FIDELITY ADVISOR
EMERGING MARKETS INCOME
FUND - CLASS A, CLASS T, CLASS B
AND CLASS C
SEMIANNUAL REPORT
JUNE 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 19 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 22 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 23 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 30 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 39 Notes to financial statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other 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.
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:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
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.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek 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 EMERGING MARKETS INCOME 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). You can also look at the class' income to measure performance.
The initial offering of Class A shares took place on September 3,
1996. Class A shares bear a 0.15% 12b-1 fee. Returns prior to
September 3, 1996 are those of Class T shares, the original class of
the fund, and reflect Class T shares' 0.25% 12b-1 fee. If Fidelity
had not reimbursed certain class expenses, the total returns and
dividends would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS 18.58% -5.52% 68.91% 66.13%
INCOME - CL A
FIDELITY ADV EMERGING MARKETS 12.95% -10.01% 60.89% 58.24%
INCOME - CL A (INCL. 4.75%
SALES CHARGE)
JP EMBI Plus 10.57% -4.26% 94.38% 71.26%
Emerging Markets Debt Funds 9.72% -10.63% 63.27% n/a
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show Class A's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on March 10, 1994. 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 those of the J.P. Morgan Emerging Markets Bond Index
Plus - a market value-weighted index of U.S. dollar- and other
external currency-denominated Brady bonds, loans, Eurobonds, and local
instruments traded in emerging markets. To measure how Class A's
performance stacked up against its peers, you can compare it to the
emerging markets debt funds average, which reflects the performance of
mutual funds with similar objectives tracked by Lipper Inc. The past
six months average represents a peer group of 52 mutual funds. These
benchmarks reflect reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS -5.52% 11.05% 10.03%
INCOME - CL A
FIDELITY ADV EMERGING MARKETS -10.01% 9.98% 9.03%
INCOME - CL A (INCL. 4.75%
SALES CHARGE)
JP EMBI Plus -4.26% 14.22% 10.66%
Emerging Markets Debt Funds -10.63% 10.12% n/a
Average
AVERAGE ANNUAL TOTAL RETURNS take Class A's cumulative return and show
you what would have happened if Class A shares had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
FA Emerg Mkt Inc -CL A JP EMBI Plus
00255 JP004
1994/03/10 9525.00 10000.00
1994/03/31 9128.32 8807.82
1994/04/30 9248.44 8643.25
1994/05/31 9844.60 9282.15
1994/06/30 9368.11 8810.67
1994/07/31 9578.30 8971.50
1994/08/31 10732.31 9714.11
1994/09/30 11038.76 10014.32
1994/10/31 10754.24 9697.82
1994/11/30 10530.74 9687.51
1994/12/31 9760.21 9059.99
1995/01/31 8639.66 8623.61
1995/02/28 8022.18 8222.51
1995/03/31 7787.58 8056.78
1995/04/30 8456.16 8918.88
1995/05/31 8960.63 9695.07
1995/06/30 9011.12 9909.06
1995/07/31 9026.46 9869.98
1995/08/31 9219.78 10140.13
1995/09/30 9586.60 10536.55
1995/10/31 9514.14 10422.17
1995/11/30 9831.92 10724.86
1995/12/31 10442.10 11485.35
1996/01/31 11211.15 12358.18
1996/02/29 10586.42 11676.46
1996/03/31 10686.18 11942.44
1996/04/30 11237.32 12593.99
1996/05/31 11532.65 12811.92
1996/06/30 11823.71 13262.30
1996/07/31 11956.95 13539.46
1996/08/31 12386.31 14036.78
1996/09/30 13395.58 14942.02
1996/10/31 13777.70 15043.72
1996/11/30 14543.65 15810.38
1996/12/31 14671.78 16000.37
1997/01/31 15288.34 16442.93
1997/02/28 15544.63 16729.03
1997/03/31 14908.02 16123.30
1997/04/30 15420.01 16602.74
1997/05/31 16079.19 17247.58
1997/06/30 16574.92 17644.32
1997/07/31 17288.48 18376.34
1997/08/31 17191.69 18301.91
1997/09/30 17741.43 18861.14
1997/10/31 15984.93 16688.46
1997/11/30 16562.96 17480.82
1997/12/31 17094.97 18083.31
1998/01/31 17114.76 18046.65
1998/02/28 17575.41 18563.20
1998/03/31 18039.84 19025.32
1998/04/30 18049.07 19071.47
1998/05/31 17302.88 18420.48
1998/06/30 16748.18 17888.74
1998/07/31 17001.72 18011.22
1998/08/31 10989.02 12835.61
1998/09/30 11969.35 14090.76
1998/10/31 12790.50 15002.37
1998/11/30 13759.46 15885.48
1998/12/31 13344.82 15488.40
1999/01/31 13003.97 14913.30
1999/02/28 13243.05 15127.43
1999/03/31 14403.21 16271.83
1999/04/30 15933.06 17383.82
1999/05/31 15075.30 16392.75
1999/06/30 15823.97 17125.88
IMATRL PRASUN SHR__CHT 19990630 19990715 110634 R00000000000067
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Emerging Markets Income Fund - Class A on
March 10, 1994, when the fund started, and the current 4.75% sales
charge was paid. As the chart shows, by June 30, 1999, the value of
the investment would have grown to $15,824 - a 58.24% increase on the
initial investment. For comparison, look at how the J.P. Morgan
Emerging Markets Bond Index Plus did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,126 - a 71.26% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets means
assuming greater risks than
investing in the United States.
Factors like changes in a
country's financial markets, its
local political and economic
climate, and the fluctuating value of
its currency create these risks. For
these reasons an international
fund's performance may be more
volatile than a fund that invests
exclusively in the United States.
Past performance is no guarantee
of future results and you may have
a gain or loss when you sell your
shares.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31, SEPTEMBER 3, 1996
(COMMENCEMENT OF SALE OF
CLASS A SHARES) TO DECEMBER
31,
1999 1998 1997 1996
Dividend returns 4.57% 8.10% A 8.37% 2.32%
Capital returns 14.01% -30.04% 8.15% 15.39%
Total returns 18.58% -21.94% 16.52% 17.71%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR A
Dividends per share 5.21(cents) 32.47(cents) 82.84(cents)
Annualized dividend rate 7.33% 7.95% 10.05%
30-day annualized yield n/a - -
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $8.65 over the past one month, $8.24 over the past six months, and
$8.24 over the past one year, you can compare the class' income
distributions over these three periods. The 30-day annualized YIELD is
a standard formula for all bond funds based on the yields of the bonds
in the fund, averaged over the past 30 days. This figure shows you the
yield characteristics of the fund's investments at the end of the
period. It also helps you to compare funds from different companies on
an equal basis. Yield information will be reported once Class A has a
longer, more stable operating history.
A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE CLASS'
INVESTMENT INCOME AND DO NOT REFLECT CURRENCY RELATED LOSSES. AS A
RESULT OF CURRENCY LOSSES, DIVIDENDS OF APPROXIMATELY 17.4(CENTS) PER
SHARE WERE A NON-TAXABLE RETURN OF CAPITAL.
FIDELITY ADVISOR EMERGING MARKETS INCOME 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). You can also look at the class' income, as reflected in its
yield, to measure performance. If Fidelity had not reimbursed certain
class expenses, the past five year and life of fund total returns
would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS 18.72% -5.53% 68.67% 65.89%
INCOME - CL T
FIDELITY ADV EMERGING MARKETS 14.57% -8.83% 62.77% 60.09%
INCOME - CL T (INCL. 3.50%
SALES CHARGE)
JP EMBI Plus 10.57% -4.26% 94.38% 71.26%
Emerging Markets Debt Funds 9.72% -10.63% 63.27% n/a
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show Class T's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on March 10, 1994. 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 those of the J.P. Morgan Emerging Markets Bond Index
Plus - a market value-weighted index of U.S. dollar- and other
external currency-denominated Brady bonds, loans, Eurobonds, and local
instruments traded in emerging markets. To measure how Class T's
performance stacked up against its peers, you can compare it to the
emerging markets debt funds average, which reflects the performance of
mutual funds with similar objectives tracked by Lipper Inc. The past
six months average represents a peer group of 52 mutual funds. These
benchmarks reflect reinvestment of dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS -5.53% 11.02% 10.00%
INCOME - CL T
FIDELITY ADV EMERGING MARKETS -8.83% 10.23% 9.27%
INCOME - CL T (INCL. 3.50%
SALES CHARGE)
JP EMBI Plus -4.26% 14.22% 10.66%
Emerging Markets Debt Funds -10.63% 10.12% n/a
Average
AVERAGE ANNUAL TOTAL RETURNS take Class T's cumulative return and show
you what would have happened if Class T had performed at a constant
rate each year.
$10,000 OVER LIFE OF FUND
FA Emerg Mkt Inc -CL T JP EMBI Plus
00635 JP004
1994/03/10 9650.00 10000.00
1994/03/31 9248.12 8807.82
1994/04/30 9369.81 8643.25
1994/05/31 9973.79 9282.15
1994/06/30 9491.05 8810.67
1994/07/31 9704.00 8971.50
1994/08/31 10873.16 9714.11
1994/09/30 11183.62 10014.32
1994/10/31 10895.38 9697.82
1994/11/30 10668.94 9687.51
1994/12/31 9888.29 9059.99
1995/01/31 8753.04 8623.61
1995/02/28 8127.46 8222.51
1995/03/31 7889.78 8056.78
1995/04/30 8567.13 8918.88
1995/05/31 9078.23 9695.07
1995/06/30 9129.37 9909.06
1995/07/31 9144.92 9869.98
1995/08/31 9340.78 10140.13
1995/09/30 9712.41 10536.55
1995/10/31 9639.00 10422.17
1995/11/30 9960.95 10724.86
1995/12/31 10579.14 11485.35
1996/01/31 11358.28 12358.18
1996/02/29 10725.35 11676.46
1996/03/31 10826.42 11942.44
1996/04/30 11384.79 12593.99
1996/05/31 11684.00 12811.92
1996/06/30 11978.87 13262.30
1996/07/31 12113.86 13539.46
1996/08/31 12548.86 14036.78
1996/09/30 13572.33 14942.02
1996/10/31 13947.71 15043.72
1996/11/30 14723.78 15810.38
1996/12/31 14854.44 16000.37
1997/01/31 15480.72 16442.93
1997/02/28 15740.89 16729.03
1997/03/31 15095.79 16123.30
1997/04/30 15612.28 16602.74
1997/05/31 16280.02 17247.58
1997/06/30 16795.95 17644.32
1997/07/31 17517.42 18376.34
1997/08/31 17419.65 18301.91
1997/09/30 17975.36 18861.14
1997/10/31 16195.49 16688.46
1997/11/30 16765.19 17480.82
1997/12/31 17301.56 18083.31
1998/01/31 17318.97 18046.65
1998/02/28 17784.00 18563.20
1998/03/31 18254.99 19025.32
1998/04/30 18263.11 19071.47
1998/05/31 17506.64 18420.48
1998/06/30 16945.16 17888.74
1998/07/31 17201.57 18011.22
1998/08/31 11111.23 12835.61
1998/09/30 12098.20 14090.76
1998/10/31 12943.55 15002.37
1998/11/30 13905.35 15885.48
1998/12/31 13483.97 15488.40
1999/01/31 13155.42 14913.30
1999/02/28 13378.82 15127.43
1999/03/31 14554.32 16271.83
1999/04/30 16102.24 17383.82
1999/05/31 15233.80 16392.75
1999/06/30 16008.70 17125.88
IMATRL PRASUN SHR__CHT 19990630 19990723 150630 R00000000000067
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Emerging Markets Income Fund - Class T on
March 10, 1994, when the fund started, and the current 3.50% sales
charge was paid. As the chart shows, by June 30, 1999, the value of
your investment would have grown to $16,009 - a 60.09% increase on the
initial investment. For comparison, look at how the J.P. Morgan
Emerging Markets Bond Index Plus did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,126 - a 71.26% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets means
assuming greater risks than
investing in the United States.
Factors like changes in a
country's financial markets, its
local political and economic
climate, and the fluctuating value of
its currency create these risks. For
these reasons an international
fund's performance may be more
volatile than a fund that invests
exclusively in the United States.
Past performance is no guarantee
of future results and you may have
a gain or loss when you sell your
shares.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31, MARCH 10, 1994 (COMMENCEMENT
OF OPERATIONS) TO DECEMBER 31,
1999 1998 1997 1996 1995 1994
Dividend returns 4.56% 7.99% A 8.32% 9.46% 9.51% 4.80%
Capital returns 14.16% -30.06% 8.15% 30.95% -2.52% -2.33%
Total returns 18.72% -22.07% 16.47% 40.41% 6.99% 2.47%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains paid
by the class are reinvested, if any, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR A
Dividends per share 5.19(cents) 32.41(cents) 81.98(cents)
Annualized dividend rate 7.31% 7.94% 9.96%
30-day annualized yield 8.00% - -
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $8.64 over the past one month, $8.23 over the past six months and
$8.23 over the past one year, you can compare the class' income
distributions over these three periods. The 30-day annualized YIELD is
a standard formula for all bond funds based on the yields of the bonds
in the fund, averaged over the past 30 days. This figure shows you the
yield characteristics of the fund's investments at the end of the
period. It also helps you to compare funds from different companies on
an equal basis. The offering share price used in the calculation of
the yield includes the effect of Class T's maximum 3.50% sales charge.
A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE CLASS'
INVESTMENT INCOME AND DO NOT REFLECT CURRENCY RELATED LOSSES. AS A
RESULT OF CURRENCY LOSSES, DIVIDENDS OF APPROXIMATELY 17.2(CENTS) PER
SHARE WERE A NON-TAXABLE RETURN OF CAPITAL.
FIDELITY ADVISOR EMERGING MARKETS INCOME 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). You can also look at income, as reflected in its yield, to
measure performance.
The initial offering of Class B shares took place on June 30, 1994.
