(Fidelity Logo Graphic)(registered trademark)
FIDELITY ADVISOR
DIVERSIFIED INTERNATIONAL
FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 8 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 11 A summary of the fund's
investments.
INVESTMENTS 12 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 22 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 31 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 DIVERSIFIED INTERNATIONAL 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV DIVERSIFIED INTL 15.80%
- - CL A
FIDELITY ADV DIVERSIFIED INTL 9.14%
- - CL A (INCL. 5.75% SALES
CHARGE)
MSCI EAFE 9.32%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 - a market capitalization-weighted index that is designed
to represent the performance of developed stock markets outside the
United States and Canada. As of April 30, 1999, the index included
over 1,022 equity securities of companies domiciled in 21 countries.
This benchmark includes reinvested dividends and capital gains, if
any, and excludes the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV DIVERSIFIED INTL 15.70%
- - CL T
FIDELITY ADV DIVERSIFIED INTL 11.65%
- - CL T (INCL. 3.50% SALES
CHARGE)
MSCI EAFE 9.32%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 - a market capitalization-weighted index that is designed
to represent the performance of developed stock markets outside the
United States and Canada. As of April 30, 1999, the index included
over 1,022 equity securities of companies domiciled in 21 countries.
This benchmark includes reinvested dividends and capital gains, if
any, and excludes the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL 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 shares' 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV DIVERSIFIED INTL 15.50%
- - CL B
FIDELITY ADV DIVERSIFIED INTL 10.50%
- - CL B (INCL. CONTINGENT
DEFERRED SALES CHARGE)
MSCI EAFE 9.32%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 - a market capitalization-weighted index that is designed
to represent the performance of developed stock markets outside the
United States and Canada. As of April 30, 1999, the index included
over 1,022 equity securities of companies domiciled in 21 countries.
This benchmark includes reinvested dividends and capital gains, if
any, and excludes the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL 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 shares' 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV DIVERSIFIED INTL 15.50%
- - CL C
FIDELITY ADV DIVERSIFIED INTL 14.50%
- - CL C (INCL. CONTINGENT
DEFERRED SALES CHARGE)
MSCI EAFE 9.32%
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 - a market capitalization-weighted index that is designed
to represent the performance of developed stock markets outside the
United States and Canada. As of April 30, 1999, the index included
over 1,022 equity securities of companies domiciled in 21 countries.
This benchmark includes reinvested dividends and capital gains, if
any, and excludes the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Monetary Union's single
currency - the euro. Many
European markets stalled in 1999,
however, as the outlook for
economic growth and corporate
profits deteriorated. The U.K. stock
market was among the strongest
performers in Europe as the economy
improved amid a favorable
environment of declining interest rates
and encouraging earnings growth.
Elsewhere, positive economic
developments in the form of
lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(Photograph of Greg Fraser)
An interview with Greg Fraser,
Portfolio Manager of Fidelity Advisor Diversified International Fund
Q. HOW DID THE FUND PERFORM, GREG?
A. From its inception on December 17, 1998, through April 30, 1999,
the fund's Class A, Class T, Class B and Class C shares returned
15.80%, 15.70%, 15.50% and 15.50%, respectively. To compare, the
Morgan Stanley Capital International EAFE Index - which tracks the
performance of stocks in Europe, Australasia and the Far East -
returned 9.32%. Although the fund has been open for only a short time,
it was able to beat the index through strong stock selection. Going
forward, we will look at the fund's performance in both six- and
12-month intervals.
Q. WHAT WERE SOME OF THE STOCKS THAT HELPED THE FUND?
A. Telephone service providers - broadly defined - were especially
helpful over the period. These included Hikari Tsushin, a seller of
telephone subscription services in Japan; BCE, the large Canadian
telephone conglomerate; Telecom Italia, the major provider of
fixed-line services in Italy; Mannesmann, a relatively new entrant to
Germany's deregulated telephone service market; and Nokia, a leading
provider of cellular handsets based in Finland. As energy stocks
finally rebounded from lows reached in the early part of the year, BP
Amoco, one of the largest integrated oil companies in the world, and
Shell Transport and Trading, the U.K. portion of the Royal Dutch Shell
group of companies, contributed meaningfully to the fund's returns.
Q. WHICH STOCKS HELD BACK THE FUND'S PERFORMANCE?
A. There were a variety of stocks that hurt the fund. Some of the
fund's blue-chip consumer-products stocks took a breather during the
period, including Unilever, the worldwide consumer products giant;
Novartis, one of the largest pharmaceutical companies in the world,
and Nestle, the worldwide candy and beverage leader. As investors
became more confident after last year's worldwide economic and market
travails, these stocks - generally considered defensive because they
offer steady, but not stellar, earnings - lost ground to more
aggressive stocks. Although these stocks were not cheap even at the
end of the period, they tend to provide greater earnings visibility
than many other companies, so the fund retained moderate holdings in
each of them.
Q. HOW HAS THE INTRODUCTION OF THE EURO AFFECTED THE FUND?
A. The euro is the new European regional currency adopted at the
beginning of the year by 11 European countries. While it won't be
fully implemented until well after 2000, many financial transactions
are already conducted in euros. Although from a technological point of
view the adoption was very smooth, the currency itself has been much
weaker than most observers expected. Further, some unforeseen
circumstances could still present major challenges prior to the final
phase-out of the participating countries' national currencies. In sum,
up until now the euro hasn't had too much of an impact on the fund,
but it is an issue that I'll continue to watch closely.
Q. GREG, WHAT'S YOUR OUTLOOK FOR THE FUND?
A. Over the past few months, market leadership appeared to shift from
large-capitalization growth stocks to smaller- cap and more
value-oriented stocks. It's very hard to know how long this shift will
remain intact. I will attempt to position the fund so that it can
perform competitively in a variety of market environments: growth or
value, large-capitalization or mid- and small- capitalization. I'm
closely watching Japan, where the country seems to have made some
genuine steps toward reform, including a lower corporate tax rate and
a greater reliance on corporate restructuring. If structural reforms
gain momentum in Japan, shareholders should not be surprised to see an
increase in the fund's Japanese holdings.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: capital growth by
investing primarily in foreign
equity securities that are
selected mainly through
quantitative analysis supported
by fundamental analysis.
START DATE: December 17,1998
SIZE: as of April 30, 1999,
more than $14 million
MANAGER: Greg Fraser,
since inception; joined
Fidelity in 1986
GREG FRASER DISCUSSES HOW HE
MAKES INVESTMENT DECISIONS:
"Fidelity's Advisor Diversified
International Fund uses a unique
blend of quantitative tools and
fundamental analysis to make
investment decisions. One set of
models - called the top-down
models - provides guidance on
which countries to emphasize or
de-emphasize. However, these
country allocation models are only
a small part of the process.
"The majority of my time is spent
studying the stocks of individual
companies. For this task, we've
developed a set of about 20
models. I think of these models as
analytical tools in my `tool kit.' The
tools answer useful questions
about the companies: Are they
cheap? Do they have sound
balance sheets? Are business
conditions likely to be improving?
The important thing to remember
is that the tools focus my time and
energy on the more attractive
situations. Also, when I meet with
company managements or listen
to conference calls - which I do
about 500 times a year - I can,
depending on the
circumstances, be very focused
on what I want to learn from the
meeting or call.
"While our process evolves both as
the markets evolve and as the
computer and statistical methods
evolve, the goal remains the same: to
provide superior returns to
shareholders."
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
BP Amoco PLC sponsored ADR 1.6
(United Kingdom, Oil & Gas)
BCE, Inc. (Canada, Telephone 1.4
Services)
Shell Transport & Trading Co. 1.3
PLC (Reg.) (United Kingdom,
Oil & Gas)
Telefonica SA sponsored ADR 1.3
(Spain, Telephone Services)
Eni Spa sponsored ADR (Italy, 1.1
Oil & Gas)
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
FINANCE 17.9
UTILITIES 15.2
TECHNOLOGY 8.7
NONDURABLES 7.6
BASIC INDUSTRIES 7.5
TOP FIVE COUNTRIES AS OF
APRIL 30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS
Japan 18.3
United Kingdom 14.2
France 7.4
Germany 5.8
Australia 5.8
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 92.90000000000001
Row: 1, Col: 2, Value: 7.1
Stocks, Investment companies 92.9%
Short-term investments 7.1%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 87.8%
SHARES VALUE (NOTE 1)
AUSTRALIA - 5.8%
AAPT Ltd. (a) 11,000 $ 39,284
AMP Ltd. 7,000 81,710
Broken Hill Proprietary Co. 10,000 112,985
Ltd. (The)
Cable & Wireless Optus Ltd. 25,000 56,215
(a)
Commonwealth Bank of Australia 7,000 127,379
CSR Ltd. 20,000 53,437
Keycorp Ltd. 5,000 11,243
National Australia Bank Ltd. 4,000 77,828
News Corp. Ltd. sponsored ADR 5,000 152,813
(ltd. vtg.)
Pasminco Ltd. 50,000 55,884
WMC Ltd. 15,600 67,370
836,148
AUSTRIA - 0.4%
Austria Tabak AG (b) 1,000 61,410
BELGIUM - 1.2%
Delhaize Freres & Compagnie 1,500 131,503
Le Lion SA
Telinfo SA 300 38,276
169,779
BERMUDA - 1.0%
Global Crossing Ltd. (a) 1,000 54,000
Sea Containers Ltd. Class A 2,000 63,875
Terra Nova (Bermuda) Holdings 1,200 26,925
Ltd. Class A
144,800
BRITISH VIRGIN ISLANDS - 0.1%
Mih Ltd. (a) 500 9,813
CANADA - 5.4%
Alberta Energy Co. Ltd. 1,300 38,367
BCE, Inc. 4,500 205,388
Canadian Imperial Bank of 1,500 38,607
Commerce
Canadian Pacific Ltd. 1,000 22,581
Falconbridge Ltd. 2,000 29,856
Gulf Canada Resources Ltd. (a) 11,200 45,353
JDS Fitel, Inc. (a) 500 30,199
Maritime Telegraph & 1,000 26,767
Telephone Co. Ltd.
Noranda, Inc. 4,000 53,535
Potash Corp. of Saskatchewan 1,000 60,947
Rio Algom Ltd. 5,000 67,776
Saskatchewan Wheat Pool Class 500 3,174
B (non-vtg.)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CANADA - CONTINUED
Suncor Energy, Inc. 800 $ 31,984
Thomson Corp. 2,500 75,498
Toronto Dominion Bank 1,000 53,432
783,464
DENMARK - 0.3%
Unidanmark AS Class A 700 48,147
FINLAND - 1.8%
Elcoteq Network Corp. Class A 5,000 39,970
Metsa Tissue PLC 2,400 19,058
Nokia AB sponsored ADR 1,800 133,538
UPM-Kymmene Corp. 2,000 60,669
253,235
FRANCE - 7.3%
Accor SA 100 26,417
AXA SA de CV 500 64,693
Canal Plus SA 100 27,868
Cap Gemini SA 500 76,604
CNP Assurances 1,000 25,094
Compagnie Generale de 2,500 26,250
Geophysique SA sponsored ADR
(a)
Dexia France 100 14,029
Elf Aquitaine SA sponsored ADR 2,000 156,250
Eurafrance (Societe) 105 52,919
France Telecom SA ADR 1,000 81,000
Groupe Danone 300 80,363
Marine Wendel SA 100 15,988
Pernod-Ricard (a) 300 20,281
Rhone-Poulenc SA Class A 700 32,987
Scor SA 500 24,988
Societe Generale, France 300 53,808
Class A
Total SA Class B 1,000 136,000
Vivendi SA 600 140,460
1,055,999
GERMANY - 5.6%
Adva AG Optical Networking (a) 600 46,820
Allianz AG (Reg.) 150 47,170
BASF AG 1,000 44,046
Bayer AG 1,500 62,654
DaimlerChrysler AG (Reg.) 800 78,550
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GERMANY - CONTINUED
Depfa Bank AG 300 $ 25,094
Deutsche Bank AG 300 17,388
Deutsche Bank AG (RFD) 33 1,852
Deutsche Telekom AG 800 31,603
Heidelberger Druckmaschinen AG 100 5,949
Linde AG 100 61,040
Mannesmann AG 1,000 130,868
Medion AG (a)(b) 200 40,891
Primacom AG (a) 100 4,341
RWE AG 3,000 136,585
Siemens AG 300 22,140
Veba AG 1,000 54,952
811,943
HONG KONG - 1.2%
CDL Hotels International Ltd. 100,000 41,283
(a)
China Telecom (Hong Kong) 20,000 45,750
Ltd. (a)
Hutchison Whampoa Ltd. 10,000 89,662
176,695
IRELAND - 0.6%
Elan Corp. PLC sponsored ADR 700 36,050
(a)
Irish Life & Permanent PLC 3,225 45,460
81,510
ISRAEL - 1.5%
Bezeq Israeli 10,000 38,851
Telecommunication Corp. Ltd.
(a)
ECI Telecom Ltd. 1,000 36,875
Forsoft Ltd. (a) 5,000 34,375
Koor Industries Ltd. 1,500 32,250
sponsored ADR
Nice Systems Ltd. sponsored 1,000 28,750
ADR (a)
Teva Pharmaceutical 1,000 45,750
Industries Ltd. ADR
216,851
ITALY - 3.8%
Alitalia Linee Aeree Italiane 6,800 21,038
Class A
Assicurazioni Generali Spa 4,000 155,982
Banca Commerciale Italiana Spa 3,400 28,130
Eni Spa sponsored ADR 2,500 163,438
Telecom Italia Mobile Spa 5,100 30,769
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - CONTINUED
Telecom Italia Spa 12,000 $ 127,424
Unicredito Italiano Spa 3,424 17,452
544,233
JAPAN - 18.3%
Acom Co. Ltd. 500 37,485
Amway Japan Ltd. sponsored ADR 5,000 23,750
Asahi Glass Co. Ltd. 5,000 38,281
Bank of Tokyo-Mitsubishi Ltd. 5,000 73,125
ADR
DDI Corp. 15 74,510
Fuji Bank Ltd. 5,000 39,035
Fuji Coca-Cola Bottling Co. 5,000 69,107
Ltd.
Fuji Photo Film Co. Ltd. 2,300 86,891
Hikari Tsushin, Inc. 500 104,708
Honda Motor Co. Ltd. 1,000 88,375
sponsored ADR
Jafco Co. Ltd. 1,000 50,092
Japan Tobacco, Inc. 5 50,260
Kao Corp. 5,000 126,906
Kirin Brewery Co. Ltd. 5,000 56,542
Kokusai Denshin Denwa 1,500 90,970
Kokusai Securities Co. Ltd. 5,000 62,406
Kyocera Corp. sponsored ADR 1,000 59,313
Mabuchi Motors Co. Ltd. 400 31,060
Matsushita Electric 500 97,406
Industrial Co. Ltd. ADR
Minebea Co. Ltd. 2,000 19,350
Nikon Corp. (a) 5,000 68,688
Nintendo Co. Ltd. 500 46,616
Nippon Telegraph & Telephone 1,000 53,750
Corp. ADR
Nomura Securities Co. Ltd. 6,000 64,734
NTT Mobile Communication 1 58,636
Network, Inc. (a)
Oracle Corp. Japan 1,000 122,299
Orix Corp. 500 40,250
Secom Ltd. 1,000 97,671
Sekisui House Ltd. 3,000 33,599
Senshukai Co. Ltd. 5,000 54,909
Sharp Corp. 5,000 58,636
Shikoku Coca-Cola Bottling 2,000 29,402
Co. Ltd.
Softbank Corp. 500 66,552
Suzuken Co. Ltd. 3,000 77,400
Takeda Chemical Industries 2,000 86,949
Ltd.
Takefuji Corp. 500 41,464
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Tokio Marine & Fire Insurance 3,000 $ 34,956
Co. Ltd. (The)
Tokyo Electron Ltd. 1,000 56,961
Tokyo Seimitsu Co. Ltd. 1,000 55,369
Toshiba Corp. 10,000 67,013
Toyo Information System Co. 3,000 86,698
Ltd.
Toyoda Automatic Loom Works 3,000 57,422
Ltd.
2,639,546
LUXEMBOURG - 0.8%
Quilmes Industrial SA 2,500 27,344
sponsored ADR
Societe Europeene de 5,000 83,125
Communication SA sponsored
ADR Class A (a)
Stolt Comex Seaway SA 1,000 12,500
122,969
MEXICO - 0.1%
Elamex SA de CV (a) 5,000 18,125
NETHERLANDS - 5.2%
ABN AMRO Holding NV 3,000 71,628
Aegon NV 175 16,815
Akzo Nobel NV 700 31,685
Equant NV (Reg.) (a) 500 44,625
Fortis Amev NV 1,000 35,682
ING Groep NV 2,400 148,147
Koninklijke (Royal) Philips 1,200 103,551
Electronics NV
STMicroelectronics NV (a) 600 61,200
TNT Post Group NV 900 24,299
Unilever NV (NY shares) 2,000 129,875
Van Melle NV 500 29,646
Wolters Kluwer NV 1,200 52,347
749,500
NEW ZEALAND - 1.7%
Fletcher Challenge Ltd.:
Building Division 25,000 41,392
Forestry Division 100,000 53,698
Paper Division 100,000 93,411
Sky City Ltd. 25,000 62,368
250,869
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PANAMA - 0.3%
Banco Latinamericano de 1,200 $ 38,250
Exporaciones SA Class E
PORTUGAL - 0.1%
Telecel Comunicacoes Pessoais 150 20,091
SA
SINGAPORE - 0.7%
Allgreen Properties Ltd. 33,000 20,041
Delgro Corp. Ltd. 20,000 40,094
Fraser & Neave Ltd. 10,000 44,222
104,357
SOUTH AFRICA - 1.1%
Anglo American Platinum Corp. 3,000 54,849
Ltd.
Anglogold Ltd. 900 42,397
Impala Platinum Holdings Ltd. 2,000 45,592
Sappi Ltd. 2,000 14,495
157,333
SPAIN - 2.0%
Banco Santander Central 2,000 43,000
Hispano SA ADR
Endesa SA sponsored ADR 1,000 22,063
Repsol SA sponsored ADR 2,400 39,600
Telefonica SA sponsored ADR 1,300 181,188
285,851
SWEDEN - 2.1%
Electrolux AB 2,000 40,652
Ericsson (L.M.) Telefon AB 2,000 54,000
ADR Class B
Icon Medialab International 100 3,673
AB (a)
Investor AB Class B Free 2,000 91,051
shares
Kinnevik Investment AB Series 2,500 54,975
B
Swedish Match Co. 18,900 62,229
306,580
SWITZERLAND - 3.3%
Credit Suisse Group (Reg.) 292 57,959
Edipresse SA (Bearer) 73 18,442
Nestle SA (Reg.) 70 129,665
Novartis AG (Reg.) 70 102,566
Roche Holding AG 3 35,315
participation certificates
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Swiss Reinsurance Co. (Reg.) 15 $ 32,854
United Bank of Switzerland AG 300 101,969
478,770
UNITED KINGDOM - 14.2%
Aggreko PLC 5,000 17,802
Allied Domecq PLC 3,800 29,752
Allied Zurich PLC (a) 7,000 92,922
Antofagasta Holdings PLC 10,000 47,525
AstraZeneca Group PLC 880 34,414
Barclays PLC 2,000 63,602
Billiton PLC 20,000 67,984
BP Amoco PLC sponsored ADR 2,000 226,364
British Telecommunications 500 83,875
PLC sponsored ADR
Capital Radio PLC 5,000 69,434
CGU PLC 4,000 63,248
Diageo PLC 8,000 92,471
Dixons Group PLC 1,500 32,067
Energis PLC (a) 1,100 29,505
Glaxo Wellcome PLC sponsored 1,000 58,250
ADR
Hanson PLC 3,400 33,277
HSBC Holdings PLC Ord. 3,400 129,760
Lloyds TSB Group PLC 5,000 80,590
National Westminster Bank PLC 4,000 96,467
Nycomed Amersham PLC 10,000 82,000
Professional Staff PLC 3,000 18,750
sponsored ADR (a)
Reckitt & Colman PLC 3,000 35,716
Rio Tinto PLC (Reg.) 3,000 52,462
Severn Trent PLC 1,900 25,023
Shell Transport & Trading Co. 25,000 189,325
PLC (Reg.)
SmithKline Beecham PLC 1,200 78,825
sponsored ADR
South African Breweries PLC 6,000 50,401
Tomkins PLC 4,700 20,008
Unilever PLC ADR 1,500 53,719
Vodafone Group PLC sponsored 500 89,688
ADR
2,045,226
UNITED STATES OF AMERICA - 1.9%
AppliedTheory Corp. (a) 100 2,050
Global TeleSystems Group, 500 33,063
Inc. (a)
Globalstar Telecommunications 2,000 40,250
Ltd. (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Hollinger International, Inc. 3,000 $ 42,188
Class A
Informatica Corp. (a) 100 2,825
Marimba, Inc. (a) 100 6,075
Mpath Interactive, Inc. (a) 100 3,938
Pharmacia & Upjohn, Inc. 1,500 84,000
United International 1,000 59,750
Holdings, Inc. Class A (a)
274,139
TOTAL COMMON STOCKS 12,685,633
(Cost $11,715,428)
INVESTMENT COMPANIES - 5.1%
CHILE - 0.4%
Chile Fund, Inc. 5,000 60,313
EMERGING MARKETS - 0.9%
Emerging Markets 4,000 35,000
Infrastructure Fund, Inc.
Templeton Dragon Fund, Inc. 10,000 96,250
131,250
FRANCE - 0.1%
France Growth Fund, Inc. 1,500 20,063
GERMANY - 0.2%
New Germany Fund, Inc. (The) 2,600 31,200
HONG KONG - 0.3%
Asia Pacific Fund, Inc. 5,000 45,000
INDIA - 0.4%
India Fund (a) 2,500 20,938
India Growth Fund (a) 2,500 23,750
Jardine Fleming India Fund, 2,500 15,625
Inc. (a)
60,313
KOREA (SOUTH) - 0.2%
Korea Fund, Inc. (The) (a) 2,000 25,000
MEXICO - 0.6%
Mexico Fund, Inc. (The) 5,000 87,813
INVESTMENT COMPANIES -
CONTINUED
SHARES VALUE (NOTE 1)
MULTI-NATIONAL - 0.8%
Morgan Stanley Asia-Pacific 5,000 $ 45,625
Fund, Inc.
Scudder New Asia Fund, Inc. 5,000 61,250
(a)
106,875
PHILIPPINES - 0.3%
First Philippine Fund, Inc. 5,000 40,625
(a)
PORTUGAL - 0.1%
Portugal Fund, Inc. 500 6,938
SINGAPORE - 0.3%
Singapore Fund, Inc. 5,000 44,375
SWITZERLAND - 0.3%
Swiss Helvetia Fund, Inc. 3,500 49,000
TAIWAN - 0.2%
Taiwan Fund, Inc. 1,300 21,125
TOTAL INVESTMENT COMPANIES 729,890
(Cost $664,431)
CASH EQUIVALENTS - 7.1%
MATURITY AMOUNT
Investments in repurchase $ 1,035,422 1,035,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
TOTAL INVESTMENT IN $ 14,450,523
SECURITIES - 100%
(Cost $13,414,859)
</TABLE>
LEGEND
(a) Non-income producing
(b) 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 $102,301 or 0.7% of net assets.
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $13,414,859. Net unrealized appreciation
aggregated $1,035,664, of which $1,391,191 related to appreciated
investment securities and $355,527 related to depreciated investment
securities.
MARKET SECTOR
DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 7.5%
CASH EQUIVALENTS 7.1
CONSTRUCTION & REAL ESTATE 1.3
DURABLES 3.6
ENERGY 7.3
FINANCE 17.9
HEALTH 5.3
HOLDING COMPANIES 0.7
INDUSTRIAL MACHINERY & 2.6
EQUIPMENT
INVESTMENT COMPANIES 5.1
MEDIA & LEISURE 4.9
NONDURABLES 7.6
PRECIOUS METALS 0.8
RETAIL & WHOLESALE 2.0
SERVICES 1.2
TECHNOLOGY 8.7
TRANSPORTATION 1.2
UTILITIES 15.2
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 14,450,523
value (including repurchase
agreements of $1,035,000)
(cost $13,414,859) - See
accompanying schedule
Cash 276
Receivable for investments 71,995
sold
Receivable for fund shares 220,439
sold
Dividends receivable 25,207
Prepaid expenses 55,622
Receivable from investment 4,817
adviser for expense
reductions
TOTAL ASSETS 14,828,879
LIABILITIES
Payable for investments $ 176,677
purchased
Payable for fund shares 12,920
redeemed
Distribution fees payable 6,363
Other payables and accrued 25,621
expenses
TOTAL LIABILITIES 221,581
NET ASSETS $ 14,607,298
Net Assets consist of:
Paid in capital $ 13,191,611
Accumulated net investment (9,733)
(loss)
Accumulated undistributed net 389,972
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,035,448
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 14,607,298
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $11.58
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($1,384,962 (divided by)
119,596 shares)
Maximum offering price per $12.29
share (100/94.25 of $11.58)
CLASS T: NET ASSET VALUE and $11.57
redemption price per share
($7,061,764 (divided by)
610,396 shares)
Maximum offering price per $11.99
share (100/96.50 of $11.57)
CLASS B: NET ASSET VALUE and $11.55
offering price per share
($2,623,976 (divided by)
227,188 shares) A
CLASS C: NET ASSET VALUE and $11.55
offering price per share
($2,324,951 (divided by)
201,331 shares) A
INSTITUTIONAL CLASS: NET $11.59
ASSET VALUE, offering price
and redemption price per
share ($1,211,645 (divided
by) 104,525 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 54,305
Dividends
Interest 14,153
68,458
Less foreign taxes withheld (6,145)
TOTAL INCOME 62,313
EXPENSES
Management fee $ 22,753
Transfer agent fees 7,724
Distribution fees 17,907
Accounting fees and expenses 22,051
Non-interested trustees' 7
compensation
Custodian fees and expenses 11,878
Registration fees 47,491
Audit 10,309
Legal 4
Miscellaneous 120
Total expenses before 140,244
reductions
Expense reductions (68,198) 72,046
NET INVESTMENT INCOME (LOSS) (9,733)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 399,949
Foreign currency transactions (9,977) 389,972
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 1,035,664
Assets and liabilities in (216) 1,035,448
foreign currencies
NET GAIN (LOSS) 1,425,420
NET INCREASE (DECREASE) IN $ 1,415,687
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (9,733)
income (loss)
Net realized gain (loss) 389,972
Change in net unrealized 1,035,448
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,415,687
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 13,191,611
increase (decrease)
TOTAL INCREASE (DECREASE) 14,607,298
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 14,607,298
accumulated net investment
loss of $9,733)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.00)
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.58
operations
Net asset value, end of period $ 11.58
TOTAL RETURN B, C 15.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,385
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment (.03)% A
income (loss) to average net
assets
Portfolio turnover 90% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS T
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.01)
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.57
operations
Net asset value, end of period $ 11.57
TOTAL RETURN B, C 15.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 7,062
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment (.20)% A
income (loss) to average net
assets
Portfolio turnover 90% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.55
operations
Net asset value, end of period $ 11.55
TOTAL RETURN B, C 15.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,624
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (.74)% A
income to average net assets
Portfolio turnover 90% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.55
operations
Net asset value, end of period $ 11.55
TOTAL RETURN B, C 15.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,325
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (.74)% A
income (loss) to average net
assets
Portfolio turnover 90% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .01
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.59
operations
Net asset value, end of period $ 11.59
TOTAL RETURN B, C 15.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,212
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment .21% A
income to average net assets
Portfolio turnover 90% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED .
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Diversified International 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. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. 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 and settlement date 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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the funds except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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.
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 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.
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 $14,733,662 and $2,750,694, respectively.
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO FDC RETAINED BY FDC
CLASS A $ 1,042 $ 972
CLASS T 6,019 1,826
CLASS B 5,548 5,121
CLASS C 5,298 5,221
$ 17,907 $ 13,140
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 3,811 $ 1,104
CLASS T 17,036 8,390
CLASS B 0 0*
CLASS C 3 3*
$ 20,850 $ 9,497
* 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 $ 988 .24*
CLASS T 3,023 .25*
CLASS B 1,431 .26*
CLASS C 1,385 .26*
INSTITUTIONAL CLASS 897 .23*
$ 7,724
* ANNUALIZED
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ACCOUNTING FEES. Fidelity Services Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $186 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 9,047
CLASS T 2.25% 26,688
CLASS B 2.75% 12,229
CLASS C 2.75% 11,697
INSTITUTIONAL CLASS 1.75% 8,526
$ 68,187
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 $11 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 40% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
DECEMBER 17, 1998 DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, TO APRIL 30,
1999 1999
CLASS A Shares sold 119,790 $ 1,210,548
Shares redeemed (194) (2,076)
Net increase (decrease) 119,596 $ 1,208,472
CLASS T Shares sold 615,289 $ 6,521,663
Shares redeemed (4,893) (53,675)
Net increase (decrease) 610,396 $ 6,467,988
CLASS B Shares sold 227,188 $ 2,378,115
CLASS C Shares sold 202,493 $ 2,101,027
Shares redeemed (1,162) (13,383)
Net increase (decrease) 201,331 $ 2,087,644
INSTITUTIONAL CLASS Shares 106,388 $ 1,070,594
sold
Shares redeemed (1,863) (21,202)
Net increase (decrease) 104,525 $ 1,049,392
</TABLE>
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 (FIIA)
Fidelity Investments Japan Limited (FIJ)
Fidelity International Investment Advisors (U.K.) Limited
(FIIA (U.K.))
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Robert Lawrence, Vice President
Greg Fraser, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy, 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation Fund
Fidelity Advisor Balanced Fund
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)
FIDELITY ADVISOR
DIVERSIFIED INTERNATIONAL
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 5 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 8 A summary of the fund's
investments.
INVESTMENTS 9 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 19 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 28 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 DIVERSIFIED INTERNATIONAL 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV DIVERSIFIED INTL 15.90%
- - INST CL
MSCI EAFE 9.32%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on December 17, 1998. 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 - a market capitalization-weighted
index that is designed to represent the performance of developed stock
markets outside the United States and Canada. As of April 30, 1999,
the index included over 1,022 equity securities of companies domiciled
in 21 countries. This benchmark includes reinvested dividends and
capital gains, if any, and excludes the effect of sales changes.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' shares'
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. In
addition, the growth of a hypothetical $10,000 investment in the fund
will appear in the fund's next report six months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Monetary Union's single
currency - the euro. Many
European markets stalled in 1999,
however, as the outlook for
economic growth and corporate
profits deteriorated. The U.K. stock
market was among the strongest
performers in Europe as the economy
improved amid a favorable
environment of declining interest rates
and encouraging earnings growth.
