(2_FIDELITY_LOGOS)(REGISTERED TRADEMARK)
FIDELITY ADVISOR
INTERNATIONAL
CAPITAL APPRECIATION
FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
ANNUAL REPORT
OCTOBER 31, 1998
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 12 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 15 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 16 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 33 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 41 THE AUDITORS' OPINION.
ACCOUNTANTS
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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
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
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories 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. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND - CLASS A
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). If Fidelity had not reimbursed certain class expenses, the
total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED OCTOBER 31, 1998 LIFE OF
FUND
FIDELITY ADV INTL CAP APP - CL A 0.70%
FIDELITY ADV INTL CAP APP - CL A -5.09%
(INCL. 5.75% SALES CHARGE)
MSCI WORLD EX US 3.21%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
November 3, 1997. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class A's returns to the performance
of the Morgan Stanley Capital International AC World Index Free ex USA
(MSCI World ex US) - an unmanaged, market capitalization weighted
index that is designed to represent the performance of developed stock
markets, excluding the United States, throughout the world. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' cumulative return
and show you what would have happened if Class A shares had performed
at a constant rate each year. These numbers will be reported once the
fund is a year old.
$10,000 OVER LIFE OF FUND
FA Intl Cap App -CL A MS World ex USA (Gross)
00288 MS025
1997/11/03 9425.00 10000.00
1997/11/30 9179.95 9717.68
1997/12/31 9368.45 9829.52
1998/01/31 9641.78 10123.55
1998/02/28 10282.68 10799.04
1998/03/31 10867.03 11172.17
1998/04/30 11121.50 11252.19
1998/05/31 11093.23 11048.13
1998/06/30 10914.15 11006.60
1998/07/31 11140.35 11111.22
1998/08/31 8963.18 9544.28
1998/09/30 8802.95 9342.67
1998/10/30 9490.98 10321.30
IMATRL PRASUN SHR__CHT 19981031 19981111 153914 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor International Capital Appreciation Fund -
Class A on November 3, 1997, when the fund started, and the current
5.75% sales charge was paid. As the chart shows, by October 31, 1998,
the value of the investment would have been $9,491 - a 5.09% decrease
on the initial investment. For comparison, look at how the Morgan
Stanley Capital International AC World Index Free ex USA did over the
same period. With dividends reinvested, the same $10,000 would have
grown to $10,321 - a 3.21% increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND - CLASS T
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). If Fidelity had not reimbursed certain class expenses, the
total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED OCTOBER 31, 1998 LIFE OF
FUND
FIDELITY ADV INTL CAP APP - CL T 0.40%
FIDELITY ADV INTL CAP APP - CL T -3.11%
(INCL. 3.50% SALES CHARGE)
MSCI WORLD EX US 3.21%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
November 3, 1997. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class T's returns to the performance
of the Morgan Stanley Capital International AC World Index Free ex
USA (MSCI World ex US) - an unmanaged, market capitalization weighted
index that is designed to represent the performance of developed stock
markets, excluding the United States, throughout the world. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' cumulative return
and show you what would have happened if Class T shares had performed
at a constant rate each year. These numbers will be reported once the
fund is a year old.
$10,000 OVER LIFE OF FUND
FA Intl Cap App -CL T MS World ex USA (Gross)
00292 MS025
1997/11/03 9650.00 10000.00
1997/11/30 9399.10 9717.68
1997/12/31 9592.10 9829.52
1998/01/31 9862.30 10123.55
1998/02/28 10518.50 10799.04
1998/03/31 11116.80 11172.17
1998/04/30 11367.70 11252.19
1998/05/31 11338.75 11048.13
1998/06/30 11145.75 11006.60
1998/07/31 11377.35 11111.22
1998/08/31 9148.20 9544.28
1998/09/30 8993.80 9342.67
1998/10/30 9688.60 10321.30
IMATRL PRASUN SHR__CHT 19981031 19981111 154345 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor International Capital Appreciation Fund -
Class T on November 3, 1997, when the fund started, and the current
3.50% sales charge was paid. As the chart shows, by October 31, 1998,
the value of the investment would have been $9,689 - a 3.11% decrease
on the initial investment. For comparison, look at how the Morgan
Stanley Capital International AC World Index Free ex USA did over the
same period. With dividends reinvested, the same $10,000 would have
grown to $10,321 - a 3.21% increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND - CLASS B
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). Class B's contingent deferred sales charge included in the
life of fund total return figure is 5%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED OCTOBER 31, 1998 LIFE OF
FUND
FIDELITY ADV INTL CAP APP - CL B -0.10%
FIDELITY ADV INTL CAP APP - CL B -5.09%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
MSCI WORLD EX US 3.21%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
November 3, 1997. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class B's returns to the performance
of the Morgan Stanley Capital International AC World Index Free ex
USA (MSCI World ex US) - an unmanaged, market capitalization weighted
index that is designed to represent the performance of developed stock
markets, excluding the United States, throughout the world. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' cumulative return
and show you what would have happened if Class B shares had performed
at a constant rate each year. These numbers will be reported once the
fund is a year old.
$10,000 OVER LIFE OF FUND
FA Intl Cap App -CL B MS World ex USA (Gross)
00290 MS025
1997/11/03 10000.00 10000.00
1997/11/30 9730.00 9717.68
1997/12/31 9930.00 9829.52
1998/01/31 10200.00 10123.55
1998/02/28 10870.00 10799.04
1998/03/31 11490.00 11172.17
1998/04/30 11750.00 11252.19
1998/05/31 11710.00 11048.13
1998/06/30 11510.00 11006.60
1998/07/31 11740.00 11111.22
1998/08/31 9440.00 9544.28
1998/09/30 9270.00 9342.67
1998/10/30 9491.00 10321.30
IMATRL PRASUN SHR__CHT 19981031 19981111 154024 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor International Capital Appreciation Fund -
Class B on November 3, 1997, when the fund started. As the chart
shows, by October 31, 1998, the value of the investment, including the
effect of the applicable contingent deferred sales charge, would have
been $9,491 - a 5.09% decrease on the initial investment. For
comparison, look at how the Morgan Stanley Capital International AC
World Index Free ex USA did over the same period. With dividends
reinvested, the same $10,000 would have grown to $10,321 - a 3.21%
increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND - CLASS C
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). Class C's contingent deferred sales charge included in the
life of fund total return figure is 1%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED OCTOBER 31, 1998 LIFE OF
FUND
FIDELITY ADV INTL CAP APP - CL C -0.20%
FIDELITY ADV INTL CAP APP - CL C -1.20%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
MSCI WORLD EX US 3.21%
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, since the fund started on
November 3, 1997. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare Class C's returns to the performance
of the Morgan Stanley Capital International AC World Index Free ex USA
(MSCI World ex US) - an unmanaged, market capitalization weighted
index that is designed to represent the performance of developed stock
markets, excluding the United States, throughout the world. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Class C shares' cumulative return
and show you what would have happened if Class C shares had performed
at a constant rate each year. These numbers will be reported once the
fund is a year old.
$10,000 OVER LIFE OF FUND
FA Intl Cap App -CL C MS World ex USA (Gross)
00281 MS025
1997/11/03 10000.00 10000.00
1997/11/30 9730.00 9717.68
1997/12/31 9930.00 9829.52
1998/01/31 10210.00 10123.55
1998/02/28 10880.00 10799.04
1998/03/31 11490.00 11172.17
1998/04/30 11750.00 11252.19
1998/05/31 11710.00 11048.13
1998/06/30 11510.00 11006.60
1998/07/31 11740.00 11111.22
1998/08/31 9440.00 9544.28
1998/09/30 9270.00 9342.67
1998/10/30 9880.00 10321.30
IMATRL PRASUN SHR__CHT 19981031 19981111 154124 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor International Capital Appreciation Fund -
Class C on November 3, 1997, when the fund started. As the chart
shows, by October 31, 1998, the value of the investment, including
the effect of the applicable contingent deferred sales charge, would
have been $9,880 - a 1.20% decrease on the initial investment. For
comparison, look at how the Morgan Stanley Capital International AC
World Index Free ex USA did over the same period. With dividends
reinvested, the same $10,000 would have grown to $10,321 - a 3.21%
increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Like a white-knuckle flyer on a long
overseas flight, international
investors were tightening their seat
belts to ride out the turbulent
international equity markets over
the past year. For the 12-month
period ending October 31, 1998,
the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 9.89%.
European markets were the primary
contributors to this solid return.
They benefited from corporate
restructurings designed to cut costs
and improve share prices, and
from solid economic growth
prospects. France and Germany
were particularly strong
performers. On the opposite side of
the world, emerging markets in
Latin America suffered considerably.
And in large part, they had Russia to
blame. Russia's devaluation of its
currency and debt defaults caused
investors to sell off investments
considered to carry more risk, such
as emerging-market equities.
Markets in Venezuela and Brazil,
already teetering on the edge thanks
to political instability, dropped
precipitously. Currency devaluations
also continued to plague Southeast
Asian countries, specifically
Indonesia, Thailand, Malaysia and
South Korea. The Japanese
economy continued to sink lower, as
the ailing banking sector seemed
oblivious to repeated promises -
and a lack of action - by the
Japanese government for
assistance.
An interview with Kevin McCarey, Portfolio Manager of Fidelity Advisor
International Capital Appreciation Fund
Q. HOW DID THE FUND PERFORM, KEVIN?
A. From November 3, 1997 - the fund's inception date - through October
31, 1998, the fund's Class A, T, B and C shares returned 0.70%, 0.40%,
- -0.10% and -0.20%, respectively. The Morgan Stanley Capital
International AC World Index Free ex USA returned 3.21% during that
time period.
Q. WHAT FACTORS PLAYED KEY ROLES IN THE FUND'S PERFORMANCE?
A. The difficult environment we witnessed during the second half of
the period was the major factor. The economic problems that began a
year ago in Asia eventually spread to other emerging markets, most
notably Russia and Latin America. Some of the larger, multinational
European companies depend on these markets as a source of growth, and
this volatility was a significant detriment. In addition, European
stock valuations - on the heels of an extended market rally - were at
lofty levels. As we entered the summer months of 1998, an economic
slowdown in the United Kingdom was in full stride, European trading
markets were sluggish and any whiff of earnings disappointments was
met with an increased sense of skepticism. As a result, investors who
had been picking stocks based on earnings momentum and growth were
forced to rethink their approach. These trends converged and
translated into a difficult six-month stretch for European stocks.
Q. BASED ON THIS VOLATILITY, DID YOU MAKE ANY CHANGES TO YOUR
INVESTING STRATEGY?
A. I made a couple. First, as growth investments fell out of favor, I
began to look at industries that tend to have more stable earnings
profiles. Two that I turned to were utilities - which accounted for
over 18% of the fund's investments at the end of the period - and
pharmaceuticals, which represented just under 12% of investments. The
fund's positions in utility stocks Deutsche Telekom, Spain's
Telefonica and Telecom Italia - all top-10 positions - performed well.
Swiss company Novartis, meanwhile - the fund's largest single
investment at the end of the period - reflected my attraction to
pharmaceutical stocks. One other strategy was to look at companies
engaged in internal "self-help" initiatives. When things are bad on
the outside, companies with room to grow within can become appealing.
Some of the fund's positions in merged companies - such as British
Petroleum, which joined forces with Amoco, and Daimler-Benz which
teamed up with Chrysler - were examples of this.
Q. FINANCE STOCKS OCCUPIED A SIGNIFICANT PERCH IN THE PORTFOLIO, WITH
JUST OVER 21% OF THE FUND'S INVESTMENTS REPRESENTED THERE. HOW DID
THESE STOCKS PERFORM?
A. Not well at all. Financial stocks were another segment that had
performed well for some time and, in retrospect, perhaps valuations
were overextended. Banks in particular had a difficult time during the
second half of the period, especially those with investment banking
exposure and those with outstanding provisions - i.e., loans or
letters of credit - to emerging-market countries. Many banks had
bolstered their investment banking resources and, when revenues began
to slow due to global uncertainty, many had difficulty keeping pace
with their expenses. Two of the fund's Swiss banking stocks - Credit
Suisse and Union Bank of Switzerland - had investment banking and
emerging-market exposure and each performed poorly as a result.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. The fund got good results from its position in Dutch music and
entertainment company PolyGram, which got a boost after Seagram's made
an offer to buy the company. At the end of the period, the fund no
longer held PolyGram. Telecommunications companies such as
Germany-based Mannesmann and the U.K.'s Vodafone also performed well.
Disappointments included French hotel operator Accor, which slid due
to slower anticipated growth for the company, and Vimpel
Communications. Vimpel Communications didn't perform all that badly,
but because the company is based in Russia, its stock price declined
amid the turbulence in that market.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I've mentioned in the past how the trend towards corporate
restructuring has been positive, and I think the drivers behind this
will both continue and deepen in the months ahead. European companies
have instituted management pay programs based on bonuses and
incentives, and companies are increasingly focusing on improving the
value of their stock. These two factors could lead to more
consolidation activity. In terms of the fund itself, opportunities
could present themselves if companies that were reluctant to
restructure in past years decide that now is the time. I'll also be
watching developments in Japan. The Japanese economy continued to
struggle throughout the period, but we began to see signs of
constructive improvement as the period came to a close.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
KEVIN MCCAREY DISCUSSES
THE UPCOMING INTRODUCTION
OF THE EURO:
"ON JANUARY 1, 1999, THE EURO WILL
BE INTRODUCED AS THE UNIFORM
CURRENCY OF 11 EUROPEAN COUNTRIES.
WHILE THE EURO WON'T HAVE MUCH OF
AN IMPACT ON THE WAY IN WHICH I
INVEST, IT SHOULD RESULT IN A NUMBER
OF POSITIVE DEVELOPMENTS. FIRST,
SHORT- AND LONG-TERM INTEREST RATES
ACROSS THE CONTINENT SHOULD BE
LOWER. AS THE EURO HAS APPROACHED,
WE'VE SEEN LOWER RATES IN SPAIN -
FROM AROUND 13% THREE YEARS AGO TO
AROUND 5% AT THE END OF THE PERIOD
- - AND IN ITALY. THE GENERAL
EXPECTATION IS THAT INFLATION WILL BE
KEPT AT BAY, AND THE POTENTIALLY
LOWER INTEREST RATES SHOULD BE VERY
GOOD FOR VARIOUS EUROPEAN
ECONOMIES.
"SECOND, A LOT OF COMPANIES MAY
CHANGE HOW THEY OPERATE THEIR
BUSINESSES. A COMPANY IN FRANCE,
FOR INSTANCE, MAY BEGIN TO LOOK
MORE GLOBALLY TO EXPAND ITS REACH.
COMPANY MANAGEMENT MAY SWITCH
FROM SAYING, `WE'RE A FRENCH
COMPANY AND WE'VE GOT X% MARKET
SHARE IN FRANCE' TO `WE'RE REALLY A
EUROPEAN COMPANY. SHOULD WE
SELL OUR PRODUCTS IN GERMANY OR
ACQUIRE A COMPANY IN ITALY?' THIS
SHOULD CREATE AN ACCELERATION IN
CROSS-BORDER MERGER AND
ACQUISITION ACTIVITY.
"AS A FINAL POINT, THE SHAREHOLDER
BASES FOR COMPANIES WILL BECOME
MORE REGIONALLY DIVERSE AND
COMPANIES MAY BECOME MORE
ACCOUNTABLE TO THEIR SHAREHOLDERS.
THAT WOULD BE A VERY POSITIVE
DEVELOPMENT."
FUND FACTS
GOAL: SEEKS CAPITAL
APPRECIATION BY INVESTING IN
SECURITIES OF FOREIGN ISSUERS
START DATE: NOVEMBER 3, 1997
SIZE: AS OF OCTOBER 31, 1998,
MORE THAN $23 MILLION
MANAGER: KEVIN MCCAREY,
SINCE INCEPTION; JOINED FIDELITY
IN 1985
(CHECKMARK)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
NOVARTIS AG (REG.) (SWITZERLAND, DRUGS & 2.6 0.6
PHARMACEUTICALS)
GLAXO WELLCOME PLC (UNITED KINGDOM, 1.9 0.1
DRUGS & PHARMACEUTICALS)
NESTLE SA (REG.) (SWITZERLAND, FOODS) 1.8 0.8
NIPPON TELEGRAPH & TELEPHONE CORP. 1.6 0.0
(JAPAN, TELEPHONE SERVICES)
BRITISH PETROLEUM CO. PLC (UNITED KINGDOM, 1.6 0.3
OIL & GAS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 21.4 20.4
UTILITIES 18.7 10.5
HEALTH 12.9 7.0
TECHNOLOGY 5.4 5.8
NONDURABLES 5.4 5.6
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF OCTOBER 31, 1998
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE COUNTRIES
6 MONTHS AGO
UNITED KINGDOM 20.7 15.1
JAPAN 14.0 12.4
FRANCE 11.9 10.9
GERMANY 9.5 5.6
SWITZERLAND 8.4 4.5
</TABLE>
TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY,
INCLUDING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT
RISKS. PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES
CONTRACTS, IF APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998 AS OF APRIL 30, 1998
ROW: 1, COL: 1, VALUE: 92.09999999999999
ROW: 1, COL: 2, VALUE: 7.9
STOCKS 89.1%
SHORT-TERM
INVESTMENTS 10.9%
STOCKS 92.1%
SHORT-TERM
INVESTMENTS 7.9%
ROW: 1, COL: 1, VALUE: 89.09999999999999
ROW: 1, COL: 2, VALUE: 10.9
INVESTMENTS OCTOBER 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 88.6%
SHARES VALUE (NOTE 1)
AUSTRALIA - 1.1%
Australia & New Zealand Banking Group Ltd. 13,000 $ 74,183
David Jones Ltd. 50,000 50,796
News Corp. Ltd. ADR 5,200 142,025
267,004
BELGIUM - 0.6%
Electrabel SA 400 147,325
BRAZIL - 0.8%
Compania Energertica Minas Gerais 600,000 11,669
Telebras sponsored ADR 2,300 174,656
Telesp Celular SA Class B 1,000 49
Telesp Participacoes SA (a) 100,000 2,557
188,931
CANADA - 3.8%
Bank of Montreal, Canada 3,500 143,140
Celestica, Inc. (sub-vtg.) (a) 1,200 21,933
CGI Group, Inc. Class A (sub. vtg.) (a) 6,000 82,442
Cinar Films, Inc. Class B (sub. vtg.) (a) 1,200 26,249
Northern Telecom Ltd. 1,100 47,197
Power Corp. of Canada 8,000 168,514
Rogers Communications, Inc. Class B (non-vtg.) (a) 5,000 39,212
Shaw Communications, Inc. Class B 2,600 52,239
Teleglobe, Inc. 3,000 82,053
Videotron Group Ltd. (sub. vtg.) 20,000 256,011
918,990
CZECH REPUBLIC - 0.1%
SPT Telecom AS (a) 1,300 19,683
FINLAND - 1.4%
Merita Ltd. Series A 8,400 45,076
OY Nokia AB sponsored ADR 2,600 241,963
Sampo Insurance Co. Ltd. 1,300 40,564
327,603
FRANCE - 11.9%
Accor SA 415 87,298
Alcatel Alsthom Compagnie Generale d'Electricite SA 3,300 363,000
Axa SA 1,800 203,760
Banque Nationale de Paris 2,800 177,609
Cap Gemini SA 780 117,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FRANCE - CONTINUED
Castorama Dubois Investissements SA 700 $ 125,043
Compagnie de St. Gobain 400 59,268
Elf Aquitaine 1,700 197,200
France Telecom SA 400 27,940
Groupe Danone 500 132,397
L'Oreal SA 150 85,846
Lagardere S.C.A. (Reg.) 2,000 80,610
Pinault Printemps SA 550 92,200
Renault SA 800 34,248
Rhone-Poulenc SA Class A 1,800 84,037
Sanofi SA 600 94,093
Societe Generale, France Class A 1,600 211,980
Suez Lyonnaise des Eaux 740 132,722
Synthelabo 400 76,428
Total SA Class B 1,600 187,200
Unibail 300 41,260
Vivendi SA 1,000 228,743
2,840,282
GERMANY - 8.0%
Allianz AG (Reg.) 800 274,970
BASF AG 3,000 127,672
Bayerische Hypo-Und Vereinsbank 2,200 174,311
BHF Bank AG 1,700 66,037
Daimler-Benz AG (a) 3,800 299,551
Deutsche Lufthansa AG (Reg.) 3,600 78,573
Deutsche Telekom AG 11,600 314,336
Dresdner Bank AG 1,000 38,996
Hoechst AG 2,000 84,317
Mannesmann AG 2,400 236,953
RWE AG 2,500 136,125
Viag AG 130 87,950
1,919,791
HONG KONG - 1.0%
China Telecom (Hong Kong) Ltd. 1,000 1,906
Johnson Electric Holdings Ltd. 20,000 46,485
Li & Fung Ltd. 40,000 62,496
Vtech Holdings Ltd. 35,000 131,287
242,174
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDIA - 0.6%
Dr. Reddy's Laboratories Ltd. (a) 8,000 $ 83,917
Pentafour Software & Exports Ltd. 3,900 58,949
State Bank of India (a) 717 2,633
145,499
IRELAND - 0.9%
Bank of Ireland, Inc. 6,000 109,763
CRH PLC 1,800 25,871
Elan Corp. PLC ADR (a) 1,250 87,578
223,212
ITALY - 3.1%
Assicurazioni Generali Spa 6,100 217,940
Banca Commerciale Italiana Spa 21,000 130,064
Banca di Roma (a) 21,800 38,087
Eni Spa sponsored ADR 26,900 160,701
Istituto Bancario San Paolo 13,300 197,908
744,700
JAPAN - 14.0%
Aeon Credit Service Ltd. 1,300 78,347
Aiwa Co. Ltd. 5,000 123,978
Banyu Pharmaceutical Co. Ltd. 12,000 204,460
Benesse Corp. 2,700 124,365
Fuji Bank Ltd. 1,000 3,840
Fuji Heavy Industries Ltd. 50,000 249,677
Fuji Photo Film Co. Ltd. 6,000 220,577
Honda Motor Co. Ltd. 8,000 241,068
Ito En Ltd. 2,900 121,093
Konami Co. Ltd. 2,400 70,047
Matsumotokiyoshi Co. Ltd. 2,300 87,129
Matsushita Electric Industrial Co. Ltd. 6,000 88,450
Matsushita Electric Works Co. Ltd. 1,000 9,565
Mitsubishi Trust & Banking Corp. 16,000 108,412
Nippon Telegraph & Telephone Corp. 50 392,596
Ntt Mobile Communication Network, Inc. (a) 5 181,231
Ntt Mobile Communication Network, Inc. (a)(c) 3 108,739
Orix Corp. (a) 2,000 143,780
Paris Miki, Inc. 5,400 90,984
Shimano, Inc. 3,000 66,638
Sumitomo Realty & Development Co. Ltd. (a) 2,000 6,009
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Takeda Chemical Industries Ltd. 8,000 $ 261,042
Takefuji Corp. 1,000 53,465
Terumo Corp. 7,000 147,654
Toto Ltd. 6,000 44,632
Yamanouchi Pharmaceutical Co. Ltd. 4,000 115,024
3,342,802
KOREA (SOUTH) - 0.3%
Medison Co. Ltd. 6,600 73,028
LUXEMBOURG - 0.3%
Stolt Comex Seaway SA 6,050 77,138
MALAYSIA - 0.0%
Berjaya Sports Toto BHD 10,000 6,442
MEXICO - 0.6%
Telefonos de Mexico SA de CV sponsored ADR representing 2,800 147,875
Class L shares
NETHERLANDS - 4.3%
Aegon NV 830 72,075
Ahold NV 3,500 116,435
Akzo Nobel NV 3,500 136,123
Fortis Amev NV 2,500 162,452
Heineken NV 1,000 53,303
ING Groep NV 4,846 234,681
Philips Electronics NV (Bearer) 700 38,413
Samas Groep NV 3,000 49,981
Vedior NV 3,800 96,898
VNU 2,100 72,674
1,033,035
PORTUGAL - 1.0%
Banco Pinto & Sotto Mayor SA 2,560 49,133
Electricidade de Portugal SA 3,500 88,114
Telecel Comunicacoes Pessoais SA 500 92,249
229,496
RUSSIA - 0.3%
Vimpel Communications sponsored ADR (a) 5,000 58,750
SPAIN - 3.5%
Banco Bilbao Vizcaya SA (Reg.) 6,600 89,126
Banco Central Hispanoamericano SA 9,000 99,467
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SPAIN - CONTINUED
Banco Santander SA 3,672 $ 67,333
Corporacion Mapfre Compania Internacional de Reaseguros 900 23,795
SA (Reg.)