Class B shares bear a 0.90% 12b-1 fee (1.00% prior to January 1,
1996). Returns prior to June 30, 1994 are those of Class T, the
original class of the fund, and reflect Class T shares' 0.25% 12b-1
fee. Had Class B shares' 12b-1 fee been reflected, returns prior to
June 30, 1994 would have been lower. Class B shares' contingent
deferred sales charge included in the past six months, past one year,
past five years and life of fund total return figures are 5% ,5%, 2%
and 2%, respectively. If Fidelity had not reimbursed certain class
expenses, the past one year, five year and life of fund total returns
and dividends would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS 18.38% -6.19% 63.11% 60.42%
INCOME - CL B
FIDELITY ADV EMERGING MARKETS 13.38% -10.46% 61.27% 59.53%
INCOME - CL B (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
JP EMBI Plus 10.57% -4.26% 94.38% 71.26%
Emerging Markets Debt Funds 9.72% -10.63% 63.27% n/a
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show Class B's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on March 10, 1994. 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 those of the J.P. Morgan Emerging Markets Bond Index
Plus - a market value-weighted index of U.S. dollar- and other
external currency-denominated Brady bonds, loans, Eurobonds, and local
instruments traded in emerging markets. To measure how Class B's
performance stacked up against its peers, you can compare it to the
emerging markets debt funds average, which reflects the performance of
mutual funds tracked by Lipper Inc. The past six months average
represents a peer group of 52 mutual funds. These benchmarks reflect
reinvestment of dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS -6.19% 10.28% 9.31%
INCOME - CL B
FIDELITY ADV EMERGING MARKETS -10.46% 10.03% 9.19%
INCOME - CL B (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
JP EMBI Plus -4.26% 14.22% 10.66%
Emerging Markets Debt Funds -10.63% 10.12% n/a
Average
AVERAGE ANNUAL TOTAL RETURNS take Class B's cumulative return and show
you what would have happened if Class B had performed at a constant
rate each year.
$10,000 OVER LIFE OF FUND
FA Emerg Mkt Inc -CL B JP EMBI Plus
00637 JP004
1994/03/10 10000.00 10000.00
1994/03/31 9583.54 8807.82
1994/04/30 9709.65 8643.25
1994/05/31 10335.54 9282.15
1994/06/30 9835.28 8810.67
1994/07/31 10042.78 8971.50
1994/08/31 11243.37 9714.11
1994/09/30 11566.18 10014.32
1994/10/31 11270.66 9697.82
1994/11/30 11019.23 9687.51
1994/12/31 10195.80 9059.99
1995/01/31 9040.37 8623.61
1995/02/28 8379.79 8222.51
1995/03/31 8129.96 8056.78
1995/04/30 8821.79 8918.88
1995/05/31 9341.02 9695.07
1995/06/30 9398.54 9909.06
1995/07/31 9408.41 9869.98
1995/08/31 9603.44 10140.13
1995/09/30 9967.22 10536.55
1995/10/31 9896.87 10422.17
1995/11/30 10220.12 10724.86
1995/12/31 10846.22 11485.35
1996/01/31 11637.09 12358.18
1996/02/29 10984.00 11676.46
1996/03/31 11081.11 11942.44
1996/04/30 11645.35 12593.99
1996/05/31 11956.55 12811.92
1996/06/30 12239.00 13262.30
1996/07/31 12370.24 13539.46
1996/08/31 12818.89 14036.78
1996/09/30 13841.33 14942.02
1996/10/31 14226.85 15043.72
1996/11/30 15019.85 15810.38
1996/12/31 15142.84 16000.37
1997/01/31 15770.43 16442.93
1997/02/28 16024.74 16729.03
1997/03/31 15360.81 16123.30
1997/04/30 15876.94 16602.74
1997/05/31 16543.60 17247.58
1997/06/30 17055.87 17644.32
1997/07/31 17775.74 18376.34
1997/08/31 17666.48 18301.91
1997/09/30 18218.22 18861.14
1997/10/31 16396.61 16688.46
1997/11/30 16991.95 17480.82
1997/12/31 17520.59 18083.31
1998/01/31 17513.16 18046.65
1998/02/28 17988.29 18563.20
1998/03/31 18450.12 19025.32
1998/04/30 18448.18 19071.47
1998/05/31 17676.74 18420.48
1998/06/30 17101.39 17888.74
1998/07/31 17348.20 18011.22
1998/08/31 11210.43 12835.61
1998/09/30 12197.71 14090.76
1998/10/31 13022.87 15002.37
1998/11/30 13997.31 15885.48
1998/12/31 13551.29 15488.40
1999/01/31 13214.92 14913.30
1999/02/28 13449.18 15127.43
1999/03/31 14615.52 16271.83
1999/04/30 16171.38 17383.82
1999/05/31 15277.37 16392.75
1999/06/30 15953.00 17125.88
IMATRL PRASUN SHR__CHT 19990630 19990723 150324 R00000000000067
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Emerging Markets Income Fund - Class B on
March 10, 1994, when the fund started. As the chart shows, by June 30,
1999, the value of the investment including the effect of the
applicable contingent deferred sales charge, would have been $15,953 -
a 59.53% increase on the initial investment. For comparison, look at
how the J.P. Morgan Emerging Markets Bond Index Plus did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $17,126 - a 71.26% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets means
assuming greater risks than
investing in the United States.
Factors like changes in a country's
financial markets, its local political
and economic climate, and the
fluctuating value of its currency
create these risks. For these
reasons an international fund's
performance may be more
volatile than a fund that invests
exclusively in the United States.
Past performance is no guarantee
of future results and you may
have a gain or loss when you sell
your shares.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31, JUNE 30, 1994 (COMMENCEMENT
OF SALE OF CLASS B SHARES)
TO DECEMBER 31,
Dividend returns 4.15% 7.45% A 7.57% 8.54% 8.69% 3.03%
Capital returns 14.23% -30.11% 8.13% 31.07% -2.31% 0.64%
Total returns 18.38% -22.66% 15.70% 39.61% 6.38% 3.67%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR A
Dividends per share 4.71(cents) 29.61(cents) 76.77(cents)
Annualized dividend rate 6.60% 7.22% 9.28%
30-day annualized yield 7.59% - -
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $8.68 over the past one month, $8.27 over the past six months, and
$8.27 over the past one year, you can compare the class' income
distributions over these three periods. The 30-day annualized YIELD is
a standard formula for all bond funds based on the yields of the bonds
in the fund, averaged over the past 30 days. This figure shows you the
yield characteristics of the fund's investments at the end of the
period. It also helps you compare funds from different companies on an
equal basis. The offering share price used in the calculation of the
yield excludes the effect of Class B's contingent deferred sales
charge.
A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE CLASS'
INVESTMENT INCOME AND DO NOT REFLECT CURRENCY RELATED LOSSES. AS A
RESULT OF CURRENCY LOSSES, DIVIDENDS OF APPROXIMATELY 16.1(CENTS) PER
SHARE WERE A NON-TAXABLE RETURN OF CAPITAL.
FIDELITY ADVISOR EMERGING MARKETS INCOME 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). You can also look at income to measure performance.
The initial offering of Class C shares took place on November 3, 1997.
Class C shares bear a 1.00% 12b-1 fee that is reflected in returns
after November 3, 1997. Returns between June 30, 1994 and November 3,
1997 are those of Class B shares and reflect Class B shares' 0.90%
12b-1 fee (1.00% prior to January 1, 1996). Returns prior to June 30,
1994 are those of Class T shares and reflect Class T shares' 0.25%
12b-1 fee. Had Class C shares' 12b-1 fee been reflected, returns from
January 1, 1996 through November 3, 1997 and prior to June 30, 1994
would have been lower. Class C shares' contingent deferred sales
charge included in the past six months, past one year, five year and
life of fund total return figures are 1%, 1%, 0% and 0%, respectively.
If Fidelity had not reimbursed certain class expenses, the past one
year, five year and life of fund total returns and dividends would
have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS 18.21% -6.03% 63.15% 60.46%
INCOME - CL C
FIDELITY ADV EMERGING MARKETS 17.21% -6.88% 63.15% 60.46%
INCOME - CL C (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
JP EMBI Plus 10.57% -4.26% 94.38% 71.26%
Emerging Markets Debt Funds 9.72% -10.63% 63.27% n/a
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show Class C's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on March 10, 1994. 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 those of the J.P. Morgan Emerging Markets Bond Index
Plus - a market value-weighted index of U.S. dollar- and other
external currency-denominated Brady bonds, loans, Eurobonds, and local
instruments traded in emerging markets. To measure how Class C's
performance stacked up against its peers, you can compare it to the
emerging markets debt funds average, which reflects the performance of
mutual funds tracked by Lipper Inc. The past six months average
represents a peer group of 52 mutual funds. These benchmarks reflect
reinvestment of dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS -6.03% 10.28% 9.31%
INCOME - CL C
FIDELITY ADV EMERGING MARKETS -6.88% 10.28% 9.31%
INCOME - CL C (INCL.
CONTINGENT DEFERRED SALES
CHARGE)
JP EMBI Plus -4.26% 14.22% 10.66%
Emerging Markets Debt Funds -10.63% 10.12% n/a
Average
AVERAGE ANNUAL TOTAL RETURNS take Class C's cumulative return and show
you what would have happened if Class C had performed at a constant
rate each year.
$10,000 OVER LIFE OF FUND
FA Emerg Mkt Inc -CL C JP EMBI Plus
00488 JP004
1994/03/10 10000.00 10000.00
1994/03/31 9583.54 8807.82
1994/04/30 9709.65 8643.25
1994/05/31 10335.54 9282.15
1994/06/30 9835.28 8810.67
1994/07/31 10042.78 8971.50
1994/08/31 11243.37 9714.11
1994/09/30 11566.18 10014.32
1994/10/31 11270.66 9697.82
1994/11/30 11019.23 9687.51
1994/12/31 10195.80 9059.99
1995/01/31 9040.37 8623.61
1995/02/28 8379.79 8222.51
1995/03/31 8129.96 8056.78
1995/04/30 8821.79 8918.88
1995/05/31 9341.02 9695.07
1995/06/30 9398.54 9909.06
1995/07/31 9408.41 9869.98
1995/08/31 9603.44 10140.13
1995/09/30 9967.22 10536.55
1995/10/31 9896.87 10422.17
1995/11/30 10220.12 10724.86
1995/12/31 10846.22 11485.35
1996/01/31 11637.09 12358.18
1996/02/29 10984.00 11676.46
1996/03/31 11081.11 11942.44
1996/04/30 11645.35 12593.99
1996/05/31 11956.55 12811.92
1996/06/30 12239.00 13262.30
1996/07/31 12370.24 13539.46
1996/08/31 12818.89 14036.78
1996/09/30 13841.33 14942.02
1996/10/31 14226.85 15043.72
1996/11/30 15019.85 15810.38
1996/12/31 15142.84 16000.37
1997/01/31 15770.43 16442.93
1997/02/28 16024.74 16729.03
1997/03/31 15360.81 16123.30
1997/04/30 15876.94 16602.74
1997/05/31 16543.60 17247.58
1997/06/30 17055.87 17644.32
1997/07/31 17775.74 18376.34
1997/08/31 17666.48 18301.91
1997/09/30 18218.22 18861.14
1997/10/31 16396.61 16688.46
1997/11/30 16977.03 17480.82
1997/12/31 17506.75 18083.31
1998/01/31 17508.74 18046.65
1998/02/28 17968.54 18563.20
1998/03/31 18432.44 19025.32
1998/04/30 18428.80 19071.47
1998/05/31 17653.68 18420.48
1998/06/30 17075.09 17888.74
1998/07/31 17319.09 18011.22
1998/08/31 11194.28 12835.61
1998/09/30 12184.82 14090.76
1998/10/31 13011.47 15002.37
1998/11/30 13987.53 15885.48
1998/12/31 13573.71 15488.40
1999/01/31 13221.04 14913.30
1999/02/28 13471.47 15127.43
1999/03/31 14637.27 16271.83
1999/04/30 16178.68 17383.82
1999/05/31 15299.84 16392.75
1999/06/30 16045.91 17125.88
IMATRL PRASUN SHR__CHT 19990630 19990715 111016 R00000000000067
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Emerging Markets Income Fund - Class C on
March 10, 1994, when the fund started. As the chart shows, by June 30,
1999, the value of the investment would have been $16,046 - a 60.46%
increase on the initial investment. For comparison, look at how the
J.P. Morgan Emerging Markets Bond Index Plus did over the same period.
With dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $17,126 - a 71.26% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets means
assuming greater risks than
investing in the United States.
Factors like changes in a country's
financial markets, its local political
and economic climate, and the
fluctuating value of its currency
create these risks. For these
reasons an international fund's
performance may be more
volatile than a fund that invests
exclusively in the United States.
Past performance is no guarantee
of future results and you may
have a gain or loss when you sell
your shares.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, NOVEMBER 3, 1997
(COMMENCEMENT OF SALE OF
CLASS C SHARES) TO DECEMBER
31,
1999 1998 1997
Dividend returns 4.09% 7.41% A 2.48%
Capital returns 14.12% -29.88% 1.68%
Total returns 18.21% -22.47% 4.16%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested, and exclude the effect of sales
charges.
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR A
Dividends per share 4.55(cents) 29.16(cents) 75.84(cents)
Annualized dividend rate 6.39% 7.13% 9.20%
30-day annualized yield n/a - -
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $8.67 over the past one month, $8.25 over the past six months, and
$8.24 over the past one year, you can compare the class' income
distributions over these three periods. The 30-day annualized YIELD is
a standard formula for all bond funds based on the yields of the bonds
in the fund, averaged over the past 30 days. This figure shows you the
yield characteristics of the fund's investments at the end of the
period. It also helps you compare funds from different companies on an
equal basis. Yield information will be reported once Class C has a
longer, more stable, operating history.
A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE CLASS'
INVESTMENT INCOME AND DO NOT REFLECT CURRENCY RELATED LOSSES. AS A
RESULT OF CURRENCY LOSSES, DIVIDENDS OF APPROXIMATELY 15.9(CENTS) PER
SHARE WERE A NON-TAXABLE RETURN OF CAPITAL.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite rising U.S. interest rates,
emerging-market debt enjoyed
positive performance in the first half
of 1999, as the J.P. Morgan
Emerging Markets Bond Index Plus
- - which tracks total returns for
traded external debt instruments in
the emerging markets - returned
10.57% for the six months ending
June 30, 1999. The market's positive
performance was a continuation of
the rally that began late last fall in
the aftermath of Russia's
devaluation and default on its local
currency-denominated debt.