Elsewhere, positive economic
developments in the form of
lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(photograph of Greg Fraser)
An interview with Greg Fraser,
Portfolio Manager of Fidelity Advisor Diversified International Fund
Q. HOW DID THE FUND PERFORM, GREG?
A. From its inception on December 17, 1998, through April 30, 1999,
the fund's Institutional Class shares returned 15.90%. To compare, the
Morgan Stanley Capital International EAFE Index - which tracks the
performance of stocks in Europe, Australasia and the Far East -
returned 9.32%. Although the fund has been open for only a short time,
it was able to beat the index through strong stock selection. Going
forward, we will look at the fund's performance in both six- and
12-month intervals.
Q. WHAT WERE SOME OF THE STOCKS THAT HELPED THE FUND?
A. Telephone service providers - broadly defined - were especially
helpful over the period. These included Hikari Tsushin, a seller of
telephone subscription services in Japan; BCE, the large Canadian
telephone conglomerate; Telecom Italia, the major provider of
fixed-line services in Italy; Mannesmann, a relatively new entrant to
Germany's deregulated telephone service market; and Nokia, a leading
provider of cellular handsets based in Finland. As energy stocks
finally rebounded from lows reached in the early part of the year, BP
Amoco, one of the largest integrated oil companies in the world, and
Shell Transport and Trading, the U.K. portion of the Royal Dutch Shell
group of companies, contributed meaningfully to the fund's returns.
Q. WHICH STOCKS HELD BACK THE FUND'S PERFORMANCE?
A. There were a variety of stocks that hurt the fund. Some of the
fund's blue-chip consumer-products stocks took a breather during the
period, including Unilever, the worldwide consumer products giant;
Novartis, one of the largest pharmaceutical companies in the world,
and Nestle, the worldwide candy and beverage leader. As investors
became more confident after last year's worldwide economic and market
travails, these stocks - generally considered defensive because they
offer steady, but not stellar, earnings - lost ground to more
aggressive stocks. Although these stocks were not cheap even at the
end of the period, they tend to provide greater earnings visibility
than many other companies, so the fund retained moderate holdings in
each of them.
Q. HOW HAS THE INTRODUCTION OF THE EURO AFFECTED THE FUND?
A. The euro is the new European regional currency adopted at the
beginning of the year by 11 European countries. While it won't be
fully implemented until well after 2000, many financial transactions
are already conducted in euros. Although from a technological point of
view the adoption was very smooth, the currency itself has been much
weaker than most observers expected. Further, some unforeseen
circumstances could still present major challenges prior to the final
phase-out of the participating countries' national currencies. In sum,
up until now the euro hasn't had too much of an impact on the fund,
but it is an issue that I'll continue to watch closely.
Q. GREG, WHAT'S YOUR OUTLOOK FOR THE FUND?
A. Over the past few months, market leadership appeared to shift from
large-capitalization growth stocks to smaller- cap and more
value-oriented stocks. It's very hard to know how long this shift will
remain intact. I will attempt to position the fund so that it can
perform competitively in a variety of market environments: growth or
value, large-capitalization or mid- and small- capitalization. I'm
closely watching Japan, where the country seems to have made some
genuine steps toward reform, including a lower corporate tax rate and
a greater reliance on corporate restructuring. If structural reforms
gain momentum in Japan, shareholders should not be surprised to see an
increase in the fund's Japanese holdings.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: capital growth by
investing primarily in foreign
equity securities that are
selected mainly through
quantitative analysis supported
by fundamental analysis.
START DATE: December 17,1998
SIZE: as of April 30, 1999,
more than $14 million
MANAGER: Greg Fraser,
since inception; joined
Fidelity in 1986
GREG FRASER DISCUSSES HOW HE
MAKES INVESTMENT DECISIONS:
"Fidelity's Advisor Diversified
International Fund uses a unique
blend of quantitative tools and
fundamental analysis to make
investment decisions. One set of
models - called the top-down
models - provides guidance on
which countries to emphasize or
de-emphasize. However, these
country allocation models are only
a small part of the process.
"The majority of my time is spent
studying the stocks of individual
companies. For this task, we've
developed a set of about 20
models. I think of these models as
analytical tools in my `tool kit.' The
tools answer useful questions
about the companies: Are they
cheap? Do they have sound
balance sheets? Are business
conditions likely to be improving?
The important thing to remember
is that the tools focus my time and
energy on the more attractive
situations. Also, when I meet with
company managements or listen
to conference calls - which I do
about 500 times a year - I can,
depending on the
circumstances, be very focused
on what I want to learn from the
meeting or call.
"While our process evolves both as
the markets evolve and as the
computer and statistical methods
evolve, the goal remains the same: to
provide superior returns to
shareholders."
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
BP Amoco PLC sponsored ADR 1.6
(United Kingdom, Oil & Gas)
BCE, Inc. (Canada, Telephone 1.4
Services)
Shell Transport & Trading Co. 1.3
PLC (Reg.) (United Kingdom,
Oil & Gas)
Telefonica SA sponsored ADR 1.3
(Spain, Telephone Services)
Eni Spa sponsored ADR (Italy, 1.1
Oil & Gas)
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
FINANCE 17.9
UTILITIES 15.2
TECHNOLOGY 8.7
NONDURABLES 7.6
BASIC INDUSTRIES 7.5
TOP FIVE COUNTRIES AS OF
APRIL 30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS
Japan 18.3
United Kingdom 14.2
France 7.4
Germany 5.8
Australia 5.8
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 92.90000000000001
Row: 1, Col: 2, Value: 7.1
Stocks, Investment companies 92.9%
Short-term investments 7.1%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 87.8%
SHARES VALUE (NOTE 1)
AUSTRALIA - 5.8%
AAPT Ltd. (a) 11,000 $ 39,284
AMP Ltd. 7,000 81,710
Broken Hill Proprietary Co. 10,000 112,985
Ltd. (The)
Cable & Wireless Optus Ltd. 25,000 56,215
(a)
Commonwealth Bank of Australia 7,000 127,379
CSR Ltd. 20,000 53,437
Keycorp Ltd. 5,000 11,243
National Australia Bank Ltd. 4,000 77,828
News Corp. Ltd. sponsored ADR 5,000 152,813
(ltd. vtg.)
Pasminco Ltd. 50,000 55,884
WMC Ltd. 15,600 67,370
836,148
AUSTRIA - 0.4%
Austria Tabak AG (b) 1,000 61,410
BELGIUM - 1.2%
Delhaize Freres & Compagnie 1,500 131,503
Le Lion SA
Telinfo SA 300 38,276
169,779
BERMUDA - 1.0%
Global Crossing Ltd. (a) 1,000 54,000
Sea Containers Ltd. Class A 2,000 63,875
Terra Nova (Bermuda) Holdings 1,200 26,925
Ltd. Class A
144,800
BRITISH VIRGIN ISLANDS - 0.1%
Mih Ltd. (a) 500 9,813
CANADA - 5.4%
Alberta Energy Co. Ltd. 1,300 38,367
BCE, Inc. 4,500 205,388
Canadian Imperial Bank of 1,500 38,607
Commerce
Canadian Pacific Ltd. 1,000 22,581
Falconbridge Ltd. 2,000 29,856
Gulf Canada Resources Ltd. (a) 11,200 45,353
JDS Fitel, Inc. (a) 500 30,199
Maritime Telegraph & 1,000 26,767
Telephone Co. Ltd.
Noranda, Inc. 4,000 53,535
Potash Corp. of Saskatchewan 1,000 60,947
Rio Algom Ltd. 5,000 67,776
Saskatchewan Wheat Pool Class 500 3,174
B (non-vtg.)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CANADA - CONTINUED
Suncor Energy, Inc. 800 $ 31,984
Thomson Corp. 2,500 75,498
Toronto Dominion Bank 1,000 53,432
783,464
DENMARK - 0.3%
Unidanmark AS Class A 700 48,147
FINLAND - 1.8%
Elcoteq Network Corp. Class A 5,000 39,970
Metsa Tissue PLC 2,400 19,058
Nokia AB sponsored ADR 1,800 133,538
UPM-Kymmene Corp. 2,000 60,669
253,235
FRANCE - 7.3%
Accor SA 100 26,417
AXA SA de CV 500 64,693
Canal Plus SA 100 27,868
Cap Gemini SA 500 76,604
CNP Assurances 1,000 25,094
Compagnie Generale de 2,500 26,250
Geophysique SA sponsored ADR
(a)
Dexia France 100 14,029
Elf Aquitaine SA sponsored ADR 2,000 156,250
Eurafrance (Societe) 105 52,919
France Telecom SA ADR 1,000 81,000
Groupe Danone 300 80,363
Marine Wendel SA 100 15,988
Pernod-Ricard (a) 300 20,281
Rhone-Poulenc SA Class A 700 32,987
Scor SA 500 24,988
Societe Generale, France 300 53,808
Class A
Total SA Class B 1,000 136,000
Vivendi SA 600 140,460
1,055,999
GERMANY - 5.6%
Adva AG Optical Networking (a) 600 46,820
Allianz AG (Reg.) 150 47,170
BASF AG 1,000 44,046
Bayer AG 1,500 62,654
DaimlerChrysler AG (Reg.) 800 78,550
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GERMANY - CONTINUED
Depfa Bank AG 300 $ 25,094
Deutsche Bank AG 300 17,388
Deutsche Bank AG (RFD) 33 1,852
Deutsche Telekom AG 800 31,603
Heidelberger Druckmaschinen AG 100 5,949
Linde AG 100 61,040
Mannesmann AG 1,000 130,868
Medion AG (a)(b) 200 40,891
Primacom AG (a) 100 4,341
RWE AG 3,000 136,585
Siemens AG 300 22,140
Veba AG 1,000 54,952
811,943
HONG KONG - 1.2%
CDL Hotels International Ltd. 100,000 41,283
(a)
China Telecom (Hong Kong) 20,000 45,750
Ltd. (a)
Hutchison Whampoa Ltd. 10,000 89,662
176,695
IRELAND - 0.6%
Elan Corp. PLC sponsored ADR 700 36,050
(a)
Irish Life & Permanent PLC 3,225 45,460
81,510
ISRAEL - 1.5%
Bezeq Israeli 10,000 38,851
Telecommunication Corp. Ltd.
(a)
ECI Telecom Ltd. 1,000 36,875
Forsoft Ltd. (a) 5,000 34,375
Koor Industries Ltd. 1,500 32,250
sponsored ADR
Nice Systems Ltd. sponsored 1,000 28,750
ADR (a)
Teva Pharmaceutical 1,000 45,750
Industries Ltd. ADR
216,851
ITALY - 3.8%
Alitalia Linee Aeree Italiane 6,800 21,038
Class A
Assicurazioni Generali Spa 4,000 155,982
Banca Commerciale Italiana Spa 3,400 28,130
Eni Spa sponsored ADR 2,500 163,438
Telecom Italia Mobile Spa 5,100 30,769
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ITALY - CONTINUED
Telecom Italia Spa 12,000 $ 127,424
Unicredito Italiano Spa 3,424 17,452
544,233
JAPAN - 18.3%
Acom Co. Ltd. 500 37,485
Amway Japan Ltd. sponsored ADR 5,000 23,750
Asahi Glass Co. Ltd. 5,000 38,281
Bank of Tokyo-Mitsubishi Ltd. 5,000 73,125
ADR
DDI Corp. 15 74,510
Fuji Bank Ltd. 5,000 39,035
Fuji Coca-Cola Bottling Co. 5,000 69,107
Ltd.
Fuji Photo Film Co. Ltd. 2,300 86,891
Hikari Tsushin, Inc. 500 104,708
Honda Motor Co. Ltd. 1,000 88,375
sponsored ADR
Jafco Co. Ltd. 1,000 50,092
Japan Tobacco, Inc. 5 50,260
Kao Corp. 5,000 126,906
Kirin Brewery Co. Ltd. 5,000 56,542
Kokusai Denshin Denwa 1,500 90,970
Kokusai Securities Co. Ltd. 5,000 62,406
Kyocera Corp. sponsored ADR 1,000 59,313
Mabuchi Motors Co. Ltd. 400 31,060
Matsushita Electric 500 97,406
Industrial Co. Ltd. ADR
Minebea Co. Ltd. 2,000 19,350
Nikon Corp. (a) 5,000 68,688
Nintendo Co. Ltd. 500 46,616
Nippon Telegraph & Telephone 1,000 53,750
Corp. ADR
Nomura Securities Co. Ltd. 6,000 64,734
NTT Mobile Communication 1 58,636
Network, Inc. (a)
Oracle Corp. Japan 1,000 122,299
Orix Corp. 500 40,250
Secom Ltd. 1,000 97,671
Sekisui House Ltd. 3,000 33,599
Senshukai Co. Ltd. 5,000 54,909
Sharp Corp. 5,000 58,636
Shikoku Coca-Cola Bottling 2,000 29,402
Co. Ltd.
Softbank Corp. 500 66,552
Suzuken Co. Ltd. 3,000 77,400
Takeda Chemical Industries 2,000 86,949
Ltd.
Takefuji Corp. 500 41,464
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Tokio Marine & Fire Insurance 3,000 $ 34,956
Co. Ltd. (The)
Tokyo Electron Ltd. 1,000 56,961
Tokyo Seimitsu Co. Ltd. 1,000 55,369
Toshiba Corp. 10,000 67,013
Toyo Information System Co. 3,000 86,698
Ltd.
Toyoda Automatic Loom Works 3,000 57,422
Ltd.
2,639,546
LUXEMBOURG - 0.8%
Quilmes Industrial SA 2,500 27,344
sponsored ADR
Societe Europeene de 5,000 83,125
Communication SA sponsored
ADR Class A (a)
Stolt Comex Seaway SA 1,000 12,500
122,969
MEXICO - 0.1%
Elamex SA de CV (a) 5,000 18,125
NETHERLANDS - 5.2%
ABN AMRO Holding NV 3,000 71,628
Aegon NV 175 16,815
Akzo Nobel NV 700 31,685
Equant NV (Reg.) (a) 500 44,625
Fortis Amev NV 1,000 35,682
ING Groep NV 2,400 148,147
Koninklijke (Royal) Philips 1,200 103,551
Electronics NV
STMicroelectronics NV (a) 600 61,200
TNT Post Group NV 900 24,299
Unilever NV (NY shares) 2,000 129,875
Van Melle NV 500 29,646
Wolters Kluwer NV 1,200 52,347
749,500
NEW ZEALAND - 1.7%
Fletcher Challenge Ltd.:
Building Division 25,000 41,392
Forestry Division 100,000 53,698
Paper Division 100,000 93,411
Sky City Ltd. 25,000 62,368
250,869
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
PANAMA - 0.3%
Banco Latinamericano de 1,200 $ 38,250
Exporaciones SA Class E
PORTUGAL - 0.1%
Telecel Comunicacoes Pessoais 150 20,091
SA
SINGAPORE - 0.7%
Allgreen Properties Ltd. 33,000 20,041
Delgro Corp. Ltd. 20,000 40,094
Fraser & Neave Ltd. 10,000 44,222
104,357
SOUTH AFRICA - 1.1%
Anglo American Platinum Corp. 3,000 54,849
Ltd.
Anglogold Ltd. 900 42,397
Impala Platinum Holdings Ltd. 2,000 45,592
Sappi Ltd. 2,000 14,495
157,333
SPAIN - 2.0%
Banco Santander Central 2,000 43,000
Hispano SA ADR
Endesa SA sponsored ADR 1,000 22,063
Repsol SA sponsored ADR 2,400 39,600
Telefonica SA sponsored ADR 1,300 181,188
285,851
SWEDEN - 2.1%
Electrolux AB 2,000 40,652
Ericsson (L.M.) Telefon AB 2,000 54,000
ADR Class B
Icon Medialab International 100 3,673
AB (a)
Investor AB Class B Free 2,000 91,051
shares
Kinnevik Investment AB Series 2,500 54,975
B
Swedish Match Co. 18,900 62,229
306,580
SWITZERLAND - 3.3%
Credit Suisse Group (Reg.) 292 57,959
Edipresse SA (Bearer) 73 18,442
Nestle SA (Reg.) 70 129,665
Novartis AG (Reg.) 70 102,566
Roche Holding AG 3 35,315
participation certificates
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWITZERLAND - CONTINUED
Swiss Reinsurance Co. (Reg.) 15 $ 32,854
United Bank of Switzerland AG 300 101,969
478,770
UNITED KINGDOM - 14.2%
Aggreko PLC 5,000 17,802
Allied Domecq PLC 3,800 29,752
Allied Zurich PLC (a) 7,000 92,922
Antofagasta Holdings PLC 10,000 47,525
AstraZeneca Group PLC 880 34,414
Barclays PLC 2,000 63,602
Billiton PLC 20,000 67,984
BP Amoco PLC sponsored ADR 2,000 226,364
British Telecommunications 500 83,875
PLC sponsored ADR
Capital Radio PLC 5,000 69,434
CGU PLC 4,000 63,248
Diageo PLC 8,000 92,471
Dixons Group PLC 1,500 32,067
Energis PLC (a) 1,100 29,505
Glaxo Wellcome PLC sponsored 1,000 58,250
ADR
Hanson PLC 3,400 33,277
HSBC Holdings PLC Ord. 3,400 129,760
Lloyds TSB Group PLC 5,000 80,590
National Westminster Bank PLC 4,000 96,467
Nycomed Amersham PLC 10,000 82,000
Professional Staff PLC 3,000 18,750
sponsored ADR (a)
Reckitt & Colman PLC 3,000 35,716
Rio Tinto PLC (Reg.) 3,000 52,462
Severn Trent PLC 1,900 25,023
Shell Transport & Trading Co. 25,000 189,325
PLC (Reg.)
SmithKline Beecham PLC 1,200 78,825
sponsored ADR
South African Breweries PLC 6,000 50,401
Tomkins PLC 4,700 20,008
Unilever PLC ADR 1,500 53,719
Vodafone Group PLC sponsored 500 89,688
ADR
2,045,226
UNITED STATES OF AMERICA - 1.9%
AppliedTheory Corp. (a) 100 2,050
Global TeleSystems Group, 500 33,063
Inc. (a)
Globalstar Telecommunications 2,000 40,250
Ltd. (a)
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Hollinger International, Inc. 3,000 $ 42,188
Class A
Informatica Corp. (a) 100 2,825
Marimba, Inc. (a) 100 6,075
Mpath Interactive, Inc. (a) 100 3,938
Pharmacia & Upjohn, Inc. 1,500 84,000
United International 1,000 59,750
Holdings, Inc. Class A (a)
274,139
TOTAL COMMON STOCKS 12,685,633
(Cost $11,715,428)
INVESTMENT COMPANIES - 5.1%
CHILE - 0.4%
Chile Fund, Inc. 5,000 60,313
EMERGING MARKETS - 0.9%
Emerging Markets 4,000 35,000
Infrastructure Fund, Inc.
Templeton Dragon Fund, Inc. 10,000 96,250
131,250
FRANCE - 0.1%
France Growth Fund, Inc. 1,500 20,063
GERMANY - 0.2%
New Germany Fund, Inc. (The) 2,600 31,200
HONG KONG - 0.3%
Asia Pacific Fund, Inc. 5,000 45,000
INDIA - 0.4%
India Fund (a) 2,500 20,938
India Growth Fund (a) 2,500 23,750
Jardine Fleming India Fund, 2,500 15,625
Inc. (a)
60,313
KOREA (SOUTH) - 0.2%
Korea Fund, Inc. (The) (a) 2,000 25,000
MEXICO - 0.6%
Mexico Fund, Inc. (The) 5,000 87,813
INVESTMENT COMPANIES -
CONTINUED
SHARES VALUE (NOTE 1)
MULTI-NATIONAL - 0.8%
Morgan Stanley Asia-Pacific 5,000 $ 45,625
Fund, Inc.
Scudder New Asia Fund, Inc. 5,000 61,250
(a)
106,875
PHILIPPINES - 0.3%
First Philippine Fund, Inc. 5,000 40,625
(a)
PORTUGAL - 0.1%
Portugal Fund, Inc. 500 6,938
SINGAPORE - 0.3%
Singapore Fund, Inc. 5,000 44,375
SWITZERLAND - 0.3%
Swiss Helvetia Fund, Inc. 3,500 49,000
TAIWAN - 0.2%
Taiwan Fund, Inc. 1,300 21,125
TOTAL INVESTMENT COMPANIES 729,890
(Cost $664,431)
CASH EQUIVALENTS - 7.1%
MATURITY AMOUNT
Investments in repurchase $ 1,035,422 1,035,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
TOTAL INVESTMENT IN $ 14,450,523
SECURITIES - 100%
(Cost $13,414,859)
</TABLE>
LEGEND
(a) Non-income producing
(b) 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 $102,301 or 0.7% of net assets.
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $13,414,859. Net unrealized appreciation
aggregated $1,035,664, of which $1,391,191 related to appreciated
investment securities and $355,527 related to depreciated investment
securities.
MARKET SECTOR
DIVERSIFICATION
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 7.5%
CASH EQUIVALENTS 7.1
CONSTRUCTION & REAL ESTATE 1.3
DURABLES 3.6
ENERGY 7.3
FINANCE 17.9
HEALTH 5.3
HOLDING COMPANIES 0.7
INDUSTRIAL MACHINERY & 2.6
EQUIPMENT
INVESTMENT COMPANIES 5.1
MEDIA & LEISURE 4.9
NONDURABLES 7.6
PRECIOUS METALS 0.8
RETAIL & WHOLESALE 2.0
SERVICES 1.2
TECHNOLOGY 8.7
TRANSPORTATION 1.2
UTILITIES 15.2
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 14,450,523
value (including repurchase
agreements of $1,035,000)
(cost $13,414,859) - See
accompanying schedule
Cash 276
Receivable for investments 71,995
sold
Receivable for fund shares 220,439
sold
Dividends receivable 25,207
Prepaid expenses 55,622
Receivable from investment 4,817
adviser for expense
reductions
TOTAL ASSETS 14,828,879
LIABILITIES
Payable for investments $ 176,677
purchased
Payable for fund shares 12,920
redeemed
Distribution fees payable 6,363
Other payables and accrued 25,621
expenses
TOTAL LIABILITIES 221,581
NET ASSETS $ 14,607,298
Net Assets consist of:
Paid in capital $ 13,191,611
Accumulated net investment (9,733)
(loss)
Accumulated undistributed net 389,972
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 1,035,448
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 14,607,298
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $11.58
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($1,384,962 (divided by)
119,596 shares)
Maximum offering price per $12.29
share (100/94.25 of $11.58)
CLASS T: NET ASSET VALUE and $11.57
redemption price per share
($7,061,764 (divided by)
610,396 shares)
Maximum offering price per $11.99
share (100/96.50 of $11.57)
CLASS B: NET ASSET VALUE and $11.55
offering price per share
($2,623,976 (divided by)
227,188 shares) A
CLASS C: NET ASSET VALUE and $11.55
offering price per share
($2,324,951 (divided by)
201,331 shares) A
INSTITUTIONAL CLASS: NET $11.59
ASSET VALUE, offering price
and redemption price per
share ($1,211,645 (divided
by) 104,525 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 54,305
Dividends
Interest 14,153
68,458
Less foreign taxes withheld (6,145)
TOTAL INCOME 62,313
EXPENSES
Management fee $ 22,753
Transfer agent fees 7,724
Distribution fees 17,907
Accounting fees and expenses 22,051
Non-interested trustees' 7
compensation
Custodian fees and expenses 11,878
Registration fees 47,491
Audit 10,309
Legal 4
Miscellaneous 120
Total expenses before 140,244
reductions
Expense reductions (68,198) 72,046
NET INVESTMENT INCOME (LOSS) (9,733)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 399,949
Foreign currency transactions (9,977) 389,972
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 1,035,664
Assets and liabilities in (216) 1,035,448
foreign currencies
NET GAIN (LOSS) 1,425,420
NET INCREASE (DECREASE) IN $ 1,415,687
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (9,733)
income (loss)
Net realized gain (loss) 389,972
Change in net unrealized 1,035,448
appreciation (depreciation)
NET INCREASE (DECREASE) IN 1,415,687
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 13,191,611
increase (decrease)
TOTAL INCREASE (DECREASE) 14,607,298
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 14,607,298
accumulated net investment
loss of $9,733)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.00)
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.58
operations
Net asset value, end of period $ 11.58
TOTAL RETURN B, C 15.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,385
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment (.03)% A
income (loss) to average net
assets
Portfolio turnover 90% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS T
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.01)
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.57
operations
Net asset value, end of period $ 11.57
TOTAL RETURN B, C 15.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 7,062
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment (.20)% A
income (loss) to average net
assets
Portfolio turnover 90% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.55
operations
Net asset value, end of period $ 11.55
TOTAL RETURN B, C 15.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,624
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (.74)% A
income to average net assets
Portfolio turnover 90% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.55
operations
Net asset value, end of period $ 11.55
TOTAL RETURN B, C 15.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,325
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (.74)% A
income (loss) to average net
assets
Portfolio turnover 90% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .01
Net realized and unrealized 1.58
gain (loss)
Total from investment 1.59
operations
Net asset value, end of period $ 11.59
TOTAL RETURN B, C 15.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,212
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment .21% A
income to average net assets
Portfolio turnover 90% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED .
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Diversified International 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. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. 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 and settlement date 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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the funds except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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.
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 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.
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 $14,733,662 and $2,750,694, respectively.
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO FDC RETAINED BY FDC
CLASS A $ 1,042 $ 972
CLASS T 6,019 1,826
CLASS B 5,548 5,121
CLASS C 5,298 5,221
$ 17,907 $ 13,140
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 3,811 $ 1,104
CLASS T 17,036 8,390
CLASS B 0 0*
CLASS C 3 3*
$ 20,850 $ 9,497
* 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 $ 988 .24*
CLASS T 3,023 .25*
CLASS B 1,431 .26*
CLASS C 1,385 .26*
INSTITUTIONAL CLASS 897 .23*
$ 7,724
* ANNUALIZED
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ACCOUNTING FEES. Fidelity Services Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $186 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 9,047
CLASS T 2.25% 26,688
CLASS B 2.75% 12,229
CLASS C 2.75% 11,697
INSTITUTIONAL CLASS 1.75% 8,526
$ 68,187
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 $11 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 40% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
DECEMBER 17, 1998 DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, TO APRIL 30,
1999 1999
CLASS A Shares sold 119,790 $ 1,210,548
Shares redeemed (194) (2,076)
Net increase (decrease) 119,596 $ 1,208,472
CLASS T Shares sold 615,289 $ 6,521,663
Shares redeemed (4,893) (53,675)
Net increase (decrease) 610,396 $ 6,467,988
CLASS B Shares sold 227,188 $ 2,378,115
CLASS C Shares sold 202,493 $ 2,101,027
Shares redeemed (1,162) (13,383)
Net increase (decrease) 201,331 $ 2,087,644
INSTITUTIONAL CLASS Shares 106,388 $ 1,070,594
sold
Shares redeemed (1,863) (21,202)
Net increase (decrease) 104,525 $ 1,049,392
</TABLE>
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 (FIIA)
Fidelity Investments Japan Limited (FIJ)
Fidelity International Investments Advisors (U.K.) Limited
(FIIA (U.K.))
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Robert Lawrence, Vice President
Greg Fraser, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy, 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Alloaction Fund
Fidelity Advisor Balanced Fund
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)
FIDELITY ADVISOR
EUROPE CAPITAL APPRECIATION
FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 8 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 11 A summary of the fund's
investments.
INVESTMENTS 12 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 17 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 26 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 EUROPE 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV EUROPE CAP APP - 2.50%
CL A
FIDELITY ADV EUROPE CAP APP - -3.39%
CL A (INCL. 5.75% SALES
CHARGE)
MSCI Europe 5.05%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 Index - a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets in Europe. As of April 30,
1999, the index included over 588 equity securities of countries
domiciled in 15 European countries. This benchmark includes reinvested
dividends and capital gains, if any and excludes the effect of sales
charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR EUROPE 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV EUROPE CAP APP - 2.40%
CL T
FIDELITY ADV EUROPE CAP APP - -1.18%
CL T (INCL. 3.50% SALES
CHARGE)
MSCI Europe 5.05%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 Index - a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets in Europe. As of April 30,
1999, the index included over 588 equity securities of countries
domiciled in 15 European countries. This benchmark includes reinvested
dividends and capital gains, if any and excludes the effect of sales
charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR EUROPE 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 shares' contingent deferred sales charge included in
the life of fund total return is 5%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV EUROPE CAP APP - 2.10%
CL B
FIDELITY ADV EUROPE CAP APP - -2.90%
CL B (INCL. CONTINGENT
DEFERRED SALES CHARGE)
MSCI Europe 5.05%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 Index - a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets in Europe. As of April 30,
1999, the index included over 588 equity securities of countries
domiciled in 15 European countries. This benchmark includes reinvested
dividends and capital gains, if any and excludes the effect of sales
charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR EUROPE 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 shares' contingent deferred sales charge included in
the life of fund total return is 1%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV EUROPE CAP APP - 2.20%
CL C
FIDELITY ADV EUROPE CAP APP - 1.20%
CL C (INCL. CONTINGENT
DEFERRED SALES CHARGE)
MSCI Europe 5.05%
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 Index - a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets in Europe. As of April 30,
1999, the index included over 588 equity securities of countries
domiciled in 15 European countries. This benchmark includes reinvested
dividends and capital gains, if any and excludes the effect of sales
charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Union's single currency
- - the euro. Many European markets
stalled in 1999, however, as the
outlook for economic growth and
corporate profits deteriorated. The
U.K. stock market was among the
strongest performers in Europe as
the economy improved amid a
favorable environment of declining
interest rates and encouraging
earnings growth. Elsewhere, positive
economic developments in the form
of lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(Photograph of Kevin McCarey)
An interview with Kevin McCarey, Portfolio Manager of Fidelity Advisor
Europe Capital Appreciation Fund
Q. HOW DID THE FUND PERFORM, KEVIN?
A. The fund has been up and running since December 17, 1998. From that
date through April 30, 1999, the fund's Class A, Class T, Class B and
Class C shares returned 2.50%, 2.40%, 2.10% and 2.20%, respectively.
The Morgan Stanley Capital International Europe Index, meanwhile,
returned 5.05% in that short time frame. Going forward, we'll look at
the fund's performance in both six- and 12-month intervals.
Q. WHAT FACTORS FIGURED INTO THE FUND'S PERFORMANCE?
A. General economic weakness throughout Europe and the depreciation of
the euro teamed up to hurt overall returns. As of April 30, the euro -
the new uniform currency of 11 European nations - was down around 9%
for 1999. This contrasted sharply with the rosy U.S. economic picture
and strong dollar. Excluding the depreciation of the euro, local
market returns in Europe were actually pretty good. Individual stock
selection also hurt in some cases, with Telecom Italia being a prime
example. Telecom Italia was the subject of a hostile takeover bid by
Olivetti, an Italian computer company. Normally, this would be a
positive development but the shares the fund owned in Telecom Italia
were classified as "savings class" shares - which are unique to Italy
- - and were not part of Olivetti's takeover bid. On the positive side,
the fund's positions in United Kingdom-based cyclical stocks - or
stocks that tend to mirror the ups and downs of the economy -
performed well. My strategy there was to favor more retail-oriented
names rather than commodity cyclicals such as steel or chemicals.
