reflected in the schedule of investments under the
caption "Forward Foreign Currency Contracts," 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.
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
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 affiliated
entities of FMR, may transfer uninvested cash balances into one or more
joint trading accounts. These balances are invested in one or more
repurchase agreements that mature in 60 days or less from the date of
purchase, and are collateralized by U.S. Treasury or Federal Agency
obligations.
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 $493,067,903 and $161,693,722 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 and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2850% to .5200% for the period November 1, 1993 to July
31, 1994 and .2700% to .5200% for the period August 1, 1994 to October 31,
1994. In the event that these rates were lower than the contractual rates
in effect during those periods, FMR voluntarily implemented the above
rates, as they resulted in the same or a lower management fee. The annual
individual fund fee rate is .45%. The basic fee is subject to a performance
adjustment (up to a maximum of (plus/minus) .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 .80% of average net assets after the
performance adjustment.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES -
CONTINUED
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 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 $2,781,822 of which
$2,139,864 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. No payments were made under the Plan during
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 $9,596,831 of which
$8,160,066 was paid to securities dealers, banks and other financial
institutions.
TRANSFER AGENT FEES. 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. The fund pays fees based
on the type, size, number of accounts and the number of transactions made
by shareholders.
ACCOUNTING FEES. Fidelity Service Company, 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 $685 for the period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
5. BANK BORROWINGS -
CONTINUED
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%.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VII and the Shareholders of
Fidelity Advisor Overseas Fund - Class A:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for Moody's and Standard &
Poor's ratings), 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 - Class
A (a fund of Fidelity Advisor Series VII) at October 31, 1994, 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 are the responsibility of the 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, 1994 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 LLP
Boston, Massachusetts
December 6, 1994
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Overseas Fund voted to pay on
December 5, 1994, to shareholders of record at the opening of business on
December 2, 1994, a distribution of $.10 derived from capital gains
realized from sales of portfolio securities.
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
GROWTH FUNDS
Fidelity Advisor Overseas Fund
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Global Resources Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Portfolio Income
Fidelity Advisor Income & Growth Fund
INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income 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)
(registered trademark)