Several factors were responsible for
the rally. First, emerging markets
enjoyed a technical rebound from
the dramatically oversold
conditions that existed last fall.
Russian debt, the primary victim of
last year's rout, enjoyed this year's
largest rebound. Brazilian debt
prices also rallied significantly
despite a devaluation of its currency
- - the real - in January. The
Brazilian recovery was driven by a
much milder-than-expected
recession and a muted inflationary
response from the devaluation.
Another important development
was the dramatic increase in the
price of oil, which benefited
Venezuela, the second-best
performing country year-to-date,
as well as Russia and Mexico. The
only country with significantly
negative returns was Ecuador,
which suffered from investors'
negative sentiment about its
creditworthiness, a stagnant
economy, high deficits and a
very weak banking sector.
(photograph of John Carlson)
An interview with John Carlson, Portfolio Manager of Fidelity Advisor
Emerging Markets Income Fund
Q. HOW DID THE FUND PERFORM IN THE FIRST HALF OF 1999, JOHN?
A. The fund generated favorable performance in the first half. For the
six months ending June 30, 1999, the fund's Class A, Class T, Class B
and Class C shares returned 18.58%, 18.72%, 18.38% and 18.21%,
respectively. The emerging markets debt funds average, as tracked by
Lipper Inc., returned 9.72% during the same period, while the J.P.
Morgan Emerging Markets Bond Index Plus returned 10.57%. For the 12
months ending June 30, 1999, the fund's Class A, Class T, Class B and
Class C shares returned -5.52%, -5.53%, -6.19% and -6.03%,
respectively, while the Lipper peer group and J.P. Morgan index
returned -10.63% and -4.26%, respectively.
Q. RUSSIA WAS THE MAJOR STORY IN EMERGING MARKETS LAST YEAR. HOW HAS
IT PERFORMED IN 1999 AND HOW DID IT INFLUENCE FUND PERFORMANCE?
A. Russian asset prices ended 1998 at deeply depressed levels after
the government devalued its currency and defaulted on local
currency-denominated debt. In addition, the themes of de-leveraging
and deflation throughout global capital markets further contributed to
the crisis. The fund maintained its overweighted position in Russia as
our team believed assets had become significantly oversold. The fund's
holdings in Russia were also shifted to include more U.S.
dollar-denominated eurobonds, which we perceived to be more
creditworthy than debt that had evolved from the former Soviet Union.
So far this year, Russian debt prices have rebounded. Stronger
commodity prices, particularly oil, helped. In addition, some
stability returned to the Russian economy. The result has been that
Russia is the top-performing country in the benchmark this year and a
top contributor to the fund.
Q. WHAT'S BEEN THE MAJOR EVENT SO FAR IN 1999?
A. If Russia was 1998's big story, Brazil has been the major story
thus far in 1999. Brazil devalued its currency - the real - in January
of this year. However, unlike Russia, the perception is that the
Brazil devaluation was one of the most widely anticipated
emerging-market crises in recent memory. In light of this, our
research team studied all the major emerging-market currency
devaluations of the 1990s and concluded that Brazilian assets already
reflected the turmoil that typically follows such an event. As a
result of this and other factors, the fund overweighted Brazil.
Brazilian debt prices subsequently recovered. Most importantly, the
economy contracted less than was expected and inflation was
surprisingly tame. In addition, the newly appointed Central Bank
Governor, Arminio Fraga, was able to convince major banks to extend
credit lines to Brazil. This action helped mitigate Brazil's growing
liquidity crisis.
Q. WHAT ELSE HELPED FUND PERFORMANCE, AND WHAT HURT?
A. One of the key trends in the first half of 1999 was the resurgence
in oil prices. The price of West Texas Intermediate crude oil rose
from approximately $12 per barrel in January to over $18 per barrel by
the end of June. Relative to its benchmark, the fund benefited from
its overweighting in Venezuela, one of the world's most important oil
producers. In addition, differentiating among oil producers benefited
fund performance. Our analysts believed that, by itself, higher oil
prices would not be enough to help Ecuador, a deteriorating credit. As
a result, the fund maintained an underweighted position relative to
the benchmark. It is also important to recognize that while country
selection is the more talked-about aspect of our investment process,
security selection - choosing the bonds with the best value in each
country - also was a key driver of fund performance. Specifically,
security selection within countries with robust bond markets, such as
Brazil and Mexico, contributed to performance. While the fund had no
significant detractors overall, security selection in Argentina
hampered performance during June. Investor speculation about a
possible currency devaluation left Argentinian debt prices lower,
which caused our holdings in that country to suffer.
Q. JOHN, WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
A. I'm cautious. Looking forward, I think it is critical that global
economic growth expands, particularly outside of the U.S. Our work has
found that long-term economic growth is the key variable for
emerging-country creditworthiness. It is also important that commodity
prices stay stable or increase. I will watch closely the level and
consistency of credit extended by banks to emerging-market countries.
Lastly, we are monitoring the potential for China to devalue its
currency and considering the possible fallout from such an event.
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: a high level of current
income; as a secondary
objective, the fund seeks
capital appreciation
START DATE: March 10, 1994
SIZE: as of June 30, 1999,
more than $76 million
MANAGER: John Carlson,
since 1995; lead manager,
Fidelity Advisor Strategic
Income Fund, since 1996;
joined Fidelity in 1995.
JOHN CARLSON TALKS ABOUT
ESTIMATING COUNTRY RISK:
"I have found when investing in
emerging markets that it is
critical to combine quantitative
analysis of countries with a
qualitative, hands-on assessment.
"The two main sources of risk for
an emerging-markets debt fund
are the overall market risk and
each country's individual risk. We
have created a proprietary tool to
help us assign a risk score to each
country in our investment
universe. One of the models we
use to reach this score looks at the
debt-servicing capacity of each
country. It is akin to the credit
scores used by banks as an aid in
deciding to whom to lend.
"The macroeconomic variables we
have found to be highly significant
in explaining the occurrence of
debt defaults are: 1) liquidity,
the gross borrowing requirements
of the country as a percentage of
foreign currency reserves; and
2) leverage, the country's external
debt as a percentage of exports of
goods and services. Additionally,
two economic performance
variables are included on the
premise that even large liquidity
requirements can be managed
provided policies are right and the
economy is experiencing robust,
non-inflationary growth. These
variables are average growth and
inflation."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF JUNE
30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE COUNTRIES 6 MONTHS AGO
Brazil 21.2 15.8
Mexico 15.2 22.9
Argentina 14.7 19.2
Russia 12.3 7.0
Venezuela 9.6 12.5
</TABLE>
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES CONTRACTS, IF
APPLICABLE. TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH
SECURITY, INCLUDING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL
AND CREDIT RISKS.
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE HOLDINGS AS OF JUNE
30, 1999
(BY ISSUER, EXCLUDING CASH % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
EQUIVALENTS) THESE HOLDINGS 6 MONTHS AGO
Brazilian Federative Republic 12.9 6.1
Argentinian Republic 10.3 12.8
Venezuelan Republic 9.6 12.5
United Mexican States 8.6 17.0
Russian Federation 5.6 1.1
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JUNE 30, 1999 AS OF DECEMBER 31, 1998
Corporate Bonds 19.9% Corporate Bonds 16.8%
Government Obligations 62.3% Government Obligations 67.3%
Stocks 5.1% Stocks 7.0%
Other Investments 6.6% Other Investments 4.7%
Short-Term Investments 6.1% Short-Term Investments 4.2%
Row: 1, Col: 1, Value: 19.9 Row: 1, Col: 1, Value: 16.8
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 62.3 Row: 1, Col: 3, Value: 67.3
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 5.1 Row: 1, Col: 5, Value: 7.0
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 6.6 Row: 1, Col: 7, Value: 4.7
Row: 1, Col: 8, Value: 6.1 Row: 1, Col: 8, Value: 4.2
</TABLE>
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 19.9%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
CONVERTIBLE BONDS - 3.1%
MALAYSIA - 2.0%
Telekom Malaysia BHD 4% Baa3 $ 1,690,000 $ 1,457,625
10/3/04
MEXICO - 1.1%
Telefonos de Mexico SA de CV BB 760,000 784,700
4.25% 6/15/04
TOTAL CONVERTIBLE BONDS 2,242,325
NONCONVERTIBLE BONDS - 16.8%
ARGENTINA - 2.4%
Compania Internacional de BB ARS 2,310,000 1,790,492
Telecomunicaciones 10.375%
8/1/04 (Reg. S)
BRAZIL - 4.9%
Banco Nacional de
Desenvolvimento Economico e
Social:
13.64% 6/16/08 (g) B1 3,225,000 2,725,125
13.64% 6/16/08 (f)(g) B1 980,000 828,100
3,553,225
MALAYSIA - 3.1%
Petroliam Nasional BHD
(Petronas):
7.625% 10/15/26 (Reg. S) A2 2,330,000 1,898,950
yankee 7.625% 10/15/26 (f) Baa3 490,000 399,350
2,298,300
MEXICO - 4.2%
Cemex SA 9.25% 6/17/02 Ba2 1,430,000 1,444,300
Petroleos Mexicanos:
9.25% 3/30/18 Ba2 570,000 475,950
9.5% 9/15/27 Ba2 1,220,000 1,160,525
3,080,775
TURKEY - 2.2%
Cellco Finance NV 15% 8/1/05 B2 1,540,000 1,586,200
TOTAL NONCONVERTIBLE BONDS 12,308,992
TOTAL CORPORATE BONDS 14,551,317
(Cost $13,809,621)
GOVERNMENT OBLIGATIONS (H) -
62.7%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
ARGENTINA - 12.3%
Argentinian Republic:
Brady par euro 6% 3/31/23 Ba3 $ 5,870,000 $ 3,756,800
9.75% 9/19/27 Ba3 4,960,000 3,812,995
City of Buenos Aires euro B1 ARS 1,820,000 1,465,298
10.5% 5/28/04
9,035,093
BRAZIL - 12.9%
Brazilian Federative Republic:
Brady discount euro 5.875% B2 2,770,000 1,765,875
4/15/24 (g)
Brady:
debt conversion bond euro B2 3,820,000 2,368,400
5.9375% 4/15/12 (g)
new money bond L:
5.9375% 4/15/09 (Bearer) (g) B2 2,530,000 1,774,163
5.9375% 4/15/09 (Reg.) (g) B2 1,990,000 1,395,488
global bond 10.125% 5/15/27 B2 2,820,000 2,125,575
9,429,501
BULGARIA - 2.6%
Bulgarian Republic Brady:
discount A 5.875% 7/28/24 (g) B2 2,440,000 1,668,350
FLIRB A 2.5% 7/28/12 (g) B2 440,000 270,600
1,938,950
COSTA RICA - 1.4%
Banco Central Costa Rica Ba1 400,000 350,000
Series A, 6.25% 5/21/10
Costa Rican Republic 9.335% Ba1 700,000 686,000
5/15/09 (f)
1,036,000
IVORY COAST - 0.7%
Ivory Coast Brady past due - 1,521,000 532,350
interest 2% 3/29/18 (g)
MALAYSIA - 1.6%
Malaysian Government yankee Baa3 1,130,000 1,142,102
8.75% 6/1/09
MEXICO - 8.6%
United Mexican States:
Brady par A 6.25% 12/31/19 Ba2 1,660,000 1,232,550
unit
Brady par B 6.25% 12/31/19 Ba2 590,000 438,075
unit
global bond 11.5% 5/15/26 Ba2 2,460,000 2,742,900
GOVERNMENT OBLIGATIONS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
MEXICO - CONTINUED
United Mexican States: -
continued
value recovery rights 6/30/03:
discount A (a)(i) - $ 1,000 $ 0
discount C (a)(i) - 1,000 0
10.375% 2/17/09 Ba2 840,000 857,850
warrants 2/17/00 (a)(i) - 16,100 1,022,350
6,293,725
NIGERIA - 1.3%
Central Bank of Nigeria:
6.25% 11/15/20 - 1,500,000 922,500
warrants 11/15/20 (a)(i) - 1,500 0
922,500
PERU - 1.2%
Peruvian Republic:
Brady FLIRB 3.75% 3/7/17 (g) Ba3 630,000 346,500
Brady past due interest 4.5% Ba3 850,000 524,875
3/7/17 (g)
871,375
POLAND - 0.5%
Polish Republic Brady par 3% Baa3 610,000 364,475
10/27/24 (e)
RUSSIA - 8.8%
Bank for Foreign Economic Ca 3,940,000 630,400
Affairs of Russia
(Vnesheconombank) interest
notes 6.0625% 12/15/15 (g)
Moscow City 9.5% 5/31/00 Caa1 2,430,000 1,500,525
(Reg.)
Russian Federation:
euro 12.75% 6/24/28 (Reg. S) B3 3,310,000 1,861,875
9.25% 11/27/01 B3 570,000 386,175
11% 7/24/18 (Reg. S) B3 3,750,000 1,875,000
Russian Federation Ministry Ca 690,000 162,150
of Finance 3% 5/14/03
6,416,125
GOVERNMENT OBLIGATIONS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
TURKEY - 1.2%
Turkish Republic:
global 12.375% 6/15/09 B1 $ 610,000 $ 601,613
Treasury Bill 0% 1/19/00 (j) - TRL 206,126,000 319,513
921,126
VENEZUELA - 9.6%
Venezuelan Republic:
Brady:
debt conversion bond euro B2 3,440,460 2,662,056
6.3125% 12/18/07 (g)
par W-B euro 6.75% 3/31/20 B2 1,550,000 1,081,125
global bond 13.625% 8/15/18 B2 1,050,000 966,000
Oil recovery rights 3/31/20 - 16,705 0
(i)
9.25% 9/15/27 B2 2,380,000 1,582,700
euro 6% 3/31/07 (g) B2 952,375 728,567
7,020,448
TOTAL GOVERNMENT OBLIGATIONS 45,923,770
(Cost $42,138,022)
</TABLE>
COMMON STOCKS - 5.1%
SHARES
BRAZIL - 3.4%
Telebras sponsored:
ADR 42,000 2,625
ADR (PFD) 27,800 2,507,213
2,509,838
MEXICO - 1.3%
Cemex SA Series B 104,000 518,335
Fomento Economico Mexicano SA 10,200 406,725
de CV sponsored ADR
925,060
SINGAPORE - 0.4%
Pacific Internet Ltd. 7,100 336,363
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - 0.0%
Paging Brazil Holding Co. LLC 490 $ 0
Class B (a)
TOTAL COMMON STOCKS 3,771,261
(Cost $3,218,102)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SOVEREIGN LOAN PARTICIPATIONS
- - 6.6%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D)
ALGERIA - 0.4%
Algerian Republic loan - $ 330,000 311,850
participation - The Chase
Manhattan Bank 7.3125%
3/4/00 (g)
ANGOLA - 0.5%
Banco Nacional de Angola loan - 1,596,128 351,148
participation - Societe
Generale (a)
CAMEROON - 0.2%
Cameroon Republic:
loan participation - Societe - FRF 1,960,000 46,346
Generale (a)
loan participation - Societe - DEM 1,430,000 113,405
Generale (a)
159,751
CONGO - 0.2%
Congo Republic loan - 1,056,047 137,286
participation - Societe
Generale (a)
MOROCCO - 1.8%
Moroccan Kingdom loan
participation:
Series A - ING Bank NV - 620,000 503,750
5.9063% 1/1/09 (g)
Series A - Merrill Lynch, - 323,809 263,095
Pierce, Fenner & Smith, Inc.