Commodity cyclicals tend to depend on a more global economic recovery.
U.K. cyclical stocks that helped performance included advertising
agency Saatchi & Saatchi as well as large retailer Dixons, both
medium-cap stocks.
Q. FOR THE PAST COUPLE YEARS, EUROPEAN MARKETS - SIMILAR TO THOSE IN
THE U.S. - HAVE BEEN DRIVEN PRIMARILY BY LARGE-CAP GROWTH STOCKS. DID
THIS CONTINUE?
A. The playing field got a little more level during the period, due
mostly to economic swings. If you look back over time, smaller stocks
tend to do best when the economies in question are trying to pick
themselves up off the floor. This is what we've seen recently in the
U.K., where small- and medium-sized companies have performed well of
late. Part of this also may be attributable to the fact that
large-company growth stocks just got too pricey relative to small- and
mid-cap names.
Q. EUROPEAN PHARMACEUTICAL STOCKS ENDURED A TOUGH STRETCH DURING THE
PERIOD. WHAT HAPPENED TO THIS GROUP?
A. High valuations, very little new product excitement and
deteriorating fundamentals equaled trouble. Swiss-based drug maker
Novartis - the fund's largest individual position at the start of the
period - experienced disappointing sales growth and its share price
became a bit too rich. I've since sold the fund's stake in Novartis.
High valuations also harmed the companies that were doing well,
including U.K.-based Glaxo Wellcome. That being said, I still held a
favorable view of drug stocks such as the U.K.'s SmithKline Beecham -
which had strong sales prospects - and France's Sanofi, which was in
the process of merging with another company as the period came to a
close.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. Two of the fund's best performers were energy companies BP Amoco -
based in the U.K. - and France's Elf Aquitaine. Both companies
benefited handsomely from the rise in oil prices, which had hovered at
or near all-time lows through the early stages of the period.
Telecommunications stocks such as Finland's Nokia and Germany's
Deutsche Telekom also performed very well. Nokia continued to benefit
from the demand for mobile communications, while Deutsche Telekom -
Europe's largest Internet provider - took advantage of the popularity
of the Internet. Disappointments included food company Nestle, which
didn't meet its unit growth target, and Allianz, a Germany-based
insurance company whose stock price tends to move in line with bond
prices. Bond prices fell during the period.
Q. WHAT'S YOUR OUTLOOK?
A. I'm reasonably optimistic about the U.K. market's prospects -
particularly on the mid-cap side - and will continue to look for good
opportunities there in the coming months. In terms of the overall
portfolio, I may look to hold down the sector bets and instead
concentrate on finding the best individual names within each sector.
(checkmark)
FUND FACTS
GOAL: long-term growth of
capital by investing mainly
in equity securities of
European issuers
START DATE: December 17,
1998
SIZE: as of April 30, 1999,
more than $16 million
MANAGER: Kevin McCarey,
since inception; joined
Fidelity in 1985
KEVIN MCCAREY DISCUSSES
THE REJUVENATED U.K.
EQUITY MARKET:
"Over the last few months, we've
begun to see a sort of changing of
the guard in terms of what types of
stocks are leading the European
markets. For some time,
large-company growth stocks
were dominant. Now we're seeing
more participation among both
small- and mid-cap stocks.
"One country that has been the
beneficiary of this rotation has
been the United Kingdom. The
U.K. economy had been very
depressed in recent years, and
we're now seeing signs of a
recovery. When economies begin
to bounce back, history tells us
that cyclical stocks - those that
tend to move up and down with
economic swings - perform well.
As a result, cyclical stocks in the
U.K. - mostly of the small- and
mid-cap variety - have been
attractive, and this development
has made for a brighter U.K. equity
market picture.
"One could argue that another
factor behind the improvement in
the U.K. was England's reluctance
to be a charter member of the euro
community. The euro has struggled
since its inception. Another is the
simple fact that the U.K. equity
market has many of the same
dynamics of the U.S. market. For
instance, if active money managers
see better opportunities in smaller
stocks, they may reallocate
assets to that area."
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
SmithKline Beecham PLC 3.3
(United Kingdom, Drugs &
Pharmaceuticals)
Mannesmann AG (Germany, 3.3
Cellular)
BP Amoco PLC (United Kingdom, 3.1
Oil & Gas)
Elf Aquitaine (France, Oil & 2.8
Gas)
Nokia AB sponsored ADR 2.8
(Finland, Communications
Equipment)
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
FINANCE 25.1
UTILITIES 21.1
RETAIL & WHOLESALE 8.7
HEALTH 8.1
ENERGY 7.7
TOP FIVE COUNTRIES AS OF
APRIL 30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS
United Kingdom 33.0
France 18.5
Germany 11.8
Netherlands 7.6
Switzerland 6.9
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 98.0
Row: 1, Col: 2, Value: 2.0
Stocks, Investment companies 98.0%
Short-term investments 2.0%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
BELGIUM - 0.8%
Electrabel SA 379 $ 125,241
FINLAND - 3.6%
Nokia AB sponsored ADR 6,160 456,995
Sonera Group PLC 2,800 55,735
UPM-Kymmene Corp. 2,800 84,937
597,667
FRANCE - 18.5%
AXA SA de CV 1,252 161,990
Banque Nationale de Paris 5,366 445,715
Cap Gemini SA 911 139,573
Castorama Dubois 740 177,465
Investissements SA
Compagnie de St. Gobain 427 73,468
Compagnie Financiere de 1,700 181,076
Paribas Class A (Reg.)
Elf Aquitaine 2,991 467,344
France Telecom SA 2,400 194,269
Groupe Danone 840 225,016
Havas Advertising SA 427 86,805
Rhone-Poulenc SA Class A 400 18,850
Sanofi SA 1,147 180,102
Societe Generale, France 360 64,570
Class A
Suez Lyonnaise des Eaux 1,195 203,708
Television Francaise 1 SA 799 156,507
(T.F.1)
Vivendi SA 1,191 278,814
3,055,272
GERMANY - 10.6%
Allianz AG (Reg.) 410 128,930
DaimlerChrysler AG (Reg.) 3,589 352,395
Deutsche Telekom AG 7,477 295,370
Fresenius Medical Care AG 2,700 48,600
Sponsored ADR
Hoechst AG 718 34,096
Mannesmann AG 4,081 534,071
Metro AG 1,000 70,950
Primacom AG (a) 2,400 104,186
Schering AG 195 22,505
Wella AG 225 148,894
1,739,997
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
IRELAND - 1.3%
Bank of Ireland, (Great 6,000 $ 120,148
Britain) Inc.
CRH PLC 3,100 61,215
Elan Corp. PLC sponsored ADR 770 39,655
(a)
221,018
ITALY - 5.6%
Assicurazioni Generali Spa 5,600 218,375
Banca Commerciale Italiana Spa 17,000 140,649
Italgas Spa 7,700 34,690
Mondadori (Arnoldo) Editore 2,700 47,976
Spa
Olivetti & Co. Spa 16,400 57,094
Telecom Italia Spa 40,300 427,934
926,718
LUXEMBOURG - 0.5%
Stolt Comex Seaway SA 6,700 83,750
NETHERLANDS - 7.6%
ABN AMRO Holding NV 5,300 126,542
Aegon NV 711 68,317
ASM Lithography Holding N V 400 15,600
(a)
Fortis Amev NV 7,900 281,884
ING Groep NV 3,552 219,258
Koninklijke (Royal) Philips 1,570 135,479
Electronics NV
Koninklijke Ahold NV 3,842 142,987
Koninklijke KPN NV 1,600 66,916
STMicroelectronics NV (a) 240 24,480
TNT Post Group NV 2,200 59,399
Vendex NV CVA 4,200 104,726
1,245,588
PORTUGAL - 0.3%
Telecel Comunicacoes Pessoais 400 53,575
SA
SPAIN - 4.7%
Banco Santander Central 11,580 252,084
Hispano SA
Endesa SA 5,000 111,386
Gas Natural SDG SA Series E 646 52,291
Iberdrola SA 8,538 119,780
Telefonica SA 4,935 231,737
Telefonica SA rights 6/15/99 4,696 4,375
(a)
771,653
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - 2.5%
Electrolux AB 6,700 $ 136,184
Ericsson (L.M.) Telefon AB 4,600 124,200
Class B
Swedish Match Co. 28,100 92,521
Volvo AB Class B 2,000 53,000
405,905
SWITZERLAND - 6.9%
Credit Suisse Group (Reg.) 859 170,504
Julius Baer Holding AG 28 91,220
Nestle SA (Reg.) 57 105,585
Roche Holding AG 31 364,921
participation certificates
Swisscom AG 313 115,013
UBS AG 867 294,689
1,141,932
UNITED KINGDOM - 33.0%
Abbey National, PLC 5,000 113,092
Allied Zurich PLC (a) 11,300 150,003
Amvescap PLC 6,400 68,049
Arcadia Group PLC 85,000 383,418
Bank of Scotland 1,100 16,481
BP Amoco PLC 26,900 507,459
British American Tobacco PLC 4,800 40,327
British Telecommunications PLC 22,200 372,405
Cable & Wireless 12,000 137,064
Communications PLC (a)
Cadbury Schweppes PLC 5,100 68,153
CGU PLC 4,800 75,897
de la Rue PLC 3,500 16,126
Diageo PLC 11,400 131,772
Dixons Group PLC 7,100 151,784
Electrocomponents PLC 8,500 72,576
GKN PLC Class L 5,500 94,054
Glaxo Wellcome PLC 4,400 128,150
HSBC Holdings PLC Ord. 2,700 103,044
Laird Group PLC 9,500 47,367
Lloyds TSB Group PLC 16,100 259,501
MFI Furniture Group PLC 90,500 65,608
New Look Group PLC 6,700 23,962
Next PLC 6,000 74,138
Premier Farnell PLC 10,900 51,451
Rentokil Initial PLC 8,800 51,852
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Reuters Group PLC 8,300 $ 112,586
Royal Bank of Scotland Group 9,500 224,364
PLC
Saatchi & Saatchi PLC 25,400 98,616
Shell Transport & Trading Co. 38,900 294,589
PLC (Reg.)
Smith (David S.) Holdings PLC 32,200 69,511
SmithKline Beecham PLC 41,200 541,264
Standard Chartered PLC 7,100 128,564
Storehouse PLC 39,100 91,336
Tarmac PLC 51,200 97,743
Trinity PLC 5,300 48,839
Unilever PLC 20,100 179,958
Vodafone Group PLC 6,600 118,388
Wickes PLC 35,000 224,412
5,433,903
UNITED STATES OF AMERICA - 0.9%
AirTouch Communications, Inc. 1,500 140,063
(a)
TOTAL COMMON STOCKS 15,942,282
(Cost $15,320,126)
NONCONVERTIBLE PREFERRED
STOCKS - 1.2%
GERMANY - 1.2%
Dyckerhoff AG 103 28,682
SAP AG (Systeme Anwendungen 455 171,986
Produkte)
TOTAL NONCONVERTIBLE 200,668
PREFERRED STOCKS
(Cost $173,748)
INVESTMENT COMPANIES - 0.0%
MULTI-NATIONAL - 0.0%
European Warrant Fund, Inc. 200 3,075
(Cost $3,948)
CASH EQUIVALENTS - 2.0%
MATURITY AMOUNT VALUE (NOTE 1)
Investments in repurchase 327,133 $ 327,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
TOTAL INVESTMENT IN $ 16,473,025
SECURITIES - 100%
(Cost $15,824,822)
</TABLE>
LEGEND
(a) Non-income producing
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $15,824,822. Net unrealized appreciation
aggregated $648,203, of which $1,122,284 related to appreciated
investment securities and $474,081 related to depreciated investment
securities.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 1.1%
CASH EQUIVALENTS 2.0
CONSTRUCTION & REAL ESTATE 2.1
DURABLES 5.2
ENERGY 7.7
FINANCE 25.1
HEALTH 8.1
INDUSTRIAL MACHINERY & 2.0
EQUIPMENT
INVESTMENT COMPANIES 0.0
MEDIA & LEISURE 2.2
NONDURABLES 5.4
RETAIL & WHOLESALE 8.7
SERVICES 3.4
TECHNOLOGY 5.5
TRANSPORTATION 0.4
UTILITIES 21.1
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 16,473,025
value (including repurchase
agreements of $327,000)
(cost $15,824,822) - See
accompanying schedule
Cash 356
Receivable for investments 744,048
sold
Receivable for fund shares 132,226
sold
Dividends receivable 38,428
Prepaid expenses 55,622
Receivable from investment 22,883
adviser for expense
reductions
TOTAL ASSETS 17,466,588
LIABILITIES
Payable for investments $ 943,370
purchased
Payable for fund shares 764
redeemed
Distribution fees payable 8,045
Other payables and accrued 55,412
expenses
TOTAL LIABILITIES 1,007,591
NET ASSETS $ 16,458,997
Net Assets consist of:
Paid in capital $ 16,355,814
Accumulated net investment (549)
loss
Accumulated undistributed net (544,347)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 648,079
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 16,458,997
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $10.25
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($1,638,172 (divided by)
159,861 shares)
Maximum offering price per $10.88
share (100/94.25 of $10.25)
CLASS T: NET ASSET VALUE and $10.24
redemption price per share
($8,807,208 (divided by)
859,957 shares)
Maximum offering price per $10.61
share (100/96.50 of $10.24)
CLASS B: NET ASSET VALUE and $10.21
offering price per share
($2,668,825 (divided by)
261,305 shares) A
CLASS C: NET ASSET VALUE and $10.22
offering price per share
($2,681,975 (divided by)
262,548 shares) A
INSTITUTIONAL CLASS: NET $10.25
ASSET VALUE, offering price
and redemption price per
share ($662,817 (divided by)
64,653 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 64,682
Dividends
Interest 21,908
86,590
Less foreign taxes withheld (7,609)
TOTAL INCOME 78,981
EXPENSES
Management fee $ 24,737
Transfer agent fees 10,087
Distribution fees 20,427
Accounting fees and expenses 22,052
Custodian fees and expenses 82,997
Registration fees 48,370
Audit 13,555
Miscellaneous 81
Total expenses before 222,306
reductions
Expense reductions (142,776) 79,530
NET INVESTMENT INCOME (LOSS) (549)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (543,914)
Foreign currency transactions (433) (544,347)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 648,203
Assets and liabilities in (124) 648,079
foreign currencies
NET GAIN (LOSS) 103,732
NET INCREASE (DECREASE) IN $ 103,183
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (549)
income (loss)
Net realized gain (loss) (544,347)
Change in net unrealized 648,079
appreciation (depreciation)
NET INCREASE (DECREASE) IN 103,183
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 16,355,814
increase (decrease)
TOTAL INCREASE (DECREASE) 16,458,997
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 16,458,997
accummulated net investment
loss of $549)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .01
Net realized and unrealized .24
gain (loss)
Total from investment .25
operations
Net asset value, end of period $ 10.25
TOTAL RETURN B, C 2.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,638
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment .35% A
income to average net assets
Portfolio turnover 237% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS CLASS - T
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .00
Net realized and unrealized .24
gain (loss)
Total from investment .24
operations
Net asset value, end of period $ 10.24
TOTAL RETURN B, C 2.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 8,807
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment .08% A
income to average net assets
Portfolio turnover 237% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.01)
Net realized and unrealized .22
gain (loss)
Total from investment .21
operations
Net asset value, end of period $ 10.21
TOTAL RETURN B, C 2.10%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,669
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (.36)% A
income (loss) to average net
assets
Portfolio turnover 237% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.01)
Net realized and unrealized .23
gain (loss)
Total from investment .22
operations
Net asset value, end of period $ 10.22
TOTAL RETURN B, C 2.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,682
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (.38)% A
income (loss) to average net
assets
Portfolio turnover 237% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .01
Net realized and unrealized .24
gain (loss)
Total from investment .25
operations
Net asset value, end of period $ 10.25
TOTAL RETURN B, C 2.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 663
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment .38% A
income to average net assets
Portfolio turnover 237% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Europe 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 (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. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. 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 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.
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
and settlement date 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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the funds except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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 that will reverse
in a subsequent period. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $24,483,337 and $8,441,601, respectively.
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. and Fidelity International
Investment Advisors (FIIA). In addition, FIIA entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (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 FDC RETAINED BY FDC
CLASS A $ 945 $ 359
CLASS T 8,494 592
CLASS B 5,664 4,597
CLASS C 5,324 5,324
$ 20,427 $ 10,872
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 FDC RETAINED BY FDC
CLASS A $ 13,412 $ 6,126
CLASS T 25,984 8,882
CLASS B 655 655*
CLASS C 173 173*
$ 40,224 $ 15,836
* 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 $ 1,135 .30 *
CLASS T 5,069 .30 *
CLASS B 1,892 .33 *
CLASS C 1,365 .26 *
INSTITUTIONAL CLASS 626 .32 *
$ 10,087
* ANNUALIZED.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $6 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 16,032
CLASS T 2.25% 71,953
CLASS B 2.75% 24,222
CLASS C 2.75% 22,292
INSTITUTIONAL CLASS 1.75% 8,277
$ 142,776
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates, were record owners
of approximately 12% of the total outstanding shares of the fund. In
addition, one unaffiliated shareholder was record owner of more than
19% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the period is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
DECEMBER 17, 1998 DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 TO APRIL 30, 1999
CLASS A Shares sold $ 1,857,246
183,425
Shares redeemed (23,564) (237,981)
Net increase (decrease) 159,861 $ 1,619,265
CLASS T Shares sold 966,849 $ 9,840,980
Shares redeemed (106,892) (1,073,371)
Net increase (decrease) 859,957 $ 8,767,609
CLASS B Shares sold 265,557 $ 2,685,482
Shares redeemed (4,252) (42,699)
Net increase (decrease) 261,305 $ 2,642,783
CLASS C Shares sold 270,378 $ 2,747,744
Shares redeemed (7,830) (79,473)
Net increase (decrease) 262,548 $ 2,668,271
INSTITUTIONAL CLASS Shares 357,901 $ 3,680,479
sold
Shares redeemed (293,248) (3,022,593)
Net increase (decrease) 64,653 $ 657,886
</TABLE>
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, Pembroke, Bermuda
Fidelity International Investment Advisors (U.K.) Limited
London, England
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
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy, 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation Fund
Fidelity Advisor Balanced Fund
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 Graphics)(registered trademark)
FIDELITY ADVISOR
EUROPE CAPITAL APPRECIATION
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 5 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 8 A summary of the fund's
investments.
INVESTMENTS 9 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 14 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 23 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 EUROPE 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV EUROPE CAP APP - 2.50%
INST CL
MSCI Europe 5.05%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on December 17, 1998. 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'
return to the performance of the Morgan Stanley Capital International
Europe Index - a market capitalization-weighted index that is designed
to represent the performance of developed stock markets in Europe. As
of April 30, 1999, the index included over 588 equity securities of
countries domiciled in 15 European countries. This benchmark includes
reinvested dividends and capital gains, if any and excludes the effect
of sales changes.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class shares'
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. In
addition, the growth of a hypothetical $10,000 investment in the fund
will appear in the fund's next report six months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Union's single currency
- - the euro. Many European markets
stalled in 1999, however, as the
outlook for economic growth and
corporate profits deteriorated. The
U.K. stock market was among the
strongest performers in Europe as
the economy improved amid a
favorable environment of declining
interest rates and encouraging
earnings growth. Elsewhere, positive
economic developments in the form
of lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(photograph of Kevin McCarey)
An interview with Kevin McCarey, Portfolio Manager of Fidelity Advisor
Europe Capital Appreciation Fund
Q. HOW DID THE FUND PERFORM, KEVIN?
A. The fund has been up and running since December 17, 1998. From that
date through April 30, 1999, the fund's Institutional Class shares
returned 2.50%. The Morgan Stanley Capital International Europe Index,
meanwhile, returned 5.05% in that short time frame. Going forward,
we'll look at the fund's performance in both six- and 12-month
intervals.
Q. WHAT FACTORS FIGURED INTO THE FUND'S PERFORMANCE?
A. General economic weakness throughout Europe and the depreciation of
the euro teamed up to hurt overall returns. As of April 30, the euro -
the new uniform currency of 11 European nations - was down around 9%
for 1999. This contrasted sharply with the rosy U.S. economic picture
and strong dollar. Excluding the depreciation of the euro, local
market returns in Europe were actually pretty good. Individual stock
selection also hurt in some cases, with Telecom Italia being a prime
example. Telecom Italia was the subject of a hostile takeover bid by
Olivetti, an Italian computer company. Normally, this would be a
positive development but the shares the fund owned in Telecom Italia
were classified as "savings class" shares - which are unique to Italy
- - and were not part of Olivetti's takeover bid. On the positive side,
the fund's positions in United Kingdom-based cyclical stocks - or
stocks that tend to mirror the ups and downs of the economy -
performed well. My strategy there was to favor more retail-oriented
names rather than commodity cyclicals such as steel or chemicals.
Commodity cyclicals tend to depend on a more global economic recovery.
U.K. cyclical stocks that helped performance included advertising
agency Saatchi & Saatchi as well as large retailer Dixons, both
medium-cap stocks.
Q. FOR THE PAST COUPLE YEARS, EUROPEAN MARKETS - SIMILAR TO THOSE IN
THE U.S. - HAVE BEEN DRIVEN PRIMARILY BY LARGE-CAP GROWTH STOCKS. DID
THIS CONTINUE?
A. The playing field got a little more level during the period, due
mostly to economic swings. If you look back over time, smaller stocks
tend to do best when the economies in question are trying to pick
themselves up off the floor. This is what we've seen recently in the
U.K., where small- and medium-sized companies have performed well of
late. Part of this also may be attributable to the fact that
large-company growth stocks just got too pricey relative to small- and
mid-cap names.
Q. EUROPEAN PHARMACEUTICAL STOCKS ENDURED A TOUGH STRETCH DURING THE
PERIOD. WHAT HAPPENED TO THIS GROUP?
A. High valuations, very little new product excitement and
deteriorating fundamentals equaled trouble. Swiss-based drug maker
Novartis - the fund's largest individual position at the start of the
period - experienced disappointing sales growth and its share price
became a bit too rich. I've since sold the fund's stake in Novartis.
High valuations also harmed the companies that were doing well,
including U.K.-based Glaxo Wellcome. That being said, I still held a
favorable view of drug stocks such as the U.K.'s SmithKline Beecham -
which had strong sales prospects - and France's Sanofi, which was in
the process of merging with another company as the period came to a
close.
Q. WHICH INDIVIDUAL STOCKS PERFORMED WELL? WHICH PROVED DISAPPOINTING?
A. Two of the fund's best performers were energy companies BP Amoco -
based in the U.K. - and France's Elf Aquitaine. Both companies
benefited handsomely from the rise in oil prices, which had hovered at
or near all-time lows through the early stages of the period.
Telecommunications stocks such as Finland's Nokia and Germany's
Deutsche Telekom also performed very well. Nokia continued to benefit
from the demand for mobile communications, while Deutsche Telekom -
Europe's largest Internet provider - took advantage of the popularity
of the Internet. Disappointments included food company Nestle, which
didn't meet its unit growth target, and Allianz, a Germany-based
insurance company whose stock price tends to move in line with bond
prices. Bond prices fell during the period.
Q. WHAT'S YOUR OUTLOOK?
A. I'm reasonably optimistic about the U.K. market's prospects -
particularly on the mid-cap side - and will continue to look for good
opportunities there in the coming months. In terms of the overall
portfolio, I may look to hold down the sector bets and instead
concentrate on finding the best individual names within each sector.
(checkmark)
FUND FACTS
GOAL: long-term growth of
capital by investing mainly
in equity securities of
European issuers
START DATE: December 17,
1998
SIZE: as of April 30, 1999,
more than $16 million
MANAGER: Kevin McCarey,
since inception; joined
Fidelity in 1985
KEVIN MCCAREY DISCUSSES
THE REJUVENATED U.K.
EQUITY MARKET:
"Over the last few months, we've
begun to see a sort of changing of
the guard in terms of what types of
stocks are leading the European
markets. For some time,
large-company growth stocks
were dominant. Now we're seeing
more participation among both
small- and mid-cap stocks.
"One country that has been the
beneficiary of this rotation has
been the United Kingdom. The
U.K. economy had been very
depressed in recent years, and
we're now seeing signs of a
recovery. When economies begin
to bounce back, history tells us
that cyclical stocks - those that
tend to move up and down with
economic swings - perform well.
As a result, cyclical stocks in the
U.K. - mostly of the small- and
mid-cap variety - have been
attractive, and this development
has made for a brighter U.K. equity
market picture.
"One could argue that another
factor behind the improvement in
the U.K. was England's reluctance
to be a charter member of the euro
community. The euro has struggled
since its inception. Another is the
simple fact that the U.K. equity
market has many of the same
dynamics of the U.S. market. For
instance, if active money managers
see better opportunities in smaller
stocks, they may reallocate
assets to that area."
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
SmithKline Beecham PLC 3.3
(United Kingdom, Drugs &
Pharmaceuticals)
Mannesmann AG (Germany, 3.3
Cellular)
BP Amoco PLC (United Kingdom, 3.1
Oil & Gas)
Elf Aquitaine (France, Oil & 2.8
Gas)
Nokia AB sponsored ADR 2.8
(Finland, Communications
Equipment)
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
FINANCE 25.1
UTILITIES 21.1
RETAIL & WHOLESALE 8.7
HEALTH 8.1
ENERGY 7.7
TOP FIVE COUNTRIES AS OF
APRIL 30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS
United Kingdom 33.0
France 18.5
Germany 11.8
Netherlands 7.6
Switzerland 6.9
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 98.0
Row: 1, Col: 2, Value: 2.0
Stocks, Investment companies 98.0%
Short-term investments 2.0%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
BELGIUM - 0.8%
Electrabel SA 379 $ 125,241
FINLAND - 3.6%
Nokia AB sponsored ADR 6,160 456,995
Sonera Group PLC 2,800 55,735
UPM-Kymmene Corp. 2,800 84,937
597,667
FRANCE - 18.5%
AXA SA de CV 1,252 161,990
Banque Nationale de Paris 5,366 445,715
Cap Gemini SA 911 139,573
Castorama Dubois 740 177,465
Investissements SA
Compagnie de St. Gobain 427 73,468
Compagnie Financiere de 1,700 181,076
Paribas Class A (Reg.)
Elf Aquitaine 2,991 467,344
France Telecom SA 2,400 194,269
Groupe Danone 840 225,016
Havas Advertising SA 427 86,805
Rhone-Poulenc SA Class A 400 18,850
Sanofi SA 1,147 180,102
Societe Generale, France 360 64,570
Class A
Suez Lyonnaise des Eaux 1,195 203,708
Television Francaise 1 SA 799 156,507
(T.F.1)
Vivendi SA 1,191 278,814
3,055,272
GERMANY - 10.6%
Allianz AG (Reg.) 410 128,930
DaimlerChrysler AG (Reg.) 3,589 352,395
Deutsche Telekom AG 7,477 295,370
Fresenius Medical Care AG 2,700 48,600
Sponsored ADR
Hoechst AG 718 34,096
Mannesmann AG 4,081 534,071
Metro AG 1,000 70,950
Primacom AG (a) 2,400 104,186
Schering AG 195 22,505
Wella AG 225 148,894
1,739,997
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
IRELAND - 1.3%
Bank of Ireland, (Great 6,000 $ 120,148
Britain) Inc.
CRH PLC 3,100 61,215
Elan Corp. PLC sponsored ADR 770 39,655
(a)
221,018
ITALY - 5.6%
Assicurazioni Generali Spa 5,600 218,375
Banca Commerciale Italiana Spa 17,000 140,649
Italgas Spa 7,700 34,690
Mondadori (Arnoldo) Editore 2,700 47,976
Spa
Olivetti & Co. Spa 16,400 57,094
Telecom Italia Spa 40,300 427,934
926,718
LUXEMBOURG - 0.5%
Stolt Comex Seaway SA 6,700 83,750
NETHERLANDS - 7.6%
ABN AMRO Holding NV 5,300 126,542
Aegon NV 711 68,317
ASM Lithography Holding N V 400 15,600
(a)
Fortis Amev NV 7,900 281,884
ING Groep NV 3,552 219,258
Koninklijke (Royal) Philips 1,570 135,479
Electronics NV
Koninklijke Ahold NV 3,842 142,987
Koninklijke KPN NV 1,600 66,916
STMicroelectronics NV (a) 240 24,480
TNT Post Group NV 2,200 59,399
Vendex NV CVA 4,200 104,726
1,245,588
PORTUGAL - 0.3%
Telecel Comunicacoes Pessoais 400 53,575
SA
SPAIN - 4.7%
Banco Santander Central 11,580 252,084
Hispano SA
Endesa SA 5,000 111,386
Gas Natural SDG SA Series E 646 52,291
Iberdrola SA 8,538 119,780
Telefonica SA 4,935 231,737
Telefonica SA rights 6/15/99 4,696 4,375
(a)
771,653
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SWEDEN - 2.5%
Electrolux AB 6,700 $ 136,184
Ericsson (L.M.) Telefon AB 4,600 124,200
Class B
Swedish Match Co. 28,100 92,521
Volvo AB Class B 2,000 53,000
405,905
SWITZERLAND - 6.9%
Credit Suisse Group (Reg.) 859 170,504
Julius Baer Holding AG 28 91,220
Nestle SA (Reg.) 57 105,585
Roche Holding AG 31 364,921
participation certificates
Swisscom AG 313 115,013
UBS AG 867 294,689
1,141,932
UNITED KINGDOM - 33.0%
Abbey National, PLC 5,000 113,092
Allied Zurich PLC (a) 11,300 150,003
Amvescap PLC 6,400 68,049
Arcadia Group PLC 85,000 383,418
Bank of Scotland 1,100 16,481
BP Amoco PLC 26,900 507,459
British American Tobacco PLC 4,800 40,327
British Telecommunications PLC 22,200 372,405
Cable & Wireless 12,000 137,064
Communications PLC (a)
Cadbury Schweppes PLC 5,100 68,153
CGU PLC 4,800 75,897
de la Rue PLC 3,500 16,126
Diageo PLC 11,400 131,772
Dixons Group PLC 7,100 151,784
Electrocomponents PLC 8,500 72,576
GKN PLC Class L 5,500 94,054
Glaxo Wellcome PLC 4,400 128,150
HSBC Holdings PLC Ord. 2,700 103,044
Laird Group PLC 9,500 47,367
Lloyds TSB Group PLC 16,100 259,501
MFI Furniture Group PLC 90,500 65,608
New Look Group PLC 6,700 23,962
Next PLC 6,000 74,138
Premier Farnell PLC 10,900 51,451
Rentokil Initial PLC 8,800 51,852
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Reuters Group PLC 8,300 $ 112,586
Royal Bank of Scotland Group 9,500 224,364
PLC
Saatchi & Saatchi PLC 25,400 98,616
Shell Transport & Trading Co. 38,900 294,589
PLC (Reg.)