Endesa SA 5,000 126,155
Iberdrola SA 5,000 80,846
Telefonica de Espana SA 8,000 361,621
848,343
SWEDEN - 1.4%
Astra AB Class A 2,900 47,619
Ericsson (L.M.) Telefon AB Class B 7,900 178,549
Svenska Handelsbanken 2,800 118,132
344,300
SWITZERLAND - 8.4%
Credit Suisse Group (Reg.) 950 146,367
Julius Baer Holding AG 35 107,461
Nestle SA (Reg.) 200 426,146
Novartis AG (Reg.) 340 613,768
Roche Holding AG participation certificates 25 292,235
Swisscom AG (a) 400 135,834
UBS AG (a) 1,050 288,592
2,010,403
UNITED KINGDOM - 20.7%
Allied Zurich PLC (a) 14,400 171,201
Bank of Scotland 8,000 86,940
Barclays PLC 4,000 86,203
BG PLC 14,900 97,679
BOC Group PLC 4,300 63,147
Boots Co. PLC 6,000 90,122
British Aerospace PLC 12,500 90,842
British American Tobacco PLC 2,800 25,295
British Petroleum Co. PLC 26,000 383,126
British Telecommunications PLC 20,800 270,588
Cable & Wireless Communications PLC (a) 13,000 97,958
Cadbury-Schweppes PLC 8,000 122,573
CGU PLC 9,600 152,152
Diageo PLC 8,100 87,484
GKN PLC Class L 4,400 53,490
Glaxo Wellcome PLC 14,300 444,967
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Kingfisher PLC 14,268 $ 125,312
Lloyds TSB Group PLC 29,700 366,778
Misys PLC 5,300 37,186
National Westminster Bank PLC 4,300 72,652
Pearson PLC 6,500 113,414
Prudential Corp. PLC 7,600 98,883
Reed International PLC 7,000 59,252
Rentokil Initial PLC 20,000 125,253
RMC Industries, Inc. 5,100 72,590
Saatchi & Saatchi PLC 48,600 94,402
Schroders PLC 4,500 85,525
Scottish Hydro-Electric PLC 9,100 93,485
Seton Scholl Healthcare Group PLC 3,832 48,446
Shell Transport & Trading Co. PLC (Reg.) 32,000 195,946
Siebe PLC 6,400 26,256
SmithKline Beecham PLC 21,900 279,151
Somerfield PLC 12,000 77,462
Unilever PLC 24,200 243,137
Vodafone Group PLC 17,200 231,494
Wickes PLC 36,100 103,066
Wimpey George PLC 5,100 9,650
Zeneca Group PLC 2,000 76,826
4,959,933
UNITED STATES OF AMERICA - 0.5%
Global TeleSystems Group, Inc. (a) 3,000 120,188
TOTAL COMMON STOCKS 21,236,927
(Cost $20,505,840)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NONCONVERTIBLE PREFERRED STOCKS - 3.5%
GERMANY - 1.5%
Dyckerhoff AG 240 73,712
Porsche AG (non-vtg.) 22 37,908
SAP AG (Systeme Anwendungen Produkte) 500 246,811
358,431
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - 2.0%
Telecom Italia Mobile Spa 43,800 $ 155,647
Telecom Italia Spa Risp 62,000 314,578
470,225
TOTAL NONCONVERTIBLE PREFERRED STOCKS 828,656
(Cost $837,978)
</TABLE>
CASH EQUIVALENTS - 7.9%
Taxable Central Cash Fund (b) 1,897,816 1,897,816
(Cost $1,897,816)
TOTAL INVESTMENT IN SECURITIES - 100% $ 23,963,399
(Cost $23,241,634)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(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 $108,739 or 0.5% of net assets.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.4%
BASIC INDUSTRIES 1.8
CASH EQUIVALENTS 7.9
CONSTRUCTION & REAL ESTATE 1.6
DURABLES 4.3
ENERGY 4.7
FINANCE 21.4
HEALTH 12.9
HOLDING COMPANIES 0.3
INDUSTRIAL MACHINERY & 3.6
EQUIPMENT
MEDIA & LEISURE 3.7
NONDURABLES 5.4
RETAIL & WHOLESALE 4.3
SERVICES 3.3
TECHNOLOGY 5.4
TRANSPORTATION 0.3
UTILITIES 18.7
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $23,468,051. Net unrealized appreciation
aggregated $495,348, of which $1,735,496 related to appreciated
investment securities and $1,240,148 related to depreciated investment
securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $2,310,991 which will expire on October 31, 2006.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $23,241,634) - $ 23,963,399
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 1,020,683
RECEIVABLE FOR FUND SHARES SOLD 69,573
DIVIDENDS RECEIVABLE 40,704
INTEREST RECEIVABLE 7,162
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 25,006
TOTAL ASSETS 25,126,527
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 88,496
PAYABLE FOR INVESTMENTS PURCHASED 1,012,899
PAYABLE FOR FUND SHARES REDEEMED 5,923
OTHER PAYABLES AND ACCRUED EXPENSES 96,757
TOTAL LIABILITIES 1,204,075
NET ASSETS $ 23,922,452
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 25,929,151
ACCUMULATED NET INVESTMENT (LOSS) (16,514)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (2,713,345)
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 723,160
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS $ 23,922,452
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE $10.07
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($859,804 (DIVIDED BY) 85,400 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/94.25 OF $10.07) $10.68
CLASS T: $10.04
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($12,116,751 (DIVIDED BY) 1,206,627 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.50 OF $10.04) $10.40
CLASS B: $9.99
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($4,047,217 (DIVIDED BY) 405,239 SHARES) A
CLASS C: $9.98
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($2,216,832 (DIVIDED BY) 222,160 SHARES) A
INSTITUTIONAL CLASS: $10.09
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($4,681,848 (DIVIDED BY) 464,227 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
NOVEMBER 3, 1997 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998
INVESTMENT INCOME $ 270,365
DIVIDENDS
INTEREST 89,955
360,320
LESS FOREIGN TAXES WITHHELD (27,330)
TOTAL INCOME 332,990
EXPENSES
MANAGEMENT FEE $ 116,243
TRANSFER AGENT FEES 37,486
DISTRIBUTION FEES 69,691
ACCOUNTING FEES AND EXPENSES 60,181
NON-INTERESTED TRUSTEES' COMPENSATION 50
CUSTODIAN FEES AND EXPENSES 167,909
REGISTRATION FEES 171,349
AUDIT 29,059
LEGAL 84
FOREIGN TAX EXPENSE 9,742
MISCELLANEOUS 515
TOTAL EXPENSES BEFORE REDUCTIONS 662,309
EXPENSE REDUCTIONS (304,620) 357,689
NET INVESTMENT INCOME (LOSS) (24,699)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (2,695,641)
FOREIGN CURRENCY TRANSACTIONS (26,451) (2,722,092)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 721,765
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 1,395 723,160
NET GAIN (LOSS) (1,998,932)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (2,023,631)
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF CHANGES IN NET ASSETS
NOVEMBER 3, 1997
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1998
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ (24,699)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) (2,722,092)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 723,160
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (2,023,631)
FROM OPERATIONS
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 25,946,083
TOTAL INCREASE (DECREASE) IN NET ASSETS 23,922,452
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF $16,514) $ 23,922,452
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS A
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .00
NET REALIZED AND UNREALIZED GAIN (LOSS) .07 G
TOTAL FROM INVESTMENT OPERATIONS .07
NET ASSET VALUE, END OF PERIOD $ 10.07
TOTAL RETURN B, C .70%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 860
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.06% A, F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .03% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNTS SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS T
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) .07 G
TOTAL FROM INVESTMENT OPERATIONS .04
NET ASSET VALUE, END OF PERIOD $ 10.04
TOTAL RETURN B, C .40%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 12,117
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.31% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.24)% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS B
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.07)
NET REALIZED AND UNREALIZED GAIN (LOSS) .06 G
TOTAL FROM INVESTMENT OPERATIONS (.01)
NET ASSET VALUE, END OF PERIOD $ 9.99
TOTAL RETURN B, C (.10)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,047
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.81% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.70)% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) .06 G
TOTAL FROM INVESTMENT OPERATIONS (.02)
NET ASSET VALUE, END OF PERIOD $ 9.98
TOTAL RETURN B, C (.20)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,217
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.81% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.75)% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .04
NET REALIZED AND UNREALIZED GAIN (LOSS) .05 G
TOTAL FROM INVESTMENT OPERATIONS .09
NET ASSET VALUE, END OF PERIOD $ 10.09
TOTAL RETURN B, C .90%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,682
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.81% A, F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .34% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor International Capital Appreciation Fund(the fund) is
a fund of Fidelity Advisor Series VIII (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, as an open-end
management investment company organized as a Massachusetts business
trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Investment income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class of shares
differs in its respective distribution, transfer agent, and certain
other class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. 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. If trading or events occurring in other markets
after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then
they are valued at their fair value taking this trading or these
events into account. Fair value is determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Securities (including restricted securities) for
which quotations are not readily available are valued primarily using
dealer-supplied valuations or at their fair value. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value. Equity securities that have reached the limit for aggregate
foreign ownership may trade at a premium to the local share price. If
the broker-quoted premium is not readily available as a result of
limited share activity, the securities are valued at the last sale
price of the local share in the principal market in which such
securities are normally traded.
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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The fund may be subject to foreign taxes on income and
gains on investments which are accrued based upon the fund's
understanding of the tax rules and regulations that exist in the
markets in which it invests. The fund accrues such taxes as
applicable. 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. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated net investment loss and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $51,743,649 and $27,704,190.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
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 .2500% to .5200% for the
period. The annual individual fund fee rate is .45%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .73% of average net
assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research (Far East) Inc., Fidelity International
Investment Advisors (FIIA), and Fidelity Investments Japan Limited
(FIJ). In addition, FIIA entered into a sub-advisory agreement with
its subsidiary, Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L). 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 FIIA(U.K.)L a fee based on costs incurred for either
service.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
CLASS C 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 1,366 $ 254
CLASS T 33,900 3,411
CLASS B 22,091 16,739
CLASS C 12,334 12,325
$ 69,691 $ 32,729
Under the Plans, FMR may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The
Plans also authorize payments to third parties that assist in the sale
of each class' shares or render shareholder support services. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 57
CLASS T 75
CLASS B 58
CLASS C 3,752
INSTITUTIONAL CLASS 3
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED BY
FDC FDC
CLASS A $ 16,408 $ 5,206
CLASS T 68,287 18,616
CLASS B 5,042 5,042 *
CLASS C 1,231 1,231 *
$ 90,968 $ 30,095
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 2,185 .39 *
CLASS T 18,048 .26 *
CLASS B 6,354 .28 *
CLASS C 4,132 .33 *
INSTITUTIONAL CLASS 6,767 .14 *
$ 37,486
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains each 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 $105 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 2.00% $ 24,491
CLASS T 2.25% 115,233
CLASS B 2.75% 48,536
CLASS C 2.75% 32,831
INSTITUTIONAL CLASS 1.75% 82,787
$ 303,878
Effective December 1, 1998, Class A, Class T, Class B, Class C and
Institutional Class expense limitations were changed to 1.70%, 1.95%,
2.45%, 2.45% and 1.45% of each class' average net assets,
respectively.
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $481 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $261 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 21% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 A 1998 A
CLASS A 103,525 $ 1,119,865
SHARES SOLD
SHARES REDEEMED (18,125) (186,338)
NET INCREASE (DECREASE) 85,400 $ 933,527
CLASS T 1,397,855 $ 15,422,063
SHARES SOLD
SHARES REDEEMED (191,228) (1,955,961)
NET INCREASE (DECREASE) 1,206,627 $ 13,466,102
CLASS B 456,271 $ 5,032,634
SHARES SOLD
SHARES REDEEMED (51,032) (570,862)
NET INCREASE (DECREASE) 405,239 $ 4,461,772
CLASS C 260,112 $ 2,832,954
SHARES SOLD
SHARES REDEEMED (37,952) (392,926)
NET INCREASE (DECREASE) 222,160 $ 2,440,028
INSTITUTIONAL CLASS 464,227 $ 4,644,654
SHARES SOLD
A SHARE TRANSACTIONS FOR CLASS A, T, B, C, AND INSTITUTIONAL CLASS ARE
FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1998.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 19,057
CLASS T 62,259
CLASS B 31,244
CLASS C 22,362
INSTITUTIONAL CLASS 36,427
$ 171,349
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VIII and the Shareholders
of Fidelity Advisor International Capital Appreciation 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 International Capital Appreciation Fund (a fund of
Fidelity Advisor Series VIII) at October 31, 1998, and the results of
its operations, the changes in its net assets and the financial
highlights for the period November 3, 1997 (commencement of
operations) to October 31, 1998, 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 International Capital
Appreciation Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted
our audit 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 audit, which included confirmation of securities at October
31, 1998 by correspondence with the custodian and brokers, provides a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 1998
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
Fidelity Investments Japan Limited
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard Spillane, Jr., Vice President
Kevin McCarey, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuantSM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
AICAP-ANN-1298 66780
1.711985.100
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(FIDELITY_LOGO_GRPAHIC)(registered trademark)
(2_FIDELITY_LOGOS)(REGISTERED TRADEMARK)
FIDELITY ADVISOR
INTERNATIONAL
CAPITAL APPRECIATION
FUND - INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 1998
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 9 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 10 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 18 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 27 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 35 THE AUDITORS' OPINION.
ACCOUNTANTS
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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
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
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories 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. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND -
INSTITUTIONAL CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). If Fidelity had not reimbursed certain class expenses, the
total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED OCTOBER 31, 1998 LIFE OF
FUND
FIDELITY ADV INTL CAP APP - INST CL 0.90%
MSCI WORLD EX US 3.21%
CUMULATIVE TOTAL RETURNS show Institutional Class performance in
percentage terms over a set period - in this case, since the fund
started on November 3, 1997. For example, if you had invested $1,000
in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare Institutional Class'
returns to the performance of the Morgan Stanley Capital International
AC World Index Free ex USA (MSCI World ex US) - an unmanaged, market
capitalization weighted index that is designed to represent the
performance of developed stock markets, excluding the United States,
throughout the world. This benchmark includes reinvested dividends and
capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' cumulative
return and show you what would have happened if Institutional Class
shares' had performed at a constant rate each year. These numbers will
be reported once the fund is a year old.
$10,000 OVER LIFE OF FUND
FA Intl Cap App -CL I MS World ex USA (Gross)
00291 MS025
1997/11/03 10000.00 10000.00
1997/11/30 9740.00 9717.68
1997/12/31 9950.00 9829.52
1998/01/31 10230.00 10123.55
1998/02/28 10910.00 10799.04
1998/03/31 11540.00 11172.17
1998/04/30 11810.00 11252.19
1998/05/31 11780.00 11048.13
1998/06/30 11590.00 11006.60
1998/07/31 11830.00 11111.22
1998/08/31 9520.00 9544.28
1998/09/30 9360.00 9342.67
1998/10/30 10090.00 10321.30
IMATRL PRASUN SHR__CHT 19981031 19981111 154224 R00000000000015
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor International Capital Appreciation Fund -
Institutional Class on November 3, 1997, when the fund started. As the
chart shows, by October 31, 1998, the value of the investment would
have grown to $10,090 - an 0.90% increase on the initial investment.
For comparison, look at how the Morgan Stanley Capital International
AC World Index Free ex USA did over the same period. With dividends
reinvested, the same $10,000 would have grown to $10,321 - a 3.21%
increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Like a white-knuckle flyer on a long
overseas flight, international
investors were tightening their seat
belts to ride out the turbulent
international equity markets over
the past year. For the 12-month
period ending October 31, 1998,
the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 9.89%.
European markets were the primary
contributors to this solid return.
They benefited from corporate
restructurings designed to cut costs
and improve share prices, and
from solid economic growth
prospects. France and Germany
were particularly strong
performers. On the opposite side of
the world, emerging markets in
Latin America suffered considerably.
And in large part, they had Russia to
blame. Russia's devaluation of its
currency and debt defaults caused
investors to sell off investments
considered to carry more risk, such
as emerging-market equities.
Markets in Venezuela and Brazil,
already teetering on the edge thanks
to political instability, dropped
precipitously. Currency devaluations
also continued to plague Southeast
Asian countries, specifically
Indonesia, Thailand, Malaysia and
South Korea. The Japanese
economy continued to sink lower, as
the ailing banking sector seemed
oblivious to repeated promises -
and a lack of action - by the
Japanese government for
assistance.
An interview with Kevin McCarey, Portfolio Manager of Fidelity Advisor
International Capital Appreciation Fund
Q. HOW DID THE FUND PERFORM, KEVIN?
A. From November 3, 1997 - the fund's inception date - through October
31, 1998, the fund's Institutional Class shares returned 0.90%. The
Morgan Stanley Capital International AC World Index Free ex USA
returned 3.21% during that time period.
Q. WHAT FACTORS PLAYED KEY ROLES IN THE FUND'S PERFORMANCE?
A. The difficult environment we witnessed during the second half of
the period was the major factor. The economic problems that began a
year ago in Asia eventually spread to other emerging markets, most
notably Russia and Latin America. Some of the larger, multinational
European companies depend on these markets as a source of growth, and
this volatility was a significant detriment. In addition, European
stock valuations - on the heels of an extended market rally - were at
lofty levels. As we entered the summer months of 1998, an economic
slowdown in the United Kingdom was in full stride, European trading
markets were sluggish and any whiff of earnings disappointments was
met with an increased sense of skepticism. As a result, investors who
had been picking stocks based on earnings momentum and growth were
forced to rethink their approach. These trends converged and
translated into a difficult six-month stretch for European stocks.
Q. BASED ON THIS VOLATILITY, DID YOU MAKE ANY CHANGES TO YOUR
INVESTING STRATEGY?
A. I made a couple. First, as growth investments fell out of favor, I
began to look at industries that tend to have more stable earnings
profiles. Two that I turned to were utilities - which accounted for
over 18% of the fund's investments at the end of the period - and
pharmaceuticals, which represented just under 12% of investments. The
fund's positions in utility stocks Deutsche Telekom, Spain's
Telefonica and Telecom Italia - all top-10 positions - performed well.
Swiss company Novartis, meanwhile - the fund's largest single
investment at the end of the period - reflected my attraction to
pharmaceutical stocks. One other strategy was to look at companies
engaged in internal "self-help" initiatives. When things are bad on
the outside, companies with room to grow within can become appealing.
Some of the fund's positions in merged companies - such as British
Petroleum, which joined forces with Amoco, and Daimler-Benz which
teamed up with Chrysler - were examples of this.
Q. FINANCE STOCKS OCCUPIED A SIGNIFICANT PERCH IN THE PORTFOLIO, WITH
JUST OVER 21% OF THE FUND'S INVESTMENTS REPRESENTED THERE. HOW DID
THESE STOCKS PERFORM?
A. Not well at all. Financial stocks were another segment that had
performed well for some time and, in retrospect, perhaps valuations
were overextended. Banks in particular had a difficult time during the
second half of the period, especially those with investment banking
exposure and those with outstanding provisions - i.e., loans or
letters of credit - to emerging-market countries. Many banks had
bolstered their investment banking resources and, when revenues began
to slow due to global uncertainty, many had difficulty keeping pace
with their expenses. Two of the fund's Swiss banking stocks - Credit
Suisse and Union Bank of Switzerland - had investment banking and
emerging-market exposure and each performed poorly as a result.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. The fund got good results from its position in Dutch music and
entertainment company PolyGram, which got a boost after Seagram's made
an offer to buy the company. At the end of the period, the fund no
longer held PolyGram. Telecommunications companies such as
Germany-based Mannesmann and the U.K.'s Vodafone also performed well.
Disappointments included French hotel operator Accor, which slid due
to slower anticipated growth for the company, and Vimpel
Communications. Vimpel Communications didn't perform all that badly,
but because the company is based in Russia, its stock price declined
amid the turbulence in that market.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I've mentioned in the past how the trend towards corporate
restructuring has been positive, and I think the drivers behind this
will both continue and deepen in the months ahead. European companies
have instituted management pay programs based on bonuses and
incentives, and companies are increasingly focusing on improving the
value of their stock. These two factors could lead to more
consolidation activity. In terms of the fund itself, opportunities
could present themselves if companies that were reluctant to
restructure in past years decide that now is the time. I'll also be
watching developments in Japan. The Japanese economy continued to
struggle throughout the period, but we began to see signs of
constructive improvement as the period came to a close.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
KEVIN MCCAREY DISCUSSES
THE UPCOMING INTRODUCTION
OF THE EURO:
"ON JANUARY 1, 1999, THE EURO WILL
BE INTRODUCED AS THE UNIFORM
CURRENCY OF 11 EUROPEAN COUNTRIES.
WHILE THE EURO WON'T HAVE MUCH OF
AN IMPACT ON THE WAY IN WHICH I
INVEST, IT SHOULD RESULT IN A NUMBER
OF POSITIVE DEVELOPMENTS. FIRST,
SHORT- AND LONG-TERM INTEREST RATES
ACROSS THE CONTINENT SHOULD BE
LOWER. AS THE EURO HAS APPROACHED,
WE'VE SEEN LOWER RATES IN SPAIN -
FROM AROUND 13% THREE YEARS AGO TO
AROUND 5% AT THE END OF THE PERIOD
- - AND IN ITALY. THE GENERAL
EXPECTATION IS THAT INFLATION WILL BE
KEPT AT BAY, AND THE POTENTIALLY
LOWER INTEREST RATES SHOULD BE VERY
GOOD FOR VARIOUS EUROPEAN
ECONOMIES.
"SECOND, A LOT OF COMPANIES MAY
CHANGE HOW THEY OPERATE THEIR
BUSINESSES. A COMPANY IN FRANCE,
FOR INSTANCE, MAY BEGIN TO LOOK
MORE GLOBALLY TO EXPAND ITS REACH.
COMPANY MANAGEMENT MAY SWITCH
FROM SAYING, `WE'RE A FRENCH
COMPANY AND WE'VE GOT X% MARKET
SHARE IN FRANCE' TO `WE'RE REALLY A
EUROPEAN COMPANY. SHOULD WE
SELL OUR PRODUCTS IN GERMANY OR
ACQUIRE A COMPANY IN ITALY?' THIS
SHOULD CREATE AN ACCELERATION IN
CROSS-BORDER MERGER AND
ACQUISITION ACTIVITY.
"AS A FINAL POINT, THE SHAREHOLDER
BASES FOR COMPANIES WILL BECOME
MORE REGIONALLY DIVERSE AND
COMPANIES MAY BECOME MORE
ACCOUNTABLE TO THEIR SHAREHOLDERS.
THAT WOULD BE A VERY POSITIVE
DEVELOPMENT."