5.9063% 1/1/09 (g)
Series A - Morgan Guaranty - 242,856 197,321
Trust Co. 5.9063% 1/1/09 (g)
Series A - Paribas Capital - 450,000 365,625
Markets 5.9063% 1/1/09 (g)
1,329,791
RUSSIA - 3.5%
Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank):
loan participation
restructured under 1997
Agreement:
- - BankBoston Corp. 6.0625% - 20,000 2,475
12/15/20 (c)(g)
SOVEREIGN LOAN PARTICIPATIONS
- - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
RUSSIA - CONTINUED
Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank): - continued
loan participation
restructured under 1997
Agreement:
- - Deutsche Bank 6.0625% - $ 1,780,000 $ 220,275
12/15/20 (c)(g)
- - Donald, Lufkin & Jenrette - 930,000 115,088
Securities Corp. 6.0625%
12/15/20 (c)(g)
- - ING Bank NV 6.0625% - 1,680,000 207,900
12/15/20 (c)(g)
- - Lehman Commercial Paper, - 170,000 21,038
Inc. 6.0625% 12/15/20 (c)(g)
- - Merrill Lynch, Pierce, - 1,460,000 180,675
Fenner & Smith, Inc. 6.0625%
12/15/20 (c)(g)
- - Morgan (J.P.) Securities, - 8,610,000 1,065,488
Inc. 6.0625% 12/15/20 (c)(g)
- - Paribus Capital Markets - 1,070,000 132,413
6.0625% 12/15/20 (c)(g)
- - The Chase Manhattan Bank - 4,710,000 582,863
6.0625% 12/15/20 (c)(g)
2,528,215
TOTAL SOVEREIGN LOAN 4,818,041
PARTICIPATIONS
(Cost $5,932,416)
</TABLE>
CASH EQUIVALENTS - 5.7%
MATURITY AMOUNT
Investments in repurchase $ 4,143,557 4,143,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.84%,
dated 6/30/99 due 7/1/99
(Cost $4,143,000)
TOTAL INVESTMENT IN $ 73,207,389
SECURITIES - 100%
(Cost $69,241,161)
SECURITY TYPE ABBREVIATION
FLIRB - Front Loaded Interest
Reduction Bonds
CURRENCY ABBREVIATIONS
ARS - Argentine peso
DEM - German deutsche mark
FRF - French franc
TRL - Turkish lira
LEGEND
(a) Non-income producing
(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(c) Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.
(d) Principal amount is stated in United States dollars unless
otherwise noted.
(e) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.
(f) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $1,913,450 or 2.5% of net assets.
(g) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(h) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed have been assigned by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
(i) Quantity represents share amount.
(j) Principal amount in thousands
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 2.6% AAA, AA, A 0.0%
Baa 4.6% BBB 4.6%
Ba 24.4% BB 35.6%
B 40.6% B 27.1%
Caa 2.0% CCC 2.2%
Ca, C 1.1% CC, C 5.9%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 8.6%. FMR has
determined that unrated debt securities that are lower quality account
for 8.6% of the total value of investment in securities.
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $70,160,029. Net unrealized appreciation
aggregated $3,047,360, of which $6,253,195 related to appreciated
investment securities and $3,205,835 related to depreciated investment
securities.
At December 31, 1998, the fund had a capital loss carryforward of
approximately $20,267,000 all of which will expire on December 31,
2006.
The fund intends to elect to defer to its fiscal year ending December
31, 1999 approximately $4,525,000 of losses recognized during the
period November 1, 1998 to December 31, 1998.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 73,207,389
value (including repurchase
agreements of $4,143,000)
(cost $69,241,161) - See
accompanying schedule
Cash 673
Receivable for investments 5,355,491
sold
Receivable for fund shares 84,421
sold
Dividends receivable 109,005
Interest receivable 1,265,620
TOTAL ASSETS 80,022,599
LIABILITIES
Payable for investments $ 3,228,356
purchased
Payable for fund shares 242,415
redeemed
Distributions payable 67,612
Accrued management fee 42,014
Distribution fees payable 25,879
Foreign tax payable 174,204
Other payables and accrued 51,940
expenses
TOTAL LIABILITIES 3,832,420
NET ASSETS $ 76,190,179
Net Assets consist of:
Paid in capital $ 98,840,650
Undistributed net investment 70,298
income
Accumulated undistributed net (26,683,746)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 3,962,977
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 76,190,179
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
JUNE 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $8.87
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($2,398,702 (divided by)
270,303 shares)
Maximum offering price per $9.31
share (100/95.25 of $8.87)
CLASS T: NET ASSET VALUE and $8.87
redemption price per share
($51,111,233 (divided by)
5,765,055 shares)
Maximum offering price per $9.19
share (100/96.50 of $8.87)
CLASS B: NET ASSET VALUE and $8.91
offering price per share
($18,339,547 (divided by)
2,059,199 shares) A
CLASS C: NET ASSET VALUE, and $8.89
offering price per share
($1,906,742 (divided by)
214,410 shares) A
INSTITUTIONAL CLASS: NET $8.83
ASSET VALUE, offering price
and redemption price per
share ($2,433,955 (divided
by) 275,637 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)
INVESTMENT INCOME $ 147,133
Dividends
Interest 4,052,885
4,200,018
Less foreign taxes withheld (14,758)
TOTAL INCOME 4,185,260
EXPENSES
Management fee $ 254,668
Transfer agent fees 70,266
Distribution fees 152,385
Accounting fees and expenses 30,542
Non-interested trustees' 257
compensation
Custodian fees and expenses 18,303
Registration fees 40,103
Audit 21,039
Legal 67
Interest 298
Total expenses before 587,928
reductions
Expense reductions (1,945) 585,983
NET INVESTMENT INCOME 3,599,277
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 510,686
Foreign currency transactions 40,941 551,627
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 8,078,395
Assets and liabilities in 3,515 8,081,910
foreign currencies
NET GAIN (LOSS) 8,633,537
NET INCREASE (DECREASE) IN $ 12,232,814
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 3,599,277 $ 9,556,479
income
Net realized gain (loss) 551,627 (24,724,723)
Change in net unrealized 8,081,910 (7,288,547)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 12,232,814 (22,456,791)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,896,870) (8,112,285)
From net investment income
Return of capital - (1,692,592)
TOTAL DISTRIBUTIONS (2,896,870) (9,804,877)
Share transactions - net (8,718,167) (12,668,733)
increase (decrease)
TOTAL INCREASE (DECREASE) 617,777 (44,930,401)
IN NET ASSETS
NET ASSETS
Beginning of period 75,572,402 120,502,803
End of period (including $ 76,190,179 $ 75,572,402
under (over) distribution
of net investment income of
$70,298 and $(632,109),
respectively)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 7.780 $ 11.120 $ 11.720 $ 10.520
period
Income from Investment
Operations
Net investment income D .405 .943 .953 .274
Net realized and unrealized 1.010 (3.275) .891 1.574
gain (loss)
Total from investment 1.415 (2.332) 1.844 1.848
operations
Less Distributions
From net investment income (.325) (.834) (.984) (.238)
From net realized gain - - (1.460) (.410)
Return of capital - (.174) - -
Total distributions (.325) (1.008) (2.444) (.648)
Net asset value, end of period $ 8.870 $ 7.780 $ 11.120 $ 11.720
TOTAL RETURN B, C 18.58% (21.94)% 16.52% 17.71%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,399 $ 2,829 $ 2,313 $ 478
(000 omitted)
Ratio of expenses to average 1.40% A, F 1.40% F 1.40% F 1.40% A, F
net assets
Ratio of expenses to average 1.40% A 1.39% G 1.38% G 1.40% A
net assets after expense
reductions
Ratio of net investment 9.87% A 10.05% 7.74% 7.31% A
income to average net assets
Portfolio turnover rate 348% A 514% 660% 410%
</TABLE>
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 PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO DECEMBER 31, 1996.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 7.770 $ 11.110 $ 11.710 $ 9.280 $ 9.520
period
Income from Invest- ment
Operations
Net investment income .402 D .975 D .877 D .758 D .860
Net realized and unrealized 1.022 (3.319) .961 2.832 (.323)
gain (loss)
Total from investment 1.424 (2.344) 1.838 3.590 .537
operations
Less Distributions
From net investment income (.324) (.824) (.978) (.750) (.777)
From net realized gain - - (1.460) (.410) -
Return of capital - (.172) - - -
Total distributions (.324) (.996) (2.438) (1.160) (.777)
Net asset value, end of period $ 8.870 $ 7.770 $ 11.110 $ 11.710 $ 9.280
TOTAL RETURN B, C 18.72% (22.07)% 16.47% 40.41% 6.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 51,111 $ 53,643 $ 93,228 $ 78,861 $ 36,205
(000 omitted)
Ratio of expenses to average 1.41% A 1.50% 1.47% 1.49% 1.50% F
net assets
Ratio of expenses to average 1.41% A 1.48% G 1.45% G 1.48% G 1.50%
net assets after expense
reductions
Ratio of net invest- ment 9.86% A 9.96% 7.08% 7.23% 9.32%
income to average net assets
Portfolio turnover rate 348% A 514% 660% 410% 305%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED DECEMBER 31,
1994 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.000
period
Income from Invest- ment
Operations
Net investment income .356
Net realized and unrealized (.073)
gain (loss)
Total from investment .283
operations
Less Distributions
From net investment income (.503)
From net realized gain (.260)
Return of capital -
Total distributions (.763)
Net asset value, end of period $ 9.520
TOTAL RETURN B, C 2.47%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 30,029
(000 omitted)
Ratio of expenses to average 1.50% A, F
net assets
Ratio of expenses to average 1.50% A
net assets after expense
reductions
Ratio of net invest- ment 6.60% A
income to average net assets
Portfolio turnover rate 354% A
</TABLE>
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 PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD MARCH 10, 1994 (COMMENCEMENT OF OPERATIONS) TO
DECEMBER 31, 1994.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 7.800 $ 11.160 $ 11.750 $ 9.300 $ 9.520
period
Income from Investment
Operations
Net investment income .375 D .907 D .806 D .686 D .835
Net realized and unrealized 1.031 (3.334) .956 2.853 (.342)
gain (loss)
Total from investment 1.406 (2.427) 1.762 3.539 .493
operations
Less Distributions
From net investment income (.296) (.772) (.892) (.679) (.713)
From net realized gain - - (1.460) (.410) -
Return of capital - (.161) - - -
Total distributions (.296) (.933) (2.352) (1.089) (.713)
Net asset value, end of $ 8.910 $ 7.800 $ 11.160 $ 11.750 $ 9.300
period
TOTAL RETURN B, C 18.38% (22.66)% 15.70% 39.61% 6.38%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 18,339 $ 16,703 $ 23,576 $ 17,746 $ 9,486
(000 omitted)
Ratio of expenses to average 2.10% A 2.15% F 2.15% 2.15% F 2.25% F
net assets
Ratio of expenses to average 2.10% A 2.13% G 2.13% G 2.15% 2.25%
net assets after expense
reductions
Ratio of net investment 9.17% A 9.36% 6.48% 6.56% 8.48%
income to average net assets
Portfolio turnover rate 348% A 514% 660% 410% 305%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED DECEMBER 31,
1994 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 9.700
period
Income from Investment
Operations
Net investment income .167
Net realized and unrealized .227
gain (loss)
Total from investment .394
operations
Less Distributions
From net investment income (.314)
From net realized gain (.260)
Return of capital -
Total distributions (.574)
Net asset value, end of $ 9.520
period
TOTAL RETURN B, C 3.67%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,034
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of expenses to average 2.25% A
net assets after expense
reductions
Ratio of net investment 5.86% A
income to average net assets
Portfolio turnover rate 354% A
</TABLE>
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 PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO DECEMBER 31, 1994.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 7.790 $ 11.110 $ 12.190
period
Income from Investment
Operations
Net investment income D .370 .792 .154
Net realized and unrealized 1.022 (3.191) .322
gain (loss)
Total from investment 1.392 (2.399) .476
operations
Less Distributions
From net investment income (.292) (.762) (.286)
From net realized gain - - (1.270)
Return of capital - (.159) -
Total distributions (.292) (.921) (1.556)
Net asset value, end of period $ 8.890 $ 7.790 $ 11.110
TOTAL RETURN B, C 18.21% (22.47)% 4.16%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,907 $ 964 $ 66
(000 omitted)
Ratio of expenses to average 2.24% A 2.25% F 2.25% A, F
net assets
Ratio of expenses to average 2.24% A 2.23% G 2.25% A
net assets after expense
reductions
Ratio of net investment 9.03% A 9.30% 9.04% A
income to average net assets
Portfolio turnover rate 348% A 514% 660%
</TABLE>
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 PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO DECEMBER 31, 1997.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995 E
SELECTED PER-SHARE DATA
Net asset value, beginning $ 7.740 $ 11.060 $ 11.650 $ 9.280 $ 8.400
of period
Income from Investment
Operations
Net investment income .410 D .931 D .860 D .786 D .393
Net realized and unrealized 1.014 (3.229) 1.008 2.779 .876
gain (loss)
Total from investment 1.424 (2.298) 1.868 3.565 1.269
operations
Less Distributions
From net investment income (.334) (.846) (.998) (.785) (.389)
From net realized gain - - (1.460) (.410) -
Return of capital - (.176) - - -
Total distributions (.334) (1.022) (2.458) (1.195) (.389)
Net asset value, end of period $ 8.830 $ 7.740 $ 11.060 $ 11.650 $ 9.280
TOTAL RETURN B, C 18.81% (21.75)% 16.84% 40.21% 15.52%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,434 $ 1,434 $ 1,320 $ 2,639 $ 201
(000 omitted)
Ratio of expenses to average 1.16% A 1.25% F 1.25% F 1.25% F 1.25% A, F
net assets
Ratio of expenses to average 1.16% A 1.24% G 1.23% G 1.25% 1.25% A
net assets after expense
reductions
Ratio of net investment 10.11% A 10.02% 6.85% 7.46% 9.09% A
income to average net assets
Portfolio turnover rate 348% A 514% 660% 410% 305%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO DECEMBER 31, 1995.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Emerging Markets Income 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. Securities (including restricted securities) for
which quotations are not readily available are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities 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 and foreign currency options, 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
U.S. federal income taxes to the extent that it distributes
substantially all of its taxable income for its fiscal year. The fund
may be subject to foreign taxes on income and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests. The
fund accrues such taxes as applicable. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain. The fund may place a debt obligation on non-accrual status
and reduce related interest income by ceasing current accruals and
writing off interest receivables when the collection of all or a
portion of interest has become doubtful based on consistently applied
procedures, under the general supervision of the Board of Trustees of
the fund. A debt obligation is removed from non-accrual status when
the issuer resumes interest payments or when collectibility of
interest is reasonably assured.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net investment income. Distributions from realized
gains, if any, are recorded on the ex-dividend date. Income dividends
and capital gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, market discount, net
operating losses, capital loss carryforwards, and losses deferred due
to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
For the period ended December 31, 1998, the fund's distributions
exceeded the aggregate amount of taxable income and net realized gains
resulting in a return of capital. This was due to certain foreign
currency losses which decreased taxable income available for
distribution after certain distributions had been made.