Smith (David S.) Holdings PLC 32,200 69,511
SmithKline Beecham PLC 41,200 541,264
Standard Chartered PLC 7,100 128,564
Storehouse PLC 39,100 91,336
Tarmac PLC 51,200 97,743
Trinity PLC 5,300 48,839
Unilever PLC 20,100 179,958
Vodafone Group PLC 6,600 118,388
Wickes PLC 35,000 224,412
5,433,903
UNITED STATES OF AMERICA - 0.9%
AirTouch Communications, Inc. 1,500 140,063
(a)
TOTAL COMMON STOCKS 15,942,282
(Cost $15,320,126)
NONCONVERTIBLE PREFERRED
STOCKS - 1.2%
GERMANY - 1.2%
Dyckerhoff AG 103 28,682
SAP AG (Systeme Anwendungen 455 171,986
Produkte)
TOTAL NONCONVERTIBLE 200,668
PREFERRED STOCKS
(Cost $173,748)
INVESTMENT COMPANIES - 0.0%
MULTI-NATIONAL - 0.0%
European Warrant Fund, Inc. 200 3,075
(Cost $3,948)
CASH EQUIVALENTS - 2.0%
MATURITY AMOUNT VALUE (NOTE 1)
Investments in repurchase 327,133 $ 327,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
TOTAL INVESTMENT IN $ 16,473,025
SECURITIES - 100%
(Cost $15,824,822)
</TABLE>
LEGEND
(a) Non-income producing
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $15,824,822. Net unrealized appreciation
aggregated $648,203, of which $1,122,284 related to appreciated
investment securities and $474,081 related to depreciated investment
securities.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 1.1%
CASH EQUIVALENTS 2.0
CONSTRUCTION & REAL ESTATE 2.1
DURABLES 5.2
ENERGY 7.7
FINANCE 25.1
HEALTH 8.1
INDUSTRIAL MACHINERY & 2.0
EQUIPMENT
INVESTMENT COMPANIES 0.0
MEDIA & LEISURE 2.2
NONDURABLES 5.4
RETAIL & WHOLESALE 8.7
SERVICES 3.4
TECHNOLOGY 5.5
TRANSPORTATION 0.4
UTILITIES 21.1
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 16,473,025
value (including repurchase
agreements of $327,000)
(cost $15,824,822) - See
accompanying schedule
Cash 356
Receivable for investments 744,048
sold
Receivable for fund shares 132,226
sold
Dividends receivable 38,428
Prepaid expenses 55,622
Receivable from investment 22,883
adviser for expense
reductions
TOTAL ASSETS 17,466,588
LIABILITIES
Payable for investments $ 943,370
purchased
Payable for fund shares 764
redeemed
Distribution fees payable 8,045
Other payables and accrued 55,412
expenses
TOTAL LIABILITIES 1,007,591
NET ASSETS $ 16,458,997
Net Assets consist of:
Paid in capital $ 16,355,814
Accumulated net investment (549)
loss
Accumulated undistributed net (544,347)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 648,079
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 16,458,997
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $10.25
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($1,638,172 (divided by)
159,861 shares)
Maximum offering price per $10.88
share (100/94.25 of $10.25)
CLASS T: NET ASSET VALUE and $10.24
redemption price per share
($8,807,208 (divided by)
859,957 shares)
Maximum offering price per $10.61
share (100/96.50 of $10.24)
CLASS B: NET ASSET VALUE and $10.21
offering price per share
($2,668,825 (divided by)
261,305 shares) A
CLASS C: NET ASSET VALUE and $10.22
offering price per share
($2,681,975 (divided by)
262,548 shares) A
INSTITUTIONAL CLASS: NET $10.25
ASSET VALUE, offering price
and redemption price per
share ($662,817 (divided by)
64,653 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 64,682
Dividends
Interest 21,908
86,590
Less foreign taxes withheld (7,609)
TOTAL INCOME 78,981
EXPENSES
Management fee $ 24,737
Transfer agent fees 10,087
Distribution fees 20,427
Accounting fees and expenses 22,052
Custodian fees and expenses 82,997
Registration fees 48,370
Audit 13,555
Miscellaneous 81
Total expenses before 222,306
reductions
Expense reductions (142,776) 79,530
NET INVESTMENT INCOME (LOSS) (549)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (543,914)
Foreign currency transactions (433) (544,347)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 648,203
Assets and liabilities in (124) 648,079
foreign currencies
NET GAIN (LOSS) 103,732
NET INCREASE (DECREASE) IN $ 103,183
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (549)
income (loss)
Net realized gain (loss) (544,347)
Change in net unrealized 648,079
appreciation (depreciation)
NET INCREASE (DECREASE) IN 103,183
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 16,355,814
increase (decrease)
TOTAL INCREASE (DECREASE) 16,458,997
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 16,458,997
accummulated net investment
loss of $549)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .01
Net realized and unrealized .24
gain (loss)
Total from investment .25
operations
Net asset value, end of period $ 10.25
TOTAL RETURN B, C 2.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,638
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment .35% A
income to average net assets
Portfolio turnover 237% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS CLASS - T
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .00
Net realized and unrealized .24
gain (loss)
Total from investment .24
operations
Net asset value, end of period $ 10.24
TOTAL RETURN B, C 2.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 8,807
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment .08% A
income to average net assets
Portfolio turnover 237% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.01)
Net realized and unrealized .22
gain (loss)
Total from investment .21
operations
Net asset value, end of period $ 10.21
TOTAL RETURN B, C 2.10%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,669
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (.36)% A
income (loss) to average net
assets
Portfolio turnover 237% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.01)
Net realized and unrealized .23
gain (loss)
Total from investment .22
operations
Net asset value, end of period $ 10.22
TOTAL RETURN B, C 2.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,682
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (.38)% A
income (loss) to average net
assets
Portfolio turnover 237% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .01
Net realized and unrealized .24
gain (loss)
Total from investment .25
operations
Net asset value, end of period $ 10.25
TOTAL RETURN B, C 2.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 663
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment .38% A
income to average net assets
Portfolio turnover 237% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Europe 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 (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. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. 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 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.
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
and settlement date 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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the funds except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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 that will reverse
in a subsequent period. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $24,483,337 and $8,441,601, respectively.
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. and Fidelity International
Investment Advisors (FIIA). In addition, FIIA entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (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 FDC RETAINED BY FDC
CLASS A $ 945 $ 359
CLASS T 8,494 592
CLASS B 5,664 4,597
CLASS C 5,324 5,324
$ 20,427 $ 10,872
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 FDC RETAINED BY FDC
CLASS A $ 13,412 $ 6,126
CLASS T 25,984 8,882
CLASS B 655 655*
CLASS C 173 173*
$ 40,224 $ 15,836
* 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 $ 1,135 .30 *
CLASS T 5,069 .30 *
CLASS B 1,892 .33 *
CLASS C 1,365 .26 *
INSTITUTIONAL CLASS 626 .32 *
$ 10,087
* ANNUALIZED.
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $6 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 16,032
CLASS T 2.25% 71,953
CLASS B 2.75% 24,222
CLASS C 2.75% 22,292
INSTITUTIONAL CLASS 1.75% 8,277
$ 142,776
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates, were record owners
of approximately 12% of the total outstanding shares of the fund. In
addition, one unaffiliated shareholder was record owner of more than
19% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the period is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
DECEMBER 17, 1998 DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 TO APRIL 30, 1999
CLASS A Shares sold $ 1,857,246
183,425
Shares redeemed (23,564) (237,981)
Net increase (decrease) 159,861 $ 1,619,265
CLASS T Shares sold 966,849 $ 9,840,980
Shares redeemed (106,892) (1,073,371)
Net increase (decrease) 859,957 $ 8,767,609
CLASS B Shares sold 265,557 $ 2,685,482
Shares redeemed (4,252) (42,699)
Net increase (decrease) 261,305 $ 2,642,783
CLASS C Shares sold 270,378 $ 2,747,744
Shares redeemed (7,830) (79,473)
Net increase (decrease) 262,548 $ 2,668,271
INSTITUTIONAL CLASS Shares 357,901 $ 3,680,479
sold
Shares redeemed (293,248) (3,022,593)
Net increase (decrease) 64,653 $ 657,886
</TABLE>
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, Pembroke, Bermuda
Fidelity International Investment Advisors (U.K.) Limited
London, England
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
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy , 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation Fund
Fidelity Advisor Balanced Fund
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)
FIDELITY ADVISOR
GLOBAL EQUITY
FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 8 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 11 A summary of the fund's
investments.
INVESTMENTS 12 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 22 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 31 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 GLOBAL EQUITY 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV GLOBAL EQUITY - 9.30%
CL A
FIDELITY ADV GLOBAL EQUITY - 3.02%
CL A (INCL. 5.75% SALES
CHARGE)
MSCI World 12.03%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 World Index - a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets throughout the world. As of
April 30, 1999, the index included over 1,462 equity securities of
companies domiciled in 22 countries. This benchmark includes
reinvested dividends and capital gains, if any and exclude the effect
of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR GLOBAL EQUITY 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV GLOBAL EQUITY - 9.20%
CL T
FIDELITY ADV GLOBAL EQUITY - 5.38%
CL T (INCL. 3.50% SALES
CHARGE)
MSCI World 12.03%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 World Index - a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets throughout the world. As of
April 30, 1999, the index included over 1,462 equity securities of
companies domiciled in 22 countries. This benchmark includes
reinvested dividends and capital gains, if any and exclude the effect
of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR GLOBAL EQUITY 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 shares' contingent deferred sales charge included in
the life of fund total return is 5%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV GLOBAL EQUITY - 9.00%
CL B
FIDELITY ADV GLOBAL EQUITY - 4.00%
CL B (INCL. CONTINGENT
DEFERRED SALES CHARGE)
MSCI World 12.03%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 World Index - a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets throughout the world. As of
April 30, 1999, the index included over 1,462 equity securities of
companies domiciled in 22 countries. This benchmark includes
reinvested dividends and capital gains, if any and exclude the effect
of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR GLOBAL EQUITY 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 shares' contingent deferred sales charge included in
the life of fund total return is 1%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV GLOBAL EQUITY - 9.00%
CL C
FIDELITY ADV GLOBAL EQUITY - 8.00%
CL C (INCL. CONTINGENT
DEFERRED SALES CHARGE)
MSCI World 12.03%
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 World Index - a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets throughout the world. As of
April 30, 1999, the index included over 1,462 equity securities of
companies domiciled in 22 countries. This benchmark includes
reinvested dividends and capital gains, if any and exclude the effect
of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Union's single currency
- - the euro. Many European markets
stalled in 1999, however, as the
outlook for economic growth and
corporate profits deteriorated. The
U.K. stock market was among the
strongest performers in Europe as
the economy improved amid a
favorable environment of declining
interest rates and encouraging
earnings growth. Elsewhere, positive
economic developments in the form
of lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(Photograph of Richard Habermann)
An interview with Richard
Habermann, Lead Portfolio Manager of Fidelity Advisor Global Equity
Fund
Q. HOW DID THE FUND PERFORM, DICK?
A. The fund has been up and running since December 17, 1998. From that
date through April 30, 1999, the fund's Class A, Class T, Class B and
Class C shares returned 9.30%, 9.20%, 9.00% and 9.00%, respectively.
The Morgan Stanley Capital International World Index, meanwhile,
returned 12.03% in that same time frame. Going forward, we'll look at
the fund's performance in both six- and 12-month intervals.
Q. WHAT FACTORS SHAPED THE FUND'S PERFORMANCE DURING THE PERIOD?
A. Much of the fund's underperformance relative to the Morgan Stanley
index can be traced to poor stock selection. The fund's investment in
Philip Morris and Swiss pharmaceutical company Novartis, for example,
did not pan out as I had hoped. Philip Morris suffered from ongoing
tobacco litigation concerns, while Novartis experienced slow sales
growth. Another factor that hurt performance involved the euro, the
new uniform currency of 11 European countries that was introduced on
New Year's Day 1999. At first, the euro was received positively. As
the period wore on, though, economic weakness in certain pockets of
Europe spoiled the party. From January 1999 through the end of the
period, in fact, the euro was down roughly 9%. The last negative I'd
highlight was the fund's exposure to Asia. Most of the fund's Asian
investments were based in Japan, but the beleaguered Southeast Asian
markets actually performed fairly well. A light weighting in those
regions also may have held performance back a bit.
Q. THE FUND HAD SIGNIFICANT EXPOSURE TO BOTH THE HEALTH AND
TELECOMMUNICATIONS INDUSTRIES. HOW DID THESE SECTORS PERFORM DURING
THE PERIOD?
A. While pharmaceutical stocks struggled in the U.S. during the
period, several overseas drug makers prospered. Japan's Takeda
Chemical, for instance, was a very strong performer as was U.K.-based
SmithKline Beecham.Telecommunications, meanwhile, was a fertile area
with much of the growth being fueled by the Internet and basic demand
for better and faster communications. The fund's investments in
Vodafone Group (U.K.) and Nippon Telegraph & Telephone (Japan)
performed especially well.
Q. CAN YOU DESCRIBE THE FUND'S INVESTMENT PROCESS?
A. Sure. We focus basically on four main regions: Europe, Japan,
Southeast Asia and North America. I serve as the point person for all
investment decisions and rely heavily on input from sub-portfolio
managers as well as a battalion of analysts in each of those regions.
Our stock-picking process revolves more around individual analysis
than country analysis. Of course, international investing is more
risky than domestic investing and one of our major objectives is to
try to minimize portfolio risk as much as possible.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD? WHICH WOULD YOU
CHARACTERIZE AS DISAPPOINTMENTS?
A. Along with the strong performance of the U.S. equity market during
the period, U.S.-based stocks Texas Instruments and Cisco Systems
generated positive results. Texas Instruments was a beneficiary of the
strong telecommunications environment I mentioned, while Cisco Systems
continued to realize strong results from the popularity of the
Internet. Among the disappointments, I'd include two technology stocks
- - Micron Technology and Compaq - as well as overseas tobacco company
Tabacalera. Micron, which is in the dynamic random accessing memory
(DRAM) business, suffered as DRAM prices declined, and Compaq - which
the fund no longer owns - was hurt by lower PC prices and a shift
towards direct and online PC purchasing trends. Tabacalera felt the
effects of the ongoing tobacco litigation here in the States.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS, DICK?
A. Compared to a year ago, overseas markets have shown steady
improvement. Many of the problems we witnessed last year - namely
turbulence in Asia and eastern Europe - have either been addressed by
the countries involved or helped by the International Monetary Fund, a
global bank set up to provide financial assistance to troubled
regions. There's also been a lot of interest-rate cutting in the past
six months, which has stimulated business and increased stability.
Going forward, I think we may see more of this gradual progress. One
area that looks particularly interesting is Asia and I may look for
more buying opportunities there.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: seeks long-term growth
of capital
START DATE: December 17,
1998
SIZE: as of April 30, 1999,
more than $7 million
MANAGER: Richard Habermann,
since inception; joined
Fidelity in 1968
DICK HABERMANN ON THE
STATE OF THE WORLD'S MARKETS:
U.S.: "The U.S. market continued
to be strong during the period, as
we saw more market participation
among the small- and mid-cap
stock groups. Increased market
breadth is generally positive. The
one concern I have is that so much
of the world lately has been
dependent on U.S. consumer
spending trends. It would be nice
to see other parts of the world pick
it up in this area.
EUROPE: "While the decline of the
euro has been a negative, we have
seen some positive developments
on the corporate landscape.
Merger and acquisition activity
increased during the period -
particularly in the
telecommunications and banking
areas - and that has been
generally favorable. In addition,
with much of the region sharing
the same currency, we've seen
more cross-border merger
activity and companies in
general are monitoring their
competitors closely.
JAPAN/SE ASIA: "While it's true
that this part of the world had no
place to go but up, I've been
impressed with the progress made
there. Japan continued to
struggle with its currency, as the
weak yen hurt domestic business
and helped exporters. We've also
seen a real change in the tone of
business in the smaller Asian
countries. This could bear watching
going forward."
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
General Electric Co. (United 1.8
States of America,
Electrical Equipment)
BP Amoco PLC (United Kingdom, 1.4
Oil & Gas)
Microsoft Corp. (United 1.4
States of America, Computer
Services & Software)
Cisco Systems, Inc. (United 1.4
States of America,
Communications Equipment)
MCI WorldCom, Inc. (United 1.4
States of America, Telephone
Services)
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
FINANCE 19.6
TECHNOLOGY 13.8
UTILITIES 13.5
HEALTH 9.6
ENERGY 7.3
TOP FIVE COUNTRIES AS OF
APRIL 30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS
United States of America 50.9
United Kingdom 10.6
Japan 10.2
France 5.0
Germany 3.5
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 93.90000000000001
Row: 1, Col: 2, Value: 6.1
Stocks 93.9%
Short-term investments 6.1%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.5%
SHARES VALUE (NOTE 1)
DENMARK - 0.7%
International Service Systems 662 $ 38,935
AS Class B
Ratin AS Class B 40 6,892
Sydbank AS 85 2,869
48,696
FINLAND - 1.5%
KCI (Konecranes International) 155 5,744
OY Nokia AB 980 72,704
Sampo Insurance Co. Ltd. 672 21,210
UPM-Kymmene Corp. 430 13,044
112,702
FRANCE - 5.0%
Atos SA (a) 80 6,861
AXA SA de CV 195 25,230
Bouygues 51 12,992
Cap Gemini SA 270 41,366
Compagnie Financiere de 175 18,640
Paribas Class A (Reg.)
Credit Commercial de France 176 18,635
Dexia France 50 7,015
Elf Aquitaine 128 20,000
France Telecom SA 184 14,894
Groupe Danone 106 28,395
LVMH Moet Hennessy Louis 74 19,886
Vuitton
Sanofi SA 159 24,966
Seita 246 14,847
Societe Generale, France 48 8,609
Class A
Suez Lyonnaise des Eaux 84 14,319
Total SA Class B 326 44,336
Vivendi SA 178 41,670
362,661
GERMANY - 2.6%
Aachener & Muenchener 64 6,844
Beteiligungs AG (Reg.)
Allianz AG (Reg.) 67 21,069
BHF Bank AG 390 14,700
Deutsche Telekom AG 335 13,234
Hannover Rueckversicherungs AG 130 10,722
Hoechst AG 415 19,707
Mannesmann AG 595 77,866
Munich Reinsurance AG (Reg.) 13 2,573
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GERMANY - CONTINUED
Schering AG 70 $ 8,079
Viag AG 35 17,565
192,359
IRELAND - 0.6%
Bank of Ireland, Inc. 944 18,903
CRH PLC 1,220 23,978
42,881
ITALY - 2.2%
Assicurazioni Generali Spa 501 19,537
Banca Fideuram Spa 3,920 22,238
Eni Spa sponsored ADR 4,996 32,913
Finmeccanica Spa (a) 19,903 19,615
Italgas Spa 3,113 14,025
Olivetti & Co. Spa 6,530 22,733
San Paolo-IMI Spa 371 5,590
Unicredito Italiano Spa 4,112 20,959
157,610
JAPAN - 10.2%
Aeon Credit Service Ltd. 100 8,628
Ajinomoto Co., Inc. 1,000 11,568
Asahi Chemical Industry Co. 1,000 5,822
Ltd.
Asahi Glass Co. Ltd. 1,000 7,656
Bank of Tokyo-Mitsubishi Ltd. 2,000 29,519
Benesse Corp. 100 8,343
Bridgestone Corp. 1,000 26,805
Canon, Inc. 1,000 24,460
Citizen Watch Co. Ltd. 1,000 8,293
Daikin Industries Ltd. 1,000 10,437
Dainippon Screen 1,000 4,858
Manufacturing Co. Ltd.
DDI Corp. 2 9,935
Fuji Bank Ltd. 2,000 15,614
Fuji Soft ABC, Inc. 130 7,906
Fujitsu Ltd. 1,000 17,130
Furukawa Electric Co. Ltd. 1,000 4,373
Hirose Electric Co. Ltd. 100 9,298
Hitachi Ltd. 1,000 7,300
Ito En Ltd. 100 6,902
Kao Corp. 1,000 25,381
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Kirin Brewery Co. Ltd. 1,000 $ 11,308
Kokusai Securities Co. Ltd. 1,000 12,481
Kuraray Co. Ltd. 1,000 11,392
Kyocera Corp. 100 5,939
Matsushita Electric 1,000 19,015
Industrial Co. Ltd.
Matsushita Electric Works Co. 1,000 10,580
Ltd.
Meiwa Estate Co. Ltd. 300 9,524
Minebea Co. Ltd. 1,000 9,675
Minolta Co. Ltd. 1,000 5,537
Mitsubishi Trust & Banking 1,000 10,973
Corp.
Mitsui Mining & Smelting Co. 1,000 5,177
Ltd.
NEC Corp. 1,000 11,945
NGK Insulators Ltd. 1,000 12,188
Nidec Corp. 100 12,984
Nippon Sheet Glass Co. Ltd. 1,000 3,820
Nippon System Development Co. 200 10,219
Nippon Telegraph & Telephone 3 32,669
Corp.
Nomura Securities Co. Ltd. 1,000 10,789
Orix Corp. 100 8,050
Ryohin Keikaku Co. Ltd. 100 18,219
Sanden Corp. 1,000 8,058
Shohkoh Fund & Co. Ltd. 30 17,591
Sony Corp. 300 27,750
Sony Music Entertainment Ltd. 100 7,288
Sumitomo Bank Ltd. Japan 1,000 13,537
Sumitomo Forestry Co. Ltd. 1,000 7,455
Sumitomo Heavy Industries Co. 2,000 4,808
Ltd.
Takeda Chemical Industries 1,000 43,475
Ltd.
THK Co. Ltd. 800 13,872
Toda Corp. 1,000 5,596
Tokyo Seimitsu Co. Ltd. 600 33,222
Toppan Forms Co. Ltd. 1,000 19,015
Toshiba Corp. 1,000 6,701
Toyota Motor Corp. 1,000 28,625
Uni-Charm Corp. 100 4,532
Union Tool Co. 100 7,371
World Co. Ltd. 200 11,074
742,682
NETHERLANDS - 3.2%
Capital Gemini NV 115 5,997
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NETHERLANDS - CONTINUED
Equant NV (a) 570 $ 51,842
Fortis Amev NV 400 14,273
ING Groep NV 894 55,185
Koninklijke (Royal) Philips 325 28,045
Electronics NV
Koninklijke Ahold NV 814 30,295
Unilever NV 450 30,875
Vedior NV 881 19,869
236,381
PORTUGAL - 0.2%
Banco Pinto & Sotto Mayor SA 368 6,877
Telecel Comunicacoes Pessoais 89 11,921
SA
18,798
SPAIN - 1.5%
Iberdrola SA 630 8,838
Tabacalera SA Series A 1,960 38,496
Telefonica SA 1,155 54,236
Telefonica SA rights 6/15/99 958 893
(a)
Vallehermoso SA 475 4,728
107,191
SWEDEN - 1.3%
Assa Abloy AB Class B 370 16,185
Electrolux AB 400 8,130
Ericsson (L.M.) Telefon AB 523 14,121
Class B
Skandia Foersaekrings AB 2,445 47,372
Svenska Handelsbanken 241 9,052
94,860
SWITZERLAND - 2.0%
Credit Suisse Group (Reg.) 131 26,002
Julius Baer Holding AG 10 32,579
Kuoni Reisen Holding AG Class 4 14,173
B (Reg.)
Novartis AG (Reg.) 32 46,887
Swisscom AG 65 23,885
143,526
UNITED KINGDOM - 10.6%
3I Group PLC 500 5,425
Allied Zurich PLC (a) 1,700 22,567
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Amvescap PLC 600 $ 6,380
Asda Group PLC 5,000 16,734
Ashtead Group PLC 4,900 17,959
AstraZeneca Group PLC 172 6,726
Bank of Scotland 1,400 20,975
Barclays PLC 900 28,621
Barratt Developments PLC 2,400 14,112
BBA Group PLC 3,700 29,625
BP Amoco PLC 5,400 101,869
British American Tobacco PLC 600 5,041
British Telecommunications PLC 3,400 57,035
Burmah Castrol PLC 700 11,971
Cable & Wireless 1,600 18,275
Communications PLC (a)
Cadbury Schweppes PLC 900 12,027
Dixons Group PLC 800 17,102
Gallaher Group PLC 1,800 10,374
Glaxo Wellcome PLC 1,400 40,775
HSBC Holdings PLC Ord. 500 19,082
Kingfisher PLC 1,100 16,481
Lloyds TSB Group PLC 3,000 48,354
National Grid Group PLC 2,400 16,635
Nycomed Amersham PLC 1,300 10,660
Prudential Corp. PLC 1,700 24,279
Reuters Group PLC 1,000 13,565
Royal & Sun Alliance 1,600 13,816
Insurance Group PLC
Scottish & Southern Energy PLC 600 5,640
Shell Transport & Trading Co. 8,400 63,613
PLC (Reg.)
SmithKline Beecham PLC 2,300 30,216
Vodafone Group PLC 3,800 68,163
774,097
UNITED STATES OF AMERICA -
50.9%
Abbott Laboratories 600 29,063
Abercrombie & Fitch Co. Class 330 31,391
A (a)
ADC Telecommunications, Inc. 220 10,519
(a)
AES Corp. (a) 680 34,000
AFLAC, Inc. 200 10,850
AirTouch Communications, Inc. 290 27,079
(a)
Albertson's, Inc. 90 4,635
Alcoa, Inc. 830 51,668
Allergan, Inc. 60 5,393
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
America Online, Inc. 420 $ 59,955
American Bankers Insurance 300 15,731
Group, Inc.
American Express Co. 170 22,217
American International Group, 360 42,278
Inc.
Ameritech Corp. 490 33,534
Amgen, Inc. (a) 960 58,980
AmSouth Bancorp. 300 14,269
Anheuser-Busch Companies, 400 29,250
Inc.
Aspect Development, Inc. (a) 100 1,094
Associates First Capital 400 17,725
Corp. Class A
Astoria Financial Corp. 180 9,023
AT&T Corp. 1,440 72,720
Automatic Data Processing, 560 24,920
Inc.
Bank of America Corp. 720 51,840
Bank of New York Co., Inc. 900 36,000
Bank One Corp. 450 26,550
Baxter International, Inc. 100 6,300
Becton, Dickinson & Co. 500 18,594
Biogen, Inc. (a) 60 5,704
Biomet, Inc. 200 8,200
BJ Services Co. (a) 500 13,375
Bristol-Myers Squibb Co. 720 45,765
Burlington Northern Santa Fe 1,040 38,090
Corp.
Cablevision Systems Corp. 120 9,285
Class A (a)
CBS Corp. (a) 970 44,196
Centex Corp. 300 10,969
Charter One Financial, Inc. 300 9,375
Chase Manhattan Corp. 540 44,685
Chevron Corp. 250 24,938
CIGNA Corp. 100 8,719
Cincinnati Bell, Inc. 280 6,335
Cisco Systems, Inc. (a) 880 100,375
Citigroup, Inc. 1,050 79,013
CMS Energy Corp. 160 7,040
Coastal Corp. (The) 200 7,650
Comcast Corp. Class A 400 26,275
(special)
Comerica, Inc. 300 19,519
Compuware Corp. (a) 60 1,463
COMSAT Corp. Series 1 440 14,300
Continental Airlines, Inc. 170 7,342
Class B (a)
CVS Corp. 270 12,859
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Danaher Corp. 260 $ 17,274
Dayton Hudson Corp. 310 20,867
Disney (Walt) Co. 1,000 31,750
DST Systems, Inc. (a) 200 11,650
Duke Energy Corp. 200 11,200
E.I. du Pont de Nemours and 30 2,119
Co.
EMC Corp. (a) 300 32,681
Enron Corp. 400 30,100
Exxon Corp. 540 44,854
Fannie Mae 500 35,469
Federal-Mogul Corp. 500 21,938
Federated Department Stores, 90 4,202
Inc. (a)
First Data Corp. 600 25,463
Fleet Financial Group, Inc. 300 12,919
Ford Motor Co. 400 25,575
Freddie Mac 490 30,748
General Electric Co. 1,230 129,742
Guidant Corp. 180 9,664
Gulfstream Aerospace Corp. (a) 160 7,800
Halliburton Co. 600 25,575
Hartford Life, Inc. Class A 200 10,463
Health Management Associates, 400 6,250
Inc. Class A (a)
Home Depot, Inc. 470 28,171
Household International, Inc. 380 19,119
IMS Health, Inc. 400 12,000
Intel Corp. 880 53,845
International Business 40 8,368
Machines Corp.
IPALCO Enterprises, Inc. 600 13,838
Johnson & Johnson 600 58,500
Kimberly-Clark Corp. 360 22,073
KLA-Tencor Corp. (a) 150 7,444
Lehman Brothers Holdings, 200 11,113
Inc.
Lilly (Eli) & Co. 550 40,494
Lincare Holdings, Inc. (a) 500 14,813
Lowe's Companies, Inc. 350 18,463
Lucent Technologies, Inc. 570 34,271
Masco Corp. 400 11,750
Maxim Integrated Products, 90 5,040
Inc. (a)
MBIA, Inc. 430 28,918
McDonald's Corp. 1,410 59,749
MCI WorldCom, Inc. (a) 1,200 98,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
McLeodUSA, Inc. Class A (a) 300 $ 16,819
MediaOne Group, Inc. 300 24,469
Merck & Co., Inc. 1,050 73,763
Meyer (Fred), Inc. (a) 500 27,063
Micron Technology, Inc. (a) 370 13,736
Microsoft Corp. (a) 1,250 101,641
Mobil Corp. 490 51,328
Monsanto Co. 380 17,195
Morgan Stanley, Dean Witter & 50 4,959
Co.