FUND FACTS
GOAL: SEEKS CAPITAL
APPRECIATION BY INVESTING IN
SECURITIES OF FOREIGN ISSUERS
START DATE: NOVEMBER 3, 1997
SIZE: AS OF OCTOBER 31, 1998,
MORE THAN $23 MILLION
MANAGER: KEVIN MCCAREY,
SINCE INCEPTION; JOINED FIDELITY
IN 1985
(CHECKMARK)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
NOVARTIS AG (REG.) (SWITZERLAND, DRUGS & 2.6 0.6
PHARMACEUTICALS)
GLAXO WELLCOME PLC (UNITED KINGDOM, 1.9 0.1
DRUGS & PHARMACEUTICALS)
NESTLE SA (REG.) (SWITZERLAND, FOODS) 1.8 0.8
NIPPON TELEGRAPH & TELEPHONE CORP. 1.6 0.0
(JAPAN, TELEPHONE SERVICES)
BRITISH PETROLEUM CO. PLC (UNITED KINGDOM, 1.6 0.3
OIL & GAS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 21.4 20.4
UTILITIES 18.7 10.5
HEALTH 12.9 7.0
TECHNOLOGY 5.4 5.8
NONDURABLES 5.4 5.6
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF OCTOBER 31, 1998
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE COUNTRIES
6 MONTHS AGO
UNITED KINGDOM 20.7 15.1
JAPAN 14.0 12.4
FRANCE 11.9 10.9
GERMANY 9.5 5.6
SWITZERLAND 8.4 4.5
</TABLE>
TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY,
INCLUDING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT
RISKS. PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES
CONTRACTS, IF APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998 AS OF APRIL 30, 1998
ROW: 1, COL: 1, VALUE: 92.09999999999999
ROW: 1, COL: 2, VALUE: 7.9
STOCKS 89.1%
SHORT-TERM
INVESTMENTS 10.9%
STOCKS 92.1%
SHORT-TERM
INVESTMENTS 7.9%
ROW: 1, COL: 1, VALUE: 89.09999999999999
ROW: 1, COL: 2, VALUE: 10.9
INVESTMENTS OCTOBER 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 88.6%
SHARES VALUE (NOTE 1)
AUSTRALIA - 1.1%
Australia & New Zealand Banking Group Ltd. 13,000 $ 74,183
David Jones Ltd. 50,000 50,796
News Corp. Ltd. ADR 5,200 142,025
267,004
BELGIUM - 0.6%
Electrabel SA 400 147,325
BRAZIL - 0.8%
Compania Energertica Minas Gerais 600,000 11,669
Telebras sponsored ADR 2,300 174,656
Telesp Celular SA Class B 1,000 49
Telesp Participacoes SA (a) 100,000 2,557
188,931
CANADA - 3.8%
Bank of Montreal, Canada 3,500 143,140
Celestica, Inc. (sub-vtg.) (a) 1,200 21,933
CGI Group, Inc. Class A (sub. vtg.) (a) 6,000 82,442
Cinar Films, Inc. Class B (sub. vtg.) (a) 1,200 26,249
Northern Telecom Ltd. 1,100 47,197
Power Corp. of Canada 8,000 168,514
Rogers Communications, Inc. Class B (non-vtg.) (a) 5,000 39,212
Shaw Communications, Inc. Class B 2,600 52,239
Teleglobe, Inc. 3,000 82,053
Videotron Group Ltd. (sub. vtg.) 20,000 256,011
918,990
CZECH REPUBLIC - 0.1%
SPT Telecom AS (a) 1,300 19,683
FINLAND - 1.4%
Merita Ltd. Series A 8,400 45,076
OY Nokia AB sponsored ADR 2,600 241,963
Sampo Insurance Co. Ltd. 1,300 40,564
327,603
FRANCE - 11.9%
Accor SA 415 87,298
Alcatel Alsthom Compagnie Generale d'Electricite SA 3,300 363,000
Axa SA 1,800 203,760
Banque Nationale de Paris 2,800 177,609
Cap Gemini SA 780 117,400
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FRANCE - CONTINUED
Castorama Dubois Investissements SA 700 $ 125,043
Compagnie de St. Gobain 400 59,268
Elf Aquitaine 1,700 197,200
France Telecom SA 400 27,940
Groupe Danone 500 132,397
L'Oreal SA 150 85,846
Lagardere S.C.A. (Reg.) 2,000 80,610
Pinault Printemps SA 550 92,200
Renault SA 800 34,248
Rhone-Poulenc SA Class A 1,800 84,037
Sanofi SA 600 94,093
Societe Generale, France Class A 1,600 211,980
Suez Lyonnaise des Eaux 740 132,722
Synthelabo 400 76,428
Total SA Class B 1,600 187,200
Unibail 300 41,260
Vivendi SA 1,000 228,743
2,840,282
GERMANY - 8.0%
Allianz AG (Reg.) 800 274,970
BASF AG 3,000 127,672
Bayerische Hypo-Und Vereinsbank 2,200 174,311
BHF Bank AG 1,700 66,037
Daimler-Benz AG (a) 3,800 299,551
Deutsche Lufthansa AG (Reg.) 3,600 78,573
Deutsche Telekom AG 11,600 314,336
Dresdner Bank AG 1,000 38,996
Hoechst AG 2,000 84,317
Mannesmann AG 2,400 236,953
RWE AG 2,500 136,125
Viag AG 130 87,950
1,919,791
HONG KONG - 1.0%
China Telecom (Hong Kong) Ltd. 1,000 1,906
Johnson Electric Holdings Ltd. 20,000 46,485
Li & Fung Ltd. 40,000 62,496
Vtech Holdings Ltd. 35,000 131,287
242,174
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDIA - 0.6%
Dr. Reddy's Laboratories Ltd. (a) 8,000 $ 83,917
Pentafour Software & Exports Ltd. 3,900 58,949
State Bank of India (a) 717 2,633
145,499
IRELAND - 0.9%
Bank of Ireland, Inc. 6,000 109,763
CRH PLC 1,800 25,871
Elan Corp. PLC ADR (a) 1,250 87,578
223,212
ITALY - 3.1%
Assicurazioni Generali Spa 6,100 217,940
Banca Commerciale Italiana Spa 21,000 130,064
Banca di Roma (a) 21,800 38,087
Eni Spa sponsored ADR 26,900 160,701
Istituto Bancario San Paolo 13,300 197,908
744,700
JAPAN - 14.0%
Aeon Credit Service Ltd. 1,300 78,347
Aiwa Co. Ltd. 5,000 123,978
Banyu Pharmaceutical Co. Ltd. 12,000 204,460
Benesse Corp. 2,700 124,365
Fuji Bank Ltd. 1,000 3,840
Fuji Heavy Industries Ltd. 50,000 249,677
Fuji Photo Film Co. Ltd. 6,000 220,577
Honda Motor Co. Ltd. 8,000 241,068
Ito En Ltd. 2,900 121,093
Konami Co. Ltd. 2,400 70,047
Matsumotokiyoshi Co. Ltd. 2,300 87,129
Matsushita Electric Industrial Co. Ltd. 6,000 88,450
Matsushita Electric Works Co. Ltd. 1,000 9,565
Mitsubishi Trust & Banking Corp. 16,000 108,412
Nippon Telegraph & Telephone Corp. 50 392,596
Ntt Mobile Communication Network, Inc. (a) 5 181,231
Ntt Mobile Communication Network, Inc. (a)(c) 3 108,739
Orix Corp. (a) 2,000 143,780
Paris Miki, Inc. 5,400 90,984
Shimano, Inc. 3,000 66,638
Sumitomo Realty & Development Co. Ltd. (a) 2,000 6,009
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Takeda Chemical Industries Ltd. 8,000 $ 261,042
Takefuji Corp. 1,000 53,465
Terumo Corp. 7,000 147,654
Toto Ltd. 6,000 44,632
Yamanouchi Pharmaceutical Co. Ltd. 4,000 115,024
3,342,802
KOREA (SOUTH) - 0.3%
Medison Co. Ltd. 6,600 73,028
LUXEMBOURG - 0.3%
Stolt Comex Seaway SA 6,050 77,138
MALAYSIA - 0.0%
Berjaya Sports Toto BHD 10,000 6,442
MEXICO - 0.6%
Telefonos de Mexico SA de CV sponsored ADR representing 2,800 147,875
Class L shares
NETHERLANDS - 4.3%
Aegon NV 830 72,075
Ahold NV 3,500 116,435
Akzo Nobel NV 3,500 136,123
Fortis Amev NV 2,500 162,452
Heineken NV 1,000 53,303
ING Groep NV 4,846 234,681
Philips Electronics NV (Bearer) 700 38,413
Samas Groep NV 3,000 49,981
Vedior NV 3,800 96,898
VNU 2,100 72,674
1,033,035
PORTUGAL - 1.0%
Banco Pinto & Sotto Mayor SA 2,560 49,133
Electricidade de Portugal SA 3,500 88,114
Telecel Comunicacoes Pessoais SA 500 92,249
229,496
RUSSIA - 0.3%
Vimpel Communications sponsored ADR (a) 5,000 58,750
SPAIN - 3.5%
Banco Bilbao Vizcaya SA (Reg.) 6,600 89,126
Banco Central Hispanoamericano SA 9,000 99,467
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SPAIN - CONTINUED
Banco Santander SA 3,672 $ 67,333
Corporacion Mapfre Compania Internacional de Reaseguros 900 23,795
SA (Reg.)
Endesa SA 5,000 126,155
Iberdrola SA 5,000 80,846
Telefonica de Espana SA 8,000 361,621
848,343
SWEDEN - 1.4%
Astra AB Class A 2,900 47,619
Ericsson (L.M.) Telefon AB Class B 7,900 178,549
Svenska Handelsbanken 2,800 118,132
344,300
SWITZERLAND - 8.4%
Credit Suisse Group (Reg.) 950 146,367
Julius Baer Holding AG 35 107,461
Nestle SA (Reg.) 200 426,146
Novartis AG (Reg.) 340 613,768
Roche Holding AG participation certificates 25 292,235
Swisscom AG (a) 400 135,834
UBS AG (a) 1,050 288,592
2,010,403
UNITED KINGDOM - 20.7%
Allied Zurich PLC (a) 14,400 171,201
Bank of Scotland 8,000 86,940
Barclays PLC 4,000 86,203
BG PLC 14,900 97,679
BOC Group PLC 4,300 63,147
Boots Co. PLC 6,000 90,122
British Aerospace PLC 12,500 90,842
British American Tobacco PLC 2,800 25,295
British Petroleum Co. PLC 26,000 383,126
British Telecommunications PLC 20,800 270,588
Cable & Wireless Communications PLC (a) 13,000 97,958
Cadbury-Schweppes PLC 8,000 122,573
CGU PLC 9,600 152,152
Diageo PLC 8,100 87,484
GKN PLC Class L 4,400 53,490
Glaxo Wellcome PLC 14,300 444,967
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Kingfisher PLC 14,268 $ 125,312
Lloyds TSB Group PLC 29,700 366,778
Misys PLC 5,300 37,186
National Westminster Bank PLC 4,300 72,652
Pearson PLC 6,500 113,414
Prudential Corp. PLC 7,600 98,883
Reed International PLC 7,000 59,252
Rentokil Initial PLC 20,000 125,253
RMC Industries, Inc. 5,100 72,590
Saatchi & Saatchi PLC 48,600 94,402
Schroders PLC 4,500 85,525
Scottish Hydro-Electric PLC 9,100 93,485
Seton Scholl Healthcare Group PLC 3,832 48,446
Shell Transport & Trading Co. PLC (Reg.) 32,000 195,946
Siebe PLC 6,400 26,256
SmithKline Beecham PLC 21,900 279,151
Somerfield PLC 12,000 77,462
Unilever PLC 24,200 243,137
Vodafone Group PLC 17,200 231,494
Wickes PLC 36,100 103,066
Wimpey George PLC 5,100 9,650
Zeneca Group PLC 2,000 76,826
4,959,933
UNITED STATES OF AMERICA - 0.5%
Global TeleSystems Group, Inc. (a) 3,000 120,188
TOTAL COMMON STOCKS 21,236,927
(Cost $20,505,840)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NONCONVERTIBLE PREFERRED STOCKS - 3.5%
GERMANY - 1.5%
Dyckerhoff AG 240 73,712
Porsche AG (non-vtg.) 22 37,908
SAP AG (Systeme Anwendungen Produkte) 500 246,811
358,431
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - 2.0%
Telecom Italia Mobile Spa 43,800 $ 155,647
Telecom Italia Spa Risp 62,000 314,578
470,225
TOTAL NONCONVERTIBLE PREFERRED STOCKS 828,656
(Cost $837,978)
</TABLE>
CASH EQUIVALENTS - 7.9%
Taxable Central Cash Fund (b) 1,897,816 1,897,816
(Cost $1,897,816)
TOTAL INVESTMENT IN SECURITIES - 100% $ 23,963,399
(Cost $23,241,634)
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(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 $108,739 or 0.5% of net assets.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.4%
BASIC INDUSTRIES 1.8
CASH EQUIVALENTS 7.9
CONSTRUCTION & REAL ESTATE 1.6
DURABLES 4.3
ENERGY 4.7
FINANCE 21.4
HEALTH 12.9
HOLDING COMPANIES 0.3
INDUSTRIAL MACHINERY & 3.6
EQUIPMENT
MEDIA & LEISURE 3.7
NONDURABLES 5.4
RETAIL & WHOLESALE 4.3
SERVICES 3.3
TECHNOLOGY 5.4
TRANSPORTATION 0.3
UTILITIES 18.7
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $23,468,051. Net unrealized appreciation
aggregated $495,348, of which $1,735,496 related to appreciated
investment securities and $1,240,148 related to depreciated investment
securities.
At October 31, 1998, the fund had a capital loss carryforward of
approximately $2,310,991 which will expire on October 31, 2006.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $23,241,634) - $ 23,963,399
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 1,020,683
RECEIVABLE FOR FUND SHARES SOLD 69,573
DIVIDENDS RECEIVABLE 40,704
INTEREST RECEIVABLE 7,162
RECEIVABLE FROM INVESTMENT ADVISER FOR EXPENSE REDUCTIONS 25,006
TOTAL ASSETS 25,126,527
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 88,496
PAYABLE FOR INVESTMENTS PURCHASED 1,012,899
PAYABLE FOR FUND SHARES REDEEMED 5,923
OTHER PAYABLES AND ACCRUED EXPENSES 96,757
TOTAL LIABILITIES 1,204,075
NET ASSETS $ 23,922,452
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 25,929,151
ACCUMULATED NET INVESTMENT (LOSS) (16,514)
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON (2,713,345)
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 723,160
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS $ 23,922,452
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE $10.07
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($859,804 (DIVIDED BY) 85,400 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/94.25 OF $10.07) $10.68
CLASS T: $10.04
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($12,116,751 (DIVIDED BY) 1,206,627 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.50 OF $10.04) $10.40
CLASS B: $9.99
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($4,047,217 (DIVIDED BY) 405,239 SHARES) A
CLASS C: $9.98
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($2,216,832 (DIVIDED BY) 222,160 SHARES) A
INSTITUTIONAL CLASS: $10.09
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($4,681,848 (DIVIDED BY) 464,227 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
NOVEMBER 3, 1997 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1998
INVESTMENT INCOME $ 270,365
DIVIDENDS
INTEREST 89,955
360,320
LESS FOREIGN TAXES WITHHELD (27,330)
TOTAL INCOME 332,990
EXPENSES
MANAGEMENT FEE $ 116,243
TRANSFER AGENT FEES 37,486
DISTRIBUTION FEES 69,691
ACCOUNTING FEES AND EXPENSES 60,181
NON-INTERESTED TRUSTEES' COMPENSATION 50
CUSTODIAN FEES AND EXPENSES 167,909
REGISTRATION FEES 171,349
AUDIT 29,059
LEGAL 84
FOREIGN TAX EXPENSE 9,742
MISCELLANEOUS 515
TOTAL EXPENSES BEFORE REDUCTIONS 662,309
EXPENSE REDUCTIONS (304,620) 357,689
NET INVESTMENT INCOME (LOSS) (24,699)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (2,695,641)
FOREIGN CURRENCY TRANSACTIONS (26,451) (2,722,092)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 721,765
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 1,395 723,160
NET GAIN (LOSS) (1,998,932)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (2,023,631)
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF CHANGES IN NET ASSETS
NOVEMBER 3, 1997
(COMMENCEMENT
OF OPERATIONS) TO
OCTOBER 31,
1998
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ (24,699)
NET INVESTMENT INCOME (LOSS)
NET REALIZED GAIN (LOSS) (2,722,092)
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 723,160
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (2,023,631)
FROM OPERATIONS
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 25,946,083
TOTAL INCREASE (DECREASE) IN NET ASSETS 23,922,452
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS OF $16,514) $ 23,922,452
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS A
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .00
NET REALIZED AND UNREALIZED GAIN (LOSS) .07 G
TOTAL FROM INVESTMENT OPERATIONS .07
NET ASSET VALUE, END OF PERIOD $ 10.07
TOTAL RETURN B, C .70%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 860
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.06% A, F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .03% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNTS SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS T
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) .07 G
TOTAL FROM INVESTMENT OPERATIONS .04
NET ASSET VALUE, END OF PERIOD $ 10.04
TOTAL RETURN B, C .40%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 12,117
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.31% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.24)% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS B
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.07)
NET REALIZED AND UNREALIZED GAIN (LOSS) .06 G
TOTAL FROM INVESTMENT OPERATIONS (.01)
NET ASSET VALUE, END OF PERIOD $ 9.99
TOTAL RETURN B, C (.10)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,047
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.81% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.70)% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.08)
NET REALIZED AND UNREALIZED GAIN (LOSS) .06 G
TOTAL FROM INVESTMENT OPERATIONS (.02)
NET ASSET VALUE, END OF PERIOD $ 9.98
TOTAL RETURN B, C (.20)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,217
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.81% A, F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.75)% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
PERIOD ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME D .04
NET REALIZED AND UNREALIZED GAIN (LOSS) .05 G
TOTAL FROM INVESTMENT OPERATIONS .09
NET ASSET VALUE, END OF PERIOD $ 10.09
TOTAL RETURN B, C .90%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,682
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.81% A, F
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .34% A
PORTFOLIO TURNOVER 199% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH
THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING
OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor International Capital Appreciation Fund(the fund) is
a fund of Fidelity Advisor Series VIII (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, as an open-end
management investment company organized as a Massachusetts business
trust.
The fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. Investment income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class of shares
differs in its respective distribution, transfer agent, and certain
other class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. 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. If trading or events occurring in other markets
after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then
they are valued at their fair value taking this trading or these
events into account. Fair value is determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Securities (including restricted securities) for
which quotations are not readily available are valued primarily using
dealer-supplied valuations or at their fair value. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value. Equity securities that have reached the limit for aggregate
foreign ownership may trade at a premium to the local share price. If
the broker-quoted premium is not readily available as a result of
limited share activity, the securities are valued at the last sale
price of the local share in the principal market in which such
securities are normally traded.
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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. The fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. By so
qualifying, the fund will not be subject to income taxes to the extent
that it distributes substantially all of its taxable income for its
fiscal year. The fund may be subject to foreign taxes on income and
gains on investments which are accrued based upon the fund's
understanding of the tax rules and regulations that exist in the
markets in which it invests. The fund accrues such taxes as
applicable. 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. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income is accrued as earned. Investment
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences may result in distribution
reclassifications.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated net investment loss and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $51,743,649 and $27,704,190.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
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 .2500% to .5200% for the
period. The annual individual fund fee rate is .45%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .73% of average net
assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research (Far East) Inc., Fidelity International
Investment Advisors (FIIA), and Fidelity Investments Japan Limited
(FIJ). In addition, FIIA entered into a sub-advisory agreement with
its subsidiary, Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L). 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 FIIA(U.K.)L a fee based on costs incurred for either
service.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
CLASS C 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 1,366 $ 254
CLASS T 33,900 3,411
CLASS B 22,091 16,739
CLASS C 12,334 12,325
$ 69,691 $ 32,729
Under the Plans, FMR may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The
Plans also authorize payments to third parties that assist in the sale
of each class' shares or render shareholder support services. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 57
CLASS T 75
CLASS B 58
CLASS C 3,752
INSTITUTIONAL CLASS 3
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED BY
FDC FDC
CLASS A $ 16,408 $ 5,206
CLASS T 68,287 18,616
CLASS B 5,042 5,042 *
CLASS C 1,231 1,231 *
$ 90,968 $ 30,095
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 2,185 .39 *
CLASS T 18,048 .26 *
CLASS B 6,354 .28 *
CLASS C 4,132 .33 *
INSTITUTIONAL CLASS 6,767 .14 *
$ 37,486
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains each 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 $105 for the period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 2.00% $ 24,491
CLASS T 2.25% 115,233
CLASS B 2.75% 48,536
CLASS C 2.75% 32,831
INSTITUTIONAL CLASS 1.75% 82,787
$ 303,878
Effective December 1, 1998, Class A, Class T, Class B, Class C and
Institutional Class expense limitations were changed to 1.70%, 1.95%,
2.45%, 2.45% and 1.45% of each class' average net assets,
respectively.
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $481 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $261 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 21% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
SHARES DOLLARS
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 A 1998 A
CLASS A 103,525 $ 1,119,865
SHARES SOLD
SHARES REDEEMED (18,125) (186,338)
NET INCREASE (DECREASE) 85,400 $ 933,527
CLASS T 1,397,855 $ 15,422,063
SHARES SOLD
SHARES REDEEMED (191,228) (1,955,961)
NET INCREASE (DECREASE) 1,206,627 $ 13,466,102
CLASS B 456,271 $ 5,032,634
SHARES SOLD
SHARES REDEEMED (51,032) (570,862)
NET INCREASE (DECREASE) 405,239 $ 4,461,772
CLASS C 260,112 $ 2,832,954
SHARES SOLD
SHARES REDEEMED (37,952) (392,926)
NET INCREASE (DECREASE) 222,160 $ 2,440,028
INSTITUTIONAL CLASS 464,227 $ 4,644,654
SHARES SOLD
A SHARE TRANSACTIONS FOR CLASS A, T, B, C, AND INSTITUTIONAL CLASS ARE
FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF SHARES) TO
OCTOBER 31, 1998.
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 19,057
CLASS T 62,259
CLASS B 31,244
CLASS C 22,362
INSTITUTIONAL CLASS 36,427
$ 171,349
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VIII and the Shareholders
of Fidelity Advisor International Capital Appreciation 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 International Capital Appreciation Fund (a fund of
Fidelity Advisor Series VIII) at October 31, 1998, and the results of
its operations, the changes in its net assets and the financial
highlights for the period November 3, 1997 (commencement of
operations) to October 31, 1998, 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 International Capital
Appreciation Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted
our audit 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 audit, which included confirmation of securities at October
31, 1998 by correspondence with the custodian and brokers, provides a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 1998
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
Fidelity Investments Japan Limited
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard Spillane, Jr., Vice President
Kevin McCarey, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuantSM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
AICAPI-ANN-1298 66783
1.711986.100
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
(2_FIDELITY_LOGOS)(REGISTERED TRADEMARK)
FIDELITY ADVISOR
OVERSEAS
FUND - CLASS A, CLASS T, CLASS B AND CLASS C
ANNUAL REPORT
OCTOBER 31, 1998
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 12 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 15 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 16 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 29 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 38 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 48 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 49
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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
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
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories 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. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR OVERSEAS FUND - CLASS A
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). The initial offering of Class A shares took place on September
3, 1996. Class A shares' bear a 0.25% 12b-1 fee. Returns prior to
September 3, 1996 are those of Class T, the original class of the
fund, and reflect Class T shares' 0.50% 12b-1 fee (0.65% prior to
January 1, 1996). If Fidelity had not reimbursed certain class
expenses, the total returns would have been lower. Prior to December
1, 1992, Fidelity Advisor Overseas Fund operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - CL A 3.73% 45.79% 95.00%
FIDELITY ADV OVERSEAS - CL A -2.24% 37.41% 83.79%
(INCL. 5.75% SALES CHARGE)
MSCI EAFE(REGISTERED TRADEMARK) 9.89% 39.58% 76.78%
INTERNATIONAL FUNDS AVERAGE 4.07% 41.60% N/A
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on April 23, 1990. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare Class A's returns to
the performance of the Morgan Stanley Capital International Europe,
Australasia, Far East Index (MSCI EAFE Index) - a market
capitalization weighted, unmanaged index of over 1,000 foreign stocks.
To measure how Class A's performance stacked up against its peers, you
can compare it to the international funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past one year average represents a peer
group of 489 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - CL A 3.73% 7.83% 8.14%
FIDELITY ADV OVERSEAS - CL A -2.24% 6.56% 7.40%
(INCL. 5.75% SALES CHARGE)
MSCI EAFE 9.89% 6.90% 6.91%
INTERNATIONAL FUNDS AVERAGE 4.07% 7.02% N/A
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' cumulative return
and show you what would have happened if Class A shares had performed
at a constant rate each year.