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 Fidelity Management & Research Company (FMR),
may transfer uninvested cash balances into one or more joint trading
accounts. These balances are invested in one or more repurchase
agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
OPTIONS. The fund may use options to manage its exposure to the bond
markets and to fluctuations in currency values. Writing puts and
buying calls tend to increase the fund's exposure to the underlying
instrument. Buying puts and writing calls tend to decrease the fund's
exposure to the underlying instrument, or hedge other fund
investments. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparties do not perform under the
contracts' terms. Gains and losses are realized upon the expiration or
closing of the options. Realized gains (losses) on purchased options
are included in realized gains (losses) on investment securities,
except purchased options on foreign currency which are included in
realized gains (losses) on foreign currency transactions.
Exchange-traded options are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations.
2. OPERATING POLICIES - CONTINUED
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).
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. The fund is permitted to
invest in loans and loan participations, trade claims or other
receivables. These investments may include standby financing
commitments that obligate the fund to supply additional cash to the
borrower on demand. Loan participations involve a risk of insolvency
of the lending bank or other financial intermediary. At the end of the
period, these investments amounted to $4,818,041 or 6.3% of net
assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $119,842,784 and $127,070,102, 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 .1100% to .3700% for the
period. The annual individual fund fee rate is .55%. 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 .68% 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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of 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 .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .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 $ 1,692 $ 37
CLASS T 65,302 10,819
CLASS B 77,202 55,925
CLASS C 8,189 7,549
$ 152,385 $ 74,330
SALES LOAD. FDC receives a front-end sales charge of up to 4.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 3,471 $ 1,138
CLASS T 21,622 10,377
CLASS B 38,127 38,127*
CLASS C 1,434 1,434*
$ 64,654 $ 51,076
* 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 $ 3,193 .29
CLASS T 45,714 .18
CLASS B 17,938 .21
CLASS C 2,039 .25
INSTITUTIONAL CLASS 1,382 .18
$ 70,266
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. 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. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. The average daily loan balance during the period for which
the loan was outstanding amounted to $2,127,000. The weighted average
interest rate was 5.04%.
6. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, securities lending fees, brokerage commissions and
extraordinary expenses, if any) 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 1.40% $ 213
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $543 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $1,189 under the custodian
arrangement.
7. CREDIT RISK.
The fund's relatively large investment in countries with limited or
developing capital markets may involve greater risks than investments
in more developed markets and the prices of such investments may be
volatile. The yields of emerging market debt obligations reflect,
among other things, perceived credit risk. The consequences of
political, social or economic changes in these markets may have
disruptive effects on the market prices of the fund's investments and
the income they generate, as well as the fund's ability to repatriate
such amounts.
8. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 11% of
the total outstanding shares of the fund.
9. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
1999 1998
FROM NET INVESTMENT INCOME
Class A $ 90,227 $ 219,978
Class T 2,070,422 6,143,721
Class B 616,844 1,620,830
Class C 56,277 37,441
Institutional Class 63,100 90,315
Total $ 2,896,870 $ 8,112,285
RETURN OF CAPITAL
Class A $ - $ 45,897
Class T - 1,281,860
Class B - 338,179
Class C - 7,812
Institutional Class - 18,844
Total $ - $ 1,692,592
Total $ 2,896,870 $ 9,804,877
10. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
1999 1998 1999
CLASS A Shares sold 235,098 $ 466,934
56,225
Reinvestment of distributions 8,995 24,274 74,107
Shares redeemed (158,540) (103,745) (1,199,571)
Net increase (decrease) (93,320) 155,627 $ (658,530)
CLASS T Shares sold 1,929,144 2,933,653 $ 16,004,010
Reinvestment of distributions 216,842 698,169 1,781,785
Shares redeemed (3,285,897) (5,118,827) (26,857,343)
Net increase (decrease) (1,139,911) (1,487,005) $ (9,071,548)
CLASS B Shares sold 350,606 816,033 $ 2,927,325
Reinvestment of distributions 57,857 175,037 478,218
Shares redeemed (489,526) (964,234) (4,012,475)
Net increase (decrease) (81,063) 26,836 $ (606,932)
CLASS C Shares sold 183,111 170,399 $ 1,548,173
Reinvestment of distributions 4,617 4,144 38,479
Shares redeemed (96,994) (56,813) (821,620)
Net increase (decrease) 90,734 117,730 $ 765,032
INSTITUTIONAL CLASS Shares 306,326 330,391 $ 2,565,832
sold
Reinvestment of distributions 5,741 10,655 47,596
Shares redeemed (221,681) (275,152) (1,759,617)
Net increase (decrease) 90,386 65,894 $ 853,811
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED DECEMBER 31,
1998
CLASS A Shares sold $ 2,083,069
Reinvestment of distributions 221,948
Shares redeemed (983,680)
Net increase (decrease) $ 1,321,337
CLASS T Shares sold $ 27,650,341
Reinvestment of distributions 6,462,132
Shares redeemed (49,719,962)
Net increase (decrease) $ (15,607,489)
CLASS B Shares sold $ 7,761,777
Reinvestment of distributions 1,605,746
Shares redeemed (9,294,273)
Net increase (decrease) $ 73,250
CLASS C Shares sold $ 1,580,351
Reinvestment of distributions 34,839
Shares redeemed (482,761)
Net increase (decrease) $ 1,132,429
INSTITUTIONAL CLASS Shares $ 2,916,407
sold
Reinvestment of distributions 96,223
Shares redeemed (2,600,890)
Net increase (decrease) $ 411,740
</TABLE>
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity Investments Japan Limited
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
Dwight D. Churchill, Vice President
Fred L. Henning, Jr., Vice President
Bart A. Grenier, Vice President
John H. Carlson, 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
* INDEPENDENT TRUSTEES
EMI-SANN-0899 82286
1.705745.101
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
The Chase Manhattan Bank
New York, NY
(2_FIDELITY_LOGOS)(registered trademark)
FIDELITY ADVISOR
EMERGING MARKETS INCOME
FUND - INSTITUTIONAL CLASS
SEMIANNUAL REPORT
JUNE 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 11 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 18 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 27 Notes to financial statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other 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.
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:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
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.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek 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 EMERGING MARKETS INCOME 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). You can also look at the class' income, as reflected in its
yield, to measure performance. The initial offering of Institutional
Class shares took place on July 3, 1995. Institutional Class shares
are sold to eligible investors without a sales load or 12b-1 fee.
Returns prior to July 3, 1995 are those of Class T, the original class
of the fund, and reflect Class T shares' 0.25% 12b-1 fee. If Fidelity
had not reimbursed certain class expenses, the past one year, five
year and life of fund total returns and dividends would have been
lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS 18.81% -5.17% 69.96% 67.16%
INCOME - INST CL
JP EMBI Plus 10.57% -4.26% 94.38% 71.26%
Emerging Markets Debt Funds 9.72% -10.63% 63.27% n/a
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show Institutional Class' performance in
percentage terms over a set period - in this case, six months, one
year, five years or since the fund started on March 10, 1994. 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 those of the J.P. Morgan
Emerging Markets Bond Index Plus - a market value-weighted index of
U.S. dollar and other external currency-denominated Brady bonds,
loans, Eurobonds, and local instruments traded in emerging markets. To
measure how Institutional Class' performance stacked up against its
peers, you can compare it to the emerging markets debt funds average,
which reflects the performance of mutual funds with similar objectives
tracked by Lipper, Inc. The past six months average represents a peer
group of 52 mutual funds. These benchmarks reflect reinvestment of
dividends and capital gains, if any, and exclude the effect of sales
charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY ADV EMERGING MARKETS -5.17% 11.19% 10.16%
INCOME - INST CL
JP EMBI Plus -4.26% 14.22% 10.66%
Emerging Markets Debt Funds -10.63% 10.12% n/a
Average
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class' cumulative
return and show you what would have happened if Institutional Class
had performed at a constant rate each year. (Note: Lipper calculates
average annual total returns by annualizing each fund's total return,
then taking an arithmetic average. This may produce a different figure
than that obtained by averaging the cumulative total returns and
annualizing the result.)
$10,000 OVER LIFE OF FUND
FA Emerg Mkt Inc -CL I JP EMBI Plus
00607 JP004
1994/03/10 10000.00 10000.00
1994/03/31 9583.54 8807.82
1994/04/30 9709.65 8643.25
1994/05/31 10335.54 9282.15
1994/06/30 9835.28 8810.67
1994/07/31 10055.96 8971.50
1994/08/31 11267.52 9714.11
1994/09/30 11589.24 10014.32
1994/10/31 11290.55 9697.82
1994/11/30 11055.90 9687.51
1994/12/31 10246.94 9059.99
1995/01/31 9070.51 8623.61
1995/02/28 8422.24 8222.51
1995/03/31 8175.93 8056.78
1995/04/30 8877.85 8918.88
1995/05/31 9407.49 9695.07
1995/06/30 9460.49 9909.06
1995/07/31 9478.29 9869.98
1995/08/31 9683.27 10140.13
1995/09/30 10070.53 10536.55
1995/10/31 10009.09 10422.17
1995/11/30 10344.64 10724.86
1995/12/31 10975.98 11485.35
1996/01/31 11786.94 12358.18
1996/02/29 11132.52 11676.46
1996/03/31 11239.43 11942.44
1996/04/30 11817.53 12593.99
1996/05/31 12141.13 12811.92
1996/06/30 12409.00 13262.30
1996/07/31 12552.11 13539.46
1996/08/31 13008.06 14036.78
1996/09/30 14076.23 14942.02
1996/10/31 14441.53 15043.72
1996/11/30 15251.78 15810.38
1996/12/31 15389.41 16000.37
1997/01/31 16045.33 16442.93
1997/02/28 16318.80 16729.03
1997/03/31 15666.08 16123.30
1997/04/30 16195.03 16602.74
1997/05/31 16893.07 17247.58
1997/06/30 17418.65 17644.32
1997/07/31 18174.39 18376.34
1997/08/31 18074.50 18301.91
1997/09/30 18657.53 18861.14
1997/10/31 16803.76 16688.46
1997/11/30 17430.57 17480.82
1997/12/31 17981.09 18083.31
1998/01/31 18002.45 18046.65
1998/02/28 18492.36 18563.20
1998/03/31 18987.43 19025.32
1998/04/30 18999.68 19071.47
1998/05/31 18212.32 18420.48
1998/06/30 17627.52 17888.74
1998/07/31 17898.02 18011.22
1998/08/31 11585.73 12835.61
1998/09/30 12607.92 14090.76
1998/10/31 13479.33 15002.37
1998/11/30 14507.78 15885.48
1998/12/31 14070.24 15488.40
1999/01/31 13729.74 14913.30
1999/02/28 13965.43 15127.43
1999/03/31 15202.03 16271.83
1999/04/30 16824.58 17383.82
1999/05/31 15919.19 16392.75
1999/06/30 16716.28 17125.88
IMATRL PRASUN SHR__CHT 19990630 19990715 111028 R00000000000067
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Emerging Markets Income Fund -
Institutional Class on March 10, 1994, when the fund started. As the
chart shows, by June 30, 1999, the value of the investment would have
grown to $16,716 - a 67.16% increase on the initial investment. For
comparison, look at how the J.P. Morgan Emerging Markets Bond Index
Plus did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 investment would have grown to
$17,126 - a 71.26% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
Many markets around the globe
offer the potential for significant
growth over time; however,
investing in foreign markets means
assuming greater risks than
investing in the United States.
Factors like changes in a country's
financial markets, its local political
and economic climate, and the
fluctuating value of its currency
create these risks. For these
reasons an international fund's
performance may be more
volatile than a fund that invests
exclusively in the United States.