Motorola, Inc. 690 55,286
Nabisco Holdings Corp. Class A 160 6,050
Navistar International Corp. 160 8,370
(a)
Ogden Corp. 300 7,744
Oracle Corp. (a) 480 12,990
PepsiCo, Inc. 780 28,811
Pfizer, Inc. 160 18,410
PG&E Corp. 1,650 51,253
Philip Morris Companies, Inc. 1,400 49,088
Procter & Gamble Co. 660 61,916
Protective Life Corp. 300 11,756
Providian Financial Corp. 80 10,325
Sabre Group Holdings, Inc. 620 32,318
Class A (a)
Safeway, Inc. (a) 500 26,969
SBC Communications, Inc. 790 44,240
Schering-Plough Corp. 810 39,133
Sepracor, Inc. (a) 40 3,380
Shaw Industries, Inc. (a) 310 5,619
Siebel Systems, Inc. (a) 40 1,538
Stillwater Mining Co. (a) 900 25,481
Texaco, Inc. 300 18,825
Texas Instruments, Inc. 400 40,850
Textron, Inc. 230 21,189
Time Warner, Inc. 570 39,900
TJX Companies, Inc. 300 9,994
Tricon Global Restaurants, 190 12,231
Inc. (a)
TRW, Inc. 150 6,291
Tyco International Ltd. 110 8,938
U.S. Bancorp 680 25,203
Union Pacific Corp. 100 6,000
Union Pacific Resources 610 8,540
Group, Inc.
United Technologies Corp. 200 28,975
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Universal Health Services, 200 $ 10,363
Inc. Class B (a)
USX-Marathon Group 1,610 50,313
Vastar Resources, Inc. 200 10,975
Viacom, Inc. Class B 170 6,949
(non-vtg.) (a)
Wal-Mart Stores, Inc. 800 36,800
Walgreen Co. 200 5,375
Warner-Lambert Co. 610 41,442
Washington Mutual, Inc. 640 26,320
Waste Management, Inc. 710 40,115
Wells Fargo & Co. 880 38,005
Zions Bancorp 90 6,002
3,717,192
TOTAL COMMON STOCKS 6,751,636
(Cost $6,207,215)
NONCONVERTIBLE PREFERRED
STOCKS - 1.4%
GERMANY - 0.9%
Boss (Hugo) AG 10 14,241
Volkswagen AG 500 21,330
Wella AG 42 33,352
68,923
ITALY - 0.5%
Telecom Italia Mobile Spa 3,287 10,952
Telecom Italia Spa Risp 4,000 21,519
32,471
TOTAL NONCONVERTIBLE 101,394
PREFERRED STOCKS
(Cost $113,020)
CASH EQUIVALENTS - 6.1%
MATURITY AMOUNT
Investments in repurchase $ 445,181 445,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
(Cost $445,000)
TOTAL INVESTMENT IN $ 7,298,030
SECURITIES - 100%
(Cost $6,765,235)
LEGEND
(a) Non-income producing
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.8%
BASIC INDUSTRIES 1.9
CASH EQUIVALENTS 6.1
CONSTRUCTION & REAL ESTATE 1.9
DURABLES 4.0
ENERGY 7.3
FINANCE 19.6
HEALTH 9.6
HOLDING COMPANIES 0.3
INDUSTRIAL MACHINERY & 3.9
EQUIPMENT
MEDIA & LEISURE 3.7
NONDURABLES 5.9
PRECIOUS METALS 0.3
RETAIL & WHOLESALE 4.6
SERVICES 2.1
TECHNOLOGY 13.8
TRANSPORTATION 0.7
UTILITIES 13.5
100.0%
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $6,765,235. Net unrealized appreciation
aggregated $532,795, of which $755,961 related to appreciated
investment securities and $223,166 related to depreciated investment
securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 7,298,030
value (including repurchase
agreements of $445,000)
(cost $6,765,235) - See
accompanying schedule
Cash 287
Receivable for investments 34,853
sold
Receivable for fund shares 51,827
sold
Dividends receivable 9,970
Prepaid expenses 55,622
Receivable from investment 14,504
adviser for expense
reductions
TOTAL ASSETS 7,465,093
LIABILITIES
Payable for investments $ 195,810
purchased
Distribution fees payable 3,393
Other payables and accrued 25,595
expenses
TOTAL LIABILITIES 224,798
NET ASSETS $ 7,240,295
Net Assets consist of:
Paid in capital $ 6,723,304
Accumulated net investment (20,185)
loss
Accumulated undistributed net 4,535
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 532,641
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 7,240,295
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $10.93
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($1,341,363 (divided by)
122,705 shares)
Maximum offering price per $11.60
share (100/94.25 of $10.93)
CLASS T: NET ASSET VALUE and $10.92
redemption price per share
($1,854,986 (divided by)
169,845 shares)
Maximum offering price per $11.32
share (100/96.50 of $10.92)
CLASS B: NET ASSET VALUE and $10.90
offering price per share
($1,404,161 (divided by)
128,822 shares) A
CLASS C: NET ASSET VALUE and $10.90
offering price per share
($1,545,049 (divided by)
141,730 shares) A
INSTITUTIONAL CLASS: NET $10.94
ASSET VALUE, offering price
and redemption price per
share ($1,094,736 (divided
by) 100,058 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 24,656
Dividends
Interest 8,540
33,196
Less foreign taxes withheld (1,823)
TOTAL INCOME 31,373
EXPENSES
Management fee $ 16,484
Transfer agent fees 5,327
Distribution fees 12,740
Accounting fees and expenses 22,049
Custodian fees and expenses 19,900
Registration fees 45,692
Audit 10,309
Miscellaneous 118
Total expenses before 132,619
reductions
Expense reductions (81,061) 51,558
NET INVESTMENT INCOME (LOSS) (20,185)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 9,431
Foreign currency transactions (4,896) 4,535
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 532,795
Assets and liabilities in (154) 532,641
foreign currencies
NET GAIN (LOSS) 537,176
NET INCREASE (DECREASE) IN $ 516,991
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (20,185)
income (loss)
Net realized gain (loss) 4,535
Change in net unrealized 532,641
appreciation (depreciation)
NET INCREASE (DECREASE) IN 516,991
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 6,723,304
increase (decrease)
TOTAL INCREASE (DECREASE) 7,240,295
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 7,240,295
accumulated net investment
loss of $20,185)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.02)
Net realized and unrealized .95
gain (loss)
Total from investment .93
operations
Net asset value, end of period $ 10.93
TOTAL RETURN B, C 9.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,341
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment (.59)% A
(loss) income to average net
assets
Portfolio turnover 65% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS T
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized .95
gain (loss)
Total from investment .92
operations
Net asset value, end of period $ 10.92
TOTAL RETURN B, C 9.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,855
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment (.84)%A
income (loss) to average net
assets
Portfolio turnover 65%A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.05)
Net realized and unrealized .95
gain (loss)
Total from investment .90
operations
Net asset value, end of period $ 10.90
TOTAL RETURN B, C 9.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,404
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (1.34)% A
income (loss) to average net
assets
Portfolio turnover 65% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.05)
Net realized and unrealized .95
gain (loss)
Total from investment .90
operations
Net asset value, end of period $ 10.90
TOTAL RETURN B, C 9.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,545
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (1.34)% A
income (loss) to average net
assets
Portfolio turnover 65% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.01)
Net realized and unrealized .95
gain (loss)
Total from investment .94
operations
Net asset value, end of period $ 10.94
TOTAL RETURN B, C 9.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,095
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment (.34)% A
income (loss) to average net
assets
Portfolio turnover 65% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Global Equity 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. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. 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 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.
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
and settlement date 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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the fund except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
transactions may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $7,703,884 and $1,393,080, respectively.
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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., and 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 FDC RETAINED BY FDC
CLASS A $ 1,062 $ 968
CLASS T 2,638 1,931
CLASS B 4,241 4,147
CLASS C 4,799 4,799
$ 12,740 $ 11,845
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 1,844 $ 981
CLASS T 1,617 901
CLASS B 0 0*
CLASS C - -*
$ 3,461 $ 1,882
* 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 $ 970 .23 *
CLASS T 1,275 .24 *
CLASS B 1,058 .25 *
CLASS C 1,167 .25 *
INSTITUTIONAL CLASS 857 .22 *
$ 5,327
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $130 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 15,245
CLASS T 2.25% 19,253
CLASS B 2.75% 15,335
CLASS C 2.75% 17,345
INSTITUTIONAL CLASS 1.75% 13,876
$ 81,054
5. EXPENSE REDUCTIONS - CONTINUED
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 $7 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 75% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the period is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
DECEMBER 17, 1998 DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, TO APRIL 30,
1999 1999
CLASS A Shares sold 124,626 $ 1,261,920
Shares redeemed (1,921) (20,721)
Net increase (decrease) 122,705 $ 1,241,199
CLASS T Shares sold 172,433 $ 1,764,800
Shares redeemed (2,588) (27,634)
Net increase (decrease) 169,845 $ 1,737,166
CLASS B Shares sold 129,810 $ 1,316,410
Shares redeemed (988) (10,398)
Net increase (decrease) 128,822 $ 1,306,012
CLASS C
Shares sold 141,730 $ 1,438,316
INSTITUTIONAL CLASS
Shares sold 100,058 $ 1,000,611
</TABLE>
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, Pembroke, Bermuda
Fidelity International Investments Advisors (U.K.) Limited,
London, England
Fidelity Investments Japan Limited,
Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard C. Habermann, Vice President
Robert A. Lawrence, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy, 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation Fund
Fidelity Advisor Balanced Fund
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)
FIDELITY ADVISOR
GLOBAL EQUITY
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 5 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 8 A summary of the fund's
investments.
INVESTMENTS 9 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 19 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 28 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(Recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 GLOBAL EQUITY 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV GLOBAL EQUITY - 9.40%
INST CL
MSCI World 12.03%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on December 17, 1998. 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
World Index - a market capitalization-weighted index that is designed
to represent the performance of developed stock markets throughout the
world. As of April 30, 1999, the index included over 1,462 equity
securities of companies domiciled in 22 countries. This benchmark
includes reinvested dividends and capital gains, if any and exclude
the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class shares'
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. In
addition, the growth of a hypothetical $10,000 investment in the fund
will appear in the fund's next report six months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Union's single currency
- - the euro. Many European markets
stalled in 1999, however, as the
outlook for economic growth and
corporate profits deteriorated. The
U.K. stock market was among the
strongest performers in Europe as
the economy improved amid a
favorable environment of declining
interest rates and encouraging
earnings growth. Elsewhere, positive
economic developments in the form
of lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(Photograph of Richard Habermann)
An interview with Richard
Habermann, Lead Portfolio Manager of Fidelity Advisor Global Equity
Fund
Q. HOW DID THE FUND PERFORM, DICK?
A. The fund has been up and running since December 17, 1998. From that
date through April 30, 1999, the fund's Institutional Class shares
returned 9.40%. The Morgan Stanley Capital International World Index,
meanwhile, returned 12.03% in that same time frame. Going forward,
we'll look at the fund's performance in both six- and 12-month
intervals.
Q. WHAT FACTORS SHAPED THE FUND'S PERFORMANCE DURING THE PERIOD?
A. Much of the fund's underperformance relative to the Morgan Stanley
index can be traced to poor stock selection. The fund's investment in
Philip Morris and Swiss pharmaceutical company Novartis, for example,
did not pan out as I had hoped. Philip Morris suffered from ongoing
tobacco litigation concerns, while Novartis experienced slow sales
growth. Another factor that hurt performance involved the euro, the
new uniform currency of 11 European countries that was introduced on
New Year's Day 1999. At first, the euro was received positively. As
the period wore on, though, economic weakness in certain pockets of
Europe spoiled the party. From January 1999 through the end of the
period, in fact, the euro was down roughly 9%. The last negative I'd
highlight was the fund's exposure to Asia. Most of the fund's Asian
investments were based in Japan, but the beleaguered Southeast Asian
markets actually performed fairly well. A light weighting in those
regions also may have held performance back a bit.
Q. THE FUND HAD SIGNIFICANT EXPOSURE TO BOTH THE HEALTH AND
TELECOMMUNICATIONS INDUSTRIES. HOW DID THESE SECTORS PERFORM DURING
THE PERIOD?
A. While pharmaceutical stocks struggled in the U.S. during the
period, several overseas drug makers prospered. Japan's Takeda
Chemical, for instance, was a very strong performer as was U.K.-based
SmithKline Beecham.Telecommunications, meanwhile, was a fertile area
with much of the growth being fueled by the Internet and basic demand
for better and faster communications. The fund's investments in
Vodafone Group (U.K.) and Nippon Telegraph & Telephone (Japan)
performed especially well.
Q. CAN YOU DESCRIBE THE FUND'S INVESTMENT PROCESS?
A. Sure. We focus basically on four main regions: Europe, Japan,
Southeast Asia and North America. I serve as the point person for all
investment decisions and rely heavily on input from sub-portfolio
managers as well as a battalion of analysts in each of those regions.
Our stock-picking process revolves more around individual analysis
than country analysis. Of course, international investing is more
risky than domestic investing and one of our major objectives is to
try to minimize portfolio risk as much as possible.
Q. WHICH STOCKS PERFORMED WELL DURING THE PERIOD? WHICH WOULD YOU
CHARACTERIZE AS DISAPPOINTMENTS?
A. Along with the strong performance of the U.S. equity market during
the period, U.S.-based stocks Texas Instruments and Cisco Systems
generated positive results. Texas Instruments was a beneficiary of the
strong telecommunications environment I mentioned, while Cisco Systems
continued to realize strong results from the popularity of the
Internet. Among the disappointments, I'd include two technology stocks
- - Micron Technology and Compaq - as well as overseas tobacco company
Tabacalera. Micron, which is in the dynamic random accessing memory
(DRAM) business, suffered as DRAM prices declined, and Compaq - which
the fund no longer owns - was hurt by lower PC prices and a shift
towards direct and online PC purchasing trends. Tabacalera felt the
effects of the ongoing tobacco litigation here in the States.
Q. WHAT'S YOUR OUTLOOK FOR THE COMING MONTHS, DICK?
A. Compared to a year ago, overseas markets have shown steady
improvement. Many of the problems we witnessed last year - namely
turbulence in Asia and eastern Europe - have either been addressed by
the countries involved or helped by the International Monetary Fund, a
global bank set up to provide financial assistance to troubled
regions. There's also been a lot of interest-rate cutting in the past
six months, which has stimulated business and increased stability.
Going forward, I think we may see more of this gradual progress. One
area that looks particularly interesting is Asia and I may look for
more buying opportunities there.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: seeks long-term growth
of capital
START DATE: December 17,
1998
SIZE: as of April 30, 1999,
more than $7 million
MANAGER: Richard Habermann,
since inception; joined
Fidelity in 1968
DICK HABERMANN ON THE
STATE OF THE WORLD'S MARKETS:
U.S.: "The U.S. market continued
to be strong during the period, as
we saw more market participation
among the small- and mid-cap
stock groups. Increased market
breadth is generally positive. The
one concern I have is that so much
of the world lately has been
dependent on U.S. consumer
spending trends. It would be nice
to see other parts of the world pick
it up in this area.
EUROPE: "While the decline of the
euro has been a negative, we have
seen some positive developments
on the corporate landscape.
Merger and acquisition activity
increased during the period -
particularly in the
telecommunications and banking
areas - and that has been
generally favorable. In addition,
with much of the region sharing
the same currency, we've seen
more cross-border merger
activity and companies in
general are monitoring their
competitors closely.
JAPAN/SE ASIA: "While it's true
that this part of the world had no
place to go but up, I've been
impressed with the progress made
there. Japan continued to
struggle with its currency, as the
weak yen hurt domestic business
and helped exporters. We've also
seen a real change in the tone of
business in the smaller Asian
countries. This could bear watching
going forward."
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
General Electric Co. (United 1.8
States of America,
Electrical Equipment)
BP Amoco PLC (United Kingdom, 1.4
Oil & Gas)
Microsoft Corp. (United 1.4
States of America, Computer
Services & Software)
Cisco Systems, Inc. (United 1.4
States of America,
Communications Equipment)
MCI WorldCom, Inc. (United 1.4
States of America, Telephone
Services)
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
FINANCE 19.6
TECHNOLOGY 13.8
UTILITIES 13.5
HEALTH 9.6
ENERGY 7.3
TOP FIVE COUNTRIES AS OF
APRIL 30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS
United States of America 50.9
United Kingdom 10.6
Japan 10.2
France 5.0
Germany 3.5
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 93.90000000000001
Row: 1, Col: 2, Value: 6.1
Stocks 93.9%
Short-term investments 6.1%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.5%
SHARES VALUE (NOTE 1)
DENMARK - 0.7%
International Service Systems 662 $ 38,935
AS Class B
Ratin AS Class B 40 6,892
Sydbank AS 85 2,869
48,696
FINLAND - 1.5%
KCI (Konecranes International) 155 5,744
OY Nokia AB 980 72,704
Sampo Insurance Co. Ltd. 672 21,210
UPM-Kymmene Corp. 430 13,044
112,702
FRANCE - 5.0%
Atos SA (a) 80 6,861
AXA SA de CV 195 25,230
Bouygues 51 12,992
Cap Gemini SA 270 41,366
Compagnie Financiere de 175 18,640
Paribas Class A (Reg.)
Credit Commercial de France 176 18,635
Dexia France 50 7,015
Elf Aquitaine 128 20,000
France Telecom SA 184 14,894
Groupe Danone 106 28,395
LVMH Moet Hennessy Louis 74 19,886
Vuitton
Sanofi SA 159 24,966
Seita 246 14,847
Societe Generale, France 48 8,609
Class A
Suez Lyonnaise des Eaux 84 14,319
Total SA Class B 326 44,336
Vivendi SA 178 41,670
362,661
GERMANY - 2.6%
Aachener & Muenchener 64 6,844
Beteiligungs AG (Reg.)
Allianz AG (Reg.) 67 21,069
BHF Bank AG 390 14,700
Deutsche Telekom AG 335 13,234
Hannover Rueckversicherungs AG 130 10,722
Hoechst AG 415 19,707
Mannesmann AG 595 77,866
Munich Reinsurance AG (Reg.) 13 2,573
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
GERMANY - CONTINUED
Schering AG 70 $ 8,079
Viag AG 35 17,565
192,359
IRELAND - 0.6%
Bank of Ireland, Inc. 944 18,903
CRH PLC 1,220 23,978
42,881
ITALY - 2.2%
Assicurazioni Generali Spa 501 19,537
Banca Fideuram Spa 3,920 22,238
Eni Spa sponsored ADR 4,996 32,913
Finmeccanica Spa (a) 19,903 19,615
Italgas Spa 3,113 14,025
Olivetti & Co. Spa 6,530 22,733
San Paolo-IMI Spa 371 5,590
Unicredito Italiano Spa 4,112 20,959
157,610
JAPAN - 10.2%
Aeon Credit Service Ltd. 100 8,628
Ajinomoto Co., Inc. 1,000 11,568
Asahi Chemical Industry Co. 1,000 5,822
Ltd.
Asahi Glass Co. Ltd. 1,000 7,656
Bank of Tokyo-Mitsubishi Ltd. 2,000 29,519
Benesse Corp. 100 8,343
Bridgestone Corp. 1,000 26,805
Canon, Inc. 1,000 24,460
Citizen Watch Co. Ltd. 1,000 8,293
Daikin Industries Ltd. 1,000 10,437
Dainippon Screen 1,000 4,858
Manufacturing Co. Ltd.
DDI Corp. 2 9,935
Fuji Bank Ltd. 2,000 15,614
Fuji Soft ABC, Inc. 130 7,906
Fujitsu Ltd. 1,000 17,130
Furukawa Electric Co. Ltd. 1,000 4,373
Hirose Electric Co. Ltd. 100 9,298
Hitachi Ltd. 1,000 7,300
Ito En Ltd. 100 6,902
Kao Corp. 1,000 25,381
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
JAPAN - CONTINUED
Kirin Brewery Co. Ltd. 1,000 $ 11,308
Kokusai Securities Co. Ltd. 1,000 12,481
Kuraray Co. Ltd. 1,000 11,392
Kyocera Corp. 100 5,939
Matsushita Electric 1,000 19,015
Industrial Co. Ltd.
Matsushita Electric Works Co. 1,000 10,580
Ltd.
Meiwa Estate Co. Ltd. 300 9,524
Minebea Co. Ltd. 1,000 9,675
Minolta Co. Ltd. 1,000 5,537
Mitsubishi Trust & Banking 1,000 10,973
Corp.
Mitsui Mining & Smelting Co. 1,000 5,177
Ltd.
NEC Corp. 1,000 11,945
NGK Insulators Ltd. 1,000 12,188
Nidec Corp. 100 12,984
Nippon Sheet Glass Co. Ltd. 1,000 3,820
Nippon System Development Co. 200 10,219
Nippon Telegraph & Telephone 3 32,669
Corp.
Nomura Securities Co. Ltd. 1,000 10,789
Orix Corp. 100 8,050
Ryohin Keikaku Co. Ltd. 100 18,219
Sanden Corp. 1,000 8,058
Shohkoh Fund & Co. Ltd. 30 17,591
Sony Corp. 300 27,750
Sony Music Entertainment Ltd. 100 7,288
Sumitomo Bank Ltd. Japan 1,000 13,537
Sumitomo Forestry Co. Ltd. 1,000 7,455
Sumitomo Heavy Industries Co. 2,000 4,808
Ltd.
Takeda Chemical Industries 1,000 43,475
Ltd.
THK Co. Ltd. 800 13,872
Toda Corp. 1,000 5,596
Tokyo Seimitsu Co. Ltd. 600 33,222
Toppan Forms Co. Ltd. 1,000 19,015
Toshiba Corp. 1,000 6,701
Toyota Motor Corp. 1,000 28,625
Uni-Charm Corp. 100 4,532
Union Tool Co. 100 7,371
World Co. Ltd. 200 11,074
742,682
NETHERLANDS - 3.2%
Capital Gemini NV 115 5,997
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NETHERLANDS - CONTINUED
Equant NV (a) 570 $ 51,842
Fortis Amev NV 400 14,273
ING Groep NV 894 55,185
Koninklijke (Royal) Philips 325 28,045
Electronics NV
Koninklijke Ahold NV 814 30,295
Unilever NV 450 30,875
Vedior NV 881 19,869
236,381
PORTUGAL - 0.2%
Banco Pinto & Sotto Mayor SA 368 6,877
Telecel Comunicacoes Pessoais 89 11,921
SA
18,798
SPAIN - 1.5%
Iberdrola SA 630 8,838
Tabacalera SA Series A 1,960 38,496
Telefonica SA 1,155 54,236
Telefonica SA rights 6/15/99 958 893
(a)
Vallehermoso SA 475 4,728
107,191
SWEDEN - 1.3%
Assa Abloy AB Class B 370 16,185
Electrolux AB 400 8,130
Ericsson (L.M.) Telefon AB 523 14,121
Class B
Skandia Foersaekrings AB 2,445 47,372
Svenska Handelsbanken 241 9,052
94,860
SWITZERLAND - 2.0%
Credit Suisse Group (Reg.) 131 26,002
Julius Baer Holding AG 10 32,579
Kuoni Reisen Holding AG Class 4 14,173
B (Reg.)
Novartis AG (Reg.) 32 46,887
Swisscom AG 65 23,885
143,526
UNITED KINGDOM - 10.6%
3I Group PLC 500 5,425
Allied Zurich PLC (a) 1,700 22,567
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED KINGDOM - CONTINUED
Amvescap PLC 600 $ 6,380
Asda Group PLC 5,000 16,734
Ashtead Group PLC 4,900 17,959
AstraZeneca Group PLC 172 6,726
Bank of Scotland 1,400 20,975
Barclays PLC 900 28,621
Barratt Developments PLC 2,400 14,112
BBA Group PLC 3,700 29,625
BP Amoco PLC 5,400 101,869
British American Tobacco PLC 600 5,041
British Telecommunications PLC 3,400 57,035
Burmah Castrol PLC 700 11,971
Cable & Wireless 1,600 18,275
Communications PLC (a)
Cadbury Schweppes PLC 900 12,027
Dixons Group PLC 800 17,102
Gallaher Group PLC 1,800 10,374
Glaxo Wellcome PLC 1,400 40,775
HSBC Holdings PLC Ord. 500 19,082
Kingfisher PLC 1,100 16,481
Lloyds TSB Group PLC 3,000 48,354
National Grid Group PLC 2,400 16,635
Nycomed Amersham PLC 1,300 10,660
Prudential Corp. PLC 1,700 24,279
Reuters Group PLC 1,000 13,565
Royal & Sun Alliance 1,600 13,816
Insurance Group PLC
Scottish & Southern Energy PLC 600 5,640
Shell Transport & Trading Co. 8,400 63,613
PLC (Reg.)
SmithKline Beecham PLC 2,300 30,216
Vodafone Group PLC 3,800 68,163
774,097
UNITED STATES OF AMERICA -
50.9%
Abbott Laboratories 600 29,063
Abercrombie & Fitch Co. Class 330 31,391
A (a)
ADC Telecommunications, Inc. 220 10,519
(a)
AES Corp. (a) 680 34,000
AFLAC, Inc. 200 10,850
AirTouch Communications, Inc. 290 27,079
(a)
Albertson's, Inc. 90 4,635
Alcoa, Inc. 830 51,668
Allergan, Inc. 60 5,393
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
America Online, Inc. 420 $ 59,955
American Bankers Insurance 300 15,731
Group, Inc.
American Express Co. 170 22,217
American International Group, 360 42,278
Inc.
Ameritech Corp. 490 33,534
Amgen, Inc. (a) 960 58,980
AmSouth Bancorp. 300 14,269
Anheuser-Busch Companies, 400 29,250
Inc.
Aspect Development, Inc. (a) 100 1,094
Associates First Capital 400 17,725
Corp. Class A
Astoria Financial Corp. 180 9,023
AT&T Corp. 1,440 72,720
Automatic Data Processing, 560 24,920
Inc.
Bank of America Corp. 720 51,840
Bank of New York Co., Inc. 900 36,000
Bank One Corp. 450 26,550
Baxter International, Inc. 100 6,300
Becton, Dickinson & Co. 500 18,594
Biogen, Inc. (a) 60 5,704
Biomet, Inc. 200 8,200
BJ Services Co. (a) 500 13,375
Bristol-Myers Squibb Co. 720 45,765
Burlington Northern Santa Fe 1,040 38,090
Corp.
Cablevision Systems Corp. 120 9,285
Class A (a)
CBS Corp. (a) 970 44,196
Centex Corp. 300 10,969
Charter One Financial, Inc. 300 9,375
Chase Manhattan Corp. 540 44,685
Chevron Corp. 250 24,938
CIGNA Corp. 100 8,719
Cincinnati Bell, Inc. 280 6,335
Cisco Systems, Inc. (a) 880 100,375
Citigroup, Inc. 1,050 79,013
CMS Energy Corp. 160 7,040
Coastal Corp. (The) 200 7,650
Comcast Corp. Class A 400 26,275
(special)
Comerica, Inc. 300 19,519
Compuware Corp. (a) 60 1,463
COMSAT Corp. Series 1 440 14,300
Continental Airlines, Inc. 170 7,342
Class B (a)
CVS Corp. 270 12,859
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Danaher Corp. 260 $ 17,274
Dayton Hudson Corp. 310 20,867
Disney (Walt) Co. 1,000 31,750
DST Systems, Inc. (a) 200 11,650
Duke Energy Corp. 200 11,200
E.I. du Pont de Nemours and 30 2,119
Co.
EMC Corp. (a) 300 32,681
Enron Corp. 400 30,100
Exxon Corp. 540 44,854
Fannie Mae 500 35,469
Federal-Mogul Corp. 500 21,938
Federated Department Stores, 90 4,202
Inc. (a)
First Data Corp. 600 25,463
Fleet Financial Group, Inc. 300 12,919
Ford Motor Co. 400 25,575
Freddie Mac 490 30,748
General Electric Co. 1,230 129,742
Guidant Corp. 180 9,664
Gulfstream Aerospace Corp. (a) 160 7,800
Halliburton Co. 600 25,575
Hartford Life, Inc. Class A 200 10,463
Health Management Associates, 400 6,250
Inc. Class A (a)
Home Depot, Inc. 470 28,171
Household International, Inc. 380 19,119
IMS Health, Inc. 400 12,000
Intel Corp. 880 53,845
International Business 40 8,368
Machines Corp.
IPALCO Enterprises, Inc. 600 13,838
Johnson & Johnson 600 58,500
Kimberly-Clark Corp. 360 22,073
KLA-Tencor Corp. (a) 150 7,444
Lehman Brothers Holdings, 200 11,113
Inc.
Lilly (Eli) & Co. 550 40,494
Lincare Holdings, Inc. (a) 500 14,813
Lowe's Companies, Inc. 350 18,463
Lucent Technologies, Inc. 570 34,271
Masco Corp. 400 11,750
Maxim Integrated Products, 90 5,040
Inc. (a)
MBIA, Inc. 430 28,918
McDonald's Corp. 1,410 59,749
MCI WorldCom, Inc. (a) 1,200 98,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
McLeodUSA, Inc. Class A (a) 300 $ 16,819
MediaOne Group, Inc. 300 24,469
Merck & Co., Inc. 1,050 73,763
Meyer (Fred), Inc. (a) 500 27,063
Micron Technology, Inc. (a) 370 13,736
Microsoft Corp. (a) 1,250 101,641
Mobil Corp. 490 51,328
Monsanto Co. 380 17,195
Morgan Stanley, Dean Witter & 50 4,959
Co.
Motorola, Inc. 690 55,286
Nabisco Holdings Corp. Class A 160 6,050
Navistar International Corp. 160 8,370
(a)
Ogden Corp. 300 7,744
Oracle Corp. (a) 480 12,990
PepsiCo, Inc. 780 28,811
Pfizer, Inc. 160 18,410
PG&E Corp. 1,650 51,253
Philip Morris Companies, Inc. 1,400 49,088
Procter & Gamble Co. 660 61,916
Protective Life Corp. 300 11,756
Providian Financial Corp. 80 10,325
Sabre Group Holdings, Inc. 620 32,318
Class A (a)
Safeway, Inc. (a) 500 26,969
SBC Communications, Inc. 790 44,240
Schering-Plough Corp. 810 39,133
Sepracor, Inc. (a) 40 3,380
Shaw Industries, Inc. (a) 310 5,619
Siebel Systems, Inc. (a) 40 1,538
Stillwater Mining Co. (a) 900 25,481
Texaco, Inc. 300 18,825
Texas Instruments, Inc. 400 40,850
Textron, Inc. 230 21,189
Time Warner, Inc. 570 39,900
TJX Companies, Inc. 300 9,994
Tricon Global Restaurants, 190 12,231
Inc. (a)
TRW, Inc. 150 6,291
Tyco International Ltd. 110 8,938
U.S. Bancorp 680 25,203
Union Pacific Corp. 100 6,000
Union Pacific Resources 610 8,540
Group, Inc.