$10,000 OVER LIFE OF FUND
FA Overseas -CL A MS EAFE Index (Net)
00252 MS001
1990/04/23 9425.00 10000.00
1990/04/30 9321.33 9870.12
1990/05/31 9726.60 10996.32
1990/06/30 10216.70 10899.46
1990/07/31 10819.90 11052.99
1990/08/31 9528.68 9979.65
1990/09/30 8718.13 8588.84
1990/10/31 9000.88 9927.15
1990/11/30 9010.30 9341.56
1990/12/31 8922.92 9492.89
1991/01/31 9141.47 9799.94
1991/02/28 9550.08 10850.48
1991/03/31 9017.94 10199.10
1991/04/30 9008.44 10299.26
1991/05/31 9017.94 10406.73
1991/06/30 8343.26 9642.03
1991/07/31 8818.39 10115.76
1991/08/31 8951.42 9910.33
1991/09/30 9417.05 10468.87
1991/10/31 9293.52 10617.27
1991/11/30 9055.95 10121.61
1991/12/31 9527.78 10644.32
1992/01/31 9556.71 10416.96
1992/02/29 9778.51 10044.12
1992/03/31 9479.56 9381.04
1992/04/30 9971.38 9425.64
1992/05/31 10376.41 10056.55
1992/06/30 10212.47 9579.54
1992/07/31 9817.08 9334.37
1992/08/31 9547.06 9919.83
1992/09/30 9402.41 9723.94
1992/10/31 8746.65 9213.87
1992/11/30 8630.93 9300.58
1992/12/31 9067.23 9348.68
1993/01/31 9525.46 9347.54
1993/02/28 9730.21 9629.89
1993/03/31 10324.94 10469.29
1993/04/30 11124.41 11462.85
1993/05/31 11416.91 11704.95
1993/06/30 11104.92 11522.33
1993/07/31 11650.90 11925.66
1993/08/31 12421.13 12569.45
1993/09/30 12294.38 12286.52
1993/10/31 12606.37 12665.16
1993/11/30 12118.88 11558.09
1993/12/31 12860.60 12392.67
1994/01/31 13710.16 13440.41
1994/02/28 13524.62 13403.18
1994/03/31 13182.85 12825.89
1994/04/30 13749.22 13370.08
1994/05/31 13495.33 13293.32
1994/06/30 13387.91 13481.18
1994/07/31 13729.69 13610.83
1994/08/31 13856.64 13933.07
1994/09/30 13426.97 13494.24
1994/10/31 13729.69 13943.59
1994/11/30 13192.61 13273.46
1994/12/31 13115.01 13356.58
1995/01/31 12573.88 12843.48
1995/02/28 12603.39 12806.62
1995/03/31 12996.94 13605.38
1995/04/30 13380.65 14117.06
1995/05/31 13528.23 13948.78
1995/06/30 13626.62 13704.16
1995/07/31 14216.94 14557.33
1995/08/31 13803.72 14002.02
1995/09/30 13970.98 14275.48
1995/10/31 13695.49 13891.75
1995/11/30 13823.39 14278.28
1995/12/31 14248.20 14853.55
1996/01/31 14505.82 14914.53
1996/02/29 14535.54 14964.95
1996/03/31 14743.62 15282.75
1996/04/30 15130.04 15727.07
1996/05/31 15130.04 15437.66
1996/06/30 15239.03 15524.55
1996/07/31 14793.16 15070.80
1996/08/31 14892.24 15103.83
1996/09/30 15308.39 15505.07
1996/10/31 15149.86 15346.41
1996/11/30 15932.62 15957.02
1996/12/31 16008.37 15751.75
1997/01/31 16008.37 15203.59
1997/02/28 16365.04 15455.97
1997/03/31 16501.42 15514.70
1997/04/30 16627.30 15600.03
1997/05/31 17665.85 16618.24
1997/06/30 18589.01 17537.23
1997/07/31 19218.43 17823.44
1997/08/31 17770.76 16494.71
1997/09/30 19082.06 17421.22
1997/10/31 17718.30 16086.58
1997/11/30 17655.36 15925.71
1997/12/31 17792.98 16067.61
1998/01/31 18367.31 16805.43
1998/02/28 19392.09 17886.86
1998/03/31 20259.22 18441.00
1998/04/30 20811.02 18590.00
1998/05/31 20777.24 18503.19
1998/06/30 20563.27 18646.59
1998/07/31 20720.93 18839.02
1998/08/31 16948.37 16508.44
1998/09/30 16903.33 16005.92
1998/10/30 18378.57 17678.06
IMATRL PRASUN SHR__CHT 19981031 19981106 160806 R00000000000106
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Overseas Fund - Class A on April 23,
1990, when the fund started, and the current 5.75% sales charge was
paid. As the chart shows, by October 31, 1998, the value of the
investment would have grown to $18,379 - an 83.79% increase on the
initial investment. For comparison, look at how the MSCI EAFE Index
did over the same period. With dividends reinvested, the same $10,000
would have grown to $17,678 - a 76.78% increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FIDELITY ADVISOR OVERSEAS FUND - CLASS T
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). Prior to December 1, 1992, Fidelity Advisor Overseas Fund
operated under a different investment objective. Accordingly, the
fund's historical performance may not represent its current investment
policies.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - CL T 3.57% 45.80% 95.02%
FIDELITY ADV OVERSEAS - CL T -0.06% 40.70% 88.19%
(INCL. 3.50% SALES CHARGE)
MSCI EAFE 9.89% 39.58% 76.78%
INTERNATIONAL FUNDS AVERAGE 4.07% 41.60% N/A
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on April 23, 1990. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare Class T's returns to
the performance of the Morgan Stanley Capital International Europe,
Australasia, Far East Index (MSCI EAFE Index) - a market
capitalization weighted, unmanaged index of over 1,000 foreign stocks.
To measure how Class T's performance stacked up against its peers, you
can compare it to the international funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past one year average represents a peer
group of 489 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - CL T 3.57% 7.83% 8.15%
FIDELITY ADV OVERSEAS - CL T -0.06% 7.07% 7.70%
(INCL. 3.50% SALES CHARGE)
MSCI EAFE 9.89% 6.90% 6.91%
INTERNATIONAL FUNDS AVERAGE 4.07% 7.02% N/A
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' cumulative return
and show you what would have happened if Class T shares had performed
at a constant rate each year.
$10,000 OVER LIFE OF FUND
FA Overseas -CL T MS EAFE Index (Net)
00175 MS001
1990/04/23 9650.00 10000.00
1990/04/30 9543.85 9870.12
1990/05/31 9958.80 10996.32
1990/06/30 10460.60 10899.46
1990/07/31 11078.20 11052.99
1990/08/31 9756.15 9979.65
1990/09/30 8926.25 8588.84
1990/10/31 9215.75 9927.15
1990/11/30 9225.40 9341.56
1990/12/31 9135.93 9492.89
1991/01/31 9359.71 9799.94
1991/02/28 9778.07 10850.48
1991/03/31 9233.22 10199.10
1991/04/30 9223.49 10299.26
1991/05/31 9233.22 10406.73
1991/06/30 8542.43 9642.03
1991/07/31 9028.91 10115.76
1991/08/31 9165.12 9910.33
1991/09/30 9641.86 10468.87
1991/10/31 9515.38 10617.27
1991/11/30 9272.14 10121.61
1991/12/31 9755.23 10644.32
1992/01/31 9784.85 10416.96
1992/02/29 10011.95 10044.12
1992/03/31 9705.86 9381.04
1992/04/30 10209.42 9425.64
1992/05/31 10624.12 10056.55
1992/06/30 10456.27 9579.54
1992/07/31 10051.44 9334.37
1992/08/31 9774.98 9919.83
1992/09/30 9626.87 9723.94
1992/10/31 8955.46 9213.87
1992/11/30 8836.98 9300.58
1992/12/31 9283.69 9348.68
1993/01/31 9752.86 9347.54
1993/02/28 9962.49 9629.89
1993/03/31 10571.42 10469.29
1993/04/30 11389.98 11462.85
1993/05/31 11689.46 11704.95
1993/06/30 11370.02 11522.33
1993/07/31 11929.04 11925.66
1993/08/31 12717.65 12569.45
1993/09/30 12587.88 12286.52
1993/10/31 12907.32 12665.16
1993/11/30 12408.19 11558.09
1993/12/31 13167.62 12392.67
1994/01/31 14037.46 13440.41
1994/02/28 13847.49 13403.18
1994/03/31 13497.56 12825.89
1994/04/30 14077.45 13370.08
1994/05/31 13817.50 13293.32
1994/06/30 13707.52 13481.18
1994/07/31 14057.46 13610.83
1994/08/31 14187.43 13933.07
1994/09/30 13747.51 13494.24
1994/10/31 14057.46 13943.59
1994/11/30 13507.56 13273.46
1994/12/31 13428.10 13356.58
1995/01/31 12874.05 12843.48
1995/02/28 12904.27 12806.62
1995/03/31 13307.21 13605.38
1995/04/30 13700.08 14117.06
1995/05/31 13851.19 13948.78
1995/06/30 13951.92 13704.16
1995/07/31 14556.34 14557.33
1995/08/31 14133.25 14002.02
1995/09/30 14304.50 14275.48
1995/10/31 14022.44 13891.75
1995/11/30 14153.40 14278.28
1995/12/31 14588.34 14853.55
1996/01/31 14852.11 14914.53
1996/02/29 14882.54 14964.95
1996/03/31 15095.59 15282.75
1996/04/30 15491.24 15727.07
1996/05/31 15491.24 15437.66
1996/06/30 15602.83 15524.55
1996/07/31 15146.31 15070.80
1996/08/31 15247.76 15103.83
1996/09/30 15683.99 15505.07
1996/10/31 15521.67 15346.41
1996/11/30 16323.12 15957.02
1996/12/31 16398.87 15751.75
1997/01/31 16398.87 15203.59
1997/02/28 16772.54 15455.97
1997/03/31 16911.33 15514.70
1997/04/30 17039.45 15600.03
1997/05/31 18107.08 16618.24
1997/06/30 19057.28 17537.23
1997/07/31 19708.54 17823.44
1997/08/31 18224.52 16494.71
1997/09/30 19559.07 17421.22
1997/10/31 18171.14 16086.58
1997/11/30 18107.08 15925.71
1997/12/31 18248.38 16067.61
1998/01/31 18819.35 16805.43
1998/02/28 19869.95 17886.86
1998/03/31 20760.67 18441.00
1998/04/30 21320.23 18590.00
1998/05/31 21274.55 18503.19
1998/06/30 21057.58 18646.59
1998/07/31 21217.45 18839.02
1998/08/31 17346.24 16508.44
1998/09/30 17311.98 16005.92
1998/10/30 18819.35 17678.06
IMATRL PRASUN SHR__CHT 19981031 19981106 162021 R00000000000106
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Overseas Fund - Class T on April 23,
1990, when the fund started, and the current 3.50% sales charge was
paid. As the chart shows, by October 31, 1998, the value of the
investment would have grown to $18,819 - an 88.19% increase on the
initial investment. For comparison, look at how the MSCI EAFE Index
did over the same period. With dividends reinvested, the same $10,000
investment would have grown to $17,678 - a 76.78% increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FIDELITY ADVISOR OVERSEAS FUND - CLASS B
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). The initial offering of Class B shares took place on July 3,
1995. Class B shares bear a 1.00% 12b-1 fee. Returns prior to July 3,
1995 are those of Class T, the original class of the fund, and reflect
Class T shares' prior 0.65% 12b-1 fee. Had Class B shares' 12b-1 fee
been reflected, returns prior to July 3, 1995 would have been lower.
Class B shares' contingent deferred sales charges included in the past
one year, past five years and life of fund total return figures are
5%, 2% and 0%, respectively. If Fidelity had not reimbursed certain
class expenses, the total returns would have been lower. Prior to
December 1, 1992, Fidelity Advisor Overseas Fund operated under a
different investment objective. Accordingly, the fund's historical
performance may not represent its current investment policies.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - CL B 3.00% 42.95% 91.20%
FIDELITY ADV OVERSEAS - CL B -1.81% 40.95% 91.20%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
MSCI EAFE 9.89% 39.58% 76.78%
INTERNATIONAL FUNDS AVERAGE 4.07% 41.60% N/A
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on April 23, 1990. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare Class B's returns to
the performance of the Morgan Stanley Capital International Europe,
Australasia, Far East Index (MSCI EAFE Index) - a market
capitalization weighted, unmanaged index of over 1,000 foreign stocks.
To measure how Class B's performance stacked up against its peers, you
can compare it to the international funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past one year average represents a peer
group of 489 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - CL B 3.00% 7.41% 7.90%
FIDELITY ADV OVERSEAS - CL B -1.81% 7.11% 7.90%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
MSCI EAFE 9.89% 6.90% 6.91%
INTERNATIONAL FUNDS AVERAGE 4.07% 7.02% N/A
AVERAGE ANNUAL TOTAL RETURNS take Class B shares' cumulative return
and show you what would have happened if Class B shares had performed
at a constant rate each year.
$10,000 OVER LIFE OF FUND
FA Overseas -CL B MS EAFE Index (Net)
00654 MS001
1990/04/23 10000.00 10000.00
1990/04/30 9890.00 9870.12
1990/05/31 10320.00 10996.32
1990/06/30 10840.00 10899.46
1990/07/31 11480.00 11052.99
1990/08/31 10110.00 9979.65
1990/09/30 9250.00 8588.84
1990/10/31 9550.00 9927.15
1990/11/30 9560.00 9341.56
1990/12/31 9467.28 9492.89
1991/01/31 9699.18 9799.94
1991/02/28 10132.72 10850.48
1991/03/31 9568.11 10199.10
1991/04/30 9558.02 10299.26
1991/05/31 9568.11 10406.73
1991/06/30 8852.26 9642.03
1991/07/31 9356.38 10115.76
1991/08/31 9497.53 9910.33
1991/09/30 9991.56 10468.87
1991/10/31 9860.49 10617.27
1991/11/30 9608.44 10121.61
1991/12/31 10109.05 10644.32
1992/01/31 10139.74 10416.96
1992/02/29 10375.08 10044.12
1992/03/31 10057.89 9381.04
1992/04/30 10579.71 9425.64
1992/05/31 11009.45 10056.55
1992/06/30 10835.51 9579.54
1992/07/31 10416.00 9334.37
1992/08/31 10129.51 9919.83
1992/09/30 9976.03 9723.94
1992/10/31 9280.27 9213.87
1992/11/30 9157.49 9300.58
1992/12/31 9620.40 9348.68
1993/01/31 10106.59 9347.54
1993/02/28 10323.83 9629.89
1993/03/31 10954.84 10469.29
1993/04/30 11803.09 11462.85
1993/05/31 12113.43 11704.95
1993/06/30 11782.40 11522.33
1993/07/31 12361.70 11925.66
1993/08/31 13178.91 12569.45
1993/09/30 13044.43 12286.52
1993/10/31 13375.46 12665.16
1993/11/30 12858.23 11558.09
1993/12/31 13645.20 12392.67
1994/01/31 14546.59 13440.41
1994/02/28 14349.73 13403.18
1994/03/31 13987.11 12825.89
1994/04/30 14588.03 13370.08
1994/05/31 14318.65 13293.32
1994/06/30 14204.68 13481.18
1994/07/31 14567.31 13610.83
1994/08/31 14702.00 13933.07
1994/09/30 14246.13 13494.24
1994/10/31 14567.31 13943.59
1994/11/30 13997.47 13273.46
1994/12/31 13915.13 13356.58
1995/01/31 13340.98 12843.48
1995/02/28 13372.30 12806.62
1995/03/31 13789.86 13605.38
1995/04/30 14196.98 14117.06
1995/05/31 14353.56 13948.78
1995/06/30 14457.95 13704.16
1995/07/31 15084.29 14557.33
1995/08/31 14645.85 14002.02
1995/09/30 14823.32 14275.48
1995/10/31 14531.03 13891.75
1995/11/30 14666.73 14278.28
1995/12/31 15108.74 14853.55
1996/01/31 15373.43 14914.53
1996/02/29 15384.02 14964.95
1996/03/31 15585.19 15282.75
1996/04/30 15987.52 15727.07
1996/05/31 15966.35 15437.66
1996/06/30 16072.23 15524.55
1996/07/31 15595.78 15070.80
1996/08/31 15691.07 15103.83
1996/09/30 16125.16 15505.07
1996/10/31 15945.17 15346.41
1996/11/30 16771.02 15957.02
1996/12/31 16838.38 15751.75
1997/01/31 16838.38 15203.59
1997/02/28 17205.39 15455.97
1997/03/31 17338.86 15514.70
1997/04/30 17461.20 15600.03
1997/05/31 18540.01 16618.24
1997/06/30 19507.60 17537.23
1997/07/31 20163.79 17823.44
1997/08/31 18628.98 16494.71
1997/09/30 19985.84 17421.22
1997/10/31 18562.25 16086.58
1997/11/30 18484.40 15925.71
1997/12/31 18620.53 16067.61
1998/01/31 19191.27 16805.43
1998/02/28 20249.52 17886.86
1998/03/31 21141.31 18441.00
1998/04/30 21712.06 18590.00
1998/05/31 21664.49 18503.19
1998/06/30 21426.68 18646.59
1998/07/31 21569.37 18839.02
1998/08/31 17645.50 16508.44
1998/09/30 17586.05 16005.92
1998/10/30 19119.93 17678.06
IMATRL PRASUN SHR__CHT 19981031 19981202 161549 R00000000000106
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Overseas Fund - Class B on April 23,
1990, when the fund started. As the chart shows, by October 31, 1998,
the value of the investment would have been $19,120 - a 91.20%
increase on the initial investment. For comparison, look at how the
MSCI EAFE Index did over the same period. With dividends reinvested,
the same $10,000 investment would have grown to $17,678 - a 76.78%
increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FIDELITY ADVISOR OVERSEAS FUND - CLASS C
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). The initial offering of Class C shares took place on November
3, 1997. Class C shares bear a 1.00% 12b-1 fee. Returns between July
3, 1995 and November 3, 1997 are those of Class B shares and reflect
Class B shares' 1.00% 12b-1 fee. Returns prior to July 3, 1995 are
those of Class T, the original class of the fund, and reflect Class T
shares' prior 0.65% 12b-1 fee. Had Class C shares' 12b-1 fee been
reflected, returns prior to July 3, 1995 would have been lower. Class
C shares' contingent deferred sales charge included in the past one
year, past five year and life of fund total return figures are 1%, 0%
and 0%, respectively. If Fidelity had not reimbursed certain class
expenses, the total returns would have been lower. Prior to December
1, 1992, Fidelity Advisor Overseas Fund operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - CL C 2.84% 42.73% 90.90%
FIDELITY ADV OVERSEAS - CL C 1.86% 42.73% 90.90%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
MSCI EAFE 9.89% 39.58% 76.78%
INTERNATIONAL FUNDS AVERAGE 4.07% 41.60% N/A
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, one year, five years or since
the fund started on April 23, 1990. For example, if you had invested
$1,000 in a fund that had a 5% return over the past year, the value of
your investment would be $1,050. You can compare Class C's returns to
the performance of the Morgan Stanley Capital International Europe,
Australasia, Far East Index (MSCI EAFE Index) - a market
capitalization weighted, unmanaged index of over 1,000 foreign stocks.
To measure how Class C's performance stacked up against its peers, you
can compare it to the international funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past one year average represents a peer
group of 489 mutual funds. These benchmarks include reinvested
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - CL C 2.84% 7.37% 7.88%
FIDELITY ADV OVERSEAS - CL C 1.86% 7.37% 7.88%
(INCL. CONTINGENT DEFERRED SALES CHARGE)
MSCI EAFE 9.89% 6.90% 6.91%
INTERNATIONAL FUNDS AVERAGE 4.07% 7.02% N/A
AVERAGE ANNUAL TOTAL RETURNS take Class C shares' cumulative return
and show you what would have happened if Class C shares had performed
at a constant rate each year.
$10,000 OVER LIFE OF FUND
FA Overseas -CL C MS EAFE Index (Net)
00485 MS001
1990/04/23 10000.00 10000.00
1990/04/30 9890.00 9870.12
1990/05/31 10320.00 10996.32
1990/06/30 10840.00 10899.46
1990/07/31 11480.00 11052.99
1990/08/31 10110.00 9979.65
1990/09/30 9250.00 8588.84
1990/10/31 9550.00 9927.15
1990/11/30 9560.00 9341.56
1990/12/31 9467.28 9492.89
1991/01/31 9699.18 9799.94
1991/02/28 10132.72 10850.48
1991/03/31 9568.11 10199.10
1991/04/30 9558.02 10299.26
1991/05/31 9568.11 10406.73
1991/06/30 8852.26 9642.03
1991/07/31 9356.38 10115.76
1991/08/31 9497.53 9910.33
1991/09/30 9991.56 10468.87
1991/10/31 9860.49 10617.27
1991/11/30 9608.44 10121.61
1991/12/31 10109.05 10644.32
1992/01/31 10139.74 10416.96
1992/02/29 10375.08 10044.12
1992/03/31 10057.89 9381.04
1992/04/30 10579.71 9425.64
1992/05/31 11009.45 10056.55
1992/06/30 10835.51 9579.54
1992/07/31 10416.00 9334.37
1992/08/31 10129.51 9919.83
1992/09/30 9976.03 9723.94
1992/10/31 9280.27 9213.87
1992/11/30 9157.49 9300.58
1992/12/31 9620.40 9348.68
1993/01/31 10106.59 9347.54
1993/02/28 10323.83 9629.89
1993/03/31 10954.84 10469.29
1993/04/30 11803.09 11462.85
1993/05/31 12113.43 11704.95
1993/06/30 11782.40 11522.33
1993/07/31 12361.70 11925.66
1993/08/31 13178.91 12569.45
1993/09/30 13044.43 12286.52
1993/10/31 13375.46 12665.16
1993/11/30 12858.23 11558.09
1993/12/31 13645.20 12392.67
1994/01/31 14546.59 13440.41
1994/02/28 14349.73 13403.18
1994/03/31 13987.11 12825.89
1994/04/30 14588.03 13370.08
1994/05/31 14318.65 13293.32
1994/06/30 14204.68 13481.18
1994/07/31 14567.31 13610.83
1994/08/31 14702.00 13933.07
1994/09/30 14246.13 13494.24
1994/10/31 14567.31 13943.59
1994/11/30 13997.47 13273.46
1994/12/31 13915.13 13356.58
1995/01/31 13340.98 12843.48
1995/02/28 13372.30 12806.62
1995/03/31 13789.86 13605.38
1995/04/30 14196.98 14117.06
1995/05/31 14353.56 13948.78
1995/06/30 14457.95 13704.16
1995/07/31 15084.29 14557.33
1995/08/31 14645.85 14002.02
1995/09/30 14823.32 14275.48
1995/10/31 14531.03 13891.75
1995/11/30 14666.73 14278.28
1995/12/31 15108.74 14853.55
1996/01/31 15373.43 14914.53
1996/02/29 15384.02 14964.95
1996/03/31 15585.19 15282.75
1996/04/30 15987.52 15727.07
1996/05/31 15966.35 15437.66
1996/06/30 16072.23 15524.55
1996/07/31 15595.78 15070.80
1996/08/31 15691.07 15103.83
1996/09/30 16125.16 15505.07
1996/10/31 15945.17 15346.41
1996/11/30 16771.02 15957.02
1996/12/31 16838.38 15751.75
1997/01/31 16838.38 15203.59
1997/02/28 17205.39 15455.97
1997/03/31 17338.86 15514.70
1997/04/30 17461.20 15600.03
1997/05/31 18540.01 16618.24
1997/06/30 19507.60 17537.23
1997/07/31 20163.79 17823.44
1997/08/31 18628.98 16494.71
1997/09/30 19985.84 17421.22
1997/10/31 18562.25 16086.58
1997/11/30 18479.42 15925.71
1997/12/31 18612.04 16067.61
1998/01/31 19195.12 16805.43
1998/02/28 20256.34 17886.86
1998/03/31 21154.29 18441.00
1998/04/30 21714.05 18590.00
1998/05/31 21667.40 18503.19
1998/06/30 21422.50 18646.59
1998/07/31 21574.11 18839.02
1998/08/31 17644.12 16508.44
1998/09/30 17585.81 16005.92
1998/10/30 19090.17 17678.06
IMATRL PRASUN SHR__CHT 19981031 19981202 161758 R00000000000106
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Overseas Fund - Class C on April 23,
1990, when the fund started. As the chart shows, by October 31, 1998,
the value of the investment would have been $19,090 - a 90.90%
increase on the initial investment. For comparison, look at how the
MSCI EAFE Index did over the same period. With dividends reinvested,
the same $10,000 investment would have grown to $17,678 - a 76.78%
increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Like a white-knuckle flyer on a long
overseas flight, international
investors were tightening their seat
belts to ride out the turbulent
international equity markets over
the past year. For the 12-month
period ending October 31, 1998,
the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 9.89%.
European markets were the primary
contributors to this solid return.
They benefited from corporate
restructurings designed to cut costs
and improve share prices, and
from solid economic growth
prospects. France and Germany
were particularly strong
performers. On the opposite side
of the world, emerging markets in
Latin America suffered considerably.
And in large part, they had Russia
to blame. Russia's devaluation of its
currency and debt defaults caused
investors to sell off investments
considered to carry more risk, such
as emerging-market equities. Markets
in Venezuela and Brazil, already
teetering on the edge thanks to
political instability, dropped
precipitously. Currency
devaluations also continued to
plague Southeast Asian countries,
specifically Indonesia, Thailand,
Malaysia and South Korea. The
Japanese economy continued to
sink lower, as the ailing banking
sector seemed oblivious to
repeated promises - and a lack
of action - by the Japanese
government for assistance.
An interview with Richard Mace, Portfolio Manager of Fidelity Advisor
Overseas Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. For the 12 months that ended October 31, 1998, the fund's Class A,
Class T, Class B and Class C shares returned 3.73%, 3.57%, 3.00%, and
2.84%, respectively. These returns lagged that of the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE) Index,
which returned 9.89% over the same time period. The international
funds average, as tracked by Lipper Analytical Services, had a
12-month return of 4.07% as of October 31, 1998.
Q. WHY DID THE FUND UNDERPERFORM BOTH THE EAFE INDEX AND THE LIPPER
PEER GROUP?
A. A major reason was the fund's exposure both to investments in
emerging-market countries as well as to companies whose businesses
were negatively affected by emerging-market disruptions. The fund's
exposure to emerging-market securities totaled slightly less than 4%
of the fund's investments, but several of the fund's commodities and
banking-related positions performed weakly. Declining demand led to
lower commodity prices in general, while banks reported an increase in
problematic loans stemming from stagnant economic growth. Commodity
holdings that were hurt during the period included energy-related
stocks Elf Aquitaine, based in France, as well as Brazil-based
Petrobras and Canadian Natural Resources. Banking positions that were
negatively affected included Mexican holdings Grupo Financiero
Bancomer and BANACCI.
Q. YOU INCREASED THE FUND'S EXPOSURE TO UTILITIES STOCKS DURING THE
PERIOD, FROM AROUND 8% TO JUST UNDER 14% OF INVESTMENTS. WHY?
A. The utilities sector - particularly the telephone utility segment -
provided a number of opportunities over the past year. Companies have
had to cope with a rapidly changing competitive environment as
industry deregulation opened up new opportunities for expansion into
new markets. I found a number of telecommunications companies in
Europe and Japan that I felt were attractively valued, particularly
among cellular providers. These included United Kingdom-based Vodafone
- - which the fund has had a stake in for some time - Germany's
Mannesmann and Spain's Telefonica. Each of these positions contributed
positively to the fund's performance.