Past performance is no guarantee
of future results and you may
have a gain or loss when you sell
your shares.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31, JULY 3, 1995 (COMMENCEMENT OF
SALE OF INSTITUTIONAL CLASS
SHARES) TO DECEMBER 31,
1999 1998 1997 1996 1995
Dividend returns 4.73% 8.27% A 8.54% 9.89% 5.04%
Capital returns 14.08% -30.02% 8.30% 30.32% 10.48%
Total returns 18.81% -21.75% 16.84% 40.21% 15.52%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
class. A capital return reflects both the amount paid by the class to
shareholders as capital gain distributions and changes in the class'
share price. Both returns assume the dividends or capital gains, if
any, paid by the class are reinvested, and exclude the effects of
sales charges.
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR A
Dividends per share 5.36(cents) 33.39(cents) 84.39(cents)
Annualized dividend rate 7.57% 8.21% 10.30%
30-day annualized yield 8.58% - -
DIVIDENDS per share show the income paid by the class for a set
period. If you annualize this number, based on an average share price
of $8.61 over the past one month, $8.20 over the past six months, and
$8.19 over the past one year, you can compare the class' income
distributions over these three periods. The 30-day annualized YIELD is
a standard formula for all bond funds based on the yields of the bonds
in the fund, averaged over the past 30 days. This figure shows you the
yield characteristics of the fund's investments at the end of the
period. It also helps you to compare funds from different companies on
an equal basis.
A NON-TAXABLE DIVIDENDS: DIVIDENDS PAID ARE BASED ON THE CLASS'
INVESTMENT INCOME AND DO NOT REFLECT CURRENCY RELATED LOSSES. AS A
RESULT OF CURRENCY LOSSES, DIVIDENDS OF APPROXIMATELY 17.6(CENTS) PER
SHARE WERE A NON-TAXABLE RETURN OF CAPITAL.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite rising U.S. interest rates,
emerging-market debt enjoyed
positive performance in the first half
of 1999, as the J.P. Morgan
Emerging Markets Bond Index Plus
- - which tracks total returns for
traded external debt instruments in
the emerging markets - returned
10.57% for the six months ending
June 30, 1999. The market's positive
performance was a continuation of
the rally that began late last fall in
the aftermath of Russia's
devaluation and default on its local
currency-denominated debt.
Several factors were responsible for
the rally. First, emerging markets
enjoyed a technical rebound from
the dramatically oversold
conditions that existed last fall.
Russian debt, the primary victim of
last year's rout, enjoyed this year's
largest rebound. Brazilian debt
prices also rallied significantly
despite a devaluation of its currency
- - the real - in January. The
Brazilian recovery was driven by a
much milder-than-expected
recession and a muted inflationary
response from the devaluation.
Another important development
was the dramatic increase in the
price of oil, which benefited
Venezuela, the second-best
performing country year-to-date,
as well as Russia and Mexico. The
only country with significantly
negative returns was Ecuador,
which suffered from investors'
negative sentiment about its
creditworthiness, a stagnant
economy, high deficits and a
very weak banking sector.
(photograph of John Carlson)
An interview with John Carlson, Portfolio Manager of Fidelity Advisor
Emerging Markets Income Fund
Q. HOW DID THE FUND PERFORM IN THE FIRST HALF OF 1999, JOHN?
A. The fund generated favorable performance in the first half. For the
six months ending June 30, 1999, the fund's Institutional Class shares
returned 18.81%. The emerging market debt funds average, as tracked by
Lipper Inc., returned 9.72% during the same period, while the J.P.
Morgan Emerging Markets Bond Plus Index returned 10.57%. For the
twelve months ending June 30, 1999, the fund's Institutional Class
shares returned -5.17%. The Lipper peer group and J.P. Morgan index
returned -10.63% and -4.26% respectively.
Q. RUSSIA WAS THE MAJOR STORY IN EMERGING MARKETS LAST YEAR. HOW HAS
IT PERFORMED IN 1999 AND HOW DID IT INFLUENCE FUND PERFORMANCE?
A. Russian asset prices ended 1998 at deeply depressed levels after
the government devalued its currency and defaulted on local
currency-denominated debt. In addition, the themes of de-leveraging
and deflation throughout global capital markets further contributed to
the crisis. The fund maintained its overweighted position in Russia as
our team believed assets had become significantly oversold. The fund's
holdings in Russia were also shifted to include more U.S.
dollar-denominated eurobonds, which we perceived to be more
creditworthy than debt that had evolved from the former Soviet Union.
So far this year, Russian debt prices have rebounded. Stronger
commodity prices, particularly oil, helped. In addition, some
stability returned to the Russian economy. The result has been that
Russia is the top-performing country in the benchmark this year and a
top contributor to the fund.
Q. WHAT'S BEEN THE MAJOR EVENT SO FAR IN 1999?
A. If Russia was 1998's big story, Brazil has been the major story
thus far in 1999. Brazil devalued its currency - the real - in January
of this year. However, unlike Russia, the perception is that the
Brazil devaluation was one of the most widely anticipated
emerging-market crises in recent memory. In light of this, our
research team studied all the major emerging-market currency
devaluations of the 1990s and concluded that Brazilian assets already
reflected the turmoil that typically follows such an event. As a
result of this and other factors, the fund overweighted Brazil.
Brazilian debt prices subsequently recovered. Most importantly, the
economy contracted less than was expected and inflation was
surprisingly tame. In addition, the newly appointed Central Bank
Governor, Arminio Fraga, was able to convince major banks to extend
credit lines to Brazil. This action helped mitigate Brazil's growing
liquidity crisis.
Q. WHAT ELSE HELPED FUND PERFORMANCE, AND WHAT HURT?
A. One of the key trends in the first half of 1999 was the resurgence
in oil prices. The price of West Texas Intermediate crude oil rose
from approximately $12 per barrel in January to over $18 per barrel by
the end of June. Relative to its benchmark, the fund benefited from
its overweighting in Venezuela, one of the world's most important oil
producers. In addition, differentiating among oil producers benefited
fund performance. Our analysts believed that, by itself, higher oil
prices would not be enough to help Ecuador, a deteriorating credit. As
a result, the fund maintained an underweighted position relative to
the benchmark. It is also important to recognize that while country
selection is the more talked-about aspect of our investment process,
security selection - choosing the bonds with the best value in each
country - also was a key driver of fund performance. Specifically,
security selection within countries with robust bond markets, such as
Brazil and Mexico, contributed to performance. While the fund had no
significant detractors overall, security selection in Argentina
hampered performance during June. Investor speculation about a
possible currency devaluation left Argentinian debt prices lower,
which caused our holdings in that country to suffer.
Q. JOHN, WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
A. I'm cautious. Looking forward, I think it is critical that global
economic growth expands, particularly outside of the U.S. Our work has
found that long-term economic growth is the key variable for
emerging-country creditworthiness. It is also important that commodity
prices stay stable or increase. I will watch closely the level and
consistency of credit extended by banks to emerging-market countries.
Lastly, we are monitoring the potential for China to devalue its
currency and considering the possible fallout from such an event.
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: a high level of current
income; as a secondary
objective, the fund seeks
capital appreciation
START DATE: March 10, 1994
SIZE: as of June 30, 1999,
more than $76 million
MANAGER: John Carlson,
since 1995; lead manager,
Fidelity Advisor Strategic
Income Fund, since 1996;
joined Fidelity in 1995.
JOHN CARLSON TALKS ABOUT
ESTIMATING COUNTRY RISK:
"I have found when investing in
emerging markets that it is
critical to combine quantitative
analysis of countries with a
qualitative, hands-on assessment.
"The two main sources of risk for
an emerging-markets debt fund
are the overall market risk and
each country's individual risk. We
have created a proprietary tool to
help us assign a risk score to each
country in our investment
universe. One of the models we
use to reach this score looks at the
debt-servicing capacity of each
country. It is akin to the credit
scores used by banks as an aid in
deciding to whom to lend.
"The macroeconomic variables we
have found to be highly significant
in explaining the occurrence of
debt defaults are: 1) liquidity,
the gross borrowing requirements
of the country as a percentage of
foreign currency reserves; and
2) leverage, the country's external
debt as a percentage of exports of
goods and services. Additionally,
two economic performance
variables are included on the
premise that even large liquidity
requirements can be managed
provided policies are right and the
economy is experiencing robust,
non-inflationary growth. These
variables are average growth and
inflation."
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE COUNTRIES AS OF JUNE
30, 1999
(EXCLUDING CASH EQUIVALENTS) % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE COUNTRIES 6 MONTHS AGO
Brazil 21.2 15.8
Mexico 15.2 22.9
Argentina 14.7 19.2
Russia 12.3 7.0
Venezuela 9.6 12.5
</TABLE>
PERCENTAGES ARE ADJUSTED FOR THE EFFECT OF OPEN FUTURES CONTRACTS, IF
APPLICABLE. TOP COUNTRIES ARE BASED UPON LOCATION OF ISSUER OF EACH
SECURITY, INCLUDING WHERE THE FUND IS EXPOSED TO POTENTIAL POLITICAL
AND CREDIT RISKS.
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE HOLDINGS AS OF JUNE
30, 1999
(BY ISSUER, EXCLUDING CASH % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
EQUIVALENTS) THESE HOLDINGS 6 MONTHS AGO
Brazilian Federative Republic 12.9 6.1
Argentinian Republic 10.3 12.8
Venezuelan Republic 9.6 12.5
United Mexican States 8.6 17.0
Russian Federation 5.6 1.1
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JUNE 30, 1999 AS OF DECEMBER 31, 1998
Corporate Bonds 19.9% Corporate Bonds 16.8%
Government Obligations 62.3% Government Obligations 67.3%
Stocks 5.1% Stocks 7.0%
Other Investments 6.6% Other Investments 4.7%
Short-Term Investments 6.1% Short-Term Investments 4.2%
Row: 1, Col: 1, Value: 19.9 Row: 1, Col: 1, Value: 16.8
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 62.3 Row: 1, Col: 3, Value: 67.3
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 5.1 Row: 1, Col: 5, Value: 7.0
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 6.6 Row: 1, Col: 7, Value: 4.7
Row: 1, Col: 8, Value: 6.1 Row: 1, Col: 8, Value: 4.2
</TABLE>
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 19.9%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
CONVERTIBLE BONDS - 3.1%
MALAYSIA - 2.0%
Telekom Malaysia BHD 4% Baa3 $ 1,690,000 $ 1,457,625
10/3/04
MEXICO - 1.1%
Telefonos de Mexico SA de CV BB 760,000 784,700
4.25% 6/15/04
TOTAL CONVERTIBLE BONDS 2,242,325
NONCONVERTIBLE BONDS - 16.8%
ARGENTINA - 2.4%
Compania Internacional de BB ARS 2,310,000 1,790,492
Telecomunicaciones 10.375%
8/1/04 (Reg. S)
BRAZIL - 4.9%
Banco Nacional de
Desenvolvimento Economico e
Social:
13.64% 6/16/08 (g) B1 3,225,000 2,725,125
13.64% 6/16/08 (f)(g) B1 980,000 828,100
3,553,225
MALAYSIA - 3.1%
Petroliam Nasional BHD
(Petronas):
7.625% 10/15/26 (Reg. S) A2 2,330,000 1,898,950
yankee 7.625% 10/15/26 (f) Baa3 490,000 399,350
2,298,300
MEXICO - 4.2%
Cemex SA 9.25% 6/17/02 Ba2 1,430,000 1,444,300
Petroleos Mexicanos:
9.25% 3/30/18 Ba2 570,000 475,950
9.5% 9/15/27 Ba2 1,220,000 1,160,525
3,080,775
TURKEY - 2.2%
Cellco Finance NV 15% 8/1/05 B2 1,540,000 1,586,200
TOTAL NONCONVERTIBLE BONDS 12,308,992
TOTAL CORPORATE BONDS 14,551,317
(Cost $13,809,621)
GOVERNMENT OBLIGATIONS (H) -
62.7%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
ARGENTINA - 12.3%
Argentinian Republic:
Brady par euro 6% 3/31/23 Ba3 $ 5,870,000 $ 3,756,800
9.75% 9/19/27 Ba3 4,960,000 3,812,995
City of Buenos Aires euro B1 ARS 1,820,000 1,465,298
10.5% 5/28/04
9,035,093
BRAZIL - 12.9%
Brazilian Federative Republic:
Brady discount euro 5.875% B2 2,770,000 1,765,875
4/15/24 (g)
Brady:
debt conversion bond euro B2 3,820,000 2,368,400
5.9375% 4/15/12 (g)
new money bond L:
5.9375% 4/15/09 (Bearer) (g) B2 2,530,000 1,774,163
5.9375% 4/15/09 (Reg.) (g) B2 1,990,000 1,395,488
global bond 10.125% 5/15/27 B2 2,820,000 2,125,575
9,429,501
BULGARIA - 2.6%
Bulgarian Republic Brady:
discount A 5.875% 7/28/24 (g) B2 2,440,000 1,668,350
FLIRB A 2.5% 7/28/12 (g) B2 440,000 270,600
1,938,950
COSTA RICA - 1.4%
Banco Central Costa Rica Ba1 400,000 350,000
Series A, 6.25% 5/21/10
Costa Rican Republic 9.335% Ba1 700,000 686,000
5/15/09 (f)
1,036,000
IVORY COAST - 0.7%
Ivory Coast Brady past due - 1,521,000 532,350
interest 2% 3/29/18 (g)
MALAYSIA - 1.6%
Malaysian Government yankee Baa3 1,130,000 1,142,102
8.75% 6/1/09
MEXICO - 8.6%
United Mexican States:
Brady par A 6.25% 12/31/19 Ba2 1,660,000 1,232,550
unit
Brady par B 6.25% 12/31/19 Ba2 590,000 438,075
unit
global bond 11.5% 5/15/26 Ba2 2,460,000 2,742,900
GOVERNMENT OBLIGATIONS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
MEXICO - CONTINUED
United Mexican States: -
continued
value recovery rights 6/30/03:
discount A (a)(i) - $ 1,000 $ 0
discount C (a)(i) - 1,000 0
10.375% 2/17/09 Ba2 840,000 857,850
warrants 2/17/00 (a)(i) - 16,100 1,022,350
6,293,725
NIGERIA - 1.3%
Central Bank of Nigeria:
6.25% 11/15/20 - 1,500,000 922,500
warrants 11/15/20 (a)(i) - 1,500 0
922,500
PERU - 1.2%
Peruvian Republic:
Brady FLIRB 3.75% 3/7/17 (g) Ba3 630,000 346,500
Brady past due interest 4.5% Ba3 850,000 524,875
3/7/17 (g)
871,375
POLAND - 0.5%
Polish Republic Brady par 3% Baa3 610,000 364,475
10/27/24 (e)
RUSSIA - 8.8%
Bank for Foreign Economic Ca 3,940,000 630,400
Affairs of Russia
(Vnesheconombank) interest
notes 6.0625% 12/15/15 (g)
Moscow City 9.5% 5/31/00 Caa1 2,430,000 1,500,525
(Reg.)