United Technologies Corp. 200 28,975
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA -
CONTINUED
Universal Health Services, 200 $ 10,363
Inc. Class B (a)
USX-Marathon Group 1,610 50,313
Vastar Resources, Inc. 200 10,975
Viacom, Inc. Class B 170 6,949
(non-vtg.) (a)
Wal-Mart Stores, Inc. 800 36,800
Walgreen Co. 200 5,375
Warner-Lambert Co. 610 41,442
Washington Mutual, Inc. 640 26,320
Waste Management, Inc. 710 40,115
Wells Fargo & Co. 880 38,005
Zions Bancorp 90 6,002
3,717,192
TOTAL COMMON STOCKS 6,751,636
(Cost $6,207,215)
NONCONVERTIBLE PREFERRED
STOCKS - 1.4%
GERMANY - 0.9%
Boss (Hugo) AG 10 14,241
Volkswagen AG 500 21,330
Wella AG 42 33,352
68,923
ITALY - 0.5%
Telecom Italia Mobile Spa 3,287 10,952
Telecom Italia Spa Risp 4,000 21,519
32,471
TOTAL NONCONVERTIBLE 101,394
PREFERRED STOCKS
(Cost $113,020)
CASH EQUIVALENTS - 6.1%
MATURITY AMOUNT
Investments in repurchase $ 445,181 445,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
(Cost $445,000)
TOTAL INVESTMENT IN $ 7,298,030
SECURITIES - 100%
(Cost $6,765,235)
LEGEND
(a) Non-income producing
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
AEROSPACE & DEFENSE 0.8%
BASIC INDUSTRIES 1.9
CASH EQUIVALENTS 6.1
CONSTRUCTION & REAL ESTATE 1.9
DURABLES 4.0
ENERGY 7.3
FINANCE 19.6
HEALTH 9.6
HOLDING COMPANIES 0.3
INDUSTRIAL MACHINERY & 3.9
EQUIPMENT
MEDIA & LEISURE 3.7
NONDURABLES 5.9
PRECIOUS METALS 0.3
RETAIL & WHOLESALE 4.6
SERVICES 2.1
TECHNOLOGY 13.8
TRANSPORTATION 0.7
UTILITIES 13.5
100.0%
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $6,765,235. Net unrealized appreciation
aggregated $532,795, of which $755,961 related to appreciated
investment securities and $223,166 related to depreciated investment
securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 7,298,030
value (including repurchase
agreements of $445,000)
(cost $6,765,235) - See
accompanying schedule
Cash 287
Receivable for investments 34,853
sold
Receivable for fund shares 51,827
sold
Dividends receivable 9,970
Prepaid expenses 55,622
Receivable from investment 14,504
adviser for expense
reductions
TOTAL ASSETS 7,465,093
LIABILITIES
Payable for investments $ 195,810
purchased
Distribution fees payable 3,393
Other payables and accrued 25,595
expenses
TOTAL LIABILITIES 224,798
NET ASSETS $ 7,240,295
Net Assets consist of:
Paid in capital $ 6,723,304
Accumulated net investment (20,185)
loss
Accumulated undistributed net 4,535
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 532,641
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 7,240,295
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $10.93
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($1,341,363 (divided by)
122,705 shares)
Maximum offering price per $11.60
share (100/94.25 of $10.93)
CLASS T: NET ASSET VALUE and $10.92
redemption price per share
($1,854,986 (divided by)
169,845 shares)
Maximum offering price per $11.32
share (100/96.50 of $10.92)
CLASS B: NET ASSET VALUE and $10.90
offering price per share
($1,404,161 (divided by)
128,822 shares) A
CLASS C: NET ASSET VALUE and $10.90
offering price per share
($1,545,049 (divided by)
141,730 shares) A
INSTITUTIONAL CLASS: NET $10.94
ASSET VALUE, offering price
and redemption price per
share ($1,094,736 (divided
by) 100,058 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 24,656
Dividends
Interest 8,540
33,196
Less foreign taxes withheld (1,823)
TOTAL INCOME 31,373
EXPENSES
Management fee $ 16,484
Transfer agent fees 5,327
Distribution fees 12,740
Accounting fees and expenses 22,049
Custodian fees and expenses 19,900
Registration fees 45,692
Audit 10,309
Miscellaneous 118
Total expenses before 132,619
reductions
Expense reductions (81,061) 51,558
NET INVESTMENT INCOME (LOSS) (20,185)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 9,431
Foreign currency transactions (4,896) 4,535
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 532,795
Assets and liabilities in (154) 532,641
foreign currencies
NET GAIN (LOSS) 537,176
NET INCREASE (DECREASE) IN $ 516,991
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (20,185)
income (loss)
Net realized gain (loss) 4,535
Change in net unrealized 532,641
appreciation (depreciation)
NET INCREASE (DECREASE) IN 516,991
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 6,723,304
increase (decrease)
TOTAL INCREASE (DECREASE) 7,240,295
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 7,240,295
accumulated net investment
loss of $20,185)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.02)
Net realized and unrealized .95
gain (loss)
Total from investment .93
operations
Net asset value, end of period $ 10.93
TOTAL RETURN B, C 9.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,341
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment (.59)% A
(loss) income to average net
assets
Portfolio turnover 65% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS T
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized .95
gain (loss)
Total from investment .92
operations
Net asset value, end of period $ 10.92
TOTAL RETURN B, C 9.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,855
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment (.84)%A
income (loss) to average net
assets
Portfolio turnover 65%A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.05)
Net realized and unrealized .95
gain (loss)
Total from investment .90
operations
Net asset value, end of period $ 10.90
TOTAL RETURN B, C 9.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,404
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (1.34)% A
income (loss) to average net
assets
Portfolio turnover 65% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.05)
Net realized and unrealized .95
gain (loss)
Total from investment .90
operations
Net asset value, end of period $ 10.90
TOTAL RETURN B, C 9.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,545
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (1.34)% A
income (loss) to average net
assets
Portfolio turnover 65% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.01)
Net realized and unrealized .95
gain (loss)
Total from investment .94
operations
Net asset value, end of period $ 10.94
TOTAL RETURN B, C 9.40%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,095
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment (.34)% A
income (loss) to average net
assets
Portfolio turnover 65% A
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Global Equity 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. Class B shares will automatically
convert to Class A shares after a holding period of seven years from
the initial date of purchase. 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 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.
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
and settlement date 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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the fund except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
transactions may include temporary book and tax basis differences
which will reverse in a subsequent period. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $7,703,884 and $1,393,080, respectively.
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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., and 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 FDC RETAINED BY FDC
CLASS A $ 1,062 $ 968
CLASS T 2,638 1,931
CLASS B 4,241 4,147
CLASS C 4,799 4,799
$ 12,740 $ 11,845
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 1,844 $ 981
CLASS T 1,617 901
CLASS B 0 0*
CLASS C - -*
$ 3,461 $ 1,882
* 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 $ 970 .23 *
CLASS T 1,275 .24 *
CLASS B 1,058 .25 *
CLASS C 1,167 .25 *
INSTITUTIONAL CLASS 857 .22 *
$ 5,327
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $130 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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 15,245
CLASS T 2.25% 19,253
CLASS B 2.75% 15,335
CLASS C 2.75% 17,345
INSTITUTIONAL CLASS 1.75% 13,876
$ 81,054
5. EXPENSE REDUCTIONS - CONTINUED
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 $7 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 75% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the period is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
DECEMBER 17, 1998 DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, TO APRIL 30,
1999 1999
CLASS A Shares sold 124,626 $ 1,261,920
Shares redeemed (1,921) (20,721)
Net increase (decrease) 122,705 $ 1,241,199
CLASS T Shares sold 172,433 $ 1,764,800
Shares redeemed (2,588) (27,634)
Net increase (decrease) 169,845 $ 1,737,166
CLASS B Shares sold 129,810 $ 1,316,410
Shares redeemed (988) (10,398)
Net increase (decrease) 128,822 $ 1,306,012
CLASS C
Shares sold 141,730 $ 1,438,316
INSTITUTIONAL CLASS
Shares sold 100,058 $ 1,000,611
</TABLE>
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, Pembroke, Bermuda
Fidelity International Investments Advisors (U.K.) Limited,
London, England
Fidelity Investments Japan Limited,
Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard C. Habermann, Vice President
Robert A. Lawrence, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy, 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Alloaction Fund
Fidelity Advisor Balanced Fund
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)
FIDELITY ADVISOR
JAPAN
FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 8 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 11 A summary of the fund's
investments.
INVESTMENTS 12 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 19 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 28 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 JAPAN 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV JAPAN - CL A 19.80%
FIDELITY ADV JAPAN - CL A 12.91%
(INCL. 5.75% SALES CHARGE)
TOPIX 19.37%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 Tokyo Stock Exchange Index - a market capitalization-weighted
index of over 1,100 stocks traded in the Japanese market. This
benchmark includes reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR JAPAN 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV JAPAN - CL T 19.70%
FIDELITY ADV JAPAN - CL T 15.51%
(INCL. 3.50% SALES CHARGE)
TOPIX 19.37%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 Tokyo Stock Exchange Index - a market capitalization-weighted
index of over 1,100 stocks traded in the Japanese market. This
benchmark includes reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR JAPAN 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 shares' contingent deferred sales charge included in
the life of fund total return is 5%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV JAPAN - CL B 19.50%
FIDELITY ADV JAPAN - CL B 14.50%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
TOPIX 19.37%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 Tokyo Stock Exchange Index - a market capitalization-weighted
index of over 1,100 stocks traded in the Japanese market. This
benchmark includes reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR JAPAN 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 shares' contingent deferred sales charge included in
the life of fund total return is 1%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV JAPAN - CL C 19.50%
FIDELITY ADV JAPAN - CL C 18.50%
(INCL. CONTINGENT DEFERRED
SALES CHARGE)
TOPIX 19.37%
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, since the fund started on
December 17, 1998. 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 Tokyo Stock Exchange Index - a market capitalization-weighted
index of over 1,100 stocks traded in the Japanese market. This
benchmark includes reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Union's single currency
- - the euro. Many European markets
stalled in 1999, however, as the
outlook for economic growth and
corporate profits deteriorated. The
U.K. stock market was among the
strongest performers in Europe as
the economy improved amid a
favorable environment of declining
interest rates and encouraging
earnings growth. Elsewhere, positive
economic developments in the form
of lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(Photograph of Brenda Reed)
An interview with Brenda Reed, Portfolio Manager of Fidelity Advisor
Japan Fund
Q. HOW DID THE FUND PERFORM, BRENDA?
A. From the fund's inception on December 17, 1998, through April 30,
1999, the fund's Class A, Class T, Class B and Class C shares had
total returns of 19.80%, 19.70%, 19.50% and 19.50%, respectively.
Those numbers slightly exceeded the 19.37% return of the Tokyo Stock
Exchange Index (TOPIX) during the same period. Going forward, we will
look at the fund's performance in both six- and 12-month intervals.
Q. WHAT FACTORS INFLUENCED THE FUND'S STRONG PERFORMANCE?
A. For one thing, the fund owned a number of stocks that benefited
substantially from the restructuring occurring in many Japanese
industries. A second factor was the fund's overweighting and favorable
stock selection in the strong telecommunications sector. I'd also
mention the fund's relatively heavy emphasis on small- and
mid-capitalization stocks, which were even stronger than large-cap
shares. It's worth noting, too, that the fund's high absolute returns
were attributable in part to a stable yen. Currency fluctuation is one
factor that tends to make foreign investments riskier than those that
are U.S.-based. On the negative side, the fund's returns were limited
somewhat by the small pool of cash available to invest during its
start-up phase.
Q. WHY IS RESTRUCTURING SUCH AN IMPORTANT TREND IN JAPAN NOW?
A. After years of operating in a fairly protected environment,
Japanese managers are being told by their government that they must
compete effectively or go out of business. The biggest problems, of
course, have to do with the troubled financial sector, where most
banks are still in the process of recovering from a huge backlog of
bad real estate loans. These problems have been exacerbated because
the Japanese economy has been extremely depressed for the past several
years. This has made it difficult for companies in most industries to
grow their way out of their problems. The other ways to improve
performance are to cut unnecessary costs, improve economies of scale
through mergers and acquisitions, close down unprofitable business
lines and increase productivity through investments in technology - in
other words, restructuring.
Q. WAS RESTRUCTURING A CATALYST FOR THE STRONG PERFORMANCE OF THE
FUND'S SMALL- AND MID-CAP TECHNOLOGY STOCKS?
A. It certainly was a key factor. Most Japanese companies are behind
their peers in the United States when it comes to availing themselves
of the technological advances of the past decade or so. Software and
hardware upgrades are particularly needed by banks, which are under
the gun to improve their balance sheets. With Japanese companies
playing catch-up, many small software vendors and developers reaped
the benefits.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. Hikari Tsushin helped the fund's performance. The stock is a play
on the exploding market for cellular communications in Japan. Earnings
were strong because the company opened a lot of new stores and sales
at existing stores were robust. Sony Music Entertainment, a publicly
traded subsidiary of Sony Corp., benefited from the parent company's
restructuring plans, which included a lucrative buyout offer for Sony
Music Entertainment.
Q. WHAT STOCKS DETRACTED FROM THE FUND'S PERFORMANCE?
A. Riso Kagaku was a laggard in the portfolio. The company makes
risographs, an industrial printer designed for large printing runs.
The stock suffered from earnings downgrades as business from Southeast
Asia and Latin America fell off. On the positive side, the company has
a great balance sheet and healthy cash flow, together with a
competitive new product line. Since the stock was modestly valued, I
decided to maintain the position.
Q. WHAT'S YOUR OUTLOOK, BRENDA?
A. With a surging stock market, concrete government initiatives
designed to help the most troubled parts of the economy and a flurry
of announced corporate restructurings, things are looking up for
Japan. However, the sustainability of the rally in Japanese stocks
will depend to a large extent on whether companies follow through on
the changes they have promised. Backed by the largest equity research
department in Tokyo, the fund is well positioned to make informed
decisions about which companies are taking the mandate for change
seriously.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: long-term growth of
capital by investing mainly
in equity securities of
Japanese issuers
START DATE: December 17,
1998
SIZE: as of April 30, 1999,
more than $9 million
MANAGER: Brenda Reed, since
inception; manager, Fidelity
Select Automotive Portfolio,
1994-1996; Fidelity Select
Air Transportation Portfolio,
1993-1994; joined
Fidelity in 1992
BRENDA REED ON THE
SHORT-TERM AND
LONG-TERM PROSPECTS FOR
THE JAPANESE ECONOMY:
"The Japanese economy has a lot
of room to improve even if there's
not much growth over the near
term. That's because there are still
a lot of inefficiencies built into the
system. For example, it was only
near the end of 1998 that the
government finally stepped up to
the plate and forced the banking
sector to seriously address the
problem of non-performing loans.
That process involved new laws
about classifying loans, as well as
the recapitalization of banks with
taxpayer money. The prospects for
some banks, therefore, are
brighter than they have been in
quite a while.
"There are also positive signs at
the macroeconomic level. Recent
polls have shown that Japanese
businesspeople are more optimistic
than they've been for a long time.
Real estate prices, which for a
while were a virtual black hole,
seem to be bottoming. Auto sales
appear to be firming, and demand
for personal computers is strong.
With Southeast Asia rebounding,
demand from that part of the world
for Japanese products and
services also can be expected to
improve.
"Over the short term, then, the lack
of growth in the Japanese economy
is not necessarily an obstacle to
improving earnings, and the
long-term prospects for economic
growth are looking brighter."
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
NTT Mobile Communication 4.7
Network, Inc.
Toyota Motor Corp. 2.9
Takeda Chemical Industries Ltd. 2.6
Bank of Tokyo-Mitsubishi Ltd. 2.5
Takefuji Corp. 2.4
Honda Motor Co. Ltd. 2.2
Shohkoh Fund & Co. Ltd. 2.1
Sanwa Bank Ltd. AG 2.0
Matsushita Electric 1.9
Industrial Co. Ltd.
Ito-Yokado Co. Ltd. 1.9
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
TECHNOLOGY 21.3
FINANCE 16.1
DURABLES 12.6
UTILITIES 7.6
HEALTH 7.0
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 89.2
Row: 1, Col: 2, Value: 10.8
Stocks 89.2%
Short-term investments 10.8%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.2%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 4.1%
CHEMICALS & PLASTICS - 2.4%
Asahi Chemical Industry Co. 6,000 $ 34,930
Ltd.
Nippon Zeon Co. Ltd. 6,000 39,806
Shin-Etsu Chemical Co. Ltd. 5,000 159,156
233,892
IRON & STEEL - 0.3%
Nippon Steel Corp. 15,000 33,674
METALS & MINING - 0.9%
Fujikura Ltd. 5,000 26,051
Furukawa Electric Co. Ltd. 14,000 61,216
87,267
PAPER & FOREST PRODUCTS - 0.5%
Oji Paper Co. Ltd. 8,000 47,914
TOTAL BASIC INDUSTRIES 402,747
CONSTRUCTION & REAL ESTATE -
1.0%
CONSTRUCTION - 0.2%
Sumitomo Forestry Co. Ltd. 2,000 14,910
ENGINEERING - 0.7%
Nippon Computer Systems Corp. 5,000 69,945
REAL ESTATE - 0.1%
Meiwa Estate Co. Ltd. 400 12,699
TOTAL CONSTRUCTION & REAL 97,554
ESTATE
DURABLES - 12.6%
AUTOS, TIRES, & ACCESSORIES -
7.0%
Bridgestone Corp. 3,000 80,415
Fuji Heavy Industries Ltd. 4,000 26,805
Hino Motors Ltd. 15,000 71,494
Honda Motor Co. Ltd. 5,000 220,938
NGK Spark Plug Co. Ltd. 1,000 10,513
Toyota Motor Corp. 10,000 286,250
696,415
CONSUMER DURABLES - 0.9%
Sankyo Co. Ltd. (Gunma) 2,700 93,634
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 4.4%
Citizen Watch Co. Ltd. 8,000 $ 66,343
Matsushita Electric 10,000 190,149
Industrial Co. Ltd.
Sharp Corp. 3,000 35,182
Sony Corp. 1,500 138,750
430,424
HOME FURNISHINGS - 0.3%
Otsuka Kagu Ltd. 200 25,130
TOTAL DURABLES 1,245,603
FINANCE - 16.1%
BANKS - 6.6%
Bank of Tokyo-Mitsubishi Ltd. 17,000 250,913
Fuji Bank Ltd. 10,000 78,070
Mitsubishi Trust & Banking 5,000 54,867
Corp.
Sanwa Bank Ltd. AG 18,000 202,044
Sumitomo Bank Ltd. Japan 5,000 67,683
653,577
CREDIT & OTHER FINANCE - 7.8%
Acom Co. Ltd. 1,800 134,947
Aeon Credit Service Ltd. 1,500 129,419
Aiful Corp. 760 62,198
Shohkoh Fund & Co. Ltd. 360 211,091
Takefuji Corp. 2,800 232,200
769,855
SECURITIES INDUSTRY - 1.7%
Daiwa Securities Co. Ltd. 9,000 55,034
Kokusai Securities Co. Ltd. 5,000 62,406
Nikko Securities Co. Ltd. 10,000 57,380
174,820
TOTAL FINANCE 1,598,252
HEALTH - 7.0%
DRUGS & PHARMACEUTICALS - 4.3%
Banyu Pharmaceutical Co. Ltd. 9,000 165,857
Takeda Chemical Industries 6,000 260,848
Ltd.
426,705
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES
- - 2.7%
Hoya Corp. 2,000 $ 104,708
Kawasumi Laboratories, Inc. 2,000 34,512
Terumo Corp. 6,000 130,675
269,895
TOTAL HEALTH 696,600
INDUSTRIAL MACHINERY &
EQUIPMENT - 6.3%
ELECTRICAL EQUIPMENT - 2.8%
Mitsubishi Electric Corp. 13,000 45,410
NGK Insulators Ltd. 7,000 85,316
Omron Corp. 11,000 151,575
282,301
INDUSTRIAL MACHINERY &
EQUIPMENT - 3.5%
Daifuku Co. Ltd. 4,000 26,973
Fuji Machine Manufacturing 4,000 142,737
Co. Ltd.
Max Co. Ltd. 3,000 33,976
THK Co. Ltd. 8,000 138,717
342,403
TOTAL INDUSTRIAL MACHINERY & 624,704
EQUIPMENT
MEDIA & LEISURE - 1.6%
ENTERTAINMENT - 1.1%
Avex, Inc. 100 9,214
Sony Music Entertainment Ltd. 1,300 94,739
103,953
LEISURE DURABLES & TOYS - 0.5%
Shimano, Inc. 2,000 50,930
TOTAL MEDIA & LEISURE 154,883
NONDURABLES - 4.5%
BEVERAGES - 2.4%
Fuji Coca-Cola Bottling Co. 2,000 27,643
Ltd.
Ito En Ltd. 1,100 75,926
Kinki Coca-Cola Bottling Co. 2,000 28,313
Ltd.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
BEVERAGES - CONTINUED
Kita Kyushu Coca-Cola 1,400 $ 68,253
Bottling Co. Ltd.
Mikuni Coca-Cola Bottling Co. 2,000 41,883
Ltd.
242,018
HOUSEHOLD PRODUCTS - 1.4%
Kao Corp. 4,000 101,525
Uni-Charm Corp. 700 31,722
133,247
TOBACCO - 0.7%
Japan Tobacco, Inc. 7 70,364
TOTAL NONDURABLES 445,629
RETAIL & WHOLESALE - 4.0%
APPAREL STORES - 0.7%
World Co. Ltd. 1,200 66,443
GENERAL MERCHANDISE STORES -
2.0%
Ito-Yokado Co. Ltd. 3,000 184,202
Seiyu Ltd. (a) 2,000 11,979
196,181
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.3%
Don Quijote Co. Ltd. 300 69,861
Paris Miki, Inc. 850 28,338
Senshukai Co. Ltd. 3,000 32,945
131,144
TOTAL RETAIL & WHOLESALE 393,768
SERVICES - 3.1%
PRINTING - 1.3%
Dai Nippon Printing Co. Ltd. 4,000 63,394
Riso Kagaku Corp. 600 28,648
Toppan Forms Co. Ltd. 2,000 38,030
130,072
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
SERVICES - 1.8%
Benesse Corp. 1,600 $ 133,490
Nippon System Development Co. 900 45,988
179,478
TOTAL SERVICES 309,550
TECHNOLOGY - 21.3%
COMMUNICATIONS EQUIPMENT - 2.1%
Matsushita Communication 1,000 71,788
Industrial Co. Ltd.
NEC Corp. 11,000 131,396
203,184
COMPUTER SERVICES & SOFTWARE
- - 3.2%
Fuji Soft ABC, Inc. 620 37,705
Hitachi Information Systems, 3,000 38,172
Ltd.
Konami Co. Ltd. 2,050 72,123
Oracle Corp. Japan 500 61,149
Square Co. Ltd. 1,200 43,223
Trend Micro, Inc. (a) 500 66,175
318,547
COMPUTERS & OFFICE EQUIPMENT
- - 4.0%
Canon, Inc. 2,000 48,919
Hitachi Ltd. 12,000 87,600
Nidec Corp. 600 77,903
Ricoh Co. Ltd. 6,000 57,799
Softbank Corp. 900 119,794
392,015
ELECTRONIC INSTRUMENTS - 1.3%
Anritsu Corp. 3,000 26,839
Dainippon Screen 7,000 34,009
Manufacturing Co. Ltd.
Tokyo Seimitsu Co. Ltd. 1,300 71,980
132,828
ELECTRONICS - 9.0%
Alps Electric Co. Ltd. 2,000 33,925
Futaba Corp. 800 33,775
Hirose Electric Co. Ltd. 1,800 167,365
Kyocera Corp. 1,000 59,390
Minebea Co. Ltd. 2,000 19,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Mitsumi Electric Co. Ltd. 3,000 $ 57,296
Nichicon Corp. 11,000 145,125
Nitto Denko Corp. 4,000 76,060
Rohm Co. Ltd. 1,000 120,623
TDK Corp. 2,000 151,282
Toko, Inc. 6,000 30,357
894,548
PHOTOGRAPHIC EQUIPMENT - 1.7%
Fuji Photo Film Co. Ltd. 3,700 139,781
Noritsu Koki Co. Ltd. 900 29,703
169,484
TOTAL TECHNOLOGY 2,110,606
UTILITIES - 7.6%
CELLULAR - 6.0%
Hikari Tsushin, Inc. 600 125,649
NTT Mobile Communication 8 469,083
Network, Inc. (a)
594,732
TELEPHONE SERVICES - 1.6%
DDI Corp. 14 69,543
Japan Telecom Co. Ltd. 1 14,156
Kokusai Denshin Denwa 1,200 72,776
156,475
TOTAL UTILITIES 751,207
TOTAL COMMON STOCKS 8,831,103
(Cost $7,983,040)
CASH EQUIVALENTS - 10.8%
MATURITY AMOUNT
Investments in repurchase $ 1,069,436 1,069,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
TOTAL INVESTMENT IN $ 9,900,103
SECURITIES - 100%
(Cost $9,052,040)
LEGEND
(a) Non-income producing
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
Japan 89.2%
United States of America 10.8
100.0%
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $9,052,040. Net unrealized appreciation
aggregated $848,063, of which $951,077 related to appreciated
investment securities and $103,014 related to depreciated investment
securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 9,900,103
value (including repurchase
agreements of $1,069,000)
(cost $9,052,040) - See
accompanying schedule
Cash 334
Receivable for investments 19,322
sold
Receivable for fund shares 407,054
sold
Dividends receivable 11,076
Prepaid expenses 55,163
Receivable from investment 14,869
adviser for expense
reductions
TOTAL ASSETS 10,407,921
LIABILITIES
Payable for investments $ 958,100
purchased
Distribution fees payable 3,684
Other payables and accrued 24,885
expenses
TOTAL LIABILITIES 986,669
NET ASSETS $ 9,421,252
Net Assets consist of:
Paid in capital $ 8,587,041
Accumulated net investment (14,121)
loss
Accumulated undistributed net 2,725
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 845,607
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 9,421,252
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $11.98
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($1,541,091 (divided by)
128,652 shares)
Maximum offering price per $12.71
share (100/94.25 of $11.98)
CLASS T: NET ASSET VALUE and $11.97
redemption price per share
($2,974,127 (divided by)
248,480 shares)
Maximum offering price per $12.40
share (100/96.50 of $11.97)
CLASS B: NET ASSET VALUE and $11.95
offering price per share
($2,214,347 (divided by)
185,255 shares) A
CLASS C: NET ASSET VALUE and $11.95
offering price per share
($1,637,871 (divided by)
137,056 shares) A
INSTITUTIONAL CLASS: NET $11.99
ASSET VALUE, offering price
and redemption price per
share ($1,053,816 (divided
by) 87,856 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 13,337
Dividends
Interest 6,902
20,239
Less foreign taxes withheld (2,001)
TOTAL INCOME 18,238
EXPENSES
Management fee $ 10,169
Transfer agent fees 4,187
Distribution fees 8,016
Accounting fees and expenses 22,047
Custodian fees and expenses 11,936
Registration fees 45,869
Audit 10,305
Miscellaneous 94
Total expenses before 112,623
reductions
Expense reductions (80,264) 32,359
NET INVESTMENT INCOME (LOSS) (14,121)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,919
Foreign currency transactions (1,194) 2,725
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 848,063
Assets and liabilities in (2,456) 845,607
foreign currencies
NET GAIN (LOSS) 848,332
NET INCREASE (DECREASE) IN $ 834,211
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (14,121)
income (loss)
Net realized gain (loss) 2,725
Change in net unrealized 845,607
appreciation (depreciation)
NET INCREASE (DECREASE) IN 834,211
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 8,587,041
increase (decrease)
TOTAL INCREASE (DECREASE) 9,421,252
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 9,421,252
accumulated net investment
loss of $14,121)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 2.01
gain (loss)
Total from investment 1.98
operations
Net asset value, end of period $ 11.98
TOTAL RETURN B, C 19.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,541
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment (.67)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS T
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 2.00
gain (loss)
Total from investment 1.97
operations
Net asset value, end of period $ 11.97
TOTAL RETURN B, C 19.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,974
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment (.73)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.06)
Net realized and unrealized 2.01
gain (loss)
Total from investment 1.95
operations
Net asset value, end of period $ 11.95
TOTAL RETURN B, C 19.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,214
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (1.52)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.06)
Net realized and unrealized 2.01
gain (loss)
Total from investment 1.95
operations
Net asset value, end of period $ 11.95
TOTAL RETURN B, C 19.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,638
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (1.51)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 2.02
gain (loss)
Total from investment 1.99
operations
Net asset value, end of period $ 11.99
TOTAL RETURN B, C 19.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,054
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment (.66)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Japan 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. Class B shares will automatically
convert to Class A after a holding period of seven years from the
initial date of purchase. 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 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 currencies, the difference
between the amount of net investment income accrued and
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
the U.S. dollar amount actually received, and gains and losses between
trade and settlement date 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 maybe 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
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the fund except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
may include temporary book and tax basis differences that will reverse
in a subsequent period. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $9,173,539 and $1,194,418, respectively.
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO FDC RETAINED BY FDC
CLASS A $ 641 $ 392
CLASS T 1,909 707
CLASS B 3,157 2,739
CLASS C 2,309 2,309
$ 8,016 $ 6,147
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 6,270 $ 4,402
CLASS T 6,471 3,244
CLASS B 249 249 *
CLASS C 0 0*
$ 12,990 $ 7,895
* 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 $ 747 .29 *
CLASS T 1,169 .30 *
CLASS B 1,012 .32 *
CLASS C 707 .31 *
INSTITUTIONAL CLASS 552 .28 *
$ 4,187
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 14,848
CLASS T 2.25% 22,210
CLASS B 2.75% 18,346
CLASS C 2.75% 13,339
INSTITUTIONAL CLASS 1.75% 11,517
$ 80,260
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 $4 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 25% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the period is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
DECEMBER 17, 1998 DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 TO APRIL 30, 1999
CLASS A Shares sold $ 1,704,017
156,757
Shares redeemed (28,105) (335,621)
Net increase (decrease) 128,652 $ 1,368,396
CLASS T Shares sold 251,160 $ 2,769,836
Shares redeemed (2,680) (29,726)
Net increase (decrease) 248,480 $ 2,740,110
CLASS B Shares sold 186,296 $ 2,035,545
Shares redeemed (1,041) (11,835)
Net increase (decrease) 185,255 $ 2,023,710
CLASS C Shares sold 139,828 $ 1,545,593
Shares redeemed (2,772) (30,412)
Net increase (decrease) 137,056 $ 1,515,181
INSTITUTIONAL CLASS Shares 87,856 $ 939,644
sold
</TABLE>
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
Pembroke, Bermuda
Fidelity International
Investment Advisors
(U.K.) Limited, London, England
Fidelity Investments Japan Ltd.
Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Brenda A. Reed, Vice President
Richard A. Spillane, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy, 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation Fund
Fidelity Advisor Balanced Fund
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)
FIDELITY ADVISOR
JAPAN
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 5 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 8 A summary of the fund's
investments.