Q. WHICH OTHER STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. European business services providers such as Britain's Rentokil and
Securicor got a boost from improved business conditions, as did
computer systems and software providers such as France's Cap Gemini
and Atos, and Denmark's International Service Systems. In terms of
disappointments, paper stocks were another commodities area hit hard
by falling prices. The fund's positions in Canadian paper companies
Domtar and St. Laurent Paperboard, for instance, were notable
detractors.
Q. SHAREHOLDERS MAY NOTICE THAT THE FUND HOLDS SEVERAL POSITIONS IN
FUTURES CONTRACTS. WHAT ROLE DO THESE INVESTMENTS PLAY IN THE
PORTFOLIO?
A. While there are many different uses for futures contracts, I use
them in the fund to be as fully invested in equities as possible.
During periods of inconsistent cash flows, volatile financial markets
or if the fund experiences a temporary cash buildup due to my selling
a few stocks, the use of futures can provide a low-cost, liquid way
for the fund to remain substantially invested in a diversified group
of stocks.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I'm optimistic that Europe's economies will continue to improve. As
the latter months of this past period proved, though, corporate
earnings must be watched carefully and a determination must be made as
to whether those earnings support prevailing valuations. If earnings
disappoint, more stock market corrections could become reality. It's
becoming an old story, but as far as the situation in Japan goes, I'll
continue to look for glimmers of economic improvement. Towards the end
of the period, we began to see Japanese companies adopt a more
shareholder-friendly focus. Lastly, the emerging markets still appear
to be in turmoil at this point. Continuing economic and currency
concerns, combined with social unrest, provide a less-than-promising
outlook for a fast recuperation. Regardless, I'll keep an eye on a
number of companies that have shown valuation improvements over the
past few months.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
RICK MACE DISCUSSES THE
IMPACT OF THE UPCOMING
INTRODUCTION OF THE EURO:
"On January 1, 1999, 11 of the `in'
countries of the European Union
- - including Germany, France,
Italy, Spain, the Netherlands,
Belgium, Austria, Finland,
Portugal, Ireland and Luxembourg
- - will officially adopt the euro as
their currency. The introduction
of the euro could have the effect
of reducing the costs of doing
business throughout Europe. This
could make Europe a more
attractive place to do business
and, in turn, could heighten
interest among multinational
corporations around the world in
both owning more European
businesses and expanding their
operations in the region. In
addition, the launch of the euro
should serve to improve the
efficiency of those businesses
operating in Europe.
"In terms of the impact the euro
will have on the way I manage the
fund, it will be extremely minimal.
My stock selection process is built
on the foundation of individual
stock analysis and that has never
wavered. Rather, I'll have to get
used to the fact that a security that
was valued at 10 Deutsche marks
the week before may be worth only
five euro on January 4. We may also
see more investment opportunities
throughout Europe, as companies
could forego the traditional bank
route and go to the capital markets
to raise money for improvements."
FUND FACTS
GOAL: seeks growth of capital
primarily through investments
in foreign securities
START DATE: April 23, 1990
SIZE: as of October 31, 1998,
more than $1.2 billion
MANAGER: Richard Mace,
since 1996; joined Fidelity
in 1987
(checkmark)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
NOVARTIS AG (REG.) (SWITZERLAND, 1.8 1.8
DRUGS & PHARMACEUTICALS)
ELF AQUITAINE (FRANCE, OIL & GAS) 1.7 0.9
TELEFONICA DE ESPANA SA (SPAIN, 1.7 1.0
TELEPHONE SERVICES)
TOTAL SA CLASS B (FRANCE, OIL & GAS) 1.6 2.0
SMITHKLINE BEECHAM PLC (UNITED KINGDOM, 1.4 1.1
DRUGS & PHARMACEUTICALS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 20.9 20.1
UTILITIES 13.7 8.3
HEALTH 8.2 9.0
ENERGY 7.1 7.3
DURABLES 5.6 6.5
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF OCTOBER 31, 1998
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE COUNTRIES
6 MONTHS AGO
UNITED KINGDOM 16.8 14.9
FRANCE 15.0 13.5
JAPAN 14.8 17.1
GERMANY 9.0 5.5
NETHERLANDS 7.6 8.8
</TABLE>
TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY,
INCLUDING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT
RISKS. PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES
CONTRACTS, IF APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998 AS OF APRIL 30, 1998
ROW: 1, COL: 1, VALUE: 91.5
ROW: 1, COL: 2, VALUE: 1.5
ROW: 1, COL: 3, VALUE: 7.0
ROW: 1, COL: 1, VALUE: 92.09999999999999
ROW: 1, COL: 2, VALUE: 1.5
ROW: 1, COL: 3, VALUE: 6.4
STOCKS, CLOSED-END
INVESTMENT COMPANIES
AND EQUITY FUTURES 92.8%
FOREIGN GOVERNMENT
OBLIGATIONS 0.2%
SHORT-TERM
INVESTMENTS 7.0%
STOCKS, CLOSED-END
INVESTMENT COMPANIES
AND EQUITY FUTURES 93.5%
FOREIGN GOVERNMENT
OBLIGATIONS 0.1%
SHORT-TERM
INVESTMENTS 6.4%
INVESTMENTS OCTOBER 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 84.3%
SHARES VALUE (NOTE 1)
(000S)
ARGENTINA - 0.0%
BANSUD SA CLASS B (A) 118,100 $ 396
AUSTRALIA - 2.4%
AUSTRALIA & NEW ZEALAND BANKING GROUP LTD. 752,366 4,293
BRAMBLES INDUSTRIES LTD. 31,550 690
BROKEN HILL PROPRIETARY CO. LTD. (THE) 272,505 2,311
COLES MYER LTD. 463,300 1,982
COMMONWEALTH BANK OF AUSTRALIA (C) 230,500 2,859
CSR LTD. 154,400 352
DAVID JONES LTD. 447,200 454
FOSTERS BREWING GROUP LTD. 572,900 1,404
NATIONAL AUSTRALIA BANK LTD. 98,300 1,300
NEWS CORP. LTD. 310,574 2,117
NEWS CORP. LTD.:
ADR 88,700 2,423
SPONSORED ADR (LTD. VTG.) 27,300 660
RIO TINTO LTD. 85,900 1,072
SMITH (HOWARD) LTD. 27,100 162
WMC LTD. 1,359,954 4,605
WOODSIDE PETROLEUM LTD. 246,000 1,297
WOOLWORTHS LTD. 480,947 1,689
29,670
AUSTRIA - 0.1%
BANK AUSTRIA AG 14,700 801
BELGIUM - 0.0%
FORTIS AG 700 201
BRAZIL - 1.5%
CENTRAIS ELECTRICAS BRASILEIRAS SA 48,058,000 1,112
COMPANIA ENERGERTICA MINAS GERAIS 110,330,283 2,146
TELEBRAS SPONSORED ADR 206,600 15,689
18,947
CANADA - 1.2%
ALCAN ALUMINIUM LTD. 25,500 640
BCE, INC. 165,500 5,610
CANADIAN NATURAL RESOURCES LTD. (A) 115,800 2,026
INCO LTD. 101,800 1,092
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CANADA - CONTINUED
NORANDA, INC. 245,500 $ 3,628
RIO ALTO EXPLORATION LTD. (A) 143,000 1,557
14,553
DENMARK - 0.5%
DEN DANSKE BANK GROUP AS 13,300 1,808
INTERNATIONAL SERVICE SYSTEMS AS CLASS B 22,100 1,494
UNIDANMARK AS CLASS A 35,300 2,694
5,996
FINLAND - 1.7%
ENSO OY CLASS R 172,900 1,340
MERITA LTD. SERIES A 88,800 477
OY NOKIA AB:
SERIES A 156,400 14,555
SPONSORED ADR 1,000 93
RAISIO GROUP PLC 48,400 654
SAMPO INSURANCE CO. LTD. 33,900 1,058
UPM-KYMMENE CORP. 115,200 2,759
20,936
FRANCE - 13.8%
ACCOR SA 30,500 6,416
ALCATEL ALSTHOM COMPAGNIE GENERALE D'ELECTRICITE SA 123,200 13,552
ALCATEL ALSTHOM COMPAGNIE GENERALE D'ELECTRICITE SA 1,000 22
SPONSORED ADR
AXA SA 93,690 10,606
ATOS SA (A) 15,200 2,871
BANQUE NATIONALE DE PARIS 83,300 5,284
CAP GEMINI SA 33,100 4,982
CASTORAMA DUBOIS INVESTISSEMENTS SA 12,900 2,304
COFLEXIP SA SPONSORED ADR 51,300 2,469
COMPAGNIE DE ST. GOBAIN 18,700 2,771
COMPAGNIE FINANCIERE DE PARIBAS CLASS A (REG.) 30,400 2,238
CREDIT COMMERCIAL DE FRANCE 30,000 2,110
ELF AQUITAINE 183,363 21,270
ELF AQUITAINE SPONSORED ADR 1,000 58
GROUPE DANONE 24,400 6,461
LAFARGE SA 23,154 2,371
LAGARDERE S.C.A. (REG.) 70,500 2,842
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FRANCE - CONTINUED
MICHELIN SA (COMPAGNIE GENERALE DES ETABLISSEMENTS) CLASS B 46,851 $ 1,934
PECHINEY SA CLASS A (A) 48,343 1,664
PEUGEOT SA 12,100 2,022
RENAULT SA 101,300 4,337
RHONE-POULENC SA:
CLASS A 104,205 4,865
SPONSORED ADR CLASS A 1,000 47
ROYAL CANIN SA (C) 5,100 276
SANOFI SA 47,945 7,519
SCOR SA 72,400 4,158
SOCIETE GENERALE, FRANCE CLASS A 83,900 11,116
SUEZ LYONNAISE DES EAUX 23,900 4,287
TOTAL SA:
CLASS B 164,390 19,234
SPONSORED ADR 1,000 59
UNIBAIL 9,000 1,238
UNION ASSURANCESFEDERALES SA 32,900 4,122
VALEO SA 24,900 2,159
VIVENDI SA 56,300 12,878
170,542
GERMANY - 6.8%
ADIDAS-SALOMON AG 21,400 2,523
ALLIANZ AG (REG.) 31,800 10,930
BASF AG 151,800 6,460
BAYER AG 112,200 4,611
BAYERISCHE HYPO-UND VEREINSBANK 81,400 6,449
BAYERISCHE MOTOREN WERKE (BMW) AG 3,600 2,536
BHF BANK AG 184,500 7,167
CONTINENTAL GUMMI-WERKE AG 22,300 593
DAIMLER-BENZ AG (A) 82,800 6,527
DEUTSCHE LUFTHANSA AG (REG.) 110,300 2,407
DEUTSCHE TELEKOM AG 193,000 5,230
DRESDNER BANK AG 38,500 1,501
HOECHST AG 47,700 2,011
HOLZMANN (PHILLIP) AG (A) 1,200 122
MANNESMANN AG 125,620 12,403
SCHERING AG 7,000 819
SIEMENS AG 61,600 3,799
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
GERMANY - CONTINUED
VEBA AG 44,100 $ 2,450
VIAG AG 7,300 4,939
83,477
HONG KONG - 0.6%
CLP HOLDINGS LTD. 248,000 1,393
DAIRY FARM INTERNATIONAL HOLDINGS LTD. 879,000 1,081
HONG KONG & CHINA GAS CO. LTD. 180,000 256
JOHNSON ELECTRIC HOLDINGS LTD. 1,334,000 3,101
LI & FUNG LTD. 92,000 144
SUN HUNG KAI PROPERTIES LTD. 86,000 600
VTECH HOLDINGS LTD. 313,000 1,174
7,749
IRELAND - 1.3%
BANK OF IRELAND, INC. 401,010 7,336
CRH PLC 102,700 1,476
ELAN CORP. PLC ADR (A) 46,600 3,265
IRISH LIFE PLC 268,200 2,380
SMURFIT (JEFFERSON) GROUP PLC 1,021,500 1,660
16,117
ITALY - 2.8%
ASSICURAZIONI GENERALI SPA 324,300 11,587
BANCA COMMERCIALE ITALIANA SPA 166,700 1,032
BANCA DI ROMA (A) 3,140,300 5,487
ENI SPA SPONSORED ADR 235,400 1,406
FINMECCANICA SPA (A) 1,143,400 903
ISTITUTO BANCARIO SAN PAOLO 178,100 2,650
ISTITUTO NAZIONALE DELLE ASSICURAZIONI SPA 590,100 1,635
TELECOM ITALIA MOBILE SPA 600,400 3,495
TELECOM ITALIA SPA 133,330 966
UNICREDITO ITALIANO SPA 910,500 4,912
34,073
JAPAN - 12.9%
ACOM CO. LTD. 64,100 3,593
AIFUL CORP. (A)(C) 37,000 1,730
AIWA CO. LTD. 56,600 1,403
BANK OF TOKYO-MITSUBISHI LTD. 63,000 586
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
JAPAN - CONTINUED
BANYU PHARMACEUTICAL CO. LTD. 145,000 $ 2,471
BRIDGESTONE CORP. 56,000 1,237
CANON, INC. 279,000 5,297
DAIWA HOUSE INDUSTRY CO. LTD. 117,000 1,325
DDI CORP. 1,174 3,437
FUJI BANK LTD. 347,000 1,332
FUJI HEAVY INDUSTRIES LTD. 1,190,000 5,942
FUJI PHOTO FILM CO. LTD. 291,000 10,698
HITACHI MAXELL LTD. 249,000 3,559
HONDA MOTOR CO. LTD. 307,000 9,251
HOYA CORP. 32,000 1,375
ITO-YOKADO CO. LTD. 98,000 5,737
KAO CORP. 150,000 3,048
MATSUMOTOKIYOSHI CO. LTD. 2,400 91
MATSUSHITA ELECTRIC INDUSTRIAL CO. LTD. 273,000 4,024
MINEBEA CO. LTD. 275,000 2,593
MINOLTA CO. LTD. 661,000 3,341
MITSUBISHI ELECTRIC CORP. 897,000 1,830
MITSUBISHI ESTATE CO. LTD. 398,000 3,622
MITSUBISHI TRUST & BANKING CORP. 207,000 1,403
MITSUI FUDOSAN CO. LTD. 177,000 1,179
NGK INSULATORS LTD. 98,000 1,093
NICHICON CORP. 54,000 588
NIPPON TELEGRAPH & TELEPHONE CORP. 701 5,504
NOMURA SECURITIES CO. LTD. 612,000 4,637
NTT MOBILE COMMUNICATION NETWORK, INC. (A)(C) 162 5,872
OMRON CORP. 199,000 1,953
ORIX CORP. (A) 99,600 7,160
OSAKA GAS CO. LTD. 219,000 705
PARIS MIKI, INC. 5,600 94
ROHM CO. LTD. 56,000 4,966
SANKYO CO. LTD. 80,000 1,811
SECOM LTD. 10,000 745
SEKISUI HOUSE LTD. 172,000 1,719
SHARP CORP. 384,000 2,909
SHIN-ETSU CHEMICAL CO. LTD. 57,000 1,139
SHOHKOH FUND & CO. LTD. 4,100 1,251
SONY CORP. 71,200 4,688
SUMITOMO REALTY & DEVELOPMENT CO. LTD. (A) 584,000 1,755
TAKEDA CHEMICAL INDUSTRIES LTD. 412,000 13,444
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
JAPAN - CONTINUED
TAKEFUJI CORP. 45,500 $ 2,433
TAKEFUJI CORP. (C) 32,700 1,748
TERUMO CORP. 85,000 1,793
THK CO. LTD. 229,300 2,369
TOKIO MARINE & FIRE INSURANCE CO. LTD. (THE) 96,000 1,095
TOKYO ELECTRON LTD. 49,000 1,599
TOKYO GAS CO. LTD. 232,000 597
TOYOTA MOTOR CORP. 59,000 1,422
UNIFIED-CHARM CORP. 46,200 2,108
YAMANOUCHI PHARMACEUTICAL CO. LTD. 87,000 2,502
159,803
LUXEMBOURG - 0.1%
STOLT COMEX SEAWAY SA 63,500 810
MALAYSIA - 0.0%
MALAYAN BANKING BHD 34,000 33
ORIENTAL HOLDINGS BHD 686,800 573
606
MEXICO - 1.1%
BANACCI SA DE CV CLASS B (A) 753,000 788
ELEKTRA SA DE CV UNIT 341,200 152
GRUPO FINANCIERO BANCOMER SA DE CV CLASS B 17,048,000 3,498
TELEFONOS DE MEXICO SA DE CV SPONSORED ADR REPRESENTING 165,300 8,730
CLASS L SHARES
13,168
NETHERLANDS - 7.6%
ABN AMRO HOLDING NV 137,100 2,571
AHOLD NV 237,953 7,916
AKZO NOBEL NV 269,300 10,474
AKZO NOBEL NV ADR 1,000 40
ELSEVIER NV 77,700 1,095
FORTIS AMEV NV 24,000 1,560
ING GROEP NV 280,708 13,594
KONINKLIJKE KPN NV 84,200 3,275
LAURUS NV 20,720 522
NUTRECO HOLDING NV 60,604 2,062
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NETHERLANDS - CONTINUED
PHILIPS ELECTRONICS NV (BEARER) 248,100 $ 13,614
ROYAL DUTCH PETROLEUM CO.:
(HAGUE REGISTRY) 268,800 13,238
(NY REGISTRY GILDER 1.25) 1,000 49
TNT POST GROUP NV 50,200 1,345
UNILEVER NV 158,100 11,739
UNILEVER NV (NY SHARES) 500 38
VEDIOR NV 193,535 4,935
VENDEX NV CVA 29,600 753
VNU 128,000 4,430
93,250
NETHERLANDS ANTILLES - 0.1%
SCHLUMBERGER LTD. 21,500 1,129
NORWAY - 0.2%
NCL HOLDINGS AS (A) 1,029,633 2,691
PORTUGAL - 0.4%
BANCO PINTO & SOTTO MAYOR SA 117,600 2,257
ELECTRICIDADE DE PORTUGAL SA 76,900 1,936
PORTUGAL TELECOM SA 11,000 522
TELECEL COMUNICACOES PESSOAIS SA 4,500 830
5,545
RUSSIA - 0.1%
VIMPEL COMMUNICATIONS SPONSORED ADR (A) 66,600 783
SOUTH AFRICA - 0.0%
ABSA GROUP LTD. 60,300 330
SPAIN - 2.7%
BANCO BILBAO VIZCAYA SA (REG.) 453,900 6,129
BANCO SANTANDER SA 104,910 1,924
CORPORACION MAPFRE COMPANIA INTERNACIONAL DE REASEGUROS 29,300 775
SA (REG.)
IBERDROLA SA 100,500 1,625
MAPFRE VIDA SA 26,200 1,041
REPSOL SA 15,600 784
TELEFONICA DE ESPANA SA 470,300 21,259
TELEFONICA DE ESPANA SA SPONSORED ADR 500 68
33,605
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SWEDEN - 3.0%
ABB AB:
SERIES A 48,600 $ 515
SERIES B 47,000 498
ASSA ABLOY AB CLASS B 4,300 172
ASTRA AB CLASS A 373,700 6,136
ELECTROLUX AB 119,400 1,802
ERICSSON (L.M.) TELEFON AB:
ADR CLASS B 1,500 34
CLASS B 290,700 6,570
NORDBANKEN HOLDING AB 429,300 2,580
SKANDIA FOERSAEKRINGS AB 323,900 4,139
SVENSKA HANDELSBANKEN 114,000 4,810
SWEDISH MATCH CO. 2,580,600 9,114
VOLVO AB CLASS B 52,200 1,130
37,500
SWITZERLAND - 6.6%
ADECCO SA (BEARER) 6,130 2,449
CREDIT SUISSE GROUP (REG.) 51,088 7,871
JULIUS BAER HOLDING AG 3,927 12,057
NESTLE SA (REG.) 7,350 15,661
NOVARTIS AG (REG.) 12,229 22,065
ROCHE HOLDING AG PARTICIPATION CERTIFICATES 200 2,338
SWISS REINSURANCE CO. (REG.) 700 1,562
SWISSCOM AG (A) 14,400 4,890
UBS AG (A) 42,139 11,582
ZURICH ALLIED AG (REG.) (A) 1,000 609
81,084
UNITED KINGDOM - 15.6%
ALLIED ZURICH PLC (A) 399,000 4,744
AMEC PLC 200 1
BANK OF SCOTLAND 284,000 3,086
BARCLAYS PLC 131,300 2,830
BARRATT DEVELOPMENTS PLC 18,800 72
BASS PLC 93,300 1,134
BBA GROUP PLC 181,945 1,126
BOC GROUP PLC 53,500 786
BOOTS CO. PLC 141,700 2,128
BRITISH AEROSPACE PLC 888,824 6,459
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED KINGDOM - CONTINUED
BRITISH AMERICAN TOBACCO PLC 259,100 $ 2,341
BRITISH PETROLEUM CO. PLC 730,551 10,765
BRITISH PETROLEUM CO. PLC ADR 500 44
BRITISH TELECOMMUNICATIONS PLC 800,400 10,412
BTP PLC 35,100 232
CABLE & WIRELESS PLC 313,900 3,522
CADBURY-SCHWEPPES PLC 144,300 2,211
CARADON PLC 2,255,460 4,675
CGU PLC 336,700 5,336
COOKSON GROUP PLC 1,370,900 2,869
COURTAULDS TEXTILES PLC 340,100 820
DEVRO PLC 6,400 30
DIAGEO PLC 116,000 1,253
GLAXO WELLCOME PLC 455,300 14,167
GLAXO WELLCOME PLC SPONSORED ADR 1,000 62
HAYS PLC 111,800 1,647
HSBC HOLDINGS PLC 111,800 2,546
HSBC HOLDINGS PLC ORD. 86,100 2,018
KINGFISHER PLC 312,300 2,743
LLOYDS TSB GROUP PLC 1,112,700 13,741
MISYS PLC 129,100 906
NATIONAL GRID GROUP PLC 347,030 2,377
NATIONAL WESTMINSTER BANK PLC 145,500 2,458
PEARSON PLC 166,900 2,912
PILKINGTON PLC 872,000 964
PRUDENTIAL CORP. PLC 44,000 572
REED INTERNATIONAL PLC 244,500 2,070
RENTOKIL INITIAL PLC 1,666,500 10,437
RIO TINTO PLC (REG.) 309,900 3,762
ROYAL & SUN ALLIANCE INSURANCE GROUP PLC 153,524 1,406
SAATCHI & SAATCHI PLC 1,264,200 2,456
SCOTTISH & NEWCASTLE PLC 111,200 1,356
SHELL TRANSPORT & TRADING CO. PLC:
(REG.) 1,591,300 9,744
ADR 1,000 37
SIEBE PLC 1,211,500 4,970
SMITHKLINE BEECHAM PLC 1,335,802 17,027
SMITHKLINE BEECHAM PLC ADR 1,000 64
SOMERFIELD PLC 389,700 2,516
TARMAC PLC 564,900 974
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED KINGDOM - CONTINUED
TOMKINS PLC 244,300 $ 1,131
UNILEVER PLC 384,800 3,866
UNILEVER PLC ADR 1,000 41
VODAFONE GROUP PLC 1,031,913 13,888
WIMPEY GEORGE PLC 339,000 641
WPP GROUP PLC 564,400 2,807
193,182
UNITED STATES OF AMERICA - 1.2%
ALUMINUM CO. OF AMERICA 82,300 6,522
GLOBAL TELESYSTEMS GROUP, INC. (A) 146,700 5,877
NEWMONT MINING CORP. 29,200 621
TRANSOCEAN OFFSHORE, INC. 34,000 1,256
14,276
TOTAL COMMON STOCKS 1,041,220
(COST $880,908)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PREFERRED STOCKS - 2.5%
CONVERTIBLE PREFERRED STOCKS - 0.2%
AUSTRALIA - 0.2%
WBK STRYPES TRUST $3.135 107,700 3,090
NONCONVERTIBLE PREFERRED STOCKS - 2.3%
AUSTRALIA - 0.1%
STAR CITY HOLDINGS LTD. (A) 940,300 639
GERMANY - 0.8%
DYCKERHOFF AG 4,300 1,321
PORSCHE AG (NON-VTG.) 160 276
SAP AG (SYSTEME ANWENDUNGEN PRODUKTE) 17,400 8,589
10,186
ITALY - 1.4%
BANCA INTESA SPA 100 0
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
ITALY - CONTINUED
TELECOM ITALIA MOBILE SPA 1,993,700 $ 7,085
TELECOM ITALIA SPA RISP 2,033,125 10,316
17,401
TOTAL NONCONVERTIBLE PREFERRED STOCKS 28,226
TOTAL PREFERRED STOCKS 31,316
(COST $18,871)
</TABLE>
CLOSED-END INVESTMENT COMPANIES - 0.6%
EMERGING MARKETS - 0.1%
TEMPLETON DRAGON FUND, INC. 123,600 1,043
GERMANY - 0.3%
EMERGING GERMANY FUND, INC. 46,200 621
NEW GERMANY FUND, INC. (THE) 228,200 3,723
4,344
MULTI-NATIONAL - 0.2%
EUROPEAN WARRANT FUND, INC. 41,700 698
MORGAN STANLEY ASIA-PACIFIC FUND, INC. 117,600 823
1,521
TOTAL CLOSED-END INVESTMENT COMPANIES 6,908
(COST $7,380)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GOVERNMENT OBLIGATIONS - 0.6%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
ITALY - 0.2%
ITALIAN REPUBLIC 5% 6/28/01 AA3 $ 1,190 1,971
UNITED STATES OF AMERICA - 0.4%
U.S. TREASURY BILLS, YIELD AT DATE OF PURCHASE 5,550 5,512
3.66% TO 4.70% 12/17/98 TO 1/7/99 (D)
TOTAL GOVERNMENT OBLIGATIONS 7,483
(COST $7,470)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 12.0%
SHARES VALUE (NOTE 1)
(000S)
TAXABLE CENTRAL CASH FUND (B) 147,500,738 $ 147,501
(COST $147,501)
TOTAL INVESTMENT IN SECURITIES - 100% $ 1,234,428
(COST $1,062,130)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
(000S) (000S)
PURCHASED
445 CAC 40 INDEX CONTRACTS (FRANCE) DEC. 1998 $ 14,069 $ 593
50 DAX 30 INDEX CONTRACTS (GERMANY) DEC. 1998 13,879 45
159 FTSE 100 INDEX CONTRACTS DEC. 1998 14,621 723
(UNITED KINGDOM)
345 NIKKEI 225 INDEX CONTRACTS DEC. 1998 23,624 (522)
(JAPAN)
$ 66,193 $ 839
</TABLE>
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 5.4%
SECURITY TYPE ABBREVIATIONS
STRYPES - Structured Yield Product
Exchangeable for
Common Stock
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(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 $12,485,000 or 1.0% of net assets.