Russian Federation:
euro 12.75% 6/24/28 (Reg. S) B3 3,310,000 1,861,875
9.25% 11/27/01 B3 570,000 386,175
11% 7/24/18 (Reg. S) B3 3,750,000 1,875,000
Russian Federation Ministry Ca 690,000 162,150
of Finance 3% 5/14/03
6,416,125
GOVERNMENT OBLIGATIONS -
CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
TURKEY - 1.2%
Turkish Republic:
global 12.375% 6/15/09 B1 $ 610,000 $ 601,613
Treasury Bill 0% 1/19/00 (j) - TRL 206,126,000 319,513
921,126
VENEZUELA - 9.6%
Venezuelan Republic:
Brady:
debt conversion bond euro B2 3,440,460 2,662,056
6.3125% 12/18/07 (g)
par W-B euro 6.75% 3/31/20 B2 1,550,000 1,081,125
global bond 13.625% 8/15/18 B2 1,050,000 966,000
Oil recovery rights 3/31/20 - 16,705 0
(i)
9.25% 9/15/27 B2 2,380,000 1,582,700
euro 6% 3/31/07 (g) B2 952,375 728,567
7,020,448
TOTAL GOVERNMENT OBLIGATIONS 45,923,770
(Cost $42,138,022)
</TABLE>
COMMON STOCKS - 5.1%
SHARES
BRAZIL - 3.4%
Telebras sponsored:
ADR 42,000 2,625
ADR (PFD) 27,800 2,507,213
2,509,838
MEXICO - 1.3%
Cemex SA Series B 104,000 518,335
Fomento Economico Mexicano SA 10,200 406,725
de CV sponsored ADR
925,060
SINGAPORE - 0.4%
Pacific Internet Ltd. 7,100 336,363
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
UNITED STATES OF AMERICA - 0.0%
Paging Brazil Holding Co. LLC 490 $ 0
Class B (a)
TOTAL COMMON STOCKS 3,771,261
(Cost $3,218,102)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SOVEREIGN LOAN PARTICIPATIONS
- - 6.6%
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D)
ALGERIA - 0.4%
Algerian Republic loan - $ 330,000 311,850
participation - The Chase
Manhattan Bank 7.3125%
3/4/00 (g)
ANGOLA - 0.5%
Banco Nacional de Angola loan - 1,596,128 351,148
participation - Societe
Generale (a)
CAMEROON - 0.2%
Cameroon Republic:
loan participation - Societe - FRF 1,960,000 46,346
Generale (a)
loan participation - Societe - DEM 1,430,000 113,405
Generale (a)
159,751
CONGO - 0.2%
Congo Republic loan - 1,056,047 137,286
participation - Societe
Generale (a)
MOROCCO - 1.8%
Moroccan Kingdom loan
participation:
Series A - ING Bank NV - 620,000 503,750
5.9063% 1/1/09 (g)
Series A - Merrill Lynch, - 323,809 263,095
Pierce, Fenner & Smith, Inc.
5.9063% 1/1/09 (g)
Series A - Morgan Guaranty - 242,856 197,321
Trust Co. 5.9063% 1/1/09 (g)
Series A - Paribas Capital - 450,000 365,625
Markets 5.9063% 1/1/09 (g)
1,329,791
RUSSIA - 3.5%
Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank):
loan participation
restructured under 1997
Agreement:
- - BankBoston Corp. 6.0625% - 20,000 2,475
12/15/20 (c)(g)
SOVEREIGN LOAN PARTICIPATIONS
- - CONTINUED
MOODY'S RATINGS (UNAUDITED) (B) PRINCIPAL AMOUNT (D) VALUE (NOTE 1)
RUSSIA - CONTINUED
Bank for Foreign Economic
Affairs of Russia
(Vnesheconombank): - continued
loan participation
restructured under 1997
Agreement:
- - Deutsche Bank 6.0625% - $ 1,780,000 $ 220,275
12/15/20 (c)(g)
- - Donald, Lufkin & Jenrette - 930,000 115,088
Securities Corp. 6.0625%
12/15/20 (c)(g)
- - ING Bank NV 6.0625% - 1,680,000 207,900
12/15/20 (c)(g)
- - Lehman Commercial Paper, - 170,000 21,038
Inc. 6.0625% 12/15/20 (c)(g)
- - Merrill Lynch, Pierce, - 1,460,000 180,675
Fenner & Smith, Inc. 6.0625%
12/15/20 (c)(g)
- - Morgan (J.P.) Securities, - 8,610,000 1,065,488
Inc. 6.0625% 12/15/20 (c)(g)
- - Paribus Capital Markets - 1,070,000 132,413
6.0625% 12/15/20 (c)(g)
- - The Chase Manhattan Bank - 4,710,000 582,863
6.0625% 12/15/20 (c)(g)
2,528,215
TOTAL SOVEREIGN LOAN 4,818,041
PARTICIPATIONS
(Cost $5,932,416)
</TABLE>
CASH EQUIVALENTS - 5.7%
MATURITY AMOUNT
Investments in repurchase $ 4,143,557 4,143,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.84%,
dated 6/30/99 due 7/1/99
(Cost $4,143,000)
TOTAL INVESTMENT IN $ 73,207,389
SECURITIES - 100%
(Cost $69,241,161)
SECURITY TYPE ABBREVIATION
FLIRB - Front Loaded Interest
Reduction Bonds
CURRENCY ABBREVIATIONS
ARS - Argentine peso
DEM - German deutsche mark
FRF - French franc
TRL - Turkish lira
LEGEND
(a) Non-income producing
(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(c) Non-income producing - issuer filed for protection under the
Federal Bankruptcy Code or is in default of interest payment.
(d) Principal amount is stated in United States dollars unless
otherwise noted.
(e) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date. The rate shown is the rate at
period end.
(f) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $1,913,450 or 2.5% of net assets.
(g) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(h) For foreign government obligations not individually rated by S&P
or Moody's, the ratings listed have been assigned by FMR, the fund's
investment adviser, based principally on S&P and Moody's ratings of
the sovereign credit of the issuing government.
(i) Quantity represents share amount.
(j) Principal amount in thousands
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 2.6% AAA, AA, A 0.0%
Baa 4.6% BBB 4.6%
Ba 24.4% BB 35.6%
B 40.6% B 27.1%
Caa 2.0% CCC 2.2%
Ca, C 1.1% CC, C 5.9%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 8.6%. FMR has
determined that unrated debt securities that are lower quality account
for 8.6% of the total value of investment in securities.
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $70,160,029. Net unrealized appreciation
aggregated $3,047,360, of which $6,253,195 related to appreciated
investment securities and $3,205,835 related to depreciated investment
securities.
At December 31, 1998, the fund had a capital loss carryforward of
approximately $20,267,000 all of which will expire on December 31,
2006.
The fund intends to elect to defer to its fiscal year ending December
31, 1999 approximately $4,525,000 of losses recognized during the
period November 1, 1998 to December 31, 1998.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 73,207,389
value (including repurchase
agreements of $4,143,000)
(cost $69,241,161) - See
accompanying schedule
Cash 673
Receivable for investments 5,355,491
sold
Receivable for fund shares 84,421
sold
Dividends receivable 109,005
Interest receivable 1,265,620
TOTAL ASSETS 80,022,599
LIABILITIES
Payable for investments $ 3,228,356
purchased
Payable for fund shares 242,415
redeemed
Distributions payable 67,612
Accrued management fee 42,014
Distribution fees payable 25,879
Foreign tax payable 174,204
Other payables and accrued 51,940
expenses
TOTAL LIABILITIES 3,832,420
NET ASSETS $ 76,190,179
Net Assets consist of:
Paid in capital $ 98,840,650
Undistributed net investment 70,298
income
Accumulated undistributed net (26,683,746)
realized gain (loss) on
investments and foreign
currency transactions
Net unrealized appreciation 3,962,977
(depreciation) on
investments and assets and
liabilities in foreign
currencies
NET ASSETS $ 76,190,179
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
JUNE 30, 1999 (UNAUDITED)
CALCULATION OF MAXIMUM $8.87
OFFERING PRICE CLASS A: NET
ASSET VALUE and redemption
price per share
($2,398,702 (divided by)
270,303 shares)
Maximum offering price per $9.31
share (100/95.25 of $8.87)
CLASS T: NET ASSET VALUE and $8.87
redemption price per share
($51,111,233 (divided by)
5,765,055 shares)
Maximum offering price per $9.19
share (100/96.50 of $8.87)
CLASS B: NET ASSET VALUE and $8.91
offering price per share
($18,339,547 (divided by)
2,059,199 shares) A
CLASS C: NET ASSET VALUE, and $8.89
offering price per share
($1,906,742 (divided by)
214,410 shares) A
INSTITUTIONAL CLASS: NET $8.83
ASSET VALUE, offering price
and redemption price per
share ($2,433,955 (divided
by) 275,637 shares)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)
INVESTMENT INCOME $ 147,133
Dividends
Interest 4,052,885
4,200,018
Less foreign taxes withheld (14,758)
TOTAL INCOME 4,185,260
EXPENSES
Management fee $ 254,668
Transfer agent fees 70,266
Distribution fees 152,385
Accounting fees and expenses 30,542
Non-interested trustees' 257
compensation
Custodian fees and expenses 18,303
Registration fees 40,103
Audit 21,039
Legal 67
Interest 298
Total expenses before 587,928
reductions
Expense reductions (1,945) 585,983
NET INVESTMENT INCOME 3,599,277
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 510,686
Foreign currency transactions 40,941 551,627
Change in net unrealized
appreciation (depreciation)
on:
Investment securities 8,078,395
Assets and liabilities in 3,515 8,081,910
foreign currencies
NET GAIN (LOSS) 8,633,537
NET INCREASE (DECREASE) IN $ 12,232,814
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net investment $ 3,599,277 $ 9,556,479
income
Net realized gain (loss) 551,627 (24,724,723)
Change in net unrealized 8,081,910 (7,288,547)
appreciation (depreciation)
NET INCREASE (DECREASE) IN 12,232,814 (22,456,791)
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,896,870) (8,112,285)
From net investment income
Return of capital - (1,692,592)
TOTAL DISTRIBUTIONS (2,896,870) (9,804,877)
Share transactions - net (8,718,167) (12,668,733)
increase (decrease)
TOTAL INCREASE (DECREASE) 617,777 (44,930,401)
IN NET ASSETS
NET ASSETS
Beginning of period 75,572,402 120,502,803
End of period (including $ 76,190,179 $ 75,572,402
under (over) distribution
of net investment income of
$70,298 and $(632,109),
respectively)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS A
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 7.780 $ 11.120 $ 11.720 $ 10.520
period
Income from Investment
Operations
Net investment income D .405 .943 .953 .274
Net realized and unrealized 1.010 (3.275) .891 1.574
gain (loss)
Total from investment 1.415 (2.332) 1.844 1.848
operations
Less Distributions
From net investment income (.325) (.834) (.984) (.238)
From net realized gain - - (1.460) (.410)
Return of capital - (.174) - -
Total distributions (.325) (1.008) (2.444) (.648)
Net asset value, end of period $ 8.870 $ 7.780 $ 11.120 $ 11.720
TOTAL RETURN B, C 18.58% (21.94)% 16.52% 17.71%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,399 $ 2,829 $ 2,313 $ 478
(000 omitted)
Ratio of expenses to average 1.40% A, F 1.40% F 1.40% F 1.40% A, F
net assets
Ratio of expenses to average 1.40% A 1.39% G 1.38% G 1.40% A
net assets after expense
reductions
Ratio of net investment 9.87% A 10.05% 7.74% 7.31% A
income to average net assets
Portfolio turnover rate 348% A 514% 660% 410%
</TABLE>
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 PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO DECEMBER 31, 1996.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS T
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 7.770 $ 11.110 $ 11.710 $ 9.280 $ 9.520
period
Income from Invest- ment
Operations
Net investment income .402 D .975 D .877 D .758 D .860
Net realized and unrealized 1.022 (3.319) .961 2.832 (.323)
gain (loss)
Total from investment 1.424 (2.344) 1.838 3.590 .537
operations
Less Distributions
From net investment income (.324) (.824) (.978) (.750) (.777)
From net realized gain - - (1.460) (.410) -
Return of capital - (.172) - - -
Total distributions (.324) (.996) (2.438) (1.160) (.777)
Net asset value, end of period $ 8.870 $ 7.770 $ 11.110 $ 11.710 $ 9.280
TOTAL RETURN B, C 18.72% (22.07)% 16.47% 40.41% 6.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 51,111 $ 53,643 $ 93,228 $ 78,861 $ 36,205
(000 omitted)
Ratio of expenses to average 1.41% A 1.50% 1.47% 1.49% 1.50% F
net assets
Ratio of expenses to average 1.41% A 1.48% G 1.45% G 1.48% G 1.50%
net assets after expense
reductions
Ratio of net invest- ment 9.86% A 9.96% 7.08% 7.23% 9.32%
income to average net assets
Portfolio turnover rate 348% A 514% 660% 410% 305%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS T
YEARS ENDED DECEMBER 31,
1994 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.000
period
Income from Invest- ment
Operations
Net investment income .356
Net realized and unrealized (.073)
gain (loss)
Total from investment .283
operations
Less Distributions
From net investment income (.503)
From net realized gain (.260)
Return of capital -
Total distributions (.763)
Net asset value, end of period $ 9.520
TOTAL RETURN B, C 2.47%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 30,029
(000 omitted)
Ratio of expenses to average 1.50% A, F
net assets
Ratio of expenses to average 1.50% A
net assets after expense
reductions
Ratio of net invest- ment 6.60% A
income to average net assets
Portfolio turnover rate 354% A
</TABLE>
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 PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD MARCH 10, 1994 (COMMENCEMENT OF OPERATIONS) TO
DECEMBER 31, 1994.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS B
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 7.800 $ 11.160 $ 11.750 $ 9.300 $ 9.520
period
Income from Investment
Operations
Net investment income .375 D .907 D .806 D .686 D .835
Net realized and unrealized 1.031 (3.334) .956 2.853 (.342)
gain (loss)
Total from investment 1.406 (2.427) 1.762 3.539 .493
operations
Less Distributions
From net investment income (.296) (.772) (.892) (.679) (.713)
From net realized gain - - (1.460) (.410) -
Return of capital - (.161) - - -
Total distributions (.296) (.933) (2.352) (1.089) (.713)
Net asset value, end of $ 8.910 $ 7.800 $ 11.160 $ 11.750 $ 9.300
period
TOTAL RETURN B, C 18.38% (22.66)% 15.70% 39.61% 6.38%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 18,339 $ 16,703 $ 23,576 $ 17,746 $ 9,486
(000 omitted)
Ratio of expenses to average 2.10% A 2.15% F 2.15% 2.15% F 2.25% F
net assets
Ratio of expenses to average 2.10% A 2.13% G 2.13% G 2.15% 2.25%
net assets after expense
reductions
Ratio of net investment 9.17% A 9.36% 6.48% 6.56% 8.48%
income to average net assets
Portfolio turnover rate 348% A 514% 660% 410% 305%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS - CLASS B
YEARS ENDED DECEMBER 31,
1994 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 9.700
period
Income from Investment
Operations
Net investment income .167
Net realized and unrealized .227
gain (loss)
Total from investment .394
operations
Less Distributions
From net investment income (.314)
From net realized gain (.260)
Return of capital -
Total distributions (.574)
Net asset value, end of $ 9.520
period
TOTAL RETURN B, C 3.67%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,034
(000 omitted)
Ratio of expenses to average 2.25% A, F
net assets
Ratio of expenses to average 2.25% A