INVESTMENTS 9 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 16 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 25 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 JAPAN 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV JAPAN - INST CL 19.90%
TOPIX 19.37%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on December 17, 1998. 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 Tokyo Stock Exchange Index - a
market capitalization-weighted index of over 1,100 stocks traded in
the Japanese market. This benchmark includes reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class shares'
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. In
addition, the growth of a hypothetical $10,000 investment in the fund
will appear in the fund's next report six months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Union's single currency
- - the euro. Many European markets
stalled in 1999, however, as the
outlook for economic growth and
corporate profits deteriorated. The
U.K. stock market was among the
strongest performers in Europe as
the economy improved amid a
favorable environment of declining
interest rates and encouraging
earnings growth. Elsewhere, positive
economic developments in the form
of lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(Photograph of Brenda Reed)
An interview with Brenda Reed, Portfolio Manager of Fidelity Advisor
Japan Fund
Q. HOW DID THE FUND PERFORM, BRENDA?
A. From the fund's inception on December 17, 1998, through April 30,
1999, the fund's Institutional Class shares had a total return of
19.90%. That slightly bettered the 19.37% return of the Tokyo Stock
Exchange Index (TOPIX) during the same period. Going forward, we will
look at the fund's performance in both six- and 12-month intervals.
Q. WHAT FACTORS INFLUENCED THE FUND'S STRONG PERFORMANCE?
A. For one thing, the fund owned a number of stocks that benefited
substantially from the restructuring occurring in many Japanese
industries. A second factor was the fund's overweighting and favorable
stock selection in the strong telecommunications sector. I'd also
mention the fund's relatively heavy emphasis on small- and
mid-capitalization stocks, which were even stronger than large-cap
shares. It's worth noting, too, that the fund's high absolute returns
were attributable in part to a stable yen. Currency fluctuation is one
factor that tends to make foreign investments riskier than those that
are U.S.-based. On the negative side, the fund's returns were limited
somewhat by the small pool of cash available to invest during its
start-up phase.
Q. WHY IS RESTRUCTURING SUCH AN IMPORTANT TREND IN JAPAN NOW?
A. After years of operating in a fairly protected environment,
Japanese managers are being told by their government that they must
compete effectively or go out of business. The biggest problems, of
course, have to do with the troubled financial sector, where most
banks are still in the process of recovering from a huge backlog of
bad real estate loans. These problems have been exacerbated because
the Japanese economy has been extremely depressed for the past several
years. This has made it difficult for companies in most industries to
grow their way out of their problems. The other ways to improve
performance are to cut unnecessary costs, improve economies of scale
through mergers and acquisitions, close down unprofitable business
lines and increase productivity through investments in technology - in
other words, restructuring.
Q. WAS RESTRUCTURING A CATALYST FOR THE STRONG PERFORMANCE OF THE
FUND'S SMALL- AND MID-CAP TECHNOLOGY STOCKS?
A. It certainly was a key factor. Most Japanese companies are behind
their peers in the United States when it comes to availing themselves
of the technological advances of the past decade or so. Software and
hardware upgrades are particularly needed by banks, which are under
the gun to improve their balance sheets. With Japanese companies
playing catch-up, many small software vendors and developers reaped
the benefits.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. Hikari Tsushin helped the fund's performance. The stock is a play
on the exploding market for cellular communications in Japan. Earnings
were strong because the company opened a lot of new stores and sales
at existing stores were robust. Sony Music Entertainment, a publicly
traded subsidiary of Sony Corp., benefited from the parent company's
restructuring plans, which included a lucrative buyout offer for Sony
Music Entertainment.
Q. WHAT STOCKS DETRACTED FROM THE FUND'S PERFORMANCE?
A. Riso Kagaku was a laggard in the portfolio. The company makes
risographs, an industrial printer designed for large printing runs.
The stock suffered from earnings downgrades as business from Southeast
Asia and Latin America fell off. On the positive side, the company has
a great balance sheet and healthy cash flow, together with a
competitive new product line. Since the stock was modestly valued, I
decided to maintain the position.
Q. WHAT'S YOUR OUTLOOK, BRENDA?
A. With a surging stock market, concrete government initiatives
designed to help the most troubled parts of the economy and a flurry
of announced corporate restructurings, things are looking up for
Japan. However, the sustainability of the rally in Japanese stocks
will depend to a large extent on whether companies follow through on
the changes they have promised. Backed by the largest equity research
department in Tokyo, the fund is well positioned to make informed
decisions about which companies are taking the mandate for change
seriously.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: long-term growth of
capital by investing mainly
in equity securities of
Japanese issuers
START DATE: December 17,
1998
SIZE: as of April 30, 1999,
more than $9 million
MANAGER: Brenda Reed, since
inception; manager, Fidelity
Select Automotive Portfolio,
1994-1996; Fidelity Select
Air Transportation Portfolio,
1993-1994; joined
Fidelity in 1992
BRENDA REED ON THE
SHORT-TERM AND
LONG-TERM PROSPECTS FOR
THE JAPANESE ECONOMY:
"The Japanese economy has a lot
of room to improve even if there's
not much growth over the near
term. That's because there are still
a lot of inefficiencies built into the
system. For example, it was only
near the end of 1998 that the
government finally stepped up to
the plate and forced the banking
sector to seriously address the
problem of non-performing loans.
That process involved new laws
about classifying loans, as well as
the recapitalization of banks with
taxpayer money. The prospects for
some banks, therefore, are
brighter than they have been in
quite a while.
"There are also positive signs at
the macroeconomic level. Recent
polls have shown that Japanese
businesspeople are more optimistic
than they've been for a long time.
Real estate prices, which for a
while were a virtual black hole,
seem to be bottoming. Auto sales
appear to be firming, and demand
for personal computers is strong.
With Southeast Asia rebounding,
demand from that part of the world
for Japanese products and
services also can be expected to
improve.
"Over the short term, then, the lack
of growth in the Japanese economy
is not necessarily an obstacle to
improving earnings, and the
long-term prospects for economic
growth are looking brighter."
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
NTT Mobile Communication 4.7
Network, Inc.
Toyota Motor Corp. 2.9
Takeda Chemical Industries Ltd. 2.6
Bank of Tokyo-Mitsubishi Ltd. 2.5
Takefuji Corp. 2.4
Honda Motor Co. Ltd. 2.2
Shohkoh Fund & Co. Ltd. 2.1
Sanwa Bank Ltd. AG 2.0
Matsushita Electric 1.9
Industrial Co. Ltd.
Ito-Yokado Co. Ltd. 1.9
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
TECHNOLOGY 21.3
FINANCE 16.1
DURABLES 12.6
UTILITIES 7.6
HEALTH 7.0
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 89.2
Row: 1, Col: 2, Value: 10.8
Stocks 89.2%
Short-term investments 10.8%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.2%
SHARES VALUE (NOTE 1)
BASIC INDUSTRIES - 4.1%
CHEMICALS & PLASTICS - 2.4%
Asahi Chemical Industry Co. 6,000 $ 34,930
Ltd.
Nippon Zeon Co. Ltd. 6,000 39,806
Shin-Etsu Chemical Co. Ltd. 5,000 159,156
233,892
IRON & STEEL - 0.3%
Nippon Steel Corp. 15,000 33,674
METALS & MINING - 0.9%
Fujikura Ltd. 5,000 26,051
Furukawa Electric Co. Ltd. 14,000 61,216
87,267
PAPER & FOREST PRODUCTS - 0.5%
Oji Paper Co. Ltd. 8,000 47,914
TOTAL BASIC INDUSTRIES 402,747
CONSTRUCTION & REAL ESTATE -
1.0%
CONSTRUCTION - 0.2%
Sumitomo Forestry Co. Ltd. 2,000 14,910
ENGINEERING - 0.7%
Nippon Computer Systems Corp. 5,000 69,945
REAL ESTATE - 0.1%
Meiwa Estate Co. Ltd. 400 12,699
TOTAL CONSTRUCTION & REAL 97,554
ESTATE
DURABLES - 12.6%
AUTOS, TIRES, & ACCESSORIES -
7.0%
Bridgestone Corp. 3,000 80,415
Fuji Heavy Industries Ltd. 4,000 26,805
Hino Motors Ltd. 15,000 71,494
Honda Motor Co. Ltd. 5,000 220,938
NGK Spark Plug Co. Ltd. 1,000 10,513
Toyota Motor Corp. 10,000 286,250
696,415
CONSUMER DURABLES - 0.9%
Sankyo Co. Ltd. (Gunma) 2,700 93,634
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 4.4%
Citizen Watch Co. Ltd. 8,000 $ 66,343
Matsushita Electric 10,000 190,149
Industrial Co. Ltd.
Sharp Corp. 3,000 35,182
Sony Corp. 1,500 138,750
430,424
HOME FURNISHINGS - 0.3%
Otsuka Kagu Ltd. 200 25,130
TOTAL DURABLES 1,245,603
FINANCE - 16.1%
BANKS - 6.6%
Bank of Tokyo-Mitsubishi Ltd. 17,000 250,913
Fuji Bank Ltd. 10,000 78,070
Mitsubishi Trust & Banking 5,000 54,867
Corp.
Sanwa Bank Ltd. AG 18,000 202,044
Sumitomo Bank Ltd. Japan 5,000 67,683
653,577
CREDIT & OTHER FINANCE - 7.8%
Acom Co. Ltd. 1,800 134,947
Aeon Credit Service Ltd. 1,500 129,419
Aiful Corp. 760 62,198
Shohkoh Fund & Co. Ltd. 360 211,091
Takefuji Corp. 2,800 232,200
769,855
SECURITIES INDUSTRY - 1.7%
Daiwa Securities Co. Ltd. 9,000 55,034
Kokusai Securities Co. Ltd. 5,000 62,406
Nikko Securities Co. Ltd. 10,000 57,380
174,820
TOTAL FINANCE 1,598,252
HEALTH - 7.0%
DRUGS & PHARMACEUTICALS - 4.3%
Banyu Pharmaceutical Co. Ltd. 9,000 165,857
Takeda Chemical Industries 6,000 260,848
Ltd.
426,705
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES
- - 2.7%
Hoya Corp. 2,000 $ 104,708
Kawasumi Laboratories, Inc. 2,000 34,512
Terumo Corp. 6,000 130,675
269,895
TOTAL HEALTH 696,600
INDUSTRIAL MACHINERY &
EQUIPMENT - 6.3%
ELECTRICAL EQUIPMENT - 2.8%
Mitsubishi Electric Corp. 13,000 45,410
NGK Insulators Ltd. 7,000 85,316
Omron Corp. 11,000 151,575
282,301
INDUSTRIAL MACHINERY &
EQUIPMENT - 3.5%
Daifuku Co. Ltd. 4,000 26,973
Fuji Machine Manufacturing 4,000 142,737
Co. Ltd.
Max Co. Ltd. 3,000 33,976
THK Co. Ltd. 8,000 138,717
342,403
TOTAL INDUSTRIAL MACHINERY & 624,704
EQUIPMENT
MEDIA & LEISURE - 1.6%
ENTERTAINMENT - 1.1%
Avex, Inc. 100 9,214
Sony Music Entertainment Ltd. 1,300 94,739
103,953
LEISURE DURABLES & TOYS - 0.5%
Shimano, Inc. 2,000 50,930
TOTAL MEDIA & LEISURE 154,883
NONDURABLES - 4.5%
BEVERAGES - 2.4%
Fuji Coca-Cola Bottling Co. 2,000 27,643
Ltd.
Ito En Ltd. 1,100 75,926
Kinki Coca-Cola Bottling Co. 2,000 28,313
Ltd.
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
BEVERAGES - CONTINUED
Kita Kyushu Coca-Cola 1,400 $ 68,253
Bottling Co. Ltd.
Mikuni Coca-Cola Bottling Co. 2,000 41,883
Ltd.
242,018
HOUSEHOLD PRODUCTS - 1.4%
Kao Corp. 4,000 101,525
Uni-Charm Corp. 700 31,722
133,247
TOBACCO - 0.7%
Japan Tobacco, Inc. 7 70,364
TOTAL NONDURABLES 445,629
RETAIL & WHOLESALE - 4.0%
APPAREL STORES - 0.7%
World Co. Ltd. 1,200 66,443
GENERAL MERCHANDISE STORES -
2.0%
Ito-Yokado Co. Ltd. 3,000 184,202
Seiyu Ltd. (a) 2,000 11,979
196,181
RETAIL & WHOLESALE,
MISCELLANEOUS - 1.3%
Don Quijote Co. Ltd. 300 69,861
Paris Miki, Inc. 850 28,338
Senshukai Co. Ltd. 3,000 32,945
131,144
TOTAL RETAIL & WHOLESALE 393,768
SERVICES - 3.1%
PRINTING - 1.3%
Dai Nippon Printing Co. Ltd. 4,000 63,394
Riso Kagaku Corp. 600 28,648
Toppan Forms Co. Ltd. 2,000 38,030
130,072
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
SERVICES - CONTINUED
SERVICES - 1.8%
Benesse Corp. 1,600 $ 133,490
Nippon System Development Co. 900 45,988
179,478
TOTAL SERVICES 309,550
TECHNOLOGY - 21.3%
COMMUNICATIONS EQUIPMENT - 2.1%
Matsushita Communication 1,000 71,788
Industrial Co. Ltd.
NEC Corp. 11,000 131,396
203,184
COMPUTER SERVICES & SOFTWARE
- - 3.2%
Fuji Soft ABC, Inc. 620 37,705
Hitachi Information Systems, 3,000 38,172
Ltd.
Konami Co. Ltd. 2,050 72,123
Oracle Corp. Japan 500 61,149
Square Co. Ltd. 1,200 43,223
Trend Micro, Inc. (a) 500 66,175
318,547
COMPUTERS & OFFICE EQUIPMENT
- - 4.0%
Canon, Inc. 2,000 48,919
Hitachi Ltd. 12,000 87,600
Nidec Corp. 600 77,903
Ricoh Co. Ltd. 6,000 57,799
Softbank Corp. 900 119,794
392,015
ELECTRONIC INSTRUMENTS - 1.3%
Anritsu Corp. 3,000 26,839
Dainippon Screen 7,000 34,009
Manufacturing Co. Ltd.
Tokyo Seimitsu Co. Ltd. 1,300 71,980
132,828
ELECTRONICS - 9.0%
Alps Electric Co. Ltd. 2,000 33,925
Futaba Corp. 800 33,775
Hirose Electric Co. Ltd. 1,800 167,365
Kyocera Corp. 1,000 59,390
Minebea Co. Ltd. 2,000 19,350
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Mitsumi Electric Co. Ltd. 3,000 $ 57,296
Nichicon Corp. 11,000 145,125
Nitto Denko Corp. 4,000 76,060
Rohm Co. Ltd. 1,000 120,623
TDK Corp. 2,000 151,282
Toko, Inc. 6,000 30,357
894,548
PHOTOGRAPHIC EQUIPMENT - 1.7%
Fuji Photo Film Co. Ltd. 3,700 139,781
Noritsu Koki Co. Ltd. 900 29,703
169,484
TOTAL TECHNOLOGY 2,110,606
UTILITIES - 7.6%
CELLULAR - 6.0%
Hikari Tsushin, Inc. 600 125,649
NTT Mobile Communication 8 469,083
Network, Inc. (a)
594,732
TELEPHONE SERVICES - 1.6%
DDI Corp. 14 69,543
Japan Telecom Co. Ltd. 1 14,156
Kokusai Denshin Denwa 1,200 72,776
156,475
TOTAL UTILITIES 751,207
TOTAL COMMON STOCKS 8,831,103
(Cost $7,983,040)
CASH EQUIVALENTS - 10.8%
MATURITY AMOUNT
Investments in repurchase $ 1,069,436 1,069,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
TOTAL INVESTMENT IN $ 9,900,103
SECURITIES - 100%
(Cost $9,052,040)
LEGEND
(a) Non-income producing
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
Japan 89.2%
United States of America 10.8
100.0%
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $9,052,040. Net unrealized appreciation
aggregated $848,063, of which $951,077 related to appreciated
investment securities and $103,014 related to depreciated investment
securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 9,900,103
value (including repurchase
agreements of $1,069,000)
(cost $9,052,040) - See
accompanying schedule
Cash 334
Receivable for investments 19,322
sold
Receivable for fund shares 407,054
sold
Dividends receivable 11,076
Prepaid expenses 55,163
Receivable from investment 14,869
adviser for expense
reductions
TOTAL ASSETS 10,407,921
LIABILITIES
Payable for investments $ 958,100
purchased
Distribution fees payable 3,684
Other payables and accrued 24,885
expenses
TOTAL LIABILITIES 986,669
NET ASSETS $ 9,421,252
Net Assets consist of:
Paid in capital $ 8,587,041
Accumulated net investment (14,121)
loss
Accumulated undistributed net 2,725
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 845,607
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 9,421,252
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $11.98
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($1,541,091 (divided by)
128,652 shares)
Maximum offering price per $12.71
share (100/94.25 of $11.98)
CLASS T: NET ASSET VALUE and $11.97
redemption price per share
($2,974,127 (divided by)
248,480 shares)
Maximum offering price per $12.40
share (100/96.50 of $11.97)
CLASS B: NET ASSET VALUE and $11.95
offering price per share
($2,214,347 (divided by)
185,255 shares) A
CLASS C: NET ASSET VALUE and $11.95
offering price per share
($1,637,871 (divided by)
137,056 shares) A
INSTITUTIONAL CLASS: NET $11.99
ASSET VALUE, offering price
and redemption price per
share ($1,053,816 (divided
by) 87,856 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 13,337
Dividends
Interest 6,902
20,239
Less foreign taxes withheld (2,001)
TOTAL INCOME 18,238
EXPENSES
Management fee $ 10,169
Transfer agent fees 4,187
Distribution fees 8,016
Accounting fees and expenses 22,047
Custodian fees and expenses 11,936
Registration fees 45,869
Audit 10,305
Miscellaneous 94
Total expenses before 112,623
reductions
Expense reductions (80,264) 32,359
NET INVESTMENT INCOME (LOSS) (14,121)
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 3,919
Foreign currency transactions (1,194) 2,725
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 848,063
Assets and liabilities in (2,456) 845,607
foreign currencies
NET GAIN (LOSS) 848,332
NET INCREASE (DECREASE) IN $ 834,211
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ (14,121)
income (loss)
Net realized gain (loss) 2,725
Change in net unrealized 845,607
appreciation (depreciation)
NET INCREASE (DECREASE) IN 834,211
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 8,587,041
increase (decrease)
TOTAL INCREASE (DECREASE) 9,421,252
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 9,421,252
accumulated net investment
loss of $14,121)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 2.01
gain (loss)
Total from investment 1.98
operations
Net asset value, end of period $ 11.98
TOTAL RETURN B, C 19.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,541
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment (.67)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS T
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 2.00
gain (loss)
Total from investment 1.97
operations
Net asset value, end of period $ 11.97
TOTAL RETURN B, C 19.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,974
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment (.73)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.06)
Net realized and unrealized 2.01
gain (loss)
Total from investment 1.95
operations
Net asset value, end of period $ 11.95
TOTAL RETURN B, C 19.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,214
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (1.52)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.06)
Net realized and unrealized 2.01
gain (loss)
Total from investment 1.95
operations
Net asset value, end of period $ 11.95
TOTAL RETURN B, C 19.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,638
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment (1.51)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E
(UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income (loss) D (.03)
Net realized and unrealized 2.02
gain (loss)
Total from investment 1.99
operations
Net asset value, end of period $ 11.99
TOTAL RETURN B, C 19.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,054
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment (.66)% A
income (loss) to average net
assets
Portfolio turnover 79% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN 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 DECEMBER 17, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Japan 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. Class B shares will automatically
convert to Class A after a holding period of seven years from the
initial date of purchase. 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 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 currencies, the difference
between the amount of net investment income accrued and
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
FOREIGN CURRENCY TRANSLATION - CONTINUED
the U.S. dollar amount actually received, and gains and losses between
trade and settlement date 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 maybe 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
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the fund except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
may include temporary book and tax basis differences that will reverse
in a subsequent period. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $9,173,539 and $1,194,418, respectively.
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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.
For the period, each class paid FDC the following amounts, a portion
of which was retained by FDC:
PAID TO FDC RETAINED BY FDC
CLASS A $ 641 $ 392
CLASS T 1,909 707
CLASS B 3,157 2,739
CLASS C 2,309 2,309
$ 8,016 $ 6,147
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 FDC RETAINED BY FDC
CLASS A $ 6,270 $ 4,402
CLASS T 6,471 3,244
CLASS B 249 249 *
CLASS C 0 0*
$ 12,990 $ 7,895
* 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 $ 747 .29 *
CLASS T 1,169 .30 *
CLASS B 1,012 .32 *
CLASS C 707 .31 *
INSTITUTIONAL CLASS 552 .28 *
$ 4,187
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 14,848
CLASS T 2.25% 22,210
CLASS B 2.75% 18,346
CLASS C 2.75% 13,339
INSTITUTIONAL CLASS 1.75% 11,517
$ 80,260
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 $4 under the custodian
arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 25% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the period is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
DECEMBER 17, 1998 DECEMBER 17, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 TO APRIL 30, 1999
CLASS A Shares sold $ 1,704,017
156,757
Shares redeemed (28,105) (335,621)
Net increase (decrease) 128,652 $ 1,368,396
CLASS T Shares sold 251,160 $ 2,769,836
Shares redeemed (2,680) (29,726)
Net increase (decrease) 248,480 $ 2,740,110
CLASS B Shares sold 186,296 $ 2,035,545
Shares redeemed (1,041) (11,835)
Net increase (decrease) 185,255 $ 2,023,710
CLASS C Shares sold 139,828 $ 1,545,593
Shares redeemed (2,772) (30,412)
Net increase (decrease) 137,056 $ 1,515,181
INSTITUTIONAL CLASS Shares 87,856 $ 939,644
sold
</TABLE>
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
Pembroke, Bermuda
Fidelity International
Investment Advisors
(U.K.) Limited, London, England
Fidelity Investments Japan Ltd.
Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Brenda A. Reed, Vice President
Richard A. Spillane, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy, 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Alloaction Fund
Fidelity Advisor Balanced Fund
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)
FIDELITY ADVISOR
LATIN AMERICA
FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 8 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 11 A summary of the fund's
investments.
INVESTMENTS 12 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 15 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 24 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 LATIN AMERICA 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV LATIN AMERICA - 25.20%
CL A
FIDELITY ADV LATIN AMERICA - 18.00%
CL A (INCL. 5.75% SALES
CHARGE)
MSCI EMF - Latin America 27.70%
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, since the fund started on
December 21, 1998. 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 Emerging Markets Free -
Latin America Index - a market capitalization-weighted index of
approximately 190 stocks traded in seven Latin American markets. This
benchmark includes reinvested dividends and capital gains, if any, and
excludes the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR LATIN AMERICA 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV LATIN AMERICA - 25.00%
CL T
FIDELITY ADV LATIN AMERICA - 20.62%
CL T (INCL. 3.50% SALES
CHARGE)
MSCI EMF - Latin America 27.70%
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, since the fund started on
December 21, 1998. 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 Emerging Markets Free -
Latin America Index - a market capitalization-weighted index of
approximately 190 stocks traded in seven Latin American markets. This
benchmark includes reinvested dividends and capital gains, if any, and
excludes the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR LATIN AMERICA 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 shares' contingent deferred sales charge included in
the life of fund total return is 5%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV LATIN AMERICA - 24.90%
CL B
FIDELITY ADV LATIN AMERICA - 19.90%
CL B (INCL. CONTINGENT
DEFERRED SALES CHARGE)
MSCI EMF - Latin America 27.70%
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, since the fund started on
December 21, 1998. 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 Emerging Markets Free -
Latin America Index - a market capitalization-weighted index of
approximately 190 stocks traded in seven Latin American markets. This
benchmark includes reinvested dividends and capital gains, if any, and
excludes the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FIDELITY ADVISOR LATIN AMERICA 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 shares' contingent deferred sales charge included in
the life of fund total return is 1%. If Fidelity had not reimbursed
certain class expenses, the total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIOD ENDED APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV LATIN AMERICA - 24.90%
CL C
FIDELITY ADV LATIN AMERICA - 23.90%
CL C (INCL. CONTINGENT
DEFERRED SALES CHARGE)
MSCI EMF - Latin America 27.70%
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, since the fund started on
December 21, 1998. 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 Emerging Markets Free -
Latin America Index - a market capitalization-weighted index of
approximately 190 stocks traded in seven Latin American markets. This
benchmark includes reinvested dividends and capital gains, if any, and
exludes the effect of sales charges.
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. In addition, the growth of a hypothetical $10,000
investment in the fund will appear in the fund's next report six
months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Union's single currency
- - the euro. Many European markets
stalled in 1999, however, as the
outlook for economic growth and
corporate profits deteriorated. The
U.K. stock market was among the
strongest performers in Europe as
the economy improved amid a
favorable environment of declining
interest rates and encouraging
earnings growth. Elsewhere, positive
economic developments in the form
of lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(Photograph of Patti Satterthwaite)
An interview with Patti Satterthwaite, Portfolio Manager of Fidelity
Advisor Latin America Fund
Q. HOW DID THE FUND PERFORM, PATTI?
A. The Latin American markets enjoyed an impressive comeback recently
and the fund's performance reflects that. For the period from the
fund's inception on December 21, 1998 through April 30, 1999, the
fund's Class A, Class T, Class B and Class C shares provided total
returns of 25.20%, 25.00%, 24.90% and 24.90%, respectively. To gauge
how the fund did relative to the Latin American markets, the Morgan
Stanley Capital International Emerging Markets Free-Latin America
Index returned 27.70% from December 21, 1998 through April 30, 1999.
Q. WHAT PRECIPITATED THE MARKET'S TURNAROUND?
A. The Latin American market rally - which really only began in
February 1999 - was fueled by optimism that the worst of the region's
financial crisis was behind it. Brazil's willingness to raise interest
rates calmed investors who worried that inflation would spiral out of
control. In fact, Brazil's inflation rate came in at a much
lower-than-expected rate. Mexico also surprised observers who feared
that it, too, would face runaway inflation or would be crippled by a
weakened currency. Positive developments on the economic front also
helped restore much needed confidence to the region. Finally,
commodity prices, which are the lifeblood of many Latin American
economies, started to show signs of bottoming.
Q. WHICH OF THE FUND'S HOLDINGS PERFORMED BEST AGAINST THIS FAVORABLE
BACKDROP?
A. First, let me point out that the fund's large stake in Mexican
stocks - relative to its benchmark index - helped its performance
since Mexico was the region's best and most consistent performer.
Among the fund's Mexican holdings, Telefonos de Mexico ("Telmex") was
one of the best performers and its largest holding at 10.5% of
investments at the end of the period. Telmex - formerly a
government-owned phone company - was privatized in 1990 and remains
Mexico's largest phone company, cellular provider and Internet
service. The company continued to prove its dominance against new and
old competitors in a deregulated environment.
Q. WHAT OTHER GROUPS OF MEXICAN STOCKS PERFORMED WELL?
A. Mexican banking stocks also posted strong gains during the period.
Grupo Financiero Bancomer, for example, rallied in response to better
economic conditions and below-forecast inflation and interest rates.
In addition, I think investors recognized that Mexican banks were
cheap and attractive alternatives to banks in other markets around the
world. Grupo Televisa - one of Latin America's leading
Spanish-language media companies - was another Mexican winner, thanks
to the company's restructuring and cost-cutting efforts. Outside
Mexico, we saw good performance on the last day of the period from
Argentinian oil company YPF when it was announced that the company
would be taken over by Spanish oil company Repsol.
Q. WHICH OF THE FUND'S BRAZILIAN HOLDINGS PERFORMED WELL?
A. Companies that benefited from Brazil's devaluation of its currency
- - primarily those that export goods - performed the best. Paper and
pulp companies Aracruz Celulose and Votorantim Celulose e Papel rose
handsomely, thanks to their ability to sell very low-cost product in
foreign markets.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. My decision to own more of cement company Apasco in Mexico - which
posted good gains - rather than the better-performing Cemex, was
somewhat of a disappointment.
Q. WHAT'S YOUR OUTLOOK FOR THE LATIN AMERICAN MARKETS, PATTI?
A. There are a couple of things that could derail the Latin American
rally, including higher inflation in Brazil or problems in other
emerging markets in Southeast Asia or Europe. But from a valuation
standpoint, I think things look fairly favorable. In spite of their
recent run-up, Latin American stocks are priced attractively compared
to stocks in much of the rest of the world. Furthermore, the proposed
acquisition of Argentina's YPF may signal the start of a trend toward
mergers and acquisitions, which are largely viewed as favorable for
stock prices.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: high total investment
return by investing mainly in
equity securities of Latin
American issuers
START DATE: December 21,
1998
SIZE: as of April 30, 1999,
more than $3 million
MANAGER: Patti Satterthwaite,
since inception; joined
Fidelity in 1986
PATTI SATTERTHWAITE ON HER
INVESTMENT APPROACH:
"In choosing investments for the
fund, I take a bottom-up approach.
By that I mean that, with the help
of Fidelity's research team, I use
in-depth fundamental research to
judge each stock on its individual
merits. Those merits include a
variety of balance sheet, valuation
and earnings factors. The fund's
ultimate weightings by countries
and sectors are primarily a function
of the stock selection process. In
addition, factors affecting
business conditions in any given
country and the region as a whole
are also considered. Other
indicators we factor in include
government policies, the expected
level of inflation, the outlook for
various currencies and expected
economic growth."
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
Telefonos de Mexico SA 10.5
sponsored ADR representing
Class L shares (Mexico,
Telephone Services)
Grupo Modelo SA de CV Class C 5.4
(Mexico, Beverages)
YPF Sociedad Anonima 5.3
sponsored ADR representing
Class D shares (Argentina,
Oil & Gas)
Grupo Televisa SA de CV 5.1
sponsored ADR (Mexico,
Broadcasting)
Cifra SA de CV Series C 4.8
(Mexico, General Merchandise
Stores)
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
UTILITIES 31.7
NONDURABLES 20.8
ENERGY 9.0
FINANCE 9.0
BASIC INDUSTRIES 5.7
TOP FIVE COUNTRIES AS OF
APRIL 30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS
Mexico 44.5
Brazil 26.3
Argentina 12.9
Chile 2.6
Peru 1.9
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 90.7
Row: 1, Col: 2, Value: 9.300000000000001
Stocks 90.7%
Short-term investments 9.3%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.7%
SHARES VALUE (NOTE 1)
ARGENTINA - 12.9%
Banco de Galicia y Buenos 300 $ 6,919
Aires SA ADR Class B
Bansud SA Class B (a) 7,900 24,184
Cresud S.A.C.I.F.y A. 847 9,635
sponsored ADR
Inversiones y Representacions 305 10,218
SA sponsored GDR
Perez Companc SA Class B 16,100 99,861
Telefonica de Argentina SA 2,400 89,700
sponsored ADR
YPF Sociedad Anonima 4,000 168,000
sponsored ADR representing
Class D shares
408,517
BRAZIL - 26.3%
Aracruz Celulose SA ADR 1,500 30,000
Banco Bradesco SA (Reg. Pfd.) 510,000 2,695
Centrais Electricas 4,000,000 84,059
Brasileiras SA
Companhia Brasileira de 2,500,000 17,397
Petroleo Ipiranga SA Class B
Companhia Cervejaria Brahma 8,500 82,875
sponsored ADR
Companhia de Electricidade do 15,000,000 4,053
Estado do Rio de Janeiro
(CERJ)
Companhia de Tecidos Norte de 80,000 5,524
Minas
Companhia Vale do Rio Doce (a) 2,000 38,307
Compania Cimento Portland Itau 50,000 5,403
Compania Energertica Minas 1,600,000 38,427
Gerais
Dixie Toga SA 20,000 6,004
Embratel Participacoes SA ADR 5,600 91,000
Itausa Investimentos Itau SA 15,000 8,106
Perdigao SA (a) 10,000,000 12,369
Souza Cruz Industria Comerico 4,200 27,866
Tele Centro Sul Participacoes 1,700 90,313
SA sponsored ADR (a)
Tele Nordeste Celular 200 4,400
Participacoes SA ADR (a)
Tele Norte Leste 5,200 88,075
Participacoes SA ADR (a)
Tele Sudeste Celular 900 25,706
Participacoes SA ADR
Telesp Participacoes SA ADR 5,800 145,000
(a)
Votorantim Celulose e Papel 1,000,000 25,272
SA (Pfd. Reg.)