(d) Security or a portion of the security was pledged to cover margin
requirements for futures contracts. At the period end, the value of
securities pledged amounted to $1,900,000.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.5%
BASIC INDUSTRIES 4.1
CASH EQUIVALENTS 12.0
CLOSED-END INVESTMENT 0.6
COMPANIES
CONSTRUCTION & REAL ESTATE 2.2
DURABLES 5.6
ENERGY 7.1
FINANCE 20.9
GOVERNMENT OBLIGATIONS 0.6
HEALTH 8.2
HOLDING COMPANIES 0.6
INDUSTRIAL MACHINERY & 5.4
EQUIPMENT
MEDIA & LEISURE 2.2
NONDURABLES 4.5
PRECIOUS METALS 0.5
RETAIL & WHOLESALE 2.4
SERVICES 3.1
TECHNOLOGY 5.4
TRANSPORTATION 0.4
UTILITIES 13.7
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $1,066,921,000. Net unrealized appreciation
aggregated $167,507,000, of which $252,095,000 related to appreciated
investment securities and $84,588,000 related to depreciated
investment securities.
The fund hereby designates approximately $55,025,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS OCTOBER 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $1,062,130) - $ 1,234,428
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE (COST $7) 7
RECEIVABLE FOR INVESTMENTS SOLD 18,509
RECEIVABLE FOR FUND SHARES SOLD 2,433
DIVIDENDS RECEIVABLE 3,427
INTEREST RECEIVABLE 621
RECEIVABLE FOR DAILY VARIATION ON FUTURE CONTRACTS 623
OTHER RECEIVABLES 1
TOTAL ASSETS 1,260,049
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 7,927
PAYABLE FOR FUND SHARES REDEEMED 2,483
DISTRIBUTIONS PAYABLE 12
ACCRUED MANAGEMENT FEE 842
OTHER PAYABLES AND ACCRUED EXPENSES 908
TOTAL LIABILITIES 12,172
NET ASSETS $ 1,247,877
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 1,056,963
UNDISTRIBUTED NET INVESTMENT INCOME 2,133
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 15,430
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 173,351
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS $ 1,247,877
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE $16.32
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($12,460 (DIVIDED BY) 763.4 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/94.25 OF $16.32) $17.32
CLASS T: $16.48
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,085,736 (DIVIDED BY) 65,892 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.50 OF $16.48) $17.08
CLASS B: $16.08
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($58,401 (DIVIDED BY) 3,631 SHARES) A
CLASS C: $16.37
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($14,655 (DIVIDED BY) 895 SHARES) A
INSTITUTIONAL CLASS: $16.36
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($76,625 (DIVIDED BY) 4,683 SHARES)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 23,681
DIVIDENDS
INTEREST 5,285
28,966
LESS FOREIGN TAXES WITHHELD (2,628)
TOTAL INCOME 26,338
EXPENSES
MANAGEMENT FEE $ 9,423
BASIC FEE
PERFORMANCE ADJUSTMENT 1,911
TRANSFER AGENT FEES 2,767
DISTRIBUTION FEES 6,391
ACCOUNTING FEES AND EXPENSES 669
NON-INTERESTED TRUSTEES' COMPENSATION 5
CUSTODIAN FEES AND EXPENSES 710
REGISTRATION FEES 147
AUDIT 52
LEGAL 13
REPORTS TO SHAREHOLDERS 156
MISCELLANEOUS 51
TOTAL EXPENSES BEFORE REDUCTIONS 22,295
EXPENSE REDUCTIONS (248) 22,047
NET INVESTMENT INCOME 4,291
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 20,455
FOREIGN CURRENCY TRANSACTIONS (311)
FUTURES CONTRACTS (2,735) 17,409
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 23,211
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 179
FUTURES CONTRACTS 1,662 25,052
NET GAIN (LOSS) 42,461
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 46,752
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 4,291 $ 9,334
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 17,409 84,440
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 25,052 83,254
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 46,752 177,028
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (11,326) (10,798)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (66,913) (42,335)
TOTAL DISTRIBUTIONS (78,239) (53,133)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 85,339 39,574
TOTAL INCREASE (DECREASE) IN NET ASSETS 53,852 163,469
NET ASSETS
BEGINNING OF PERIOD 1,194,025 1,030,556
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 1,247,877 $ 1,194,025
INCOME OF $2,133 AND $10,180, RESPECTIVELY)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31,
1998 1997 1996 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.89 $ 15.29 $ 14.98
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME E .09 .09 .04
NET REALIZED AND UNREALIZED GAIN (LOSS) .51 2.39 .27
TOTAL FROM INVESTMENT OPERATIONS .60 2.48 .31
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.21) (.25) -
FROM NET REALIZED GAIN (.96) (.63) -
TOTAL DISTRIBUTIONS (1.17) (.88) -
NET ASSET VALUE, END OF PERIOD $ 16.32 $ 16.89 $ 15.29
TOTAL RETURN B, C 3.73% 16.95% 2.07%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 12 $ 5 $ 1
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.55% F 1.90% F 1.16% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER 1.54% G 1.89% G 1.16% A
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .51% .53% 1.74% A
PORTFOLIO TURNOVER 74% 70% 82%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 17.02 $ 15.30 $ 13.92 $ 14.06 $ 12.93
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .06 C .13 C .19 C, D .07 .01
NET REALIZED AND .52 2.38 1.29 (.11) 1.14
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT .58 2.51 1.48 (.04) 1.15
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.16) (.16) (.09) - -
FROM NET REALIZED GAIN (.96) (.63) (.01) (.02) (.02)
IN EXCESS OF NET REALIZED GAIN - - - (.08) -
TOTAL DISTRIBUTIONS (1.12) (.79) (.10) (.10) (.02)
NET ASSET VALUE, END OF PERIOD $ 16.48 $ 17.02 $ 15.30 $ 13.92 $ 14.06
TOTAL RETURN A, B 3.57% 17.07% 10.69% (.25)% 8.91%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 1,086 $ 1,111 $ 995 $ 742 $ 654
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE 1.74% 1.66% 1.61% 1.90% 2.12%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE 1.72% E 1.65% E 1.60% E 1.90% 2.12%
NET ASSETS AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT INCOME .35% .80% 1.30% 1.01% .05%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER 74% 70% 82% 47% 34%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.69 $ 15.06 $ 13.92 $ 13.89
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.03) D .02 D .08 D, E .01
NET REALIZED AND UNREALIZED GAIN (LOSS) .51 2.36 1.26 .02
TOTAL FROM INVESTMENT OPERATIONS .48 2.38 1.34 .03
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.13) (.12) (.19) -
FROM NET REALIZED GAIN (.96) (.63) (.01) -
TOTAL DISTRIBUTIONS (1.09) (.75) (.20) -
NET ASSET VALUE, END OF PERIOD $ 16.08 $ 16.69 $ 15.06 $ 13.92
TOTAL RETURN B, C 3.00% 16.41% 9.73% .22%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 58 $ 40 $ 19 $ 3
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.30% G 2.30% 2.37% 1.97% A, G
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.29% H 2.29% H 2.37% 1.97% A
AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME (LOSS) TO (.19)% .15% .53% .94% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 74% 70% 82% 47%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS B SHARES)
TO OCTOBER 31,1995.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.23
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) .29
TOTAL FROM INVESTMENT OPERATIONS .26
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.16)
FROM NET REALIZED GAIN (.96)
TOTAL DISTRIBUTIONS (1.12)
NET ASSET VALUE, END OF PERIOD $ 16.37
TOTAL RETURN B, C 2.84%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 15
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.30% A, F
RATIO OF NET INVESTMENT (LOSS) INCOME TO AVERAGE NET ASSETS (.20)% A
PORTFOLIO TURNOVER 74%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.92 $ 15.20 $ 13.97 $ 13.89
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .13 D .22 D .21 D, E .05
NET REALIZED AND UNREALIZED GAIN (LOSS) .53 2.36 1.24 .03
TOTAL FROM INVESTMENT OPERATIONS .66 2.58 1.45 .08
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.26) (.23) (.21) -
FROM NET REALIZED GAIN (.96) (.63) (.01) -
TOTAL DISTRIBUTIONS (1.22) (.86) (.22) -
NET ASSET VALUE, END OF PERIOD $ 16.36 $ 16.92 $ 15.20 $ 13.97
TOTAL RETURN B, C 4.11% 17.73% 10.51% .58%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 77 $ 38 $ 16 $ 1
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.26% 1.17% 1.44% .97% A, G
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER 1.24% H 1.16% H 1.43% H .97% A
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO .76% 1.31% 1.46% 1.94% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 74% 70% 82% 47%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Overseas Fund (the fund) is a fund of Fidelity
Advisor Series VIII (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 fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. 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. If trading or events occurring in other markets
after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then
they are valued at their fair value taking this trading or these
events into account. Fair value is determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Securities (including restricted securities) for
which quotations are not readily available are valued primarily using
dealer-supplied valuations or at their fair value. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available 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.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
currencies, the difference between the amount of net investment income
accrued and the U.S. dollar amount actually received, and gains and
losses between trade date and settlement on purchases and sales of
securities. The effects of changes in foreign currency exchange rates
on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
U.S. federal income taxes to the extent that it distributes
substantially all of its taxable income for its fiscal year. The fund
may be subject to foreign taxes on income and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests. The
fund accrues such taxes as applicable. 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. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, foreign currency transactions,
passive foreign investment companies (PFIC), non-taxable dividends,
and losses deferred due to wash sales. The fund also utilized earnings
and profits distributed to shareholders on redemption of shares as a
part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
subsequent period. Any taxable income or gain remaining at fiscal year
end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), 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 for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
2. OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock markets and to fluctuations in currency values.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Futures contracts involve, to varying degrees, risk of loss in excess
of the futures variation margin reflected in the Statement of Assets
and Liabilities. The underlying face amount at value of any open
futures contracts at period end is shown in the schedule of
investments under the caption "Futures Contracts." This amount
reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the
underlying instruments or if the counterparties do not perform under
the contracts' terms. Gains (losses) are realized upon the expiration
or closing of the futures contracts. Futures contracts are valued at
the settlement price established each day by the board of trade or
exchange on which they are traded.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $859,645,000 and $930,283,000, respectively.
The market value of futures contracts opened and closed during the
period amounted to $108,372,000 and $47,489,000, 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 .2500% to
.5200% for the period. The annual individual fund fee rate is .45%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
to the appropriate index over a specified period of time. For the
period, the management fee was equivalent to an annual rate of .89% of
average net assets after the performance adjustment.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research (Far East) Inc., Fidelity International
Investment Advisors (FIIA), and Fidelity Investments Japan Limited
(FIJ). In addition, FIIA entered into a sub-advisory agreement with
its subsidiary, Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L). 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 FIIA(U.K.)L a fee based on costs incurred for either
service.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares, (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
CLASS C 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 21,000 $ -
CLASS T 5,793,000 62,000
CLASS B 517,000 388,000
CLASS C 60,000 60,000
$ 6,391,000 $ 510,000
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The
Plans also authorize payments to third parties that assist in the sale
of each class' shares or render shareholder support services. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 7,000
CLASS T 383,000
CLASS B 33,000
CLASS C 7,000
INSTITUTIONAL CLASS 10,000
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 123,000 $ 42,000
CLASS T 618,000 174,000
CLASS B 124,000 124,000 *
CLASS C 4,000 4,000 *
$ 869,000 $ 344,000
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 28,000 .32
CLASS T 2,490,000 .21
CLASS B 158,000 .30
CLASS C 16,000 .27 *
INSTITUTIONAL CLASS 75,000 .16
$ 2,767,000
* ANNUALIZED
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $38,000 for the
period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.55% $ 11,000
CLASS T 1.80% -
CLASS B 2.30% 18,000
CLASS C 2.30% 12,000
INSTITUTIONAL CLASS 1.30% -
$ 41,000
Effective December 1, 1998 these expense limitations were eliminated.
5. EXPENSE REDUCTIONS - CONTINUED
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $207,000 under this arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
AMOUNTS IN THOUSANDS YEAR ENDED OCTOBER 31,
1998 A 1997
FROM NET INVESTMENT INCOME
CLASS A $ 68 $ 15
CLASS T 10,334 10,326
CLASS B 321 155
CLASS C 3 -
INSTITUTIONAL CLASS 600 302
TOTAL $ 11,326 $ 10,798
FROM NET REALIZED GAIN
CLASS A $ 310 $ 38
CLASS T 62,023 40,659
CLASS B 2,341 812
CLASS C 27 -
INSTITUTIONAL CLASS 2,212 826
TOTAL $ 66,913 $ 42,335
$ 78,239 $ 53,133
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 A 1997 1998 A 1997
CLASS A 2,135 333 $ $35,934 $ $5,654
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 23 3 371 52
SHARES REDEEMED (1,691) (82) (28,405) (1,418)
NET INCREASE (DECREASE) 467 254 $ 7,900 $ 4,288
CLASS T 47,385 29,400 $ 815,252 $ 487,493
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,208 3,178 67,693 47,914
SHARES REDEEMED (50,964) (32,358) (879,988) (538,266)
NET INCREASE (DECREASE) 629 220 $ 2,957 $ (2,859)
CLASS B 2,567 1,517 $ 43,550 $ 25,441
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 153 63 2,417 931
SHARES REDEEMED (1,476) (432) (24,505) (7,271)
NET INCREASE (DECREASE) 1,244 1,148 $ 21,462 $ 19,101
CLASS C 1,843 - $ 30,151 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1 - 16 -
SHARES REDEEMED (949) - (14,817) -
NET INCREASE (DECREASE) 895 - $ 15,350 $ -
INSTITUTIONAL CLASS 3,622 2,508 $ 58,034 $ 41,330
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 146 68 2,327 1,019
SHARES REDEEMED (1,346) (1,384) (22,691) (23,305)
NET INCREASE (DECREASE) 2,422 1,192 $ 37,670 $ 19,044
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998..
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 8,000
CLASS T 73,000
CLASS B 12,000
CLASS C 15,000
INSTITUTIONAL CLASS 39,000
$ 147,000
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VIII 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 (a fund of Fidelity Advisor Series
VIII) at October 31, 1998, and the results of its operations, 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 at October 31, 1998 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Overseas Fund voted to pay
to shareholders of record at the opening of business on record date,
the following distributions derived from capital gains realized from
sales of portfolio securities, and dividends derived from net
investment income:
CLASS A
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $0.21 $0.11
SHORT-TERM
CAPITAL GAINS $0.34 __
LONG-TERM
CAPITAL GAINS $0.62 $0.14
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 55.85% __
20% rate 44.15% 100%
CLASS T
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $0.16 $0.04
SHORT-TERM
CAPITAL GAINS $0.34 __
LONG-TERM
CAPITAL GAINS $0.62 $0.14
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 55.85% __
20% rate 44.15% 100%
CLASS B
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $0.13 __
SHORT-TERM
CAPITAL GAINS $0.34 __
LONG-TERM
CAPITAL GAINS $0.62 $0.14
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 55.85% __
20% rate 44.15% 100%
CLASS C
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $0.16 $0.06
SHORT-TERM
CAPITAL GAINS $0.34 __
LONG-TERM
CAPITAL GAINS $0.62 $0.14
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 55.85% __
20% rate 44.15% 100%
A total of 1.32% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 1% of the dividends distributed during the fiscal year for
each of Class A, Class T, Class B, and Class C qualifies for the
dividends-received deduction for corporate shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
The amounts per share which represent income derived from sources
within, and taxes paid to, foreign countries or possessions of the
United States are as follows for the dividend paid December 8, 1997:
INCOME PER SHARE TAXES PER SHARE
Class A $0.273 $0.031
Class T $0.249 $0.031
Class B $0.235 $0.031
Class C $0.249 $0.031
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
Fidelity Investments Japan Limited
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard A. Spillane, Jr., Vice President
Richard R. Mace, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuantSM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
OS-ANN-1298 66784
1.538536.101
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
(2_FIDELITY_LOGOS)(REGISTERED TRADEMARK)
FIDELITY ADVISOR
OVERSEAS
FUND - INSTITUTIONAL CLASS
ANNUAL REPORT
OCTOBER 31, 1998
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 9 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.
INVESTMENTS 10 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.
FINANCIAL STATEMENTS 23 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 32 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 42 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 43
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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
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
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories 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. Of course, it's important to
remember that there is no assurance that a money market fund will
achieve its goal of maintaining a stable net asset value of $1.00 per
share, and that these types of funds are neither insured nor
guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
Remember to contact your investment professional if you need help with
your investments.
Best regards,
Edward C. Johnson 3d
FIDELITY ADVISOR OVERSEAS FUND - INSTITUTIONAL CLASS
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate 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.
Total return reflects the change in the value of an investment,
assuming reinvestment of the class' dividend income and capital gains
(the profits earned upon the sale of securities that have grown in
value). The initial offering of Institutional Class shares took place
on July 3, 1995. Institutional Class shares are sold to eligible
investors without a sales load or 12b-1 fee. Returns prior to July 3,
1995 are those of Class T, the original class of the fund, and reflect
Class T shares' prior 0.65% 12b-1 fee. If Fidelity had not reimbursed
certain class expenses, the past five years and life of fund total
returns would have been lower. Prior to December 1, 1992, Fidelity
Advisor Overseas Fund operated under a different investment objective.
Accordingly, the fund's historical performance may not represent its
current investment policies.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - INST CL 4.11% 47.68% 97.53%
MSCI EAFE(REGISTERED TRADEMARK) 9.89% 39.58% 76.78%
INTERNATIONAL FUNDS AVERAGE 4.07% 41.60% N/A
CUMULATIVE TOTAL RETURNS show Institutional Class performance in
percentage terms over a set period - in this case, one year, five
years or since the fund started on April 23, 1990. For example, if you
had invested $1,000 in a fund that had a 5% return over the past year,
the value of your investment would be $1,050. You can compare
Institutional Class' returns to the performance of the Morgan Stanley
Capital International Europe, Australasia, Far East Index (MSCI EAFE
Index) - a market capitalization weighted, unmanaged index of over
1,000 foreign stocks. To measure how Institutional Class' performance
stacked up against its peers, you can compare it to the international
funds average, which reflects the performance of mutual funds with
similar objectives tracked by Lipper Analytical Services, Inc. The
past one year average represents a peer group of 489 mutual funds.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY ADV OVERSEAS - INST CL 4.11% 8.11% 8.31%
MSCI EAFE 9.89% 6.90% 6.91%
INTERNATIONAL FUNDS AVERAGE 4.07% 7.02% N/A
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' cumulative
return and show you what would have happened if Institutional Class
shares had performed at a constant rate each year.
$10,000 OVER LIFE OF FUND
FA Overseas -CL I MS EAFE Index (Net)
00655 MS001
1990/04/23 10000.00 10000.00
1990/04/30 9890.00 9870.12
1990/05/31 10320.00 10996.32
1990/06/30 10840.00 10899.46
1990/07/31 11480.00 11052.99
1990/08/31 10110.00 9979.65
1990/09/30 9250.00 8588.84
1990/10/31 9550.00 9927.15
1990/11/30 9560.00 9341.56
1990/12/31 9467.28 9492.89
1991/01/31 9699.18 9799.94
1991/02/28 10132.72 10850.48
1991/03/31 9568.11 10199.10
1991/04/30 9558.02 10299.26
1991/05/31 9568.11 10406.73
1991/06/30 8852.26 9642.03
1991/07/31 9356.38 10115.76
1991/08/31 9497.53 9910.33
1991/09/30 9991.56 10468.87
1991/10/31 9860.49 10617.27
1991/11/30 9608.44 10121.61
1991/12/31 10109.05 10644.32
1992/01/31 10139.74 10416.96
1992/02/29 10375.08 10044.12
1992/03/31 10057.89 9381.04
1992/04/30 10579.71 9425.64
1992/05/31 11009.45 10056.55
1992/06/30 10835.51 9579.54
1992/07/31 10416.00 9334.37
1992/08/31 10129.51 9919.83
1992/09/30 9976.03 9723.94
1992/10/31 9280.27 9213.87
1992/11/30 9157.49 9300.58
1992/12/31 9620.40 9348.68
1993/01/31 10106.59 9347.54
1993/02/28 10323.83 9629.89
1993/03/31 10954.84 10469.29
1993/04/30 11803.09 11462.85
1993/05/31 12113.43 11704.95
1993/06/30 11782.40 11522.33
1993/07/31 12361.70 11925.66
1993/08/31 13178.91 12569.45
1993/09/30 13044.43 12286.52
1993/10/31 13375.46 12665.16
1993/11/30 12858.23 11558.09
1993/12/31 13645.20 12392.67
1994/01/31 14546.59 13440.41
1994/02/28 14349.73 13403.18
1994/03/31 13987.11 12825.89
1994/04/30 14588.03 13370.08
1994/05/31 14318.65 13293.32
1994/06/30 14204.68 13481.18
1994/07/31 14567.31 13610.83
1994/08/31 14702.00 13933.07
1994/09/30 14246.13 13494.24
1994/10/31 14567.31 13943.59
1994/11/30 13997.47 13273.46
1994/12/31 13915.13 13356.58
1995/01/31 13340.98 12843.48
1995/02/28 13372.30 12806.62
1995/03/31 13789.86 13605.38
1995/04/30 14196.98 14117.06
1995/05/31 14353.56 13948.78
1995/06/30 14457.95 13704.16
1995/07/31 15094.73 14557.33
1995/08/31 14677.17 14002.02
1995/09/30 14865.07 14275.48
1995/10/31 14583.22 13891.75
1995/11/30 14729.37 14278.28
1995/12/31 15182.32 14853.55
1996/01/31 15447.38 14914.53
1996/02/29 15479.18 14964.95
1996/03/31 15691.23 15282.75
1996/04/30 16115.31 15727.07
1996/05/31 16094.11 15437.66
1996/06/30 16200.13 15524.55
1996/07/31 15723.03 15070.80
1996/08/31 15829.05 15103.83
1996/09/30 16284.95 15505.07
1996/10/31 16115.31 15346.41
1996/11/30 16963.49 15957.02
1996/12/31 17055.42 15751.75
1997/01/31 17066.64 15203.59
1997/02/28 17447.89 15455.97
1997/03/31 17604.88 15514.70
1997/04/30 17750.65 15600.03
1997/05/31 18860.77 16618.24
1997/06/30 19858.75 17537.23
1997/07/31 20553.97 17823.44
1997/08/31 19006.54 16494.71
1997/09/30 20408.20 17421.22
1997/10/31 18972.90 16086.58
1997/11/30 18905.62 15925.71
1997/12/31 19065.21 16067.61
1998/01/31 19668.92 16805.43
1998/02/28 20779.75 17886.86
1998/03/31 21709.47 18441.00
1998/04/30 22301.10 18590.00
1998/05/31 22276.95 18503.19
1998/06/30 22047.54 18646.59
1998/07/31 22216.58 18839.02
1998/08/31 18183.79 16508.44
1998/09/30 18135.49 16005.92
1998/10/30 19729.29 17678.06
IMATRL PRASUN SHR__CHT 19981031 19981106 162146 R00000000000106
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Overseas Fund - Institutional Class on
April 23, 1990, when the fund started. As the chart shows, by October
31, 1998, the value of the investment would have grown to $19,753 - a
97.53% increase on the initial investment. For comparison, look at how
the MSCI EAFE Index did over the same period. With dividends
reinvested, the same $10,000 would have grown to $17,678 - a 76.78%
increase.
UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets
means assuming greater risks
than investing in the United
States. Factors like changes in
a country's financial markets,
its local political and economic
climate, and the fluctuating value
of its currency create these risks.
For these reasons an
international fund's performance
may be more volatile than a
fund that invests exclusively in
the United States. Past
performance is no guarantee of
future results and you may have
a gain or loss when you sell
your shares.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Like a white-knuckle flyer on a long
overseas flight, international
investors were tightening their seat
belts to ride out the turbulent
international equity markets over
the past year. For the 12-month
period ending October 31, 1998,
the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 9.89%.
European markets were the primary
contributors to this solid return.
They benefited from corporate
restructurings designed to cut costs
and improve share prices, and
from solid economic growth
prospects. France and Germany
were particularly strong
performers. On the opposite side
of the world, emerging markets in
Latin America suffered considerably.
And in large part, they had Russia
to blame. Russia's devaluation of its
currency and debt defaults caused
investors to sell off investments
considered to carry more risk, such
as emerging-market equities. Markets
in Venezuela and Brazil, already
teetering on the edge thanks to
political instability, dropped
precipitously. Currency
devaluations also continued to
plague Southeast Asian countries,
specifically Indonesia, Thailand,
Malaysia and South Korea. The
Japanese economy continued to
sink lower, as the ailing banking
sector seemed oblivious to
repeated promises - and a lack
of action - by the Japanese
government for assistance.
An interview with Richard Mace, Portfolio Manager of Fidelity Advisor
Overseas Fund
Q. HOW DID THE FUND PERFORM, RICK?
A. For the 12 months that ended October 31, 1998, the fund's
Institutional Class shares returned 4.11%. This lagged the Morgan
Stanley Capital International Europe, Australasia, Far East (EAFE)
Index, which returned 9.89% over the same time period. The
international funds average, as tracked by Lipper Analytical Services,
had a 12-month return of 4.07% as of October 31, 1998.
Q. WHY DID THE FUND UNDERPERFORM BOTH THE EAFE INDEX AND THE LIPPER
PEER GROUP?
A. A major reason was the fund's exposure both to investments in
emerging-market countries as well as to companies whose businesses
were negatively affected by emerging-market disruptions. The fund's
exposure to emerging-market securities totaled slightly less than 4%
of the fund's investments, but several of the fund's commodities and
banking-related positions performed weakly. Declining demand led to
lower commodity prices in general, while banks reported an increase in
problematic loans stemming from stagnant economic growth. Commodity
holdings that were hurt during the period included energy-related
stocks Elf Aquitaine, based in France, as well as Brazil-based
Petrobras and Canadian Natural Resources. Banking positions that were
negatively affected included Mexican holdings Grupo Financiero
Bancomer and BANACCI.
Q. YOU INCREASED THE FUND'S EXPOSURE TO UTILITIES STOCKS DURING THE
PERIOD, FROM AROUND 8% TO JUST UNDER 14% OF INVESTMENTS. WHY?
A. The utilities sector - particularly the telephone utility segment -
provided a number of opportunities over the past year. Companies have
had to cope with a rapidly changing competitive environment as
industry deregulation opened up new opportunities for expansion into
new markets. I found a number of telecommunications companies in
Europe and Japan that I felt were attractively valued, particularly
among cellular providers. These included United Kingdom-based Vodafone
- - which the fund has had a stake in for some time - Germany's
Mannesmann and Spain's Telefonica. Each of these positions contributed
positively to the fund's performance.
Q. WHICH OTHER STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. European business services providers such as Britain's Rentokil and
Securicor got a boost from improved business conditions, as did
computer systems and software providers such as France's Cap Gemini
and Atos, and Denmark's International Service Systems. In terms of
disappointments, paper stocks were another commodities area hit hard
by falling prices. The fund's positions in Canadian paper companies
Domtar and St. Laurent Paperboard, for instance, were notable
detractors.
Q. SHAREHOLDERS MAY NOTICE THAT THE FUND HOLDS SEVERAL POSITIONS IN
FUTURES CONTRACTS. WHAT ROLE DO THESE INVESTMENTS PLAY IN THE
PORTFOLIO?
A. While there are many different uses for futures contracts, I use
them in the fund to be as fully invested in equities as possible.
During periods of inconsistent cash flows, volatile financial markets
or if the fund experiences a temporary cash buildup due to my selling
a few stocks, the use of futures can provide a low-cost, liquid way
for the fund to remain substantially invested in a diversified group
of stocks.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS?
A. I'm optimistic that Europe's economies will continue to improve. As
the latter months of this past period proved, though, corporate
earnings must be watched carefully and a determination must be made as
to whether those earnings support prevailing valuations. If earnings
disappoint, more stock market corrections could become reality. It's
becoming an old story, but as far as the situation in Japan goes, I'll
continue to look for glimmers of economic improvement. Towards the end
of the period, we began to see Japanese companies adopt a more
shareholder-friendly focus. Lastly, the emerging markets still appear
to be in turmoil at this point. Continuing economic and currency
concerns, combined with social unrest, provide a less-than-promising
outlook for a fast recuperation. Regardless, I'll keep an eye on a
number of companies that have shown valuation improvements over the
past few months.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
RICK MACE DISCUSSES THE
IMPACT OF THE UPCOMING
INTRODUCTION OF THE EURO:
"On January 1, 1999, 11 of the `in'
countries of the European Union
- - including Germany, France,
Italy, Spain, the Netherlands,
Belgium, Austria, Finland,
Portugal, Ireland and Luxembourg
- - will officially adopt the euro as
their currency. The introduction
of the euro could have the effect
of reducing the costs of doing
business throughout Europe. This
could make Europe a more
attractive place to do business
and, in turn, could heighten
interest among multinational
corporations around the world in
both owning more European
businesses and expanding their
operations in the region. In
addition, the launch of the euro
should serve to improve the
efficiency of those businesses
operating in Europe.
"In terms of the impact the euro
will have on the way I manage the
fund, it will be extremely minimal.
My stock selection process is built
on the foundation of individual
stock analysis and that has never
wavered. Rather, I'll have to get
used to the fact that a security that
was valued at 10 Deutsche marks
the week before may be worth only
five euro on January 4. We may also
see more investment opportunities
throughout Europe, as companies
could forego the traditional bank
route and go to the capital markets
to raise money for improvements."
FUND FACTS
GOAL: seeks growth of capital
primarily through investments
in foreign securities
START DATE: April 23, 1990
SIZE: as of October 31, 1998,
more than $1.2 billion
MANAGER: Richard Mace,
since 1996; joined Fidelity
in 1987
(checkmark)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STOCKS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
NOVARTIS AG (REG.) (SWITZERLAND, 1.8 1.8
DRUGS & PHARMACEUTICALS)
ELF AQUITAINE (FRANCE, OIL & GAS) 1.7 0.9
TELEFONICA DE ESPANA SA (SPAIN, 1.7 1.0
TELEPHONE SERVICES)
TOTAL SA CLASS B (FRANCE, OIL & GAS) 1.6 2.0
SMITHKLINE BEECHAM PLC (UNITED KINGDOM, 1.4 1.1
DRUGS & PHARMACEUTICALS)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE MARKET SECTORS AS OF OCTOBER 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 20.9 20.1
UTILITIES 13.7 8.3
HEALTH 8.2 9.0
ENERGY 7.1 7.3
DURABLES 5.6 6.5
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF OCTOBER 31, 1998
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE COUNTRIES
6 MONTHS AGO
UNITED KINGDOM 16.8 14.9
FRANCE 15.0 13.5
JAPAN 14.8 17.1
GERMANY 9.0 5.5
NETHERLANDS 7.6 8.8
</TABLE>
TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH SECURITY,
INCLUDING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL AND CREDIT
RISKS. PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES
CONTRACTS, IF APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998 AS OF APRIL 30, 1998
ROW: 1, COL: 1, VALUE: 91.5
ROW: 1, COL: 2, VALUE: 1.5
ROW: 1, COL: 3, VALUE: 7.0
ROW: 1, COL: 1, VALUE: 92.09999999999999
ROW: 1, COL: 2, VALUE: 1.5
ROW: 1, COL: 3, VALUE: 6.4
STOCKS, CLOSED-END
INVESTMENT COMPANIES
AND EQUITY FUTURES 92.8%
FOREIGN GOVERNMENT
OBLIGATIONS 0.2%
SHORT-TERM
INVESTMENTS 7.0%
STOCKS, CLOSED-END
INVESTMENT COMPANIES
AND EQUITY FUTURES 93.5%
FOREIGN GOVERNMENT
OBLIGATIONS 0.1%
SHORT-TERM
INVESTMENTS 6.4%
INVESTMENTS OCTOBER 31, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 84.3%
SHARES VALUE (NOTE 1)
(000S)
ARGENTINA - 0.0%
BANSUD SA CLASS B (A) 118,100 $ 396
AUSTRALIA - 2.4%
AUSTRALIA & NEW ZEALAND BANKING GROUP LTD. 752,366 4,293
BRAMBLES INDUSTRIES LTD. 31,550 690
BROKEN HILL PROPRIETARY CO. LTD. (THE) 272,505 2,311
COLES MYER LTD. 463,300 1,982
COMMONWEALTH BANK OF AUSTRALIA (C) 230,500 2,859
CSR LTD. 154,400 352
DAVID JONES LTD. 447,200 454
FOSTERS BREWING GROUP LTD. 572,900 1,404
NATIONAL AUSTRALIA BANK LTD. 98,300 1,300
NEWS CORP. LTD. 310,574 2,117
NEWS CORP. LTD.:
ADR 88,700 2,423
SPONSORED ADR (LTD. VTG.) 27,300 660
RIO TINTO LTD. 85,900 1,072
SMITH (HOWARD) LTD. 27,100 162
WMC LTD. 1,359,954 4,605
WOODSIDE PETROLEUM LTD. 246,000 1,297
WOOLWORTHS LTD. 480,947 1,689
29,670
AUSTRIA - 0.1%
BANK AUSTRIA AG 14,700 801
BELGIUM - 0.0%
FORTIS AG 700 201
BRAZIL - 1.5%
CENTRAIS ELECTRICAS BRASILEIRAS SA 48,058,000 1,112
COMPANIA ENERGERTICA MINAS GERAIS 110,330,283 2,146
TELEBRAS SPONSORED ADR 206,600 15,689
18,947
CANADA - 1.2%
ALCAN ALUMINIUM LTD. 25,500 640
BCE, INC. 165,500 5,610
CANADIAN NATURAL RESOURCES LTD. (A) 115,800 2,026
INCO LTD. 101,800 1,092
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CANADA - CONTINUED
NORANDA, INC. 245,500 $ 3,628
RIO ALTO EXPLORATION LTD. (A) 143,000 1,557
14,553
DENMARK - 0.5%
DEN DANSKE BANK GROUP AS 13,300 1,808
INTERNATIONAL SERVICE SYSTEMS AS CLASS B 22,100 1,494
UNIDANMARK AS CLASS A 35,300 2,694
5,996
FINLAND - 1.7%
ENSO OY CLASS R 172,900 1,340
MERITA LTD. SERIES A 88,800 477
OY NOKIA AB:
SERIES A 156,400 14,555
SPONSORED ADR 1,000 93
RAISIO GROUP PLC 48,400 654
SAMPO INSURANCE CO. LTD. 33,900 1,058
UPM-KYMMENE CORP. 115,200 2,759
20,936
FRANCE - 13.8%
ACCOR SA 30,500 6,416
ALCATEL ALSTHOM COMPAGNIE GENERALE D'ELECTRICITE SA 123,200 13,552
ALCATEL ALSTHOM COMPAGNIE GENERALE D'ELECTRICITE SA 1,000 22
SPONSORED ADR
AXA SA 93,690 10,606
ATOS SA (A) 15,200 2,871
BANQUE NATIONALE DE PARIS 83,300 5,284
CAP GEMINI SA 33,100 4,982
CASTORAMA DUBOIS INVESTISSEMENTS SA 12,900 2,304
COFLEXIP SA SPONSORED ADR 51,300 2,469
COMPAGNIE DE ST. GOBAIN 18,700 2,771
COMPAGNIE FINANCIERE DE PARIBAS CLASS A (REG.) 30,400 2,238
CREDIT COMMERCIAL DE FRANCE 30,000 2,110
ELF AQUITAINE 183,363 21,270
ELF AQUITAINE SPONSORED ADR 1,000 58
GROUPE DANONE 24,400 6,461
LAFARGE SA 23,154 2,371
LAGARDERE S.C.A. (REG.) 70,500 2,842
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FRANCE - CONTINUED
MICHELIN SA (COMPAGNIE GENERALE DES ETABLISSEMENTS) CLASS B 46,851 $ 1,934
PECHINEY SA CLASS A (A) 48,343 1,664
PEUGEOT SA 12,100 2,022
RENAULT SA 101,300 4,337
RHONE-POULENC SA:
CLASS A 104,205 4,865
SPONSORED ADR CLASS A 1,000 47
ROYAL CANIN SA (C) 5,100 276
SANOFI SA 47,945 7,519
SCOR SA 72,400 4,158
SOCIETE GENERALE, FRANCE CLASS A 83,900 11,116
SUEZ LYONNAISE DES EAUX 23,900 4,287
TOTAL SA:
CLASS B 164,390 19,234
SPONSORED ADR 1,000 59
UNIBAIL 9,000 1,238
UNION ASSURANCESFEDERALES SA 32,900 4,122
VALEO SA 24,900 2,159
VIVENDI SA 56,300 12,878
170,542
GERMANY - 6.8%
ADIDAS-SALOMON AG 21,400 2,523
ALLIANZ AG (REG.) 31,800 10,930
BASF AG 151,800 6,460
BAYER AG 112,200 4,611
BAYERISCHE HYPO-UND VEREINSBANK 81,400 6,449
BAYERISCHE MOTOREN WERKE (BMW) AG 3,600 2,536
BHF BANK AG 184,500 7,167
CONTINENTAL GUMMI-WERKE AG 22,300 593
DAIMLER-BENZ AG (A) 82,800 6,527
DEUTSCHE LUFTHANSA AG (REG.) 110,300 2,407
DEUTSCHE TELEKOM AG 193,000 5,230
DRESDNER BANK AG 38,500 1,501
HOECHST AG 47,700 2,011
HOLZMANN (PHILLIP) AG (A) 1,200 122
MANNESMANN AG 125,620 12,403
SCHERING AG 7,000 819
SIEMENS AG 61,600 3,799
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
GERMANY - CONTINUED
VEBA AG 44,100 $ 2,450
VIAG AG 7,300 4,939
83,477
HONG KONG - 0.6%
CLP HOLDINGS LTD. 248,000 1,393
DAIRY FARM INTERNATIONAL HOLDINGS LTD. 879,000 1,081
HONG KONG & CHINA GAS CO. LTD. 180,000 256
JOHNSON ELECTRIC HOLDINGS LTD. 1,334,000 3,101
LI & FUNG LTD. 92,000 144
SUN HUNG KAI PROPERTIES LTD. 86,000 600
VTECH HOLDINGS LTD. 313,000 1,174
7,749
IRELAND - 1.3%
BANK OF IRELAND, INC. 401,010 7,336
CRH PLC 102,700 1,476
ELAN CORP. PLC ADR (A) 46,600 3,265
IRISH LIFE PLC 268,200 2,380
SMURFIT (JEFFERSON) GROUP PLC 1,021,500 1,660
16,117
ITALY - 2.8%
ASSICURAZIONI GENERALI SPA 324,300 11,587
BANCA COMMERCIALE ITALIANA SPA 166,700 1,032
BANCA DI ROMA (A) 3,140,300 5,487
ENI SPA SPONSORED ADR 235,400 1,406
FINMECCANICA SPA (A) 1,143,400 903
ISTITUTO BANCARIO SAN PAOLO 178,100 2,650
ISTITUTO NAZIONALE DELLE ASSICURAZIONI SPA 590,100 1,635
TELECOM ITALIA MOBILE SPA 600,400 3,495
TELECOM ITALIA SPA 133,330 966
UNICREDITO ITALIANO SPA 910,500 4,912
34,073
JAPAN - 12.9%
ACOM CO. LTD. 64,100 3,593
AIFUL CORP. (A)(C) 37,000 1,730
AIWA CO. LTD. 56,600 1,403
BANK OF TOKYO-MITSUBISHI LTD. 63,000 586
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
JAPAN - CONTINUED
BANYU PHARMACEUTICAL CO. LTD. 145,000 $ 2,471
BRIDGESTONE CORP. 56,000 1,237
CANON, INC. 279,000 5,297
DAIWA HOUSE INDUSTRY CO. LTD. 117,000 1,325
DDI CORP. 1,174 3,437
FUJI BANK LTD. 347,000 1,332
FUJI HEAVY INDUSTRIES LTD. 1,190,000 5,942
FUJI PHOTO FILM CO. LTD. 291,000 10,698
HITACHI MAXELL LTD. 249,000 3,559
HONDA MOTOR CO. LTD. 307,000 9,251
HOYA CORP. 32,000 1,375
ITO-YOKADO CO. LTD. 98,000 5,737
KAO CORP. 150,000 3,048
MATSUMOTOKIYOSHI CO. LTD. 2,400 91
MATSUSHITA ELECTRIC INDUSTRIAL CO. LTD. 273,000 4,024
MINEBEA CO. LTD. 275,000 2,593
MINOLTA CO. LTD. 661,000 3,341
MITSUBISHI ELECTRIC CORP. 897,000 1,830
MITSUBISHI ESTATE CO. LTD. 398,000 3,622
MITSUBISHI TRUST & BANKING CORP. 207,000 1,403
MITSUI FUDOSAN CO. LTD. 177,000 1,179
NGK INSULATORS LTD. 98,000 1,093
NICHICON CORP. 54,000 588
NIPPON TELEGRAPH & TELEPHONE CORP. 701 5,504
NOMURA SECURITIES CO. LTD. 612,000 4,637
NTT MOBILE COMMUNICATION NETWORK, INC. (A)(C) 162 5,872
OMRON CORP. 199,000 1,953
ORIX CORP. (A) 99,600 7,160
OSAKA GAS CO. LTD. 219,000 705
PARIS MIKI, INC. 5,600 94
ROHM CO. LTD. 56,000 4,966
SANKYO CO. LTD. 80,000 1,811
SECOM LTD. 10,000 745
SEKISUI HOUSE LTD. 172,000 1,719
SHARP CORP. 384,000 2,909
SHIN-ETSU CHEMICAL CO. LTD. 57,000 1,139
SHOHKOH FUND & CO. LTD. 4,100 1,251
SONY CORP. 71,200 4,688
SUMITOMO REALTY & DEVELOPMENT CO. LTD. (A) 584,000 1,755
TAKEDA CHEMICAL INDUSTRIES LTD. 412,000 13,444
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
JAPAN - CONTINUED
TAKEFUJI CORP. 45,500 $ 2,433
TAKEFUJI CORP. (C) 32,700 1,748
TERUMO CORP. 85,000 1,793
THK CO. LTD. 229,300 2,369
TOKIO MARINE & FIRE INSURANCE CO. LTD. (THE) 96,000 1,095
TOKYO ELECTRON LTD. 49,000 1,599
TOKYO GAS CO. LTD. 232,000 597
TOYOTA MOTOR CORP. 59,000 1,422
UNIFIED-CHARM CORP. 46,200 2,108
YAMANOUCHI PHARMACEUTICAL CO. LTD. 87,000 2,502
159,803
LUXEMBOURG - 0.1%
STOLT COMEX SEAWAY SA 63,500 810
MALAYSIA - 0.0%
MALAYAN BANKING BHD 34,000 33
ORIENTAL HOLDINGS BHD 686,800 573
606
MEXICO - 1.1%
BANACCI SA DE CV CLASS B (A) 753,000 788
ELEKTRA SA DE CV UNIT 341,200 152
GRUPO FINANCIERO BANCOMER SA DE CV CLASS B 17,048,000 3,498
TELEFONOS DE MEXICO SA DE CV SPONSORED ADR REPRESENTING 165,300 8,730
CLASS L SHARES
13,168
NETHERLANDS - 7.6%
ABN AMRO HOLDING NV 137,100 2,571
AHOLD NV 237,953 7,916
AKZO NOBEL NV 269,300 10,474
AKZO NOBEL NV ADR 1,000 40
ELSEVIER NV 77,700 1,095
FORTIS AMEV NV 24,000 1,560
ING GROEP NV 280,708 13,594
KONINKLIJKE KPN NV 84,200 3,275
LAURUS NV 20,720 522
NUTRECO HOLDING NV 60,604 2,062
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NETHERLANDS - CONTINUED
PHILIPS ELECTRONICS NV (BEARER) 248,100 $ 13,614
ROYAL DUTCH PETROLEUM CO.:
(HAGUE REGISTRY) 268,800 13,238
(NY REGISTRY GILDER 1.25) 1,000 49
TNT POST GROUP NV 50,200 1,345
UNILEVER NV 158,100 11,739
UNILEVER NV (NY SHARES) 500 38
VEDIOR NV 193,535 4,935
VENDEX NV CVA 29,600 753
VNU 128,000 4,430
93,250
NETHERLANDS ANTILLES - 0.1%
SCHLUMBERGER LTD. 21,500 1,129
NORWAY - 0.2%
NCL HOLDINGS AS (A) 1,029,633 2,691
PORTUGAL - 0.4%
BANCO PINTO & SOTTO MAYOR SA 117,600 2,257
ELECTRICIDADE DE PORTUGAL SA 76,900 1,936
PORTUGAL TELECOM SA 11,000 522
TELECEL COMUNICACOES PESSOAIS SA 4,500 830
5,545
RUSSIA - 0.1%
VIMPEL COMMUNICATIONS SPONSORED ADR (A) 66,600 783
SOUTH AFRICA - 0.0%
ABSA GROUP LTD. 60,300 330
SPAIN - 2.7%
BANCO BILBAO VIZCAYA SA (REG.) 453,900 6,129
BANCO SANTANDER SA 104,910 1,924
CORPORACION MAPFRE COMPANIA INTERNACIONAL DE REASEGUROS 29,300 775
SA (REG.)