net assets after expense
reductions
Ratio of net investment 5.86% A
income to average net assets
Portfolio turnover rate 354% A
</TABLE>
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 PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO DECEMBER 31, 1994.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FINANCIAL HIGHLIGHTS - CLASS C
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 E
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 7.790 $ 11.110 $ 12.190
period
Income from Investment
Operations
Net investment income D .370 .792 .154
Net realized and unrealized 1.022 (3.191) .322
gain (loss)
Total from investment 1.392 (2.399) .476
operations
Less Distributions
From net investment income (.292) (.762) (.286)
From net realized gain - - (1.270)
Return of capital - (.159) -
Total distributions (.292) (.921) (1.556)
Net asset value, end of period $ 8.890 $ 7.790 $ 11.110
TOTAL RETURN B, C 18.21% (22.47)% 4.16%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 1,907 $ 964 $ 66
(000 omitted)
Ratio of expenses to average 2.24% A 2.25% F 2.25% A, F
net assets
Ratio of expenses to average 2.24% A 2.23% G 2.25% A
net assets after expense
reductions
Ratio of net investment 9.03% A 9.30% 9.04% A
income to average net assets
Portfolio turnover rate 348% A 514% 660%
</TABLE>
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 PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO DECEMBER 31, 1997.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995 E
SELECTED PER-SHARE DATA
Net asset value, beginning $ 7.740 $ 11.060 $ 11.650 $ 9.280 $ 8.400
of period
Income from Investment
Operations
Net investment income .410 D .931 D .860 D .786 D .393
Net realized and unrealized 1.014 (3.229) 1.008 2.779 .876
gain (loss)
Total from investment 1.424 (2.298) 1.868 3.565 1.269
operations
Less Distributions
From net investment income (.334) (.846) (.998) (.785) (.389)
From net realized gain - - (1.460) (.410) -
Return of capital - (.176) - - -
Total distributions (.334) (1.022) (2.458) (1.195) (.389)
Net asset value, end of period $ 8.830 $ 7.740 $ 11.060 $ 11.650 $ 9.280
TOTAL RETURN B, C 18.81% (21.75)% 16.84% 40.21% 15.52%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,434 $ 1,434 $ 1,320 $ 2,639 $ 201
(000 omitted)
Ratio of expenses to average 1.16% A 1.25% F 1.25% F 1.25% F 1.25% A, F
net assets
Ratio of expenses to average 1.16% A 1.24% G 1.23% G 1.25% 1.25% A
net assets after expense
reductions
Ratio of net investment 10.11% A 10.02% 6.85% 7.46% 9.09% A
income to average net assets
Portfolio turnover rate 348% A 514% 660% 410% 305%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO DECEMBER 31, 1995.
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.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Advisor Emerging Markets Income 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. Securities (including restricted securities) for
which quotations are not readily available are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities 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 and foreign currency options, 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
U.S. federal income taxes to the extent that it distributes
substantially all of its taxable income for its fiscal year. The fund
may be subject to foreign taxes on income and gains on investments
which are accrued based upon the fund's understanding of the tax rules
and regulations that exist in the markets in which it invests. The
fund accrues such taxes as applicable. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain. The fund may place a debt obligation on non-accrual status
and reduce related interest income by ceasing current accruals and
writing off interest receivables when the collection of all or a
portion of interest has become doubtful based on consistently applied
procedures, under the general supervision of the Board of Trustees of
the fund. A debt obligation is removed from non-accrual status when
the issuer resumes interest payments or when collectibility of
interest is reasonably assured.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net investment income. Distributions from realized
gains, if any, are recorded on the ex-dividend date. Income dividends
and capital gain distributions are declared separately for each class.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, market discount, net
operating losses, capital loss carryforwards, and losses deferred due
to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
For the period ended December 31, 1998, the fund's distributions
exceeded the aggregate amount of taxable income and net realized gains
resulting in a return of capital. This was due to certain foreign
currency losses which decreased taxable income available for
distribution after certain distributions had been made.
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 Fidelity Management & Research Company (FMR),
may transfer uninvested cash balances into one or more joint trading
accounts. These balances are invested in one or more repurchase
agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
OPTIONS. The fund may use options to manage its exposure to the bond
markets and to fluctuations in currency values. Writing puts and
buying calls tend to increase the fund's exposure to the underlying
instrument. Buying puts and writing calls tend to decrease the fund's
exposure to the underlying instrument, or hedge other fund
investments. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparties do not perform under the
contracts' terms. Gains and losses are realized upon the expiration or
closing of the options. Realized gains (losses) on purchased options
are included in realized gains (losses) on investment securities,
except purchased options on foreign currency which are included in
realized gains (losses) on foreign currency transactions.
Exchange-traded options are valued using the last sale price or, in
the absence of a sale, the last offering price. Options traded
over-the-counter are valued using dealer-supplied valuations.
2. OPERATING POLICIES - CONTINUED
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).
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. The fund is permitted to
invest in loans and loan participations, trade claims or other
receivables. These investments may include standby financing
commitments that obligate the fund to supply additional cash to the
borrower on demand. Loan participations involve a risk of insolvency
of the lending bank or other financial intermediary. At the end of the
period, these investments amounted to $4,818,041 or 6.3% of net
assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $119,842,784 and $127,070,102, 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 .1100% to .3700% for the
period. The annual individual fund fee rate is .55%. 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 .68% 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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Board of 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 .15%
CLASS T .25%
CLASS B .90%*
CLASS C 1.00%**
* .65% REPRESENTS A DISTRIBUTION FEE AND .25% REPRESENTS A SHAREHOLDER
SERVICE FEE.
** .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 $ 1,692 $ 37
CLASS T 65,302 10,819
CLASS B 77,202 55,925
CLASS C 8,189 7,549
$ 152,385 $ 74,330
SALES LOAD. FDC receives a front-end sales charge of up to 4.75% for
selling Class A shares, and 3.50% for selling Class T shares of the
fund. FDC receives the proceeds of contingent deferred sales charges
levied on Class B share redemptions occurring within six years of
purchase and Class C share redemptions occurring within one year of
purchase. Contingent deferred sales charges are based on declining
rates ranging from 5% to 1% for Class B and 1% for Class C, of the
lesser of the cost of shares at the initial date of purchase or the
net asset value of the redeemed shares, excluding any reinvested
dividends and capital gains. In addition, purchases of Class A and
Class T shares that were subject to a finder's fee bear a contingent
deferred sales charge on assets that do not remain in the fund for at
least one year. The Class A and Class T contingent deferred sales
charge is based on 0.25% of the lesser of the cost of shares at the
initial date of purchase or the net asset value of the redeemed
shares, excluding any reinvested dividends and capital gains. A
portion of the sales charges paid to FDC are paid to securities
dealers, banks and other financial institutions.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SALES LOAD - CONTINUED
For the period, sales charge amounts paid to and retained by FDC were
as follows:
PAID TO FDC RETAINED BY FDC
CLASS A $ 3,471 $ 1,138
CLASS T 21,622 10,377
CLASS B 38,127 38,127*
CLASS C 1,434 1,434*
$ 64,654 $ 51,076
* 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 $ 3,193 .29
CLASS T 45,714 .18
CLASS B 17,938 .21
CLASS C 2,039 .25
INSTITUTIONAL CLASS 1,382 .18
$ 70,266
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. 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. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. The interest
rate on the borrowings is the bank's base rate, as revised from time
to time. The average daily loan balance during the period for which
the loan was outstanding amounted to $2,127,000. The weighted average
interest rate was 5.04%.
6. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, securities lending fees, brokerage commissions and
extraordinary expenses, if any) 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 1.40% $ 213
FMR has also directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $543 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of expenses. During the period,
the fund's custodian fees were reduced by $1,189 under the custodian
arrangement.
7. CREDIT RISK.
The fund's relatively large investment in countries with limited or
developing capital markets may involve greater risks than investments
in more developed markets and the prices of such investments may be
volatile. The yields of emerging market debt obligations reflect,
among other things, perceived credit risk. The consequences of
political, social or economic changes in these markets may have
disruptive effects on the market prices of the fund's investments and
the income they generate, as well as the fund's ability to repatriate
such amounts.
8. BENEFICIAL INTEREST.
At the end of the period, FMR was record owner of approximately 11% of
the total outstanding shares of the fund.
9. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class were as follows:
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
1999 1998
FROM NET INVESTMENT INCOME
Class A $ 90,227 $ 219,978
Class T 2,070,422 6,143,721
Class B 616,844 1,620,830
Class C 56,277 37,441
Institutional Class 63,100 90,315
Total $ 2,896,870 $ 8,112,285
RETURN OF CAPITAL
Class A $ - $ 45,897
Class T - 1,281,860
Class B - 338,179
Class C - 7,812
Institutional Class - 18,844
Total $ - $ 1,692,592
Total $ 2,896,870 $ 9,804,877
10. SHARE TRANSACTIONS.
Transactions for each class of shares for the periods are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SHARES DOLLARS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
1999 1998 1999
CLASS A Shares sold 235,098 $ 466,934
56,225
Reinvestment of distributions 8,995 24,274 74,107
Shares redeemed (158,540) (103,745) (1,199,571)
Net increase (decrease) (93,320) 155,627 $ (658,530)
CLASS T Shares sold 1,929,144 2,933,653 $ 16,004,010
Reinvestment of distributions 216,842 698,169 1,781,785
Shares redeemed (3,285,897) (5,118,827) (26,857,343)
Net increase (decrease) (1,139,911) (1,487,005) $ (9,071,548)
CLASS B Shares sold 350,606 816,033 $ 2,927,325
Reinvestment of distributions 57,857 175,037 478,218
Shares redeemed (489,526) (964,234) (4,012,475)
Net increase (decrease) (81,063) 26,836 $ (606,932)
CLASS C Shares sold 183,111 170,399 $ 1,548,173
Reinvestment of distributions 4,617 4,144 38,479
Shares redeemed (96,994) (56,813) (821,620)
Net increase (decrease) 90,734 117,730 $ 765,032
INSTITUTIONAL CLASS Shares 306,326 330,391 $ 2,565,832
sold
Reinvestment of distributions 5,741 10,655 47,596
Shares redeemed (221,681) (275,152) (1,759,617)
Net increase (decrease) 90,386 65,894 $ 853,811
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
DOLLARS
YEAR ENDED DECEMBER 31,
1998
CLASS A Shares sold $ 2,083,069
Reinvestment of distributions 221,948
Shares redeemed (983,680)
Net increase (decrease) $ 1,321,337
CLASS T Shares sold $ 27,650,341
Reinvestment of distributions 6,462,132
Shares redeemed (49,719,962)
Net increase (decrease) $ (15,607,489)
CLASS B Shares sold $ 7,761,777
Reinvestment of distributions 1,605,746
Shares redeemed (9,294,273)
Net increase (decrease) $ 73,250
CLASS C Shares sold $ 1,580,351
Reinvestment of distributions 34,839
Shares redeemed (482,761)
Net increase (decrease) $ 1,132,429
INSTITUTIONAL CLASS Shares $ 2,916,407
sold
Reinvestment of distributions 96,223
Shares redeemed (2,600,890)
Net increase (decrease) $ 411,740
</TABLE>
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
Fidelity Investments Japan Limited
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
Dwight D. Churchill, Vice President
Fred L.Henning, Jr., Vice President
Bart A. Grenier, Vice President
John H. Carlson, 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
*INDEPENDENT TRUSTEES
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
The Chase Manhattan Bank
New York, NY
FOCUS FUNDS
Fidelity Advisor Consumer
Industries Fund
Fidelity Advisor Cyclical
Industries Fund
Fidelity Advisor Financial
Services Fund
Fidelity Advisor Health Care Fund
Fidelity Advisor Natural
Resources Fund
Fidelity Advisor Technology Fund
Fidelity Advisor Utilities Growth Fund
GROWTH FUNDS
Fidelity Advisor Latin America Fund
Fidelity Advisor Emerging Asia 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 (registered trademark)
Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Value Strategies 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
EMII-SANN-0899 82287
1.705746.101
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
(2_FIDELITY_LOGOS)(registered trademark)