832,851
CHILE - 2.6%
Chilectra SA sponsored ADR 300 6,600
Cristalerias de Chile SA 900 14,400
sponsored ADR
Embotelladora Andina 1,550 27,997
sponsored ADR Class A
Enersis SA sponsored ADR 309 5,871
Santa Isabel SA sponsored ADR 800 8,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CHILE - CONTINUED
Supermercados Unimarc SA 600 $ 2,250
sponsored ADR
Vina Concha Stet y Toro SA 500 16,219
sponsored ADR
81,337
COLOMBIA - 0.2%
Banco Ganadero SA sponsored 600 5,700
ADR Class C
LUXEMBOURG - 0.9%
Quilmes Industrial SA 2,700 29,531
sponsored ADR
MEXICO - 44.5%
Apasco SA de CV 5,000 29,285
Banacci SA de CV Class O (a) 43,000 108,829
Cemex SA Series B 1,000 4,621
Cifra SA de CV Series C (a) 82,000 152,456
Coca Cola Femsa SA de CV ADR 2,200 45,513
Empresas ICA Sociedad 1,600 10,500
Controladora SA de CV
sponsored ADR
Fomento Economico Mexicano SA 1,500 54,563
de CV sponsored ADR
Gruma SA de CV Class B 2,700 20,925
sponsored ADR (a)
Grupo Carso SA de CV Class A-1 19,000 91,580
Grupo Financiero Bancomer SA 385,000 132,402
de CV Series A
Grupo Indus Bimbo SA de CV 10,500 22,185
Series A
Grupo Modelo SA de CV Class C 66,000 172,004
Grupo Televisa SA de CV 3,950 161,950
sponsored ADR (a)
Kimberly-Clark de Mexico SA 17,000 65,588
de CV Class A
Telefonos de Mexico SA 4,400 333,296
sponsored ADR representing
Class L shares
1,405,697
PANAMA - 1.4%
Panamerican Beverages, Inc. 2,000 44,375
Class A
PERU - 1.9%
Compania de Minas 3,800 61,275
Buenaventura SA sponsored
ADR Class B
TOTAL COMMON STOCKS 2,869,283
(Cost $2,293,723)
CASH EQUIVALENTS - 9.3%
MATURITY AMOUNT VALUE (NOTE 1)
Investments in repurchase $ 294,120 $ 294,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
TOTAL INVESTMENT IN $ 3,163,283
SECURITIES - 100%
(Cost $2,587,723)
LEGEND
(a) Non-income producing
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $2,587,723. Net unrealized appreciation
aggregated $575,560, of which $604,304 related to appreciated
investment securities and $28,744 related to depreciated investment
securities.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 5.7%
CASH EQUIVALENTS 9.3
CONSTRUCTION & REAL ESTATE 1.9
DURABLES 0.2
ENERGY 9.0
FINANCE 9.0
HOLDING COMPANIES 0.3
MEDIA & LEISURE 5.1
NONDURABLES 20.8
PRECIOUS METALS 1.9
RETAIL & WHOLESALE 4.9
SERVICES 0.2
UTILITIES 31.7
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 3,163,283
value (including repurchase
agreements of $294,000)
(cost $2,587,723) - See
accompanying schedule
Cash 536
Receivable for fund shares 27,096
sold
Dividends receivable 18,531
Prepaid expenses 56,425
Receivable from investment 14,636
adviser for expense
reductions
TOTAL ASSETS 3,280,507
LIABILITIES
Payable for investments $ 66,185
purchased
Distribution fees payable 1,297
Other payables and accrued 19,261
expenses
TOTAL LIABILITIES 86,743
NET ASSETS $ 3,193,764
Net Assets consist of:
Paid in capital $ 2,629,126
Undistributed net investment 15,693
income
Accumulated undistributed net (25,565)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 574,510
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 3,193,764
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $12.52
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share ($579,542
(divided by) 46,306 shares)
Maximum offering price per $13.28
share (100/94.25 of $12.52)
CLASS T: NET ASSET VALUE and $12.50
redemption price per share
($710,596 (divided by)
56,843 shares)
Maximum offering price per $12.95
share (100/96.50 of $12.50)
CLASS B: NET ASSET VALUE and $12.49
offering price per share
($797,173 (divided by)
63,835 shares) A
CLASS C: NET ASSET VALUE and $12.49
offering price per share
($599,065 (divided by)
47,964 shares) A
INSTITUTIONAL CLASS: NET $12.53
ASSET VALUE, offering price
and redemption price per
share ($507,388 (divided by)
40,499 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 21, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 32,228
Dividends
Interest 4,090
36,318
Less foreign taxes withheld (2,778)
TOTAL INCOME 33,540
EXPENSES
Management fee $ 5,715
Transfer agent fees 2,463
Distribution fees 4,378
Accounting fees and expenses 21,593
Custodian fees and expenses 7,731
Registration fees 45,151
Audit 10,830
Miscellaneous 56
Total expenses before 97,917
reductions
Expense reductions (80,070) 17,847
NET INVESTMENT INCOME 15,693
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (20,252)
Foreign currency transactions (5,313) (25,565)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 575,560
Assets and liabilities in (1,050) 574,510
foreign currencies
NET GAIN (LOSS) 548,945
NET INCREASE (DECREASE) IN $ 564,638
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 21, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 15,693
income
Net realized gain (loss) (25,565)
Change in net unrealized 574,510
appreciation (depreciation)
NET INCREASE (DECREASE) IN 564,638
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 2,629,126
increase (decrease)
TOTAL INCREASE (DECREASE) 3,193,764
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 3,193,764
undistributed net investment
income of $15,693)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .09
Net realized and unrealized 2.43
gain (loss)
Total from investment 2.52
operations
Net asset value, end of period $ 12.52
TOTAL RETURN B, C 25.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 580
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment 2.41% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS T
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .07
Net realized and unrealized 2.43
gain (loss)
Total from investment 2.50
operations
Net asset value, end of period $ 12.50
TOTAL RETURN B, C 25.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 711
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment 1.99% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .06
Net realized and unrealized 2.43
gain (loss)
Total from investment 2.49
operations
Net asset value, end of period $ 12.49
TOTAL RETURN B, C 24.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 797
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment 1.59% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES NOT INCLUDE THE CONTINGENT DEFERRED 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .06
Net realized and unrealized 2.43
gain (loss)
Total from investment 2.49
operations
Net asset value, end of period $ 12.49
TOTAL RETURN B, C 24.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 599
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment 1.60% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES NOT INCLUDE THE CONTINGENT DEFERRED 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .09
Net realized and unrealized 2.44
gain (loss)
Total from investment 2.53
operations
Net asset value, end of period $ 12.53
TOTAL RETURN B, C 25.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 507
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment 2.66% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Latin America 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. Class B shares will automatically
convert to Class A after a holding period of seven years from the
initial date of purchase. 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 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.
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
and settlement date 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 maybe 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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the fund except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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 that will reverse
in a subsequent period. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,776,388 and $462,397, respectively.
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., and Fidelity International
Investment Advisors (FIIA). In addition, FIIA entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (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 FDC RETAINED BY FDC
CLASS A $ 369 $ 359
CLASS T 861 717
CLASS B 1,635 1,584
CLASS C 1,513 1,513
$ 4,378 $ 4,173
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 FDC RETAINED BY FDC
CLASS A $ 267 $ 167
CLASS T 173 147
CLASS B - -*
CLASS C 500 500 *
$ 940 $ 814
* 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 $ 430 .29 *
CLASS T 578 .34 *
CLASS B 562 .35 *
CLASS C 510 .34 *
INSTITUTIONAL CLASS 383 .27 *
$ 2,463
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 15,126
CLASS T 2.25% 17,705
CLASS B 2.75% 16,874
CLASS C 2.75% 15,610
INSTITUTIONAL CLASS 1.75% 14,755
$ 80,070
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 80% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the period is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
DECEMBER 21, 1998 DECEMBER 21, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, TO APRIL 30,
1999 1999
CLASS A Shares sold 46,306 $ 472,415
CLASS T Shares sold 78,679 $ 788,582
Shares redeemed (21,836) (200,436)
Net increase (decrease) 56,843 $ 588,146
CLASS B Shares sold 63,835 $ 675,123
CLASS C Shares sold 52,964 $ 541,558
Shares redeemed (5,000) (54,150)
Net increase (decrease) 47,964 $ 487,408
INSTITUTIONAL CLASS Shares 40,499 $ 406,034
sold
</TABLE>
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,
Pembroke, Bermuda
Fidelity International
Investment Advisors
(U.K.) Limited, London, England
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard A. Spillane, Jr., Vice President
Patricia Satterthwaite, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy, 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation Fund
Fidelity Advisor Balanced Fund
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)
FIDELITY ADVISOR
LATIN AMERICA
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
APRIL 30, 1999
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 5 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT SUMMARY 8 A summary of the fund's
investments.
INVESTMENTS 9 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 12 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 21 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
(recycle logo)This report is printed on recycled paper using soy-based
inks.
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
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 an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
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 LATIN AMERICA 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 APRIL 30, 1999 LIFE OF FUND
FIDELITY ADV LATIN AMERICA - 25.30%
INSTITUTIONAL CL
MSCI EMF - Latin America 27.70%
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, since the fund
started on December 21, 1998. 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
Emerging Markets Free - Latin America Index - a market
capitalization-weighted index of approximately 190 stocks traded in
seven Latin American markets. This benchmark includes reinvested
dividends and capital gains, if any, and excludes the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class shares'
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. In
addition, the growth of a hypothetical $10,000 investment in the fund
will appear in the fund's next report six months from now.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In recent months, the black cloud
hanging over many global
economies last fall began to give
way to brighter forecasts. Although
it is too soon to tell whether rallies in
Latin America, Japan and Asia are
sustainable, they did represent an
important turning point. During the
six-month period ending April 30,
1999, the Morgan Stanley Capital
International EAFE Index - which
measures the performance of stock
markets in Europe, Australasia and
the Far East - returned 15.40%.
While the global economy still has
many obstacles to overcome,
government initiatives to aid banks,
corporate restructuring in Japan
and stable currencies in Asia and
emerging markets improved investor
sentiment. Turning to Europe, the
indexes posted mixed results as
volatility prevailed. Toward the end
of 1998, European stocks surged in
response to a strong U.S. market,
increased merger and acquisition
activity and enthusiasm about the
European Union's single currency
- - the euro. Many European markets
stalled in 1999, however, as the
outlook for economic growth and
corporate profits deteriorated. The
U.K. stock market was among the
strongest performers in Europe as
the economy improved amid a
favorable environment of declining
interest rates and encouraging
earnings growth. Elsewhere, positive
economic developments in the form
of lower-than-expected inflation
reports and signs that commodity
prices had bottomed fueled optimism
in Brazil and Mexico.
(Photograph of Patti Satterthwaite)
An interview with Patti Satterthwaite, Portfolio Manager of Fidelity
Advisor Latin America Fund
Q. HOW DID THE FUND PERFORM, PATTI?
A. The Latin American markets enjoyed an impressive comeback recently
and the fund's performance reflects that. For the period from the
fund's inception on December 21, 1998 through April 30, 1999, the
fund's Institutional Class shares provided a total return of 25.30%.
To gauge how the fund did relative to the Latin American markets, the
Morgan Stanley Capital International Emerging Markets Free-Latin
America Index returned 27.70% from December 21, 1998 through April 30,
1999.
Q. WHAT PRECIPITATED THE MARKET'S TURNAROUND?
A. The Latin American market rally - which really only began in
February 1999 - was fueled by optimism that the worst of the region's
financial crisis was behind it. Brazil's willingness to raise interest
rates calmed investors who worried that inflation would spiral out of
control. In fact, Brazil's inflation rate came in at a much
lower-than-expected rate. Mexico also surprised observers who feared
that it, too, would face runaway inflation or would be crippled by a
weakened currency. Positive developments on the economic front also
helped restore much needed confidence to the region. Finally,
commodity prices, which are the lifeblood of many Latin American
economies, started to show signs of bottoming.
Q. WHICH OF THE FUND'S HOLDINGS PERFORMED BEST AGAINST THIS FAVORABLE
BACKDROP?
A. First, let me point out that the fund's large stake in Mexican
stocks - relative to its benchmark index - helped its performance
since Mexico was the region's best and most consistent performer.
Among the fund's Mexican holdings, Telefonos de Mexico ("Telmex") was
one of the best performers and its largest holding at 10.5% of
investments at the end of the period. Telmex - formerly a
government-owned phone company - was privatized in 1990 and remains
Mexico's largest phone company, cellular provider and Internet
service. The company continued to prove its dominance against new and
old competitors in a deregulated environment.
Q. WHAT OTHER GROUPS OF MEXICAN STOCKS PERFORMED WELL?
A. Mexican banking stocks also posted strong gains during the period.
Grupo Financiero Bancomer, for example, rallied in response to better
economic conditions and below-forecast inflation and interest rates.
In addition, I think investors recognized that Mexican banks were
cheap and attractive alternatives to banks in other markets around the
world. Grupo Televisa - one of Latin America's leading
Spanish-language media companies - was another Mexican winner, thanks
to the company's restructuring and cost-cutting efforts. Outside
Mexico, we saw good performance on the last day of the period from
Argentinian oil company YPF when it was announced that the company
would be taken over by Spanish oil company Repsol.
Q. WHICH OF THE FUND'S BRAZILIAN HOLDINGS PERFORMED WELL?
A. Companies that benefited from Brazil's devaluation of its currency
- - primarily those that export goods - performed the best. Paper and
pulp companies Aracruz Celulose and Votorantim Celulose e Papel rose
handsomely, thanks to their ability to sell very low-cost product in
foreign markets.
Q. WERE THERE ANY DISAPPOINTMENTS DURING THE PERIOD?
A. My decision to own more of cement company Apasco in Mexico - which
posted good gains - rather than the better-performing Cemex, was
somewhat of a disappointment.
Q. WHAT'S YOUR OUTLOOK FOR THE LATIN AMERICAN MARKETS, PATTI?
A. There are a couple of things that could derail the Latin American
rally, including higher inflation in Brazil or problems in other
emerging markets in Southeast Asia or Europe. But from a valuation
standpoint, I think things look fairly favorable. In spite of their
recent run-up, Latin American stocks are priced attractively compared
to stocks in much of the rest of the world. Furthermore, the proposed
acquisition of Argentina's YPF may signal the start of a trend toward
mergers and acquisitions, which are largely viewed as favorable for
stock prices.
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 AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)
FUND FACTS
GOAL: high total investment
return by investing mainly in
equity securities of Latin
American issuers
START DATE: December 21,
1998
SIZE: as of April 30, 1999,
more than $3 million
MANAGER: Patti Satterthwaite,
since inception; joined
Fidelity in 1986
PATTI SATTERTHWAITE ON HER
INVESTMENT APPROACH:
"In choosing investments for the
fund, I take a bottom-up approach.
By that I mean that, with the help
of Fidelity's research team, I use
in-depth fundamental research to
judge each stock on its individual
merits. Those merits include a
variety of balance sheet, valuation
and earnings factors. The fund's
ultimate weightings by countries
and sectors are primarily a function
of the stock selection process. In
addition, factors affecting
business conditions in any given
country and the region as a whole
are also considered. Other
indicators we factor in include
government policies, the expected
level of inflation, the outlook for
various currencies and expected
economic growth."
INVESTMENT SUMMARY
TOP FIVE STOCKS AS OF APRIL
30, 1999
% OF FUND'S INVESTMENTS
Telefonos de Mexico SA 10.5
sponsored ADR representing
Class L shares (Mexico,
Telephone Services)
Grupo Modelo SA de CV Class C 5.4
(Mexico, Beverages)
YPF Sociedad Anonima 5.3
sponsored ADR representing
Class D shares (Argentina,
Oil & Gas)
Grupo Televisa SA de CV 5.1
sponsored ADR (Mexico,
Broadcasting)
Cifra SA de CV Series C 4.8
(Mexico, General Merchandise
Stores)
TOP FIVE MARKET SECTORS AS OF
APRIL 30, 1999
% OF FUND'S INVESTMENTS
UTILITIES 31.7
NONDURABLES 20.8
ENERGY 9.0
FINANCE 9.0
BASIC INDUSTRIES 5.7
TOP FIVE COUNTRIES AS OF
APRIL 30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS
Mexico 44.5
Brazil 26.3
Argentina 12.9
Chile 2.6
Peru 1.9
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF FUTURES CONTRACTS, IF
APPLICABLE.
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1999
Row: 1, Col: 1, Value: 90.7
Row: 1, Col: 2, Value: 9.300000000000001
Stocks 90.7%
Short-term investments 9.3%
INVESTMENTS APRIL 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.7%
SHARES VALUE (NOTE 1)
ARGENTINA - 12.9%
Banco de Galicia y Buenos 300 $ 6,919
Aires SA ADR Class B
Bansud SA Class B (a) 7,900 24,184
Cresud S.A.C.I.F.y A. 847 9,635
sponsored ADR
Inversiones y Representacions 305 10,218
SA sponsored GDR
Perez Companc SA Class B 16,100 99,861
Telefonica de Argentina SA 2,400 89,700
sponsored ADR
YPF Sociedad Anonima 4,000 168,000
sponsored ADR representing
Class D shares
408,517
BRAZIL - 26.3%
Aracruz Celulose SA ADR 1,500 30,000
Banco Bradesco SA (Reg. Pfd.) 510,000 2,695
Centrais Electricas 4,000,000 84,059
Brasileiras SA
Companhia Brasileira de 2,500,000 17,397
Petroleo Ipiranga SA Class B
Companhia Cervejaria Brahma 8,500 82,875
sponsored ADR
Companhia de Electricidade do 15,000,000 4,053
Estado do Rio de Janeiro
(CERJ)
Companhia de Tecidos Norte de 80,000 5,524
Minas
Companhia Vale do Rio Doce (a) 2,000 38,307
Compania Cimento Portland Itau 50,000 5,403
Compania Energertica Minas 1,600,000 38,427
Gerais
Dixie Toga SA 20,000 6,004
Embratel Participacoes SA ADR 5,600 91,000
Itausa Investimentos Itau SA 15,000 8,106
Perdigao SA (a) 10,000,000 12,369
Souza Cruz Industria Comerico 4,200 27,866
Tele Centro Sul Participacoes 1,700 90,313
SA sponsored ADR (a)
Tele Nordeste Celular 200 4,400
Participacoes SA ADR (a)
Tele Norte Leste 5,200 88,075
Participacoes SA ADR (a)
Tele Sudeste Celular 900 25,706
Participacoes SA ADR
Telesp Participacoes SA ADR 5,800 145,000
(a)
Votorantim Celulose e Papel 1,000,000 25,272
SA (Pfd. Reg.)
832,851
CHILE - 2.6%
Chilectra SA sponsored ADR 300 6,600
Cristalerias de Chile SA 900 14,400
sponsored ADR
Embotelladora Andina 1,550 27,997
sponsored ADR Class A
Enersis SA sponsored ADR 309 5,871
Santa Isabel SA sponsored ADR 800 8,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
CHILE - CONTINUED
Supermercados Unimarc SA 600 $ 2,250
sponsored ADR
Vina Concha Stet y Toro SA 500 16,219
sponsored ADR
81,337
COLOMBIA - 0.2%
Banco Ganadero SA sponsored 600 5,700
ADR Class C
LUXEMBOURG - 0.9%
Quilmes Industrial SA 2,700 29,531
sponsored ADR
MEXICO - 44.5%
Apasco SA de CV 5,000 29,285
Banacci SA de CV Class O (a) 43,000 108,829
Cemex SA Series B 1,000 4,621
Cifra SA de CV Series C (a) 82,000 152,456
Coca Cola Femsa SA de CV ADR 2,200 45,513
Empresas ICA Sociedad 1,600 10,500
Controladora SA de CV
sponsored ADR
Fomento Economico Mexicano SA 1,500 54,563
de CV sponsored ADR
Gruma SA de CV Class B 2,700 20,925
sponsored ADR (a)
Grupo Carso SA de CV Class A-1 19,000 91,580
Grupo Financiero Bancomer SA 385,000 132,402
de CV Series A
Grupo Indus Bimbo SA de CV 10,500 22,185
Series A
Grupo Modelo SA de CV Class C 66,000 172,004
Grupo Televisa SA de CV 3,950 161,950
sponsored ADR (a)
Kimberly-Clark de Mexico SA 17,000 65,588
de CV Class A
Telefonos de Mexico SA 4,400 333,296
sponsored ADR representing
Class L shares
1,405,697
PANAMA - 1.4%
Panamerican Beverages, Inc. 2,000 44,375
Class A
PERU - 1.9%
Compania de Minas 3,800 61,275
Buenaventura SA sponsored
ADR Class B
TOTAL COMMON STOCKS 2,869,283
(Cost $2,293,723)
CASH EQUIVALENTS - 9.3%
MATURITY AMOUNT VALUE (NOTE 1)
Investments in repurchase $ 294,120 $ 294,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.89%,
dated 4/30/99 due 5/3/99
TOTAL INVESTMENT IN $ 3,163,283
SECURITIES - 100%
(Cost $2,587,723)
LEGEND
(a) Non-income producing
INCOME TAX INFORMATION
At April 30, 1999, the aggregate cost of investment securities for
income tax purposes was $2,587,723. Net unrealized appreciation
aggregated $575,560, of which $604,304 related to appreciated
investment securities and $28,744 related to depreciated investment
securities.
MARKET SECTOR DIVERSIFICATION (UNAUDITED)
As a Percentage of Total Value of Investment in Securities
BASIC INDUSTRIES 5.7%
CASH EQUIVALENTS 9.3
CONSTRUCTION & REAL ESTATE 1.9
DURABLES 0.2
ENERGY 9.0
FINANCE 9.0
HOLDING COMPANIES 0.3
MEDIA & LEISURE 5.1
NONDURABLES 20.8
PRECIOUS METALS 1.9
RETAIL & WHOLESALE 4.9
SERVICES 0.2
UTILITIES 31.7
100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 3,163,283
value (including repurchase
agreements of $294,000)
(cost $2,587,723) - See
accompanying schedule
Cash 536
Receivable for fund shares 27,096
sold
Dividends receivable 18,531
Prepaid expenses 56,425
Receivable from investment 14,636
adviser for expense
reductions
TOTAL ASSETS 3,280,507
LIABILITIES
Payable for investments $ 66,185
purchased
Distribution fees payable 1,297
Other payables and accrued 19,261
expenses
TOTAL LIABILITIES 86,743
NET ASSETS $ 3,193,764
Net Assets consist of:
Paid in capital $ 2,629,126
Undistributed net investment 15,693
income
Accumulated undistributed net (25,565)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 574,510
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 3,193,764
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
APRIL 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $12.52
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share ($579,542
(divided by) 46,306 shares)
Maximum offering price per $13.28
share (100/94.25 of $12.52)
CLASS T: NET ASSET VALUE and $12.50
redemption price per share
($710,596 (divided by)
56,843 shares)
Maximum offering price per $12.95
share (100/96.50 of $12.50)
CLASS B: NET ASSET VALUE and $12.49
offering price per share
($797,173 (divided by)
63,835 shares) A
CLASS C: NET ASSET VALUE and $12.49
offering price per share
($599,065 (divided by)
47,964 shares) A
INSTITUTIONAL CLASS: NET $12.53
ASSET VALUE, offering price
and redemption price per
share ($507,388 (divided by)
40,499 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
DECEMBER 21, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INVESTMENT INCOME $ 32,228
Dividends
Interest 4,090
36,318
Less foreign taxes withheld (2,778)
TOTAL INCOME 33,540
EXPENSES
Management fee $ 5,715
Transfer agent fees 2,463
Distribution fees 4,378
Accounting fees and expenses 21,593
Custodian fees and expenses 7,731
Registration fees 45,151
Audit 10,830
Miscellaneous 56
Total expenses before 97,917
reductions
Expense reductions (80,070) 17,847
NET INVESTMENT INCOME 15,693
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (20,252)
Foreign currency transactions (5,313) (25,565)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 575,560
Assets and liabilities in (1,050) 574,510
foreign currencies
NET GAIN (LOSS) 548,945
NET INCREASE (DECREASE) IN $ 564,638
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 21, 1998
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 15,693
income
Net realized gain (loss) (25,565)
Change in net unrealized 574,510
appreciation (depreciation)
NET INCREASE (DECREASE) IN 564,638
NET ASSETS RESULTING FROM
OPERATIONS
Share transactions - net 2,629,126
increase (decrease)
TOTAL INCREASE (DECREASE) 3,193,764
IN NET ASSETS
NET ASSETS
Beginning of period -
End of period (including $ 3,193,764
undistributed net investment
income of $15,693)
FINANCIAL HIGHLIGHTS - CLASS A
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .09
Net realized and unrealized 2.43
gain (loss)
Total from investment 2.52
operations
Net asset value, end of period $ 12.52
TOTAL RETURN B, C 25.20%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 580
(000 omitted)
Ratio of expenses to average 2.00% A, F
net assets
Ratio of net investment 2.41% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS T
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .07
Net realized and unrealized 2.43
gain (loss)
Total from investment 2.50
operations
Net asset value, end of period $ 12.50
TOTAL RETURN B, C 25.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 711
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of net investment 1.99% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS B
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .06
Net realized and unrealized 2.43
gain (loss)
Total from investment 2.49
operations
Net asset value, end of period $ 12.49
TOTAL RETURN B, C 24.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 797
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment 1.59% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES NOT INCLUDE THE CONTINGENT DEFERRED 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - CLASS C
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .06
Net realized and unrealized 2.43
gain (loss)
Total from investment 2.49
operations
Net asset value, end of period $ 12.49
TOTAL RETURN B, C 24.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 599
(000 omitted)
Ratio of expenses to average 2.75% A, F
net assets
Ratio of net investment 1.60% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN DOES NOT INCLUDE THE CONTINGENT DEFERRED 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
APRIL 30, 1999 E (UNAUDITED)
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.00
period
Income from Investment
Operations
Net investment income D .09
Net realized and unrealized 2.44
gain (loss)
Total from investment 2.53
operations
Net asset value, end of period $ 12.53
TOTAL RETURN B, C 25.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 507
(000 omitted)
Ratio of expenses to average 1.75% A, F
net assets
Ratio of net investment 2.66% A
income to average net assets
Portfolio turnover 63% A
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
C TOTAL RETURN 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 DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1999.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Latin America 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. Class B shares will automatically
convert to Class A after a holding period of seven years from the
initial date of purchase. 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 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.
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
and settlement date 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 maybe 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.
PREPAID EXPENSES. Fidelity Management & Research Company (FMR) bears
all organizational expenses of the fund except for the cost of
registering and qualifying shares of each class for distribution under
federal and state securities law. These registration expenses are
borne by the fund and amortized over one year.
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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
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 that will reverse
in a subsequent period. Any taxable income or gain remaining at fiscal
year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
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.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,776,388 and $462,397, respectively.
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., and Fidelity International
Investment Advisors (FIIA). In addition, FIIA entered into a
sub-advisory agreement with its subsidiary, Fidelity International
Investment Advisors (U.K.) Limited (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 FDC RETAINED BY FDC
CLASS A $ 369 $ 359
CLASS T 861 717
CLASS B 1,635 1,584
CLASS C 1,513 1,513
$ 4,378 $ 4,173
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 FDC RETAINED BY FDC
CLASS A $ 267 $ 167
CLASS T 173 147
CLASS B - -*
CLASS C 500 500 *
$ 940 $ 814
* 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 $ 430 .29 *
CLASS T 578 .34 *
CLASS B 562 .35 *
CLASS C 510 .34 *
INSTITUTIONAL CLASS 383 .27 *
$ 2,463
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc., an affiliate of FMR,
maintains the fund's accounting records. The fee is based on the level
of average net assets for the month plus out-of-pocket expenses.
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 EXPENSE LIMITATIONS REIMBURSEMENT
CLASS A 2.00% $ 15,126
CLASS T 2.25% 17,705
CLASS B 2.75% 16,874
CLASS C 2.75% 15,610
INSTITUTIONAL CLASS 1.75% 14,755
$ 80,070
6. BENEFICIAL INTEREST.
At the end of the period, FMR and its affiliates were record owners of
approximately 80% of the total outstanding shares of the fund.
7. SHARE TRANSACTIONS.
Transactions for each class of shares for the period is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES DOLLARS
DECEMBER 21, 1998 DECEMBER 21, 1998
(COMMENCEMENT OF OPERATIONS) (COMMENCEMENT OF OPERATIONS)
TO APRIL 30, TO APRIL 30,
1999 1999
CLASS A Shares sold 46,306 $ 472,415
CLASS T Shares sold 78,679 $ 788,582
Shares redeemed (21,836) (200,436)
Net increase (decrease) 56,843 $ 588,146
CLASS B Shares sold 63,835 $ 675,123
CLASS C Shares sold 52,964 $ 541,558
Shares redeemed (5,000) (54,150)
Net increase (decrease) 47,964 $ 487,408
INSTITUTIONAL CLASS Shares 40,499 $ 406,034
sold
</TABLE>
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,
Pembroke, Bermuda
Fidelity International
Investment Advisors
(U.K.) Limited, London, England
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Richard A. Spillane, Jr., Vice President
Patricia Satterthwaite, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy 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
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
CUSTODIAN
State Street Bank and Trust Company
Quincy, 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 Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International
Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
Fidelity Advisor TechnoQuant SM
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic
Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth
Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation Fund
Fidelity Advisor Balanced Fund
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
(registered trademark)