IBERDROLA SA 100,500 1,625
MAPFRE VIDA SA 26,200 1,041
REPSOL SA 15,600 784
TELEFONICA DE ESPANA SA 470,300 21,259
TELEFONICA DE ESPANA SA SPONSORED ADR 500 68
33,605
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SWEDEN - 3.0%
ABB AB:
SERIES A 48,600 $ 515
SERIES B 47,000 498
ASSA ABLOY AB CLASS B 4,300 172
ASTRA AB CLASS A 373,700 6,136
ELECTROLUX AB 119,400 1,802
ERICSSON (L.M.) TELEFON AB:
ADR CLASS B 1,500 34
CLASS B 290,700 6,570
NORDBANKEN HOLDING AB 429,300 2,580
SKANDIA FOERSAEKRINGS AB 323,900 4,139
SVENSKA HANDELSBANKEN 114,000 4,810
SWEDISH MATCH CO. 2,580,600 9,114
VOLVO AB CLASS B 52,200 1,130
37,500
SWITZERLAND - 6.6%
ADECCO SA (BEARER) 6,130 2,449
CREDIT SUISSE GROUP (REG.) 51,088 7,871
JULIUS BAER HOLDING AG 3,927 12,057
NESTLE SA (REG.) 7,350 15,661
NOVARTIS AG (REG.) 12,229 22,065
ROCHE HOLDING AG PARTICIPATION CERTIFICATES 200 2,338
SWISS REINSURANCE CO. (REG.) 700 1,562
SWISSCOM AG (A) 14,400 4,890
UBS AG (A) 42,139 11,582
ZURICH ALLIED AG (REG.) (A) 1,000 609
81,084
UNITED KINGDOM - 15.6%
ALLIED ZURICH PLC (A) 399,000 4,744
AMEC PLC 200 1
BANK OF SCOTLAND 284,000 3,086
BARCLAYS PLC 131,300 2,830
BARRATT DEVELOPMENTS PLC 18,800 72
BASS PLC 93,300 1,134
BBA GROUP PLC 181,945 1,126
BOC GROUP PLC 53,500 786
BOOTS CO. PLC 141,700 2,128
BRITISH AEROSPACE PLC 888,824 6,459
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED KINGDOM - CONTINUED
BRITISH AMERICAN TOBACCO PLC 259,100 $ 2,341
BRITISH PETROLEUM CO. PLC 730,551 10,765
BRITISH PETROLEUM CO. PLC ADR 500 44
BRITISH TELECOMMUNICATIONS PLC 800,400 10,412
BTP PLC 35,100 232
CABLE & WIRELESS PLC 313,900 3,522
CADBURY-SCHWEPPES PLC 144,300 2,211
CARADON PLC 2,255,460 4,675
CGU PLC 336,700 5,336
COOKSON GROUP PLC 1,370,900 2,869
COURTAULDS TEXTILES PLC 340,100 820
DEVRO PLC 6,400 30
DIAGEO PLC 116,000 1,253
GLAXO WELLCOME PLC 455,300 14,167
GLAXO WELLCOME PLC SPONSORED ADR 1,000 62
HAYS PLC 111,800 1,647
HSBC HOLDINGS PLC 111,800 2,546
HSBC HOLDINGS PLC ORD. 86,100 2,018
KINGFISHER PLC 312,300 2,743
LLOYDS TSB GROUP PLC 1,112,700 13,741
MISYS PLC 129,100 906
NATIONAL GRID GROUP PLC 347,030 2,377
NATIONAL WESTMINSTER BANK PLC 145,500 2,458
PEARSON PLC 166,900 2,912
PILKINGTON PLC 872,000 964
PRUDENTIAL CORP. PLC 44,000 572
REED INTERNATIONAL PLC 244,500 2,070
RENTOKIL INITIAL PLC 1,666,500 10,437
RIO TINTO PLC (REG.) 309,900 3,762
ROYAL & SUN ALLIANCE INSURANCE GROUP PLC 153,524 1,406
SAATCHI & SAATCHI PLC 1,264,200 2,456
SCOTTISH & NEWCASTLE PLC 111,200 1,356
SHELL TRANSPORT & TRADING CO. PLC:
(REG.) 1,591,300 9,744
ADR 1,000 37
SIEBE PLC 1,211,500 4,970
SMITHKLINE BEECHAM PLC 1,335,802 17,027
SMITHKLINE BEECHAM PLC ADR 1,000 64
SOMERFIELD PLC 389,700 2,516
TARMAC PLC 564,900 974
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UNITED KINGDOM - CONTINUED
TOMKINS PLC 244,300 $ 1,131
UNILEVER PLC 384,800 3,866
UNILEVER PLC ADR 1,000 41
VODAFONE GROUP PLC 1,031,913 13,888
WIMPEY GEORGE PLC 339,000 641
WPP GROUP PLC 564,400 2,807
193,182
UNITED STATES OF AMERICA - 1.2%
ALUMINUM CO. OF AMERICA 82,300 6,522
GLOBAL TELESYSTEMS GROUP, INC. (A) 146,700 5,877
NEWMONT MINING CORP. 29,200 621
TRANSOCEAN OFFSHORE, INC. 34,000 1,256
14,276
TOTAL COMMON STOCKS 1,041,220
(COST $880,908)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PREFERRED STOCKS - 2.5%
CONVERTIBLE PREFERRED STOCKS - 0.2%
AUSTRALIA - 0.2%
WBK STRYPES TRUST $3.135 107,700 3,090
NONCONVERTIBLE PREFERRED STOCKS - 2.3%
AUSTRALIA - 0.1%
STAR CITY HOLDINGS LTD. (A) 940,300 639
GERMANY - 0.8%
DYCKERHOFF AG 4,300 1,321
PORSCHE AG (NON-VTG.) 160 276
SAP AG (SYSTEME ANWENDUNGEN PRODUKTE) 17,400 8,589
10,186
ITALY - 1.4%
BANCA INTESA SPA 100 0
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - CONTINUED
ITALY - CONTINUED
TELECOM ITALIA MOBILE SPA 1,993,700 $ 7,085
TELECOM ITALIA SPA RISP 2,033,125 10,316
17,401
TOTAL NONCONVERTIBLE PREFERRED STOCKS 28,226
TOTAL PREFERRED STOCKS 31,316
(COST $18,871)
</TABLE>
CLOSED-END INVESTMENT COMPANIES - 0.6%
EMERGING MARKETS - 0.1%
TEMPLETON DRAGON FUND, INC. 123,600 1,043
GERMANY - 0.3%
EMERGING GERMANY FUND, INC. 46,200 621
NEW GERMANY FUND, INC. (THE) 228,200 3,723
4,344
MULTI-NATIONAL - 0.2%
EUROPEAN WARRANT FUND, INC. 41,700 698
MORGAN STANLEY ASIA-PACIFIC FUND, INC. 117,600 823
1,521
TOTAL CLOSED-END INVESTMENT COMPANIES 6,908
(COST $7,380)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GOVERNMENT OBLIGATIONS - 0.6%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
ITALY - 0.2%
ITALIAN REPUBLIC 5% 6/28/01 AA3 $ 1,190 1,971
UNITED STATES OF AMERICA - 0.4%
U.S. TREASURY BILLS, YIELD AT DATE OF PURCHASE 5,550 5,512
3.66% TO 4.70% 12/17/98 TO 1/7/99 (D)
TOTAL GOVERNMENT OBLIGATIONS 7,483
(COST $7,470)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CASH EQUIVALENTS - 12.0%
SHARES VALUE (NOTE 1)
(000S)
TAXABLE CENTRAL CASH FUND (B) 147,500,738 $ 147,501
(COST $147,501)
TOTAL INVESTMENT IN SECURITIES - 100% $ 1,234,428
(COST $1,062,130)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
(000S) (000S)
PURCHASED
445 CAC 40 INDEX CONTRACTS (FRANCE) DEC. 1998 $ 14,069 $ 593
50 DAX 30 INDEX CONTRACTS (GERMANY) DEC. 1998 13,879 45
159 FTSE 100 INDEX CONTRACTS DEC. 1998 14,621 723
(UNITED KINGDOM)
345 NIKKEI 225 INDEX CONTRACTS DEC. 1998 23,624 (522)
(JAPAN)
$ 66,193 $ 839
</TABLE>
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 5.4%
SECURITY TYPE ABBREVIATIONS
STRYPES - Structured Yield Product
Exchangeable for
Common Stock
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.96%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(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 $12,485,000 or 1.0% of net assets.
(d) Security or a portion of the security was pledged to cover margin
requirements for futures contracts. At the period end, the value of
securities pledged amounted to $1,900,000.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.5%
BASIC INDUSTRIES 4.1
CASH EQUIVALENTS 12.0
CLOSED-END INVESTMENT 0.6
COMPANIES
CONSTRUCTION & REAL ESTATE 2.2
DURABLES 5.6
ENERGY 7.1
FINANCE 20.9
GOVERNMENT OBLIGATIONS 0.6
HEALTH 8.2
HOLDING COMPANIES 0.6
INDUSTRIAL MACHINERY & 5.4
EQUIPMENT
MEDIA & LEISURE 2.2
NONDURABLES 4.5
PRECIOUS METALS 0.5
RETAIL & WHOLESALE 2.4
SERVICES 3.1
TECHNOLOGY 5.4
TRANSPORTATION 0.4
UTILITIES 13.7
100.0%
INCOME TAX INFORMATION
At October 31, 1998, the aggregate cost of investment securities for
income tax purposes was $1,066,921,000. Net unrealized appreciation
aggregated $167,507,000, of which $252,095,000 related to appreciated
investment securities and $84,588,000 related to depreciated
investment securities.
The fund hereby designates approximately $55,025,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS OCTOBER 31, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $1,062,130) - $ 1,234,428
SEE ACCOMPANYING SCHEDULE
FOREIGN CURRENCY HELD AT VALUE (COST $7) 7
RECEIVABLE FOR INVESTMENTS SOLD 18,509
RECEIVABLE FOR FUND SHARES SOLD 2,433
DIVIDENDS RECEIVABLE 3,427
INTEREST RECEIVABLE 621
RECEIVABLE FOR DAILY VARIATION ON FUTURE CONTRACTS 623
OTHER RECEIVABLES 1
TOTAL ASSETS 1,260,049
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 7,927
PAYABLE FOR FUND SHARES REDEEMED 2,483
DISTRIBUTIONS PAYABLE 12
ACCRUED MANAGEMENT FEE 842
OTHER PAYABLES AND ACCRUED EXPENSES 908
TOTAL LIABILITIES 12,172
NET ASSETS $ 1,247,877
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 1,056,963
UNDISTRIBUTED NET INVESTMENT INCOME 2,133
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 15,430
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 173,351
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS $ 1,247,877
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) OCTOBER 31, 1998
CALCULATION OF MAXIMUM OFFERING PRICE $16.32
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($12,460 (DIVIDED BY) 763.4 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/94.25 OF $16.32) $17.32
CLASS T: $16.48
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,085,736 (DIVIDED BY) 65,892 SHARES)
MAXIMUM OFFERING PRICE PER SHARE (100/96.50 OF $16.48) $17.08
CLASS B: $16.08
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($58,401 (DIVIDED BY) 3,631 SHARES) A
CLASS C: $16.37
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($14,655 (DIVIDED BY) 895 SHARES) A
INSTITUTIONAL CLASS: $16.36
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE ($76,625 (DIVIDED BY) 4,683 SHARES)
</TABLE>
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME $ 23,681
DIVIDENDS
INTEREST 5,285
28,966
LESS FOREIGN TAXES WITHHELD (2,628)
TOTAL INCOME 26,338
EXPENSES
MANAGEMENT FEE $ 9,423
BASIC FEE
PERFORMANCE ADJUSTMENT 1,911
TRANSFER AGENT FEES 2,767
DISTRIBUTION FEES 6,391
ACCOUNTING FEES AND EXPENSES 669
NON-INTERESTED TRUSTEES' COMPENSATION 5
CUSTODIAN FEES AND EXPENSES 710
REGISTRATION FEES 147
AUDIT 52
LEGAL 13
REPORTS TO SHAREHOLDERS 156
MISCELLANEOUS 51
TOTAL EXPENSES BEFORE REDUCTIONS 22,295
EXPENSE REDUCTIONS (248) 22,047
NET INVESTMENT INCOME 4,291
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 20,455
FOREIGN CURRENCY TRANSACTIONS (311)
FUTURES CONTRACTS (2,735) 17,409
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 23,211
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 179
FUTURES CONTRACTS 1,662 25,052
NET GAIN (LOSS) 42,461
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 46,752
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 4,291 $ 9,334
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 17,409 84,440
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 25,052 83,254
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 46,752 177,028
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (11,326) (10,798)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (66,913) (42,335)
TOTAL DISTRIBUTIONS (78,239) (53,133)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) 85,339 39,574
TOTAL INCREASE (DECREASE) IN NET ASSETS 53,852 163,469
NET ASSETS
BEGINNING OF PERIOD 1,194,025 1,030,556
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 1,247,877 $ 1,194,025
INCOME OF $2,133 AND $10,180, RESPECTIVELY)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31,
1998 1997 1996 D
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.89 $ 15.29 $ 14.98
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME E .09 .09 .04
NET REALIZED AND UNREALIZED GAIN (LOSS) .51 2.39 .27
TOTAL FROM INVESTMENT OPERATIONS .60 2.48 .31
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.21) (.25) -
FROM NET REALIZED GAIN (.96) (.63) -
TOTAL DISTRIBUTIONS (1.17) (.88) -
NET ASSET VALUE, END OF PERIOD $ 16.32 $ 16.89 $ 15.29
TOTAL RETURN B, C 3.73% 16.95% 2.07%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 12 $ 5 $ 1
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.55% F 1.90% F 1.16% A, F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER 1.54% G 1.89% G 1.16% A
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .51% .53% 1.74% A
PORTFOLIO TURNOVER 74% 70% 82%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 17.02 $ 15.30 $ 13.92 $ 14.06 $ 12.93
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .06 C .13 C .19 C, D .07 .01
NET REALIZED AND .52 2.38 1.29 (.11) 1.14
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT .58 2.51 1.48 (.04) 1.15
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.16) (.16) (.09) - -
FROM NET REALIZED GAIN (.96) (.63) (.01) (.02) (.02)
IN EXCESS OF NET REALIZED GAIN - - - (.08) -
TOTAL DISTRIBUTIONS (1.12) (.79) (.10) (.10) (.02)
NET ASSET VALUE, END OF PERIOD $ 16.48 $ 17.02 $ 15.30 $ 13.92 $ 14.06
TOTAL RETURN A, B 3.57% 17.07% 10.69% (.25)% 8.91%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 1,086 $ 1,111 $ 995 $ 742 $ 654
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE 1.74% 1.66% 1.61% 1.90% 2.12%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE 1.72% E 1.65% E 1.60% E 1.90% 2.12%
NET ASSETS AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT INCOME .35% .80% 1.30% 1.01% .05%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER 74% 70% 82% 47% 34%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.69 $ 15.06 $ 13.92 $ 13.89
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.03) D .02 D .08 D, E .01
NET REALIZED AND UNREALIZED GAIN (LOSS) .51 2.36 1.26 .02
TOTAL FROM INVESTMENT OPERATIONS .48 2.38 1.34 .03
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.13) (.12) (.19) -
FROM NET REALIZED GAIN (.96) (.63) (.01) -
TOTAL DISTRIBUTIONS (1.09) (.75) (.20) -
NET ASSET VALUE, END OF PERIOD $ 16.08 $ 16.69 $ 15.06 $ 13.92
TOTAL RETURN B, C 3.00% 16.41% 9.73% .22%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 58 $ 40 $ 19 $ 3
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.30% G 2.30% 2.37% 1.97% A, G
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.29% H 2.29% H 2.37% 1.97% A
AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME (LOSS) TO (.19)% .15% .53% .94% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 74% 70% 82% 47%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS B SHARES)
TO OCTOBER 31,1995.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS C
YEAR ENDED
OCTOBER 31,
1998 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.23
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) D (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) .29
TOTAL FROM INVESTMENT OPERATIONS .26
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.16)
FROM NET REALIZED GAIN (.96)
TOTAL DISTRIBUTIONS (1.12)
NET ASSET VALUE, END OF PERIOD $ 16.37
TOTAL RETURN B, C 2.84%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 15
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.30% A, F
RATIO OF NET INVESTMENT (LOSS) INCOME TO AVERAGE NET ASSETS (.20)% A
PORTFOLIO TURNOVER 74%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
YEARS ENDED OCTOBER 31,
1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.92 $ 15.20 $ 13.97 $ 13.89
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .13 D .22 D .21 D, E .05
NET REALIZED AND UNREALIZED GAIN (LOSS) .53 2.36 1.24 .03
TOTAL FROM INVESTMENT OPERATIONS .66 2.58 1.45 .08
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.26) (.23) (.21) -
FROM NET REALIZED GAIN (.96) (.63) (.01) -
TOTAL DISTRIBUTIONS (1.22) (.86) (.22) -
NET ASSET VALUE, END OF PERIOD $ 16.36 $ 16.92 $ 15.20 $ 13.97
TOTAL RETURN B, C 4.11% 17.73% 10.51% .58%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (IN MILLIONS) $ 77 $ 38 $ 16 $ 1
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.26% 1.17% 1.44% .97% A, G
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER 1.24% H 1.16% H 1.43% H .97% A
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO .76% 1.31% 1.46% 1.94% A
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 74% 70% 82% 47%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Overseas Fund (the fund) is a fund of Fidelity
Advisor Series VIII (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 fund offers Class A, Class T, Class B, Class C, and Institutional
Class shares, each of which has equal rights as to assets and voting
privileges. Each class has exclusive voting rights with respect to
matters that affect that class. The fund commenced sale of Class C
shares on November 3, 1997. Investment income, realized and unrealized
capital gains and losses, the common expenses of the fund, and certain
fund-level expense reductions, if any, are allocated on a pro rata
basis to each class based on the relative net assets of each class to
the total net assets of the fund. Each class of shares differs in its
respective distribution, transfer agent, and certain other
class-specific fees, expenses, and expense reductions.
The financial statements have been prepared in conformity with
generally accepted accounting principles which require management to
make certain estimates and assumptions at the date of the financial
statements. 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. If trading or events occurring in other markets
after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then
they are valued at their fair value taking this trading or these
events into account. Fair value is determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Securities (including restricted securities) for
which quotations are not readily available are valued primarily using
dealer-supplied valuations or at their fair value. Short-term
securities with remaining maturities of sixty days or less for which
quotations are not readily available 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.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
currencies, the difference between the amount of net investment income
accrued and the U.S. dollar amount actually received, and gains and
losses between trade date and settlement on purchases and sales of
securities. The effects of changes in foreign currency exchange rates
on investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
U.S. federal income taxes to the extent that it distributes
substantially all of its taxable income for its fiscal year. The fund
may be subject to foreign taxes on income and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests. The
fund accrues such taxes as applicable. 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. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date. Income dividends and capital gain distributions are
declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, foreign currency transactions,
passive foreign investment companies (PFIC), non-taxable dividends,
and losses deferred due to wash sales. The fund also utilized earnings
and profits distributed to shareholders on redemption of shares as a
part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
subsequent period. Any taxable income or gain remaining at fiscal year
end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), 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 for U.S. Treasury or
Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
2. OPERATING POLICIES - CONTINUED
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the stock markets and to fluctuations in currency values.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Futures contracts involve, to varying degrees, risk of loss in excess
of the futures variation margin reflected in the Statement of Assets
and Liabilities. The underlying face amount at value of any open
futures contracts at period end is shown in the schedule of
investments under the caption "Futures Contracts." This amount
reflects each contract's exposure to the underlying instrument at
period end. Losses may arise from changes in the value of the
underlying instruments or if the counterparties do not perform under
the contracts' terms. Gains (losses) are realized upon the expiration
or closing of the futures contracts. Futures contracts are valued at
the settlement price established each day by the board of trade or
exchange on which they are traded.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $859,645,000 and $930,283,000, respectively.
The market value of futures contracts opened and closed during the
period amounted to $108,372,000 and $47,489,000, 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 .2500% to
.5200% for the period. The annual individual fund fee rate is .45%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).20% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
to the appropriate index over a specified period of time. For the
period, the management fee was equivalent to an annual rate of .89% of
average net assets after the performance adjustment.
SUB-ADVISER FEE. FMR, on behalf of the fund, entered into sub-advisory
agreements with Fidelity Management & Research (U.K.) Inc., Fidelity
Management & Research (Far East) Inc., Fidelity International
Investment Advisors (FIIA), and Fidelity Investments Japan Limited
(FIJ). In addition, FIIA entered into a sub-advisory agreement with
its subsidiary, Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L). 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 FIIA(U.K.)L a fee based on costs incurred for either
service.
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each class of shares, (collectively referred to as "the
Plans"). Under certain of the Plans, the class pays Fidelity
Distributors Corporation (FDC), an affiliate of FMR, a distribution
and service fee. A portion of this fee may be reallowed to securities
dealers, banks and other financial institutions for the distribution
of each class of shares and providing shareholder support services.
For the period, this fee was based on the following annual rates of
the average net assets of each applicable class:
CLASS A .25%
CLASS T .50%
CLASS B 1.00% *
CLASS C 1.00% *
* .75% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 21,000 $ -
CLASS T 5,793,000 62,000
CLASS B 517,000 388,000
CLASS C 60,000 60,000
$ 6,391,000 $ 510,000
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
Under the Plans, FMR may use its resources to pay administrative and
promotional expenses related to the sale of each class' shares. The
Plans also authorize payments to third parties that assist in the sale
of each class' shares or render shareholder support services. For the
period, the following amounts were paid to third parties under the
Plans:
CLASS A $ 7,000
CLASS T 383,000
CLASS B 33,000
CLASS C 7,000
INSTITUTIONAL CLASS 10,000
SALES LOAD. FDC receives a front-end sales charge of up to 5.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO RETAINED
FDC BY FDC
CLASS A $ 123,000 $ 42,000
CLASS T 618,000 174,000
CLASS B 124,000 124,000 *
CLASS C 4,000 4,000 *
$ 869,000 $ 344,000
* WHEN CLASS B AND CLASS C SHARES ARE INITIALLY SOLD, FDC PAYS
COMMISSIONS FROM ITS OWN RESOURCES TO SECURITIES DEALERS,
BANKS, AND OTHER FINANCIAL INSTITUTIONS THROUGH WHICH THE SALES ARE
MADE.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc., (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for each class of the fund.
FIIOC receives account fees and asset-based fees that vary according
to the account size and type of account of the shareholders of the
respective classes of the fund. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to FIIOC:
AMOUNT % OF
AVERAGE
NET ASSETS
CLASS A $ 28,000 .32
CLASS T 2,490,000 .21
CLASS B 158,000 .30
CLASS C 16,000 .27 *
INSTITUTIONAL CLASS 75,000 .16
$ 2,767,000
* ANNUALIZED
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $38,000 for the
period.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each of the following classes:
FMR REIMBURSEMENT
EXPENSE
LIMITATIONS
CLASS A 1.55% $ 11,000
CLASS T 1.80% -
CLASS B 2.30% 18,000
CLASS C 2.30% 12,000
INSTITUTIONAL CLASS 1.30% -
$ 41,000
Effective December 1, 1998 these expense limitations were eliminated.
5. EXPENSE REDUCTIONS - CONTINUED
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $207,000 under this arrangement.
6. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
AMOUNTS IN THOUSANDS YEAR ENDED OCTOBER 31,
1998 A 1997
FROM NET INVESTMENT INCOME
CLASS A $ 68 $ 15
CLASS T 10,334 10,326
CLASS B 321 155
CLASS C 3 -
INSTITUTIONAL CLASS 600 302
TOTAL $ 11,326 $ 10,798
FROM NET REALIZED GAIN
CLASS A $ 310 $ 38
CLASS T 62,023 40,659
CLASS B 2,341 812
CLASS C 27 -
INSTITUTIONAL CLASS 2,212 826
TOTAL $ 66,913 $ 42,335
$ 78,239 $ 53,133
A DISTRIBUTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998.
7. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES DOLLARS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 A 1997 1998 A 1997
CLASS A 2,135 333 $ $35,934 $ $5,654
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 23 3 371 52
SHARES REDEEMED (1,691) (82) (28,405) (1,418)
NET INCREASE (DECREASE) 467 254 $ 7,900 $ 4,288
CLASS T 47,385 29,400 $ 815,252 $ 487,493
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 4,208 3,178 67,693 47,914
SHARES REDEEMED (50,964) (32,358) (879,988) (538,266)
NET INCREASE (DECREASE) 629 220 $ 2,957 $ (2,859)
CLASS B 2,567 1,517 $ 43,550 $ 25,441
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 153 63 2,417 931
SHARES REDEEMED (1,476) (432) (24,505) (7,271)
NET INCREASE (DECREASE) 1,244 1,148 $ 21,462 $ 19,101
CLASS C 1,843 - $ 30,151 $ -
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 1 - 16 -
SHARES REDEEMED (949) - (14,817) -
NET INCREASE (DECREASE) 895 - $ 15,350 $ -
INSTITUTIONAL CLASS 3,622 2,508 $ 58,034 $ 41,330
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS 146 68 2,327 1,019
SHARES REDEEMED (1,346) (1,384) (22,691) (23,305)
NET INCREASE (DECREASE) 2,422 1,192 $ 37,670 $ 19,044
</TABLE>
A SHARE TRANSACTIONS FOR CLASS C ARE FOR THE PERIOD NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF SHARES) TO OCTOBER 31, 1998..
8. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
CLASS A $ 8,000
CLASS T 73,000
CLASS B 12,000
CLASS C 15,000
INSTITUTIONAL CLASS 39,000
$ 147,000
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VIII 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 (a fund of Fidelity Advisor Series
VIII) at October 31, 1998, and the results of its operations, 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 at October 31, 1998 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 11, 1998
DISTRIBUTIONS
The Board of Trustees of Fidelity Advisor Overseas Fund voted to pay
to shareholders of record at the opening of business on record date,
the following distributions derived from capital gains realized from
sales of portfolio securities, and dividends derived from net
investment income:
INSTITUTIONAL CLASS
PAY DATE 12/8/97 12/7/98
RECORD DATE 12/5/97 12/4/98
DIVIDENDS $0.26 $0.16
SHORT-TERM
CAPITAL GAINS $0.34 __
LONG-TERM
CAPITAL GAINS $0.62 $0.14
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 55.85% __
20% rate 44.15% 100%
A total of 1.32% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 1% of the dividends distributed during the fiscal year for
Institutional Class qualifies for the dividends-received deduction for
corporate shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
The amounts per share which represent income derived from sources
within, and taxes paid to, foreign countries or possessions of the
United States are as follows for the dividend paid December 8, 1997:
INCOME PER SHARE TAXES PER SHARE
Institutional Class $0.296 $0.031
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity International Investment Advisors
Fidelity International Investment Advisors
(U.K.) Limited
Fidelity Investments Japan Limited
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard A. Spillane, Jr., Vice President
Richard R. Mace, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
William J. McCoy *
Marvin L. Mann *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
CUSTODIAN
The Chase Manhattan Bank
New York, NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor International Capital
Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor TechnoQuantSM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth
Opportunities Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
OSI-ANN-1298 66785
1.538538.101
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage
Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
MONEY MARKET FUNDS
Prime Fund
Treasury Fund
Tax-Exempt Fund
(FIDELITY_LOGO_GRAPHIC)(registered trademark)
